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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: April 20, 1999
SOURCE ONE MORTGAGE SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-2898 38-2011419
(State or other jurisdiction of (Commission file No.) (I.R.S. employer
incorporation or organization) identification no.)
27555 Farmington Road, Farmington Hills, Michigan 48334-3357
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (248) 488-7000
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits.
Item 601
Regulation S-K
Exhibit Reference
Number Exhibit Description
10(a) Source One Mortgage Services Corporation 401(k) Savings Plan and Trust
Agreement (as amended and restated effective as of January 1, 1998
except as herein otherwise provided)
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Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
Source One Mortgage Services Corporation
Date: April 20, 1999 By: Gregory Ghilardi
---------------------------------------
Gregory Ghilardi
Vice President - Human Resources
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INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
NO.
10(a) Source One Mortgage Services Corporation 401(k) Savings Plan and Trust
Agreement (as amended and restated effective as of January 1, 1998
except as herein otherwise provided)
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EXHIBIT 10(a)
SOURCE ONE MORTGAGE SERVICES CORPORATION
401(K) SAVINGS PLAN AND TRUST AGREEMENT
(as amended and restated effective as of January 1, 1998
except as herein otherwise provided)
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SOURCE ONE MORTGAGE SERVICES CORPORATION
401(K) SAVINGS PLAN AND TRUST AGREEMENT
(AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1998
EXCEPT AS HEREIN OTHERWISE PROVIDED)
INDEX
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PART ONE
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ARTICLE I DEFINITIONS AND INTERPRETATION......................................................I-1
A. Definitions..................................................................................I-1
B. Governing Law and Rules of Construction.....................................................I-10
C. Power to Interpret..........................................................................I-11
D. Adoption of Plan by Related Companies.......................................................I-11
ARTICLE II PARTICIPATION......................................................................II-1
A. Eligibility.................................................................................II-1
B. All Years of Service Counted for Eligibility................................................II-1
C. Reemployment................................................................................II-1
D. Inactive Participants.......................................................................II-1
ARTICLE III CONTRIBUTIONS.....................................................................III-1
A. Discretionary Company Contributions........................................................III-1
B. Elective Contributions; Adjusted $7,000 Limitation; Corrective Distributions...............III-1
C. Matching Company Contributions.............................................................III-3
D. Limitations on Company Contributions.......................................................III-3
E. Two or More Plans..........................................................................III-3
F. Deductibility..............................................................................III-4
G. Contributions by Mistake...................................................................III-4
H. Limitation on Repayments...................................................................III-4
I. No After-Tax Employee Contributions........................................................III-5
ARTICLE IV ALLOCATION AND ACCOUNTS............................................................IV-1
A. Discretionary Company Contributions Accounts................................................IV-1
A-1 ESOP Accounts Transferred to and Considered to be Discretionary Company Contributions
Accounts Effective January 1, 1998..........................................................IV-1
B. Elective Contributions Accounts.............................................................IV-1
C. Matching Company Contributions Accounts.....................................................IV-1
D. Limitations on Annual Additions to Accounts.................................................IV-1
E. Special Limitations on Allocations of Elective Contributions................................IV-4
F. Special Limitations on Allocations of Matching Company Contributions........................IV-5
G. Adjustments to Prevent Excess Allocations of Elective Contributions.........................IV-6
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H. Adjustments to Prevent Excess Allocations of Matching Company Contributions.................IV-9
I. Adjustments to Prevent Multiple Use of Alternative Limitation..............................IV-11
J. Establishment and Objectives of Investment Funds...........................................IV-12
K. Investment of Company Contributions and Rollover Contributions.............................IV-12
L. Participant's Rights to Periodic Reallocation of Accounts..................................IV-13
M. Participants' Credit Accounts..............................................................IV-13
N. Periodic Revaluation of Investment Funds...................................................IV-13
O. Periodic Adjustments to Accounts...........................................................IV-13
P. Fixed Accounts.............................................................................IV-14
Q. Forfeitures................................................................................IV-15
R. Company Stock Fund.........................................................................IV-16
ARTICLE V RETIREMENT BENEFITS AND VESTING.....................................................V-1
A. Normal Retirement............................................................................V-1
B. Late Retirement..............................................................................V-2
C. Early Retirement; Vesting Schedule for Discretionary Company Contributions and
Matching Company Contributions; Full Vesting of Elective Contributions.......................V-2
D. Deadline for Payment of Benefits; Required Beginning Date....................................V-4
E. Cash-Outs....................................................................................V-5
F. Limitations on Payment of Benefits Derived from Elective Contributions and Matching
Company Contributions........................................................................V-6
G. Termination of Employment by Reason of Dissolution...........................................V-6
H. Termination of Employment in Other Circumstances.............................................V-6
I. Temporary Absences...........................................................................V-6
J. Manner of Payment of Benefits From Company Stock Fund; Company Stock or Cash.................V-7
ARTICLE VI OTHER BENEFITS.....................................................................VI-1
A. Death, Spousal Consent to Designation Required if Spouse is not Beneficiary.................VI-1
B. Designation of Beneficiary..................................................................VI-1
C. Required Distributions......................................................................VI-2
C-1. Manner of Payment on Death; Company Stock or Cash...........................................VI-2
D. Disability..................................................................................VI-2
E. Hardship Distributions; Distributions After Age 59-1/2......................................VI-2
F. Loans ...................................................................................VI-6
ARTICLE VII RESERVED VII-1
PART TWO
ARTICLE VIII COMMITTEE.................................................................................VIII-1
A. Composition of Committee..................................................................VIII-1
B. Removal and Resignation...................................................................VIII-1
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C. Quorum VIII-1
D. Officers VIII-1
E. Records and Reports.......................................................................VIII-1
F. Powers and Duties.........................................................................VIII-1
G. Rules and Regulations.....................................................................VIII-2
H. Claims Procedure..........................................................................VIII-2
I. No Separate Committee.....................................................................VIII-3
J. Investment Committee......................................................................VIII-4
K. Indemnification...........................................................................VIII-4
ARTICLE IX TRUSTEE AND OTHER FIDUCIARIES......................................................IX-1
A. Bonding.....................................................................................IX-1
B. Protective Provisions for Fiduciaries.......................................................IX-1
C. Management and Control of Assets; Consultants and Investment Managers.......................IX-1
D. Participant-Directed Investments............................................................IX-3
E. Prohibited Transactions, Etc................................................................IX-4
F. General Duties of Trustee...................................................................IX-4
G. General Powers of Trustee...................................................................IX-4
H. Appraisal...................................................................................IX-6
I. Periodic Accounting.........................................................................IX-7
J. Protective Provisions for Trustee...........................................................IX-8
K. Provisions Pertaining to Co-Trustees........................................................IX-8
L. Removal and Resignation of Trustee..........................................................IX-9
M. Successor Trustees..........................................................................IX-9
N. Settlement of Accounts upon Resignation or Removal of Trustee...............................IX-9
O. Segregated Accounts........................................................................IX-10
P. Investments in Common Trust Funds..........................................................IX-10
Q. Voting Rights of Participants with respect to Company Stock................................IX-10
R. Rights on Tender or Exchange Offer for Company Stock.......................................IX-10
ARTICLE X TERMINATION, AMENDMENT AND SUSPENSION...............................................X-1
A. Termination, Etc.; Assumption of Plan........................................................X-1
B. Liquidation of Trust.........................................................................X-1
C. Termination of Trust.........................................................................X-2
D. Amendment....................................................................................X-2
ARTICLE XI MISCELLANEOUS......................................................................XI-1
A. Persons Prohibited from Serving as Fiduciaries, Etc.........................................XI-1
B. Information Required by ERISA...............................................................XI-1
C. Retention of Records for Six Years..........................................................XI-1
D. No Reversion................................................................................XI-1
E. Nonforfeitability, Etc......................................................................XI-1
F. Rollovers; Direct Transfers; Certain Transfers Prohibited...................................XI-2
G. Spendthrift Provision.......................................................................XI-4
H. Exceptions to Spendthrift Provision.........................................................XI-5
I. Execution of Instruments....................................................................XI-6
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J. Successors, Etc.............................................................................XI-6
K. Reserved....................................................................................XI-6
L. Miscellaneous Protective Provisions.........................................................XI-6
M. No Duress or Retaliation Against Participants, Etc..........................................XI-7
N. Record Keeping, Investigations, Etc.........................................................XI-7
O. Distributions to Minors and Incompetent or Missing Individuals..............................XI-7
P. Expenses and Compensation...................................................................XI-8
Q. No Warranty of Company Stock Value or Dividends.............................................XI-8
ARTICLE XII INSURANCE PROVISIONS.......................................................................XII-1
A. No Life Insurance..........................................................................XII-1
ARTICLE XIII TOP-HEAVY RULES...........................................................................XIII-1
A. Application; Top-Heavy Status.............................................................XIII-1
B. Effect of Top-Heavy Status................................................................XIII-3
C. Definitions...............................................................................XIII-5
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SOURCE ONE MORTGAGE SERVICES CORPORATION
401(k) SAVINGS PLAN AND TRUST AGREEMENT
(as amended and restated effective as of January 1, 1998
except as herein otherwise provided)
THIS AGREEMENT, made effective this 1st day of January 1998, except as
herein otherwise expressly provided, by and between Source One Mortgage Services
Corporation, a Delaware corporation (herein, with its predecessors and
successors, called the "Company"), and Merrill Lynch Trust Bank of Michigan
(herein, with its predecessors and successors, called the "Trustee"),
WITNESSETH THAT WHEREAS --
(A) On or about February 14, 1991, the Company amended its then
existing profit-sharing plan, which met the requirements of Section 401(a) of
the Internal Revenue Code and qualified as an eligible individual account plan
under Section 407(d)(3) of ERISA, by adopting a document captioned "Fireman's
Fund Mortgage Corporation Amended Employee Stock Ownership Plan" (herein called
the "Original Plan");
(B) The Company has amended the Original Plan from time to time by
adopting the amendments bearing the captions and dates set forth below in this
paragraph:
First Amendment to Fireman's Fund
Mortgage Corporation Amended Employee
Stock Ownership Plan May 19, 1992
Second Amendment to Source One Mortgage
Services Corporation Amended Employee
Stock Ownership Plan November 11, 1993
Third Amendment to Source One Mortgage
Services Corporation Amended Employee
Stock Ownership Plan January 1, 1994
Fourth Amendment to Source One Mortgage
Services Corporation Amended Employee
Stock Ownership Plan August 23, 1994
Source One Mortgage Services Corporation
Employee Stock Ownership and 401(k) Savings
Plan and Trust Agreement (as amended and
restated effective October 1, 1996) September 14, 1996
the Original Plan as so amended being hereinafter called the "Amended Plan";
(C) The amended and restated plan effective October 1, 1996 added
a 401(k) feature to the Original Plan, as previously amended;
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(D) Effective October 1, 1996, at the request of Merrill Lynch
Trust Bank of Michigan, as successor trustee under the Plan, the Company and
such Trustee entered into a trust agreement under the Amended Plan captioned
"Trust Agreement between Merrill Lynch Trust Bank of Michigan, as Trustee, and
Source One Mortgage Services Corporation, as the Employer" (herein as amended
called the "Trust Agreement");
(E) The Company desires to amend the Amended Plan (i) effective as
of January 1, 1998 to provide for discretionary Company contributions, to
transfer the accounts of participants in the ESOP portion of the Plan to
discretionary Company contributions accounts and to permit participants to
direct the investment of their discretionary and matching Company contributions
accounts among the same investment funds available under the Plan for the
investment of participant elective contributions, including shares of Fund
American Enterprises Holdings, Inc. common stock, and (ii) effective as of the
dates herein specified to comply with the Uniformed Services Employment and
Reemployment Rights Act of 1994 ("USERRA"), the Uruguay Round Agreements Act
("GATT"), the Small Business Job Protection Act of 1996 and the Taxpayer Relief
Act of 1997, and to make certain related amendments.
NOW, THEREFORE, in consideration of the premises and of the provisions
hereinafter set forth, it is agreed as follows:
1. The Amended Plan is hereby amended and restated in its
entirety to read as set forth in Parts One and Two attached hereto.
2. No benefit provided under the Plan protected by Section
411(d)(6) of the Code and Regulations thereunder shall be eliminated by the
adoption of this agreement, and this agreement shall be construed and
administered so as to comply with such Code Section and Regulations.
3. This agreement was authorized by resolutions of the Board of
Directors of the Company adopted on November 13, 1997 and August 19, 1998 and
shall be effective as of January 1, 1998 except as herein otherwise expressly
provided.
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IN WITNESS WHEREOF, the Company has duly executed this agreement on the
______ day of ________________, 1998.
Signed and delivered SOURCE ONE MORTGAGE SERVICES
in the presence of: CORPORATION
_____________________ By _________________________________
Its ____________________________
The Trustee acknowledges receipt of an executed copy of this Agreement,
assents to the provisions of this Agreement which relate to the rights, duties
and obligations of the Trustee, and agrees to serve as trustee under this
Agreement subject to its terms.
Signed and delivered MERRILL LYNCH TRUST BANK OF
in the presence of: MICHIGAN
_____________________ By ________________________________
Its ____________________________
This Agreement was prepared for execution by and between Merrill Lynch
Trust Bank of Michigan (the "Trustee") and Source One Mortgage Services
Corporation (the "Company"). However, the Trustee has not executed this
Agreement. Instead, at its request it previously entered into a separate Trust
Agreement with the Company designating it as trustee of the Plan and setting
forth the provisions relating to its services as trustee of the Plan. The
Company acknowledges that if there is any conflict between the provisions of the
Plan and such separate Trust Agreement the provisions of the separate Trust
Agreement, as amended, control, to the extent such provisions comply with ERISA.
A copy of this document has been furnished to the Trustee.
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PART ONE
ARTICLE I
DEFINITIONS AND INTERPRETATION
A. Definitions. The following words and phrases, wherever capitalized,
shall have the following meanings respectively, unless the context otherwise
requires:
(1) "Account" or "account" means and includes a Participant's
Discretionary Company Contributions Account, Elective Contributions Account,
Matching Company Contributions Account and any additional accounts established
for the Participant under this Agreement.
(2) "Accrued Benefit" means the balance in a Participant's account
separately maintained under Article IV hereof.
(3) "Adjusted Equivalent", wherever applied to a dollar amount,
means said amount adjusted for increases in the cost of living in accordance
with applicable Treasury Regulations.
(4) "Administrative Parties" means and includes the Company, the
Trustee, the Committee and any Insurer.
(5) "Agreement" means this Agreement, as from time to time amended
or supplemented.
(6) "Anniversary Date" means the last day of the Plan Year.
(7) "Annual Addition" means the amounts allocated to a
Participant's account for any Limitation Year which constitute -
(a) Company contributions to the Trust (including
Elective Contributions and Matching Company
Contributions) in respect of such Limitation Year;
(b) Forfeitures credited to the Participant's account in
respect of such Limitation Year;
(c) Contributions allocated to an individual medical
account described in Section 415(l)(2) of the Code
which is part of a pension or annuity plan maintained
by the Company and amounts described in Section
419A(d)(2) of the Code dealing with separate accounts
for key employees, as defined in Section 419(A)(d)(3)
of the Code established for post-retirement medical
benefits under a welfare benefit fund maintained by
the Company; and
(d) Employee after-tax contributions.
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Company Contributions initially allocated to a Participant's Elective
Contributions Account or Matching Company Contributions Account and later
determined to be an Excess Elective Deferral, Excess Contribution or Excess
Matching Contribution do not cease to be Annual Additions even if corrected
through distribution or other means.
(8) "Attained Age" of any individual means his chronological age,
not the age he was, or will be, on his nearest birthday.
(9) "Beneficiary" means the person so designated by a Participant
pursuant to this Agreement, or the person otherwise named as the Participant's
beneficiary under (A) or (B) of Article VI.
(10) "Code" means the Internal Revenue Code of 1986, as from time
to time amended.
(11) "Committee" means the administrative committee appointed under
Article VIII, which shall be the plan administrator as defined in Section 414(g)
of the Code, except as otherwise provided in Article VIII(I).
(12) "Company Contributions" means and includes Discretionary
Company Contributions, Elective Contributions, Matching Company Contributions,
Qualified Nonelective Contributions and Qualified Matching Contributions.
(13) "Company Stock" mean shares of common stock, $1.00 par value,
of Fund American Enterprises Holdings, Inc., a Delaware corporation, which is
the indirect parent of the Company, as traded on the New York Stock Exchange.
(14) "Compensation" for Plan Years beginning after December 31,
1996 means all compensation as that term is defined in Section 415(c)(3) of the
Code.
"Creditable Compensation," where used with reference to any Participant
or Employee, means for Plan Years beginning after December 31, 1997 the total
Compensation (as above defined) paid to him by the Company, including overtime
and bonuses, if any, any elective deferral (as defined in Code Section 401
(g)(3)) and any amount which is contributed or deferred by the Company at the
election of the Participant and which is not included in the gross income of the
Participant or Employee by reason of Code Section 125 or 457, but excluding -
(i) Compensation paid in kind, including personal
use of a Company car and similar non-cash
compensation,
(ii) Special allowances or reimbursements to cover
expenses on behalf of the Company or in the course of
employment with the Company (for example, but not by
way of limitation, travel and entertainment
expenses), and
(iii) Deferred compensation and contributions to or under
any other employee retirement, welfare, medical,
dental, health, disability or insurance plan or
arrangement.
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(iv) Compensation paid under the Source One Mortgage
Services Corporation Long Term Incentive Plan, ICP I
and ICP II, and
(v) For purposes of determining the portion of a
Discretionary Company Contribution allocated to a
Participant's Discretionary Company Contributions
Account for a taxable year only, bonuses and
commissions which in the aggregate exceed one-third
of the base salary paid in such taxable year to any
Participant who in the taxable year in which such
bonuses and commissions are earned is a corporate
vice president or higher ranking officer of the
Company or a vice president of the Company who
participates in the Company's Executive Incentive
Compensation Plan and is not a Regional Manager of
the Company.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, the
Compensation and Creditable Compensation of each Employee taken into account
under the Plan for any Plan Year shall not exceed $150,000, as adjusted by the
Commissioner for increases in the cost-of-living in accordance with Section
401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
Compensation and Creditable Compensation are determined (determination period)
beginning in such calendar year. If a determination period consists of fewer
than 12 months, the $150,000 (adjusted) 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.
Any reference in this Plan to the limitation under Section 401(a)(17)
of the Code shall mean the $150,000 (adjusted) annual compensation limit set
forth in this provision.
If Compensation or Creditable Compensation for any prior determination
period is taken into account in determining an Employee's benefits accruing in
the current Plan Year, the Compensation or Creditable Compensation for that
prior determination period is subject to the `93$150,000 (adjusted) annual
compensation limit in effect for that prior determination period.
(15) "Computation Period" means for purposes of determining
eligibility to participate in the Plan an Eligibility Computation Period and for
purposes of determining Years of Vesting Service a calendar year.
(16) "Defined Contribution Plan" means a plan described in Section
415(k) of the Code which provides for an individual account for each participant
and for benefits based solely on the amount contributed to the participant's
account, and any income, expenses, gains and losses, and any forfeitures of
accounts of other participants which may be allocated to such participant's
account, except as otherwise provided by Section 414(k) of the Code for hybrid
plans.
(17) "Disqualified Person" means a disqualified person as defined
in Section 4975(e)(2) of the Code.
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(18) "Eligibility Computation Period" means with respect to an
Employee each consecutive twelve-month period commencing on the date the
Employee first completes an Hour of Service and anniversaries thereof.
(19) "Employee" means an individual who renders services to the
Company as a common law employee or officer, i.e., a person whose compensation
from the Company is subject to federal income tax withholding, who -
(a) is not laid off without pay, on unpaid leave of absence, or on
active duty in the armed forces of any nation or international
body (other than as a member of the inactive reserve of the
armed forces of the United States of America while not
receiving pay from the Company); and
(b) is not included in an employee unit covered by a collective
bargaining agreement (not violated by this Subparagraph (b))
as to which there is evidence that retirement benefits were
the subject of good faith bargaining, all within the meaning
of Section 410(b)(3)(A) of the Code, except to the extent a
collective bargaining agreement provides for coverage under
the Plan.
An individual rendering services to the Company purportedly as an
independent contractor shall not be treated as an Employee before the Company
has acknowledged that it must withhold federal income tax from the individual's
compensation.
For purposes of the pension requirements of Section 414(n)(3) of the
Code (but not for purposes of eligibility to participate in the Plan) the term
Employee shall include leased employees as defined in Section 414(n)(2) of the
Code. Under this section of the Code the term leased employee means any person
who is not an employee of the Company or a Related Company (in this paragraph
any of such Companies being referred to as the "recipient") and who provides
services to the recipient if (i) such services are provided pursuant to an
agreement between the recipient and any other person (in this paragraph called
the "leasing organization"), (ii) such person has performed such services for
the recipient (or for the recipient and related persons) on a substantially
full-time basis for a period of at least one year, and (iii) recipient or for
Plan Years beginning for Plan Years beginning after December 31, 1996 such
services are performed under primary direction or control by the recipient.
Contributions or benefits provided by the leasing organization which are
attributable to services performed for the recipient shall be treated as
provided by the recipient. However, a leased employee shall not be considered an
Employee if (i) such employee is covered by a money purchase pension plan
providing (aa) a nonintegrated employer contribution rate of at least 10% of
compensation, as defined in Section 415(c)(3) of the Code, but including amounts
contributed pursuant to a salary reduction agreement which are excludable from
the employee's gross income under Section 125, Section 402(e)(3), Section 402(h)
or Section 403(b) of the Code, (bb) immediate participation, and (cc) full and
immediate vesting, and (ii) leased employees do not constitute more than 20% of
the recipient's nonhighly compensated work force.
(For purposes of meeting the minimum coverage requirements of Section
410(b) of the Code, employee shall mean any employee of the Company or any other
employer required to be aggregated with the Company under Sections 414(b), (c),
(m), or (o) of the Code.)
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(20) "Entry Date" means and includes commencing January 1, 1998 the
beginning of the first payroll period coinciding with or next following the
first day of each calendar quarter.
(21) "ERISA" means the Employee Retirement Income Security Act of
1974 (Public Law 93-406), as from time to time amended.
(22) "Excess Contribution" means Excess Contribution as defined in
Article IV(G)(2)(c).
(23) "Fiduciary" means and includes the Trustee, Committee members,
and any other Person who -
(a) Exercises any discretionary authority or
discretionary control respecting management of the
Plan or exercises any authority or control respecting
management or disposition of its assets,
(b) Renders investment advice for a fee or other
compensation, direct or indirect, with respect to any
moneys or other property of the Plan, or has any
authority or responsibility to do so,
(c) Has any discretionary authority or discretionary
responsibility in the administration of the Plan,
(d) Is described as a "fiduciary" in Section 3 of ERISA
or is designated to carry out fiduciary
responsibilities (other than trustee
responsibilities) pursuant to this Agreement.
Notwithstanding the foregoing provisions of this definition, the word
"Fiduciary" shall in any particular context not include any Person or category
of Persons to the extent excluded by any applicable Regulation. The Committee
shall be the "Named Fiduciary" with respect to control and management of the
operation and administration of the Plan. The Investment Committee shall be the
"Named Fiduciary" with respect to the acquisition or sale of Company Stock, the
selection of the Investment Funds and generally the investment of Plan assets as
provided in Article VIII(I-1). The Trustee shall be the "Named Fiduciary" for
custody of Plan assets, the investment of said assets other than Company Stock
(except where an Investment Manager has been appointed to manage investments or
as otherwise provided by Section 404(c) of ERISA), the disbursement of benefits
as instructed by the Committee, and the purchase and sale of Company Stock as
instructed by the Investment Committee.
(24) "Fixed Account" means an account which has become fixed,
Vested, set apart and segregated pursuant to Article IV(P), regardless of
whether or not the assets thereof shall be commingled with any other such
account or accounts.
(25) "Highly Compensated Employee" means, for Plan Years beginning
after December 31, 1996, any Employee of the Company or a Related Company who-
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(a) Was a 5-percent owner as defined in Code Section
416(i)(1) (A)(iii) at any time during the Plan Year
(the "Determination Year") or preceding twelve-month
period (the "Lookback Year"), or
(b) or For the Lookback Year received compensation from
the Company or any Related Company in excess of the
Adjusted Equivalent of $80,000.
As used above in this definition of Highly Compensated Employee, "compensation"
has the meaning given such term by Code Section 415(c)(3), except that for any
Plan Year beginning after December 31, 1996 and before January 1, 1998 such
compensation shall be determined without regard to Code Sections 125, 402(e)(3),
402(h)(1)(B) and in the case of employer contributions made pursuant to a salary
reduction agreement, without regard to Code section 403(b).
In determining whether an Employee is a 5-percent owner as defined in
Code Section 416(I)(1)(A)(iii), certain family members are considered under Code
Sections 416(I)(1)(B) and 318 to own the outstanding stock of the Company owned
directly or indirectly by other family members. As a result, Employees who do
not directly own 5 percent of the outstanding stock of the Company may be
treated as 5-percent owners and hence as Highly Compensated Employees.
A former Employee who Separated from the Service of the Company or a
Related Company prior to the Plan Year for which the determination of Highly
Compensated Employees is being made shall be treated as a Highly Compensated
Employee if such Employee was a Highly Compensated Employee in the Plan Year of
separation or in any Plan Year ending on or after the Employee's 55th birthday,
in accordance with the rules applicable to determining Highly Compensated
Employee status in effect for such Plan Year.
Notwithstanding the foregoing provisions of this definition of Highly
Compensated Employee, any transition relief granted by the Internal Revenue
Service or applicable law in connection with the changes in this definition
which are effective for Plan Years beginning after December 31, 1996 shall be
available to the Plan.
(26) "Hour of Service" means with respect to an employee of the
Company:
(a) Each hour for which an employee is paid, or entitled
to payment, for the performance of duties for the
Company during the applicable Computation Period,
with such hours being credited to the employee for
the Computation Period in which such duties were
performed;
(b) Each hour for which an employee is paid, or entitled
to payment, by the Company on account of a period of
time during which no duties are performed
(irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty,
military duty or leave of absence; provided, however
that no more than 501 hours of service are required
to be credited under this item (b) to an employee on
account of any single continuous
I-6
<PAGE> 15
period during which the employee performs no duties
(whether or not such period occurs in a single
Computation Period);
(c) Each Hour of Service for which he receives credit
pursuant to Article V(I), provided that the counting
of such hours shall not cause an individual who does
not meet the requirements of Article I(A)(19)(a) to
become a Participant while temporarily absent for a
reason described in Article V(I);
(d) Each hour for which back pay irrespective of
mitigation of damages, has been either awarded or
agreed to by the Company. These hours shall be
credited to the employee for the Computation Period
or periods to which the award or agreement pertains
rather than the Computation Period in which the
award, agreement or payment is made; and
(e) Hours shall not be credited under (a), (b) and/or (c)
if such hours are credited under (d) of this
subparagraph (26).
Also, solely for purposes of determining whether a One-Year Break in
Service for eligibility and Vesting purposes has occurred, but not for purposes
of determining the number of Years of Service of an Employee or Participant for
eligibility or Vesting purposes, nor for any other purpose under the Plan, an
Employee or Participant who is absent from work by reason of maternity or
paternity shall be deemed to have completed Hours of Service during such absence
subject to the following terms and conditions:
(f) Absence from work by reason of maternity or paternity
means and includes any absence (i) by reason of the
pregnancy of the individual, (ii) by reason of the
birth of a child of the individual, (iii) by reason
of the placement of a child of the individual in
connection with the adoption of such child by such
individual, or (iv) for purposes of caring for such
child for a period beginning immediately following
such birth or placement,
(g) The number of Hours of Service deemed to have been
completed during any such absence (not to exceed 501)
shall be the number of Hours of Service which
otherwise normally would have been credited to such
Employee or Participant but for such absence, or in
any case when the Committee is unable to determine
such number of hours, eight Hours of Service per day
of such absence,
(h) Hours of Service shall be deemed to have been
completed during an absence under this paragraph only
in the Computation Period in which the absence begins
if an Employee or Participant would be prevented from
incurring a One-Year Break in Service in such
Computation Period solely because Hours of Service
are deemed to have been completed during such
absence, or in any other case in the immediately
following Computation Period,
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<PAGE> 16
(i) No Hour of Service shall be deemed to have been
completed during an absence under this paragraph
unless the Employee or Participant furnishes to the
Committee such timely information as the Committee
may reasonably require to establish that the absence
is for a reason described in (f) above and the number
of days of such absence, and
(j) Nothing in this paragraph shall be deemed to prevent
the crediting of Hours of Service for any purpose
under the Plan under Article II(D), even though such
hours are not required to be credited under (f)
through (i) above.
The word Company as used in this paragraph shall be deemed to include
any Related Company. The foregoing definition shall be interpreted in accordance
with the rules set forth in Department of Labor Regulations ss.ss.
2530.200b-2(b) and 2530.200b-2(c), the contents of which are hereby incorporated
herein by reference.
(27) "Investment Manager" means a Fiduciary which has fully
complied with the provisions of Section 3(38) of ERISA and has provided the
Committee and the Trustee with written acknowledgement that he has done so and
is a Fiduciary with respect to the Plan.
(28) "Limitation Year" shall mean the Plan Year unless the Company
has designated a different 12 consecutive month period pursuant to a written
resolution of its Board of Directors.
(29) "Lump Sum" means one or more payments all made within a single
taxable year of the recipient.
(30) "Normal Retirement Age," in respect of any Participant, means
his 65th birthday.
(31) "Normal Retirement Benefit" means the benefit payable under
Article V(A).
(32) "Normal Retirement Date," in respect of any Participant, means
the Anniversary Date coinciding with or next following his Normal Retirement
Age.
(33) "One-Year Break in Service" means a Computation Period during
which the employee in question has not completed more than 500 Hours of Service.
(34) "Participant" means a person who at the time in question is
participating in the Plan pursuant to Article II.
(35) "Person" means any individual, corporation or other entity
mentioned in Section 3(9) of ERISA.
(36) "Plan Year" means the fiscal year on which the records of the
Plan are kept, which shall be the twelve consecutive month period ending on
December 31st.
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<PAGE> 17
(37) "Regulation" shall be construed as a reference to a
regulation, ruling, or other interpretation, validly promulgated by the
Department of Treasury or Department of Labor, as the case may be, and in effect
at the time in question.
(38) "Related Company" means and includes (i) each organization,
whether or not incorporated, which is a service organization and is a member of
an affiliated service group (within the meaning of Section 414(m) of the Code)
of which the Company is a member, (ii) all corporations which are members of a
controlled group of corporations (within the meaning of Section 414(b) of the
Code) of which the Company is a member, (iii) each trade or business, whether or
not incorporated, which is under common control (within the meaning of Section
414(c) of the Code) with the Company and (iv) any other entity required to be
aggregated with the Company pursuant to Regulations under Section 414(o) of the
Code; provided that no such corporation, organization, trade or business shall
be considered to be a Related Company at any time prior or subsequent to the
period of time during which it meets the foregoing definition; provided further
that the status of being employed by a Related Company shall only pertain to an
individual during the period of time when his employer is a Related Company, and
not to any period of time prior or subsequent to its Related Company status
unless this Agreement or an amendment to it shall otherwise expressly provide.
(39) "Rollover Account" means the account established for any
Employee who makes a Rollover Contribution to the Plan under Article XI(F) after
October 1, 1996 consisting of the Rollover adjusted for earnings or losses.
(40) "Separation (or Separated) from Service" means separation (or
separated) from the service of the Company within the meaning of Section
410(a)(4) of the Code.
(41) "Trust Fund" means and includes any and all property which
shall comprise the corpus of the Trust at the inception thereof, together with
any contributions thereto and such other property as shall from time to time
become subject to the Trust, and any and all property acquired by the Trustee in
substitution for any such contributions or other property, and any and all
accumulations thereon, increments thereof, and accretions thereto, less amounts
paid out or sustained as distributions, expenses, losses or otherwise; provided,
further, that Contracts (as hereafter defined) shall be deemed to be property
and included in the Trust Fund, except as otherwise expressly stated in this
Agreement.
(42) "Vested" when used with respect to a benefit, right or account
hereunder, means a claim obtained by a Participant or his Beneficiary to that
part of an immediate or deferred benefit under the Plan (arising from the
Participant's service) which is unconditional and legally enforceable against
the Trust; but a right to an Accrued Benefit derived from Company contributions
shall not fail to meet this definition solely (i) because it is not payable if
the Participant dies, or (ii) because the payment of benefits is suspended
during the period that the Participant is employed by the Company.
(43) "Year of Eligibility Service" means (i) with respect to a
full-time Employee, the period of 12 months ending on the first anniversary of
the date on which he first is credited with an Hour of Service and anniversaries
thereof, and (ii) with respect to a part-time Employee, an Eligibility
Computation Period during which such Employee is credited with at least one
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<PAGE> 18
thousand (1,000) Hours of Service. For purposes of determining an Employee's
Years of Eligibility Service, all periods of employment with the Company or a
Related Company, including periods prior to the effective date of the Plan and
periods when he does not meet the definition of an Employee, shall be
recognized.
(44) "Year of Vesting Service" means with respect to an Employee
each calendar year during which such Employee is credited with at least one
thousand (1,000) Hours of Service. For purposes of determining an Employee's
vested interest in his Account, all periods of employment with an Employer or a
Related Company, including periods prior to the Effective Date and periods when
he does not meet the definition of an Employee, shall be recognized, except as
provided in Article V(C)(2).
(45) Definitions of the following words and phrases are contained
in the following provisions, respectively:
<TABLE>
<S> <C>
Actual Contribution Percentage Article IV(F)
Actual Deferral Percentage Article IV(E)
Company Opening Paragraph
Contribution Percentage Article IV(F)
Deferral Percentage Article IV(E)
Discretionary Company Contributions
Account Article IV(A)
Discretionary Company Contribution Article III(A)
Elective Contribution Article III(B)
Elective Contributions Account Article IV(B)
Excess Contribution Article IV(G)(2)(c)
Excess Elective Deferrals Article III(B)
Excess Matching Contributions Article IV(H)(3)
Investment Committee Article VIII(J)
Investment Fund Article IV(J)
Matching Company Contribution Article III(C)
Matching Company Contributions Account Article IV(C)
Plan Opening Paragraph
Qualified Matching Contributions Article IV(G)(2)(b)
Qualified Nonelective Contributions Article IV(G)(2)(a)
Re-employment Commencement Date Article V(C)(2)(a)
Required Beginning Date Article V(D)(2)
Rollover Contribution Article XI(F)
Top Heavy Plan and Related Definitions Article XIII
Trust Opening Paragraph
Trustee Opening Paragraph
Valuation Date Article IV(P)(1)
</TABLE>
B. Governing Law and Rules of Construction. This Agreement shall be
governed in all respects, whether as to construction, capacity, validity,
performance or otherwise, by applicable Federal law and, to the extent that
Federal law is inapplicable, by the laws of the State of Michigan. Wherever
reasonably necessary, pronouns of any gender shall be deemed
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<PAGE> 19
synonymous, as shall singular and plural pronouns. The index to this Agreement
and the headings to the Articles and paragraphs of this Agreement are included
solely for convenience and shall in no event affect, or be used in connection
with, the interpretation of this Agreement. Each provision of this Agreement
shall be treated as a severable, to the end that, if any one or more provisions
shall be adjudged or declared illegal, invalid or unenforceable, this Agreement
shall be interpreted, and shall remain in full force and effect, as though such
provision or provisions had never been contained in this Agreement.
C. Power to Interpret. This Agreement shall be interpreted and effectuated
to comply with the applicable requirements of ERISA and the Code; and all such
applicable requirements are hereby incorporated herein by reference. Any
reference in this Agreement to the requirements of ERISA or any section or title
thereof shall be construed with due regard to Sections 108, 109 and 110 of
ERISA. Subject to the above, the Committee shall have power to construe and
interpret this Agreement and to make determinations of fact under this
Agreement, including but not limited to the power to construe and interpret all
provisions of this Agreement and to make factual determinations relating to
eligibility for benefits and the amount, manner, and time of payment of
benefits, any such construction and interpretation or factual determination by
the Committee and any action taken thereon in good faith by any Administrative
Party to be final and conclusive upon any affected party. The Committee shall
also have power to correct any defect, supply any omission, or reconcile any
inconsistency in such manner and to such extent as the Committee shall deem
proper to carry out and put into effect this Agreement; and any construction,
interpretation, or factual determination made or other action taken by the
Committee pursuant to this Paragraph (C), if and when communicated in writing to
any other Administrative Party or affected party, shall be binding upon such
other party and may be relied upon by such other party.
D. Adoption of Plan by Related Companies. Any Related Company may adopt
this Agreement and the Plan and Trust for the benefit of its eligible employees
by action of its Board of Directors but only with the consent of the Company
evidenced by a resolution of its Board of Directors or the written consent of
its President. Unless the context otherwise requires, at any time while a
Related Company has adopted this Agreement (i) the term Company as used herein
with respect to any Employee or Participant shall be construed to mean the
adopting corporation by which such Employee or Participant is employed, and (ii)
whenever the term Company is used in connection with action to be taken in
connection with the Plan, or its administration, e.g., in Article X relating to
the termination or amendment of the Plan or in Article VIII(A) relating to the
appointment of the Committee, the term Company shall mean Company as defined in
the opening paragraph of this Agreement. A transfer of employment by a
Participant between Related Companies shall not be considered a termination of
employment requiring a distribution from the Trust. A Related Company which has
adopted this Agreement shall, by doing so, authorize Source One Mortgage
Services Corporation to adopt any amendments to this Agreement on behalf of the
Related Company without the separate authorization of such Related Company.
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<PAGE> 20
ARTICLE II
PARTICIPATION
A. Eligibility. Each employee who was a Participant in the Plan
immediately prior to January 1, 1998 shall continue to be a Participant, subject
to the terms of this Agreement. Each other Employee shall become a Participant
in the Plan on or after January 1, 1998 automatically on the earlier of the
Entry Date coinciding with or next following (i) the date on which he has
completed one Year of Eligibility Service or (ii) the first Entry Date on which
he is employed in a position normally requiring at least 1,000 Hours of Service
annually. As a consequence of being or becoming a Participant in the Plan, the
Employee shall be eligible to elect as of the Entry Date on which he becomes a
Participant, or as of any later January 1, April 1, July 1 or October 1 on which
he is a Participant, to reduce his Creditable Compensation and to have the
Company make Elective Contributions on his behalf to the Trust in the amount of
such reductions in accordance with Article III(B) and to make Matching Company
Contributions for him in the discretion of the Company under Article III(C).
B. All Years of Service Counted for Eligibility. For purposes of
determining eligibility to participate, all Years of Service with the Company
and/or a Related Company shall be counted.
C. Reemployment. A former Participant or Employee shall be subject to the
following rules with respect to participation in the Plan upon reemployment:
(1) A former Participant or other former Employee who (i) did not
have a Nonforfeitable right to an accrued benefit derived from Company
contributions on the date his employment with the Company or a Related Company
terminated, (ii) did not complete at least one Year of Eligibility Service on
the date his employment terminated, and (iii) subsequently is reemployed by the
Company or a Related Company which has adopted the Plan shall become eligible,
or again become eligible, to participate in the Plan upon meeting anew the
eligibility requirements of Article II(A) above.
(2) A former Participant who subsequently is reemployed by the
Company or a Related Company which has adopted the Plan again shall become a
Participant as soon as administratively feasible after again becoming an
Employee.
D. Inactive Participants. Subject to Article IV(P)(1) and (R) with respect
to certain Participants, it is agreed as follows:
(1) During any Plan Year in which a Participant does not have at
least 1,000 Hours of Service but remains employed by the Company throughout such
Plan Year, he shall be deemed an inactive Participant in the portion of the Plan
relating to Discretionary Company Contributions and as such he shall not share
in the allocation of any such contributions or forfeitures of the same, if any,
for such Plan Year under Article IV(A). However, he shall continue to be treated
as a Participant in such portion of the Plan for other Plan purposes including
the periodic adjustments to accounts of Participants described in Article
IV(O)(1), (2), (4) and (5) and his eligibility to make Elective Contributions to
the Trust under Article II(A). If in any subsequent Plan Year such an inactive
Participant in the Discretionary Company
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<PAGE> 21
Contributions portion of the Plan completes at least 1,000 Hours of Service he
again shall become an active Participant and shall be treated as such for all
Plan purposes.
(2) During any period when a Participant fails to conform to the
definition of an Employee because he is covered by a collective bargaining
agreement within the meaning of Article I(A)(19)(b) but is still employed by the
Company or because he is transferred to employment with a Related Company which
has not adopted the Plan for its eligible employees, he shall be deemed an
inactive Participant and during such period no Compensation paid to him by the
Company shall be taken into account for the purpose of allocating Discretionary
Company Contributions or forfeitures of the same under Article IV or otherwise
under the Plan. However, he shall continue to be treated as a Participant for
other Plan purposes including the periodic adjustments to accounts of
Participants described in Article IV(O)(1), (2), (4) and (5). If such an
inactive Participant again conforms to the definition of an Employee he
subsequently shall be treated as an active Participant for all Plan purposes and
Compensation paid to him thereafter by the Company shall be taken into account
for the foregoing purposes.
(3) During any period (i) when an election under Article III(B) to
reduce the Creditable Compensation which a Participant otherwise would be
entitled to receive and to have the Company make Elective Contributions to the
Trust on his behalf is not in effect, (ii) when a Participant fails to meet the
definition of an Employee because he is covered by a collective bargaining
agreement within the meaning of Article I(A)(19)(b), or (iii) when because of a
transfer of employment he is employed by a Related Company which has not adopted
the Plan, he shall be considered an inactive Participant in the Elective
Contributions portion of the Plan and no Elective Contributions will be
allocated to his Elective Account for such period. However, during such period
the Participant shall continue to be treated as a Participant in the Elective
Contributions portion of the Plan for other Plan purposes including the periodic
adjustments to accounts of Participants described in Article IV(O)(1), (2), (4)
and (5).
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<PAGE> 22
ARTICLE III
CONTRIBUTIONS
A. Discretionary Company Contributions. Subject to the limitations of
Article III(D) and (E), the Company shall in respect of each taxable year,
within the time prescribed by law for filing its federal income tax return for
such taxable year (including extensions thereof), contribute to the Trust in
furtherance of the Plan, in cash or investments authorized under Article
IX(G)(General Powers of Trustee), such amount, if any, as may be determined in
the discretion of the Company by or in accordance with a resolution of its Board
of Directors adopted within the time prescribed by law for filing its federal
income tax return for such taxable year, including extensions thereof, any such
amounts being herein called "Discretionary Company Contributions".
B. Elective Contributions; Adjusted $7,000 Limitation; Corrective
Distributions. Subject to the limitations of Article III(D) and (E) and Article
IV(E), each Participant may elect within a reasonable time (to be specified by
the Committee) before any Entry Date, and before any additional regular periodic
dates which the Committee may designate and communicate to Participants, on a
form to be furnished to him by the Committee to reduce the Creditable
Compensation which otherwise would be paid to him after such Entry Date (or
other designated date) and to have the Company make contributions (herein called
"Elective Contributions") to the Trust in the amounts of such reductions on his
behalf, provided, however, that no Participant may elect to have Elective
Contributions (i) made to the Trust on his behalf of less than 1% or more than
14% of such Creditable Compensation or (ii) made to the Trust and/or to any
other tax qualified plan of the Company on his behalf of more than the Adjusted
Equivalent of $7,000 in any taxable year of the Participant. Such an election,
and any election to change the same made pursuant to this Agreement, may be made
only with respect to Creditable Compensation which is not currently available to
the electing Participant on the Entry Date (or other designated date) as of
which the election is made.
Elective Contributions made by means of payroll reductions shall be
paid by the Company to the Trustee at the earliest date on which they can
reasonably be segregated from the Company's general assets and in no event later
than the 15th business day of the month following the month in which (i) the
Elective Contributions are received by the Company (in the case of amounts that
a Participant pays to the Company) or (ii) such amounts would otherwise have
been paid to the Participants in cash (in the case of amounts withheld by the
Company from a Participant's Creditable Compensation), plus any extension of
such maximum time period obtained by the Company in accordance with applicable
U.S. Department of Labor Regulations. Subject to the foregoing, Elective
Contributions for a Plan Year shall be made during the Plan Year or within the
time prescribed in A. above for making Discretionary Company Contributions for
the Plan Year, except that any additional Company Contributions made under
Article IV(G)(2) and treated as Elective Contributions for the Plan Year may be
made within 12 months following the close of the Plan Year.
A Participant who has elected to have the Company make Elective
Contributions to the Trust on his behalf may, as of any Entry Date and as of any
additional regular periodic dates as the Committee may determine and communicate
to Participants, change the annual dollar amount of such Elective Contributions
or the percentage of Creditable Compensation used to
III-1
<PAGE> 23
determine the amount of such Elective Contributions. Also, at any time, a
Participant may elect to terminate his Elective Contributions for the period
subsequent to the effective date of the election. All such elections may be made
and become effective only in accordance with such reasonable rules as may be
established by the Committee. In the event of the termination of Elective
Contributions on behalf of a Participant under this paragraph, the Participant
shall not be entitled, until a subsequent Entry Date, to again elect that
Elective Contributions be made on his behalf.
If the Elective Contributions made to the Trust on behalf of a
Participant under the Plan together with any elective deferrals (as defined in
Section 402(g)(3) of the Code) under another qualified cash or deferred
arrangement as defined in Section 401(k) of the Code, a simplified employee
pension as defined in Section 408(k) of the Code, a salary reduction arrangement
under Section 403(b) of the Code, a deferred compensation plan under Section 457
of the Code, or a trust described in Section 501(c)(18) of the Code,
cumulatively exceed the limitation imposed by Section 402(g) of the Code for the
Participant's taxable year, the Participant may, not later than March 1
following the close of such taxable year, notify the Committee in writing of the
excess Elective Contributions made to the Trust (in this Agreement called
"Excess Elective Deferrals") and request that such Excess Elective Deferrals be
paid to the Participant.
In such event the Committee may direct the Trustee to pay such Excess
Elective Deferrals plus any income, or less any loss, allocable to the same to
the Participant not later than the first April 15 following the close of such
taxable year. At the request of the Participant Excess Elective Deferrals for a
taxable year of the Participant may be paid to the Participant from the Trust
during the taxable year for which they were made if the Committee so directs the
Trustee, provided that in such event (i) the Participant designates the payment
as an Excess Elective Deferral, (ii) the payment is made after the date on which
the Trustee received the Excess Elective Deferral, and (iii) the Committee
designates the payment as a distribution of Excess Elective Deferrals.
Notwithstanding the foregoing, a Participant's Excess Elective
Deferrals for the taxable year of the Participant shall be reduced, but not
below zero, by any distribution of Excess Contributions made to the Participant
pursuant to Article IV(G) for the Plan Year beginning with or within the taxable
year of the Participant.
The income or loss allocable to an Excess Elective Deferral paid to a
Participant by the Trustee shall be an amount equal to the income or loss of the
Participant's Elective Contributions Account for the taxable year of the
Participant for which the Excess Elective Deferral was made multiplied by a
fraction the numerator of which is the Excess Elective Deferral made on behalf
of the Participant for such taxable year and the denominator of which is the
Participant's Elective Contributions Account balance as of the beginning of such
taxable year plus the Participant's Elective Contributions for such taxable
year.
If Elective Contributions for any Plan Year exceed the percentage
limitation imposed on the same by the first paragraph of this Article III(B) the
excess shall be refunded to the Participant in the same manner as Excess
Elective Deferrals.
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<PAGE> 24
C. Matching Company Contributions. Subject to the limitations of Article
III(D) and (E) and Article IV(F) and (P) and the rights and obligations of the
Committee under Article IV(G) and (H) to monitor and make adjustments in certain
contributions, the Company shall contribute to the Trust for each Plan Year on
behalf of each Participant for whom it makes Elective Contributions for such
Plan Year matching contributions (herein called "Matching Company
Contributions") in an amount equal to a percentage of each Participant's
Elective Contributions to be determined each Plan Year in the discretion of the
Board of Directors of the Company, or a percentage of each Participant's
Elective Contributions limited to a specified dollar amount or specified
percentage of each Participant's Creditable Compensation, or a percentage of
that portion of a Participant's Elective Contributions which does not exceed a
specified percentage of the Participant's Creditable Compensation, such
percentages and such other limitations to be determined annually in the
discretion of the Board of Directors of the Company. If the Board does not make
such determinations for a Plan Year, its determinations for the previous Plan
Year shall apply. For purposes of this Paragraph (C), a Participant's Elective
Contributions means his Elective Contributions for the Plan Year remaining after
distribution to him of any excess Elective Contributions under Article III(B),
IV(D), IV(G)(2)(c) or IV(I) for such Plan Year. A Participant's Elective
Contribution for the Plan Year for purposes of this Paragraph (C) means his
Elective Contribution remaining after distribution to him of any Excess Elective
Deferrals under Article III(B) and any Excess Contributions under Article
IV(G)(2)(c) for such Plan Year. The Company shall contribute all such Matching
Company Contributions to the Trust for each Plan Year in cash from time to time
during such Plan Year, or after the end of such Plan Year but not later than the
time prescribed by law for filing its federal income tax return for its taxable
year with respect to which the Matching Company Contribution is made, including
extensions thereof. Pursuant to Article IV(Q)(4), Matching Company Contributions
required to be made to the Trust under this Article III(C) pursuant to a
resolution of the Board of Directors of the Company shall be reduced by any
forfeitures of Matching Company Contributions under Article V(C).
D. Limitations on Company Contributions. The Company Contributions to the
Trust for any taxable year of the Company shall not exceed the least of:
(1) The aggregate Company Contributions permitted by Article IV(D)
(specifying maximum Annual Additions) as applied to all Participants;
(2) An amount equal to 15% of the aggregate Compensation paid
during such taxable year to Employees who are Participants as of the Anniversary
Date falling within such taxable year, plus the amount of any unused pre-87
limitation carry forwards available under Section 404(a)(3)(A)(v) of the Code in
respect of such taxable year; or
(3) The Company contributions permitted by Article III(E)
(pertaining to two or more plans).
E. Two or More Plans. If the Company makes contributions for the taxable
year in question, in connection with one or more additional tax qualified plans
(including annuity plans) whose participants include one or more Participants in
this Plan, the total amount so contributed by the Company for said taxable year,
including its contribution for said taxable year under Paragraphs A, B and C of
this Article III, shall not exceed the greater of (i) 25% of the
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<PAGE> 25
Compensation otherwise paid during said taxable year to the participants in said
additional plans and the Participants in this Plan or (ii) the amount of Company
contributions necessary to satisfy the minimum funding standard provided by
Section 412 of the Code for the Plan Year which ends with or within said taxable
year (or for any prior Plan Year), all within the meaning of Section 404(a)(7)
of the Code; provided that:
(1) If any carry-over deduction is available to the Company for
said taxable year from one or more prior taxable years under Section
404(a)(7)(B), the amount thereof shall reduce the limitation set forth in the
foregoing portion of this Paragraph (E).
(2) If said limitation (reduced, if appropriate, under (1) above)
would otherwise be exceeded, the Company's contribution under this Plan for said
taxable year shall be reduced by an amount equal to the excess.
F. Deductibility. All Company Contributions to the Trust are conditioned
upon the Plan and Trust being initially tax qualified and upon deductibility
under Section 404 of the Code, unless otherwise expressly stated by the Company.
Accordingly (unless so stated), if the Plan and Trust are submitted to the
Internal Revenue Service for a determination letter within the time provided by
law for filing the Company's federal income tax return for the fiscal year of
the Company in which the Plan and Trust were adopted or by such later date as
the Secretary of the Treasury may prescribe, and are determined to be not
initially tax qualified, or if and to the extent that such a deduction is
disallowed within the meaning of Section 403(c)(2) of ERISA, the contribution in
question shall be repaid to the Company upon demand (but subject to Paragraph
(H) below and, if by reason of disallowance, only to the extent disallowed)
within one year after such disallowance or denial of initial qualification. Any
Elective Contributions so returned to the Company shall be paid by the Company
to the Employees on whose behalf they were made. If any Company contribution for
any taxable year shall exceed the amount deductible for said taxable year under
the Code, but shall not be repaid pursuant to the foregoing sentence, the
portion not so deductible shall in like amount reduce the contribution required
in respect of the subsequent taxable year during which the disallowance or other
determination of nondeductibility is made and (to the extent not thereby
consumed) any subsequent taxable year or years.
G. Contributions by Mistake. If and to the extent that a Company
contribution to the Trust is made as a result of facts and circumstances
constituting a good faith mistake of fact, the same shall be repaid to the
Company upon demand (but subject to Paragraph (H) below and only to the extent
of such mistake) within one year after the payment of the contribution. Any
Elective Contributions so returned to the Company shall be paid by the Company
to the Employees on whose behalf they were made.
H. Limitation on Repayments. All repayments of Company Contributions under
Paragraphs (F) and (G) above shall be subject to the conditions that:
(1) Such repayment shall not include any earnings attributable to
that portion of the Company contribution which qualifies for repayment under
Paragraphs (F) and (G) above.
III-4
<PAGE> 26
(2) There shall be deducted from the amount of such repayment any
losses attributable to that portion of the Company Contribution which qualifies
for repayment under Paragraphs (F) and (G) above.
(3) If in any event such repayment would result in any
Participant's account being reduced to a balance which is less than the balance
which would have been in his account had the amount contributed by mistake of
fact or in excess of the deductible amount not been contributed, then the amount
to be repaid shall be reduced until no Participant's account shall be so reduced
by reason of such repayment.
I. No After-Tax Employee Contributions. No Employee shall make any
nondeductible (after-tax) employee contributions to the Trust for any Plan Year
beginning after 1986. This prohibition shall not prevent rollovers or transfers
to the Trust permitted under Article XI(F).
III-5
<PAGE> 27
ARTICLE IV
ALLOCATION AND ACCOUNTS
A. Discretionary Company Contributions Accounts. The Trustee shall
establish an account (herein called a "Discretionary Company Contributions
Account") for each Participant and shall thereafter maintain a record thereof.
Discretionary Company Contributions under Article III(A) for any taxable year
shall, subject to the limitations of Article IV(D) and to Article II(D)
regarding inactive Participants, promptly upon receipt be allocated among the
various Participants' Discretionary Company Contributions Accounts, as of the
Anniversary Date falling within such taxable year, as follows:
(1) The amount allocated to each Participant's Discretionary
Company Contributions Account (including the Discretionary Company Contributions
Account of any individual who first became a Participant as of either Entry Date
falling within such taxable year) shall be that portion of the Company's
Discretionary Company Contributions which the Creditable Compensation paid to
such Participant in the taxable year bears to the total Creditable Compensation
paid to all the Participants in the taxable year.
(2) If a Participant's employment terminates for any reason during
the taxable year an amount shall be allocated to his Discretionary Company
Contribution Account only if, and to the extent, required by Article IV(P)(1)
(relating to Fixed Accounts).
A-1 ESOP Accounts Transferred to and Considered to be Discretionary Company
Contributions Accounts Effective January 1, 1998. Effective January 1, 1998, the
ESOP Accounts (as defined in the Plan prior to January 1, 1998) of all
Participants shall be transferred to and considered to be Discretionary Company
Contributions Accounts and shall be subject to, and governed by, the provisions
of this Agreement which relate to Discretionary Company Contributions Accounts,
including but not limited to those of such provisions which govern vesting,
payment, investment, loans and hardship distributions.
B. Elective Contributions Accounts. The Trustee shall establish an account
(herein called an "Elective Contributions Account") for each Participant and
shall thereafter maintain a record thereof. Elective Contributions under Article
III(B) for any Plan Year shall, subject to the limitations of Paragraphs (D) and
(E) of this Article IV, be credited to the Participant's Elective Contributions
Account upon receipt by the Trustee not less frequently than monthly and in no
event later than as of the Anniversary Date falling within such Plan Year.
C. Matching Company Contributions Accounts. The Trustee shall establish an
account (herein called a "Matching Company Contributions Account") for each
Participant in respect of whom the Company makes a Matching Company Contribution
to the Trust and shall thereafter maintain a record thereof. Matching Company
Contributions under Article III (C) for any Plan Year in respect of each
Participant shall be credited to the Participant's Matching Company
Contributions Account upon receipt by the Trustee and in no event later than as
of the Anniversary Date falling within such Plan Year.
D. Limitations on Annual Additions to Accounts. Notwithstanding the
foregoing provisions of Paragraphs A, B and C of this Article IV or of Article
III, the contributions and other additions
IV-1
<PAGE> 28
with respect to any one Participant for any Limitation Year under all Defined
Contribution Plans of the Company, expressed as an Annual Addition to such
Participant's Accounts under this Plan and as annual additions (defined
similarly to Article I(A)(7) allocated to such Participant's accounts under all
other Defined Contribution Plans of the Company, shall not exceed the lesser of:
(1) For Limitation Years beginning after December 31, 1994, the
Adjusted Equivalent of $30,000.00; or
(2) 25% of the Compensation paid to such Participant by the
Company in said taxable year;
provided that:
(a) if the applicable limitation of (1) or (2) above would
otherwise be exceeded, the amount allocated to said
Participant's Accounts shall be reduced by an amount equal to
the excess, and the Company's contributions for said Plan Year
shall be reduced to the extent necessary to avoid such excess;
provided, however, that if such reduction is not possible or
practical in the circumstances because the Company's
contributions for such Plan Year have been made at the time it
is discovered that said limitation would otherwise be exceeded
and the Committee determines that the excess part of such
contribution cannot be returned to the Company without
adversely affecting the tax qualified status of the Plan
either as a contribution made as a result of a mistake of fact
or by reason of its nondeductibility, then if such excess was
created as the result of the allocation of forfeitures, a
reasonable error in estimating a Participant's Compensation or
Creditable Compensation, a reasonable error in determining the
amount of Elective Contributions that may be made with respect
to any individual under the limits of Section 415 of the Code,
or under other limited facts and circumstances which the
Commissioner of Internal Revenue finds justify the
availability of the rules set forth in the remainder of this
Paragraph (D), the portion of such excess, if any,
attributable to Excess Elective Deferrals may be distributed
to the Participant to the extent such distribution reduces the
excess, and any remaining excess shall be held in a suspense
account, provided (i) no further Company contributions will be
made to the Trust on behalf of the Participants for which such
excess exists until they can be allocated to the accounts of
such Participants without violating the aforesaid limitation,
(ii) investment gains and/or losses and other Trust income are
not allocated to such suspense account and (iii) the amounts
in such suspense account are allocated to the accounts of
Participants for which such excess exists, or if no such
excess exists for any Participant, to the accounts of the
remaining Participants, as of each subsequent date on which
Company contributions are normally allocated until such
suspense account is exhausted. In the event the Plan and Trust
are terminated any amount remaining in such suspense account
at the time of termination shall be paid to the Company and to
the extent any such amount consists of Elective Contributions,
the Company shall pay the same to the appropriate
Participants.
IV-2
<PAGE> 29
(b) if said Participant is also a participant in a Defined Benefit
Plan maintained by the Company, the sum of his Defined Benefit
Plan Fraction and his Defined Contribution Plan Fraction shall
not exceed 1.0 for any taxable year of the Company, except as
otherwise permitted by Section 2004(a) of ERISA; provided,
however, that if this requirement would otherwise be violated,
the Company shall first adjust, freeze or suspend the rate of
benefit accrual under any said Defined Benefit Plan and shall
then reduce the amount of its contributions (or other
components of Annual Additions) to any said Defined
Contribution Plan to the extent necessary, whether or not
including this Plan, with respect to the Participant in
question, so that such violation will not occur.
(c) for purposes of applying the foregoing provisions of this
Paragraph (D), all Defined Benefit Plans (whether or not
terminated) of the Company are to be treated as one Defined
Benefit Plan, and all Defined Contribution Plans (whether or
not terminated) of the Company are to be treated as one
Defined Contribution Plan, all within the meaning of (and to
the extent necessary to comply with) Section 415 of the Code
(including, in particular, subsection (f) thereof) and any
applicable Treasury Regulations thereunder.
(d) for purposes of this Article IV(D) the following terms,
wherever capitalized, shall have the following meanings,
respectively, unless the context otherwise requires:
(1) "Defined Benefit Plan" means any plan described in
Section 414(j) of the Code (listing tax qualified and
similar plans) which is not a Defined Contribution
Plan, except as otherwise provided in Section 414(k)
of the Code for hybrid plans.
(2) "Defined Benefit Plan Fraction" for a Participant for
any Plan Year is a fraction -
(i) The numerator of which is the projected
annual benefit of the Participant under the
Company's Defined Benefit Plan (determined
as of the close of such Plan Year), and
(ii) The denominator of which is the lesser of
(A) the product of 1.25, multiplied by the
dollar limitation in effect under Section
415(b)(1)(A) of the Code for such Plan Year,
or (B) the product of 1.4, multiplied by the
amount which may be taken into account under
Section 415(b)(1)(B) of the Code with
respect to the Participant under such
Defined Benefit Plan for such Plan Year.
(3) "Defined Contribution Plan" shall have the meaning
given to this term in Article I(A)(13).
(4) "Defined Contribution Plan Fraction" for a
Participant for any Plan Year is a fraction -
IV-3
<PAGE> 30
(i) The numerator of which is the sum of the
Annual Additions to the Participant's
account as of the close of such Plan Year,
and
(ii) The denominator of which is the sum of the
lesser of the following amounts determined
for such Plan Year and for each prior year
of service with the Company and/or a Related
Company: (A) the product of 1.25, multiplied
by the dollar limitation in effect under
Section 415(c)(1)(A) of the Code for such
Plan Year and for each prior year of service
with the Company and/or a Related Company,
or (B) the product of 1.4, multiplied by the
amount which may be taken into account under
Section 415(c)(1)(B) of the Code with
respect to such Participant for such Plan
Year.
(e) The word Company as used above in this Article IV(D) shall be
deemed to include any Related Company unless the context
otherwise requires so that for purposes of Section 415 of the
Code all employees of the Company and any Related Company
shall be treated as employed by a single employer.
(f) The limitations on Annual Additions set forth in this Article
IV(D) shall apply only if and to the extent required by
Section 415 of the Code or a successor Code Section.
E. Special Limitations on Allocations of Elective Contributions. For each
Plan Year beginning after December 31, 1998, allocations of Elective
Contributions to the Participants' Elective Contribution Accounts shall be
limited so that the Actual Deferral Percentage for the group of Participants who
are Highly Compensated Employees for the Plan Year shall bear a relationship to
the Actual Deferral Percentage for the group of all other Participants for the
preceding Plan Year which meets either of the following tests:
(1) The Actual Deferral Percentage for the group of Participants
who are Highly Compensated Employees for the Plan Year is not more than the
Actual Deferral Percentage for the group of Participants for the preceding Plan
Year who are not Highly Compensated Employees for such preceding Plan Year using
the definition of Highly Compensated Employee in effect for such preceding Plan
Year multiplied by 1.25, or
(2) The excess of the Actual Deferral Percentage for the group of
Participants who are Highly Compensated Employees for the Plan Year over the
actual Deferral Percentage for the group of Participants for the preceding Plan
Year who are not Highly Compensated Employees for such preceding Plan Year using
the definition of Highly Compensated Employee in effect for such preceding Plan
Year is not more than 2 percentage points, and the Actual Deferral Percentage
for the group of Participants who are Highly Compensated Employees for the Plan
Year is not more than the Actual Deferral Percentage for the group of
Participants for the preceding Plan Year who are not Highly Compensated
Employees for such preceding Plan Year using the definition of Highly
Compensated Employee in effect for such preceding Plan Year multiplied by 2.
IV-4
<PAGE> 31
For purposes of this Paragraph (E), "Actual Deferral Percentage" for
each group of Participants referred to above for a Plan Year means the average
of the ratios, calculated separately for each Participant in the group, of the
amount of Elective Contributions paid to the Trust on behalf of the Participant
for the Plan Year, to the Participant's Creditable Compensation paid in that
portion of the Plan Year during which he was a Participant. As separately
calculated for each Participant, such ratio is referred to as his "Deferral
Percentage."
The Deferral Percentage of a Participant for whom no Elective
Contribution is made for the Plan Year is zero. For Plan Years beginning after
1988 the Deferral Percentages of Participants and the Actual Deferral Percentage
of each group of Participants shall be calculated to the nearest one hundredth
of one percent. For purposes of the tests described in (1) and (2) above
Elective Contributions shall include any amounts treated as Elective
Contributions under Article IV(G).
For purposes of this Paragraph (E), the following special rules shall
apply:
(3) The Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have Elective
Contributions allocated to his accounts under this Plan and under one or more
other plans or arrangements described in Section 401(k) of the Code that are
maintained by the Company or a Related Company shall be determined as if all
such Elective Contributions were made under a single plan or arrangement.
(4) The determination and treatment of the Elective Contributions
and Deferral Percentage of any Participant shall satisfy such other requirements
as may be prescribed by Regulation. The Company shall maintain for a reasonable
time records sufficient to demonstrate compliance with the Regulations relating
to the Actual Deferral Percentage test(s) described above and/or applicable
prior to January 1, 1997.
F. Special Limitations on Allocations of Matching Company Contributions.
For each Plan Year beginning after 1998, allocations of Matching Company
Contributions to Participants' Matching Company Contributions Accounts shall be
limited so that the Actual Contribution Percentage for the group of Participants
who are Highly Compensated Employees for the Plan Year shall bear a relationship
to the Actual Contribution Percentage for the group of all other Participants
for the preceding Plan Year which meets either of the following tests:
(1) The Actual Contribution Percentage for the group of
Participants who are Highly Compensated Employees for the Plan Year is not more
than the Actual Contribution Percentage for the group of Participants for the
preceding Plan Year who are not Highly Compensated Employees for such preceding
Plan Year using the definition of Highly Compensated Employee in effect for such
preceding Plan Year multiplied by 1.25, or
(2) The excess of the Actual Contribution Percentage for the group
of Participants who are Highly Compensated Employees for the Plan Year over the
Actual Contribution Percentage for the group of Participants for the preceding
Plan Year who are not Highly Compensated Employees for such preceding Plan Year
using the definition of Highly Compensated Employee in effect for such preceding
Plan Year is not more than 2 percentage points, and the Actual Contribution
Percentage for the group of Participants who are Highly
IV-5
<PAGE> 32
Compensated Employees for the Plan Year is not more than the Actual Contribution
Percentage for the group of Participants for the preceding Plan Year who are not
Highly Compensated Employees for such preceding Plan Year using the definition
of Highly Compensated Employee in effect for such preceding Plan Year multiplied
by 2.
For purposes of this Paragraph (F), "Actual Contribution Percentage"
for each group of Participants for a Plan Year means the average of the ratios,
calculated separately for each Participant in the group, of the amount of
Matching Company Contributions paid to the Trust on behalf of each Participant
for the Plan Year, to the Participant's Creditable Compensation paid in that
portion of the Plan Year during which he was a Participant. As separately
calculated for each Participant, such ratio is referred to as his "Contribution
Percentage."
The Contribution Percentage of a Participant for whom no Matching
Company Contribution is made for the Plan Year is zero. For Plan Years beginning
after 1988 the Contribution Percentages of Participants and the Actual
Contribution Percentage of each group of Participants shall be calculated to the
nearest one hundredth of one percent. For purposes of the tests described in (1)
and (2) above Matching Company Contributions shall include any amounts treated
as Matching Company Contributions under Article IV(H).
For purposes of this Paragraph (F), the following special rules shall
apply:
(3) The Contribution Percentage for any Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to have
Matching Company Contributions allocated to his accounts under this Plan and
under one or more other plans or arrangements described in Section 401(k) of the
Code that are maintained by the Company or a Related Company shall be determined
as if all such Matching Company Contributions were made under a single plan or
arrangement.
(4) The determination and treatment of the Matching Company
Contributions and Contribution Percentage of any Participant shall satisfy such
other requirements as may be prescribed by Regulation. The Company shall
maintain for a reasonable time records sufficient to demonstrate compliance with
the Regulations relating to the Actual Contribution Percentage test(s) described
above and/or applicable prior to January 1, 1997.
G. Adjustments to Prevent Excess Allocations of Elective Contributions. In
order to assure that no amounts in excess of the limitations imposed by
Paragraph (E) of this Article IV are allocated to the Elective Contributions
Account of any Participant who is a Highly Compensated Employee, and in the case
of (1) below also to assure that no amounts in excess of the limitations imposed
by Article III(D) and (E) and Article IV(D) are exceeded, the following steps
shall be taken:
(1) The Committee shall monitor elections made by Participants
under Article III(B) and Elective Contributions being made periodically to the
Trust pursuant to such elections and may require changes in the elections of
Participants, prior to or during any Plan Year, which would reduce the Elective
Contributions being made to the Trust on behalf of such Participants and the
Matching Company Contributions being made to the Trust on account of such
Elective Contributions and/or may reduce or terminate such Elective
Contributions and the Matching
IV-6
<PAGE> 33
Company Contributions being made to the Trust on account of such Elective
Contributions at any time, in order to assure compliance with any of the
limitations referred to above.
(2) If notwithstanding the Committee's efforts to monitor
allocations to the Accounts of Participants as required by subparagraph (1)
above, the Committee determines after the end of a Plan Year that the
allocations of Elective Contributions to the Elective Contribution Accounts of
Highly Compensated Employees for such Plan Year exceed the special limitations
described in Paragraph (E) above:
(a) The Company may make additional discretionary contributions to
the Trust for such Plan Year for allocation to separate
accounts of Participants who are not Highly Compensated
Employees, or to accounts of all Participants, in amounts
which in combination with Elective Contributions (and any
Qualified Matching Contributions under (b) below) for such
Plan Year are sufficient to cause such special limitations not
to be exceeded. Any such contributions (i) shall be allocated
to separate accounts of such Participants in proportion to the
Creditable Compensation of each paid in that portion of the
Plan Year during which he was a Participant, (ii) shall meet
the requirements of Regulation 1.401(k)-1(b)(5), and (iii)
shall normally be made within the time prescribed by law for
filing the Company's federal income tax return for its taxable
year with respect to which the discretionary contribution is
made, including extensions thereof. Such special accounts
shall be fully Vested at all times, shall be subject to the
same limitations on distributions which are applicable to
Elective Contributions described in Article V(F) and shall be
treated as Elective Contributions for purposes of Article
IV(E). Also, the Company may transfer to separate accounts of
the kind described above any Discretionary Company
Contributions made to the Trust for such Plan Year in which
event they shall be treated in the same manner and be subject
to the same conditions as additional discretionary
contributions to the Trust under this subparagraph (a).
Contributions made or transferred to separate accounts
pursuant to this subparagraph (a) are referred to in this
Agreement as "Qualified Nonelective Contributions".
(b) The Company may treat all or part of the Matching Company
Contributions to the Trust for such taxable year, all of which
are fully Vested and subject to the limitations of Article
V(F), as Elective Contributions. The Company may make
additional matching contributions to the Trust for such Plan
Year for allocation to separate accounts of Participants for
whom Elective Contributions were made to the Trust for such
Plan Year and who are not Highly Compensated Employees in
amounts which in combination with the Elective Contributions,
the Matching Company Contributions treated as Elective
Contributions (and any Qualified Nonelective Contributions
under (a) above) for such Plan Year are sufficient to cause
such special limitations not to be exceeded. Any such
additional matching contributions (i) shall be allocated to
separate accounts of such Participants in proportion to the
Elective Contributions made on behalf of each for the Plan
Year, (ii) shall meet the requirements of Regulation
1.401(k)-1(b)(5), and (iii) shall normally be made within the
time prescribed by law for filing the Company's federal income
tax return for its taxable year with respect to which the
matching
IV-7
<PAGE> 34
contribution is made, including extensions thereof. Such
special accounts shall be fully Vested at all times and shall
be subject to the same limitations on distributions which are
applicable to Elective Contributions described in Article V(F)
and shall be treated as Elective Contributions for purposes of
Article IV(E). Also, the Company may transfer to separate
accounts of the kind described above any Discretionary Company
Contributions and Matching Company Contributions, which are
not fully Vested and subject to the limitations of Article
V(F), made to the Trust for such Plan Year in which event they
shall be treated in the same manner and be subject to the same
conditions as additional matching contributions to the Trust
under this subparagraph (b). Matching Company Contributions
which are fully Vested and subject to the limitations of
Article V(F), and contributions made or transferred to
separate accounts pursuant to this subparagraph (b) are
referred to in this Agreement as "Qualified Matching
Contributions".
(c) The Committee may direct the Trustee to distribute to
Participants who are Highly Compensated Employees that portion
of the Elective Contributions made to the Trust on their
behalf for such Plan Year which exceeds the special
limitations of Article IV(E) (in this Agreement called "Excess
Contributions") adjusted for earnings or losses. Any Excess
Contributions, as so adjusted, to be distributed to
Participants shall be designated as Excess Contributions by
the Company and be distributed after the close of the Plan
Year for which they were made normally within 2 1/2 months
after the end of such Plan Year, and in any event not later
than 12 months after the end of such Plan Year. (If such
Excess Contributions are distributed after 2 1/2 months after
the end of such Plan Year an excise tax is imposed on the
Company with respect to the same.)
(d) The total Excess Contributions, if any, for each Plan Year
beginning after December 31, 1996 for Participants who are
Highly Compensated Employees shall be determined and (if the
Committee directs the Trustee as permitted by (c) above) shall
be distributed in accordance with the following procedure:
(i) First, determine the dollar amount of Excess
Contributions for each Highly Compensated Employee
for whom an Excess Contribution is made for the Plan
Year in the manner described in Code Section
401(k)(8)(B) and Regulation ss. 1.401(k)-1(f)(2).
(ii) Second, determine the total amount of the Excess
Contributions described in (i) above (the "Total
Excess Contributions").
(iii) Third, reduce the Elective Contribution of the Highly
Compensated Employee with the highest dollar amount
of Elective Contribution for the Plan Year to the
extent required to either (A) reduce the Total Excess
Contributions to zero or (B) cause the Highly
Compensated Employee's Percentage Elective
Contribution to equal the dollar amount of the
Elective Contribution of the Highly Compensated
Employee with the next highest the dollar amount of
Elective Contributions, whichever is less.
IV-8
<PAGE> 35
Repeat this process until the Total Excess
Contributions are reduced to zero. When and if the
Elective Contributions of two or more Highly
Compensated Employees to be reduced are the same,
such Elective Contributions shall be reduced equally
and simultaneously. The amount of any and all such
reductions for each Highly Compensated Employee for
whom a reduction is made (the "Excess Elective
Contribution"), adjusted for earnings or losses,
shall be distributed to each such Highly Compensated
Employee in accordance with (c) above.
(iv) If the distributions referred to in (iii) above are
made, the requirements of Article IV(E) shall be
treated as being met, regardless of whether the
Actual Deferral Percentage for the group of
Participants who are Highly Compensated Employees, if
recalculated after such distributions are made, would
satisfy such requirements.
(e) The income or loss allocable to an Excess Contribution
distributed to a Highly Compensated Employee under (c) and (d)
above by the Trustee shall be an amount equal to the income or
loss of the Participant's Elective Contributions Account for
the Plan Year for which the Excess Elective Contribution was
made multiplied by a fraction the numerator of which is the
Excess Elective Contribution made on behalf of the Participant
for such Plan Year and the denominator of which is the
Participant's Elective Contributions Account balance as of the
beginning of such Plan Year plus the Participant's Elective
Contributions for such Plan Year.
H. Adjustments to Prevent Excess Allocations of Matching Company
Contributions. If notwithstanding the Committee's efforts to monitor allocations
to the Accounts of Participants as required by Article IV(G)(1), the Committee
determines after the end of a Plan Year that the allocations of Matching Company
Contributions to the Matching Company Contribution Accounts of Highly
Compensated Employees for such Plan Year exceed the special limitations
described in Paragraph (F) above:
(1) The Company may make Qualified Nonelective Contributions to
the Trust for such Plan Year for allocation to separate accounts of Participants
and/or transfer Discretionary Company Contributions for such Plan Year to such
separate accounts, in the same manner and subject to the same conditions set
forth in Article IV(G)(2)(a), which in combination with the Matching Company
Contributions (and any additional matching contributions under (2) below) for
such Plan Year are sufficient to cause such special limitations not to be
exceeded. Also, to cause such special limitations not to be exceeded the Company
may transfer to separate accounts of the kind described above any Elective
Contributions made to the Trust for such Plan Year provided that Elective
Contributions for such Plan Year meet the requirements of Reg. 1.401(m)-1(b)(5).
(2) The Company may make additional matching contributions to the
Trust for such Plan Year for allocation to the Matching Company Contributions
Accounts of Participants for whom Elective Contributions were made to the Trust
for such Plan Year and who are not Highly Compensated Employees in amounts which
in combination with the Matching Company
IV-9
<PAGE> 36
Contributions (and any Qualified Nonelective Contributions under (1) above) for
such Plan Year are sufficient to cause such special limitations not to be
exceeded. Any such contributions shall be allocated to the Matching Company
Contributions Accounts of such Participants in proportion to the Matching
Company Contributions theretofore made on behalf of each for the Plan Year, and
shall normally be made within the time prescribed by law for filing the
Company's federal income tax return for its taxable year with respect to which
the additional matching contribution is made, including extensions thereof. Such
additional matching contributions shall be subject to the same plan rules
applicable to Matching Company Contributions and shall be treated as Matching
Company Contributions for purposes of Article IV(F).
(3) The Committee may direct the Trustee to distribute to
Participants who are Highly Compensated Employees that portion of the Matching
Company Contributions made to the Trust on their behalf for such Plan Year which
exceeds the special limitations of Paragraph (F) of this Article IV (in this
Agreement called "Excess Matching Contributions") adjusted for earnings or
losses. Any Excess Matching Contributions, as so adjusted, to be distributed to
Participants shall be designated as Excess Matching Contributions by the Company
and be distributed after the close of the Plan Year for which they were made
normally within 2 1/2 months after the end of such Plan Year, and in any event
not later than 12 months after the end of such Plan Year. (If such Excess
Matching Company Contributions are distributed after 2 1/2 months after the end
of such Plan Year an excise tax is imposed on the Company with respect to the
same.)
(4) The total Excess Matching Company Contributions, if any, for
each Plan Year beginning after December 31, 1996 for Participants who are Highly
Compensated Employees shall be determined and (if the Committee directs the
Trustee as permitted by (3) above) shall be distributed in accordance with the
following procedure:
(i) First, determine the dollar amount of Excess Matching Company
Contributions for each Highly Compensated Employee for whom an
Excess Matching Company Contribution is made for the Plan Year
in the manner described in Code Section 401(m)(6)(C) and
Regulation ss. 1.401(m)-1(e)(2).
(ii) Second, determine the total amount of the Excess Matching
Company Contributions described in (i) above (the "Total
Excess Matching Company Contributions").
(iii) Third, reduce the Matching Company Contribution of the Highly
Compensated Employee with the highest dollar amount of
Matching Company Contribution for the Plan Year to the extent
required to either (A) IV(F),reduce the Total Excess Matching
Company Contributions to zero or (B) cause the Highly
Compensated Employee's Matching Company Contribution to equal
the dollar amount of the Matching Company Contribution of the
Highly Compensated Employee with the next highest dollar
amount of Matching Company Contributions, whichever is less.
Repeat this process until the Total Excess Matching Company
Contributions are reduced to zero. When and if the Matching
Company Contributions and of two or more Highly Compensated
Employees to be reduced are the same, such Matching Company
Contributions shall be reduced equally and simultaneously. The
amount of any and all such reductions for each Highly
Compensated
IV-10
<PAGE> 37
Employee for whom a reduction is made (the "Excess Matching
Contribution"), adjusted for earnings or losses, shall be
distributed to each such Highly Compensated Employee in
accordance with (3) above.
(iv) If the distributions referred to in (iii) above are made, the
requirements of Article IV(F) shall be treated as being met,
regardless of whether the Actual Deferral Percentage for the
group of Participants who are Highly Compensated Employees if
recalculated after such distributions are made, would satisfy
such requirements.
(5) The income or loss allocable to an Excess Matching
Contribution distributed to a Highly Compensated Employee under (3) and (4)
above by the Trustee shall be an amount equal to the income or loss of the
Participant's Matching Company Contributions Account for the Plan Year for which
the Excess Matching Contribution was made multiplied by a fraction the numerator
of which is the Excess Matching Company Contributions made on behalf of the
Participant for such Plan Year and the denominator of which is the Participant's
Matching Company Contributions Account balance as of the beginning of such Plan
Year plus the Matching Company Contributions made on behalf of the Participant
for the Plan Year.
(6) Instead of directing the Trustee to distribute any Excess
Matching Company Contributions for the Plan Year to Participants who are Highly
Compensated Employees, the Committee may direct the Trustee to allocate such
Excess Matching Company Contributions, adjusted for income or loss and
determined and allocated as provided in (3) through (5) above, to the Matching
Company Contribution Accounts of Participants who are not Highly Compensated
Employees and for whom Elective Contributions were made to the Trust for the
Plan Year. Such Excess Matching Company Contributions as so adjusted shall be
allocated among such accounts in the ratio which each such Participant's
Creditable Compensation for the Plan Year bears to the Creditable Compensation
of all such Participants for the Plan Year. Any Matching Company Contribution
for the Plan Year made to the Trust on account of an Elective Contribution which
is determined to be an Excess Elective Deferral under Article III(B) or an
Excess Contribution under Article IV(E) and (G) or (I) shall, after adjustment
for income or loss, be allocated among the Matching Company Contribution
Accounts of such participants in the same manner.
I. Adjustments to Prevent Multiple Use of Alternative Limitation. If
multiple use of the alternative limitations described in Articles IV(E)(2) and
IV(F)(2), as defined by Regulation 1.401(m)-2, shall occur, such multiple use
shall be corrected by reducing the Actual Deferral Percentage of the group of
Highly Compensated Employees in the manner described in Article IV(G)(2)(d) and
(e). In determining whether multiple use of such alternative limitations has
occurred the applicable Actual Deferral Percentages and Actual Contribution
Percentages shall be determined after all adjustments made under Article IV(G)
and (H). The required reduction shall be treated as an Excess Contribution and
shall be allocated and distributed in the same manner described in Article
IV(G)(2)(c), (d) and (e).
If Excess Elective Contributions and Excess Matching Contributions, if
any, have been distributed to one or more Highly Compensated Employees under
Article IV(G)(2)(c) and (d) and Article IV(H)(3) and (4), the Actual Deferral
Percentages and Actual Contribution Percentages referred to in the preceding
paragraph shall be deemed to be the highest percentages permitted under Code
Sections 401(k)(3) and 401(m)(2), respectively.
IV-11
<PAGE> 38
J. Establishment and Objectives of Investment Funds. The Company
Contributions allocated for each Plan Year to Accounts of Participants for such
Plan Year as provided in Paragraphs (A), (B) and (C) of this Article IV, shall
be received by the Trustee to be held and administered by it in accordance with
the terms of this Agreement. Within the context of the Trust Fund, the Trustee
at the direction of the Investment Committee shall establish one or more
Investment Funds having such investment objectives as may be ascribed to each
such fund by the Investment Committee. Such Investment Funds may consist of the
Trust's investment in (i) one or more pooled funds established by the Trustee,
if it is a bank or trust company, for the investment of the assets of tax
qualified pension and/or profit-sharing plans, (ii) one or more mutual funds,
(iii) one or more contracts issued by an insurance company, (iv) a Company Stock
Fund (herein called the "Company Stock Fund") consisting of shares of Company
Stock and short term money market investments in which funds may be temporarily
invested pending investment in shares of Company Stock and/or in (v) any other
investment vehicle suitable for the investment of assets of the Trust Fund and
designated by the Investment Committee.
The Committee shall provide information to Participants regarding the
Investment Funds available under the Plan, including a description of the
investment objectives and types of investments of each such Investment Fund. If
a prospectus is required to be issued with respect to any such Investment Fund,
the Committee will inform Participants of the availability of such prospectus
or, if required by law, arrange to furnish a copy of the prospectus to each
Participant.
K. Investment of Company Contributions and Rollover Contributions. As of
each Entry Date, and as of any more frequent intervals designated by the
Committee (including intervals as frequently as daily), each Participant shall
have the right to designate on an investment election form furnished by the
Committee in accordance with procedures established by the Committee how Company
Contributions and Rollover Contributions thereafter made to the Trust on his
behalf are to be allocated among the Investment Funds. The Committee shall
either furnish such investment election forms to the Trustee or shall compile
the results of such elections and direct the Trustee how such contributions for
each Participant are to be allocated among such Investment Funds. The Trustee
shall as soon as reasonably possible after receipt of each Company Contribution
or Rollover Contribution made by the Company or the Participant to the Trust,
and not less frequently than monthly, allocate such contribution among the
Investment Funds in accordance with such investment elections or instructions.
Until a new investment election or instruction (or telephone call if permitted
by the Committee) for any Participant is received by the Trustee, the Trustee
shall continue to invest Company Contributions and Rollover Contributions made
for such Participant in the manner designated on the most recently received
investment election or instruction or telephone call relating to such
Participant. If the Trustee shall receive a Company Contribution or Rollover
Contribution for a Participant for whom it has not received any investment
election or instruction, the Trustee shall invest such contribution in the
Investment Fund which most nearly fits the description of a short-term fixed
income fund.
Notwithstanding the foregoing, if the Investment Committee so directs
the Trustee in writing and advises the Participants in the summary description
of the Plan or in another written communication, the amounts allocated to the
Discretionary Company Contribution Accounts and Matching Company Contributions
Accounts of Participants shall be invested in the sole discretion of the Trustee
or an investment manager appointed pursuant to Article IX(C). Such
IV-12
<PAGE> 39
investments shall be considered to be a separate Investment Fund invested in the
discretion of the Trustee (or the Investment Committee).
L. Participant's Rights to Periodic Reallocation of Accounts. As of each
Entry Date and as of any more frequent intervals designated by the Committee
(including intervals as frequently as daily), each Participant shall be entitled
to direct the Trustee in accordance with procedures established by the Committee
to reallocate all or a portion of his Accounts so that, as of the date of such
reallocation, specified percentages (in multiples to be designated by the
Committee) of his Accounts shall be invested in one or more of the Investment
Funds. Upon receipt of timely instructions from the Committee (which shall be
consistent with the directions of Participants desiring allocation or
reallocation), or upon timely telephone calls from Participants if permitted by
the Committee, the Trustee shall invest or reinvest such portions of the
Accounts of Participants thus directing allocation or reallocation as will
(immediately following such investment or reinvestment) result in the Accounts
of each such Participant being invested in the Investment Funds substantially in
accordance with the directions of each such Participant. However, no transfers
between Investment Funds shall be permitted if prohibited by the rules
applicable to the particular Investment Fund from or to which a transfer is to
be made or by rules adopted by the Committee and communicated to the
Participants.
M. Participants' Credit Accounts. The Trustee shall establish and maintain
one or more Credit Accounts for each Participant, showing the balance of each of
his Accounts in each of the Investment Funds, and for such other purposes as may
be useful in the administration of the Trust under this Agreement, and shall
cause to be furnished to each Participant at least annually a statement of the
Credit Accounts. The fact that Credit Accounts are established and maintained
shall not be construed to mean under any circumstances or event that any
Participant has title to any specific asset held in trust hereunder.
N. Periodic Revaluation of Investment Funds. As of each Valuation Date the
Trustee shall determine as provided in Article IX(H) (Appraisal), or shall cause
the organization(s) holding the assets of a particular Investment Fund, such as
an insurance company or mutual fund, to determine the net earnings or the net
loss of each Investment Fund including net capital gains or losses, if any, for
the period ending on such date or since the previous Valuation Date, and shall
revalue, or cause to be revalued, each Investment Fund so as to reflect the
increase or decrease in the value of the investments of each Investment Fund as
compared to the value of such investments as of the previous Valuation Date. To
the extent an Investment Fund is invested in shares or units of participation in
a mutual fund or pooled fund maintained by the Trustee, such shares or units of
participation shall be valued in the manner they are normally valued by the
mutual fund or pooled fund. To the extent an Investment Fund is invested in an
annuity or deposit administration contract, including a guaranteed income
contract or similar contract issued by an insurance company, it shall be valued
in the manner such contract is normally valued by the insurance company.
O. Periodic Adjustments to Accounts. Adjustments shall from time to time
be made to each Participant's Accounts as follows:
(1) The Trustee shall debit such Accounts currently in respect of
any distributions of benefits therefrom.
IV-13
<PAGE> 40
(2) Promptly following each revaluation of an Investment Fund
pursuant to Paragraph (N) above, the Trustee shall allocate, or shall cause to
be allocated, to each such Account invested in such Investment Fund a portion of
the net earnings or net loss of such Investment Fund, including appreciation or
depreciation in the value of the assets of such fund, such portion being
determined by applying to such net earnings or loss the ratio which the balance
of each Account in such fund on the immediately preceding Valuation Date bears
to the total of the balances of all Accounts in such fund on such Valuation
Date, but taking into account in a manner determined to be equitable by the
Trustee (with the consent of the Committee) any Company Contributions to, or
distributions from, such Accounts since the immediately preceding Valuation
Date. Notwithstanding the foregoing, the Trustee may allocate, or cause to be
allocated, to each such Account invested in such Investment Fund a portion of
the net earnings or net loss of such Investment Fund, periodically and not less
frequently than quarterly, on any other basis which in the Trustee's judgment is
fair and equitable to Participants and which is based in substance on the sizes
of the Accounts invested in such Investment Fund over the period during which
such net earnings or net loss in value occurs; provided the Committee consents
to such other basis of allocation.
(3) As of each Anniversary Date, the Trustee shall credit each
Discretionary Company Contributions Account in the same proportion as
Discretionary Company Contributions are to be credited under Paragraph (A)
above, with respect to any forfeitures occurring or becoming final, as the case
may be, since the previous Anniversary Date, as provided in Paragraph (Q) below
(Forfeitures).
(4) Notwithstanding (2) above, any portion of a Participant's
Discretionary Company Contributions Account which is "segregated" pursuant to
Article IX(O) shall be excluded from the calculation described in (2) above but
shall nevertheless remain as part of such Participant's Discretionary Company
Contributions Account.
(5) Expenses and compensation of the Trustee and Committee may be
charged to the Accounts of Participants as provided in Article XI(P).
P. Fixed Accounts. Upon the termination of a Participant's employment with
the Company, whether due to his retirement, death, disability or other cause
whatsoever, he shall cease to be a Participant for purposes of Article III and,
except for benefits payable or distributable under this Agreement, shall cease
to have any further right, title or interest in the Plan and Trust; provided,
further, that -
(1) Such Participant's Accounts, except to the extent his
Discretionary Company Contributions Account and/or his Matching Company
Contributions Account may be forfeited, shall become fixed and Vested at their
balances as of the close of the Valuation Date coinciding with or next following
the date of such termination. "Valuation Date" shall mean the last day of each
calendar quarter or other date occurring regularly more frequently than
quarterly (including daily) designated by the Committee and communicated to the
Participants in writing. If such termination shall be by reason of his death or
disability, or if he shall retire under the Source One Mortgage Services
Corporation Retirement Plan on or after his early retirement date (as defined in
such plan), his Discretionary Company Contributions Account shall participate in
the allocation of any Company contributions and forfeitures under Paragraphs (A)
and (O)(3) above,
IV-14
<PAGE> 41
and to the allocation of Matching Company Contributions, if any, under Article
III(C), as of the Anniversary Date coinciding with or next following his
termination to the same extent as if he were still a Participant. However,
except as provided in the preceding sentence, unless a Participant is employed
by the Company on the last day of the Plan Year the Participant shall not be
entitled to the allocation of any Matching Company Contributions for the Plan
Year. The portion of the Participant's entire Vested Account not including any
such Discretionary Company Contribution, forfeitures and Matching Company
Contributions shall be paid or shall start as soon as administratively feasible
after the applicable Valuation Date, and any such Discretionary Company
Contribution, forfeitures and Matching Company Contributions shall be paid, or
payments of the same shall start, as soon as administratively feasible after
they are allocated to the Participant's Discretionary Contributions Account and
Matching Company Contributions Account. Notwithstanding the foregoing, if the
Valuation Date described above is subsequent to the Participant's Required
Beginning Date then such Valuation Date shall be the Valuation Date immediately
preceding the Participant's Required Beginning Date.
(2) In determining the balance of any Account under (1) above,
there shall be included any Company Contributions and other items which have
been or should be credited or debited to such Account as of the Valuation Date
or prior thereto. Thereafter, no further credits or debits shall be made to said
Account, except as provided in (1) above and except for:
(a) Distributions therefrom,
(b) Special expenses chargeable thereto under Article
XI(P)(2)(b),
(c) Matters mentioned in Subparagraphs (3) and (4) below,
(d) Adjustments in respect of Contracts under Article XII
and
(e) Any Elective Contributions and Matching Company
Contributions made to the Trust with respect to the
Participant after the Valuation Date.
(3) If prior to the termination of the Participant's employment
the Trustee was investing any of his Accounts in accordance with the
Participant's instructions, the Trustee shall continue to invest such Accounts
in accordance with such instructions for as long as administratively feasible
prior to the time such Accounts are paid to the Participant.
Q. Forfeitures. With respect to all or part of a Participant's
Discretionary Company Contributions Account and Matching Company Contributions
Account which are subject to forfeiture under Article V(C) below (Early
Retirement; Vesting Schedule) -
(1) If the Participant elects under Article V(A)(1) and (C) to
receive the Vested part of his Discretionary Company Contribution Account, if
any, in a Lump Sum as promptly as possible after the termination of his
employment and such forfeiture is not contested, on the last day of the Plan
Year in which the Participant's employment terminates the forfeited part of his
Discretionary Company Contributions Account shall become final and be credited
to other Discretionary Company Contributions Accounts, as provided by Article
IV(O)(3) above (Periodic Adjustments to Accounts). If the Participant is not
Vested in any part of his
IV-15
<PAGE> 42
Discretionary Company Contributions Account, he shall be deemed to have elected
to receive the Vested part of such Account, namely zero, in the manner provided
above.
(2) If the Participant elects under Article V(A)(2) and (C) to
receive the Vested part of his Accounts, if any, in any form permitted by the
Plan other than a Lump Sum, on the last day of the Plan Year in which the
Participant receives the payment of a portion of the Vested part of his
Discretionary Company Contributions Account, part of the nonvested portion of
such account shall be treated as forfeited and shall be credited to other
Discretionary Company Contributions Accounts as provided in (1) above. Such part
shall be the total nonvested portion of the Participant's Discretionary Company
Contributions Account multiplied by a fraction, the numerator of which is the
amount received by the Participant from his Discretionary Company Contributions
Account in the Plan Year and the denominator of which is the Participant's
Vested Discretionary Company Contributions Account balance as of the last day of
the previous Plan Year; provided, however, that if the Participant incurs five
consecutive One-Year Breaks in Service the remaining nonvested portion of the
Participant's Discretionary Company Contributions Account shall be forfeited and
allocated to other Discretionary Company Contributions Accounts as of the last
day of the Plan Year in which the fifth consecutive One-Year Break in Service
occurs.
(3) In the event (2) above applies, or if such forfeiture is
contested, it shall be held in suspense and, while so held, shall be subject to
debits and credits under Paragraph (G) above in the same manner as an active
Participant's Discretionary Company Contributions Account, except that
Discretionary Company Contributions and other forfeitures shall not be credited
thereto. Later, when its status is finalized, it shall (adjusted by debits and
credits as aforesaid) either be paid to the terminated Participant to the extent
successfully contested by him or credited to other Discretionary Company
Contributions Accounts as provided by (1) and(2) above.
(4) Matching Company Contributions forfeited under Article V(C)
shall be treated in the same manner as forfeited Discretionary Company
Contributions under (1) through (3) above as if the terms Matching Company
Contributions and Matching Company Contributions Accounts were substituted for
the terms Discretionary Company Contributions and Discretionary Company
Contributions Accounts, except that instead of allocating such forfeited
Matching Company Contributions to the Matching Company Contribution Accounts of
other Participants such forfeited amounts shall be applied to reduce Matching
Company Contributions otherwise required to be made to the Trust for the Plan
Year in which the forfeiture occurred or for the next following Plan Year or
Plan Years and pending such application shall be held in a suspense account in
the Trust.
R. Company Stock Fund. The Company Stock Fund, subject to the next
following paragraph, shall be invested by the Trustee solely in Company Stock
purchased by the Trustee in the open market or by private purchase from Fund
American Enterprises Holdings, Inc. or others at the fair market value of such
stock at the time of purchase as determined by the Trustee pursuant to Article
IX(H). Company Stock may also be acquired within the Plan for the accounts of
active Participants from the accounts of Participants who elect, or whose
Beneficiaries elect, pursuant to Article V(J) or VI(C-1), to receive cash
distributions from the Plan instead of shares of Company Stock allocated to
their Accounts. All such acquisitions shall
IV-16
<PAGE> 43
be at the fair market value of such shares at the close of the day of the
transaction as determined by the Trustee pursuant to Article IX(H). In acquiring
shares of Company Stock for the accounts of active Participants the Trustee may
net purchases, including internal acquisitions of the kind described above,
against sales of Company Stock. There shall be no percentage limitation on the
portion of the Trust which the Trustee may invest or hold in Company Stock.
However, no Participant may direct that any portion of his Elective
Contributions Account or Rollover Account be invested in the Company Stock Fund
before the effective date of the registration of the Company Stock to be held in
the Company Stock Fund with the U.S. Securities and Exchange Commission.
Dividends, interest and other distributions received by the Trustee in
respect of each Investment Fund, including the Company Stock Fund, shall be
reinvested in the same Investment Fund. However, pending reinvestment, any such
dividends, interest and other distributions in respect of the Company Stock Fund
shall be invested by the Trustee in short-term fixed income investments, which
may include units of participation in a short term fixed income fund maintained
by the Trustee or a short term fixed income mutual fund.
IV-17
<PAGE> 44
ARTICLE V
RETIREMENT BENEFITS AND VESTING
A. Normal Retirement. A Participant may retire from the employment of the
Company at his Normal Retirement Date, whereupon the Trustee shall as promptly
as possible arrange to make benefits available to the Participant as follows:
(1) Except as provided in (3)-(5) below, the balance of the
Participant's Fixed Account shall be paid in a Lump Sum.
(2) In no event shall the Participant's Account be paid, or
commence to be paid, later than his Required Beginning Date.
(3) If the Participant shall so specify in a written election
delivered to the Company not later than 30 days after the later of (i) his
retirement, (ii) the Valuation Date as of which the balance of his Account is to
be determined under Article IV(P)(1) the balance of the Participant's
Discretionary Company Contributions Account shall be paid in regular
installments over a period not exceeding the lesser of (i) fifteen (15) years or
(ii) the life expectancy of the Participant or the joint life expectancy of such
Participant and his designated Beneficiary, which installments shall not be
directed at a rate of less than $1200 per year nor payable more frequently than
monthly, provided however, that the amount to be distributed each year,
commencing with the year in which the Participant's Required Beginning Date
falls, must be at least an amount equal to the quotient obtained by dividing the
entire interest of the Participant in his Discretionary Company Contributions
Account at the time the distribution is made by the life expectancy of the
Participant and his designated Beneficiary (whichever is applicable); and
provided, further, that payments in regular installments under this subparagraph
(3) may not be elected by a Participant who elects under Article V(J) to receive
his Vested Discretionary Company Contributions Account in shares of Company
Stock.
(4) For purposes of paragraph (3) above, life expectancy and joint
life and last survivor expectancy shall be computed by use of the return
multiples included in Section 1.72-9 of the Income Tax Regulations or such other
applicable successor regulations which may be issued by the Internal Revenue
Service. For purposes of paragraph (3) above, the Participant's life expectancy,
and the joint life and last survivor life expectancies of the Participant and
his designated Beneficiary, if such designated Beneficiary is the Participant's
spouse, may be recalculated from time to time but not more frequently than
annually, but the life expectancy of a designated Beneficiary other than the
Participant's spouse may not be recalculated.
(5) If the installments payable under the method of payment
elected by the Participant under paragraph (3) above are payable to the
Participant and a designated Beneficiary who is not the Participant's spouse,
the present value of the payments to be made to the Participant at the time of
his retirement must satisfy the incidental benefits requirements of Section
401(a)(9) of the Code and the Regulations thereunder.
(6) If the Participant timely specifies benefits under (3) above
but fails to specify the frequency or duration of payments, benefits shall be
paid annually over the lesser of ten years or the Participant's life expectancy
in the amount of the required minimum distributions except that
V-1
<PAGE> 45
the last payment shall be for the balance of the Participant's Discretionary
Company Contributions Account.
(7) Effective January 1, 1994, 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 ss. 1.411(a)-11(c) of
the Regulations is given, provided that:
(a) the Committee clearly informs the Participant that
the Participant has a right for 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.
(7) The Participant's Fixed Account payable under (1) or (2) above
shall be fully Vested and nonforfeitable.
Notwithstanding the foregoing, a Participant's Normal Retirement Date under the
Plan shall not be construed as a mandatory retirement date.
B. Late Retirement. If a Participant shall continue in the Company's
employ beyond his Normal Retirement Date (in which event he shall remain a
Participant in the Plan for all purposes), no retirement benefits shall be
payable to him under this Agreement until his actual retirement, at which time
the same steps shall be taken as in the case of normal retirement, provided that
in no event shall such benefits be paid or commence to be paid later than the
Required Beginning Date or other deadline specified in Article V(D).
C. Early Retirement; Vesting Schedule for Discretionary Company
Contributions and Matching Company Contributions; Full Vesting of Elective
Contributions. Upon retirement of a Participant prior to his Normal Retirement
Date, the Trustee shall as promptly as possible (but subject to Article V(E))
arrange to make benefits available to the Participant (except as otherwise
provided in Article X(A)) in the same manner and form as at normal retirement;
provided, however, that the Participant shall not have the right to elect that
his Discretionary Company Contributions Account be paid in installments as
provided in Article V(A)(3) unless he retires under the Source One Mortgage
Services Corporation Retirement Plan on or after his early retirement date (as
defined in such plan), and provided, further, that -
(1) Such Participant shall be entitled only to a percentage of the
balance in his Discretionary Company Contributions Account and his Matching
Company Contributions Account based upon the number of his Years of Service, as
follows:
V-2
<PAGE> 46
<TABLE>
<CAPTION>
YEARS OF PERCENTAGE VESTING IN ESOP AND
SERVICE MATCHING COMPANY CONTRIBUTION ACCOUNTS
------- --------------------------------------
<S> <C>
Less than 3 0%
3 but less than 4 30%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
</TABLE>
(2) In computing a Participant's period of service for purposes of
(1) above, he shall be credited with one Year of Service for each Plan Year,
i.e., the vesting Computation Period, during which he has completed at least
1,000 Hours of Service with the Company (regardless of whether or not he was a
Participant at such time) except that the following shall not be counted:
(a) For purposes of determining his Vested percentage in
such account following a break in service, Years of
Service during vesting Computation Periods prior to a
One-Year Break in Service shall not be counted unless
and until the Employee completes 1,000 Hours of
Service during the 12 consecutive month period
beginning on the date he first completes one Hour of
Service (his "Re-employment Commencement Date") or
during any subsequent 12 consecutive month period
beginning on an anniversary of his Re-employment
Commencement Date;
(b) In the case of a Participant or other Employee who
does not have a Vested right to an Accrued Benefit
derived from Discretionary Company Contributions and
Matching Company Contributions, i.e., who is not
Vested in any part of his account balance under the
Plan derived from Discretionary Company Contributions
and Matching Company Contributions, Years of Service
prior to a period of consecutive One-Year Breaks in
Service shall not be counted if the number of
consecutive One-Year Breaks in Service in such period
equals or exceeds five (excluding from the number of
Years of Service before such period any Years of
Service not required to be counted hereunder by
reason of any prior break in service);
provided, further, that Years of Service after five or more consecutive One-Year
Breaks in Service shall not be counted for purposes of determining the Vested
percentage under (1) above of the Participant's Accrued Benefit derived from
Discretionary Company Contributions and Matching Company Contributions which
accrued before such five or more consecutive One-Year Breaks in Service.
(3) If a Participant's eligibility Computation Period overlaps two
vesting Computation Periods and he completed 1,000 Hours of Service during such
eligibility Computation Period but failed to complete 1,000 Hours of Service in
either of the overlapped vesting Computation Periods, then the Year of Service
completed for eligibility to participate
V-3
<PAGE> 47
shall be deemed a Year of Service for the vesting Computation Period during
which such eligibility Computation Period ended.
(4) The portion of such Participant's Discretionary Company
Contributions Account to which he is not entitled under (1) above, if any, shall
be forfeited and allocated among the other Participants' Discretionary Company
Contributions Accounts pursuant to Article IV(Q) (Forfeitures). The portion of
such Participant's Matching Company Contribution Account to which he is not
entitled under (1) above, if any, shall be forfeited and applied to reduce
Matching Company Contributions pursuant to Article IV(Q)(4). If, following a
distribution of the Vested portion of a partially Vested Participant's Account,
he is re-employed by the Company in circumstances where he has not sustained
five consecutive One-Year Breaks in Service, then, following such re-employment,
the portion of the Participant's Account which was forfeited will be restored to
its amount on the date of distribution if the Participant repays to the Trust
the full amount of the distribution attributable to Discretionary Company
Contributions and Matching Company Contributions before the earlier of 5 years
after the first date on which the Participant is re-employed by the Company, or
the date the Participant incurs 5 consecutive One-Year Breaks in Service
following the date of the distribution. If a Participant who was not Vested in
any part of his Discretionary Company Contributions Account or Matching Company
Contributions Account was deemed to have received a distribution pursuant to
Article IV(Q) and the Participant is re-employed by the Company in circumstances
where he has not sustained five consecutive One-Year Breaks in Service, upon the
reemployment of such Participant, the forfeited Account balances of the
Participant will be restored to their amounts on the date of such deemed
distribution. The funds to be used to restore such accounts shall first be
obtained out of forfeitures, if any, and next out of Discretionary Company
Contributions and Matching Company Contributions to the Trust, for such Plan
Year or succeeding Plan Years.
(5) Notwithstanding the foregoing provisions of this Paragraph
(C), if a Participant is discharged for participating in any fraud, theft,
dishonesty or embezzlement towards or involving the Company or other Related
Company at a time when the Participant has accumulated less than five (5) Years
of Service, he shall not be entitled to any part of his (i) Discretionary
Company Contributions Account, which shall be forfeited and allocated among the
Discretionary Company Contributions Accounts of the other Participants pursuant
to Article IV(Q) (Forfeitures) or (ii) Matching Company Contributions Account,
which shall be forfeited and applied to reduce Matching Company Contributions
pursuant to Article N(Q)(4); provided, however, that this subparagraph (5) shall
not apply to any discharge from employment occurring in any Plan Year in, or
after, which the Plan becomes a Top-Heavy plan as described in Article XIII.
(6) Notwithstanding the foregoing provisions, a Participant's
Discretionary Company Contributions Account and his Matching Company
Contributions Account shall be fully Vested at his Normal Retirement Age.
(7) A Participant's Elective Contributions Account shall at all
times be fully and immediately Vested.
D. Deadline for Payment of Benefits; Required Beginning Date. The
following deadlines shall apply to the payment, or commencement of payment, of
any benefits under the Plan:
V-4
<PAGE> 48
(1) Unless the Participant shall otherwise elect, the payment of
benefits under the Plan to the Participant shall begin not later than the 60th
day after the close of the Plan Year in which occurs the latest of the
following:
(a) The date on which he attains the earlier of age 65 or
Normal Retirement Age;
(b) The tenth anniversary of the year in which he
commenced participation in the Plan; or
(c) The termination of his service with the Company.
If the Participant under another provision of this Agreement may elect to defer
the payment, or commencement of payment, of benefits under the Plan beyond the
latest of the foregoing dates, such election shall be subject to (2) below and
to the distribution rules of Article V(A), must be submitted to the Committee in
writing, signed by the Participant, and must describe the benefit and the date
on which payment of such benefit shall be made or shall commence.
(2) Any benefits payable under the Plan to a Participant who
attained age 70-1/2 after December 31, 1996 shall be paid, or shall begin to be
paid, not later than April 1 of the calendar year following the calendar year in
which (i) the Participant attains age 70-1/2 or (ii) the Participant's
employment terminates, whichever is later, except in the case of a Participant
who is a 5-percent owner (as defined in Code Section 416), clause (ii) shall not
apply. However, if a Participant attained age 70-1/2 prior to January 1, 1997
and after 1998, such Participant's benefits under the Plan shall be paid, or
shall begin to be paid, not later than April 1, of the calendar year following
the calendar year in which the Participant attained age 70-1/2. In the Plan the
date by which any such benefits must be paid, or begin to be paid, as specified
above in this paragraph, is called the "Required Beginning Date".
E. Cash-Outs. Notwithstanding anything in this Article V or in Article VI
to the contrary, if at the time of a Participant's death or other termination of
employment occurring in any Plan Year beginning after August 5, 1997 the present
value of any Accrued Benefit payable to or with respect to him under the Plan,
i.e., the Vested portion of his Fixed Account derived from Company contributions
plus his account, if any, derived from nondeductible employee contributions made
by him to the Trust does not exceed, or at the time of any prior distribution
did not exceed, $5,000, such benefit shall be paid to his Beneficiary or to him
in a Lump Sum. If a Participant's employment terminates in any Plan Year
beginning after August 5, 1997 before his Normal Retirement Date for any reason
other than his death and such Accrued Benefit exceeds, or at the time of any
prior distribution exceeded, $5,000, the Participant shall have the right to
elect in writing delivered to the Committee to defer payment of such Accrued
Benefit (subject to adjustment for profits or losses and fees and expenses as
provided in Article IV(C)(3) and (5)) to the Participant's Normal Retirement
Date. The failure of such a Participant to timely elect either an immediate Lump
Sum or an immediate Lump Sum of his Matching Company Contributions and his
Elective Contributions and installments of his Discretionary Company
Contributions if and as permitted by Article V(C) and Article V(A)(1) and (3)
shall be deemed an election by the Participant to defer payment of any such
Accrued Benefit to his Normal Retirement Date as provided above. If payment of
the Participant's Accrued Benefit is so
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<PAGE> 49
deferred, such Accrued Benefit shall be paid to the Participant as soon as
administratively feasible in a Lump Sum after the Valuation Date coinciding with
or next following the earlier of (i) the Participant's Normal Retirement Date or
(ii) receipt by the Committee of the Participant's written election to receive a
distribution from the Plan prior to his Normal Retirement Date.
F. Limitations on Payment of Benefits Derived from Elective Contributions
and Matching Company Contributions. In no event shall any distribution from a
Participant's account which is attributable to Elective Contributions or
Matching Company Contributions (other than a hardship distribution under Article
VI(E)) be made earlier than: (1) the Participant's retirement, death,
disability, separation from service, or attainment of age 59-1/2; (2) the
termination of the Plan and Trust pursuant to Article X without establishment of
a successor plan; (3) the date of sale by the Company of substantially all of
its assets to a corporation in whose employment the Participant continues; or
(4) the date of sale by the Company of a subsidiary in whose employment the
Participant continues.
G. Termination of Employment by Reason of Dissolution. Subject to Paragraph
(F) above, if a Participant's employment shall terminate by reason of complete
or partial liquidation or dissolution of the Company, then such Participant
shall be deemed to have retired under Article V(A), (B) or (C), as the case may
be, except that, for purposes of said Paragraph (C) (Early Retirement; etc.),
his percentage Vesting in his Discretionary Company Contributions Account and
his Matching Company Contributions Account shall be 100%.
H. Termination of Employment in Other Circumstances. Subject to Paragraph
(F) above, if a Participant's employment shall terminate for any reason not
covered by Article V(G) (Dissolution) or Article VI(A) (Death, etc.) or (D)
(Disability), he shall be deemed to have retired and shall be entitled to only
such benefits as are provided by Article V(A), (B) or (C), as the case may be.
I. Temporary Absences. Any substantial absence from active employment with
the Company other than during vacation, holidays and non-business hours shall
constitute a termination of employment for purposes of the Plan except as
follows:
(1) If the Participant or other Employee shall be absent from
active employment with the Company for a period not exceeding one year on
account of (i) illness, (ii) mental or physical disability, (iii) leave of
absence granted by the Company in accordance with uniform and nondiscriminatory
rules so that all employees in similar circumstances are treated alike, (iv)
temporary layoff or (v) jury duty, his employment with the Company or
participation in the Plan, as the case may be, shall not be deemed to have
terminated solely on account of such absence and during such absence he shall be
provisionally credited with Hours of Service at the same weekly rate (not
exceeding 37-1/2 hours per week) he was being credited with Hours of Service at
the time such absence commenced; provided, however, that if he does not resume
active employment within thirty (30) days from the expiration of such illness,
disability, leave of absence or jury duty, or if he fails promptly to report for
work upon being recalled from such layoff, his employment or participation, as
the case may be, shall be deemed to have terminated on the date when such
absence commenced, provided, further that his Valuation Date shall be the
Valuation Date coinciding with or preceding the expiration of such thirty (30)
day period.
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(2) If the Participant or other Employee shall leave the active
employment of the Company for the purpose of becoming (and thereupon becomes) a
member of the Armed Forces of the United States, his employment with the Company
or participation in the Plan, as the case may be, shall not be deemed to have
terminated solely on account of such absence and during such absence he shall be
credited with Hours of Service at the same weekly rate (not exceeding 37-1/2
hours per week) he was being credited with Hours of Service at the time such
absence commenced; provided, however, that if he does not resume active
employment within ninety (90) days after his first eligibility for release or
discharge from said Armed Forces, his employment or participation, as the case
may be, shall be deemed to have terminated on the date when such absence
commenced, provided, further that his Valuation Date shall be the Valuation Date
coinciding with or preceding the expiration of such ninety (90) day period.
(3) During any period when a Participant or other Employee is not
in fact actively employed by the Company, he shall not be regarded as receiving
any Compensation except such as the Company may actually pay to him during such
period.
(4) If contributions or other credit or debit items shall be
allocated to a Participant's account due to the provisions of Subparagraph (l)
above and it shall later be determined that such Participant's employment should
be deemed to have theretofore terminated, then the Trustee upon notification
thereof shall treat such allocations as erroneous and shall reasonably endeavor
to undo the effects thereof.
(5) If the Participant timely resumes active employment (or
reports for work) as contemplated by (1) or (2) above but his resumed employment
is terminated (other than by death, permanent and total disability, normal or
late retirement, or complete or partial dissolution or liquidation of the
Company) prior to his having been in the Company's continuous employ for a
period at least equal to the lesser of (a) six (6) months or (b) the period from
the commencement of the absence in question to the resumption of his active
employment, then his employment or participation, as the case may be, shall be
deemed to have terminated on the date when such absence commenced.
(6) The foregoing provisions of this Paragraph (I) shall not
prevent the Company and the Participant or other employee in question from
mutually determining in writing that his status as an employee or Participant,
as the case may be, shall terminate (or have terminated) at any designated time,
either with or without cause.
(7) The foregoing provisions of this Paragraph (I) are subject to
any contrary requirements, more favorable to the Participant or other employee
in question, contained in Article II(A) or Article V(C).
J. Manner of Payment of Benefits From Company Stock Fund; Company Stock or
Cash. The benefits payable to a Participant (or to a Beneficiary under Article
VI) from the Company Stock Fund shall be payable in the following manner:
(1) All benefits payable under the Plan to a Participant or
Beneficiary from the Participant's Account not invested in the Company Stock
Fund shall be paid in cash. However, the Participant or Beneficiary shall be
entitled to elect in accordance with (2) below and any
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<PAGE> 51
rules and procedures which the Committee may adopt to receive all or any portion
of his Account which is invested in the Company Stock Fund either in cash or in
shares of Company Stock plus cash for any fractional share of Company Stock.
(2) If pursuant to (1) above the Participant elects to receive any
portion of his Vested or partially Vested Account which is invested in the
Company Stock Fund in cash rather than in shares of Company Stock, the Trustee
shall, as soon as administratively feasible after the applicable Valuation Date,
sell such portion of the Vested shares of Company Stock in such Account and pay
the proceeds to the Participant in accordance with Article V(A), (B) or (C), or
in accordance with Article V(E), whichever applies. If pursuant to (1) above the
Participant elects to receive any portion of his Vested or partially Account
which is invested in the Company Stock Fund, in shares of Company Stock rather
than in cash, the Trustee shall distribute such shares to the Participant in
accordance with Article V(A), (B) or (C), or in accordance with Article V(E),
whichever applies. In the event of the Participant's death similar procedures
shall be followed with respect to the Participant's Beneficiary depending upon
the Beneficiary's election under Article VI(C-1).
(3) Any Discretionary Company Contributions and forfeitures
allocated to the Discretionary Company Contributions Account of a Participant
under Article IV(P)(1) for the Plan Year in which a Participant's employment
terminates by reason of the Participant's death, permanent disability or
retirement on or after the Participant's early retirement date under the Source
One Mortgage Services Corporation Retirement Plan after payment to the
Participant (or Beneficiary) has been made or has commenced under Article V(A),
(B) or (C) shall, as provided in Article IV(P), be paid (or shall commence to be
paid) to the Participant (or Beneficiary) as soon as administratively feasible
after the Anniversary Date as of which they are allocated. Any such payments
shall be made in cash and not in shares of Company Stock.
K. Qualified Military Service. Notwithstanding any provision of this Plan
to the contrary contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Section 414(u) of
the Internal Revenue Code. This provision is effective as of December 12, 1994,
except as this date for purposes of compliance with Code Section 414(u) is
extended to a later date by the Uniformed Services Employment and Reemployment
Rights Act ("USERRA").
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<PAGE> 52
ARTICLE VI
OTHER BENEFITS
A. Death, Spousal Consent to Designation Required if Spouse is not
Beneficiary. Upon the death of a Participant irrespective of whether his
employment has theretofore terminated, the Participant's Account shall be fully
Vested and the Trustee shall arrange as promptly as possible to pay the entire
balance of such Participant's Fixed Account in a Lump Sum (reduced by any
portion of the Participant's account applied pursuant to Article VI(F)(4) to pay
the balance of any loan from the Trust to the Participant outstanding at the
time of the Participant's death) to his surviving spouse (who, subject to the
following provisions of this sentence, shall be deemed the Participant's
designated Beneficiary), or if there is no surviving spouse, or the surviving
spouse has consented in writing to the designation of another specific
Beneficiary by the Participant, to the Participant's designated Beneficiary,
subject, however, to Article VI (B) and (C) below. Any such written consent by
the Participant's spouse shall acknowledge the effect of the consent and be
witnessed by a representative of the Plan or a notary public. A representative
of the Plan shall include any member of the Committee or any other person
designated by the Committee for this purpose. No designation by a married
Participant of a Beneficiary other than the Participant's spouse or method of
payment shall be changed without the written consent of the spouse unless the
written consent of the spouse to the first designation expressly permits further
designations by the Participant without any requirement of further consent by
the spouse. No such written consent of the spouse of a Participant need be
obtained if it is established to the satisfaction of the Committee that such
spouse cannot be located or that such other circumstances as may be described in
Treasury Regulations promulgated under Section 417(a)(2)(B) of the Code exist.
B. Designation of Beneficiary. Subject to Paragraphs (A) (requiring
spousal consent if a person other than the Participant's spouse is to be
designated as a Beneficiary) and (C) (imposing certain restrictions on
distributions from the Plan on account of the death of the Participant) of this
Article VI, a Participant shall have the right from time to time to file with
the Committee a written designation of Beneficiary under the Plan, which
designation may from time to time be amended or revoked. Upon receipt of any
such designation or notice, the Committee shall inform the Trustee, who shall
(subject to Paragraphs (A) and (C) of this Article VI) in turn take any and all
steps reasonably necessary to make the same effective; provided, however, -
(1) No designation of Beneficiary, and no amendment or revocation
thereof, shall become effective if filed after such Participant's death, unless
the Committee and Trustee shall determine such designation, amendment or
revocation to be valid.
(2) A Participant shall not have the right, unless the Committee
shall otherwise consent, to designate as a Beneficiary anyone except his estate,
his dependents, individuals who are the natural objects of his bounty, or a
trust or trusts for the principal benefit of one or more such dependents or
Persons.
(3) In the absence of an effective designation of Beneficiary, or
if the Beneficiary designated shall not survive the Participant, then said death
benefits shall be paid to the individual in (or paid in equal shares, per
stirpes and not per capita, to the individuals in) the first of the following
classes of successive preference Beneficiaries (deemed to have been designated
as such by the Participant) in which there shall be an individual surviving such
Participant:
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<PAGE> 53
(a) His spouse,
(b) His children,
(c) His parents, or
(d) His brothers and sisters and issue thereof.
(4) In determining who are "children" for purposes of (3) above,
adopted individuals shall be treated as if they are the natural offspring of
their adoptive parents, rather than their natural parents.
(5) If any individual who would be entitled to receive death
benefits (either under (3) above or because designated by the Participant as a
Beneficiary) shall be a minor or adjudged mentally incompetent, the Committee
may in its discretion direct the Trustee to pay all or part of the death
benefits otherwise distributable in accordance with Article XI(O). If and to the
extent that there shall be no surviving Beneficiary under (3) above, or
effectively designated by the Participant, the Participant's estate shall be
deemed to be the Beneficiary.
C. Required Distributions. Upon the death of a Participant the
distribution of his interest under the Plan, i.e., the entire balance of his
Fixed Account shall be made in a Lump Sum as soon as administratively feasible
after the Valuation Date falling on or next following the Participant's death,
subject to Article V(J)(3).
C-1. Manner of Payment on Death; Company Stock or Cash. Any benefits payable
from that portion of the Participant's Account which is invested in the Company
Stock Fund, if any, on account of the death of a Participant shall be payable in
cash and/or in shares of Company Stock in accordance with the rules set forth in
Article V(J) (Manner of Payment of Benefits from Company Stock Fund; Company
Stock or Cash). All other benefits payable on account of the death of a
Participant shall be payable in cash.
D. Disability. If, notwithstanding Article V(I) (Temporary Absences), a
Participant's employment shall terminate on account of his permanent disability,
mental or physical (as defined in the Company's long term disability insurance
policy, if any) or, if the Company has no such policy as evidenced by the
certificate of a physician satisfactory to the Committee, the Participant's
Fixed Account shall be fully Vested and the entire balance of such Fixed Account
shall be paid in a Lump Sum (subject to the same restrictions set forth in
Paragraph (2) of Article V(A)), except the entire balance of his Discretionary
Company Contributions Account shall be paid in a Lump Sum or in regular annual
or more frequent installments, subject to the restrictions set forth in
paragraphs (2) and (3) of Article V, whichever the Participant shall elect in
writing delivered to the Committee.
E. Hardship Distributions; Distributions After Age 59-1/2. Subject to the
application of uniform rules consistently applied, the Committee may upon the
written request of a Participant direct the Trustee to distribute funds to such
Participant from his Discretionary Company Contributions Account, his Matching
Company Contributions Account (but no Matching Company Contributions treated as
Elective Contributions or income allocable thereto), his
VI-2
<PAGE> 54
Elective Contributions/or Account (but not amounts treated as Elective
Contributions or income allocable thereto), and from his rollover contributions
account, if any, as follows:
(1) Any such distribution from the Participant's Discretionary
Company Contributions Account, his Matching Company Contributions Account, or
his rollover contributions account, shall be subject to the following
requirements:
(a) No such distribution shall be made unless the
Committee determines that the distribution will be
made on account of an immediate and heavy financial
need of the Participant and is necessary to satisfy
such financial need.
(b) A distribution will be deemed to be made on account
of an immediate and heavy financial need only if the
distribution is on account of:
(i) Medical expenses described in Code Section
213(d) incurred by the Participant, the
Participant's spouse, or any dependents of
the Participant (as defined in Code Section
152) or necessary for these individuals to
obtain medical care described in Code
Section 213(d);
(ii) Purchase (excluding mortgage payments) of a
principal residence for the Participant;
(iii) Payment of tuition and related educational
fees for the next 12 months of
post-secondary education for the
Participant, his or her spouse, children or
dependents;
(iv) The need to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the
Participant's principal residence; or
(v) Any other immediate and heavy financial need
of the Participant designated as such for
purposes of Section 401(k) of the Code in a
revenue ruling, notice, or other document of
general applicability published by the U.S.
Treasury Department.
(c) A distribution will not be considered necessary to
satisfy an immediate and heavy financial need of the
Participant to the extent it exceeds the amount
required to relieve the financial need or to the
extent such need may be satisfied from other
resources that are reasonably available to the
Participant. The amount of an immediate and heavy
financial need may include amounts necessary to pay
any federal, state, or local income taxes or
penalties reasonably anticipated to result from the
distribution. A distribution may be treated as
necessary to satisfy a financial need if the
Committee reasonably relies upon the Participant's
written representation that the need cannot be
relieved -
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<PAGE> 55
(i) through reimbursement or compensation by
insurance or otherwise;
(ii) by reasonable liquidation of the
Participant's assets, to the extent such
liquidation would not itself cause an
immediate and heavy financial need;
(iii) by cessation of Elective Contributions under
the Plan; or
(iv) by other distributions or nontaxable (at the
time of the loan) loans from this Plan or
other plans maintained by the Company, or a
Related Company or by any other employer of
the Participant, or by borrowing from
commercial sources on reasonable commercial
terms.
For purposes of this determination, the Participant's
resources shall be deemed to include those assets of
his spouse and minor children that are reasonably
available to the Participant.
(d) The amount of any such distribution from any of the
accounts described in (1) above shall not exceed the
amount which would be distributable to him from such
account if his employment were to terminate at the
time of the distribution in question.
(2) Any such distribution from the Participant's Elective
Contributions Account shall be subject to the following requirements:
(a) No such distribution shall be made unless the
Committee determines that the distribution will be
made on account of an immediate and heavy financial
need of the Participant and is necessary to satisfy
such financial need.
(b) A distribution will be deemed to be made on account
of an immediate and heavy financial need only if the
distribution is on account of:
(i) Medical expenses described in Code Section
213(d) incurred by the Participant, the
Participant's spouse, or any dependents of
the Participant (as defined in Code Section
152) or necessary for these individuals to
obtain medical care described in Code
Section 213(d);
(ii) Purchase (excluding mortgage payments) of a
principal residence for the Participant;
(iii) Payment of tuition and related educational
fees for the next 12 months of
post-secondary education for the
Participant, his or her spouse, children or
dependents;
VI-4
<PAGE> 56
(iv) The need to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the
Participant's principal residence; or
(v) Any other immediate and heavy financial need
of the Participant designated as such for
purposes of Section 401(k) of the Code in a
revenue ruling, notice, or other document of
general applicability published by the U.S.
Treasury Department.
(c) A distribution will be deemed necessary to satisfy an
immediate and heavy financial need of the Participant
if all of the following requirements are satisfied:
(i) The distribution is not in excess of the
amount of the immediate and heavy financial
need of the Participant. The amount of an
immediate and heavy financial need may
include amounts necessary to pay any
federal, state, or local income taxes or
penalties reasonably anticipated to result
from the distribution.
(ii) The Participant has obtained all
distributions, other than hardship
distributions, and all nontaxable loans
currently available under this Plan and all
other plans maintained by the Company,
(iii) All other plans maintained by the Company
which cover the Participant provide that the
Participant's elective contributions and
employee contributions, if any, will be
suspended for at least 12 months after
receipt of the hardship distribution under
the Plan, and
(iv) All other plans maintained by the Company
which cover the Participant provide that the
Participant may not make elective
contributions for the Participant's taxable
year immediately following the taxable year
of the hardship distribution in excess of
the applicable limit under Section 402(g) of
the Code for such taxable year less the
amount of the Participant's elective
contributions (to this Plan and such other
plans) for the taxable year of the hardship
distribution.
If a Participant receives a hardship distribution
under this Plan the Participant's Elective
Contributions to this Plan will be suspended for 12
months after receipt of the distribution and he may
not make Elective Contributions to this Plan (and to
any other plan of the Company) for his taxable year
immediately following the taxable year of the
distribution in excess of the applicable limit under
Section 402(g) of the Code for such taxable year less
the amount of his Elective Contributions to this Plan
(and his elective contributions to any other plan of
the Company) for the taxable year of the hardship
distribution. A Participant will not fail to be
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<PAGE> 57
treated as an eligible employee for purposes of the
coverage and discrimination requirements of
Regulation Section 1.401(k)-1(b) merely because he is
suspended from making elective contributions or
employee contributions under the above requirements.
(d) No such distribution shall exceed the Participant's
Elective Contributions credited to his Elective
Contributions Account. Earnings on the Participant's
aggregate Elective Contributions shall not be
distributed under this Article VI(E)(2).
(3) Notwithstanding the foregoing provisions of this Paragraph
(E), the Trustee may distribute up to 100% of the funds from the Participant's
Elective Contributions Account under the Plan to such Participant in a Lump Sum
while the Participant is still employed by the Company, provided the Participant
has attained age 59-1/2 and requests such distribution in writing.
F. Loans. Subject to the application of uniform rules consistently
applied, the Committee may upon the written request of a Participant, which
shall be treated as an election by the Participant to segregate and separately
direct the investment of a portion of his Account under Article IX(O), direct
the Trustee to make a loan or loans to such Participant from his Account as
follows:
(1) The aggregate amount of such loan or loans to a Participant
shall not exceed the lesser of -
(a) $50,000 reduced by the excess, if any, of (i) the
highest outstanding balance of loans from the Trust
during the one-year period ending on the day before
the date on which the loan is made, over (ii) the
outstanding balance of loans from the Trust on the
date on which the loan is made; or
(b) 50% of the amount which would be the Vested balance
of his Fixed Account if he were to retire or
otherwise terminate his employment with the Company
at the time of the loan.
(2) No such loan shall be made unless the Committee shall
determine that there is a reasonable expectation of its repayment as and when
due, otherwise than under (4) below.
(3) The Committee shall determine the amount, terms and conditions
of any such loan; provided that each such loan must by its terms be repayable in
substantially equal payments of principal and interest not less frequently than
quarterly within five years from the date of the loan, bear interest at a
reasonable rate, be adequately secured, and, if made to a so-called
"disqualified person", meet the other requirements of Section 4975(d)(1) of the
Code. Notwithstanding the limitation on the term of a loan set forth in this
subparagraph, the Committee may agree to a loan term in excess of five years
provided that the loan is used to acquire a dwelling unit which within a
reasonable time is to be used (determined at the time the loan is made) as the
principal residence of the Participant.
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<PAGE> 58
(4) No payment out of the Trust shall be made to or in respect of
such Participant or his Beneficiary (except under Paragraph (E) or this
Paragraph (F)) unless and until all unpaid loans to such Participant have been
satisfied in full, and if any loan to a Participant has not been satisfied in
full at the time such Participant or the Participant's Beneficiary is to receive
a payment out of the Trust, the Trustee may apply a sufficient part of the
Participant's account in satisfaction of any unpaid part of such loan. No part
of a Participant's Elective Contributions Account shall be applied in
satisfaction of the unpaid part of a loan to the Participant prior to the
earlier of an event entitling the Participant or the Participant's Beneficiary
to the payment of his Elective Contributions Account or the Participant's
attainment of age 59-1/2.
(5) The aggregate of all loans to a Participant under this Plan
and under all other tax qualified Plans of the Company or any Related Company
shall not exceed the amount stated in (1)(a) above.
(6) If the Company is or should become an electing small business
(S) corporation, no such loan shall be made to any shareholder-employee of the
Company in any taxable year of the Company in which it is an S corporation. For
purposes of this paragraph a shareholder-employee means an employee or officer
of the Company who owns, or is considered as owning within the meaning of
Section 318(a)(1) of the Code, on any day during the taxable year of the
Company, more than 5% of its outstanding capital stock.
(7) The Committee shall, before directing the Trustee to make any
loan under this Paragraph (F), adopt rules relating to loans consistent with
this Paragraph (F) and in compliance with the applicable provisions of the Code
and ERISA.
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ARTICLE VII
RESERVED
VII-1
<PAGE> 60
PART TWO
ARTICLE VIII
COMMITTEE
A. Composition of Committee. Subject to Article IX, the Plan may, but need
not, be administered by a Committee of one or more employees (or other
individuals familiar with the affairs and personnel of the Company), who shall
be appointed by, and hold office at the pleasure of, the Board of Directors of
the Company. Vacancies in the Committee resulting from death, resignation,
removal or otherwise shall be promptly filled by the Board, but the Committee
may exercise its powers and authority notwithstanding the existence of
vacancies.
B. Removal and Resignation. A member of the Committee may resign at any
time upon not less than ten days' written notice to the Board, specifying the
effective date of resignation. A member may be removed or appointed by the Board
for any reason or for no reason and at any meeting of the Board, whether or not
called for that purpose.
C. Quorum. The Committee shall act by a majority of its members at the
time in office, and such action may be taken either by vote at a meeting or in
writing without a meeting. A member of the Committee shall not vote or act on
any matter relating solely to himself.
D. Officers. The Committee may by such majority action appoint from among
its number a Chairman to preside at its meetings and a Secretary, who need not
be a member, to keep records of its meetings and activities and to perform such
other duties and functions as the Committee may prescribe. It may in like manner
designate any one or more of its members or its Secretary to execute any
instrument or document upon its behalf, and the action of such person shall have
the same force and effect as if taken by the entire Committee. In the event of
such authorization, the Committee shall in writing notify the other
Administrative Parties thereof, and such parties shall be entitled to rely upon
such notification until the Committee shall give written notification to the
contrary.
E. Records and Reports. The Committee shall exercise such authority and
responsibility as it deems appropriate in order to comply with ERISA, the Code,
and governmental regulations issued thereunder relating to reporting and
disclosure, including the furnishing of information to Participants and
Beneficiaries and the filing of information and reports with the Internal
Revenue Service and the Department of Labor.
F. Powers and Duties. The Committee shall have any and all powers,
authority and duties which shall be necessary and proper to enable it to carry
out its obligations under this Agreement, including by way of illustration and
not limitation, the power and duty:
(1) To construe and interpret the Plan as provided in Article
I(C), decide all questions of eligibility, determine the amount, manner and time
of payment of any benefits hereunder, and direct the Trustee with respect to the
amount, manner and time of payment of such benefits;
(2) To prescribe procedures to be followed by Participants or
Beneficiaries filing applications to participate, elections, designation of
beneficiary forms, applications for benefits, if any, and any other forms
required or desirable under the Plan;
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(3) To prepare and distribute, in such manner as the Committee
determines to be appropriate, information explaining the Plan;
(4) To receive from the Company and from Participants such
information as shall be necessary for the proper administration of the Plan;
(5) To furnish the Company, upon request, such annual reports with
respect to the administration of the Plan as are reasonable and appropriate;
(6) To receive and review the periodic valuation of accounts made
by the Trustee;
(7) To receive, review and keep on file (as it deems convenient
and proper) reports of account allocations and benefit payments by the Trustee
and reports of disbursements for expenses directed by the Committee;
(8) To appoint or employ individuals to assist in the
administration of the Plan and any other agents it deems advisable, including
legal, accounting, and benefit consultant counsel.
G. Rules and Regulations. The Committee may adopt such rules and
regulations as it deems necessary, desirable or appropriate in connection with
the administration of the Plan including, but not limited to, rules and
regulations relating to loans and hardship distributions. All rules and
regulations of the Committee shall be uniformly and consistently applied to all
Participants in similar circumstances. When making a determination or
calculation, the Committee shall be entitled to rely upon information furnished
by a Participant or Beneficiary, the Company, any Related Company, legal counsel
for the Company, or the Trustee.
H. Claims Procedure. If any Participant or Beneficiary shall claim
benefits for which the Committee has determined he is ineligible, or shall
dispute the amount or timing of benefits determined by the Committee to be
payable hereunder, he shall be entitled to make a claim for benefits pursuant to
this Paragraph (H). All claims for benefits under this Agreement, whether made
by a Participant or Beneficiary, shall be in writing addressed and delivered to
the Committee, or any member thereof, at the Company's main office, shall
contain the claimant's name, mailing address, and telephone number, if any, and
shall identify the claim in a manner reasonably calculated to make the claim
understandable to the Committee. If the claim is defective in any foregoing
respect, the Committee may at any time within ten days after said delivery give
the claimant not less than ten days' written notice specifying the defect or
defects and the deadline for correction. A claim shall be deemed to be
effectively made when and if it is timely corrected in writing (addressed and
delivered as aforesaid), or when it is timely and correctly prepared and
delivered in the first place, or when it (or a revision thereof) is timely
delivered as aforesaid if the Committee does not give written notice of any
defect therein within ten days after said delivery. It is further agreed:
(1) If a claim is (or is deemed to be) effectively made, the
Committee, shall within 60 days thereafter notify the claimant in writing
whether the claim has been granted or has been denied in whole or in part. Such
notice shall be written in a manner calculated to be understood by the claimant,
shall make specific reference to the Plan, and, if adverse in whole or in part,
shall set forth:
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(a) The specific reason or reasons for the denial;
(b) A description of any additional material or
information necessary for the claimant to perfect the
claim, together with an explanation of why such
material or information is necessary; and
(c) An explanation of the claim review procedure set
forth in (3) and (4) below.
(2) If within said 60 days the claim has not been granted, it
shall be deemed to have been denied for purposes of the claim review procedure
set forth in (3) below, even if notice of denial has not been given under (1)
above.
(3) Upon denial of a claim in whole or in part, the claimant or
his duly authorized representative shall have 60 days within which to file with
the Committee or any member thereof a written request for a review of such
denial, whereupon -
(a) The Committee shall as promptly as is practicable,
but not later than 60 days after receipt of such
request, schedule a hearing to review said claim.
(b) The claimant or his duly authorized representative
shall, pending and/or at said hearing, be permitted
at all reasonable hours to review the pertinent
documents and also be entitled to submit issues and
comments in writing.
(4) The hearing mentioned in (3) above shall be held at the
Company's main office during normal business hours, unless a different time
and/or place are mutually agreed upon. It shall be attended by at least a
majority of the Committee. A decision on the claim shall be rendered thereat or
as soon as possible thereafter, but in no event later than 120 days after the
Committee's receipt of the written request for review; shall be in writing and
include specific reasons; shall be written in a manner calculated to be
understood by the claimant; and shall contain specific reference to the
pertinent Plan provisions on which the decision is based.
I. No Separate Committee. Notwithstanding the foregoing provisions of
this Article VIII -
(1) If and while the one or more Persons comprising the Committee
and Trustee are identical, the separation in this Agreement of the
responsibilities, rights, powers, authority, and functions of the Committee and
Trustee respectively shall be disregarded; said Persons shall act and serve in
both said capacities combined; and they need not furnish information,
directions, instructions or notices, or make reports or demands, by themselves
in one such capacity to themselves in the other such capacity.
(2) If and while there is no Committee, either because none is
designated or no one or more Persons are at the time in question actively
serving as members thereof, the responsibilities, rights, powers, authority, and
functions of the Committee shall be vested in the Company; and the Company and
Committee need not furnish information, directions, instructions or notices, or
make reports or demands, one to the other.
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(3) Whoever performs the functions of the Committee shall be the
Plan Administrator as defined in ERISA.
J. Investment Committee. The Board shall appoint an Investment Committee
of one or more individuals to select, deselect and monitor the performance of,
the Investment Funds. The Investment Committee shall have such powers as are
necessary, desirable and/or appropriate to enable it to carry out its duties.
The rules applicable to the Committee in Article VIII(), (B), (C) and (D) also
shall apply to the Investment Committee.
K. Indemnification. The Company shall indemnify each member of the
Committee and the Investment Committee against any personal liability or expense
in connection with serving as a Committee member except for his own gross
negligence, willful misconduct or bad faith. The Company may obtain and maintain
in effect fiduciary liability insurance covering each member of the Committee
and the Investment Committee in amounts determined by the Company to be
sufficient to cover any liability or costs which could arise from their serving
as members of the Committee and the Investment Committee. Such indemnification
and/or insurance shall also apply to any individual serving as Trustee or
co-Trustee but not to a corporate trustee.
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ARTICLE IX
TRUSTEE AND OTHER FIDUCIARIES
A. Bonding. Every Fiduciary shall be bonded to the extent (1) required by
Section 412 of ERISA or applicable Labor Regulations or (2) directed by the
Company.
B. Protective Provisions for Fiduciaries. To the extent permitted by
ERISA, it is agreed:
(1) No Fiduciary shall be liable with respect to a breach of
fiduciary duty if such breach was committed before he became a Fiduciary or
after he ceased to be a Fiduciary.
(2) Notwithstanding any other provisions of this Agreement -
(a) Any Fiduciary may, but need not, purchase insurance
from and for his own account to cover liability
arising under or with respect to the Plan.
(b) The Company may, but need not, purchase insurance to
cover potential liability of one or more Persons who
serve in a fiduciary capacity with respect to the
Plan.
(c) Upon first obtaining the written consent of the
Company, any Trustee may use assets of the Trust to
purchase insurance for itself and/or one or more
other Fiduciaries and/or the Trust to cover liability
or losses occurring by reason of the act or omission
of itself and/or one or more other Fiduciaries, if
such insurance permits recourse by the insurer
against such Trustee and/or one or more other
Fiduciaries in question in the case of its or their
breach of a fiduciary obligation.
(3) Any Fiduciary may, by written instrument, allocate and
delegate to others any of such Fiduciary's powers, duties or responsibilities,
terminable upon such notice as such Fiduciary deems prudent. Any person or
entity may serve in more than one fiduciary capacity with respect to the Plan. A
Fiduciary's responsibility shall be limited to performance of those duties
conferred upon such Fiduciary by or pursuant to the Plan, and, subject to
Section 405 and 410 of ERISA, no Fiduciary shall be responsible for the acts or
omissions of any other Fiduciaries.
C. Management and Control of Assets; Consultants and Investment Managers.
To the extent permitted by Section 402(c) of ERISA:
(1) Any Fiduciary may employ one or more Persons to render advice
with regard to any responsibility which such Fiduciary has under this Agreement.
(2) Except as hereinafter provided and/or as provided in any
separate trust agreement with the Trustee which takes precedence over this
agreement, the Trustee shall be the Fiduciary with respect to the investment,
management and control of the Trust Fund, with full discretion in the exercise
of such investment, management and control; provided, however, that this
subparagraph (C)(2) shall not apply to Trust assets which consist of Contracts
issued by an Insurer qualified to do business in Michigan nor to any Trust
assets held by such Insurer; nor
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shall it apply if the Plan is exempt from such requirements by reason of Section
403(b)(4) of ERISA and applicable Labor Regulations.
(3) The Company may, by resolution of its Board of Directors,
assume from the Trustee and transfer to the Committee or an Investment Manager
the authority and duty to direct the investment and management of all or a
portion of the Trust Fund; and, if such authority and duty have been transferred
to the Committee, the Committee, by appropriate action, may appoint an
Investment Manager to direct the investment and management of all or a portion
of the Trust Fund, provided that:
(a) A copy of any such Board resolution or Committee
action shall be delivered to the Trustee whereupon
the Committee or the Investment Manager, as the case
may be, shall be the Fiduciary with respect to the
investment and management of the Trust Fund (or
designated portion thereof) and the Trustee shall
have no responsibility therefor.
(b) Any transfer of investment and management to the
Committee or to an Investment Manager may be revoked
upon receipt by the Trustee of a written notice to
that effect by the Company through its Board of
Directors or the Committee, as the case may be.
(c) The appointment, selection and retention of a
qualified Investment Manager shall be solely the
responsibility of the Company or the Committee, as
the case may be.
(4) During such period or periods of time, if any, as the
Committee or any Investment Manager is authorized to direct the investment and
management of all or a part of the Trust Fund:
(a) The Trustee is authorized and entitled to rely upon
the fact that said Investment Manager is at all times
a qualified Investment Manager, as defined in Section
3(38) of ERISA, until such time as the Trustee has
received a written notice from the Company or
Committee to the contrary, as well as to rely upon
the fact that said Investment Manager is authorized
to direct the investment and management of the Trust
Fund until such time as the Company or Committee, as
the case may be, shall notify the Trustee in writing
that another Investment Manager has been appointed in
the place and stead of the Investment Manager named
or, in the alternative, that the Investment Manager
named has been removed and the responsibility for the
investment and management of the Trust Fund has been
assumed by the Committee or has been transferred back
to the Trustee, as the case may be.
(b) The Trustee shall not be liable or responsible for
losses or unfavorable results arising from the
Trustee's compliance with proper directions of the
Committee which are made in accordance with this
Agreement and which are not contrary to the
provisions of any applicable Federal or State statute
IX-2
<PAGE> 66
regulating such investment and management of the
assets of an employee benefit trust.
(c) The Trustee shall not be liable or responsible in any
way for any losses or other unfavorable results
arising from the Trustee's compliance with investment
or management directions received by the Trustee from
the Investment Manager.
(d) All directions concerning investments made by the
Committee or the Investment Manager shall be signed
by such person or persons, acting on behalf of the
Committee or the Investment Manager, as the case may
be, as may be duly authorized in writing; provided,
however, that the transmission to the Trustee of such
directions by photostatic teletransmission with
duplicate or facsimile signature or signatures shall
be considered a delivery in writing of the aforesaid
directions until the Trustee is notified in writing
by the Committee that the use of such devices with
duplicate or facsimile signatures is no longer
authorized.
(e) The Trustee shall, as promptly as possible, comply
with any written directions given by the Committee or
an Investment Manager hereunder and, where such
directions are given by photostatic teletransmission
with facsimile signature or signatures, the Trustee
shall be entitled to presume that any directions so
given are fully authorized.
(f) The Trustee shall not be liable for its failure to
invest any or all of the Trust Fund in the absence of
such written directions.
(g) The Trustee shall have no obligation to determine the
existence of any conversion, redemption, exchange,
subscription or other right relating to any of said
securities purchased, of which notice was given prior
to the purchase of such securities, and shall have no
obligation to exercise any such right unless the
Trustee is informed of the existence of the right and
is instructed to exercise such right, in writing, by
the Committee or the Investment Manager, as the case
may be, within a reasonable time prior to the
expiration of such right.
(h) Neither the Committee nor any Investment Manager
referred to above shall direct the purchase, sale or
retention of any assets of the Trust Fund if such
directions are not in compliance with the applicable
provisions of ERISA and any Regulations issued
thereunder.
D. Participant-Directed Investments. If, while, and to the extent that a
Participant exercises control within the meaning of Section 404(c) of ERISA over
the assets in his Account by an election under Article IV(K), such Participant
shall not be deemed to be a Fiduciary by reason of such exercise; and no Person
who is otherwise a Fiduciary shall be liable under Title I, Subtitle B, Part 4,
of ERISA (or comparable provisions of this Agreement) for any loss, or by reason
of any breach, which results from such Participant's exercise of control.
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E. Prohibited Transactions, Etc. Notwithstanding any other provision of
this Agreement -
(1) Except as authorized by applicable Regulations, no Fiduciary
may maintain the indicia of ownership of any assets of the Trust outside the
jurisdiction of the district courts of the United States.
(2) A Fiduciary shall not knowingly and willfully cause the Trust
to engage in a transaction which violates Section 406 or 407 of ERISA or which
is taxable under Section 4975 of the Code.
F. General Duties of Trustee. In addition to all its other duties and
responsibilities under this Article IX and other provisions of this Agreement,
the Trustee shall -
(1) Receive, collect, hold, safeguard, administer and retain,
temporarily or permanently, the cash and other property originally or at any
time comprising all or part of the Trust Fund, together with such income, rents,
issues and profits as shall from time to time be produced thereby or arise
therefrom.
(2) Make such payments and distributions, and take such further
action, as shall be proper to effectuate benefits under the Plan and to carry
out this Agreement.
(3) Maintain complete records and accounts of the Trust, including
those which the Company or Committee may direct, and the Company or Committee
may examine the same at all reasonable times during business hours.
(4) Render such periodic accountings and reports, including but
not limited to those hereafter described in this Article IX, as the Company or
Committee may reasonably require.
(5) Carry out the proper directions and instructions of the
Committee and, insofar as may be proper under this Agreement, make
determinations, participate in consultations and conferences, and give or
withhold approvals and consents.
G. ` General Powers of Trustee. Except as otherwise expressly provided in
this Agreement or required by law, the Trustee is authorized and empowered -
(1) To sell, exchange, transfer, assign, lease, pledge, mortgage
or otherwise encumber or dispose of, publicly or privately, any real or personal
property at any time included in the Trust Fund as and when, for such (if any)
price and consideration, on credit or otherwise, with or without security, and
upon such other terms and conditions as the Trustee shall deem proper.
(2) To invest and reinvest all or part of the Trust Fund, in such
amounts, proportions and investments, including but not limited to bonds, notes,
debentures, mortgages, equipment trust certificates, investment trust
certificates, preferred or common stocks, mutual funds or other property, real
or personal, either within or without the State of Michigan, as the Trustee may
deem proper or the Committee shall direct.
(3) To hold cash uninvested, or on deposit with any bank, savings
and loan association or trust company, in such amount as the Trustee shall deem
proper, for the purpose of
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defraying anticipated expenses of (and benefits out of) the Trust. At any time
the Trustee is a bank or trust company the authority herein conferred shall
extend to deposits with the Trustee.
(4) To pay, perform, defend, collect, maintain, sue on, modify,
settle, compromise, release, abandon or otherwise adjust or dispose of any
claims or demands in favor of or against the Trust Fund or any Participant's
account.
(5) To vote or not vote any stock or securities in person, through
designees or by proxy.
(6) To hold or register any stock, securities or other property in
the name of any Trustee or nominee or unregistered or in such form that title
shall pass by delivery, provided that the records of the Trustee shall always
indicate the fiduciary nature of such ownership.
(7) To exercise, not exercise, sell or otherwise dispose of any
conversion or subscription right, or other right or option, and to make any
payments incidental thereto.
(8) To oppose, consent to or participate in any voting trust,
pooling agreement, foreclosure, reorganization, consolidation, merger,
liquidation, refinancing, or sale of assets, of or with respect to any
corporation or other organization, and in connection therewith to deposit stock,
securities or other property with, and transfer title to, any protective
committee or other Person whatsoever.
(9) To pay calls, assessments and other charges which the Trustee
shall deem proper.
(10) To borrow and lend money in such circumstances and upon such
terms and conditions, with or without security, as the Trustee shall deem
proper.
(11) To make or not make any provision for amortization or a
sinking fund with respect to any security which is received at a value or
purchased at a price in excess of par or of the amount payable on its call,
redemption, maturity or liquidation.
(12) Subject to Article IX(E)(1), to keep all or part of the Trust
Fund at any place or places, and to hold and administer the Trust Fund in one or
more common trust funds or other consolidated funds, in which the various
accounts may have undivided interests, and without distinction between income
and corpus.
(13) To retain as an investment any stock, securities or other
property received through the exercise of any foregoing powers and authority.
(14) To make, execute and deliver any and all agreements,
instruments and documents whatsoever, including but not limited to those
incidental to the foregoing powers and authority, and to make the same binding
and enforceable beyond the duration of the Trust.
(15) To buy, sell and trade in option contracts and `short' sales
for cash, and for such purpose the Trustee may maintain and operate cash
accounts with brokers, and may deliver and pledge any securities held or
purchased by the Trustee with such brokers both as security for loans and
advances made to the Trustee and to ensure the Trustee's ability to deliver
stock
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against short options provided that all such purchases, sales and trades shall
be made on one or more designated national securities exchanges whose plans
regulating such transactions have been declared effective pursuant to the
Securities Exchange Act of 1934, such as the Chicago Board Options Exchange,
Incorporated.
(16) To do any and all additional acts and things which the Trustee
shall be authorized to do under the laws of the State of Michigan or of any
other jurisdiction in which it may act or which the Trustee in its discretion
shall deem proper to carry out this Agreement, to the end that the Trustee shall
have and may exercise all the powers and authority of an absolute owner, except
as the Committee shall otherwise direct; and no Person dealing with the Trustee
shall be bound to see to the application of any money or other property paid,
delivered or transferred to the Trustee or to inquire into the validity or
propriety of any transaction whatsoever.
(17) As directed by the Investment Committee, to invest and
reinvest the assets of the Company Stock Fund primarily in Company Stock in
accordance with this Agreement.
(18) In the event that the Investment Committee directs the Trustee
to dispose of any Company Stock held as Trust assets, under circumstances which
require registration and/or qualification of the securities under applicable
Federal or state securities laws, then the Company, at its own expense, will
take, or cause to be taken, any and all such actions as may be necessary or
appropriate to effect such registration and/or qualification.
H. Appraisal. As of each Anniversary Date and Valuation Date, and as of
such other dates as the Company or Committee may reasonably direct, the Trustee
shall determine the fair market value of the assets comprising the Trust Fund,
including the assets of each Investment Fund established within the context of
the Trust Fund, by appraising such assets as follows, except as otherwise
required by ERISA:
(1) Stocks and securities which are listed or reported on any
national exchange shall be valued on the basis of their closing prices on such
exchange on the appraisal date or, if there were no reported sales on such
exchange on the appraisal date, then at their bid prices at the close of market.
Mutual fund shares shall be valued in the manner such shares customarily are
valued for purposes of determining their daily net asset values as quoted in the
Wall Street Journal.
(2) Stocks and securities not susceptible of valuation under (l),
but which are traded over-the-counter, shall be valued on the basis of their
closing prices on the market on the appraisal date or, if there were no reported
sales over-the-counter on the appraisal date, then at their bid prices at the
close of market.
(3) Stocks and securities not susceptible of valuation under (1)
or (2), but which would be susceptible of valuation as of a date not more than
seven (7) days prior to the appraisal date, shall be valued as of such prior
date as near as possible to the appraisal date.
(4) For purposes of (1), (2) and (3) above, information contained
in any newspaper of general circulation or any standard financial periodical, or
furnished by any national securities exchange or by any broker who is a member
of any national securities exchange, as the case may
IX-6
<PAGE> 70
be, may be fully relied upon by the Trustee in the absence of actual knowledge
or advice to the contrary.
(5) Property not subject to valuation by the foregoing methods
shall be valued at its fair market value in accordance with written directions
given to the Trustee by the Committee (except as otherwise provided in Article
XII).
(6) There shall be excluded from the assets valued under this
Paragraph (H), if appraisal is being made as of an Anniversary Date, the amount
of the Company's contribution which is allocable to the Participants' accounts
as of said date.
(7) Valuations determined by appraisal under this Paragraph (H)
shall be binding and conclusive upon each and every Person beneficially
interested in the Trust, but shall not be binding upon the Company or Committee
unless incorporated in an accounting under Paragraph (I) below.
(8) Upon completion of an appraisal, the Trustee shall file copies
thereof with the Committee and the Company.
(9) Notwithstanding the foregoing, any assets of the Trust Fund or
any Investment Fund within the context of the Trust Fund consisting of units of
participation in any pooled fund established and maintained by the Trustee under
any trust instrument establishing a pooled fund or funds for the investment of
the assets of pension and profit-sharing plans of various employers for which
the Trustee acts as trustee shall be valued in accordance with the terms of such
trust instrument.
I. Periodic Accounting. Within 60 days after such Anniversary Date, and at
such other times as the Company or Committee may reasonably direct or as ERISA
may require, the Trustee shall prepare and deliver to the Company and Committee
an accounting of the administration of the Trust, which accounting shall include
a description of all assets then comprising the Trust Fund and shall be in such
further detail as the Company or Committee may reasonably request. Within 90
days after receiving such accounting, the Company and Committee, respectively,
shall notify the Trustee in writing whether or not such accounting is approved;
and unless so disapproved, it shall be deemed to be approved. It is in addition
agreed:
(1) Either the Company or the Committee or both may require the
Trustee to furnish such other or additional information with respect to the
administration of the Trust as may be reasonably necessary or desirable prior to
determining upon the approval thereof; and in such event the aforesaid 90-day
period shall be tolled until such information is received by the party
requesting it.
(2) If the Company or Committee shall notify the Trustee that the
aforesaid accounting is not approved, an audit or opinion shall thereupon be
made by an independent public accountant or accountants chosen by the Company or
Committee, as the case may be. Upon completion of such audit or opinion, any
errors in the accounting shall be corrected, and the corrected accounting shall
be deemed to be approved by the Company and Committee.
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(3) The approval by the Company and Committee of the accounting or
corrected accounting shall constitute an account stated between the Company,
Committee, Trustee, all Participants, all Beneficiaries, and any other Persons
having any interest in the Trust or Plan.
(4) Nothing in this Paragraph (I) shall prevent the Trustee from
having an accounting settled and allowed by, or being required by the Company or
Committee to account in, a court of competent jurisdiction.
(5) The foregoing provisions of this Paragraph (I) are subject to
the provisions of ERISA.
J. Protective Provisions for Trustee. The Trustee accepts the Trust solely
upon the terms and conditions of this Agreement, and no duties or
responsibilities not expressly set forth herein or in ERISA shall be implied or
imposed. It is further agreed:
(1) The Trustee shall have no duty to ascertain whether any
directions or instructions of the Company or Committee are in accordance with
this Agreement, nor to see to the application of any payment made pursuant to
such directions or instructions.
(2) Any benefit or other payment under the Plan shall be made only
if and when the Trustee has sufficient assets of the Trust Fund available for
the purpose intended.
(3) In the event of any dispute as to the Persons to whom payment
of any money or delivery of any other property shall be made by the Trustee, the
Trustee may withhold such payment or delivery in whole or part until such
dispute shall be settled to the satisfaction of the Trustee or determined by a
court of competent jurisdiction.
(4) The Trustee may withhold all or such part of any distribution
as the Trustee in its discretion may deem proper to protect the Trustee and the
Trust Fund against any liability or claim or account of any estate, inheritance,
income or other tax whatsoever, and with all or any part of any such
distribution so withheld may discharge any such liability. Any part of any such
distribution so withheld by the Trustee that may be determined by the Trustee to
be in excess of any such liability shall upon such determination by the Trustee
be distributed forthwith to the Person from whom it was withheld.
(5) The Trustee shall not be obligated to institute any action or
proceedings for the collection of money or other property due the Trust, or in
defense of any claim against the Trust or any portion of the Trust Fund, unless
the Trustee shall first have been indemnified to its satisfaction for all costs,
expenses, attorney fees and liabilities to which the Trustee might become
subject.
K. Provisions Pertaining to Co-Trustees. During any period of time when
the Trustee shall consist of two or more Persons (whether individuals,
corporations or otherwise), the following provisions shall apply:
(1) Except as otherwise provided in the foregoing provisions of
this Article IX -
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(a) Each such Person shall use reasonable care to prevent
a co-Trustee from committing a breach; and
(b) Such Persons shall jointly manage and control the
Trust assets, except that this item (b) shall not
preclude any agreement, and the co-Trustees are
hereby authorized to agree (in a written document
executed by all co-Trustees) to allocate specific
responsibilities, obligations or duties among
themselves, in which event a co-Trustee to whom
certain responsibilities, obligations or duties have
not been allocated shall not be liable by reason of
this item (b), either individually or as a Trustee,
for any loss resulting to the Trust arising from acts
or omissions on the part of another co-Trustee to
whom such responsibilities, obligations or duties
have been allocated.
(2) Nothing in (1) above shall limit any liability that a
Fiduciary may have under Part 4 of Title I of ERISA.
(3) The Trustee shall act by a majority of such Persons at the
time in office, and such action may be taken either by vote at a meeting or in
writing without a meeting.
(4) Said Persons serving as co-Trustees may unanimously designate
any one or more co-Trustees to execute any instrument or document on behalf of
all, including but not limited to the signing or endorsement of any check and
the signing of any applications for Contracts, and the action of such designated
co-Trustee shall have the same force and effect as if taken by all the
co-Trustees. In the event of such authorization, all the co-Trustees shall in
writing notify the other Administrative Parties thereof, and such parties shall
be entitled to rely upon such notifications until one or more co-Trustees shall
give written notification to the contrary.
L. Removal and Resignation of Trustee. Any sole or co-Trustee may resign
at any time upon not less than 30 days written notice to the Board of Directors
of the Company specifying the effective date of resignation. Any sole or
co-Trustee may be removed by the Board with or without cause, but only upon not
less than 30 days' written notice to such sole or co-Trustee specifying the
effective date of removal and enclosing a copy of the resolution of the Board.
No such removal shall become effective until all sums due to such sole or
co-Trustee under this Agreement have been paid. The Trustee and the Company may
waive any of the provisions of this Paragraph by mutual agreement in writing.
M. Successor Trustees. The lack of a Trustee due to resignation, removal
or otherwise shall not terminate the Trust. The Company shall promptly appoint
one or more successor Trustees. In the absence of any other Trustee, the
Committee shall act and serve as an interim Trustee. Each and every estate,
title, right, power, authority, discretion, duty and obligation conferred upon
the Trustee by this Agreement shall devolve upon, and be exercised and performed
by, such successor Trustees, including the Committee or any remaining Trustee.
N. Settlement of Accounts upon Resignation or Removal of Trustee. In the
event of the resignation or removal of a sole or co-Trustee, such sole or
co-Trustee shall have the right to a settlement of its accounts at the expense
of the Trust, which accounting shall be made as provided in Paragraph (I) above.
Upon completion of such accounting and payment to the
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outgoing sole or co-Trustee of its compensation and expenses, including court
costs and legal fees, such sole or co-Trustee or its legal representative shall
promptly assign, transfer and deliver unto the remaining or successor Trustee
(or in the absence thereof, to the Committee) the Trust Fund and all records and
data (or copies thereof) pertaining to the Plan and Trust.
O. Segregated Accounts. Except as provided in Article IV(K), no
Participant shall be permitted to segregate and/or separately direct the
investment of his account under the Plan, and any reference to segregated
accounts elsewhere in this Agreement shall be disregarded.
P. Investments in Common Trust Funds. Notwithstanding any other provisions
of this Agreement, all or any part of the assets of the Trust may be invested in
any collective investment trust; provided that such collective investment trust
is exempted under the Code or regulations or rulings issued by the Internal
Revenue Service and is then maintained by the Trustee. The provisions of the
document governing any such collective investment trust, as amended from time to
time, shall govern any investment therein and are hereby made a part of this
Agreement.
Q. Voting Rights of Participants with respect to Company Stock. Each
Participant shall have the right to direct the Trustee as to the manner in which
voting rights appurtenant to Company Stock allocated to the Participant's
Account are to be exercised in each matter brought before an annual or special
stockholders meeting of the Company and on each matter as to which shareholder
authorization of corporate action is solicited by written consent. Before each
such meeting or solicitation, the Company shall cause to be furnished to each
Participant a copy of the proxy, other information or solicitation material
furnished to stockholders, together with a form requesting directions on how the
shares of Company Stock allocated to the Participant's Account shall be voted on
each such matter. Upon timely receipt of such directions the Trustee shall on
each such matter vote as directed the number of shares held by the Trustee and
covered by such instructions. If a Participant fails to give the Trustee timely
instructions as to how to vote any Company Stock, the Trustee shall not vote
such Company Stock. The instructions received by the Trustee from Participants
shall be held by the Trustee in confidence and shall not be divulged or released
to any person, including officers or employees of the Company or any Related
Company.
R. Rights on Tender or Exchange Offer for Company Stock. Each present or
former Participant (or, in the event of his death, his Beneficiary) shall have
the right, to the extent of the number of shares of Company Stock allocated to
his Account, to instruct the Trustee in writing as to the manner in which to
respond to a tender or exchange offer with respect to such shares of Company
Stock. The Committee shall use its best efforts timely to distribute or cause to
be distributed to each present or former Participant (or Beneficiary thereof)
such information as will be distributed to stockholders of the Company in
connection with any such tender offer or exchange offer. Upon timely receipt of
such instructions, the Trustee shall respond as instructed with respect to
shares of such Company Stock. The instructions received by the Trustee from
Participants shall be held by the Trustee in confidence and shall not be
divulged or released to any person, including officers or employees of the
Company or any Related Company. If the Trustee does not receive timely
instruction from a Participant (or Beneficiary) as to the manner in which to
respond to such a tender or exchange offer, such Participant (or Beneficiary)
shall be deemed to have instructed the Trustee not to tender or exchange the
shares allocated to his Account, and the Trustee shall not tender or exchange
any such shares.
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If pursuant to instructions from any Participant or Beneficiary (each
in this paragraph being referred to as a "Tendering Participant") given pursuant
to this Paragraph R the Trustee tenders shares of Company Stock in the Tendering
Participant's Account, if any, and receives cash for these shares, the portion
of the Participant's Account, if any, invested in the Company Stock Fund shall
be reduced by the number of shares in the Company Stock Fund portion of his
Account which were sold, and the proceeds of the sale if they consist of cash
shall be invested in any one or more of the other Investment Funds as directed
by the Participant. If the Trustee receives property other than cash for any
tendered shares of Company Stock, the Tendering Participant's portion of the
Participant's Account, if any, invested in the Company Stock Fund shall be
reduced by the number of shares in the Company Stock Fund portion of his Account
which were sold, the property received shall be retained in a separate
Investment Fund in the Trust pending a decision by the Trustee of its
disposition, and the Tendering Participant shall be credited with his allocable
share of such separate Investment Fund.
The Trustee shall tender or exchange unallocated shares of Company
Stock only if so directed by the Investment Committee, which, in so directing,
shall act solely in accordance with the principles set forth in Section 404(a)
of ERISA.
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ARTICLE X
TERMINATION, AMENDMENT AND SUSPENSION
A. Termination, Etc.; Assumption of Plan. It is the present intention of
the Company permanently to maintain the Plan and continue to make contributions
under Article III(A); provided, however, that subject to Article XI(E) -
(1) The Company reserves the right at any time to revoke this
Agreement, terminate the Plan, or terminate or suspend its liability to make
further contributions to the Trust, but no such action shall become effective
until the Company shall notify the Committee and Trustee.
(2) The Plan shall automatically terminate, and likewise the
Company's liability to make contributions to the Trust, upon the Company's legal
dissolution, or upon its adjudication as bankrupt or insolvent, or upon its
making a general assignment for the benefit of creditors, or upon a receiver
being appointed for its assets, or upon its merger or consolidation with or into
any other corporation or corporations, or upon a complete discontinuance of
contributions under the Plan within the meaning of Section 411(d)(3) of the
Code.
(3) Termination of the Plan may be forestalled if and to the
extent that any successor corporation, or any corporation or business entity
employing a majority of the then Participants, shall expressly assume the Plan
and the Company's liability to make contributions. Such assumption shall be
expressed in a written agreement between the Company and such corporation or
business entity, pursuant to proper resolution of the latter's Board of
Directors or other governing body, but shall not be effective unless copies of
such agreement and resolution shall be filed with the Trustee prior to
termination. Such agreement shall provide for assumption of the Plan and the
liability to make contributions, with respect to all Participants employed by
such corporation or business entity, and such corporation or business entity
shall thereupon be substituted pro tanto in the place and stead of the Company.
With respect to any then Participants who are not taken over as employees of
such corporation or business entity, the Plan shall be deemed to terminate, and
Paragraph (B) below shall be invoked.
(4) In the event of any termination or suspension under (1) or (2)
above, the Company and the Trustee shall give prompt notice thereof to the
Internal Revenue Service; and, subject to Paragraph (B) below, each
Participant's account shall be Vested to the extent required by Article
XI(E)(2).
B. Liquidation of Trust. In the event of termination of the Plan, the
Trustee shall proceed as promptly as possible, subject to any directions from
the Committee, to liquidate all investments, other than Contracts, and shall
thereupon determine the value of each Participant's account under Article IV(P)
as of the date of termination. After each such account has been appropriately
adjusted to cover any expenses of distribution and final liquidation costs, but
subject nevertheless to Sections 403(d)(1) and 4044 of ERISA and applicable
Labor Regulations, the Trustee shall pay the balance of such account to the
Participant (or, if deceased, his Beneficiary) in an immediate Lump Sum or by
means of the purchase and delivery of a Contract providing one of the payment
options permitted by the Plan (if such a Contract can be purchased from an
Insurer), whichever the Participant (or, if deceased, his Beneficiary) shall
elect in writing delivered to the
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Committee. Any Contract issued in respect of any Participant shall be assigned
to him or, if deceased, his Beneficiary at as early a date as is possible after
termination.
Notwithstanding Article V(E) (Cash-Outs) or any other provision of the
Plan to the contrary, if at the time the Trust is terminated the Company does
not maintain any other defined contribution plan (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of the Code), the Trustee shall
pay the balance of each Participant's account (adjusted as provided above) to
the Participant (or, if deceased, his Beneficiary) in a Lump Sum as soon as
administratively possible after such termination and the consent of the
Participant or his Beneficiary to such distribution shall not be required.
Alternatively, if so directed by the Committee, the Trustee shall
continue the Plan and Trust in existence as a "frozen" Plan and Trust (without
receiving any additional Company contributions and without admitting any
additional Participants) and shall pay the balances of the accounts of
Participants to them at such times as they are entitled to receive the same
under this Agreement, i.e., at retirement, death, other termination of
employment, or by reason of hardship or the attainment of age 59-1/2. In such
event the frozen Plan and Trust shall be operated and maintained so that they
continue to meet the qualification requirements of Section 401(a) of the Code,
including the minimum coverage requirements of Section 410(b) of the Code.
C. Termination of Trust. Notwithstanding termination of the Plan, the
Trust shall terminate when and if, but not until, the Trust Fund shall be
entirely paid out and distributed in accordance with this Agreement.
D. Amendment. Subject to Article XI(E) (Nonforfeitability, etc.) the
Company reserves the right at any time and from time to time to amend this
Agreement, without the consent of any Participant or Beneficiary, in any manner
which the Company deems to be proper, whether or not (1) for reasons of business
necessity or (2) for the purpose of causing the Plan and Trust to be tax
qualified or to continue to be tax qualified. No such amendment, except upon
written consent, shall increase the duties or liabilities of the Trustee or
Committee, or diminish their compensation, or deprive any Participant or
Beneficiary of any then Vested equitable interest in the Trust; provided,
however, that such amendment may be retroactive to the extent necessary to take
full advantage of Section 401(b) of the Code if such amendment is adopted for
the purpose of causing the Plan and Trust to be tax qualified or to continue to
be tax qualified with respect to any taxable year of the Company and is adopted
and effective within the time limit specified in Article III(A) with respect to
making contributions for such taxable year or within such longer period
permitted under applicable Regulations. Notwithstanding anything herein to the
contrary, any provisions of Article IV relating to allocations of Company Stock
to Discretionary Company Contributions Accounts shall not be amended more than
once every six months other than to comport with changes in the Code, ERISA or
the rules thereunder.
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ARTICLE XI
MISCELLANEOUS
A. Persons Prohibited from Serving as Fiduciaries, Etc. No person shall
serve as a Committee member, Fiduciary, officer, Trustee, custodian, counsel,
agent or employee of the Trust, or as a consultant to the Trust or in any other
capacity, if prohibited so to do by Section 411 of ERISA.
B. Information Required by ERISA. If some or all of the information
necessary to enable the Committee to comply with the requirements of Title I of
ERISA is maintained by -
(1) An insurance carrier or other organization (normally the
Insurer) which provides some or all of the benefits under the Plan, or holds
assets of the Plan in a separate account,
(2) A bank or similar institution (normally a corporate Trustee)
which holds some or all of the assets of the Plan in a common or collective
trust or a separate trust or custodial account, or
(3) A Plan sponsor (normally the Company) as defined in Section
3(16)(B) of ERISA,
such carrier, organization, bank, institution or sponsor shall transmit and
certify the accuracy of such information to the Committee within 120 days after
the end of the Plan Year (or such other date as may be prescribed by applicable
Labor Regulations).
C. Retention of Records for Six Years. Every Person (such as the Trustee,
Committee, Insurer, Company or an accountant) who is subject to a requirement to
file any description or report or to certify any information therefor under
Title I of ERISA (whether or not expressly required to do so by this Agreement),
or who would be subject to such a requirement but for an exemption or simplified
reporting requirement under Section 104(a)(2) or (3) of ERISA, shall maintain
records on matters of which disclosure is required which will provide in
sufficient detail the necessary basic information and data from which the
documents thus required may be verified, explained or clarified, and checked for
accuracy and completeness, and shall include vouchers, worksheets, receipts, and
applicable resolutions, and shall keep such records available for examination
for a period of not less than six (6) years after the filing date of the
documents based on the information which they contain, or six (6) years after
the date on which such documents would have been filed but for the aforesaid
exemption or simplified reporting requirement.
D. No Reversion. The assets of the Trust shall never inure to the benefit
of the Company and shall be held for the exclusive purposes of providing
benefits to Participants and their Beneficiaries and defraying reasonable
expenses of administering the Plan; and except as otherwise provided in Article
III(F) and (G), the Company shall not be entitled to receive or recover any part
of its contributions to the Trust or the earnings thereof.
E. Nonforfeitability, Etc. In compliance with ERISA and the Code, it is
agreed:
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(1) A Participant's right to his normal retirement benefits under
Article V(A) shall be Vested upon his attaining his Normal Retirement Age.
(2) Upon termination or partial termination of the Plan, or the
complete discontinuance of contributions by the Company under the Plan, the
rights of all affected Participants to Accrued Benefits as of such time (i.e.,
those accrued to the date of such event), to the extent then funded or credited,
shall be Vested, except as otherwise required or permitted by applicable
Regulations (e.g., Regulation Section 1.411(d)-2(a)) mentioned in Section
411(d)(3) of the Code. In addition the Committee in its sole discretion may
fully vest the Matching Company Contributions Accounts and Discretionary Company
Contributions Accounts of a group of Participants because they are affected by a
business divestiture, layoff or other similar transaction, in which case the
rules relating to a partial termination described or referred to above shall
apply (even when a true "partial termination" under Code Section 411(d)(3) has
not occurred.
(3) The Accrued Benefit of a Participant shall never be decreased
by an amendment of the Plan, except an amendment described in Section 412(c)(8)
of the Code and Section 302(c)(8) of ERISA. An amendment which has the effect of
eliminating an optional form of benefit with respect to benefits attributable to
service before the amendment shall be treated as decreasing the Accrued Benefit
of a Participant except as otherwise provided by Treasury Regulations.
(4) The vesting schedule in Article V(C) and any other vesting
provision of this Agreement based thereon shall not be amended unless -
(a) The Vested percentage of the Accrued Benefit derived
from the Discretionary Company Contributions and
Matching Company Contributions (determined as of the
later of the date such amendment is adopted, or the
date such amendment becomes effective) of any
Participant is at least equal to such Vested
percentage computed without regard to such amendment;
and
(b) Each Participant with at least three Years of Service
is permitted within a period beginning no later than
the date such amendment is adopted, an election
complying with the requirements of Regulation ss.
1.411(a)-8T(b) to have his aforesaid Vested
percentage computed without regard to such amendment.
(5) In the case of any merger or consolidation with, or transfer
of assets or liabilities to, any other plan, within the meaning of Section
401(a)(12) of the Code, each Participant shall (if the Plan then terminates)
receive a benefit immediately after the merger, consolidation, or transfer which
is equal to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan had then
terminated).
F. Rollovers; Direct Transfers; Certain Transfers Prohibited. Subject to
Subparagraphs (3) and (4) of this Paragraph (F), but notwithstanding any
contrary provisions of this Agreement, including but not limited to Articles V,
VI and X, but only as and to the extent contemplated by
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<PAGE> 79
Sections 402(a)(5), (6) or (7), 403(a)(4), 408(d)(3) or 409(b)(3) of the Code, a
Participant, and in the case of (1) below an Employee who is expected to become
a Participant but has not yet met the eligibility requirements of Article II(A),
shall be entitled -
(1) Subject to the last paragraph of Subparagraph (2) below
(prohibiting certain transfers to this Plan), to transfer (or cause to be
transferred) to the Trust to be held as part of his account (i) the redemption
proceeds of a retirement bond and/or (ii) all or part of the cash and other
property or the proceeds of the same received by him in one or more
distributions together constituting a Lump Sum distribution from or under
another tax qualified trust or tax qualified plan or an employee annuity or
custodial account and/or (iii) an amount paid or distributed out of an
individual retirement account or individual retirement annuity or retirement
bond consisting of a prior rollover contribution from a tax qualified trust or
annuity plan; provided, however, that no such transfer will be permitted unless
the Committee determines that such transfer will meet the applicable
requirements of the Plan and will not adversely affect the tax qualified status
of the Plan; and/or
(2) Upon at least 60 days' written notice to the Committee, to
cause his entire account to the extent that it has Vested to be transferred in
whole or in part on his behalf (or to him for retransfer), in the form of cash
or other property or the proceeds of the same (in one or more distributions
which, together with any distributions retained by him, constitute a Lump Sum
distribution), to an individual retirement account, an individual retirement
annuity (other than an endowment contract), a tax qualified trust, or an annuity
plan.
The amount so transferred to or from the Trust is herein called a "Rollover
Contribution." Any Rollover Contribution to the Trust, together with the
earnings thereon, shall be fully Vested but need not be segregated from the
remainder of the Participant's account unless the Trustee otherwise elects or
the Participant or Committee otherwise directs. In the case of a transfer
described in (2) above, made to the Participant for retransfer, he shall not
retransfer the portion described in Section 402(e)(4)(D)(i) of the Code
(constituting in effect his own nondeductible employee contributions).
A Participant also shall be entitled to directly transfer to the Trust
any amount described in Subparagraph (1)(ii) above, provided the tax qualified
plan referred to in said Subparagraph (1)(ii) permits such transfer, and to
directly transfer to another tax qualified plan which provides for the
acceptance of direct transfers any amount described in Subparagraph (2) above;
provided, however, that no such direct transfer to or from this Plan will be
permitted unless the Committee makes the same determination with respect to such
transfer as it must make under Subparagraph (1) above with respect to a Rollover
Contribution.
Notwithstanding the foregoing provisions of this Paragraph (F), there
shall not be transferred to this Plan, nor shall this Plan accept, a transfer of
assets from (i) a tax qualified defined benefit plan, (ii) a tax qualified
Defined Contribution Plan which is subject to the funding standards of Section
412 of the Code, including a target benefit plan, or (iii) any other plan to
which clause (iii) of Section 401(a)(11)(B) of the Code applies with respect to
a Participant, which transfer would cause this Plan to be a "direct or indirect
transferee" of such a plan with respect to a Participant within the meaning of
such term as defined in Section 401(a)(11)(B)(iii) of the Code.
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<PAGE> 80
(3) This Subparagraph (3) and Subparagraph (4) below apply to
distributions made on or after January 1, 1993. Notwithstanding any provision of
this Agreement to the contrary that would otherwise limit a distributee's
election under this Subparagraph (3), 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.
(4) 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: any distribution that
is one of a series of substantially equal periodic
payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or
the joint lives (or joint life expectancies) of the
distributee and the distributee's designated
beneficiary, or for a specified period of ten years
or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of
the Code; and the portion of any distribution that is
not includible in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(ii) Eligible retirement plan: An eligible retirement plan
is an individual retirement account described in
Section 408(a) of the Code, an individual retirement
annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code,
or a qualified trust described in Section 401(a) of
the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an
eligible rollover distribution to the surviving
spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(iii) Distributee: A distributee includes an Employee or
former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's
or former Employee's spouse or former spouse who is
the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of
the spouse or former spouse.
(iv) Direct rollover: A direct rollover is a payment by
the Plan to the eligible retirement plan specified by
the distributee.
G. Spendthrift Provision. It is the intention and purpose of the parties
to this Agreement to place the absolute title to the Trust Fund in the Trustee
alone, with power and authority to pay out the same only as provided in this
Agreement. Accordingly, the benefits provided by this Agreement may not be
assigned or alienated, within the meaning of Section 206(d)(1) of ERISA and
Section 401(a)(13) of the Code, except as provided in Paragraph (H) below.
XI-4
<PAGE> 81
H. Exceptions to Spendthrift Provision. It is agreed that:
(1) Paragraph (G) above shall not apply to a loan made under
Article VI(F) to a Participant or Beneficiary if such loan is secured by the
Participant's Accrued Vested Benefit (within the meaning of Section 401(a)(13)
of the Code) and by reason of Section 4975(d) of the Code is exempt from the tax
on prohibited transactions imposed by Section 4975 of the Code.
(2) Paragraph (G) above shall apply to the creation, assignment,
or recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, except that effective January 1, 1985
said Paragraph (G) shall not apply if the order is determined by the Committee
to be a qualified domestic relations order (as defined in Section 414(p) of the
Code), and shall not apply to any domestic relations order entered before
January 1, 1985 if the Trust commenced to pay benefits pursuant to such order on
or prior to such date, or if the Trust had not then commenced to pay any such
benefits the Committee determines that such order is valid and compliance with
same will not violate any provision of the Code or adversely affect the tax
qualified status of the Plan. Notwithstanding any restrictions in this Agreement
regarding the payment of benefits prior to the date on which a Participant
terminates employment with the Company, a qualified domestic relations order may
provide for payment of benefits to any "alternate payee" (as defined in Section
414(p)(8) of the Code) on any date subsequent to the entry of such order and
subsequent to a determination by the Committee that such order is a "qualified
domestic relations order" pursuant to Section 414(p) of the Code, whether or not
such payment would be made prior to the Participant's "earliest retirement age"
(as defined in Section 414(p)(4)(B) of the Code). If a qualified domestic
relations order so provides, the Trustee shall pay benefits to the alternate
payee from the vested portion of a Participant's Account as required by the
qualified domestic relations order.
(3) If a Participant shall so direct the Committee or Trustee in
writing, amounts may be withheld out of his benefits under the Plan (not in
excess of 10% of any benefit payment) to pay for his chargeable portion of group
medical, hospital, accident or life insurance premiums and other group programs,
not necessarily related to insurance, maintained by the Company for the
convenience or welfare of all or part of its active or retired Employees.
(4) Paragraph (G) above shall not apply to any offset of a
Participant's benefits provided under the Plan against an amount that the
Participant is ordered or required to pay to the Plan if -
(a) the order or requirement to pay arises -
(i) under a judgment or conviction for a crime involving
the Plan,
(iii) under a civil judgment (including a consent order or
decree) entered by a court in an action brought in connection
with a violation (or alleged violation of part 4 of subtitle B
of title I of ERISA (dealing with fiduciary responsibility),
or
(iv) pursuant to a settlement agreement between the
Secretary of Labor and the Participant, or a settlement
agreement between the Pension Benefit Guaranty
XI-5
<PAGE> 82
Corporation and the Participant, in connection with a
violation (or alleged violation) of part 4 of such subtitle by
a fiduciary or any other person.
(b) the judgment, order, decree, or settlement agreement expressly
provides for the offset of all or part of the amount ordered or required to be
paid to the Plan against the Participant's benefits provided under the Plan, and
(c) the judgment, order or decree is issued or entered, and the
settlement agreement was entered into, on or after August 5, 1997.
I. Execution of Instruments. Except as in this Agreement otherwise
expressly provided, any instrument or document to be delivered or furnished by
the Company shall be sufficiently executed if executed in the name of the
Company by any officer or officers thereof; or, where furnished or delivered by
the Committee, if executed in the name of the Committee by any member thereof;
or where furnished or delivered by the Trustee, if executed as follows:
(1) If the Trustee consists of two or more Persons, if executed
in the Trustee's name by any such Person, and
(2) In the case of any corporate Trustee (whether or not the sole
Trustee), if executed as Trustee in the name of such corporation by any officer
or officers thereof;
provided, further, that any Administrative Party shall be fully protected in
relying upon any instrument or document so executed; and execution as aforesaid
shall create a strong presumption that any signature so affixed is duly
authorized and that any information contained in such instrument or document is
true and correct.
J. Successors, Etc. This Agreement shall be binding upon, and inure to the
benefit of, the Company and (subject to Article X(A)) its successors, the
Trustee and its successors, the Committee as from time to time constituted, and
the Participants and Beneficiaries, their heirs, personal representatives,
successors, and assigns, all in accordance with and subject to the terms of this
Agreement.
K. Reserved.
L. Miscellaneous Protective Provisions. It is further agreed, that, except
as otherwise provided in this Agreement or ERISA -
(1) Any Administrative Party may request and rely upon an opinion
of counsel, who may or may not be counsel for the Company, and shall be fully
protected for any action taken, suffered or omitted in good faith reliance upon
such opinion.
(2) No recourse under this Agreement, or for any action or
nonaction hereunder, or for any loss or diminution of the Trust Fund, or for any
payment or nonpayment of benefits, or for any other reason whatsoever relating
to the Plan, shall be had by any Person whomsoever
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<PAGE> 83
against any individual in his capacity as stockholder, officer, director or
employee of the Company, past, present or future.
(3) Where the establishment of any fact is in question, any
Administrative Party may in its discretion accept as evidence thereof any
properly executed instrument or document furnished by any other Administrative
Party or such other evidence as may seem reasonable in the circumstances.
M. No Duress or Retaliation Against Participants, Etc. No Participant or
Beneficiary shall be discharged, fined, suspended, expelled, disciplined, or
discriminated against for exercising any right to which he is entitled under
this Agreement, ERISA, or the federal Welfare and Pension Plan Disclosure Act,
or for the purpose of interfering with the attainment of any right to which such
Participant may become entitled thereunder; nor shall any Participant or
Beneficiary (through the use of fraud, force, violence, or threat of such use)
be restrained, coerced, or intimidated (nor shall there be any attempt so to do)
for the purpose of interfering with or preventing the exercise of any right to
which he is or may become entitled under this Agreement, ERISA, or said
Disclosure Act; nor shall any Person be discharged, fined, suspended, expelled,
or discriminated against because he has given information or has testified or is
about to testify in any inquiry or proceeding relating to ERISA or said
Disclosure Act.
N. Record Keeping, Investigations, Etc. The Company and each Fiduciary,
Committee member, and other appropriate Person shall maintain such books and
records pertaining to the Plan and Trust, make them available for inspection,
file such information, and submit to such investigations as are properly
required by the Secretary of Labor or his delegate pursuant to Section 504 or
505 of ERISA.
O. Distributions to Minors and Incompetent or Missing Individuals. If any
individual to whom benefits shall be distributable under the Plan shall be a
minor, adjudged mentally incompetent or cannot reasonably be located, the
Committee may direct the Trustee to distribute such benefits by one or more of
the following methods, to be determined by the Committee: (1) directly to such
minor or incompetent individual; (2) to the guardian of such individual; (3) to
another Person for the use or benefit of such individual; (4) by the Trustee or
Committee, or their agents, expending, or arranging for the expenditure of, such
benefits for the education, health or maintenance of such individual; or (5) to
a bank account established on behalf of such individual. Except as to (4) above,
neither the Committee nor Trustee shall be required to see to the application of
any such distributions. Distributions made pursuant to this Paragraph (O) shall
operate as a complete discharge of the Trustee, the Committee and the Trust
Fund. Also, if the Committee determines after reasonable efforts to locate an
individual who is entitled to a distribution of all or part of an account
balance under the Plan that such individual cannot be located, the amount
payable to such individual may, if the Committee so determines, be forfeited as
of the Anniversary Date falling within the Plan Year of such determination and
be allocated among the accounts of the Participants in the same manner as a
forfeiture under Article IV(Q)(1). However, in such event if the individual
entitled to a distribution of the forfeited amount subsequently makes a claim
for the same, it shall be reinstated out of forfeitures, if any, for the Plan
Year in which the claim is made and/or an additional contribution to the Trust
by the Company for such Plan Year and shall be paid to such individual in
accordance with the Plan.
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P. Expenses and Compensation. Subject to Article IX -
(1) Members of the Committee shall serve without compensation, but
the Trustee shall be paid compensation in such amount and manner as may from
time to time be mutually agreed between the Trustee and the Company.
(2) The expenses of the Trustee and Committee, including but not
limited to legal fees and the Trustee's compensation, shall be paid by the
Company:
(a) Although it is intended that expenses shall be paid
by the Company, the Trust Fund guarantees that they
shall in all events be paid in full when due, and a
lien for such payment is hereby impressed upon the
Trust Fund; provided that no individual Trustee who
already receives full-time pay from the Company shall
receive from the Trust Fund any compensation for his
services as Trustee, excepting reimbursement of
expenses properly and actually incurred.
(b) Notwithstanding any provision to the contrary, any
expenses which the Trustee or Committee may incur
with special reference to any Participant or his
account (including any Fixed Account) shall first be
charged against such account to the extent that the
same is sufficient for such purpose. Any balance of
said special expenses shall then be charged to the
Company or the Trust Fund pursuant to (a) above but
shall if possible be later reimbursed to the Company
or the Trust Fund out of future credits to such
Participant's account.
Q. No Warranty of Company Stock Value or Dividends. Neither the Company
nor any Related Company nor the Trustee nor the Committee nor the Investment
Committee warrants or represents in any way to any Participant or Beneficiary
that the value of Company Stock will increase or will not decrease or that
dividends will continue to be paid on Company Stock, either at all or at any
particular level. Each Participant assumes all risks in connection with changes
in the value of Company Stock and all risks that dividends may not be paid or
continued, either at all or at any particular level.
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ARTICLE XII
INSURANCE PROVISIONS
A. No Life Insurance. No portion of the Trust Fund shall be invested in
life insurance policies, and any reference to life insurance policies or
contracts elsewhere in this Agreement shall be disregarded.
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ARTICLE XIII
TOP-HEAVY RULES
A. Application; Top-Heavy Status. Notwithstanding any other provision of
the Plan to the contrary, the provisions of Article XIII(B) shall apply for any
Plan Year beginning after December 31, 1983 in which the Plan is determined to
be Top-Heavy as of the Determination Date, in accordance with the following:
(1) Required Aggregation of Plans. If the Company and any Related
Companies maintain one or more tax qualified plans in addition to this Plan,
then there shall be aggregated for purposes of this Article XIII(A) those of
such plans -
(a) in which a Key Employee is a participant, and
(b) which enable any plan in which a Key Employee is a
participant to meet the nondiscrimination
requirements of Section 401(a)(4) of the Code or the
minimum participation standards of Section 410 of the
Code.
All such plans shall be referred to in this Article XIII as the
"Required Aggregation Group". There also must be aggregated with the aforesaid
plans and considered as included in the Required Aggregation Group any other tax
qualified plan which was maintained by the Company or a Related Company within
the five Plan Years ending on the Determination Date and would be part of the
Required Aggregation Group for the Plan Year but for the fact that such plan
terminated before the Determination Date.
(2) Permissive Aggregation of Plans. If the Company and any one or
more Related Companies maintain one or more tax qualified plans in addition to
this Plan and any other plan or plans in the Required Aggregation Group then
there may be aggregated with this Plan, or with the plans in the Required
Aggregation Group, any of such additional plans which, when so aggregated,
continue to meet the requirements of Sections 401(a)(4) and 410 of the Code (the
"Permissive Aggregation Group"). There also may be aggregated with the aforesaid
plans and considered as included in the Permissive Aggregation Group any other
tax qualified plan which was maintained by the Company or a Related Company
within the five Plan Years ending on the Determination Date and could be part of
the Permissive Aggregation Group for the Plan Year but for the fact that such
plan terminated before the Determination Date.
(3) Key Employees. Key Employees shall mean and include all
employees and former employees (and the beneficiaries of all employees and
former employees) who are or were one or more of the following during the five
Plan Years ending on the Determination Date:
(a) officers of the Company or any Related Company having
annual compensation greater than 50 percent of the
Adjusted Equivalent of the amount in effect under
Section 415(b)(1)(A) of the Code for such Plan Year,
provided that no more than 50 employees (or if
lesser, the greater of (i) three or (ii) 10% of the
employees) shall be treated as officers, and provided
that employees described in Section 414(q)(8) of the
Code shall be excluded;
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(b) one of the ten employees owning (or considered as
owning within the meaning of Section 318 of the Code)
both more than a one-half percent interest and the
largest interests in the Company and any Related
Company, as further defined in Section
416(i)(1)(A)(ii) of the Code and the Treasury
Regulations thereunder, having annual compensation
greater than the Adjusted Equivalent of $30,000,
provided that if two or more employees own the same
interest, the employee having greater annual
compensation shall be treated as owning the greater
interest;
(c) five percent owners of the Company; or
(d) one percent owners of the Company having annual
compensation from the Company and any Related Company
of more than $150,000 per year.
For purposes of (a), (b) and (d) above, "compensation" means Creditable
Compensation as that term is defined in Article I(A)(13). For purposes of (c)
and (d) above, "owner" shall have the same meaning as in Section 416(i)(1)(B) of
the Code. Also, for purposes of determining ownership in the Company under (b),
(c) and (d) above, the aggregation rules of subsections (b), (c) and (m) of
Section 414 of the Code shall not apply.
An employee who is identified as a Key Employee under more than one
category shall nevertheless be counted as one Key Employee. A Non-Key Employee
who is also the beneficiary of a Key Employee shall be counted as a Key
Employee, but only the Accrued Benefit attributable to the Key Employee shall be
counted in determining Top-Heavy status.
(4) Accrued Benefits. For purposes of this Article XIII(A),
Accrued Benefits for all defined benefit plans required or permitted to be
aggregated under (1) and (2) above shall mean the Actuarial Equivalent (which
shall be the same for all plans being aggregated) of the Accrued Benefit
determined as of the actuarial valuation date preceding or coinciding with the
Determination Date. If there is no method of computing Accrued Benefits that
uniformly applies for all such plans, then solely for the purposes of this
Article XIII(A), the Accrued Benefit of an employee other than a Key Employee
shall be determined as if his benefits accrued not more rapidly than the slowest
accrual rate permitted under the fractional accrual rate of Section 411(b)(1)(C)
of the Code.
For all defined contribution plans required or permitted to be so
aggregated, Accrued Benefits shall mean the balance in the employer and employee
contribution accounts (excluding amounts attributable to deductible employee
contributions) as of the Determination Date, and shall for all plans include:
(a) distributions to any employee during the five Plan
Years ending on the Determination Date;
(b) unrelated rollovers (rollovers during the five Plan
Years ending on the Determination Date which were
initiated by the employee and transferred to a plan
maintained by an employer other than the Company or
any Related Company) made from this Plan, (or made to
this Plan prior to December 31, 1983); and
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(c) related rollovers (rollovers to this Plan which were
either not initiated by the employee or were made
from another tax qualified plan maintained by the
Company or any Related Company).
(5) Top-Heavy Determination. There shall be computed, as of the
Determination Date, the sum of all Accrued Benefits for all Key Employees and
the sum of all Accrued Benefits of all employees. Such computation shall be made
separately for each plan required or permitted to be aggregated with this Plan,
as of the determination date (as defined in each such plan) which falls within
the calendar year in which the Determination Date falls. If the following
ratio --
the sum of all Accrued Benefits for all Key Employees
the sum of all Accrued Benefits for all Employees
for this Plan if it is the only tax qualified plan maintained by the Company and
any Related Company, or for all plans in any Required Aggregation Group, is
greater than sixty percent (60%), then this Plan and all plans in any Required
Aggregation Group is (are) Top-Heavy, effective on the first day of the Plan
Year. If such ratio for all tax qualified plans in any Permissive Aggregation
Group is 60% or less, then neither this Plan (nor any other plan in such
Permissive Aggregation Group) is (are) Top-Heavy for the Plan Year. For purposes
of the foregoing computation, there shall be excluded the Accrued Benefits of:
(a) former Key Employees, i.e., persons who were Key
Employees but who have not fulfilled the definition
of Key Employee at any time during the five Plan
Years ending on the Determination Date), and
(b) former employees who have not performed any service
for the Company or a Related Company during the five
Plan Years ending on the Determination Date.
B. Effect of Top-Heavy Status.
(1) Minimum Contribution. For any Plan Year in which the Plan is
Top-Heavy the following shall apply:
(a) The amount of Company Contributions and forfeitures
allocated pursuant to Article IV to the account of
each Participant who is a Non-Key Employee shall not,
when expressed as a percentage of such Participant's
Compensation for such Plan Year, be less than the
lesser of:
(i) three percent (3%), or
(ii) the percentage for the Key Employee for whom
such percentage is the highest
minus the amount of Company (or Related Company)
contributions plus forfeitures allocated to such
Participant's account(s) under any other tax
qualified Defined Contribution Plan(s) maintained by
the Company or by a Related Company, if any.
Notwithstanding the foregoing, neither
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Matching Company Contributions nor Elective
Contributions allocated to the accounts of Non-Key
Employees shall be treated as Company Contributions
for purposes of meeting the above minimum
contribution requirement. However, Elective
Contributions allocated to the accounts of Key
Employees shall be treated as Company Contributions
for purposes of meeting the minimum contribution
requirement.
Subparagraph (ii) above shall not apply in any Plan Year in which this Plan is
required to be aggregated with a tax qualified defined benefit plan in order to
enable such plan to meet the requirements of Sections 401(a)(4) or 410 of the
Code.
(b) For purposes of this paragraph (1) --
(i) The minimum allocations under this paragraph
shall be made to the account of each active
and inactive Participant who is a Non-Key
Employee who has not Separated from Service
as of the Anniversary Date falling within
such Plan Year; and
(ii) This and any other tax qualified Defined
Contribution Plan(s) maintained by the
Company or by a Related Company shall be
treated as a single plan.
(2) Vesting. Commencing with the first day of the first Plan Year in
which the Plan is Top-Heavy, Article V(C)(1) shall be amended to read as
follows:
"(1) Such Participant shall be entitled only to a
percentage of the balance in his Discretionary Company Contributions
and the balance of his Matching Company Contributions Account based
upon the number of his full Years of Service, as follows:
<TABLE>
<CAPTION>
================================ ==============================
YEARS OF SERVICE PERCENTAGE VESTING
================================ ==============================
<S> <C>
Less than 2 0%
- -------------------------------- ------------------------------
2 but less than 3 20%
- -------------------------------- ------------------------------
3 but less than 4 40%
- -------------------------------- ------------------------------
4 but less than 5 60%
- -------------------------------- ------------------------------
5 but less than 6 80%
- -------------------------------- ------------------------------
6 or more 100%
================================ ==============================
</TABLE>
The foregoing Vesting schedule shall apply to all Plan Years after the Plan
first becomes Top-Heavy, whether or not the Plan is Top-Heavy for that Plan
Year. Such Vesting schedule shall not apply to any Participant who fails to
perform an Hour of Service for the Company on or after the day the Plan first
becomes Top-Heavy.
XIII-4
<PAGE> 90
(3) Section 415 Fraction Reduced to 1.0 if Plan Becomes Super
Top-Heavy. For any Plan Year in which the plan is Top-Heavy, the figure 1.0
shall replace the figure 1.25 in the definitions of Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction in Article IV(A)(3)(d) (and in
Section 415(e)(2)(B) and (3)(B) of the Code), except for Plan Years as to which
the Plan is not Super Top-Heavy. For purposes of this subparagraph (b), a plan
is "Super Top-Heavy" if (and only if) it fails the ninety percent test mentioned
in Section 416(h)(2)(B) of the Code, i.e., if (and only if) it would meet the
"Top-Heavy" definition in Article XIII(A)(5) above if the phrase "sixty percent"
therein were replaced by "ninety percent" wherever it appears.
C. Definitions. For purposes of this Article XIII, the following
definitions apply:
(1) "Determination Date" means the last day of the preceding Plan
Year or, for the first Plan Year, the last day of such Plan Year.
(2) "Non-Key Employee" means any employee who is not a Key
Employee and the beneficiary of any Non-Key Employee.
XIII-5
