<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Advantica Restaurant Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3487402
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
203 East Main Street, Spartanburg, SC 29319
(Address of Principal Executive Offices) (Zip Code)
Advantica 401(k) Plan
(Full title of the plan)
----------------------------------------
Rhonda J. Parish, Esq.
Executive Vice President, General Counsel and Secretary
Advantica Restaurant Group, Inc.
203 East Main Street
Spartanburg, South Carolina 29319
(864) 597-8000
(Name, address and telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Amount to be Proposed Proposed Amount of
Securities to Be Registered Maximum Maximum Registration
Registered Offering Price Aggregate Fee
Per Share Offering
Price
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par 1,000,000 $10.469 (2) $10,469,000 (2) $3,089
value (1)
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this registration statement also covers an indeterminate amount of
interests to be offered pursuant to the employee benefit plan(s)
described herein.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) under the Securities Act of 1933, based upon
the average of the high and low prices of the Registrant's Common Stock
reported on the Nasdaq Stock MarketSM on June 25, 1998, which prices
were $10.688 and $10.250, respectively.
<PAGE> 2
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents have been filed by Advantica Restaurant Group,
Inc. ("Advantica" or the "Registrant") with the Securities and Exchange
Commission (the "Commission") and are hereby incorporated by reference in this
Registration Statement:
(1) The Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997, filed with the Commission pursuant to Section
13 of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
including the Registrant's Amendment No. 1 to Annual Report on Form
10-K/A filed as of the date hereof pursuant to Rule 15d-21 under the
1934 Act containing information required by Form 11-K with respect to
the plan;
(2) The Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended April 1, 1998.
(3) The Registrant's current reports on Form 8-K reporting
events occurring on January 7, 1998, January 15, 1998, April 1, 1998
and June 10, 1998; and
(4) The section entitled "Description of Registrant's
Securities To Be Registered" in Registrant's Registration Statement on
Form 8-A, filed with the Commission pursuant to the 1934 Act.
All documents subsequently filed by the Registrant with the Commission
pursuant to Sections 13(a), 13(c), 14, and 15(d) of the 1934 Act, prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such documents.
Item 4. Description of Securities.
Not Applicable
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Advantica Restaurant Group, Inc. is a Delaware corporation. Reference
is made to Section 102(b)(7) of the Delaware General Corporation Law (the
"DGCL"), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the DGCL (providing
for liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions) or (iv) for any transaction from which a director
derived an improper personal benefit.
Reference is also made to Section 145 of the DGCL, which provides that
a corporation may indemnify any persons, including officers and directors, who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation or is or was serving at the
request of such corporation as an officer, director, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorney's fees), judgements, fines and amounts
<PAGE> 3
paid in settlement actually and reasonably incurred by such person in connection
with such action, suit or proceeding, provided such officer, director, employee
or agent acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was unlawful. A Delaware corporation may indemnify officers, directors,
employees and agents in an action by or in the right of the corporation under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer, director, employee or agent is adjudged to be
liable to the corporation. Where an officer, director, employee or agent is
successful on the merits or otherwise in the defense of any action referred to
above, the corporation must indemnify him against the expenses that such
officer, director, employee or agent actually and reasonably incurs.
Advantica's Restated Certificate of Incorporation and By-Laws provide
for indemnification of its officers and directors to the full extent permitted
under Delaware law. Specifically, Articles Sixth and Seventh of the Restated
Certificate of Incorporation provide for indemnification of officers and
directors to the extent permitted by Section 145 of the DGCL and the elimination
of liability of directors to the extent permitted by Section 102(b)(7) of the
DGCL, and Article 5, Section 14 of the By-Laws provides for indemnification of
officers and directors to the extent permitted by Section 145 of the DGCL.
Consequently, the registrant maintains officers' and directors' liability
insurance for the benefit of its officers and directors. The Employment
Agreement dated as of January 7, 1998 between Advantica and James B. Adamson
also provides for indemnification by the Company to the extent permitted by
Delaware law and, in connection therewith, calls for the advancement of
attorney's fees and expenses (subject to repayment in certain circumstances).
The Registration Rights Agreement, dated as of January 7, 1998, among Advantica
and each of the holders of registrable securities named therein, provides for
indemnification by Advantica of the holder of registrable securities that is a
party thereto for control person liability, if any, in respect of certain claims
under the Securities Act.
Item 7. Exemption from Registration Claimed.
Not Applicable
Item 8. Exhibits
(A) The following exhibits are filed as a part of this Registration
Statement:
Exhibit No. Description
- ----------- -----------
4.1 Advantica 401(k) Plan
*4.2 Specimen Certificate of Common Stock of Advantica
(incorporated by reference to Exhibit 4.1 to Amendment No. 2
to the Registration Statement (No. 333-45811) of Advantica)
23.1 Consent of Deloitte & Touche, LLP
24.1 Power of Attorney (contained on the signature page to the
Registration Statement)
* Certain of the exhibits to this Registration Statement on Form S-8,
indicated by asterisk are hereby incorporated by reference to other
documents on file with the Commission with which they are physically
filed, to be part hereof as of their respective dates.
(B) In lieu of attaching as an exhibit the Internal Revenue Service
determination letter that the Advantica 401(k) Plan is qualified under Section
401 of the Internal Revenue Code of 1986, as amended, the Registrant hereby
undertakes that it has submitted or will submit the Advantica 401(k) Plan and
any amendments thereto to the Internal Revenue Service ("IRS") in a timely
manner and has made or will make all changes required by the IRS in order to
qualify such plan, as amended.
<PAGE> 4
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) That for the purposes of determining any liability under
the Securities Act of 1933, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Spartanburg, State of South Carolina, on this 26th
day of June, 1998.
ADVANTICA RESTAURANT GROUP, INC.
By: /s/ RHONDA J. PARISH
-----------------------------------
Rhonda J. Parish
Executive Vice President,
General Counsel and Secretary
Each person whose signature appears below constitutes and appoints
Rhonda J. Parish as his or her lawful attorney-in-fact and agent, acting alone,
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any or all
amendments (including, post-effective amendments) to this Registration Statement
and to file the same, with all exhibits thereto, and other documents, in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, acting alone, or his or her substitute or
substitutes may lawfully do or cause to be done by virtue hereof. Pursuant to
the requirements of the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Director, Chairman, President and Chief June 26, 1998
/s/ JAMES B. ADAMSON Executive Officer (Principal Executive Officer)
- -----------------------------------
(James B. Adamson)
/s/ RONALD B. HUTCHISON Executive Vice President and Chief Financial June 26, 1998
- ----------------------------------- Officer (Principal Financial and Accounting Officer)
(Ronald B. Hutchison)
/s/ ROBERT H. ALLEN Director June 26, 1998
- -----------------------------------
(Robert H. Allen)
Director June 26, 1998
- -----------------------------------
(Ronald E. Blaylock)
Director June 26, 1998
- -----------------------------------
(Vera King Farris)
/s/ JAMES J. GAFFNEY Director June 26, 1998
- -----------------------------------
(James J. Gaffney)
/s/ IRWIN N. GOLD Director June 26, 1998
- -----------------------------------
(Irwin N. Gold)
/s/ ROBERT E. MARKS Director June 26, 1998
- -----------------------------------
(Robert E. Marks)
Director June 26, 1998
- -----------------------------------
(Charles F. Moran)
/s/ ELIZABETH A. SANDERS Director June 26, 1998
- -----------------------------------
(Elizabeth A. Sanders)
/s/ DONALD R. SHEPHERD Director June 26, 1998
- -----------------------------------
(Donald R. Shepherd)
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Spartanburg, State of
South Carolina, on June 26, 1998.
Advantica 401(k) Plan
By /s/ Stephen W. Wood
------------------------------------
Stephen W. Wood
Executive President, Human Resources
and Corporate Affairs
Advantica Restaurant Group, Inc.
<PAGE> 1
EXHIBIT 4.1
FLAGSTAR THRIFT PLAN
AMENDED AND RESTATED
AS OF JANUARY 1, 1987
<PAGE> 2
TABLE OF CONTENTS
FLAGSTAR THRIFT PLAN
<TABLE>
<S> <C> <C>
ARTICLE I. RECITALS...........................................................................................-1-
ARTICLE II. DEFINITIONS AND CONSTRUCTION.......................................................................-2-
2.1 Definitions........................................................................................-2-
2.2 Construction......................................................................................-19-
2.3 Governing Law.....................................................................................-19-
2.4 Effect of Restatement.............................................................................-19-
ARTICLE III. PARTICIPATION AND SERVICE.........................................................................-20-
3.1 Participation.....................................................................................-20-
3.2 Service...........................................................................................-20-
3.3 Inactive Status...................................................................................-20-
3.4 Participation and Service Upon Reemployment.......................................................-20-
ARTICLE IV. CONTRIBUTIONS AND FORFEITURES.....................................................................-22-
4.1 Employer Matching Contributions and Employee Pre-Tax Contributions................................-22-
4.2 Employee After-Tax Contributions by Participants..................................................-23-
4.3 Participant's Election to Make Employee Pre-Tax Contributions.....................................-24-
4.4 Limitations on Employee Pre-Tax Contributions and on Employer Pre-Tax
Matching Contributions, Employer After-Tax Matching Contributions and
Employee After-Tax Contributions..................................................................-25-
4.5 Rollover Contributions............................................................................-30-
ARTICLE V. ALLOCATIONS TO PARTICIPANTS' ACCOUNTS.............................................................-32-
5.1 Individual Accounts...............................................................................-32-
5.2 Account Adjustments...............................................................................-32-
5.3 Maximum Additions.................................................................................-34-
ARTICLE VI. BENEFITS..........................................................................................-42-
6.1 Normal and Early Retirement or Disability.........................................................-42-
6.2 Death and Designation of Beneficiary..............................................................-42-
6.3 Termination for Other Reasons.....................................................................-43-
6.4 Payment of Benefits...............................................................................-43-
6.5 Withdrawals by Participants.......................................................................-48-
6.6 Loans to Participants.............................................................................-52-
6.7 Requirement of Qualified Joint and Survivor Annuity...............................................-52-
6.8 Distributions Pursuant to Qualified Domestic Relations Orders.....................................-54-
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE VII. TRUST FUND.......................................................................................-58-
7.1 Trust Fund.......................................................................................-58-
7.2 Collective Investment Subaccounts................................................................-58-
7.3 Special Provisions Regarding Investment of Trust Assets in Employer Stock........................-59-
ARTICLE VIII. ADMINISTRATION...................................................................................-62-
8.1 Allocation of Responsibility Among Fiduciaries for Plan Administration...........................-62-
8.2 Appointment of Committee.........................................................................-62-
8.3 Claims Procedure.................................................................................-63-
8.4 Records and Reports..............................................................................-63-
8.5 Other Committee Powers and Duties................................................................-63-
8.6 Rules and Decisions..............................................................................-64-
8.7 Committee Procedures.............................................................................-64-
8.8 Authorization of Benefit Payments................................................................-65-
8.9 Application and Forms for Benefits...............................................................-65-
8.10 Facility of Payment..............................................................................-65-
8.11 Inability to Locate Participant, Surviving Spouse or Beneficiary.................................-65-
8.12 Omission of Eligible Employee....................................................................-65-
8.13 Inclusion of Ineligible Employee.................................................................-66-
8.14 Bonding..........................................................................................-66-
8.15 Indemnification..................................................................................-66-
ARTICLE IX. MISCELLANEOUS....................................................................................-67-
9.1 Nonguarantee of Employment.......................................................................-67-
9.2 Rights to Trust Assets...........................................................................-67-
9.3 Nonalienation of Benefits........................................................................-67-
9.4 Discontinuance of Employer Contributions.........................................................-67-
ARTICLE X. AMENDMENTS AND ACTION BY EMPLOYER................................................................-68-
10.1 Amendments.......................................................................................-68-
10.2 Special Rules Regarding Amendments Relating to Vesting...........................................-68-
10.3 Action by Employer...............................................................................-69-
ARTICLE XI. SUCCESSOR EMPLOYER AND MERGER
OR CONSOLIDATION OF PLANS......................................................................................-70-
11.1 Successor Employer...............................................................................-70-
11.2 Plan Assets in the Event of Merger or Consolidation of Plans.....................................-70-
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE XII. PLAN TERMINATION..................................................................................-71-
12.1 Right to Terminate................................................................................-71-
12.2 Partial Termination...............................................................................-71-
12.3 Liquidation of the Trust Fund.....................................................................-71-
12.4 Manner of Distribution............................................................................-71-
ARTICLE XIII. RELATED CORPORATIONS..............................................................................-72-
13.1 Joinder...........................................................................................-72-
13.2 Contributions.....................................................................................-72-
13.3 Treatment of Employee Transfers...................................................................-72-
13.4 Commingling of Funds..............................................................................-73-
13.5 Special Provisions Regarding Canteen Group Employees..............................................-73-
13.6 Special Provisions Regarding TW Recreational Services, Inc. Employees.............................-74-
</TABLE>
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<PAGE> 5
FLAGSTAR THRIFT PLAN
AMENDED AND RESTATED
AS OF JANUARY 1, 1987
THIS PLAN, amended and restated as of January 1, 1987, by Flagstar
Corporation for itself and its affiliates which have adopted this Plan pursuant
to its terms as listed on Appendix A (collectively, the "Employer");
W I T N E S S E T H:
ARTICLE I. RECITALS
A. Effective as of April 25, 1968, the Employer adopted the Thrift Plan
for Noncontract Employees of TW Services, Inc. to encourage savings by eligible
employees.
B. The Plan was subsequently amended and restated several times and the
Plan name was changed to the Flagstar Thrift Plan effective June 16, 1993.
Effective as of January 1, 1987 (or as otherwise provided herein), the Employer
again desires to restate the Plan and has adopted the amended and restated Plan
as set forth herein.
C. The Plan and Trust are intended to meet the requirements of Sections
40l(a), 401(k) and 50l(a) of the Internal Revenue Code.
D. The provisions of this Plan shall apply only to an employee who has an
Hour of Service on or after the Effective Date. The rights and benefits, if
any, of a former employee shall be determined in accordance with the prior
provisions of the Plan in effect on the date his employment terminated.
NOW, THEREFORE, Flagstar Corporation for itself and its affiliates who have
adopted this Plan hereby amends and restates the Flagstar Thrift Plan in
accordance with the following terms and provisions.
<PAGE> 6
ARTICLE II. DEFINITIONS AND CONSTRUCTION
2.1 Definitions: The following words and phrases, when used herein, unless
their context clearly indicates otherwise, shall have the following respective
meanings:
(1) ACTUAL CONTRIBUTION PERCENTAGE or ACP: For any Plan Year
beginning after December 31, 1986, with respect to Participants who are members
of the Highly Compensated Employee group and the Non-Highly Compensated
Employee group, the average of the ratios (expressed as a percentage and
calculated separately for each Eligible Participant in each group) of:
(a) the sum of the Employer Pre-Tax Matching
Contributions, Employer After-Tax Matching Contributions and any Employee
After-Tax Contributions made under the Plan on behalf of each Eligible
Participant for such Plan Year (plus, such other Employee Pre-Tax Contributions
or qualified non-elective contributions under this or any other plan of the
Employer or Aggregated Employer as may be permitted under the Commissioner's
regulations), to
(b) each Eligible Participant's Compensation for such
Plan Year.
If other plans of the Employer or any Aggregated Employer have employee
contributions or matching contributions under Code Section 401(m), then all
such plans shall be treated as one plan for purposes of calculating the
Participants' ACP (using for this purpose each such plan's definition of ACP),
but such aggregation shall take place only to the extent that such plans are
treated as one plan for purposes of Code Section 410(b).
(2) ACTUAL DEFERRAL PERCENTAGE or ADP: For any Plan Year
beginning after December 31, 1986, with respect to the Highly Compensated
Employee group and Non-Highly Compensated Employee group, the average of the
ratios (expressed as a percentage and calculated separately for each Eligible
Participant in each group) of:
(a) the amount of Employee Pre-Tax Contributions paid
over to the Trust on behalf of each Eligible Participant, (plus such other
matching contributions and other qualified nonelective contributions allocated
to the Participant's Pre-Tax Account, as may be permitted under the
Commissioner's regulations), to
(b) each Eligible Participant's Compensation for the
Plan Year.
If other plans of the Employer or any Aggregated Employer have cash or deferred
arrangements under Code Section 401(k), then all such plans shall be treated as
one plan for purposes of calculating Participants' ADP, but only to the extent
that such plans are treated as one plan for purposes of Code Section 410(b).
Furthermore, for the purpose of determining the ADP of any Highly Compensated
Employee, all plans of the Employer and any Aggregated Employer which have cash
or deferred arrangements under Code Section 401(k) shall be treated as one
plan.
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<PAGE> 7
(3) ADDITIONS or ANNUAL ADDITIONS: With respect to each
Participant for each Limitation Year, the sum of: all Employee Pre-Tax
Contributions and Employer Pre-Tax Matching Contributions allocated to his
Pre-Tax Account; plus all Employee After-Tax Contributions and Employer
After-Tax Matching Contributions for such Limitation Year which were allocated
to his After-Tax Account (provided, that Employee After-Tax Contributions for
Plan Years beginning prior to January 1, 1987 shall be considered to be
Additions only to the extent they were considered as Additions under the Code
in existence as of that Plan Year). The term "Annual Additions" does not
include the following: amounts contributed to an account because of an
erroneous forfeiture or an erroneous failure to allocate in a prior Limitation
Year, but such forfeiture reinstatement or contribution (less actual investment
gains attributable to the period subsequent to the Limitation Year to which it
relates) will be considered an Annual Addition for the Limitation Year to which
it relates; the allowable restoration of accrued benefits following either
repayment of withdrawn mandatory Employee contributions or repayments of
benefits paid out; amounts distributed from the Plan as permitted by Code
Section 402(g)(2) and Treasury Regulation Section 1.415-6(b)(6)(iv); or the
transfer of funds from another qualified plan. Furthermore, with respect to a
Participant's Employee After-Tax Contributions, the term "Annual Additions"
does not include the following: rollover contributions as permitted under
ERISA; repayments of loans made to a Participant; allowable repayments of
either withdrawn mandatory Employee contributions or benefits paid out;
qualified voluntary Employee contributions allowed under Code Section
219(e)(2); or the direct transfer of funds from another qualified plan, if any,
pursuant to Section 4.5 of this Plan. 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 annuity plan maintained by the Employer shall be treated
as Annual Additions to a defined contribution plan. 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
under a welfare benefit fund (as defined in Code Section 419(e)) maintained by
the Employer which are allocated to the separate account of an Employee who is
or was a Key Employee during the Plan Year or the preceding Plan Year, also
shall be treated as Annual Additions to a defined contribution plan.
(4) AFTER-TAX ACCOUNT: The account maintained to record the
aggregate total amount of a Participant's Employee After-Tax Contributions and
Employer After-Tax Matching Contributions and adjustments relating thereto.
(5) AGGREGATED EMPLOYER: An employer (whether or not considered
an Employer under the Plan) required to be aggregated with the Employer under
subsection b, c, m, n or o of Code Section 4l4; provided, that another employer
shall be an Aggregated Employer for any Plan Year only to the extent the
foregoing subsections of Code Section 414 applied with respect to that Plan
Year, and only to the extent such employer is required to be aggregated
notwithstanding the separate lines of business provisions of Code Section
414(r).
(6) ALTERNATE PAYEE: A beneficiary as defined in Section 6.8.
(7) ANNIVERSARY DATE: December 31 of each year.
-3-
<PAGE> 8
(8) AUTHORIZED LEAVE OF ABSENCE: Any absence authorized in
writing by the Employer under the Employer's standard personnel practices,
provided that all persons under similar circumstances must be treated alike in
the granting of such Authorized Leaves of Absence and provided further that the
Participant returns within the period of authorized absence. An absence due to
service in the Armed Forces of the United States shall be considered an
Authorized Leave of Absence to the extent required by applicable statutes of
the United States in effect from time to time, provided that the Employee
returns to employment with the Employer within the period provided by law.
(9) BENEFICIARY: A person or persons (natural or otherwise)
designated in accordance with the provisions of Section 6.2(b) to receive any
death benefit which shall be payable under this Plan.
(10) BREAK IN SERVICE: A Break in Service shall occur for any
consecutive twelve month period after the Effective Date beginning on an
Employee's Severance from Service Date and ending on the first anniversary of
such date during which the Employee fails to complete one Hour of Service. A
Break in Service shall not be deemed to have occurred during any period of
Authorized Leave of Absence if the Employee returns to the employ of the
Employer within the period of authorized absence.
Solely for purposes of determining whether a Break in Service has
occurred in a computation period for participation purposes, an individual who
is absent from work beyond the first anniversary of the first day of absence
for a period by reason of Maternity Leave (as defined in Section 2.1) shall
receive credit for the period of Service from the first anniversary of the
first day of absence to the second anniversary of the first day of absence.
Such Service shall only count as Service for purposes of determining whether a
Break in Service has occurred and shall not otherwise count as a period of
Service or a Period of Severance.
(11) CHANGE DATE: The first day of the first payroll period in any
calendar month. The Committee may designate different Change Dates for
different purposes, for example, fewer Change Dates may be designated to reduce
Employee Pre-Tax Contributions than to increase Employee Pre-Tax Contributions.
(12) CODE: The Internal Revenue Code of 1986, as amended.
(13) COMMISSIONER: The Commissioner of Internal Revenue. For
purposes of this Plan, Commissioner also refers to the Department of the
Treasury with respect to official regulations and pronouncements under the
Code.
(14) COMMITTEE: The person or persons appointed under the
provisions of Article VIII to administer the Plan.
(15) COMPENSATION:
-4-
<PAGE> 9
(a) The total of all amounts paid to a Participant by
the Employer within the meaning of Code Section 3401(a) and all other payments
of compensation to a Participant by the Employer (in the course of the
Employer's trade or business) for which the Employer is required to furnish the
Participant a written statement under Code Sections 6041(d), 6051(a)(3) and
6052 ("Box 1" compensation on 1993 Form W-2) for the Plan Year; plus any
amounts not includible by the Employer in the Participant's income for that
Plan Year by virtue of Participant salary deferrals pursuant to Code Sections
125, 401(k), 403(b), or 408(k). Compensation shall not include reimbursements
or other expense allowances, fringe benefits (cash and noncash), moving
expenses, deferred compensation and welfare benefits (such exclusions to
include, without limitation, severance pay, relocation allowances, gross-up pay
to compensate for taxable reimbursements, hiring bonuses, imputed income for
use of Employer property or services, compensation resulting from participation
in any stock option plan, overseas pay, cost of living differentials, and any
type of non-cash compensation). Solely for purposes of making Employee
After-Tax Contributions and calculating Employer After-Tax Matching
Contributions thereon, compensation also shall exclude all amounts other than
base salary.
(b) For Plan Years beginning prior to January 1, 1989 in
which the Plan is a Top-Heavy Plan, and for any Plan Year beginning after
December 31, 1988 but before January 1, 1994 (regardless of whether the Plan is
a Top-Heavy Plan), the Compensation taken into account for any Employee shall
not exceed $200,000 for any Plan Year (or such greater amount as authorized by
the Commissioner). For Plan Years beginning after December 31, 1993, the
Compensation taken into account for any Employee shall not exceed $150,000 for
any Plan Year (or such greater amount as authorized by the Commissioner),
regardless of whether the Plan is a Top-Heavy Plan. In determining the
Compensation of a Participant for purposes of this adjusted $150,000 (or
$200,000) limitation, the family aggregation rules of Code 414(q)(6) shall
apply, except that in applying these rules, the term Family Member shall
include only the spouse of a Participant and any lineal descendants of a
Participant who have not attained age nineteen before the last day of the Plan
Year. If the adjusted $150,000 (or $200,000) limitation is exceeded as a result
of the application of this family aggregation rule, then 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.
(c) In the event that the definition of Compensation as
stated above is subject to the nondiscrimination requirement of Treasury
Regulation Section 1.414(s)-1(d)(3), the average percentage of total
compensation for all Highly Compensated Employees shall not exceed by more than
a de minimis amount the average percentage of total compensation for all
employees who are not Highly Compensated Employees within the meaning of
Treasury Regulation Section 1.414(s)-1(d)(3). In the event that this provision
requires that Compensation for Highly Compensated Employees be reduced, such
reduction shall be made by decreasing the Compensation for all Highly
Compensated Employees by the same percentage, such percentage to be the
smallest whole percentage necessary to satisfy Treasury Regulation Section
1.414(s)-1(d)(3).
(16) DETERMINATION DATE: The last day of the preceding Plan Year
(or, in the case of the first Plan Year of the Plan, the last day of that first
Plan Year).
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<PAGE> 10
(17) DIRECT ROLLOVER: A payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
(18) DISABILITY: A physical or mental condition which in the
judgment of the Committee, based upon medical reports and other evidence
satisfactory to the Committee, permanently prevents an Employee from
satisfactorily performing his usual duties for the Employer.
(19) DISTRIBUTEE: 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 Code Section 414(p), are Distributees
with regard to the interest of the spouse or former spouse.
(20) DOMESTIC RELATIONS ORDER: An order as defined in Section 6.8.
(21) EARLIEST RETIREMENT AGE: The date on which a Participant
becomes eligible to elect to receive normal retirement benefits under Section
6.1 or, if earlier, for early retirement benefits under Section 6.1.
(22) EARLY RETIREMENT AGE: The first day of the month coincident
with or next following age fifty-five and the completion of five Years of
Service.
(23) EFFECTIVE DATE: January 1, 1987, the date on which the
provisions of this amended and restated Plan became effective; provided, that
specific provisions of this Plan may be effective as of other dates to the
extent specifically stated in the Plan. The Original Effective Date of this
Plan is April 25, 1968.
(24) ELIGIBLE PARTICIPANT: With respect to any Plan Year, a
Participant who is eligible to make an Employee Pre-Tax Contribution or
Employee After-Tax Contribution, or to receive an Employer Pre-Tax Matching
Contribution or Employer After-Tax Matching Contribution under this Plan.
(25) ELIGIBLE RETIREMENT PLAN: 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; provided, that 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.
(26) ELIGIBLE ROLLOVER DISTRIBUTION: Any distribution of all or
any portion of the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include (i) any distribution that is
one of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
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<PAGE> 11
Distributee or the joint lives (or joint life expectancies) of the Distributee
and the Distributee's designated Beneficiary, or for a specified period of ten
years or more; (ii) any distribution to the extent such distribution is
required under Code Section 401(a)(9); and (iii) the portion of any
distribution that is not includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to Employer
securities).
(27) EMPLOYEE:
(a) Any person who, on or after the Effective Date, is
classified by the Employer as a salaried exempt employee or salaried non-exempt
employee, including any officer who, on or after the Effective Date, is
receiving regular compensation from the Employer in United States currency
other than a retainer or fee under a contract.
(b) Employee shall not include independent contractors
or any individual who is included in a unit of employees covered by a
collective bargaining agreement (within the meaning of Code Section
7701(a)(46)) between an employee representative and the Employer under which
retirement benefits were the subject of good faith bargaining between the
parties (unless and only to the extent that the collective bargaining agreement
expressly provides for inclusion in this Plan).
(c) Leased employees under Code Section 414 shall not be
included in the definition of Employee for purposes of Participation or benefit
accrual under the Plan; provided, that such leased employees shall be
considered as employees for purposes of applying the various tests under Code
Sections 401, 404, 408(k) and 416, and Service as a leased employee shall be
counted under the Plan for vesting purposes in the event that a leased employee
changes status so as to become eligible for Participation under the Plan.
(d) Effective January 1, 1989, Employees who are Highly
Compensated Employees shall not be eligible to participate in the Plan as
provided in Section 3.1.
(28) EMPLOYEE AFTER-TAX CONTRIBUTIONS: Contributions made by a
Participant on an after-tax basis pursuant to Section 4.2 of the Plan.
(29) EMPLOYEE PRE-TAX CONTRIBUTIONS: Contributions made by a
Participant on a pre-tax basis pursuant to Section 4.3 of the Plan.
(30) EMPLOYER: Flagstar Corporation, a corporation organized and
existing under the laws of the State of Delaware, or its successor or
successors that assume Plan liabilities pursuant to Article XI and any related
corporation or entity which adopts this Plan with the consent of Flagstar
Corporation. Adopting Employers as of January 1, 1994, are listed on Appendix
A.
(31) EMPLOYER AFTER-TAX MATCHING CONTRIBUTION: After-tax matching
contributions made by the Employer pursuant to Section 4.1(a)(iii).
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<PAGE> 12
(32) EMPLOYER PRE-TAX MATCHING CONTRIBUTION: Pre-tax matching
contributions made by the Employer pursuant to Section 4.1(a)(ii).
(33) EMPLOYER STOCK: The preferred and/or common stock of the
Employer or any other corporation which is a member of the same controlled
group as defined in Code Section 414(b).
(34) ENTRY DATE: The first day of any payroll period.
(35) ERISA: Public Law No. 93-406, the Employee Retirement Income
Security Act of l974, as amended from time to time.
(36) EXCESS CONTRIBUTIONS: With respect to any Plan Year, the
excess of:
(a) The aggregate amount of Employer Pre-Tax Matching
Contributions, Employer After-Tax Matching Contributions and any Employee
After-Tax Contributions (plus any Employee Pre-Tax Contributions or qualified
non-elective contributions taken into account in computing the ACP) actually
made for that Plan Year on behalf of a Highly Compensated Employee, over
(b) the maximum amount of such contributions permitted
under the limitations of Section 4.4(b), determined by reducing such
contributions made on behalf of Highly Compensated Employees in order of their
individual Actual Contribution Percentages beginning with the highest such
percentage.
(37) EXCESS DEFERRALS: With respect to any Plan Year, the excess
of:
(a) the aggregate amount of Employee Pre-Tax
Contributions (plus such other Employer Pre-Tax Matching Contributions,
Employer After-Tax Matching Contributions and other qualified non-elective
contributions taken into account under Code Section 401(k)(3)(D) in computing
the ADP) actually paid over to the Trust for that Plan Year on behalf of a
Highly Compensated Employee, over
(b) The maximum amount of such deferrals permitted under
the limitations of Section 4.4(a), determined by reducing Employee Pre-Tax
Contributions made on behalf of Highly Compensated Employees in order of their
individual Actual Deferral Percentages beginning with the highest such
percentage.
(38) FAMILY MEMBER: With respect to any individual, his spouse and
lineal ascendents or descendents, and the spouses of such lineal ascendents and
descendents.
(39) FIDUCIARIES OR NAMED FIDUCIARIES: The Employer, the Committee
and its members, and the Trustee, but only with respect to the specific
responsibilities of each
-8-
<PAGE> 13
for Plan administration, all as described in Section 8.1. If an Investment
Manager is appointed as provided in Section 8.1, it also shall be a Fiduciary.
(40) FIVE PERCENT OWNER: With respect to a Plan Year, an owner of
more than five percent of the outstanding stock (or an owner of stock
possessing more than five percent of the total combined voting power, or an
owner of more than five percent of the capital or profits interest of an
unincorporated business) of the Employer or of any one of the Aggregated
Employers (ownership in the Employer and Aggregated Employers not being
considered together). In determining ownership, the constructive ownership
rules of Code Section 416(i)(1)(B)(iii) shall apply.
(41) FLAGSTAR: Flagstar Corporation, a corporation organized under
the laws of the State of Delaware, or its successor or successors.
(42) FORMER PARTICIPANT: A Participant whose employment with the
Employer has terminated but who has a vested account balance under the Plan
which has not been paid in full.
(43) 4l5 COMPENSATION: The total of all amounts paid to a
Participant by the Employer within the meaning of Code Section 3401(a) and all
other payments of compensation to a Participant by the Employer (in the course
of the Employer's trade or business) for which the Employer is required to
furnish the Participant a written statement under Code Sections 6041(d),
6051(a)(3) and 6052 ("Box 1" compensation on 1993 Form W-2) for the Plan Year;
provided, that for all purposes other than determining compliance with Code
Section 415 (as described in Section 5.3), 415 Compensation also shall include
elective or salary reduction contributions to a cash or deferred arrangement,
cafeteria plan, simplified employee pension or tax-sheltered annuity pursuant
to Code Sections 401(k), 125, 408(k) or 403(b).
(44) HIGHLY COMPENSATED EMPLOYEE: Any Employee of the Employer who
is a "highly compensated employee" as defined in Code Section 414(q) and the
regulations thereunder; provided that, for purposes of determining eligibility
to participate under the Plan, the Committee may deem additional Employees to
be Highly Compensated Employees. With respect to any Plan Year, such definition
generally shall include any Employee or former Employee who during the Plan
Year:
(a) was at any time a Five Percent Owner;
(b) received 415 Compensation from the Employer and all
Aggregated Employers in excess of $75,000 (or greater amount authorized by the
Commissioner);
(c) both received 415 Compensation from the Employer and
all Aggregated Employers in excess of $50,000 (or greater amount authorized by
the Commissioner) and was in the Top Paid Group of employees for such Plan
Year; or
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<PAGE> 14
(d) was at any time both an officer (as defined and
limited in the definition of Key Employee) and had 415 Compensation in excess
of fifty percent of the amount in effect under Code Section 415(b)(1)(A) for
such Plan Year, provided that at least the one highest paid officer shall
always be taken into account for a Plan Year.
If any employee is a Family Member of (i) a Five Percent Owner or (ii) a Highly
Compensated Employee who is in the group consisting of the ten Highly
Compensated Employees receiving the most 415 Compensation during the Plan Year,
then such Employee shall not be considered a separate employee, but shall be
aggregated with all his Family Members so that any 415 Compensation and any
Plan contributions or benefits (including Employee Pre-Tax Contributions) are
treated as if paid to or on behalf of one single Highly Compensated Employee.
Notwithstanding the foregoing, this Plan has a calendar Plan Year and
has elected to use the "calendar year calculation election" described in
Section 1.414(q)-1T, Q&A 14(b) of the Commissioner's regulations and thus need
not consider the prior Plan Year in determining who is a Highly Compensated
Employee. In the event that this Plan ceases to have a calendar Plan Year, then
an individual also will be a Highly Compensated Employee if he met any of the
above criteria during the prior Plan Year.
A former employee also shall be considered a Highly Compensated
Employee if he was a Highly Compensated Employee for the year of separation
from Service or for any Plan Year ending on or after the employee attains age
fifty-five.
(45) HOUR OF SERVICE or HOUR OF CREDITED SERVICE:
(a) Each hour during the applicable computation period
when the Employee is directly or indirectly paid or entitled to payment by the
Employer for the performance of duties for the Employer. An Hour of Service
also includes 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), lay-off,
jury duty, military duty or Authorized Leave of Absence.
(b) Hours of Service determined under the preceding
sentences shall include each hour for which back pay, irrespective of
mitigation of damages, has been awarded or agreed to by the Employer; provided
that (i) no more than 50l Hours of Service are required to be credited to an
Employee on account of any single continuous period during which he performs no
duties whether or not such period occurs in a single computation period, (ii)
such hours will be credited to the Employee for the computation period or
periods to which the award or agreement pertains, (iii) an hour for which an
Employee is directly or indirectly paid or entitled to payment on account of a
period during which no duties are performed will not be credited if such
payment is on account of compliance with worker's compensation or unemployment
compensation or disability insurance laws, and (iv) hours will not be credited
for payments which solely reimburse an Employee for medical or medically
related expenses incurred by him.
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<PAGE> 15
(c) In applying the rules of the preceding sentences,
the provisions of paragraphs (b) and (c) of Section 2530.200b-2 of the
Department of Labor regulations shall apply and are incorporated herein by
reference.
(46) INCOME: The net gain or loss of the Trust Fund from
investments, as reflected by interest payments, dividends, realized and
unrealized gains and losses on securities, other investment transactions and
expenses paid from the Trust Fund. In determining the Income of the Trust Fund
for any period, assets shall be valued on the basis of their fair market value.
Amounts which are distributed to Participants as Excess Contributions, Excess
Deferrals, or excess amounts under Code Section 402(g) shall include Income for
the Plan Year and for the period between the end of the Plan Year (or taxable
year in the case of excess amounts under Code Section 402(g)) through the date
of distribution, with such Income being calculated for the Plan Year by
multiplying the Income for the Plan Year (or taxable year) by a fraction. The
numerator of the fraction is the amount of Excess Deferrals or Excess
Contributions, as the case may be, made for the Plan Year (or taxable year).
The denominator of the fraction is the total account balance of the Employee
attributable to Excess Deferrals or Excess Contributions as of the end of the
Plan Year (or taxable year) reduced by the gain allocable to such amount for
the Plan Year (or taxable year) and increased by the loss allocable to such
total amount for the taxable year. Such Income shall be calculated for the
period from the end of the Plan Year (or taxable year) through the date of
distribution by multiplying the amount which is ten percent of the allocable
Income for the Plan Year (or taxable year) by the number of calendar months
that have elapsed since the end of such year. Distributions made on or before
the fifteenth day of the month shall be treated as having been made on the last
day of the preceding month, and a distribution made after the fifteenth of the
month shall be treated as having been made on the first day of the next
subsequent month.
(47) INVESTMENT MANAGER: A Fiduciary (other than the Trustee or
Named Fiduciary) who:
(a) has the power to manage, acquire or dispose of any
asset(s) of the Plan;
(b) is (i) registered as an investment adviser under the
Investment Adviser Act of 1940, (ii) a bank as defined in that Act, or (iii) an
insurance company qualified to perform services described in subparagraph (a)
under the laws of more than one State; and
(c) has acknowledged that he or it is a Fiduciary with
respect to the Plan.
(48) KEY EMPLOYEE: Any employee or Partner of the Employer or any
Aggregated Employer who is at any time during the Plan Year containing the
Determination Date, or was during any of the four preceding Plan Years, any one
or more of the following:
(a) A duly authorized officer of the Employer in regular
and continued service having 415 Compensation during the Plan Year greater than
fifty percent of the maximum dollar limitation under Code Section 415(b)(1)(A)
in effect for the calendar year containing the
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<PAGE> 16
Determination Date, provided that if during such Plan Year the number of
employees (whether or not Employees under the Plan) of the Employer plus all
other Aggregated Employers is:
(i) less than thirty, then no more than a total
of three individuals shall be considered officers for that Plan Year for the
Employer and all Aggregated Employers,
(ii) greater than thirty but less than five
hundred, then no more than a total of ten percent of the total employees shall
be considered officers for that Plan Year for the Employer and all Aggregated
Employers, or
(iii) greater than five hundred, then no more
than a total of fifty employees shall be considered officers for that Plan Year
for the Employer and all Aggregated Employers; or
(b) One of the ten employees (whether or not Employees
under the Plan) owning the largest interest in the Employer and Aggregated
Employers during such Plan Year (the Employer and Aggregated Employers being
considered as one unit) if he has 415 Compensation during the Plan Year of more
than the maximum dollar limitation under Code Section 415(c)(1)(A) in effect
for the calendar year containing the Determination Date; provided that an
employee need not be considered if he does not have an ownership interest of
more than one-half of one percent in value, and if two employees have the same
interest in the Employer and Aggregated Employer, then the employee having the
greater 415 Compensation from the Employer and Aggregated Employers for the
calendar year containing the Determination Date shall be treated as having a
larger interest; or
(c) A Five Percent Owner; or
(d) An owner of one percent of the outstanding stock (or
an owner of stock possessing one percent of the total combined voting power) of
the Employer or of any one of the Aggregated Employers (ownership in the
Employer and Aggregated Employers not being considered together) for such Plan
Year, if he has annual 415 Compensation during the Plan Year from the Employer
and all Aggregated Employers totalling more than $l50,000.
For purposes of determining ownership under subSection s (b), (c) and (d)
above, the constructive ownership rules of Code Section 3l8 shall apply as
modified by Code Section 4l6(i). The beneficiary of a former Key Employee shall
continue to be treated as such former Key Employee. If a maximum number of
employees are to be considered officers under subSection (a) above, the
officers having the largest annual 415 Compensation during such Plan Year shall
be the officers considered under subSection (a).
(49) LIMITATION YEAR: The Limitation Year shall be the twelve
month period ending on each Anniversary Date.
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<PAGE> 17
(50) MATERNITY LEAVE: Absence from work for maternity or paternity
reasons by an individual (male or female) on account of and by reason of (a)
the pregnancy of the individual, (b) the birth of a child of the individual,
(c) the placement of a child with the individual in connection with the
adoption of such child by such individual, or (d) caring for a child referred
to above for a period beginning immediately following such birth or placement.
A period of absence shall not be considered Maternity Leave for purposes of
this Plan unless both (i) such absence began on or after the first day of the
first Plan Year beginning after December 31, 1984, and (ii) the individual
furnishes the Committee such timely information as the Plan reasonably may
require to establish that the absence from work is for one of the reasons
referred to above and the number of days for which there was such an absence.
The determination of whether an individual has taken a Maternity Leave for
purposes of this Plan shall not have any effect upon whether such absence from
work is entitled to any other special treatment by the Employer for any other
employment purposes, and the existence of these Maternity Leave provisions in
the Plan shall not be in any way determinative of whether the Employer has any
other maternity or paternity leave policy or the terms of that policy (if any).
(51) NON-HIGHLY COMPENSATED EMPLOYEE: Any Participant who is
neither a Highly Compensated Employee nor a Family Member of a Highly
Compensated Employee.
(52) NONKEY EMPLOYEE: Any employee (or former employee) of the
Employer or any Aggregated Employer who is not a Key Employee. The beneficiary
of a Nonkey Employee or a former Nonkey Employee shall continue to be treated
as such Nonkey Employee or former Nonkey Employee.
(53) NORMAL RETIREMENT AGE: For any Participant who enters the
Plan on or after January 1, 1988, the later of the date the Participant attains
age sixty-five and the fifth anniversary of Participation in the Plan. For
Participants who entered the Plan before January 1, 1988, the date the
Participant attains age sixty-five.
(54) PARTICIPANT: An Employee participating in the Plan in
accordance with the provisions of Section 3.1; provided, that for purposes only
of making or transferring a rollover contribution to the Plan under Section
4.5, an Employee shall be considered a Participant once he has become an
Employee who would be eligible to be a Participant but for the age or Service
requirements of Section 3.1.
(55) PARTICIPATION: The period commencing on the date the Employee
becomes a Participant and ending on the date his employment with the Employer
terminates.
(56) PAYMENT STARTING DATE: The latest date until which the Plan
may delay payment of benefits to a Participant in the absence of the
Participant's consent to later payment. Such date shall be the sixtieth day
after the close of the Plan Year in which the last of the following events
occurs: (a) the Participant attains the earlier of age sixty-five or the Normal
Retirement Age, (b) the tenth anniversary of the year in which the Participant
commenced Participation in the Plan, or (c) the Participant terminates his
Service with the Employer; provided
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<PAGE> 18
further, that benefits also must commence not later than April 1 of the
calendar year following the calendar year in which a Participant attains age
seventy and one-half, even if he is still employed by the Employer, except as
may otherwise be allowable under Section 242(b)(2) of the Tax Equity and Fiscal
Responsibility Act of 1982 and Section 521 of the Deficit Reduction Act of 1984
(regarding special designations filed before January 1, 1984), and except as
may otherwise be allowable under Section 1121(d) of the Tax Reform Act of 1986
(regarding Participants, other than certain Five Percent Owners, who reached
age seventy and one-half before January 1, 1988 and certain collective
bargaining agreements). If the amount of payment cannot be determined or the
proper recipient located before the Payment Starting Date, retroactive payment
may be made to such date in accordance with Treasury Regulation Section
1.401(a)-14(d).
(57) PERIOD OF SEVERANCE: The period of time beginning on an
Employee's Severance from Service Date and ending on the date the Employee
again performs an Hour of Service.
(58) PLAN: The Flagstar Thrift Plan (formerly called the Thrift
Plan for Noncontract Employees of TW Services, Inc.), the Plan set forth
herein, as amended from time to time.
(59) PLAN ADMINISTRATOR: The Committee appointed pursuant to
Section 8.2 or, in the absence of such appointment, the Employer.
(60) PLAN YEAR: The consecutive twelve month period commencing on
January 1 and ending on the following December 31.
(61) PRESENT VALUE OF ACCRUED BENEFITS: With respect to any
individual and as of any Determination Date, the sum of (a) his After-Tax
Account and Pre-Tax Account balances on the most recent Valuation Date (which
for the first Plan Year of the Plan shall include contributions made after the
Determination Date which are allocated as of a date in the first Plan Year, but
otherwise shall only include allocated contributions which actually were made
after the Valuation Date if such contributions were made on or before the
Determination Date) less any Employee After-Tax Contributions which were
deductible under Code Section 219(e)(2), and (b) his Rollover Account balance
(if any) as of the most recent Valuation Date to the extent it is attributable
to any rollover contribution from a plan of an Aggregated Employer and/or any
rollover contribution accepted on or before December 31, 1983. For purposes of
determining whether the Plan is a Top-Heavy Plan, the Present Value of Accrued
Benefits also shall include the amount of Plan distributions (whether made on
or after the Effective Date and including distributions from a terminated plan
which would have been required to be aggregated under the definition of
Top-Heavy Plan) made within the five consecutive Plan Year period ending on the
Determination Date to any Key Employee or Nonkey Employee or Beneficiary
thereof (regardless of whether such individual is employed or has an accrued
benefit as of the Determination Date); provided, that distributions of benefits
paid on account of death shall be deemed to include only the present value of
benefits existing immediately prior to death. For Plan Years beginning after
December 31, 1984, if an individual has not performed an Hour of Service for
any employer
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<PAGE> 19
maintaining the Plan at any time during the five year period ending on the
Determination Date, any account balance or accrued benefit for such individual
shall be disregarded.
(62) PRE-TAX ACCOUNT: The account maintained to record a
Participant's Employee Pre-Tax Contributions and Employer Pre-Tax Matching
Contributions and adjustments relating thereto.
(63) QUALIFIED DOMESTIC RELATIONS ORDER: An order as defined in
Section 6.8.
(64) QUALIFIED JOINT AND SURVIVOR ANNUITY: An immediate annuity
for the life of the Participant with a survivor annuity for the life of his
Surviving Spouse which is fifty percent of the amount payable during the joint
lives of the Participant and his spouse, which annuity is the actuarial
equivalent of a single annuity for the life of the Participant (that is, has
been purchased with the total of all vested account balances of the
Participant). With respect to a Participant who is not married to a Surviving
Spouse, a Qualified Joint and Survivor Annuity shall be an annuity for the life
of the Participant.
(65) ROLLOVER ACCOUNT: The account established pursuant to Section
4.5 hereof to record permissible rollover contributions from another qualified
plan or an Individual Retirement Account and adjustments relating thereto.
(66) SERVICE: Effective January 1, 1990 Service shall be as
follows:
(a) An Employee's period of employment with the
Employer. Service shall be measured from the date an Employee first performs an
Hour of Service for the Employer until his first Severance From Service Date.
If an Employee returns to employment after his Severance From Service Date,
Service also shall include the period of employment with the Employer measured
from the date the Employee again performs an Hour of Service following
re-employment and ending on his next Severance From Service Date; provided
that, certain periods of Service may be disregarded as provided in Section 3.4.
(b) If an Employee terminates employment while an active
Employee as a result of quitting, being discharged or retiring, and then
performs an Hour of Service within twelve months from his Severance From
Service Date, the Period of Severance shall be counted as Service.
(c) If an Employee terminates employment as a result of
quitting, being discharged or retiring at a time when he was absent from
Service for any other reason (e.g., leave of absence, layoff, sickness,
holiday, vacation or disability) and then performs an Hour of Service within
twelve months of the date on which the Employee was first absent from Service
(e.g., due to leave of absence, lay off, sickness, holiday, vacation or
disability), the Period of Severance shall be counted as Service.
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<PAGE> 20
(d) Service shall include all periods of Authorized
Leave of Absence provided the Employee returns to the employ of the Employer
upon expiration of the Authorized Leave of Absence.
(e) Service shall be expressed as whole years and
fractional parts of a year. Thirty days of Service shall equal one month of
Service and 12 months of Service or 365 days of Service shall equal one Year of
Service.
(f) Service with the Employer also shall include Service
with an Aggregated Employer for the period during which the employers are
considered aggregated. Except as specifically indicated otherwise, Service for
the purposes of vesting and eligibility shall include all Service with an
Aggregated Employer on the date the employer became an Aggregated Employer.
(g) Service for any Employee as of January 1, 1989 shall
not be less than years of Service which he would have been credited on December
31, 1988, under the Plan then in effect and Service for any Employee as of
January 1, 1990 shall not be less than Years of Service which he would have
been credited on December 31, 1989 under the Plan then in effect.
(h) Periods of employment before an interruption of
full-time employment commencing before January 1, 1976 shall not be counted
unless such periods would have been counted under the rules of the Plan in
effect as of January 1, 1976.
(i) Notwithstanding the foregoing provisions, the
Committee in its discretion (but subject to any specific directions that may be
given by the Board of Directors of Flagstar) may grant Service credit to any
group of persons who become Employees as a result of the acquisition of any
asset, corporation or other trade or business, for so much of their service
with a previous employer as the Committee may specify. All such decisions by
the Committee and the reasons therefor shall be recorded in writing in the
minutes of the meeting at which a decision thereon is reached.
(j) Service following re-employment shall be determined
in accordance with Section 3.4. Service for Employees who transfer between
classes of employment, between Related Employers (as defined in Section 13.3)
and between Employers shall be determined in accordance with Section 13.3.
(67) SEVERANCE FROM SERVICE DATE: The earlier of (a) the date an
Employee quits, retires, is discharged or dies, or (b) the first anniversary of
the date an Employee separates from Service with the Employer or an Aggregated
Employer and remains absent (with or without pay) for a reason other than
quitting, retiring, being discharged or dying (e.g., leave of absence, layoff,
sickness, holiday, vacation or disability.
(68) SUPER TOP-HEAVY PLAN: The Plan will be a Super Top-Heavy Plan
with respect to any Plan Year in which as of the Determination Date it is a
Top-Heavy Plan in which
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the Present Value of Accrued Benefits for Key Employees exceeds ninety percent
of the Present Value of Accrued Benefits for all Key Employees and Nonkey
Employees who are or were Plan Participants. In determining whether a Plan is a
Super Top-Heavy Plan, all the rules of determining whether the Plan is a
Top-Heavy Plan shall be applied except that "ninety percent" shall be
substituted for "sixty percent."
(69) SURVIVING SPOUSE: The surviving spouse of a Participant, but
only if the Participant and that spouse had been married throughout the one
year period ending on the earlier of (a) the Participant's Payment Starting
Date or (b) the date of the Participant's death. If a Participant marries
within one year before his Payment Starting Date and the Participant and his
spouse in such marriage have been married for at least a one year period ending
on or before the date of his death, such Participant and his spouse also shall
be treated as having been married throughout the one year period ending on the
Participant's Payment Starting Date. A former spouse of a Participant will be
treated as a Surviving Spouse to the extent it specifically is provided under a
Qualified Domestic Relations Order as described in Article VI of this Plan and
Code Section 414(p).
(70) SUSPENSE ACCOUNT: The account maintained for the Trustee to
record any part of the Employer Contribution which is an excess Annual Addition
under Section 5.3 of the Plan and adjustments relating thereto.
(71) TOP-HEAVY PLAN: The Plan will be a Top-Heavy Plan with
respect to any Plan Year in which, as of the Determination Date, the Present
Value of Accrued Benefits under the Plan for all Key Employees exceeds sixty
percent of the Present Value of Accrued Benefits for all Key Employees and
Nonkey Employees who are or were Plan Participants; provided, that if any
individual is a Nonkey Employee with respect to any Plan Year but was a Key
Employee with respect to any prior Plan Year, the Present Value of Accrued
Benefits for such individual shall not be taken into account in determining
whether the Plan is a Top-Heavy Plan. In determining whether the Plan is a
Top-Heavy Plan, the Plan shall be aggregated with each plan of an Employer or
Aggregated Employer in which a Key Employee is a participant and with each
other plan of an Employer or Aggregated Employer which enables any such plan to
meet the requirements of Code Sections 401(a)(4) or 410, and may be
aggregated with any or all other plans of an Employer or Aggregated Employer if
such aggregation group would continue to meet the requirements of Code Sections
401(a)(4) and 410 with such plan being taken into account. If the Plan must or
may be aggregated with any other plan, the top-heavy ratio for the aggregated
group shall be determined by adding together the numerators for each plan, and
then adding together the denominators for each plan.
(72) TOP-HEAVY YEAR OF SERVICE: A Year of Service ending in a Plan
Year for which the Plan is a Top-Heavy Plan.
(73) TOP PAID GROUP: For any Plan Year, the group consisting of
the top twenty percent of employees who performed services for the Employer
during the Plan Year when ranked on the basis of 415 Compensation paid during
such year, determined as provided in Code
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Section 414(q) and regulations issued thereunder. All active employees and
leased employees under Code Section 414(n) shall be counted in determining the
Top Paid Group, without any exclusion for age or service or collective
bargaining employees, except that employees who are non-resident aliens with no
United States source income shall be excluded.
(74) TRUST, TRUST FUND or TRUST AGREEMENT: The fund known as the
Flagstar Thrift Plan Trust, maintained in accordance with the terms of the
Flagstar Thrift Plan Trust Agreement, as from time to time amended, which is
incorporated and made a part of this Plan.
(75) TRUSTEE: The corporation or individuals appointed under the
Trust Agreement to administer the Trust.
(76) VALUATION DATE: The Anniversary Date in each Plan Year,
December 31, plus any other interim dates during the Plan Year which the
Committee designates as Valuation Dates. The Committee may develop reasonable
rules and procedures for designating additional Valuation Dates, which rules
and procedures may include using different Valuation Dates for different
purposes under the Plan and valuing assets and allocating Income to Participant
accounts as of different Valuation Dates depending on the investment vehicle in
which the assets are invested. Additional Valuation Dates may be designated by
the Committee at any time, and if designated shall apply for all purposes under
the Plan (including pending distributions).
(77) YEAR OF SERVICE: Twelve months of Service as defined in
Section 2.1. Years of Service following re-employment shall be determined in
accordance with Section 3.4.
2.2 Construction: The masculine gender, where appearing in the Plan, shall
be deemed to include the feminine gender, unless the context clearly indicates
to the contrary. The words "hereof," "herein," "hereunder" and other similar
compounds of the word "here" shall mean and refer to the entire Plan and not to
any particular provision or Section.
2.3 Governing Law: This Plan and Trust shall be governed to the maximum
extent by federal law under ERISA. To the extent not so preempted or otherwise
governed by ERISA, the laws of the State of South Carolina shall control on all
other matters.
2.4 Effect of Restatement: If the Plan's restatement as of January 1, 1987
fails to qualify under the Code upon its submission to the Internal Revenue
Service, the Employer may elect to make further amendments as requested by the
Internal Revenue Service or, alternatively, to withdraw this restatement, and
continue to operate the Plan under the documents in effect prior to the
restatement.
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ARTICLE III. PARTICIPATION AND SERVICE
3.1 Participation:
(a) Any Employee (which includes only those individuals
classified by the Employer as salaried exempt or salaried non-exempt), other
than a Highly Compensated Employee (or an Employee deemed to be a Highly
Compensated Employee by the Committee), who was included under the prior
provisions of the Plan as of the Effective Date shall continue to participate
in accordance with the provisions of this amended and restated Plan.
(b) Each other salaried Employee who is so classified (other than
a Highly Compensated Employee) shall be eligible to participate as of the first
Entry Date on or after the date on which he both attains age twenty-one and
completes one Year of Service (provided that the Employee is still in the
Employer's Service on such Entry Date). For this purpose, an Employee is
considered to be in the Employer's Service on such Entry Date as long as the
Entry Date does not fall during a Period of Severance.
(c) Effective as of January 1, 1989, no Employee who is a Highly
Compensated Employee shall be eligible to participate in the Plan. Highly
Compensated Employees who participated in the Plan prior to January 1, 1989
shall revert to inactive status effective January 1, 1989 and as of that date
shall no longer be eligible to make Employee Pre-Tax Contributions or Employee
After-Tax Contributions, or to share in Employer Pre-Tax Matching Contributions
or Employer After-Tax Matching Contributions.
3.2 Service: A Participant's eligibility for benefits under the Plan shall
be based on his period of Service, determined in accordance with the definition
of Service in Section 2.1.
3.3 Inactive Status: In the event that any Participant shall become a
Highly Compensated Employee, his After-Tax Account and Pre-Tax Account shall be
placed on inactive status.
In such case, the Participant may no longer make Employee Pre-Tax
Contributions or Employee After-Tax Contributions and shall not share in the
Employer After-Tax Matching Contribution or in the Employer Pre-Tax Matching
Contribution allocations for any such Plan Year, but he shall continue to
receive Income allocations in accordance with Section 5.2(a). In the event such
Participant ceases to be a Highly Compensated Employee in a subsequent Plan
Year, his Pre-Tax Account and After-Tax Account shall revert to active status
with full rights and privileges under this Plan resuming as of such Plan Year.
3.4 Participation and Service Upon Reemployment:
(a) Participation Ceases Upon Termination of Employment:
Participation in the Plan shall cease upon termination of employment with the
Employer. Such termination of employment may have resulted from retirement,
death or voluntary or involuntary termination of employment, unauthorized
absence, or by failure to return to active employment with the Employer by the
date on which an Authorized Leave of Absence expired.
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<PAGE> 24
(b) Special Rules Regarding Reemployment: Upon the reemployment
of any person after his Severance From Service Date, the following rules shall
apply in determining his Participation in the Plan and his Service:
(1) Plan Participation:
(i) Employee Who Had Not Been a Participant: If
the reemployed Employee was not a Participant in the Plan during his prior
period of employment he shall commence Participation after he has met the
requirements of Section 3.1 as if he were a new Employee; provided, that any
Service attributable to his prior period of employment shall be taken into
account for such reemployed Employee unless the number of consecutive one-year
Breaks in Service equals or exceeds the greater of (A) five or (B) the
aggregate number of Years of Service before the consecutive Breaks in Service
(such aggregate number not including Years of Service disregarded by reason of
prior periods of Breaks in Service). Notwithstanding the foregoing, if an
Employee is re-employed by the Employer after his Severance From Service Date
and the Employee receives credit for Service during his Period of Severance as
provided in Section 2.1(66)(b) or Section 2.1(66)(c) and the Employee satisfied
the eligibility requirements of Section 3.1 during the Period of Severance, he
shall be entitled to participate in the Plan on his date of re-employment;
provided, that in no event shall an Employee be entitled to participate in the
Plan prior to the Entry Date on which he would have participated in the Plan
had he never separated from Service.
(ii) Employee Who Had Been a Participant: If the
reemployed Employee was a Participant in the Plan during his prior period of
employment or had completed the eligibility requirements but had not become a
Participant, he shall be entitled to reparticipate in the Plan on his date of
reemployment for all purposes; provided, that his ability to elect to make
Employee Pre-Tax Contributions and Employee After-Tax Contributions shall be
subject to the Plan's normal rules and procedures which may delay the election
of making Employee Pre-Tax Contributions and Employee After-Tax Contributions
to the next Change Date.
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ARTICLE IV. CONTRIBUTIONS AND FORFEITURES
4.1 Employer Matching Contributions and Employee Pre-Tax Contributions:
The Employer in its discretion may, for each year, contribute an amount as it
may determine. Such amount shall not exceed the lesser of the following
amounts:
(a) The total of:
(i) the amount which is elected to be deferred by
Participants as Employee Pre-Tax Contributions under Section 4.3; plus
(ii) an amount equal to 25% of each Participant's
Employee Pre-Tax Contributions which are not in excess of 6% of that
Participant's Compensation, plus an additional 75% of the first $500 per year
of each Participant's Employee Pre-Tax Contributions; plus
(iii) an amount equal to 25% of each Participant's
Employee After-Tax Contributions which are not in excess of 10% of the
Participant's Compensation (as provided in Section 4.2); or
(b) Fifteen percent of all 415 Compensation (which excludes
amounts deferred pursuant to Code Section 401(k)) paid or accrued in the Plan
Year to all Participants in the employ of the Employer who are eligible to
receive an allocation to their accounts in accordance with the provisions of
Section 5.2, plus any contribution carryover, pre-1987 limitation carryforward,
or other amounts permitted (even if not deductible) under Code Section 404(a),
and less any Employer contributions or Employee pre-tax contributions to any
other profit sharing plan or Code Section 401(k) plan of the Employer.
All contributions of the Employer shall be made in cash or other property
permitted by ERISA, and shall be conditioned upon their deductibility under
Code Section 404 and shall be paid to the Trustee, and payments shall be made
not later than the date prescribed by law for filing the Employer's federal
income tax returns, including extensions which have been granted for the filing
of such tax returns; provided, that Employee Pre-Tax Contributions made
pursuant to Participants' elections under Section 4.3 shall be paid to the
Trustee on the earliest date on which such contributions can reasonably be
segregated from the Employer's general assets but not later than ninety days
after the date on which the deferred amount otherwise would have been payable
to the Participant (or such longer period permitted by the Commissioner or
under ERISA). Contributions of the Employer which are determined to be
nondeductible shall be returned to the Employer in accordance with the
provisions of the Trust Agreement.
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<PAGE> 26
4.2 Employee After-Tax Contributions by Participants:
(a) Election: Participants are not required to make any
contributions under this Plan; however, a Participant may in each Plan Year
voluntarily contribute Employee After-Tax Contributions to the Trust Fund
subject to the rules and regulations of the Committee (which rules and
regulations may limit or prohibit Employee After-Tax Contributions, so long as
such limitation or prohibitions are nondiscriminatory with respect to
Non-Highly Compensated Employees and are not made contingent upon a
Participant's Employee Pre-Tax Contributions), and to the limitations of this
Section, Section 4.4 and Section 5.3 of this Plan. Notwithstanding the
foregoing, effective on and after January 1, 1989, Highly Compensated Employees
may not make Employee After-Tax Contributions to the Plan.
A Participant's ability to make Employee After-Tax Contributions is
limited as follows:
(i) Such Employee After-Tax Contributions in a Plan Year
may not exceed 10% of the Participant's Compensation for that Plan Year;
(ii) The sum of a Participant's Employee After-Tax
Contributions (or comparable contributions) under this Plan and all other
defined contribution plans of the Employer for all years does not exceed 10% of
his aggregate 415 Compensation since becoming a Participant; and
(iii) The Participant may not make Employee After-Tax
Contributions in any month in which he has made Employee Pre-Tax Contributions.
A Participant's Employee After-Tax Contributions shall be credited to his
After-Tax Account and may be made by payroll deduction of a whole percentage
between one percent and ten percent of his Compensation, or by other methods
and in other percentage amounts in accordance with rules established by the
Committee. The value of a Participant's Employee After-Tax Contributions shall
at all times be fully vested and nonforfeitable. A Participant's Employee
After-Tax Contributions shall be transmitted to the Trustee by the Employer on
the earliest date on which such contributions reasonably can be segregated from
the Employer's general assets, but in any event within ninety days after the
date on which each such contribution was made.
(b) Elections and Modification or Revocation of Elections:
Elections to make, withdraw, modify, discontinue or resume Employee After-Tax
Contributions shall be in writing, signed by the Participant and on such form
or forms as the Committee shall provide. Elections to begin to make Employee
After-Tax Contributions by payroll deduction, to change the percentage of such
payroll deductions or to discontinue such payroll deductions must be filed with
the Committee and shall be effective as of the next Change Date; provided, that
payroll deductions for Employee After-Tax Contributions may be increased,
reduced or terminated no more often than once a calendar quarter.
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<PAGE> 27
(c) Withdrawal and Distribution: A Participant may elect to have
an in-service withdrawal from his After-Tax Account only in accordance with
Section 6.5. Upon termination of employment, the Employee After-Tax
Contributions made by a Participant shall be distributed in accordance with
Article VI.
4.3 Participant's Election to Make Employee Pre-Tax Contributions:
(a) Election: By written election, made and filed with the
Committee pursuant to the Committee's rules and regulations and prior to the
Change Date at which such election is to take effect, a Participant may elect
to have a whole percentage between one percent and ten percent (or such higher
or lower percentage as may be allowed by the Committee's rules or regulations)
of his Compensation contributed as an Employee Pre-Tax Contribution to the
Plan; provided that, on and after January 1, 1989, Highly Compensated Employees
may not make Employee Pre-Tax Contributions to the Plan. As an administrative
matter, in calculating the amount to be withheld from a Participant's periodic
pay as an Employee Pre-Tax Contribution, the Committee may adopt rules and
procedures whereby the amount of periodic withholding is determined by using a
dollar figure or by using a percentage of base pay or of some other amount
which is not identical to Compensation; provided, that for purposes of applying
the various nondiscrimination and other tests required by the Code, the
definition of Compensation will still be utilized. Notwithstanding the
foregoing, no Participant may make an Employee Pre-Tax Contribution in any
month in which he has made an Employee After-Tax Contribution.
(b) General $7,000 Limitation on Employee Pre-Tax Contributions:
Notwithstanding the foregoing, for Plan Years beginning after December 31,
1986, no Participant's Employee Pre-Tax Contributions to this Plan and any
other cash or deferred arrangement of any employer may exceed $7,000 for any
taxable year (i.e., generally the calendar year) of the Participant. The
foregoing $7,000 limitation shall be adjusted automatically each year to
reflect cost-of-living adjustments announced by the Commissioner. Amounts
contributed by a Participant in excess of such limit (plus Income attributable
thereto through the most recent Valuation Date) may be distributed by the Plan
to that Participant in accordance with Code Section 402(g)(2) on or before
April 15 of the following calendar year; provided, that the Plan need not make
such distribution unless so requested in writing by the affected Participant on
or before March 1 of the following calendar year, but if not distributed, any
amount contributed in excess of the amount permitted under Code Section 402(g)
shall be considered an after-tax employee contribution, credited to the
affected Participant's Employee After-Tax Contribution Account, and thereafter
separately accounted for under the Plan. Such distributed or redesignated
amounts nevertheless shall continue to be considered for Highly Compensated
Employees (but not for Non-Highly Compensated Employees) for purposes of the
Plan's Actual Deferral Percentage.
(c) Elections and Modification or Revocation of Elections:
Elections to make, withdraw, modify, discontinue or resume Employee Pre-Tax
Contributions shall be in writing, signed by the Participant and on such form
or forms as the Committee shall provide. Elections to make Employee Pre-Tax
Contributions, to change the percentage of such payroll deductions or to
discontinue such payroll deductions must be filed with the Committee and will
be effective
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on the next Change Date; provided that the amount of payroll deductions for
Employee Pre-Tax Contributions may be changed no more often than once a
calendar quarter. The Committee may develop rules and procedures regarding
Change Dates and the modification or revocation of elections, which rules and
procedures may discriminate against Highly Compensated Employees.
(d) Withdrawal and Distribution: A Participant may elect to have
an in-service withdrawal from his Pre-Tax Account only in accordance with
Section 6.5. Upon termination of employment, the Pre-Tax Account shall be
distributed in accordance with Article VI.
4.4 Limitations on Employee Pre-Tax Contributions and on Employer Pre-Tax
Matching Contributions, Employer After-Tax Matching Contributions and Employee
After-Tax Contributions:
(a) Special Rules Limiting Employee Pre-Tax Contributions under
Code Section 401(k):
(1) Upon receipt of all Employee Pre-Tax Contribution
elections at the adoption of the Plan, and periodically thereafter (but no less
frequently than as of the Anniversary Date each Plan Year), the Employer shall
check the Actual Deferral Percentages against the tests set forth in Subsection
(5) below. The Committee shall formulate limits and rules regarding the
percentage of Compensation which may be deferred by Participants to the extent
it deems necessary or desirable in order to meet one of the tests. Any such
limits and rules may discriminate against Participants who are Highly
Compensated Employees.
(2) On and after January 1, 1989, Highly Compensated
Employees may not make Employee Pre-Tax Contributions to the Plan and the
Actual Deferral Percentage of any Highly Compensated Employee as of the last
day of the Plan Year shall not exceed zero. In the event any such Highly
Compensated Employee makes an Employee Pre-Tax Contribution, such employee
shall receive as a cash distribution , the amount of such Employee Pre-Tax
Contribution plus any Income attributable thereto (computed in accordance with
the Commissioner's regulations). Any cash distributions under the foregoing
sentence shall be treated as if they had never been deferred to the Plan under
Section 4.3.
(3) In the event that neither test in Subsection (5) is
met as of the last day of any Plan Year, the Committee shall:
(i) Request that the Employer make an
additional contribution to the Plan, which contribution shall be allocated
among Pre-Tax Accounts in one of the following manners, as specified by the
Committee: (A) as if it were an additional Employer Pre-Tax Matching
Contribution allocated based upon some stated amount of Employee Pre-Tax
Contributions, either among all Participants or just among those Participants
who are Non-Highly Compensated Employees; or (B) in the proportion that each
Participant's Compensation bears to the total Compensation of all affected
Participants, with such additional contribution either being made with respect
to all Participants or just among those Participants who are Non-Highly
Compensated Employees.
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<PAGE> 29
(ii) In addition to or as an alternative to the
foregoing, the Committee may request that the Employer designate that all or
part of the Employer Pre-Tax Matching Contribution which it will put into the
accounts of either all Participants or just those Participants who are
Non-Highly Compensated Employees be designated a "Qualified Non-elective
Contribution" as described in regulations under Code Section 401(k) and be
allocated to such Participants' Pre-Tax Accounts.
(iii) In addition to or as an alternative to the
foregoing, the Committee may in its discretion require that Participants who
are Highly Compensated Employees be required to amend their Employee Pre-Tax
Contribution percentage elections and/or to elect to receive as a cash
distribution under Code Section 401(k)(8) Excess Deferrals already contributed
to the Plan with respect to the Plan Year, plus any Income attributable thereto
(computed in accordance with the Trustee's usual procedures for allocating
Income to Participant's accounts); and/or to recharacterize a portion of their
Employee Pre-Tax Contributions as an Employee After-Tax Contribution. If any
Employee Pre-Tax Contributions are distributed pursuant to this Section , any
Employer Pre-Tax Matching Contributions allocated to the Participant's Pre-Tax
Account by reference to those Employee Pre-Tax Contributions also must be
distributed (if such Employer Pre-Tax Matching Contributions are vested), or
forfeited (if such Employer Pre-Tax Matching Contributions are not vested) as
required to comply with Section 401(a) of the Commissioner's regulations. In
all events, the Committee's determination as to which Participants will be
affected under this subparagraph (iii) shall be determined by reducing the
deferrals of Participants who are Highly Compensated Employees in order of
their Actual Deferral Percentages, beginning with the highest such percentage
during that Plan Year. Any cash distributions under the foregoing sentence
shall be treated as if they had never been deferred to the Plan under Section
4.3.
(4) The timing of any corrective measures under
Subsection (3) above should be as follows: (i) any additional amounts
contributed pursuant to Subsection (3)(i) or (ii) above shall be deposited in
the affected Participants' Pre-Tax Accounts no later than the date prescribed
by law for filing the Employer's federal income tax returns, including
extensions which have been granted for the filing of such tax return; (ii) any
cash distribution of Excess Deferrals pursuant to Subsection (3)(iii) above
must be made to the appropriate Highly Compensated Employees after the close of
the Plan Year in which the Excess Deferral arose and within twelve months after
the close of that Plan Year; and (iii) any Employee Pre-Tax Contributions
recharacterized as Employee After-Tax Contributions pursuant to Subsection
(3)(iii) must be recharacterized within two and one-half months after the close
of the Plan Year to which the recharacterization reflects.
(5) As of each Anniversary Date (and more frequently as
deemed necessary by the Committee), all Participants who were directly or
indirectly eligible to make an Employee Pre-Tax Contribution for all or a
portion of the Plan Year shall be separated into the Highly Compensated
Employee group (including Family Members of Highly Compensated Employees) and
the Non-Highly Compensated Employee group. One of the following two tests must
be satisfied as of each Anniversary Date for there not to be a further Employer
Contribution and/or
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<PAGE> 30
amendment of salary deferral elections and/or required cash election and/or
recharacterization by Highly Compensated Employees under SubSection (3) above:
TEST I - the Actual Deferral Percentage for the
Highly Compensated Employee group is not more
than the Actual Deferral Percentage of the
Non-Highly Compensated Employee group for the
same Plan Year multiplied by 1.25.
TEST II - the excess of the Actual Deferral
Percentage for the Highly Compensated Employee
group over the Non-Highly Compensated Employee
group for the same Plan Year is not more than two
percentage points, and the Actual Deferral
Percentage for the Highly Compensated Employee
Group is not more than the Actual Deferral
Percentage of the Non-Highly Compensated Employee
group multiplied by 2.0.
Notwithstanding the foregoing, the use of Test II shall be limited to the
extent necessary in order to avoid any restrictions on the use of this
"alternative limitation" which have been promulgated by the Commissioner, as
further described in Subsection (b)(6) below.
Effective for Plan Years beginning on and after January 1,
1989, the Actual Deferral Percentage for Highly Compensated Employees
(determined under the then current Code Section 401(k) and regulations
thereunder) under the Plan shall always be zero.
(6) Each group's Actual Deferral Percentage and Test I
and Test II shall be determined in accordance with Code Section 401(k) and any
related rules or regulations of the Commissioner.
(b) Special Rules Limiting Employer Pre-Tax Matching
Contributions, Employer After-Tax Matching Contributions and Employee After-Tax
Contributions:
(1) At the adoption of the Plan, and periodically
thereafter (but not less frequently than as of the Anniversary Date each Plan
Year), the Employer shall check the Actual Contribution Percentages against the
tests set forth in Subsection (5) below. The Committee may formulate limits and
rules regarding the contribution and/or allocation of any Employee After-Tax
Contributions, Employer Pre-Tax Matching Contributions and Employer After-Tax
Matching Contributions to the extent it deems necessary or desirable in order
to meet one of the tests. Any such limits and rules may discriminate against
Participants who are Highly Compensated Employees.
(2) On and after January 1, 1989, Highly Compensated
Employees may not make Employee After-Tax Contributions and shall not share in
any Employer Pre-Tax Matching Contributions or Employer After-Tax Matching
Contributions. Therefore, the Actual Contribution Percentage of any Highly
Compensated Employee as of the last day of the Plan Year shall not
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<PAGE> 31
exceed zero. In the event any such Highly Compensated Employee makes an
Employee After-Tax Contribution after January 1, 1989, such Employee shall
receive as a cash distribution the amount of such Employee After-Tax
Contribution, plus any Income attributable thereto (computed in accordance with
the Commissioner's regulations). In the event the Employer mistakenly makes
Employer Pre-Tax Matching Contributions or Employer After-Tax Matching
Contributions to the Plan on behalf of a Highly Compensated Employee after
January 1, 1989, such contribution shall be returned to the Employer in
accordance with the provision of the Trust regarding contributions made by
mistake. Any cash distributions under the foregoing sentence shall be treated
as if they had never been deferred to the Plan.
(3) In the event that neither test in Subsection (5) is
met as of the last day of any Plan Year, the Committee shall:
(i) Request that the Employer make an
additional Employer Pre-Tax Matching Contribution (or Employer After-Tax
Matching Contribution) to the Plan, which contribution shall be allocated among
Pre-Tax Accounts (or After-Tax Accounts) as an additional Employer Pre-Tax
Matching Contribution (or Employer After-Tax Matching Contribution) allocated
based upon some stated amount of Employee Pre-Tax Contributions (or Employee
After-Tax Contributions) either among all Participants or just among those
Participants who are Non-Highly Compensated Employees.
(ii) In addition to or as an alternative to the
foregoing, the Committee may, in its discretion, require that Participants who
are Highly Compensated Employees be required to amend their Employee After-Tax
Contribution percentage elections; and/or to elect to receive as a cash
distribution under Code Section 401(m)(6) any Excess Contributions of Employee
After-Tax Contributions and/or vested Employer Pre-Tax Matching Contributions
and/or vested Employer After-Tax Matching Contributions already contributed to
the Plan with respect to the Plan Year, plus any Income attributable thereto
(computed in accordance with the Trustee's usual procedures for allocating
Income to Participant's accounts). In all events, the Committee's determination
as to which Participants will be affected shall be determined under this
subparagraph (ii) by reducing the contributions by or on behalf of Participants
who are Highly Compensated Employees in order of their Actual Contribution
Percentages, beginning with the highest such percentage during that Plan Year.
Any cash distributions under the foregoing sentence shall be treated as if they
had never been contributed to the Plan under Section 4.1 or 4.2.
(4) The timing of any corrective measures under
Subsection (3) above shall be as follows: (i) any additional amount to be
contributed pursuant to Subsection (3)(i) above shall be deposited in the
affected Participants' Pre-Tax Accounts (or After-Tax Accounts) no later than
the date prescribed by law for filing the Employers' federal income tax return,
including extensions which have been granted for the filing of such tax return;
and (ii) any cash distribution of Excess Contributions of Employee After-Tax
Contributions and/or Employer Pre-Tax Matching Contributions and/or Employer
After-Tax Matching Contributions pursuant to Subsection (3)(ii) above must be
made to the appropriate Highly Compensated Employees after
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the close of the Plan Year in which the Excess Contribution arose and within
twelve months after the close of that Plan Year.
(5) As of each Anniversary Date (and more frequently as
deemed necessary by the Committee), all Participants shall be divided into the
Highly Compensated Employee group (including Family Members of Highly
Compensated Employees) and the Non-Highly Compensated Employee group. One of
the following two tests must be satisfied as of each Anniversary Date for there
not to be a further Employer Pre-Tax Matching Contribution or Employer
After-Tax Matching Contribution and/or amendment of Employee After-Tax
Contribution elections and/or required cash election by Highly Compensated
Employees under SubSection (3) above:
TEST I - the Actual Contribution Percentage for the
Highly Compensated Employee group is not more than
the Actual Contribution Percentage of the Non-Highly
Compensated Employee group multiplied by 1.25.
TEST II - the excess of the Actual Contribution
Percentage for the Highly Compensated Employee group
over the Non-Highly Compensated Employee group is
not more than two percentage points, and the Actual
Contribution Percentage for the Highly Compensated
Employee group is not more than the Actual
Contribution Percentage of the Non-Highly
Compensated Employee group multiplied by 2.0.
Notwithstanding the foregoing, the use of Test II shall be limited to the
extent necessary in order to avoid any restrictions on the use of this
"alternative limitation" which have been promulgated by the Commissioner, as
described in Subsection (6) below.
Effective for Plan Years beginning on and after January 1,
1989, the Actual Contribution Percentage for Highly Compensated Employees
(determined under the then current Code Section 401(m) and regulations
thereunder) under the Plan shall always be zero.
(6) Restriction on Multiple Use of Test II: The
following restrictions shall apply in any case where the Plan is required to
use Test II for computing both the maximum ADP and ACP limitations for Highly
Compensated Employees. In such case, the sum of the ADP and ACP for Highly
Compensated Employees may not exceed the greater of (i) or (ii) below:
(i) the sum of:
(A) 1.25 times the greater of the ADP
or the ACP for Non-Highly Compensated Employees, plus
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(B) 2.0 times the lesser of the ADP or
the ACP for Non-Highly Compensated Employees, provided that this figure may not
exceed the lesser of the ADP or the ACP for Non-Highly Compensated Employees by
more than two percentage points.
(ii) the sum of:
(A) 1.25 times the lesser of the ADP
or the ACP for Non-Highly Compensated Employees, plus
(B) 2.0 times the greater of the ADP
or the ACP for Non-Highly Compensated Employees, provided that this figure may
not exceed the greater of the ADP or the ACP for Non-Highly Compensated
Employees by more than two percentage points.
In the event that such aggregate limitation is exceeded, correction shall be
made by reducing the ACP for Highly Compensated Employees in accordance with
this SubSection (b) to the extent necessary to meet this aggregate limitation.
(7) Each group's Actual Contribution Percentage and Test
I and Test II shall be determined in accordance with Code Section 401(m) and
any related rules and regulations of the Commissioner.
4.5 Rollover Contributions:
(a) In General: Subject to all the provisions of this Plan, a
Participant, including any other Employee who is considered a Participant under
Section 2.1(27), may direct the appropriate fiduciary of any qualified
retirement plan of another employer to distribute or transfer directly to the
Trustee any portion or all of such Participant's interest in the distributing
or transferring plan, exclusive of contributions made by the Participant
thereunder except that a Participant may rollover into this Plan employee
contributions deductible under Code Section 219(e)(2) to the extent such
amounts are thereafter accounted for separately and also may rollover elective
contributions considered employer contributions under Code Section 401(k).
Alternatively, the Participant may personally present such amount to the
Trustee within sixty days of receipt thereof as a distribution from another
qualified retirement plan. In addition, an Employee who has become a
Participant who has established an Individual Retirement Account solely for 32e
purpose of serving as a repository for distributions from the qualified
retirement plan of a former employer, and who has not made any contributions to
such Individual Retirement Account on his own behalf also may transfer or
present within sixty days of receipt part or all of the assets of such
Individual Retirement Account to the Trustee.
Upon the receipt of such a rollover contribution, the Trustee shall
establish a Rollover Account for the Participant on whose behalf the
distribution was received. The value of the Rollover Account so established
shall be fully vested and nonforfeitable at all times.
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(b) Requirements and Conditions With Respect to Rollover Contributions:
Rollover contributions shall further be subject to the following conditions:
(1) No Interim Withdrawals: No withdrawals from Rollover Accounts
shall be permitted until such time as the Participant is otherwise eligible to
receive his vested interest attributable to Employee Pre-Tax Contributions.
(2) Certification: The Participant shall at the Committee's
request present a written certification in a form acceptable to the Committee to
the effect that: The amount received as a rollover contribution is attributable
only to amounts to the Participant's credit in a qualified retirement plan or
rollover Individual Retirement Account; no portion of such amount consists of
contributions made by the Participant other than employee contributions
deductible under Code ss.219(e)(2) and elective contributions considered
employer contributions under ss.401(k); specifying any amounts transferred which
are subject to any restrictions under Code ss.401(a)(9) or ss.402(c)(4) or
otherwise; and if such amount is being paid by the Participant personally, it
was received within the prior sixty calendar days.
(3) Other Limitations: No rollover contribution shall be accepted
(i) directly or indirectly from an Individual Retirement Account to which the
Participant contributed on his own behalf; or (ii) which consists in whole or in
part of insurance contract(s) with respect to which future premium payments are
or may become due, unless there are sufficient other assets being transferred so
as to make maintenance of such contract(s) feasible without violation of any
limitation on assets which may be applied for that purpose; or (iii) which
consists of amounts not eligible for rollover treatment under Code ss.402(c)(4)
because such amounts were part of a series of payments or required to be
distributed under Code ss.401(a)(9).
(4) No Transfer Allowed from Plan Subject to Code ss.417: No
direct or indirect transfer will be permitted into this Plan from (i) a plan
which is a defined benefit pension plan, (ii) a defined contribution plan
subject to the minimum funding standards of Code ss.412 (e.g., a money purchase
or target benefit pension plan), or (iii) any other defined contribution plan
that does not meet the requirements of Code ss.401(a)(11)(B)(iii)(I) and (II)
regarding all death benefits being paid to a Surviving Spouse absent spousal
consent and regarding the Participant's ability to elect a life annuity form of
payment. Rollovers into this Plan which are not direct or indirect transfers
(i.e., which have actually been distributed to the Participant by the other
plan) will be permitted with respect to benefits attributable to such a plan.
(c) Directed Rollover Option: Effective January 1, 1993, a
distribution from this Plan may be directly rolled over to another plan pursuant
to the provisions of Subsection 6.4(g).
ARTICLE V. ALLOCATIONS TO PARTICIPANTS' ACCOUNTS
5.1 Individual Accounts: The Committee shall create and maintain
adequate records to disclose the interest in the Trust of each Participant,
Former Participant and Beneficiary. Such records shall be in the form of
individual accounts and credits and charges shall be made to such
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accounts in the manner herein described. When appropriate, a Participant shall
have a Pre-Tax Account, an After-Tax Account, and a Rollover Account.
Subaccounts also may be maintained pursuant to rules and regulations of the
Committee to reflect collective investment subaccounts, segregated subaccounts
and any other subaccounts deemed necessary or desirable by the Committee. The
maintenance of individual accounts is only for accounting purposes, and a
segregation of the assets of the Trust Fund to each account shall not be
required. Distributions and withdrawals made from an account shall be charged to
the account as of the date paid.
5.2 Account Adjustments: The accounts of Participants, Former
Participants and Beneficiaries and the Suspense Account shall be adjusted in
accordance with the following:
(a) Income: As of each Valuation Date, the Income of the Trust
Fund since the last Valuation Date shall be allocated among the Suspense Account
and the accounts of Participants, Former Participants and Beneficiaries who had
unpaid balances in their accounts on the Valuation Date in proportion to the
balances in such accounts immediately following the prior Valuation Date, but
after first reducing each such account balance by the amount of any
distributions, withdrawals, directed investments, and loans from the account
since the prior Valuation Date, and after increasing the balance in each Pre-Tax
Account, After-Tax Account and Rollover Account since the prior Valuation Date
by a weighted proportion of any Employee Pre-Tax Contributions, Employee
After-Tax Contributions, Employer Pre-Tax Matching Contributions, Employer
After-Tax Matching Contributions and rollover contributions since the last
Valuation Date weighted in accordance with the Trustee's customary and
reasonable accounting procedures. The interest paid by a Participant since the
prior Valuation Date in respect of a loan from his accounts as provided in
Section 6.6 or in any loan procedures pursuant to Section 6.6 shall be
segregated and credited to such Participant's accounts under the rules for such
accounts. The Income since the prior Valuation Date attributable to any
investment of any directed investment account or collective investment
subaccount which has been established in accordance with the Trust also shall be
allocated to such account as of each Valuation Date, or at such other times
(including any distribution date), as may be appropriate under the Trustee's
normal procedures for such accounts. All valuations shall be based on the fair
market value of assets in the Trust Fund on the Valuation Date. Notwithstanding
the foregoing, in the event that the Plan's assets are invested among collective
investment funds, the foregoing allocation of Income shall be adjusted to
reflect the segregation of each such collective investment fund.
(b) Employee After-Tax Contributions: Subject to Section 4.2
(including the requirement that a Participant's Employee After-Tax Contributions
may not exceed ten percent of the Participant's Compensation for the Plan Year),
a Participant's Employee After-Tax Contributions for the Plan Year shall be
allocated to his After-Tax Account when received by the Trustee, or when
recharacterized as such under Section 4.4; provided, that effective January 1,
1989, no Employee After-Tax Contribution shall be permissible in the case of a
Highly Compensated Employee. Any contribution erroneously made for such a Highly
Compensated Employee shall be returned to the extent permitted by the Code.
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(c) Employee Pre-Tax Contributions: A Participant's Employee
Pre-Tax Contributions under Section 4.3 during the Plan Year, and other amounts
contributed by the Employer to the Pre-Tax Accounts of Participants pursuant to
Section 4.4(a)(3)(i), shall be allocated to his Pre-Tax Account when received by
the Trustee (less amounts required to be recharacterized as Employee After-Tax
Contributions or to be withdrawn as cash under Section 4.4). Notwithstanding the
foregoing, effective January 1, 1989, Highly Compensated Employees shall not be
permitted to make Employee Pre-Tax Contributions or any other contributions to
the Plan. Any contributions erroneously made for such a Highly Compensated
Employee shall be returned to the extent permitted by the Code.
(d) Employer Contributions: Effective January 1, 1991, as of each
Valuation Date (or more frequently in the Committee's discretion exercised in a
manner that is not discriminatory with respect to different Participants), the
Employer Pre-Tax Matching Contributions and the Employer After-Tax Matching
Contributions for the Plan Year shall be allocated among those Participants
employed by the Employer at any time during the period from the last allocation
date. Prior to January 1, 1991, Participants who were not employed on the
Valuation Date (or other allocation date) were not eligible for an allocation of
Employer Pre-Tax Matching Contributions or Employer After-Tax Matching
Contributions. Notwithstanding the foregoing, effective January 1, 1989, no
allocation shall be made for a Participant whose Pre-Tax Account and After-Tax
Account were placed on inactive status for such Plan Year under Section 3.3 by
virtue of the Participant's becoming a Highly Compensated Employee. Allocations
of Employer contributions shall be made in accordance with the following formula
(subject to subsection (e) below):
(1) Each eligible Participant's Pre-Tax Account shall
receive as an Employer Pre-Tax Matching Contribution, a portion of the Employer
contribution which is equal to 25% of the total Employee Pre-Tax Contributions
made by the Participant since the last allocation date which are equal to or
less than six percent of that Participant's Compensation since the last
allocation date, plus an additional 75% of the first $500 per year of that
Participant's Employee Pre-Tax Contributions.
(2) Each eligible Participant's After-Tax Account shall
receive as an Employer After-Tax Matching Contribution, a portion of the
Employer contribution which is equal to 25% of the total Employee After-Tax
Contributions made by the Participant since the last allocation date.
(e) Minimum Contributions and Forfeitures for a Top-Heavy Plan:
For any Plan Year in which the Plan is a Top-Heavy Plan, the allocation formula
will be changed to the extent necessary so that each Participant who is a Nonkey
Employee and who has not separated from Service on the Anniversary Date will
receive a total allocation as an Employer contribution to his account which is
equal to the lesser of the following percentages of his 4l5 Compensation for
that Plan Year: (i) three percent or (ii) the highest percentage provided under
the Plan during that Plan Year on behalf of a Key Employee (with the percentage
being determined for each Key Employee by using that part of his 4l5
Compensation which is not in excess of $150,000, or
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$200,000 for Plan Years beginning before January 1, 1994, or other higher amount
applicable under Code ss.401(a)(17) and, effective for Plan Years beginning
after December 31, 1988, by taking into account all Employee Pre-Tax
Contributions under Code ss.401(k) and matching contributions for that Key
Employee); provided, that the minimum contribution may be less than three
percent only if the Plan is not used by a defined benefit plan (whether active
or wasting) to meet the participation tests of Code ss.ss.401(a)(4) or 410.
Effective for Plan Years beginning after December 31, 1988, amounts contributed
at a Participant's election under Code ss.401(k) and any matching contributions
allocated to Nonkey Employees which are necessary in order to satisfy the
requirements of Code ss.ss.401(k) and 401(m) may not be offset against the
aforesaid minimum contribution for a Participant, but amounts contributed by the
Employer as qualified non-elective contributions under Code ss.401(m)(4)(C) and
matching contributions not necessary to satisfy Code ss.401(k) or (m) may be
offset. In all cases, Employer contributions and forfeitures allocated to a
Participant from any other tax-qualified defined contribution plan of the
Employer and any Aggregated Employer required or permitted to be aggregated as
described in the definition of Top-Heavy Plan in Section 2.1 which meet the
top-heavy minimum contribution shall be offset. In the case of a Participant
covered both by tax-qualified defined contribution plan(s) and tax-qualified
defined benefit plan(s) of the Employer and any Aggregated Employer required or
permitted to be aggregated as described in the definition of Top-Heavy Plan in
Section 2.1, each Participant shall receive an aggregate minimum benefit and
contribution at least equal (using a comparability analysis) to the minimum
defined benefit (as defined in the Employer's defined benefit plan) in any Plan
Year in which the Plan is a Top-Heavy Plan.
(f) Rollover Contributions: A Participant's rollover contributions
for the Plan Year shall be allocated to his Rollover Account when received by
the Trustee.
5.3 Maximum Additions:
(a) 415 Limitation: Notwithstanding anything contained herein to
the contrary, the total Additions made to the Pre-Tax Account and After-Tax
Account (or comparable accounts) of a Participant in the Plan and all other
defined contribution plans (whether or not terminated) of the Employer and any
Aggregated Employer for any Limitation Year shall not exceed the "4l5
Limitation" which is the lesser of (i) $30,000 (or, if greater, one-fourth of
the dollar limitation in effect under Code ss.415(b)(1)(A) for that Plan Year)
or (ii) twenty-five percent of the Participant's 4l5 Compensation for such
Limitation Year. If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different consecutive twelve month period, the
(a)(i) amount will be multiplied by a fraction whose numerator is the number of
months in the short Limitation Year and whose denominator is twelve; and the
(a)(ii) amount will be based upon the Participant's 4l5 Compensation for the
short Limitation Year.
(b) Return of Employee Pre-Tax Contributions and Employee
After-Tax Contributions: The Trustee will return any Employee Pre-Tax
Contributions (within the meaning of Code ss.402(g)) and Employee After-Tax
Contributions made by a Participant (plus earnings and gains attributable
thereto) to the extent necessary to reduce the total Additions for that Plan
Year so as not to exceed the 4l5 Limitation on Annual Additions.
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(c) Suspense Account: If as a result of the allocation of
forfeitures or a reasonable error in estimating a Participant's annual
Compensation, or in determining the amount of Employee Pre-Tax Contributions
within the meaning of Code ss.402(g) that may be made within the limits of Code
ss.415 (or under other limited facts and circumstances which the Commissioner
finds justify the availability of the rules set forth in this Plan pursuant to
Commissioner's Regulation ss.l.4l5-6), the Annual Additions for a Participant
would exceed the 4l5 Limitation, then amounts in excess of the 4l5 Limitation
shall be treated in accordance with this subparagraph. Any excess amounts in a
Participant's account shall be used to reduce Employer contributions for the
next Limitation Year (and succeeding years, as necessary) for that Participant
if that Participant is covered by the Plan as of the end of the Limitation Year.
If that Participant is not covered by the Plan as of the end of the Limitation
Year, then the excess amounts shall be transferred to and held unallocated in a
Suspense Account for the Limitation Year and allocated and reallocated as
necessary to prevent the relevant 4l5 Limitations from being exceeded in the
next Limitation Year (and succeeding Limitation Years as necessary) to all the
remaining Participants in the Plan. Furthermore, the excess amounts in the
Suspense Account must be used to reduce Employer contributions for the next
Limitation Year (and succeeding Limitation Years as necessary) for all
Participants in the Plan. In no event may any excess amounts which are due to
Employer contributions (other than amounts that are Employee Pre-Tax
Contributions within the meaning of Code ss.402(g)) be distributed out to
Participants or Former Participants.
(d) Aggregate Limitations:
(1) For Plan Years beginning prior to January 1, 1983, but
only if the Plan was in existence on July 1, 1982:
(i) If an Employee is a Participant in one or more
defined benefit plans and one or more defined contribution plans ever maintained
by the Employer and any Aggregated Employer, the sum of his defined benefit plan
fraction and his defined contribution plan fraction shall not exceed 1.4 in any
Limitation Year.
(ii) The term defined benefit plan fraction in any
Limitation Year shall mean a fraction the numerator of which is the sum of the
projected annual benefits (as defined below) payable to the Participant
(determined as of the last day of the current Limitation Year) under all defined
benefit plans of the Employer and any Aggregated Employer, and the denominator
of which is the projected annual benefit payable to the Participant (determined
as of the last day of the current Limitation Year) if the Plan(s) provided the
maximum annual benefit under the relevant 415 Limitation. For the purposes of
this subsection, a Participant's "projected annual benefit" is equal to the
annual benefit (i.e., the benefit payable annually in the form of a straight
life annuity, but excluding benefits attributable to Employee After-Tax
Contributions or rollover contributions, if any) to which the Participant in a
defined benefit plan would be entitled under the terms of the plan assuming that
the Participant will continue employment until reaching the later of the plan's
normal retirement age or his current age, that the Participant's 415
Compensation for the Limitation Year under consideration will remain the
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same until the date the Participant attains the later of the normal retirement
age or his current age, and that all other relevant factors used to determine
benefits under the plan for the Limitation Year under consideration will remain
constant for all future Limitation Years.
(iii) The term defined contribution plan fraction
in any Limitation Year shall mean a fraction the numerator of which is the sum
of the Annual Additions made to the Participant's account(s) as of the last day
of the current Limitation Year and for all prior Limitation Years under all
defined contribution plans of the Employer and any Aggregated Employer, and the
denominator of which is the sum of the maximum Annual Additions under the
relevant 4l5 Limitations which could have been made to the Participant's
account(s) for the current Limitation Year and for each prior Limitation Year in
which the Participant was an Employee of the Employer and any Aggregated
Employer (regardless of whether a plan was in existence during the years).
(iv) Annual Additions in the numerator of the
defined contribution plan fraction shall not exceed the aggregate maximum Annual
Additions in the denominator of the defined contribution plan fraction in any
Limitation Year beginning prior to January 1, 1976.
(2) For all Plan Years ending prior to January 1, 1987, if
the Plan was adopted after July 1, 1982; and for Plan Years beginning on or
after January 1, 1983, and ending prior to January 1, 1987, if the Plan was in
existence on July 1, 1982:
(i) If an Employee is a Participant in one or
more defined benefit plans and one or more defined contribution plans ever
maintained by the Employer and any Aggregated Employer, the sum of his defined
benefit plan fraction and his defined contribution plan fraction shall not
exceed 1.0 in any Limitation Year.
(ii) The term defined benefit plan fraction in any
Limitation Year shall mean a fraction the numerator of which is the sum of the
projected annual benefits (as defined below) payable to the Participant as of
the last day of the current Limitation Year under all defined benefit plans of
the Employer and any Aggregated Employer, and the denominator of which is the
lesser of: (A) the product of 1.25 (or 1.0 in the case of a Top-Heavy Plan which
does not meet the additional benefit requirements of subsection (v) below or in
the case of any Super Top-Heavy Plan) multiplied by $90,000 (or such greater
amount as shall be authorized by the Internal Revenue Service under
cost-of-living or other statutory adjustments which shall automatically be
applied on January 1 of each year when effective, or such greater or lesser
amount as may be required to actuarially adjust such $90,000 limitation so it is
equivalent to a benefit beginning at age sixty-two in the case of a benefit
beginning before age sixty-two, or equivalent to a benefit at age sixty-five in
the case of a benefit beginning after age sixty-five), or (B) the product of 1.4
multiplied by the amount which is equal to one hundred percent of the
Participant's average 415 Compensation for the three highest consecutive
calendar years of Participation. For the purposes of this subsection, a
Participant's "Projected Annual Benefit" is equal to the annual benefit (i.e.,
the benefit payable annually in the form of an equivalent straight life annuity
beginning no earlier than age sixty-two or later than age sixty-five, but
excluding
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benefits attributable to Employee After-Tax Contributions or rollover
contributions, if any) to which the Participant in a defined benefit plan would
be entitled under the terms of the plan assuming that the Participant will
continue employment until reaching the later of the plan's normal retirement age
or his current age, that the Participant's 415 Compensation for the Limitation
Year under consideration will remain the same until the date the Participant
attains the later of the plan's normal retirement age or his current age, and
that all other relevant factors used to determine benefits under the plan for
the Limitation Year under consideration will remain constant for all future
years. Furthermore, actuarial adjustments for form of benefit or for benefits
beginning before age sixty-two shall use an interest rate assumption which is
not less than the greater of five percent or the rate specified by the plan, and
actuarial adjustments for benefits beginning after age sixty-five shall use an
interest rate which is not greater than the lesser of five percent or the rate
specified by the plan. None of the aforesaid actuarial adjustments shall be
taken into account before the year for which such adjustments take effect.
(iii) The term defined contribution plan fraction
in any Limitation Year shall mean a fraction the numerator of which is the sum
of the Annual Additions made to the Participant's account(s) as of the last day
of the current Limitation Year and for all prior Limitation Years under all
defined contribution plans of the Employer and any Aggregated Employer (less any
amount which may be subtracted therefrom by virtue of the Commissioner's
regulations adopted under the Tax Equity and Fiscal Responsibility Act of 1982),
and the denominator of which is the sum of the lesser of the following amounts
determined for each year and for each prior Year of Service: (A) the product of
1.25 (or 1.0 in the case of a Top-Heavy Plan which does not meet the additional
minimum benefit requirements of subsection (v) below or any Super Top-Heavy
Plan) multiplied by the dollar limitation in effect under Code ss.415(c)(1)(A)
for such year determined without regard to Code ss.415(c)(6),or (B) 1.4
multiplied by the amount which is equal to twenty-five percent of the
Participant's 415 Compensation for such Limitation Year; provided, at the
election of the Committee, in any year beginning after December 31, 1982 where
the plan was in existence on or before July 1, 1982, the denominator of the
defined contribution fraction with respect to a Participant for all years ending
before January 1, 1983, shall be an amount equal to the product of the amount
determined to be the denominator under the foregoing sentence multiplied by a
fraction the numerator of which is the lesser of $51,875 or 1.4 multiplied by
twenty-five percent of the Participant's 415 Compensation for the year ending in
1981, and the denominator of which is the lesser of $41,500 or twenty-five
percent of the Participant's 415 Compensation for the year ending 1981.
(iv) Annual Additions in the numerator of the
defined contribution plan fraction shall not exceed the aggregate maximum Annual
Additions in the denominator of the defined contribution plan fraction in any
Limitation Year beginning prior to January 1, 1976.
(v) In computing the defined benefit plan fraction
and the defined contribution plan fraction in subsections (ii) and (iii) above,
the number 1.0 shall not be substituted for 1.25 in computing the denominator in
the case of a Top-Heavy Plan (other than a Super Top-Heavy Plan) if each Nonkey
Employee who is a Participant receives a certain minimum benefit or contribution
under a plan of the Employer or any Aggregated Employer.
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The minimum benefit for these purposes in the case of a defined benefit plan
shall be the product of the Participant's high consecutive five year 415
Compensation (not including 415 Compensation in Plan Years beginning before
January 1, 1984, or 415 Compensation for Plan Years beginning after the close of
the last Plan Year in which the Plan was not a Top-Heavy Plan) times the lesser
of (A) three percent per Top-Heavy Year of Service, or (B) the sum of twenty
percent plus one percent per each of the first ten Top-Heavy Years of Service.
The minimum contribution for these purposes in the case of a defined
contribution plan shall be a total allocation of Employer contribution and
forfeitures of four percent of the 415 Compensation for each Participant who is
a Nonkey Employee (but this four percent figure shall be reduced to the extent
necessary in any Plan Year so that it is no more than the largest percentage
provided for any Key Employee during that Plan Year, with the Key Employees'
percentages being determined by using only that part of their 415 Compensation
that is not in excess of $200,000). In the case of a Nonkey Employee covered
both by defined contribution plan(s) and defined benefit plan(s) of the Employer
and any Aggregated Employer, the Nonkey Employee must receive an aggregate
benefit and contribution at least equal to the minimum defined benefit described
above.
(3) For all Plan Years beginning after December 31, 1986:
(i) If an Employee is a Participant in one or more
defined benefit plans and one or more defined contribution plans ever maintained
by the Employer and any Aggregated Employer, the sum of his defined benefit plan
fraction and his defined contribution plan fraction shall not exceed 1.0 in any
Limitation Year.
(ii) The term defined benefit plan fraction in any
Limitation Year shall mean a fraction the numerator of which is the sum of the
projected annual benefits (as defined below) payable to the Participant as of
the last day of the current Limitation Year under all defined benefit plans of
the Employer and any Aggregated Employer, and the denominator of which is the
lesser of: (A) the product of 1.25 (or 1.0 in the case of a Top-Heavy Plan which
does not meet the additional benefit requirements of subsection (v) below or in
the case of any Super Top-Heavy Plan) multiplied by $90,000 (or such greater
amount as shall be authorized by the Internal Revenue Service under
cost-of-living or other statutory adjustments which shall automatically be
applied on January 1 of each year when effective, or such greater or lesser
amount as may be required to actuarially adjust such $90,000 limitation so it is
equivalent to a benefit beginning at the Social Security Retirement Age, as
defined below), or (B) the product of 1.4 multiplied by the amount which is
equal to one hundred percent of the Participant's average 415 Compensation for
the three highest consecutive Years of Service (or actual number of years of
employment if less than three Years of Service).
For purposes of this subsection, a Participant's "Projected Annual
Benefit" is equal to the annual benefit (i.e., the benefit payable annually in
the form of an equivalent straight life annuity beginning at the Social Security
Retirement Age, but excluding benefits attributable to Employee After-Tax
Contributions or rollover contributions, if any) to which the Participant in a
defined benefit plan would be entitled under the terms of the plan assuming that
the
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Participant will continue employment until reaching the later of the plan's
normal retirement age or his current age, that the Participant's 415
Compensation for the Limitation Year under consideration will remain the same
until the date the Participant attains the later of the plan's normal retirement
age or his current age, and that all other relevant factors used to determine
benefits under the plan for the Limitation Year under consideration will remain
constant for all future years.
Actuarial adjustments for form of benefit or for benefits beginning
before the Social Security Retirement Age shall use an interest rate assumption
which is not less than the greater of five percent or the rate specified by the
plan, and otherwise shall be made in the manner prescribed by the Commissioner
to be consistent with the reduction for old-age insurance benefits beginning
prior to the Social Security Retirement Age. Actuarial adjustments for benefits
beginning after the Social Security Retirement Age shall use an interest rate
which is not greater than the lesser of five percent or the rate specified by
the plan. None of the aforesaid actuarial adjustments shall be taken into
account before the year for which such adjustments take effect. For purposes of
this subsection, "Social Security Retirement Age" shall mean the retirement age
under ss.216(1) of the Social Security Act, except that such ss.216(1) shall be
applied without regard to the age increase factor and as if the early retirement
age under ss.216(1)(2) were age 62.
(iii) The term defined contribution plan fraction
in any Limitation Year shall mean a fraction the numerator of which is the sum
of the Annual Additions made to the Participant's account(s) as of the last day
of the current Limitation Year and for all prior Limitation Years under all
defined contribution plans of the Employer and any Aggregated Employer (less any
amount which may be subtracted therefrom by virtue of the Commissioner's
regulations adopted under the Tax Equity and Fiscal Responsibility Act of 1982),
and the denominator of which is the sum of the lesser of the following amounts
determined for each year and for each prior Year of Service: (A) the product of
1.25 (or 1.0 in the case of a Top-Heavy Plan which does not meet the additional
minimum benefit requirements of subsection (v) below or any Super Top-Heavy
Plan) multiplied by the dollar limitation in effect under Code ss.415(c)(1)(A)
for such year determined without regard to Code ss.415(c)(6), or (B) 1.4
multiplied by the amount which is equal to twenty-five percent of the
Participant's 415 Compensation for such Limitation Year; provided, at the
election of the Committee, in any year beginning after December 31, 1982 where
the plan was in existence on or before July 1, 1982, the denominator of the
defined contribution fraction with respect to a Participant for all years ending
before January 1, 1983, shall be an amount equal to the product of the amount
determined to be the denominator under the foregoing sentence multiplied by a
fraction the numerator of which is the lesser of $51,875 or 1.4 multiplied by
twenty-five percent of the Participant's 415 Compensation for the year ending in
1981, and the denominator of which is the lesser of $41,500 or twenty-five
percent of the Participant's 415 Compensation for the year ending 1981.
(iv) Annual Additions in the numerator of the
defined contribution plan fraction shall not exceed the aggregate maximum Annual
Additions in the denominator of the defined contribution plan fraction in any
Limitation Year beginning prior to January 1, 1976.
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(v) In computing the defined benefit plan fraction
and the defined contribution plan fraction in subsections (ii) and (iii) above,
the number 1.0 shall not be substituted for 1.25 in computing the denominator in
the case of a Top-Heavy Plan (other than a Super Top-Heavy Plan) if each Nonkey
Employee who is a Participant receives a certain minimum benefit or contribution
under a plan of the Employer or Aggregated Employer. The minimum benefit for
these purposes in the case of a defined benefit plan shall be the product of the
Participant's high consecutive five year 415 Compensation (not including 415
Compensation in Plan Years beginning before January 1, 1984, or 415 Compensation
for Plan Years beginning after the close of the last Plan Year in which the Plan
was not a Top-Heavy Plan) times the lesser of (A) three percent per Top-Heavy
Year of Service, or (B) the sum of twenty percent plus one percent per each of
the first ten Top-Heavy Years of Service. The minimum contribution for these
purposes in the case of a defined contribution plan shall be a total allocation
of Employer contribution and forfeitures of four percent of the 415 Compensation
for each Participant who is a Nonkey Employee (but this four percent figure
shall be reduced to the extent necessary in any Plan Year so that it is no more
than the largest percentage provided for any Key Employee during that Plan Year,
with the Key Employees' percentages being determined by using only that part of
their 415 Compensation that is not in excess of $150,000, or $200,000 for Plan
Years beginning prior to January 1, 1994). In the case of a Nonkey Employee
covered both by defined contribution plan(s) and defined benefit plan(s) of the
Employer and any Aggregated Employer, the Nonkey Employee must receive an
aggregate benefit and contribution at least equal to the minimum defined benefit
described above.
(vi) Notwithstanding the foregoing, in the case of
any individual who is a participant as of the first day of the first plan year
beginning after December 31, 1986 in a defined benefit plan which was in
existence on May 6, 1986, and with respect to which the requirements of Code
ss.415 have been met for all plan years, if such individual's current accrued
benefit under the plan exceeds the limitation of Code ss.415(b) as amended by
the Tax Reform Act of 1986, then for purposes of Code ss.415(b) and (e), the
limitation of Code ss.415(b)(1)(A) with respect to such individual shall be
equal to such individual's accrued benefit at the close of the last plan year
beginning prior to January 1, 1987 when expressed as an annual benefit within
the meaning of Code ss.415(b)(2) (but without taking into account any changes in
the terms or conditions of the plan after May 5, 1986 or any cost-of-living
adjustment occurring after May 5, 1986). Furthermore, in the case of a plan
which satisfied the requirements of Code ss.415 for its last plan year beginning
prior to January 1, 1987, in accordance with regulations that may be promulgated
by the Commissioner, an amount may be subtracted from the numerator of the
defined contribution plan fraction (not exceeding such numerator) so that the
sum of the defined benefit plan fraction and defined contribution plan fraction
computed under Code ss.415(e)(1) does not exceed 1.0 for such year.
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ARTICLE VI. BENEFITS
6.1 Normal and Early Retirement or Disability: If a Participant has
attained Normal Retirement Age or Early Retirement Age or if his employment is
terminated at an earlier age because of Disability, he shall be fully vested in
the amount allocated to each of his accounts and shall be entitled to receive
such amount following the termination of his employment payable in accordance
with Section 6.4. If a Participant elects to receive full or partial payment
before termination of employment but on or after Normal Retirement Age, then any
payments after termination of employment following Normal Retirement Age shall
be deemed to be on account of the Participant's separation from Service.
6.2 Death and Designation of Beneficiary:
(a) Death Benefits: In the event that the termination of
employment of a Participant is caused by his death, the entire amount then
allocated to each of his accounts shall be fully vested and shall be payable to
his Beneficiary after receipt by the Committee of an acceptable proof of death
in accordance with this Section. In the event that the Participant's death
occurs after his termination of employment but before he has received all of his
Plan benefits, the vested amount then allocated to each of his accounts as
provided in Section 6.3 shall be payable to his Beneficiary after receipt by the
Committee of an acceptable proof of death in accordance with this Section.
(b) Designation of Beneficiary: Subject to the spousal consent
requirements of Section 6.2(c) and 6.7, each Participant from time to time may
designate any person or persons (who may be designated contingently or
successively and who may be an entity other than a natural person) as his
Beneficiary or Beneficiaries to whom his Plan benefits are paid if he dies
before receipt of all such benefits; provided, that a Participant's or Former
Participant's Beneficiary in all cases shall be his Surviving Spouse as defined
in Section 2.1, unless either (i) the present value of the Participant's
nonforfeitable account balance is not more than $3,500 as of the Payment
Starting Date, or (ii) there is no such Surviving Spouse at the time of death or
(iii) the Surviving Spouse consents to the appointment of another Beneficiary
pursuant to a waiver of spousal rights as provided in Subsection (c) below. Each
beneficiary designation shall be in a form prescribed by the Committee and will
be effective only when filed with the Committee during the Participant's
lifetime, and shall be subject to and conditioned upon any and all provisions of
federal law (including, but not limited to, the Retirement Equity Act of 1984)
regarding the choice of Beneficiary. Each beneficiary designation filed with the
Committee will cancel all beneficiary designations previously filed with the
Committee. If any Participant fails to designate a Beneficiary in the manner
provided above, or if the designated Beneficiary dies before the deceased
Participant or before complete distribution of the Participant's benefits and a
contingent Beneficiary has not been designated, then, and in any such event, the
person(s) who shall constitute the Beneficiary shall be the estate of the
deceased Participant.
(c) Requirements of Surviving Spouse Consent to Alternative
Beneficiary: A Participant's or Former Participant's Surviving Spouse or spouse
may consent to the designation
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of another Beneficiary if such consent is in a writing which is signed by the
Participant's or Former Participant's Surviving Spouse or spouse, acknowledges
the effect of the consent, and is witnessed by a notary public. The spouse's
consent must either acknowledge the specific non-spouse Beneficiary or
explicitly permit any non-spouse Beneficiary, and such Beneficiary may not
subsequently be changed to another non-spouse Beneficiary unless the spouse's
consent again is obtained in the form prescribed above, or unless the spouse's
prior consent expressly permitted new designations by the Participant without
the requirement of further consent by the spouse. Any consent necessary under
this Section will be valid only with respect to the spouse who signs the
consent, but shall be irrevocable by that spouse as to the specified non-spouse
Beneficiary. However, a Participant or Former Participant may revoke a spouse's
waiver (and thereby cause the spouse to become a Beneficiary) at any time before
the commencement of benefits by filing a new Beneficiary designation form, even
without the consent of the spouse or Surviving Spouse, and the number of such
revocations by a Participant or Former Participant shall not be limited.
Notwithstanding the foregoing written 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, or if a Participant has a court order that he either is legally
separated or has been abandoned within the meaning of local law, then a valid
spousal consent will be deemed to have been made.
6.3 Termination for Other Reasons: If a Participant's employment with
the Employer is terminated before Normal or Early Retirement Age for any reason
other than Disability or death, the Participant (or his Beneficiary under
Section 6.2 in the event of the Participant's death prior to his receipt of all
his Plan benefits) shall be entitled to the entire amount credited to each of
his accounts payable in accordance with Section 6.4; provided, however, that the
Participant shall not be entitled to a distribution of his benefits if his
employment is reinstated by the Employer before such payment would otherwise be
made.
6.4 Payment of Benefits:
(a) Participant's Claim for Benefits: Upon a Participant's
entitlement to payment of benefits under Section 6.1 or 6.3, or a Beneficiary's
entitlement to payment under Section 6.2, he shall file with the Committee his
written request as to time and manner of payment on such form or forms, and
subject to such conditions, as the Committee shall provide.
(b) Committee's Determination: Subject to the provisions of
subsections (c) through (g) below, and also subject to the Qualified Joint and
Survivor Annuity and related spousal consent requirements of Sections 6.2 and
6.7, the Committee shall determine when payment of a Participant's benefits is
to commence and the method by which his benefits will be paid, and shall direct
the Trustee accordingly. The Committee shall act in accordance with this Plan in
making any determinations under this section and shall not be bound by a
Participant's request under this section.
(c) When Benefit Payments Commence:
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(1) Payment of a Participant's benefits must commence no
later than the Payment Starting Date (as defined in Section 2.l of the Plan),
unless the Participant elects later payment (subject to the provisions of
subsection (e) below) or is deemed to have elected to defer payment of benefits
by failing to give consent to a distribution in excess of $3,500 as provided in
the Commissioner's Regulation ss.1.411(a)-11(c)(7).
(2) Unless the Participant has consented to earlier
payment, a distribution will be deferred until the earliest of his attainment of
age sixty-five or Normal Retirement Age, or his death; provided, that if the
total of his vested benefits in all accounts does not exceed $3,500 or such
other greater cash-out amount as may be provided under the Commissioner's
rulings and regulations, the Committee shall require a mandatory cash-out and
provide for distribution of vested benefits in a lump sum as of the earliest
date permitted under Section 6.4(c)(3) below. For purposes of this mandatory
cash-out provision, if the value of a Participant's vested account balance is
zero, the Participant shall be deemed to have received a distribution of such
vested account balance on the date of his termination of employment.
Within a period of no less than thirty days and no
more than ninety days prior to a distribution, the Committee shall provide the
Participant written notice of his rights to consent to a distribution and the
Participant must consent in writing to the distribution in accordance with
Treasury Regulation ss.1.411(a)-11(C); provided that, if the distribution is one
to which Section 6.7 does not apply, subject to the rules relating to the timing
of distributions in Section 6.4(c)(3) below, such distribution may commence less
than thirty days after such notice is given, provided that (i) the Committee
clearly informs the Participant that the Participant has a right to a period of
at least thirty 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.
(3) Distributions to any Participant, Beneficiary, or
Alternate Payee may be made as soon as administratively practicable following
the next allocation date after the date of the Participant's separation from
Service and the Committee's receipt and processing of the distribution forms, or
earlier distribution date permitted to an Alternate Payee, valued as of the
Valuation Date immediately preceding the distribution date.
Notwithstanding the foregoing, in any event where
the Trustee has determined that the value of the Trust has declined since the
last Valuation Date in a manner which would cause the distribution of Plan
assets based on the prior Valuation Date to injure other Plan Participants, then
distributions under this Plan will be delayed (except to the extent required in
Code ss.401(a)(9) and the regulations thereunder) until the next Valuation Date
as of which a distribution would not cause harm to other Plan Participants.
(4) To the extent a Participant's death benefits are to be
distributed to his Surviving Spouse, the Surviving Spouse shall have the
election to receive such benefits within a reasonable time after the
Participant's death, which time period must be no less favorable than any other
time period applicable to other distributions under the Plan.
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(5) Notwithstanding the foregoing, in all events, the
commencement of benefit payments shall be subject to Subsection (e) below.
(d) Method of Payment: Subject to Subsection (e) below and to the
Qualified Joint and Survivor Annuity and spousal consent requirements of Section
6.7 and also subject to any Beneficiary's right to waive his right to receive
Plan benefits, a Participant may direct the Committee to distribute his benefits
in any one or more of the following methods:
(1) In a lump sum; or
(2) In periodic payments computed in accordance with
Subsection (e) below and not in excess of that permitted by Subsection (e)
below; or
(3) By purchase of an immediate or deferred annuity for
his life, or over the joint lives of him and a designated Beneficiary in
accordance with the Commissioner's Regulations under Code ss.401(a)(9); or
(4) In any combination of (1), (2), and (3).
Notwithstanding the above, unless the Participant's total vested benefits are
equal to or less than $3,500, (or such other greater amount as may be provided
under the Commissioner's regulations for mandatory cash-outs) or the Participant
otherwise elects with his spouse's consent in accordance with the Qualified
Joint and Survivor Annuity requirements of Section 6.7, if a Participant elects
to have his benefits paid in the form of an annuity, then such Participant's
benefits will be paid in the form of a Qualified Joint and Survivor Annuity. In
the event of periodic payments under subsection (2) above, the unpaid balance at
the end of each Plan Year shall receive an Income allocation.
(e) When Distribution Must be Completed and Minimum Amount of Periodic
Payments:
(1) Before Death of Participant: Anything to the contrary
in this Plan notwithstanding, the entire interest of a Participant or Former
Participant in the Plan either (i) must be distributed to him not later than
April 1 of the calendar year following the calendar year in which he attains age
seventy and one-half (or, in the case of a Participant or Former Participant
other than a Five Percent Owner who reached age seventy and one-half before
January 1, 1988, not later than April 1 of the calendar year following the later
of such year or the calendar year he retires); or (ii) will be distributed,
commencing not later than the date specified in subsection (i) above, over the
life of such Participant or Former Participant or the lives of him and a
designated beneficiary, or over a specified period not in excess of his life
expectancy or the life expectancies of him and a designated beneficiary
(provided, that if the Participant's spouse is not the designated beneficiary,
then the method of distribution selected must assure that more than fifty
percent of the present value of the amount available for distribution is paid
within the Participant's life expectancy). In any case where the Participant's
entire interest is
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distributed other than in a lump sum, the amount to be distributed each year
must be at least an amount equal to the quotient obtained by dividing the
Participant's entire interest by the life expectancy of the Participant or joint
and last survivor expectancy of the Participant and designated beneficiary. Life
expectancy and joint and last survivor expectancy for purposes of this paragraph
shall be computed by the use of the return multiples contained in ss.1.72-9 of
the Commissioner's Regulations if the designated beneficiary is the
Participant's spouse. If the beneficiary is not the Participant's spouse, the
amount to be distributed each year must be at least equal to an amount equal to
the quotient obtained by dividing the Participant's entire interest by the
lesser of (i) the life expectancy as computed under the foregoing sentence or
(ii) the applicable divisor from the table in Proposed Regulation
ss.1.401(a)(9)-2, Q&A4. For purposes of this computation, the life expectancy
(other than in the case of a life annuity) may be recalculated no more
frequently than annually; however, the life expectancy of a non-spouse
beneficiary may not be recalculated.
(2) After Death of Participant (or Surviving Spouse):
If a Participant or Former Participant dies after distribution of his or her
interest has commenced, the remaining portion of his interest will be
distributed at least as rapidly as under the method of distribution being used
prior to the Participant's or Former Participant's death. If a Participant or
Former Participant dies before distribution of his interest in that Plan has
commenced, then distribution of such interest of the Participant or Former
Participant must be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's or Former Participant's death, except to
the extent that the distributions are in accordance with (i) and (ii) below:
(i) If any portion of the Participant's or Former
Participant's interest is payable to or for the benefit of a designated
beneficiary, distributions may be made in substantially equal installments over
the life expectancy of such designated beneficiary commencing no later than on
or before December 31 of the calendar year immediately following the calendar
year in which the Participant or Former Participant died (or such later date as
may be prescribed by the Commissioner's Regulation); provided that,
(ii) If the designated beneficiary is the
Participant's or Former Participant's surviving spouse, the date distributions
are required to begin under Subsection (i) above shall be not earlier than the
later of the date required by Subsection (i) above or December 31 of the
calendar year in which the Participant or Former Participant would have attained
age seventy and one-half, and if the surviving spouse dies before payment to
such spouse begins, subsequent distributions shall be made as if the spouse had
been the Participant or Former Participant.
For purposes of the preceding sentence, payments will be calculated by use of
the return multiples specified in ss.1.72-9 of the Commissioner's Regulations.
Life expectancy of a Participant's or Former Participant's surviving spouse may
be calculated annually; however, the life expectancy of any other designated
Beneficiary shall be calculated at the time payment first commences without
further recalculation. For purposes of this subparagraph (e)(2), any amount paid
to a child of a Participant or Former Participant will be treated as if it had
been paid to the
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Participant's or Former Participant's surviving spouse if the amount becomes
payable to the surviving spouse when the child reaches the age of majority.
(3) Forms of Benefit: Nothing in this Section shall be
construed as permitting distribution in a form other than one permitted under
the other Sections of this Article VI.
(4) Commercial Annuity: If the Participant's benefits are
distributed in the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with the requirements of
Code ss.401(a)(9) and the regulations thereunder.
(5) Pre-TEFRA Designations: Notwithstanding Subsections
(e)(1) and (e)(2) above, distributions before and after death will be permitted
which do not satisfy the requirements of (e)(1) and/or (e)(2) if such
distributions are made pursuant to a method designated in a signed writing by
the Participant or Former Participant (or the beneficiary of a deceased
Participant or Former Participant) prior to January 1, 1984, and such
designation would not have disqualified the Plan under Code ss.401(a)(9) as in
effect prior to amendment by the Deficit Reduction Act of 1984. A designation
under this section only applies to Participants and Former Participants having
benefits accrued under the Plan as of December 31, 1983 (but also will apply to
benefits accrued after that date for such a Participant or Former Participant).
The designation by a Participant or Former Participant (or beneficiary of a
Former Participant), in order to be effective, must specify the time
distribution will commence and the period over which distributions will be made.
In the case of any distribution upon death of the Participant or Former
Participant, the designation must include the beneficiaries of the Participant
or Former Participant (listed in order of priority) in addition to the foregoing
specifications of time and period. Unless paid to a Surviving Spouse pursuant to
a Qualified Joint and Survivor Annuity, the method of distribution selected
under this subparagraph (5) must assure that more than fifty percent of the
present value of the amount available for distribution is paid within the life
expectancy of the Participant or Former Participant. A distribution which
commenced before January 1, 1984 but continues after December 31, 1983, will be
presumed to have been designated by the Participant or Former Participant (or
beneficiary thereof) if such method of distribution was specified in writing and
otherwise satisfied the foregoing requirements. If a designation is changed in
any way (other than a mere substitution or addition of another beneficiary not
named in the designation, which substitution or addition does not alter,
directly or indirectly, the period over which distributions were to be made),
any subsequent designation must satisfy the requirements of Code ss.401(a)(9) as
then amended.
(6) Commissioner's Regulations: This subsection (e) shall
be construed in accordance with the Commissioner's Regulations promulgated under
Code ss.401(a)(9).
(f) Form of Payment: The amount which a Participant, Former
Participant, or Beneficiary is entitled to receive at any time and from time to
time may be paid in cash, Employer Stock or in other traded securities, or in
any combination thereof, provided no discrimination in value results therefrom.
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(g) Direct Rollover Option: This Subsection applies to distributions
made on or after January 1, 1993. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a Distributee's election under this
Subsection, a Distributee who otherwise has become entitled to a distribution
under the Plan may elect, at the time and in the manner prescribed by the
Committee to have any portion of that distribution which is an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover. The Committee may establish rules whereby
rollovers are not permitted in cases where the anticipated annual distribution
is less than $200, in cases where the Participant wishes to have a portion of
the distribution paid to him but the entire distribution is $500 or less, where
the Participant seeks a rollover to more than one Eligible Retirement Plan, and
in other limited circumstances permitted by the Commissioner.
6.5 Withdrawals by Participants:
(a) Withdrawals of Employer After-Tax Matching Contributions: A
Participant in the employ of the Employer may, by written application made on
such form or forms as may be prescribed by the Committee and delivered to the
Committee, elect to withdraw in one lump sum payment the value of all of the
Employer After-Tax Matching Contributions (including Income thereon) then held
in his After-Tax Account; provided, that no such withdrawal may be made to a
Participant unless he has completed at least sixty months of Participation in
the Plan or those Employer After-Tax Matching Contributions have been held by
the Plan for at least two full years.
(b) Withdrawals of Employee After-Tax Contributions: A Participant
in the employ of the Employer may, by written application made on such form or
forms as may be prescribed by the Committee and delivered to the Committee,
elect to withdraw from his After-Tax Account all or any portion of the value of
his Employee After-Tax Contributions (including Income thereon), subject to the
following rules and restrictions.
(1) If a Participant receives a withdrawal of his Employee
After-Tax Contributions, then he shall not be eligible to make Employee
After-Tax Contributions for twelve months after the date of the withdrawal
unless the Employee After-Tax Contributions have been held by the Plan for at
least two full years;
(2) A withdrawal of a Participant's Employee After-Tax
Contributions may only be made once during any one calendar year, and shall be
limited to the aggregate amount of Employee After-Tax Contributions (less
previous withdrawals of such contributions), including any increase in value
attributable to Income thereon and may include appreciation due to increase in
the value of withdrawn Employee After-Tax Contributions that were invested
immediately prior to the time of withdrawal in Employer Stock, to the extent
such appreciation is due to investment in such Employer Stock.
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(3) The Committee shall develop rules and procedures for
adjusting the amount that may be withdrawn in cases where the value of a
Participant's Employee After-Tax Contributions has declined since the time they
were contributed.
(c) Withdrawals of Employer Pre-Tax Matching Contributions: A
Participant in the employ of the Employer may, by written application made on
such form or forms as may be prescribed by the Committee and delivered to the
Committee, elect to withdraw from such Participant's Pre-Tax Account all or a
portion of the value of his Employer Pre-Tax Matching Contributions made prior
to December 31, 1987 (and Income thereon) subject to the following rules and
restrictions.
(1) A withdrawal of such Employer Pre-Tax Matching
Contributions may only be made once per calendar quarter.
(2) No Employer Pre-Tax Matching Contribution may be
withdrawn by a Participant who has not attained age 59 1/2 unless such Employer
Pre-Tax Matching Contribution was contributed to the Plan no less than two years
prior to the last day of the calendar quarter preceding the date of request for
withdrawal.
Employer Pre-Tax Matching Contributions (and Income thereon) made after December
31, 1987 or attributable to the Employer's match of 75% of the first $500 of a
Participant's Employee Pre-Tax Contributions also may be withdrawn but only to
the extent the Participant would qualify for a withdrawal of Employee Pre-Tax
Contributions under Paragraph (d) below.
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(d) Withdrawals of Employee Pre-Tax Contributions and Rollover
Contributions:
(1) Withdrawal at Age 59 1/2: A Participant in the employ
of the Employer who has reached age 59 1/2 may, by written application made on
such form or forms as may be prescribed by the Committee and delivered to the
Committee, elect to withdraw all or any part of his Employee Pre-Tax
Contributions (plus Income thereon) then held in his Pre-Tax Account or his
Rollover Contributions (plus Income thereon) then held in his Rollover Account.
(2) Hardship Withdrawals: A Participant in the employ of
the Employer may, by written application made on such form or forms as may be
prescribed by the Committee and delivered to the Committee, request a withdrawal
of the value of all or a portion of his Employee Pre-Tax Contributions (plus a
portion of the Income thereon) then held in his Pre-Tax Account or his Rollover
Contributions (plus Income thereon) then held in his Rollover Account subject to
the following rules and restrictions.
(i) The Participant must demonstrate to the
Committee that such withdrawal is necessary by reason of his Hardship (as
defined below);
(ii) Hardship withdrawals shall not be permitted
with respect to a Participant's Employee Pre-Tax Contributions (and Income
thereon) except to the extent that such withdrawal is equal to or less than the
total of (A) the value of the Employee Pre-Tax Contributions made through
December 31, 1988 (including Income thereon through December 31, 1988) plus (B)
the amount of Employee Pre-Tax Contributions made following December 31, 1988
(not including Income thereon) and not including any qualified non-elective
contributions or qualified matching contributions to the extent required by the
Commissioner's regulations;
(iii) Only one Hardship withdrawal shall be
permitted in any one calendar quarter;
(iv) The Participant must demonstrate that the
distribution is necessary to satisfy a financial need as provided in Section
6.5(d)(4) below;
(v) In no event may the amount distributed exceed
the amount necessary to satisfy the Hardship (as defined below); and
(vi) No Hardship withdrawals may be made under the
Plan until the Participant has obtained all other distributions, withdrawals,
and nontaxable loans available under the Plan and all other plans of the
Employer.
(3) Definition of Hardship: The determination of Hardship shall be
made by the Committee using uniform, non-discriminatory and objective standards
and shall be limited to genuine financial emergencies when the Participant has
an immediate and heavy financial need of the funds and the funds are not
reasonably available from other resources of the Participant.
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The amount of an immediate and heavy financial need may include any amounts
necessary to pay federal, state or local income taxes or penalties reasonably
anticipated to result from the distribution. Hardships justifying withdrawal
shall be limited solely to:
(i) the costs directly related to the purchase of a
primary home for the Participant (not including mortgage payments);
(ii) the need to prevent the eviction of a Participant from
his principal residence or foreclosure on the mortgage of the Participant's
principal residence;
(iii) paying tuition and related educational fees for the
next twelve months of post-secondary education of the Participant, his spouse,
children or dependents;
(iv) providing income for medical expenses described in
Code ss.213(d) incurred by the Participant, his spouse, or any of his dependents
(as defined in Code ss.152) or necessary for these persons to obtain such
medical care; or
(v) other hardships deemed immediate and heavy financial
needs under IRS regulations,
provided, that the interpretation of Hardship shall in all cases be consistent
with final regulations issued under Code ss.401(k).
(4) Distribution Necessary to Satisfy Financial Need: In order to
obtain a Hardship distribution, the Participant must submit documentation that
the financial need cannot be relieved
(i) through reimbursement or compensation by insurance or
otherwise,
(ii) by reasonable liquidation of the Participant's assets
to the extent such liquidation would not itself cause an immediate and heavy
financial need,
(iii) by cessation of Employee Pre-Tax Contributions or
Employee After-Tax Contributions under the Plan, or
(iv) by other distributions or nontaxable (at the time of
the loan) loans from this Plan or other plans maintained by the Employer or by
any other employer or by borrowing from commercial sources on reasonable
commercial terms.
Prior to October 1, 1994, a Participant requesting a Hardship
withdrawal, in lieu of submitting the documentation required under subsections
(i) through (iv), could agree that
(A) he shall not be eligible to make Employee
Pre-Tax Contributions to this Plan or employee contributions to any other plan
maintained by the Employer (including nonqualified plans, stock option or
purchase plans, and any similar plans; but not including any
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contribution to a health, cafeteria or other welfare plan, or any mandatory
employee contribution portion of a defined benefit plan), for twelve months
after receipt of the Hardship withdrawal, and
(B) he may not make Employee Pre-Tax Contributions
during his taxable year (generally, the calendar year) immediately following the
taxable year in which he received the Hardship distribution which are in excess
of the $7,000 (as adjusted) limit under Code ss.402(g) reduced by the amount of
his Employee Pre-Tax Contributions for the taxable year of the Hardship
distribution.
(e) Procedures for Distribution of Withdrawals: Applications for
withdrawals pursuant to Section 6.5 shall be submitted in writing on such form
or forms as may be prescribed by the Committee and delivered to the Committee,
and otherwise shall be made in accordance with the normal administrative
procedures of the Committee. Approved withdrawals shall be distributed as soon
as practicable, subject to the terms of any security or contract in which any
assets are invested. The proceeds of each such withdrawal shall be charged with
any transfer taxes, postage, commissions, Trustee transfer charges, and all
other direct expenses arising from such withdrawal.
(f) All withdrawals shall be in the form of a lump sum payment and
shall not be available in the form of an annuity.
6.6 Loans to Participants: Loans shall be available to Participants
and Beneficiaries on a reasonably equivalent basis and in accordance with
written procedures and rules adopted by the Committee which shall be considered
a part of this Plan. Any amendments to such written procedures and rules also
shall be in writing, shall be adopted by the Committee, and shall be considered
a part of this Plan.
6.7 Requirement of Qualified Joint and Survivor Annuity:
(a) Applicability of this Section: The provisions of this Section
shall take precedence over any other conflicting provisions of the Plan. The
requirements of this Section shall apply only to any Participant who is credited
with one or more Hours of Service with the Employer on or after August 23, 1984.
(b) Qualified Joint and Survivor Annuity as Normal Form of
Benefit: If a Participant or Former Participant has elected a form of payment
under Section 6.4 or 6.5 which includes a life annuity, then such a
Participant's or Former Participant's vested benefits shall be paid in the form
of a Qualified Joint and Survivor Annuity, unless an optional form of benefit is
selected pursuant to a Qualified Waiver (as described in Subsection (c) below)
made within the ninety-day period ending on the first date as of which an amount
is paid as an annuity or in any other form.
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For purposes of this Section 6.7, "vested benefits" shall include
benefits derived from a Participant's pre-tax or Employee After-Tax
Contributions to the Plan, if any. Any annuity contract distributed pursuant to
this section must be nontransferable and the terms of such contract must comply
with the requirements of this Plan.
Notwithstanding the foregoing, the Committee may provide that
distribution be made in a form other than a Qualified Joint and Survivor Annuity
if the present value of the Participant's or Former Participant's vested
benefits is equal to or less than $3,500 (or such other amount provided under
the Commissioner's regulations on mandatory cash-outs), so long as annuity
payments to such Participant (or his Beneficiary) have not already begun,
regardless of whether the Participant's or Former Participant's spouse has
consented.
(c) Notice and Waivers:
(1) Notice of Qualified Joint and Survivor Annuity Requirements
Prior to Commencement of Benefits: If a Participant or Former Participant has
elected payment of benefits in a form which includes a life annuity, then within
a period of no less than thirty days and no more than ninety days prior to the
commencement of benefits (or in the case of a benefit not payable as an annuity,
the first day on which all events have occurred which entitle the Participant or
Former Participant to such benefit), the Committee shall provide each
Participant and Former Participant a written explanation of: (i) the terms and
conditions of a Qualified Joint and Survivor Annuity; (ii) the Participant's or
Former Participant's right to waive the Qualified Joint and Survivor Annuity
form of benefit and the effect of such a waiver; (iii) the rights of a
Participant's or Former Participant's spouse; and (iv) the right to revoke a
previous waiver and the effect of the revocation of a previous election.
(2) Requirements of Waiver: No waiver of a Qualified Joint and
Survivor Annuity shall be effective unless it is in writing and consented to in
writing by the Participant's or Former Participant's spouse (or Surviving Spouse
in the case of the waiver of a designation of Beneficiary under Section 6.2(b)).
Such spousal consent must acknowledge the effect of the consent and must
specifically designate the non-spouse beneficiary or alternate form of benefits,
which designation may not be changed without further spousal consent in the form
prescribed by this paragraph; provided, that further spousal consent to changes
shall not be necessary if the initial consent of the spouse expressly permits
the Participant to change such designation without any requirements of further
consent by the spouse. Any spousal consent must be witnessed by a Plan
representative or notary public. Any consent necessary under this Section will
be valid only with respect to the spouse who signs the consent, but shall be
irrevocable by that spouse as to any specified beneficiary and/or form of
benefit to the extent indicated in the consent form. However, a Participant or
Former Participant may revoke a spouse's waiver (and thereby cause the benefits
to be distributed in the form of a Qualified Joint and Survivor Annuity) at any
time before the commencement of benefits by filing a new benefit election form
designating the spouse as beneficiary and/or electing a Qualified Joint and
Survivor Annuity form of benefit, even without the consent of the spouse or
Surviving Spouse. The number of such revocations by a Participant or Former
Participant shall not be limited.
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(3) Waiver Deemed Made if No Spouse or Spouse Not Locatable or
as Otherwise Permitted by Regulations: Notwithstanding the foregoing written
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, or if such spousal consent
otherwise is not required under the Commissioner's regulations, a valid waiver
will be deemed to have been made.
6.8 Distributions Pursuant to Qualified Domestic Relations Orders:
(a) Payments to an Alternate Payee Under a Qualified Domestic
Relations Order: On and after January 1, 1985, the Committee shall pay benefits
to the Alternate Payee(s) in accordance with the terms of this Section, any
government regulations adopted under ERISA ss.206, and the applicable provisions
of any Qualified Domestic Relations Order entered by a court of competent
jurisdiction on or after January 1, 1985. In the case of a Domestic Relations
Order entered by a court of competent jurisdiction before January 1, 1985, the
Committee (1) shall treat such order as a Qualified Domestic Relations Order
under this Section if the Committee is paying benefits pursuant to such order on
January 1, 1985 and (2) may, in its discretion, treat any other such order as a
Qualified Domestic Relations Order under this Section even if such order does
not meet the requirements therefor.
(b) Plan Procedures Relative to Qualified Domestic Relations
Orders:
(1) Notification: Following its receipt of any Domestic
Relations Order, the Committee shall promptly notify in writing the affected
Participant or Former Participants and Alternate Payee(s) of its receipt of the
order, and shall furnish such persons a copy of the order and of these Plan
procedures (and any other procedures which may have been adopted by the
Committee) for determining whether the order is a Qualified Domestic Relations
Order. This notice and all other notices pursuant to this Section will be sent
to the address included in the Domestic Relations Order (or to such other
address as is known to the Committee or as may thereafter be specified in
writing by the addressee). Any Alternate Payee shall be permitted to designate a
representative for receipt of copies of notices that are to be sent to the
Alternate Payee. Such notice shall set a time and date no less than fifteen days
nor more than thirty days from the date the notice is mailed on which the
Committee will meet to determine whether the order is a Qualified Domestic
Relations Order, and shall inform the Participant or Alternate Payee that he may
present written or oral comments at that time with regard to such determination.
(2) Determination of Committee: On the date specified in
the above notice, the Committee shall examine the Domestic Relations Order in
light of any comments received and in light of applicable law and regulations,
and shall make one of three determinations: (i) that the order is a Qualified
Domestic Relations Order; (ii) that the order is not a Qualified Domestic
Relations Order; or (iii) that the determination of whether the order is a
Qualified Domestic Relations Order should be submitted to and made by a court of
competent jurisdiction. If, within eighteen months from the date on which the
first payment of benefits would be required to be made under such order, it is
determined by the Committee or court of competent
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jurisdiction that the order (or modification thereof) is a Qualified Domestic
Relations Order, the Committee shall pay any separately accounted for amounts
(plus adjustments required by the order) to the specified Alternate Payee, and
thereafter shall pay the Alternate Payee the amount specified by the Qualified
Domestic Relations Order. If, within the aforesaid eighteen month period, it is
determined by the Committee or a court of competent jurisdiction that the order
is not a Qualified Domestic Relations Order, or the question of whether the
order is a Qualified Domestic Relations Order is not determined by the Committee
or a court of competent jurisdiction, then the Committee shall pay any amounts
(plus any Income or allocated interest or earnings thereon) separately accounted
for below to the Participant, Former Participant or other person or persons who
would have been entitled thereto if there had been no Domestic Relations Order.
Any determination other than that an order is a Qualified Domestic Relations
Order after the close of the aforesaid eighteen month period shall be applied
prospectively only.
(3) Separate Accounting of Participant's and Alternate
Payee's Benefits: During any period in which the Participant otherwise would
have had a right to payment of Plan benefits and in which the issue of whether
an order is a Qualified Domestic Relations Order is being determined, the
Committee shall separately account for (but need not physically escrow) the
amounts as to which the Participant or Former Participant otherwise would have
had a right to payment during such period and which amounts would have been
payable to the Alternate Payee during such period if the order had been
determined to be a Qualified Domestic Relations Order. Amounts determined to be
payable to an Alternate Payee in accordance with a Qualified Domestic Relations
Order (or otherwise separately accounted for by this subsection) shall not be
considered to be part of the Participant's account with respect to any other
spouse or beneficiary of the Participant.
(4) Effect Upon Any Joint and Survivor Annuity Provisions
of the Plan: If the Plan provides for payment in the form of a Qualified Joint
and Survivor Annuity, a former spouse of a Participant shall be treated as a
Surviving Spouse of such Participant (and any spouse of the Participant shall
not be treated as a spouse for such purposes) to the extent provided in any
Qualified Domestic Relations Order.
(5) Expenses of Domestic Relations Order: All unreasonable
or unusual fees and expenses incurred by the Plan, the Committee and/or the
Trustee in evaluating and effecting a Domestic Relations Order shall be charged
to the Accounts of the Participant with respect to whom the Domestic Relations
Order was received; provided, that if a separate account is established for an
Alternate Payee pursuant to a Qualified Domestic Relations Order, such
unreasonable and unusual fees and expenses shall be charged equally to the
Participant's Plan accounts and the Alternate Payee's Plan accounts. Such fees
and expenses may include, but need not be limited to, attorneys' fees,
accountants' fees, court costs, mailing expenses and other expenses attributable
to the Domestic Relations Order.
(c) Notification of Pending Order: In the event the Committee is
notified in writing by the attorney representing a potential Alternate Payee
that the attorney has commenced legal action in a court of competent
jurisdiction and has requested a Qualified Domestic Relations
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Order or will request an Order in connection with such legal action, the
Committee may delay any distribution from the Plan for which the Participant is
eligible until such time as the court makes a disposition with respect to the
Order or the pending action or such earlier time as the Participant and
potential Alternate Payee otherwise agree in writing.
(d) Definitions:
(1) Alternate Payee: Any spouse, former spouse, child or
other dependent of a Participant or Former Participant who is recognized by a
Domestic Relations Order as having a right to receive all, or a portion of, the
benefits payable under the Plan with respect to such Participant or Former
Participant.
(2) Domestic Relations Order: Any judgment, decree or order
(including approval of a property settlement agreement) which relates to the
provision of child support, alimony payments, or marital property rights to a
spouse, former spouse, child or other dependent of a Participant, and is made
pursuant to a State's domestic relations law or community property law.
(3) Qualified Domestic Relations Order: A Domestic
Relations Order which:
(i) Creates or recognizes the existence of an
Alternate Payee's right to, or assigns to an Alternate Payee the right to
receive all or a portion of the Plan benefits payable with respect to a
Participant or Former Participant; and
(ii) In the order clearly specifies (A) the name and
last known mailing address (if any) of the Participant or Former Participant,
and of each Alternate Payee covered by the order, (B) the amount or percentage
of the Participant's or Former Participant's benefits to be paid by the Plan to
each Alternate Payee, or the manner in which such amount or percentage is to be
determined, (C) the number of payments or period to which such order applies,
and (D) each plan to which such order applies; and
(iii) Does not require the Plan to provide any type or
form of benefit, or any option, not otherwise provided by the Plan; and
(iv) Does not require the Plan to provide increased
benefits, determined on the basis of actuarial value; and
(v) Does not require the payment of benefits to an
Alternate Payee which are required to be paid to another Alternate Payee under
another order previously determined to be a Qualified Domestic Relations Order;
and
(vi) In the case of any payment before a Participant
has separated from Service, does not require payment to the Alternate Payee
before the earlier of (A) the date
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the Participant or Former Participant is entitled to a distribution under the
Plan, or (B) the date the Participant or Former Participant could begin
receiving benefits if he separated from Service; and
(vii) In the case of an order which requires
benefits to be paid to an Alternate Payee as if the Participant had retired on
the date payment is to begin under such order, only takes into account the
present value of benefits actually accrued using, in the event the Plan is a
defined benefit plan, the interest rate specified in the Plan for determining
actuarial equivalence, (or five percent if no interest rate is specified); and
(viii) Requires payment in a form provided by the
Plan, except that in no event may payment be in the form of a joint and survivor
annuity with respect to the Alternate Payee and his subsequent spouse.
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ARTICLE VII. TRUST FUND
7.1 Trust Fund: All contributions under this Plan shall be paid to the
Trustee and deposited in the Trust Fund. The Trust Fund shall be governed by a
separate Trust document which is incorporated and made a part of this Plan.
7.2 Collective Investment Subaccounts:
(a) Collective Investment Funds: The Trustee may develop, pursuant
to any general investment guidelines or funding policy provided by the
Committee, separate Trustee-sponsored or Investment Manager-sponsored collective
investment funds (which, without limitation, may consist of pooled funds under
the Trust, a fund composed of Employer Stock, or funds in which only the Trust
may invest) among which Plan Participants may direct investment of any amounts
in their accounts pursuant to such uniform and non-discriminatory rules as the
Committee may adopt, less loans under Section 6.6. The Committee may select,
replace and change the available collective investment funds consistent with the
investment guidelines and funding policy. To the extent practicable, a
Participant's directions regarding investments shall apply uniformly to all of a
Participant's accounts as of the time that the direction is implemented so that
such direction shall apply consistently both to amounts attributable to
contributions by the Participant and amounts attributable to contributions by
the Employer. Investments of each such collective investment fund shall be
managed and otherwise shall be the responsibility of the Trustee (or Investment
Manager appointed by the Committee to manage the fund), and separate records
shall be maintained to record the performance and Income of each such fund. The
Committee shall develop guidelines for collective investments, which guidelines
may apply to all Plan Participants or only to certain groups of Participants
designated on the basis of age, years of Participation, type of account (for
example, After-Tax Accounts or Rollover Accounts or accounts relating to a
predecessor plan), or other basis, so long as such different groupings do not
discriminate in favor of Highly Compensated Employees or violate regulations
under Code ss.401(a)(4).
(b) Subaccounts: The Committee shall cause separate subaccounts to
be maintained to reflect each Participant's direction among each collective
investment fund, and each such subaccount shall be adjusted each Valuation Date
to reflect its share of the Income of the collective investment fund of which it
is a part. Distributions and forfeitures from accounts of a Participant, and
contributions allocated to the accounts of a Participant shall be allocated by
the Trustee among the Participant's collective investment subaccounts pursuant
to the most recent direction of the Participant, subject to the reasonable rules
and procedures of the Committee and Trustee.
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(c) Direction: Direction among such collective investment funds by
a Participant shall be given in writing to the Committee on such forms and
pursuant to other reasonable rules and procedures of the Committee and Trustee
as to time, percentage and amount. Any such direction once made shall remain in
effect as to contributions, forfeitures and distributions for that Plan Year and
succeeding Plan Years, unless the Participant shall file a timely application
made in accordance with applicable Committee and Trustee rules and procedures
which effectively redesignates the investment of his account. In the event a
Participant shall fail for any reason to make an effective direction of his
accounts at a time when different collective investment funds are available,
then the amounts in his accounts shall be deemed to have been designated to a
fund or funds as selected by the Trustee to apply in such instances, subject to
any funding policy statement or any other restrictions or guidelines provided by
the Committee and to the standards that would be followed by a prudent fiduciary
in similar circumstances.
7.3 Special Provisions Regarding Investment of Trust Assets in
Employer Stock:
(a) Investment in Employer Stock: Subject to Participant direction
under Section 7.2, the Trustee may invest in Employer Stock and/or other
securities of the Employer which are "qualifying employer securities" under
ss.406(d) of ERISA in that such securities are stock (or otherwise an equity
security) or bonds, debenture, notes or certificates or other evidence of
indebtedness which is described in paragraph (1), (2) or (3) of Code ss.503(e)
(the foregoing other securities hereinafter referred to as "Employer
Securities"). Notwithstanding the foregoing, a Participant may not direct the
investment of new contributions (whether Employee contributions or Employer
contributions) to his account in Employer Stock or Employer Securities to the
extent that such new investment exceeds 25% of such new contributions.
Additionally, a Participant may not transfer assets from other subaccounts to
investments in Employer Stock or Employer Securities to the extent such transfer
causes his account's total investment in Employer Stock and Employer Securities
to exceed 25% of the total value of his Account.
(b) Contribution and Purchase of Stock: The Trust may receive
Employer Stock or other Employer Securities by way of Employer contribution, or
it may purchase such Employer Stock or other Employer Securities (regardless of
whether it had been held as treasury stock, or was previously authorized but
unissued, or had been owned by individuals, including Participants).
(c) Purchase Price of Employer Stock: The Trust acquisition of
Employer Stock or other Employer Securities shall be at not more than its fair
market value, as determined by its current established market for the Employer
Stock or other Employer Security, or (if such acquisition or sale is from or to
a "disqualified person" under Code ss.4975 and there is no established market
providing a fair market value) the independently appraised value as of the date
of the transaction.
(d) Compliance with Securities Laws: In the event the Trustee
invests any part of the Trust's assets in Employer Stock or any other Employer
Securities, and the Committee thereafter directs the Trustee to dispose of such
investment, or any part thereof, under
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circumstances which, in the opinion of the counsel for the Trustee, require a
notice of filing and/or registration of the Employer Stock or other Employer
Securities under the Securities Act of 1933 (or rulings and regulations
thereunder) and/or qualification of the Employer Stock or other Employer
Securities under the "blue sky laws" of any state or states, then the Employer,
at its own expense, will take or cause to be taken any and all such action as
may be necessary or appropriate to effect notice filing, registration and/or
qualification. The Committee may adopt rules limiting the ability of
Participants who are directors, officers and owners subject to the "short-swing
profit" rules of Section 16(b) of the Securities Exchange Act to invest Plan
assets in Employer Stock or other Employer Securities and also may limit such
Participants' ability to elect transactions under the Plan that will include the
buying or selling of Employer Stock or other Employer Securities consistent with
the requirements for exemption from Rule 16(b)(3).
(e) Tender Offers and Other Reorganizations: In the event the
consummation of a tender offer, merger, recapitalization, reorganization,
liquidation or exchange transaction relating to Employer Stock or other Employer
Securities and the receipt by the Plan of cash proceeds as a result of such
consummation, Participants may be solicited one or more times for a special
transfer of the cash proceeds generated from the aforementioned transactions
into other investment vehicles offered under the Plan and Trust. Participants
who fail to make a timely election regarding such a transfer shall have such
cash proceeds invested in a fund designated by the Trustee. This special
transfer may be made applicable to cash proceeds from all categories of Employer
Stock.
If at any time under applicable law or other circumstances
Employee contributions or related Employer contributions cannot be invested in
Employer Stock, the Trustee may invest the accounts in cash and such
interest-bearing securities as the Trustee considers advisable, until such funds
are again permitted to be invested in Employer Stock. At such time, Participants
may be solicited one or more times to permit them to redesignate the investment
vehicle into which these funds will be invested. Those Participants who do not
respond in a timely manner to such solicitation shall have these assets invested
in a fund designated by the Trustee.
Promptly at the time Employee contributions or related Employer
contributions again can be invested in Employer Stock, Participants shall be so
notified; further, to the extent required by applicable law, Participants shall
be notified that any prior election regarding investment of funds in Employer
Stock is not effective, shall be provided a prospectus or any other required
documents, and shall be asked to provide the Employer with new instructions
regarding investment of contributions in Employer Stock; provided, however, any
Participant who has previously instructed the Employer to invest his or her
contributions in Employer Stock and who does not provide the Employer with
subsequent instructions, will have such contributions invested in a fund
designated by the Trustee.
(f) Voting Rights: All voting and related stockholder rights
(including the right to tender in the event of a tender offer and any conversion
rights) shall be passed through to Participants in proportion to the relevant
Employer Stock or Employer Securities held by each Participant's account. The
Trustee shall vote Employer Stock or Employer Securities in
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accordance with voting instructions solicited from Participants in whose
accounts there is any Employer Stock or other Employer Securities. Voting rights
and related stockholder rights with respect to Employer Stock and Employer
Securities held by the Plan which are not allocated to any particular
Participant's account and/or as to which the Trustee has not received any
Participant direction as to its vote shall be exercised solely by the Trustee.
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ARTICLE VIII. ADMINISTRATION
8.1 Allocation of Responsibility Among Fiduciaries for Plan
Administration: The Fiduciaries shall have only those powers, duties,
responsibilities, and obligations as are specifically given them under this Plan
and the Trust Agreement.
(a) Employer Responsibilities: In general, the Employer shall have
the sole responsibility for making the contributions provided for under Section
4.1.
(b) Flagstar Responsibilities: Flagstar shall have the sole
authority to appoint and remove the Trustee and members of the Committee and to
amend or terminate, in whole or in part, this Plan.
(c) Committee Responsibilities: The Committee shall have the sole
responsibility for the administration of this Plan, which responsibility is
specifically described in this Plan and the Trust.
(d) Trustee Responsibilities: The Trustee (subject to such
directions as may be given by the Committee and/or any Investment Manager) shall
have the sole responsibility for the administration of the Trust and the
management of the assets held under the Trust, all as specifically provided in
the Trust.
(e) Investment Manager Responsibilities: If any Investment Manager
is appointed as described above, then it shall have the sole responsibility for
the management of the Trust assets under its control.
Each Fiduciary warrants that any directions given, information furnished, or
action taken by it shall be in accordance with the provisions of the Plan
authorizing or providing for such direction, information, or action.
Furthermore, each Fiduciary may rely upon any such direction, information or
action of another Fiduciary as being proper under this Plan, and is not required
under this Plan to inquire into the propriety of any such direction,
information, or action. It is intended under this Plan that each Fiduciary shall
be responsible for the proper exercise of its own powers, duties, and
responsibilities and not for any act or failure to act of another Fiduciary. No
Fiduciary guarantees the Trust Fund in any manner against investment loss or
depreciation in asset value.
8.2 Appointment of Committee: The Plan shall be administered by a
Committee consisting of at least one person who shall be appointed by and serve
at the pleasure of the Board of Directors of Flagstar. All usual and reasonable
expenses of the Committee (including, without limitation, fees for legal
services, accounting services and investment related services) may be paid in
whole or in part by the Employer, and any expenses not paid by the Employer
shall be paid by the Trustee out of the principal or income of the Trust Fund.
Provided however, except as otherwise provided under ERISA and regulations
thereunder, no person who is an Employee of the Employer shall receive any
compensation from the Trust Fund with respect to his services
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for the Committee (although such compensation may be paid to that person by the
Employer), but may be reimbursed from the Trust Fund or by the Employer for
reasonable costs and expenses incurred in connection therewith. Any
administrative expenses paid to the Trust Fund shall not be considered an
Employer contribution. In the absence of the appointment of a Committee, the
Employer shall be the Plan Administrator whose duties shall include all those
duties given to the Committee under this Plan.
8.3 Claims Procedure: The Committee shall make all determinations as
to the right of any person to a benefit. All claims for benefits shall be
presented by the Participant or his Beneficiary to the Committee on application
forms provided by the Committee. Such Participant or Beneficiary will
subsequently be notified in writing of acceptance or denial in whole or in part
of his claim. In the event of denial, the notification shall specify the
reason(s) for denial, refer to Plan provisions on which the denial is based,
include a description of any additional material or information necessary and an
explanation of why it is necessary, and advise the Participant or Beneficiary of
the procedure for appeal of such denial. The Participant or Beneficiary whose
claim has been denied shall file a written notice of desire to appeal the denial
within sixty days of notification of claim denial by the Committee, including
all of the facts upon which the appeal is based. The Committee shall arrange a
conference with the claimant within thirty days after the date of the appeal; if
the claim cannot be resolved at such conference, a hearing will be held before
the Committee within sixty days of the date of appeal. At the hearing, the
Participant or Beneficiary, or his representative may present relevant evidence,
written issues and comments. Within sixty days after the hearing, the Committee
shall render a determination upon the appealed claim, accompanied by a written
statement as to the reasons therefor. The determination so rendered shall be
final and binding upon all parties.
8.4 Records and Reports: The Committee shall exercise such authority
and responsibility as it deems appropriate in order to comply with ERISA and
government regulations issued thereunder relating to records of Participants'
Service, account balances and the percentage of such account balances which are
nonforfeitable under the Plan; notifications to Participants; annual
registrations with the Internal Revenue Service; and annual reports to the
Department of Labor.
8.5 Other Committee Powers and Duties: The Committee shall have such
duties and powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following:
(a) To construe and interpret the Plan (including, without
limitation, any of its terms which are uncertain, doubtful or disputed), decide
all questions of eligibility and determine the amount, manner and time of
payment of any benefits hereunder;
(b) To prescribe requirements, guidelines and procedures to be
followed by Participants or Beneficiaries in making elective salary deferrals
and in filing applications for benefits, loans or withdrawals;
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(c) To prepare and distribute, in such manner as the Committee
determines to be appropriate, information explaining the Plan;
(d) To receive from the Employer and from Participants such
information as shall be necessary for the proper administration of the Plan;
(e) To furnish the Employer, upon request, such annual reports
with respect to the administration of the Plan as are reasonable and
appropriate;
(f) To receive, review, and keep on file (as it deems convenient
or proper) reports of the financial condition, and of the receipts and
disbursements, of the Trust Fund from the Trustee;
(g) To appoint or employ individuals to assist in the
administration of the Plan and Trust, and any other agents it deems advisable,
including any Investment Manager, legal and actuarial counsel;
(h) To develop and carry out a funding and/or investment policy in
cooperation with the Trustee (and an Investment Manager, if any) consistent with
the aims and objectives of the Plan.
The Committee shall have no power to add to, subtract from, or modify
any of the explicit terms of the Plan, or to change or add to any specific
benefits provided by the Plan, or to waive or fail to apply any specific
requirements of eligibility for a benefit under the Plan. However, any
construction or interpretation of the Plan's provisions or decisions as to
benefits under this Plan which is adopted by the Committee in good faith shall
be binding upon all parties to or Beneficiaries of the Plan, subject only to any
administrative intra-Plan rights of review provided by this Plan's claim
procedure.
8.6 Rules and Decisions: The Committee may adopt such rules as it
deems necessary, desirable, or appropriate. All rules and decisions of the
Committee shall be uniformly and consistently applied to all Participants in
similar circumstances. When making a determination or calculation, the Committee
shall be entitled to rely upon information furnished by a Participant or
Beneficiary, the Employer, the legal counsel of the Employer, or the Trustee.
8.7 Committee Procedures: The Committee may act at a meeting or in
writing without a meeting. The Committee shall elect one of its members as
chairman, appoint a secretary, who may or may not be a Committee member, and
advise the Trustee of such actions in writing. The secretary shall keep a record
of all meetings and forward all necessary communications to the Employer or the
Trustee. The Committee may adopt such by-laws and regulations as it deems
desirable for the conduct of its affairs. All decisions of the Committee shall
be made by the vote of the majority including actions in writing taken without a
meeting; provided, that the Committee may adopt rules whereby one or more
Committee members may act for the Committee either with respect to all Committee
duties or only as to specific Committee duties.
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A dissenting Committee member who, within a reasonable time after he has
knowledge of any action or failure to act by the majority, registers his dissent
in writing delivered to the other Committee members, the Employer, and the
Trustee, shall not be responsible for any such action or failure to act.
8.8 Authorization of Benefit Payments: The Committee shall issue
directions to the Trustee concerning all benefits which are to be paid from the
Trust Fund pursuant to the provisions of the Plan.
8.9 Application and Forms for Benefits: The Committee may require a
Participant to complete and file with the Committee an application for a benefit
on forms approved by the Committee, and to furnish any other pertinent
information requested by the Committee. The Committee may rely upon all such
information so furnished it, including the Participant's current mailing
address.
8.10 Facility of Payment: Whenever, in the Committee's opinion, a
person entitled to receive any payment of a benefit or installment of a benefit
hereunder is under a legal disability or is incapacitated in any way so as to be
unable to manage his financial affairs, the Committee may direct the Trustee to
make payments to such person or to his legal representative or to a relative or
friend of such person for his benefit, or the Committee may direct the Trustee
to apply the payment for the benefit of such person in such manner as the
Committee considers advisable. Any payment of a benefit or installment thereof
in accordance with the provisions of this Section shall be a complete discharge
of any liability for the making of such payment under the provisions of the
Plan.
8.11 Inability to Locate Participant, Surviving Spouse or Beneficiary:
In the event that a Participant, Surviving Spouse or beneficiary entitled to
receive Plan benefits fails to respond or cannot be located by the Committee
within six months following the sending of notice by certified mail to his last
known address, his Plan benefits shall be declared by the Committee to be
forfeited and shall be used to reduce the Employer contribution on the next
Valuation Date. If the Participant, Surviving Spouse or beneficiary is later
located or makes a claim for benefits, any amount treated as a forfeiture by
reason of this Section shall be reinstated by the Committee from a special
Employer contribution or from forfeitures (if any) available in the year of
reinstatement.
8.12 Omission of Eligible Employee: If, in any Plan Year, any Employee
who should be included as a Participant in the Plan is erroneously omitted and
discovery of such omission is not made until after a contribution by the
Employer for the year has been made and allocated, the Employer shall make a
subsequent contribution with respect to the omitted Employee in the amount which
the said Employer would have contributed with respect to him had he not been
omitted. Such contribution shall be made regardless of whether or not it is
deductible in whole or in part in any taxable year under applicable provisions
of the Code by such Employer.
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8.13 Inclusion of Ineligible Employee: If, in any Plan Year, any person
who should not have been included as a Participant in the Plan is erroneously
included and discovery of such incorrect inclusion is not made until after a
contribution for the year has been made and allocated, the appropriate Employer
shall not be entitled to recover the contribution made with respect to the
ineligible person regardless of whether or not a deduction is allowable with
respect to such contribution. In such event, the amount contributed with respect
to the ineligible person shall constitute a forfeiture for the Plan Year in
which the discovery is made.
8.14 Bonding: Every Fiduciary (including any Committee and any employee
of the Employer who handles the Plan's contributions, distributions or assets),
except a bank or an insurance company, unless exempted by ERISA and regulations
thereunder, shall be bonded in an amount not less than ten percent of the amount
of the funds such Fiduciary handles; provided, however, that the minimum bond
shall be $1,000 and the maximum bond, $500,000. The amount of funds handled
shall be determined at the beginning of each Plan Year by the amount of funds
handled by such person, group, or class to be covered and their predecessors, if
any, during the preceding Plan Year, or if there is no preceding Plan Year, then
by the amount of the funds to be handled during the then current year. If the
amount handled cannot be determined with reasonable accuracy, then it may be
deemed to be the total amount of Plan assets at the end of the preceding Plan
Year. The bond shall provide protection to the Plan against any loss by reason
of acts of fraud or dishonesty by the Fiduciary alone or in connivance with
others. The surety shall be a corporate surety company (as such term is used in
ss.412(a)(2) of ERISA), and the bond shall be in a form approved by the
Secretary of Labor. Notwithstanding anything in the Plan to the contrary, the
cost of such bonds shall be an expense of and may, at the election of the
Committee, be paid from the Trust Fund or by the Employer.
8.15 Indemnification: The Employer shall indemnify and save harmless
the Committee members to the maximum extent permitted under ERISA against any
and all claims, losses, damages, expenses and liabilities the Committee may
incur in the exercise and performance of its duties hereunder, unless such
actions are determined to be due to gross negligence or willful misconduct.
8.16 Plan Administrator's Discretion to Interpret the Plan: It is the
Plan settlor's original intention that the Committee, as Plan Administrator
under this Plan (which term includes for these purposes all related documents,
including, but not limited to, insurance or trust documents), in addition to the
authority granted in Section 8.5 above, has discretionary authority to interpret
and construe this Plan's provisions as necessary to determine eligibility for
benefits and otherwise to construe disputed, doubtful or uncertain terms under
the Plan.
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ARTICLE IX. MISCELLANEOUS
9.1 Nonguarantee of Employment: Nothing contained in this Plan shall
be construed as a contract of employment between the Employer and any employee,
or as a right of any employee to be continued in the employment of the Employer,
or as a limitation of the right of the Employer to discharge any of its
employees, with or without cause.
9.2 Rights to Trust Assets: No Employee or Beneficiary shall have any
right to, or interest in, any assets of the Trust Fund upon termination of his
employment or otherwise, except as provided from time to time under this Plan,
and then only to the extent of the benefits payable under the Plan to such
Employee out of the assets of the Trust Fund. All payments of benefits as
provided for in this Plan shall be made solely out of the assets of the Trust
Fund and none of the Fiduciaries shall be liable therefor in any manner.
9.3 Nonalienation of Benefits: The Trust Fund shall not in any manner
be liable for, or subject to, the debts, contracts, liabilities, engagements, or
torts of any person entitled to benefits hereunder. Benefits payable under this
Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or
levy of any kind, either voluntary or involuntary, including any such liability
which is for alimony or other payments for the support of a spouse or former
spouse, or for any other relative of the Employee, prior to actually being
received by the person entitled to the benefit under the terms of the Plan; and
any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber,
charge or otherwise dispose of any right to benefits payable hereunder, shall be
void. The preceding sentence shall not apply to (a) the creation, assignment or
recognition of a right to any benefit payable with respect to a Participant
pursuant to an order which is determined under Section 6.8 to be a Qualified
Domestic Relations Order as defined in Code ss.414(p), which was entered into on
or after January 1, 1985 or (b) any other alienation permitted under Code
ss.401(a)(13) or rules and regulations thereunder. Provided, that a Beneficiary
who has been designated in accordance with Article VI to receive benefits in the
event of a Participant's death may elect to disclaim all or any part of such
benefits in favor of another designated Beneficiary.
9.4 Discontinuance of Employer Contributions: In the event of
permanent discontinuance of contributions to the Plan by the Employer, the
accounts of all Participants shall, as of the date of such discontinuance,
become nonforfeitable.
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ARTICLE X. AMENDMENTS AND ACTION BY EMPLOYER
10.1 Amendments: Flagstar reserves the right to make from time to time
any amendment or amendments to this Plan which does not cause any part of the
Trust Fund to be used for, or diverted to, any purpose other than the exclusive
benefit of Participants, Former Participants, or their Beneficiaries; provided,
however, that Flagstar may make any amendment it determines necessary or
desirable, with or without retroactive effect, to comply with ERISA. The
procedure followed for making any amendment shall consist of the preparation of
a written Plan amendment and its execution by one or more officers of Flagstar.
Such amendment may, but need not, be authorized (or later ratified) by
Flagstar's Board of Directors. The Trustee's signature on the Plan's documents
(including any Plan amendments) shall not be necessary and shall only indicate
the Trustee's receipt of those documents.
Notwithstanding the above, no amendment made by Flagstar shall:
(a) Reduce the vested percentages (determined without regard to
such amendment as of the later of the date the amendment was adopted or the date
the amendment was effective) of any Participant; or decrease the balance in any
Participant's account; or eliminate an optional form of benefit in violation of
Code ss.411(d)(6) and regulations thereunder, with respect to benefits
attributable to Service prior to the amendment;
(b) Provide for the use of any portion of the Trust Fund for any
purpose other than the exclusive benefit of Participants and Beneficiaries, or
provide that any portion of the Trust Fund shall ever revert to or be used by
the Employer, except as otherwise provided in the Trust Agreement; or
(c) Increase the duties or liabilities of the Employer, the
Committee or Trustee without its written consent.
10.2 Special Rules Regarding Amendments Relating to Vesting: In the
event the vesting provisions of the Plan are amended, each Participant in the
Plan who has three (or five in the case of a Participant who does not have at
least one Hour of Service with the Employer for Plan Years beginning after
December 31, 1988) or more Years of Service shall be given an election to have
the nonforfeitable percentage of his accounts determined without regard to such
amendment. The election period will begin the date the amendment is adopted and
will end on the last to occur of (a) sixty days after the day the amendment is
adopted, (b) sixty days after the day the amendment becomes effective, and (c)
sixty days after the date the Participant is given written notice of the
amendment and of the election by the Employer or the Committee. If the election,
as herein provided, is not given to any such Participant, his nonforfeitable
percentages under the Plan, as amended, cannot at any time be less than such
percentage determined without regard to such amendment.
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<PAGE> 71
10.3 Action by Employer: Any action by the Employer (or Flagstar) under
this Plan may be by resolution of its Board of Directors, or by any person or
persons duly authorized by said Board or having apparent authority by virtue of
his corporate office to take such action.
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ARTICLE XI. SUCCESSOR EMPLOYER AND MERGER
OR CONSOLIDATION OF PLANS
11.1 Successor Employer: In the event of the dissolution, merger,
consolidation, or reorganization of the Employer, provision may be made by which
the Plan will be continued by the successor; and, in that event, such successor
shall be substituted for the Employer under the Plan. The substitution of the
successor shall constitute an assumption of Plan liabilities by the successor
and the successor shall have all of the powers, duties, and responsibilities of
the Employer under the Plan.
11.2 Plan Assets in the Event of Merger or Consolidation of Plans: In
the event of any merger or consolidation of the Plan with (or transfer in whole
or in part of the assets and liabilities of the Trust Fund to) another trust
fund held under any other plan of deferred compensation maintained or to be
established for the benefit of all or some of the Participants of this Plan, the
assets of the Trust Fund applicable to such Participants shall be transferred to
the other trust fund only if:
(a) Each Participant would (if either this Plan or the other plan
then terminated) receive a benefit immediately after the merger, consolidation,
or transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation, or transfer
(if this Plan had then terminated);
(b) Resolutions of the Board of Directors of Flagstar or the
Employer under this Plan, or of any new or successor employer of the affected
Participants, shall authorize such transfer of assets; and, in the case of the
new or successor employer of the affected Participants, its resolutions shall
include an assumption of liabilities with respect to such Participants'
inclusion in the new employer's plan; and
(c) Such other plan and trust are qualified under Code ss.401(a)
and ss.501(a).
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ARTICLE XII. PLAN TERMINATION
12.1 Right to Terminate: In accordance with the procedure set forth in
this Article, Flagstar may terminate the Plan at any time. In the event of the
dissolution, merger, consolidation, or reorganization of Flagstar, the Plan
shall terminate and the Trust Fund shall be liquidated unless the Plan is
continued by a successor to Flagstar in accordance with Section 11.1.
12.2 Partial Termination: Upon termination of the Plan with respect to
a group of Participants which constitutes a partial termination of the Plan, the
Trustee shall, in accordance with the directions of the Committee, allocate and
segregate for the benefit of the affected Employees then or theretofore employed
by the Employer with respect to which the Plan is being terminated the amount
necessary to pay the proportionate interest of such Employees who are
Participants in the Trust Fund. The funds so allocated and segregated shall be
used by the Trustee to pay benefits to or on behalf of all affected Employees in
accordance with Section 12.3.
12.3 Liquidation of the Trust Fund: Upon partial or complete
termination of the Plan, the accounts of all employees affected thereby shall
become fully vested and nonforfeitable, and the Committee shall direct the
Trustee to distribute (or transfer directly in accordance with Section 6.4(g))
the assets remaining in the Trust Fund, after payment of any expenses properly
chargeable thereto, to Participants, Former Participants, and Beneficiaries in
proportion to their respective account balances; provided, however, that any
amounts properly allocated to the Plan's Suspense Account, pursuant to Section
5.3 of the Plan, shall upon termination of the Plan revert to the Employer. For
purposes of calculating forfeitures with respect to any Former Participants who
were not employed on the Plan's termination date, but who still had account
balances in the Plan immediately prior to the Plan's termination, such Former
Participants' vested percentages shall be calculated in accordance with the
Plan's vesting schedule immediately prior to the Plan's termination. Any amounts
not vested with respect to such Former Participants shall be treated as a
forfeiture under the Plan, and such Former Participants shall be treated as if
they had incurred five consecutive Breaks in Service as of the date of Plan
termination.
12.4 Manner of Distribution: To the extent that no discrimination in
value results, any distribution after termination of the Plan may be made, in
whole or in part, in cash, in securities or other assets in kind, as the Plan
Administrator (in its discretion) may determine. All noncash distributions shall
be valued at fair market value at date of distribution.
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ARTICLE XIII. RELATED CORPORATIONS
13.1 Joinder: Any corporation which is related to the Employer by stock
ownership may adopt this Plan and Trust by action of its Board of Directors.
13.2 Contributions: Each corporation which joins the Plan and Trust and
thereby becomes an Employer hereunder shall make its own contributions to the
Plan, except to the extent otherwise permitted under the Code; provided that,
such contributions shall be made so as to avoid having separate benefit
structures.
13.3 Treatment of Employee Transfers:
(a) Transfer to or From a Noncovered Class of Employee:
(1) Transfer to a Noncovered Class of Employee: In the
event that any Plan Participant's classification by the Employer is changed from
salaried to hourly or from a Non-Highly Compensated Employee to a Highly
Compensated Employee or the Participant is otherwise transferred or reclassified
from a class of employment for an Employer which is covered by the definition of
Employee to a class of employment for an Employer which is not covered by the
definition of Employee (or which otherwise is not eligible to participate in the
Plan), the transferred individual's Participation in the Plan shall be placed on
inactive status. An individual's Hours of Service for the Employer while a
member of a noncovered class of employee shall be considered Service for
eligibility and vesting purposes under the Plan.
(2) Transfer From a Noncovered Class of Employee: In the
event that any individual's classification by the Employer is changed from
hourly to salaried or from a Highly Compensated Employee to a Non-Highly
Compensated Employee or the individual otherwise is transferred from a class of
employment for an Employer which is not covered by the definition of Employee
(or which otherwise is not eligible to participate in the Plan) to a class of
employment for the Employer which is covered by the definition of Employee, the
Employee shall become a Participant in the Plan on the next succeeding Entry
Date after meeting the age, Service and any other Participation requirements.
Service for the Employer (whether earned while an Employee covered as a
Participant under the Plan or while a member of a noncovered class of employee)
shall be considered Service for eligibility and vesting purposes under the Plan.
(b) Transfer To or From a Related Employer:
(1) Transfer to a Related Employer: In the event that any
individual is transferred from the employ of an Employer of the Plan to the
employ of an employer that is not an Employer of the Plan but that is a Related
Employer (as defined below), all Service with the Related Employer shall be
considered Service for eligibility and vesting purposes under the Plan. The
Committee may adopt rules allowing for such an Employee's vested accounts under
the Plan to be transferred to any qualified defined contribution retirement plan
maintained by such Related Employer.
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(2) Transfer From a Related Employer: In the event that an
individual is transferred from the employ of a Related Employer (as defined
below) to the employ of an Employer of the Plan, all Service with the Related
Employer shall be considered Service for eligibility and vesting purposes under
the Plan. The Committee may adopt rules allowing for such individual to transfer
to this Plan the individual's vested account balances under any qualified
defined contribution retirement plan maintained by such Related Employer.
(3) Definition of Related Employer: For purposes of this
Section, the term Related Employer means an employer required to be aggregated
with the Employer under Subsection b, c, m or o of Code ss.414. If at any time a
Related Employer is no longer required to be aggregated with the Employer under
Subsection b, c, m or o of Code ss.414, that employer will no longer be
considered a Related Employer for purposes of determining an employee's Service
under the Plan. In computing Service with a Related Employer, only time while
such entity is a Related Employer shall be included.
(c) Transfer Between Employers of the Plan: In the event that an
individual is transferred from one Employer of the Plan to another Employer of
the Plan while remaining in a class of employment covered by the definition of
Employee and otherwise eligible to participate in the Plan, such transfer will
have no effect on computation of the Employee's Service for any purposes. All
Service with any Employer while a covered Participant shall count as Service
under the Plan.
13.4 Commingling of Funds: Notwithstanding that the Plan may for some
purposes be considered the separate Plan of each Employer or that contributions
are made separately, the assets of the Plan and Trust may be invested and
commingled as a single fund without allocation on the books and records of the
Trustee.
13.5 Special Provisions Regarding Canteen Group Employees: Effective
June 17, 1994 (the "Transition Date"), IM Vending Inc., Canteen Corporation and
the subsidiaries of Canteen Corporation (collectively, the "Canteen Group") were
sold to an entity outside of the Flagstar Corporation controlled group.
Effective May 6, 1994, Employees classified as Canteen Food and Vending
Employees who would have become Participants in the Plan on or after May 6, 1994
were no longer eligible to become Participants in the Plan. Effective as of the
Transition Date and thereafter, the Canteen Group is not a Plan sponsor or
participating Employer under the Plan and active employees of the Canteen Group
as of the Transition Date (including any Employees of Flagstar Corporation or
any of its affiliates who were transferred to and employed by the Canteen Group
as of the Transition Date) and any Employees of Flagstar Corporation or any of
its affiliates who were classified as Canteen Food & Vending Employees as of the
Transition Date and who were subsequently transferred to the Canteen Group
("Canteen Group Employees") are not permitted to make contributions under the
Plan or eligible to receive Employer contributions under the Plan.
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Effective as of the Transition Date, Canteen Group Employees were
considered terminated employees under the Plan with respect to their After-Tax
and Rollover Accounts and were eligible for a distribution from such accounts as
provided in the Plan then in effect. In accordance with Code Section 401(k)(10),
Canteen Group Employees were given the right to elect to receive a lump sum
distribution of their entire Pre-Tax Account as of the Transition Date. A
Canteen Group Employee is considered a terminated employee as of the Transition
Date with respect to his Pre-Tax Account and eligible for a distribution from
such account only if the Canteen Group Employee elects to receive such a lump
sum distribution of his Pre-Tax Account (or is subject to the mandatory cash-out
rules). A Canteen Group Employee who does not elect to receive a lump sum
distribution of his Pre-Tax Account and who is not subject to the mandatory
cash-out rules shall be considered a terminated employee eligible for a
distribution of his Pre-Tax Account as otherwise provided in Section 6.4 when he
separates from service with the Canteen Group. Notwithstanding the mandatory
cash-out rules, a Canteen Group Employee whose account balance does not exceed
$3500 may elect to postpone distribution of his account from the Plan.
Notwithstanding the foregoing, the sale of the Canteen Group had no
effect for Plan purposes on the amount of benefits, terminated status or form or
timing of distributions for former employees of the Canteen Group who were not
active employees of the Canteen Group as of the Transition Date.
13.6 Special Provisions Regarding TW Recreational Services, Inc.
Employees: Effective November 30, 1994, Employees classified as TW Recreational
Services, Inc. Employees who would have become Participants in the Plan on or
after November 30, 1994 were no longer eligible to become Participants in the
Plan.
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IN WITNESS WHEREOF, Flagstar Corporation (for itself and the Employers
who have adopted this Plan) has caused this Plan to be properly executed on the
23rd day of December, 1994.
FLAGSTAR CORPORATION
("Employer")
By: /s/ Stephen Wood
--------------------------------------
Its: Vice President
-------------------------------------
(Corporate Seal)
ATTEST:
/s/ George E. Moselay
- ----------------------------------
Secretary
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<PAGE> 78
APPENDIX A
Affiliated Employers Who Have
Adopted the Flagstar Thrift Plan
as of January 1, 1994
Canteen Corporation (and its subsidiaries)*
Canteen Management Services, Inc.
Flagstar Enterprises, Inc.
Flagstar Systems, Inc.
Quincy's Realty, Inc.
Quincy's Restaurants, Inc.
Spardee's Realty, Inc.
Spartan Management, Inc.
Spartan Realty, Inc.
TW Recreational Services, Inc.
Volume Services, Inc.
*No longer Plan sponsors effective on and after June 17, 1994.
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<PAGE> 79
AMENDMENT NO. ONE
TO THE
FLAGSTAR THRIFT PLAN
AS AMENDED AND RESTATED
JANUARY 1, 1987
THIS AMENDMENT, made and executed the 12th day of December, 1995, by
Flagstar Corporation for itself and its affiliates which have joined as
participating employers under this Plan (collectively, the "Employer");
W I T N E S S E T H:
A. The Employer previously has entered into the Flagstar Thrift
Plan (the "Plan") for the benefit of its eligible employees (including eligible
employees of Canteen Management Services, Inc., Flagstar Enterprises, Inc.,
Flagstar Systems, Inc., Quincy's Realty, Inc, Quincy's Restaurants, Inc.,
Spardee's Realty, Inc., Spartan Management, Inc., Spartan Realty, Inc., TW
Recreational Services, Inc. and Volume Services, Inc.) and Flagstar Corporation
has reserved the right to amend the same from time to time.
B. Flagstar Corporation desires to amend the Plan in the manner
hereinafter set forth in connection with the sale of TW Recreational Services,
Inc.
THEREFORE, the Plan is amended as follows:
1. Effective as of the Transition Date, a new Section 2.1(75A)
shall be added to the Plan to read as follows:
"(75A) TWRS: TW Recreational Services, Inc."
2. Effective as of the Transition Date, a new Section 2.1(75B)
shall be added to the Plan to read as follows:
"(75B) TWRS EMPLOYEES: Active employees of TWRS on the TWRS
Transition Date."
3. Effective as of the Transition Date, a new Section 2.1(75C)
shall be added to the
<PAGE> 80
Plan to read as follows:
"(75C) TWRS TRANSITION DATE: The "Closing Date" as that term
is defined in the Stock Purchase Agreement between Canteen Holdings,
Inc., Flagstar Corporation, Flagstar Companies, Inc., AMFAC Parks, Inc.
and Northbrook Corporation dated July 14, 1995 which describes the sale
of TWRS to a buyer unrelated to Flagstar Corporation or any of its
affiliates, such date to be on or about December 12, 1995."
4. Section 3.1 shall be amended by adding a new sentence to the
end thereof to read as follows:
"Notwithstanding the foregoing, effective on and after the
Transition Date, in connection with the sale of TWRS, no Employee who
is a TWRS Employee shall be eligible to participate in the Plan."
5. Effective as of the TWRS Transition Date, Section 13.6 of the
Plan shall be amended in its entirety to read as follows:
"13.6 Special Provisions Regarding TW Recreational Services,
Inc. Employees: Effective November 30, 1994, Employees classified as
TWRS Employees who would have become Participants in the Plan on or
after November 30, 1994 are no longer eligible to become Participants
in the Plan. Effective as of the TWRS Transition Date and thereafter,
TWRS is not a Plan sponsor or participating Employer under the Plan and
TWRS Employees shall no longer be permitted to make Employee Pre-Tax
Contributions or Employee After-Tax Contributions under the Plan or be
eligible to receive Employer contributions under the Plan. New loans
shall not be available to TWRS Employees after the Transition Date
unless the loan request was approved by the Committee on or before the
Transition Date.
"Effective as of the TWRS Transition Date, TWRS Employees
shall be considered terminated employees under the Plan with respect to
their After-Tax and Rollover Accounts and shall be eligible for a
distribution from such accounts as provided in Section 6.3 and Section
6.4. In accordance with Code Section 401(k)(10), TWRS Employees shall
be given the right to elect to receive a lump sum distribution of their
entire Pre-Tax Accounts as of the TWRS Transition Date. A TWRS Employee
is considered a terminated employee as of the TWRS Transition Date with
respect to his Pre-Tax Account and eligible for a distribution from
such account only if the TWRS Employee elects to receive such a lump
sum distribution of his Pre-Tax Account (or is subject to the mandatory
cash-out rules). A TWRS Employee who does not elect to receive a lump
sum distribution of his Pre-Tax Account and who is not subject to the
mandatory cash-out rules shall be considered a terminated employee
eligible for a distribution of his Pre-Tax Account as otherwise
provided
2
<PAGE> 81
in Section 6.3 and Section 6.4 when he separates from service with
TWRS.
"Notwithstanding the foregoing, the sale of TWRS shall have no
effect for Plan purposes on the amount of benefits, terminated status
or form or timing of distributions for former employees of TWRS who are
not active employees of TWRS as of the TWRS Transition Date."
6. The foregoing Amendments shall be effective as of the TWRS
Transition Date.
IN WITNESS WHEREOF, the Employer has caused the Amendment to be
properly executed on the 12th day of December, 1995.
FLAGSTAR CORPORATION
By: /s/ Rhonda J. Parish
-----------------------------------------
Title: Rhonda J. Parish, Senior Vice
--------------------------------------
President, General Counsel
and Secretary
The signature of TW Recreational Services, Inc. while not necessary under the
terms of the Plan and Trust shall indicate receipt of this Amendment and
agreement with the actions taken by this Amendment.
TW RECREATIONAL SERVICES, INC.
By: /s/ Rhonda J. Parish
-----------------------------------------
Title: Rhonda J. Parish
--------------------------------------
Vice President, General Counsel
and Secretary
3
<PAGE> 82
AMENDMENT NO. TWO
TO THE
FLAGSTAR THRIFT PLAN
AS AMENDED AND RESTATED
JANUARY 1, 1987
THIS AMENDMENT, made and executed the _______ day of ________________,
1996, by Flagstar Corporation for itself and its affiliates which have joined as
participating employers under this Plan (collectively, the "Employer");
W I T N E S S E T H:
A. The Employer previously has entered into the Flagstar Thrift
Plan (the "Plan") for the benefit of eligible employees and has reserved the
right to amend the same from time to time.
B. Flagstar Corporation desires to amend the Plan in the manner
hereinafter set forth in connection with a change in service providers for the
Plan and a switch to daily valuations.
THEREFORE, the Plan is amended as follows:
1. Section 2.1(58) of the Plan shall be amended to read as
follows:
"(58) PLAN: Flagstar 401(k) Plan (formerly
called the Flagstar Thrift Plan and, prior to that, the Thrift
Plan for Noncontract Employees of TW Services, Inc.), the Plan
set forth herein, as amended from time to time."
2. Section 2.3 of the Plan shall be amended to read as follows:
"2.3 Governing Law: This Plan shall be governed to
the maximum extent by federal law under ERISA. To the extent
not so preempted or otherwise governed by ERISA, the laws of
the state of South Carolina shall control on all matters."
3. The first sentence of Section 4.3(c) shall be amended to read
as follows:
"Elections to make, withdraw, modify, discontinue or resume
Employee Pre-Tax Contributions shall be made by any method
authorized by the Committee, including but not limited to
telephonic or electronic communication."
<PAGE> 83
4. The third sentence of the first paragraph of Section 4.5(a)
shall be amended to read as follows:
"In addition, an Employee who has become a Participant who has
established an Individual Retirement Account solely for the
purpose of serving as a repository for distributions from the
qualified retirement plan of a former employer, and who has
not made any contributions to such Individual Retirement
Account on his own behalf also may transfer or present within
sixty days of receipt part or all of the assets of such
Individual Retirement Account to the Trustee."
5. Section 6.5(b)(2) shall be amended to read as follows:
"(2) A withdrawal of a Participant's
Employee After-Tax Contributions may only be made once during
any one calendar quarter, and shall be limited to the
aggregate amount of Employee After-Tax Contributions (less
previous withdrawals of such contributions), including any
increase in value attributable to Income thereon and may
include appreciation due to increase in the value of withdrawn
Employee After-Tax Contributions that were invested
immediately prior to the time of withdrawal in Employer Stock,
to the extent such appreciation is due to investment in such
Employer Stock."
6. The fourth sentence of Section 7.2(a) shall be amended to read
as follows:
"Investments of each such collective investment fund shall be
managed and otherwise shall be the responsibility of Flagstar
(or the Investment Manager appointed by the Committee to
manage the fund), and separate records shall be maintained to
record the performance and Income of each such fund."
7. The second and third sentences of Section 7.2(c) shall be
amended to read as follows:
"Any such direction once made shall remain in effect as to
contributions, forfeitures and distributions for that Plan
Year and succeeding Plan Years, unless the Participant shall
file a timely application made in accordance with applicable
Committee rules and procedures which effectively redesignates
the investment of his account. In the event a Participant
shall fail for any reason to make an effective direction of
his accounts at a time when different collective investment
funds are available, then the amounts in his accounts shall be
deemed to have been designated to a fund or funds as selected
by the Committee to apply in such instances, subject to any
funding policy statement or any other restrictions or
guidelines provided by the Committee and to the standards that
would be followed by a prudent fiduciary in similar
circumstances."
8. The second and third sentences of Section 7.3(a) shall be
deleted in their entirety.
2
<PAGE> 84
9. The first sentence of Section 7.3(d) shall be amended to read
as follows:
"In the event the Trustee invests any part of the Trust's
assets in Employer Stock or any other Employer Securities, and
the Committee thereafter directs the Trustee to dispose of
such investment, or any part thereof, under circumstances
which require a notice of filing and/or registration of the
Employer Stock or other Employer Securities under the
Securities Act of 1933 (or rulings and regulations thereunder)
and/or qualification of the Employer Stock or other Employer
Securities under the "blue sky laws" of any state or states,
then the Employer, at its own expense, will take or cause to
be taken any and all such action as may be necessary or
appropriate to effect notice filing, registration and/or
qualification."
10. The third sentence of Section 7.3(f) shall be amended to read
as follows:
"Voting rights and related stockholder rights with respect to
Employer Stock and Employer Securities held by the Plan which
are not allocated to any particular Participant's account
and/or as to which the Trustee has not received any
Participant direction as to its vote shall not be voted."
11. A new Section 9.5 shall be added to the Plan as follows:
"9.5 Compensation and Expenses: The Trustee,
Investment Manager and recordkeeper of the Plan ("Service
Providers") will receive reasonable compensation as may be
agreed upon from time to time between Flagstar or the
Committee and such Service Providers. To the extent permitted
by law, such compensation shall be paid from the Trust Fund
unless paid by the Employer."
12. The foregoing Amendments shall be effective as of July 1,
1996.
IN WITNESS WHEREOF, the Employer has caused the Amendment to be
properly executed on the ____________ day of __________________, 1996.
FLAGSTAR CORPORATION
By:
-------------------------------------
Title:
----------------------------------
3
<PAGE> 85
AMENDMENT NO. THREE
TO THE
FLAGSTAR 401(K) PLAN
AMENDED AND RESTATED AS OF JANUARY 1, 1987
THIS AMENDMENT, made and executed the 29th day of December, 1997 by
FLAGSTAR CORPORATION, for itself and its affiliates which have adopted the
Flagstar 401(k) Plan (collectively, the "Employer");
W I T N E S S E T H:
A. The Employer previously has entered into the Flagstar 401(k)
Plan (the "Plan") for the benefit of eligible employees and Flagstar Corporation
has reserved the right to amend the same from time to time.
B. Flagstar Corporation desires to amend the Plan in the manner
hereinafter set forth.
THEREFORE, the Plan is amended as follows:
1. Effective January 1, 1997, Section 2.1(30) of the Plan shall
be amended to read as follows:
"(30) EMPLOYER: Flagstar Corporation, a corporation
organized and existing under the laws of the State of
Delaware, or its successor or successors that assume Plan
liabilities pursuant to Article XI and any related corporation
or entity which adopts this Plan with the consent of Flagstar
Corporation. Adopting Employers as of January 1, 1997 are
listed on Appendix A. Appendix A may be updated from time to
time by an authorized officer of Flagstar Corporation."
2. Effective January 1, 1997, a new Section 2.1(41A) shall be
added to the Plan to read as follows:
"(41A) FORFEITURE: The portion of a Participant's
Pre-Tax Account and After-Tax Account which is forfeited under
Section 6.3 because of termination of employment before full
vesting."
<PAGE> 86
3. Effective January 1, 1997, Section 4.1 of the Plan shall be
amended to read as follows:
"4.1 Employer Matching Contributions and Employee
Pre-Tax Contributions: Each individual Employer in its
discretion may, for each year, contribute an amount as it may
determine; provided, that to the extent permitted by the Code
and regulations thereunder, an Aggregated Employer may make an
Employer's contribution and the limitations on deductibility
shall be determined on an aggregate controlled group basis.
Such amount shall not exceed the lesser of the following
amounts:
(a) The amount which is elected to be
deferred by Participants as Employee Pre-Tax Contributions
under Section 4.3; plus any additional amount contributed as
an Employer contribution by each individual Employer in its
discretion; or
(b) Fifteen percent of all 415
Compensation paid or accrued in the Plan Year to all
Participants in the employ of the Employer who are eligible to
receive an allocation to their accounts in accordance with the
provisions of Section 5.2, plus any contribution carryover,
pre-1987 limitation carryforward, or other amounts permitted
(even if not deductible) under Code Section 404(a), and less
any Employer contributions or Employee pre-tax contributions
to any other profit sharing plan or Code Section 401(k) plan
of the Employer.
"All contributions of the Employer shall be made in
cash or other property permitted by ERISA, and shall be
conditioned upon their deductibility under Code Section 404
and shall be paid to the Trustee, and payments shall be made
not later than the date prescribed by law for filing the
Employer's federal income tax returns, including extensions
which have been granted for the filing of such tax returns;
provided, that Employee Pre-Tax Contributions made pursuant to
Participants' elections under Section 4.3 shall be paid to the
Trustee on the earliest date on which such contributions can
reasonably be segregated from the Employer's general assets
but not later than the fifteenth business day of the month
following the month in which the Employee Pre-Tax
Contributions are received or withheld by the Employer (or
such other period permitted by the Commissioner or under
ERISA). Contributions of the Employer which are determined to
be nondeductible shall be returned to the Employer in
accordance with the provisions of the Trust Agreement."
4. Effective January 1, 1997, a new Section 4.6 shall be added to
the Plan to read as follows:
2
<PAGE> 87
"4.6 Disposition of Forfeitures: Upon termination
of employment, a Participant's Forfeiture, if any, shall be
maintained in his Pre-Tax Account and/or After-Tax Account, as
applicable, until his Forfeiture Date, which is the earlier of
(A) the date on which he has received a distribution of the
entire non-forfeitable portion of his account (or deemed
distribution in the case of a Participant without any vesting,
which deemed distribution date shall be the date of his
termination of employment with the Employer) or (B) the last
day of the Plan Year in which the Participant incurs five
consecutive one-year Breaks in Service, and shall continue to
receive Income allocations pursuant to Section 5.2(a) until
such time. If the terminated Participant returns to the employ
of the Employer before his Forfeiture Date, the undistributed
amount in his Pre-Tax Account and/or After-Tax Account,
including any Forfeiture still maintained in either such
account, plus Income allocations, shall upon reparticipation
become the beginning balance in such account. If the
terminated Participant does not return before his Forfeiture
Date, any vested amount remaining in the terminated
Participant's accounts will be distributed to him as
hereinafter provided; and his Forfeiture, plus Income
allocations shall become available as of such Forfeiture Date
for use as provided in Section 5.2(g) as a current or
subsequent Employer contribution. If a terminated Participant
who is less than one hundred percent vested in his Pre-Tax
Account and/or After-Tax Account is reemployed after five
consecutive one-year Breaks in Service, but before
distribution of his vested account balance, any portion of his
accounts that has not been distributed will be segregated in
the records of the Trust and separately accounted for until
such time as the Participant is one hundred percent vested in
his accounts."
5. Effective January 1, 1997, a new Section 4.7 shall be added to
the Plan to read as follows:
"4.7 Pay Back Provision: If a terminated
Participant who is less than one hundred percent vested in the
Plan receives a distribution of his entire nonforfeitable
benefit derived from Employee Pre-Tax Contributions and/or
Employer Pre-Tax Matching Contributions and/or Employer
After-Tax Matching Contributions and such Former Participant
returns to the employ of the Employer, then such reemployed
Participant shall be given an opportunity to repay the full
amount of any such prior distribution of amounts derived from
Employee Pre-Tax Contributions and Employer Pre-Tax Matching
Contributions and/or Employer After-Tax Matching Contributions
as provided below. If such a reemployed Employee repays such
amounts from his Pre-Tax Account and After-Tax Account before
the earlier of five years after the first date on which he is
subsequently reemployed by the Employer or the close of the
first period of five consecutive one-year Breaks in Service
commencing after distribution (or,
3
<PAGE> 88
in the case of a distribution from the Plan other than by
reason of separation from Service, five years after the date
of the distribution), then his prior account balance shall be
restored to the amount which was allocated to such accounts on
the date of distribution. In the case of a reemployed Former
Participant who had no vested interest in either his Pre-Tax
Account or After-Tax Account at the time of his previous
separation from Service and who therefore was deemed to have
received a distribution, if such Former Participant is
reemployed before he has incurred five consecutive one-year
Breaks in Service, then repayment of his Pre-Tax Account and
After-Tax Account shall be deemed to be made on the date
following the Anniversary Date following reemployment.
"If the Plan is required to restore forfeited amounts by
virtue of a pay back under this Section, such restoration
shall be made no later than the end of the Plan Year following
the Plan Year of repayment, and the Committee may choose among
any or a combination of the following permissible sources for
restoration: Income of the Plan, Forfeitures which become
available that Plan Year, or additional Employer contributions
(which Employer contributions shall be in addition to those
required or permitted by Section 4.1 of the Plan)."
6. Effective January 1, 1997, Section 5.2(d) of the Plan shall be
amended to read as follows:
"(d) Employer Contributions: As of each Valuation
Date (or more frequently in the Committee's discretion
exercised in a manner that is not discriminatory with respect
to different Participants), the Employer Pre-Tax Matching
Contributions and the Employer After-Tax Matching
Contributions for the Plan Year shall be allocated in
accordance with the formula determined in writing by each
individual Employer in its discretion among those Participants
employed by such Employer at any time during the period from
the last allocation date.
"Prior to January 1, 1991, Participants who were not employed
on the Valuation Date (or other allocation date) were not
eligible for an allocation of Employer Pre-Tax Matching
Contributions or Employer After-Tax Matching Contributions.
"Notwithstanding the foregoing, effective January 1, 1989, no
allocation shall be made for a Participant whose Pre-Tax
Account and After-Tax Account were placed on inactive status
for such Plan Year under Section 3.3 by virtue of the
Participant's becoming a Highly Compensated Employee."
4
<PAGE> 89
7. Effective January 1, 1997, Section 5.2 of the Plan shall be
amended to add a new subsection (g) to the end thereof to read as follows:
"(g) Forfeitures: Forfeitures assessed against
Participants' accounts as provided in Section 4.6 shall be
retained in a Forfeitures account and shall be available for
reallocation as provided in this Section. As of each Valuation
Date (or, if earlier, the Plan's termination date),
Forfeitures which have become available for reallocation since
the prior Valuation Date shall be used to reduce current or
future Employer contributions to be made under subsection (d)
above."
8. Effective January 1, 1997, Section 6.3 of the Plan shall be
amended to read as follows:
"6.3 Termination for Other Reasons: If a
Participant's employment with the Employer is terminated
before Normal or Early Retirement Age for any reason other
than Disability or death, the Participant (or his Beneficiary
under Section 6.2 in the event of the Participant's death
prior to his receipt of all his Plan benefits) shall be
entitled to the sum of the amounts determined under (a) and
(b) below:
(a) The amount credited to his Pre-Tax
Account attributable to his Employee Pre-Tax Contributions,
the amount credited to his After-Tax Account attributable to
his Employee After-Tax Contributions, and the entire amount
credited to his Rollover Account, plus
(b) The vested percentage of the amount
credited to his Pre-Tax Account attributable to Employer
Pre-Tax Matching Contributions and the vested percentage of
the amount credited to his After-Tax Account attributable to
Employer After-Tax Matching Contributions, with such vested
percentages to be determined in accordance with the applicable
schedule provided in Appendix B.
"The percentage of the Participant's Pre-Tax Account and
After-Tax Account which is not vested shall be a Forfeiture
subject to the provisions of Section 4.6. Payment of benefits
due under this Section 6.3 shall be made in accordance with
Section 6.4; provided, however, that the Participant shall not
be entitled to a distribution of his benefits if his
employment is reinstated by the Employer before such payment
would otherwise be made."
9. Effective as of the date specified therein, a new Section 13.7
shall be added to the Plan to read as follows:
5
<PAGE> 90
"13.7 Special Provisions Regarding Volume
Services, Inc. Employees: Effective upon the sale of Volume
Services, Inc. ("VSI") to a buyer unrelated to Flagstar
Corporation or any of its affiliates (in accordance with the
Stock Purchase Agreement by and among Canteen Holdings, Inc.,
Flagstar Corporation, Flagstar Companies, Inc. and VSI
Acquisition II Corporation dated November 22, 1995) and
thereafter, VSI is no longer a Plan sponsor or participating
Employer under the Plan and VSI Employees shall no longer be
permitted to make Employee Pre-Tax Contributions or Employee
After-Tax Contributions under the Plan or be eligible to
receive Employer contributions under the Plan. New loans shall
not be available to VSI Employees after the sale of VSI unless
the loan request was approved by the Committee on or before
the sale of VSI.
"Effective upon the sale of VSI as described above,
VSI Employees shall be considered terminated employees under
the Plan with respect to their After-Tax Accounts, Rollover
Accounts and the portion of their Pre-Tax Accounts
attributable to Employer Pre-Tax Matching Contributions and
shall be eligible for a distribution from such accounts as
provided in Section 6.3 and Section 6.4. In accordance with
Code Section 401(k)(10), upon the sale of VSI, VSI Employees
shall be given the right to elect to receive a lump sum
distribution of the portion of their Pre-Tax Accounts
attributable to Employee Pre-Tax Contributions. A VSI Employee
is considered a terminated employee as of the sale with
respect to the portion of his Pre-Tax Account attributable to
Employee Pre-Tax Contributions and eligible for a distribution
of such amount from his Pre-Tax Account only if the VSI
Employee elects to receive such a lump sum distribution from
his Pre-Tax Account (or is subject to the mandatory cash-out
rules). A VSI Employee who does not elect to receive a lump
sum distribution of the portion of his Pre-Tax Account
attributable to Employee Pre-Tax Contributions and who is not
subject to the mandatory cash-out rules shall be considered a
terminated employee eligible for a distribution of the portion
of his Pre-Tax Account attributable to Employee Pre-Tax
Contributions as otherwise provided in Section 6.3 and Section
6.4 when he separates from service with VSI.
"Notwithstanding the foregoing, the sale of VSI shall
have no effect for Plan purposes on the amount of benefits,
terminated status or form or timing of distributions for
former employees of VSI who are not active employees of VSI as
of the sale of VSI."
10. This Amendment shall be effective as of the dates specified
herein and each provision of this Amendment shall apply only to an employee who
has an Hour of Service on or after the effective date of such provision of this
Amendment.
6
<PAGE> 91
IN WITNESS WHEREOF, Flagstar Corporation, for itself and its affiliates
which have adopted this Plan, has caused this Amendment to be properly executed
on the 29th day of December, 1997.
FLAGSTAR CORPORATION
[Corporate Seal]
By: /s/ Stephen Wood
-----------------------------------------
Its: Senior Vice President
----------------------------------------
ATTEST:
By: /s/ J.S. Melton
---------------------------------
Its: Assistant Secretary
--------------------------------
7
<PAGE> 92
APPENDIX A
AFFILIATED EMPLOYERS WHO HAVE
ADOPTED THE FLAGSTAR CORPORATION 401(K) PLAN
AS OF JANUARY 1, 1997
Flagstar Enterprises, Inc.
Flagstar Systems, Inc.
Quincy's Realty, Inc.
Quincy's Restaurants, Inc.
Spardee's Realty, Inc.
Spartan Management, Inc.
Spartan Realty, Inc.
Carrows California Family Restaurants, Inc.*
Carrows Restaurants, Inc.*
Coco's Restaurants, Inc.*
jojo's California Family Restaurants, Inc.*
jojo's Restaurants, Inc.*
*Joined as sponsoring Employers effective January 1, 1997.
<PAGE> 93
APPENDIX B
VESTING SCHEDULES
VESTING SCHEDULE FOR EMPLOYEES OF CARROWS CALIFORNIA FAMILY RESTAURANTS, INC.,
CARROWS RESTAURANTS, INC., COCO'S RESTAURANTS, INC., JOJO'S CALIFORNIA FAMILY
RESTAURANTS, INC., OR JOJO'S RESTAURANTS, INC. WHO BECOME PARTICIPANTS ON OR
AFTER JANUARY 1, 1997. For each Employee of Carrows California Family
Restaurants, Inc., Carrows Restaurants, Inc., Coco's Restaurants, Inc., jojo's
California Family Restaurants, Inc., or jojo's Restaurants, Inc. who becomes a
Participant on or after January 1, 1997, the vested percentage of
(1) the portion of his Pre-Tax Account attributable to Employer
Pre-Tax Matching Contributions, and
(2) the portion of his After-Tax Account attributable to Employer
After-Tax Matching Contributions
shall be determined in accordance with the following schedule:
<TABLE>
<CAPTION>
Vested Forfeited
Years of Service Percentage Percentage
---------------- ---------- ----------
<S> <C> <C>
Less than 5 0% 100%
5 or more 100% 0%
</TABLE>
VESTING SCHEDULE FOR ALL EMPLOYEES OF ALL OTHER EMPLOYERS. For each other
Employee of any other Employer who is a Participant with at least one Hour of
Service with the Employer after December 31, 1986, the vested percentage of
(1) the portion of his Pre-Tax Account attributable to Employer
Pre-Tax Matching Contributions, and
(2) the portion of his After-Tax Account attributable to Employer
After-Tax Matching Contributions
shall be 100%.
TOP-HEAVY RULES. If the Plan becomes a Top-Heavy Plan, with respect to any
Participant who completes at least one Hour of Service after the Plan becomes a
Top-Heavy Plan (including amounts attributable to Employer contributions and
Forfeitures allocated before the Plan became a Top-Heavy Plan), the vested
percentage of the amount then credited to his Pre-Tax Account attributable to
Employer Pre-Tax Matching Contributions and the vested percentage of the amount
then credited to his After-Tax Account attributable to Employer After-Tax
Matching Contributions shall be determined in accordance with the following
"Top-Heavy" schedule (unless
<PAGE> 94
another vesting schedule is permitted by Code Section 416 which fully vests in a
less rapid manner, in which event such other permissible vesting schedule hereby
is instead incorporated by reference):
<TABLE>
<CAPTION>
Vested Forfeited
Years of Service Percentage Percentage
---------------- ---------- ----------
<S> <C> <C>
Less than 1 0% 100%
1 but less than 2 10% 90%
2 but less than 3 20% 80%
3 but less than 4 40% 60%
4 but less than 5 60% 40%
5 or more 100% 0%
</TABLE>
If the Plan ceases to be a Top-Heavy Plan, the Plan's vesting schedule
automatically will be changed to the non-Top-Heavy vesting schedule.
AMENDMENTS TO VESTING SCHEDULE. Notwithstanding any amendment (or automatic
change by virtue of the Plan becoming or ceasing to be a Top-Heavy Plan) of the
Plan's vesting schedule, with respect to any Participant who had been covered
under the prior provisions of the Plan, the vested percentage of the amount
credited to the Participant's Pre-Tax Account attributable to Employer Pre-Tax
Matching Contributions and the vested percentage of the amount credited to the
Participant's After-Tax Account attributable to Employer After-Tax Matching
Contributions (such amounts being determined as of the later of (i) the date the
amendment or change is adopted or (ii) the date it becomes effective) shall not
be less than the vested percentage of such previously allocated amounts which
the Participant would have had, had the provisions of the Plan as in effect
immediately prior to the effective date continued without change. In addition,
in the event the vesting provisions of the Plan are amended (or are changed
automatically by virtue of the Plan becoming or ceasing to be a Top-Heavy Plan),
each Participant in the Plan who has had three (or five in the case of a
Participant who does not have at least one Hour of Service with the Employer for
Plan Years beginning after December 31, 1988) or more Years of Service shall be
permitted to make an election as provided under Section 10.2 of this Plan.
<PAGE> 95
AMENDMENT NO. FOUR
TO THE
FLAGSTAR 401(k) PLAN
AS AMENDED AND RESTATED
AS OF JANUARY 1, 1987
THIS AMENDMENT, made and executed the day of , 1998, by ADVANTICA
RESTAURANT GROUP, INC. (formerly Flagstar Companies, Inc.) for itself and its
affiliates which have adopted the Flagstar 401(k) Plan (collectively, the
"Employer");
W I T N E S S E T H:
A. The Employer previously has entered into the Flagstar 401(k)
Plan (the "Plan") for the benefit of eligible employees, and Advantica
Restaurant Group, Inc. has reserved the right to amend the same from time to
time.
B. Advantica Restaurant Group, Inc. desires to amend the Plan in
the manner hereinafter set forth in connection with (i) recent changes in the
law, (ii) a change in corporate name and structure, and (iii) the sale of
Flagstar Enterprises, Inc. and Spardee's Realty, Inc.
THEREFORE, the Plan is amended as follows:
1. Effective for Plan Years beginning after December 31, 1996,
Section 2.1(1) of the Plan shall be amended to read as follows:
"(1) ACTUAL CONTRIBUTION PERCENTAGE or ACP:
(a) With respect to Participants who are members
of the Highly Compensated Employee group, for any Plan Year beginning
after December 31, 1996, the average of the ratios (expressed as a
percentage and calculated separately for each Eligible Participant in
such group) of:
(i) the sum of the Employer Pre-Tax
Matching Contributions, Employer After-Tax Matching
Contributions and any Employee After-Tax Contributions made
under the Plan for such Plan Year on behalf of each Eligible
Participant that is a Highly Compensated Employee (plus, such
other Employee Pre-Tax Contributions or qualified
<PAGE> 96
non-elective contributions under this or any other plan of the
Employer or Aggregated Employer as may be permitted under the
Commissioner's regulations), to
(ii) each such Eligible Participant's
Compensation for such Plan Year.
(b) With respect to Participants who are members
of the Non-Highly Compensated Employee group, for any Plan Year
beginning after December 31, 1996, the average of the ratios (expressed
as a percentage and calculated separately for each Eligible Participant
in such group) of:
(i) the sum of the Employer Pre-Tax
Matching Contributions, Employer After-Tax Matching
Contributions and any Employee After-Tax Contributions made
under the Plan for the preceding Plan Year on behalf of each
Eligible Participant that is a Non-Highly Compensated Employee
(plus, such other Employee Pre-Tax Contributions or qualified
non-elective contributions under this or any other plan of the
Employer or Aggregated Employer as may be permitted under the
Commissioner's regulations), to
(ii) each such Eligible Participant's
Compensation for the preceding Plan Year.
(c) Notwithstanding the foregoing, Advantica
Restaurant Group, Inc. may elect to determine the Actual Contribution
Percentage of each Non-Highly Compensated Employee on the basis of the
Plan Year rather than the preceding Plan Year, provided that if such an
election is made, it may not be changed except in accordance with the
Commissioner's rules and regulations.
(d) If other plans of the Employer or any
Aggregated Employer have employee contributions or matching
contributions under Code Section 401(m), then all such plans shall be
treated as one plan for purposes of calculating the Participants' ACP
(using for this purpose each such plan's definition of ACP), but such
aggregation shall take place only to the extent that such plans are
treated as one plan for purposes of Code Section 410(b). Furthermore,
for purposes of determining the ACP of any Highly Compensated Employee,
all plans of the Employer and any Aggregated Employer to which Employer
Pre-Tax Matching Contributions, Employer After-Tax Matching
Contributions and any Employee After-Tax Contributions are made shall
be treated as one plan.
(e) For Plan Years beginning before December 31,
1996, the ACP of Participants shall be determined in accordance with
the prior provisions of the Plan then in effect."
2
<PAGE> 97
2. Effective for Plan Years beginning after December 31, 1996,
Section 2.1(2) of the Plan shall be amended to read as follows:
"(2) ACTUAL DEFERRAL PERCENTAGE or ADP:
(a) With respect to Participants who are members
of the Highly Compensated Employee group, for any Plan Year beginning
after December 31, 1996, the average of the ratios (expressed as a
percentage and calculated separately for each Eligible Participant in
such group) of:
(i) the amount of Employee Pre-Tax
Contributions made under the Plan for such Plan Year on behalf
of each Eligible Participant that is a Highly Compensated
Employee (plus such other matching contributions and other
qualified non-elective contributions allocated to the
Participant's Pre-Tax Account, as may be permitted under the
Commissioner's regulations), to
(ii) each such Eligible Participant's
Compensation for the Plan Year.
(b) With respect to Participants who are members
of the Non-Highly Compensated Employee group, for any Plan Year
beginning after December 31, 1996, the average of the ratios (expressed
as a percentage and calculated separately for each Eligible Participant
in such group) of:
(i) the amount of Employee Pre-Tax Contributions
made under the Plan for the preceding Plan Year on behalf of each
Eligible Participant that is a Non-Highly Compensated Employee (plus
such other matching contributions and other qualified non-elective
contributions allocated to the Participant's Pre-Tax Account, as may be
permitted under the Commissioner's regulations), to
(ii) each such Eligible Participant's
Compensation for the preceding Plan Year.
(c) Notwithstanding the foregoing, Advantica
Restaurant Group, Inc. may elect to determine the Actual Deferral
Percentage of each Non-Highly Compensated Employee on the basis of the
Plan Year rather than the preceding Plan Year, provided that if such an
election is made, it may not be changed except in accordance with the
Commissioner's rules and regulations.
(d) If other plans of the Employer or any
Aggregated Employer have cash or deferred arrangements under Code
Section 401(k), then all such plans shall be treated as one plan for
purposes of calculating Participants' ADP, but only to the extent that
such plans are treated as one plan for purposes of Code Secttion
410(b). Furthermore, for the purpose of determining the ADP of any
Highly Compensated
3
<PAGE> 98
Employee, all plans of the Employer and any Aggregated Employer which
have cash or deferred arrangements under Code Section 401(k) shall be
treated as one plan.
(e) For Plan Years beginning before December 31,
1996, the ADP of Participants shall be determined in accordance with
the provisions of the Plan then in effect."
3. Effective for Plan Years beginning after December 31, 1996,
the last two sentences of Section 2.1(15)(b) of the Plan relating to family
aggregation rules shall be deleted.
4. Effective January 7, 1998, Section 2.1(30) of the Plan shall
be amended to read as follows:
"(30) EMPLOYER: Advantica Restaurant Group, Inc., a
corporation organized and existing under the laws of the State
of Delaware, or its successor or successors that assume Plan
liabilities pursuant to Article XI and any related corporation
or entity which adopts this Plan with the consent of Advantica
Restaurant Group, Inc. Adopting Employers as of April 1, 1998
are listed on Appendix A. Appendix A may be updated from time
to time by an authorized officer of Advantica Restaurant
Group, Inc."
5. Effective January 7, 1998, Section 2.1(41) of the Plan shall
be amended to read as follows:
"(41) FLAGSTAR: Effective January 7, 1998, all
references in the Plan to Flagstar shall be read instead to
mean Advantica Restaurant Group, Inc., a corporation organized
and existing under the laws of the State of Delaware, or its
successor or successors. Effective ___________________,
Flagstar Corporation (formerly known as TW Services, Inc.)
merged into Flagstar Companies, Inc., which became known as
Advantica Restaurant Group, Inc."
6. Effective for Plan Years beginning after December 31, 1997,
Section 2.1(43) of the Plan shall be amended to read as follows:
"(43) 415 COMPENSATION: Effective for Plan Years
beginning after December 31, 1997, the total of all amounts
paid to a Participant by the Employer within the meaning of
Code Section 3401(a) and all other payments of compensation to
a Participant by the Employer (in the course of the Employer's
trade or business) for which the Employer is required to
furnish the Participant a written statement under Code
Sections 6041(d), 6051(a)(3) and 6052 ("Box 1" compensation on
1997 Form W-2) for the Plan Year, plus elective or salary
reduction contributions to a cash or deferred arrangement,
4
<PAGE> 99
cafeteria plan, simplified employee pension or tax-sheltered
annuity pursuant to Code Sections 401(k), 125, 408(k) or
403(b)."
7. Effective for Plan Years beginning after December 31, 1996,
Section 2.1(44) of the Plan shall be amended to read as follows:
"(44) HIGHLY COMPENSATED EMPLOYEE: Effective for
Plan Years beginning after December 31, 1996, any Employee of
the Employer who is a "highly compensated employee" as defined
in Code Section 414(q) and the regulations thereunder;
provided that, for purposes of eligibility to participate
under the Plan, the Committee may deem additional Employees to
be Highly Compensated Employees. With respect to any Plan
Year, such definition generally shall include any Employee
who:
(a) was a Five Percent Owner at any
time during the Plan Year or the preceding Plan Year; or
(b) received 415 Compensation from the
Employer and all Aggregated Employers in excess of $80,000 (or
greater amount authorized by the Commissioner) during the
preceding Plan Year.
"A former employee also shall be considered a Highly
Compensated Employee if the former employee was a Highly
Compensated Employee for the year of separation from Service
or for any Plan Year ending on or after the employee attains
age fifty-five."
8. Effective for Plan Years beginning after December 31, 1996,
Section 2.1(51) of the Plan shall be amended to read as follows:
"(51) NON-HIGHLY COMPENSATED EMPLOYEE: Effective
for Plan Years beginning after December 31, 1996, any
Participant who is not a Highly Compensated Employee."
9. Effective January 7, 1998, Section 2.1(58) of the Plan shall
be amended to read as follows:
"(58) PLAN: Advantica 401(k) Plan, the Plan set
forth herein, as amended from time to time. Prior to January
7, 1998, the Plan was known as the Flagstar 401(k) Plan, and
prior to that, the Plan was known as the Flagstar Thrift Plan,
and prior to that, the Plan was known as the Thrift Plan for
Noncontract Employees of TW Services, Inc."
5
<PAGE> 100
10. Effective October 13, 1996, Section 2.1(66) of the Plan shall
be amended to add a new subsection (k) to the end thereof to read as follows:
"(k) Notwithstanding any provision of this Plan
to the contrary, contributions, benefits and
service credit with respect to qualified military service will
be provided in accordance with Code Section 414(u)."
11. Effective October 13, 1996, Section 2.1(67) of the Plan shall
be amended to add a new sentence to the end thereof to read as follows:
"Notwithstanding the foregoing, or any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with Code Section 414(u)."
12. Effective January 7, 1998, Section 2.1(74) of the Plan shall
be amended to read as follows:
"(74) TRUST, TRUST FUND or TRUST: The fund known
as the Advantica 401(k) Plan Trust maintained in accordance
with the terms of the Trust Agreement, as from time to time
amended, which is incorporated and made a part of this Plan.
Prior to January 7, 1998, the Trust was known as the Flagstar
401(k) Plan Trust and prior to that, the Trust was known as
the Flagstar Thrift Plan Trust and prior to that, the Trust
was known as the Thrift Plan for Noncontract Employees of TW
Services, Inc. Trust."
13. Effective April 1, 1998, Section 3.1 of the Plan shall be
amended by adding a new sentence to the end thereof to read as follows:
"Notwithstanding the foregoing, effective on and after April
1, 1998, in connection with the sale of FEI to a buyer
unrelated to the Employer, no Employee who is a FEI Employee
shall be eligible to participate in the Plan."
14. Effective for Plan Years beginning after December 31, 1996,
the sentence immediately preceding the last sentence of Section 4.4(a)(3)(iii)
of the Plan shall be amended to read as follows:
"In all events, the Committee's determination as to which
Participants will be affected under this subparagraph (iii)
shall be determined by reducing the deferrals of Participants
who are Highly Compensated Employees in order of their
Employee Pre-Tax Contributions, beginning with the Highly
6
<PAGE> 101
Compensated Employee with the greatest dollar amount of
Employee Pre-Tax Contributions during that Plan Year."
15. Effective for Plan Years beginning after December 31, 1996,
the sentence immediately preceding the last sentence of Section 4.4(b)(3)(ii) of
the Plan shall be amended to read as follows:
"In all events, the Committee's determination as to which
Participants will be affected shall be determined under this
subparagraph (ii) by reducing the contributions by or on
behalf of Participants who are Highly Compensated Employees in
order of such contributions, beginning with the Highly
Compensated Employee with the greatest dollar amount of such
contributions during that Plan Year."
16. Effective January 1, 1997, the heading of Section 5.3(d)(3) of
the Plan shall be amended to read as follows:
"(3) For all Plan Years beginning after December
31, 1986 but before January 1, 2000:"
17. Effective for Plan Years beginning after December 31, 1999,
Section 5.3(d) of the Plan shall be deleted.
18. Effective January 1, 1997, Section 6.4(e)(1) of the Plan shall
be amended to read as follows:
"(1) Before Death of Participant:
(i) For Participants who attain age
seventy and one-half after December 31, 1998:
Anything to the contrary in this Plan
notwithstanding, the entire interest of such
Participant or Former Participant in the Plan either:
(A) must be distributed to him
not later than April 1 of the calendar year following
the calendar year in which occurs the later of (I)
termination of employment (except that this clause
shall not apply in the case of a Five Percent Owner)
and (II) attainment of age seventy and one-half; or
(B) will be distributed,
commencing as of the date specified in subsection (A)
above, over the life of such Participant or Former
Participant or the lives of him and a designated
beneficiary,
7
<PAGE> 102
or over a specified period not in excess of his life
expectancy or the life expectancies of him and a
designated beneficiary (provided, that if the
Participant's spouse is not the designated
beneficiary, then the method of distribution selected
must assure that more than fifty percent of the
present value of the amount available for
distribution is paid within the Participant's life
expectancy).
(ii) For Participants who attain age
seventy and one-half on or before December 31, 1998:
Anything to the contrary in the Plan notwithstanding,
but only to the extent required or allowed by
relevant Internal Revenue Service rules or
regulations, a Participant (including a Participant
who already has commenced required minimum
distributions) who attains age seventy and one-half
on or before December 31, 1998 and has not terminated
employment who would be required to receive
distributions pursuant to this subsection (1) as in
effect prior to January 1, 1997 may elect to defer
commencement of benefits hereunder until no later
than April 1 of the calendar year following the
calendar year in which the Participant terminates
employment.
(iii) General Rules: In any case where
the Participant's entire interest is distributed
other than in a lump sum, the amount to be
distributed each year must be at least an amount
equal to the quotient obtained by dividing the
Participant's entire interest by the life expectancy
of the Participant or joint and last survivor
expectancy of the Participant and designated
beneficiary. Life expectancy and joint and last
survivor expectancy of the purposes of this paragraph
shall be computed by the use of the return multiples
contained in Section 1.72-9 of the Commissioner's
regulations if the designated beneficiary is the
Participant's spouse. If the beneficiary is not the
Participant's spouse, the amount to be distributed
each year must be at least an amount equal to the
quotient obtained by dividing the Participant's
entire interest by the lesser of (A) the life
expectancy as computed under the foregoing sentence
or (B) the applicable divisor in Proposed Regulation
Section 1.401(a)(9)-2, Q&A 4. For purposes of this
computation, the life expectancy (other than in the
case of a life annuity) may be recalculated no more
frequently than annually; however, the life
expectancy of a non-spouse beneficiary may not be
recalculated."
19. Effective April 1, 1998, a new Section 13.8 shall be added to
the Plan to read as follows:
"13.8 Special Provisions Regarding Employees of
Flagstar Enterprises, Inc. and Spardee's Realty, Inc.:
Effective April 1, 1998, Employees of Flagstar Enterprises,
Inc. and Spardee's Realty, Inc.
8
<PAGE> 103
(collectively, "FEI") who would have become Participants in
the Plan on or after April 1, 1998 are no longer eligible to
become Participants in the Plan. Effective April 1, 1998 and
thereafter, FEI is not a Plan sponsor or participating
Employer under the Plan and FEI Employees shall no longer be
permitted to make Employee Pre-Tax Contributions or Employee
After-Tax Contributions under the Plan or be eligible to
receive Employer contributions under the Plan. [OPTION: NEW
LOANS SHALL NOT BE AVAILABLE TO FEI EMPLOYEES AFTER APRIL 1,
1998 UNLESS THE LOAN REQUEST WAS APPROVED BY THE COMMITTEE
BEFORE APRIL 1, 1998.]
"Effective April 1, 1998, FEI Employees shall be
considered terminated employees under the Plan with respect to
their After-Tax Accounts, Rollover Accounts and the portion of
their Pre-Tax Accounts attributable to Employer Pre-Tax
Matching Contributions (other than Employer Contributions
designated as "qualified matching contributions" or "qualified
nonelective contributions") and shall be eligible for a
distribution from such accounts as provided in Section 6.3 and
Section 6.4. In accordance with Code Section 401(k)(10), FEI
Employees shall be given the right to elect as of April 1,
1998 to receive a lump sum distribution of the portion of
their Pre-Tax Accounts attributable to Employee Pre-Tax
Contributions (which also shall include for purposes of this
Section 13.8 Employer contributions designated as "qualified
matching contributions" or "qualified nonelective
contributions"). A FEI Employee is considered a terminated
employee as of April 1, 1998 with respect to the portion of
the FEI Employee's Pre-Tax Account attributable to Employee
Pre-Tax Contributions and eligible for a distribution from
such account of such amount only if the FEI Employee elects to
receive such a lump sum distribution of this amount from the
FEI Employee's Pre-Tax Account (or is subject to the mandatory
cash-out rules). A FEI Employee who does not elect to receive
a lump sum distribution of the portion of the FEI Employee's
Pre-Tax Account attributable to Employee Pre-Tax Contributions
and who is not subject to the mandatory cash-out rules shall
be considered a terminated employee eligible for a
distribution of the FEI Employee's Pre-Tax Account as
otherwise provided in Section 6.3 and Section 6.4 when the FEI
Employee separates from service with FEI.
"Notwithstanding the foregoing, the sale of FEI shall
have no effect for Plan purposes on the amount of benefits,
terminated status or form or timing of distributions for
former employees of FEI who are not active employees of FEI as
of April 1, 1998."
20. Effective January 1, 1998, any provision of the Plan which
relates to the mandatory cash-out rules set forth in Internal Revenue Code
Section 411(a)(11) and related regulations shall be amended such that all
references to the $3,500 cash-out limit shall be changed to $5,000.
9
<PAGE> 104
IN WITNESS WHEREOF, Advantica Restaurant Group, Inc., for itself and
its affiliates which have adopted this Plan, has caused the Amendment to be
properly executed on the ____ day of __________, 1998.
ADVANTICA RESTAURANT GROUP,
INC. (FORMERLY FLAGSTAR COMPANIES, INC.)
By:
-----------------------------------------
Title:
--------------------------------------
********
The signature of Flagstar Enterprises, Inc. and Spardee's Realty, Inc. while not
necessary under the terms of the Plan and Trust shall indicate receipt of this
Amendment and agreement with the actions taken by this Amendment.
FLAGSTAR ENTERPRISES, INC.
By:
-----------------------------------------
Title:
--------------------------------------
SPARDEE'S REALTY, INC.
By:
-----------------------------------------
Title:
--------------------------------------
10
<PAGE> 105
APPENDIX A
AFFILIATED EMPLOYERS WHO HAVE
ADOPTED THE ADVANTICA 401(K) PLAN
AS OF APRIL 1, 1998
Flagstar Systems, Inc.
Quincy's Realty, Inc.
Quincy's Restaurants, Inc.
Spartan Management, Inc.
Spartan Realty, Inc.
Carrows California Family Restaurants, Inc.
Carrows Restaurants, Inc.
Coco's Restaurants, Inc.
jojo's California Family Restaurants, Inc.
jojo's Restaurants, Inc.
<PAGE> 106
AMENDMENT NO. FIVE
TO THE
ADVANTICA 401(k) PLAN
AS AMENDED AND RESTATED
AS OF JANUARY 1, 1987
THIS AMENDMENT, made and executed the 9th day of June, 1998, by
ADVANTICA RESTAURANT GROUP, INC. for itself and its affiliates which have
adopted the Advantica 401(k) Plan (collectively, the "Employer");
W I T N E S S E T H:
A. The Employer previously has entered into the Advantica 401(k)
Plan (the "Plan") for the benefit of eligible employees, and Advantica
Restaurant Group, Inc. has reserved the right to amend the same from time to
time.
B. Advantica Restaurant Group, Inc. desires to amend the Plan in
the manner hereinafter set forth in connection with the sale of Quincy's
Restaurants, Inc. and Quincy's Realty, Inc. (collectively, "Quincy's"), causing
Quincy's no longer to be employers related to the Employer under the Plan.
THEREFORE, the Plan is amended as follows:
1. Section 3.1 of the Plan shall be amended by adding a new
sentence to the end thereof to read as follows:
"Notwithstanding the foregoing, in connection with the sale of
Quincy's Restaurants, Inc. and Quincy's Realty, Inc.
(collectively, "Quincy's") to a buyer unrelated to the
Employer, no Employee who is an Employee of Quincy's shall be
eligible to participate in the Plan, effective on the Quincy's
Closing Date (as defined in Section 13.9 of the Plan)."
2. A new Section 13.9 shall be added to the Plan to read as
follows:
<PAGE> 107
"13.9 Special Provisions Regarding Employees of
Quincy's Restaurants, Inc. and Quincy's Realty, Inc.:
Effective on the Closing Date (as that term is defined in the
Stock Purchase Agreement among Buckley Acquisition
Corporation, Spartan Holdings, Inc. and Advantica Restaurant
Group, Inc., dated May 13, 1998) of the sale of Quincy's
Restaurants, Inc. and Quincy's Realty, Inc. (collectively,
"Quincy's," and such effective date to be the "Quincy's
Closing Date"), Quincy's no longer will be Related Employers
and therefore, under the terms of the Plan, no longer will be
a Plan sponsor or participating Employer under the Plan.
Employees of Quincy's who would have become Participants in
the Plan on or after the Quincy's Closing Date no longer shall
be eligible to become Participants in the Plan. Employees of
Quincy's no longer shall be permitted to make Employee Pre-Tax
Contributions or Employee After-Tax Contributions under the
Plan or be eligible to receive Employer contributions under
the Plan. New loans shall not be available to Employees of
Quincy's unless the loan request was approved by the Committee
before May 19, 1998.
"Effective as of the Quincy's Closing Date, Employees
of Quincy's shall be considered terminated employees under the
Plan with respect to their After-Tax Accounts, Rollover
Accounts and the portion of their Pre-Tax Accounts
attributable to Employer Pre-Tax Matching Contributions (other
than Employer contributions designated as "qualified matching
contributions" or "qualified nonelective contributions") and
shall be eligible for a distribution from such accounts as
provided in Section 6.3 and Section 6.4. In accordance with
Code Section 401(k)(10), Employees of Quincy's shall be given
the right to elect as of the Quincy's Closing Date to receive
a lump sum distribution of the portion of their Pre-Tax
Accounts attributable to Employee Pre-Tax Contributions (which
also shall include for purposes of this Section 13.9 Employer
contributions designated as "qualified matching contributions"
or "qualified nonelective contributions" or loans attributable
thereto). An Employee of Quincy's will be considered a
terminated employee as of the Quincy's Closing Date with
respect to the portion of such Employee's Pre-Tax Account
attributable to Employee Pre-Tax Contributions and eligible
for a distribution from such account of such amount only if
the Employee of Quincy's elects to receive such a lump sum
distribution of this amount from such Employee's Pre-Tax
Account (or is subject to the mandatory cash-out rules). An
Employee of Quincy's who does not elect to receive a lump sum
distribution of the portion of such Employee's Pre-Tax Account
attributable to Employee Pre-Tax Contributions and who is not
subject to the mandatory cash-out rules shall be considered a
terminated employee eligible for a distribution of such
Employee's Pre-Tax Account as otherwise provided in Section
6.3 and Section 6.4 when the Employee of Quincy's separates
from service with Quincy's.
2
<PAGE> 108
"Notwithstanding the foregoing, the sale of Quincy's
shall have no effect for Plan purposes on the amount of
benefits, terminated status or form or timing of distributions
for former Employees of Quincy's who are not active Employees
of Quincy's as of the Quincy's Closing Date."
IN WITNESS WHEREOF, Advantica Restaurant Group, Inc., for itself and
its affiliates which have adopted this Plan, has caused the Amendment to be
properly executed on the 9th day of June, 1998.
ADVANTICA RESTAURANT GROUP, INC.
By: /s/ Stephen Wood
-----------------------------------------
Title: Exec. VP
--------------------------------------
The signature of Quincy's Restaurants, Inc. and Quincy's Realty, Inc. while not
necessary under the terms of the Plan and Trust shall indicate receipt of this
Amendment and agreement with the actions taken by this Amendment.
QUINCY'S RESTAURANTS, INC.
By: /s/ Rhonda J. Parish
-----------------------------------------
Title: Exec. V.P.
--------------------------------------
QUINCY'S REALTY, INC.
By: /s/ Rhonda J. Parish
-----------------------------------------
Title: Exec. V.P.
--------------------------------------
3
<PAGE> 109
APPENDIX A
AFFILIATED EMPLOYERS WHO HAVE
ADOPTED THE ADVANTICA 401(K) PLAN
AS OF JUNE 9, 1998
Flagstar Systems, Inc.
Spartan Management, Inc.
Spartan Realty, Inc.
Carrows California Family Restaurants, Inc.
Carrows Restaurants, Inc.
Coco's Restaurants, Inc.
jojo's California Family Restaurants, Inc.
jojo's Restaurants, Inc.
<PAGE> 110
FLAGSTAR 401(k) PLAN
TRUST AGREEMENT
RESTATED EFFECTIVE
AS OF
JULY 1, 1996
<PAGE> 111
FLAGSTAR 401(k) PLAN
TRUST AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. RECITALS............................................................................1
ARTICLE II. DEFINITIONS........................................................................1
2.1 Definitions in Plan Incorporated...................................................1
2.2 Interpretation Consistent with Plan................................................1
ARTICLE III. ESTABLISHMENT AND IRREVOCABILITY OF THE TRUST.....................................1
3.1 Trust for Exclusive Benefit of Employees..........................................1
3.2 Irrevocability....................................................................2
ARTICLE IV. GENERAL DUTIES OF EMPLOYER AND TRUSTEE.............................................2
4.1 General Duties of Employer.........................................................2
4.2 General Duties of Trustee..........................................................2
ARTICLE V. INVESTMENT AND ADMINISTRATIVE POWERS................................................4
5.1 Investment of the Trust Fund........................................................4
5.2 Investments in Pooled Fund..........................................................4
5.3 Collective Investment Subaccounts and Investments in Employer Stock.................5
5.4 Trustee's Powers....................................................................5
5.5 Trustee's Authority.................................................................7
ARTICLE VI. POWERS AND DUTIES OF THE TRUSTEE IN THE DISBURSEMENT OF THE TRUST FUND............7
ARTICLE VI-A. GENERAL POWERS AND DUTIES OF INVESTMENT MANAGERS.................................7
ARTICLE VII. TAXES, EXPENSES AND COMPENSATION OF THE TRUSTEE...................................8
ARTICLE VIII. ACCOUNTS OF THE TRUSTEE..........................................................9
8.1 Records, Reports and Accounts....................................................9
8.2 Fiscal Year......................................................................9
ARTICLE IX. REMOVAL, RESIGNATION AND SUBSTITUTION OF TRUSTEE...................................9
9.1 Resignation, Removal, and Successor Trustee........................................9
(a) Resignation of Trustee........................................................9
(b) Removal of Trustee............................................................9
(c) Successor Trustee............................................................10
9.2 Acts of Multiple Trustees.........................................................10
</TABLE>
<PAGE> 112
<TABLE>
<S> <C>
ARTICLE X. FOR THE PROTECTION OF THE TRUSTEE..................................................10
10.1 Actions by the Board and the Employer..............................................10
10.2 Certificate of Committee as to Certain Matters.....................................10
10.3 Actions by the Committee...........................................................11
10.4 Notice of Appointments and Terminations............................................11
10.5 Reliance on Counsel; Delegation of Duties..........................................11
10.6 Distributions......................................................................11
10.7. Indemnification....................................................................11
ARTICLE XI. DURATION OF THE TRUST - RIGHT TO TERMINATE........................................12
11.1 Duration and Termination..........................................................12
11.2 Liquidation Upon Termination......................................................12
ARTICLE XII. RIGHT TO AMEND...................................................................12
ARTICLE XIII. MISCELLANEOUS...................................................................12
13.1 Merger or Consolidation of the Trustee..........................................12
13.2 Necessary Parties...............................................................12
13.3 Participants Bound by Accountings...............................................12
13.4 Governing Law...................................................................13
13.5 Acceptance of Trust.............................................................13
13.6 Execution in Counterparts.......................................................13
13.7 ERISA Bonding...................................................................13
</TABLE>
ii
<PAGE> 113
FLAGSTAR 401(k) PLAN
TRUST AGREEMENT
THIS TRUST AGREEMENT, amended and restated as of the 1st day of July,
1996 by and between FLAGSTAR CORPORATION for itself, and its affiliates which
have adopted the related Plan funded under this Trust (collectively, "Employer")
and , effective as of July 1, 1996, AMERICAN EXPRESS TRUST COMPANY ("Trustee"),
for the purpose of continuing a thrift plan Trust;
W I T N E S S E T H:
ARTICLE I. RECITALS
A. The Employer previously has adopted the Flagstar 401(k) Plan
(formerly called the Thrift Plan for Noncontract Employees of TW Services, Inc.
and, effective as of June 16, 1993, the Flagstar Thrift Plan, hereafter referred
to as the "Plan") to encourage savings by eligible employees, which Plan is
incorporated by reference herein.
B. The Trustee has consented to serve as Trustee and to accept
and manage the funds, securities and other properties transferred to it ("Trust
Fund(s)") for the purposes and in accordance with the terms and conditions set
forth in this restated Trust Agreement and in the Plan.
C. The Employer intends that this Trust Agreement shall
constitute a part of the Plan, and meet the requirements of Sections 401(a),
401(k) and 501(a) of the Internal Revenue Code of 1986, as amended ("Code") and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
NOW, THEREFORE, the Employer and the Trustee hereby amend and restate
this Trust Agreement, effective as of July 1, 1996 in accordance with the
following terms and provisions:
ARTICLE II. DEFINITIONS
2.1 Definitions in Plan Incorporated: Definitions in the Plan
shall have the same meaning wherever used in this Trust Agreement, unless the
context clearly indicates otherwise.
2.2 Interpretation Consistent with Plan: The terms and provisions
of this Trust Agreement shall in all instances be interpreted to be consistent
with the Plan.
ARTICLE III. ESTABLISHMENT AND IRREVOCABILITY OF THE TRUST
3.1 Trust for Exclusive Benefit of Employees: The Trustee accepts
the Trust created hereby and covenants that it will hold all property which it
may receive hereunder, in trust, for the exclusive purpose of providing benefits
to Participants, Former Participants and their Beneficiaries and defraying
reasonable expenses of administering the Plan and the Trust Agreement upon the
terms and conditions herein stated.
<PAGE> 114
3.2 Irrevocability:
(a) All contributions made by the Employer shall be
irrevocable, except as provided in Section 3.2(b) below, and, prior to the
satisfaction of all liabilities of the Plan with respect to Participants and
their Beneficiaries, no part of the corpus of the Trust Fund nor any income
therefrom shall revert to the Employer or be used for or diverted to purposes
other than for the exclusive benefit of the Participants and their
Beneficiaries, or to pay administrative expenses of the Plan and Trust fund to
the extent not paid by the Employer, except as otherwise stated in Section 11.2.
All assets of the Trust Fund including investment income, shall be paid to the
Trustee.
(b) Contributions shall be returned under the following
circumstances:
(i) In the case of a contribution which is made
by a mistake of fact, such contribution shall be returned to the Employer within
one year after payment.
(ii) If the contribution is conditioned upon
qualification of the Plan or any amendment thereto, or if the contribution is
conditioned upon the deductibility of such contribution under Code Section 404,
and if the Plan or amendment does not qualify, or if the deduction is
disallowed, then the contribution shall be returned to the Employer within one
year after denial of qualification or disallowance of the deduction.
ARTICLE IV. GENERAL DUTIES OF EMPLOYER AND TRUSTEE
4.1 General Duties of Employer: The Employer shall provide the
Trustee with a certified copy of the Plan and with copies of all amendments
promptly upon their adoption and shall from time to time certify to the Trustee
the names and specimen signatures of the members of the Committee, appointed in
accordance with the Plan, who have authority to control and manage the operation
and administration of the Plan. The Employer shall make its contributions as the
same may be appropriated by due corporate action, which contributions may be in
cash or in other property acceptable to the Trustee. The Employer shall keep
accurate books and records with respect to its Employees and their compensation.
4.2 General Duties of Trustee:
(a) The Trustee shall hold all property received by it
hereunder, which, together with the income and gains therefrom and additions
thereto, shall constitute the Trust Fund. The Trustee, subject to any direction
by the Committee or an Investment Manager, shall manage, invest and reinvest the
Trust Fund, collect the income thereof, and make payments therefrom, all as
hereinafter provided. The Trustee shall be responsible only for the property
actually received by it hereunder. It shall have no duty or authority to compute
any amount to be paid to it by the Employer or to bring any action or proceeding
to enforce the collection from the Employer of any contribution to the Trust
Fund.
(b) The Trustee (subject to any direction by the
Committee and/or Investment Manager), any Investment Manager, and the Committee
(to the extent it directs the Trustee regarding Trust assets) shall discharge
their duties solely in the interest of the Participants and Beneficiaries and
2
<PAGE> 115
(i) for the exclusive purpose of providing
benefits to Participants and their Beneficiaries and defraying reasonable
expenses of administering the Plan and the Trust;
(ii) to the extent required by ERISA, by
diversifying the investments of the Trust so as to minimize the risk of large
losses, unless under the circumstances it is clearly prudent not to do so and/or
the Trustee's investments are subject to Participant direction; and
(iii) in accordance with the documents and
instruments governing the Trust insofar as such documents and instruments are
consistent with the provisions of ERISA and the Code.
(c) The Committee and/or any Investment Manager may
direct the Trustee as to the investment funds to be established for investment
of the Trust Funds in accordance with the provisions of the Plan. If and to the
extent such direction is given regarding the underlying investments of any
investment funds, except for those investment funds that are mutual funds, the
Committee and/or the Investment Manager shall be responsible for determining the
underlying investments of the investment funds.
The Committee also may authorize the Trustee to accept
direction from Participants. In such case, the Trustee shall invest in the
investment funds in accordance with investment directions given by the
Participants and Beneficiaries for whose accounts such assets are held, to the
extent so provided for in the Plan. All such directions by the Participants or
Beneficiaries to the Trustee will be made by either telephonic or electronic
communications or in such other manner as is acceptable to the Trustee and
authorized by the Committee.
Where the Committee, a Participant, a Beneficiary or an
Investment Manager other than the Trustee has the power and authority to direct
the investment of assets of the Trust Fund, the Trustee does not have any duty
to question any direction given in accordance with the established procedures
for direction (which for Participant direction may be telephonically or by
electronic communication, but with respect to Committee direction must be in
writing), to review any securities or other property, or to make any suggestions
in connection therewith unless upon its face such direction constitutes a
prohibited transaction as defined by Code Section 4975(b) or involves a
direction in violation of established Committee procedures. The Trustee will
promptly comply with any direction given by the Committee, a Participant, a
Beneficiary or Investment Manager. The Trustee will not be liable for failing to
invest any assets of the Trust Fund under the management and control of the
Committee, a Participant, a Beneficiary or an Investment Manager in the absence
of investment directions regarding such assets.
(d) The Trustee will determine the current fair market
value of the assets and liabilities of the Trust Fund as of the end of each
Valuation Date.
The fair market value of assets of the Trust Fund will be
determined by the Trustee on the basis of such sources of information as it may
deem reliable, including (but not limited to) information reported in (i)
newspapers of general circulation; (ii) standard financial periodicals or
publications; (iii) statistical and valuation services; (iv) records of
securities exchanges; (v) reports of any Investment Manager, insurance company
or financial institution that has issued an investment contract to the Trustee
or brokerage firm deemed reliable by the Trustee; or (vi) any combination
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of the foregoing. If the Trustee is unable to value assets from sources, it
shall so inform the Committee and thereafter may rely on information from the
Employer, the Committee, appraisers or other sources, and will not be liable for
inaccurate valuation based in good faith.
The Trustee may, for administrative purposes, establish unit
values for one or more investment funds (or any portion thereof) and maintain
the accounts setting forth each Participant's interest in such investment fund
(or any portion thereof) in terms of such units, all in accordance with such
rules and procedures as the Committee shall deem to be fair, equitable, and
administratively practicable. In the event that unit accounting is thus
established for any investment fund, the value of a Participant's interest in
that investment fund (or any portion thereof) at any time shall be an amount
equal to the then value of a unit in such investment fund (or any portion
thereof) multiplied by the number of units then credited to the Participant.
ARTICLE V. INVESTMENT AND ADMINISTRATIVE POWERS
OF THE TRUSTEE
5.1 Investment of the Trust Fund: Except as otherwise provided in
the Plan, the net income and profits of the Trust Fund shall be accumulated,
added to the principal of the Trust Fund and invested and reinvested therewith
as a single fund. Subject to direction by the Investment Manager or of the
Committee, the Trustee is authorized to invest the Trust Fund in such mutual
funds or other investments including: investments offered by the Trustee or its
affiliates, bonds, notes, debentures, mortgages, equipment trust certificates,
investment trust certificates, preferred or common stocks, deposit
administration contracts, fixed and variable annuity contracts, and in such
other property, real or personal, within the United States, as the Trustee (or
to the extent they direct the Trustee, the Committee or any Investment Manager)
may deem advisable, subject to the provisions of Sections 404 and 406 of ERISA.
Furthermore, subject to Section 5.4 below, the Trustee may invest up to fifty
percent of the total value of the Trust Fund represented by Employer
contribution accounts at the time of such investment in qualifying Employer
securities and any investment presently maintained in Employer's securities
and/or real property may be continued, subject to the provisions of ERISA. The
Trustee may hold in cash such portion of the Trust Fund as shall be reasonable
under the circumstances, pending investment or payment of expenses or
distribution of benefits and, further, may make temporary investments of funds
as they are received and before such funds are credited to Participants'
accounts provided such funds are credited to Participants' accounts within a
reasonable time after receipt by the Trustee.
5.2 Investments in Pooled Fund: Notwithstanding any other
provision of this Trust Agreement, all or any part of the assets may be invested
in any collective investment trust (including a collective investment trust
maintained by a bank which is the Trustee) which then provides for the pooling
of the assets of plans described in Code Section 401(a) and exempt from taxation
under Code Section 501(a) (whether or not such collective investment trust
provides for the pooling of assets of other tax-exempt trusts), provided that
such collective investment trust is exempt from tax under the Code or
regulations or rulings issued by the Internal Revenue Service. The provisions of
the document governing any such collective investment trust, as amended from
time to time, shall govern any investment therein and are hereby made a part of
this Trust Agreement.
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5.3 Collective Investment Subaccounts and Investments in Employer
Stock:
The Trustee shall invest Participants' Accounts in blended or other
investment subaccounts and/or in Employer Stock and/or other Employer Securities
in accordance with Article VII of the Plan which is incorporated and made a part
of this Trust Agreement.
5.4 Trustee's Powers: The Trustee shall have the following powers,
rights and duties in addition to those vested in it elsewhere in the Plan or by
law; provided that, the Trustee's exercise of all the powers described in this
Section 5.4, with the exception of those described in Sections (i) and (j), may
be subject to direction by the Committee or any appointed Investment Manager:
(a) Control Assets: To retain, manage, improve, repair,
operate and control any assets of the Trust Fund;
(b) Dispose of Assets: To sell, convey, transfer,
exchange, partition, grant options with respect to, lease for any term (even
though such terms extend beyond the duration of this Trust Fund or commence in
the future), mortgage, pledge or otherwise deal with or dispose of any asset of
the Trust Fund in such manner, for such consideration and upon such terms and
conditions as the Trustee, in its discretion, shall determine;
(c) Bank Deposits: To invest the Trust Fund in deposits
(and in certificates of deposit) which bear a reasonable interest rate in any
bank, including a bank which is acting as Trustee;
(d) Employ Agents: With prior notice to the Committee,
and subject to the Committee's approval if compensation is to be directly or
indirectly from Trust assets, to employ such agents and counsel as may be
reasonably necessary in collecting, managing, administering, investing,
distributing and protecting the Trust Fund or the assets thereof and to pay them
reasonable compensation;
(e) Settle Claims: To settle, compromise or abandon all
claims and demands in favor of or against the Trust Fund;
(f) Borrow Money: To borrow money for the Trust Fund from
anyone (other than a "party in interest" as defined in Section 3(14) of ERISA),
with or without giving security from the Trust Fund;
(g) Deal with Corporations, Proxies and Voting: The
Trustee shall deliver or cause to be executed and delivered, to the Committee or
the designated Investment Manager, all notices, prospectuses, finance
statements, proxies and proxy soliciting materials relating to any mutual fund
held hereunder. Except for those Trust Fund assets for which American Express
Trust is the Investment Manager, the Trustee shall not vote any proxy or tender
offer election, participate in any voting trust, exercise any options or
subscription right or join in, dissent from or oppose any merger,
reorganization, consolidation, liquidation or sale with respect to any asset
held hereunder except in accordance with the timely written instructions of the
Committee. If no such written instructions are received, such proxies, elections
and voting trust votes shall not be voted; such
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options or subscription rights shall not be exercised; and such mergers,
reorganizations, consolidations, liquidations or sales shall not be joined,
dissented from or opposed;
The Committee may assign, in whole or in part, to the
Participants the right to vote proxies or exercise other rights of ownership
with respect to any American Express Financial Advisors, Inc. Mutual Funds or
other Trust assets allocable to Participants. To the extent the right to vote or
other incidents of ownership are vested in whole or in part in the Participants,
in whole or in part, the Trustee shall act in this regard only in accordance
with the timely written instructions received from the Participants. Solely for
this purpose, each Participant shall act as the Named Fiduciary, as defined in
ERISA, in providing direction to the Trustee. To the extent practicable, all
unallocated assets or investments held hereunder, and all assets or investments
for which Trustee has not received instruction, shall, solely for the purposes
of this section, be allocated to the account of each Participant who has issued
instructions to the Trustee, in the same proportion as such Participant's
allocated proportion of assets or investments bear to the aggregate of all like
assets or investments for which instructions have been issued by the Participant
to the Trustee;
(h) Organize Corporations: To organize and incorporate
(or participate in the organization or incorporation of) under the laws of any
state, a corporation for the purpose of acquiring and holding title to any
property which the Trustee is authorized to acquire for the Trust Fund and to
exercise with respect thereto any of the powers, rights and duties it has with
respect to other assets of the Trust Fund;
(i) Facility of Title: To cause title to the assets of
the Trust Fund to be held in the name of the Trustee, in the name of a nominee,
in a broker's street name, in bearer form so that title will pass by delivery,
or in any other manner authorized by applicable law in effect from time to time,
provided the records of the Trustee shall indicate the true ownership of such
asset; (j) General Powers: To exercise any of the powers and rights of an
individual owner with respect to any property of the Trust Fund and to do all
other acts in its judgment necessary or desirable for the proper administration
of the Trust Fund although the power to do such acts is not specifically set
forth herein;
(k) Hold Cash: Subject to any Committee guidelines, to
hold a reasonable amount of cash uninvested and unproductive of income or
deposit same with any banking or savings institution, including its own banking
department or the banking department of an affiliate;
(l) Participant Loans: To invest or reinvest a portion of
the assets in individual Participant directed loans;
(m) Transfer of Assets: Subject to Committee and its own
procedures, to accept the transfer of assets by use of electronic or telephonic
communications or any other method approved by the Committee; and
(n) Pool Assets: To pool all or any of the assets of the
Trust Fund with assets belonging to any other employee benefit trust created by
the Employer or an affiliate of the Employer, and to commingle such assets and
make joint or common investment carry joint accounts on behalf of the Trust and
such other trust or trusts, and allocate undivided shares or interest in such
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investments or accounts or in any pooled assets to the two or more trusts in
respect to their respective interests in the pooled investment.
5.5 Trustee's Authority: Third parties dealing with the Trustee
shall be under no obligation to see to the proper application of any money paid
or property delivered to the Trustee or to inquire into the Trustee's authority
as to any transaction. If any instrument executed by the Trustee bears its seal,
such seal shall constitute the Trustee's certificate that it is authorized as
the Trustee hereunder to execute such instrument and to proceed as may be
provided for therein.
ARTICLE VI. POWERS AND DUTIES OF THE TRUSTEE
IN THE DISBURSEMENT OF THE TRUST FUND
Except for reasonable administrative expenses, and other reasonable
fees and charges incurred in connection with the proper administration of the
Trust Fund as are otherwise provided for herein, the Trustee shall make such
distributions in cash or property from the Trust Fund only to such person or
persons, including a paying agent or agents designated by the Committee or the
Committee as paying agent, at such time or times, and in such amounts as are
directed in writing by the Committee. Any cash or property so paid or delivered
to any paying agent shall be held in trust until disbursed in accordance with
the Plan.
ARTICLE VI-A. GENERAL POWERS AND DUTIES OF INVESTMENT MANAGERS
(a) The Committee has the power and authority to appoint one or
more Investment Mangers as defined in and subject to the requirements of Section
3(38) of ERISA. Each Investment Manger so appointed will have the following
powers with respect to investments under their control: the power and authority
to vote any corporate stock either in person or by proxy for any purpose, except
to the extent that voting rights with respect to Employer Stock and other
Employer Securities are granted to Participants under Section 7.3(f) of the
Plan; to exercise any conversion privilege, subscription right, or any other
right or option given to the Trustee as the owner of any security owned by the
Trust Fund and to make any payments incidental hereto; to consent to, take any
action in connection with, and receive and retain any securities resulting from
any reorganization, consolidation, merger, readjustment of the financial
structure, sale, lease, or other disposition of the assets of any corporation or
other organization, the securities of which may be an asset of the Trust Fund
unless the Committee expressly reserved such power in its grant of authority to
the Investment Manager.
(b) If the Committee elects to delegate investment authority for
the assets of all or any portion of the Trust Fund to an Investment Manager
pursuant to subsection (a), the Committee will inform the Trustee in writing of
such designation and such written notice shall describe the portion of the Trust
Fund affected. Upon receipt of such notice, the Trustee will be obligated to
follow the investment directions of the Investment Manager with respect to the
assets of the specified portion of the Trust Fund until the Trustee receives
written notice that such Investment Manager has resigned or has been removed or
replaced by the Committee. The Trustee will not be a party to any agreement
between the Committee and an Investment Manager, and will have no responsibility
respecting the terms and conditions of such agreement. The Trustee shall be held
harmless by the Employer for any liability due to any direction, action or
non-action caused by the Investment Manager unless such liability is exacerbated
by the action or inaction of the Trustee.
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(c) In exercising its authority to delegate investment authority
to an Investment Manager, the Committee shall have the duty, responsibility and
power to (i) examine and analyze the performance of prospective Investment
Managers; (ii) select an Investment Manager or Managers; (iii) determine the
portion of the Trust Fund that will be under the management of each Investment
Manager; (iv) issue appropriate instructions to the Trustee and to each
Investment Manager regarding the allocation of investment authority; (v) review
the performance of each Investment Manager at periodic intervals; and (vi)
remove any Investment Manager when the Committee deems such removal to be
necessary or appropriate.
(d) All directions by an Investment Manager to the Trustee
concerning the investment, reinvestment, sale or management of assets of the
Trust Fund will be made, in writing or in such other manner as is acceptable to
the Trustee, by such person or persons as the Investment Manager designates in
writing to the Trustee from time to time.
(e) With advance written notice to the Committee and subject to
the Committee's approval, an Investment Manager may engage any investment
adviser or investment counselor that it deems necessary or appropriate, and may
provide for directions concerning the investment and reinvestment of the assets
of the Trust Fund under its management and control to be made directly to the
Trustee by such adviser or counselor as its agent; provided however, prior to
such direction by the investment advisor or investment counselor, the Trustee
and Committee receive written notice from the Investment Manager that the
directions of such agent will be considered the directions of the Investment
Manger and that the Investment Manager will be responsible for the directions of
such agent.
(f) If an Investment Manager resigns or is removed by the
Committee, the Committee will notify the Trustee in writing of such resignation
or removal. Upon actual receipt of such notice, the power and authority to
invest and reinvest the assets of the Trust Fund formerly under the control and
management of the Investment Manager will return to the Committee unless the
Committee indicates that a successor Investment Manager has been appointed with
respect to such assets.
(g) The fees and expenses of each Investment Manager, except to
the extent paid by the Employer shall be paid from the Trust Fund. The Trustee
may request a representation from the Employer that such payments are allowed
under ERISA.
ARTICLE VII. TAXES, EXPENSES AND COMPENSATION OF THE TRUSTEE
(a) All reasonable costs, charges and expenses incurred by the
record keeper in connection with the administration of the Plan, or incurred by
the Investment Manager in connection with the exercise of its duties under this
Trust Agreement or incurred by the Trustee in connection with its administration
of the Trust Fund, including fees for legal services rendered to the Trustee and
such reasonable compensation to the Trustee as may be agreed upon from time to
time between the Employer and the Trustee, shall be paid by the Employer, but if
not paid by the Employer, shall be paid from the Trust Fund; provided, however,
a Trustee who is an Employee shall not receive any compensation from the Trust
Fund for serving as Trustee (although such compensation may be paid by the
Employer), but may be reimbursed from the Trust Fund or by the Employer for
reasonable costs and expenses incurred by him in connection therewith, and
provided further that all federal and state transfer taxes and other expenses
which are payable by a Participant pursuant to the terms of
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the Plan shall be borne by the Participant and the Trustee is authorized to
deduct the amount of such expenses from any amounts otherwise payable or
creditable to him.
(b) In the event the Employer files or declares bankruptcy, the
Employer authorizes the Trustee to make payments from the Trust Fund for any and
all reasonable fees, expenses or other forms of compensation due under this
Section whether or not the fees, expenses or other compensation were earned but
not yet paid prior to or after the bankruptcy filing.
ARTICLE VIII. ACCOUNTS OF THE TRUSTEE
8.1 Records, Reports and Accounts: The Trustee shall keep accurate
and detailed accounts of all investments, receipts and disbursements and other
transactions hereunder, and all accounts, books and records relating thereto
shall be open to inspection by any person designated by the Committee, at all
reasonable times. Within sixty (60) days after the close of each fiscal year of
the Trust, the Trustee shall file a written report with the Employer and with
the Committee. The report shall set forth all investments, receipts and
disbursements, and other transactions effected by the Trustee during such year;
it shall contain an exact description of all securities purchased and sold, the
cost or net proceeds of sale (excluding accrued interest paid or received) and
show the securities, contracts, and investments held at the end of such year and
the cost of each item thereof as carried on the books of the Trustee. It shall
also indicate the fair market value of the investments of the Trust as of the
day of the report. The Trustee also shall provide the Committee, or the record
keeper designated by the Committee, with such other information in its
possession as may be necessary for the Committee and the Employer to conform
with the requirements of Section 103 of ERISA, and such other reasonable
information and reports as may be requested by the Committee or Employer from
time to time.
8.2 Fiscal Year: The fiscal year of the Trust shall be the
calendar year.
ARTICLE IX. REMOVAL, RESIGNATION AND SUBSTITUTION OF TRUSTEE
9.1 Resignation, Removal, and Successor Trustee:
(a) Resignation of Trustee: The Trustee may resign from
the Trust at any time by giving sixty (60) days prior written notice thereof to
the Employer, and such resignation shall take effect sixty (60) days from the
date of the delivery of such written notice, or upon the appointment of a
successor Trustee pursuant to Section 9.1(c), whichever shall first occur or at
such earlier date as consented to by both Flagstar and the Trustee. Within sixty
(60) days of such resignation becoming effective, the Trustee shall render to
the Employer an account of the administration of the Plan during the period
following that covered by the last annual accounting, and the Trustee shall
perform all acts necessary to transfer and deliver the assets of the Trust and
any and all information in connection therewith or the administration thereof to
its successor Trustee.
(b) Removal of Trustee: Flagstar may remove the Trustee
at any time by giving sixty (60) days prior written notice thereof to the
Trustee, and such removal shall take effect sixty (60) days from the date of
delivery of such written notice, or at such earlier date as consented to by both
Flagstar and the Trustee. In the event of such removal, the Trustee shall be
under the same duties to account and to transfer and deliver the assets of the
Trust and any and all information in
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connection therewith or the administration thereof to its successor Trustee as
provided hereinabove in the event of the Trustee's resignation.
(c) Successor Trustee: In the event of a vacancy in the
trusteeship of the Plan and Trust occurring at any time, the Employer shall
designate and appoint a qualified successor Trustee of the Plan. Any successor
Trustee shall have all the rights and powers and all of the duties and
responsibilities herein conferred upon the original Trustee. If a successor
Trustee is not appointed within sixty (60) days after the Trustee gives notice
of its resignation pursuant to Section 9.1(a) above, the Trustee may apply to
any court of competent jurisdiction for appointment of a successor.
The Trustee's powers, duties, rights and responsibilities
under this Trust Agreement will continue, with respect to those Trust Fund
assets held by the Trustee, until the date on which the transfer of the Trust
Fund assets and delivery of the related documents to the successor trustee is
completed. The successor trustee will neither be liable or responsible for any
act or omission to act with respect to the operation or administration of the
Trust Fund under this Trust Agreement prior to the date it receives any Trust
Fund assets and related documents, nor be under any duty or obligation to audit
or otherwise inquire into or take any action concerning the acts or omissions of
the Trustee or any predecessor trustee. The successor trustee shall be held
harmless by the Employer for any and all acts or omissions of the predecessor
trustee.
9.2 Acts of Multiple Trustees: If the Trustee consists of more
than one individual or entity, all acts and decisions of the Trustee shall be by
vote of the majority of them, provided, that the signature on any document
(other than an amendment to the Plan or Trust Agreement) of any one such
individual or entity constituting the Trustee shall be sufficient evidence to
any party that such document is valid and in accordance with the terms of this
Plan and Trust Agreement.
ARTICLE X. FOR THE PROTECTION OF THE TRUSTEE
10.1 Actions by the Board and the Employer: Any action by the board
of directors of an Employer pursuant to any of the provisions of this Trust
Agreement may be evidenced by a resolution of such board of directors certified
over the signature of the Secretary or an Assistant Secretary of the Employer
and under its corporate seal, and the Trustee shall be protected to the extent
the law permits in acting in accordance with any such resolution so certified.
Any action of the Employer pursuant to any of the provisions of this Trust
Agreement may be evidenced by a letter or other communication signed by any
officer of the Employer.
10.2 Certificate of Committee as to Certain Matters: Without
limiting or restricting any other provisions of this Trust Agreement relating to
the right of the Trustee to rely upon any instruments furnished to it in any
specified form, it is hereby provided that the Trustee shall be fully protected
in relying upon a certificate of the Committee as to whether, at any time, all
liabilities with respect to the Participants of the Plan or their Beneficiaries
have been satisfied, and also as to all other matters of any nature whatsoever
which the Trustee may deem pertinent to the discharge of its duties hereunder.
10.3 Actions by the Committee: All requests, directions, orders,
requisitions and instructions of the Committee to the Trustee shall be in
writing. They shall be signed either by the
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Secretary of the Committee or by any one member of the Committee authorized by
the majority to sign. The Trustee shall act in accordance with and shall be
protected to the extent the law permits in acting in accordance with and relying
upon, such requests, directions, orders, requisitions, instructions and any
other communications, unless upon their face such communications constitute
prohibited transactions as defined by Code Section 4975(b). The Committee shall
have the discretionary authority to interpret and construe the provisions of the
Plan and Trust Agreement as necessary to determine eligibility for benefits and
otherwise to construe disputed, doubtful or uncertain terms.
10.4 Notice of Appointments and Terminations: The Employer shall
furnish the Trustee from time to time with certified copies of the resolutions
of its Board of Directors evidencing the appointment and termination of office
of any members of the Committee and the appointment of successors thereto. The
Trustee shall be entitled to assume that the membership of the Committee is as
stated in any such certified copy of resolutions of the Board of Directors
delivered to it, and the Trustee shall not be charged with notice of any change
in the membership of a Committee until it shall have received a certified copy
of a resolution of the Board of Directors evidencing such change. If a Committee
is not appointed, the Plan Administrator shall be the Employer.
10.5 Reliance on Counsel; Delegation of Duties: The Trustee may
from time to time consult with counsel, who may be counsel to the Employer, and
shall be protected to the extent the law permits in acting upon such advice of
counsel as respects legal questions. The Trustee may also from time to time
employ agents and expert assistants and delegate to them such ministerial duties
as it sees fit, provided that such delegation is permitted by the board of
directors. In the event that the Trustee does delegate such ministerial duties,
it shall periodically review the performance of the person(s) to whom these
duties have been delegated.
10.6 Distributions: The Trustee may make any distribution or
payment to be made by it hereunder by mailing its check for the specified
amount, or delivering the specified property, to the person to whom such
distribution or payment is to be made, at such address as may have been last
furnished to the Trustee, or if no such address shall have been so furnished, to
such person in care of the Employer or the Committee, or (if so directed by the
Committee) by crediting the account of such person or by transferring funds to
such person's account by bank wire or transfer.
10.7. Indemnification: The Employer shall indemnify and save
harmless the Trustee from and against any and all claims, losses, damages,
expenses (including reasonable attorney fees) and liability to which the Trustee
may be subject by reason of any act done or omitted to be done, except where the
same is due to the negligence or willful misconduct of the Trustee.
The Employer recognizes that a burden of litigation may be imposed upon
the Trustee as a result of some transaction for which it has no responsibility
or which it has no control under this Trust Agreement. Therefore, the Employer
agrees to indemnify and hold harmless and, if requested, defend the Trustee (and
any employee of the Trustee) from any expenses (including counsel fees,
liabilities, claims, damages, actions, suits or other charges) incurred by the
Trustee (or its employees) in defending against any such litigation provided
that the Trustee uses the same counsel as the Employer (or counsel approved by
the Employer) and the Trustee is not adverse to the Employer.
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ARTICLE XI. DURATION OF THE TRUST - RIGHT TO TERMINATE
11.1 Duration and Termination: This Trust Agreement shall continue
for such time as may be necessary to accomplish the purpose for which it was
created but, subject to Title IV of ERISA, may be terminated at any time by
Flagstar by action of its Board of Directors. Notice of such termination shall
be given to the Trustee by an instrument in writing executed by Flagstar and
acknowledged in the same form as this Trust Agreement, together with a certified
copy of the resolutions of the Board of Directors of Flagstar authorizing such
termination. Flagstar shall send a copy of such notice to each member of the
Committee.
11.2 Liquidation Upon Termination: Upon termination of the Trust
Agreement, provided that the Trustee has not received instructions to the
contrary from the Committee, the Trustee shall liquidate the Trust Agreement
and, after paying the reasonable expenses of the Trust Agreement, including
expenses involved in the termination, distribute the balance thereof according
to written directions from the Committee.
ARTICLE XII. RIGHT TO AMEND
The Flagstar Board of Directors may at any time alter, modify or amend,
in whole or in part, any or all of the provisions of this Trust Agreement,
provided that no such alteration, modification or amendment may affect the
rights, duties or responsibilities of the Trustee without its consent and,
provided, further, that no such alteration, modification or amendment may permit
any part of the corpus or income of the Trust Fund to be used for or diverted
for purposes other than for the exclusive benefit of the Participants under the
Plan and their Beneficiaries at any time prior to the satisfaction of all
liabilities under the Plan with respect to such persons.
ARTICLE XIII. MISCELLANEOUS
13.1 Merger or Consolidation of the Trustee: Any corporation into
which the Trustee may be merged, or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Trustee may
be a party, or any corporation succeeding to the business of the Trustee or to
which substantially all of the assets of the Trustee may be transferred, shall
be the successor of the Trustee hereunder without the execution or filing of any
paper and without any further action on the part of the parties hereto, with
like effect as if such successor Trustee had originally been named Trustee
herein.
13.2 Necessary Parties: In any application to the courts for an
interpretation of this Trust Agreement or for an accounting by the Trustee
hereunder, only the Trustee and the Employer shall be necessary parties, and no
Participant or Former Participant or other person shall be entitled to any
notice or service of process. Any final judgment entered in such an action or
proceeding shall be conclusive upon all persons claiming under the Plan or this
Trust Agreement.
13.3 Participants Bound by Accountings: No Participant under the
Plan shall have any right to compel an accounting, judicial or otherwise, by the
Trustee, and all such persons shall be bound by all accountings by the Trustee
to the Employer and the Committee as herein provided.
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13.4 Governing Law: This Trust Agreement and the Trust hereby
created shall be deemed to be a Minnesota Trust and shall in all respects be
construed and regulated by the laws of the State of Minnesota, except where such
laws are superseded by the Code or ERISA.
13.5 Acceptance of Trust: The Trustee hereby accepts this Trust and
agrees to hold, subject to all the terms and conditions of this Trust, all the
property now or hereafter constituting the Trust Fund.
13.6 Execution in Counterparts: This Trust Agreement has been
executed in counterparts, each of which shall be deemed to be the original even
though the others are not produced.
13.7 ERISA Bonding: The Employer hereby warrants and represents
that the Employer has obtained a fidelity bond with respect to Employer's own
employees that complies with the bonding requirements of Section 412 of ERISA.
Trustee and any other Investment Manager or record keeper handling Plan assets
shall be responsible for complying with ERISA's bonding requirements with
respect to their employees.
[EXECUTIONS APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Employer and Trustee have caused this Trust
Agreement to be executed on the 28th day of June, 1996.
FLAGSTAR CORPORATION
[CORPORATE SEAL]
By: /s/ Stephen Wood
-----------------------------------------
Its: Sr. VP
----------------------------------------
ATTEST:
/s/ J.S. Melton
- --------------------------------
Asst. Secretary
TRUSTEE:
AMERICAN EXPRESS TRUST COMPANY
[CORPORATE SEAL]
By: /s/ Illegible Signature
-----------------------------------------
Its: Vice President
----------------------------------------
ATTEST:
- --------------------------------
Secretary or Assistant Secretary
14
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Advantica Restaurant Group, Inc. (formerly Flagstar Companies, Inc.) on Form S-8
of our report dated February 20, 1998, appearing in the Annual Report on Form
10-K of Advantica Restaurant Group, Inc., for the year ended December 31, 1997.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
June 30, 1998
