As filed with the Securities and Exchange Commission on April 7, 2000
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMERICAN CAPITAL STRATEGIES, LTD.
(Exact Name of registrant as specified in its charter)
Delaware 52-1451377
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
------------------------
(Address, including zip code, of principal executive offices)
American Capital Strategies, Ltd. Employee Investment and Stock Ownership Plan
------------------------------------------------------------------------------
(Full title of the plan)
John Erickson
Vice President and Chief Financial Officer
American Capital Strategies, Ltd.
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
(301) 951-6122
(Name, address, including zip code, and telephone number including area
code, of agent for service)
Copy to:
Samuel A. Flax, Esq.
Arnold & Porter
555 12th Street, N.W.
Washington, D.C. 20004
(202) 942-5730
---------------------
Calculation of Registration Fee
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Title of securities to be Amount to be Proposed maximum Proposed maximum Amount of registration
registered registered offering price per aggregate offering fee
unit(1)(2) price(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 300,000 $25.50 $7,650,000 $2,020
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this Registration Statement, also covers an indeterminate amount of interests to
be sold or offered pursuant to the employee benefit plan(s) described herein.
(1) Calculated on the basis of the average of the closing prices of the
Registrant's Common Stock as reported on April 5, 2000, on the Nasdaq National
Market which date is within 5 business days prior to the date of the filing of
this Registration Statement.
(2) Estimated solely for the purpose of determining the registration
fee in accordance with Rule 457(h).
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed by American Capital Strategies, Ltd.
("Registrant" or "Company") with the Securities and Exchange Commission
("Commission") under the Securities Act of 1933, as amended ("Securities Act")
or the Securities Exchange Act of 1934, as amended ("Exchange Act"), are
incorporated herein by reference:
(a) The Company's latest annual report on Form 10-K for the fiscal
year ended December 31, 1999, filed with the Commission on
March 29, 2000.
(b) The description of the common stock of the Company, par value
$0.01 per share ("Common Stock"), contained in a registration
statement on Form 8-A filed with the Commission by the
Registrant on August 27, 1997.
All documents filed by the Registrant after the date of this
Registration Statement pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act, prior to the filing of the post-effective amendment that indicates
that all Common Stock offered hereby has been sold or which deregisters such
Common Stock then remaining unsold, shall be deemed to be incorporated in this
Registration Statement by reference and shall be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference in this Registration Statement shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference in
this Registration Statement modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or so superseded, to constitute a part of this Registration Statement.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Not Applicable
Item 6. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law ("DGCL"), permits,
under certain circumstances, the indemnification of any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or
II-2
<PAGE>
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving in a similar capacity for another enterprise at the request of the
corporation. To the extent that a director, officer, employee or agent of the
corporation has been successful in defending any such proceeding, the DGCL
provides that he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
With respect to a proceeding by or in the right of the corporation,
such person may be indemnified against expenses (including attorneys' fees),
actually and reasonably incurred, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation. The DGCL provides, however, that indemnification shall not be
permitted in such a proceeding if such person is adjudged liable to the
corporation unless, and only to the extent that, the court, upon application,
determines, that he is entitled to indemnification under the circumstances. With
respect to proceedings other than those brought by or in the right of the
corporation, notwithstanding the outcome of such a proceeding, such person may
be indemnified against judgments, fines, and amounts paid in settlement, as well
as expenses, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action, had no reason to believe his conduct was unlawful.
Except with respect to mandatory indemnification of expenses to successful
defendants as described in the preceding paragraph or pursuant to a court order,
the indemnification described in this paragraph may be made only upon a
determination in each specific case (i) by majority vote of the directors that
are not parties to the proceeding, even though less than a quorum, or (ii) if
there are no such directors, or if such directors so direct, by independent
legal counsel in a written opinion, or (iii) by the stockholders.
The DGCL permits a corporation to advance expenses incurred by a
proposed indemnitee in advance of final disposition of the proceeding, provided
that the indemnitee undertakes to repay such advanced expenses if it is
ultimately determined that he is not entitled to indemnification. Also, a
corporation may purchase insurance on behalf of an indemnitee against any
liability asserted against him in his designated capacity, whether or not the
corporation itself would be empowered to indemnify him against such liability.
The Company has adopted provisions in its Second Amended and Restated
Certificate of Incorporation and its Second Amended and Restated Bylaws that
provide for indemnification of its officers and directors to the maximum extent
permitted under the DGCL. In addition, the Board of Directors has voted to
extend indemnification rights to employees of the Company.
As authorized by the DGCL, the Company's Second Amended and Restated
Certificate of Incorporation limits the liability of directors of the
Corporation for monetary damages. The effect of this provision is to eliminate
the rights of the Company and its stockholders (through stockholders' derivative
suits on behalf of the Company) to
II-3
<PAGE>
recover monetary damages against a director for breach of the fiduciary duty of
care as a director (including breaches resulting from negligent or grossly
negligent behavior) except in certain limited situations. This provision does
not limit or eliminate the rights of the Company or any stockholder to seek
non-monetary relief such as an injunction or rescission in the event of a breach
of a director's duty of care. This provision will not alter the liability of
directors under federal securities laws.
The Company has purchased an insurance policy which purports to insure
the officers and directors of the Corporation against certain liabilities
incurred by them in the discharge of their functions as such officers and
directors, except for liabilities resulting from their own malfeasance.
The foregoing descriptions are general summaries only. Reference is
made to the full text of the Company's Second Amended and Restated Certificate
of Incorporation and its Second Amended and Restated Bylaws, both filed with the
Commission on August 12, 1997, as part of Pre-Effective Amendment Number 1 to
the Registration Statement on Form N-2 (File No. 333-29943), and Exhibit 3.1 to
the Company's annual report on Form 10-K for the fiscal year ended December 31,
1999, filed with the Commission on March 29, 2000, which are incorporated herein
by reference.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
The exhibits listed on the Exhibit Index on page II-9 of this
Registration Statement are filed herewith or are incorporated herein by
reference to other filings.
Item 9. Undertakings
The Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed
that which was registered) and any
II-4
<PAGE>
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
Provided, however, that paragraphs (i) and (ii) do not apply if the
registration statement is on Form S-3, Form S-8 or From F-3, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement;
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof;
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering;
4. That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Company's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such new
securities at that time shall be deemed to be the initial bona fide
offering thereof.
5. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person
of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
II-5
<PAGE>
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will
be governed by the final adjudication of such issue.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized in the city of Bethesda, state of Maryland, on April 7, 2000.
AMERICAN CAPITAL STRATEGIES, LTD.
By: /s/ John R. Erickson
------------------------------------
John R. Erickson
Vice President, Secretary and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
* Director, Chairman and Chief April 7, 2000
- --------------------------- Executive Officer (Principal
Malon Wilkus Executive Officer)
*
- --------------------------- Director and Vice Chairman April 7, 2000
David Gladstone
*
- --------------------------- President, Chief Operating Officer April 7, 2000
Adam Blumenthal and Director
Vice President, Chief
/s/ John R. Erickson Financial Officer and April 7, 2000
- --------------------------- Secretary (Principal
John R. Erickson Accounting and Financial
Officer)
*
- --------------------------- Director April 7, 2000
Robert L. Allbritton
II-7
<PAGE>
*
- --------------------------- Director April 7, 2000
Alvin N. Puryear
- --------------------------- Director April _, 2000
Neil M. Hahl
*
- --------------------------- Director April 7, 2000
Philip R. Harper
*
- --------------------------- Director April 7, 2000
Stan Lundine
*
- --------------------------- Director April 7, 2000
Stephen P. Walko
* By: /s/ John R. Erickson April 7, 2000
--------------------
(Attorney-in-fact)
II-8
<PAGE>
EXHIBIT INDEX
Exhibit Description
- ------- -----------
Exhibit 3.1 American Capital Strategies, Ltd. Second Amended and
Restated Certificate of Incorporation. Incorporated
herein by reference to Exhibit 2.a of the
Pre-Effective Amendment Number 1 to the Registration
Statement on Form N-2 (File No. 333-29943) filed on
August 12, 1997, as amended by a certain Amendment
No. 1 filed as Exhibit 3.1 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1999, filed with the Commission on
March 29, 2000.
Exhibit 3.2 American Capital Strategies, Ltd. Second Amended and
Restated Bylaws. Incorporated herein by reference to
Exhibit 2.b of the Pre-Effective Amendment Number 1
to the Registration Statement on Form N-2 (File No.
333-29943) filed on August 12, 1997.
Exhibit 4 American Capital Strategies, Ltd. Employee
Investment and Stock Ownership Plan, filed herewith.
Exhibit 5 Opinion of Arnold & Porter, filed herewith.
Exhibit 23.1 Consent of Arnold & Porter, included in the opinion
filed as Exhibit 5 hereto.
Exhibit 23.2 Consent of Ernst & Young LLP, filed herewith.
Exhibit 24 Powers of Attorney of certain directors and officers
of American Capital Strategies, Ltd., filed
herewith.
II-9
EXHIBIT 4
AMERICAN CAPITAL STRATEGIES, LTD.
EMPLOYEE INVESTMENT AND
STOCK OWNERSHIP PLAN
Amended and Restated Effective
May 1, 2000
<PAGE>
AMERICAN CAPITAL STRATEGIES, LTD.
EMPLOYEE INVESTMENT AND
STOCK OWNERSHIP PLAN
TABLE OF CONTENTS
Page
INTRODUCTION.................................................................1
ARTICLE 1 Definitions........................................................1
1.1 Account....................................................1
1.2 Administrator..............................................1
1.3 Affiliate..................................................1
1.4 Board of Directors.........................................1
1.5 Code.......................................................1
1.6 Compensation...............................................2
1.7 Contribution...............................................2
1.8 Corporation................................................2
1.9 Disability.................................................2
1.10 Disqualified Person........................................2
1.11 Effective Date.............................................2
1.12 Elective Contribution......................................2
1.13 Eligible Employee..........................................2
1.14 Employee...................................................2
1.15 Employer...................................................2
1.16 Employer Stock.............................................3
1.17 Employer Stock Fund........................................3
1.18 Employment.................................................3
1.19 ESOP Contribution..........................................3
1.20 ERISA......................................................3
1.21 Excess Aggregate Contribution..............................3
1.22 Excess Elective Contribution...............................3
1.23 Excess Elective Deferral...................................3
1.24 Exempt Loan................................................3
1.25 Forfeiture.................................................3
1.26 Highly Compensated Employee (HCE)..........................3
1.27 Hour of Service............................................3
1.28 Investment Fund............................................4
1.29 Leased Employee............................................4
1.30 Matching Contribution......................................4
1.31 Normal Retirement Age......................................5
1.32 One-Year Break in Service..................................5
1.33 Participant................................................5
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Page
1.34 Plan.......................................................5
1.35 Plan Year..................................................5
1.36 Prime Rate.................................................5
1.37 Profit Sharing Contribution................................5
1.38 Publicly Traded Security...................................5
1.39 Qualified Domestic Relations Order.........................5
1.40 Qualified Matching Contribution............................5
1.41 Qualified Nonelective Contribution.........................5
1.42 Qualifying Participant.....................................5
1.43 Required Beginning Date....................................6
1.44 Suspense Account...........................................6
1.45 Trust Fund.................................................6
1.46 Trustee....................................................6
1.47 Valuation Date.............................................6
1.48 Vested Percentage..........................................6
1.49 Year of Service............................................6
ARTICLE 2 Eligibility and Participation......................................6
2.1 Eligibility and Commencement of
Participation..............................................6
2.2 Reemployment...............................................6
ARTICLE 3 Contributions and Allocations......................................7
3.1 Contribution and Allocation
Restrictions...............................................7
3.2 Elective Contributions.....................................7
3.3 Matching Contributions.....................................8
3.4 Profit Sharing Contributions...............................9
3.5 ESOP Contributions........................................10
3.6 Rollovers.................................................11
3.7 Participant After-Tax Contributions.......................11
3.8 Determination of Contributions............................11
3.9 Time of Payment of Contributions..........................11
3.10 Return of Contributions...................................12
3.11 Contributions for Veterans................................12
ARTICLE 4 Accounts..........................................................13
4.1 Separate Accounts and Records.............................13
4.2 Investment of Accounts....................................13
4.3 Valuation of Accounts.....................................14
4.4 Independent Appraiser.....................................15
- ii -
<PAGE>
Page
ARTICLE 5 Contribution And Allocation Restrictions..........................15
5.1 Maximum Limits on Allocations.............................15
5.2 Limitations for Defined Benefit and
Defined Contribution Plans Covering the
Same Employee.............................................16
5.3 Limitation on Allocation to Accounts
With Respect to Shareholder Electing
Gain Deferral.............................................16
5.4 Actual Deferral Percentage Test...........................17
5.5 Actual Contribution Percentage Test.......................19
5.6 Qualified Nonelective Contributions and
Qualified Matching Contributions..........................20
ARTICLE 6 Vesting 21
6.1 Vesting...................................................21
6.2 Forfeitures...............................................22
6.3 Reinstatement of Service Upon Rehire......................22
ARTICLE 7 Withdrawals During Employment.....................................23
7.1 Hardship Withdrawals......................................23
7.2 Withdrawals After Age 59 1/2..............................25
7.3 Diversification of Investments............................25
ARTICLE 8 Distributions.....................................................25
8.1 Entitlement to Distribution...............................25
8.2 Time of Distribution......................................25
8.3 Method of Distribution....................................27
8.4 Prohibition on Alienation.................................28
8.5 Designation of Beneficiary................................28
8.6 Rollover Distribution.....................................29
8.7 Distributions to Alternate Payees.........................30
8.8 Transfer Restrictions: Right of First
Refusal of Trustee and Employer...........................30
8.9 Option to Sell............................................32
ARTICLE 9 Administration of the Plan........................................34
9.1 Powers and Duties of the Administrator....................34
9.2 Records and Notices.......................................35
9.3 Compensation and Expenses.................................35
ARTICLE 10 Trust Provisions.................................................36
10.1 Dealings with Trustee.....................................36
- iii -
<PAGE>
Page
10.2 Compensation of Trustee...................................36
10.3 Resignation and Removal of Trustee........................36
10.4 Accountings by Trustee....................................37
10.5 Trustee's Power to Protect Itself on
Account of Taxes..........................................38
10.6 Other Trustee Powers......................................38
10.7 Investment Managers.......................................42
10.8 No Investment in Employer Real Property...................42
10.9 Employer Stock Fund.......................................42
10.10 Fiduciary Principles......................................43
10.11 Prohibited Transactions...................................43
10.12 Indemnity.................................................43
10.13 Voting Rights.............................................43
10.14 Tender Offers.............................................44
ARTICLE 11 Claims Procedure.................................................44
11.1 Application for Benefits..................................44
11.2 Notice of Denied Claim for Benefits.......................44
11.3 Review of Denied Claim....................................45
ARTICLE 12 Amendment and Termination........................................45
12.1 Amendment or Restatement..................................45
12.2 Termination and Discontinuance of
Contributions.............................................45
12.3 Distribution Upon Termination.............................46
12.4 Merger, Consolidation or Transfer of
Assets and Liabilities....................................46
12.5 Successor Employer........................................46
ARTICLE 13 General Provisions...............................................46
13.1 Limitation on Liability...................................46
13.2 Indemnification...........................................46
13.3 Insurance.................................................47
13.4 Compliance with ERISA.....................................47
13.5 Nonalienation of Benefits.................................47
13.6 Employment Not Guaranteed by Plan.........................47
13.7 Construction..............................................47
13.8 Form of Communication.....................................47
13.9 Facility of Payment.......................................47
13.10 Location of Participant or Beneficiary
Unknown...................................................48
13.11 Service in More Than One Fiduciary
Capacity..................................................48
13.12 Offset....................................................48
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<PAGE>
Page
ARTICLE 14 Exempt Loans.....................................................48
14.1 Definition of Exempt Loan.................................48
14.2 Accounts and Allocations of
Contributions.............................................50
14.3 Valuation.................................................51
14.4 Distribution..............................................51
14.5 Termination of the Plan...................................51
14.6 Preemption................................................51
ARTICLE 15 Contingent Top Heavy Plan Rules..................................51
15.1 Applicability of this Article.............................51
15.2 Aggregated Employers......................................51
15.3 Aggregation Group.........................................51
15.4 Compensation..............................................52
15.5 Determination Date........................................52
15.6 Five Percent Owner........................................52
15.7 Key Employee..............................................52
15.8 One Percent Owner.........................................53
15.9 Shareholder Attribution Rules.............................53
15.10 Top Heavy Aggregation Group...............................53
15.11 Top Heavy Plan............................................55
15.12 Determination of Top Heavy Status.........................56
15.13 When Applicable...........................................57
15.14 Vesting Requirement.......................................57
15.15 Defined Contribution Plan Minimum
Benefit Requirement.......................................57
15.16 Salary Reduction and Matching
Contributions.............................................58
15.17 Priorities Among Plans....................................58
15.18 Bargaining Units..........................................59
- v -
<PAGE>
INTRODUCTION
As of January 1, 1992, American Capital Strategies, Ltd. established
the American Capital Strategies, Ltd. Employee Stock Ownership Plan, (the
"Plan"). The Corporation amended and restated the Plan in its entirety as of
August 12, 1997, and changed the name of the Plan to the American Capital
Strategies, Ltd. First Amended and Restated Employee Stock Ownership Plan.
Effective January 1, 1998, the Plan was amended and restated to, among other
things, comply with the Code's qualification requirements, as amended by the
Uniformed Services Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997 and the
Internal Revenue Service Restructuring and Reform Act of 1998. Effective October
28, 1999, the Corporation amended the Plan (i) to add a cash or deferred
arrangement pursuant to Code Section 401(k), (ii) to allow the Employer to make
discretionary contributions to the Plan, and (iii) to rename the Plan the
American Capital Strategies, Ltd. Employee Investment and Stock Ownership Plan.
All provisions relating to the addition of the cash or deferred arrangement and
discretionary Employer contributions were effective as of October 28, 1999.
Effective May 1, 2000, the Corporation amends and restates the Plan in its
entirety as follows:
ARTICLE 1
Definitions
1.1 Account. The record of each Participant's interest in the Trust
Fund, comprised of the following subaccounts: the Elective Contribution
Subaccount, the Matching Contribution Subaccount, the Profit Sharing
Contribution Subaccount, the ESOP Contribution Subaccount, the Qualified
Nonelective Contribution Subaccount, the Qualified Matching Contribution
Subaccount and the Rollover Contribution Subaccount.
1.2 Administrator. The Corporation.
1.3 Affiliate. Any corporation which is a member of a controlled group
of corporations (as defined in Code Section 414(b)) which includes the
Corporation, any trade or business (whether or not incorporated) which is under
common control (as defined in Code Section 414(c)) with the Corporation, any
organization (whether or not incorporated) which is a member of an affiliated
service group (as defined in Code Section 414(m)) which includes the
Corporation, and any other entity required to be aggregated with the Corporation
pursuant to Treasury Regulations under Code Section 414(o).
1.4 Board of Directors. The Board of Directors of the Corporation.
1.5 Code. The Internal Revenue Code of 1986, as amended from time to
time, and as interpreted by applicable regulations and rulings.
<PAGE>
1.6 Compensation.
(a) An Employee's (i) wages received from the Employer
received during the Plan Year required to be reported on the Employee's IRS Form
W-2 for income tax withholding purposes, plus (ii) elective contributions made
by the Employer on behalf of the Employee that are not includible in the
Employee's gross income pursuant to Code Section 125, Code Section 402(e)(3) or
Code Section 402(h).
(b) For purposes of Sections 5.4 and 5.5 hereof, the term
"Compensation" shall be determined by the Administrator in a manner which
satisfies Code Section 414(s) for the Plan Year and which shall be applied
uniformly to determine the Compensation of every Participant for that Plan Year.
(c) The Compensation of each Participant taken into account
for determining all benefits provided under the Plan for any Plan Year shall not
exceed the annual compensation limit in effect for such Plan Year pursuant to
Code Section 401(a)(17). In the event of any short Plan Year, the Code Section
401(a)(17) annual compensation limit shall be multiplied by the ratio obtained
by dividing the number of full months in the short Plan Year by 12.
1.7 Contribution. A Profit Sharing Contribution, Elective Contribution,
Matching Contribution, ESOP Contribution, Qualified Nonelective Contribution,
Qualified Matching Contribution or Rollover Contribution.
1.8 Corporation. American Capital Strategies, Ltd. and any successor
thereto.
1.9 Disability. The inability to engage in any substantial gainful
activity by reason of a medically determinable impairment expected to last at
least 12 months or to end in death, as defined in Code Section 72(m) and Title
II and Title XVI of the Social Security Act.
1.10 Disqualified Person. The Employer, an owner (either direct or
indirect) of 50% or more of the voting power or total value of all classes of
stock entitled to vote, an officer or director of the Employer, a holder of 10%
or more of the Employer's shares or any other person defined as a "disqualified
person" in Code Section 4975(e)(2).
1.11 Effective Date. January 1, 1992.
1.12 Elective Contribution. A contribution made by the Employer to the
Trust Fund pursuant to Section 3.2 hereof.
1.13 Eligible Employee. An Employee who has satisfied the eligibility
requirements of Section 2.1 hereof.
1.14 Employee. Any common law employee of the Employer.
1.15 Employer. The Corporation and any Affiliate that adopts the Plan
with the approval of the Corporation. As the context requires, the term
"Employer" as used herein shall apply collectively to all corporations that are
Employers under the Plan or singly to an Employer.
- 2 -
<PAGE>
1.16 Employer Stock. Stock of the Corporation that satisfies the
requirements of Code Section 409(l).
1.17 Employer Stock Fund. An Investment Fund invested primarily in
Employer Stock as described in Sections 10.9 hereof.
1.18 Employment. An Employee's employment with the Employer.
1.19 ESOP Contribution. A contribution made by the Employer to the
Trust Fund pursuant to Section 3.5 hereof.
1.20 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
1.21 Excess Aggregate Contribution. An excess Matching Contribution
described in Section 5.5(d) hereof.
1.22 Excess Elective Contribution. An excess Elective Contribution
described in Section 5.4(c) hereof.
1.23 Excess Elective Deferral. An excess elective deferral described in
Section 3.2(e) hereof.
1.24 Exempt Loan. A loan described in Section 14.1 hereof.
1.25 Forfeiture. The portion, if any, of a Participant's Account that
is forfeited pursuant to Section 2.4, 3.2(e)(iii) or 6.2 hereof.
1.26 Highly Compensated Employee (HCE). Any Employee who:
(a) Was a five-percent owner (as defined in Code Section
416(i)(1)) at any time during the current or preceding Plan Year, or
(b) Had Compensation in excess of $80,000, as adjusted in
accordance with Code Section 414(q)(1), and was in the top-paid group during the
preceding Plan Year. The term "top-paid group" shall mean the group consisting
of the top 20 percent of the Employees of the Employer and Affiliates when
ranked by Compensation.
1.27 Hour of Service.
(a) An Employee shall be credited with an Hour of Service for:
(i) Each hour for which an Employee is paid, or
entitled to payment, for the performance of service for the Employer;
(ii) Each hour for which an Employee is paid, or
entitled to payment, by the Employer without the performance of service
(regardless of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
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lay off, jury duty, military duty, or leave of absence. Pursuant to this Section
1.27(a)(ii), no more than 51 Hours of Service (501 Hours of Service for Plan
Years beginning on and after January 1, 2000) shall be credited for any single
continuous period, regardless of whether such period occurs in one or more Plan
Years. The determination of an Employee's Hours of Service shall be governed by
29 CFR Section 2530.200b-2 and 3; and
(iii) Each hour for which back pay, regardless of any
mitigation of damages, is either awarded or agreed to by the Employer.
(b) The same Hours of Service shall not be credited pursuant
to both paragraph (a)(i) or (a)(ii) above, as the case may be, and paragraph
(a)(iii) above.
(c) Solely to avoid a One-Year Break in Service, an Employee
who is absent from work for maternity or paternity reasons shall receive credit
for the Hours of Service which would otherwise have been credited to such
Employee but for such absence. An absence from work for maternity or paternity
reasons means an absence due to (i) the pregnancy of the Employee, (ii) the
birth of a child of the Employee, (iii) the placement of a child with the
Employee for adoption by the Employee, or (iv) the care of such child
immediately after birth or placement. An Employee shall be credited with Hours
of Service pursuant to this Section 1.27(c) first to the Plan Year in which the
absence begins to the extent necessary to prevent a One-Year Break in Service in
that Plan Year, then to the Plan Year following the Plan Year in which the
absence begins. No more than 51 Hours of Service (501 Hours of Service for Plan
Years beginning on and after January 1, 2000) shall be credited under this
Section 1.27(c). If the hours which would have been credited but for an absence
due to maternity or paternity reasons cannot be determined, an Employee shall be
credited with eight Hours of Service for each day of the absence. An Employee
shall not be credited with Hours of Service pursuant to this Section 1.27(c)
unless the Employee provides the Administrator such information as the
Administrator reasonably requires to establish the purpose of the absence as
consistent with this Section and to establish the number of days in the absence.
(d) An Employee shall be credited with an Hour of Service for
a Plan Year with respect to which a payment, agreement or award relates rather
than the year or period in which the payment, agreement or award occurs.
(e) Hours of Service shall be credited for Employment with any
Affiliate for vesting purposes under Article 6 hereof, but not for determining
whether an Employee is a Qualifying Participant.
1.28 Investment Fund. An investment fund selected by the Administrator
pursuant to Section 9.1(a) hereof.
1.29 Leased Employee. Any individual described in Code Section
414(n)(2). A Leased Employee shall not be eligible to participate in the Plan.
1.30 Matching Contribution. A discretionary contribution made by the
Employer to the Trust Fund pursuant to Section 3.3 hereof.
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1.31 Normal Retirement Age. The later of: (1) the date on which a
Participant attains age 65, or (2) a Participant's fifth anniversary of
participation in the Plan.
1.32 One-Year Break in Service. A Plan Year during which a Participant
does not complete at least 51 Hours of Service. Effective for Plan Years
beginning on and after January 1, 2000, the term "One-Year Break in Service"
means a Plan Year in which a Participant does not complete at least 501 Hours of
Service.
1.33 Participant. Any Employee who has satisfied the eligibility
requirements of Article 2 hereof and any other individual with an Account
balance hereunder.
1.34 Plan. The American Capital Strategies, Ltd. Employee Investment
and Stock Ownership Plan, as stated herein and as amended from time to time. The
Plan is a combined profit sharing and stock bonus plan, and the stock bonus
portion of the Plan is intended to constitute an employee stock ownership plan
within the meaning of Code Section 4975(e)(7).
1.35 Plan Year. The calendar year.
1.36 Prime Rate. The rate of interest identified as such under the
heading "Money Rates" in the Eastern Edition of The Wall Street Journal or, if a
range of rates is listed, the lowest such rate. In the event the practice of
listing such a rate is discontinued, such other indication of the generally
accepted prime rate of interest as may be designated by the Board of Directors.
1.37 Profit Sharing Contribution. A discretionary profit sharing
contribution made by the Employer to the Trust Fund pursuant to Section 3.4
hereof.
1.38 Publicly Traded Security. A security listed on a national
securities exchange registered under Section 6 of the Securities Exchange Act of
1934 or that is quoted on a system sponsored by a national securities
association registered under Section 15A(b) of the Securities Exchange Act.
1.39 Qualified Domestic Relations Order. A "qualified domestic
relations order" within the meaning of Code Section 414(p).
1.40 Qualified Matching Contribution. A matching contribution made by
the Employer to the Trust Fund pursuant to Section 5.6 hereof that is
nonforfeitable when made and is distributable only in accordance with the
distribution provisions hereunder applicable to Elective Contributions.
1.41 Qualified Nonelective Contribution. A nonelective contribution
(other than a matching contribution) made by the Employer to the Trust Fund
pursuant to Section 5.6 hereof that is nonforfeitable when made and is
distributable only in accordance with the distribution provisions hereunder
applicable to Elective Contributions.
1.42 Qualifying Participant. A Participant who, with respect to a Plan
Year (a) completes a Year of Service during such Plan Year, and (b) is employed
by the Employer on
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the last day of such Plan Year. In the case of a Profit Sharing Contribution or
an ESOP Contribution made pursuant to Section 3.4 hereof or Section 3.5 hereof,
respectively, a Qualifying Participant includes a Participant who terminated
Employment during the Plan Year because of death, Disability or attainment of
Normal Retirement Age, regardless of the number of Hours of Service he completed
during such Plan Year.
1.43 Required Beginning Date. With respect to a Participant, the April
1 of the calendar year following the later of (a) the calendar year in which the
Participant attains age 70 1/2, or (b) in the case of a Participant who is not a
5% owner (as defined in Code Section 416) with respect to the calendar year in
which he attained age 70 1/2, the calendar year in which the Participant
terminates Employment.
1.44 Suspense Account. A suspense account described in Section 14.1
hereof.
1.45 Trust Fund. The assets of the Plan held in trust by a Trustee.
1.46 Trustee. The person, persons or entity holding the assets of the
Plan in trust.
1.47 Valuation Date. Each business day during the Plan Year.
1.48 Vested Percentage. The percentage by which a Participant is vested
in his Account.
1.49 Year of Service. A Plan Year in which an Employee completes at
least 100 Hours of Service. For Plan Years beginning on and after January 1,
2000, the term "Year of Service" means a Plan Year in which an Employee
completes at least 1,000 Hours of Service. Any short Plan Year shall be prorated
accordingly.
ARTICLE 2
Eligibility and Participation
2.1 Eligibility and Commencement of Participation. Each Employee who is
a Participant in the Plan on April 30, 2000 shall be a Participant on May 1,
2000. Each other Employee shall become a Participant in the Plan upon the
completion of a 30-day probationary period beginning on the first date on which
he completes an Hour of Service. An Employee who completes the 30-day
probationary period shall enter the Plan on the first day of the Plan Year in
which he completes the 30-day probationary period.
2.2 Reemployment. If an Eligible Employee who is a Participant
terminates Employment and subsequently resumes Employment, he shall immediately
resume active participation in the Plan upon his date of reemployment. If an
Employee who is not a Participant in the Plan terminates Employment and
subsequently resumes Employment, he must complete the eligibility requirements
of Section 2.1 hereof before he can participate hereunder.
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ARTICLE 3
Contributions and Allocations
3.1 Contribution and Allocation Restrictions. All Contributions and
allocations provided for in this Article 3 are subject to the limitations and
restrictions set forth in Article 5 hereof.
3.2 Elective Contributions.
(a) Amount. For each Plan Year, an Eligible Employee may
direct the Employer to make Elective Contributions on his behalf in lieu of the
Employer's payment of an equal amount of Compensation to the Eligible Employee
for the Plan Year. For each Plan Year, the amount of an Eligible Employee's
Elective Contributions under this Plan and elective contributions under all
other plans and arrangements of the Employer shall not exceed the least of (1)
15 percent of the Eligible Employee's Compensation, (2) the limit of Code
Section 402(g), as adjusted for increases in the cost of living by the Secretary
of the Treasury, or (3) such amount or percentage of the Eligible Employee's
Compensation as determined by the Administrator in order to satisfy the actual
deferral percentage test as set forth in Section 5.4 hereof.
(b) Enrollment. An Eligible Employee may enroll to make
Elective Contributions effective as of the first day of any pay period (or such
other date or dates as are established by the Administrator) coincident with or
following the date on which the Eligible Employee satisfies the eligibility
requirements of Section 2.1 hereof. An Eligible Employee shall enroll by filing
with the Administrator a written election (on a form acceptable to the
Administrator) directing the Employer to make Elective Contributions. The
Eligible Employee shall file the written election with the Administrator within
a reasonable time, as determined by the Administrator, prior to the election's
effective date. Once filed, an Eligible Employee's written election authorizing
Elective Contributions shall remain in effect until amended or discontinued
pursuant to paragraph (c) or (d) below.
(c) Discontinuance of Elective Contributions. An Eligible
Employee may discontinue his Elective Contributions effective as of the first
day of any pay period by filing with the Administrator within a reasonable time,
as determined by the Administrator, prior to the election's effective date, a
revised written election directing the Employer to discontinue his Elective
Contributions. The Eligible Employee's subsequent enrollment, if any, shall be
effective only pursuant to the terms specified in paragraph (b) above.
(d) Increase or Decrease in Elective Contributions. An
Eligible Employee may increase or decrease the amount of his Elective
Contributions, effective as of the first day of the pay period coincident with
or immediately following the first day of any calendar quarter, by filing with
the Administrator within a reasonable time prior to the election's effective
date, as determined by the Administrator, a revised written election directing
the Employer to increase or decrease his Elective Contributions.
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(e) Return of Excess Elective Deferrals.
(i) If an Eligible Employee notifies the
Administrator in writing by the March 1 following the close of a Plan Year, or
the Employer so determines on behalf of the Eligible Employee by the April 15
following the close of a Plan Year, that the Eligible Employee has made "Excess
Elective Deferrals" for the Plan Year, the Administrator shall distribute to the
Eligible Employee the amount of the Excess Elective Deferrals allocable to the
Plan (including any earnings thereon through the close of the Plan Year) by the
April 15 immediately following the close of the Plan Year. The term "Excess
Elective Deferrals" means for any Plan Year (1) the sum of the amounts
contributed as Elective Contributions on behalf of the Eligible Employee plus
other elective deferrals made by the Eligible Employee pursuant to arrangements
described in Code Sections 401(k), 408(k) and 403(b) for the Plan Year, minus
(2) the elective deferral limit of Code Section 402(g) in effect for the Plan
Year. The Eligible Employee's written notification must contain a statement to
the effect that, if such Excess Elective Deferrals were not distributed, the
Eligible Employee's total Elective Contributions and other elective deferrals
for the Plan Year would exceed the limit specified in Code Section 402(g) for
the Plan Year.
(ii) Earnings allocable to Excess Elective Deferrals
for a Plan Year shall be determined (1) under any reasonable method used for
allocating earnings to all Eligible Employees' Elective Contribution Subaccounts
as applied consistently to all Eligible Employees for the Plan Year, or (2) by
multiplying earnings allocable to the Participant's Elective Contribution
Subaccount for the Plan Year by a fraction, the numerator of which is such
Eligible Employee's Excess Elective Deferrals for the Plan Year, and the
denominator of which is the Eligible Employee's Elective Contribution Subaccount
balance as of the beginning of the Plan Year plus the Participant's Elective
Contributions for the Plan Year.
(iii) To the extent required by applicable
nondiscrimination regulations, any Matching Contribution relating to an Excess
Elective Deferral of a Highly Compensated Employee distributed in accordance
with this Section 3.2(e) shall be declared a Forfeiture as of the end of the
Plan Year in which the Excess Elective Deferral is distributed (even if the
Highly Compensated Employee is vested in such Matching Contributions) except to
the extent that the Matching Contribution is an Excess Aggregate Contribution
distributed to the Highly Compensated Employee in accordance with Section 5.5(d)
hereof.
3.3 Matching Contributions.
(a) Eligibility. Each Qualifying Participant's Matching
Contribution Subaccount shall be eligible for an allocation of the Matching
Contribution, if any, made for a Plan Year provided that the Qualifying
Participant has made an Elective Contribution for the Plan Year.
(b) Amount. The amount of the Matching Contribution, if any,
for a Plan Year shall equal the amount determined by the Board of Directors;
provided, however, that in no event shall the Matching Contribution for any
Qualifying Participant exceed six percent of such Qualifying Participant's
Compensation for the Plan Year for which the Matching Contribution is
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made. Matching Contributions may be made in cash, in Employer Stock, in other
property of any kind or in any combination thereof, as the Employer may from
time to time determine.
(c) Allocation. As of the last day of each Plan Year and
following the allocation of earnings pursuant to Article 4 hereof, the
Administrator shall allocate the Matching Contributions, if any, for a Plan Year
to the Matching Contribution Subaccounts of the Qualifying Participants who made
Elective Contributions for the Plan Year.
(d) Suspension, Reduction or Elimination of Matching
Contributions. Notwithstanding any other provisions of the Plan, the Board of
Directors may act to suspend, reduce or eliminate Matching Contributions to be
made by the Employer and may rescind such action at any time. The Board of
Directors shall not, however, suspend, reduce or eliminate a Matching
Contribution for which a Participant has already satisfied the requirements for
receiving an allocation thereof.
(e) Allocation of Forfeitures from Matching Contribution
Subaccounts. As of the last day of each Plan Year and following the allocation
of earnings pursuant to Article 4 hereof, Forfeitures attributable to Matching
Contribution Subaccounts, if any, shall be allocated to Profit Sharing
Contribution Subaccounts in the same manner as Profit Sharing Contributions are
allocated under Section 3.4 hereof.
3.4 Profit Sharing Contributions.
(a) Eligibility. Each Qualifying Participant's Profit Sharing
Contribution Subaccount shall be eligible for an allocation of the Profit
Sharing Contribution, if any, made for the Plan Year.
(b) Amount. The amount of the Profit Sharing Contribution, if
any, for a Plan Year shall equal the amount determined by the Board of
Directors. Profit Sharing Contributions may be made in cash, Employer Stock, in
other property of any kind or in any combination thereof, as the Employer may
from time to time determine.
(c) Allocation. As of the last day of each Plan Year and
following the allocation of earnings pursuant to Article 4 hereof, the
Administrator shall allocate the Profit Sharing Contribution, if any, for the
Plan Year among the Profit Sharing Contribution Subaccounts of Qualifying
Participants. The amount (or in the case of a Profit Sharing Contribution made
in Employer Stock, the number of shares) allocated on behalf of each Qualifying
Participant shall bear the same proportion to the total Profit Sharing
Contribution (measured, in the case of a Profit Sharing Contribution made in the
form of Employer Stock, by the number of shares contributed) for the Plan Year
as the Participant's Compensation for the Plan Year bears to the total
Compensation of all Qualifying Participants for the Plan Year.
(d) Suspension, Reduction or Elimination of Profit Sharing
Contributions. Notwithstanding any other provisions of the Plan, the Board of
Directors may act to suspend, reduce or eliminate Profit Sharing Contributions
to be made by the Employer and may rescind such action at any time. The Board of
Directors shall not, however, suspend, reduce or eliminate
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a Matching Contribution for which a Participant has already satisfied the
requirements for receiving an allocation thereof.
(e) Allocation of Forfeitures from Profit Sharing Contribution
Subaccounts. As of the last day of each Plan Year and following the allocation
of earnings pursuant to Article 4 hereof, Forfeitures attributable to
Participants' Profit Sharing Contribution Subaccounts, if any, shall be
allocated to other Participants' Profit Sharing Contribution Subaccounts in the
same manner as Profit Sharing Contributions are allocated under this Section
3.4.
3.5 ESOP Contributions.
(a) Eligibility. Effective for Plan Years beginning before
January 1, 2000, each Qualifying Participant's ESOP Contribution Subaccount
shall receive an allocation of the ESOP Contribution made for the Plan Year.
Effective for Plan Years beginning on and after January 1, 2000, each Eligible
Employee shall receive an allocation of the ESOP Contribution made for the Plan
Year.
(b) Amount.
(i) Effective for Plan Years beginning before January
1, 2000, the Employer shall make an ESOP Contribution for each Plan Year in an
amount equal to three percent of the total Compensation of all Qualifying
Participants. In addition, the Employer may make an additional ESOP Contribution
for a Plan Year in an amount determined by the Board of Directors. Contributions
may be made in cash, Employer Stock, in other property of any kind or in any
combination thereof, as the Employer may from time to time determine. It is
intended that the total ESOP Contributions for a Plan Year be sufficient in
amount to permit the Plan to meet its obligations for the Plan Year under any
Exempt Loan.
(ii) Effective for Plan Years beginning on and after
January 1, 2000, the Employer shall make an ESOP Contribution for each Plan Year
in an amount equal to three percent of the total Compensation of all Eligible
Employees. Such ESOP Contributions shall be intended to satisfy the "safe harbor
contribution" provisions in Code Section 401(k)(12), and shall be 100% vested at
all times and subject to the distribution requirements hereunder for Elective
Contributions. In addition, the Employer may make an additional ESOP
Contribution for a Plan Year in an amount determined by the Board of Directors.
ESOP Contributions may be made in cash, Employer Stock, in other property of any
kind or in any combination thereof, as the Employer may from time to time
determine. It is intended that total ESOP Contributions for a Plan Year be
sufficient in amount to permit the Plan to meet its obligations for the Plan
Year under any Exempt Loan.
(c) Allocation. As of the last day of each Plan Year and
following the allocation of earnings pursuant to Article 4 hereof, the
Administrator shall allocate the ESOP Contribution for the Plan Year among the
ESOP Contribution Subaccounts of Qualifying Participants, or, for Plan Years
beginning on and after January 1, 2000, among the ESOP Contribution Subaccounts
of Eligible Employees. The amount (or, in the case of a contribution made in
Employer Stock, the numbers of shares) allocated on behalf of each Qualifying
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Participant or Eligible Employee, as the case may be, shall bear the same
proportion to the total ESOP Contribution (measured, in the case of a
contribution made in the form of Employer Stock, by the number of shares
contributed) for the Plan Year as the Compensation of the Qualifying Participant
or Eligible Employee, as the case may be, for the Plan Year bears to the total
Compensation of all Qualifying Participants or all Eligible Employees, as the
case may be, for the Plan Year. Notwithstanding the foregoing, ESOP
Contributions used to repay an Exempt Loan shall be allocated pursuant to
Section 14.2 hereof.
(d) Suspension, Reduction or Elimination of ESOP
Contributions. Notwithstanding any other provision of the Plan, the Board of
Directors may act to suspend, reduce or eliminate ESOP Contributions to be made
by the Employer and may rescind any such action at any time. The Board of
Directors shall not, however, suspend, reduce or eliminate an ESOP Contribution
for which a Participant has already satisfied the requirements for receiving an
allocation thereof.
(e) Allocation of Forfeitures from ESOP Contribution
Subaccounts. As of the last day of each Plan Year and following the allocation
of earnings pursuant to Article 4 hereof, Forfeitures attributable to
Participant's ESOP Contribution Subaccounts, if any, shall be allocated to other
Participants' ESOP Contribution Subaccounts in the same manner as ESOP
Contributions are allocated under this Section 3.5.
(f) ESOP. The portion of the Plan comprised of the ESOP
Contribution Subaccounts and any Suspense Accounts shall be considered an
"employee stock ownership plan" within the meaning of Code Section 4975(e)(7).
3.6 Rollovers. An Employee may, subject to such rules as may be
prescribed by the Administrator, contribute to the Plan amounts that may be
transferred pursuant to Code Section 402(c) or 408(d)(3) to a plan described in
Code Section 401(a); provided, however, that such a contribution is in the form
of cash.
3.7 Participant After-Tax Contributions. A Participant shall not be
permitted to make after-tax contributions to the Trust Fund.
3.8 Determination of Contributions. The Board of Directors shall
determine the amount of any Contribution other than (a) an Elective
Contribution, (b) an ESOP Contribution intended to satisfy the "safe harbor
contribution provisions" of Code Section 401(k)(12), or (c) a Rollover
Contribution. The Board of Director's determination of such a Contribution shall
bind all Participants, the Trustee and the Administrator. Such determination
shall be final and conclusive and shall not be subject to change as a result of
a subsequent audit by the Internal Revenue Service or as a result of any
subsequent adjustment of the Employer's records. The Trustee shall have no right
or duty to inquire into the amount of the Contribution or the method used in
determining the amount of such Contribution. The Trustee shall be accountable
for only funds it actually receives.
3.9 Time of Payment of Contributions. The Employer shall pay its
Contribution for each Plan Year to the Trustee within the time prescribed by
law, including extensions, for the
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filing of the Employer's federal income tax return for such Plan Year or within
such other period as provided in Code Section 404(a)(6). Notwithstanding the
preceding, the Employer shall pay Elective Contributions to the Trustee as of
the earliest date the Employer can reasonably segregate such Elective
Contributions from its general assets but not later than the 15th business day
of the month following the date on which the Elective Contributions were
withheld from Eligible Employee wages. However, upon satisfaction of regulations
issued by the Department of Labor, twice each Plan Year the deadline for making
Effective Contributions may be extended to the 25th business day of the month
following the date the Elective Contributions were withheld.
3.10 Return of Contributions.
(a) The Employer and the Plan hereby condition all
Contributions (other than Rollover Contributions) to the Trust Fund upon the
Employer obtaining a deduction pursuant to Code Section 404(a) in an equal
amount for the Employer's taxable year ending with or within the Plan Year for
which the Contributions are made. If all or any portion of a Contribution is not
deductible for such Plan Year pursuant to Code Section 404(a), the Trustee shall
return the nondeductible amount to the Employer, without earnings, but reduced
by any losses attributable thereto, within one year of the disallowance of the
deduction by the Internal Revenue Service.
(b) The Trustee, at the direction of the Employer, shall
return to the Employer, without earnings, but reduced by any losses attributable
thereto, any Contribution made due to a mistake of fact provided the
Administrator determines that such mistake existed at the time of the
Contribution. The Trustee may return a Contribution pursuant to this Section
3.10(b) only within 12 months of the date the Contribution was made.
(c) The Employer and the Plan condition all Contributions to
Trust Fund upon the initial qualification of the Plan pursuant to Code Section
401(a). Within one year after the date the Internal Revenue Service determines
that the Plan fails to qualify pursuant to Code Section 401(a), and provided
that the Plan's application for determination to the Internal Revenue Service is
made within the time prescribed by law, the Trustee shall return to the Employer
the entire assets of the Plan attributable to all amounts contributed during the
time the Plan failed to qualify.
(d) The Employer shall return Elective Contributions to
Participants if such Contributions are returned to the Employer pursuant to
paragraph (a), (b) or (c) above.
3.11 Contributions for Veterans. Notwithstanding any provision of this
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service shall be provided in accordance with Code Section
414(u).
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ARTICLE 4
Accounts
4.1 Separate Accounts and Records. The Administrator shall maintain a
separate Account in the name of each Participant and Beneficiary having an
interest in the Trust Fund. Contributions made on behalf of a Participant shall
be credited to his Account. If a Participant is entitled to have a Contribution
credited to his Account, but he terminates Employment before such Contribution
has been made to the Trust Fund and such credit effected, such Contribution
shall be made and such credit shall be effected as though the Participant had
not terminated Employment. Records shall be kept showing separately the amount
of Elective Contributions, Matching Contributions, Profit Sharing Contributions,
ESOP Contributions, Qualified Nonelective Contributions, Qualified Matching
Contributions and Rollover Contributions made on behalf of or by each
Participant. A statement of a Participant's Account balance at each March 31,
June 30, September 30, and December 31, shall be distributed to him within a
reasonable time after each such date.
4.2 Investment of Accounts.
(a) A Participant shall elect, at the time and in the manner
prescribed by the Administrator, to have Contributions made on his behalf
invested in one or more of the Investment Funds. The percentage of Contributions
invested in any Investment Fund shall be an integral multiple of 1%.
(b) A Participant may elect, at the time and in the manner
prescribed by the Administrator, to change the designation of the Investment
Fund or Funds, in which future Contributions made on his behalf shall be
invested, effective as of the first business day following such election, so
long as, under the new designation, the percentage of future Contributions
invested in any Investment Fund is an integral multiple of 1%.
(c) A Participant may elect, at the time and in the manner
prescribed by the Administrator, to change how his existing Account shall be
invested in the Investment Fund or Funds, effective as of the day following the
next succeeding Valuation Date, so long as any reallocation of the amount
invested in an Investment Fund must be made among the Investment Funds in an
integral multiple of 1% of the value, at the time of the reallocation, of the
Investment Fund as to which there is to be a reallocation.
(d) In the event that the Administrator liquidates an
Investment Fund prior to the termination of the Plan, each Participant shall
elect to invest the portion of his Account and future Contributions, which
otherwise would have been invested in the liquidated Investment Fund, in the
remaining Investment Fund or Funds.
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(e) Notwithstanding paragraphs (a) through (d) above, a
Participant may not direct the investment of his ESOP Contribution Subaccount,
except that if cash dividends are paid on Employer Stock allocated to a
Participant's ESOP Contribution Subaccount, and the Participant elects under
Section 4.3(b) hereof to have such dividends credited to his ESOP Contribution
Subaccount, the Participant may direct the investment of such dividends among
the Investment Funds.
4.3 Valuation of Accounts.
(a) As of each Valuation Date, all income and gains (realized
and unrealized) relating to each Investment Fund for the period since the next
preceding Valuation Date shall be credited to, and all losses (realized and
unrealized) and expenses of such Investment Fund for the period since the next
preceding Valuation Date shall be charged to, the various Accounts invested in
such Investment Fund as of such Valuation Date, in proportion to the values of
the portions of such Accounts invested in such Investment Fund as of the next
preceding Valuation Date.
(b) Notwithstanding paragraph (a) above, if cash dividends are
payable with respect to Employer Stock allocated to a Participant's ESOP
Contribution Subaccount that (A) were not acquired with the proceeds of an
Exempt Loan, or (B) were acquired with the proceeds of an Exempt Loan for which
the Plan is no longer obligated to make payments, the Administrator, in its sole
discretion, may direct the Corporation to pay the dividends either directly to
the Participants or to the Trustee. If the cash dividends are paid to the
Trustee, the Trustee shall distribute the dividends to the Participant no later
than 90 days after the end of the Plan Year in which the Trustee received the
dividends. Effective October 1, 1998, if cash dividends are paid to the Trustee,
the Trustee may allow each Participant to direct that the dividends be credited
to his ESOP Contribution Subaccount. If the Participant does not direct the
Trustee to credit the dividends to the Participant's ESOP Contribution
Subaccount, the Trustee shall distribute the dividends to the Participant no
later than 90 days after the end of the Plan Year in which the Trustee received
the dividends.
(c) Notwithstanding paragraph (a) above, any stock dividend
paid to the Trustee with respect to shares of Employer Stock shall be credited
to the Contribution Subaccount to which the Employer Stock on which such
dividend was declared was allocated.
(d) The Administrator shall determine the value of a
Participant's Account for purposes of Articles 6 and 8 hereof as of the
Valuation Date immediately preceding the date a distribution occurs or
commences. Contributions or Forfeitures, if any, shall be included in the
valuation if the Account otherwise qualifies for such allocation and the
Valuation Date is actually the last day of a Plan Year, or if the Plan otherwise
requires allocation of such amounts, as of such Valuation Date.
(e) If the Administrator determines that valuing a
Participant's Account as of the immediately preceding Valuation Date would
significantly jeopardize the interests of the Plan and its Participants because,
due to subsequent market fluctuations or other developments, that valuation
would inaccurately reflect the value of the Participant's Account as of the date
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distribution occurs or commences, the Administrator may, in its discretion,
value the Participant's Account as of a date closer to the date the distribution
occurs or commences.
(f) The Trustee shall determine, as appropriate, the value of
the Employer Stock and other assets of the Trust Fund pursuant to this Article 4
and for all other purposes of the Plan and Trust.
4.4 Independent Appraiser. All valuations of Employer Stock which are
not readily tradable on an established securities market shall be made by an
independent appraiser, within the meaning of Treasury Regulations prescribed
under Code Section 170(a)(1). The determination of the value of the Employer
Stock made by the Independent Appraiser shall be the "fair market value" of the
Employer Stock.
ARTICLE 5
Contribution And Allocation Restrictions
5.1 Maximum Limits on Allocations. This Section 5.1 shall limit
Contributions and allocations made pursuant to Article 3 hereof.
(a) The annual addition to a Participant's Account for any
Plan Year shall not exceed the lesser of $30,000 or 25% of the Compensation paid
to the Participant for the Plan Year.
(b) The term "annual addition" means the sum allocated to a
Participant's Account for any Plan Year of contributions and forfeitures, if
any, pursuant to this Plan (except as excluded below) and allocated to his
credit under all other defined contribution plans maintained by the Employer for
the Plan Year, including employee contributions but excluding rollover
contributions. Contributions allocated to any individual accounts which are part
of a pension or annuity plan under Code Sections 415(l) and 419A(d)(2) shall be
treated as annual additions to a defined contribution plan for purposes of
paragraph (a) above. The term "annual additions" shall not include earnings
allocated to a Participant's Account pursuant to Section 4.1 hereof. In the
event that the proceeds of an Exempt Loan were used to purchase Employer Stock
held in a Suspense Account, computation of annual additions pursuant to this
Article 5 shall be made with respect to the lesser of (i) the amount of ESOP
Contributions used to repay the Exempt Loan, or (ii) the fair market value of
the Employer Stock released from the Suspense Account. If no more than one-third
of the ESOP Contribution deductible under Code Section 404(a)(9) for a Plan Year
is allocated to Highly Compensated Employees, allocations of (i) Forfeitures of
Employer Stock acquired with the proceeds of an Exempt Loan, and (ii) ESOP
Contributions attributable to interest payments made on an Exempt Loan, for such
Plan Year shall not be considered annual additions.
(c) In the event that a Participant's annual addition exceeds
the limits set forth in paragraph (a) above, pursuant to Treasury Regulation ss.
1.415-6(b)(6), the Administrator shall
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eliminate the excess annual addition in the following manner and in the
following order: (i) by refunding Elective Contributions to the Participant,
(ii) by reducing Matching Contributions, if any, made on behalf of the
Participant, (iii) by reducing Profit Sharing Contributions, if any, made on
behalf of the Participant, and (iv) by reducing ESOP Contributions made on
behalf of the Participant. If all or any portion of the excess annual addition
is attributable to Contributions other than Elective Contributions, the
Administrator shall reallocate the excess annual addition under one of the
following methods:
(i) The excess annual addition shall be reallocated
to the Accounts of the Participants in the Plan who have not exceeded the limit
set forth in paragraph (a) above. If the reallocation causes the limit set forth
in paragraph (a) above to be exceeded with respect to any Participant for the
Plan Year, then the remaining excess annual addition shall be held unallocated
in a suspense account and reallocated to Participants' Accounts in the next (or
succeeding, if necessary) Plan Year(s) before the allocation of additional
Contributions.
(ii) The excess annual addition shall be used to
reduce Contributions (other than Rollover Contributions) for the next (or
succeeding, if necessary) Plan Year(s) for the Participant who incurred the
excess amount provided that the Participant is an Employee covered by the Plan
at the end of such Plan Year. If the Participant is no longer an Employee
covered by the Plan as of the end of such Plan Year, the excess annual addition
shall be held unallocated in a suspense account and reallocated in the next (or
succeeding, if necessary) Plan Year(s) to all remaining Participants as a
reduction of Contributions (other than Rollover Contributions). Excess annual
additions may not be distributed to Participants.
(iii) The excess annual addition shall be held
unallocated in a suspense account for the Plan Year and reallocated in the next
(or succeeding, if necessary) Plan Year(s) to the Accounts of all Participants.
The excess annual addition must be used to reduce Contributions (other than
Rollover Contributions) for the next (and succeeding, if necessary) Plan
Year(s). Excess annual additions may not be distributed to Participants.
(d) Any excess amount held in a suspense account shall not
share in earnings of the Trust Fund. If the Plan terminates before the
allocation of such excess, the excess shall revert to the Employer, to the
extent that it may not be allocated to any Participant's Account.
5.2 Limitations for Defined Benefit and Defined Contribution Plans
Covering the Same Employee. For Plan Years beginning before January 1, 2000, the
Plan shall comply with the limitations of Code Section 415(e), which limitations
are incorporated herein by reference.
5.3 Limitation on Allocation to Accounts With Respect to Shareholder
Electing Gain Deferral.
(a) If a shareholder of the Corporation sells Employer Stock
to the Trust Fund and elects (with the consent of the Corporation)
nonrecognition of gain under Code Section 1042, no portion of such Employer
Stock may be allocated during the nonallocation period (as defined in paragraph
(b) below) to the Account of (or be allocated directly or indirectly under any
plan of the Employer for the benefit of: (i) the shareholder who made the
election under
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Code Section 1042 with respect to such Employer Stock, or (ii) such
shareholder's spouse, brothers or sisters (whether by whole or half blood),
ancestors or lineal descendants (except as to certain lineal descendants, to the
extent permitted under Code Section 409(n)(3)(A)) or any other person who bears
a relationship to him that is described in Code Section 267(b).
(b) The "nonallocation period" is the period beginning on the
date of the sale of the Employer Stock to the Trust Fund and ending on the later
of (i) the date that is 10 years from the date of that sale, or (ii) the date of
the Plan allocation attributable to the final payment of any loan obligation
incurred by the Plan in connection with that sale.
(c) No portion of the Employer Stock purchased in any
transaction to which Code Section 1042 applies (or any dividends or other income
attributable thereto) may thereafter be allocated to the Account of any
Participant owning (as determined under Code Section 318(a) (without regard to
Code Section 318(a)(2)(B)(i)), during the entire one-year period preceding the
date of sale of the Employer Stock or as of the date such Employer Stock are
allocated, more than 25% of any class of outstanding stock of the Employer or of
the total value of any class of outstanding stock of the Employer.
5.4 Actual Deferral Percentage Test.
(a) Applying the Test. Each Plan Year for which the Plan does
not satisfy the "safe harbor contribution" provisions of Code Section
401(k)(12), the actual deferral percentage (the "ADP") for Eligible Employees
who are HCEs may not exceed the greater of: (i) 1.25 times the ADP for all
Eligible Employees who are not HCEs, or (ii) the lesser of (A) two times the ADP
of Eligible Employees who are not HCEs, or (B) the ADP of Participants who are
not HCEs plus two percentage points. The Administrator shall determine the
Eligible Employees' deferral percentages consistent with Code Section 401(k)(3)
and applicable Treasury Regulations, which the Plan incorporates herein by
reference. The Administrator shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Nonelective
Contributions or Qualified Matching Contributions, if any, used to satisfy such
test.
(b) ADP Defined. Each Plan Year for which the Plan does not
satisfy the "safe harbor contribution" provisions of Code Section 401(k)(12),
the Administrator shall determine the ADP as follows:
(i) The ADP for the HCEs shall equal the average of
the ratios, calculated separately for each Eligible Employee in the group, of
(A) the allocations of Elective Contributions and Qualified Nonelective
Contributions or Qualified Matching Contributions (if any and to the extent not
taken into account for purposes of the actual contribution percentage test of
Section 5.5 hereof), excluding earnings thereon, to the Eligible Employee's
Elective Contribution Subaccount and Qualified Nonelective Contribution
Subaccount or Qualified Matching Contribution Subaccount for the current Plan
Year to (B) the Eligible Employee's Compensation for the current Plan Year. The
ADP for the Eligible Employees who are not HCEs shall equal the average of the
ratios, calculated separately for each Eligible Employee in the group, of (A)
the allocations of Elective Contributions and Qualified Nonelective
Contributions or Qualified Matching Contributions (if any and to the extent not
taken into
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account for purposes of the actual contribution percentage test of Section 5.5
hereof), excluding earnings thereon, to the Eligible Employee's Elective
Contribution Subaccount and Qualified Nonelective Contribution Subaccount or
Qualified Matching Contribution Subaccount for the previous Plan Year to (B) the
Eligible Employee's Compensation for the previous Plan Year. Excess Elective
Deferrals of Eligible Employees who are not HCEs, determined pursuant to Section
3.2(e) hereof, are not taken into account for purposes of ADP testing. For the
first Plan Year in which Eligible Employees are eligible to make Elective
Contributions, the ADP for Eligible Employees other than HCEs shall be deemed to
be three percent.
(ii) The ADP for any Eligible Employee who is an HCE
and eligible to have elective contributions allocated to his accounts under this
Plan and one or more other plans or arrangements described in Code Section
401(k) maintained by the Employer shall be determined as if all such
contributions were made pursuant to a single arrangement.
(c) Excess Elective Contributions.
(i) If, for any Plan Year, the total amount of
Elective Contributions allocated to the Elective Contribution Subaccounts of
HCEs exceeds the maximum amount of Elective Contributions permitted in paragraph
(a) above ("Excess Elective Contributions"), the Administrator may distribute
such Excess Elective Contributions, plus earnings thereon, to some or all of the
Eligible Employees who are HCEs (determined by reducing Elective Contributions
made on behalf of HCEs in order of the HCEs with the greatest dollar amount of
Elective Contributions). The Administrator may make such distributions on or
before March 15, but in no event later than December 31, of the Plan Year
following the Plan Year in which the Excess Elective Contributions arose. The
Administrator shall calculate any Excess Elective Contributions under this
Section 5.4(e) after determining the amount of Excess Elective Deferrals
pursuant to Article 3 hereof.
(ii) Earnings allocable to an Eligible Employee's
Excess Elective Contributions shall be determined (A) under any reasonable
method used for allocating earnings to all Eligible Employees' Elective
Contribution Subaccounts as applied consistently to all Eligible Employees for
the Plan Year, or (B) by multiplying earnings allocable to the Eligible
Employee's Elective Contributions for the Plan Year by a fraction, the numerator
of which equals the Eligible Employee's Excess Elective Contributions for the
Plan Year, and the denominator of which equals the Eligible Employee's Elective
Contribution Subaccount balance as of the beginning of the Plan Year plus the
Participant's Elective Contributions for the Plan Year. The Administrator may
distribute Excess Elective Contributions (and earnings thereon) without regard
to consent otherwise required for Plan distributions.
(iii) To the extent required by applicable
nondiscrimination regulations, any Matching Contribution relating to Excess
Elective Contributions distributed to an HCE in accordance with this Section
5.4(c) shall be declared a Forfeiture as of the end of the Plan Year in which
the Excess Elective Contribution is distributed (even if the HCE is vested in
such Matching Contribution) except to the extent that the Matching Contribution
is an Excess Aggregate Contribution distributed to the HCE in accordance with
Section 5.5(d) hereof.
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5.5 Actual Contribution Percentage Test.
(a) Applying The Test. Each Plan Year for which the Plan does
not satisfy the "safe harbor contribution" provisions of Code Section
401(k)(12), Matching Contributions (other than Qualified Matching Contributions
limited pursuant to the average deferral percentage test of Section 5.4 hereof)
shall be limited pursuant to the actual contribution percentage ("ACP") test.
The ACP for Participants who are HCEs may not exceed the greater of: (i) 1.25
times the ACP for all Participants who are not HCEs, or (ii) the lesser of (A)
two times the ACP for all Participants who are not HCEs, or (B) the ACP for all
Participants who are not HCEs plus two percentage points. The Administrator
shall determine each Participant's ACP consistent with Code Section 401(m)(3)
and applicable Treasury Regulations, which are hereby incorporated herein by
reference. The Administrator shall maintain records sufficient to demonstrate
satisfaction of the ACP test, and the amount of Qualified Nonelective
Contributions and Qualified Matching Contributions, if any, used to satisfy such
test.
(b) Multiple Use. The Administrator shall adjust the limit
described in paragraph (a)(ii) above in accordance with Section 1.401(m)-2 of
the Treasury Regulations to avoid multiple use of that limit for any Participant
who is an HCE. If multiple use occurs, such multiple use shall be corrected by
reducing the ACP of HCEs who are eligible in both the Plan's cash or deferred
arrangement and the portion of the Plan subject to Code Section 401(m) in
accordance with paragraph (c) below. Multiple use shall not occur if the sum of
the ADP and ACP for HCEs does not exceed the aggregate limit. The aggregate
limit is the greater of (i) or (ii) below:
(i) The sum of: (A) 1.25 times the greater of (1) the
ADP for all Participants who are not HCEs; or (2) the ACP for all Participants
who are not HCEs; and (B) the lesser of (A)(1) or (A)(2) above, plus two percent
(provided this number does not exceed two times the lesser of (A)(1) or (A)(2)
above).
(ii) The sum of: (A) 1.25 times the lesser of (1) the
ADP for all Participants who are not HCEs, or (2) the ACP for all Participants
who are not HCEs; and (B) the greater of (A)(1) or (A)(2) above, plus two
percent (provided this number does not exceed two times the greater of either
(A)(1) or (A)(2) above).
(c) ACP Defined. Each Plan Year for which the Plan does not
satisfy the "safe harbor contribution" provisions of Code Section 401(k)(12),
the Administrator shall determine the ACP as follows:
(i) The ACP for HCEs shall equal the average of the
ratios, calculated separately for each Participant in the group, of (A) the
allocations of Matching Contributions (to the extent not taken into account for
purposes of the average deferral percentage test of Section 5.4 hereof),
excluding earnings thereon, to the Participant's Matching Contribution
Subaccount for the current Plan Year to (B) the Participant's Compensation for
the current Plan Year. The ACP for the Participants who are not HCEs shall equal
the average of the ratios, calculated separately for each Participant in the
group, of (A) the allocations of Matching Contributions (to the extent not taken
into account for purposes of the average deferral percentage test of Section
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5.4 hereof), excluding earnings thereon, to the Participant's Matching
Contribution Subaccount for the previous Plan Year to (B) the Participant's
Compensation for the previous Plan Year. Qualified Nonelective Contributions or
Qualified Matching Contributions, if any, (to the extent not taken into account
for purposes of the average deferral percentage test of Section 5.4 hereof) may
be taken into account for purposes of calculating the ACP for Participants.
(ii) The ACP for any Participant who is an HCE and
eligible to have matching contributions, if any, allocated to his accounts under
this Plan and one or more other plans or arrangements described in Code Section
401(m) maintained by the Employer shall be determined as if all such matching
contributions were made pursuant to a single arrangement.
(d) Excess Aggregate Contributions.
(i) If, for any Plan Year, the aggregate amount of
Matching Contributions allocated to the Matching Contributions Subaccounts, if
any, of Participants who are HCEs exceeds the maximum amount permitted under
paragraph (a) above ("Excess Aggregate Contributions"), the Administrator may
distribute such Excess Aggregate Contributions, plus earnings thereon, to some
or all of the Participants who are HCEs (determined by reducing Matching
Contributions made on behalf of HCEs, in order of the HCEs with the greatest
dollar amount of Matching Contributions). The Administrator may distribute such
Excess Matching Contributions on or before March 15, but not later than December
31, of the Plan Year following the Plan Year in which such Excess Matching
Contributions arose. The Administrator shall distribute any Excess Aggregate
Contributions under this Section 5.5(d) after determining the amount of Excess
Elective Deferrals pursuant to Article 3 hereof and the amount of Excess
Elective Contributions pursuant to Section 5.4(c) hereof.
(ii) Earnings allocable to a Participant's Excess
Aggregate Contributions shall be determined (1) under any reasonable method used
for allocating earnings to all Participants' Matching Contribution Subaccounts
as applied consistently to all Participants for the Plan Year, or (2) by
multiplying earnings allocated to the Participant's Matching Contributions for
the Plan Year by a fraction, the numerator of which equals the Participant's
Excess Aggregate Contributions for the Plan Year, and the denominator of which
equals the Participant's Matching Contribution Subaccount balance (and Qualified
Matching Contribution Subaccount balance, if any) as of the beginning of the
Plan Year plus the Participant's Matching Contributions (and Qualified Matching
Contributions, if any) for the Plan Year. The Administrator may distribute
Excess Aggregate Contributions (and earnings thereon) without regard to consent
otherwise required for Plan distributions.
5.6 Qualified Nonelective Contributions and Qualified Matching
Contributions. Pursuant to Treasury Regulations and in lieu of distributing
Excess Elective Contributions or Excess Aggregate Contributions, the Corporation
may elect for the Employer to make Qualified Nonelective Contributions or
Qualified Matching Contributions to the Trust Fund on behalf of all or some of
Participants. The Administrator shall allocate Qualified Nonelective
Contributions or Qualified Matching Contributions to Participants' Qualified
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Nonelective Contribution Subaccounts or Qualified Matching Subaccounts in a
manner that does not discriminate in favor of Highly Compensated Employees.
ARTICLE 6
Vesting
6.1 Vesting.
(a) A Participant shall have a Vested Percentage of 100% at all times
in his Elective Contribution Subaccount, Qualified Nonelective Contribution
Subaccount, Qualified Matching Contribution Subaccount, Rollover Contribution
Subaccount and the portion of his ESOP Contribution Subaccount attributable to
ESOP Contributions made for Plan Years beginning on and after January 1, 2000
(including earnings thereon) intended to satisfy the "safe harbor contribution
provisions" of Code Section 401(k)(12).
(b) A Participant's Vested Percentage in his Matching Contribution
Subaccount, Profit Sharing Contribution Subaccount and the portion his ESOP
Contribution Subaccount attributable to ESOP Contributions made for Plan Years
beginning before January 1, 2000 (including earnings thereon) shall be
determined as follows:
(i) A Participant shall have a Vested Percentage of
100% in the foregoing Subaccounts upon his attainment of Normal Retirement Age,
if he is Employed on such date, or upon termination of Employment on account of
death or Disability; or
(ii) A Participant's Vested Percentage in the
foregoing Subaccounts shall be determined in accordance with the following
schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than three 0%
3 60%
4 80%
5 100%
(c) Change in Vesting Schedule. In no event shall a change in
the Plan's vesting schedule reduce a Participant's Vested Percentage in his
Account. Upon a change in the Plan's vesting schedule, a Participant who has
accumulated at least three Years of Service may elect to determine the Vested
Percentage in his Account pursuant to either the revised vesting schedule or the
vesting schedule without regard to such change. Such election shall be made
during an election period which shall commence with the date the amendment is
adopted or deemed to be made and shall end 60 days after the latest of the date
the amendment is adopted, becomes effective, or the date the Participant is
issued written notice of the amendment by the Employer or the Administrator.
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6.2 Forfeitures.
(a) The nonvested portion of a Participant's Account shall
constitute a Forfeiture on the earlier of: (i) the date of distribution of the
entire vested portion of the Participant's Account, or (ii) the date on which
the Participant incurs five consecutive One-Year Breaks in Service. A
Participant who is zero percent vested in his Account shall be deemed to have
received a distribution of the entire vested portion thereof on the date on
which he terminates Employment, and his nonvested Account shall be forfeited on
such date.
(b) Forfeitures shall be charged first against the portion of
a Participant's Account invested in the Investment Funds other than the Employer
Stock Fund, second to the portion of the Participant's Account invested in
Employer Stock allocated without regard to an Exempt Loan, and third to the
portion of the Participant's Account invested in Employer Stock allocated in
accordance with an Exempt Loan. Forfeitures shall be reallocated, in accordance
with Article 3 hereof, as of the end of the Plan Year in which the Forfeiture
occurs.
(c) If a Participant who previously terminated Employment when
he was zero percent vested in his Account and whose entire Account was forfeited
pursuant to paragraph (a) above, is rehired by the Employer prior to the date on
which the Participant incurs five consecutive One-Year Breaks in Service, the
forfeited Account shall be reinstated in full immediately upon Participant's
rehire by the Employer.
(d) If a Participant who (i) previously terminated Employment
with the Employer, (ii) received a distribution of his entire vested Account,
and (iii) forfeited his nonvested Account pursuant to paragraph (a) above, is
rehired by the Employer prior to the date on which the Participant incurs five
consecutive One-Year Breaks in Service, the forfeited Account shall be
reinstated only if the Participant repays the full amount of the distribution
prior to the date five years after the date of his rehire by the Employer. If
such a Participant is rehired by the Employer after the date on which he incurs
five consecutive One-Year Breaks in Service, the Participant may not repay the
distribution, and the forfeited Account shall not be reinstated.
(e) If an Account of a Participant is reinstated pursuant to
this Section 6.2, the Account shall be reinstated unadjusted by gains or losses
since the Valuation Date coinciding with or immediately preceding the date of
Forfeiture. The source of the funds and/or Employer Stock for the reinstatement
shall be the Forfeitures occurring during the Plan Year of reinstatement. If the
Forfeitures for such Plan Year are inadequate to reinstate the Account in full,
the Employer shall make a special contribution to reinstate the Account.
6.3 Reinstatement of Service Upon Rehire.
(a) If a Participant who previously terminated Employment is
rehired by the Employer before he incurs a One-Year Break in Service, all of his
Years of Service shall be counted toward his Vested Percentage.
(b) If a Participant who previously terminated Employment is
rehired by the Employer after he incurs a One-Year Break in Service but before
he completes five consecutive
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One-Year Breaks in Service, his pre-Break service shall be included in his Years
of Service for purposes of determining his Vested Percentage only after he
completes one Year of Service following the date of his rehire by the Employer.
(c) If a Participant who previously terminated Employment when
his Vested Percentage in his entire Account was zero is rehired after he incurs
at least five consecutive One-Year Breaks in Service, his Years of Service
completed prior to such consecutive One-Year Breaks in Service shall be
disregarded in determining his Vested Percentage under the Plan.
(d) If a Participant who previously terminated Employment when
he had a Vested Percentage of more than zero, but less than 100, is rehired by
the Employer after he incurs five consecutive One-Year Breaks in Service, the
Participant's Vested Percentage in his Account attributable to Employer
Contributions made prior to such consecutive One-Year Breaks in Service shall
not be increased as a result of his post Break service.
(e) For purposes of this Section 6.3, Years of Service
completed by a Participant prior to his One-Year Break in Service shall not
include any Years of Service disregarded pursuant to this Section 6.3 by reason
of prior One-Year Breaks in Service.
ARTICLE 7
Withdrawals During Employment
7.1 Hardship Withdrawals.
(a) Generally. In the event a Participant suffers a financial
hardship while Employed, the Administrator, upon written application by the
Participant, may permit him to withdraw all or a portion of his Elective
Contribution Subaccount, Matching Contribution Subaccount (only if the
Participant has a Vested Percentage of 100% in such Subaccount), Profit Sharing
Contribution Subaccount (only if the Participant has a Vested Percentage of 100%
in such Subaccount), Qualified Nonelective Contribution Subaccount and Qualified
Matching Contributions Subaccount, provided that the withdrawal is made on
account of an immediate and heavy financial need of the Participant and does not
exceed the lesser of (i) the amount required to meet such financial need, or
(ii) the sum of the balances in the foregoing Subaccounts as of the next
preceding Valuation Date, minus any earnings on Elective Contributions earned
after December 31, 1988.
(b) Immediate and Heavy Financial Need. The determination of
whether there is an immediate and heavy financial need shall be made by the
Administrator in a uniform and nondiscriminatory manner based on all relevant
circumstances. An immediate and heavy financial need shall be considered to
exist for purposes of this Section 7.1 if a withdrawal is made on account of the
following:
(i) Medical expenses, described in Code Section
213(d), previously incurred by the Participant, the Participant's spouse, or any
dependent of the Participant (as
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defined in Code Section 152) or necessary for these persons to obtain medical
care described in Code Section 213(d);
(ii) The purchase (excluding mortgage payments) of a
principal residence for the Participant;
(iii) The payment of tuition, related educational
expenses and room and board for the next 12 months of post-secondary education
for the Participant, his spouse, child, or dependent;
(iv) The need to prevent the eviction of the
Participant from his principal residence or the foreclosure on the mortgage of
the Participant's principal residence;
(v) Other expenses listed in Internal Revenue Service
revenue rulings or notices, or other Internal Revenue Service documents of
general, rather than individual, applicability; or
(vi) Such other expenses that the Administrator may,
in its discretion, determine constitute immediate and heavy financial needs.
(c) Other Available Resources. A distribution shall not be
considered necessary to satisfy an immediate and heavy financial need to the
extent such need may be satisfied from other resources reasonably available to
the Participant. The Participant shall be required to provide to the
Administrator a written certification as to the nature of the financial
hardship, the funds that are reasonably available to him from other sources, and
the amount he desires to withdraw from his Account. The Administrator shall not
be obligated to make any further investigation as to the facts and circumstances
to which the Participant certifies. The sources reasonably available to the
Participant include the following:
(i) Reimbursement or compensation by insurance or
otherwise;
(ii) Reasonable liquidation of the Participant's
assets, to the extent such liquidation would not itself cause an immediate and
heavy financial need;
(iii) Cessation of the Participant's Elective
Contributions under the Plan;
(iv) Other distributions from plans maintained by the
Employer or by any other employer, or loans from commercial sources on
reasonable commercial terms; or
(v) Assets of the Participant's spouse or minor
children reasonably available to the Participant.
(d) Order of Withdrawal. In order to provide funds for a
hardship withdrawal from a Subaccount, amounts shall be withdrawn pro rata from
each of the Investment Funds in which the Subaccount is invested.
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7.2 Withdrawals After Age 59 1/2. A Participant who has attained age 59
1/2 may elect to withdraw all or a portion of any of his Subaccounts in which he
has a Vested Percentage of 100. In order to provide funds for a withdrawal after
age 59-1/2, amounts shall be withdrawn pro rata from each of the Investment
Funds in which such Subaccounts are invested.
7.3 Diversification of Investments. A Participant who has attained age
55 and completed at least ten years of participation in the Plan may elect in
each of the Plan Years during his "qualified election period" (as defined in
paragraph (b) below) to transfer the value of a specified number of shares of
Employer Stock allocated to his ESOP Contribution Subaccount to one or more of
the other Investment Funds, or to withdraw such shares from the Plan, pursuant
to the following:
(a) Amount Eligible for Transfer or Withdrawal. In each of the
first five Plan Years of the Participant's qualified election period, the
Participant may transfer or withdraw, the value of (i) up to 25 percent of the
total number of shares of Employer Stock that have been allocated to his ESOP
Contribution Subaccount as of the immediately preceding Valuation Date, less
(ii) the number of shares of Employer Stock the Participant previously elected
to transfer or withdraw, if any. In each of the sixth through tenth Plan Years
of the Participant's qualified election period, "50 percent" shall be
substituted for "25 percent" in the preceding sentence in determining the number
of shares the Participant may transfer or withdraw.
(b) Qualified Election Period. "Qualified election period"
means the ten consecutive Plan Years commencing on the first day of the Plan
Year in which the Participant attains age 55 and has completed at least ten
years of participation in the Plan.
(c) Transfer/Distribution Procedure. A Participant must make
an election to transfer or withdraw shares of Employer Stock in accordance with
this Section 7.3, in writing, within the 90-day period following the close of
each Plan Year during his qualified election period. The Administrator shall
transfer or distribute the amount designated by the Participant's election
within 90 days after the date the Participant's election is filed with the
Administrator. For Plan Years beginning before January 1, 2000, the Participant
could only elect to withdraw such amounts.
ARTICLE 8
Distributions
8.1 Entitlement to Distribution. Upon a Participant's termination of
Employment (with the Employer and any Affiliate) for any reason, he (or, in the
event of his death, his Beneficiary) shall be entitled to a distribution in the
amount of his Account.
8.2 Time of Distribution.
(a) If, on the Valuation Date coincident with or next
following the date of a Participant's termination of Employment, the value of
the Participant's Account exceeds $5,000
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and the Participant has not attained age 65, the distribution shall be made as
soon as practicable after the Participant elects, in writing delivered to the
Administrator, to receive a distribution of his Account hereunder. A Participant
may defer his distribution until the date on which the Participant attains age
65.
(b) If, on any Valuation Date coincident with or following the
date of a Participant's termination of Employment with the Employer or an
Affiliate, the value of the Participant's Account is not greater than $5,000 or
the Participant attains age 65, the distribution shall be made as soon as
practicable after such Valuation Date.
(c) A Participant shall receive a distribution of his entire
interest in the Plan not later than his Required Beginning Date.
(i) If a Participant (A) is a 5% owner (as defined in
Code Section 416) with respect to the calendar year in which the Participant
attained age 70 1/2, and (B) has not terminated Employment, then, with respect
to each calendar year during which and after the Participant attained age 70
1/2, the Plan shall distribute to the Participant, at his election, either the
minimum distribution required under Code Section 401(a)(9) or the Participant's
Account balance as of the applicable Valuation Date. Such distribution shall be
made (A) as soon as practicable after the December 31 of the calendar year in
which the Participant attained age 70 1/2 (but not later than the April 1
following such calendar year), or (B) on or before the December 31 of any
calendar year thereafter. For this purpose, "applicable Valuation Date" means
the Participant's Account balance as of the December 31 of the calendar year
immediately preceding the calendar year for which the required distribution is
made.
(ii) Notwithstanding (i) above, if a Participant
attains age 70 1/2 on or before April 7, 2000, is not a 5% owner (as defined in
Code Section 416) with respect to the calendar year in which the Participant
attained age 70 1/2, and has not terminated Employment, he may elect, at the
time and in the manner prescribed by the Administrator to (A) defer any
distribution of his Account until after his termination of Employment, or (B) to
begin (or continue) receiving in-service distributions of his Account upon his
attainment of age 70 1/2. If the Participant elects to receive in-service
distributions of his Account, then, with respect to each calendar year during
which and after the Participant attained age 70 1/2, the Plan shall make
in-service distributions to the Participant as if he were a Participant
described in (i) above.
(d) In addition, unless the Participant elects otherwise,
distributions to the Participant will begin not later than the 60th day after
the latest of the close of the Plan Year in which (i) the Participant attains
Normal Retirement Age; (ii) occurs the tenth anniversary of the year in which
the Participant commenced participation in the Plan; or (iii) the Participant
terminates Employment.
(e) If a Participant dies after the Required Beginning Date,
any distribution payable after the death of the Participant shall be made in
accordance with the terms of, and at least a rapidly as under, the form of
distribution elected by the Participant and in effect on his date of death. If a
Participant dies before the Required Beginning Date, any distribution payable
after the death of the Participant shall meet one of the following requirements:
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(i) If a distribution is payable to the surviving
spouse of a Participant, such distribution shall commence no later than the date
on which the Participant would have attained age 70 1/2 and shall be paid over a
period no longer than the life of such spouse or a period not extending beyond
the life expectancy of such spouse.
(ii) If a distribution is payable to a designated
Beneficiary other than a surviving spouse, such distribution shall commence
within one year after the date of the Participant's death and shall be paid over
a period no longer than the life of such designated Beneficiary or a period not
extending beyond the life expectancy of such designated Beneficiary.
(iii) If a Participant has no surviving spouse or
designated Beneficiary, distribution of the Participant's entire interest in the
Plan shall be made within five years of the death of the Participant.
(f) Each distribution under the Plan shall be made in
accordance with Code Section 401(a)(9), including the minimum death benefit
requirements of Code Section 401(a)(9)(G), and the Treasury Regulations
thereunder. If any provision of the Plan conflicts with the requirements of Code
Section 401(a)(9) and the Treasury Regulations thereunder, the requirements of
Code Section 401(a)(9) and the Treasury Regulations thereunder shall supersede
any such Plan provision.
(g) If a distribution is one to which Code Sections 401(a)(11)
and 417 do not apply, such distribution may be made less than 30 days after the
notices required under Treasury Regulation Section 1.411(a)-11(c) and Code
Section 402(f) is given provided that (i) the Committee clearly informs the
Participant that the Participant has a right to a period of at least 30 days
after receiving the notices to consider the decision of whether or not to elect
a distribution (and, if applicable, a particular distribution option), and (ii)
the Participant, after receiving the notice, affirmatively elects a
distribution.
8.3 Method of Distribution.
(a) A distribution under this Plan shall be paid in a lump sum
(i) to the Participant (or to the Alternate Payee designated in a Qualified
Domestic Relations Order), or (ii) on the death of the Participant, to the
Participant's surviving spouse, or, if there is no surviving spouse or the
surviving spouse consents, or such consent may not be obtained, as described in
Section 8.5(b) hereof, to a designated Beneficiary.
(b) A distribution to a Participant or Beneficiary shall be
made in cash, except that, with respect to (i) that portion of an Account (other
than the ESOP Contribution Subaccount) invested in the Employer Stock Fund, the
distribution may be made, at the election of the Participant, either in cash,
whole shares of Employer Stock, and cash in lieu of fractional shares thereof or
partly in cash and partly in Employer Stock, and (ii) an ESOP Contribution
Subaccount, the distribution shall be made in whole shares of Employer Stock and
cash in lieu of fractional shares thereof.
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(c) Notwithstanding paragraphs (a) and (b) above, (i) the
Administrator may elect in a uniform and nondiscriminatory manner, to defer
distribution of the portion of a Participant's ESOP Contribution Subaccount
attributable to Employer Stock acquired with the proceeds of an Exempt Loan
until the close of the Plan Year in which such Exempt Loan is repaid in full
(this clause shall not be operative if Code Section 401(a)(9) or (14) requires
an earlier distribution of the Participant's ESOP Contribution Subaccount), and
(ii) no distribution from the Plan shall be paid in Employer Stock if, at the
time of distribution, (A) the Corporation's bylaws restrict ownership of
substantially all securities of the Corporation to the Plan and to active
Employees, or (B) the Corporation is an S corporation under the Code.
8.4 Prohibition on Alienation. The rights of a Participant or
Beneficiary to receive a distribution shall not be subject to alienation or
assignment, and shall not be subject to anticipation, encumbrance or claims of
creditors. Neither a distribution to the estate of a deceased Participant or
Beneficiary or to an heir or legatee of a right to receive a distribution
hereunder, nor a distribution in accordance with a Qualified Domestic Relations
Order, shall be deemed an alienation, assignment or anticipation for the
purposes of this Section 8.4.
8.5 Designation of Beneficiary.
(a) Each Participant may designate a person or persons who
shall receive the distribution payable hereunder on the death of the
Participant, and shall, subject to paragraph (b) below, have the right to revoke
any such designation. Any such designation shall be evidenced by a written
instrument filed with the Administrator and signed by the Participant. The
designation by a Participant of a Beneficiary who is not the Participant's
spouse shall require an effective consent thereto by the Participant's spouse or
surviving spouse, or a demonstration that such consent may not be obtained, as
described in paragraph (b) below. If no Beneficiary designation is on file with
the Administrator at the time of the death of a Participant, or if such
designation is not effective for any reason as determined by the Administrator,
then payment of the Participant's Account shall be made in the order of priority
listed below, in equal shares among members of a class (except for the per
stirpes requirement of class (ii)) if there is more than one member of a class:
(i) The Participant's spouse (unless a final divorce
order has been entered by a court);
(ii) If the Participant has no surviving spouse, the
Participant's issue, per stirpes (including issue by adoption);
(iii) If the Participant has no surviving spouse or
issue, the Participant's parents (including parents by adoption);
(iv) If the Participant has no surviving spouse,
issue or parents, the Participant's brothers and sisters (including brothers and
sisters of the half blood and brothers and sisters by adoption);
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(v) If the Participant has no surviving spouse,
issue, parents, brothers or sisters, the executor or administrator of the
deceased Participant's estate.
(b) A Participant may designate a person as Beneficiary who is
not his spouse if (i) (A) his spouse consents in writing to such designation,
(B) the designation may not be changed without spousal consent (or the consent
of the spouse expressly permits designations by the Participant without further
consent by the spouse), and (C) the spouse's consent acknowledges the effect of
such election and is witnessed by a representative of the Plan or a notary
public; or (ii) it is established to the satisfaction of the Administrator that
such consent cannot be obtained because there is no spouse, because the spouse
cannot be located, or because of such other circumstances as are prescribed by
Treasury Regulations. Any consent by a spouse (or establishment that the consent
of a spouse cannot be obtained) shall be effective only with respect to such
spouse.
8.6 Rollover Distribution.
(a) Notwithstanding any provision of the Plan to the contrary
that would limit a Distributee's election under this Section 8.6, a Distributee
may elect, at the time and in the manner prescribed by the Administrator, to
have any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct Rollover, as
those terms are defined below.
(b) For purposes of this Section 8.6, 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:
(i) 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;
(ii) Any distribution required under Code Section
401(a)(9);
(iii) 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); or
(iv) Any distribution that is a hardship withdrawal
made pursuant to Article 7 hereof.
(c) For purposes of this Section 8.6, an "Eligible Retirement
Plan" is an individual retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b), an annuity plan
described in Code Section 403(a) or a qualified trust described in Code Section
401(a) that accepts the Distributee's Eligible Rollover Distribution. However,
in the case of an Eligible Rollover Distribution to a surviving spouse, an
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Eligible Retirement Plan shall include only an individual retirement account or
individual retirement annuity.
(d) For purposes of this Section 8.6, a "Distributee" includes
a Participant. In addition, the surviving spouse of a Participant or former
Participant, or a Participant's or a former Participant's spouse or former
spouse who is an alternate payee under a Qualified Domestic Relations Order are
Distributees with regard to the interest of the spouse or former spouse.
(e) For purposes of this Section 8.6, a "Direct Rollover" is a
payment by the Plan to an Eligible Retirement Plan specified by the Distributee.
8.7 Distributions to Alternate Payees. Notwithstanding any other
provisions of the Plan, the Account balance of a Participant may be apportioned
between the Participant and an alternate payee, as defined in Code Section
414(p)(8), either through separate Accounts or by providing the alternate payee
a percentage of the Participant's Account, in accordance with the terms of a
Qualified Domestic Relations Order. The Plan shall comply with a Qualified
Domestic Relations Order that directs the Plan to make a distribution to an
alternate payee of the alternate payee's separate Account or percentage of the
Participant's Account prior to the date on which the Participant attains the
earliest retirement age, as defined in Code Section 414(p)(4)(B), under the
Plan.
8.8 Transfer Restrictions: Right of First Refusal of Trustee and
Employer.
(a) General Restriction. No Employer Stock Distributed from a
Participant's ESOP Contribution Subaccount may be offered, sold, pledged,
bequeathed, given, hypothecated or otherwise disposed of by any Participant,
former Participant or Beneficiary ("Distributee"), whether for value or not,
unless such Employer Stock has first been offered for sale to the Trustee and
the Employer under the provisions of paragraphs (b) and (c) below. Any attempt
to dispose of such Employer Stock without regard to this restriction shall be
deemed to be an offer to the Trustee and the Employer under the terms set forth
in paragraphs (b) and (c) below, and, in such a case, the date of the offer
shall be deemed to be the date on which the Trustee or the Employer receives
actual notice of the attempted disposition.
(b) Price of Securities Offered. Employer Stock offered to the
Trustee and the Employer pursuant to this Section 8.8 shall be offered at its
fair market value. The Trustee shall advise the Distributee of the fair market
value of the Employer Stock as determined by the Trustee in good faith and based
on all relevant factors for determining the fair market value of the Employer
Stock on the date of valuation. The date of valuation shall be the Valuation
Date immediately preceding the date of acceptance of the offer; provided,
however, that the date of valuation with respect to a transaction between the
Plan and a Distributee who is a Disqualified Person on the date of such
transaction shall be the date of the transaction. The Trustee's determination
shall be deemed for purposes of this Section 8.8 to be fair market value unless
the Distributee presents to the Trustee a current, written bona fide offer from
any person to purchase the Employer Stock at a higher price or on more favorable
terms than those otherwise offered by
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the Trustee and the Employer under this Section 8.8. If such written bona fide
offer is submitted to the Trustee, the price designated in the bona fide written
offer shall be deemed the fair market value of the Employer Stock for purposes
of this Section 8.8, and the Trustee or the Employer may elect, but shall not be
required, to purchase the Employer Stock at such price or upon such terms.
(c) Method of Sale to Trustee or Employer. The offer shall be
in writing and shall provide that, if accepted in whole or in part, the Trustee
or Employer shall have the right to pay the purchase price in one payment or in
installments over five years, plus interest on the unpaid balance at the Prime
Rate on the date of the sale plus two percentage points.
(d) Expiration of Offer. The Trustee and the Employer shall
have 14 days following receipt of an offer under this Section 8.8 to accept or
reject the offer as to all or some of the Employer Stock offered. Mailing of
notice of acceptance to the address of the Distributee listed on the stock
transfer books of the Corporation shall constitute acceptance as of the date of
postmark of such notice. If the Trustee or Employer do not accept the offer to
purchase the Employer Stock by the expiration of the 14-day period, the Employer
Stock may be sold or otherwise disposed of by the Distributee. Notwithstanding
the preceding sentence, if, pursuant to paragraph (b) above, the Distributee has
submitted a written bona fide offer to purchase the Employer Stock at a higher
price or on more favorable terms than otherwise offered by the Trustee or the
Employer under this Section 8.8, and neither the Trustee nor the Employer have
elected, within 14 days of the offer and submission of such offer, to purchase
the Employer Stock at such higher price or on such terms, then the Distributee
may sell such Employer Stock only at a price not less than, and terms no less
favorable to the Distributee than, the price and terms specified in the bona
fide written offer so submitted; if the Distributee attempts to sell the
Employer Stock at a lower price or on less favorable terms, then the provisions
of this Section 8.8 shall again apply as if no offer under this Section 8.8 was
ever made, and any such attempted sale shall be void.
(e) Rights as Between Trustee and Employer. The Trustee shall
have the first right to purchase any or all Employer Stock offered under this
Section 8.8. The Trustee shall notify the Employer of any such offer immediately
after receipt, and shall notify the Employer within seven days after receipt of
the offer of the number of shares of Employer Stock, if any, the Trustee intends
to purchase. The Employer shall have the right to purchase any remaining shares
of Employer Stock.
(f) Restriction to Continue. The restrictions set forth in
this Section 8.8 shall be perpetual to the extent allowed by law; provided,
however, that these restrictions shall not apply for any period during which the
Employer Stock subject thereto is a Publicly Traded Security. All Distributees
shall take Employer Stock distributed from the Trust Fund subject to the
restrictions contained in this Section 8.8, and the certificates for such shares
of Employer Stock shall contain a statement showing the existence of these
restrictions.
(g) Payment. Payment shall be made on a date specified by the
Trustee or Employer, but not more than 30 days after the offer is accepted. If
the Trustee or Employer
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elects to pay for the Employer Stock in annual installments, the first annual
installment toward the Trustee's or Employer's purchase of Employer Stock under
this Section 8.8 is due no later than 30 days after the offer is accepted.
8.9 Option to Sell. If Employer Stock, when distributed to a
Participant or Beneficiary ("Distributee"), is (i) not a Publicly Traded
Security, (ii) subject to trading limitations under any federal or state
securities laws, any regulations thereunder, or any agreement affecting the
Employer Stock which would make the Employer Stock not as freely tradable as
stock not subject to such restrictions, or (iii) is a Publicly Traded Security
without restriction but ceases to be so traded within 12 months after
distribution, such Employer Stock shall be subject to a put option to sell any
or all such Employer Stock to the Employer. The put option may be exercised by
the Distributee and shall be subject to the terms and conditions of this Section
8.9 as follows:
(a) Exercise of Option. The put option exercise period shall
commence on the day following the date on which the Employer Stock is
Distributed to the Distributee and shall end 60 days thereafter. If the
Distributee does not exercise the put option during this first put option
exercise period, the Distributee may exercise the put option during any
subsequent 60-day period beginning on the day after the Administrator mails
written notice to the Distributee of the then most recent determination of the
fair market value of the Employer Stock.
(b) Terms of Option. Unless extended as provided in paragraph
(c) or (f) below, each put option shall expire at 12:00 midnight (Eastern
Standard or Eastern Daylight Time, whichever shall be in effect at the
Employer's principal office) on the day after the applicable 60-day put option
exercise period expires. The option price shall be the fair market value of the
Employer Stock, as determined in good faith and based on all relevant factors
for determining the fair market value of Employer Stock on the date of
valuation, by the Trustee. The date of valuation shall be the Valuation Date
immediately preceding the date of exercise of the option provided, however, that
the date of valuation with respect to a transaction between the Plan and a
Participant who is a Disqualified Person on the date of such transaction shall
be the date of the transaction. If the Distributee received the Employer Stock
in a distribution of the Participant's entire vested Account, then the Employer
may elect to pay the option price in equal annual installments over a period not
longer than five years from the date on which the option is exercised. If the
Employer so elects, it shall pay interest on the unpaid balance at the Prime
Rate on the date of sale, plus two percentage points. Any other terms of sale
shall be determined by agreement between the Employer and the Distributee. The
Distributee shall in any event be provided with adequate security for the
payment of any amounts deferred beyond 30 days from the exercise of the put
option.
(c) Obligation to Purchase Limited. The Employer shall not be
required to purchase Employer Stock pursuant to a put option under this Section
8.9 to the extent that, at the time the option is exercised, the purchase would
be prohibited by applicable federal or state law. If a Distributee is unable to
exercise his option during any 60-day put option exercise period because the
Employer is prohibited by applicable federal or state law from honoring the
option, then the put option exercise period shall be postponed until the
prohibition on the option
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transaction has been removed. Under no circumstances shall the Trustee be bound
to purchase Employer Stock pursuant to a put option under this Section 8.9. If,
however, a purchase by the Trustee is not then prohibited by law, and would not
in the opinion of the Trustee, violate any fiduciary obligation imposed upon it,
then the Trustee may, with the consent of the Employer, elect to assume the
rights and obligations of the Employer under the put option.
(d) Nontransferability. The put option granted under this
Section 8.9 may not be transferred or assigned.
(e) Certain Arrangements Barred. Neither the Employer nor the
Trustee shall enter into any arrangements involving the Plan which would provide
for the issuance of put options by the Plan other than as specified in this
Section 8.9. Furthermore, neither the Employer nor the Trustee shall be
obligated to purchase Employer Stock except as specifically provided herein.
(f) Notice of Grant of Certain Put Options. If a put option is
granted because Employer Stock was a Publicly Traded Security without
restriction when Distributed but subsequently ceased to be a Publicly Traded
Security, then the first put option exercise period during which the option is
exercisable shall begin on the date on which the Distributee is notified that
the Employer Stock have ceased to be a Publicly Traded Security.
(g) Payment. Payment for the purchase of Employer Stock under
this Section 8.9 shall occur on a date specified by the Employer or Trustee, but
not more than 30 days after a put option is exercised. If the Employer or
Trustee elects to pay for the Employer Stock in annual installments, the first
annual installment toward the Trustee's or Employer's purchase of Employer Stock
under this Section 8.9 shall be due no later than 30 days after the put option
is exercised.
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ARTICLE 9
Administration of the Plan
9.1 Powers and Duties of the Administrator. The Administrator shall
administer the Plan in accordance with its terms and shall discharge its duties
with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like character and with
like aims. The Administrator shall have full and complete authority and control
with respect to Plan operations and administration unless the Administrator
allocates and delegates such authority or control pursuant to the procedures
stated in paragraph (c) or (d) below. Any decision of the Administrator or its
delegate shall be final and binding upon all persons dealing with the Plan or
claiming any benefit under the Plan. The Administrator shall have all powers
which are necessary to manage and control Plan operations and administration
including, but not limited to, the following:
(a) To establish the Investment Funds in which Participants
may elect, pursuant to Article 4 hereof, to invest Contributions made on their
behalf and the amounts of their Accounts. The Administrator may, from time to
time, establish new Investment Funds or discontinue and liquidate an existing
Investment Fund. In no event, however, shall the number of Investment Funds be
fewer than three.
(b) To employ such accountants, counsel or other persons as it
deems necessary or desirable in connection with Plan administration. The Trust
Fund shall bear the costs of such services and other administrative expenses
unless paid by the Employer.
(c) To designate in writing persons other than the
Administrator to perform any of its powers and duties hereunder including, but
not limited to, Plan fiduciary responsibilities (other than any responsibility
to manage or control the Plan assets).
(d) To allocate in writing any of its powers and duties
hereunder, including but not limited to fiduciary responsibilities (other than
any responsibility to manage or control the plan assets) to those persons who
have been designated to perform Plan fiduciary responsibilities.
(e) To construe and interpret the Plan language in a
discretionary manner, including the power to construe disputed provisions.
(f) Subject to Article 11 hereof, to resolve all questions
arising in the administration, interpretation and application of the Plan,
including, but not limited to, questions as to the eligibility or the right of
any person to a benefit.
(g) To adopt such by-laws, rules, regulations, forms and
procedures from time to time as it deems advisable and appropriate in the proper
administration of the Plan.
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(h) To receive from the Employer or from Participants such
information as shall be necessary for the proper administration of the Plan.
(i) To furnish, upon request, such annual reports with respect
to the administration of the Plan as are reasonable and appropriate.
(j) To receive from the Trustee, and review, reports of the
financial condition and receipts and disbursements of the Trust Fund.
(k) To prescribe procedures to be followed by any person in
applying for distributions pursuant to the Plan and to designate the forms or
documents, evidence and such other information as the Administrator may
reasonably deem necessary, desirable or convenient to support an application for
such distribution.
(l) To issue directions to the Trustee, and thereby bind the
Trustee, concerning all benefits to be paid pursuant to the Plan.
(m) To apply consistently and uniformly to all Participants
and Beneficiaries, the rules, regulations, and determinations of the Plan.
(n) To take any and all such actions as the Administrator, in
its discretion, deems necessary or appropriate with respect to the
administration and operation of the plan, including taking any corrective action
authorized under the Internal Revenue Service Employee Plans Compliance
Resolution Program (or any successor or similar program), for purposes of
maintaining the Plan's and Trust's compliance with the requirements of Sections
401(a), 401(k) and 501(a) of the Code.
9.2 Records and Notices. The Administrator shall keep a record of all
its proceedings and acts and shall maintain all such books of accounts, records
and other data as may be necessary for proper Plan administration. The
Administrator shall notify the Trustee of any action taken by the Administrator
which affects the obligations or rights of the Trustee and, when required, shall
notify any other interested parties.
9.3 Compensation and Expenses. The expenses incurred by the
Administrator in the proper administration of the Plan shall be paid from the
Trust Fund, unless the Employer elects to pay such expenses directly. The
Employer may elect to pay such expenses directly and payment of such expenses by
the Employer shall not be deemed to be additional Plan contributions.
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ARTICLE 10
Trust Provisions
10.1 Dealings with Trustee.
(a) No Duty to Inquire. No person, firm or corporation dealing
with the Trustee shall be required to take cognizance of the provisions of this
Plan or be required to make inquiry as to the authority of the Trustee to do any
act which the Trustee shall do hereunder. No person, firm or corporation dealing
with the Trustee shall be required to see either to the administration of the
Plan or the Trust Fund or to the faithful performance by the Trustee of its
duties hereunder (except to the extent otherwise provided by ERISA). Any such
person, firm or corporation shall be entitled to assume conclusively that the
Trustee is properly authorized to do any act which it shall do hereunder. Any
such person, firm or corporation shall be under no liability to anyone
whomsoever for any act done hereunder pursuant to the written direction of the
Trustee.
(b) Assumed Authority. Any such person, firm or corporation
may conclusively assume that the Trustee has full power and authority to receive
and receipt for any money or property becoming due and payable to the Trustee.
No such person shall be bound to inquire as to the disposition or application of
any money or property paid to the Trustee or paid in accordance with the written
directions of the Trustee.
10.2 Compensation of Trustee. If a corporate Trustee shall be acting
hereunder, the corporate Trustee shall be entitled to receive compensation for
its services as Trustee hereunder as may be agreed upon from time to time by the
Corporation and the Trustee. Any individual Trustee who already receives
full-time pay from the Employer shall receive no compensation for his services
hereunder. Other individual Trustees shall likewise serve without compensation
unless they shall otherwise specifically agree with the Corporation to the
contrary. In any event, however, the Trustee (whether corporate or individual)
shall be entitled to receive reimbursement for reasonable expenses, fees, costs
and other charges incurred by it or payable by it on account of the
administration of the Plan and the Trust Fund to the extent approved by the
Corporation. Such items of expense and compensation shall be payable out of the
Fund in a fair and equitable manner as determined by the Trustee, except to the
extent that the Corporation, in its discretion, directly reimburses the Trustee.
10.3 Resignation and Removal of Trustee.
(a) Resignation, Removal and Appointment. The Trustee (or in
the event two or more co-trustees are acting, any such co-trustee) may resign by
giving 30 days' written notice of intention so to do to the Corporation or such
shorter notice as the Corporation may approve. The Corporation may remove any
Trustee or successor Trustee hereunder by giving such Trustee (or any
co-trustee) 30 days' written notice of removal by certified mail. The
Corporation shall have the power to appoint one or more individual or corporate
Trustees, or both, as additional or successor Trustees. If any individual who is
a Trustee is a director, officer or Employee when
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appointed as a Trustee, then such individual shall be automatically removed as a
Trustee at the earliest time such individual ceases to be a director, officer or
Employee. This removal shall occur automatically and without any requirement for
action by the Corporation or any notice to the individual so removed.
(b) Surviving Trustees. When any person appointed, qualified
and serving as a Trustee hereunder shall cease to be a Trustee of the Trust
Fund, the remaining Trustee(s) then serving hereunder, or the successor
Trustee(s) appointed hereunder, as the case may be, shall thereupon be and
become vested with full title and right to possession of all assets and records
of the Plan and the Trust Fund in the possession or control of such prior
Trustee, and the prior Trustee shall forthwith account for and deliver the same
to such remaining or successor Trustee(s).
(c) Co-Trustee Responsibility. No Trustee shall be or become
liable for any act or omission of a co-trustee serving hereunder with him or it
(except to the extent that liability is imposed under ERISA) or of a prior
Trustee hereunder, it being the purpose and intent that each Trustee shall be
liable only for his or its own acts or omissions during his or its term of
service as Trustee hereunder.
(d) Allocation of Responsibility. If there shall at any time
be two or more co-trustees serving hereunder, such Trustees, in addition to all
other powers and authorities vested in them by law or conferred upon them by any
provision of this Plan, shall have power to allocate and reallocate from time to
time to any one or more of their number specific responsibilities, obligations
or duties and may delegate and redelegate from time to time to any one or more
of their number the exercise of any right, power or discretion vested in the
Trustees by law or conferred upon them by any provision of this Plan, and any
person, firm or corporation dealing with the co-trustees with respect to the
Plan or the Trust Fund may assume conclusively that any action taken or
instrument executed by any one of such co-trustees is the action of all the
co-trustees serving hereunder, and that authority for the doing of such act or
the execution of such instrument has been conferred upon and delegated to the
Trustee doing such act or executing such instrument. If any responsibility,
obligation, duty, right, power or discretion vested in the Trustee is allocated
or delegated to one or more co-trustees, the remaining co-trustees shall not be
or become liable for an act or omission by the co-trustees to whom a right,
power or discretion was delegated while such co-trustees were acting pursuant to
such delegation.
(e) Majority Decisions. If there shall at any time be three or
more co-trustees serving hereunder who are qualified to perform a particular
act, the same may be performed, on behalf of all, by a majority of those
qualified, with or without the concurrence of the minority. No person who failed
to join or concur in such act shall be held liable for the consequences thereof,
except to the extent that liability is imposed under ERISA.
10.4 Accountings by Trustee.
(a) Periodic Reports. The Trustee shall render to the
Corporation and to the Administrator an account and report as soon as
administratively feasible after the last day of each calendar quarter showing
all transactions affecting the administration of the Plan and the Trust
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Fund, including, but not necessarily limited to, such information concerning the
Plan and the Trust Fund and the administration thereof by the Trustee as shall
be requested in writing by the Corporation or the Administrator.
(b) Special Reports. The Trustee shall also render such
further reports from time to time as may be requested by the Corporation and
shall submit its final report and account to the Corporation when it shall cease
to be Trustee hereunder, whether by resignation or other cause.
10.5 Trustee's Power to Protect Itself on Account of Taxes. As a
condition to making the distribution of a Participant's vested Account during
his lifetime, the Trustee may require the Participant (or his Beneficiary) to
furnish the Trustee with proof of payment of all income, inheritance, estate,
transfer, legacy and/or succession taxes and all other taxes of any different
type or kind that may be imposed under or by virtue of any state or federal
statute or law upon the payment, transfer, descent or distribution of such
vested Account and for the payment of which the Trustee may, in its judgment, be
directly or indirectly liable. In lieu of the foregoing, the Trustee may deduct,
withhold and transmit to the proper taxing authorities any such tax which it may
be permitted or required to deduct and withhold and the vested Account to be
distributed in such case shall be correspondingly reduced. Unless the
Corporation and the Trustee agree otherwise in writing, the Trustee shall be
responsible for withholding federal income taxes and for providing all required
notices and elections concerning such withholding to all Participants and
Beneficiaries.
10.6 Other Trustee Powers. Except to the extent that the Trustee is
subject to the authorized and properly given investment directions of a
Participant, Beneficiary or Investment Manager (and in extension, but not in
limitation, of the rights, powers and discretion conferred upon the Trustee
herein), the Trustee shall have and may exercise from time to time in the
administration of the Plan and the Trust Fund, for the purpose of distribution
after the termination thereof, and for the purpose of distribution of vested
Accounts, without order or license of any court, any one or more or all of the
following rights and powers:
(a) To invest and reinvest the Trust Fund in accordance with
the investment characteristics and objectives determined therefor and to invest
and reinvest the assets of the Trust Fund in any securities or properties in
which an individual could invest the individual's own funds and which it deems
for the best interest of the Trust Fund, without limitation by any statute, rule
of law or regulation of any governmental body prescribing or limiting the
investment of trust assets by corporate or individual trustees, in or to certain
kinds, types or classes of investments or prescribing or limiting the portion of
the Trust Fund which may be invested in any one property or kind, type or class
of investment. Specifically and without limiting the generality of the
foregoing, the Trustee may invest and reinvest principal and accumulated income
of the Trust Fund in any real or personal property; preferred or common stocks
of any kind or class of any corporation, including but not limited to investment
and small business investment companies of all types; voting trust certificates;
interests in investment trusts; shares of mutual funds; interests in any limited
or general partnership or other business enterprise, however organized and for
whatever purpose; group or individual annuity contracts (which may
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involve investment in the issuer's general account or any of its separate
accounts); interests in common or collective trusts, variable interest notes or
any other type of collective fund maintained by a bank or similar institution
(whether or not the Trustee hereunder); bonds, notes and debentures, secured or
unsecured; mortgages, leases or other interests in real or personal property;
interests in mineral, gas, oil or timber properties or other wasting assets;
call options; put options; commodity or financial futures contracts; foreign
currency; interest-bearing certificates or accounts in a bank or similar
financial institution, including the Trustee or an affiliate of the Trustee
provided such certificates, accounts or instruments bear a reasonable rate of
interest; insurance contracts on the life of any "keyman" or shareholder of the
Employer; or conditional sales contracts. Prior to maturity and distribution of
the vested Accounts of Participants, the Trustee may commingle the Accounts of
Participants in the Trust Fund and invest, reinvest, control and manage each of
the same as a common trust fund.
(b) To sell, exchange or otherwise dispose of any asset of
whatsoever character at any time held by the Trustee in trust hereunder.
(c) To segregate any part or portion of the Trust Fund for the
purpose of administration or distribution thereof and, in its sole discretion,
to hold the Trust Fund uninvested whenever and for so long as, in the Trustee's
discretion, the same is likely to be required for the payment in cash of
Accounts normally expected to become distributable in the near future, or
whenever, and for as long as market conditions are uncertain, or for any other
reason which, in the Trustee's discretion, requires such action or makes such
action advisable.
(d) To hold uninvested reasonable amounts of cash whenever it
is deemed advisable to do so to facilitate disbursements or for other
operational reasons, and to deposit the same, with or without interest, in the
commercial or savings departments of any bank, trust company or other financial
institution.
(e) To register any investment held in the Trust Fund in the
name of the Trustee, without trust designation, or in the name of a nominee or
nominees, and to hold any investment in bearer form, but the records of the
Trustee shall at all times show that all such investments are part of the Trust
Fund, and the Trustee shall be as responsible for any act or default of any such
nominee as for its own.
(f) Subject to the prior approval of the Administrator, to
retain and employ such attorneys, agents and servants as may be necessary or
desirable, in the opinion of the Trustee, in the administration of the Trust
Fund, and to pay them such reasonable compensation for their services as may be
agreed upon as an expense of administration of the Trust Fund, including power
to employ and retain counsel upon any matter of doubt as to the meaning of or
interpretation to be placed upon this Plan or any provisions thereof with
reference to any question arising in the administration of the Trust Fund or
pertaining to the distribution thereof or pertaining to the rights and
liabilities of the Trustee hereunder or to the rights and claims of Participants
and Beneficiaries. The Trustee, in any such event, may act in reliance upon the
advice, opinions, records, statements and computations of any attorneys and
agents and on the records, statements and computations of any servants so
selected by it in good faith and shall be
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released and exonerated of and from all liability to anyone in so doing (except
to the extent that liability is imposed under ERISA).
(g) Subject to the prior approval of the Administrator, to
institute, prosecute and maintain, or to defend, any proceeding at law or in
equity concerning the Plan or the Trust Fund or the assets thereof or any claims
thereto, or the interests of Participants and Beneficiaries hereunder at the
sole cost and expense of the Trust Fund or at the sole cost and expense of the
Account of the Participant who may be concerned therein or who may be affected
thereby as, in the Trustee's opinion, shall be fair and equitable in each case,
and to compromise, settle and adjust all claims and liabilities asserted by or
against the Plan or the Trust Fund or asserted by or against the Trustee, on
such terms as the Trustee, in each such case, shall deem reasonable and proper.
The Trustee shall be under no duty or obligation to institute, prosecute,
maintain or defend any suit, action or other legal proceeding unless it shall be
indemnified to its satisfaction against all expenses and liabilities which it
may sustain or anticipate by reason thereof.
(h) To institute, participate and join in any plan of
reorganization, readjustment, merger or consolidation with respect to the issuer
of any securities held by the Trustee hereunder, and to use any other means of
protecting and dealing with any of the assets of the Trust Fund which it
believes reasonably necessary or proper and, in general, to exercise each and
every other power or right with respect to each asset or investment held by it
hereunder as individuals generally have and enjoy with respect to their own
assets and investment, including, subject to Section 10.13 hereof, the power to
vote upon any securities or other assets having voting power which it may hold
from time to time, and to give proxies with respect thereto, with or without
power of substitution or revocation, and to deposit assets or investments with
any protective committee, or with trustees or depositories designated by any
such committee or by any such trustees or any court. Neither the Trustee nor any
Investment Manager, as the case may be, shall vote or take similar actions with
respect to any security in which it may have an interest, direct or indirect. In
such case, the Trustee or Investment Manager shall notify the Corporation, and
the Corporation shall direct the Trustee or the Investment Manager with respect
to such voting or similar action.
(i) In any matter of doubt affecting the meaning, purpose or
intent of any provision of this Plan which directly affects its duties, to
determine such meaning, purpose or intent.
(j) To require, as a condition to distribution of any vested
Account, proof of identity or of authority of the person entitled to receive the
same, including power to require reasonable indemnification on that Account as a
condition precedent to its obligation to make distribution hereunder.
(k) To collect, receive, receipt and give quittance for all
payments that may be or become due and payable on account of any asset of the
Trust Fund hereunder which has not, by act of the Trustee taken pursuant
thereto, been made payable to others; and payment thereof by the Corporation
issuing the same, or by the party obligated thereon, as the case may be, when
made to the Trustee hereunder or to any person or persons designated by the
Trustee, shall
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acquit, release and discharge such company or obligated party from any and all
liability on account thereof.
(l) To determine from time to time, for any purpose of the
Plan, the then value of the Trust Fund and the Accounts in the Trust Fund, in
each such case, using and employing for that purpose the fair market value of
each of the assets constituting the Trust Fund. Each such determination so made
by the Trustee in good faith shall be binding and conclusive upon all persons
interested or becoming interested in the Plan or the Trust Fund.
(m) To receive and retain contributions made in a form other
than cash in the form in which the same are received until such time as the
Trustee, in its sole discretion, deems it advisable to sell or otherwise dispose
of such assets.
(n) To commingle, for investment purposes, the assets of the
Trust Fund with the assets of any other qualified retirement plan trust fund of
the Employer, provided that the records of the Trustee shall reflect the
relative interests of the separate trusts in such commingled fund.
(o) To grant options for the sale or other disposition of
Trust Fund assets; to purchase options for the acquisition of assets of any
type; and to buy and sell (including short sales) call options, put options and
futures contracts.
(p) To have and to exercise such other and additional powers
as may be advisable or proper in its opinion for the effective and economical
administration of the Trust Fund.
(q) To deposit any part or all of the assets of the Trust Fund
in any collective trust fund, which is a medium for the collective investment of
funds of pension, profit sharing or other employee benefit plans, and which is
qualified under Code Section 401(a) and exempt from taxation under Code Section
501(a), and to withdraw any part or all of the assets so deposited. Any assets
of the Trust Fund deposited with the trustee of a collective trust fund shall be
held and invested by the trustee thereunder pursuant to all the terms and
conditions of the trust agreement or declaration of trust establishing the Trust
Fund, which are hereby incorporated herein by reference and shall prevail over
any contrary provisions of this Plan.
(r) To deposit any part or all of the assets of the Trust Fund
with the trustee of any master investment trust which is maintained for the
investment of assets of qualified pension, profit sharing or stock bonus plans
maintained by the Employer or its affiliates, and which is qualified under Code
Section 401(a) and exempt from taxation under Code Section 501(a), and to
withdraw any part or all of the assets so deposited. Any assets deposited with
the trustee of such a master investment trust shall be held and invested, by
that trustee pursuant to the terms and conditions of the master investment trust
document, which is hereby incorporated herein by reference and shall prevail
over any contrary provision of this Plan.
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10.7 Investment Managers.
(a) Appointment and Removal. The Corporation shall have the
power to appoint from time to time one or more Investment Managers to direct the
Trustee in the investment of, or to assume complete investment responsibility
over, all or any portion of the Trust Fund. An Investment Manager may be any
person or firm (i) which is either (A) registered as an investment adviser under
the Investment Advisers Act of 1940, (B) a bank, or (C) an insurance company
which is qualified to perform the services of an Investment Manager under the
laws of more than one state; and (ii) which acknowledges in writing that it is a
fiduciary with respect to the Plan. The conditions prescribed in the preceding
sentence shall apply to the issuer of any group annuity contract hereunder only
if, and to the extent that, such issuer would otherwise be considered a
"fiduciary" with respect to the Plan, within the meaning of ERISA. The
Corporation may remove any Investment Manager appointed pursuant to this Section
10.7(a) and shall have the power to appoint a successor or successors from time
to time in succession to any Investment Manager who shall be removed, shall
resign or shall otherwise cease to serve hereunder.
(b) Powers of an Investment Manager. An Investment Manager
shall have any or all of such powers and rights, as described in Sections
10.6(a) through (h) hereof, with respect to Plan assets for which it has
investment responsibility, but only if (and only to the extent that) such powers
and rights are expressly given to such Investment Manager in a written agreement
signed by it and acknowledged in writing by the Trustee. In all other cases,
such powers and rights shall be exercised solely by the Trustee.
(c) Relation to Other Fiduciaries. The Trustee shall comply
with all investment directions given to the Trustee by an Investment Manager
with respect to the designated portion of the Trust Fund for which the
Investment Manager has responsibility, and the Trustee shall be released and
exonerated of and from all liability for or an account of any action taken or
not taken by it pursuant to the directions of such Investment Manager, except to
the extent that liability is imposed under ERISA. Neither the Employer or any of
its officers, directors or Employees nor the Administrator shall be liable for
the acts or omissions of the Trustee or of any Investment Manager appointed
hereunder. The fees and expenses of an Investment Manager, as agreed upon from
time to time between the Investment Manager and the Corporation, shall be
charged to and paid from the Trust Fund in a fair and equitable manner, except
to the extent that the Employer, in its discretion, may make payment of the fees
of the Investment Manager directly to the Investment Manager.
10.8 No Investment in Employer Real Property. Notwithstanding any other
provision of this Plan, the Plan may not acquire or hold any "employer real
property" as that term is defined in ERISA Section 407(d).
10.9 Employer Stock Fund. ESOP Contributions, and other Contributions
and cash dividends described in Section 4.3 hereof as directed by Participants
and Beneficiaries, shall be held, invested and reinvested by the Trustee without
distinction between principal and income, primarily in Employer Stock, so long
as any such Stock is available for purchase at not more
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than fair market value, provided that the Trustee may keep such portion of the
Trust Fund in cash or invested in assets readily convertible into cash, as the
Trustee may deem advisable for the purpose of paying expenses of the Plan and
Trust Fund or for such other reasonable needs for liquidity as the Trustee may
deem advisable, including without limitation, reasonably foreseeable Employer
Stock purchases. If Employer Stock is not purchased by the Trustee, the Trustee
shall invest the Trust Fund in accordance with the other provisions of this
Article 10.
10.10 Fiduciary Principles. The Trustee and each other fiduciary
hereunder, in the exercise of each and every power or discretion vested in them
by the provisions of this Plan, shall (subject to the provisions of ERISA)
discharge their duties with respect to the Plan solely in the interest of the
Participants and Beneficiaries, and for the exclusive purpose of providing
benefits to Participants and Beneficiaries and defraying reasonable expenses of
administering the Plan. Notwithstanding anything in this Plan to the contrary,
any provision hereof which purports to relieve a fiduciary from responsibility
or liability for any responsibility, obligation or duty under Part 4 of Subtitle
B of Title I of ERISA shall, to the extent the same is inconsistent with said
Part 4, be deemed void.
10.11 Prohibited Transactions. Except as may be permitted by law, no
Trustee or other fiduciary hereunder shall permit the Plan to engage, directly
or indirectly, in a "prohibited transaction" (as defined in ERISA Section 406 or
Code Section 4975(c)) The provisions of this Section 10.11 shall not prohibit a
transaction which qualifies as an Exempt Loan under Article 14 hereof.
10.12 Indemnity. Each individual (as distinguished from corporate)
Trustee of the Plan or officer, director or Employee of the Employer shall,
except as prohibited by law, be indemnified and held harmless by the Employer
from any and all liabilities, costs and expenses (including legal fees), to the
extent not covered by liability insurance, arising out of any action taken by
such individual with respect to the Plan, whether imposed under ERISA or
otherwise, unless the liability, cost or expense arises from the individual's
claim for his or her own benefit, the proven gross negligence, the bad faith or,
if the individual had reasonable cause to believe his or her conduct was
unlawful, the criminal misconduct of such individual. This indemnification shall
continue as to an individual who has ceased to be a Trustee of the Plan or
officer, director or Employee and shall inure to the benefit of the heirs,
executors and administrators of such an individual.
10.13 Voting Rights. Each Participant and Beneficiary shall direct the
Administrator to direct the Trustee how to vote the Employer Stock allocated to
his Account in accordance with paragraphs (a) and (b) below. The Administrator
shall direct the Trustee how to vote the Employer Stock not allocated to any
Participant's Account and any Employer Stock allocated to Participants' Accounts
for which voting instructions are not timely received. Such vote shall be made
in the same proportion as the vote that was timely received from Participants
and Beneficiaries.
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(a) If the Employer Stock is a "registration-type class of
securities," within the meaning of Code Section 409(e)(4), each Participant and
Beneficiary shall be entitled to direct the Trustee as to the manner in which
the Stock allocated to his Account is to be voted.
(b) If the Employer Stock is not described in paragraph (a)
above, each Participant and Beneficiary shall be entitled to direct the Trustee
as to the manner in which voting rights of the Securities allocated to his
Account are to be exercised with respect to any corporate matter in which a
shareholder vote is required for the approval or disapproval of any corporate
merger, consolidation, recapitalization, reclassification, liquidation,
dissolution, sale of substantially all the assets of a trade or business or any
similar transaction.
10.14 Tender Offers. With respect to any offer for the purchase or
exchange of Employer Stock held in the Trust Fund, the Administrator shall
direct the Trustee to respond to such purchase or exchange offer with respect to
allocated shares of Employer Stock held in the Trust in accordance with
directions received from each Participant with respect to shares of Employer
Stock allocated to his or her Account under the Plan. The Administrator shall
direct the Trustee to respond to such purchase or exchange offer with respect to
any (a) unallocated Employer Stock held in the Trust Fund, and (b) any allocated
Employer Stock held in the Trust Fund for which voting instructions are not
timely received, in the same proportion as the responses that were timely
received from Participants and Beneficiaries.
ARTICLE 11
Claims Procedure
11.1 Application for Benefits. Any person entitled to benefits must
file a written claim with the Administrator on forms provided by the
Administrator. Such application shall include all information and evidence the
Administrator deems necessary to properly evaluate the merit of and to make any
necessary determinations on a claim for benefits. Unless special circumstances
exist, a claimant shall be informed of the decision on his claim within 90 days
of the date all the information and evidence necessary to process the claim is
received. Within such 90-day period, he shall receive a notice of the decision
or a notice that explains the special circumstances requiring a delay in the
decision and sets a date, no later than 180 days after all the information and
evidence necessary to process his claim have been received, by which he can
expect to receive a decision. The claimant may assume that the claim has been
denied and may proceed to appeal the denial if the claimant does not receive any
notice from the Administrator within the 90-day period or a notice of a delayed
decision within such 90-day period.
11.2 Notice of Denied Claim for Benefits. If a claim for benefits is
partially or wholly denied, the claimant shall receive a notice that: (a) states
the specific reason or reasons for denial; (b) refers to provisions of the Plan
on which the denial is based; (c) describes and explains the need for any
additional material or information that the claimant must supply in
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order to make his claim valid; and (d) explains the steps that must be taken to
submit his claim for review.
11.3 Review of Denied Claim. A claimant may file a written appeal of a
denied claim with the Administrator within 60 days after receiving notice that
his claim has been denied. The written appeal may include related comments,
statements or documents. The claimant may review all pertinent Plan documents
upon reasonable request to the Administrator. Within 60 days after the
submission of the written appeal, the Administrator shall render a determination
on the appeal of the claim in a written statement. The written decision shall
contain the reason or reasons for the decision and refer to specific Plan
provisions on which the decision is based. If special circumstances require a
delay in the decision, the Administrator shall notify the claimant of the
reasons for the delay within the 60-day period. A delayed decision shall be
issued no later than 120 days after the date the Administrator receives a
request for review. The determination rendered by the Administrator shall be
binding upon all parties.
ARTICLE 12
Amendment and Termination
12.1 Amendment or Restatement. The Corporation may amend or restate the
Plan at any time and from time to time. No amendment or restatement shall
authorize any part of the Trust Fund, other than amounts which are necessary to
pay taxes and administration expenses, to be used for or diverted to purposes
other than for the exclusive benefit of the Participants or their Beneficiaries.
No amendment or restatement shall be construed to: (1) reduce a Participant's
Account balance determined as of the date immediately preceding the effective
date of the amendment or restatement; (2) reduce or eliminate any benefit
protected by Code Section 411(d)(6); or (3) cause or permit any portion of the
Trust Fund to revert to, or become property of, the Employer. No amendment which
affects the rights, duties or responsibilities of the Trustee shall be effective
without the Trustee's written consent. The provisions of the Plan as in effect
at the time of a Participant's termination of Employment shall control as to
that Participant unless otherwise specified in the Plan.
12.2 Termination and Discontinuance of Contributions. The Corporation
reserves the right to terminate the Plan at any time with respect to any or all
Participants. Upon discontinuance of Plan contributions or full or partial
termination of the Plan, the Account of each affected Participant shall become
fully vested and nonforfeitable. The Corporation shall provide the Trustee with
written notification of the full or partial termination of the Plan. In the
event of full or partial termination, the Employer's liability to pay Plan
benefits shall be strictly limited to assets of the Trust Fund. No one shall
have any claim against the Employer to provide any or all of the plan benefits
regardless of the sufficiency of the Trust Fund, except as otherwise required by
law. The termination of the Plan shall not result in the reduction of any
benefit protected by Code Section 411(d)(6) except as permitted by applicable
Treasury Regulations.
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12.3 Distribution Upon Termination. If the Plan terminates pursuant to
Section 12.2 hereof and the Corporation does not merge the assets of the Plan
with another qualified plan or continue the Plan as a "wasting trust" by
satisfying all ongoing plan qualification rules, each Participant's Account
shall be distributed in accordance with Article 8 hereof. However, if the
Employer or any Affiliate establishes or maintains another defined contribution
plan, other than an employee stock ownership plan, each Participant's Account
may be transferred to such other defined contribution plan. Participant consent
to such a transfer shall be required only if transfer of the Participant's
Account results in an elimination or reduction of Code Section 411(d)(6)
protected benefits.
12.4 Merger, Consolidation or Transfer of Assets and Liabilities. Upon
any merger or consolidation with, or a transfer of assets or liabilities to
another plan, each Participant shall be entitled to receive a benefit
immediately after such event which is equal to or greater than the benefit he
would have been entitled to receive if the Plan had terminated immediately prior
to such event. Any such transfer, merger or consolidation shall not otherwise
result in the elimination or reduction of any benefit protected by Code Section
411(d)(6).
12.5 Successor Employer. Any successor to the business of the
Corporation may, with the written consent of the Corporation, continue the Plan.
Such successor shall succeed to all the rights, powers and duties of the
Corporation. If an Employee continues in the employ of the successor, he shall
not be deemed to have been terminated or severed for any purpose of the Plan.
ARTICLE 13
General Provisions
13.1 Limitation on Liability. In no event shall the Corporation,
Employer, Administrator or any Employee, officer or director of the Corporation
or Employer incur any liability for any act or failure to act unless such act or
failure to act constitutes a lack of good faith, willful misconduct or gross
negligence with respect to the Plan or Trust Fund.
13.2 Indemnification. The Trust Fund shall indemnify the Administrator
and any Employee, officer or director of the Corporation or the Employer against
all liabilities arising by reason of any act or failure to act unless such act
or failure to act is due to such person's own gross negligence or willful
misconduct or lack of good faith in the performance of his duties to the Plan or
Trust Fund. Such indemnification shall include, but not be limited to, expenses
reasonably incurred in the defense of any claim, including attorney and legal
fees, and amounts paid in any settlement or compromise; provided, however, that
indemnification shall not occur to the extent that it is not permitted by
applicable law. If Trust Fund assets are insufficient or indemnification is not
permitted by applicable law, the Employer shall indemnify such person.
Indemnification shall not be deemed the exclusive remedy of any person entitled
to indemnification pursuant to this Section 13.2. The indemnification provided
hereunder shall continue as to a person who has ceased acting as a director,
officer, member, agent or Employee
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of the Administrator or as an officer, director or Employee of the Corporation
or the Employer, and such person's rights shall inure to the benefit of his
heirs and representatives.
13.3 Insurance. The Corporation, in its sole discretion, or the
Trustee, at the Administrator's discretion, may obtain a policy or policies of
insurance for the Administrator (and other fiduciaries of the Plan) to cover
liability or loss occurring by reason of the act or omission of a fiduciary. If
such insurance is purchased with Trust Assets, the policy must permit recourse
by the insurer against the fiduciary in the case of a breach of a fiduciary
obligation by such fiduciary.
13.4 Compliance with ERISA. Notwithstanding any other provisions of
this Plan, a fiduciary or other person shall not be relieved of any
responsibility or liability for any responsibility, obligation or duty imposed
upon such person pursuant to ERISA.
13.5 Nonalienation of Benefits. Except with respect to any indebtedness
owing to the Trust Fund or payments required pursuant to a Qualified Domestic
Relations Order, or as otherwise permitted by law, benefits payable by the Plan
shall not be subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, charge, garnishment, execution or levy, either voluntary or
involuntary. Any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, charge or otherwise dispose of any right to Plan benefits
shall be void.
13.6 Employment Not Guaranteed by Plan. The establishment of this Plan,
its amendments and the granting of a benefit pursuant to the Plan shall not give
any Participant the right to continued Employment with the Employer, or limit
the right of the Employer to dismiss or impose penalties upon the Participant or
modify the terms of Employment of any Participant.
13.7 Construction. Except to the extent preempted by ERISA, the laws of
the State of Delaware, as amended from time to time, shall govern the
construction and application of the Plan. Words used in the masculine gender
shall include the feminine and words in the singular shall include the plural,
as appropriate. All references to statutory sections shall include the section
so identified, as amended from time to time, or any other statute of similar
import. If the Code or ERISA render any provisions of this Plan unenforceable,
such provision shall be of no force and effect only to the extent required by
such law.
13.8 Form of Communication. Any election, application, claim, notice or
other communication required or permitted to be made by or to a Participant, the
Administrator, the Corporation or the Employer shall be made in writing and in
such form as the Administrator, the Corporation or Employer shall prescribe. A
communication shall be effective upon mailing if sent first class, postage
prepaid and addressed to the Administrator, Corporation or Employer at the
principal office of the Administrator, Corporation or Employer or to the
Participant at his last known address.
13.9 Facility of Payment. If a Participant's duly qualified guardian or
legal representative makes claim for any amount owing to the Participant, the
Trustee shall pay the amount to which the Participant is entitled to such
guardian or legal representative. In the event a distribution is to be made to a
minor, the Administrator may direct that such distribution be
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paid to the legal guardian, or if none, to a parent of such minor or an adult
with whom the Beneficiary maintains his residence, or to the custodian for such
Beneficiary under the Uniform Gift to Minors Act if permitted by the laws of the
state in which the Beneficiary resides. Any payment made pursuant to this
Section 13.9 in good faith shall be a payment for the Account of the Participant
and shall be a complete discharge from any liability of the Trust Fund or the
Trustee.
13.10 Location of Participant or Beneficiary Unknown. If the
Administrator is unable to pay benefits from the Plan to any Participant or
Beneficiary due to the Administrator's inability to locate such Participant or
Beneficiary for three years after mailing a registered letter, return receipt
requested, to the last known address of such Participant or Beneficiary, the
amount to be Distributed shall be treated as a Forfeiture. If the Participant or
Beneficiary is located subsequent to the allocation of the Forfeiture, the
forfeited amount (unadjusted for earnings thereon) shall be restored, first from
Forfeitures, if any, then from a special Employer contribution made for such
purpose.
13.11 Service in More Than One Fiduciary Capacity. Any individual,
entity or group of persons may serve in more than one fiduciary capacity with
respect to the Plan and Trust Fund.
13.12 Offset. In the event any payment is made by the Trustee to any
individual who is not entitled to such payment, the Trustee shall have the right
to reduce future payments due to such individual by the amount of any such
erroneous payment. This right of offset, however, shall not limit the rights of
the Trustee to recover such overpayments in any other manner.
ARTICLE 14
Exempt Loans
14.1 Definition of Exempt Loan. An Exempt Loan is any loan or extension
of credit, such as a purchase money security interest, which is made to the Plan
and which either is made or is guaranteed by the Employer or by a Disqualified
Person, and which meets the following requirements:
(a) Primary Benefit. The loan shall be for the primary benefit
of Participants and their Beneficiaries. This requirement shall not be met
unless, at the time that the loan is made, both (i) the interest rate for the
loan and the price of the Employer Stock to be acquired with the loan proceeds
are not such that Plan assets might be diminished, and (ii) the terms of the
loan, whether or not between independent parties, are at least as favorable to
the Plan as the terms of a comparable loan resulting from arm's length
negotiations between independent parties.
(b) Use of Loan Proceeds. Within a reasonable time after
receipt of the loan proceeds, the Trustee shall use the proceeds to acquire
Employer Stock, to repay such loan or to repay a prior Exempt Loan. The proceeds
of the loan shall not be used for any purpose or
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purposes other than as set forth in the preceding sentence. Employer Stock
acquired with the proceeds of the loan shall not be subject to any options or
buy-sell or similar arrangements or restrictions while held by and distributed
from the Plan, except as provided for in Sections 8.8 and 8.9 hereof.
(c) Liability and Collateral. The loan shall be without
recourse against the Plan. The only assets which may be used as collateral for
the loan are Employer Stock acquired with the proceeds of the loan or used as
collateral on a prior Exempt Loan repaid with the proceeds of the current loan.
The only assets of the Plan to which any person entitled to payment under the
loan shall have any right are (i) the collateral of the loan, (ii) Contributions
(other than in the form of Employer Stock) made under the Plan to meet the
Plan's obligations under the loan, and (iii) earnings attributable to the
collateral and to the investment of such Contributions.
(d) Default. In the event of a default on the loan, the value
of Plan assets transferred in satisfaction of the loan shall not exceed the
amount of the default. Any loan made to the Plan by a Disqualified Person, but
not including a loan made to the Plan by an independent person and merely
guaranteed by a Disqualified Person, shall provide that, upon default, Plan
assets shall be transferred only upon and to the extent of the failure of the
Plan to meet the payment schedule of the loan.
(e) Rate of Interest. The rate of interest of the loan shall
not be in excess of a reasonable rate of interest, considering all relevant
factors including the amount and duration of the loan, the security and
guarantee (if any) involved, the credit standing of the Plan and the guarantor
(if any) and the interest rate then prevailing for comparable loans. A variable
interest rate may be deemed to be reasonable when the foregoing factors are
considered.
(f) Release from Encumbrance. The loan shall provide for the
release from encumbrance of Plan assets used as collateral for the loan
according to one of the following formulas, as specified by the Administrator:
(i) the number of shares of Employer Stock released
for each Plan Year during the term of the loan shall equal the number of shares
of such Stock held immediately before release for the current Plan Year,
multiplied by the amount of principal and interest paid for the Plan Year,
divided by the amount of principal and interest both paid for the current Plan
Year and remaining to be paid in all future Plan Years. The number of future
Plan Years under the loan must be definitely ascertainable and shall not take
into account any possible extensions or renewal periods. In computing the
interest due in all future years on a loan with a variable interest rate, the
interest rate applicable at the end of the current Plan Year shall be used. If
the collateral for a loan consists of more than one class of Employer Stock, the
number of shares of Stock of each class to be released in any Plan Year shall be
determined by applying the same fraction to each class; or
(ii) the number of shares of Employer Stock to be
released from encumbrance may be determined solely with reference to principal
payments if (A) the loan provides for annual payments of principal and interest
at a cumulative rate not less rapid at any time than level annual payment of
such amounts for ten years, (B) the interest portion of any
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payment is disregarded only to the extent that it would be deemed to be interest
under standard loan amortization tables, and (C) the sum of the expired duration
of the loan and the period of any renewal or extension or the duration of a new
loan does not exceed ten years.
(g) Term of Loan. The term of the loan shall be specific and
shall not be payable on the demand of any person except in the case of default.
14.2 Accounts and Allocations of Contributions.
(a) Suspense Account. Notwithstanding any provisions in
Article 4 hereof to the contrary, the Trustee shall maintain a separate Suspense
Account to which it shall add all Employer Stock acquired with the proceeds of
an Exempt Loan. All Employer Stock held in the Suspense Account shall be assets
of the Plan. At the time an Exempt Loan is made, the Administrator shall inform
the Trustee whether it is to release Employer Stock from the Suspense Account
according to the formula set forth in Section 14.1(f)(i) or (ii) hereof. At the
end of each Plan Year the Trustee shall release such shares of Employer Stock
from the Suspense Account in accordance with the applicable formula and shall
withdraw such shares of Employer Stock from the Suspense Account. Immediately
upon releasing Employer Stock from the Suspense Account, the Trustee shall
allocate to the Participants' ESOP Contribution Subaccounts, the shares and
fractions of shares withdrawn from the Suspense Account (subject to the
limitations set forth in Article 5 hereof) in the same proportion that each
Participant would have shared in the Employer's ESOP Contribution for such year
had the Contribution been allocated in accordance with Article 3 hereof.
(b) Earnings. The Trustee shall allocate the earnings, if any,
received with respect to Employer Stock in the Suspense Account acquired with
the proceeds of an Exempt Loan as earnings of the Plan except to the extent that
such earnings are used to repay the Exempt Loan or are collateral for the Exempt
Loan. If the Plan receives cash dividends with respect to Employer Stock held in
the Suspense Account, the Trustee may, as directed by the Administrator, use
said cash dividends to make payments on the Exempt Loan. If the Plan receives
cash dividends with respect to Employer Stock allocated to a Participant's ESOP
Contribution Subaccount acquired with the proceeds of an Exempt Loan while the
Plan remains obligated to make payments on the Exempt Loan, the Trustee may, as
directed by the Administrator, use said cash dividends to make payments on the
Exempt Loan. If the cash dividends are used to make payments on the Exempt Loan,
the Trustee shall allocate to such Participant's ESOP Contribution Subaccount
Employer Stock with a fair market value, determined pursuant to Section 14.3
hereof, at least equal to the amount of such cash
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dividend which, but for the repayment of the Exempt Loan, would have been
allocated to such Participant. If the cash dividends are not used to make
payments on an Exempt Loan, the cash dividends shall be distributed to the
Participant or credited to the Participant's ESOP Contribution Subaccount as
described in Section 4.3(b) hereof. Notwithstanding the foregoing, no cash
dividend on Employer Stock shall be applied to make payments on an Exempt Loan
unless the proceeds of such Exempt Loan were used to (i)acquire the Employer
Stock with respect to which such cash dividend was paid, or (ii) repay another
Exempt Loan the proceeds of which were used to acquire such Employer Stock.
14.3 Valuation. For the purposes of this Article 14, the valuation of
all Employer Stock shall be the fair market value of the shares, as determined
in good faith and based on all relevant factors for determining the fair market
value of securities, on the date of valuation. In the case of a transaction
between the Plan and a Disqualified Person, the date of valuation shall be the
date of the transaction. For all other purposes relating to allocation, the date
of valuation shall be the most recent Valuation Date pursuant to Section 4.2
hereof.
14.4 Distribution. If Employer Stock acquired with the proceeds of an
Exempt Loan consists of more than one class of securities, each Distributee
shall receive substantially the same proportion of each class as such securities
are held by the Trust Fund. The provisions of Article 8 hereof shall govern the
form of distribution.
14.5 Termination of the Plan. If this Plan ever ceases to be an
employee stock ownership plan, all Employer Stock which has been acquired with
proceeds of an Exempt Loan shall continue, after the Exempt Loan is paid, to be
subject to Sections 8.8 and 8.9 hereof.
14.6 Preemption. Any provision herein to the contrary notwithstanding,
the provisions of this Article 14 shall govern all transactions relating to
Exempt Loans and Employer Stock acquired with the proceeds of such Loans.
ARTICLE 15
Contingent Top Heavy Plan Rules
15.1 Applicability of this Article. Notwithstanding any of the
foregoing provisions of the Plan, if after applying the definitions and rules
set forth in this Article 15, the Plan is determined to be a top heavy plan for
a Plan Year, the top heavy provisions of this Article 15 shall apply. If the
Plan is not a top heavy plan, the provisions of this Article 15 shall be
inapplicable and not effective.
15.2 Aggregated Employers. "Aggregated employers" means the Employer
and each other corporation, partnership or proprietorship which is a
"predecessor" to the Employer, or is an Affiliate of the Employer.
15.3 Aggregation Group. "Aggregation group" means a grouping of this
Plan and:
(a) if any Participant in the Plan is a key employee, each
other qualified pension, profit sharing or stock bonus plan of the aggregated
employers in which a key employee is a Participant (and for this purpose, a key
employee shall be considered a Participant only during periods when he is
actually accruing benefits and not during periods when he has preserved accrued
benefits attributable to periods of participation when he was not a key
employee), and
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(b) each other qualified pension, profit sharing or stock
bonus plan of the aggregated employers which is required to be taken into
account for this Plan or any plan described in paragraph (a) above to satisfy
the qualification requirements under Section 410 or Code Section 401(a)(4), and
(c) each other qualified pension, profit sharing or stock
bonus plan of the aggregated employers which is not included in paragraph (a) or
(b) above, but which the Employer elects to include in the aggregation group and
which, when included, would not cause the aggregation group to fail to satisfy
the qualification requirements under Code Section 410 or 401(a)(4).
15.4 Compensation. Unless the context clearly requires otherwise,
"compensation" means the wages, tips and other compensation paid to the
Participant by the Employer and reportable in the box designated "wages, tips,
other compensation" on Treasury Form W-2 (or any comparable successor box or
form) for the applicable period but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Code Section 3401(a)(2)). In determining compensation there shall be
included elective contributions made by the Employer on behalf of the
Participant that are not includable in gross income under Code Sections 125,
402(e)(3), 402(h), 403(b), 414(h)(2) and 457 including elective contributions
authorized by the Participant under a cafeteria plan or any qualified cash or
deferred arrangement under Code Section 401(k). For the purposes of this Article
(excluding Section 15.6), compensation shall be limited in accordance with Code
Section 401(a)(17).
15.5 Determination Date. Determination date means, for the first Plan
Year of a plan, the last day of such first Plan Year, and for each subsequent
Plan Year, the last day of the immediately preceding Plan Year.
15.6 Five Percent Owner. "Five percent owner" means for each aggregated
employer that is a corporation, any person who owns (or is considered to own
within the meaning of the shareholder attribution rules) more than five percent
of the value of the outstanding stock of the corporation or stock possessing
more than five percent of the total combined voting power of the corporation,
and for each aggregated employer that is not a corporation, any person who owns
more than five percent of the capital interest or the profits interest in such
aggregated employer. For the purposes of determining ownership percentages, each
corporation, partnership and proprietorship otherwise required to be aggregated
shall be viewed as a separate entity.
15.7 Key Employee. "Key employee" means each Participant (whether or
not then an Employee) who at any time during a Plan Year (or any of the four
preceding Plan Years) is:
(a) an officer of any aggregated employer (excluding persons
who have the title of an officer but not the authority and including persons who
have the authority of an officer but not the title) having annual compensation
from all aggregated employers for any such Plan Year in excess of fifty percent
of the amount in effect under Code Section 415(b)(1)(A) for any such Plan Year,
or
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(b) one of the ten Employees (not necessarily Participants)
owning (or considered to own within the meaning of the shareholder attribution
rules) both more than one-half of one percent ownership interest in value and
the largest percentage ownership interests in value of any of the aggregated
employers (which are owned by Employees) and who has annual Compensation from
all the aggregated employers in excess of the limitation in effect under Code
Section 415(c)(1)(A) for any such Plan Year, or
(c) a five percent owner, or
(d) a one percent owner having annual compensation from the
aggregated employers of more than $150,000;
provided, however, that no more than 50 Employees (or, if lesser, the greater of
(i) three of all the aggregated employers' Employees, or (ii) ten percent of all
the aggregated employers' Employees) shall be treated as officers. For the
purposes of determining ownership percentages, each corporation, partnership and
proprietorship otherwise required to be aggregated shall be viewed as a separate
entity. For purposes of paragraph (b) above, if two Employees have the same
interest in any of the aggregated employers, the Employee having the greatest
annual compensation from that aggregated employer shall be treated as having a
larger interest. For the purpose of determining compensation, however, all
compensation received from all aggregated employers shall be taken into account.
The term "key employee" shall include the beneficiaries of a deceased key
employee.
15.8 One Percent Owner. "One percent owner" means, for each aggregated
employer that is a corporation, any person who owns (or is considered to own
within the meaning of the shareholder attribution rules) more than one percent
of the value of the outstanding stock of the corporation or stock possessing
more than one percent of the total combined voting power of the corporation, and
for each aggregated employer that is not a corporation any person who owns more
than one percent of the capital or the profits interest in such aggregated
employer. For the purposes of determining ownership percentages, each
corporation, partnership and proprietorship otherwise required to be aggregated
shall be viewed as a separate entity.
15.9 Shareholder Attribution Rules. "Shareholder attribution rules"
means the rules of Code Section 318, (except that subparagraph (C) of Code
Section 318(a)(2) shall be applied by substituting "5 percent" for "50 percent")
or, if the Employer is not a corporation, the rules determining ownership in
such Employer which shall be set forth in regulations prescribed by the
Secretary of the Treasury.
15.10 Top Heavy Aggregation Group.
(a) "Top heavy aggregation group" means any aggregation group
for which, as of the determination date, the sum of: (i) the present value of
the cumulative accrued benefits for key employees under all defined benefit
plans included in such aggregation group, and (ii) the aggregate sum of the
accounts of key employees under all defined contribution plans included in such
aggregation group, exceeds 60% of a similar sum determined for all Employees.
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(b) In applying the paragraph (a) above, the following rules
shall be observed:
(i) For the purpose of determining the present value
of the cumulative accrued benefit for any Employee under a defined benefit plan,
or the amount of the account of any Employee under a defined contribution plan,
such present value or amount shall be increased by the aggregate distributions
made with respect to such Employee under the plan during the five year period
ending on the determination date.
(ii) Any rollover contribution (or similar transfer)
initiated by the Employee, made from a plan maintained by one employer to a plan
maintained by another employer and made after December 31, 1983, to a plan shall
not be taken into account with respect to the transferee plan for the purpose of
determining whether such transferee plan is a top heavy plan (or whether any
aggregation group which includes such plan is a top heavy aggregation group).
Any rollover contribution (or similar transfer) not described in the preceding
sentence shall be taken into account with respect to the transferee plan for the
purpose of determining whether such transferee plan is a top heavy plan (or
whether any aggregation group which includes such plan is a top heavy
aggregation group).
(iii) If any individual is not a key employee with
respect to a plan for any Plan Year, but such individual was a key employee with
respect to a plan for any prior Plan Year, the cumulative accrued benefit of
such Employee and the account of such Employee shall not be taken into account.
(iv) The determination of whether a plan is a top
heavy plan shall be made once for each Plan Year of the Plan as of the
determination date for that Plan Year.
(v) In determining the present value of the
cumulative accrued benefits of Employees under a defined benefit plan, the
determination shall be made as of the actuarial valuation date last occurring
during the 12 months preceding the determination date and shall be determined on
the assumption that the Employees terminated employment on the valuation date
except as provided in Code Section 416 and the regulations thereunder for the
first and second Plan Years of a defined benefit plan. The accrued benefit of
any Employee (other than a key employee) shall be determined under the method
which is used for accrual purposes for all plans of the employer or if there is
no method which is used for accrual purposes under all plans of the employer, as
if such benefit accrued not more rapidly than the slowest accrual rate permitted
under Code Section 411(b)(1)(C). In determining this present value, the
mortality and interest assumptions shall be those which would be used by the
Pension Benefit Guaranty Corporation in valuing the defined benefit plan if it
terminated on such valuation date. The accrued benefit to be valued shall be the
benefit expressed as a single life annuity.
(vi) In determining the accounts of Employees under a
defined contribution plan, the account values determined as of the most recent
asset valuation occurring within the 12-month period ending on the determination
date shall be used. In addition, amounts required to be contributed under either
the minimum funding standards or the plan's contribution formula shall be
included in determining the account. In the first year of the plan,
contributions
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made or to be made as of the determination date shall be included even if such
contributions are not required.
(vii) If any individual has not performed any
services for any employer maintaining the plan at any time during the five-year
period ending on the determination date, any accrued benefit of the individual
under a defined benefit plan and the account of the individual under a defined
contribution plan shall not be taken into account
(viii) For this purpose, a terminated plan shall be
treated like any other plan and must be aggregated with other plans of the
employer if it was maintained within the last five years ending on the
determination date for the Plan Year in question and would, but for the fact
that it terminated, be part of the aggregation group for such Plan Year.
15.11 Top Heavy Plan.
(a) "Top heavy plan" means a qualified plan under which (as of
the determination date):
(i) if the plan is a defined benefit plan, the
present value of the cumulative accrued benefits for key employees exceeds 60
percent of the present value of the cumulative accrued benefits for all
Employees, and
(ii) if the plan is a defined contribution plan, the
aggregate of the accounts of key employees exceeds 60 percent of the aggregate
of all of the accounts of all Employees.
(b) In applying paragraph (a) above, the following rules shall
be observed:
(i) Each plan of an Employer required to be included
in an aggregation group shall be a top heavy plan if such aggregation group is a
top heavy aggregation group.
(ii) For the purpose of determining the present value
of the cumulative accrued benefit for any Employee under a defined benefit plan,
or the amount of the account of any Employee under a defined contribution plan,
such present value or amount shall be increased by the aggregate distributions
made with respect to such Employee under the plan during the five-year period
ending on the determination date.
(iii) Any rollover contribution (or similar transfer)
initiated by the Employee, made from a plan maintained by one employer to a plan
maintained by another employer and made after December 31, 1983, to a plan shall
not be taken into account with respect to the transferee plan for the purpose of
determining whether such transferee plan is a top heavy plan (or whether any
aggregation group which includes such plan is a top heavy aggregation group).
Any rollover contribution (or similar transfer) not described in the preceding
sentence shall be taken into account with respect to the transferee plan for the
purpose of
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determining whether such transferee plan is a top heavy plan (or whether any
aggregation group which includes such plan is a top heavy aggregation group).
(iv) If any individual is not a key employee with
respect to a plan for any Plan Year, but such individual was a key employee with
respect to the plan for any prior Plan Year, the cumulative accrued benefit of
such Employee and the account of such Employee shall not be taken into account.
(v) The determination of whether a plan is a top
heavy plan shall be made once for each Plan Year of the plan as of the
determination date for that Plan Year.
(vi) In determining the present value of the
cumulative accrued benefits of Employees under a defined benefit plan, the
determination shall be made as of the actuarial valuation date last occurring
during the 12 months preceding the determination date and shall be determined on
the assumption that the Employees terminated employment on the valuation date
except as provided in Code Section 416 and the regulations thereunder for the
first and second Plan Years of a defined benefit plan. The accrued benefit of
any Employee (other than a key employee) shall be determined under the method
which is used for accrual purposes for all plans of the employer or if there is
no method which is used for accrual purposes under all plans of the employer, as
if such benefit accrued not more rapidly than the slowest accrual rate permitted
under Code Section 411(b)(1)(C). In determining this present value, the
mortality and interest assumptions shall be those which would be used by the
Pension Benefit Guaranty Corporation in valuing the defined benefit plan if it
terminated on such valuation date. The accrued benefit to be valued shall be the
benefit expressed as a single life annuity.
(vii) In determining the accounts of Employees under
a defined contribution plan, the account values determined as of the most recent
asset valuation occurring within the 12 month period ending on the determination
date shall be used. In addition, amounts required to be contributed under either
the minimum funding standards or the plan's contribution formula shall be
included in determining the account. In the first year of the plan,
contributions made or to be made as of the determination date shall be included
even if such contributions are not required.
(viii) If any individual has not performed any
services for any employer maintaining the plan at any time during the five -
year period ending on the determination date, any accrued benefit of the
individual under a defined benefit plan and the account of the individual under
a defined contribution plan shall not be taken into account.
(ix) For this purpose, a terminated plan shall be
treated like any other plan and must be aggregated with other plans of the
employer if it was maintained within the last five years ending on the
determination date for the Plan Year in question and would, but for the fact
that it terminated, be part of the aggregation group for such Plan Year.
15.12 Determination of Top Heavy Status. Once each Plan Year, as of the
determination date for that Plan Year, the administrator of this Plan shall
determine if this Plan is a top heavy plan.
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15.13 When Applicable. If this Plan is determined to be a top heavy
plan for any Plan Year, Sections 15.13, 15.14 and 15.15 hereof shall apply for
that Plan Year (and to the extent hereinafter specified, for subsequent Plan
Years), notwithstanding any provisions to the contrary in the Plan.
15.14 Vesting Requirement.
(a) General Rule. During any Plan Year that the Plan is
determined to be a Top Heavy Plan, then all accounts of all Participants in a
defined contribution plan that is a top heavy plan and the accrued benefits of
all Participants in a defined benefit plan that is a top heavy plan shall be
vested and nonforfeitable in accordance with the following schedule if, and to
the extent, that it is more favorable than other provisions of the Plan:
If the Participant Has Completed the His Vested
Following Years of Vesting Service Percentage Shall Be:
---------------------------------- --------------------
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
(b) Subsequent Year. In each subsequent Plan Year that the
Plan is determined not to be a top heavy plan, the other nonforfeitability
provisions of the Plan (and not this Section 15.14) shall apply in determining
the vested and nonforfeitable rights of Participants who do not have five or
more years of Vesting Service (three or more years of Vesting Service for
Participants who have one or more Hours of Service in any Plan Year beginning
after December 31, 1988) as of the beginning of such subsequent Plan Year;
provided, however, that they shall not be applied in a manner which would reduce
the vested and nonforfeitable percentage of any Participant.
15.15 Defined Contribution Plan Minimum Benefit Requirement.
(a) General Rule. If this Plan is a defined contribution plan,
then for any Plan Year that this Plan is determined to be a top heavy plan, the
Employer shall make a contribution for allocation to the account of each
Employee who is a Participant for that Plan Year and who is not a key employee
in an amount (when combined with other Employer contributions and forfeited
accounts allocated to his account) which is at least equal to three percent of
such Participant's Compensation. (This minimum contribution amount shall be
further reduced by all other Employer contributions to this Plan or any other
defined contribution plans.) This contribution shall be made for each
Participant who has not separated from service with the Employer at the end of
the Plan Year (including for this purpose any Participant who is then on
temporary layoff or authorized leave of absence or who, during such Plan Year,
was inducted into the Armed Forces of the United States) including, for this
purpose, each Employee of the Employer who would have been a Participant if he
had: (i) completed 1,000 Hours of Service (or
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the equivalent) during the Plan Year, and (ii) made any mandatory contributions
to the Plan, and (iii) earned Compensation in excess of the stated amount
required for participation in the Plan.
(b) Special Rule. Subject to the following rules, the
percentage of Compensation required to be contributed pursuant to subsection (a)
above shall not exceed the percentage at which contributions are made (or
required to be made) under this Plan for the Plan Year for that key employee for
whom the percentage is the highest for the Plan Year.
(i) The percentage referred to above shall be
determined by dividing the Employer contributions for such key employee for such
Plan Year by his Compensation for such Plan Year.
(ii) For the purposes of this Section 15.15, all
defined contribution plans required to be included in an aggregation group shall
be treated as one (1) plan.
(iii) The exception contained in this subsection
shall not apply to (be available to) this Plan if this Plan is required to be
included in an aggregation group if including this Plan in an aggregation group
enables a defined benefit plan to satisfy the qualification requirements of Code
Section 410 or 401(a)(4).
15.16 Salary Reduction and Matching Contributions. For the purpose of
this Section 15.16, all Employer contributions attributable to a salary
reduction or similar arrangement shall be taken into account for the purpose of
determining the minimum percentage contribution required to be made for a
particular Plan Year for a Participant who is not a key employee but not for the
purpose of determining whether that minimum contribution requirement has been
satisfied. For the purpose of this Section 15.16 during all Plan Years beginning
after December 31, 1988, all Employer Matching Contributions shall be taken into
account for the purposes of determining the minimum percentage contribution
required to be made for a particular Plan Year for a Participant who was not a
key employee but not for the purpose of determining whether that minimum
contribution requirement has been satisfied.
15.17 Priorities Among Plans. In applying the minimum benefit
provisions of this Article 15 in any Plan Year that this Plan is determined to
be a top heavy plan, the following rules shall apply:
(a) If an Employee participates only in this Plan, the
Employee shall receive the minimum benefit applicable to this Plan.
(b) If an Employee participates in both a defined benefit plan
and a defined contribution plan and only one of such plans is a top heavy plan
for the Plan Year, the Employee shall receive the minimum benefit applicable to
the plan which is a top heavy plan.
(c) If an Employee participates in both a defined contribution
plan and a defined benefit plan and both are top heavy plans, then the Employee,
for that Plan Year, shall receive the defined benefit plan minimum benefit
unless for that Plan Year the Employee has
- 58 -
<PAGE>
received employer contributions and forfeitures allocated to his account in the
defined contribution plan in an amount which is at least equal to five percent
of his Compensation.
(d) If an Employee participates in two or more defined
contribution plans which are top heavy plans, then the Employee, for that Plan
Year, shall receive the defined contribution plan minimum benefit in this Plan.
15.18 Bargaining Units. The requirements of Sections 15.13, 15.14,
15.15 and 15.16 of this Article 15 shall not apply with respect to any Employee
included in a unit of Employees covered by an agreement which the Secretary of
Labor finds to be a collective bargaining agreement between Employee
representatives and one or more employers if there is evidence that retirement
benefits are the subject of good faith bargaining between such Employee
representatives and such employer or employers.
IN WITNESS WHEREOF, the Employer and Trustee have caused this Agreement
to be executed as of the date first written above, as evidence of acceptance of
the terms contained herein.
AMERICAN CAPITAL STRATEGIES, LTD.
- ----------------------------- ------------------------------------
Witness as to Employer By:
- ----------------------------- ------------------------------------
Witness as to Trustee JOHN ERICKSON, TRUSTEE
- 59 -
EXHIBIT 5
[ARNOLD & PORTER LETTERHEAD]
April 7, 2000
Board of Directors
American Capital Strategies, Ltd.
2 Bethesda Metro Center, 14th Floor
Bethesda, Maryland 20814
Re: Registration Statement on Form S-8
File No. 333-
----------------------------------
Gentlemen:
We have acted as your counsel in the preparation of a Registration
Statement on Form S-8 (the "Registration Statement") relating to the Company's
Employee Investment and Stock Ownership Plan (the "Plan") filed by you with the
Securities and Exchange Commission covering 300,000 shares (the "Shares") of
common stock, $0.01 par value per share ("Common Stock"), issuable pursuant to
the Plan.
In connection with rendering the opinions set forth in this letter, we
have examined such corporate records of the Company, including forms of the
Company's Second Amended and Restated Certificate of Incorporation, its Second
Amended and Restated Bylaws, and resolutions of the Board of Directors, as well
as made such investigation of matters of fact and law and examined such other
documents as we deem necessary for rendering the opinions hereinafter expressed.
The opinions set forth herein are subject to the following
qualifications, which are in addition to any other qualifications contained
herein:
A. We have assumed without verification the genuineness of all
signatures on all documents, the authority of the parties (other than the
Company) executing such documents, the authenticity of all documents submitted
to us as originals, and the conformity to original documents of all documents
submitted to us as copies.
B. The opinions set forth herein are based on existing laws,
ordinances, rules, regulations, court and administrative decisions as they
presently have been interpreted and we can give no assurances that our opinions
would not be different after any change in any of the foregoing occurring after
the date hereof.
C. We have assumed without verification that, with respect to the
minutes of any meetings of the Board of Directors or any committees thereof of
the Company that
<PAGE>
we have examined, due notice of the meetings was given or duly waived, the
minutes accurately and completely reflect all actions taken at the meetings and
a quorum was present and acting throughout the meetings.
D. We have assumed without verification the accuracy and completeness
of all corporate records made available to us by the Company.
E. We express no opinion as to the effect or application of any laws or
regulations other than the general corporation law of the State of Delaware and
the federal laws of the United States. As to matters governed by the laws
specified in the foregoing sentence, we have relied exclusively on the latest
standard compilations of such statutes and laws as reproduced in commonly
accepted unofficial publications available to us.
Based on the foregoing, upon the assumptions that there will be no
material changes in the documents we have examined and the matters investigated
referred to above, we are of the opinion that the Shares, when issued and
delivered in the manner and on the terms described in the Plan, will be validly
issued, fully paid and nonassessable.
This letter does not address any matters other than those expressly
addressed herein. This letter is given for your sole benefit and use. No one
else is entitled to rely hereupon. This letter speaks only as of the date
hereof. We undertake no responsibility to update or supplement it after such
date.
We hereby consent to your filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
ARNOLD & PORTER
By: /s/ Samuel A. Flax
---------------------
Samuel A. Flax
EXHIBIT 23.2
We consent to the incorporation by reference of our report dated February 2,
2000, with respect to the financial statements of American Capital Strategies,
Ltd. included in its Annual Report (Form 10-K) for the year ended December 31,
1999 in the Registration Statement (Form S-8 No. 333- ) pertaining to American
Capital Strategies, Ltd.'s Employee Investment and Stock Ownership Plan, filed
with the Securities and Exchange Commission
/s/ Ernst & Young LLP
--------------------------
McLean, Virginia
April 5, 2000
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors and
officers of American Capital Strategies, Ltd., a corporation organized under the
laws of the state of Delaware (the "Corporation"), hereby constitute and appoint
John Erickson and Samuel A. Flax, and each of them (with full power to each of
them to act alone), his true and lawful attorneys-in-fact and agents for him and
on his behalf and in his name, place and stead, in all cases with full power of
substitution and resubstitution, in any hand and all capacities, to sign,
execute and affix his seal to and file with the Securities and Exchange
Commission (or any other governmental or regulatory authority) a Registration
Statement on Form S-8 or any other appropriate form and all amendments or
supplements (including post-effective amendments) thereto with all exhibits and
any and all documents required to be filed with respect thereto, relating to the
registration of up to 300,000 shares of common stock, $0.01 par value per share,
and grants to each of them full power and authority to do and to perform each
and every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully and to all intents and
purposes as he himself might or could do if personally present, hereby ratifying
and confirming all that said attorneys-in-fact and agents, or any of them, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS HEREOF, each of the undersigned directors and/or
officers have hereunto set his hand and seal, as of the date specified.
AMERICAN CAPITAL STRATEGIES, LTD.
/s/ Malon Wilkus
Dated: April 4, 2000. -------------------------------------------
Malon Wilkus
Chairman and Chief Executive Officer
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director, Chairman and Chief April 4, 2000
/s/ Malon Wilkus Executive Officer (Principal
- ------------------------ Executive Officer)
Malon Wilkus
/s/ David Gladstone
- ------------------------ Director and Vice Chairman April 4, 2000
David Gladstone
/s/ Adam Blumenthal
- ------------------------ President, Chief Operating Officer April 4, 2000
Adam Blumenthal and Director
Vice President, Chief Financial April 4, 2000
/s/ John Erickson Officer and Secretary (Principal
- ------------------------ Accounting and Financial Officer)
John Erickson
/s/ Robert L. Allbritton
- ------------------------ Director April 4, 2000
Robert L. Allbritton
/s/ Alvin N. Puryear
- ------------------------ Director April 4, 2000
Alvin N. Puryear
- ------------------------ Director April 4, 2000
Neil M. Hahl
/s/ Philip R. Harper
- ------------------------ Director April 4, 2000
Philip R. Harper
/s/ Stan Lundine
- ------------------------ Director April 4, 2000
Stan Lundine
/s/ Stephen P. Walko
- ------------------------ Director April 4, 2000
Stephen P. Walko
</TABLE>
