<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-4197
UNITED STATES LIME & MINERALS, INC.
-----------------------------------
(Exact name of Registrant as specified in its charter)
TEXAS 75-0789226
----------------------- -----------------
(State of incorporation) (I.R.S. Employer Identification Number)
12221 MERIT DRIVE, SUITE 500, DALLAS, TEXAS 75251
- ------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 991-8400
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class Name of Each Exchange on
------------------- ------------------------
Which Registered
----------------
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.10 par value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment of this Form 10-K. [ X ]
The aggregate market value of Common Stock held by non-affiliates as of
February 28, 1997: $12,579,974.
Number of shares of Common Stock outstanding as
of February 28, 1997: 3,921,853.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the Registrant's
definitive proxy statement to be filed for its 1997 Annual Meeting of
Shareholders. Part IV incorporates certain exhibits by reference from the
Registrant's previous filings.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I
ITEM I. BUSINESS .................................................. 1
General ................................................... 1
Business and Products ..................................... 1
Product Sales ............................................. 1
Order Backlog ............................................. 2
Seasonality ............................................... 2
Limestone Reserves ........................................ 2
Mining .................................................... 3
Plant and Facilities ...................................... 3
Employees ................................................. 3
Competition ............................................... 4
Environmental Matters ..................................... 4
Disposition of Assets ..................................... 4
ITEM 2. PROPERTIES ................................................ 4
ITEM 3. LEGAL PROCEEDINGS ......................................... 4
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ....... 4
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS ..................................... 5
ITEM 6. SELECTED FINANCIAL DATA ................................... 6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ..................... 7
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ............... 11
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE ..................... 12
PART III ................................................................ 12
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K ............................................. 12
SIGNATURES .............................................................. 15
</TABLE>
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UNITED STATES LIME & MINERALS, INC.
FORM 10-K
For the Year Ended December 31, 1996
PART I
ITEM 1. BUSINESS.
GENERAL. The business of United States Lime & Minerals, Inc. (the
"Company" or the "Registrant"), which was incorporated in 1950, is the
production and sale of lime and limestone products. The Company extracts
high-quality limestone from its quarries and then processes the limestone for
sale as aggregate, pulverized limestone, quicklime and hydrated lime. These
operations are conducted through three wholly-owned subsidiaries of the
Company: Arkansas Lime Company, Corson Lime Company and Texas Lime Company.
References to the Company herein include references to its subsidiaries.
The Company's principal corporate office is located at 12221 Merit Drive,
Suite 500, Dallas, Texas 75251.
BUSINESS AND PRODUCTS. The Company extracts raw limestone and then
processes it for sale as aggregate, pulverized limestone, quicklime and
hydrated lime. Aggregate is raw limestone which has been crushed to specified
sizes. Pulverized limestone is a dried product ground to granular and finer
sizes. Quicklime is produced when carbon dioxide is removed from limestone in a
heat process called calcination. Hydrated lime is formed in a process called
hydration in which water is added to quicklime to produce a soft powder.
Aggregate is used by the construction industry in concrete, asphalt and
road base. Pulverized limestone is used primarily in the production of
construction materials such as asphalt paving and roofing shingles, as an
additive to agriculture feeds and as a soil enhancement. Quicklime is used
primarily in the manufacturing of paper products, in sanitation and water
filtering systems and in metal processing. Hydrated lime is used primarily in
municipal sanitation/water treatment, soil stabilization in highway and
building construction, the production of chemicals and the production of
construction materials such as stucco, plaster and mortar.
PRODUCT SALES. The Company sells its lime and limestone products primarily
in the states of Arkansas, Connecticut, Delaware, Kansas, Louisiana,
Mississippi, Missouri, New Jersey, New Mexico, New York, Oklahoma,
Pennsylvania, South Carolina, Tennessee, Texas and Virginia. Sales are made
primarily by the Company's eight sales employees. Sales personnel call on
potential customers and solicit orders which are generally made on a
purchase-order basis. The Company also receives orders in response to bids that
it prepares and submits to potential customers.
Principal customers for the Company's lime and limestone products are
highway, street and parking lot contractors, chemical producers, paper
manufacturers, roofing shingle manufacturers, glass manufacturers, municipal
sanitation/water treatment facilities, poultry and cattle feed producers,
governmental agencies, steel producers and electrical utility companies.
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During the year ended December 31, 1996, approximately 1,500 customers
accounted for the Company's sales of lime and limestone products. No single
customer accounted for more than 10% of such sales. The Company is not subject
to significant customer risks as its customers are considerably diversified as
to geographic location and industrial concentration. However, given the nature
of the lime and limestone industry, the Company's profits are very sensitive to
changes in volume.
Lime and limestone products are transported by rail and truck to
customers generally within a radius of 400 miles of each of the Company's
processing plants. Sales of lime and limestone products are highest during the
months of March through November.
Substantially all of the Company's sales are made within the United
States.
ORDER BACKLOG. The Company does not believe that backlog information
accurately reflects anticipated annual revenues or profitability from year to
year.
SEASONALITY. The Company's sales have historically reflected seasonal
trends, with the largest percentage of total annual revenues being realized in
the second and third quarters. Low seasonal demand normally results in reduced
shipments and revenues in the first quarter. Inclement weather conditions have
a negative impact on the demand for lime and limestone products.
LIMESTONE RESERVES. The Company extracts limestone from three open-pit
quarries, all of which are Company-owned. The Cleburne Quarry is located 14
miles from Cleburne, Texas; the Batesville Quarry is located near Batesville,
Arkansas; and the Corson Quarry is located at Plymouth Meeting, Pennsylvania.
Access to each location is provided by paved roads.
Texas Lime Company operates out of the Cleburne Quarry, which is
situated upon a tract of land containing approximately 459 acres. In addition,
the Company owns 2,149 acres of land adjacent to the Cleburne tract containing
known high-quality limestone reserves in a bed averaging 28 feet in thickness,
with an overburden which ranges from 0 to 50 feet. The Company also has mineral
interests in the 560 acres of land adjacent to the Northwest boundary of the
Company's property. This tract of land has 531 acres of proven limestone
reserves. The calculated reserves are approximately 117,000,000 tons. Assuming
the present level of production at the Quarry is maintained, the Company
estimates the reserves are sufficient to sustain operations for approximately
100 years.
Arkansas Lime Company operates out of the Batesville Quarry, which is
situated upon a tract of 725 acres, 90 of which contain known deposits of
high-quality limestone reserves. The average thickness of the chemical-quality
limestone sequence in this deposit is approximately 70 feet, with an overburden
averaging 35 feet. Additional drilling was done in 1996 to validate the present
reserves. The total calculated available reserves are approximately 26,000,000
tons. Assuming the present level of production at the quarry is maintained, the
Company estimates that reserves are sufficient to sustain operations for
approximately 50 years.
Corson Lime Company operates out of the Corson Quarry, which is
situated at Plymouth Meeting, Pennsylvania upon a tract of land containing
approximately 315 acres, approximately 153 acres of which are underlain by
dolomitic limestone reserves. Permitted reserves are calculated to be
approximately 79,000,000 tons at the Quarry. The overburden averages
approximately 39 feet over the nonexposed portion of the Quarry. The Company
estimates that, assuming the present level of production at the Quarry is
maintained, the reserves are sufficient to sustain operations for approximately
50 years.
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MINING. The Company extracts limestone by the open-pit method at its
three operating quarries. The open-pit method, which consists of removing the
top layer of soil, trees and other substances and then extracting the exposed
limestone, is generally less expensive than underground mining. The principal
disadvantage of the open-pit method is that operations are subject to inclement
weather. To extract limestone, the Company utilizes standard mining equipment
which is Company-owned. After extraction, limestone is crushed, screened and
ground in the case of aggregate and pulverized limestone, or further processed
in kilns and hydrators in the case of quicklime and hydrated lime, before
shipment. The Company has no knowledge of any recent changes in the physical
quarrying conditions on any of its properties which have materially affected
its operations, and no such changes are anticipated.
PLANTS AND FACILITIES. The Company produces lime and limestone
products in the following plants:
The Texas plant is located adjacent to the Cleburne Quarry on a tract
of land covering approximately 8.4 acres. This plant is equipped with three
rotary kilns and has a daily-rated capacity of 1,200 tons of quicklime. The
plant has pulverized limestone equipment which has a capacity to produce
550,000 tons of pulverized limestone annually, depending on the product mix. In
addition to this plant, the Company owns a plant which is located near Blum,
Texas on a tract of land covering approximately 40 acres. It is equipped with
two vertical kilns and has a daily-rated capacity of 600 tons of quicklime. The
Blum plant was acquired in 1989 and has not been operated since that time;
however, the plant's storage and shipment facilities are currently being
utilized.
The Arkansas plant, situated on a tract of approximately 290 acres, is
located roughly two miles from the Batesville Quarry and is connected to the
Quarry by a Company-owned railway. Utilizing six vertical kilns, this plant has
a daily-rated capacity of 345 tons of quicklime. The plant has two grinding
systems which, depending on the product mix, has the capacity to produce
700,000 tons of pulverized limestone annually.
The Pennsylvania plant is located adjacent to the Corson Quarry on a
tract of land covering approximately 147 acres. It is equipped with a dual
crushing system and six vertical kilns and has a daily-rated capacity of 8,000
tons of aggregate and 300 tons of quicklime.
The Company maintains lime hydrating equipment and limestone drying
equipment at all three plants. Storage facilities, lime and pulverized
limestone products at each of its plants consist primarily of cylindrical
tanks, which are considered by the Company to be adequate to protect its lime
and limestone products and to provide an available supply for customers' needs
at the existing volume of shipments. Equipment is maintained at each plant to
load trucks and at the Arkansas and Blum plants to load railroad cars.
The Company believes that its processing plants for the most part are
being properly maintained and are adequately insured. Much of the equipment in
the plants is aging and will require maintenance and repair in the future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's expected capital expenditures for
modernizing and re-equipping the plants.
EMPLOYEES. The Company employed, at December 31, 1996, 318 persons, 38
of whom are engaged in sales, administrative and management activities. Of the
Company's 280 production employees, 224 are covered by collective bargaining
agreements. These agreements expire as follows:
Pennsylvania facility in July 1998
Texas facility in November 1999
Arkansas facility in December 1999
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COMPETITION. The lime and limestone industry has certain limiting
factors, including: the availability of high-quality limestone (calcium
carbonate) reserves, the ability to secure mining and operating permits for a
facility, the cost of building processing plants to create the lime and
limestone products and the transportation costs associated with delivering the
products to customers. There is not a large number of producers in the United
States as a whole, but producers tend to concentrate on known limestone
formations where competition takes place on a local basis. The contraction of
the U.S. steel industry in the late 1970's and the early 1980's created an
excess of supply over demand, thus impacting prices and profit levels. The
industry as a whole has expanded its customer base and, while still selling
heavily to the steel industry, also counts paper producers and road builders
among its major customers. In recent years, the environmental-related uses for
lime have been expanding, including use in flue gas desulfurization and the
treatment of both waste and potable water.
ENVIRONMENTAL MATTERS. The Company's operations are subject to various
federal, state and local environmental laws and regulations, including the
Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act,
the Comprehensive Environmental Response, Compensation, and Liability Act as
well as the Toxic Substances Control Act. Management does not believe that any
lack of compliance by the Company with applicable environmental laws will have
a material adverse effect on the Company. In part in response to requirements
of environmental regulatory agencies, the Company incurred capital expenditures
of approximately $200,000 in 1996 on environmental compliance and is planning
to incur approximately $200,000 in 1997 excluding major projects. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." In the judgment of management, forecastable expenditure
requirements for the future are not of such dimension as to have a materially
adverse effect on the Company's financial condition, results of operations,
liquidity or competitive position. The Company's recurring costs associated
with managing and disposing of potentially hazardous substances (such as fuels
and lubricants used in operations) and maintaining pollution control equipment
amounted to approximately $100,000 in 1996 and $150,000 in 1995. The Company
has not been named as a potentially responsible party in any superfund cleanup
site.
DISPOSITION OF ASSETS. Effective July 15, 1992, substantially all of
the assets and business of Virginia Lime Company ("VLC"), a wholly owned
subsidiary of the Company, were sold to Eastern Ridge Lime Company, L.P.
ITEM 2. PROPERTIES.
Reference is made to Item 1 of this Report for a description of the
properties of the Company, and such description is hereby incorporated by
reference in answer to this Item 2. As discussed in Note 2 of Notes to
Consolidated Financial Statements, plant facilities and mineral reserves are
subject to encumbrances to secure the Company's loans.
ITEM 3. LEGAL PROCEEDINGS.
Information regarding legal proceedings is set forth in Note 6 of
Notes to Consolidated Financial Statements and is hereby incorporated by
reference in answer to this Item 3.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company did not submit any matters to a vote of security holders
during the fourth quarter of 1996.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is quoted on the Nasdaq National Market
under the symbol "USLM." As of February 28, 1997, the Company had 899
shareholders of record.
As of December 31, 1996, 500,000 shares of $5.00 par value preferred
stock were authorized, and none was issued.
The high and low sales prices for the Company's Common Stock for the
periods indicated, as well as dividends declared, were:
<TABLE>
<CAPTION>
1996 1995
------------------------------------- -----------------------------------------
MARKET PRICE MARKET PRICE
------------ ------------
LOW HIGH DIVIDENDS LOW HIGH DIVIDENDS
--- ---- --------- --- ---- ---------
DECLARED DECLARED
-------- --------
<S> <C> <C> <C> <C> <C> <C>
First Quarter $ 8 $11 3/4 $0.025 $5 1/2 $6 1/4 _
Second Quarter $ 11 3/8 $14 3/4 $0.025 $5 1/2 $6 3/4 $0.025
Third Quarter $ 8 3/4 $13 3/4 $0.025 $6 1/4 $8 1/4 $0.025
Fourth Quarter $ 7 3/4 $ 9 1/4 $0.025 $7 $8 3/4 $0.025
</TABLE>
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ITEM 6. SELECTED FINANCIAL DATA.
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1996 1995 1994 1993 1992
------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Operating Results
Revenues from continuing operations $40,159 41,419 36,865 32,359 35,950
======= ====== ====== ======= =======
Net income (loss)
From continuing operations $ 2,602 4,260 1,916(1) (441) 9,930(2)
From discontinued operations -- -- -- 480 (462)
------- ------ ------ ------- -------
$ 2,602 4,260 1,916 39 9,468
======= ====== ====== ======= =======
Income (loss) per share of common stock
From continuing operations $ 0.67 1.11 0.50 (0.11) 2.59
From discontinued operations -- -- -- 0.12 (0.12)
------- ------ ------ ------- -------
$ 0.67 1.11 0.50 0.01 2.47
======= ====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Total Assets $ 31,319 29,793 27,397 29,937 30,182
============ ====== ====== ====== ======
Long-Term Debt $ 3,238 4,381 6,225 9,622 --
============ ====== ====== ====== ======
Stockholders' Equity Per Share $ 5.40 4.89 3.86 3.32 3.32
============ ====== ====== ====== ======
Cash Dividends Declared Per Share $ 0.10 0.075 -- -- --
============ ====== ====== ====== ======
Employees at Year-End 318 338 313 302 317
============ ====== ====== ====== ======
</TABLE>
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(1) Includes a gain of $372,000, net of related taxes ($425,000
gross), due to the expiration of certain potential post-closing
obligations relating to the sale of VLC assets.
(2) Includes a gain on sale of VLC assets of $10,679, net of related taxes.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations", and Notes to Consolidated Financial Statements.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The following table sets forth selected financial information of the
Company expressed as a percentage of revenues for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Revenues 100% 100% 100%
Cost of revenues:
Labor and other operating expenses (71) (67) (71)
Depreciation, depletion and amortization (9) (8) (9)
Amortization of costs in excess of
net assets acquired -- -- (1)
--- --- ---
GROSS PROFIT 20 25 19
Selling, general and administrative expenses (11) (12) (13)
--- --- ---
OPERATING PROFIT 9 13 6
Other (deductions) income:
Interest expense (1) (2) (2)
Other - net -- 1 2
Federal and state income tax (2) (2) (1)
--- --- ---
Net income 6% 10% 5%
=== === ===
</TABLE>
1996 VS 1995
Revenues decreased from $41,419,000 in 1995 to $40,159,000 in 1996, a
decrease of $1,260,000 or 3.0%. This decrease was a result of a 6.9% decrease
in sales volume, partially offset by a 3.9% increase in sales prices. Sales
volumes were down at all plants, with the largest percentage of reductions
attributed to the Arkansas and Texas plants. The single largest reason for
Arkansas's reduced sales volume was the loss of a pulverized limestone
customer. The increase in sales prices was attributed principally to the Texas
plant.
The Company's gross profit was $7,883,000 for 1996 compared to
$10,543,000 for 1995, a 25.2% decrease. The decrease was the result of a number
of factors. The lower sales volume reduced the gross profit as fixed costs,
including greater depreciation expense, were absorbed by fewer units. The
increased cost of fuel, particularly natural gas prices, impacted all three
plants, but particularly the Pennsylvania plant. The Pennsylvania plant's
continued operating and productivity problems accounted for approximately 50%
of the reduction in gross profit. The 9% reduction in sales volume at the
Arkansas plant also contributed to the decrease in gross profit.
Selling, general and administrative ("SG&A") expenses decreased from
$4,881,000 in 1995 to $4,359,000 in 1996, a 10.7% decrease. SG&A expenses
declined as a percent of revenues to 10.9% in 1996,
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from 11.8% in 1995. The reduction in SG&A was primarily the result of
lower bonus payments, professional fees and insurance costs.
Interest expense decreased by $160,000 in 1996 from 1995, primarily
due to lower debt outstanding
The Company's net income for 1996 decreased $1,658,000 or 38.9% from
$4,260,000 ($1.11 per share) in 1995, to $2,602,000 ($0.67 per share)
principally due to the decrease in gross profit.
1995 VS 1994
Revenues increased from $36,865,000 in 1994 to $41,419,000 in 1995, an
increase of $4,554,000 or 12.4%. This resulted from a 12.0% increase in sales
volume and a 0.4% increase in sales prices. Sales volume was up at all plants
in 1995. Sales prices received for lime and limestone products at the Arkansas
and Texas plants increased slightly in 1995 compared to 1994. Sales prices
received for lime and limestone products, including aggregates, at the
Pennsylvania plant were down slightly when compared to 1994.
The Company's gross profit was $10,543,000 for 1995 compared to
$7,365,000 for 1994, a 43.2% increase. In addition to increased revenues, gross
profit was enhanced by improved efficiencies at the plants and lower
amortization of costs in excess of net assets acquired.
SG&A expenses increased by $20,000 in 1995 compared to 1994. SG&A
expenses declined as a percent of revenues to 11.8% in 1995, from 13.2% in
1994.
Interest expense decreased by $161,000 in 1995 from 1994. This
decrease was due to lower debt outstanding.
The Company's net income for 1995 increased by $2,344,000 or 122.3%
from $1,916,000 ($0.50 per share) in 1994, to $4,260,000 ($1.11 per share)
principally due to the increase in gross profit.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial condition is reflected by the following key
financial measurements (dollars in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Total bank debt $ 4,381 5,524 7,368
Ratio of total liabilities to
stockholders' equity .48 .59 .85
Working capital 5,439 6,156 5,443
Current ratio 1.88 2.01 1.96
</TABLE>
In 1996, cash flow from operations was $7,050,000, a decline of
$893,000 or 11.2% from 1995. In 1996, this cash flow fully funded the Company's
capital expenditure program and reduced the Company's bank debt by $1,143,000.
The Company has a financing agreement with a commercial bank. The
agreement, as amended in November, 1996, provides for a five-year $8,000,000
term loan with monthly principal repayments of $95,238 maturing in October,
2000. The agreement also provides for a $6,000,000 revolving credit facility
which matures in June, 1998. Both facilities are secured by substantially all
of the Company's assets. Beginning in
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March, 1997, all borrowings under the agreement carry an interest rate of the
bank's prime rate. In addition, the Company has the option to borrow at
a LIBOR rate plus 2 1/2% for the term loan, and LIBOR plus 2 1/4% for the
revolving credit facility. The terms of the agreement contain, among other
provisions, requirements for maintaining defined levels of working capital, net
worth, financial ratios and capital expenditure limitations. The covenants also
restrict incurrence of debt, liens and lease obligations, mergers, and
consolidation or acquisition of assets.
As part of the same amended agreement, the Company has negotiated a
$10,000,000 secured line of credit, which is available to finance capital
expenditures. The term of any borrowings under this facility would match the
assets financed, and the interest rate would be the same as for borrowings
under the term loan portion of the Company's credit agreement. The Company has
also arranged for a secured line of credit for purposes of acquisitions. This
facility is for up to $10,000,000, and the interest rate would be the bank's
prime rate. Both the capital expenditure and acquisition facilities are
available, if not extended, through 1997 and are subject to approval by the
bank.
Capital expenditures for 1996 totaled $6,121,000 compared to
$4,851,000 in 1995. The Company expects to spend $4,000,000 to $5,000,000 per
year over the next several years to continue modernizing and re-equipping plant
facilities to improve efficiency and reduce costs, to effect environmental
improvements and to ensure that capacity is in place to meet market demand.
Management believes that the necessary funds will be generated by operations.
The Company is not contractually committed to any planned capital expenditures
until actual orders are placed for equipment.
In addition to the above capital expenditures, the Company currently
plans to undertake major modernization and expansion projects at the Arkansas
and Texas facilities. The Company has for some time considered constructing a
new kiln at the Arkansas plant. As part of this process, a new plant-wide
permit was recently obtained in order to be in position to build the new kiln.
Recent firm bid proposals indicate that the current costs of the new kiln have
increased substantially from the preliminary cost estimates supplied from the
vendors. Because of this change, management believes it is now necessary to
again review in detail the various kiln processing systems that can be employed
at Arkansas. In addition, the crushing, handling, loadout, and storage
facilities at Arkansas will be evaluated in order to develop a comprehensive
modernization and expansion plan for this facility.
The Company has decided to move ahead with the Texas modernization and
expansion project at this time. The Texas plans are a result of a thorough
study of both the projected replacement horizon of the existing equipment and
certain current inefficiencies of the plant. The plans include the installation
of a new stone crushing and stone handling system, the addition of a pre-heater
to one of the existing kilns, additional storage, screening and shipping
capacity, and a new support building which will house a laboratory and
administrative and shop facilities.
The planned Texas improvements will allow the Company to better serve
its customers by improving both quality and service. With the improvements, the
Company will be in a position to compete for customers who currently cannot use
the Company's lime in their processes. The additional storage will improve both
kiln utilization and the plant's ability to meet peek customer demand. The
storage and load-out facilities will also substantially reduce the amount of
time required for the loading of bulk quicklime trucks. The pre-heater addition
to a current kiln will reduce fuel consumption and will also increase the
plant's quicklime capacity by approximately 25%. These improvements will result
in lower operating costs and in more efficient utilization of the work force.
The cost of the Texas modernization and expansion project is currently expected
to be approximately $20,000,000. The project is subject to obtaining various
permits. This project will be financed from a combination of internally
generated funds and banking facilities.
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The Company's results for 1996 were adversely impacted by the
continued operating and productivity problems at the Pennsylvania plant. The
Company continues to take corrective action to address these problems.
Specifically, the Company has begun to implement certain projects to improve
the profitability of the plant. They include: an electric power costs reduction
program, an increase in capacity to produce manufactured sand, improvements in
product yields, eliminating bottlenecks between the primary crusher and the
secondary crushing plants, and improvements in work force productivity. The
Company also implemented price increases at the beginning of 1997. As the
management is working to restore the Pennsylvania facility to profitability, it
is also considering other alternatives to ensure that this plant does not
continue to impact adversely the Company's overall results.
ENVIRONMENTAL MATTERS
The Company's operations are subject to various environmental laws and
regulations. In part in response to requirements of environmental regulatory
agencies, the Company incurred capital expenditures of approximately $200,000
in 1996. In the judgment of management, forecastable expenditure requirements
for the future are not of such dimension as to have a materially adverse effect
on the Company's financial condition, results of operations, liquidity or
competitive position. See "Business--Environmental Matters."
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors F1
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1996 and 1995 F2
Consolidated Statements of Income for the years ended December
31, 1996, 1995 and 1994 F4
Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1996, 1995 and 1994 F5
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994 F6
Notes to Consolidated Financial Statements F7
</TABLE>
-11-
<PAGE> 14
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
United States Lime & Minerals, Inc.
We have audited the consolidated balance sheets of United States Lime &
Minerals, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of United
States Lime & Minerals, Inc. and subsidiaries at December 31, 1996 and 1995,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Dallas, Texas
January 24, 1997
-F1-
<PAGE> 15
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
ASSETS Notes 1996 1995
----- -------- --------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 1,000 1,161
Trade receivables 1 5,152 5,509
Inventories 1 5,054 5,332
Prepaid expenses and other assets 434 234
-------- --------
Total current assets 11,640 12,236
Property, plant and equipment, at cost:
Land 2,338 2,280
Buildings and building improvements 2,073 2,057
Machinery and equipment 53,816 48,104
Furniture and fixtures 753 724
Automotive equipment 805 762
-------- --------
59,785 53,927
Less accumulated depreciation (41,045) (37,503)
-------- --------
Net property, plant and equipment 18,740 16,424
Other assets, net 1, 4 939 1,133
-------- --------
TOTAL ASSETS $ 31,319 29,793
======== ======
</TABLE>
See accompanying notes to consolidated financial statements
-F2-
<PAGE> 16
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31,
LIABILITIES AND --------------------
STOCKHOLDERS' EQUITY Notes 1996 1995
----- -------- --------
<S> <C> <C> <C>
Current liabilities:
Current installments of long-term debt 2 $ 1,143 1,143
Accounts payable - trade 3,117 2,568
Accrued expenses:
Salaries and wages 238 383
Insurance costs 228 436
Other expenses 1,475 1,550
-------- --------
Total current liabilities 6,201 6,080
Long-term debt, excluding current installments 2 3,238 4,381
Other liabilities 4 714 583
-------- --------
TOTAL LIABILITIES 10,153 11,044
Commitments and contingencies 6
Stockholders' equity: 2,5
Preferred stock, $5 par value,
Authorized 500,000 shares; none issued -- --
Common stock, $.10 par value, authorized
15,000,000 shares; issued 5,294,065 shares 529 529
Additional paid-in capital 15,311 15,848
Retained earnings 19,888 17,844
Less treasury stock at cost; 1,372,212 shares
and 1,458,002 shares of common stock (14,562) (15,472)
-------- --------
Total stockholders' equity 21,166 18,749
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 31,319 29,793
======== ========
</TABLE>
See accompanying notes to consolidated financial statements
-F3-
<PAGE> 17
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
Notes 1996 1995 1994
----- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 40,159 41,419 36,865
Cost of revenues:
Labor and other operating expenses 28,684 27,679 26,017
Depreciation, depletion and amortization 3,592 3,197 3,191
Amortization of costs in excess of
net assets acquired -- -- 292
-------- -------- --------
32,276 30,876 29,500
-------- -------- --------
GROSS PROFIT 7,883 10,543 7,365
Selling, general and administrative expenses 4,359 4,881 4,861
-------- -------- --------
OPERATING PROFIT 3,524 5,662 2,504
Other deductions (income):
Interest expense 2 563 723 884
Gains on sale of assets, net (21) (127) (436)
Other, net (234) (216) (132)
-------- -------- --------
308 380 316
-------- -------- --------
INCOME BEFORE TAXES 3,216 5,282 2,188
Income taxes 3 614 1,022 272
-------- -------- --------
NET INCOME $ 2,602 4,260 1,916
======== ======== ========
INCOME PER SHARE OF COMMON STOCK $ 0.67 1.11 0.50
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements
-F4-
<PAGE> 18
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in thousands)
Years ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Common Stock
---------------------- Additional Amount
Shares Paid-In Retained Treasury Due From
Outstanding Amount Capital Earnings Stock ESOP Total
----------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1994 3,836,063 $ 529 15,848 12,022 (15,472) (185) 12,742
Reduction of amount due
from ESOP (Note 4) -- -- -- -- -- 185 185
Adjustment to reflect
minimum pension
liability (Note 4) -- -- -- (41) -- -- (41)
Net income -- -- -- 1,916 -- -- 1,916
--------- --------- --------- --------- --------- --------- ---------
BALANCES AT DECEMBER 31, 1994 3,836,063 $ 529 15,848 13,897 (15,472) -- 14,802
Common stock dividends -- -- -- (286) -- -- (286)
Adjustment to reflect
minimum pension
liability (Note 4) -- -- -- (27) -- -- (27)
Net income -- -- -- 4,260 -- -- 4,260
--------- --------- --------- --------- --------- --------- ---------
BALANCES AT DECEMBER 31, 1995 3,836,063 $ 529 15,848 17,844 (15,472) -- 18,749
Stock options exercised 85,790 -- (537) -- 910 -- 373
Common stock dividends -- -- -- (389) -- -- (389)
Adjustment to reflect
minimum pension
liability (Note 4) -- -- -- (169) -- -- (169)
Net income -- -- -- 2,602 -- -- 2,602
--------- --------- --------- --------- --------- --------- ---------
BALANCES AT DECEMBER 31, 1996 3,921,853 $ 529 15,311 19,888 (14,562) -- 21,166
========= ========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements
-F5-
<PAGE> 19
UNITED STATES LIME & MINERALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,602 4,260 1,916
Adjustments to reconcile net income
to net cash provided by operations:
to net cash provided by operations:
Depreciation, depletion and amortization 3,757 3,354 3,661
Gains on sale of assets, net (21) (127) (436)
Amortization of financing costs 101 139 74
Changes in assets and liabilities:
(Increase) / decrease in trade receivables 357 493 (1,031)
(Increase) / decrease in inventories 278 (562) 1,747
(Increase) / decrease in prepaid expenses (200) 86 241
(Increase) / decrease in other assets 93 34 55
Increase / (decrease) accounts payable and accrued expenses 121 408 (272)
Increase / (decrease) other liabilities (38) (142) (547)
------- ------- -------
Total adjustments 4,448 3,683 3,492
------- ------- -------
Net cash provided by operations $ 7,050 7,943 5,408
------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Purchase of property, plant and equipment $(6,121) (4,851) (2,682)
Proceeds from sales of property, plant and equipment 69 176 95
------- ------- -------
Net cash used in investing activities $(6,052) (4,675) (2,587)
======= ======= =======
CASH FLOWS FROM OPERATING ACTIVITIES:
Proceeds from exercise of stock options $ 373 -- --
Payment of common stock dividends (389) (286) --
Proceeds from borrowings 800 2,200 1,400
Repayments of long-term debt (1,943) (4,044) (4,797)
Amount due from ESOP, net of income taxes -- -- 185
------- ------- -------
Net cash used in financing activities $(1,159) (2,130) (3,212)
------- ------- -------
Net increase (decrease) in cash and cash equivalents (161) 1,138 (391)
Cash and cash equivalents at beginning of period 1,161 23 414
------- ------- -------
Cash and cash equivalents at end of period $ 1,000 1,161 23
======= ======= =======
</TABLE>
See accompanying notes to consolidated
financial statements.
-F6-
<PAGE> 20
UNITED STATES LIME & MINERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Years ended December 31, 1996, 1995 and 1994
(1) Summary of Significant Accounting Policies
(a) Organization
The Company is a manufacturer of lime and limestone products
supplying primarily the steel, paper, agriculture, municipal
sanitation/water treatment and construction industries. The
Company is headquartered in Dallas, Texas and operates lime
and aggregate plants in Arkansas, Pennsylvania and Texas
through its wholly owned subsidiaries, Arkansas Lime Company,
Corson Lime Company and Texas Lime Company, respectively.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and all of its subsidiaries. All material
intercompany balances and transactions have been eliminated.
(c) Use of Estimates
The preparation of the financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
(d) Statements of Cash Flows
For purposes of reporting cash flows, the Company considers
all certificates of deposit and highly-liquid debt
instruments, such as U.S. treasury bills and notes, with
original maturities of three months or less to be cash
equivalents. Cash equivalents are carried at cost plus
accrued interest, which approximates fair market value.
Supplemental cash flow information is presented below:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash paid during the period for:
Interest (net of amounts capitalized) $450 597 811
==== ==== ====
Income taxes $902 789 261
==== ==== ====
</TABLE>
(e) Trade Receivables
Trade receivables are presented net of the related allowance
for doubtful accounts, which totaled $71 and $115 at December
31, 1996 and 1995, respectively.
-F7-
<PAGE> 21
UNITED STATES LIME & MINERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(f) Inventories
Inventories are valued principally at the lower of cost or
market determined using the average cost method. Such costs
include materials, labor and production overhead.
A summary of inventories is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1996 1995
------ ------
<S> <C> <C>
Lime and limestone inventories:
Raw materials $ 860 1,000
Finished goods 2,190 2,436
------ ------
3,050 3,436
Service parts inventories 2,004 1,896
------ ------
$5,054 5,332
====== ======
</TABLE>
(g) Property, Plant and Equipment
Depreciation of property, plant and equipment is being
provided for by the straight-line and declining-balance
methods over estimated useful lives as follows:
Buildings and building improvements 3-40 years
Machinery and equipment 3-20 years
Furniture and fixtures 3-10 years
Automotive equipment 3-8 years
Maintenance and repairs are charged to expense as incurred;
renewals and betterments are capitalized. When units of
property are retired or otherwise disposed of, their cost and
related accumulated depreciation are removed from the
accounts, and any resulting gain or loss is credited or
charged to income.
The Company reviews its long-term assets for impairment when
changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Impairment is measured as
the amount by which the carrying amount of the asset exceeds
the estimated fair value of the asset less disposal costs.
(h) Other Assets
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1996 1995
------ ------
<S> <C> <C>
Assets held for sale $ 33 33
Deferred stripping costs 717 783
Intangible asset, pension 138 165
Deferred financing costs 51 152
------ ------
$ 939 1,133
====== ======
</TABLE>
-F8-
<PAGE> 22
UNITED STATES LIME & MINERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
It is the Company's policy to make available for sale assets
considered excess and no longer necessary for operations. The
carrying values of such assets are periodically reviewed and
adjusted downward to market, when appropriate.
Deferred stripping costs are amortized by the
unit-of-production method based on the estimated recoverable
reserves in the underlying area.
Deferred financing costs are expensed over the shorter of the
life of the debt or expected life of the loan using the
interest method.
(i) Environmental Expenditures
Environmental expenditures that relate to current operations
are expensed or capitalized as appropriate. Expenditures that
relate to an existing condition caused by past operations,
and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are
probable, and the costs can be reasonably estimated.
Generally, the timing of these accruals will coincide with
completion of a feasibility study or the Company's commitment
to a formal plan of action.
(j) Stock Options
The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) in accounting for its employee stock options. Under
APB 25, if the exercise price of an employee's stock options
equals or exceeds the market price of the underlying stock on
the date of grant, no compensation expense is recognized.
(k) Earnings Per Share of Common Stock
Earnings per share of common stock are based on the weighted
average number of shares outstanding during each year, which
amounted to 3,890,646 shares for the year ended December 31,
1996 and 3,836,063 shares for the years ended December 31,
1995 and 1994. The dilutive affect of outstanding stock
options was not significant during any of the periods
presented.
(l) Reclassifications
Certain previously reported amounts have been reclassified to
conform with the current presentation.
-F9-
<PAGE> 23
UNITED STATES LIME & MINERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(2) Long-Term Debt
The Company has a financing agreement with a commercial bank. The
agreement, as amended in November, 1996, provides for a five-year
$8,000 term loan with monthly principal repayments of $95 maturing in
October, 2000. The agreement also provides for a $6,000 revolving
credit facility which matures in June, 1998. Both facilities are
secured by substantially all of the Company's assets. Beginning in
March, 1997, all borrowings under the agreement carry an interest rate
of the bank's prime rate. In addition, the Company has the option to
borrow at a LIBOR rate plus 2 1/2% for the term loan and LIBOR plus 2
1/4% for the revolving credit facility. The terms of the agreement
contain, among other provisions, requirements for maintaining defined
levels of working capital, net worth, financial ratios and capital
expenditure limitations. The covenants also restrict incurrence of
debt, liens and lease obligations, mergers, and consolidation or
acquisition of assets.
As part of the same amended agreement, the Company has negotiated a
$10,000 secured line of credit, which is available to finance capital
expenditures. The term of any borrowings under this facility would
match the assets financed, and the interest rate would be the same as
for borrowings under the term loan portion of the Company's credit
agreement. The Company has also arranged for a secured line of credit
for purposes of acquisitions. This facility is for up to $10,000, and
the interest rate would be the bank's prime rate. Both the capital
expenditure and acquisition facilities are available, if not extended,
through 1997 and are subject to approval by the bank.
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
December 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Term loan $ 4,381 5,524
Revolving credit facility -- --
------- -------
Subtotal 4,381 5,524
Less current installments (1,143) (1,143)
------- -------
Long-term debt, excluding
current installments $ 3,238 4,381
======= =======
</TABLE>
Amounts payable on long-term debt in 1997 and thereafter are: 1997,
$1,143; 1998, $1,143; 1999, $1,143; 2000, $952.
The carrying amount of the Company's long-term debt approximates its
fair values.
-F10-
<PAGE> 24
UNITED STATES LIME & MINERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(3) Income Taxes
Income tax expense for the years ended December 31, 1996, 1995 and
1994 was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Current - federal $ 416 743 156
Current - state and local 198 279 116
----- --- ---
Total income tax expense $ 614 1,022 272
===== ===== ===
</TABLE>
A reconciliation of income taxes expense computed at the federal
statutory rate to income taxes expense for the years ended December
31, 1996, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
--------------------- ------------------- --------------------
Percent Percent Percent
of pretax of pretax of pre-tax
Amount income Amount income Amount income
--------- ----------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income taxes computed
at the federal statutory rate $ 1,093 34.0% 1,796 34.0% 745 34.0%
Increase (reductions) in taxes
resulting from:
General business credits
carryforwards (162) (5.0) (248) (4.6) (130) (6.0)
Excess of statutory
depletion over cost depletion (415) (12.9) (612) (11.6) (408) (18.6)
State income taxes, net
of federal income tax
benefit 131 4.0 176 3.3 77 3.5
Other (33) (1.0) (90) (1.7) (12) (0.1)
------- ---- ------- ---- ------- ----
Income tax expense $ 614 19.1% 1,022 19.4% 272 12.4%
======= ==== ======= ==== ======= ====
</TABLE>
At December 31, 1996, the Company had deferred tax liabilities of
$555, deferred tax assets of $3,657 and a valuation allowance of
$3,102. The principal temporary difference related to the deferred tax
liabilities is depreciation ($555). The principal temporary
differences related to the deferred tax assets were net operating loss
(NOL) carryforwards ($109), general business credits ($357), certain
financial statement accruals ($598) and alternative minimum tax credit
carryforwards ($2,593).
At December 31, 1995, the Company had deferred tax liabilities of
$653, deferred tax assets of $4,188 and a valuation allowance of
$3,535. The principal temporary difference related to the deferred tax
liabilities is depreciation ($653). The principal temporary
differences related to the deferred tax assets were net operating loss
(NOL) carryforwards ($1,047), general business credits ($510), certain
financial statement accruals ($656) and alternative minimum tax credit
carryforwards ($1,975).
-F11-
<PAGE> 25
UNITED STATES LIME & MINERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
The Company has NOL carryforwards for tax purposes of $287 which will,
if unused, expire in 2008. General business credits of $357 are
available to reduce the Company's federal income tax, which expire
starting 1997 through 2001.
Deferred tax assets have been reduced by a valuation allowance as
realization of some portion of these future tax benefits is dependent
on generating sufficient taxable income. Favorable resolution of these
uncertainties would result in the reduction of the valuation
allowance.
(4) Employee Retirement Plans
The Company has a noncontributory defined benefit pension plan
covering substantially all union employees of its wholly-owned
subsidiary, Corson Lime Company. Benefits for the Corson Lime Union
Pension Plan (Corson Plan) are based on certain multiples of years of
service. The Company's funding policy is to contribute annually not
less than the minimum required nor more than the maximum amount that
can be deducted for federal income tax purposes. Contributions are
intended to provide not only for benefits attributed to service to
date but also for those expected to be earned in the future. The
Company funded pension costs of $162 for 1996, $127 for 1995 and $96
for 1994.
A summary of the funding status of the Corson Plan and the amounts
recognized in the consolidated balance sheets are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1995
------- -------
<S> <C> <C>
Actuarial present value of accumulated benefit obligation:
Vested $ 1,417 1,347
Non-vested 13 6
------- -------
Total $ 1,430 1,353
======= =======
Projected benefit obligation $(1,430) (1,353)
Plan assets at fair value, primarily listed securities and short-term investments 776 800
------- -------
Projected benefit obligation in excess of plan assets (654) (553)
Unrecognized net loss from past experience different from that assumed 426 252
Unrecognized net obligation at transition, being recognized over 15 years 8 9
Prior service cost not yet recognized in net periodic pension cost 131 156
Adjustment to recognize minimum liability (565) (417)
------- -------
Liability recognized in the consolidated balance sheets $ (654) (553)
======= =======
</TABLE>
-F12-
<PAGE> 26
UNITED STATES LIME & MINERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
A summary of the components of net periodic pension expense for the
Corson Plan follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 40 41 48
Interest cost on projected benefit obligation 108 100 95
Actual return on plan assets 117 (32) (30)
Net liability deferred for later recognition (186) (33) (30)
Amortization of unrecognized net liability 11 10 5
Amortization of unrecognized prior service cost 25 23 23
----- ----- -----
Net periodic pension expense $ 115 109 112
===== ===== =====
Significant assumptions used in determination of
pension expense consist of the following:
Discount rate 8% 8% 8%
Long-term rate of return on plan assets 9% 9% 9%
</TABLE>
The Company also has a contributory retirement (401(k)) savings plan
for nonunion employees. The Company contributions to the plan were $61
during 1996, $58 during 1995 and $23 during 1994. The Company has a
contributory retirement (401(k)) savings plan for union employees of
Texas Lime Company. The Company contributions to this plan were $14 in
1996, $12 in 1995 and $11 in 1994.
In December 1986, the Company purchased 1,550,000 shares of its
outstanding common stock for $10.50 per share. Subsequent to that
purchase, 200,000 shares (300,000 shares after stock split) were sold
to the Employee Stock Ownership Plan (ESOP) for $8.20 per share. The
Company obtained a note receivable from the ESOP for the purchase of
the shares, which was classified as a reduction of stockholders'
equity. As of December 1994, the Company had made all of the necessary
contributions to the ESOP to repay all principal and interest due on
the note.
The ESOP covers substantially all full-time nonunion employees and is
designed to invest primarily in the Company's common stock.
Contributions to the ESOP are currently made at the option of the
Company. The Company did not make a contribution during 1996 or 1995
and contributed $205 during 1994.
-F13-
<PAGE> 27
UNITED STATES LIME & MINERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(5) Stock Option Plan
The Company has a stock option plan under which options for shares of
common stock may be granted to key employees. The options expire ten
years from the date of grant and generally become exercisable after
the expiration of one year from the grant date. As of December 31,
1996, 35,000 shares are available for future grant under this plan.
A summary of the Company's stock option activity and related
information for the years ended December 31, 1996, 1995 and 1994, is
as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------------------------- ---------------------------- -------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
------------------------- ----------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 345,000 $ 6.52 215,000 4.77 235,000 4.75
Granted -- -- 160,000 8.25 20,000 5.00
Exercised (92,790) 4.80 -- -- -- --
Forfeited -- -- (30,000) 5.92 (40,000) 4.75
--------- -------- -------
Outstanding at end of year 252,210 7.15 345,000 6.52 215,000 4.77
========= ======== =======
Exercisable at end of year 252,210 195,000 4.78 195,000 4.75
========= ======== =======
Weighted average fair value of
options granted during the year $ -- 2.15
========= ========
Weighted average remaining
contractual life in years 8.125
=========
</TABLE>
-F14-
<PAGE> 28
UNITED STATES LIME & MINERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Statement of Financial Accounting Standards No. 123, "Accounting For
Stock Based Compensation" (SFAS 123), requires the disclosure of pro
forma net income and income per share of common stock information
computed as if the Company had accounted for its employee stock
options granted subsequent to December 31, 1994, under the fair value
method set forth in SFAS 123. The fair value for these options was
estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted average assumptions for the 1995
grant: a risk-free interest rate of 6%; a dividend yield of 2%; and a
volatility factor of .34. In addition, the fair value of these options
was estimated based on an expected life of three years.
The Black-Scholes options valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including
the expected stock price volatility. Because the Company's employee
stock options have characteristics significantly different from those
of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in
management's opinion the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock
options. In addition, because SFAS 123 is applicable only to options
granted subsequent to December 31, 1994, the pro forma information
does not reflect the pro forma effect of all previous stock option
grants of the Company, and thus the pro forma information is not
necessarily indicative of future amounts until SFAS 123 is applied to
all outstanding stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options vesting period. The
Company's pro forma information follows (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Pro forma net income $ 2,301 4,217
Pro forma earnings per share $ .59 1.10
</TABLE>
(6) Commitments and Contingencies
The Company leases some of the equipment used in its operations.
Generally, the leases are for periods varying from one to five years
and are renewable at the option of the Company. Total rent expense was
$75 for 1996, $232 for 1995 and $134 for 1994. As of December 31,
1996, future minimum payments under non-cancelable operating leases
are as follows: 1997, $77; 1998, $75; and 1999, $36.
The Company is party to lawsuits and claims arising in the normal
course of business, none of which, in the opinion of management, is
expected to have a material adverse effect on the Company's financial
condition, results of operation, liquidity or competitive position.
-F15-
<PAGE> 29
UNITED STATES LIME & MINERALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
(7) Summary of Quarterly Financial Data (unaudited)
<TABLE>
<CAPTION>
March 31, June 30, September 30, December 31,
1996 1996 1996 1996
--------- ------ ------ -----
<S> <C> <C> <C> <C>
Revenues $ 8,523 11,583 10,452 9,601
========= ====== ====== =====
Gross profit 1,810 3,063 1,890 1,120
========= ====== ====== =====
Net income 503 1,471 571 57
========= ====== ====== =====
Net income per share of
common stock $ .13 .38 .15 .01
========= ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
March 31, June 30, September 30, December 31,
1995 1995 1995 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues $ 8,649 11,458 11,106 10,206
======= ======= ======= =======
Gross profit 1,993 3,242 3,001 2,611
======= ======= ======= =======
Net income 426 1,440 1,535 860
======= ======= ======= =======
Net income per share of
common stock $ .11 .38 .40 .22
======= ======= ======= =======
</TABLE>
-F16-
<PAGE> 30
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
NONE
PART III
The information required in response to Items 10, 11, 12 and 13 is
hereby incorporated by reference to the information under the captions
"Election of Directors", "Executive Officer of the Company Who Is Not Also a
Director", "Executive Compensation", "Voting Securities and Principal
Shareholder", and "Shareholdings of Company Directors and Executive Officers"
in the definitive Proxy Statement for the Company's 1997 Annual Meeting of
Shareholders. The Company anticipates that it will file the definitive Proxy
Statement with the Securities and Exchange Commission on or before April 30,
1997.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. The following financial statements are included in Item 8:
Report of Independent Auditors
Consolidated Financial Statements:
Consolidated Balance Sheets as of December, 31, 1996 and 1995;
Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994;
Consolidated Statements of Stockholders' Equity for the
years ended December, 31, 1996, 1995 and 1994;
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994; and
Notes to Consolidated Financial Statements.
2. All financial statement schedules are omitted because they
are not applicable or the required information is presented
in the consolidated financial statements or the related
notes.
-12-
<PAGE> 31
3. The following documents are filed with or incorporated by
reference into this Report:
3(a) Articles of Amendment to the Articles of
Incorporation of Scottish Heritable, Inc. dated
January 25th, 1994 (incorporated by reference to
Exhibit 3(a) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1993, File Number 0-4197).
3(b) Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3(b) to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, File number
0-4197).
3(c) Composite Copy of Bylaws of the Company, as
currently in effect (incorporated by reference to
Exhibit 3(b) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1991, File Number 0-4197).
10(a) United States Lime & Minerals, Inc. Employee Stock
Ownership Plan, as restated and amended effective
August 1, 1989 (incorporated by reference to
Exhibit 10 (b) to the Company's Annual Report on
form 10-K for the fiscal year ended December 31,
1995, File Number 0-4197).
10(b) Amendment No. Two to United States Lime &
Minerals, Inc. Employee Stock Ownership
Plan effective August 1, 1996.
10(c) United States Lime & Minerals, Inc. 401(k) Profit
Sharing Plan effective August 1, 1983 as amended
and restated effective January 1, 1997.
10(d) Texas Lime Company Bargaining Unit 401(k) Plan
effective as of January 1, 1992 (incorporated by
reference to Exhibit 19(f) to the Company's
Quarterly Report on Form 10-Q for the quarter
ended June, 30, 1992, File Number 0-4197).
10(e) Executive Retention Agreements dated as of June
10, 1992 between the Company and certain officers
of the Company (incorporated by reference to
Exhibit 19(b) to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1992,
File Number 0-4197).
10(f) Employment Agreements between the Company and
certain officers of the Company (incorporated by
reference to Exhibit 19(c) to the Company's
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1992, File Number 0-4197).
10(g) United States Lime & Minerals, Inc. 1992 Stock
Option Plan (incorporated by reference to Exhibit
A to the Company's definitive Proxy Statement for
its 1992 Annual Meeting of Shareholders held on
June 9, 1992, File Number 0-4197).
10(h) Stock Purchase Agreement dated October 23,1986
between Rangaire Corporation and InterFirst Bank
Fort Worth, N.A. as trustee of the Rangaire
Corporation Employee Stock Ownership Trust
(incorporated by reference to Exhibit (c) (2) to
the Company's Tender Offer Statement on Schedule
13E-4 for a tender offer first published sent or
given to security holders on October 30, 1986,
File Number 0-4197).
10(i) Employment Agreement dated as of September 27,
1993 between Scottish Heritable, Inc. and Robert
F. Kizer (incorporated by reference to Exhibit
10(a) to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1994, File
Number 0-4197).
-13-
<PAGE> 32
10(j) Employment Agreement dated November 27, 1993
between Scottish Heritable, Inc. and Robert K.
Murray (incorporated by reference to Exhibit 10(b)
to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1994, File Number
0-4197).
10(k) Separation Agreement effective as of December 19,
1996 between United States Lime & Minerals, Inc.
and Robert K. Murray.
10(l) Loan and Security Agreement dated October 20, 1993
among Scottish Heritable, Inc. and subsidiaries
and CoreStates Bank, N.A.(incorporated by
reference to Exhibit 10(p) to the Company's
Quarterly Report on Form 10-Q for the quarter
ended September, 30, 1993, File Number 0-4197).
10(m) Asset Purchase Agreement dated as of July 13, 1992
among Eastern Ridge Lime Company, L.P., Virginia
Lime Company, Eastern Ridge Lime, Inc., and
Scottish Heritable, Inc. (incorporated by
reference to Exhibit 2 to the Company's Current
Report on Form 8-K dated July 15, 1992, File
Number 0-4197).
10(n) First Amendment to Term Note dated as of March 1,
1994, among United States Lime & Minerals, Inc.
and subsidiaries and CoreStates Bank, N.A.
(incorporated by reference to Exhibit 10(b) to the
Company's Quarterly Report on Form 10-Q for the
quarter ended March 31,1994, File Number 0-4197).
10(o) Amendment No. 1 to Loan and Security Agreement
dated as of December 23, 1994, among United States
Lime & Minerals, Inc. and subsidiaries and
CoreStates Bank, N.A. (incorporated by reference
to Exhibit 10(y) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1994, File number 0-4197).
10(p) Amendment No. 2 to Loan and Security Agreement
dated as of April 28, 1995, among United States
Lime & Minerals, Inc. and subsidiaries and
CoreStates Bank, N.A. (incorporated by reference
to Exhibit 10(z) to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1995,
File number 0-4197).
10(q) Amendment No. 3 to Loan and Security Agreement
dated as of September 29, 1995, among United
States Lime & Minerals, Inc. and subsidiaries and
CoreStates Bank, N.A. (incorporated by reference
to Exhibit 10(aa) to the Company's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1995, File number 0-4197).
10(r) Letter Agreement dated October 26, 1995, among
United States Lime & Minerals, Inc. and
subsidiaries and CoreStates Bank, N.A.
10(s) Amendment No. 5 to Loan and Security Agreement
dated as of November 27, 1996, among United States
Lime & Minerals, Inc. and subsidiaries and
CoreStates Bank, N.A.
10(t) Consulting Agreement dated April 18, 1996 between
United States Lime & Minerals, Inc. and Wallace G.
Irmscher.
11 Statement re computation of per share earnings.
21 Subsidiaries of the Company.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
- -------------
Exhibits 10(a) through 10(g); 10(i) through 10(k); and 10(t) are management
contracts or compensatory plans or arrangements required to be filed
as exhibits.
(b) The Company did not file any Current Reports on Form 8-K during the
fourth quarter of 1996.
-14-
<PAGE> 33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
UNITED STATES LIME & MINERALS, INC.
Date: March 28, 1997 By: /s/ Robert F. Kizer
---------------------
Robert F. Kizer, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C>
Date: March 28, 1997 By: /s/ Robert F. Kizer
---------------------
Robert F. Kizer, President,
Chief Executive Officer, and Director
(Principal Executive Officer)
Date: March 28, 1997 By: /s/ Timothy W. Byrne
----------------------
Timothy W. Byrne, Senior Vice President
of Finance & Admin., Chief Financial Officer,
Treasurer, Secretary and Director
(Principal Financial Officer)
Date: March 28, 1997 By: /s/ Larry T. Ohms
-------------------
Larry T. Ohms, Corporate Controller
and Assistant Treasurer
(Principal Accounting Officer)
Date: March 28, 1997 By: /s/ Edward A. Odishaw
-----------------------
Edward A. Odishaw, Director and
Chairman of the Board
Date: March 28, 1997 By: /s/ Antoine M. Doumet
-----------------------
Antoine M. Doumet, Director and
Vice Chairman of the Board
Date: March 28, 1997 By: /s/ John J. Brown
-------------------
John J. Brown, Director
Date: March 28, 1997 By: /s/ Wallace G. Irmscher
-------------------------
Wallace G. Irmscher,
Director
Date: March 28, 1997 By: /s/ Robert J. Smith
---------------------
Robert J. Smith, Director
</TABLE>
-15-
<PAGE> 34
UNITED STATES LIME & MINERALS, INC.
Annual Report on Form 10-K
Index to Exhibits
Certain exhibits to this annual report on Form 10-K have been
incorporated by reference. For the list of these exhibits see Item 14 hereof.
The following exhibits are being filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- -------
<S> <C>
10(b) Amendment No. Two to United States Lime & Minerals,
Inc. Employee Stock Ownership Plan effective August
1, 1996.
10(c) United States Lime & Minerals, Inc. 401(k) Profit
Sharing Plan effective August 1, 1983, as amended
and restated effective January 1, 1997.
10(k) Separation Agreement effective as of December 19,
1996 between United States Lime & Minerals, Inc.
and Robert K. Murray.
10(r) Letter Agreement dated October 26, 1995, among
United States Lime & Minerals, Inc. and
subsidiaries and CoreStates Bank, N.A.
10(s) Amendment No. 5 to Loan and Security Agreement
dated as of November 27, 1996, among United States
Lime & Minerals, Inc. and subsidiaries and
CoreStates Bank, N.A.
10(t) Consulting Agreement dated April 18, 1996 between
United States Lime & Minerals, Inc. and Wallace G.
Irmscher.
11 Statement re computation of per share earnings.
21 Subsidiaries of the Company.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 10(b)
SECOND AMENDMENT TO THE
UNITED STATES LIME & MINERALS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
WHEREAS, United States Lime & Minerals, Inc. (the "Company")
amended and restated the United States Lime & Minerals, Inc. Employee
Stock Ownership Plan generally effective as of August 1, 1989 (the
"Plan"); and
WHEREAS, the Company desires to liberalize participant
diversification rights in order to permit participants who have
attained age fifty (50) and completed ten (10) years of service in the
Plan to transfer all or a portion of their Plan benefits into
diversified investments maintained under an individual retirement
account; and
WHEREAS, in response to the recent comments received from the
Internal Revenue Service related to a pending determination letter
request related to the Plan, the Company wishes to further amend the
Plan to satisfy such comments.
NOW, THEREFORE, pursuant to the powers reserved in Section
10.01 of the Plan, the Company does hereby amend the Plan, as follows:
I.
Section 4.07(a) of the Plan is amended, effective August 1, 1996, to read as
follows:
a. Each Qualified Participant, as defined below, shall be
permitted to direct the Plan as to the investment of up to the
Applicable Percentage, defined below, of such Participant's
Accounts within one hundred and twenty (120) days after the
last day of each Plan Year during the Participant's Qualified
Election Period, as defined below. For the purposes of this
Section 4.07:
1. "Qualified Participant" means a Participant
who has attained age fifty (50) and who has
completed at least ten (10) years of
participation in the Plan.
2. "Qualified Election Period" means the period
beginning with the Plan Year in which the
Participant becomes a Qualified Participant
and ending with the Plan Year in which the
balance to the credit of Participant's
Account is distributed
<PAGE> 2
3. "Applicable Percentage" means with respect to
any Plan Year in the Qualified Election
period, the following percentage:
<TABLE>
<CAPTION>
Plan Year Applicable Percentage
--------- ---------------------
<S> <C>
1 25%
2 50%
3 75%
4 and later 100%
</TABLE>
II.
Section 4.08(e) of the Plan is amended, effective August 1, 1989, to read as
follows:
Repayments of principal and interest on any Acquisition Loan shall be made by
the Trustee (as directed by the Company or Committee) only from (I) Employer
Contributions, paid in cash to enable the repayment of such Acquisition Loan;
(2) Financed Shares or other collateral given for the loan in the event of
default or foreclosure; (3) earnings on such Employer Contribution and any
dividends or other earnings received by the Trust on such Financed Shares; (4)
earnings attributable to such permissible collateral other than Financed
Shares; and (5) the, proceeds of a subsequent Acquisition Loan incurred to
repay an existing Acquisition loan repayments. The committee shall instruct the
Trustee as to the priority and source of Acquisition Loan repayments.
III.
Section 9.05 of the Plan is amended, effective August 1, 1989 to read as
follows:
a. a contribution to the Plan made by mistake of fact, if such
contribution (to the extent made by mistake of fact) is
returned to the Employer within one year after payment of such
contribution. While losses attributable to returned
contributions will reduce the amount to be returned, any
earnings attributable to returned contributions will not be
returned. Such returns will only be made with Qualifying
employer securities after other assets have been exhausted.
<PAGE> 3
IV.
Except as amended by this instrument, the Plan, as previously amended and
restated, shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed as of
this 26th day of December, 1996.
UNITED STATES LIME &
MINERALS, INC.
By: /s/ TIMOTHY W. BYRNE
---------------------------------------
Title: Sr. VP of Finance and Administration
and Chief Financial Officer
<PAGE> 1
EXHIBIT 10(c)
Plan number 002
(nonstandardized)
SCUDDER 401(k) PLAN
Adoption Agreement
The undersigned (the "Employer") establishes or amends the (Sponsor
automatically inserts employer's name) 401(k) Plan by completing this Adoption
Agreement adopting or amending the plan in the form of the Prototype 401(k)
Plan attached.
I. ELIGIBILITY
A. To become a Participant who is eligible to make a salary
reduction election and/or to receive allocations of Deferred
Cash Contributions, an Employee need not complete any period
of Service
[X] or, if this box is checked, an Employee must
complete:
[ ] (1) _____ Year of Service (insert no more
than "1").
[X] (2) 6 consecutive months of service
----- (insert no more than "12"; no
minimum number of hours can be
required).
B. An Employee who meets the above requirements for eligibility
to make a salary reduction election and/or to receive
allocations of Deferred Cash Contributions shall become such
an eligible Participant on the first day the requirements are
met
[ ] or, if this box is checked, on the first day of the
next month
[X] or, if this box is checked, on the first day of the
next pay period
[ ] or, if this box is checked, on the first day of the
next quarter of the Plan Year.
[ ] or, if this box is checked, on the first day of the
next Plan Year, or the first day of the seventh month
of the Plan Year, whichever is earlier.
C. To become a Participant who is eligible to receive allocations
of Employer Matching Contributions and/or Employer Profit
Sharing Contributions and to make Nondeductible Voluntary
Contributions (if permitted by Section XIII), an Employee must
complete l Year of Service
[X] or, if this box is checked, an Employee must complete
1/2 Year(s) of Service, (insert "2" or less;
----- select more than 1 only if the Employer selects
full and immediate vesting in Section V.A. and B.
below; insert "0" for no waiting period).
D. An Employee who meets the above requirements for eligibility
to receive allocations of Employer Matching Contributions
and/or Employer Profit Sharing Contributions and to make
Nondeductive Voluntary Contributions (if permitted by Section
XIII) shall become such an eligible Participant on the first
day the requirements are met
[ ] or, if this box is checked, on the first day of the
next month
1
<PAGE> 2
[X] or, if this box is checked, on the first day of the
next pay period
[ ] or, if this box is checked, on the first day of the
next quarter of the Plan Year
[ ] or, if this box is checked, on the first day of the
next Plan Year, or the first day of the seventh month
of the Plan Year, whichever is earlier.
E. The number of Hours of Service required to have a Year of
Service is 1000
[ ] or, if this box is checked, ______ (insert less than
"1000").
F. A Year of Service (for the purpose of eligibility) shall be
measured on the 12-consecutive-month period beginning on the
Employee's initial date of employment and reemployment or an
anniversary of that date
[ ] or, if this box is checked, on the
12-consecutive-month period beginning on the
Employee's initial date of employment or reemployment
and each Plan Year commencing thereafter.
G. For purposes of calculating periods of Service, the Employer
shall calculate periods of Service based on an actual count of
the Hours of Service an Employee performs
[ ] or, if this box is checked, an Employee shall be
credited with 45 Hours of Service for each week
during which the Employee performs an actual Hour of
Service.
H. Before an Employee may become a Participant, the Employee need
not attain any minimum age
[ ] or, if this box is checked, an Employee must be at
least ____ (insert "21" or less) years of age.
I. All Employees are entitled to be Participants except (one or
more may be selected):
[ ] Non-resident aliens who receive no earned income from
the Employer which constitutes income from sources
within the United States;
[X] Individuals covered by a collective bargaining
contract which meets the requirements specified in
the Plan;
[ ] Salaried Employees;
[ ] Hourly-paid Employees;
[X] Leased Employees;
[X] Piece-rate Employees;
[ ] Employees paid by commission;
[ ] Employees covered by another retirement plan to which
the Employer is required to contribute;
[ ] Employees of the following subsidiaries or
affiliates:
------------------------------------------------------
------------------------------------------------------
2
<PAGE> 3
[ ] Employees in the following non-discriminatory
classification:
------------------------------------------------------
------------------------------------------------------
Note: If Employees are excluded from the Plan under
one or more of the classifications above (not
including the first two classifications) the Plan
must satisfy, on a continuing basis, the coverage,
nondiscrimination, and participation requirements of
Code Sections 410(b), 401(a)(4), and 401(a)(26).
II. SALARY REDUCTIONS AND DEFERRED CASH CONTRIBUTIONS
For each Plan Year, the Employer will make the following
contribution to the Trust on behalf of each eligible
Participant:
A. [X] A Salary Reduction Contribution equal to
the portion of the Compensation otherwise payable
to the Participant that the Participant has elected
to contribute to the Trust. The Participant's election
shall specify the portion of the Compensation to be
contributed, which amount shall be not less than 0%
(insert "0" or more, but not more than the next
chosen number) and not more than 20% (insert "20" or
less, but not less than the previously chosen number)
of the Participant's Compensation for the Plan Year.
B. [ ] A Deferred Cash Contribution equal to that
portion of the Deferred Cash Allocation which the
eligible Participant has not elected to receive in
cash. The Deferred Cash Allocation for this purpose
shall be amount equal to the percentage of the
eligible Participant's Compensation as is determined
by the Employer for each Plan Year (which percentage
shall be the same for each Participant)
[ ] or, if this box is checked, ____% of the
eligible Participant's Compensation.
C. A Participant shall be entitled to a Deferred Cash
Allocation and a Deferred Cash Contribution for a
Plan Year if the Participant receives Compensation
from the Employer during the Plan Year
[X] and, if this box is checked, the Participant
is employed on the last day of the Plan Year and is
credited with at least 1000 (insert "1000" or less)
Hours of Service during the Plan Year, or the
Participant retires, dies or becomes disabled during
the Plan Year.
III. PROFIT SHARING CONTRIBUTIONS
For each Plan Year, the Employer will not make an Employer Profit
Sharing Contribution
[X] or, if this box is checked, the Employer will
make an Employer Profit Sharing Contribution.
A. [ ] Fixed Formula
For each Plan Year, the Employer will make an
Employer Profit Sharing Contribution to the Trust in
an amount equal to _____ % (not to exceed 15%) of
each such eligible Participant's Compensation.
3
<PAGE> 4
A Participant shall be entitled to an allocation of
the fixed Employer Profit Sharing Contribution for a
Plan Year if the Participant receives Compensation
from the Employer during a Plan Year
[ ] and, if this box is checked, the Participant is
employed on the last day of the Plan Year, or the
Participant retires, dies or becomes disabled
during the Plan Year.
[ ] and, if this box is checked, the Participant is
credited with at least ____ (insert "1000" or
less) Hours of Service during the Plan Year, or
the Participant retires, dies or becomes
disabled during the Plan Year.
B. [X] Discretionary Formula
For each Plan Year, the Employer will make an
Employer Profit Sharing Contribution to the Trust
equal to the amount, if any, determined by the
Employer for such Plan Year.
A Participant shall be entitled to an allocation of
the discretionary Employer Profit Sharing
Contribution for a Plan Year if the Participant
receives Compensation from the Employer during the
Plan Year
[X] and, if this box is checked, the Participant is
employed on the last day of the Plan Year, or
the Participant retires, dies or becomes
disabled during the Plan Year.
[ ] and, if this box is checked, the Participant is
credited with at least ______ (insert "1000" or
less) Hours of Service during the Plan Year, or
the Participant retires, dies or becomes
disabled during the Plan Year.
C. Employer Profit Sharing Contributions will be allocated to
eligible Participants in the ratio that each eligible
Participant's Compensation for the Plan Year bears to the
total Compensation paid to all eligible Participants for the
Plan Year, or
[ ] if this box is checked, on an integrated basis
in accordance with the provisions of Section
4.03(b)(ii) of the Plan.
The Integration Level for a Plan Year will be the
Social Security Wage Base for such Plan Year
[ ] or, if this box is checked, $_____ (not in
excess of the Social Security Wage Base).
[ ] or, if this box is checked, ___% of the Social
Security Wage Base (not in excess of 100%).
The Integration Rate for a Plan Year will be the
Maximum Disparity Rate for such Plan Year.
[ ] or if this box is checked, ___% (not in excess of
the Maximum Disparity Rate).
4
<PAGE> 5
Note: An Employer may elect to integrate the Plan with
Social Security only if the Employer does not
maintain another qualified retirement plan
integrated with Social Security.
IV. MATCHING CONTRIBUTIONS
A. For each Plan Year, the Employer will not make an Employer
Matching Contribution
[X] or, if this box is checked, the Employer will make an
Employer Matching Contribution on behalf of each
eligible Participant who, pursuant to Section VI
below, is eligible to receive an allocation; such
contribution shall be equal to the percentage
indicated in (B) below of aggregate:
[X] (1) Salary Reduction Contributions
[ ] (2) Deferred Cash Contributions
[ ] (3) Nondeductible Voluntary Contributions
A Participant shall be entitled to an allocation of the
Employer Matching Contribution for a Plan Year if the
Participant makes contributions indicated above for the Plan
Year
[ ] and, if this box is checked, the Participant is
employed by the Employer oft the last day of
the Plan Year, or the Participant retires,
dies or becomes disabled during the Plan Year.
[ ] and, if this box is checked, the Participant is
credited with at least ____ Hours of Service
(insert "1000" or less) during the Plan Year,
or the Participant retires, dies or becomes
disabled during the Plan Year.
B. The Employer Matching Contribution made on behalf of each
eligible Participant shall be equal to a percentage of the
Participant's contributions selected in (A) above; which
percentage shall be equal to:
[ ] (1) ___%
[X] (2) the sum of 100 % of the first 2% of the
Participant's Compensation, plus 0 % of the
next 0 % of the Participant's Compensation.
[ ] (3) the sum of % of such contributions up to
________dollars, plus % of such contributions
which are in excess of dollars.
[ ] (4) the percentage voted or declared by the
Employer for the Plan Year.
NOTE: if (2) or (3) above are completed with
the second matching percentage (following the
word "plus") greater than the first matching
percentage (following the words "the sum
of"), the IRS may deem the plan to be
discriminatory under Code Section 401 (a)
(4).
C. The Employer Matching Contribution shall be limited as
follows:
[ ] (1) A Participant's aggregate contributions
indicated in (A) above for a Plan Year in
excess of ___% of the Participant's
Compensation shall not be matched.
5
<PAGE> 6
[ ] (2) A Participant's aggregate contributions
indicated in (A) above for a Plan Year in
excess of ____ dollars shall not be matched.
[ ] (3) The Employer Matching Contribution for a
Participant for a Plan Year shall not exceed%
of the Participant's Compensation or
________ dollars.
V. QUALIFIED NONELECTIVE CONTRIBUTIONS AND QUALIFIED MATCHING
CONTRIBUTIONS
For each Plan Year, the Employer will not make a Qualified Nonelective
Contribution or a Qualified Matching Contribution
[X] or, if this box is checked, in any Plan Year in which
the Plan cannot satisfy one or more of the
non-discrimination tests set forth in Article VI, the
Employer may make a Qualified Nonelective
Contribution and/or Qualified Matching Contribution
to the Trust in an amount sufficient to enable the
Plan to satisfy such tests.
VI. VESTING OF EMPLOYER CONTRIBUTIONS
NOTE: Make selections in Section VI. only if Employer
Profit Sharing Contributions and/or Employer Matching
Contributions have been selected.
A. Employer Profit Sharing Contributions shall be immediately
vested and nonforfeitable
[ ] (1) or, if this box is checked, vested at the
rate specified in Column I below.
[ ] (2) or, if this box is checked, vested at the
rate specified in Column 2 below.
[ ] (3) or, if this box is checked, vested at the
rate specified in Column 3 below.
[ ] (4) or, if this box is checked, vested at the
rate specified in Column 4 below which rate
shall, if a graded rate is specified, be at
least as rapid as the rate specified in
Column 2 below or, if a cliff rate is
specified, be at least as rapid as the rate
specified in Column 3 below.
<TABLE>
<CAPTION>
Column 1 Column 2 Column 3 Column 4
Vesting Top-Heavy 7-Year 5-Year Percentage
Years Vesting Rate Graded Rate Cliff Rate Elected
----- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
1 0% 0% 0%
----------
2 20% 0% 0%
----------
3 40% 20% 0%
----------
4 60% 40% 0%
----------
5 80% 60% 100%
----------
6 100% 80% 100%
----------
7 100% 100% 100%
----------
</TABLE>
NOTE: Employer Profit Sharing Contributions must be
immediately vested and nonforfeitable if the Employer
makes the election in Section I.C. above and requires
Employees to complete more than one Year of Service.
6
<PAGE> 7
B. Employer Matching Contributions shall be immediately vested
and nonforfeitable
[ ] (1) or, if this box is checked, vested at the
rate specified in Column 1 below
[ ] (2) or, if this box is checked, vested at the
rate specified in Column 2 below
[ ] (3) or, if this box is checked, vested at the
rate specified in Column 3 below
[ ] (4) or, if this box is checked, vested at the
rate specified in Column 4 below which rate
shall, if a graded rate is specified, be at
least as rapid as the rate specified in
Column 2 below, or, if a cliff rate is
specified, be at least as rapid as the rate
specified in Column 3 below.
<TABLE>
<CAPTION>
Column 1 Column 2 Column 3 Column 4
Vesting Top-Heavy 7-Year 5-Year Percentage
Years Vesting Rate Graded Rate Cliff Rate Elected
----- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C>
1 0% 0% 0%
----------
2 20% 0% 0%
----------
3 40% 20% 0%
----------
4 60% 40% 0%
----------
5 80% 60% 100%
----------
6 100% 80% 100%
----------
7 100% 100% 100%
----------
</TABLE>
NOTE: Employer Matching Contributions must be
immediately vested and nonforfeitable if the Employer
makes the election in Section 1.C. above and requires
Employees to complete more than one Year of Service.
C. The following Service will not be included in determining
Vesting Years unless checked below:
[ ] (1) Service before the Employer maintained this
Plan or a predecessor plan.
[ ] (2) Service before the first Plan Year during
which a Participant attained age 18.
[ ] (3) Service before the first Plan Year to which
ERISA is applicable, if this Plan is a
continuation of an earlier plan which would
have disregarded such service.
D. Vesting Years and One-Year Breaks in Service for the purpose
of vesting shall be measured on the 12 consecutive-month
period beginning on the Participant's initial date of
employment or an anniversary of that date
[ ] or, if this box is checked, on the Plan Year.
E. The Participant will have a Vesting Year only if the
Participant is credited with at least 1000 Hours of Service
[ ] or, if this box is checked, ____ (insert less than
"1000").
F. If the Plan becomes a Top-Heavy Plan but thereafter ceases to
be a Top-Heavy Plan, the vesting schedule in effect while the
Plan was a Top-Heavy Plan will continue to be in effect for
all existing and future Participants.
7
<PAGE> 8
[ ] or, if this box is checked, the vesting schedule
selected in Sections VI.A. or B. above, as the case
may be, will apply for all Plan Years during which
the Plan is not a Top-Heavy Plan.
VII. SPECIAL RULES FOR ALLOCATIONS OF EMPLOYER CONTRIBUTIONS
A. An otherwise eligible Participant who is a Highly Compensated
Employee for a given Plan Year shall receive an allocation of
any Employer Profit Sharing Contributions made pursuant to
Section III. above and any reallocated forfeitures
[ ] or, if this box is checked, shall not receive an
allocation of any Employer Profit Sharing
Contributions made pursuant to Section III. above and
any reallocated forfeitures.
B. An otherwise eligible Participant who is a Highly Compensated
Employee for a given Plan Year shall receive an allocation of
any Employer Matching Contributions made pursuant to Section
III.B. above and any reallocated forfeitures
[ ] or, if this box is checked, shall not receive an
allocation of any Employer Matching Contributions
made pursuant to Section IV. above and any
reallocated forfeitures.
C. Any minimum Top-Heavy allocations will be made First from this
Plan
[ ] or, if this box is checked, First from the
_______ Plan (insert name of another qualified
retirement plan maintained by the Employer).
D. For any Plan Year for which the Plan is a Top-Heavy Plan,
minimum allocations shall be made in accordance with the
provisions of Section 23.03
[ ] or, if this box is checked, because the Employer
maintains at least one other qualified retirement
plan, minimum allocations shall be made at the
following rate of Compensation: ___% (insert "3" or
more).
Note: Only consider checking the box in Section
VII.D. ((the Employer sponsors two or more
tax-qualified retirement plans and either (1)
one of those plans is a defined benefit plan
or (2) the plans do not have identical
eligibility requirements.
VIII. REALLOCATION OF FORFEITURES
Any forfeiture which results from a Participant's termination of
Service shall be reallocated as if it were a contribution of the same
type (i.e., Employer Profit Sharing Contribution or Employer Matching
Contribution) for the Plan Year following the Plan Year in which such
forfeiture occurs
[ ] or, if this box is checked, such forfeiture shall be applied
to reduce the Employer's obligation to make Employer Matching
Contributions and Fixed Profit Sharing Contributions for the
Plan Year during which the forfeiture occurs.
8
<PAGE> 9
IX. COMPENSATION
A. Compensation shall be defined as follows for the purposes
designated below:
[ ] (1) W-2 Compensation. Compensation as reported on
Form W-2 and as more fully defined in Section
2.09(a)(i) of the Plan.
The above definition of Compensation shall
apply for the purposes of allocating or
determining:
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
[ ] Employer Matching Contributions
[ ] Non-discrimination tests contained
in Article VI of the Plan.
[ ] Section 415 Limitations on Allocations
[X] (2) 415 Safe Harbor Compensation. "Compensation"
as defined in Section 5.05(b)(ii) of this
Plan.
The above definition of Compensation shall
apply for the purposes of allocating or
determining:
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
[ ] Employer Matching Contributions
[X] Non-discrimination tests contained
in Article VI of the Plan.
[X] Section 415 Limitations on Allocations
[ ] (3) Safe Harbor Alternative Definition. 415 Safe
Harbor Compensation, reduced by all of the
following items (even if includible in gross
income): reimbursement or other expense
allowances, fringe benefits (cash and
non-cash), moving expenses, deferred
compensation, and welfare benefits.
The above definition of Compensation shall
apply for the purposes of allocating or
determining:
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
[ ] Employer Matching Contributions
[ ] Non-discrimination tests contained in
Article VI of the Plan.
[ ] Section 415 Limitations on Allocations
[X] (4)a. Non Safe Harbor Alternative Definition.
Compensation as indicated above but excluding:
[ ] overtime pay; premiums for shift
differential and call-in premiums;
[X] bonuses;
[ ] commissions;
[ ] such other items as follows:
------------
-----------------------------------------
9
<PAGE> 10
The above definition of Compensation shall
apply for the purposes of allocating or
determining
[X] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[X] Employer Profit Sharing Contributions
(non-integrated formula only)
[X] Employer Matching Contributions.
b. Non Safe Harbor Alternative Definition.
Compensation as indicated above but excluding:
[ ] overtime pay, premiums for shift
differential and call-in premiums;
[ ] bonuses;
[ ] commissions;
[ ] such other items as follows:
-------------
---------------------------------------------
The above definition of Compensation shall
apply for the purposes of allocating or
determining
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
(non-integrated formula only)
[ ] Employer Matching Contributions.
NOTE: If the Employer elects an
alternative definition of
Compensation by making a reduction
pursuant to this IX.A.4 for purposes
of allocating Employer Profit
Sharing Contributions, then such
alternative definition must be
tested by the Administrator to show
that it meets the nondiscrimination
requirements of Section 414(s)(3) of
the Code.
B. Compensation
[X] shall include [ ] shall not include
A Participant's Salary Reduction Contributions, Deferred Cash
Contributions (which the Participant did not elect to take in
cash) and other amounts which are excluded from an Employee's
gross income pursuant to Code Sections 125, 402(a)(8),
402(h)(1)(B), and 403(b).
The above rule shall apply for the purposes of allocating or
determining
[X] Employer Profit Sharing Contributions
[X] Employer Matching Contributions
[X] Non-discrimination tests contained in Article VI of
the Plan.
C. Compensation
[ ] shall include [X] shall not include
amounts paid during that portion of the Plan Year during which
the Employee is not eligible to participate in the Plan with
respect to the allocation of Employer Profit Sharing
Contributions and/or Employer Matching Contributions.
10
<PAGE> 11
The above rule shall apply for the purposes of allocating or
applying
[X] Employer Profit Sharing Contributions
[X] Employer Matching Contributions
[X] Section 401(m) non-discrimination test contained in
Article VI of the Plan.
D. Compensation for purposes of applying the Section 401(k)
non-discrimination test contained in Article VI of the Plan.
[ ] shall include [X] shall not include
amounts paid during that portion of the Plan Year during which
the Employee is not eligible to make a salary reduction
election and/or to receive allocations of Deferred Cash
Contributions.
NOTE: Participant's Salary Reduction Contributions,
Deferred Cash Contributions (which the
Participants do not elect to take in cash)
and other amounts which are excluded from an
Employee's gross income pursuant to Code
Sections 125, 402(a)(8), 402(h)(1)(B), and
403(b) are not considered compensation for
purposes of determining the Employer's
permissible deduction under Code Section 404
or for purposes of applying the limitations
on allocations to Participants' Accounts
under Article V of the Plan and Code Section
415.
X. NORMAL RETIREMENT DATE
A Participant's Normal Retirement Date shall be age 59 1/2
[X] or, if this box is checked, age 65 (insert more than 59 1/2 but
not more than 65).
XI. IN-SERVICE HARDSHIP WITHDRAWALS
A. In-service withdrawals by a Participant from his or her
Employer Profit Sharing Contribution Account shall not be
permitted unless the Participant has attained his or her
Normal Retirement Date
[X] or, if this box is checked, a Participant who has not
attained his or her Normal Retirement Date and who is
fully vested in his or her Employer Profit Sharing
Contribution Account may request an in-service
withdrawal from such account in case of hardship.
B. In-service withdrawals by a Participant from his or her
Employer Matching Contribution Account shall not be permitted
unless the Participant has attained his or her Normal
Retirement Date
[X] or, if this box is checked, a Participant who has not
attained his or her Normal Retirement Date and who is
fully vested in his or her Employer Matching
Contribution Account may request an in-service
withdrawal from such account in case of hardship.
C. In-service withdrawals by a Participant from his or her Salary
Reduction Contribution Account, Deferred Cash Contribution
Account and Qualified Nonelective Contribution Account shall
not be permitted unless the Participant has attained his or
her Normal Retirement Date
11
<PAGE> 12
[X] or, if this box is checked, a Participant who has not
attained his or her Normal Retirement Date may
request an in-service withdrawal from his or her
Salary Reduction Contribution Account and Deferred
Cash Contribution Account in case of hardship.
XII. DISTRIBUTION OPTIONS
A Participant (or Beneficiary to the extent permitted under the Plan)
may elect to receive a distribution of his or her vested Account
balance in one or more of the following optional forms:
[ ] (1) Distribution of the Participant's entire
vested Account balance in monthly
installments over a period equal to the
shorter of 120 months or the Applicable Life
Expectancy.
[X] (2) Distribution of the Participant's entire
vested Account balance in a lump sum.
[ ] (3) Distribution of the Participant's entire
vested Account balance in installment
payments of a fixed amount, such payments to
be made until exhaustion of the Participant's
vested Account balance.
[ ] (4) Distribution in kind.
[ ] (5) Any reasonable combination of the foregoing
or any reasonable time or manner of
distribution within the above-stated
limitations as elected by the Participant (or
Beneficiary to the extent permitted under the
Plan).
XIII. NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS
Nondeductible Voluntary Contributions by a Participant are not
permitted
[X] or, if this box is checked, are permitted.
XIV. INVESTMENT
Investment decisions with respect to all contribution sources shall be
made by the Participant
[ ] or, if this box is checked, by the Administrator with respect
to all contribution sources.
[ ] or, if this box is checked, by the Administrator with respect
to Employer Matching Contributions, Employer Profit Sharing
Contributions, Qualified Nonelective Contributions and
Qualified Matching Contributions.
XV. LOANS
Loans to a Participant are not permitted
[ ] or, if this box is checked, are permitted.
Note: If you elect to permit loans to Participants, you must
designate a Loan Trustee in Section XX. Scudder Trust Company
will not act as Loan Trustee unless it expressly agrees to act
as such.
12
<PAGE> 13
XVI. EFFECTIVE DATE
The Effective Date of this Plan or Amendment shall be the first day of
the Employer's fiscal year during which the Plan is adopted or amended
[ ] or, if this box is checked, _____________________.
(insert date)
XVII. PLAN AND LIMITATION YEARS
A. The Plan Year shall be the same as the fiscal year of the
Employer
[ ] or, if this box is checked, shall end on the last day
of the month of _____________.
B. The Limitation Year shall be the Plan Year
[ ] or, if this box is checked, shall be the 12
consecutive month period ending on the last day of
the month of ________________.
XVIII. AMENDMENT
Execution of this Adoption Agreement is not an amendment to an
existing plan
[X] or, if this box is checked, is an amendment to an existing plan
XIX. CALCULATION OF TOP HEAVY RATIO
If the Employer has maintained, now or subsequently maintains one or
more defined benefit plans, then, for purposes of calculating the
Top-Heavy Ratio, Present Value shall be based upon the interest rate
and mortality table employed as of the date in question for such
purpose as specified in the most recently adopted or amended defined
benefit plan maintained by the Employer
[ ] or, if this box is checked, the interest rate and mortality
table specified below.
Interest Rate: ____________%
Mortality Table: ___________
XX. APPOINTMENT OF TRUSTEES
The Employer hereby designates the following Trustees:
A. Scudder Trust Company shall act as Trustee under this Trust
with respect to all assets of Plan except as provided below.
B. __________ shall act as Trustee with respect to _____________.
C. __________ shall act as Trustee with respect to _____________.
D. __________ shall act as Loan Trustee.
13
<PAGE> 14
XXI. LIMITATIONS ON ALLOCATIONS
This section applies only for an Employer who maintains or has ever
maintained: another qualified retirement plan (other than a plan which
the Employer amended into the Prototype 401(k) Plan) in which any
Participant in this Plan is or was a participant or could possibly
become a participant, a welfare benefit fund (as defined in Code
Section 419(e)), or an individual medical account (as defined in Code
Section 415(1)(2)) under which amounts are treated as annual additions
with respect to any Participant in this Plan.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a
master or prototype plan, the provisions of Article V of the
Plan will apply as if the other plan were a master or
prototype plan
[ ] or, if this box is checked, the attached rider
describes the method by which the plans will limit
total Annual Additions to the Maximum Permissible
Amount described in Section 5.05 of the Plan and
reduce any excess amount in a manner that precludes
Employer discretion.
B. If the Participant is, or has ever been, a participant in a
defined benefit plan maintained by the Employer, the
provisions of Article V of the Plan will apply
[ ] or, if this box is checked, the attached rider
describes the method by which the plans involved will
satisfy the 1.0 limitation described in Section 5.04
of the Plan and reduce any excess amount in a manner
that precludes Employer discretion.
XXII. SIGNATURES
The Employer (1) covenants and agrees that whenever a Participant
makes a contribution the Employer shall ascertain that the Participant has
received a copy of the current prospectus relating to any Designated Investment
or other investment in which such contribution is to be invested where required
by any state or federal law, and (2) by remitting any contribution to the
Trustee the Employer shall be deemed to represent that the Employer has
received a current prospectus of any investment in which it is to be invested
where required by any state or federal law.
An Employer adopting this Plan may not rely on the opinion letter
issued by the National Office of the Internal Revenue Service as evidence that
this Plan is qualified under Code Section 401. An Employer who wishes to obtain
such reliance should apply for a determination letter from the appropriate Key
District Director of the Internal Revenue Service to obtain reliance that the
plan is qualified.
This Adoption Agreement may be used in conjunction with basic plan
document #02. Failure to properly complete this Adoption Agreement may result
in the disqualification of the Plan.
14
<PAGE> 15
All inquiries regarding this Plan should be made to Scudder Investor
Services, Inc. by calling 1-800-323-6105, or by writing to Scudder Investor
Services, Inc., Group Retirement Plans Department, Two International Place,
Boston, MA, 02110. Scudder Investor Services, Inc. will notify each adopting
Employer of any amendments made to, or of the discontinuance or abandonment of,
this Plan.
Trustee(s) Signature(s):
SCUDDER TRUST COMPANY
[ILLEGIBLE] By: /s/ SYDNEY STUDER - VICE PRESIDENT
- ------------------------------------ -----------------------------------
Signature of Employer
United States Lime & Minerals Inc.
- ------------------------------------ -----------------------------------
Print Name of Employer Trustee
12221 Merit Drive. #500
- ------------------------------------ -----------------------------------
Street Address Trustee
Dallas, TX 75251
- ------------------------------------ -----------------------------------
City State Zip Loan Trustee
75-0789226
- ------------------------------------
Employer Tax Identification Number
December 31
- ------------------------------------
Employer's Fiscal Year
(972) 991-8400
- ------------------------------------
Employer's Telephone Number
12/23/96 /s/ SYDNEY STUDER
- ------------------------------------ -----------------------------------
Date Accepted by Scudder Investor
Services, Inc.
100
- ------------------------------------
Expected Number of Participants
15
<PAGE> 16
SCUDDER PROTOTYPE 401(k) PLAN
Basic Plan Document 02
<PAGE> 17
SCUDDER PROTOTYPE 401(k) PLAN
Basic Plan Document 02
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.01 "Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.02 "Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.03 "Administrator" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.04 "Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.05 "Annuity Starting Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.06 "Applicable Life Expectancy" . . . . . . . . . . . . . . . . . . . . . . . . 2
2.07 "Beneficiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.08 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.09 "Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 "Deductible Voluntary Contribution Account" . . . . . . . . . . . . . . . . . 7
2.11 "Deferred Cash Allocation" . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.12 "Deferred Cash Contribution Account" . . . . . . . . . . . . . . . . . . . . 8
2.13 "Deferred Cash Contributions" . . . . . . . . . . . . . . . . . . . . . . . . 8
2.14 "Designated Investment" . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.15 "Designation of Beneficiary" or "Designation" . . . . . . . . . . . . . . . . 8
2.16 "Disabled" or "Disability" . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.17 "Distributor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.18 "Earned Income" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.19 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.20 "Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.21 "Employer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.22 "Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.23 "Employer Profit Sharing Contribution Account" . . . . . . . . . . . . . . . 11
2.24 "Employer Profit Sharing Contributions" . . . . . . . . . . . . . . . . . . . 11
2.25 "Employer Matching Contribution Account" . . . . . . . . . . . . . . . . . . 12
2.26 "Employer Matching Contributions" . . . . . . . . . . . . . . . . . . . . . . 12
2.27 "Family Member" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.28 "First Required Distribution Year" . . . . . . . . . . . . . . . . . . . . . 12
2.29 "Highly Compensated Employee" . . . . . . . . . . . . . . . . . . . . . . . . 13
2.30 "Highly Compensated Participant" . . . . . . . . . . . . . . . . . . . . . . 15
2.31 "Hour of Service" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.32 "Integration Level" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.33 "Integration Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.34 "Loan Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.35 "Maximum Disparity Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.36 "Nondeductible Voluntary Contribution Account" . . . . . . . . . . . . . . . 23
</TABLE>
<PAGE> 18
<TABLE>
<S> <C> <C>
2.37 "Nondeductible Voluntary Contributions" . . . . . . . . . . . . . . . . . . . 23
2.38 "Non-Highly Compensated Employee" . . . . . . . . . . . . . . . . . . . . . . 23
2.39 "Non-Highly Compensated Participant" . . . . . . . . . . . . . . . . . . . . 24
2.40 "Normal Retirement Date" or "Normal Retirement Age" . . . . . . . . . . . . . 24
2.41 "OASDI Rate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.42 "One-Year Break in Service" . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.43 "Owner-Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.44 "Participant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.45 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.46 "Plan Year" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.47 "Prototype 401(k) Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.48 "Qualified Matching Contributions". . . . . . . . . . . . . . . . . . . . . . 25
2.49 "Qualified Nonelective Contributions" . . . . . . . . . . . . . . . . . . . . 26
2.50 "Qualified Nonelective Contribution Account" . . . . . . . . . . . . . . . . 26
2.51 "Rollover Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.52 "Rollover Contributions". . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.53 "Salary Reduction Contribution Account" . . . . . . . . . . . . . . . . . . . 27
2.54 "Salary Reduction Contributions" . . . . . . . . . . . . . . . . . . . . . . 27
2.55 "Self-Employed Individual" . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.56 "Service" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.57 "Social Security Wage Base" . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.58 "Sponsor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.59 "Spouse" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.60 "Trust" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.61 "Trust Fund" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.62 "Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.63 "Valuation Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.64 "Vesting Years" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.65 "Year". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.66 "Year of Service" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE III. ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.01 Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.02 Interrupted Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.03 Transfer to Eligible Class . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.04 Determination by Administrator . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IV. CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.01 Salary Reduction Contributions . . . . . . . . . . . . . . . . . . . . . . . 31
4.02 Deferred Cash Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.03 Employer Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . 34
4.04 Employer Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . 36
4.05 Nondeductible Voluntary Contributions . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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4.06 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.07 Transfers from Other Qualified Plans . . . . . . . . . . . . . . . . . . . . 38
4.08 Limitations on Contributions . . . . . . . . . . . . . . . . . . . . . . . . 39
4.09 Deductible Voluntary Contributions . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V. CODE SECTION 415 LIMITATIONS ON ALLOCATIONS . . . . . . . . . . . . . . . . . 40
5.01 Employers Maintaining No Other Plan . . . . . . . . . . . . . . . . . . . . . 40
5.02 Employers Maintaining Other Master or Prototype
Defined Contribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.03 Employers Maintaining Other Defined Contribution
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.04 Employers Maintaining Defined Benefit Plans . . . . . . . . . . . . . . . . . 45
5.05 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VI. LIMITATIONS ON DEFERRALS,
MATCHING ALLOCATIONS AND VOLUNTARY CONTRIBUTIONS . . . . . . . . . . . . . . . . . . 53
6.01 Maximum Amount of Elective Deferrals . . . . . . . . . . . . . . . . . . . . 53
6.02 Limitation on Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . 55
6.03 Limitation on Voluntary Nondeductible Contributions
and Employer Matching Contributions . . . . . . . . . . . . . . . . . . . . . 61
6.04 Multiple Use Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.05 Further Limitations on Employer Matching
Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.06 Special Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE VII. TIME AND MANNER OF MAKING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 69
7.01 Manner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.02 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
7.03 Separate Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE VIII. VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.01 When Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
8.02 Employer Profit Sharing Contribution and Employer
Matching Contribution Forfeiture . . . . . . . . . . . . . . . . . . . . . . 71
8.03 Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE IX. DISTRIBUTIONS UPON DEATH . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.01 Distributions at Death . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
9.02 Children as Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 79
9.03 Nonconsensual Distributions to Beneficiaries . . . . . . . . . . . . . . . . 80
9.04 Eligible Rollover Distributions . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE X. DISTRIBUTIONS AFTER SEPARATION FROM SERVICE . . . . . . . . . . . . . . . . . 80
10.01 Commencement of Distributions . . . . . . . . . . . . . . . . . . . . . . . . 80
10.02 Forms of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
</TABLE>
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10.03 Required Minimum Distributions . . . . . . . . . . . . . . . . . . . . . . . 83
10.04 Nonconsensual Distributions . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.05 Special One-Time Distribution Election . . . . . . . . . . . . . . . . . . . 83
10.06 Distribution on Account of Plan Termination . . . . . . . . . . . . . . . . . 85
10.07 Eligible Rollover Distribution . . . . . . . . . . . . . . . . . . . . . . . 85
ARTICLE XI IN-SERVICE WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.01 In-service Withdrawal from Participant's Accounts . . . . . . . . . . . . . . 87
11.02 Rules Governing Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . 89
11.03 Manner of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.04 Limitation on Distributions . . . . . . . . . . . . . . . . . . . . . . . . . 91
ARTICLE XII. LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.01 Availability of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.02 Spousal Consent Required . . . . . . . . . . . . . . . . . . . . . . . . . . 93
12.03 Equivalent Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
12.04 Limitation on Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
12.05 Maximum Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
12.06 Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
12.07 Adequate Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
12.08 Repayment By Payroll Reduction . . . . . . . . . . . . . . . . . . . . . . . 95
12.09 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.10 Level Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.11 Additional Repayment Rules . . . . . . . . . . . . . . . . . . . . . . . . . 96
12.12 Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
12.13 Administration of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
12.14 Precedence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
ARTICLE XIII. TRUST PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
13.01 Manner of Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
13.02 Investment Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
13.03 Directed Powers of the Trustee . . . . . . . . . . . . . . . . . . . . . . . 101
13.04 Discretionary Powers of the Trustee . . . . . . . . . . . . . . . . . . . . . 104
13.05 Limitations in Investments . . . . . . . . . . . . . . . . . . . . . . . . . 105
13.06 Appointment of Investment Manager . . . . . . . . . . . . . . . . . . . . . . 107
13.07 Trustee: Number, Qualifications and Majority Action . . . . . . . . . . . . . 108
13.08 Change of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
13.09 Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
13.10 Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
13.11 Certifications and Instructions . . . . . . . . . . . . . . . . . . . . . . . 111
13.12 Accounts and Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
13.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
13.14 Employment of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
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13.15 Compensation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
13.16 Limitation of Trustee's Liability . . . . . . . . . . . . . . . . . . . . . . 113
13.17 Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
13.18 Enforcement of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 114
13.19 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
13.20 Applicability to Loan Trustee . . . . . . . . . . . . . . . . . . . . . . . . 116
13.21 Applicability to Other Trust . . . . . . . . . . . . . . . . . . . . . . . . 116
ARTICLE XIV. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
14.01 Appointment of Administrator . . . . . . . . . . . . . . . . . . . . . . . . 116
14.02 Named Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
14.03 Allocation of Responsibilities . . . . . . . . . . . . . . . . . . . . . . . 117
14.04 More Than One Administrator . . . . . . . . . . . . . . . . . . . . . . . . . 119
14.05 No Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
14.06 Record of Acts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
14.07 Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
14.08 Agent for Service of Legal Process . . . . . . . . . . . . . . . . . . . . . 119
14.09 Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
14.10 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
14.11 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
ARTICLE XV. FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
ARTICLE XVI. BENEFIT RECIPIENT INCOMPETENT OR DIFFICULT
TO ASCERTAIN OR LOCATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
16.01 Incompetency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
16.02 Difficulty to Ascertain or Locate . . . . . . . . . . . . . . . . . . . . . . 123
ARTICLE XVII. DESIGNATION OF BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . 123
ARTICLE XVIII. SPENDTHRIFT PROVISION AND DISTRIBUTIONS PURSUANT TO
QUALIFIED DOMESTIC RELATIONS ORDERS . . . . . . . . . . . . . . . . . . . . . . . . 124
18.01 General Spendthrift Rule . . . . . . . . . . . . . . . . . . . . . . . . . . 124
18.02 Account Division and Distribution Pursuant to
Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . 124
ARTICLE XIX. NECESSITY OF QUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . 125
ARTICLE XX. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 126
20.01 Amendment or Termination by the Employer . . . . . . . . . . . . . . . . . . 126
20.02 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
20.03 Distribution of Accounts Upon Termination . . . . . . . . . . . . . . . . . . 129
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ARTICLE XXI. TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
ARTICLE XXII. OWNER-EMPLOYEE PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 130
22.01 Purpose of Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
22.02 Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
22.03 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
ARTICLE XXIII. TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
23.01 Purpose of Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
23.02 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
23.03 Minimum Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
23.04 Nonforfeitability of Minimum Allocation . . . . . . . . . . . . . . . . . . . 139
23.05 Limitation on Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 139
23.06 Minimum Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . 139
23.07 Effect on Code Section 415 Limitations . . . . . . . . . . . . . . . . . . . 140
23.08 Termination of Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . . . 141
ARTICLE XXIV. SPECIAL DISTRIBUTION RULES . . . . . . . . . . . . . . . . . . . . . . . . . 141
24.01 Special Distribution Rules for Certain Participants . . . . . . . . . . . . . 141
24.02 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
24.03 Distributions upon Death . . . . . . . . . . . . . . . . . . . . . . . . . . 145
24.04 Timing of Annuity Payments and Normal Distributions . . . . . . . . . . . . . 146
24.05 Form of Distribution and Optional Times for
Commencement of Distribution . . . . . . . . . . . . . . . . . . . . . . . . 147
24.06 Elections for Former Participants . . . . . . . . . . . . . . . . . . . . . . 148
24.07 Election Period for Certain Elections by
Separated Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
24.08 Benefit Form for Certain Former Participants . . . . . . . . . . . . . . . . 149
24.09 Notice of Waivability of Qualified Preretirement Survivor Annuity . . . . . . . 151
24.10 Notice of Waivability of Qualified Joint and Survivor Annuity . . . . . . . . . 153
ARTICLE XXV. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
25.01 Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
25.02 No Enlargement of Plan Rights . . . . . . . . . . . . . . . . . . . . . . . . 154
25.03 No Enlargement of Employment Rights . . . . . . . . . . . . . . . . . . . . . 154
25.04 Written Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
25.05 No Release from Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 154
25.06 Discretionary Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
25.07 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
25.08 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
25.09 No Reversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
25.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
25.11 Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
25.12 Prior Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
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Basic Plan Document 02
PROTOTYPE 401(k) PLAN
ARTICLE I. INTRODUCTION
The Employer has established this Plan (the "Plan"), consisting of the
Adoption Agreement and the following provisions (the "Prototype 401(k) Plan")
for the exclusive benefit of Participants and their Beneficiaries.
ARTICLE II. DEFINITIONS
Where the following words and phrases appear in this Plan, they shall have
the respective meanings set forth below, unless their context clearly indicates
a contrary meaning. The singular herein shall include the plural, and vice
versa, and the masculine gender shall include the feminine gender, and vice
versa, where the context requires.
2.01 "Account" shall mean the Trust assets held by the Trustee for the
benefit of a Participant, which shall be the sum of the Participant's Salary
Reduction Contribution Account, Deferred Cash Contribution Account, Employer
Profit Sharing Contribution Account, Employer Matching Contribution Account,
Nondeductible Voluntary Contribution Account, Deductible Voluntary Contribution
Account, Rollover Account and Qualified Nonelective Contribution Account and
any transfer account established pursuant to Section 4.07 hereof with respect
to funds transferred to the Trust on the Participant's behalf.
2.02 "Act" shall mean the Employee Retirement Income Security Act of
1974, as amended.
<PAGE> 24
2.03 "Administrator" shall mean the person or persons specified in
Section 14.01 hereof.
2.04 "Adoption Agreement" shall mean the agreement by which the
Employer has most recently adopted or amended the Plan.
2.05 "Annuity Starting Date" shall mean the first day of the first
period for which an amount is paid to a Participant (other than loan(s) or
in-service withdrawal(s)) from the Trust (whether or not such distributions are
received in the form of an annuity).
2.06 "Applicable Life Expectancy" shall mean the life expectancy of the
Participant or the joint life and last survivor expectancy of the Participant
and Beneficiary calculated using the return multiples specified in Section
1.72-9 of the Treasury Regulations. Unless the Participant elects otherwise,
life expectancies determined as of the First Required Distribution Year shall
be calculated using the attained age of the Participant and, if applicable, the
Beneficiary as of his or her birth date in the First Required Distribution
Year. Life expectancies for subsequent calendar years shall be determined by
reducing the life expectancy determined as of the First Required Distribution
Year by one for each calendar year that has elapsed; provided, however, that
the Participant may elect prior to April 1 of the year immediately following
his or her First Required Distribution Year to have his or her life expectancy
and, if the Participant's Beneficiary is his or her Spouse, the life expectancy
of such Beneficiary, recalculated annually. If a Participant elects
recalculation, life expectancies for each subsequent calendar year shall be
determined using the attained ages of the Participant and, if applicable, his
or her Beneficiary, as of their respective birth dates in such calendar year.
2
<PAGE> 25
With respect to a Beneficiary who is entitled to receive a distribution
after the death of a Participant, "Applicable Life Expectancy" shall mean the
life expectancy of the Beneficiary calculated using the return multiples
specified in Section 1.72-9 of the Treasury Regulations as of the Beneficiary's
birth date in the calendar year in which distributions are required to
commence, and reduced by one for each subsequent calendar year. If the
Beneficiary is the Participant's Spouse, he or she may elect, prior to the time
distributions are required to commence, to have his or her life expectancy
recalculated annually. If a Spouse so elects, his or her life expectancy for
each subsequent calendar year shall be determined as of his or her birth date
in such calendar year.
2.07 "Beneficiary" shall mean any person or legal representative
effectively designated by the Participant as a person entitled to receive
benefits on or after the death of a Participant. Such term shall also include
any person or legal representative designated by a Beneficiary as a person
entitled to receive benefits on or after the death of such Beneficiary.
2.08 "Code" shall mean the Internal Revenue Code of 1986, as amended.
Reference to a section of the Code shall include any comparable section or
sections of future legislation that amends, supplements or supersedes such
section.
2.09 "Compensation" shall mean:
(a) except as provided in subsection (b), (c), and (d) and subject to
the limitation of subsection (e), one of the following as elected by the
Employer in the Adoption Agreement:
(i) W-2 Compensation. Information required to be reported under
Sections 6041, 6051 and 6052 of the Code (Wages, tips and other compensation as
reported on
3
<PAGE> 26
Form W-2). Compensation is defined as wages within the meaning of Section
3401(a) and all other payments of compensation to an Employee by the Employer
(in the course of the Employer's trade or business) for which the Employer is
required to furnish the Employee a written statement under Sections 6041(d),
6051(a)(3) and 6052. Compensation must be determined without regard to any
rules under Section 3401(a) that limit the remuneration included in wages based
on the nature or location of the employment or the services performed (such as
the exception for agricultural labor in Section 3401(a)(2)).
(ii) 415 Safe Harbor Compensation. "Compensation" as defined in
Section 5.05(b)(ii) of this Plan.
(iii) Safe Harbor Alternative Definition. Compensation as defined
in Section 2.09(a)(ii) above, reduced by all of the following items (even if
includable in gross income): reimbursements or other expense allowances, fringe
benefits (cash and non-cash), moving expenses, deferred compensation, and
welfare benefits.
(iv) In the case of a Self-Employed Individual, the
determination of Compensation shall be made on the basis of the Self-Employed
Individual's Earned Income.
(b) If so specified in the Adoption Agreement, the Employer may elect
to include in the definition of Compensation the Participant's Salary Reduction
Contributions, Deferred Cash Contributions and any other amount which is
contributed by the Employer pursuant to a salary reduction agreement and which
is not includable in the gross income of the employee under sections 125,
402(e)(3), 402(h) or 403(b) of the Code.
(c) If so specified in the Adoption Agreement, an Employer may elect
to exclude from the definition any one or more of the following types of
compensation:
4
<PAGE> 27
(i) additional compensation for Participants working outside
their regularly scheduled tour of duty such as overtime pay, premiums for shift
differential and call-in premiums;
(ii) bonuses;
(iii) commissions;
(iv) such other items as specified in the Adoption Agreement;
provided, however, that if the Employer elects an alternative definition of
Compensation pursuant to this Section 2.09(c) for purposes of allocating
Employer Profit Sharing Contributions and forfeitures thereof, then such
alternative definition must be tested by the Administrator to show that it
meets the nondiscrimination requirements of Section 414(s)(3) of the Code. Such
alternative definition of Compensation may not be used for purposes of Articles
V, VI and XXIII.
(d) If this Plan is adopted, (i) as an amendment to an existing plan,
(ii) to remove a disqualifying provision which results from a change in the
qualification requirements of the Code made by the Tax Reform Act of 1986 and
such other legislation as set forth in Section 1.401(b)-1(b)(2)(ii) of the
regulations under Code Section 401(b), and (iii) within the remedial amendment
period applicable to such disqualifying provision, then for Plan Years
beginning before the date such amendment is adopted, "Compensation" shall,
subject to the limitation of subsection (e), mean compensation as defined under
the terms of the plan prior to its amendment.
(e) In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on
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or after January 1, 1994, the annual Compensation of each Participant taken
into account under the Plan for any determination period shall not exceed the
OBRA '93 annual compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost of living
in accordance with Section 401(a)(17) of the Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not to exceed
12 months, beginning in such calendar year over which Compensation is
determined ("determination period"). If a determination period is a short Plan
Year (i.e., shorter than 12 months), the OBRA '93 annual compensation limit
will be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is 12.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only the Spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the year. If, as a result of the application of such
rules the OBRA '93 annual compensation limit is exceeded, then (except for
purposes of determining the portion of Compensation up to the integration level
if this Plan provides for permitted disparity), the limitation shall be
prorated among the affected individuals in proportion to each such individual's
Compensation as determined under this Section prior to the application of this
limitation.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Section 401(a)(17) of the Code shall mean the OBRA
'93 annual compensation limit.
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<PAGE> 29
(f) Compensation shall be based on the amount actually paid to the
Participant during the Plan Year. To the extent elected by the Employer in the
Adoption Agreement, for purposes of allocating Employer Profit Sharing
Contributions and/or Employer Matching Contributions and/or applying the
Section 401(m) nondiscrimination test, Compensation shall be based on the
amounts paid during that portion of the Plan Year during which the Employee is
eligible to participate with respect to the allocation of such contributions.
To the extent elected by the Employer in the Adoption Agreement, for purposes
of applying the Section 401(k) nondiscrimination test, Compensation shall be
based on the amount paid during that portion of the Plan Year during which the
Employee is eligible to make a salary reduction election and/or to receive
allocations of Deferred Cash Contributions. Notwithstanding the preceding
sentence, compensation for the purposes of Article V (Code Section 415
Limitations on Allocations) shall be based on the amount actually paid or made
available to the Participant during the Limitation Year. Compensation for the
initial Plan Year for a new plan shall be based upon eligible Participants'
Compensation, subject to the Adoption Agreement, from the Effective Date
through the end of the first Plan Year.
2.10 "Deductible Voluntary Contribution Account" shall mean the
separate account maintained pursuant to Section 7.03(g) for any deductible
voluntary contributions under Code Section 219 that the Participant made for
1986 and earlier calendar years and the income, expenses, gains and losses
attributable thereto.
2.11 "Deferred Cash Allocation" shall mean the contribution payable by
the Employer to the Trust on behalf of a Participant subject to the
Participant's right to elect to
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<PAGE> 30
receive all or a portion of such contribution in cash in lieu of having it
contributed to the Trust on his or her behalf.
2.12 "Deferred Cash Contribution Account" shall mean the separate
account maintained pursuant to Section 7.03(b) hereof for Deferred Cash
Contributions allocated to the Participant and the income, expenses, gains and
losses attributable thereto.
2.13 "Deferred Cash Contributions" shall mean contributions to the
Trust by the Employer in accordance with Section 4.02 hereof.
2.14 "Designated Investment" shall mean either a collective investment
trust for the collective investment of assets of employee pension or profit
sharing trusts pursuant to Revenue Ruling 81-100, a commingled investment
vehicle for the collective investment of assets of institutional investors, or
a regulated investment company, for which Scudder, Stevens & Clark, Inc., its
successor or any of its affiliates, acts as investment adviser and any of which
are designated by Scudder Investor Services, Inc. or its successors as eligible
for investment under the Plan.
2.15 "Designation of Beneficiary" or "Designation" shall mean the
document executed by a Participant under Article XVII.
2.16 "Disabled" or "Disability" shall mean the inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or last
for a continuous period of 12 months or more, as certified by a licensed
physician selected by the Participant and approved by the Employer.
2.17 "Distributor" shall mean Scudder Investor Services, Inc. or its
successor.
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2.18 "Earned Income" shall mean the net earnings from self-employment
in the trade or business with respect to which the Plan is established, for
which personal services of the Owner-Employee or Self-Employed Individual are a
material income-producing factor. Net earnings will be determined without
regard to items not included in gross income and the deductions allocable to
such items, except that, for taxable years beginning after December 31, 1989,
net earnings shall be determined with regard to the deduction allowed by Code
Section 164(f). Net earnings are reduced by contributions by the Employer to a
qualified plan, including this Plan, to the extent deductible under Code
Section 404.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Earned Income of each
Participant taken into account under the Plan for any determination period
shall not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the Commissioner for increases
in the cost of living in accordance with Section 401(a)(17) of the Code. The
cost-of-living adjustment in effect for a calendar year applies to any period,
not to exceed 12 months beginning in such calendar year over which Earned
Income is determined ("determination period"). If a determination period is a
short Plan Year (i.e., shorter than 12 months), the OBRA '93 annual
compensation limit will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the denominator of which
is 12.
In determining the Earned Income of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only the Spouse of the
Participant and any lineal descendants of the
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<PAGE> 32
Participant who have not attained age 19 before the close of the year. If, as a
result of the application of such rules the OBRA '93 annual compensation limit
is exceeded, then (except for purposes of determining the portion of Earned
Income up to the integration level if this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's Earned Income as determined under this
Section prior to the application of this limitation.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Section 401(a)(17) of the Code shall mean the OBRA
'93 annual compensation limit.
2.19 "Effective Date" shall mean the date specified by the Employer in
the Adoption Agreement.
2.20 "Employee" shall mean any individual who performs services in any
capacity in the business of the Employer (including any individual deemed to be
an employee of the Employer under Code Section 414(n) or (o)).
2.21 "Employer" shall mean the organization or other entity named as
such in the Adoption Agreement and any successor organization or entity which
adopts the Plan. If the organization or other entity named as Employer in the
Adoption Agreement is a sole proprietorship or a professional corporation and
the sole proprietor of such proprietorship or the sole shareholder of the
professional corporation dies, then the legal representative of the estate of
such sole proprietor or shareholder shall be deemed to be the Employer until
such time as, through the disposition of such sole proprietor's or sole
shareholder's estate or
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<PAGE> 33
otherwise, any organization or other entity succeeds to the interests of the
sole proprietor in the proprietorship or the sole shareholder in the
professional corporation.
Unless the adopting organization or entity elects otherwise in the Adoption
Agreement, any two or more organizations or entities which are members of (a) a
controlled group of corporations (as defined under Code Section 414(b)) which
includes the adopter, (b) a group of trades or businesses (whether or not
incorporated) which are under common control (as defined under Code Section
414(c)) which includes the adopter, or (c) an affiliated service group (as
defined under Code Section 414(m)) which includes the adopter, will be
considered to be the Employer for the purposes of the Plan. Similarly, any
other organization or entity which is required to be aggregated with the
adopter pursuant to Code Section 414(o) and the regulations thereunder will be
considered to be the Employer for the purposes of the Plan.
2.22 "Employer Contributions" shall mean Employer Profit Sharing
Contributions, Employer Matching Contributions, Salary Reduction Contributions,
Deferred Cash Contributions, Qualified Matching Contributions and Qualified
Nonelective Contributions.
2.23 "Employer Profit Sharing Contribution Account" shall mean the
separate account maintained pursuant to Section 7.03(c) hereof for Employer
Profit Sharing Contributions allocated to the Participant and the income,
expenses, gains and losses attributable thereto.
2.24 "Employer Profit Sharing Contributions" shall mean contributions
to the Trust by the Employer in accordance with Section 4.03 hereof. Employer
Profit Sharing Contributions may be fixed or discretionary as provided in the
Adoption Agreement.
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2.25 "Employer Matching Contribution Account" shall mean the separate
account maintained pursuant to Section 7.03(d) hereof for Employer Matching
Contributions allocated to the Participant and the income, expenses, gains and
losses attributable thereto.
2.26 "Employer Matching Contributions" shall mean the contributions
made to the Trust by the Employer in accordance with Section 4.04 hereof as
matching contributions.
2.27 "Family Member" shall mean, with respect to a particular Employee,
any individual who is a Spouse, lineal ascendant, lineal descendent, or a
Spouse of a lineal ascendant or descendent of the Employee. "Family Member" as
used in this Plan refers to an individual who is, or was during the Plan Year
in question, an Employee.
2.28 "First Required Distribution Year" shall mean:
(a) in the case of a Participant whose date of birth is July 1, 1917
or a later date, the calendar year during which the Participant attains age 70
1/2;
(b) in the case of a Participant (i) whose date of birth is June 30,
1917 or an earlier date and (ii) who is not, and has not been at any time since
the calendar year during which he or she attained age 65 1/2, a "5% owner" (as
defined in Code Section 416(i)(1)(B)(i)) of the Employer (hereinafter a "5%
owner"), the calendar year during which occurs the later of the Participant's
separation from Service or the Participant's attainment of age 70 1/2, provided
that if the Participant continues in Service after he or she attains age 70 1/2
and later becomes a 5% owner, such Participant's First Required Distribution
Year shall be the calendar year during which the Participant attains the status
of a 5% owner;
(c) in the case of a Participant (i) whose date of birth is June 30,
1917 or an earlier date and (ii) who is, or has been at sometime since the
calendar year during which he
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<PAGE> 35
or she attained age 65 1/2, a 5% owner, the calendar year during which the
Participant attains age 70 1/2.
2.29 "Highly Compensated Employee" shall mean:
(a) any Employee who was, at any time in the look-back year or
determination year, a 5% owner;
(b) any Employee who, in the look-back year:
(i) earned more than $75,000 (as adjusted by the Secretary of
the Treasury to reflect rises in the cost of living in accordance with Code
Section 415(d)) in annual compensation,
(ii) was an officer and earned more than 50% of the dollar
limitation in effect for such year under Code Section 415(b)(1)(A); or
(iii) earned more than $50,000 (as adjusted by the Secretary of
the Treasury to reflect rises in the cost of living in accordance with Code
Section 415(d)) in annual compensation and was among the top 20% of Employees
when ranked on the basis of compensation paid during such year.
For purposes of calculating the top 20% of Employees when ranked on the
basis of compensation paid during the look-back year, there shall be excluded
from the total number of Employees: (A) Employees with less than six months of
Service, (B) Employees who normally work less than 17 1/2 hours per week, (C)
Employees who normally work less than six months per year, (D) except as
provided in Treasury Regulations, Employees covered by a collective bargaining
agreement, (E) Employees who have not attained 21 years of age, and
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<PAGE> 36
(F) Employees who are nonresident aliens and who receive no earned income from
the Employer that constitutes income from sources within the United States;
(c) any Employee not described in paragraph (b) above but who is
described in clause (i), (ii) or (iii) of paragraph (b) if the term
"determination year" is substituted for the term "look-back year," and the
Employee is among the 100 Employees who received the most compensation from the
Employer during the determination year; and
(d) any former Employee who has separated from Service but who was a
Highly Compensated Employee as described in paragraph (a), (b) or (c) above when
he separated from Service or at any time after he attained age 55.
For purposes of this Section, "compensation" shall mean the amount paid
during the look-back year or determination year, whichever is applicable, by
the Employer to the Employee for services rendered (regardless of whether the
individual was a Participant at the time) as reportable to the Federal
Government for the purpose of withholding federal income taxes and increased by
any amount to which Code Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) apply.
Also for purposes of this Section, no more than 50 Employees or, if lesser, the
greater of three Employees or 10% of Employees shall be treated as officers;
however, if no officer has compensation in excess of the applicable stated
dollar amount above in any year, the officer with the highest compensation
shall be treated as described in paragraph (b) or (c), as applicable.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the 12-month period immediately preceding the
determination year. The Employer may elect to make the look-back year
calculation for a determination on the basis of the
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<PAGE> 37
calendar year ending with or within the applicable determination year, as
prescribed by Section 414(q) of the Code and the regulations issued thereunder.
If an Employee is, during a determination year or look-back year, a Family
Member of either a 5% owner who is an active or former Employee or a Highly
Compensated Employee who is one of the ten most Highly Compensated Employees
ranked on the basis of compensation paid by the Employer during such year, then
the Family Member and the 5% owner or top-ten Highly Compensated Employee shall
be aggregated. In such case, the Family Member and the 5% owner or top-ten
Highly Compensated Employee shall be treated as a single Employee receiving
compensation and Plan contributions or benefits equal to the sum of such
compensation and contributions or benefits of the Family Member and 5% owner or
top-ten Highly Compensated Employee. Finally, all interpretative questions
concerning whether an individual constitutes a Highly Compensated Employee
shall be resolved in a manner consistent with Department of Treasury and
Internal Revenue Service interpretations of Code Section 414(q).
2.30 "Highly Compensated Participant" shall mean a Highly Compensated
Employee who was, at any time during the Plan Year in question, eligible to
participate in the Plan.
2.31 "Hour of Service" shall mean each hour credited to an Employee in
the applicable computation period (a 12-consecutive month period) pursuant to
subsection (a) or (b) below, as the case may be.
(a) If the Employer has so selected in the Adoption Agreement, Hours
of Service shall be credited on the basis of weeks of employment and the rules
in paragraphs (i) through (iii) below shall apply as modified by paragraphs
(iv) and (v) below.
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(i) Each Employee shall be credited with 45 Hours of Service
for each week in which the Employee would be credited with at least one hour of
service under Section 2530.200b-2 of the Department of Labor Regulations which
are incorporated herein by reference. In the case of a week which extends into
two computation periods, the Hours of Service for such week shall be allocated
between the two computation periods on a pro rata basis.
(ii) In the case of a payment made or due to an Employee which
is not calculated on the basis of units of time, the number of Hours of Service
to be credited shall be equal to the amount of the payment divided by the
Employee's most recent hourly rate of compensation as determined under Section
2530.200b-2 of the Department of Labor Regulations.
(iii) No more than 501 Hours of Service shall be credited under
this Section for any single continuous period (whether or not such period
occurs in a single computation period) during which no duties or services are
performed for the Employer (or any other corporation during a time when such
corporation was related to the Employer within the meaning of Code Section
414), but for which the individual is paid.
(iv) The following hours shall be considered to be hours of
service for which an Employee would be credited under Section 2530.200b-2 of
the Department of Labor Regulations for the purposes of subsection (a)(i) of
this Section:
(A) An hour for which an Employee is paid, or entitled to
payment, for the performance of duties or services for the Employer.
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<PAGE> 39
(B) An hour for which an Employee is paid, or entitled to
payment, by the Employer (or any other corporation during a time when such
corporation was related to the Employer within the meaning of Code Section 414)
on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including Disability), layoff, jury
duty, military duty or leave of absence (unless such payment is made or due
solely to comply with applicable workman's compensation, unemployment
compensation or disability insurance laws or solely as reimbursement for the
Employee's medical expenses).
(C) An hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer (or any
other corporation during a time when such corporation was related to the
Employer within the meaning of Code Section 414). The same hours shall not be
considered both under paragraph (iv)(A) or paragraph (iv)(B), as the case may
be, and under this paragraph (iv)(C). Such hours shall be treated under
paragraphs (i) through (iii) as occurring in the computation period or periods
to which the award or agreement pertains rather than the computation period in
which the award, agreement or payment is made.
(v) Solely for the purpose of determining whether a One-Year
Break in Service has occurred, an Employee shall be credited with any Hours of
Service which would otherwise have been credited to such Employee but for such
absence from work during a Plan Year which commences after December 31, 1984
because of: such Employee's pregnancy, birth of a child of the Employee,
placement of an adopted child with the
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Employee, or caring for a natural or an adopted child for a period beginning
immediately following birth or placement.
Hours of Service shall be credited to an Employee pursuant to this
paragraph in the manner indicated in paragraphs (i) through (iii) above for the
computation period during which such absence begins, if the Employee would
otherwise have suffered a One-Year Break in Service and, in all other cases, in
the next following computation period. No more than 501 Hours of Service shall
be credited under this paragraph by reason of any one placement or pregnancy.
Notwithstanding any implication of this paragraph (v) to the contrary, no
credit shall be given pursuant to this paragraph (v) unless the Employee makes
a timely, written filing with the Administrator which establishes valid reasons
for the absence and enumerates the days for which there was such an absence.
(b) If the Employer has not selected in the Adoption Agreement to have
Hours of Service credited on the basis of weeks of employment, Hours of Service
shall mean:
(i) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours shall be
credited to the Employee for the computation period in which the duties are
performed;
(ii) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
Disability), layoff, jury duty, military duty or leave of absence. No more than
501 Hours of Service shall be credited under this paragraph for any single
continuous period (whether or not such period occurs in a single computation
period). Hours
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<PAGE> 41
under this subsection shall be calculated and credited pursuant to section
2530.200b-2 of the Department of Labor Regulations which are incorporated
herein by this reference;
(iii) Solely for the purpose of determining whether a One-Year
Break in Service has occurred, each hour which normally would have been
credited to an Employee (or in any case in which such hours cannot be
determined, eight hours per day of such absence) but for an absence from work
during a Plan Year which commences after December 31, 1984 because of such
individual's pregnancy, birth of a child of the Employee, placement of an
adopted child with the Employee, or caring for an adopted or a natural child
following placement or birth. Hours of Service shall be credited to an Employee
pursuant to this paragraph for the computation period during which such absence
begins if the individual would otherwise have suffered a One-Year Break in
Service, and in all other cases, in the immediately following computation
period. No more than 501 Hours of Service shall be credited under this
paragraph by reason of any one placement or pregnancy. Notwithstanding any
implication of this paragraph (iii) to the contrary, no credit shall be given
under this paragraph (iii) unless the Employee makes a timely, written filing
with the Administrator which establishes valid reasons for the absence and
enumerates the days for which there was such an absence;
(iv) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraph (i), (ii) or (iii), as the
case may be, and under this paragraph (iv). These hours shall be credited to
the Employee for the computation period or
19
<PAGE> 42
periods to which the award or agreement pertains rather than the computation
period in which the award, agreement or payment is made.
(c) (i) Where the Employer maintains the plan of a predecessor
employer, service for such predecessor employer shall be treated as Service of
the Employer. Where the Employer does not maintain the plan of a predecessor
employer, employment by a predecessor employer, upon the written election of
the Employer made in a uniform and non-discriminatory manner, shall be treated
as Service for the Employer.
(ii) If the Employer is a member of (A) a controlled group of
corporations (as defined under Code Section 414(b)), (B) a group of trades or
businesses (whether or not incorporated) which are under common control (as
defined under Code Section 414(c)), or (C) an affiliated service group (as
defined under Code Section 414(m)), all service of an Employee for any member
of such a group, or for any other entity required to be aggregated with the
Employer pursuant to Code Section 414(o) and the regulations thereunder, shall
be treated as if it were Service for the Employer for purposes of this Section.
(iii) Except as provided below, service of any Employee who is
considered a leased employee of the Employer under Code Section 414(n)(2) shall
be treated as if it were Service for the Employer for purposes of this Section.
However, qualified plan contributions or benefits provided by the leasing
organization which are attributable to services performed for the Employer
shall be treated as provided by the Employer. The provisions of this paragraph
shall not apply to any leased employee if such individual:
(A) is covered by a money purchase pension plan
maintained by the leasing organization providing:
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<PAGE> 43
(1) a non-integrated employer contribution rate of at
least 10% of compensation (as defined in Code Section 415(c)(3), but including
amounts contributed by the Employer pursuant to a salary reduction agreement
which are excludable from the Employee's gross income under Code Section 125,
402(e)(3), 402(h), or 403(b),
(2) immediate participation for leasing organization
employees who earn more than $1,000 in a year (other than employees who perform
substantially all their services for the organization), and
(3) full and immediate vesting, and
(B) is a member of a group of leased employees which in
the aggregate does not constitute more than 20% of the Employer's non-highly
compensated work force (within the meaning of Code Section 414(n)(5)(C)(ii)).
(C) For purposes of this Section, the term "leased
employee" means any person who is not an Employee and who, pursuant to an
agreement between the recipient and any other person, has performed services
for the Employer (or for the Employer and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full-time basis for
a period of at least one year and such services are of a type historically
performed by employees in the business field of the Employer.
2.32 "Integration Level" for a Plan Year shall mean the lesser of the
Social Security Wage Base (as in effect on the first day of the Plan Year) or
the dollar amount specified in the Adoption Agreement.
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<PAGE> 44
2.33 "Integration Rate" for the Plan Year shall mean the lesser of the
Maximum Disparity Rate (as in effect on the first day of the Plan Year) or the
rate specified in the Adoption Agreement.
2.34 "Loan Trustee" shall mean the person named in the Adoption
Agreement to act as trustee solely for the purpose of administering the
provisions of Article XII and holding the Trust assets to the extent that they
are invested in loans pursuant to such Article. Loan assets shall be held in a
separate trust if the person named as Loan Trustee is not the same person as
the person named as Trustee. Scudder Trust Company will not act as Loan Trustee
unless it specifically agrees in writing to act as such.
2.35 "Maximum Disparity Rate" shall mean the rate determined in
accordance with paragraphs (a), (b) or (c) and (d) below.
(a) If the Integration Level selected by the Employer in the
Adoption Agreement is equal to the Social Security Wage Base or does not exceed
the greater of $10,000 or 20 percent of the Social Security Wage Base, then,
except as provided in (d) below, the Maximum Disparity Rate is equal to the
greater of (i) 5.7 percent or (ii) the OASDI Rate.
(b) If the Integration Level selected by the Employer in the
Adoption Agreement exceeds the greater of $10,000 or 20 percent of the Social
Security Wage Base but is less than or equal to 80 percent of the Social
Security Wage Base, then, except as provided in (d) below, the Maximum Disparity
Rate is equal to the greater of (i) 4.3 percent or (ii) the OASDI Rate
multiplied by a fraction the numerator of which is 4.3 and the denominator of
which is 5.7.
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<PAGE> 45
(c) If the Integration Level selected by the Employer in the
Adoption Agreement exceeds 80 percent of the Social Security Wage Base but is
less than the Social Security Wage Base, then, except as provided in (d) below,
the Maximum Disparity Rate is equal to the greater of (i) 5.4 percent or (ii)
the OASDI Rate multiplied by a fraction the numerator of which is 5.4 and the
denominator of which is 5.7.
(d) If allocations for a Plan Year are made on an integrated basis
pursuant to Section 4.03(b)(ii) and the provisions of Section 23.03 are
applicable for such Plan Year, then for purposes of determining the Integration
Rate as applied to limit allocations under Section 4.03(b)(ii), the Maximum
Disparity Rate determined in accordance with paragraph (a), (b) or (c) above
shall be reduced by 3 percent. If the Employer has elected in the Adoption
Agreement to make a 4 percent minimum allocation pursuant to Section 23.07(b),
then 4 percent shall be substituted for 3 percent in the preceding sentence.
2.36 "Nondeductible Voluntary Contribution Account" shall mean the
separate account maintained pursuant to the Section 7.03(e) hereof for
Nondeductible Voluntary Contributions made by the Participant and the income,
expenses, gains and losses attributable thereto.
2.37 "Nondeductible Voluntary Contributions" shall mean all
contributions by Participants which are not deductible voluntary contributions
under Code Section 219, Rollover Contributions, or contributions of accumulated
deductible employee contributions (as defined in Code Section 72(o)(5)).
2.38 "Non-Highly Compensated Employee" shall mean an Employee who is
neither a Highly Compensated Employee nor a Family Member of a Highly
Compensated Employee.
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<PAGE> 46
2.39 "Non-Highly Compensated Participant" shall mean a Non-Highly
Compensated Employee who was, at any time during the Plan Year in question,
eligible to participate in the Plan.
2.40 "Normal Retirement Date" or "Normal Retirement Age" shall mean the
date selected by the Employer in the Adoption Agreement.
2.41 "OASDI Rate" for a Plan Year shall mean that portion of the tax
rate under Code Section 3111(a) in effect on the first day of the Plan Year
which is attributable to old-age insurance.
2.42 "One-Year Break in Service" shall mean a 12-consecutive-month
period in which an Employee does not complete more than 500 Hours of Service
unless the number of Hours of Service specified in the Adoption Agreement for
purposes of determining a Year of Service is less than 501, in which case a
12-consecutive-month period in which an Employee has fewer than that number of
Hours of Service shall be a One-Year Break in Service. The computation period
over which One-Year Breaks in Service shall be measured shall be the same
computation period over which Years of Service are measured.
2.43 "Owner-Employee" shall mean an Employee who is a sole proprietor
adopting this Plan as the Employer, or who is a partner owning more than 10% of
either the capital or profits interest of a partnership adopting this Plan as
the Employer. Solely for the purposes of Article XII hereof, an Owner-Employee
shall also mean an Employee who owns (or is considered as owning within the
meaning of Code Section 318(a)(1)) on any day during the Year, more than 5% of
the Employer if the Employer is an electing small business corporation.
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2.44 "Participant" shall mean an Employee who is eligible to
participate in the Plan under Article III (other than, if this Plan is adopted
as a nonstandardized plan, a Self-Employed Individual who elects not to be a
Participant in the Plan) and any other person (including former Employees) with
respect to whom any Account exists under the Plan.
2.45 "Plan" shall mean this 401(k) Plan and Adoption Agreement.
2.46 "Plan Year" shall mean the fiscal year of the Employer or a
different 12-consecutive-month period as specified in the Adoption Agreement. A
Plan Year may consist of less than a 12-consecutive-month period in the case of
the initial Plan Year or a short Plan Year resulting from a change in Plan
Year.
2.47 "Prototype 401(k) Plan" shall mean these Articles I to XXV.
2.48 "Qualified Matching Contributions" shall mean contributions made
to the Trust by the Employer in accordance with Section 6.03(c) hereof on
behalf of Non-Highly Compensated Participants to enable the Plan to satisfy one
or more of the nondiscrimination tests set forth in Article VI. Qualified
Matching Contributions are subject to full and immediate vesting and are
distributable only in accordance with the distribution provisions, other than
hardship distributions, that are applicable to Deferred Cash Contributions and
Salary Reduction Contributions. The term "Qualified Matching Contributions"
could, at the election of the Administrator, also apply to Employer Matching
Contributions if such contributions are subject to full and immediate vesting
and are distributable only in accordance with the distribution provisions,
other than hardship distributions, that are applicable to Deferred Cash
Contributions and Salary Reduction Contributions.
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2.49 "Qualified Nonelective Contributions" shall mean contributions
made to the Trust by the Employer in accordance with Section 6.02(c) hereof on
behalf of Non-Highly Compensated Participants to enable the Plan to satisfy one
or more of the nondiscrimination tests set forth in Article VI. Qualified
Nonelective Contributions are subject to full and immediate vesting and are
distributable only in accordance with the distribution provisions, other than
hardship distributions, that are applicable to Deferred Cash Contributions and
Salary Reduction Contributions. The term "Qualified Nonelective Contributions"
could, at the election of the Administrator, also apply to Employer Profit
Sharing Contributions if such contributions are subject to full and immediate
vesting and are distributable only in accordance with the distribution
provisions, other than hardship distributions, that are applicable to Deferred
Cash Contributions and Salary Reduction Contributions.
2.50 Qualified Nonelective Contribution Account" shall mean the
separate account maintained pursuant to Section 7.03(f) hereof for Qualified
Matching Contributions and Qualified Nonelective Contributions allocated to the
Participant and the income, expenses, gains and losses attributable thereto.
2.51 "Rollover Account" shall mean the separate account maintained
pursuant to Section 7.03(h) hereof for any Rollover Contributions made by the
Participant and the income, expenses, gains and losses attributable thereto.
2.52 "Rollover Contributions" shall mean contributions made to the
Trust by Participants in accordance with Section 4.06 hereof.
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2.53 "Salary Reduction Contribution Account" shall mean the separate
account maintained pursuant to Section 7.03(a) hereof for Salary Reduction
Contributions made on behalf of the Participant and the income, expenses, gains
and losses attributable thereto.
2.54 "Salary Reduction Contributions" shall mean contributions made to
the Trust by the Employer in accordance with Section 4.01 hereof as a result of
the election by Participants to contribute part of their Compensation.
2.55 "Self-Employed Individual" shall mean an Employee who has Earned
Income for the taxable year from the trade or business for which the Plan is
established or would have had earned income but for the fact that the trade or
business had no net profits for such year.
2.56 "Service" shall mean employment by the Employer and, if the
Employer is maintaining the plan of a predecessor employer, or if the Employer
is not maintaining the plan of a predecessor employer but has so elected in the
manner described in Section 2.31 above, employment by such predecessor
employer.
2.57 "Social Security Wage Base" for a Plan Year shall mean the maximum
amount of annual earnings which may be considered wages under Code Section
3121(a)(1) as in effect on the first day of such Plan Year for purposes of the
old-age, survivors, and disability insurance under Code Section 3111(a).
2.58 "Sponsor" shall mean any of the organizations (a) which have
requested a favorable opinion letter from the National Office of the Internal
Revenue Service for this Plan or (b) to which a favorable opinion letter for
this Plan has been issued by the National Office of the Internal Revenue
Service.
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2.59 "Spouse" shall mean the Spouse or surviving Spouse of the
Participant, provided that a former Spouse will be treated as the Spouse and a
current Spouse will not be treated as the Spouse to the extent provided under a
qualified domestic relations order (as defined in Code Section 414(p)).
2.60 "Trust" shall mean any trust established under Article XIII of
this Plan for investment of the assets of the Plan. If more than one Trust is
established under Article XIII, references herein to the Trust shall, as the
context requires, refer to each such Trust, separately or all such Trusts,
collectively.
2.61 "Trust Fund" shall mean with respect to a Trust the contributions
to such Trust and any assets into which such contributions shall be invested or
reinvested in accordance with Sections 13.01 and 13.03 of this Plan. If more
than one Trust is established under Article XIII, references herein to the
Trust Fund shall refer to the Trust Fund of each such Trust, separately, or all
such Trusts, collectively, as the context requires.
2.62 "Valuation Date" shall mean, with respect to each Trust, the
person or persons, including any successor or successors thereto, named in the
Adoption Agreement to act as trustee of the such Trust and hold the assets of
such Trust in accordance with Article XIII hereof. If more than one Trust is
established under Article XIII, references herein to the Trustee shall, as the
context requires, refer to the Trustee or Trustees of each such Trust.
2.63 "Valuation Date" shall mean the last day of each Plan Year and
such other date(s) as may be designated by the Administrator from time to time.
2.64 "Vesting Years" shall be measured on the 12-consecutive-month
computation period specified in the Adoption Agreement.
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(a) A Participant will have a Vesting Year during any such
computation period if the Participant completes the number of Hours of Service
selected in the Adoption Agreement for purposes of computing a Year of Service.
(b) When determining Vesting Years, unless the Employer has
otherwise specified in the Adoption Agreement, there shall be excluded: (i) if
this Plan is a continuation of an earlier plan which would have disregarded
such service, Service before the first Plan Year to which the Act is
applicable; (ii) Service before the first Plan Year in which the Participant
attained age 18 and (iii) Service before the Employer maintained this Plan or a
predecessor plan.
2.65 "Year" shall mean the fiscal year of the Employer.
2.66 "Year of Service" shall be measured on the 12-consecutive-month
period computation period specified in the Adoption Agreement during which the
Employee completes the number of Hours of Service specified in the Adoption
Agreement. The initial date of employment or reemployment is the first day on
which the Employee performs an Hour of Service. If the Employer specifies in
the Adoption Agreement that the computation period after the initial
computation period shall be the Plan Year which begins after the Employee's
initial date of employment or reemployment, an Employee who is credited with
the requisite number of Hours of Service in both the initial computation period
and in the Plan Year which begins after the Employee's date of employment or
reemployment shall be credited with two Years of Service.
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ARTICLE III. ELIGIBILITY
3.01 Entry. Each Employee of the Employer, who on the Effective Date of
this Plan meets the conditions specified in the Adoption Agreement, shall
become eligible to participate in the Plan commencing with the Effective Date.
Each other Employee of the Employer, including future Employees, shall become
eligible to participate in the Plan when the eligibility requirements specified
in the Adoption Agreement are met. For the purposes of this Plan's eligibility
requirements, the exclusion concerning Employees who are covered by collective
bargaining agreements applies to individuals who are covered by a collective
bargaining contract between the Employer and Employee Representatives if
contract negotiations considered retirement benefits in good faith, unless such
contract specifically provides for participation in the Plan. For the purposes
of this Section, "Employee Representatives" shall mean the representatives of
an employee organization which engages in collective bargaining negotiations
with the Employer provided that, owners, officers, and executives of the
Employer do not comprise more than 50% of the employee organization's
membership.
3.02 Interrupted Service. All Years of Service with the Employer are
counted towards eligibility except that if the Employer has specified in the
Adoption Agreement that more than one Year of Service is required before
becoming a Participant eligible to receive allocations of Employer Matching
Contributions and/or Employer Profit Sharing Contributions, and if the
individual has a One-Year Break in Service before satisfying the relevant
eligibility requirement, Service before such break will not be taken into
account for purposes of determining when the individual is eligible to receive
allocations of Employer Matching Contributions and/or Employer Profit Sharing
Contributions once the individual
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returns to the employ of the Employer. A former Employee who has met the entry
requirements and who terminates Service with the Employer prior to becoming a
Participant, or a former Participant, shall become a Participant immediately
upon return to the employ of the Employer as a member of an eligible class of
Employees.
3.03 Transfer to Eligible Class. In the event an Employee who is not a
member of an eligible class of Employees becomes a member of an eligible class,
such Employee shall participate immediately if such Employee has satisfied the
minimum age and Service requirements and would have previously become a
Participant had he or she been a member of an eligible class throughout the
period of employment with the Employer.
3.04 Determination by Administrator. The Administrator shall have the
discretionary authority to determine an Employee's eligibility to participate
in the Plan and shall notify each Employee upon his or her admission as a
Participant in the Plan.
ARTICLE IV. CONTRIBUTIONS
4.01 Salary Reduction Contributions. If selected by the Employer in the
Adoption Agreement, the Employer will make a Salary Reduction Contribution (for
allocation to the eligible Participant's Salary Reduction Account) on behalf of
each Participant who both has elected to have a portion of the Compensation
which would otherwise have been paid to him or her for the Plan Year
contributed to the Trust and has received Compensation during the Plan Year.
With respect to such elective contributions, the following provisions shall
apply:
(a) an Employee shall be given an opportunity to elect, prior to the
date as of which he or she becomes eligible in accordance with procedures set
by the Administrator,
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to have Salary Reduction Contributions made on his or her behalf or, in the
case of an Employee who becomes eligible immediately upon becoming an Employee,
as soon as is administratively possible following his or her initial date of
eligibility;
(b) Participants shall be given opportunities to elect to commence
having Salary Reduction Contributions made on their respective behalves at such
other time or times as the Administrator designates;
(c) such elections may only be made on a prospective basis and
pursuant to written, salary reduction agreements between the Employee and the
Employer;
(d) each such written, salary reduction agreement shall be in such
form and subject to such rules as the Administrator may prescribe, and the
agreement shall specify the percentage or amount of Compensation that the
Participant desires to contribute (but in no event may such contribution exceed
the percentage of Compensation specified in the Adoption Agreement);
(e) a salary reduction agreement may be amended or terminated
prospectively during the Plan Year at such times and in such manner as
permitted by rules prescribed by the Administrator;
(f) Salary Reduction Contributions made on behalf of a Participant
shall be in an amount equal to the percentage or amount of Compensation
specified in the eligible Participant's salary reduction agreement; provided,
however, that at any time during a Plan Year the Administrator may reduce the
rate of Salary Reduction Contributions to be made on behalf of any Participant
for the remainder of the Plan Year to the extent the Administrator determines
necessary to comply with the limitations of Section 4.08, and Articles V and VI
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hereof. Any amount which cannot be contributed to the Trust because of those
limitations shall be paid to the Participant in cash and such payment shall be
subject to federal income and other tax withholding by the Employer.
4.02 Deferred Cash Contributions. If selected by the Employer in the
Adoption Agreement, the Employer will make a Deferred Cash Contribution on
behalf of each eligible Participant (as determined in accordance with the
Adoption Agreement), in an amount equal to the Deferred Cash Allocation
specified in the Adoption Agreement, as expressed as a percentage of such
Participant's Compensation.
With respect to Participants' elections not to have amounts contributed,
the following provisions shall apply:
(a) each Participant shall be afforded a reasonable opportunity to
elect not to have Deferred Cash Allocations contributed to the Trust on his or
her behalf at least once during each Plan Year and at such other time or times
as the Administrator elects;
(b) such elections may only be made pursuant to written agreements
between the Participant and the Employer;
(c) each such written agreement shall be in such form and subject to
such rules as the Administrator may prescribe, and the election shall specify
the amount of the Deferred Cash Allocation that the Participant desires to
receive in cash; and
(d) the amount which a Participant has elected to receive in cash
pursuant to such an election shall be paid to the Participant by the Employer
no later than the last day on which the Deferred Cash Contributions for the
Plan Year in question must be paid to the Trust under Section 7.02 hereof.
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Notwithstanding the above, the Deferred Cash Contribution otherwise to be
made for a Participant may be reduced to the extent necessary to comply with
the limitations of Section 4.08 hereof and shall be reduced to the extent
necessary to comply with the limitations of Articles V and VI hereof. Any
amount which cannot be contributed to the Trust because of those limitations
shall be paid to the Participant in cash and such payment shall be subject to
federal income and other tax withholding by the Employer.
4.03 Employer Profit Sharing Contributions. If selected by the Employer
in the Adoption Agreement, for each Plan Year, the Employer will contribute, as
Employer Profit Sharing Contributions, either a fixed amount or the amount
determined by it in its discretion. Employer Profit Sharing Contributions, plus
any forfeitures under Section 8.02 hereof, for a Plan Year shall be allocated
as of the last day of such Plan Year among the Employer Profit Sharing
Contribution Accounts of eligible Participants (as determined in accordance
with the Adoption Agreement), as follows:
(a) If a non-integrated formula is elected in the Adoption Agreement,
such contribution and forfeitures shall be allocated to the Employer Profit
Sharing Contribution Account of each eligible Participant in the ratio that
each such Participant's Compensation for the Plan Year bears to the total
Compensation paid to all eligible Participants for the Plan Year; and
(b) If an integrated formula is elected in the Adoption Agreement,
such contributions and forfeitures shall be allocated in the following steps:
(i) First, Employer Profit Sharing Contributions and
forfeitures will be allocated to the Employer Profit Sharing Contribution
Account of each eligible Participant
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in the ratio that the sum of each such Participant's Compensation and
Compensation in excess of the Integration Level for the Plan Year bears to the
sum of Compensation and Compensation in excess of the Integration Level for all
such eligible Participants for the Plan Year, provided that the amount so
credited to any such Participant's Employer Profit Sharing Contribution Account
for the Plan Year shall not exceed the product of the Integration Rate times
the sum of the Participant's Compensation and Compensation in excess of the
Integration Level for the Plan Year. For purposes of this step, in the case of
any Participant who has exceeded the cumulative permitted disparity limit
described below, two times such Participant's Compensation for the Plan Year
will be taken into account.
(ii) Next, any remaining Employer Profit Sharing Contributions
and forfeitures will be allocated to the Employer Profit Sharing Contribution
Account of each eligible Participant in the ratio that each such Participant's
Compensation for the Plan Year bears to the total Compensation paid to all
eligible Participants for the Plan Year.
(c) Overall permitted disparity limits.
(i) Annual overall permitted disparity limit: Notwithstanding
the preceding paragraphs, for any Plan Year this Plan benefits any Participant
who benefits under another qualified plan or simplified employee pension, as
defined in Section 408(k) of the Code, maintained by the Employer that provides
for permitted disparity (or imputes disparity), Employer contributions and
forfeitures will be allocated pursuant to the provisions of Section 4.03(a)
rather than 4.03(b).
(ii) Cumulative permitted disparity limit: Effective for Plan
Years beginning on or after January 1, 1995, the cumulative permitted disparity
limit for a
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Participant is 35 total cumulative permitted disparity years. Total cumulative
permitted years means the number of years credited to the Participant for
allocation or accrual purposes under this Plan, any other qualified plan or
simplified employee pension plan (whether or not terminated) ever maintained by
the Employer. For purposes of determining the Participant's cumulative
permitted disparity limit, all years ending in the same calendar year are
treated as the same year. If the Participant has not benefitted under a defined
benefit or target benefit plan for any year beginning on or after January 1,
1994, the Participant has no cumulative disparity limit.
4.04 Employer Matching Contributions.
(a) If selected by the Employer in the Adoption Agreement, the
Employer will make an Employer Matching Contribution (for allocation together
with forfeitures under Section 8.02 below) to the Participant's Employer
Matching Contribution Account on behalf of each eligible Participant (as
determined in accordance with the Adoption Agreement) for each Plan Year that a
contribution within one or more of the contribution categories selected by the
Employer in the Adoption Agreement (i.e;, Salary Reduction Contributions,
Deferred Cash Contributions, or Nondeductible Voluntary Contributions) is
allocated to such Participant's Account. The Employer Matching Contribution
made for an eligible Participant shall be in an amount determined in accordance
with the Adoption Agreement and shall be allocated in the manner specified in
the Adoption Agreement.
(b) Notwithstanding any implication of the preceding subsection (a) to
the contrary, the Employer Matching Contribution otherwise to be made for a
Participant may be reduced to the extent necessary to comply with the
limitations of Section 4.08 hereof and shall
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be reduced to the extent necessary to comply with the limitations of Articles
V. Any amount which cannot be contributed to the Trust because of these
limitations will be retained by the Employer, and the Employer shall have no
obligation to contribute such amount to the Trust.
4.05 Nondeductible Voluntary Contributions. If, in the Adoption
Agreement, the Employer has specified that Participants may make Nondeductible
Voluntary Contributions, a Participant may make such contributions to his or
her Account; provided, however, that a Participant's right to make such
contributions shall be subject to the conditions and limitations specified
below:
(a) The aggregate amount of a Participant's Nondeductible Voluntary
Contributions shall not cause the Annual Addition (as defined in Section
5.05(a) hereof) to his or her Account to exceed the limitations set forth in
Article V.
(b) A Participant's Nondeductible Voluntary Contributions shall be
allocated to his or her Nondeductible Voluntary Contribution Account under
Section 7.03(e) hereof.
(c) At any time during a Plan Year, the Administrator may cause a
Participant to reduce the rate of his or her Nondeductible Voluntary
Contributions for the remainder of the Plan Year to the extent the
Administrator determines necessary to comply with the limitations of Article V
and VI hereof.
4.06 Rollover Contributions. The Administrator may, in its discretion,
direct the Trustee to accept a Rollover Contribution upon the express request
of an Employee wishing to make such Rollover Contribution, subject to the
consent of the Trustee if the contribution includes property other than cash. A
Rollover Contribution shall mean a contribution which is an "eligible rollover
distribution" within the meaning of Code Section 402(c)(4) or a "rollover
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contribution" within the meaning of Code Section 408(d)(3)(A)(ii) and which
satisfies all applicable provisions of the Code. Each Rollover Contribution
made by an Employee shall be allocated to his or her Rollover Account pursuant
to Section 7.03(h) hereof. Such Rollover Account shall be invested by the
Trustee as part of the Trust Fund, pursuant to Article XIII hereafter. An
Employee may make a contribution under this Section 4.06 whether or not he or
she has satisfied the age and service participation requirements set forth in
the Adoption Agreement. An Employee who makes a contribution under this Section
4.06 and does not otherwise qualify as a Participant is, nevertheless, deemed
to be a Participant for the limited purpose of administering that contribution.
The Administrator may, in its discretion, accept accumulated deductible
employee contributions (as defined in Code Section 72(o)(5)) that were
distributed from a qualified retirement plan and rolled over pursuant to Code
Sections 402(c), 403(a)(4), or 408(d)(3). The rolled over amount will be added
to the Participant's Deductible Voluntary Contribution Account.
4.07 Transfers from Other Qualified Plans. The Administrator may, in
its discretion, direct the Trustee to accept the transfer of any assets held
for a Participant's benefit under a qualified retirement plan of a former
employer of such Participant. Such a transfer shall be made directly between
the trustee or custodian of the former employer's plan and the Trustee in the
form of cash or its equivalent, and shall be accompanied by written instruction
showing separately the portion of the transfer attributable to types of
contributions made by the former employer and pre-tax and after-tax
contributions made by the Participant, respectively. Separate written
instructions delivered by the Administrator shall identify the portion of the
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transferred funds, if any, attributable to any period during which the
Participant participated in a defined benefit plan, money purchase pension plan
(including a target benefit plan), stock bonus plan or profit sharing plan
which would otherwise have provided a life annuity form of payment to the
Participant. The Trustee and recordkeeper shall be entitled to rely on such
written instructions with respect to the character of the transferred funds.
Except as otherwise provided in Article XXIV, the amounts transferred shall be
allocated to separate accounts as provided in Section 7.03 that match the
character of the transferred funds.
4.08 Limitations on Contributions. During a Plan Year, Employer Profit
Sharing Contributions and Employer Matching Contributions may not, in the
aggregate, exceed (a) 15% (or such larger percentage as may be permitted by the
Code as a current deduction to the Employer with respect to any Plan Year) of
the total Compensation (disregarding any exclusion from Compensation specified
by the Employer in the Adoption Agreement) paid to, or accrued by the Employer
for, Participants for the Year ending in the Plan Year, less (b) any amounts
contributed as Salary Reduction Contributions and Deferred Cash Contributions,
plus (c) any unused pre-'87 credit carryovers. For this purpose, a "pre-'87
credit carryover" is the amount by which Employer Contributions for a previous
Year which commenced before January 1, 1987 were less than 15% of the total
Compensation (disregarding any exclusion from Compensation specified by the
Employer in the Adoption Agreement) paid or accrued by the Employer to
Participants for such Year, but such unused pre-'87 credit carryover shall in
no event permit the Employer Contributions for a Year to exceed 25% (or such
larger percentage as may be permitted by the Code as a deduction to the
Employer) of the total Compensation (disregarding any exclusion from
Compensation specified by the Employer in
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the Adoption Agreement) paid or accrued by the Employer to Participants for the
Year ending in the Plan Year in question.
4.09 Deductible Voluntary Contributions. This Plan will not accept
deductible voluntary contributions for taxable years beginning after December
31, 1986. Deductible voluntary contributions made in prior taxable years shall
be maintained in the Participant's Deductible Voluntary Contribution Account
and shall share in the gains and losses of the Trust Fund in accordance with
Section 8.02(e). No part of a Participant's Deductible Voluntary Contribution
Account may be used to purchase life insurance. A Participant may withdraw all
or a portion of his or her Deductible Voluntary Contribution Account in
accordance with Section 11.01.
ARTICLE V. CODE SECTION 415 LIMITATIONS ON ALLOCATIONS
5.01 Employers Maintaining No Other Plan.
(a) If a Participant does not participate in, and has never
participated in another qualified plan, a welfare benefit fund (as defined in
Code Section 419(e)), an individual medical account (as defined in Code Section
415(1)(2)), or a simplified employee pension (as defined in Code Section
408(k)) maintained by the Employer, the amount of the Annual Addition which may
be credited to the Participant's Account for any Limitation Year shall not
exceed the lesser of the Maximum Permissible Amount or any other limitation
contained in the Plan.
(b) If the Employer Contribution (including any forfeitures) that
would otherwise be allocated to a Participant's Account would cause the Annual
Addition for the
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Limitation Year to exceed the Maximum Permissible Amount, the amount allocated
will be reduced so that any Excess Amount shall be eliminated and,
consequently, the Annual Addition for the Limitation Year will equal the
Maximum Permissible Amount.
(i) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimation of the
Participant's Compensation for the Limitation Year, uniformly determined for
all Participants similarly situated.
(ii) As soon as is administratively feasible after the end of
each Limitation Year, the Maximum Permissible Amount for the Limitation Year
will be determined on the basis of Participants' actual Compensation for the
Limitation Year.
(c) If the allocation of forfeitures or the use by the Employer of the
estimation described in Section 5.01(b)(i) above results in an Excess Amount,
such Excess Amount shall be eliminated pursuant to the following procedure:
(i) The portion of the Excess Amount consisting of
Nondeductible Voluntary Contributions which are a part of the Annual Addition
shall be returned to the Participant (with any income or gains attributable
thereto) as soon as administratively feasible;
(ii) At the election of the Administrator, if after the
application of Subparagraph (i) an Excess Amount still exists, the portion of
the Excess Amount consisting of Salary Reduction Contributions and Deferred
Cash Contributions (with any income or gains attributable thereto) shall be
returned to the Participant;
(iii) If after the application of subparagraph (ii) an Excess
Amount still exists and the Participant is covered by the Plan at the end of a
Limitation Year, the
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Excess Amount in the Participant's Account will be used to reduce Employer
Contributions (including any allocation of forfeitures) for such Participant in
the next Limitation Year, and each succeeding Limitation Year if necessary;
(iv) If after the application of subparagraph (iii) an Excess
Amount still exists and the Participant is not covered by the Plan at the end
of a Limitation Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce proportionately future
Employer Contributions (including any allocation of forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year, if necessary. If a suspense account is in existence at any
time during a Limitation Year pursuant to this subparagraph, it will not
participate in the allocation of the Trust's investment gains and losses. In
the event of termination of the Plan, the suspense account shall revert to the
Employer to the extent it may not then be allocated to any Participant's
Account.
(v) If a suspense account is in existence at any time during a
particular Limitation Year, all amounts in the suspense account must be
allocated and reallocated to Participants' Accounts before any Employer
Contributions or Nondeductible Voluntary Contribution may be made to the Plan
for that Limitation Year.
(d) Notwithstanding any other provision in subsections (a) through
(c), the Employer shall not contribute any amount that would cause an
allocation to the suspense account as of the date the contribution is
allocated.
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5.02 Employers Maintaining Other Master or Prototype Defined
Contribution Plans.
(a) This Section applies if, in addition to this Plan, a Participant
is covered under another qualified Master or Prototype defined contribution
plan, a welfare benefit fund (as defined in Code Section 419(e)), an individual
medical account (as defined in Code Section 415(1)(2)), or a simplified
employee pension (as defined in Code Section 408(k)) maintained by the Employer
during any Limitation Year. The Annual Addition which may be allocated to any
Participant's Account for any such Limitation Year shall not exceed the Maximum
Permissible Amount, reduced by the sum of any portion of the Annual Addition
credited to the Participant's account under such other plans, welfare benefit
funds, and individual medical accounts for the same Limitation Year.
(b) If the Annual Addition with respect to a Participant under other
defined contribution plans, welfare benefit funds, individual medical accounts
and simplified employee pensions maintained by the Employer of what would be
portions of the Annual Addition (if the allocations were made under the Plan)
are less than the Maximum Permissible Amount and the Employer Contribution that
would otherwise be contributed or allocated to the Participant's Account under
this Plan would cause the Annual Addition for the Limitation Year to exceed
this limitation, the amount contributed or allocated will be reduced so that
the Annual Addition under all such plans and funds for the Limitation Year
will equal the Maximum Permissible Amount.
(c) If the Annual Addition with respect to the Participant under such
other defined contribution plans, welfare benefit funds, individual medical
accounts and simplified employee pensions in the aggregate are equal to or
greater than the Maximum Permissible
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Amount, no amount will be contributed or allocated to the Participant's Account
under this Plan for the Limitation Year.
(d) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible Amount for
a Participant in the manner described in Section 5.01(b)(i) provided the
Employer complies with the provisions of Section 5.01(b)(ii).
(e) If, pursuant to Section 5.02(d) or as a result of the allocation
of forfeitures, a Participant's Annual Addition under this Plan and such
Participant's annual additions under such other defined contributions plans,
welfare benefit funds, individual medical accounts and simplified employee
pensions would result in an Excess Amount for a Limitation Year, the Excess
Amount will be deemed to consist of the annual additions last allocated, except
that annual additions attributable to a simplified employee pension will be
deemed to have been allocated first, followed by annual additions to a welfare
benefit find or individual medical account, regardless of the actual allocation
date.
(f) If an Excess Amount was allocated to a Participant under this Plan
on a date which coincides with the date an allocation was made under another
plan, the Excess Amount attributed to this Plan will be the product of:
(i) The total Excess Amount allocated as of such date,
multiplied by
(ii) the quotient obtained by dividing
(A) the portion of the Annual Addition allocated to the
Participant for the Limitation Year as of such date by
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(B) the total Annual Addition allocated to the
Participant for the Limitation Year as of such date under this and all the
other qualified Master or Prototype defined contribution plans maintained by
the Employer.
(g) Any Excess Amount attributed to the Plan will be disposed in the
manner described in Section 5.01.
5.03 Employers Maintaining Other Defined Contribution Plans. If a
Participant is covered under another qualified defined contribution plan which
is not a Master or Prototype plan, the Annual Addition credited to the
Participant's Account under this Plan for any Limitation Year will be limited
in accordance with the provisions of Section 5.02 above as though the plan were
a Master or Prototype Plan, unless the Employer provides other limitations
pursuant to the Adoption Agreement.
5.04 Employers Maintaining Defined Benefit Plans. If the Employer
maintains, or at any time maintained, a qualified defined benefit plan covering
any Participant in this Plan, the sum of the Participant's Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction will not exceed 1.0 in any
Limitation Year. The Annual Addition which may be credited to the Participant's
Account under this Plan for any Limitation Year will be limited in accordance
with the provisions of Section 5:02 above, unless the Employer provides other
limitations pursuant to the Adoption Agreement.
5.05 Definitions. For purposes of this Article, the following terms shall
be defined as follows:
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(a) Annual Addition. With respect to any Participant, the "Annual
Addition" shall be the sum of the following amounts credited to a Participant's
Account for the Limitation Year:
(i) Employer Contributions;
(ii) forfeitures; and
(iii) Nondeductible Voluntary Contributions.
For the purposes of calculating the amount of Employer Contributions
credited to a Participant's Account, Excess Elective Deferrals distributed on
or before the April 15 deadline described in Section 6.01(b) below shall not be
considered to be amounts credited to the Participant's Account but Excess
Contributions distributed to the Participant pursuant to Section 6.02 below,
and Excess Aggregate Contributions distributed to, or forfeited by, the
Participant pursuant to Section 6.03, 6.04 or 6.05 below shall be considered to
be amounts credited to a Participant's Account.
Any Excess Amount applied under Section 5.01(c)(iii) or (iv) or Section
5.02(e) hereof in a Limitation Year to reduce Employer Contributions will be
considered part of the Annual Addition for such Limitation Year. Amounts
allocated, after March 31, 1984, to an individual medical account (as defined
in Code Section 415(1)(2)) which is part of a pension or an annuity plan
maintained by the Employer, or to a simplified employee pension (as defined in
Code Section 408(k)) maintained by the Employer, are treated as part of the
Annual Addition. Also, amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the separate
account of a Key Employee (as defined in Section 23.02(a) hereof)
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under a welfare benefit fund (as defined in Code Section 419(e)) maintained by
the Employer, are treated as part of the Annual Addition but only for the
purpose of determining whether the dollar limitation portion of the definition
of Maximum Permissible Amount has been exceeded.
(b) Compensation. For the purposes of this Article V, the term
"Compensation" shall mean one of the following as selected by the Employer in
the Adoption Agreement:
(i) W-2 Compensation. Information required to be reported under
Sections 6041, 6051 and 6052 of the Code (Wages, tips and other compensation as
reported on Form W-2). Compensation is defined as wages within the meaning of
Section 3401(a) and all other payments of compensation to an Employee by the
Employer (in the course of the Employer's trade or business) for which the
Employer is required to furnish the Employee a written statement under Sections
6041(d), 6051(a)(3) and 6052. Compensation must be determined without regard to
any rules under Section 3401(a) that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Section 3401(a)(2)).
(ii) 415 Safe Harbor Compensation. Wages, salaries, and fees for
professional services and other amounts received for personal services actually
rendered in the course of employment with the Employer maintaining the Plan
(including, but not limited to commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
(A) Employer contributions to a plan of deferred
compensation which are not includable in the Participant's gross income for the
taxable year in
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which contributed, or Employer contributions under a simplified employee
pension plan, or any distributions from a plan of deferred compensation;
(B) Amounts realized from the exercise of a non-qualified
stock option, or when property transferred to the Participant in connection
with the performance of services either becomes freely transferable or is no
longer subject to a substantial risk of forfeiture;
(C) Amounts realized from the sale, exchange or other
disposition of stock acquired under an incentive stock option; and
(D) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in Code Section 403(b)
(whether or not the amounts are actually excludable from the gross income of
the Participant).
(iii) Safe Harbor Alternative Definition. Compensation as defined
in (ii) above, reduced by all of the following items (even if includable in
gross income): reimbursements or other expenses allowances, fringe benefits
(cash and non-cash) moving expenses, deferred compensation and welfare
benefits.
For any Self-Employed Individual, Compensation shall mean Earned Income.
For purposes of applying the limitations of this Article V, Compensation
for a Limitation Year is the Compensation actually paid or made available in
gross income during such year.
Notwithstanding the preceding sentence, Compensation for a Participant in a
defined contribution plan who is permanently and totally disabled (as defined
in Code Section 22(e)(3))
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is the Compensation such Participant would have received for the Limitation
Year if the Participant was paid at the rate of Compensation paid immediately
before becoming permanently and totally disabled; such imputed compensation for
the disabled Participant may be taken into account only if the Participant is
not a Highly Compensated Employee, and contributions made on behalf of such a
Participant are nonforfeitable when made.
(c) Defined Benefit Fraction. The "Defined Benefit Fraction" shall be
a fraction, the numerator of which is the sum of the Participant's Projected
Annual Benefits under all the defined benefit plans (whether or not terminated)
maintained by the Employer, and the denominator of which is the lesser of 125%
of the dollar limitation in effect for the Limitation Year under Code Section
415(b)(l)(A) or 140% of the Participant's Highest Average Compensation
(including any adjustments required by Code Section 415(b)).
Notwithstanding the above, if the Participant was a participant as of the
first day of the first Limitation Year beginning after December 31, 1986 in one
or more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction will not be less
than 125% of the sum of the annual benefits under such plans which the
Participant had accrued as of the end of the last Limitation Year beginning
before January 1, 1987 (disregarding any changes in the terms and conditions of
the Plan after May 5, 1986). The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied the requirements of
Code Section 415 for all Limitation Years beginning before January 1, 1987.
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(d) Defined Contribution Dollar Limitation. The "Defined Contribution
Dollar Limitation" shall be the greater of: (i) $30,000; or (ii) one-fourth
(1/4) of the defined benefit dollar limitation set forth in Code Section
415(b)(i) as in effect for the Limitation Year.
(e) Defined Contribution Fraction. The "Defined Contribution Fraction"
shall be a fraction, the numerator of which is the sum of the Annual Additions
to the Participant's account under all the defined contribution plans (whether
or not terminated) maintained by the Employer for the current and all prior
Limitation Years (including the Annual Additions attributable to the
Participant's nondeductible employee contributions to all defined benefit
plans, whether or not terminated, maintained by the Employer, and the Annual
Additions attributable to all welfare benefit funds (as defined in Code Section
419(e)), individual medical accounts (as defined in Code Section 415(1)(2)) and
simplified employee pensions (as defined in Code Section 408(k)), and the
denominator of which is the sum of the Maximum Aggregate Amounts for the
current and all prior Limitation Years of service with the Employer (regardless
of whether a defined contribution plan was maintained by the Employer). The
Maximum Aggregate Amount in any Limitation Year is the lesser of 125% of the
dollar limitation in effect under Code Section 415(c)(1)(A) or 35% of the
Participant's Compensation for such year.
If the Participant was a participant as of the end of the first day of the
first Limitation Year beginning after December 31, 1986 in one or more defined
contribution plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
Defined Contribution Fraction and the Defined Benefit Fraction
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would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment,
an amount equal to the product of:
(i) the excess of the sum of the fractions over 1.0, multiplied
by
(ii) the denominator of this Defined Contribution Fraction, will
be permanently subtracted from the numerator of this fraction. The adjustment
is calculated using the fractions as they would be computed as of the end of
the last Limitation Year beginning before January 1, 1987 (disregarding any
changes in the terms and conditions of the Plan made after May 5, 1986 but
using the Code Section 415 limitation applicable to the first Limitation Year
beginning on or after January 1, 1987). This adjustment also will be made if at
the end of the last Limitation Year beginning before January 1, 1984, the sum
of the fractions exceeds 1.0 because of accruals or additions that were made
before the limitations of this Section 5 became effective to any plans of the
Employer in existence on July 1, 1982. For purposes of this paragraph, a Master
or Prototype plan with an opinion letter issued before January 1, 1983, which
was adopted by the Employer on or before September 30, 1983, is treated as a
plan in existence on July 1, 1982.
(f) Employer. "Employer" means the Employer that adopts this Plan and
all members of (i) a controlled group of corporations (as defined in Code
Section 414(b) as modified by Code Section 415(h)), (ii) commonly controlled
trades or businesses (whether or not incorporated) (as defined in Code Section
414(c) as modified by Code Section 415(h)), or (iii) affiliated service groups
(as defined in Code Section 414(m)) of which the Employer is a part and (iv)
any other entity required to be aggregated with the employer pursuant to Code
Section 414(o) and the regulations thereunder.
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(g) Excess Amount. The "Excess Amount" is the excess of what would
otherwise be a Participant's Annual Addition for the Limitation Year over the
Maximum Permissible Amount. If at the end of a Limitation Year when the Maximum
Permissible Amount is determined on the basis of the Participant's actual
Compensation for the year, an Excess Amount results, the Excess Amount will be
deemed to consist of the portion of the Annual Addition last allocated, except
that the portion of the Annual Addition attributable to a welfare benefit fund
will be deemed to have been allocated first regardless of the actual allocation
date.
(h) Highest Average Compensation. A Participant's "Highest Average
Compensation" is his or her average Compensation for the three consecutive
Years of Service with the Employer that produces the highest average.
(i) Limitation Year. A "Limitation Year" is the Plan Year or any other
12-consecutive-month period specified by the Employer in the Adoption
Agreement. All qualified plans maintained by the Employer must use the same
Limitation Year. If the Limitation Year is amended to a different
12-consecutive-month period, the new Limitation Year must begin on a date
within the Limitation Year in which the amendment is made.
(j) Master or Prototype Plan. A "Master or Prototype" plan is a plan
the form of which is the subject of a favorable opinion letter from the
Internal Revenue Service.
(k) Maximum Permissible Amount. For a Limitation Year, the "Maximum
Permissible Amount" with respect to any Participant shall be the lesser of
(i) the Defined Contribution Dollar Limitation or
(ii) 25% of the Participant's Compensation for the Limitation
Year.
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The compensation limitation referred to in (ii) above shall not apply to
contribution for medical benefits (within the meaning of Code Section 401(h) or
Section 419A(f)(2)) which is otherwise treated as an Annual Addition under Code
Section 415(l)(1) or 419A(d)(2).
(l) Projected Annual Benefit. The "Projected Annual Benefit" is the
annual retirement benefit (adjusted to an actuarial equivalent straight life
annuity if such benefit is expressed in a form other than a straight life
annuity or qualified joint and survivor annuity) to which the Participant would
be entitled under the terms of the plan assuming:
(i) the Participant will continue employment until normal
retirement date under the plan (or current age, if later), and
(ii) the Participant's compensation for the current Limitation
Year and all other relevant factors used to determine benefits under the plan
will remain constant for all future Limitation Years.
ARTICLE VI. LIMITATIONS ON DEFERRALS,
MATCHING ALLOCATIONS AND VOLUNTARY CONTRIBUTIONS.
6.01 Maximum Amount of Elective Deferrals. For each calendar year, the sum
of (i) the Salary Reduction Contributions, (ii) Deferred Cash Contributions
(together "Elective Deferrals") made on behalf of any Participant under this
Plan, and (iii) similar contributions made under all other plans of the
Employer with a cash or deferred feature shall not exceed the dollar limitation
contained in Code Section 402(g) in effect at the beginning of such calendar
year. Elective Deferrals shall not include amounts properly distributed to a
Participant as an Excess Amount pursuant to Section 6.01(b). If, during any
calendar year, more than the
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maximum permissible amount under Code Section 402(g) is allocated pursuant to
one or more cash or deferred arrangements to a Participant's accounts under the
Plan and any other plan described in Code Sections 401(k), 408(k), 403(b), 457,
or 501(c)(18), the following provisions shall apply:
(a) The Participant may, but is not required to, assign to this Plan
all or part of such contributions in excess of the maximum permissible amount
(hereinafter "Excess Elective Deferrals") by notifying the Administrator by
March 1 of the calendar year next succeeding the calendar year in which such
contributions are made. To be effective, such notice must be in writing, state
that Excess Elective Deferrals have been made on behalf of such Participant for
the preceding calendar year, and be submitted to the Administrator. A
Participant is deemed to notify the Administrator of any Excess Elective
Deferrals that arise by taking into account only those Excess Elective
Deferrals made to this Plan and any other plans of this Employer.
(b) To the extent a Participant timely assigns, or is deemed to
assign, Excess Elective Deferrals to the Plan pursuant to (a) above, the
Administrator shall direct the Trustee to distribute such Excess Elective
Deferrals, adjusted for income or loss allocable thereto pursuant to Section
6.01(c) below, to the Participant no later than the April 15 of the calendar
year next succeeding the calendar year in which such Excess Elective Deferrals
were made.
(c) Excess Elective Deferrals shall be adjusted for any income or loss
up to the last day of the calendar year in which such Excess Elective Deferrals
were made. The income or loss allocable to Excess Elective Deferrals is (i) the
income or loss allocable to the
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<PAGE> 77
Participant's Salary Reduction Contribution Account and/or Deferred Cash
Contribution Account, as the case may be, for the taxable calendar year
multiplied by a fraction, the numerator of which is such Participant's Excess
Elective Deferrals for the year and the denominator is the balance of such
account or accounts, as the case may be, determined as the beginning of the
calendar year plus any Salary Reduction Contributions or Deferred Cash
Contributions made during the calendar year without regard to any income or
loss occurring during such calendar year or (ii) such other amount determined
under any reasonable method, provided that such method is used consistently for
all Participants in calculating the distributions required under this Article
VI for the Plan Year, and is used by the Plan to allocate income or loss to
Participants' Accounts. Income or loss allocable to the period between the end
of the calendar year and the date of distribution shall be disregarded in
determining income or loss. Excess Elective Deferrals shall be treated as an
Annual Addition under the Plan, unless such amounts are distributed no later
than the first April 15 following the close of the calendar year.
6.02 Limitation on Elective Deferrals.
(a) For each Plan Year, the Average Deferral Percentage of the group
of Highly Compensated Participants for the Plan Year may not exceed the greater
of (i) 1.25 times the Average Deferral Percentage of the group of Non-Highly
Compensated Participants for the same Plan Year; or (ii) the lesser of 2 times
the Average Deferral Percentage of all such Non-Highly Compensated
Participants, or such Average Deferral Percentage plus 2 percentage points.
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For purposes of this Section 6.02, the "Average Deferral Percentage" of a
specified group of Participants for a Plan Year shall be the average of the
ratios (calculated separately for each Participant in such group) of (A) the
amount of the Contributions actually paid over to the Trust on behalf of each
Participant for each Plan Year to (B) the Participant's Compensation for the
Plan Year. For purposes of this Section 6.02, "Compensation" shall have the
same meaning as in Section 2.09(a); provided, however, that to the extent
elected by the Employer in the Adoption Agreement "Compensation" shall exclude
amounts paid for the period when the Participant was not eligible to make
Elective Deferrals and/or shall include the amounts set forth in Section
2.09(b). For purposes of this Section 6.02, "Contributions" shall include both
Elective Deferrals (including Excess Elective Deferrals of Highly Compensated
Participants) and Qualified Nonelective Contributions, if any. Such
Contributions shall not include (1) Excess Elective Deferrals of Non-Highly
Compensated Participants that arise solely from Elective Deferrals made under
this Plan or other plans of the Employer, and (2) Elective Deferrals that are
taken into account in the Contribution Percentage Test (provided the Average
Deferral Percentage test is satisfied both with and without exclusion of these
Elective Deferrals). For purposes of computing Average Deferral Percentages,
each Employee who would be a Participant but for the failure to make Elective
Deferrals shall be treated as a Participant on whose behalf no Elective
Deferrals are made.
(b) Special Rules:
(i) The deferral percentage of a Highly Compensated Participant
for the Plan Year who is eligible to have Elective Deferrals allocated to his
or her accounts under two or more arrangements described in Code Section
401(k), that are maintained by the
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<PAGE> 79
Employer, shall be determined as if such Elective Deferrals were made under a
single arrangement. If a Highly Compensated Participant participates in two or
more cash or deferred arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar year shall be
treated as a single arrangement. Notwithstanding the foregoing, certain plans
shall be treated as separate if mandatorily disaggregated under regulations
promulgated under Code Section 401(k).
(ii) In the event that this Plan satisfies the requirements of
Code Section 401(k), 401(a)(4), or 410(b) only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of such
Code sections only if aggregated with this Plan, then this Section 6.02 shall
be applied by determining the Average Deferral Percentages of Employees as if
all such plans were a single plan. For Plan Years beginning after the December
31, 1989, plans may be aggregated in order to satisfy Code Section 401(k) only
if they have the same Plan Year.
(iii) For purposes of determining the deferral percentage of a
Participant who is a 5% owner or one of the top ten Highly Compensated
Employees, the Elective Deferrals (and, if applicable, Qualified Nonelective
Contributions) and Compensation of such Participant shall include the Elective
Deferrals (and, if applicable, Qualified Nonelective Contributions) and
Compensation for the Plan Year of his Family Members. Such Family Members shall
be disregarded as separate Participants in determining the Average Deferral
Percentage both for Non-Highly Compensated Participants and for Highly
Compensated Participants.
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(iv) For purposes of applying the Average Deferral Percentage
test, Elective Deferrals and Qualified Nonelective Contributions must be made
before the last day of the 12-month period immediately following the Plan Year
to which contributions relate.
(v) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Average Deferral Percentage test and the amount
of Qualified Nonelective Contributions, if any, used in such test.
(vi) The determination and treatment of the deferral percentage
of any Participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
(vii) If, in any Plan Year, the Plan benefits Employees otherwise
excludable from the Plan if the Plan had imposed the greatest minimum age and
service conditions permissible under Section 410(a) of the Code, and the
Employer applies Section 410(b) of the Code separately to the portion of the
Plan that benefits only Employees who satisfy age and service conditions under
the Plan that are lower than the greatest minimum age and service conditions
permissible under Section 410(a) and to the portion of the Plan that benefits
Employees who have satisfied the greatest minimum age and service conditions
permissible under Section 410(a), the Plan shall be treated as comprising two
separate Plans and the Average Deferral Percentage test set forth in subsection
(a) shall be applied separately for each group of Employees in each Plan.
(c) If, for any Plan Year, the Plan is unable to satisfy the Average
Deferral Percentage test set forth in subsection (a) above, the Employer may
make a Qualified Nonelective Contribution to the Trust in an amount determined
at the discretion of the
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Employer on behalf of the group of Non-Highly Compensated Participants who were
actively employed on the last day of the Plan Year and who were eligible to
participate in the Plan for the entire Plan Year. The Qualified Nonelective
Contribution will be allocated as follows:
(i) The lowest paid Participant in the group will be allocated
an amount equal to the lowest of (1) 25% of the Participant's Compensation for
the Plan Year; (2) the Maximum Permissible Amount applicable to the
Participant; or (3) the full amount of the Qualified Nonelective Contribution.
(ii) The next lowest paid Participant will be allocated an
amount equal to the lowest of (1) 25% of the Participant's Compensation for the
Plan Year; (2) the Maximum Permissible Amount applicable to the Participant; or
(3) the balance of the Qualified Nonelective Contribution after the above
allocation.
(iii) The allocation in step (ii) will be applied individually to
each remaining Participant in the group, in ascending order of Compensation,
until the Qualified Nonelective Contribution is fully allocated. Once the
Qualified Nonelective Contribution is fully allocated, no further allocation
will be made to the remaining Participants in the group.
(d) If, for any Plan Year, after taking into account the Qualified
Nonelective Contributions made by the Employer pursuant to Subsection (c)
above, if any, the Administrator shall determine the aggregate amount of
Elective Deferrals of Highly Compensated Participants for such Plan Year
exceeds the maximum amount of such contributions permitted by the Average
Deferral Percentage test set forth in subsection (a) above, the Administrator
shall reduce such excess contributions made on behalf of Highly Compensated
Participants in order of their deferral percentages, beginning with the highest
of
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such percentages (hereinafter "Excess Contributions"). For each Highly
Compensated Participant who is so affected, the Administrator shall reduce
amounts credited to his or her Salary Reduction Contribution Account and
Deferred Cash Contribution Account in proportion to the Participant's Salary
Reduction Contributions and Deferred Cash Contributions for the Plan Year.
Excess Contributions of each Participant who is subjected to the Family Member
aggregation rules shall be allocated among the Family Members of such
Participant in proportion to the Elective Deferrals (and amounts treated as
Elective Deferrals) of each Family Member that is combined to determine the
combined deferral percentage. Such Excess Contributions, plus any income and
minus any loss allocable thereto, shall be distributed to each affected Highly
Compensated Participant no later than the last day of the Plan Year following
the Plan Year in which such Excess Contributions were made. If Excess
Contributions are not distributed before the date which is 2-1/2 months after
the last day of the Plan Year in which such Excess Contributions arose, a 10%
excise tax shall be imposed on the Employer maintaining the Plan with respect
to such amounts. Excess Contributions shall be treated as an Annual Addition
under the Plan.
(e) Excess Contributions shall be adjusted for any income or loss up
to and including the last day of the Plan Year for which such Excess
Contributions were made. The income or loss allocable to Excess Contributions
is (i) the income or loss allocable to the Participant's Salary Reduction
Contribution Account and/or Deferred Cash Contribution Account, as the case may
be, for the Plan Year multiplied by a fraction, the numerator of which is such
Participant's Excess Contributions for the year and the denominator is the
balance of such Account or Accounts, as the case may be, determined as of the
beginning of
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the Plan Year plus any Salary Reduction Contributions and/or Deferred Cash
Contributions made during the Plan Year without regard to any income or loss
occurring during such Plan Year, or (ii) such other amount determined under any
reasonable method, provided that such method is used consistently for all
Participants in calculating any distributions required under this Article VI
for the Plan Year and is used by the Plan in allocating income or loss to
Participants' Accounts. Income or loss allocable to the period between the end
of the Plan Year and the date of distribution shall be disregarded.
6.03 Limitation on Voluntary Nondeductible Contributions and Employer
Matching Contributions.
(a) For each Plan Year, the Average Contribution Percentage of the
group of Highly Compensated Participants for the Plan Year may not exceed the
greater of (i) 1.25 times the Average Contribution Percentage of the group of
Non-Highly Compensated Participants for the same Plan Year, or (ii) the lesser
of 2 times the Average Contribution Percentage of all such Non-Highly
Compensated Participants, or such Average Contribution Percentage plus 2
percentage points.
For purposes of this Section 6.03, the "Average Contribution Percentage" of
a specified group of Participants for a Plan year shall be the average of the
ratios (expressed as a percentage and calculated separately for each
Participant in such group) of (A) the Contribution Percentage Amounts actually
paid over to the Trust on behalf of each Participant to (B) the Participant's
Compensation for the Plan Year. For purposes of this Section 6.03,
"Compensation" shall have the same meaning as in Section 2.09; provided,
however, that to the extent elected by the Employer in the Adoption Agreement,
"Compensation" shall exclude
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amounts paid for the period when the Participant was not eligible to
participate in the Plan with respect to the allocation of Employer Matching
Contributions or with respect to the making of Voluntary Nondeductible
Contributions and/or shall include the amounts set forth in Section 2.09(b).
For purposes of this Section 6.03, "Contribution Percentage Amounts" shall be
the sum of Voluntary Nondeductible Contributions and Employer Matching
Contributions. Such Contribution Percentage Amounts shall not include Employer
Matching Contributions that are forfeited either to correct Excess Aggregate
Contributions or because the contributions to which they related are Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions. In
determining the Contribution Percentage Amounts, the Administrator may include
Qualified Nonelective Contributions that are not used in satisfying the Average
Deferral Percentage test of Section 6.02 and Qualified Matching Contributions.
The Administrator also may elect to use Elective Deferrals in the Contribution
Percentage Amounts so long as the Average Deferral Percentage test is met
before the Elective Deferrals are used in the Average Contribution Percentage
test and continues to be met following the exclusion of those Elective
Deferrals that are used to meet the Average Contribution Percentage test. For
purposes of computing Average Contribution Percentages, each Employee who is
eligible to make Voluntary Nondeductible Contributions or Elective Deferrals or
to receive an Employer Matching Contribution shall be taken into account as a
Participant, whether or not he is actually making, or entitled to receive, such
contributions to the Trust.
(b) Special Rules:
(i) For purposes of this Section 6.03, the contribution
percentage of a Highly Compensated Participant for the Plan Year who is
eligible to have Contribution
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Percentage Amounts allocated to his or her accounts under two or more plans
described in Code Section 401(a), or arrangements described in Code Section
401(m) that are maintained by the Employer, shall be determined as if the total
of such Contribution Percentage Amounts was made under each plan.
Notwithstanding the foregoing, certain plans shall be treated as separate if
mandatorily disaggregated under regulations under Code Section 401(m).
(ii) In the event that this Plan satisfies the requirements of
Code Section 401(m), 401(a)(4) or 410(b) only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of such
sections of the Code only if aggregated with this Plan, then this Section 6.03
shall be applied by determining the Contribution Percentage of Participants as
if all such plans were a single plan. For Plan Years beginning after December
31, 1989, plans may be aggregated in order to satisfy Code Section 401(m) only
if they have the same Plan Year.
(iii) For purposes of determining the Contribution Percentage of
a Participant who is a 5% owner or one of the top-ten Highly Compensated
Employees, the Contribution Percentage Amounts and Compensation of such
Participant shall include the Contribution Percentage Amounts and Compensation
for the Plan Year of his Family Members. Such Family Members shall be
disregarded as separate Employees in determining the Average Contribution
Percentage both for Non-Highly Compensated Participants and for Highly
Compensated Participants.
(iv) For purposes of applying the Average Contribution
Percentage test, Voluntary Nondeductible Contributions are considered to have
been made in the Plan Year in which contributed to the Trust. Employer Matching
Contributions, Elective
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Deferrals, Qualified Matching Contributions and Qualified Nonelective
Contributions will be considered made for a Plan Year if made no later than the
end of the 12-month period immediately following the Plan Year to which such
Contributions relate.
(v) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Average Contribution Percentage test and the
amount of Qualified Matching Contributions and Qualified Nonelective
Contributions, if any, used in such test.
(vi) The determination and treatment of the contribution
percentage of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
(vii) If, in any Plan Year, the Plan benefits Employees otherwise
excludable from the Plan if the Plan had imposed the greatest minimum age and
service conditions permissible under Section 410(a) of the Code, and the
Employer applies Section 410(b) of the Code separately to the portion of the
Plan that benefits only Employees who satisfy age and service conditions under
the Plan that are lower than the greatest minimum age and service conditions
permissible under Section 410(a) and to the portion of the Plan that benefits
Employees who have satisfied the greatest minimum age and service conditions
permissible under Section 410(a), the Plan shall be treated as comprising two
separate Plans and the Average Contribution Percentage test set forth in
subsection (a) shall be applied separately for each group of Employees in each
Plan.
(c) If, for any Plan Year, the Plan is unable to satisfy the Average
Contribution Percentage test set forth in subsection (a) above, in lieu of
distributing excess Contribution Percentage Amounts to Highly Compensated
Participants as provided in
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subsection (d) below, the Employer may make a Qualified Matching Contribution
to the Trust on behalf of Non-Highly Compensated Participants in an amount
sufficient to enable the Plan to meet the Average Contribution Percentage test
set forth in subsection (a) above. Such Qualified Matching Contribution shall
be allocated to the Qualified Nonelective Contribution Account of each
Non-Highly Compensated Participant who is eligible to participate in the Plan
at any time during the Plan Year in the same manner as the allocation of
Employer Matching Contributions.
(d) If, for any Plan Year, the Administrator shall determine that the
aggregate Contribution Percentage Amounts of Highly Compensated Participants
for such Plan Year exceeds the maximum amount permitted by the Average
Contribution Percentage test in subsection (a) above, the Administrator shall
reduce such excess Contribution Percentage Amounts made on behalf of Highly
Compensated Participants in order of their contribution percentages, beginning
with the highest of such percentages (hereinafter "Excess Aggregate
Contributions"). The foregoing determination shall be made after first
determining Excess Elective Deferrals pursuant to Section 6.01, and then
determining Excess Contributions pursuant to Section 6.02. For each Highly
Compensated Participant who is affected, the Administrator shall reduce, on a
pro rata basis, amounts credited to his or her Voluntary Nondeductible
Contribution Account and his or her Employer Matching Contribution Account.
Excess Aggregate Contributions of each Highly Compensated Participant who is
subject to the Family Member aggregation rules shall be allocated among the
Family Members in proportion to the Voluntary Nondeductible Contributions and
Employer Matching Contributions (and amounts treated as Contribution Percentage
Amounts) of each Family Member that is
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combined to determine the combined contribution percentage. Subject to the
provisions of Section 6.05, Excess Aggregate Contributions which are
attributable to the sum of Voluntary Nondeductible Contributions and fully
vested Employer Matching Contributions plus any income and minus any loss
allocable thereto, shall be distributed to each affected Highly Compensated
Participant no later than the last day of the Plan Year following the Plan Year
in which such Excess Aggregate Contributions were made. If such Excess
Aggregate Contributions are not distributed within 2-1/2 months after the last
day of the Plan Year in which such Excess Aggregate Contributions arose, a 10%
excise tax shall be imposed on the Employer maintaining the Plan with respect
to those amounts. Excess Aggregate Contributions which are attributable to
Employer Matching Contributions which are not fully vested, plus any income and
minus any loss allocable thereto, shall be forfeited and shall be applied to
reduce future Employer Matching Contributions. Excess Aggregate Contributions
shall be treated as an Annual Addition under the Plan.
(e) Excess Aggregate Contributions shall be adjusted for any income or
loss up to and including the last day of the Plan Year for which such Excess
Aggregate Contributions were made. The income or loss allocable to Excess
Aggregate Contributions is (i) the income or loss allocable to the
Participant's Voluntary Nondeductible Contribution Account and/or Employer
Matching Contribution Account, as the case may be, for the Plan Year multiplied
by a fraction, the numerator of which is such Participant's Excess Aggregate
Contributions for the year and the denominator is the balance of such Account
or Accounts, as the case may be, determined as of the beginning of the Plan
Year plus any Voluntary Nondeductible Contributions and/or Employer Matching
Contributions made during the Plan
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without regard to any income or loss occurring during such Plan Year, or (ii)
such other amount determined under any reasonable method, provided that such
method is used consistently for all Participants in calculating any
distributions required under this Article VI for the Plan Year and is used by
the Plan in allocating income or loss to Participants' Accounts. Income or loss
allocable to the period between the end of the Plan Year and the date of
distribution shall be disregarded.
6.04 Multiple Use Test. If one or more Highly Compensated Participants
participate in both a cash or deferred arrangement and a plan subject to the
Average Contribution Percentage test maintained by the Employer and the sum of
the Average Deferral Percentage and Average Contribution Percentage of those
Highly Compensated Participants subject to either or both tests exceeds the
Aggregate Limit, then unless the Employer elects to make a Qualified
Nonelective Contribution or a Qualified Matching Contribution to the Trust to
the extent necessary to enable the Plan to satisfy the Aggregate Limit, the
Contribution Percentage Amounts of those Highly Compensated Participants who
also participate in a cash or deferred arrangement will be reduced (beginning
with such Highly Compensated Participant whose contribution percentage is the
highest) so that the Aggregate Limit is not exceeded. The amount by which each
Highly Compensated Participant's Contribution Percentage Amount is reduced shall
be treated as an Excess Aggregate Contribution. The Average Deferral Percentage
and Average Contribution Percentage of the Highly Compensated Participants are
determined after any corrections required to meet the Average Deferral
Percentage and Average Contribution Percentage tests in Sections 6.02 and 6.03.
Multiple use does not occur if both the Average Deferral Percentage and Average
Contribution Percentage of the Highly
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Compensated Employees do not exceed 1.25 multiplied by the Average Deferral
Percentage and Average Contribution Percentage of the Non-Highly Compensated
Employees.
For purposes of this Section 6.04, the "Aggregate Limit" shall mean the sum
of (i) 125 percent of the greater of the Average Deferral Percentage of the
Non-Highly Compensated Participants for the Plan Year or the Average
Contribution Percentage of the Non-Highly Compensated Participants under the
Plan subject to Code Section 401(m) for the Plan Year beginning with or within
the Plan Year of the cash or deferred arrangement and (ii) the lesser of 200%
of, or two percentage points plus the lesser of such Average Deferral
Percentage or Average Contribution Percentage. "Lesser" shall be substituted
for "greater" in (i) and "greater" shall be substituted for "lesser" after
"two percentage points plus the" in (ii) if such substitution would result in a
larger Aggregate Limit.
6.05 Further Limitations on Employer Matching Contributions.
Notwithstanding anything to the contrary in the foregoing, any Employer
Matching Contributions related to a Participant's Excess Deferrals, Excess
Contributions and/or Excess Aggregate Contributions shall be forfeited by such
Participant and such amounts shall be applied to reduce future Employer
Matching Contributions.
6.06 Special Rules. Any amount distributed to a Highly Compensated
Participant pursuant to this Article VI shall not be subject to any of the
consent rules for Participants and sponsors contained in Articles IX, X and
XXIV, below. Amounts distributed pursuant to this Article VI shall be
allocated on a pro rata basis among the Designated Investments in which a
Participant's Account is invested; provided, however, that the Administrator or
the Participant may specify an alternative manner in which distributions shall
be allocated.
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ARTICLE VII. TIME AND MANNER OF MAKING CONTRIBUTIONS
7.01 Manner. Unless otherwise agreed to by the Trustee, contributions to
said Trustee shall be made only in cash. All contributions may be made in one
or more installments.
7.02 Time. Employer Contributions (other than Salary Reduction
Contributions and Deferred Cash Contributions) with respect to a Plan Year
shall be made before the time limit, including extensions thereof, for filing
the Employer's federal income tax return for the Year with or within which the
particular Plan Year ends (or such later time as is permitted by regulations
authorized by the Secretary of the Treasury or delegate or such earlier time as
the Secretary of the Treasury or delegate prescribes with respect to
contributions used to satisfy the nondiscrimination tests set forth in Article
VI above). Unless the Secretary of the Treasury prescribes a later date in
regulations, Salary Reduction and Deferred Cash Contributions shall be made
within 30 days after the date on which, in the absence of the Participant's
election to make such contributions, such amounts would have been payable to
the Participant as cash compensation. Nondeductible Voluntary Contributions for
a given Limitation Year (as defined in Section 5.05(i) above) must be made
during such Limitation Year or within 30 days of the end of the Limitation
Year. Rollover Contributions may be made at any time acceptable to the
Administrator in accordance with Section 4.06 hereof.
All contributions shall be paid to the Administrator for transfer to the
Trustee, as soon as possible, or, if acceptable to the Administrator and the
Trustee, such contributions may be paid directly to the Trustee. The
Administrator shall transfer such contributions to the Trustee as soon as
possible. The Administrator may establish a payroll deduction system or other
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procedure to assist the making of Nondeductible Voluntary Contributions to the
Trust, and the Administrator may from time to time adopt rules or policies
governing the manner in which such contributions may be made so that the Plan
may be conveniently administered.
7.03 Separate Accounts. For each Participant, a separate account shall be
maintained for each of the following types of contributions and the income,
expenses, gains and losses attributable thereto:
(a) Salary Reduction Contributions, if selected in the Adoption
Agreement;
(b) Deferred Cash Contributions, if selected in the Adoption
Agreement;
(c) Employer Profit Sharing Contributions, if selected in the Adoption
Agreement;
(d) Employer Matching Contributions, if selected in the Adoption
Agreement;
(e) Nondeductible Voluntary Contributions, if selected in the Adoption
Agreement, with separate accounts maintained for pre-1987 Nondeductible
Voluntary Contributions and post-1986 Nondeductible Voluntary Contributions;
(f) Qualified Nonelective Contributions and Qualified Matching
Contributions, if selected in the Adoption Agreement;
(g) Deductible Voluntary Contributions, if Participants made such
contributions in past years; and
(h) Rollover Contributions, if, pursuant to Section 4.06 hereof, the
Administrator directs the Trustee to accept such contributions.
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In addition, pursuant to Section 8.03 hereof, separate accounts will be
maintained for the pre-break and post-break Employer Contributions made on
behalf of a Participant who has Service excluded from the calculations of
Vesting Years. Notwithstanding the above, if a Participant's rights to one or
more types of Employer Contributions are immediately and fully nonforfeitable
and are subject to the same distribution rules, such types of contributions may
be maintained in a single account.
ARTICLE VIII. VESTING
8.01 When Vested. A Participant shall always have a fully vested and
nonforfeitable interest in his or her Nondeductible Voluntary Contribution
Account, Deductible Voluntary Contribution Account, Salary Reduction
Contribution Account, Deferred Cash Contribution Account, Qualified Nonelective
Contribution Account and Rollover Account. A Participant's interest in his or
her Employer Profit Sharing Contribution Account and Employer Matching
Contribution Account shall be vested and nonforfeitable at Normal Retirement
Date, death while in Service, Disability, upon termination (including a
complete discontinuance of Employer Contributions) or partial termination of
the Plan and otherwise only to the extent specified in the Adoption Agreement.
8.02 Employer Profit Sharing Contribution and Employer Matching
Contribution Forfeitures. If a Participant's employment with the Employer is
terminated before his or her Employer Profit Sharing Contribution Account
and/or Employer Matching Contribution Account is (are) fully vested in
accordance with Section 8.01, this Section 8.02 shall apply.
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(a) The portion of the Participant's Employer Profit Sharing
Contribution Account and/or Employer Matching Contribution Account which is to
be forfeited pursuant to subsection (b) below shall be treated as follows:
(i) if the Employer has not specified otherwise in the Adoption
Agreement, the forfeiture shall be allocated as if it were an Employer Profit
Sharing Contribution or Employer Matching Contribution, as the case may be, for
the Plan Year following the Plan Year in which such forfeiture occurs, or
(ii) if the Employer so specifies in the Adoption Agreement, the
forfeiture(s) shall be applied to reduce the Employer's obligation to make
Employer Matching Contributions for the Plan Year following the Plan Year in
which the forfeiture occurs, provided that if the amount of the forfeiture to
be reallocated exceeds the Employer's then unsatisfied obligation to make
Employer Matching Contributions for the Plan Year, the forfeiture shall be
applied to reduce the Employer's obligation to make fixed Employer Profit
Sharing Contributions for the Plan Year following the Plan Year in which the
forfeiture occurs. If the Plan does not provide for fixed Employer Profit
Sharing Contributions, or the amount of forfeiture to be reallocated exceeds
the Employer's then unsatisfied obligation to make fixed Employer Profit
Sharing Contributions, the forfeiture shall be reallocated as if it were an
additional discretionary Employer Profit Sharing Contribution made for the Plan
Year following the Plan Year in which the forfeiture occurs.
(b) If the Participant elects to receive a distribution of the value
of his vested account balances in his or her Employer Profit Sharing
Contribution and Employer Matching Contribution Accounts in a lump sum pursuant
to the provisions of Section 10.02(a)(ii) or
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receives a nonconsensual distribution pursuant to Section 10.04, the nonvested
portion of his or her Employer Profit Sharing Contribution and Employer
Matching Contribution Accounts shall be treated as a forfeiture and reallocated
pursuant to the provisions of Section 8.02(a). For this purpose, if the value
of a Participant's vested account balance in his or her Employer Profit Sharing
Contribution and Employer Matching Contribution Accounts is zero, the
Participant shall be deemed to have received a distribution of such vested
account balance. A Participant's vested account balance shall not include
accumulated deductible employee contributions within the meaning of Code
Section 72(o)(5)(B) for Plan Years beginning prior to January 1, 1989.
In all other cases, the nonvested portion of a Participant's Employer
Profit Sharing Contribution and Employer Matching Contribution Accounts shall
be treated as a forfeiture and reallocated pursuant to the provisions of
Section 8.02(a) when such Participant incurs five consecutive One-Year Breaks
in Service.
(c) No forfeitures shall occur solely as a result of withdrawal of
Deductible Voluntary Contributions, Nondeductible Voluntary Contributions, or
Rollover Contributions.
8.03 Reemployment
(a) If a former Participant who was not fully vested in his or her
Employer Profit Sharing Contribution and/or Employer Matching Contribution
Accounts at termination of employment is reemployed after incurring five
consecutive One-Year Breaks in Service, he or she shall have no right to any
forfeited account balance. Any undistributed vested portion of his or her
Employer Profit Sharing Contribution Account shall be held in a separate vested
Employer Profit Sharing Contribution Account, and future Employer Profit
Sharing
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Contributions on his or her behalf shall be credited to a new Employer Profit
Sharing Contribution Account until such Participant becomes fully vested in
such Account where upon such Participant's old and new Employer Profit Sharing
Contribution Accounts shall be merged. Any undistributed vested portion of his
or her Employer Matching Contribution Account shall be held in a separate
vested Employer Matching Contribution Account, and future Employer Matching
Contributions on his or her behalf shall be credited to a new Employer Matching
Contribution Account until such Participant becomes fully vested in such
Account whereupon such Participant's old and new Employer Matching Contribution
Accounts shall be merged.
(b) The following provisions shall apply with respect to a former
Participant who was not fully vested in his or her Employer Profit Sharing
Contribution and/or Employer Matching Contribution Accounts at termination of
employment, and who is reemployed before he or she incurs five consecutive
One-Year Breaks in Service:
(i) If no amounts have been forfeited from his or her Employer
Profit Sharing Contribution Account and/or Employer Matching Contribution
Account, the amounts remaining in his or her Employer Profit Sharing
Contribution Account and/or Employer Matching Contribution Account shall be
restored to his or her credit.
(ii) If the nonvested portion of the Participant's Employer
Profit Sharing Contribution Account and/or Employer Matching Contribution
Account has been forfeited, and the Participant has previously received the
vested portions of his or her Employer Profit Sharing Contribution Account
and/or Employer Matching Contribution Account, he or she shall have the right
to repay to the Plan the full amount of such prior
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distribution. Such repayment must be made on or before the earlier of five
years after the first date on which the Participant is subsequently reemployed
by the Employer, or the close of the first period of five consecutive One-Year
Breaks in Service following the date of distribution. Upon such repayment, the
amount of any such repayment plus the value of the forfeited portion of such
Accounts as of the date of forfeiture shall be credited to such Accounts.
(iii) If the Participant is deemed to have received a
distribution from his Employer Profit Sharing Contribution Account and/or
Employer Matching Contribution Account pursuant to Section 8.02(b), and his
entire Employer Profit Sharing Contribution Account and/or Employer Matching
Contribution Account has been forfeited, upon the reemployment of such
Participant, the value of his Employer Profit Sharing Contribution Account
and/or Employer Matching Contribution Account as of the date of the forfeiture
shall be restored to his credit within a reasonable time after his or her
reemployment.
(iv) Restoration of the previously forfeited amount shall be
funded by current unallocated forfeitures, additional Employer contributions,
or any combination thereof at the Employer's discretion. Such restoration shall
not be treated as an Annual Addition under Article V.
(v) Any Employer Profit Sharing Contributions to which such
Participant becomes entitled after reemployment shall be credited to his or her
Employer Profit Sharing Contribution Account. Any Employer Matching
Contributions to which such Participant becomes entitled after reemployment
shall be credited to his or her Employer Matching Contribution Account. The
portion of such Accounts to which he or she will be
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entitled upon subsequent termination of employment will be based upon his or
her aggregate Vesting Years before and after the break.
ARTICLE IX. DISTRIBUTIONS UPON DEATH
9.01 Distributions at Death. If a Participant dies at a time when he or
she has a vested Account balance, this Section shall apply with respect to such
vested Account balance.
(a) The Trustee shall, at the direction of the Administrator,
distribute a Participant's vested Account balance in accordance with the
provisions of this Article IX. The Administrator's direction shall include
notification of the Participant's death, the existence or non-existence of a
surviving spouse; the amounts, or method of calculating the amounts, to be
distributed on given dates; and such other information required by the Trustee.
(b) If the Participant has validly named a Beneficiary or
Beneficiaries in compliance with Article XVII, his or her vested Account
balance shall be distributed to the Beneficiary or Beneficiaries so named. To
the extent that any portion of a vested Account balance of a deceased
Participant is not governed by an effective Designation of Beneficiary, that
portion of the vested Account balance shall be distributed to the deceased
Participant's Spouse or if that is not possible, to the estate of the deceased
Participant.
(c) If the Participant has validly elected a form of distribution
permitted under Section 10.02 which complies with the applicable provisions of
subsection (d) below (a "permissible form of distribution") with respect to his
or her vested Account balance, such vested Account balance shall be distributed
in accordance with such election whether or not distributions have commenced
prior to the Participant's death. With respect to any portion of
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a deceased Participant's vested Account balance for which the Participant had
not validly elected a permissible form of distribution prior to his or her
death, distribution shall be made in such permissible form as the Participant's
Beneficiary (or Beneficiaries) may elect in writing with the Trustee. In the
absence of such a valid election by the Beneficiary, the Participant's vested
Account balance shall be distributed as follows:
(i) if distributions have commenced prior to the Participant's
death, in the form selected by the Participant,
(ii) if distributions have not commenced prior to the
Participant's death, and if the Beneficiary is the Spouse, in substantially
equal installment payments over the Spouse's Applicable Life Expectancy, or, if
the Beneficiary is not the Spouse, in a lump sum.
(d) Distribution to the Participant's Beneficiary shall be made
according to the following provisions:
(i) If the Participant dies before distributions have commenced
on account of the Participant's attainment of his or her First Required
Distribution Year and if the Beneficiary is not the Spouse, the Participant's
entire vested Account balance must be distributed to the Participant's
Beneficiary either (A) on or before December 31 of the calendar year during
which occurs the fifth anniversary of the Participant's death, or (B) in
substantially equal annual or more frequent installments over a period not
exceeding the Applicable Life Expectancy of the oldest Beneficiary (as
determined as of the date of the Participant's death) provided that such
distributions commence before the second January 1 which follows the
Participant's death.
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(ii) If the Participant dies before distributions have commenced
on account of the Participant's attainment of his or her First Required
Distribution Year and if the Beneficiary is the Spouse, the Participant's
entire vested Account balance must be distributed to the Participant's Spouse
either (A) in a lump sum payable, or in installments which will be completely
paid, on or before December 31 of the calendar year during which occurs the
fifth anniversary of the date of the Participant's death, or (B) in annual
installments over the Spouse's life or a period not longer than the Spouse's
Applicable Life Expectancy provided that such distribution is commenced before
the later of (1) the first January 1 following the calendar year during which
the Participant would have attained age 70 1/2 had the Participant not died or
(2) the second January 1 which follows the Participant's death.
(iii) If a Participant dies after distributions have commenced on
account of the Participant's attainment of his or her First Required
Distribution Year, distributions to the Participant's Spouse, Beneficiary or
estate shall continue over a period at least as rapid as the period selected by
the Participant.
(e) If a Beneficiary dies after the Participant (or in the case of a
Beneficiary designated by another Beneficiary, after such other Beneficiary) and
before such deceased Beneficiary receives full payment of the portion of the
vested Account balance to which he or she is entitled, the Trustee shall, upon
direction of the Administrator, distribute the funds to which the deceased
Beneficiary is entitled to the Beneficiary or Beneficiaries validly named on
the most recent Designation of Beneficiary filed by the deceased Beneficiary.
To the extent that any portion of the funds to which the deceased Beneficiary
was entitled are not governed by an effective Designation of Beneficiary, the
funds shall be distributed to the deceased
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Beneficiary's surviving Spouse, or if that is not possible, to the estate of
the deceased Beneficiary. The Administrator's direction shall include
notification of the Beneficiary's death and the existence or non-existence of a
surviving Spouse and such other information required by the Trustee. Such finds
shall be distributed as follows:
(i) If distributions had commenced before the Participant's
death, distribution to the beneficiary of a deceased Beneficiary shall continue
over a period at least as rapid as that selected by the Participant.
(ii) If the deceased Beneficiary was the surviving Spouse of the
Participant and had not begun to receive distributions from the Participant's
Account at the time of his or her death, the Participant's vested Account
balance shall be distributed to the deceased Beneficiary's Beneficiary
according to the provisions of Sections 9.01(c) applied as if the deceased
Beneficiary were the Participant. In addition, the surviving Spouse's
Beneficiaries shall be treated as Beneficiaries during any future application
of this Section.
(iii) If neither subparagraph (i) nor (ii) above apply, the
Participant's vested Account balance shall be distributed to the deceased
Beneficiary's Beneficiary either (A) on or before December 31 of the calendar
year during which occurs the fifth anniversary of the Participant's death or
(B) in substantially equal annual or more frequent installments over the
remainder of the Applicable Life Expectancy of the oldest Beneficiary of the
Participant as determined at the Participant's death provided that
distributions commence before the second January 1 which follows the
Participant's death.
9.02 Children as Beneficiaries. For the purposes of Section 9.01, to
the extent provided by Treasury regulations, any distribution paid to a
Participant's child shall be treated
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as paid to the Participant's surviving Spouse if the remaining portion of the
Participant's vested Account balance with respect to which such child is a
Beneficiary becomes payable to the surviving Spouse when the child reaches the
age of majority (or such other designated event permitted under the Treasury
regulations).
9.03 Nonconsensual Distributions to Beneficiaries. Notwithstanding any
provision of this Article, Article X or Article XXIV to the contrary, the
Administrator may direct the entire vested Account balance of a deceased
Participant (exclusive of his or her Rollover Account and Deductible Voluntary
Contribution Account) be distributed if the amount distributed will be equal to
$3,500 or less. The Administrator may make such direction without obtaining the
consent of any Beneficiary.
9.04 Eligible Rollover Distributions. If the Participant's Beneficiary is a
surviving Spouse, the provisions of Section 10.07 shall apply to distributions
made pursuant to Article IX.
ARTICLE X. DISTRIBUTIONS AFTER SEPARATION FROM SERVICE
10.01 Commencement of Distributions. The Trustee shall, at the direction of
the Administrator, distribute a Participant's vested Account balance in
accordance with the provisions of this Article X. The Administrator's direction
shall include the amounts, or method of calculating the amounts, to be
distributed on given dates and such other information required by the Trustee.
In the event distribution is to be made in the form of an annuity contract, the
Administrator shall also direct the Trustee with regard to the purchase of such
a contract, including the selection of an appropriate insurance carrier. Except
as otherwise
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provided in this Article X, distributions of a Participant's vested Account
balance shall commence within 60 days after the close of the Plan Year during
which occurs the later of (a) the Participant's Normal Retirement Date or (b)
the earlier of (i) the Participant's separation from Service or (ii) the end of
his or her First Required Distribution Year. Payment of benefits may, at the
discretion of the Trustee, be paid directly to the Participant or to the
Administrator, as payee agent. If the Participant's vested Account balance
(exclusive of his or her Rollover Account and Deductible Voluntary Contribution
Account) is greater than $3,500, written consent of the Participant is required
for any earlier distribution. A Participant may file an election with the
Administrator to request that distributions commence in accordance with one of
the following options provided that the distribution shall otherwise comply
with the requirements of the Plan (including, but not limited to, Section
10.03):
(A) Distributions commencing before the Participant's Normal
Retirement Date if the Participant is Disabled or experiences a separation from
Service.
(B) Distributions commencing after the normal time of distribution
described above; provided, however, that any such deferred distribution must
commence no later than 60 days after the end of the Participant's First
Required Distribution Year.
10.02 Forms of Distribution.
(a) Upon a Participant's separation from Service (for reasons
other than death), he or she may file an election with the Administrator to
request to receive a distribution of his or her vested Account balance in one
or more of the following optional forms, provided that the distribution shall
otherwise comply with the requirements of this
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Plan and provided that the optional forms have been designated by the Employer
in the Adoption Agreement:
(i) Distribution of the Participant's entire vested Account
balance in monthly installments over a period equal to the shorter of 120
months or the Applicable Life Expectancy. The monthly amount shall normally be
the balance of the Participant's vested Account balance divided by the
remaining number of months in such period, all rounded to the nearest cent.
However, the amount of each monthly installment may be recomputed and adjusted
from time to time no more frequently than monthly as the Trustee may reasonably
determine.
(ii) Distribution of the Participant's entire vested Account
balance in a lump sum.
(iii) Distribution of the Participant's entire vested Account
balance in installment payments of a fixed amount, such payments to be made
until exhaustion of the Participant's vested Account balance.
(iv) Distribution in kind.
(v) Any reasonable combination of the foregoing or any
reasonable time or manner of distribution within the above-stated limitations.
(vii) Any distribution option that is a "protected benefit" under
Code Section 411(d)(6).
(b) To the extent permitted by applicable law and consistent with the
provisions of this Article X, amounts distributed pursuant to this Article X
shall be allocated on a pro rata basis among the Participant's Accounts and
among the Designated Investments in
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which each Account is invested; provided, however, that the Participant may
specify to the Administrator an alternative manner in which distributions shall
be so allocated.
10.03 Required Minimum Distributions. In the case of each Participant,
the annual distribution from his or her Account shall be determined by the
Administrator in accordance with the regulations under Code Section 401(a)(9),
including the minimum distribution incidental benefit requirement of Section
1.401(c)(9)-2 of such regulations and must equal or exceed the amount equal to
the quotient obtained by dividing the Participant's Account balance at the
beginning of the calendar year by the lesser of (a) the Applicable Life
Expectancy, or (b) if the Participant's Spouse is not the Beneficiary, the
applicable divisor determined from the table set forth in Q&A-4 of Section
1.401(a)(9)-2 of the regulations under Code Section 401(a)(9).
10.04 Nonconsensual Distributions. Notwithstanding any provision of
Article IX, this Article or Article XXIV to the contrary, the Administrator may
direct that the entire vested Account balance of a Participant (exclusive of
his or her Rollover Account and Deductible Voluntary Contribution Account) be
distributed if the amount distributed will be equal to $3,500 or less. The
Administrator may make such direction (a) only if the Participant has not
previously attained his or her Annuity Starting Date and (b)regardless of
whether the Participant requests or otherwise consents to such distribution.
10.05 Special One-Time Distribution Election. Notwithstanding any Plan
provision to the contrary, distribution on behalf of any Participant, including
a 5% owner, may be made in accordance with the following requirements
(regardless of when such distribution commences):
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(a) The distribution is one which would not have disqualified the Plan
under Code Section 401(a)(9) as it was in effect prior to its amendment by the
Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of distribution
designated by the Participant whose interest in the Plan is being distributed
or, if the Participant has died, by a beneficiary of such Participant.
(c) Such designation was in writing, was signed by the Participant or
the beneficiary, and was made before January 1, 1984.
(d) The Participant had accrued a benefit under the Plan as of
December 31, 1983.
(e) The method of distribution designated by the Participant or the
beneficiary specifies the time at which distribution will commence, the period
over which distributions will be made, and in the case of any distribution upon
the Participant's death, the Beneficiaries of the Participant are listed in
order of priority.
(f) If the distribution is one to which the provisions of Article XXIV
hereof would otherwise have applied and the Participant is married, the
Participant's Spouse consents to the election in a writing filed with the
Administrator.
A distribution upon death will not be covered by this Section unless the
information in the designation contains the required information described
above with respect to the distributions to be made upon the death of the
Participant.
For any distribution which commenced before January 1, 1984, but continues
after December 31, 1983, the Participant; or the Beneficiary, to whom such
distribution is being
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made, will be presumed to have designated the method of distribution under
which the distribution is being made if the method of distribution was
specified in writing and the distribution satisfies the requirement in
subsections (a) and (e) above.
If a designation is revoked, any subsequent distribution must satisfy the
requirements of Code Section 401(a)(9) as amended. Any changes in the
designation will be considered to be a revocation of the designation. However,
the mere substitution or addition of another Beneficiary (one not named in the
designation) under the designation will not be considered to be a revocation of
the designation, so long as such substitution or addition does not alter the
period over which distributions are to be made under the designation, directly
or indirectly (for example, by altering the relevant measuring life).
10.06 Distribution on Account of Plan Termination. Subject to the
provisions of Section 11.04, if the Employer terminates the Plan or completely
discontinues making Employer Contributions to the Trust, the Administrator has
discretion pursuant to Section 20.03 below to distribute, or retain in the
Trust, Participants' Account balances.
10.07 Eligible Rollover Distribution.
(a) This Section applies to distributions made by the Trustee on or
after January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election under this
Section, a Distributee may elect, at the time and in the manner prescribed by
the 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.
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(b) An Eligible Rollover Distribution is any distribution of all or
any portion of the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee or the
joint lives (or life expectancies) of the Distributee and the Distributee's
designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Code Section
401(a)(9); and the portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(c) An Eligible Retirement Plan is an individual retirement account
described in Code Section 408(a), an individual retirement annuity described in
Code Section 408(b), an annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a), that accepts the
Distributee's Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the surviving Spouse, an Eligible Retirement
Plan is an individual retirement account or individual retirement annuity.
(d) A Distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving Spouse and the
Employee's or former Employee's Spouse or former Spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are Distributees with regard to the interest of the Spouse or
former Spouse.
(e) A Direct Rollover is a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
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If a distribution is one to which Code Sections 401(a)(11) and 417 do not
apply, such distribution may commence less than 30 days after the notice
required under Section 1.411(a)-11(c) of the Income Tax Regulations is given,
provided that:
(i) the Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and
(ii) the Participant, after receiving the notice, affirmatively
elects a distribution.
ARTICLE XI. IN-SERVICE WITHDRAWALS
11.01 In-service Withdrawal from Participant's Accounts. This Section
11.01 shall apply only to Participants who remain in the employ of the
Employer.
(a) Nondeductible Voluntary Contribution Account. A Participant may
withdraw all or a portion of his or her Nondeductible Voluntary Contribution
Account upon notice to the Administrator; provided, however, that a Participant
who withdraws any amount from his or her Nondeductible Voluntary Contribution
Account which previously generated an Employer Matching Contribution shall be
prohibited from making a nondeductible voluntary contribution for six calendar
months, beginning with the calendar month immediately following the date of
withdrawal.
(b) Rollover Account. A Participant may withdraw all or a portion of
his or her Rollover Account upon notice to the Administrator.
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(c) Deductible Voluntary Contribution Account. A Participant may
withdraw all or a portion of his or her Deductible Voluntary Contribution
Account upon notice to the Administrator.
(d) Employer Profit Sharing Contribution Account. Upon attainment of
his or her Normal Retirement Date, a Participant may withdraw all or a portion
of his or her Employer Profit Sharing Contribution Account upon notice to the
Administrator. If elected by the Employer in the Adoption Agreement, a
Participant who has not attained his or her Normal Retirement Date but who is
fully vested in his or her Employer Profit Sharing Contribution may submit a
request to the Administrator for a withdrawal of all or a portion of his or her
Employer Profit Sharing Contribution Account. The Administrator may permit
such a withdrawal only if the Participant can demonstrate to the satisfaction
of the Administrator that he or she is suffering from "hardship" as defined in
Section 11.02 below.
(e) Employer Matching Contribution Account. Upon attainment of his or
her Normal Retirement Date, a Participant may withdraw all or a portion of his
or her Employer Matching Contribution Account upon notice to the Administrator.
If elected by the Employer in the Adoption Agreement, a Participant who has not
attained his or her Normal Retirement Date but who is fully vested in his or
her Employer Matching Contribution Account may submit a request to the
Administrator for a withdrawal of all or a portion of his or her Employer
Matching Contribution Account. The Administrator may permit such a withdrawal
only if the Participant can demonstrate to the satisfaction of the
Administrator that he or she is suffering from "hardship" as defined in Section
11.02 below.
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(f) Salary Reduction Contribution Account. Deferred Cash Contribution
Account and Qualified Nonelective Contribution Account. Upon attainment of his
or her Normal Retirement Date, a Participant may withdraw all or a portion of
his or her Salary Reduction Contribution Account, Deferred Cash Contribution
Account and/or Qualified Nonelective Contribution Account upon notice to the
Administrator. If elected by the Employer in the Adoption Agreement, a
Participant who has not attained his or her Normal Retirement Date may submit a
request to the Administrator for a withdrawal of all or a portion of his or her
Salary Reduction Contribution Account or Deferred Cash Contribution Account
(but not earnings on such accounts after December 31, 1988). The Administrator
may permit such a withdrawal only if the Participant can demonstrate that he or
she is suffering from "hardship" as defined in Section 11.02 below.
11.02 Rules Governing Hardship Withdrawals. A Participant shall be
considered to be suffering from "hardship" only if the distribution is both
made on account of an immediate and heavy financial need of the Participant and
is necessary to satisfy such financial need, determined in accordance with
objective, nondiscretionary standards as set forth in this Section.
(a) An "immediate and heavy financial need" shall be deemed to
include, and shall be limited to, the following:
(i) Expenses incurred or necessary for medical care described
in Code Section 213(d) of the Participant, his or her Spouse, or any dependents
of the Participant (as defined in Code Section 152);
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(ii) Purchase (excluding mortgage payments) of a principal
residence for the Participant;
(iii) Payment of tuition, related educational fees and room and
board for the next 12 months of post-secondary education for the Participant,
his or her Spouse, children, or dependents; or
(iv) The need to prevent the eviction of the Participant from
his or her principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) A distribution will be treated as "necessary" to satisfy an
immediate and heavy financial need of the Participant only if:
(i) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all plans maintained by
the Employer;
(ii) All plans maintained by the Employer provide that the
Participant's Salary Reduction Contributions and/or Deferred Cash Contributions
(and Nondeductible Voluntary Contributions) will be suspended for 12 months
after the receipt of the hardship distribution;
(iii) The distribution is not in excess of the amount of an
immediate and heavy financial need (including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably anticipated to
result from the distribution); and
(iv) All plans maintained by the Employer provide that the
Participant may not make Salary Reduction Contribution and/or Deferred Cash
Contributions for the Participant's taxable year immediately following the
taxable year of the hardship distribution in excess of the applicable limit
under Code Section 402(g) for such taxable year less the
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amount of such Participant's Salary Reduction Contributions and/or Deferred
Cash Contributions for the taxable year of the hardship distribution.
11.03 Manner of Distribution. A distribution under this Article shall be
made in a lump-sum payment to the Participant. In each case in which a partial
distribution is made from a Participant's Account, the amount distributed from
such Account pursuant to this Article XI shall be allocated on a pro rata basis
among the Designated Investments in which such Account is invested; provided,
however, that the Administrator or the Participant may specify an alternative
manner in which such distribution shall be so allocated.
11.04 Limitation on Distributions. Notwithstanding anything to the
contrary elsewhere herein, the amounts credited to a Participant's Salary
Reduction Contribution Account and Deferred Cash Contribution Account, and
Qualified Nonelective Contribution Account shall not be distributable to a
Participant or his or her Beneficiary until the Participant separates from
Service on account of retirement, disability, death or termination of
employment or upon the occurrence of one of the following events:
(a) Termination of the Plan without the establishment of another
defined contribution plan, other than an employee stock ownership plan (as
defined in Code Section 4975(e) or Section 409) or a simplified pension plan as
defined in Code Section 408(k).
(b) The disposition by a corporation to an unrelated corporation of
substantially all of the assets (within the meaning of Code Section 409(d)(2))
used in a trade or business of such corporation if such corporation continues
to maintain this Plan after the disposition, but only with respect to
Participants who continue employment with the corporation acquiring such
assets.
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(c) The disposition by a corporation to an unrelated entity of such
corporation interest in a subsidiary (within the meaning of Code Section
409(d)(3)) if such corporation continues to maintain this Plan, but only with
respect to Participants who continue employment with such subsidiary.
(d) The attainment of age 59-1/2 by the Participant.
(e) In the case of the Participant's Salary Reduction Contribution
Account and Deferred Cash Contribution Account, the hardship of the Participant
as described in Section 11.02.
All distributions that may be made pursuant to one or more of the foregoing
distributable events are subject to the spousal and Participant consent
requirements (if applicable) contained in Code Sections 411(a)(11) and 417. In
addition, distributions made after March 31, 1988, that are triggered by an
event enumerated in Sections 11.04(a)-(c) must be made in a lump sum.
ARTICLE XII. LOANS
12.01 Availability of Loans. If, in the Adoption Agreement, the Employer
has specified that loans to Participants are permitted, the Loan Trustee shall,
upon the direction of the Administrator, make one or more loans, including any
renewal thereof, to a Participant who is an Employee or, in the discretion of
the Administrator, a former Employee (other than a Participant who is an
Owner-Employee). Any such loan shall be subject to such terms and conditions as
the Administrator shall determine pursuant to a written uniform policy adopted
by the Administrator for this purpose, which policy shall be incorporated
herein as part of the
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Plan, at least as restrictive as required by this Article, and, contain
specific provisions setting forth: (a) the identity of the person or positions
authorized to administer the loan program; (b) a procedure for applying for
loans; (c) the basis upon which loans will be approved or denied; (d)
limitations, in addition to those described in this Article XII, on the types
and amount of loans offered; (e) the procedure under the program for
determining a reasonable rate of interest; (f) the types of collateral which
may secure a loan; and (g) the events constituting default and the steps that
will be taken to preserve plan assets in the event of such default.
12.02 Spousal Consent Required. If this Plan is adopted as a plan which
is subject to the special annuity rules discussed in Article XXIV below, to
obtain a loan, a Participant must obtain the consent of his or her Spouse, if
any, within the 90-day period before the time his or her Account balance is
used as security for the loan. Furthermore, a new consent is required if an
increase in the amount of the security-is necessary and any of the remaining
balance of the Account is used. A spousal consent to a loan must be in writing,
witnessed by a Plan representative or notary public, and acknowledge that as a
result of a default in repayment of the loan the Spouse may be entitled to a
lesser death benefit than he or she would otherwise receive under the Plan. A
Spouse shall be deemed to consent to any loan which is outstanding at the time
of his or her marriage to the Participant.
12.03 Equivalent Basis. No such loan may be made to a disqualified
person within the meaning of Code Section 4975(e), unless such loans are
available to all active Participants on a reasonably equivalent basis and are
not made available to Highly Compensated
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Employees in an amount which, when stated as a percentage of any such
Participant's Account, is greater than is available to any other Participants.
12.04 Limitation on Amount. The amount of any such loan, when added to
the outstanding balance of all other loans from the Trust (and any other
qualified retirement plans of the Employer) to the Participant, shall not
exceed the lesser of:
(a) $50,000 reduced by the amount by which (i) the highest outstanding
balance of all such loans to the Participant during the one-year period ending
on the day before the date on which the loan is made exceeds (ii) the
outstanding balance of such loans to the Participant on the date on which such
loan is made; or
(b) the amount determined pursuant to the following chart:
<TABLE>
<CAPTION>
Vested Maximum
Account Balance Amount of Loan
--------------- --------------
<S> <C>
$0 - $100,000 50% of vested Account balance
over $100,000 $50,000.
</TABLE>
The value of the Participant's Account balance shall be as determined by
the Administrator; provided, however, that such determination shall in no event
take into account the portion of the Participant's Account attributable to the
Participant's Deductible Voluntary Contribution Account.
12.05 Maximum Term. The term of any such loan shall not exceed five
years; provided, however, that such limitation shall not apply to any loan used
for the purchase of a dwelling unit which within a reasonable time is to be
used (determined at the time the loan is made) as a principal residence of the
Participant.
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12.06 Promissory Note. Any such loan shall be evidenced by a promissory
note executed by the Participant and payable to the Loan Trustee, on the
earliest of (i) a fixed maturity date meeting the requirements of Section 12.05
above, (ii) the Participant's death (iii) the Participant's separation from
service if the loan policy does not permit loans to former Employees. Such
promissory note shall evidence such terms as are required by this Article.
12.07 Adequate Security. Each loan and related promissory note shall be
secured by an assignment of no more than 50 percent of the Participant's
Account to the Loan Trustee. A Participant may also provide such other or
additional security for the loan as the Loan Trustee may require or permit.
12.08 Repayment By Payroll Reduction. In addition to executing a
promissory note, the Participant who desires to take out a loan shall enter
into a payroll reduction agreement with the Employer or such other form of
repayment agreement with the Employer as the Administrator permits from time to
time. The Participant shall enter into such agreement on or before the date
when the loan is made. Such agreement shall provide that, if the Participant
defaults on the loan while he or she is still an Employee, the Employer shall
be entitled to reduce the Participant's pay in sufficient increments to ensure
that, over a reasonable period of time, the amount with respect to which the
Participant has defaulted plus any interest owed and any costs of collection
incurred by the Loan Trustee will be repaid to the Trust. The Employer shall
promptly pay to the Loan Trustee all amounts that the Employer withholds from a
Participant's pay pursuant to such a payroll reduction agreement or other
repayment agreement. The Administrator and/or Loan Trustee shall credit all
amounts withheld from a
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Participant's pay or collected pursuant to a repayment agreement to the
relevant Participant's Account as payments of amounts owed on the note.
12.09 Interest. Any such loan shall be subject to a reasonable rate of
interest.
12.10 Level Amortization. A Participant shall repay the principal of any
loan according to a schedule which shall provide for level amortization over a
period of the loan, with payments to be made no less frequently than quarterly.
12.11 Additional Repayment Rules. If a Participant fails to make a
payment in accordance with the schedule developed in accordance with the
requirements of Section 12.10 above, the Administrator shall notify the
Participant in writing that if the relevant loan principal and accumulated and
unpaid interest thereon is not paid within 30 days, action will be taken to
collect such amounts plus any cost of collection. When collecting such amounts,
the Loan Trustee may utilize any of the remedies available to it including
those provided by the promissory note, a payroll reduction agreement entered
into pursuant to Section 12.08 and applicable law. If a note is not paid when
the Participant's benefits hereunder are to be distributed, then any unpaid
portion of such loan, and unpaid interest thereon, and any costs of collection
incurred by the Loan Trustee shall be deducted by the Loan Trustee from the
Participant's Account before benefits are paid from or purchased out of the
Account. Such deduction shall, to the extent thereof, cancel the indebtedness
of the Participant. Notwithstanding any implication of the preceding sentence
to the contrary, no attachment of the Participant's Account which is subject to
Section 11.04 shall occur until a distributable event occurs as specified in
Section 11.04.
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12.12 Accounting. Loans shall be made on a pro rata basis among the
Participant's Accounts and among the Designated Investments in which each
Account is invested and shall be treated as an investment of each such Account,
provided, however, that the Administrator or the Participant may specify an
alternative manner in which such loan shall be so allocated. Notwithstanding
the foregoing, no loans shall be made from the Participant's Deductible
Voluntary Contribution Account, and without the consent of the Distributor, no
loans shall be made from the Participant's Accounts invested in qualifying
employer securities.
12.13 Administration of Loans. Except as expressly provided otherwise in
this Article XII, the Administrator shall have the sole responsibility for all
administrative tasks relating to loans made pursuant hereto including, but not
limited to, the issuance of any appropriate notices or information returns
required under the Code or other applicable law.
12.14 Precedence. This Article overrides Section 18.01 below.
ARTICLE XIII. TRUST PROVISIONS
13.01 Manner of Investment. Except as expressly provided otherwise
herein, all contributions made pursuant to the Plan and any assets in which
such contributions shall be invested or reinvested shall be held in trust by
one or more Trustee pursuant to the provisions of this Agreement of Trust.
Certain assets of the Plan (including, but not limited to, insurance contracts
and shares of securities of an Employer that are not publicly traded) may be
held by the Administrator or such other entity as the Trustee may appoint as
subcustodian on behalf of the Trustee. Except to the extent that a
Participant's Account is invested in a loan pursuant to Article XII hereof, the
Account of a Participant may only be invested and reinvested in
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Designated Investments, unless the Distributor consents to such other
investments. If the Administrator or the Participant, as the case may be, has
elected to have a portion of an Account invested in investments other than
Designated Investments, and the Distributor has given its consent, the Trustee
shall invest such amount in such investments, directed by the Administrator or
other person with investment discretion and in accordance with Section 13.03
hereof. Both the Designated Investments and investments other than Designated
Investments available for investment may be limited by the Administrator who
may impose separate rules for separate accounts or for terminated Participants.
Investment in more than one Designated Investment is not permitted unless the
value of the Participant's Account and the value of the investment in each
additional Designated Investment exceed amounts from time to time determined by
the Distributor.
If the Trustee invests in one or more collective investment funds (whether
or not the Trustee acts as trustee thereof) for the collective investment of
assets of employee pension or profit-sharing trusts pursuant to Revenue Ruling
81-100, and such collective investment fund constitutes a qualified trust under
the applicable provisions of the Code, such collective investment funds shall
constitute part of the Plan, and the instrument creating such funds shall
constitute part of this Agreement of Trust while any portion of the Trust is so
invested.
13.02 Investment Decision.
(a) The decision as to the investment of an Account shall be made by
the person designated in the Adoption Agreement or as provided in this Section
13.02, and the Trustee shall have no responsibility for determining how an
Account is to be invested or to see that investment directions communicated to
it comply with the terms of the Plan. Each such
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person, including the Administrator, a Participant or a Beneficiary, is hereby
designated a "named fiduciary" within the meaning of Sections 402(a)(2) and
403(a)(1) of the Act, with respect to the Accounts over which he or she may
exercise investment control. If the decision is made by the Participant, then
(subject to Section 13.02(d) below) the Participant shall convey investment
instructions to the Administrator and the Administrator shall promptly transmit
those instructions to the Trustee. Further, if the decision is to be made by
the Participant, the right to make such a decision shall remain with the
Participant upon retirement and shall pass to his or her Beneficiary upon
death; provided, however, that upon termination of Service by a Participant,
the Administrator shall have the right to make investment decisions with
respect to the portion of such Participant's Account which is not vested
pursuant to Article VIII and any suspense account maintained under the Plan. In
the event that all or a portion of a Participant's Account is assigned to an
"alternate payee" pursuant to a "qualified domestic relations order," such
alternate payee shall have the right to make investment decisions with respect
to such portion and any earnings thereon to the same extent as the Participant.
(b) The person designated to make the decision as to the investment of
an Account may direct that the investment medium of an Account be changed,
provided that no such change may be made from or to an investment other than a
Designated Investment except to the extent permitted under Section 13.01 above
and by the terms of that other investment vehicle. Notwithstanding the
foregoing, the Administrator may from time to time establish uniform,
nondiscretionary rules with respect to the frequency or times at which changes
in the investment medium of the Account may be made. If the Distributor
determines in its own
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judgment that there has been trading of Designated Investments in the Accounts
of the Participants, any Designated Investment may refuse to sell to such
Accounts. When an investment is being made or changed, the person designated to
do so shall specify the type of Account to which the change refers.
(c) Except as provided in subsection (a) above, if any decision as to
investments is to be made by the Administrator, it shall be made on a uniform
basis with respect to all Participants.
(d) The Administrator and the Trustee may adopt procedures permitting
Participants to convey their investment instructions directly to the Trustee or
to the transfer agent for the Designated Investment or for any other investment
permitted by the Distributor.
(e) Whenever a Participant is the person designated to make the
decision as to the investment of an Account, the Administrator shall ascertain
that the Participant has received a copy of the current prospectus relating to
any Designated Investment in which such Account is to be invested where
required by any state or federal law. With respect to contributions designated
for investment by a Participant, by remitting such a contribution to the
Trustee, the Administrator shall be deemed to warrant to the Trustee for the
benefit of the appropriate Designated Investment and its principal underwriter
(if applicable) that the Participant has received all such prospectuses. By
remitting any other contribution to the Trustee, the Administrator shall be
deemed to warrant to the Trustee for the benefit of the appropriate Designated
Investment and its principal underwriter (if applicable) that the Administrator
has received a current prospectus of any Designated Investment in which the
contribution is to be invested where required by any state or federal law.
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13.03 Directed Powers of the Trustee. To the extent that a portion of
the Trust assets are invested other than in Designated Investments pursuant to
Section 13.01 above, the Trustee shall have the following powers and authority
in the administration of the Trust to be exercised at the direction of the
Administrator or other person with investment discretion:
(a) To purchase, receive or subscribe for any securities or other
property and to retain in trust such securities or other property.
(b) To sell for cash or credit, to convert, redeem, or exchange
securities for other securities or other property, to tender securities
pursuant to tender offers, or otherwise to dispose of any securities or other
property at any time held by the Trustee.
(c) To settle, compromise, or submit to arbitration any claims, debts
or damages, due or owing to or from the Trust Fund, to commence or defend suits
or legal proceedings and to represent the Trust Fund in all suits or legal
proceedings; provided, however, that the Trustee shall have the right, in its
sole discretion, to bring, join in or oppose any such suits or legal
proceedings where it may be adversely affected by the outcome, individually or
as Trustee, or where it is advised by counsel that such action is required on
its part by the Act or other applicable law.
(d) To exercise any conversion privilege and/or subscription right
available in connection with any securities or other property at any time held
by it; to oppose or to consent to the reorganization, consolidation, merger or
readjustment of the finances of any corporation, company or association, or to
the sale, mortgage, pledge or lease of the property of any corporation, company
or association, the securities of which may at any time be held by it and to do
any act with reference thereto, including the exercise of options, the making
of
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agreements or subscriptions and the payment of expenses, assessments or
subscriptions which may be deemed necessary or advisable in connection
therewith, and to hold and retain any securities or other property which it may
so acquire, and to deposit any property with any protective, reorganization or
similar committee or with depositories designated thereby, to delegate power
thereto, and to pay or agree to pay part of the expenses and compensation of
any such committee and any assessments levied with respect to property so
deposited; provided, however, that the Trustee shall not be responsible for
taking any action or exercising any right described in this subsection (d) with
respect to securities or other property of the Trust Fund unless, at least
three business days prior to the date on which such power is to be exercised,
it or its agents (i) are in actual possession or control of such securities or
property (if such possession or control is necessary to exercise any such
power) and (ii) have received instructions from the Administrator to exercise
any such power.
(e) To exercise, personally, by proxy or by general or limited power
of attorney, any right appurtenant to any securities or other property held by
it at any time.
(f) To invest and reinvest all or any part of the assets of the Trust
Fund, and to hold part of the Trust Fund uninvested.
(g) To employ suitable agents and counsel and to pay their reasonable
expenses and compensation as expenses of the Trust.
(h) To purchase, enter into, sell, hold and generally deal in any
manner in and with contracts for the immediate delivery of financial
instruments of any issuer or of any other property, to grant, purchase, sell,
exercise, permit to exercise, permit to be held in escrow and otherwise to
acquire, dispose of, hold and generally deal in any manner with or in
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all forms of options in any combination; and, in connection with its exercise
of the powers hereinabove granted, to deposit any securities or other property
as collateral with any broker-dealer or other person, and to take all other
appropriate action in connection with such contracts.
(i) To deposit or pledge any securities or other property as
collateral with any broker-dealer or other person (including the Trustee), and
to permit securities or other property to be held by or in the name of others
or in transferable form.
(j) To borrow money, with or without security, from any legally
permissible source, to encumber property of the Trust Fund to secure repayment
of such indebtedness, to assume liens on properties acquired by the Trust, and
to acquire properties subject to liens.
(k) To form corporations and to create trusts to hold title to any
securities or other property of the Trust Fund.
(l) To acquire and hold securities which constitute qualifying
employer securities with respect to a Plan (as such term is defined in Section
407 of the Act); provided that the Trustee shall have no responsibility for
determining whether such acquisition or holding complies with the Act; and
provided further that the Administrator shall be responsible for filing all
reports required under federal or state securities laws with respect to the
Trust Fund's ownership of qualifying employer securities (including without
limitation any reports required under Section 13 or 16 of the Securities
Exchange Act of 1934, as amended) and shall immediately notify the Trustee in
writing of any requirement to stop purchases or sales of employer securities
pending the filing of any report, and the Trustee shall provide to the
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Administrator such information on the Trust Fund's ownership of qualifying
employer securities as the Administrator may reasonably request in order to
comply with federal or state securities laws and the Act;
(m) To convert any monies into any currency through foreign exchange
transactions (which may be effected with the Trustee or an affiliate of the
Trustee to the extent permitted under the Act); and
(n) Generally, to do all acts, whether or not expressly authorized,
which may be considered necessary or desirable for the protection or
enhancement of the Trust Fund or to carry out any of the foregoing powers and
the purposes of the Trust Fund.
13.04 Discretionary Powers of the Trustee. The Trustee shall have the
following powers and authority in the administration of the Trust to be
exercised in its sole discretion:
(a) To register any securities held by it hereunder in its own name or
in the name of a nominee with or without the addition of words indicating that
such securities are held in a fiduciary capacity and to hold any securities in
bearer form and to deposit any securities or other property in a depository,
clearing corporation, or similar corporation, either domestic or foreign.
(b) To make, execute and deliver, as Trustee hereunder, any and all
instruments in writing necessary or proper for the accomplishment of any of the
powers referred to in Section 13.03 or in this Section 13.04.
(c) To employ suitable agents, custodians, subcustodians, and counsel
including but not limited to entities which are affiliates of the Trustee and,
subject to applicable law, to pay their reasonable compensation and expenses as
expenses of the Trust.
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(d) With the consent of the Administrator, to loan securities held in
the Trust to brokers or dealers or other borrowers under such terms and
conditions as the Trustee, in its absolute discretion, deems advisable, to
secure the same in any manner permitted by law and the provisions of this
Agreement, and during the term of any such loan, to permit the loaned
securities to be transferred into the name of and voted by the borrowers or
others, and, in connection with the exercise of the powers hereinabove granted,
to hold any property deposited as collateral by the borrower pursuant to any
master loan agreement in bulk, together with the unallocated interests of other
lenders, and to retain any such property upon the default of the borrower,
whether or not investment in such property is authorized under this Agreement,
and to receive compensation therefor out of any amounts paid by or charged to
the account of the borrower.
13.05 Limitations in Investments. Notwithstanding the above, the
following restrictions on the investment of a Participant's Account shall
apply:
(a) No part of a Participant's Deductible Voluntary Contribution
Account may be used to purchase life insurance.
(b) At most, less than one-half of the aggregate Employer
Contributions allocated to a Participant's Employer Contribution Account may be
used to pay premiums attributable to the purchase of ordinary life insurance
contracts (life insurance contracts with both nondecreasing death benefits and
non-increasing premiums).
(c) No more than one-quarter of aggregate Employer Contributions
allocated to a Participant's Account may be used to pay premiums on term life
insurance contracts,
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universal life insurance contracts, and all other life insurance contracts
which are not ordinary life insurance contracts.
(d) One-half of the amount used to pay premiums on ordinary life
insurance contracts plus the amount used to pay premiums on all other life
insurance contracts may not exceed an amount equal to one-quarter of the
aggregate Employer Contributions allocated to a Participant's Account.
(e) No part of a Participant's Account shall be applied towards the
purchase of any insurance contract unless (i) the Trustee applies for and is
the owner of such contract, (ii) the contract provides that all contract
proceeds shall be paid to the Trustee, and (iii) the contract provides for
distributions to the Participant's Spouse, as necessary to ensure compliance
with the applicable requirements of Articles IX, X, and XXIV.
(f) Amounts used to pay premiums on, or purchase, any insurance
contract(s) on the life of a Participant shall be paid first from that portion
of the Participant's Nondeductible Voluntary Contribution Account which
represents Nondeductible Voluntary Contributions made by the Participant prior
to January 1, 1987, provided that the Plan, as of May 5, 1986, permitted
withdrawal of Nondeductible Voluntary Contributions before separation from
Service. Amounts used to pay premiums on, or purchase, any insurance
contract(s) on the life of a Participant which exceed that portion of the
Participant's Nondeductible Voluntary Contribution Account described in the
preceding sentence shall be paid first from the portion of the Participant's
Nondeductible Voluntary Contribution Account which represents the remaining
Nondeductible Voluntary Contributions made by the
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Participant and then, except as provided in paragraph (a) above, from such
other of the Participant's Accounts as the Administrator directs pursuant to
the Participant's election.
(g) Except as provided in Section 22.01, any insurance contract(s) on
the life of a Participant will be converted to cash or distributed to the
Participant as of the Participant's Annuity Starting Date.
(h) Any dividends or credits earned on insurance contract(s) will be
allocated to the Account of the Participant for whose benefit the contract is
held, provided, however, that if an insurance contract was purchased with a
Participant's Nondeductible Voluntary Contributions, such dividends or credits
which are attributable to the Participant's Nondeductible Voluntary
Contributions shall, to the extent treated as a return of premium, be credited
to the Participant's Nondeductible Voluntary Contribution Account.
If a Participant's Account is invested in one or more insurance contracts,
the Trustee is required to pay over all proceeds of the contract(s) to the
Participant's Beneficiary or Beneficiaries in accordance with the terms of this
Plan and under no circumstances shall the Trust retain any contract proceeds.
13.06 Appointment of Investment Manager. Subject to Sections 13.01 and
13.03 above, the Administrator may designate, and the Employer may contract
with, Scudder, Stevens & Clark Inc., or its successor or any affiliate, or any
other qualified entity to act as investment manager (within the meaning of the
Act), and may at any time revoke such designation. If an investment manager is
so designated, the Trustee shall follow all investment directions given by the
investment manager with respect to the retention, investment and reinvestment
of the Plan assets to the extent they are under the control of such investment
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manager. If permitted by the Trustee, the investment manager may issue orders
for the purchase and sale of securities, including orders through any affiliate
of such investment manager. Such an investment manager is specifically allowed
to direct or make investments in any Designated Investment and any other
investments to which the Distributor has given its consent. The Trustee shall
not be liable for following any direction given by, or any actions of, an
investment manager so appointed.
13.07 Trustee: Number, Qualifications and Majority Action.
(a) The Employer shall designate one or more Trustees for each Trust.
Any natural person and any corporation having power under applicable law to act
as a trustee of a pension or profit sharing plan may be a Trustee. No person
shall be disqualified from being a Trustee by being employed by the Employer,
by being the Administrator, by being a trustee under any other qualified
retirement plan of the Employer or by being a Participant in this Plan or such
other qualified plan.
(b) A Trustee holding office as sole Trustee with respect to a Trust
hereunder shall have all the powers and duties herein given to the Trustees
hereunder. When the number of Trustees with respect to a Trust is three, any
two of them may act, but the third Trustee shall be promptly informed of the
action. When there are two or more Trustees with respect to a Trust, they may,
by written instrument communicated to the Employer and the Administrator,
allocate among themselves the powers and duties herein given to the Trustee
hereunder. If such an allocation is made, to the extent permitted by applicable
law, no Trustee shall be liable either individually or as a trustee for loss to
the Plan from the acts or omissions of another Trustee with respect to duties
allocated to such other Trustee.
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13.08 Change of Trustee.
(a) Any Trustee may resign as Trustee upon notice in writing to the
Employer, and the Employer may remove any Trustee upon notice in writing to
each Trustee. The removal of a Trustee shall be effective immediately, except
that a corporation serving as a Trustee shall be entitled to 60 days' notice
which it may waive, and the resignation of a Trustee shall be effective
immediately, provided that, if the Trustee is the sole Trustee, neither a
removal nor a resignation of a Trustee shall be effective until a successor
Trustee has been appointed and has accepted the appointment. If within 60 days
of the delivery of the written resignation or removal of a sole Trustee,
another Trustee shall not have been appointed and have accepted, the resigning
or removed Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee or may terminate the Plan pursuant to
Section XVIII of the Prototype Plan. The Trustee shall not be liable for the
acts and omissions of any successor Trustee.
(b) At any time when the number of Trustees is one or two the Employer
may but need not appoint, respectively two or one additional Trustees. Such an
appointment and the acceptance thereof shall be in writing, and shall take
effect upon the delivery of written notice thereof to all the Trustees and the
Administrator and such acceptance by the appointed Trustee, provided that if a
corporation is a Trustee then in the absence of its consent, such an
appointment of an additional or successor Trustee shall not become effective
until 60 days after its receipt of notice.
(c) Although any Employer adopting the Plan may choose any Trustee who
is willing to accept the Trust, the Distributor or its successor may make or
may have made
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tentative standard arrangements with any bank or trust company with the
expectation it will be used as the Trustee by a substantial group of Employers.
It is also contemplated that more favorable results can be obtained with a
substantial volume of business, and that it may become advisable to remove such
bank or trust company as Trustee and substitute another Trustee. Therefore,
anything in the prior two subsections notwithstanding, each Employer adopting
this Plan hereby agrees that the Distributor may, upon a date specified in a
notice of at least 30 days to the affected Employer and in the absence of
written objection by the Employer received by the Distributor before such date,
(i) remove any Trustee and in that case, or if such a Trustee has resigned as
to a group of Employers, (ii) appoint a successor Trustee, provided such action
is taken with respect to all Employers similarly circumstanced of which the
Distributor has knowledge, and provided such notice is given in writing and
mailed postage prepaid to the Employer at the latest address furnished to the
Distributor directly or supplied to it by such Trustee which is to be
succeeded. If within 60 days after a Trustee's resignation or removal pursuant
to this subsection (i), the Distributor has not appointed a successor which has
accepted such appointment the resigning or removed Trustee may petition an
appropriate court for the appointment of its successor. The resigning or
removed Trustee shall not be liable for the acts and omissions of such
successor.
(d) Successor Trustees qualifying under this Section shall have all
rights and powers and all the duties and obligations of original Trustees.
13.09 Valuation. Annually, on the Valuation Date, or more frequently in
the discretion of the Trustee, the assets of each Trust shall be valued at fair
market value and the accounts of the Trust shall be proportionately adjusted to
reflect income, gains, losses or
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expenses, if the system of accounting does not directly accomplish all such
adjustments. Each account shall share in income gains, losses, or expenses
connected with an asset in which it is invested according to the proportion
which the account's investment in the asset bears to the total amount of the
Trust Fund invested in the asset. Any dividends or credits earned on insurance
contracts shall be allocated to the specific account of the Participant from
which the funds originated for investment in the contract.
The Trust Fund shall be administered separately from, and shall not include
any assets being administered under, any other plan of an Employer. Interim
valuations, if any, shall be applied uniformly and in a nondiscriminatory
manner for all Employees.
13.10 Registration. Any assets in the Trust Fund may be registered in
the name of the Trustee or any nominee designated by the Trustee.
13.11 Certifications and Instructions.
(a) Any pertinent vote or resolution of the Board of Directors of the
Employer (if it is a corporation) shall be certified to the Trustee over the
signature of the Secretary or an Assistant Secretary of the Employer and under
its corporate seal. The Employer shall promptly furnish to the Trustee
appropriate certification evidencing the appointment and termination of the
individual or individuals serving as Administrator under Section 14.01 of the
Plan.
(b) The Administrator shall furnish to the Trustee appropriate
certification of the individual or individuals authorized to give notice on
behalf of the Administrator and providing specimens of their signatures. All
requests, directions, requisitions for money and instructions by the
Administrator to the Trustee shall be in writing and signed. There may be
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standing requests, directions, requisitions or instructions to the extent
acceptable to the Trustee.
13.12 Accounts and Approval.
(a) The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions, hereunder, and
all books and records relating thereto shall be open at all reasonable times to
inspection and audit by any person or persons designated by the Administrator
or by the Employer.
(b) Within 90 days following the close of each Plan Year the Trustee
may, and upon the request of the Employer or the Administrator shall, file with
the Administrator and the Employer a written report setting forth all
securities or other investments (including insurance contracts) purchased and
sold, all receipts, disbursements and other transactions effected by it during
the period since the date covered by the next prior report, and showing the
securities and other property held at the end of such period, and such other
information about the Trust Fund as the Administrator shall request. Unless the
Employer or Administrator, within 90 days from the date of mailing of such
report, objects to the contents of such report, the report shall be deemed
approved. Any such objections shall set forth the specific grounds on which
they are based.
13.13 Taxes. The Trustee may assume that any taxes assessed on or in
respect of the Trust Fund are lawfully assessed unless the Administrator shall
in writing advise the Trustee that in the opinion of counsel for the Employer
such taxes are not lawfully assessed. In the event that the Administrator shall
so advise the Trustee, the Trustee, if so requested by the Administrator and
suitable provision for their indemnity having been made, shall contest the
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validity of such taxes in any manner deemed appropriate by the Administrator or
counsel for the Employer. The word "taxes" in this Article shall be deemed to
include any interest or penalties that may be levied or imposed in respect to
any taxes assessed. Any taxes, including transfer taxes incurred in connection
with the investment or reinvestment of the assets of the Trust Fund that may be
levied or assessed in respect to such assets shall, if allocable to the
Accounts of specific Participants, be charged to such Accounts, and if not so
allocable, they shall be equitably apportioned among all such Participants'
Accounts.
13.14 Employment of Counsel. The Trustee may employ legal counsel (who
may be counsel for the Employer) and shall be fully protected in acting or
refraining from acting, upon such counsel's advice in respect to any legal
questions.
13.15 Compensation of Trustee. An individual Trustee who is an Employee
of the Employer shall not be compensated for services as Trustee. A
corporation, or an individual who is not an Employee of the Employer, serving
as a Trustee shall be entitled to reasonable compensation for services; such
compensation shall be paid in accordance with Article XV.
13.16 Limitation of Trustee's Liability.
(a) The Trustee shall have no duty to take any action other than as
herein specified, unless the Administrator shall furnish it with instructions
in proper form and such instructions shall have been specifically agreed to by
it, or to defend or engage in any suit unless it shall have first agreed in
writing to do so and shall have been fully indemnified to its satisfaction.
(b) The Trustee may conclusively rely upon and shall be protected in
acting in good faith upon any written representation or order from the
Administrator or any other
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notice, request, consent, certificate or other instrument or paper believed by
the Trustee to be genuine and properly executed, or any instrument or paper if
the Trustee believes the signature thereon to be genuine.
(c) The Trustee shall not be liable for interest on any reasonable
cash balances maintained in the Trust.
(d) The Trustee shall not be obligated to, but may, in its discretion,
receive a contribution directly from a Participant.
(e) The Employer shall indemnify and save harmless the Trustee from
and against any and all liability to which the Trustee may be subjected by
reason of any act, conduct or failure to act (except willful misconduct or
gross negligence) in its capacity as Trustee, including all expenses reasonably
incurred in its defense.
13.17 Successor Trustee. Any corporation into which a corporation acting
as a Trustee hereunder may be merged or with which it may be consolidated, or
any corporation resulting from any merger, reorganization or consolidation to
which such Trustee may be a party, shall be the successor of the Trustee
hereunder, without the necessity of any appointment or other action, provided
the Trustee does not resign and is not removed.
13.18 Enforcement of Provisions. To the extent permitted by applicable
law, the Employer and the Administrator shall have the exclusive right to
enforce any and all provisions of this Agreement on behalf of all Employees or
former Employees of the Employer or their Beneficiaries or other persons having
or claiming to have an interest in the Trust Fund or under the Plan. In any
action or proceeding affecting the Trust Fund or any property constituting a
part or all thereof, or the administration thereof or for instructions to
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the Trustee, the Employer, the Administrator and the Trustee shall be the only
necessary parties and shall be solely entitled to any notice of process in
connection therewith; any judgment that may be entered in such action or
proceeding shall be binding and conclusive on all persons having or claiming to
have any interest in the Trust Fund or under the Plan.
13.19 Voting. The Trustee shall deliver, or cause to be executed and
delivered, to the Administrator, or to such individuals designated by the
Administrator, all notices, prospectuses, financial statements, proxies and
proxy soliciting materials received by the Trustee relating to securities held
by the Trust. The Administrator shall deliver these to the individuals entitled
to make investment decisions pursuant to Section 13.02 hereof (if the Adoption
Agreement so provides this may be the Participant or a Beneficiary) to the
extent that the Administrator has decided to pass-through voting to such
individuals. Each individual, including the Administrator, with voting rights,
is hereby designated a "named fiduciary," within the meaning of Section
402(a)(2) and 403(a)(1) of the Act, with respect to the Accounts over which he
or she may exercise voting rights. With respect to proxies, proxy solicitation
materials,and other voting matters, the Trustee shall vote securities held by
the Trust in accordance with the written instructions (as expressed in a
properly completed and executed proxy) of the Administrator or of the
individuals entitled to make investment decisions pursuant to Section 13.02 as
expressed in a properly completed and executed proxy. Such instructions shall
be delivered to the Trustee by the Administrator, or such person designated by
the Administrator. With respect to securities issued by the Employer, voting
instructions shall be delivered directly to the Trustee by the individuals
entitled to make investment decisions' with respect to such securities and the
Trustee shall maintain the
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confidentiality, and shall not disclose the contents, of any such vote except
as otherwise required by law or a court of competent jurisdiction. The Trustee
and the Administrator may establish a procedure whereby any votes relating to
securities issued by the Employer are delivered by the Administrator to the
Trustee provided that the contents of such votes are not made known to the
Administrator. If, however, the Trustee has not received instructions with
respect to how to vote given securities at least five full business days (or
such shorter period as the Trustee, in its discretion, may determine) prior to
the meeting at which such securities are to be voted, the Trustee shall not
vote such securities unless otherwise required by law.
13.20 Applicability to Loan Trustee. Where appropriate, the foregoing
provisions of this Article shall apply to the Loan Trustee on the same basis as
if the Loan Trustee were the Trustee.
13.21 Applicability to Other Trust. The provisions of this Article XIII
shall apply with respect to a separate trust which is created hereby but shall
not apply to a separate trust created pursuant to a separate trust agreement.
ARTICLE XIV. ADMINISTRATION
14.01 Appointment of Administrator. From time to time, the Employer may,
by identifying such person(s) in writing to both the Trustee and the
Participants, appoint one or more persons as Administrator (hereinafter
referred to in the singular). Such Administrator shall have all power and
authority necessary to carry out the terms of the Plan. A person appointed as
Administrator may also serve in any other fiduciary capacity, including that of
Trustee, with respect to the Plan. The Administrator may resign upon 15 days'
advance
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written notice to the Employer, and the Employer may at any time revoke the
appointment of the Administrator with or without cause. The Employer shall
exercise the power and fulfill the duties of the Administrator if at any time
an Administrator has not been properly appointed in accordance with this
Section or the position is otherwise vacant.
14.02 Named Fiduciaries. The "Named Fiduciaries" within the meaning of
the Act shall be the Administrator, each Trustee and each Participant and
Beneficiary with voting rights and/or investment rights.
14.03 Allocation of Responsibilities. Responsibilities under the Plan
shall be allocated among the Trustee, the Administrator and the Employer as
follows:
(a) Trustee: The Trustee shall have exclusive responsibility to hold,
manage and invest, pursuant to instructions communicated to it in accordance
with Section 13.02 above, the funds received by it subject to the powers
granted to it under Article XIII hereof. Notwithstanding the preceding
sentence, to the extent that loans are made to Participants in accordance with
Article XII hereof, the Trustee shall not be responsible for management of the
portion of Trust assets subject to such loans and the Loan Trustee shall be
responsible for administering such Trust assets in accordance with provisions
of Article XII.
(b) The Administrator: The Administrator shall have the responsibility
and authority to control the operation and administration of the Plan in
accordance with its terms including, without limiting the generality of the
foregoing, (i) any investment decisions assigned to it under the Adoption
Agreement or the Plan or transmission to the Trustee of any Participant
investment decision under Section 13.02; (ii) interpretation of the Plan,
conclusive determination of all questions of eligibility, status, benefits and
rights under the Plan and
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certification to the Trustee of all benefit payments under the Plan; (iii)
hiring of persons to provide necessary services to the Plan not provided by
Employees; (iv) preparation and filing of all statements, returns and reports
required to be filed by the Plan with any agency of government; (v) compliance
with all disclosure requirements of all state or federal law; (vi) maintenance
and retention of all Plan records as required by law, except those required to
be maintained by the Trustee; and (vii) all functions otherwise assigned to it
under the terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of the
Plan, as adopted or amended, the designation of the Administrator and each
Trustee (and, if appropriate, the Loan Trustee) as provided in the Plan, the
delivery to the Administrator and the Trustee of employee information necessary
for operation of the Plan (including, without limitation, dates of birth, hire,
and death; compensation amounts; and dates of death of beneficiaries), the
timely making of the Employer Contributions pursuant to Articles IV and VII,
and the exercise of all functions provided in or necessary to the Plan except
those assigned in the Plan to other persons.
(d) This Section is intended to allocate individual responsibility for
the prudent execution of the functions assigned to each of the Trustees, the
Loan Trustee, the Administrator and the Employer and none of such
responsibilities or any other responsibility shall be shared among them unless
specifically provided in the Plan. Whenever one such person is required by the
Plan to follow the directions of another, the two shall not be deemed to share
responsibility, but the person who gives the direction shall be responsible for
giving it
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and the responsibility of the person receiving the direction shall be to follow
it insofar as it is on its face proper under applicable law.
14.04 More Than One Administrator. If more than one individual is
appointed as Administrator, such individuals shall either exercise the duties
of the Administrator in concert, acting by a majority vote or allocate such
duties among themselves by written agreement delivered to the Employer and the
Trustee. In such a case, the Trustee may rely upon the instruction of any one
of the individuals appointed as Administrator regardless of the allocation of
duties among them.
14.05 No Compensation. The Administrator shall not be entitled to
receive any compensation from the funds held under the Plan for its services in
that capacity unless so determined by the Employer or required by law.
14.06 Record of Acts. The Administrator shall keep a record of all its
proceedings, acts and decisions, and all such records and all instruments
pertaining to Plan administration shall be subject to inspection by the
Employer at any time. The Employer shall supply, and the Administrator may rely
on the accuracy of, all Employee data and other information needed to
administer the Plan.
14.07 Bond. The Administrator shall be required to give bond for the
faithful performance of its duties to the extent, if any, required by the Act,
the expense to be borne by the Employer.
14.08 Agent for Service of Legal Process. The Administrator shall be
agent for service of legal process on the Plan.
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14.09 Rules. The Administrator may adopt or amend and shall publish to
the Employees such rules and forms for the administration of the Plan, and may
employ or retain such attorneys, accountants, physicians, investment advisors,
consultants and other persons to assist in the administration of the Plan as it
deems necessary or advisable.
14.10 Delegation. To the extent permitted by applicable law, the
Administrator may delegate all or part of its responsibilities hereunder and at
any time revoke such delegation, by written statement communicated to the
delegate and the Employer. The Trustee may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review the
performance of all such delegates.
14.11 Claims Procedure. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established by
the Administrator and published to the Participants and Beneficiaries.
(a) Manner of Making Claim. A claim for benefits by a Participant or
Beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or by
course of conduct waives such requirements.
(b) Notice of Reason for Denial. If an effective claim is wholly or
partially denied, the Administrator shall furnish such Participant or
Beneficiary with written notice of the denial within 60 days after the original
claim was filed. This notice of denial shall set forth in a manner calculated
to be understood by the claimant (i) the reason or reasons for
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denial, (ii) specific reference to pertinent plan provisions on which the
denial is based, (iii) a description of any additional information needed to
perfect the claim and an explanation of why such information is necessary, and
(iv) an explanation of the Plan's claims procedure.
(c) The Participant or Beneficiary shall have 60 days from receipt of
the denial notice in which to make written application for review by the
Administrator. The Participant or Beneficiary may request that the review be in
the nature of a hearing. The Participant or Beneficiary shall have the rights
(i) to have representation, (ii) to review pertinent documents, and (iii) to
submit comments in writing.
(d) The Administrator shall issue a decision on such review within 60
days after receipt of an application for review, except that such period may be
extended for a period of time not to exceed an additional 60 days if the
Administrator determines that special circumstances (such as the need to hold a
hearing) requires such extension. The decision on review shall be in writing
and shall include specific reasons for the decision, written in a manner
calculated to be understood by the claimant, and specific references to the
pertinent Plan provisions on which the decision is based.
(e) The Employer shall indemnify and hold harmless the Administrator,
if the Administrator is not the Employer, and any employees of the Employer who
performs the function of the Administrator for the Employer, if the
Administrator is the Employer, (collectively, an "Indemnitee"), from any and
all claims, loss, damages, expenses (including reasonable counsel fees approved
by the Employer) and liability (including any reasonable amounts paid in
settlement with the Employer's approval), arising from any act or omission of
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such Indemnitee, except when the same is judicially determined to be due to the
willful misconduct or gross negligence of such Indemnitee.
ARTICLE XV. FEES AND EXPENSES
All reasonable fees and expenses of the Administrator or Trustee incurred
in the performance of their duties hereunder or under the Trust may be paid by
the Employer; and to the extent not so paid by the Employer, said fees and
expenses shall be deemed to be an expense of the Trust and shall be charged
against the assets of the Trust, including any forfeitures that have not been
reallocated or applied to reduce Employer Contributions. In addition, if the
Plan permits Participant-directed investment of Accounts, expenses that are
allocable to the Accounts of specific Participants shall be charged against the
respective Participants' Accounts in accordance with procedures adopted by the
Administrator from time to time.
ARTICLE XVI. BENEFIT RECIPIENT INCOMPETENT
OR DIFFICULT TO ASCERTAIN OR LOCATE
16.01 Incompetency. If any portion of the Trust Fund becomes
distributable to a minor or to a Participant or Beneficiary who, as determined
in the sole discretion of the Administrator, is physically or mentally
incapable of handling his or her financial affairs, the Administrator may
direct the Trustee to make such distribution either to the legal representative
or custodian of the incompetent or to apply such distribution directly for the
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incompetent's support and maintenance. Payments which are made in good faith
shall completely discharge the Employer, Administrator and Trustee from
liability therefor.
16.02 Difficulty to Ascertain or Locate. If it is impossible or
difficult to ascertain or locate the person who is entitled to receive any
benefit under the Plan, the Administrator in its discretion may direct that
such benefit (a) be retained in the Trust, (b)be paid to a court pending
judicial determination of the right thereto, or (c) be forfeited and
reallocated pursuant to the provisions of Section 8.02(a)(i) or (ii) above, as
the case may be, provided that as a result the Employer shall incur an
obligation to restore the individual's Account balance or otherwise pay the
individual his or her benefit if the individual is subsequently ascertained or
located.
ARTICLE XVII. DESIGNATION OF BENEFICIARY
Each Participant and Beneficiary may submit a properly executed Designation
of Beneficiary to the person designated under this Article XVII to keep such
records. In order to be effective, such designation must have been properly
executed and submitted to the appropriate person before the death of the
Participant or Beneficiary, as the case may be; and, for a Participant who is
survived by his or her Spouse, unless the Participant leaves 100% of his or her
benefit to such Spouse, must be accompanied, or preceded, by the consent of
such Spouse. Such consent of the Spouse must (a) be in writing; (b)acknowledge
that the effect of such consent is that the Spouse may receive no benefits
under the Plan; (y) be witnessed by a Plan representative or a notary public;
and (c) be either (i) a limited consent to the payment of death benefits to a
specific person or persons or (ii) expressly permit the Participant to
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designate another person or other persons without obtaining further consent of
the Spouse. The last effective Designation accepted by the appropriate person
shall be controlling, and whether or not fully dispositive of the Participant's
Account, thereupon shall revoke all Designations previously submitted by the
Participant or Beneficiary, as the case may be. If a Participant's
Beneficiary(ies) predeceases the Participant, the remaining living
Beneficiary(ies) shall receive their proportionate share of the Participant's
Account as if such deceased Beneficiary(ies) had never been designated. Similar
rules shall apply with respect to contingent Beneficiaries. Each such executed
Designation is hereby specifically incorporated herein by reference and shall
be construed and enforced in accordance with the laws of the state in which the
Trustee has its principal place of business. The Administrator shall be the
person responsible for accepting and safekeeping Designation of Beneficiary
Forms unless the Trustee agrees in writing to accept and safekeep such forms.
ARTICLE XVIII. SPENDTHRIFT PROVISION AND DISTRIBUTIONS
PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS
18.01 General Spendthrift Rule. No interest of any Participant or
Beneficiary shall be assigned, anticipated or alienated in any manner nor shall
it be subject to attachment, to bankruptcy proceedings or to any other legal
process or to the interference or control of creditors or others, except (a) to
the extent that Participants may secure loans from the Trust with their
Accounts pursuant to Article XII hereof and (b) pursuant to Section 18.02
hereof.
18.02 Account Division and Distribution Pursuant to Qualified Domestic
Relations Orders. A Participant's vested Account may be assigned pursuant to a
qualified domestic
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relations order as defined in Code Section 414(p). If, and to the extent that,
any portion of a Participant's vested Account is payable to an alternate payee
pursuant to a qualified domestic relations order within the meaning of Sections
401(a)(13)(B) and 414(p) of the Code, the provisions of said order shall govern
the payment thereof. An order shall not fail to constitute a qualified domestic
relations order within the meaning of Sections 401(a)(13)(B) and 414(p) of the
Code if the order provides for a payment to be made to an alternate payee prior
to the time the Participant would be entitled to receive a benefit payment
hereunder. The Administrator shall be responsible for determining whether an
order constitutes a qualified domestic relations order.
ARTICLE XIX. NECESSITY OF QUALIFICATION
This Plan is established with the intent that it shall qualify under Code
Section 401(a) as that Section exists at the time the Plan is established. If
the Plan as adopted by the Employer fails to attain such qualification, the
Plan will no longer participate in the relevant sponsor's prototype 401(k) plan
and will be considered an individually designed plan. If the Plan as adopted by
the Employer fails to attain or retain such qualification, the Employer shall
promptly either amend the Plan under Code Section 401(b) so that it does
qualify, or direct the Trustee to terminate the Trust, and distribute all the
assets of the Trust equitably among the contributors thereto in proportion to
their contributions, and the Plan and Trust shall be considered to be rescinded
and of no force and effect.
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ARTICLE XX. AMENDMENT AND TERMINATION
20.01 Amendment or Termination by the Employer. The Employer by action
of the Board of Directors, other governing board, general partner or sole
proprietor, as the case may be, may at any time, and from time to time amend
this Prototype Plan and the Adoption Agreement (including a change in any
election it has made in the Adoption Agreement), or suspend or terminate this
Plan by giving written notice to the Trustee, but the Trust may not thereby be
diverted from the exclusive benefit of the Participants, their Beneficiaries,
survivors or estates, or the administrative expenses of the Plan, nor revert to
the Employer, nor may an allocation or contribution theretofore made be changed
thereby, nor may any amendment directly or indirectly deprive a Participant of
such Participant's nonforfeitable rights to benefits accrued to the date of the
amendment.
No amendment to the Plan shall be effective to the extent that it would
have the effect of decreasing a Participant's Account balance or eliminating an
optional form of distribution. Notwithstanding the preceding sentence, a
Participant's Account balance may be reduced to the extent permitted under Code
Section 412(c)(8). Furthermore, if the vesting schedule of the Plan is amended,
in the case of an Employee who is a Participant as of the later of the date
such amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such Employee's right to his
Employer-derived Account balance will not be less than his percentage computed
under the Plan without regard to such amendment.
The Employer may (a) change the choice of options in the Adoption
Agreement, (b) add overriding language in the Adoption Agreement when such
language is necessary to satisfy
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the requirements of Code Section 415 or to avoid duplication of minimum
benefits or accruals under Code Section 416 because of the required
aggregation of multiple plans, or (c) adopt a model amendment published by the
Internal Revenue Service which specifically provides that the adoption of such
a model amendment will not cause the Plan to be treated as an individually
designed plan. Any other amendment by the Employer will constitute a
substitution by the Employer of an individually designed plan for the sponsor's
prototype plan. After such an amendment, the Plan shall no longer participate
in the sponsor's prototype plan and the general amendment procedure of the
Internal Revenue Service governing individually designed plans will be
applicable.
If an amendment changing the vesting schedule is executed (including
execution of this Adoption Agreement as an amendment to an existing plan),
Participants with three or more Vesting Years (five or more Vesting Years for
Participants who have not been credited with an Hour of Service in a Plan Year
beginning after December 31, 1988) before the expiration of the election period
described in the next sentence shall have the right to elect the vesting
schedule in effect on the day before the election period. The election period
shall commence on the date the amendment is adopted and end on the latest of
(x) 60 days after the amendment is adopted, (y) 60 days after the Effective
Date, or (z) 60 days after the Participant is issued written notice of the
amendment by the Administrator. Failure to so elect shall be treated as a
rejection and such election or rejection shall be final.
Nothing contained herein shall constitute an agreement or representation by
any Sponsor or the Distributor that it will continue to maintain its
sponsorship of the Plan indefinitely.
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20.02 Delegation. The Employer hereby delegates to the Sponsor the
authority to amend so much of the Adoption Agreement and this Prototype 401(k)
Plan as is in prototype form and, to the extent to which the Employer could
effect such amendment, the Employer shall be deemed to have consented to any
amendment so made. When an election within the prototype form has been made by
the Employer, it shall be deemed to continue after amendment of the prototype
form unless and until the Employer expressly further amends the election,
notwithstanding that the provision for the election in the amended prototype
form is in a different form or place; provided, however, that if the amended
form inadvertently fails to provide means to duplicate exactly the earlier
election, such earlier election shall continue until such further amendment.
The immediately preceding sentence is subject to the qualification that each
Employer hereby delegates to the Sponsor, in the event of such an amendment of
the prototype form, authority to determine conclusively that such a
continuation of an earlier election by the Employer is not advisable and to
make the election for the Employer in the amended prototype form which in the
judgment of the Sponsor most nearly corresponds with the election made by the
Employer before the amendment of the prototype form, provided the following
procedure is followed: the election for the Employer may be made with respect
to any specified Employers as to whom it may be made applicable singly, or such
election may be made with respect to all Employers as to whom it may be made
applicable as a group; and the election shall be made as of an effective date
which has been specified in a notice mailed or delivered, at the last
address(es) of the Employer(s) on the records of the Distributor, to the
Employer(s) at least 20 days before the end of the remedial amendment period.
Such notice may be mailed to Employers to whom it cannot be applicable by
reason of a previous election
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made by the Employer or otherwise, but it shall be effective only as to those
Employers who have received the notice and have not themselves made a new
election with respect to that item since the amendment of the prototype form
and previous to the effective date of such election by the Sponsor. In the case
of a mass submitter plan, the Sponsor delegates its authority to make
elections, or to make amendments, to the mass submitter who shall make such
elections or amendments on behalf of the Sponsor and the Sponsor shall be
deemed to have consented to any such election or amendment so made. The
foregoing delegations of authority to make elections, or to make amendments,
shall not impose any duty on the Sponsor or, if applicable, the mass submitter
to make a given election or amendment and shall not affect the interpretation
of the Plan if any so delegated authority is not used.
20.03 Distribution of Accounts Upon Termination. Upon termination or
partial termination of the Plan or complete discontinuance of Employer
Contributions under it, the rights of all Participants (or, in the case of a
partial termination, the Participants affected thereby) to amounts theretofore
credited to their Accounts under the Plan shall be fully vested and
nonforfeitable. Upon any such termination or discontinuance, the Administrator
shall determine whether to pay the interests of Participants, and Beneficiaries
immediately, to retain such interest in the Trust and pay them in the future
according to Articles IX and X (or Article XXIV, if applicable) or to use what
other methods the Administrator deems advisable in order to furnish whatever
benefits the Trust will provide; provided any such distributions pursuant to
this Section shall comply with the requirements of Articles IX or X (or Article
XXIV, if applicable) hereof.
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ARTICLE XXI. TRANSFERS
Nothing contained herein shall prevent the merger or consolidation of the
Plan with, or transfer of assets or liabilities of the Plan to, another plan
meeting the requirements of Code Section 401(a) or the transfer to the Plan of
assets or liabilities of another such plan so qualified under the Code. Any
such merger, consolidation or transfer shall be accompanied by the transfer of
such existing records and information as may be necessary to properly allocate
such assets among Participants, including any tax or other information
necessary for the Participants or persons administering the plan which is
receiving the assets. The terms of such merger, consolidation or transfer must
be such that if this Plan is then terminated, the requirements of Section 20.01
hereof would be satisfied and each Participant would receive a benefit
immediately after the merger, consolidation or transfer equal to or greater
than the benefit he or she would have received if the Plan had terminated
immediately before the merger, consolidation or transfer. If this Plan is a
transferee plan with respect to all or a portion of a Participant's Account,
the optional forms of distribution described in Article X shall include any
optional form of distribution which the Participant could have elected under
the transferor plan and which would otherwise comply with the provisions of
this Plan.
ARTICLE XXII. OWNER-EMPLOYEE PROVISIONS
22.01 Purpose of Section. This Section is intended to insure that the
Plan complies with Code Section 401(d). Any ambiguity herein will be construed
to that end, and this Article will override any other provision of the Plan
with which it may be inconsistent.
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22.02 Control. For purposes of this Article, "Control" means the
ownership directly or indirectly of the entire interest in an unincorporated
trade or business or more than 50% of either the capital interest or the profits
interest in a partnership. For the purposes of applying the preceding sentence,
an Owner-Employee, or two or more Owner-Employees shall be treated as owning any
interest in a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee, or such two or more Owner-Employees, are
considered to Control.
22.03 Limitations. No benefits shall be provided to an Owner-Employee
under this Plan unless:
(a) if an Owner-Employee or group of Owner-Employees Controls the
trade or business covered by this Plan and also Control as an Owner-Employee or
Owner-Employees one or more other trades or businesses, this Plan and the plans
established for such other trades or businesses, when taken together, form a
single plan which satisfies the requirements of Code Sections 401(a) and (d)
with respect to the employees of all the controlled trades or businesses;
(b) if an Owner-Employee or group of Owner-Employees Controls another
trade or business but does not Control the trade or business covered by this
Plan, the employees of such other trades or businesses are included in a plan
which satisfies the requirements of Sections 401(a) and (d) of the Code and
which provides contributions and benefits for such employees which are not less
favorable than those provided for Owner-Employees under this Plan; and
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(c) if an Owner-Employee is covered under the qualified retirement
plans of two or more trades or businesses which he or she does not Control and
the Owner-Employee Controls a trade or business, contributions or benefits for
the employees under the plan of the trade or business which the Owner-Employee
Controls are not less favorable than those provided for the Owner-Employee in
the most favorable qualified retirement plan of the trade(s) or business(es)
which the Owner-Employee does not Control.
ARTICLE XXIII. TOP-HEAVY PROVISIONS
23.01 Purpose of Section. This Article is intended to insure that the
Plan complies with Code Section 416. If the Plan is or becomes Top-Heavy in any
Plan Year, the provisions of this Section will supersede any conflicting
provision in the Plan.
23.02 Definitions. The terms used in this Section shall have the
following meanings:
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was (i) an officer of the Employer having an annual compensation greater than
50% of the amount in effect under Code Section 415(b)(1)(A) for the Plan Year
(subject to the limitation that no more than the lesser of (A) 50 Employees or
the greater of 3 Employees or 10% of the Employees shall be deemed to be
officers), (ii) an owner (or considered an owner under Code Section 318) of 1
of the 10 largest interests in the Employer if both such individual was an
owner of more than a .5% interest in the Employer (aggregated with the Employer
for this purpose are all members of (A) a controlled group of corporations (as
defined in Code Section 414(b) as modified by Code Section 415(h)), (B)
commonly controlled trades or businesses
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(whether or not incorporated) (as defined in Code Section 414(c) as modified by
Code Section 415(h)), or (C) affiliated service groups (as defined in Code
Section 414(m)) of which the Employer is a part) and such individual's
compensation exceeds the dollar limitation under Code Section 415(c)(1)(A),
(iii) a 5% owner of the Employer, or (iv) a 1-percent owner of the Employer who
has an annual compensation of more than $150,000. The determination period is
the Plan Year containing the Determination Date and the 4 preceding Plan Years.
The determination of who is a Key Employee will be made in accordance with Code
Section 416(i)(1) and the regulations thereunder.
(b) Top-Heavy Plan. This Plan is Top-Heavy if any of the following
conditions exist:
(i) If the Top-Heavy Ratio for this Plan exceeds 60% and this
Plan is not part of any Required Aggregation Group or Permissive Aggregation
Group of plans.
(ii) If this Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy Ratio
for the Required Aggregation Group of plans exceeds 60%.
(iii) If this Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
(c) Top-Heavy Ratio.
(i) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan within the meaning of
Code Section 408(k)) and the Employer has not maintained any defined benefit
plan which during the five-year
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period ending on the Determination Date(s) has or has had accrued benefits,
Top-Heavy Ratio for this Plan alone or for the Required Aggregation Group or
Permissive Aggregation Group, as appropriate, is a fraction, the numerator of
which is the sum of the account balances under all of the plans as of the
Determination Date(s) (including any part of any account balance distributed in
the five-year period ending on the Determination Date(s)) of all Key Employees
who have received compensation from the Employer (other than benefits under a
qualified retirement plan) at any time during the five-year period ending on
the Determination Date(s), and the denominator of which is the sum of all
account balances as of the Determination Date(s) (including any part of any
account balance distributed in the five-year period ending on the Determination
Date(s)), of all Participants who have received compensation from the Employer
(other than benefits under a qualified retirement plan) at any time during the
five-year period ending on the Determination Date(s). Both the numerator and
denominator of the fraction shall be computed in accordance with Code Section
416 and the Treasury Regulations promulgated thereunder. In addition, both the
numerator and denominator of the Top-Heavy Ratio shall be increased to reflect
any contribution which is not actually made as of the Determination Date(s),
but which is required to be taken into account on that date under Code Section
416 and the Treasury Regulations promulgated thereunder.
(ii) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan within the meaning of
Code Section 408(k)) and the Employer maintains or has maintained one or more
defined benefit plans which during the five-year period ending on the
Determination Date(s) has or has had accrued benefits, the Top-Heavy Ratio for
any Required Aggregation Group or Permissive Aggregation Group, as
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appropriate, is a fraction, the numerator of which is the sum of (A) account
balances under the defined contribution plans as of the Determination Date(s)
(including any part of any account balance distributed in the five-year period
ending on the Determination Date(s)) of all Key Employees who have received
compensation from the Employer (other than benefits under a qualified
retirement plan) at any time during the five-year period ending on the
Determination Date(s) and (B) the present value of accrued benefits under the
defined benefit plans for all Key Employees, who have received compensation
from the Employer (other than benefits under a qualified retirement plan) at any
time during the five-year period ending on the Determination Date(s) and the
denominator of which is the sum of (A) the account balances under the defined
contribution plans as of the Determination Date(s) (including any part of any
account balance distributed in the five-year period ending on the Determination
Date(s)) of all participants who have received compensation from the Employer
(other than benefits under this Plan) at any time during the five-year period
ending on the Determination Date(s) and (B) the present value of accrued
benefits under the benefit plans for all participants who have received
compensation from the Employer (other than benefits under this Plan) at any
time during the five-year period ending on the Determination Date(s). Both the
numerator and denominator of the fraction shall be computed in accordance with
Code Section 416 and Treasury Regulations promulgated thereunder. In addition,
both the numerator and denominator of the Top-Heavy Ratio shall be increased
for aggregate distribution(s) of an account balance or an accrued benefit made
during the five-year period ending on the Determination Date(s) and any
contribution to a defined contribution plan not actually made as
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of the Determination Date(s), but which is required to be taken into account on
that date under Code Section 416 and the Treasury Regulations promulgated
thereunder.
(iii) For purposes of (i) and (ii) above, the value of account
balances and the present value of accrued benefits will be determined as of the
most recent Valuation Date that falls within, or ends with, the 12-month period
ending on the Determination Date, except as provided in Code Section 416 and
the Treasury Regulations promulgated thereunder for the first and second plan
years of a defined benefit plan. The account balances and accrued benefits of a
Participant who has not been credited with at least one Hour of Service at any
time during the five-year period ending on the Determination Date, will be
disregarded. The calculation of the Top-Heavy Ratio, and the extent to which
distributions, rollovers, and transfers are taken into account will be made in
accordance with Code Section 416 and the Treasury Regulations promulgated
thereunder. Deductible employee contributions under any qualified plan
maintained by the Employer will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year.
For Plan Years commencing after December 31, 1986 for the purpose of
determining the Top-Heavy Ratio, if any target benefit or defined benefit plan
is included in the Required Aggregation Group, the accrued benefit of an
Employee other than a Key Employee shall be determined under the method that
uniformly applies for accrual purposes under all qualified retirement plans
maintained by the Employer, or if there is no such method, as if such benefit
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accrued not more rapidly than the slowest accrual rate permitted under the
fractional accrual rate of Code Section 411(b)(1)(C).
(d) Permissive Aggregation Group. The Required Aggregation Group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(e) Required Aggregation Group. (i) Each qualified plan of the
Employer in which at least one Key Employee participates or participated at any
time during the determination period (regardless of whether the plan has
terminated), and (ii) any other qualified plan of the Employer which enables a
plan described in (i) to meet the requirements of Code Sections 401(a)(4) or
410.
(f) Determination Date. For any Plan Year subsequent to the first Plan
Year, the Determination Date shall be the last day of the preceding Plan Year.
For the first Plan Year of the Plan, the Determination Date shall be the last
day of that year.
(g) Valuation Date. Shall be the last day of the Plan Year.
(h) Present Value. Present Value shall be based only on the interest
rate and the mortality table specified by the Employer in the Adoption
Agreement.
23.03 Minimum Allocation.
(a) In any Plan Year in which this Plan is Top-Heavy, except as
otherwise provided in subsections (c) and (d) below, the Employer Contributions
and forfeitures allocated, or during a Plan Year which begins after December
31, 1988, Employer Profit Sharing Contributions and forfeitures allocated to
the Participant's Employer Profit Sharing
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Contribution Account, on behalf of any Participant who is not a Key Employee
shall not be less than the lesser of 3% of such Participant's Compensation or,
in the case where the Employer has no defined benefit plan which designates this
Plan to satisfy Code Section 401, the largest percentage of Employer
Contributions and forfeitures stated as a percentage of a Key Employee's
Compensation, allocated on behalf of any Key Employee for that Plan Year. The
minimum allocation is determined without regard to any Social Security
contribution by the Employer. Salary Reduction Contributions, Employer Matching
Contributions and Qualified Matching Contributions may not be taken into account
to satisfy this minimum allocation. This minimum allocation shall be made even
though, under other provisions of this Plan, the Participant would not otherwise
be entitled to receive an allocation, or would have received a lesser allocation
for the year because (i) the Participant failed to complete the minimum number
of Hours of Service specified in the Adoption Agreement for receiving an
allocation, (ii) the Participant's Compensation was less than a stated amount,
or (iii) the Participant made insufficient mandatory contributions to receive an
Employer Matching Contribution.
(b) For purposes of computing the minimum allocation, "Compensation"
shall have the same meaning as in Section 5.05(b) hereof.
(c) The provision in subsection (a) above shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
(d) The provision in subsection (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan or
plans of the Employer, and the
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Employer has provided in the Adoption Agreement that the minimum allocation or
benefit requirement applicable to Top-Heavy Plans will be met in such other
plan or plans.
23.04 Nonforfeitability of Minimum Allocation. The minimum allocation
required (to the extent required to be nonforfeitable under Code Section
416(b)) may not be forfeited under Code Section 411(a)(3)(B) or 411(a)(3)(D).
23.05 Limitation on Compensation. For Plan Years beginning after January
1, 1994, only the first $150,000 (or such other amount as may be prescribed by
the Secretary of the Treasury or his or her delegate) of a Participant's
Compensation for the Plan Year shall be taken into account for purposes of
allocating Employer Contributions under this Article XXIII.
23.06 Minimum Vesting Schedule. Unless the Employer has specified a more
rapid vesting schedule in the Adoption Agreement, for any Plan Year in which
this Plan is Top-Heavy, the following minimum vesting schedule shall apply:
<TABLE>
<CAPTION>
Nonforfeitable Percentage of
Employer Profit Sharing and
Vesting Years Matching Contribution Accounts
------------- ------------------------------
<S> <C>
1 0%
2 20
3 40
4 60
5 80
6 or more 100
</TABLE>
The minimum vesting schedule applies to all benefits within the meaning of Code
Section 411(a)(7) attributable to Employer Contributions and forfeitures,
including benefits accrued before the effective date of Code Section 416 and
benefits accrued before the Plan became Top-Heavy. Further, no reduction in a
Participant's nonforfeitable percentage may occur in
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the event the Plan's status as Top-Heavy changes for any Plan Year. If
conversion of the Plan into a Top-Heavy Plan has resulted in a change of the
Plan's vesting schedule to the minimum vesting schedule discussed above, the
change shall be treated as an amendment to the Plan and the election referred
to in Section 20.01 hereof shall apply.
This Section does not apply to the Employer Profit Sharing Contribution
Account and Employer Matching Contribution Account balances of any Participant
who does not have an Hour of Service after the Plan has initially become
Top-Heavy and such Participant's vested Employer Profit Sharing Contribution
Account and Employer Matching Contribution Account balance will be determined
without regard to this Section.
23.07 Effect on Code Section 415 Limitations. Notwithstanding anything
to the contrary in Article V above, the following provisions apply if the Plan
is Top-Heavy:
(a) In any Plan Year in which the Top-Heavy Ratio exceeds 90% (and the
Plan therefore becomes super Top-Heavy) the denominators of the Defined Benefit
Fraction (as defined in Section 5.05(c) above) and the Defined Contribution
Fraction (as defined in Section 5.05(d) above) shall be computed using 100% of
the dollar limitation stated therein instead of 125%.
(b) In any Plan Year in which the Top-Heavy Ratio exceeds 60%, but is
less than 90%, the denominators of the Defined Benefit Fraction (as defined in
Section 5.05(c) above) and the Defined Contribution Fraction (as defined in
Section 5.05(e) above) shall be computed using 100% of the dollar limitation
described therein instead of 125%, unless the Employer has specified in the
Adoption Agreement that the minimum allocation provisions of Section 23.03
above shall be computed using 4% of a Participant's Compensation, in which
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case the dollar limitations of the Defined Benefit Fraction (as defined in
Section 5.05(c) above) and the Defined Contribution Fraction (as defined in
Section 5.05(e) above) shall continue to be computed using 125% of the dollar
limitations.
23.08 Termination of Top-Heavy Status. If the Plan ceases to be
Top-Heavy for any Plan Year and if the Employer has not specified otherwise in
the Adoption Agreement, the minimum vesting schedule described in Section 23.06
shall continue to apply. If the Employer has specified in the Adoption
Agreement that, upon conversion of the Plan to non-Top-Heavy status,
Participants' vested benefits are to be determined according to a schedule
other than the minimum vesting schedule described in Section 23.06 hereof, such
change in vesting schedules shall be treated as an amendment, and the election
referred to in Section 20.01 hereof shall apply.
ARTICLE XXIV. SPECIAL DISTRIBUTION RULES
24.01 Special Distribution Rules for Certain Participants. If (a) it is
determined that this Plan is a direct or indirect transferee (where such
transfer occurred after December 31, 1984) of a defined benefit plan, money
purchase pension plan (including a target benefit plan), stock bonus or profit
sharing plan which would otherwise provide a life annuity form of payment with
respect to a Participant (including a plan which was amended into this Plan),
(b) the Plan is amended so as to allow a Participant to elect to receive his or
her benefits in the form of a life annuity and a Participant elects to receive
his or her benefits in such form, (c) the Plan is amended to provide that
absent a Qualified Election of a Participant's surviving Spouse, someone other
than the Participant's surviving Spouse becomes entitled to the
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Participant's vested Account balance, or (d) if someone other than the
Participant's surviving Spouse is the beneficiary of any insurance purchased
with funds from the Participant's Account, then the provisions of Sections
24.03 to 24.05 below shall apply in lieu of Article IX above and Sections 10.01
and 10.02 above. The Administrator shall specify in writing to the Trustee the
Participants' Accounts (or frozen amounts in such Accounts) to which the
provisions of Section 24.03 to 24.05 shall apply.
For the purposes of determining whether the provisions of this Article
apply, the Trustee shall be entitled to rely conclusively on written
instructions, if any, received by the Trustee from the Administrator concurrent
with the transfer. Furthermore, where the transfer is, or was, not accompanied
by written instructions specifying conditions under which specific provisions
of this Article would apply, the Trustee shall be entitled to conclusively
presume that this Article does not apply.
24.02 Definitions. For the purpose of this Section, the following terms
shall have the specified meanings:
(a) "Election Period" shall mean the period which begins on the first
day of the Plan Year in which the Participant attains age 35 and which ends on
the date of the Participant's death. If a Participant separates from Service
prior to the first day of the Plan Year in which he or she attains age 35, the
Election Period with respect to his or her Vested Account Balance (as of his or
her date of separation) shall begin on his or her date of separation.
(b) "Qualified Election" shall mean a valid waiver of a Qualified
Joint and Survivor Annuity or Qualified Preretirement Survivor Annuity, as the
case may be. To be
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valid, the waiver must be in writing and Participant's Spouse must consent to
it in writing. The Spouse's consent to the waiver (i) must be witnessed by a
Plan representative or notary public and (ii) must be (A) a general consent to
the provision of a form (or forms) of distribution to any alternative person
(or alternative persons); (B)a limited consent to the provision of a specific
form (or specific forms) of distribution to a specific alternate person (or
specific alternate persons); or (iii) a limited consent which is specific with
respect to form or alternative payee. Notwithstanding the foregoing consent
requirement, if the Participant establishes to the satisfaction of a Plan
representative that such written consent may not be obtained because there is
no Spouse or the Spouse cannot be located, a waiver will nonetheless be deemed
a Qualified Election. Any consent necessary for a Qualified Election will be
valid only with respect to the Spouse who signs the consent, or in the event of
a deemed Qualified Election, the Spouse whose consent could not be obtained or
who could not be located. Additionally, a revocation of a prior waiver may be
made by a Participant without the consent of the Spouse at any time before the
commencement of distributions or benefits. The number of revocations shall be
unlimited. Each such revocation shall once again make the Qualified Joint and
Survivor Annuity or Qualified Preretirement Survivor Annuity applicable, as the
case may be. No consent obtained pursuant to this Section shall be valid
unless the Participant has received the relevant notice as provided in Sections
24.09 and 24.10.
(c) "Qualified Joint and Survivor Annuity" shall mean, in the case of
a married Participant, an annuity which can be purchased with the
Participant's Vested Account Balance for the life of the Participant with a
survivor annuity for the life of the Spouse equal to 50% of the amount of the
annuity which is payable during the joint lives of the Participant and
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the Spouse. In the case of an unmarried Participant, Qualified Joint and
Survivor Annuity shall mean an annuity which can be purchased with a
Participant's Vested Account Balance for the life of the Participant.
(d) "Special Qualified Election" shall mean a valid waiver of a
Qualified Preretirement Survivor Annuity for the period beginning on the date
of such election and ending on the first day of the Plan Year in which the
Participant attains age 35. To be valid, the waiver must be (i) in writing,
(ii) made prior to the first day of the Plan Year in which the Participant
attains age 35, and (iii) preceded by a written explanation to the Participant
of the Qualified Preretirement Survivor Annuity in such terms as are comparable
to the explanation required by Section 24.09 and 24.10. Any election made
pursuant to this Section shall be void as of the first day of the Plan Year in
which the Participant attains age 35 and Qualified Preretirement Survivor
Annuity coverage shall be automatically reinstated as of such date. Any future
election to waive the Qualified Preretirement Survivor Annuity must be a
Qualified Election.
(e) "Vested Account Balance" shall mean the Participant's vested
portion of his or her Account consisting of the sum of the balances of
Participant's Nondeductible Voluntary Contributions Account, Deductible
Voluntary Contribution Account, Rollover Account, Salary Reduction
Contributions Account, Deferred Cash Contribution Account and Nonelective
Contribution Account and the vested portions of a Participant's Employer Profit
Sharing Account and Employer Matching Account, reduced by any loans outstanding
on the Annuity Starting Date which are secured by the Participant's Account
balance.
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24.03 Distributions upon Death.
(a) Qualified Preretirement Survivor Annuity.
(i) Unless either paragraph (ii) below applies or the
Participant has selected an optional form of distribution within the Election
Period pursuant to a Qualified Election or a Special Qualified Election, if the
Participant dies before the earlier of (A) his or her Annuity Starting Date or
(B) his or her First Required Distribution Date, then the Trustee shall, upon
the direction of the Administrator, apply 50% of the Participant's Vested
Account Balance toward the purchase of an annuity contract for the life of the
Spouse.
(ii) Notwithstanding the provisions of paragraph (i) above,
prior to the earlier of (A) Spouse's Annuity Starting Date or (B) the Spouse's
First Required Distribution Year, the Spouse of a Participant may deliver a
written election to the Administrator whereby the Spouse elects not to have 50%
of the Participant's Vested Account Balance applied toward the purchase of an
annuity contract for the Spouse's life. Similarly, after the earlier of (A) the
Spouse's Annuity Starting Date or (B) the Spouse's First Required Distribution
Year, the Spouse may deliver a written election to the Administrator whereby
the Spouse elects to terminate distributions pursuant to the Qualified
Preretirement Survivor Annuity and to receive the liquidated value of the
remainder of the Qualified Preretirement Survivor Annuity in an alternative
form. In the case where a Spouse makes either of such elections, the portion of
the deceased Participant's Vested Account Balance which would otherwise have
been distributed pursuant to this subsection shall be distributed pursuant to
the provisions of subsection (b) below.
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(iii) In the case of a Spouse of a deceased Participant who is
scheduled to receive a Qualified Preretirement Survivor Annuity and who does
not otherwise elect, at the instruction of the Administrator, the Trustee shall
apply 50% of the deceased Participant's Vested Account Balance toward an
annuity under which payments begin as of the later of the Participant's
separation from Service or (what would have been) the Participant's Normal
Retirement Date. A Spouse of a deceased Participant may elect a commencement
date which is earlier than the date discussed in the previous sentence by
filing a written election to that effect with the Administrator; the Trustee
shall begin to make payments on such earlier date upon instruction from the
Administrator.
(b) Other Distributions at Death. If the Participant dies after he or
she has begun to receive distributions pursuant to Section 24.04 below, this
subsection shall apply with respect to the Participant's entire Vested Account
Balance. With respect to any Vested Account Balance, or portion thereof, to
which subsection (a) did not apply, the provisions of Article IX shall govern
the distribution thereof.
24.04 Timing of Annuity Payments and Normal Distributions. Payment
of benefits under the Qualified Joint and Survivor Annuity or distributions
pursuant to the normal form of distribution discussed in Section 24.05(b) below
shall commence within 60 days after the close of the Plan Year during which
occurs the later of (a) the Participant's Normal Retirement Date or (b) the
earlier of (i) the Participant's separation from Service or (ii) the end of his
or her First Required Distribution Year. Payment of benefits may, at the
discretion of the Trustee, be paid directly to the Participant or to the
Administrator, as payee agent. If the Participant's vested Account balance
(exclusive of his or her Rollover Account and Deductible Voluntary
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Contribution Account) is greater than $3,500, written consent of the
Participant is required for any earlier distribution. A Participant may file an
election with the Administrator to request that distributions commence in
accordance with one of the following options provided that the distribution
shall otherwise comply with the requirements of the Plan (including, but not
limited to, Section 10.03):
(A) Distributions commencing before the Participant's Normal
Retirement Date if the Participant is Disabled or experiences a separation from
Service.
(B) Distributions commencing after the normal time of distribution
described above; provided, however, that any such deferred distribution must
commence no later than 60 days after the end of the Participant's First
Required Distribution Year.
24.05 Form of Distribution and Optional Times for Commencement of
Distribution. The Vested Account Balance of a Participant to which Section
24.03 above does not apply, shall be distributed in a form determined according
to this Section.
(a) Unless the Participant elects an optional form of distribution
pursuant to a Qualified Election or a Special Qualified Election within 90 days
before his or her Annuity Starting Date, the Participant's Vested Account
Balance shall be paid in the form of a Qualified Joint and Survivor Annuity.
(b) If the Participant was eligible to receive a Qualified Joint and
Survivor Annuity and he or she elects an optional form of distribution set
forth in Article X pursuant to a Qualified Election or a Special Qualified
Election within 90 days before his or her Annuity Starting Date, then the
Participant's Vested Account Balance will be distributed in the form selected
by the Participant and the provisions of Article X shall apply.
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(c) All annuity contracts purchased and distributed by the Plan to a
Participant or a Beneficiary shall be nontransferable when distributed and the
terms of such contracts shall comply with the requirements of the Plan.
24.06 Elections for Former Participants. An opportunity to make the
applicable distribution elections discussed in this Section must be given to
any living former Participant who had not begun receiving benefits from this
Plan on August 23, 1984 and who would not otherwise receive the benefit forms
prescribed by Section 24.05 above.
(a) In the case of a former Participant who:
(i) would have been entitled to receive his or her benefits in
the form of a life annuity had he or she completed an Hour of Service during a
Plan Year commencing after December 31, 1984,
(ii) was credited with Service under this Plan or a predecessor
plan in a plan year beginning after December 31, 1975, and
(iii) had at least ten years of Vesting Service when he or she
separated from Service,
the former Participant must be given an opportunity to elect to receive his or
her benefits in accordance with the provisions of Section 24.05 above.
(b) In the case of a former Participant:
(i) who was credited with service under this Plan or a
predecessor plan after September 1, 1974;
(ii) who was not credited with service under this plan or a
predecessor plan in a plan year beginning after December 31, 1975; and
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(iii) whose benefits would have been payable in the form of a
life annuity, the Participant must be given an opportunity to elect to receive
his or her benefits in accordance with the provisions of Section 24.08 below.
(c) In the case of a former Participant who:
(i) satisfies the requirements of subsection (a) but does not
exercise the election made available to him or her in subsection (a), or
(ii) satisfies the requirements of subsection (a) other than the
requirement of paragraph (iii), the former Participant shall have his or her
benefits distributed in accordance with the provisions of Section 24.08 below.
24.07 Election Period for Certain Elections by Separated Participants.
The period during which a former Participant entitled to make an election
pursuant to Section 24.06 above shall commence on August 23, 1984 and end on
the earlier of the former Participant's death or the date benefits would
otherwise commence to said former Participant.
24.08 Benefit Form for Certain Former Participants. The benefits of a
former Participant who is entitled to elect, and has elected to have his or her
benefits distributed pursuant to this Section or a former Participant whose
benefits are required to be distributed in accordance with the provisions of
this Section shall be distributed in accordance with the following provisions:
(a) If benefits in the form of a life annuity become payable to a
married former Participant who:
(i) begins to receive payments under the Plan on or after
Normal Retirement Age; or
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(ii) dies on or after Normal Retirement Age while still working
for the Employer; or
(iii) begins to receive payments prior to Normal Retirement Age;
or
(iv) separates from Service on or after attaining Normal
Retirement Age (or the qualified early retirement age) after satisfying the
eligibility requirement for the payment of benefits under the Plan and
thereafter dies before beginning to receive such benefits; then such benefits
will be received under this plan in the form of a Qualified Joint and Survivor
Annuity, unless the former Participant has elected otherwise during the
election period. For this purpose, the election period must begin at least six
months before the Participant attains qualified early retirement age and end
not more than 90 days before the commencement of benefit distributions. Any
election hereunder must be in writing and delivered to the Administrator; such
election may be changed by the former Participant at any time by delivery of
written notification of such change and/or a separate written election to the
Administrator.
(b) A former Participant who is employed at the start of the election
period defined below will be given the opportunity to elect, during such
election period, to have a survivor annuity payable on death. If the former
Participant elects the survivor annuity, payments under such annuity must not
be less than the payments which would have been made to the Spouse under the
Qualified Joint and Survivor Annuity if the former Participant had retired on
the day before his or her death. Any election under this provision must be in
writing and delivered to the Administrator; such election may be changed by the
former Participant at any time by delivery of written notification of such
change and/or a separate
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written election to the Administrator. The election period begins on the later
of (i) the 90th day before the former Participant attains the qualified early
retirement age or (ii) the date on which participation begins, and ends on the
date the former Participant terminates employment with the Employer.
(c) The qualified early retirement age referred to in this Section
shall mean the latest of:
(i) the earliest date, under the Plan, on which the former
Participant may elect to receive retirement benefits:
(ii) the first day of the 120th month beginning before the
former Participant reaches Normal Retirement Age: or
(iii) the date the former Participant began participation.
24.09 Notice of Waivability of Qualified Preretirement Survivor Annuity.
(a) In the case of a Participant who is scheduled to receive Qualified
Preretirement Survivor Annuity coverage pursuant to Section 24.03 hereof, the
Administrator shall provide to the Participant within the applicable period as
determined pursuant to subsection (b) below, a written explanation of: (i) the
terms and conditions of a Qualified Preretirement Survivor Annuity; (ii) the
Participant's right to make, and the effect of, an election to waive Qualified
Preretirement Survivor Annuity coverage; (iii) the rights of a Participant's
Spouse; and (iv) the Participant's right to make, and the effect of, a
revocation of a previous election to waive Qualified Preretirement Survivor
Annuity coverage.
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(b) The applicable period during which the Administrator shall provide
the written explanation described in subsection (a) above shall mean, with
respect to a given Participant, whichever of the following periods ends last:
(i) The period beginning when the individual becomes a
Participant and ending a reasonable period of time thereafter;
(ii) The period beginning on the first day of the Plan Year
during which the Participant attains age 32 and ending on the last day of the
Plan Year during which the Participant attains age 34;
(iii) The period that begins with a Participant's separation from
Service when the Participant separates from Service before attaining age 35 and
ends a reasonable period of time after such separation from Service;
(iv) The period of time that begins on the effective date of a
Plan amendment which causes the Plan to no longer fully subsidize the cost of
the Qualified Preretirement Survivor Annuity and ends a reasonable period of
time after the effective date of such an amendment; or
(v) The period of time which begins when Section 24.03(a) above
first applies in the case of the Participant and ends a reasonable period of
time thereafter.
For purposes of applying the preceding paragraph, a reasonable period
ending after the enumerated events described in (i), (iv) and (v) is the end of
the two-year period beginning one year prior to the date the applicable event
occurs and ending one year after that date. In the case of a Participant who
separates from service before the Plan Year in which age 35 is attained, notice
shall be provided within the two-year period beginning one year prior to
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separation and ending one year after separation. If such a Participant
thereafter returns to employment with the Employer, the applicable period for
such Participant shall be redetermined.
24.10 Notice of Waivability of Qualified Joint and Survivor Annuity. In
the case of a Participant who is scheduled to receive a Qualified Joint and
Survivor Annuity pursuant to the provisions of Section 24.05 hereof, the
Administrator shall provide to the Participant, no less than 30 days and no
more than 90 days prior to the annuity starting date, a written explanation of:
(a) the terms and conditions of a Qualified Joint and Survivor Annuity; (b)the
Participant's right to make, and the effect of, an election to waive
distribution in the form of a Qualified Joint and Survivor Annuity; (c) the
rights of the Participant's Spouse; and (d) the Participant's right to make,
and the effect of, a revocation of a previous election to waive distribution in
the form of the Qualified Joint and Survivor Annuity. Distribution to a
Participant may commence seven days after the foregoing explanation is given,
provided that:
(i) the Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and
(ii) the Participant, after receiving the explanation,
affirmatively elects a distribution.
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ARTICLE XXV. MISCELLANEOUS
25.01 Misrepresentation. Notwithstanding any other provision herein, if
an Employee misrepresents his or her age or any other fact, any benefit payable
hereunder shall be the smaller of: (a) the amount that would be payable if no
facts had been misrepresented, or (b) the amount that would be payable if the
facts were as misrepresented.
25.02 No Enlargement of Plan Rights. It is a condition of the Plan, and
each Participant by participating herein expressly agrees, that he or she shall
look solely to the assets of the Trust for the payment of any benefit under the
Plan.
25.03 No Enlargement of Employment Rights. Nothing appearing in or done
pursuant to the Plan shall be construed (a) to give any person a legal or
equitable right or interest in the assets of the Trust or distribution
therefrom, nor against the Employer, except as expressly provided herein or (b)
to create or modify any contract of employment between the Employer and any
Employee or obligate the Employer to continue the services of any Employee.
25.04 Written Orders. In taking or omitting to take any action under
this Plan, the Trustee may conclusively rely upon and shall be protected in
acting upon any written orders from or determinations by the Employer or the
Administrator as appropriate, or upon any other notices, requests, consents,
certificates or other instruments or papers believed by it to be genuine and to
have been properly executed, and so long as it acts in good faith, in taking or
omitting to take any other action.
25.05 No Release from Liability. Nothing in the Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of the
Act. Subject thereto, neither Trustee, Loan Trustee, Administrator or
Distributor nor any other person shall have any
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liability under the Plan, except as a result of negligence or wilful
misconduct, and in any event the Employer shall fully indemnify and save
harmless all persons from any liability except that resulting from their
negligence or wilful misconduct.
25.06 Discretionary Actions. The Administrator shall have discretionary
authority to determine eligibility for benefits and construe the terms of the
Plan. Any discretionary action, including the granting of a loan pursuant to
Article XII hereof, to be taken by the Employer or the Administrator under this
Plan shall be non-discriminatory in nature and all Employees similarly situated
shall be treated in a uniform manner.
25.07 Headings. Headings herein are primarily for convenience of
reference, and if they conflict with the text, the text shall control.
25.08 Applicable Law. This Plan and Trust shall, to the extent state law
is applicable, be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the laws of the state in which (a) if the
Trustee is a corporation, the Trustee has its principal place of business;
(b)if the Trustee is an individual, the Trustee resides; or (c) if the Trustee
is individuals, where a Majority of the individuals serving as Trustee reside.
The Employer's execution of the Adoption Agreement may be acknowledged where
required by applicable law.
25.09 No Reversion. Notwithstanding any other contrary provision of the
Plan, but subject nevertheless to Articles XVIII, no part of the assets in
the Trust shall revert to the Employer, and no part of such assets, other than
that amount required to pay taxes or administrative expenses, shall be used for
any purpose other than exclusive benefit of Employees or their Beneficiaries.
However, the Employer may request a return, and this
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Section shall not prohibit return, of an amount to the Employer under any of
the following circumstances:
(a) if the amount was all or part of an Employer Contribution which was
made as a result of a mistake of fact and the amount contributed or, if less,
the then current value is returned to the Employer within one year after the
date on which the mistaken payment of the contribution was made, or
(b) if the amount was all or part of an Employer Contribution which was
conditioned on deductibility under Code Section 404, such deduction was
disallowed with respect to such amount and this condition is not satisfied and
the amount is returned to the Employer within one year after the date on which
the deduction is disallowed, or
(c) if the amount was all or part of an Employer Contribution which was
conditioned on the initial qualification of the Plan under Code Section 401(a),
the Plan receives an adverse determination with respect to this qualification
and the amount is returned to the Employer within one year after the date on
which such adverse determination is made, but only if the application for the
determination is made by the time prescribed by law for filing the Employer's
return for the taxable year in which the Plan was adopted, or such later date
as the Secretary of Treasury may prescribe.
For the purposes of this Section, all Employer Contributions are
conditioned on initial qualification of the Plan under Code Section 401(a),
qualification of the Plan as amended under Code Section 401(a), and
deductibility under Code Section 404.
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25.10 Notices. The Employer will provide the notice to other interested
parties contemplated under Code Section 7476 before requesting a determination
by the Secretary of the Treasury or his or her delegate with respect to the
qualification of the Plan.
25.11 Conflict. In the event of any conflict between the provisions of
this Plan and the terms of any contract or agreement issued thereunder or with
respect thereto, the provisions of the Plan shall control. In particular, the
proceeds of any life insurance contract purchased by the Trustee and not
governed by an effective Designation of Beneficiary form shall be paid to the
Participant's Spouse regardless of who is named as the beneficiary or
beneficiaries in the contract.
25.12 Prior Benefits. If the optional form of benefits under the Plan
prior to adoption of the Prototype 401(k) Plan (the "Prior Benefits") were
different than the optional form of benefits as provided in the Prototype
401(k) Plan, then the portion of a Participants' Account which are attributable
to participation in the Plan prior to adoption of the Prototype 401(k) Plan
shall be subject to such Prior Benefits and, in the discretion of the
Administrator the remaining portion of the Participants' Account shall also be
subject to such Prior Benefits. The Administrator shall notify the Trustee as
to what portion, if any, of the Participants' Account is subject to such Prior
Benefits and give a full description of such Prior Benefits; and, separate
accounts shall be maintained for each type of contribution (as provided in
Section 7.03) for such portion.
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EXHIBIT 10(k)
[UNITED STATES LIME & MINERALS, INC. LETTERHEAD]
December 11, 1996
Mr. Robert K. Murray
United States Lime & Minerals, Inc.
12221 Merit Drive, Suite 500
Dallas, Texas 75251
Dear Bob:
We appreciate your service to United States Lime & Minerals, Inc. and
its wholly owned subsidiaries (hereinafter "U.S. Lime"). This is to confirm our
discussions concerning the termination of your position, effective December 15,
1996, as Vice President - Operations for U.S. Lime, and U.S. Lime's offer and
your acceptance of this proposed Separation Agreement on the terms set forth
below.
1. SPECIAL SEPARATION BENEFITS. In consideration of your
continued services and the General Release and the Confidentiality of
Separation Agreement and Nondisparagement provisions of this Agreement, and
contingent upon your acceptance of the terms of this Agreement, U.S. Lime
offers you the following Special Separation Benefits:
a. Salary Continuation. U.S. Lime offers to continue to pay you
compensation in an amount equivalent to your regular monthly
salary for a period of six months from January 1, 1997 to June
30, 1997. You will be paid for the last two weeks of December
1996, from the vacation you have earned. These payments are
subject to all legal deductions and will be paid to you in
equal installments on regularly scheduled U.S. Lime paydays.
b. Fringe Benefits. For a period of six months from January 1,
1997 U.S. Lime offers to continue your current employee fringe
benefits with the exception of the company car and further
vacation accrual. You will have the use of the company car
until January 15, 1997. During the salary continuation period,
you will be considered an employee for purposes of exercising
your option under the Company's 1992 Stock Option Plan.
c. Moving Costs. U.S. Lime will reimburse you for the reasonable
costs to move your household items and personal goods in an
amount not to exceed $6,000.
<PAGE> 2
By execution of this Agreement, you acknowledge and agree that U.S.
Lime has no legal obligation to enter into such Separation Agreement with you.
You also acknowledge and agree that your acceptance of benefits pursuant to
such Separation Agreement and the attendant obligations as described in this
Agreement are in consideration of the promises and undertakings of U.S. Lime as
set forth in this Agreement. You further acknowledge and agree that should you
breach any of your obligations set forth in this Agreement (i) U.S. Lime will
have no obligation to make payments to you under this Agreement, but that all
other provisions of this Agreement shall remain in full force and effect, and
(ii) you may be required to repay any payments made to you and reimburse U.S.
Lime for any payments made on your behalf pursuant to this Agreement.
2. USE OF CONFIDENTIAL INFORMATION. You agree that all of the
documents and information to which you have had access during your employment
are confidential and may not be disseminated or disclosed by you to any other
parties, except as required by law or judicial process. In the event it appears
you will be compelled by law or judicial process to disclose such confidential
information, you should notify U.S. Lime in writing immediately upon your
receipt of a subpoena or other legal process to avoid potential liability.
3. GENERAL RELEASE. In consideration of the Special Separation
Benefits described above, you and your family members, heirs, successors, and
assigns (hereinafter collectively the "Releasing Parties") hereby release,
acquit, and forever discharge any and all claims and demands of whatever kind
or character, whether vicarious, derivative, or direct, that you or they,
individually, collectively, or otherwise, may have or assert against: (i) U.S.
Lime, (ii) any of U.S. Lime's subsidiaries or affiliated companies, or (iii)
any officer, director, stockholder, agent, employee, representative, attorney,
or any successor or assign of the entities just named (collectively the
"Released Parties"). This General Release includes but is not limited to any
claim or demand based on any state, federal, or local statutory or common law
that applies or is asserted to apply, directly or indirectly, to your
employment relationship or the termination of your employment relationship with
U.S. Lime, including but not limited to any claim for wrongful discharge,
unlawful discrimination on the basis of race, color, religion, sex, national
origin, age, citizenship status, disability, or any other form of
discrimination prohibited by jaw, retaliation, breach of contract (express or
implied), breach of any duty of good faith and fair dealing, violation of the
public policy of the United States, the State of Texas, or any other state,
tortious interference with contract or prospective contractual relations,
promissory estoppel, detrimental reliance, invasion of privacy, assault,
battery, conspiracy, intentional or negligent infliction of emotional distress,
defamation, duress, fraud or misrepresentation, loss of consortium, or any
other alleged negligent or intentional tort, or any violation of Title VII of
the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967,
the Employee Retirement Income Security Act of 1974, the Americans with
Disabilities Act of 1990, the Family and Medical Leave Act, the Fair Labor
Standards Act, the Fair Credit Reporting Act, The Texas Workers' Compensation
Act or any other State or Federal statute, arising out of your employment
relationship or the termination of your employment relationship with U.S. Lime.
<PAGE> 3
The effect of your acceptance of this Agreement is to waive, release,
and forever discharge any and all claims, demands, actions, or causes of action
of whatever kind or character that any of the Releasing Parties may now or
hereafter have against U.S. Lime or any of the other Released Parties for any
liability, whether vicarious, derivative, or direct, except for violations of
this Agreement. This includes, but is not limited to, any claims for damages
(actual or punitive), back wages, future wages, bonuses, reinstatement, accrued
vacation leave benefits, past and future employee benefits (except as to which
there is vested entitlement on June 30, 1997) including, but not limited to,
contributions to your employee benefit plans, compensatory damages, liquidated
damages, penalties, equitable relief, attorney's fees, costs of court,
interest, and any and all other loss, expense, or detriment of whatever kind
resulting from, growing out of, connected with, or related in any way to your
employment relationship or the termination of your employment relationship with
U.S. Lime. This general release does not apply to any rights or claims that may
arise as a result of violations of this Agreement.
Should you or any of the other Releasing Parties violate this
Agreement, the Releasing Parties may be required to repay any payments made to
you or reimburse U.S. Lime for any payments made on your behalf pursuant to
this Separation Agreement. The Releasing Parties also may be held liable for
any of the Released Parties' damages caused by the violation, including without
limitation their costs and attorney's fees incurred in defending against such
action.
4. CONFIDENTIALITY OF SEPARATION AGREEMENT AND NON-DISPARAGEMENT.
In consideration of the Special Separation Benefits described above, you agree
that the terms of this Agreement shall be and remain confidential, and shall
not be disclosed by you to any party other than your spouse, attorney, and
accountant or tax return preparer if such persons have agreed to keep such
information confidential, and except as may be required by law or judicial
process. You further agree that, except as requested by U.S. Lime or as
compelled by law or judicial process, you will not institute or prosecute, or
cooperate in the institution of prosecution of, any proceeding or lawsuit
relating to the hiring, employment, or termination of employment of you or
others by U.S. Lime.
You agree not to make any statement, oral or written, that directly or
indirectly impugns the quality or integrity of U.S. Lime's or any of the other
Released Parties' business practices, or make any other disparaging or
derogatory remarks about any of the Released Parties to any other parties. You
further agree and acknowledge that should you breach this obligation, you may
be required to repay any payments made to you or reimburse U.S. Lime for any
payments made on your behalf pursuant to this Agreement.
5. EXPIRATION OF OFFER. U.S. Lime's offer of this proposed
Separation Agreement will expire at midnight on the twenty-first day following
the date of this letter. You may accept this offer at any time before
expiration by executing this Agreement and returning it to the undersigned
representative of U.S. Lime.
<PAGE> 4
6. EFFECTIVE DATE. This Agreement will become effective and
enforceable seven days after you execute it ("Effective Date"). At any time
before the Effective Date of this Agreement, you may revoke your acceptance.
You also agree to re-execute this Agreement at any time on or after June 30,
1997 if U.S. Lime requests that you do so.
7. CONSULTATION WITH AN ATTORNEY. You have the right to consult
an attorney before executing this Agreement.
8. VOLUNTARY AGREEMENT. You acknowledge that your execution of
this Agreement is knowing and voluntary, that you have had a reasonable time to
deliberate regarding its terms, and that you have had the right to consult with
an attorney if you so desired.
-------------------------
If you are in agreement with the foregoing provisions, please execute
the attached duplicate copy of this letter in the space provided below. This
letter shall then constitute a valid and binding agreement by and between U.S.
Lime and you, effective as of seven (7) days after the date of execution.
Sincerely,
UNITED STATES LIME & MINERALS, INC.
By: /s/ TIMOTHY W. BYRNE
-----------------------------------
ACCEPTED AND AGREED TO:
/s/ ROBERT K. MURRAY
- ---------------------------------
ROBERT K. MURRAY
Date Signed: 12/12/96
--------------------
<PAGE> 5
I, Robert K. Murray, hereby resign as a Officer of United States Lime
& Minerals, Inc. In addition, I further resign as an Officer and Director from
Arkansas Lime Company, Corson Lime Company, Texas Lime Company and Colorado
Lime Company.
/s/ ROBERT K. MURRAY 12/12/96
- ----------------------------------- --------------------------
Robert K. Murray Date
<PAGE> 1
EXHIBIT 10(r)
[CORESTATES BANK, N.A. LETTERHEAD]
October 26, 1995
Timothy W. Byrne
Vice President - Finance
UNITED STATES LIME & MINERALS, INC.
12221 Merit Drive
Suite 500
Dallas, TX 75231
Re: Loan and Security Agreement dated October 20, 1993,
as Amended, By and Among United States Lime &
Minerals, Inc. (Formerly known as Scottish Heritable,
Inc.), Corson Lime Company, Texas Lime Company and
Arkansas Lime Company (collectively the "Borrowers")
and CoreStates Bank N.A. ("Bank")
Dear Tim:
We refer to the Loan and Security Agreement dated October 20,1993, as
amended by Amendment No. 1 to Loan and Security Agreement dated as of December
23, 1994, Amendment No. 2 to Loan and Security Agreement dated April 28, 1995,
and Amendment No. 3 to Loan and Security Agreement dated September 29, 1995
(collectively, the "Loan Agreement"). Initially capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Loan
Agreement unless the context clearly requires to the contrary. Section
references are to sections of the Loan Agreement.
Borrowers and Bank hereby agree that notwithstanding the provisions of
Section 7.1.12 of the Loan Agreement (last amended by Amendment No. 2),
Borrowers may make Capital expenditures in any Fiscal year not to exceed
$5,000,000 in the aggregate.
When fully executed by Bank and Borrowers, this letter will constitute
an amendment to the Loan Agreement as a contract to be construed under the
internal laws of the Commonwealth of Pennsylvania. All provisions of the Loan
Agreement not modified hereby shall remain in full force and effect.
<PAGE> 2
Timothy V. Byrne, Vice President - Finance
October 26, 1995
Page 2
Please indicate Borrowers' acceptance of the terms of this letter
agreement in the space provided below.
Very truly yours,
CORESTATES BANK, N.A.
By: /s/ CLIFFORD W. KEWLEY
-----------------------
Clifford W. Kewley,
Vice President
THE TERMS OF THE FORGOING LETTER
AGREEMENT ARE AGREED TO AND
ACCEPTED THIS ___ DAY OF
_________________, 1995
UNITED STATES LIME & MINERALS, INC.
(Formerly known as Scottish Heritable, Inc.)
By: /s/ TIMOTHY W. BYRNE
-----------------------------------------
CORSON LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
-----------------------------------------
ARKANSAS LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
-----------------------------------------
TEXAS LINE COMPANY
By: /s/ TIMOTHY W. BYRNE
-----------------------------------------
<PAGE> 1
EXHIBIT 10(s)
AMENDMENT NO. 5 TO
LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT (this "Fifth
Amendment") dated this 27th day of November, 1996 by and between UNITED STATES
LIME & MINERALS, INC. (formerly known as Scottish Heritable, Inc.), a Texas
corporation ("USL"), CORSON LIME COMPANY, a Pennsylvania corporation ("CLC"),
TEXAS LIME COMPANY, a Texas corporation ("TLC"), ARKANSAS LIME COMPANY, an
Arkansas corporation ("ALC", and together with USL, CLC, and TLC, collectively
referred to as the "Borrowers") and CORESTATES BANK, N.A., a national banking
association ("Bank").
BACKGROUND
A. Borrowers and Bank entered into a Loan and Security Agreement
dated October 20, 1993, since amended by Amendment No.1 to Loan and Security
Agreement dated as of December 23, 1994, Amendment No. 2 to Loan and Security
Agreement dated April 28, 1995, Amendment No. 3 to Loan and Security Agreement
dated September 29, 1995 and that certain Letter Agreement dated October 26,
1995 (collectively, the "Loan Agreement"), pursuant to which Bank made
available to Borrowers certain credit facilities specifically described in the
Loan Agreement. All initially-capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Loan Agreement unless the
context clearly requires to the contrary.
B. Borrowers have requested that Bank further amend the terms of
the Loan Agreement to (i) add Adjusted LIBOR as an interest rate option (ii)
extend the Termination Date to June 30, 1998 and extend the maturity date for
the Term Loan to October l, 2000, (iii) add one noncommitted secured line of
credit in the amount of $10,000,000 to be used to finance equipment purchases
and improvements to current plant and equipment and one secured discretionary
line of credit in the amount of $10,000,000 to be used for acquisitions, (iv)
increase the annual limit on Capital Expenditures, and (v) amend certain
financial covenants set forth in the Loan Agreement. Bank has agreed to such
changes subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Ratification of Loan Documents. This Fifth Amendment is a
supplement to and a modification of the Loan Agreement pursuant to Section 9.2
thereof. To the extent not
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modified hereby, each and every term, condition, covenant, representation,
warranty, and each and all of the other provisions set forth in the Loan
Agreement, are hereby ratified and confirmed in full.
2. Additional Definitions. Each of the terms listed below shall
have the meaning herein ascribed to it for the purposes hereof, the Loan
Agreement and for each of the Loan Documents. All capitalized terms not defined
herein shall have the meaning ascribed to them respectively in the Loan
Agreement.
"Acquisition Line of Credit" means the aggregate secured
discretionary line of credit facility under which Bank makes Acquisition Loans
to one or more of the Borrowers, as more fully described in and subject to the
terms of Section 2.6 hereof.
"Acquisition Loan(s)" means collectively, those loans extended
by Bank in its sole discretion to Borrowers pursuant to the Acquisition Line of
Credit, as more fully described in and subject to the terms of Section 2.6
hereof.
"Acquisition Note" means each note of Borrowers payable to the
order of the Bank to evidence Borrowers' joint and several repayment
obligations under this Agreement with respect to the Acquisition Line of
Credit.
"Adjusted LIBOR" means the LIBOR finally adjusted and
determined with respect to the following formula:
[LIBOR] *
Adj. LR = -----------
[1.00 - RP]
Adj. LR = Adjusted LIBOR
LIBOR = London Interbank Offered Rate
RP = Reserve Percentage pertaining to
eurocurrency liabilities
- ----------
* the amount in brackets being rounded upwards if necessary, to the next
higher 1/16 of 1%
"Adjusted LIBOR Loan(s)" means applicable portions of the
Revolving Credit, the Term Loan and the Capital Expenditure Line of Credit
bearing interest at a rate determined with reference to the Adjusted LIBOR.
"Base Rate Loan(s)" means applicable portions of the Revolving
Credit, the Term Loan, the Capital Expenditure Line
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of Credit and the Acquisition Line of Credit bearing interest at the Base Rate.
"Capital Expenditure Line of Credit" means the aggregate
secured noncommitted line of credit facility under which Bank makes Capital
Expenditure Loans to one or more of the Borrowers, as more fully described in
and subject to the terms of Section 2.5 hereof.
"Capital Expenditure Loan(s)" means those loans extended by
Bank in its sole discretion to Borrowers pursuant to the Capital Expenditure
Line of Credit as more fully described in and subject to the terms of Section
2.5 hereof.
"Capital Expenditure Note(s)" means each note of Borrowers
payable to the order of the Bank to evidence Borrowers' joint and several
repayment obligations under this Agreement with respect to the Capital
Expenditure Line of Credit.
"Conversion Date" means, with respect to a Loan, the Business
Day on which a portion of the Loan is converted to or continued as an Adjusted
LIBOR Loan.
"Dollars" and the symbol "$" mean the lawful money of the
United States of America.
"Interest Period" means that period of time applicable to an
Adjusted LIBOR Loan as determined pursuant to Section 2.4.8.2 hereof.
"Interest Rate Determination Date" means each date for
determining the Adjusted LIBOR with respect to an Interest Period. The Interest
Rate Determination Date shall be the second London Business Day prior to the
first day of the related Interest Period for each Adjusted LIBOR Loan.
"Interest Rate Option" means the Base Rate or the Adjusted
LIBOR selected by Borrower for all or any part of the Revolving Credit, the
Term Loan or the Capital Expenditure Line of Credit.
"LIBOR" means the rate per annum at which deposits of Dollars
are offered to Bank by prime banks in the London Eurodollar Interbank Market at
or about 11:00 A.M. London time, two London Business Days prior to the first
day of the applicable Interest Period for a period equal to the period of such
Interest Period in an amount substantially equal to the principal amount
requested to be converted to or continued as an Adjusted LIBOR Loan.
3
<PAGE> 4
"London Business Day" means any Business Day on which
commercial banks are open for international business (including dealings in
Dollar deposits) in London and Philadelphia.
"Notice of LIBOR Election" means a notice substantially in the
form of Schedule 2.4.8.1 attached hereto and made a part hereof.
"Reserve Percentage" means for any day that maximum percentage
(expressed as a decimal), whether or not incurred, which is in effect on such
day, as prescribed by the Board of Governors of the Federal Reserve System, for
determining the reserve requirement for a member bank of the Federal Reserve
System in Philadelphia with respect to "Eurocurrency liabilities" (as such term
is defined in Regulation D) (or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Adjusted
LIBOR Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of Bank to United
States residents).
"Rules" means any law, regulation, regulatory guideline or
directive or rule of practice whether or not having the force of law by which
Bank is bound or to which it adheres.
3. Definition Amendments.
3.1 The following definitions are hereby amended and
restated in their entirety:
"Loans" means collectively, the Cash Advances, ACH
Advances, the Term Loan, the Capital Expenditure Loans and the Acquisition
Loans, and a "Loan" means any Cash Advance, ACH Advance, the Term Loan, Capital
Expenditure Loan or Acquisition Loan.
"Loan Documents" means this Agreement, the Note, the
Term Note, any Capital Expenditure Note and any Acquisition Note, the
individual Mortgages, the ACH Documents, the Pledge Agreement, all financing
statements and fixture filings filed or recorded in connection with this
Agreement, and all certificates of Borrowers, or any Borrower, delivered
pursuant to the requirements of this Agreement.
"Notes" means collectively, the Note, the Term Note,
any Capital Expenditure Note and any Acquisition Note, any substitution
therefor and any extension, supplement, amendment or addendum thereto.
4
<PAGE> 5
"Termination Date" means June 30, 1998 or such later
date as may be agreed to in writing by Bank.
3.2 The references to "80%" and "50%" in the definition
of "Borrowing Base" are hereby deleted and replaced with "90%" and "80%",
respectively.
4. Base Rate Revision.
4.1 The first clause of the first sentence of Section
2.1.1 is hereby amended and restated in its entirety as follows:
Borrowers shall pay interest on the unpaid principal
balance of all Cash Advances at a rate per annum
equal to the Base Rate, with the first payment
4.2 The first sentence of Section 2.2.2 is hereby amended
and restated in its entirety as follows:
The Term Loan shall bear interest on the unpaid
principal balance thereof at a rate per annum equal to the Base Rate.
5. Conversion to Adjusted LIBOR; Capital Expenditure Line of
Credit; Acquisition Line of Credit. The Loan Agreement is hereby amended by
adding thereto the following sections:
2.4.8 Adjusted LIBOR Loans; Interest Rate Option.
The Cash Advances under Revolving Credit shall henceforth bear interest on the
unpaid principal balance thereof from the Funding Date of each Cash Advance or
the Funding Date or Conversion Date of each Adjusted LIBOR Loan to maturity
(whether by acceleration or otherwise): (i) with respect to Base Rate Loans as
set forth in the Loan Agreement, or (ii) with respect to Adjusted LIBOR Loans
at the Adjusted LIBOR for the applicable Interest Period on the relevant
Interest Rate Determination Date plus two and one-fourth percent (2.25%) per
annum, calculated on the basis of a 360-day year and charged for the actual
number of days elapsed. The Term Loan and the Capital Expenditure Line of
Credit shall henceforth bear interest on the unpaid principal balance thereof
from the Funding Date of the Term Loan or the Capital Expenditure Loan or the
Funding Date or Conversion Date of each such Adjusted LIBOR Loan to maturity
(whether by acceleration or otherwise): (i) with respect to Base Rate Loans as
set forth in the Loan Agreement, or (ii) with respect to Adjusted LIBOR Loans
at the Adjusted LIBOR on the relevant Interest Rate Determination Date plus two
and one-half percent (2.50%) per annum, calculated on the basis of a 360-day
year and charged for the actual number of days elapsed. The basis for
determining the Interest Rate Option with
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<PAGE> 6
respect to portions of the Revolving Credit, the Term Loan and the Capital
Expenditure Line of Credit shall be selected by Borrower at the time a Notice of
Borrowing or a Notice of LIBOR Election is submitted to Bank.
2.4.8.1 Notice of LIBOR Election. Whenever
Borrower desires to change or continue the Interest Rate Option on a portion of
the Revolving Credit, the Term Loan or the Capital Expenditure Line of Credit
to the Adjusted LIBOR, Borrower shall deliver by overnight delivery or
facsimile telecopy to Bank a properly completed and executed Notice of LIBOR
Election no later than 11:00 A.M. at least three London Business Days in
advance of the proposed Conversion Date or expiration of the current Interest
Period. The Notice of LIBOR Election shall specify: (i) the proposed Conversion
Date (which shall be a Business Day); (ii) the amount of the Revolving Credit,
the Term Loan or the Capital Expenditure Line of Credit affected; and (iii) the
initial or continuation Interest Period(s) therefor; provided that the minimum
amount of any conversion to or continuation of Adjusted LIBOR Loans shall be
$500,000 and integral multiples of $100,000 in excess of that amount. If at the
termination of any Interest Period, Borrower fails to submit a Notice of LIBOR
Election to convert or to continue Adjusted LIBOR Loans, then such Loans shall
automatically be and become Base Rate Loans as of the termination of the
relevant Interest Period.
Subject to Section 2.4.8.6 hereof, Adjusted LIBOR
Loans may only be converted into Base Rate Loans on the expiration date of the
Interest Period applicable thereto; provided, that no portion of the
outstanding Revolving Credit, Term Loan or the Capital Expenditure Line of
Credit may be converted into Adjusted LIBOR Loans or continued as Adjusted
LIBOR Loans: (i) when any Event of Default or Unmatured Event of Default has
occurred and is continuing, or (ii) if the Interest Period relating to the
Adjusted LIBOR of such conversion or continuation would extend beyond the
Termination Date or the maturity date for either the Term Loan or the
applicable Capital Expenditure Loan.
A Notice of Borrowing or Notice of Rate Election
shall be irrevocable on and after the related Interest Rate Determination Date,
and Borrower shall be bound to make, continue or convert the applicable portion
of the Revolving Credit, the Term Loan or the Capital Expenditure Line of
Credit, as applicable, in accordance therewith.
2.4.8.2 Interest Periods. In connection with
each Adjusted LIBOR Loan, Borrower shall elect an Interest Period to be
applicable to such Adjusted LIBOR Loan, which Interest Period shall be either a
one, two, three or six month period; provided that:
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<PAGE> 7
(A) the Interest Period for any Adjusted
LIBOR Loan shall commence on the Funding Date or Conversion Date of such
Adjusted LIBOR Loan;
(B) except as provided in subsection
2.4.8.2(C) hereof, if an Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next succeeding
Business Day;
(C) any Interest Period which: (i)
begins on the last Business Day of a calendar month (or a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the relevant calendar
month, or (ii) would expire on a day which is not a Business Day but is a day
of the month after which no further Business Day occurs in that month, such
Interest Period shall expire on the last Business Day of the month;
(D) with respect to any Adjusted LIBOR
Loan, no Interest Period shall extend beyond the Termination Date or the
applicable maturity date for either the Term Loan or the Capital Expenditure
Loans; and
(E) there shall be no more than five (5)
outstanding Adjusted LIBOR Loans at any time;
2.4.8.3 Interest Payments. Interest shall be
payable as follows: (i) with respect to Base Rate Loans, Borrowers shall pay
interest on the unpaid principal balance of all Cash Advances, the Term Loan,
the Capital Expenditure Loans or the Acquisition Loans, as applicable, at the
Base Rate, with the first payment to be made on the first Business Day of the
month following the month containing the Funding Date for the applicable Cash
Advance or Loan, and thereafter on the first Business Day of each consecutive
month and at maturity; and (ii) with respect to Adjusted LIBOR Loans, interest
shall be due and payable to Bank in arrears on and to the last day of the
Interest Period applicable to such Adjusted LIBOR Loan; provided however, that
interest on Adjusted LIBOR Loans with Interest Periods of six months shall be
paid in arrears on and to the last day of the third-month and the last day of
the relevant Interest Period.
2.4.8.4 Adjusted LIBOR.
(A) Bank shall give Borrower prompt
notice of the Adjusted LIBOR determined for an Interest Period, and absent
manifest error, each determination of such rates by Bank shall be conclusive
and binding for all purposes hereof.
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<PAGE> 8
(B) If Borrower requests conversion to
or continuation of the Adjusted LIBOR for an Interest Period and (i) Bank
determines that, by reason of circumstances affecting the interbank Eurodollar
market generally, deposits in U.S. Dollars (in the applicable amounts) are not
then being offered to banks in the London Interbank Eurodollar Market for the
selected Interest Period, or (ii) Bank shall certify that the relevant rates of
interest referred to in the definition of Adjusted LIBOR will not accurately
reflect the cost to Bank of making or maintaining Adjusted LIBOR Loans for the
Interest Periods therefor, then Bank shall give notice thereof to Borrower,
whereupon until Bank notifies Borrower that the circumstances giving rise to
such suspension no longer exist, the obligation of Bank to convert to or
continue portions of the Revolving Credit, the Term Loan or the Capital
Expenditure Line of Credit as Adjusted LIBOR Loans shall be suspended so long
as such circumstances exist.
(C) If, after the date hereof, the
adoption of or any change in Rules, or change in the interpretation or
administration thereof, by a governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Bank (or Bank's holding company) with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for Bank to convert or maintain
loans at the Adjusted LIBOR, Bank will forthwith notify Borrower of the
circumstances and the interest rates on the applicable portions of the
outstanding Adjusted LIBOR Loans shall be deemed to have been converted to Base
Rate Loans on either (i) the last day of the then current Interest Period if
Bank may lawfully continue to maintain loans at the Adjusted LIBOR to such day,
or (ii) immediately if Bank may not lawfully continue to maintain loans at the
Adjusted LIBOR to such day.
(D) If any governmental authority,
central bank or other comparable authority shall at any time impose, modify or
deem applicable any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), any tax (including without
limitation, any United States interest equalization tax or similar tax however
named applicable to the acquisition or holding of debt obligations and any
interest or penalties with respect thereto), duty, charge, fee, deduction, or
withholding, with respect to Adjusted LIBOR Loans, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, Bank, or shall impose on Bank or the London Interbank Eurodollar
Market any other condition affecting loans at the Adjusted LIBOR and the result
of any of the foregoing is to increase the cost to Bank of making or
maintaining the interest rate at the Adjusted LIBOR or to reduce the amount of
any sum received or receivable by Bank under this
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<PAGE> 9
Agreement, and any of the Notes by an amount deemed by Bank to be material,
Bank will promptly notify Borrower of any event of which it has knowledge
occurring after the date hereof. If such event occurs during any Interest
Period or if Borrower requests conversion to the Adjusted LIBOR after
notification of the event, said event will entitle Bank to compensation
pursuant to this subsection (but without duplication of any adjustment made
pursuant to 2.4.8.4(E)). A certificate of Bank claiming compensation under this
subsection and setting forth the additional amount or amounts to be paid to
Bank hereunder shall be conclusive in the absence of manifest error.
(E) The LIBOR shall be adjusted
automatically on and as of the effective day of any change in the relevant
Reserve Percentage.
(F) Promptly upon notice from Bank to
Borrower, Borrower will pay, prior to the date on which penalties attach
thereto, all present and future stamp, documentary and other similar taxes,
levies, or costs and charges whatsoever imposed, assessed, levied or collected
on or in respect of the Adjusted LIBOR Loans solely as a result of the interest
rate being determined by reference to the Adjusted LIBOR and/or the provisions
of this Agreement relating to the Adjusted LIBOR and/or the recording,
registration, notarization or other formalization of any thereof and/or
payments of principal, interest or other amounts made on or in respect of
portions of the Revolving Credit, the Term Loan or the Capital Expenditure Line
of Credit when and as a result of the fact that the interest rate is determined
by reference to the Adjusted LIBOR (all such taxes, levies, costs and charges
being herein collectively called "Eurodollar Rate Tax"). Promptly after the
date on which payment of any such Eurodollar Rate Tax is due pursuant to
applicable law, Borrower will, at the request of Bank, furnish to Bank evidence
that Borrower has met its obligations under this subsection. Borrower will
indemnify Bank against, and reimburse Bank on demand for, any Eurodollar Rate
Tax, as determined by Bank in its good faith discretion. Bank shall provide
Borrower with appropriate receipts for any payments or reimbursements made by
Borrower pursuant to this subsection. A certificate of Bank as to any amount
payable pursuant to this Section shall, absent manifest error, be final,
conclusive and binding on all parties hereto.
(G) Failure on the part of Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any Interest
Period shall not constitute a waiver of Bank's right to demand compensation
with respect to such Interest Period or any other Interest Period. The
protection of this Section shall be available to Bank regardless of any
possible
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<PAGE> 10
contention of the invalidity or inapplicability of the law, Rule, regulation,
guideline or other change or condition which shall have occurred or been
imposed. Any claim for compensation must be made no later than 12 months after
the Termination Date.
2.4.8.5 Funding Losses. If Borrower fails to borrow,
or consummate any conversion to, or to continue, an Adjusted LIBOR Loan after a
Notice of Borrowing or Notice of LIBOR Election has been delivered to Bank and
as provided herein, Borrower shall reimburse Bank on demand for any resulting
loss or expense incurred by Bank, including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties,
provided that Bank shall have delivered to Borrower a certificate as to the
amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
2.4.8.6 Prepayment Premium For Adjusted LIBOR Loans.
All prepayments shall be applied first to Base Rate Loans to the extent
outstanding, then to Adjusted LIBOR Loans, unless otherwise specified by
Borrowers and consented to by Bank, such consent not to be unreasonably
withheld. Adjusted LIBOR Loans may be prepaid or converted to Base Rate Loans
before the expiration date of the Interest Period applicable thereto only upon
payment to Bank of prepayment compensation determined as follows: (i) on the
prepayment date, the remaining payments of principal and interest that would
otherwise have become payable during or at the expiration of the Interest
Period pertaining to the principal being prepaid shall be discounted to a
present value at a rate per annum equal to the "Prepayment Yield to Maturity",
as hereinafter defined, plus any costs for reserves or assessments or for
reinvesting the amount being prepaid or converted, and if such discounted value
shall exceed the unpaid principal amount being prepaid or converted, then the
prepayment premium shall be an amount equal to such excess; otherwise no
prepayment premium shall be payable; (ii) the "Prepayment Yield to Maturity"
shall mean the yield to maturity of the debt obligation of the United States
Treasury (excluding those commonly known as "Flower Bonds") having a term
substantially equal to the term of the relevant Interest Period maturity date
nearest in expiration of the relevant Interest Period. The maturity date and
yield to maturity of such United States Treasury obligations shall be
determined on the basis of quotations published in the Wall Street Journal or
similar publication on the prepayment date or Conversion Date. If there shall
be more than one such debt obligation of the United States Treasury maturing
nearest in time to the expiration of the relevant Interest Period, the
Prepayment Yield to Maturity shall be the arithmetic average of the yields to
maturity of all such obligations.
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2.5 Capital Expenditure Line of Credit.
2.5.1 Amount. Provided that no event of
Default or Unmatured Event of Default has occurred and is continuing and
subject to the terms and conditions set forth herein, Bank may in its sole
discretion, commencing on November ___________, 1996, and expiring on December
31, 1997, lend to Borrowers upon Borrowers' written request from time to time
certain principal amounts determined and approved by the Bank not to exceed
$10,000,000 in the aggregate for the purpose of financing Borrowers' capital
expenditures made in the normal course of business, in the form of one or more
term loans. Each such Capital Expenditure Loan shall mature on a date
determined and approved by the Bank which is reflective of the useful and/or
depreciable life of the equipment or other items to be purchased by
Borrower(s), but in no event shall such maturity date be later than a date
which is seven (7) years following the Funding Date of such Capital Expenditure
Loan. In addition to the security set forth in Section 3 of the Loan Agreement,
Bank may require in its sole discretion as a condition to the extension of a
Capital Expenditure Loan, that Borrowers grant to Bank a security interest in
the equipment or other items to be purchased by Borrowers with the proceeds of
any Capital Expenditure Loan.
2.5.2 Interest Rate. The Capital
Expenditure Loans shall bear interest on the unpaid principal balance thereof
at the Base Rate or Adjusted LIBOR, as the Borrowers may select, in accordance
with the provisions of Section 2.4.8 hereof.
2.5.3 Payment of Principal and Interest.
Each Capital Expenditure Loan shall be payable in installments of principal as
the Bank may determine in its sole discretion at the time such Capital
Expenditure Loan is extended by the Bank. Interest shall be paid as provided in
Section 2.4.8.3 of the Loan Agreement.
2.5.4 Capital Expenditure Note. To
evidence Borrowers' joint and several repayment obligations under the Capital
Expenditure Loans, Borrowers shall execute and deliver a Capital Expenditure
Note each time a Capital Expenditure Loan is extended by the Bank in the
original principal amount equal to such Capital Expenditure Loan. The terms of
the Capital Expenditure Notes shall reflect the terms of payment determined by
the Bank in accordance with Section 2.5.3 hereof.
2.5.5 Conditions Precedent. In addition to
the terms and conditions set forth in this Section 2.5, as conditions precedent
to the extension by Bank of each Capital Expenditure Loan,- Borrowers agree to
provide to Bank, in form and
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<PAGE> 12
substance satisfactory to Bank and Bank's counsel, the following documents,
items and instruments:
2.5.5.1 a Capital Expenditure Note
pursuant to Section 2.5.4 hereof;
2.5.5.2 resolutions adopted by the
Boards of Directors of each Borrower authorizing the execution, delivery and
performance of the Capital Expenditure Note, certified by Borrower's Secretary
to be in full force and effect as of the date the Capital Expenditure Loan is
extended; and
2.5.5.3 invoices or bills of sale
setting forth the purchase price for the items to be acquired with the proceeds
of the Capital Expenditure Loans.
2.6 Acquisition Line of Credit.
2.6.1 Amount. Provided that no event of
Default or Unmatured Event of Default has occurred and is continuing and
subject to the terms and conditions set forth here+n, Bank may in its sole
discretion, commencing on November, 1996, and expiring on December 31, 1997,
extend to Borrowers from time to time upon Borrowers' written request the
Acquisition Line of Credit for purposes of providing temporary, initial
financing for acquisitions by Borrowers of entities and/or assets in the
construction materials, limestone products or related industries (each, an
"Acquisition"), pursuant to which Bank may extend Acquisition Loans to
Borrowers, in amounts determined and approved by the Bank which, if not
exhausting the unadvanced portion of the Acquisition Line of Credit or
Borrowing. Base, as the case may be, the Borrowers may, from time to time,
repay, and, subject to the terms determined by the Bank at the time- the
Acquisition Loans are extended to Borrowers, reborrow. Borrowers may not
reborrow Acquisition Loans pursuant to the Acquisition Line of Credit after
December 31, 1997.
2.6.2 Interest Rate. The Acquisition Loans
shall bear interest on the unpaid principal balance thereof at the Base Rate.
Interest on the outstanding principal balance of each Acquisition Loan shall be
payable monthly on the first business day of each month, commencing with the
first month following the Funding Date of such Acquisition Loan, and at
maturity.
2.6.3 Repayment of Principal; Prepayment.
The outstanding principal balance of, and any accrued and unpaid interest on,
all Acquisition Loans, and all Bank's Costs pertaining thereto, shall be
payable as determined by the Bank in its sole discretion exercised at the time
of the Acquisition Loan
12
<PAGE> 13
provided that each Acquisition Loan shall be paid in full on the earlier to
occur of (i) the date on which permanent financing for the Acquisition funded
by such Acquisition Loan is obtained, but no later than nine (9) months
following Funding Date of a particular Acquisition Loan, (ii) December 31,
1997, or (iii) the date on which the Acquisition Loan is payable as provided in
Section 8.2 hereof.
2.6.4 Acquisition Note. To evidence
Borrowers' joint and several repayment obligations under the Acquisition Line
of Credit, Borrowers shall execute and deliver an Acquisition Note concurrently
with the funding of each Acquisition Loan. The terms of the Acquisition Notes
shall reflect the terms of payment determined by the Bank in accordance with
Sections 2.6.2 and 2.6.3 hereof.
2.6.5 Conditions Precedent. In addition to
the terms and conditions set forth in this Section 2.6, as conditions precedent
to the extension by Bank of each Acquisition Loan, Borrowers agree to provide
to Bank, in form and substance satisfactory to Bank and Bank's counsel, the
following documents, items and instruments:
2.6.5.1 an Acquisition Note pursuant to
Section 2.6.4 hereof;
2.6.5.2 resolutions adopted by the Boards of
Directors of each Borrower authorizing the execution, delivery and performance
of the Acquisition Note, certified by Borrower's Secretary to be in full force
and effect as of the date the Acquisition Loan is extended; and
2.6.5.3 a copy of the definitive or proposed
acquisition agreement, together with copies of-all other relevant documentation
relating to the proposed acquisition.
6. Maturity Date. In the first sentence of Section 2.2.3 of the
Loan Agreement, the reference to "October l, 1998", is hereby deleted and
replaced with "October l, 2000".
7. Capital Expenditures. Section 7.1.12 of the Loan Agreement is
hereby amended and restated in its entirety as follows:
Make Capital Expenditures in any Fiscal Year in excess of
$15,000,000; or
8. Financial Covenants.
8.1 Section 6.1.13.2 of the Loan Agreement is hereby
amended and restated in its entirety as follows:
13
<PAGE> 14
Maintain at all times the ratio of Borrowers' consolidated
Total Liabilities to consolidated Net Worth at no greater than
1.75 to l. Borrowers' ratio of Total Liabilities to Net Worth
shall be tested quarterly upon Bank's receipt of Borrowers'
quarterly consolidated Financial Statements;
8.2 Section 6.1.13.3 of the Loan Agreement is hereby
amended and restated in its entirety as follows:
Maintain at all times the ratio of Borrowers' Cash Flow to
Borrowers' Fixed Obligations at no less than 1.5 to 1, which
ratio shall be tested quarterly upon receipt of Borrowers'
quarterly consolidated Financial Statements, on a rolling
four-quarter historical basis commencing with the four
consecutive Calendar Quarters ending December 31, 1996.
9. Conditions Precedent. As conditions precedent to the
effectiveness of this Fifth Amendment, Borrower acknowledges that Bank shall
have received, in form and substance reasonably satisfactory to Bank and Bank's
counsel, in addition to this Fifth Amendment, the following documents, items
and instruments:
9.1 the Amended and Restated Note executed by Borrowers
substantially in the form attached hereto as Exhibit A;
9.2 the Amended and Restated Term Note executed by
Borrowers substantially in the form attached hereto as Exhibit B;
9.3 resolutions adopted by the Boards of Directors of
each Borrower authorizing the execution, delivery and performance of this Fifth
Amendment, the Amended and Restated Note, Amended and Restated Term Note
certified by Borrower's Secretary to be in full force and effect as of the date
hereof; and
9.4 Such additional documents or instruments as Bank may
reasonably require.
Upon Borrower's satisfaction of all of the foregoing
conditions precedent, Bank, in consideration of the execution and delivery of
the replacement promissory notes described herein to evidence the Loans as
modified hereby, shall return to Borrowers the original promissory notes in
Bank's possession evidencing the Loans prior to the date hereof, marked
"cancelled and replaced."
14
<PAGE> 15
In the event Bank agrees to fund any Acquisition Loan or any
Capital Expenditure Loan, Bank shall have received on or before the Funding
Date thereof, in form and substance reasonably satisfactory to Bank and Bank's
counsel, a promissory note or notes, as applicable, and such collateral and
other documentation as Bank may reasonably require.
10. Miscellaneous.
10.1 Integration. This fifth Amendment, the Loan
Agreement, and the other loan documents shall be construed as one agreement,
and in the event of any inconsistency, the provisions of this Fifth Amendment
shall control the provisions of any other Loan Document, except for the Notes.
This Fifth Amendment, the Loan Agreement, the Notes, and the other Loan
Documents, contain all of the agreements of the parties hereto with respect to
the subject matter of each thereof and supersede all prior or contemporaneous
agreements with respect to such subject matter.
10.2 Survivorship. The terms of this Fifth Amendment and
all agreements, representations, warranties or covenants made by Borrower in
the Loan Agreement and the other Loan Documents shall survive the issuance and
payment of the Notes and shall continue as long as any portion of the
Indebtedness shall remain outstanding and unpaid, provided, however, that the
covenants set forth in Section 1.6 and 6.2 of the Loan Agreement shall survive
the payment of the Indebtedness.
10.3 Successors and Assigns; Governing Law. This Fifth
Amendment shall be binding upon and inure to the benefit of the
respective-successors and assigns of the parties hereto; provided however that
no Borrower shall assign this Fifth Amendment, or any of its respective rights
or duties arising hereunder, without the prior written consent of Bank. This
Fifth Amendment shall be construed and enforced in accordance with the internal
laws of the Commonwealth of Pennsylvania.
10.4 WAIVER OF JURY TRIAL. EACH BORROWER AND BANK
EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION BROUGHT BY ANY PARTY
WITH RESPECT TO THE LOAN AGREEMENT, AS AMENDED HEREBY, OR AS AMENDED HEREAFTER,
ANY LOAN DOCUMENT OR THE INDEBTEDNESS.
10.5 Partial Invalidity. If any provision of this Fifth
Amendment shall for any reason be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision hereof, but
this Fifth Amendment shall be construed as if such invalid or unenforceable
provision had never been contained herein.
15
<PAGE> 16
10.6 Headings. The heading of any paragraph contained in
this Fifth Amendment is for convenience of reference only and shall not be
deemed to amplify, limit, modify or give full notice of the provisions thereof.
10.7 Counterparts. This Fifth Amendment may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Fifth
Amendment under seal, intending to be legally bound hereby, on the day and year
first above written.
Bank:
CORESTATES BANK, N.A.
By: /s/ CLIFFORD W. KEWLEY
----------------------------------
Clifford W. Kewley,
Vice President
Borrowers:
UNITED STATES LIME & MINERALS, INC.
(formerly known as Scottish Heritable,
Inc.)
By: /s/ ROBERT F. KIZER
----------------------------------
CORSON LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
----------------------------------
ARKANSAS LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
----------------------------------
TEXAS LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
----------------------------------
16
<PAGE> 17
AMENDED AND RESTATED TERM NOTE
$4,476,194 November 27th, 1996
FOR VALUE RECEIVED, UNITED STATES LIME & MINERALS, INC. (formerly
known as Scottish Heritable, Inc.), a Texas corporation, CORSON LIME COMPANY, a
Pennsylvania corporation, TEXAS LIME COMPANY, a Texas corporation, and ARKANSAS
LIME COMPANY, an Arkansas corporation (collectively referred to as
"Borrowers"), jointly and severally promise to pay to the order of CoreStates
Bank, N.A., a national banking association ("Bank"), the principal sum of Four
Million Four Hundred Seventy-six Thousand One Hundred Ninety-four ($4,476,194)
Dollars together with interest on the unpaid principal amount hereof accrued
from the date hereof to maturity (whether by acceleration or otherwise) or
earlier repayment at a rate per annum equal to the Base Rate or, with respect
to such portion of the Term Loan as is converted to or continued as an Adjusted
LIBOR Loan, at a rate based on the applicable Adjusted LIBOR on the relevant
Interest Rate Determination Date plus two and one-half percent (2.50%) per
annum, payable in accordance with Section 2.2 of the Loan and Security
Agreement, as amended (the Fifth Amendment of which is dated of even date
herewith) by and between Borrowers and the Bank (the "Loan Agreement") and as
hereinafter provided. All initially capitalized terms not otherwise defined
herein shall have the same meanings as ascribed to them in the Loan Agreement
unless the context clearly requires to the contrary.
Principal shall be payable in 47 equal consecutive monthly
installments of principal of $95,238.17 each, due on the first Business Day of
each consecutive month, beginning on the first Business Day of the month
following the date hereof and continuing monthly thereafter on the first
Business Day of each month, with a final payment of all of the remaining
outstanding principal balance, together with all accrued and unpaid interest
and Bank's Costs pertaining thereto due and payable on October 1, 2000.
Interest on Base Rate Loans shall be payable monthly, in arrears
through the last Business Day of each month, on the first Business Day of each
month, with the first payment to made on the first Business Day of the first
month following the date hereof and at maturity. Interest payments on Adjusted
LIBOR Loans shall be payable, in arrears, on and to, but not including, the
last day of the Interest Period applicable to that Loan (subject to the
provisions of Section 2.4.8.3 of the Loan Agreement); provided,
1
<PAGE> 18
however, that interest on such Loans with Interest Periods of 6 months shall be
payable, in arrears, on and to the last day of the third month of such Interest
Periods, as the case may be, and the last day of the relevant Interest Period,
subject as aforesaid. Interest shall be calculated on the basis of a 360 day
year, but charged for the number of days actually elapsed during any year or
part thereof.
Borrowers may prepay the entire amount of the principal of the Term
Loan at any time, or in portions of $50,000 or an integral multiple from time
to time, without premium or penalty during the term thereof, provided that
Adjusted LIBOR Loans may be prepaid only as provided in Section 2.4.8.6 of the
Loan Agreement.
All payments of principal, interest, and fees hereunder shall be made
by Borrowers jointly and severally without defense, set off, or counterclaim
and in same day funds and delivered to Bank not later than 12:00 noon
(Philadelphia time) on the date due at Bank's office located at The Widener
Building, 11th Floor, 1339 Chestnut Street, Philadelphia, Pennsylvania 19101 or
such other place as shall be designated in writing for such purpose in
accordance with the terms of the Loan Agreement.
Each Borrower authorizes Bank to charge such Borrower's demand deposit
account with Bank in order to cause timely payment to be made to Bank of all
principal, interest and fees hereunder as provided in Section 1.5 of the Loan
Agreement.
Subject to Section 2.4.8.2, whenever any payment on this Amended and
Restated Term Note shall be stated to be due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of interest on this
Amended and Restated Term Note.
Any principal payment hereon and, to the extent permitted by
applicable law, any interest payment hereon which is not paid when due, and any
other amount due to Bank under the Loan Agreement or any other Loan Document
not paid when due, in any case whether at stated maturity, by notice of
prepayment, by acceleration or otherwise, shall thereafter bear interest
payable upon demand at a rate per annum which is three percent (3%) in excess
of the Base Rate.
It shall be an event of default hereunder if an Event of Default shall
have occurred under the Loan Agreement (a "Default").
In addition to other remedies of Bank as set forth in this Amended and
Restated Term Note, the Loan Agreement, or any other Loan Document, upon the
occurrence of a Default which shall
2
<PAGE> 19
be continuing, Bank may, without demand, by written notice to Borrowers, cause
this Amended and Restated Term Note to become immediately due and payable in
the manner, upon the conditions and with the effect provided in the Loan
Agreement.
THE FOLLOWING SETS FORTH A WARRANT OF ATTORNEY TO CONFESS JUDGMENT
AGAINST BORROWERS. IN GRANTING THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT
AGAINST BORROWERS, BORROWERS, FOLLOWING CONSULTATION WITH (OR DECISION NOT TO
CONSULT WITH) SEPARATE COUNSEL FOR BORROWERS, AND WITH KNOWLEDGE OF THE LEGAL
EFFECT HEREOF, HEREBY WAIVES ANY AND ALL RIGHTS BORROWERS HAVE, OR MAY HAVE TO
PRIOR NOTICE AND AN OPPORTUNITY TO BE HEARD UNDER THE CONSTITUTIONS AND LAWS OF
THE UNITED STATES AND THE COMMONWEALTH OF PENNSYLVANIA. BORROWERS SPECIFICALLY
ACKNOWLEDGE THAT BANK HAS RELIED ON THIS WARRANT OF ATTORNEY IN GRANTING THE
FINANCIAL ACCOMMODATIONS DESCRIBED HEREIN.
UPON THE OCCURRENCE AND CONTINUANCE OF ANY DEFAULT, BORROWERS,
INDIVIDUALLY AND COLLECTIVELY, HEREBY IRREVOCABLY AUTHORIZE AND EMPOWER ANY
ATTORNEY OF ANY COURT OF RECORD TO APPEAR FOR BORROWERS OR ANY BORROWER IN ANY
AND ALL ACTIONS, AND TO: (I) ENTER JUDGMENT AGAINST BORROWERS OR ANY BORROWER
FOR THE PRINCIPAL SUN HEREOF, TOGETHER WITH ACCRUED AND UNPAID INTEREST; OR
(II) SIGN FOR BORROWERS OR ANY BORROWER AN AGREEMENT FOR ENTERING IN ANY
COMPETENT COURT AN AMICABLE ACTION OR ACTIONS TO CONFESS JUDGMENT AGAINST
BORROWERS OR ANY BORROWER FOR ALL OR ANY PART OF THE INDEBTEDNESS; AND IN
EITHER CASE FOR INTEREST AND COSTS TOGETHER WITH A REASONABLE COLLECTION FEE.
EACH BORROWER FURTHER IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY
COURT OF RECORD TO APPEAR FOR AND TO ENTER JUDGMENT AGAINST BORROWERS OR ANY
BORROWER AND IN FAVOR OF BANK OR ANY HOLDER HEREOF WITH RESPECT TO AN AMICABLE
ACTION OF REPLEVIN OR ANY OTHER ACTION TO RECOVER POSSESSION OF ANY COLLATERAL
PURSUANT TO THE LOAN AGREEMENT. BORROWERS WAIVE ALL RELIEF FROM ANY AND ALL
APPRAISEMENT OR EXEMPTION LAWS NOW OR IN FORCE OR HEREINAFTER ENACTED. IF A
COPY OF THIS AMENDED AND RESTATED TERM NOTE, VERIFIED BY AFFIDAVIT OF AN
OFFICER OF BANK OR ANY OTHER HOLDER HEREOF, SHALL BE FILED IN ANY PROCEEDING OR
ACTION WHEREIN JUDGMENT IS TO BE CONFESSED, IT SHALL NOT BE NECESSARY TO FILE
THE ORIGINAL HEREOF AND SUCH VERIFIED COPY SHALL BE SUFFICIENT WARRANT FOR ANY
ATTORNEY OF ANY COURT OF RECORD TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
BORROWERS OR ANY BORROWER AS PROVIDED HEREIN. JUDGMENT MAY BE CONFESSED FROM
TIME TO TIME UNDER THE AFORESAID POWERS WHICH SHALL NOT BE EXHAUSTED BY ONE
EXERCISE THEREOF.
Borrowers hereby individually and collectively waive presentment,
demand for payment, notice of dishonor, protest or notice of protest and any
and all notices or demands and, to the full extent permitted by law, the right
to plead any statute of
3
<PAGE> 20
limitations as a defense to any demand hereunder in connection with the
delivery, acceptance or performance of this Amended and Restated Term Note.
The joint and several liabilities and obligations of Borrowers
hereunder shall be unconditional without regard to the liability or obligations
of any other party and shall not be in any manner affected by any indulgence
whatsoever granted or consented to by Bank, including, but not limited to, any
extension of time, renewal, waiver or other modification. Any failure of Bank
to exercise any right hereunder shall not be construed as a waiver of the right
to exercise the same or any other right at any time and from time to time
thereafter.
This Amended and Restated Term Note shall be governed as to its
validity, interpretation and effect by the internal laws of the Commonwealth of
Pennsylvania. Any and all actions at law or in equity relating to this Amended
and Restated Term Note and the Indebtedness shall be brought, and jurisdiction
may be had, in the courts of the Philadelphia County, Pennsylvania, or at the
election of the holder hereof, the United States District Court for the Eastern
District of Pennsylvania. Borrowers consent in advance to service of process by
registered mail, return receipt requested, to the address set forth in Section
9.3 of the Loan Agreement.
EACH BORROWER AND BANK EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION BROUGHT BY ANY PARTY WITH RESPECT TO THE INDEBTEDNESS OR ANY LOAN
DOCUMENT.
This Amended and Restated Term Note may not be changed or amended
orally but only by an agreement in writing and signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
This Amended and Restated Term Note is secured by and entitled to the
benefits of certain other Loan Documents.
If any provision of this Amended and Restated Term Note shall for any
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this Amended
and Restated Term Note shall be construed as if such invalid or unenforceable
provision had never been contained herein.
Borrowers promise to pay all Bank's Costs and expenses, including
reasonable attorneys' fees, as provided in Section 1.6 of the Loan Agreement,
incurred in the collection and enforcement of this Amended and Restated Term
Note. Each Borrower and endorsers of this Amended and Restated Term Note
hereby consent to renewals
4
<PAGE> 21
and extensions of time at or after the maturity hereof, without notice.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
Borrowers have executed this Amended and Restated Term Note, as an instrument
under seal, the day and year first above written.
UNITED STATES LIME & MINERALS, INC.
By: /s/ ROBERT F. KIZER
------------------------------------
CORSON LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
------------------------------------
TEXAS LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
------------------------------------
ARKANSAS LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
------------------------------------
5
<PAGE> 22
AMENDED AND RESTATED NOTE
$6,000,000 November 27th, 1996
FOR VALUE RECEIVED, UNITED STATES LIME & MINERALS, INC. (formerly
known as Scottish Heritable, Inc.), a Texas corporation, CORSON LIME COMPANY, a
Pennsylvania corporation, TEXAS LIME COMPANY, a Texas corporation, and ARKANSAS
LIME COMPANY, an Arkansas corporation (collectively referred to as
"Borrowers"), jointly and severally promise to pay to the order of CoreStates
Bank, N.A., a national banking association ("Bank"), the lesser of (x) Six
Million Dollars ($6,000,000) or (y) the aggregate unpaid principal amount of
all Cash Advances made by Bank to the Borrowers or any Borrower under the Loan
and Security Agreement, as amended (the Fifth Amendment of which is dated of
even date herewith) by and between Borrowers and Bank ("Loan Agreement"),
together with interest on the unpaid principal amount hereof accrued from the
date hereof to the Termination Date (whether by acceleration or otherwise) or
earlier repayment at a rate per annum equal to the Base Rate or, with respect
to such portion of the Revolving Credit made as, converted to or continued as
an Adjusted LIBOR Loan, at a rate based on the applicable Adjusted LIBOR on the
relevant Interest Rate Determination Date plus two and one-quarter percent
(2.25%) per annum, payable in accordance with Section 2.1 of the Loan Agreement
and as hereinafter provided, on the Termination Date. All initially capitalized
terms not otherwise defined herein shall have the same meanings as ascribed to
them in the Loan Agreement unless the context clearly requires to the contrary.
Interest on Base Rate Loans shall be payable monthly, in arrears
through the last Business Day of each month, on the first Business Day of each
month, with the first payment to made on the first Business Day of the first
month following the date hereof and at maturity. Interest payments on Adjusted
LIBOR Loans shall be payable, in arrears, on and to, but not including, the
last day of the Interest Period applicable to that Loan (subject to the
provisions of Section 2.4.8.3 of the Loan Agreement); provided, however, that
interest on such Loans with Interest Periods of 6 months shall be payable, in
arrears, on and to the last day of the third month of such Interest Periods, as
the case may be, and the last day of the relevant Interest Period, subject as
aforesaid. Interest shall be calculated on the basis of a 360 day year, but
charged for the number of days actually elapsed during any year or part
thereof.
<PAGE> 23
Any principal payment on Cash Advances not paid when due and, to the
extent permitted by applicable law, any interest payment on Cash Advances not
paid when due, and any other amount due to Bank under the Loan Agreement or any
other Loan Document not paid when due, in any case whether at stated maturity,
by notice of prepayment, by acceleration or otherwise, shall thereafter bear
interest payable upon demand at a rate per annum which is two and three-fourths
percent (2-3/4%) per annum in excess of the Base Rate.
This Amended and Restated Note is issued pursuant to and entitled to
the benefits of the Loan Agreement to which reference is hereby made for a more
complete statement of the terms and conditions under which Cash Advances
evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Amended and
Restated Note shall be made by Borrowers without defense, setoff or
counterclaim in same day funds and delivered to Bank not later than 12:00 noon
(Philadelphia time) on the date due to Bank at the Banks' offices at The
Widener Building, 11th Floor, 1339 Market Street, Philadelphia, Pennsylvania
19101 or at such other place as shall be designated in writing for such purpose
in accordance with the terms of the Loan Agreement. Each of Bank and any
subsequent holder of this Amended and Restated Note agrees, by its acceptance
hereof, that before disposing of this Amended and Restated Note or any part
hereof it will make a notation hereon of all principal payments previously made
hereunder and of the date to which interest hereon has been paid; provided,
however, that the failure to make a notation of any payment made on this
Amended and Restated Note shall not limit or otherwise affect the obligation of
Borrowers hereunder with respect to payments of principal or interest on this
Amended and Restated Note.
Subject to Section 2.4.8.2 of the Loan Agreement, whenever any payment
on this Amended and Restated Note shall be stated to be due on a day which is
not a Business Day, such payment shall be made on the next succeeding Business
Day and such extension of time shall be included in the computation of interest
on this Amended and Restated Note.
Each Borrower authorizes Bank to charge such Borrower's demand deposit
account with Bank in order to cause timely payment to be made to Bank of all
principal, interest and fees hereunder as provided in Section 1.5 of the Loan
Agreement.
This Amended and Restated Note is subject to mandatory prepayment and
repayment at the option of the Borrowers as provided in Sections 2.4.6 and
2.1.2 of the Loan Agreement, provided that
2
<PAGE> 24
Adjusted LIBOR Loans may be prepaid only as provided in Section 2.4.8.6 of the
Loan Agreement.
This Amended and Restated Note is secured by and entitled to the
benefits of certain other Loan Documents.
The liabilities and obligations of Borrowers hereunder shall be
unconditional without regard to the liability or obligations of any other party
and shall not be in any manner affected by any indulgence whatsoever granted or
consented to by Bank, including, but without being limited to, any release by
any party of any Collateral, extension of time, renewal, waiver or other
modification. Any failure of Bank to exercise any right hereunder shall not be
construed as a waiver of the right to exercise the same or any other right at
any time and from time to time thereafter.
This Amended and Restated Note shall be governed as to its validity,
interpretation and effect by the internal laws of the Commonwealth of
Pennsylvania for contracts made and to be performed in Pennsylvania. Each
Borrower consents to the jurisdiction of the courts of Philadelphia County,
Pennsylvania, or at the election of the holder hereof, the United States
District Court for the Eastern District of Pennsylvania, in any and all actions
and proceedings by Bank arising under or in any way related to this Amended and
Restated Note or the Loan Agreement or the transactions contemplated thereby.
Notwithstanding anything herein to the contrary, an action to enforce the
Bank's rights with respect to the Collateral may be brought in any jurisdiction
in which the Collateral is located. Notwithstanding Section 9.8 of the Loan
Agreement, with respect to any action of foreclosure, ejectment, distraint,
distress, expulsion, removal or other disentitlement of any parcel of Real
Estate, the provisions of the applicable Mortgage shall control the provisions
of any other Loan Document.
EACH BORROWER AND BANK EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION BROUGHT BY ANY PARTY WITH RESPECT TO THIS AMENDED AND RESTATED NOTE
OR THE LOAN AGREEMENT.
It shall be an event of default hereunder if an Event of Default shall
have occurred under the Loan Agreement (a "Default").
Upon the occurrence of a Default which shall be continuing, the unpaid
balance of the principal amount of this Amended and Restated Note, together
with all accrued but unpaid interest thereon, and all other Indebtedness may
become, or may by written notice to Borrowers be declared to be, due and
payable in the manner, upon the conditions, and with the effect, provided in
the Loan Agreement.
3
<PAGE> 25
THE FOLLOWING SETS FORTH A WARRANT OF ATTORNEY TO CONFESS JUDGMENT
AGAINST BORROWERS. IN GRANTING THIS WARRANT OF ATTORNEY TO CONFESS JUDGMENT
AGAINST BORROWERS, BORROWERS, FOLLOWING CONSULTATION WITH (OR DECISION NOT TO
CONSULT WITH) SEPARATE COUNSEL FOR BORROWERS, AND WITH KNOWLEDGE OF THE LEGAL
EFFECT HEREOF, HEREBY WAIVES ANY AND ALL RIGHTS BORROWERS HAVE, OR MAY HAVE TO
PRIOR NOTICE AND AN OPPORTUNITY TO BE HEARD UNDER THE CONSTITUTIONS AND LAWS OF
THE UNITED STATES AND THE COMMONWEALTH OF PENNSYLVANIA. BORROWERS SPECIFICALLY
ACKNOWLEDGE THAT BANK HAS RELIED ON THIS WARRANT OF ATTORNEY IN GRANTING THE
FINANCIAL ACCOMMODATIONS DESCRIBED HEREIN.
UPON THE OCCURRENCE AND CONTINUANCE OF ANY DEFAULT, BORROWERS,
INDIVIDUALLY AND COLLECTIVELY, HEREBY IRREVOCABLY AUTHORIZE AND EMPOWER ANY
ATTORNEY OF ANY COURT OF RECORD TO APPEAR FOR BORROWERS OR ANY BORROWER IN ANY
AND ALL ACTIONS, AND TO: (I) ENTER JUDGMENT AGAINST BORROWERS OR ANY BORROWER
FOR THE PRINCIPAL SUM HEREOF, TOGETHER WITH ACCRUED AND UNPAID INTEREST; OR
(II) SIGN FOR BORROWERS OR ANY BORROWER AN AGREEMENT FOR ENTERING IN ANY
COMPETENT COURT AN AMICABLE ACTION OR ACTIONS TO CONFESS JUDGMENT AGAINST
BORROWERS OR ANY BORROWER FOR ALL OR ANY PART OF THE INDEBTEDNESS; AND IN
EITHER CASE FOR INTEREST AND COSTS TOGETHER WITH A REASONABLE COLLECTION FEE.
EACH BORROWER FURTHER IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY OF ANY
COURT OF RECORD TO APPEAR FOR AND TO ENTER JUDGMENT AGAINST BORROWERS OR ANY
BORROWER AND IN FAVOR OF BANK OR ANY HOLDER HEREOF WITH RESPECT TO AN AMICABLE
ACTION OF REPLEVIN OR ANY OTHER ACTION TO RECOVER POSSESSION OF ANY COLLATERAL
PURSUANT TO THE LOAN AGREEMENT. BORROWERS WAIVE ALL RELIEF FROM ANY AND ALL
APPRAISEMENT OR EXEMPTION LAWS NOW OR IN FORCE OR HEREINAFTER ENACTED. IF A
COPY OF THIS AMENDED AND RESTATED NOTE, VERIFIED BY AFFIDAVIT OF AN OFFICER OF
BANK OR ANY OTHER HOLDER HEREOF, SHALL BE FILED IN ANY PROCEEDING OR ACTION
WHEREIN JUDGMENT IS TO BE CONFESSED, IT SHALL NOT BE NECESSARY TO FILE THE
ORIGINAL HEREOF AND SUCH VERIFIED COPY SHALL BE SUFFICIENT WARRANT FOR ANY
ATTORNEY OF ANY COURT OF RECORD TO APPEAR FOR AND CONFESS JUDGMENT AGAINST
BORROWERS OR ANY BORROWER AS PROVIDED HEREIN. JUDGMENT MAY BE CONFESSED FROM
TIME TO TIME UNDER THE AFORESAID POWERS WHICH SHALL NOT BE EXHAUSTED BY ONE
EXERCISE THEREOF.
The terms of this Amended and Restated Note may not be changed or
amended orally but only by an agreement in writing and signed by the party
against whom enforcement of any waiver, change, modification, or discharge is
sought.
Borrowers and endorsers, if any, of this Amended and Restated Note
hereby waive presentment, demand for payment, notice of dishonor, protest or
notice of protest and any and all notices or demands in connection with the
delivery, acceptance,
4
<PAGE> 26
performance, extension or renewal of this Amended and Restated Note.
Borrowers promise to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in Sections 1.6 and 3.1.5 of the Loan
Agreement, incurred in the collection and enforcement of this Amended and
Restated Note. Borrowers and endorsers, if any, of this Amended and Restated
Note hereby consent to renewals and extensions of time at or after the maturity
hereof, without notice, and hereby waive diligence, presentment, protest,
demand and notice of every kind and, to the full extent permitted by law, the
right to plead any statute of limitations as a defense to any demand hereunder.
If any provision of this Amended and Restated Note shall for any
reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this Amended
and Restated Note shall be construed as if such invalid or unenforceable
provision had never been contained herein.
IN WITNESS WHEREOF, Borrowers have caused this Amended and Restated
Note to be executed and delivered by their respective duly authorized officers,
on the day and year first above written.
UNITED STATES LIME & MINERALS, INC.
By: /s/ ROBERT F. KIZER
------------------------------------
CORSON LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
------------------------------------
TEXAS LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
------------------------------------
ARKANSAS LIME COMPANY
By: /s/ TIMOTHY W. BYRNE
------------------------------------
5
<PAGE> 27
TRANSACTIONS ON NOTE
<TABLE>
<CAPTION>
Amount of Outstanding
Amount of Principal Principal
Loan Made Paid Balance Notation
Date This Date This Date This Date Made By
- ---- --------- --------- --------- -------
<S> <C> <C> <C> <C>
</TABLE>
6
<PAGE> 1
EXHIBIT 10(t)
[UNITED STATES LIME & MINERALS, INC. LETTERHEAD]
April 18, 1996
Mr. Wallace G. Irmscher
51 Marsh Creek Road
Amelia Island, Florida 32034
Dear Jack,
This letter is to confirm our understanding of the consulting work
that you will be undertaking for United States Lime & Minerals, Inc.
The following will highlight these understandings:
1) You will provide consulting services which will assist U.S.
Lime in pursuing acquisitions and/or expansion opportunities.
2) You will, on average, spend three to four days per month on
these consulting activities.
3) You will be paid $2,000.00 per month, plus you will be
reimbursed for reasonable out of pocket expenses which you
incur on our behalf.
4) You will be directed by me in these undertakings and you will
keep me appraised of your work with periodic oral and written
reports.
5) These arrangements for your consulting services will cover a
one year period starting April 1st, 1996, unless either you or
I terminate this understanding, for any reason, before the end
of one year.
Jack, I appreciate your commitment to our Company and I look forward
to developing new opportunities for U.S. Lime. If you have any questions,
please let me know.
Very truly yours,
/s/ ROBERT F. KIZER
Robert F. Kizer,
President and Chief Executive Officer
cc: Ed Odishaw
<PAGE> 1
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------
1996 1995 1994
-----------------------------------------
<S> <C> <C> <C>
Net income $ 2,602,000 4,260,000 1,916,000
=========== ========= =========
Weighted average number of common
shares outstanding 3,890,646 3,836,063 3,836,063
=========== ========= =========
Net income per share of common stock $ 0.67 1.11 0.50
=========== ========= =========
</TABLE>
Note: Outstanding stock options are excluded from the computation as the
effective dilution in earnings per share data is less than 3%.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE COMPANY
Arkansas Lime Company, an Arkansas Corporation
Corson Lime Company, a Pennsylvania Corporation
Texas Lime Company, a Texas Corporation
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-58311) pertaining to the United States Lime & Minerals, Inc.
1992 Stock Option Plan, as amended, of our report dated January 24, 1997, with
respect to the consolidated financial statements of United States Lime &
Minerals, Inc. and subsidiaries included in the Annual Report on Form 10-K for
the year ended December 31, 1996.
ERNST & YOUNG LLP
Dallas, Texas
March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,000
<SECURITIES> 0
<RECEIVABLES> 5,152
<ALLOWANCES> 0
<INVENTORY> 5,054
<CURRENT-ASSETS> 11,640
<PP&E> 59,785
<DEPRECIATION> 41,045
<TOTAL-ASSETS> 31,319
<CURRENT-LIABILITIES> 6,201
<BONDS> 0
0
0
<COMMON> 529
<OTHER-SE> 20,637
<TOTAL-LIABILITY-AND-EQUITY> 31,319
<SALES> 40,159
<TOTAL-REVENUES> 40,159
<CGS> 32,276
<TOTAL-COSTS> 32,276
<OTHER-EXPENSES> 4,359
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 563
<INCOME-PRETAX> 3,216
<INCOME-TAX> 614
<INCOME-CONTINUING> 2,602
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,602
<EPS-PRIMARY> .67
<EPS-DILUTED> .67
</TABLE>
