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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-23192
CELADON GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3361050
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9503 East 33rd Street
One Celadon Drive
Indianapolis, IN 46236-4207
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (317) 972-7000
Indicate by check mark whether the Registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
The number of shares outstanding of the Common Stock ($.033 par value) of the
Registrant as of the close of business on February 7, 1997 was 7,622,580.
<PAGE>
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CELADON GROUP, INC.
Index to
December 31, 1996 Form 10-Q
<TABLE>
<S> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets at December 31, 1996
and June 30, 1996......................................................................................3
Condensed consolidated statements of operations - For the three and six months
ended December 31, 1996 and 1995.......................................................................4
Condensed consolidated statements of cash flows - For the six months ended
December 31, 1996 and 1995.............................................................................5
Notes to condensed consolidated financial statements ..................................................6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................................................13
Part II. Other Information
Item 5. Other..........................................................................................17
Item 6. Exhibits and Reports on Form 8-K...............................................................17
</TABLE>
2
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<PAGE>
Part I - Financial Information
CELADON GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts)
(Unaudited)
December 31, June 30,
<TABLE>
<CAPTION>
1996 1996
---- ----
A S S E T S
<S> <C> <C>
Current assets:
Cash and cash equivalents................................................................... $ 4,473 $ 5,246
Trade receivables, net of allowance......................................................... 29,749 33,642
Accounts receivable - other................................................................. 2,714 4,338
Prepaid expenses and other current assets................................................... 3,694 3,247
Tires in service ........................................................................... 3,352 2,814
Income tax recoverable...................................................................... 5,626 3,926
Assets held for resale...................................................................... 34 2,548
Deferred income tax assets ................................................................. 1,496 3,404
--------- --------
Total current assets ................................................ 51,138 59,165
--------- --------
Property and equipment, at cost ................................................................. 114,202 95,003
Less accumulated depreciation and amortization.............................................. 25,547 22,715
--------- --------
Net property and equipment........................................................ 88,655 72,288
--------- --------
Deposits......................................................................................... 524 809
Tires in service ................................................................................ 2,178 2,234
Advances to unconsolidated affiliate............................................................. 1,933 ---
Intangible assets................................................................................ 812 875
Goodwill, net of accumulated amortization........................................................ 4,914 4,980
Other assets..................................................................................... 1,521 1,570
--------- --------
Total assets................................................................................ $151,675 $141,921
========= ========
L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
Current liabilities:
Accounts payable............................................................................ 7,252 8,707
Accrued expenses ........................................................................... 17,782 20,122
Bank borrowings and current maturities of long-term debt.................................... 3,860 4,029
Notes payable............................................................................... --- 1,200
Current maturities of capital lease obligations............................................. 10,491 7,356
Income taxes payable ....................................................................... 718 527
Current maturities of ESOP loan............................................................. --- 185
------- -------
Total current liabilities............................................................. 40,103 42,126
------- -------
Long-term debt, net of current maturities ....................................................... 10,920 26,552
Capital lease obligations, net of current maturities............................................. 48,714 23,473
Deferred income tax liabilities ................................................................. 8,649 7,796
-------- -------
Total liabilities........................................................................... 108,386 99,947
-------- -------
Minority interest................................................................................ 12 12
Commitments and contingencies
Stockholders' equity:
Common stock, $.033 par value, authorized 12,000,000 shares; issued and
outstanding 7,750,580 shares at December 31, 1996 and June 30, 1996 256 256
Additional paid-in capital.................................................................. 56,281 56,281
Retained earnings .......................................................................... (11,865) (14,035)
Equity adjustment for foreign currency translation.......................................... (435) (355)
--------- ---------
44,237 42,147
Treasury stock, at cost, 128,000 shares and zero shares at December 31, 1996
and June 30, 1996, respectively (960) ---
Less:
Debt guarantee for ESOP.......................................................................... --- (185)
-------- ---------
Total stockholders' equity.................................................................. 43,277 41,962
-------- ---------
Total liabilities and stockholders' equity.................................................. $151,675 $141,921
======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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<PAGE>
CELADON GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
December 31, December 31,
-------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating revenue $ 46,743 $ 40,694 $ 92,935 $ 79,514
----------- ----------- ----------- -----------
Operating expenses:
Salaries, wages and employee benefits 16,339 15,237 33,473 29,610
Fuel 7,581 6,354 15,063 12,195
Operating costs and supplies 3,660 2,896 6,548 5,712
Insurance and claims 969 1,265 2,625 2,359
Depreciation and amortization 2,592 1,943 4,880 3,630
Rent and purchased transportation 8,487 7,564 17,238 15,140
Professional and consulting fees 389 267 600 744
Communications and utilities 745 611 1,490 1,262
Permits, licenses and taxes 1,018 967 2,076 1,958
Employee stock ownership plan contribution -- 25 34 50
(Gain) on sale of revenue equipment -- (359) -- (905)
Selling expenses 653 634 1,475 1,470
General and administrative 845 644 1,502 1,155
----------- ----------- ----------- -----------
Total operating expenses 43,278 38,048 87,004 74,380
----------- ----------- ----------- -----------
Operating income 3,465 2,646 5,931 5,134
Other (income) expense:
Interest expense, net 1,378 951 2,358 1,811
Other (income) expense net (37) 22 (46) 35
----------- ----------- ----------- -----------
Income from continuing operations before income
taxes 2,124 1,673 3,619 3,288
Provision for income taxes 850 702 1,448 1,751
----------- ----------- ----------- -----------
Income from continuing operations 1,274 971 2,171 1,537
Discontinued operations :
Loss from operations of freight forwarding
division (net of tax) -- (950) -- (1,137)
Loss on disposal of freight-forwarding division
(net of tax) -- (8,214) -- (8,214)
Income from operations of logistics division (net
of tax) -- 210 -- 447
----------- ----------- ----------- -----------
Income from discontinued operations (net of tax) -- (8,954) -- (8,904)
----------- ----------- ----------- -----------
Net income $ 1,274 $ (7,983) $ 2,171 $ (7,367)
=========== =========== =========== ===========
Earnings per Common Share:
Continuing operations $ 0.17 $ 0.12 $ 0.28 $ 0.19
Discontinued operations -- (1.12) -- (1.12)
----------- ----------- ----------- -----------
Net income loss per share $ 0.17 $ (1.00) $ 0.28 (0.93)
=========== =========== =========== ===========
Weighted average number of common shares and
equivalents outstanding 7,651,038 7,950,580 7,648,432 7,949,699
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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CELADON GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
( Dollar amounts in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
December 31,
--------------------
1996 1995
----- ----
<S> <C> <C>
Continuing Operations:
Cash flows from operating activities:
Net income from continuing operations ................................ $ 2,171 $ 1,537
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization ......................................... 4,880 3,630
Provision for deferred income taxes ................................ 850 1,746
Provision for doubtful accounts .................................... 131 85
Net (gain) on sale of property and equipment ....................... -- (905)
Changes in assets and liabilities:
(Increase) in trade receivables ................................. (1,967) (4,701)
(Increase) decrease in accounts receivable -- other ............. (497) 709
Decrease (increase) in income tax recoverable ................... 503 (50)
(Increase) in tires in service .................................. (482) (971)
(Increase) decrease in prepaid expenses and other current assets (593) 851
Decrease in other assets ........................................ 1,217 130
Increase in accounts payable and accrued expenses ............... 1,754 5,695
Increase (decrease) increase in income taxes payable ............ 301 (492)
-------- --------
Net cash provided by operating activities .......................... 8,268 7,264
-------- --------
Cash flows from investing activities:
Purchase of property and equipment .................................... (862) (5,823)
Proceeds on sale of property and equipment ............................ 13,798 1,608
Decrease in deposits .................................................. 285 247
-------- --------
Net cash provided by (used for) investing activities .............. 13,221 (3,968)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock ................................ -- 136
Purchase of common stock held in treasury ............................. (235) --
Proceeds from bank borrowings and debt ................................ 132 1,874
Payments of bank borrowings and debt .................................. (17,133) (50)
Principal payments under capital lease obligations .................... (5,649) (4,120)
-------- --------
Net cash (used for) financing activities ........................... (22,885) (2,160)
-------- --------
Net cash (used for) provided by continuing operations .............. (1,396) 1,136
-------- --------
Discontinued Operations:
Income (loss) from operations, net of income taxes .................... -- (690)
Estimated loss on disposal, net of income taxes ....................... -- (8,214)
Change in net operating assets ........................................ 623 (676)
-------- --------
Operating activities .................................................. 623 (9,580)
Investing activities .................................................. -- 4,081
Financing activities .................................................. -- 3,912
-------- --------
Net cash provided by (used for) discontinued operations ............ 623 (1,587)
-------- --------
Increase (decrease) in cash and cash equivalents ...................... (773) (451)
Cash and cash equivalents at beginning of year ........................ 5,246 1,809
-------- --------
Cash and cash equivalents at end of period ............................ $ 4,473 $ 1,358
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial reporting and the general instructions to Form 10-Q of
Regulation S-X. Accordingly, they do not include certain information and note
disclosures required by generally accepted accounting principles for annual
financial reporting and should be read in conjunction with the consolidated
financial statements and notes thereto of Celadon Group, Inc. (the "Company")
for the years ended June 30, 1996, 1995 and 1994.
The unaudited interim financial statements reflect all adjustments (all
of a normal recurring nature) which management considers necessary for a fair
presentation of the financial condition and results of operations for these
periods. The results of operations for the interim period are not necessarily
indicative of the results that may be reported for the full year.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
The condensed consolidated balance sheet at June 30, 1996 was derived
from the audited consolidated balance sheet at that date.
(2) Segment and Geographical Information; Significant Customer
The Company's continuing operations consist of two divisions: truckload
and flatbed, and the Company generates revenue from its operations in the United
States and Mexico. Revenue from Chrysler accounts for a significant amount of
the Company's revenue. During December, 1995, the Company's Board of Directors
adopted a plan to discontinue its freight forwarding business which was
previously reported as a separate business segment. In the fourth quarter of
fiscal year 1996, the Company also discontinued the operations of the logistics
operations which was previously reported as a separate business segment. The
Company has presented the results of these segments as discontinued operations,
as described in note 5.
6
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CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
December 31, 1996
( Dollar amounts in thousands)
(Unaudited)
Information as to the Company's continuing operations by division is summarized
below (in thousands):
<TABLE>
<CAPTION>
For the three months ended For the six months ended
December 31, December 31,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating revenue:
Truckload .................................. $ 41,069 $ 36,482 $ 82,274 $ 70,626
Flatbed .................................... 5,674 4,212 10,661 8,888
--------- --------- --------- ---------
Total .................................. $ 46,743 $ 40,694 $ 92,935 $ 79,514
========= ========= ========= =========
Operating income:
Truckload .................................. $ 3,736 $ 3,177 $ 6,508 $ 6,457
Flatbed .................................... 324 203 515 340
--------- --------- --------- ---------
Total from operating divisions ......... 4,060 3,380 7,023 6,797
Corporate expense .......................... (595) (734) (1,092) (1,663)
Interest expense ........................... (1,378) (951) (2,358) (1,811)
Other income (expense) ..................... 37 (22) 46 (35)
--------- --------- --------- ---------
Income from continuing operations
before incomes taxes ................... $ 2,124 $ 1,673 $ 3,619 $ 3,288
========= ========= ========= =========
Capital expenditures (including capital leases):
Truckload .................................. $ 13,287 $ 9,320 $ 28,388 $ 19,740
Flatbed .................................... 19 18 32 18
Corporate .................................. 4 3 11 7
--------- --------- --------- ---------
Total .................................. $ 13,310 $ 9,341 $ 28,431 $ 19,765
========= ========= ========= =========
Depreciation and amortization:
Truckload .................................. $ 2,514 $ 1,879 $ 4,723 $ 3,502
Flatbed .................................... 59 60 119 119
Corporate .................................. 19 4 38 9
--------- --------- --------- ---------
Total .................................. $ 2,592 $ 1,943 $ 4,880 $ 3,630
========= ========= ========= =========
Total assets:
Truckload ............................................................ $ 125,684 $ 104,655
Flatbed .............................................................. 6,647 6,739
--------- ---------
Total from operating divisions ................................... 132,331 111,394
Corporate ............................................................ 8,327 2,570
Discontinued operations .............................................. 11,017 48,919
--------- ---------
Total ............................................................ $ 151,675 $ 162,883
========= =========
</TABLE>
7
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CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS -- (CONTINUED)
(Dollar amounts in thousands)
(Unaudited)
Information as to the Company's continuing operations by geographic area is
summarized below (in thousands):
<TABLE>
<CAPTION>
For the three months ended For the six months ended
December 31, December 31,
1996 1995 1996 1995
--------- --------- --------- ------
<S> <C> <C> <C> <C>
Operating revenue:
United States ............................................... $ 45,453 $ 39,592 $ 90,569 $ 77,329
Mexico (I) .................................................. 1,290 1,102 2,366 2,185
--------- --------- --------- ---------
Total ..................................................... $ 46,743 $ 40,694 $ 92,935 $ 79,514
========= ========= ========= =========
Income (loss) before income taxes:
United States ............................................... $ 2,147 $ 1,737 $ 3,654 $ 3,134
Mexico (I) .................................................. (23) (64) (35) 154
--------- --------- --------- ---------
Total ..................................................... $ 2,124 $ 1,673 $ 3,619 $ 3,288
========= ========= ========= =========
Total assets:
Unites States ......................................................................... $ 138,310 $ 112,446
Mexico (I) ............................................................................ 2,348 1,518
--------- ---------
Total ............................................................................... $ 140,658 $ 113,964
========= =========
</TABLE>
(I) Relates to the Company's trucking operations in Mexico.
Significant Customer:
Revenue from Chrysler accounted for approximately 42% and 49% of the
Company's revenue for the three months ended December 31, 1996 and 1995,
respectively. The Company transports Chrysler after-market replacement parts
and accessories within the United States and Chrysler original equipment
automotive parts primarily between the United States and the Mexican border,
which accounted for 29% and 71%, respectively, of the Company's revenue from
Chrysler for the three months ended December 31, 1996 and 32% and 68%,
respectively, for the three months ended December 31, 1995. Chrysler business is
covered by two agreements, one of which covers the United States-Mexico business
and the other of which covers domestic business. The international contract was
extended for three years and now expires on December 31, 1999. The contract
applicable to domestic movements is being renegotiated. No other customer
accounted for more than 5% of the Company's revenue during any of its three most
recent fiscal years.
8
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CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
December 31, 1996
(Unaudited)
(3) Income Taxes
The Company's effective tax rate differs from the statutory federal
tax rate of 35% due to state income taxes and certain expenses which are not
deductible for income tax purposes. The effective tax rates for continuing
operations for the six months ending December 31, 1996 and 1995 were 40% and
53%, respectively. The 1995 tax provision includes additional tax expense
related to the non-deductible portion of expense allowances paid to drivers
which pay practice was discontinued by the Company in September, 1995.
(4) Hedging Activities, Commitments and Contingencies
The Company, from time-to-time, enters into arrangements to protect
against fluctuations in the price of the fuel used by its trucks. As of December
31, 1996, the Company had contracts to purchase for future delivery
approximately 35% of its fuel requirements through February, 1997. Contracts for
fuel delivery in the period March through July 1997 were canceled in the
September 1996 quarter and the Company realized a cancellation gain of $85
thousand. This gain was reflected as a reduction in fuel expense in the quarter.
Additionally, the Company periodically acquires exchange-traded petroleum
futures contracts and various commodity collar transactions. At December 31,
1996, the market value of outstanding transactions which extended through May of
1997 approximated the $35 thousand carrying cost and covered approximately 40%
of the Company's fuel requirements. Gains and losses on transactions, not
designated as hedges, are recognized when realized and in the December 1996
quarter resulted in a loss of $15 thousand. The net gain for the six months
ended December 31, 1996 was $68 thousand. The loss and gain were reflected as
adjustments to fuel expense in the respective periods. The current and future
delivery prices of fuel are monitored closely and transaction positions adjusted
accordingly. Total commitments are also monitored to ensure they will not exceed
actual fuel requirements in any period.
Standby letters of credit, not reflected in the accompanying condensed
consolidated financial statements, aggregated approximately $2.1 million at
December 31, 1996.
The Company has outstanding commitments to purchase approximately $10
million of revenue equipment at December 31, 1996.
The Company has been assessed approximately $750 thousand by the State
of Texas for Interstate Motor Carrier Sales and Use Tax for the period from
April 1988 through June 1992. The Company disagrees with the State of Texas over
the method used by the state in computing such taxes and intends to vigorously
pursue all of its available remedies. On October 30, 1996, the Company made a
payment of $1.1 million, under protest, which includes interest to the date of
payment and enables the Company to pursue resolution of the matter with the
State of Texas Attorney General. The Company has accrued an amount that
management estimates is due based upon methods they believe are appropriate. The
Company believes that the ultimate resolution of this matter will not have a
material adverse effect on its consolidated financial position.
There are various claims, lawsuits and pending actions against the
Company and its subsidiaries incident to the operation of its business. The
Company believes many of these proceedings are covered in whole or in part by
insurance and that none of these matters will have a material adverse effect on
its financial position or results of operations.
9
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(5) Discontinued Operations
During December, 1995 the Board of Directors of Celadon Group, Inc.
authorized the disposal of the Company's freight forwarding business. In
connection with the Company's plan of disposition effective February 1, 1996,
the U.S. customer list together with certain assets and liabilities of the
Company's U.S. freight forwarding business, operating under the name
Celadon/Jacky Maeder Company, were sold to the Harper Group, Inc.'s primary
operating subsidiary, Circle International, Inc. Pursuant to the terms of the
transaction, the total purchase price for these assets and liabilities will be
paid in cash and will equal the net revenue derived from such customer list
during the twelve-month period following February 1, 1996. The Harper Group,
Inc. made an initial down payment of $9.5 million at closing with the balance of
the purchase price to be paid in quarterly installments as earned by the Harper
Group, Inc. It is now estimated that there will be no additional payments by the
Harper Group, Inc., to the Company. The remaining assets and liabilities of this
segment are in the process of liquidation.
In the fourth quarter of fiscal 1996, the Company disposed of the two
primary operating subsidiaries of the logistics segment. At that time, the
Company determined that it would discontinue offering logistics services as a
separate product line. In accordance with the terms of sale of the South
American warehousing, logistics and distribution business for $3.2 million, the
Company received 100,000 shares of the Company's common stock valued at $725,000
on July 3, 1996, and payment on October 3, 1996, of the $2.5 million promissory
note issued by the purchaser.
In the second quarter of fiscal 1997, there was a dispute between the
Company and its partner in the discontinued freight forwarding operation
concerning final liquidation of the partnership. The dispute was resolved by the
Company acquiring, in February, 1997, the other partner's 30% interest in the
remaining assets and liabilities of the partnership.
On December 18, 1996, the Company sold certain assets consisting
primarily of customer lists of its wholly owned freight forwarding operations
conducted in the New York area to NG Enterprises Inc (NGE), a company controlled
by Norman G. Grief the former President and Chief Executive Officer of Randy
International, Inc. In connection with the sale, the Company acquired a 49%
interest in NGE, agreed to provide a five year interest bearing revolving credit
loan up to a $1.9 million secured by the assets of NGE and agreed to an option
exercisable by NGE to acquire the Company's 49% interest in NGE for $300,000
initially, which amount will increase by $30 thousand annually. The Company will
account for its investment in NGE on the cost basis in the future. No gain or
loss was recognized on the sale.
10
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CELADON GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
December 31, 1996
(Dollar amounts in thousands)
(Unaudited)
At December 31, 1996 and June 30, 1996, assets and liabilities included in
the Company's consolidated balance sheet related to the discontinued operations
are as follows (in thousands):
<TABLE>
<CAPTION>
Freight Forwarding: December 31, June 30,
1996 1996
---- ----
<S> <C> <C>
Assets:
Cash ............................................. $ 3,716 $ 3,142
Accounts receivable (net of allowance) ........... 2,933 8,436
Accounts receivable other ........................ 1,069 2,558
Assets held for resale ........................... 34 69
Deferred income tax receivable ................... 2,663 2,369
Prepaid expenses and other current assets ........ 78 224
-------- --------
Total ....................................... $ 10,493 $ 16,798
======== ========
Liabilities and Equity:
Accounts payable ................................. $ 1,840 $ 4,805
Accrued expenses ................................. 3,693 6,146
Income taxes payable ............................. -- 105
Deferred income tax assets ....................... (11) (11)
Equity adjustment for foreign currency translation 10 25
-------- --------
Total ....................................... $ 5,532 $ 11,070
======== ========
Logistics:
Assets:
Cash ............................................. $ 82 $ 33
Accounts receivable (net of allowances) .......... 77 303
Accounts receivable other ........................ -- 632
Assets held for sale ............................. -- 2,479(1)
Income tax - receivable .......................... 329 329
Deferred income tax receivable ................... 36 36
-------- --------
Total ........................................ $ 524 $ 3,812
======== ========
Liabilities and Equity:
Accrued expenses ................................. $ 80 $ 214
Income taxes payable ............................. 272 276
Deferred income taxes payable .................... 210 206
Equity adjustment for foreign currency translation -- (2)
-------- --------
Total ....................................... $ 562 $ 694
======== ========
</TABLE>
- ---------------------
(1) Represents the net investment in Celsur Inc., the stock of which was sold on
July 3, 1996.
11
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<PAGE>
The disposal of the freight forwarding and logistics segments has been
accounted for as discontinued operations in accordance with Accounting
Principles Board Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions." As such, prior
period financial statements have been restated to reflect the discontinuation of
these lines of business.
(6) Common Stock
On October 18, 1996, the Company's Board of Directors ("the Board")
authorized the sale of up to 250,000 shares of the Company's Common Stock to the
Celadon Group, Inc. Employee Stock Purchase Plan, referred to informally by the
Company as the Celadon Hallmark Investment Plan ("CHIP"). The Common Stock, par
value $0.33 per share, may be treasury shares or newly issued shares, at a price
equal to 85% of the fair market value of the shares as of the day of purchase.
On September 24, 1996, the Board extended to November 1, 1997 the
expiration date for the stock purchase warrant originally issued to
International Bancshares Corporation in August 1990 pursuant to the Employee
Stock Ownership Plan loan agreement.
(7) Supplemental Cash Flow Information
During the three months ended December 31, 1996 and 1995, capital
lease obligations in the amount of $19.3 million and $6.4 million, respectively
and for the six months ended December 31, 1996 and 1995, capital lease
obligations in the amount of $34.0 million and $14.8 million, respectively were
incurred in connection with the purchase of, or option to purchase revenue
equipment (including tires in service).
12
<PAGE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Three months ended December 31, 1996 compared with the three months ended
December 31, 1995
Revenue. Consolidated revenue from continuing operations of the Company
increased by $6.0 million, or 15%, to $46.7 million for the three months ended
December 31, 1996 (the "1996 period") from $40.7 million for the three months
ended December 31, 1995 (the "1995 period"). Revenue from the truckload division
increased by $4.6 million, or 13%, to $41.1 million in the 1996 period from
$36.5 million in the 1995 period, as a result of a volume increase primarily in
the demand for the Company's transportation services between the United States
and Mexico and an increase in net rate per mile. The Company's flatbed division
acquired in June, 1995 represented $1.5 million of the increase in consolidated
revenues. The number of tractors operated by the Company's U.S. truckload
operation in over-the-road service rose to 1,200 at December 31, 1996 compared
to 1,134 at December 31, 1995 in both cases excluding 49 tractors operated by
the Company's Mexican affiliate in both periods.
Operating income. The truckload division operating income increased by
$0.5 million, or 16%, to $3.7 million in the 1996 period from $3.2 million in
the 1995 period. The operating ratio for the truckload division, which is the
percentage of operating expenses to its revenue, improved to 90.9% in the 1996
period from 91.3% in the 1995 period. The 1995 operating ratio was reduced by
one percentage point due to a gain on sale of revenue equipment. The improvement
in operating ratio was principally attributable to the increase in net rate per
mile noted above partially offset by cost increases. Average fuel cost per
gallon increased by $0.12 in the 1996 period compared with the 1995 period.
This cost increase includes realized losses of $15 thousand attributable to the
Company's fuel price management program. The Company's flatbed division
operating ratio, which is typically higher than the Company's truckload division
since its revenue is generated by owner-operators which are generally more
expensive as a percentage of revenue than the use of Company owned equipment,
improved to 94.3% in the 1996 period from 95.2% in the 1995 period. This
improvement was primarily due to the flatbed division's overhead and fixed
operating expenses not increasing as rapidly as the revenue increase. Costs
associated with the rental of flatbed owner-operated equipment is classified as
rent expense in the consolidated statement of operations.
Corporate expenses decreased by $0.1 million to $0.6 million in the 1996
period from $0.7 million in the 1995 period primarily due to senior management
changes implemented at the end of the June 1996 quarter.
Interest expense. Interest expense increased by $0.4 million, or 40%, to
$1.4 million in the 1996 period from $1.0 million in the 1995 period, as a
result of higher average outstanding borrowings and the conversion in October,
1996 of 252 tractors from operating lease to capital lease.
Income taxes. The effective tax rates for the December 31, 1996 and 1995
periods were 40% and 42% respectively. The lower effective tax rate during the
1996 period is principally due to lower estimated state tax expense.
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Six months ended December 31, 1996 compared with the six months ended
December 31, 1995
Revenue. Consolidated revenue from continuing operations of the Company
increased by $13.4 million, or 17%, to $92.9 million for the six months ended
December 31, 1996 (the "1996 period") from $79.5 million for the six months
ended December 31, 1995 (the "1995 period"). Revenue from the truckload division
increased by $11.7 million, or 17%, to $82.3 million in the 1996 period from
$70.0 million in the 1995 period, primarily as a result of a volume increase in
the demand for the Company's transportation services between the United States
and Mexico, as well as an increase in rate per mile. Revenue from the flatbed
division increased by $1.8 million, or 20% to $10.7 million in the 1996 period
from $8.9 million in the 1995 period, primarily as a result of increasing the
network of owner- operated tractors to 260 at December 31, 1996 from 200 at
December 31, 1995. The number of tractors operated by the Company's U.S.
truckload operation in over-the- road service rose to 1,200 at December 31, 1996
compared to 1,134 at December 31, 1995 in both cases excluding 49 tractors
operated by the Company's Mexican affiliate in both periods.
Operating income. The truckload division operating income was $6.5
million in both the 1996 and 1995 periods. The operating ratio for the truckload
division, which is the percentage of operating expenses to its revenue,
increased to 92.1% in the 1996 period from 90.9% in the 1995 period. This
increase was principally attributable to a one time gain of approximately $0.9
million on the sale of revenue equipment in the 1995 period and losses
experienced in the Company's Mexican affiliate in the 1996 period. Average fuel
cost per gallon increased by $0.09 in the 1996 period compared with the 1995
period. This cost increase is net of realized gains of $153 thousand
attributable to the Company's fuel price management program or $0.012 per
gallon. Other cost increases were offset by the revenue rate increases noted
above. The Company's flatbed division operating ratio, which is typically
higher than the Company's truckload division since its revenue is generated by
owner-operators which are generally more expensive as a percentage of revenue
than the use of Company owned equipment, improved to 94.3% in the 1996 period
from 95.2% in the 1995 period. This improvement was primarily due to the flatbed
division's overhead and fixed operating expenses not increasing as rapidly as
the revenue increase. Costs associated with the rental of flatbed
owner-operated equipment is classified as rent expense in the consolidated
statement of operations.
Corporate expenses decreased by $0.6 million to $1.1 million in the 1996
period from $1.7 million in the 1995 period primarily due to senior management
changes implemented at the end of the June 1996 quarter and decreased
professional fees.
Interest expense. Interest expense increased by $0.6 million, or 25%, to
$2.4 million in the 1996 period from $1.8 million in the 1995 period, as a
result of higher average outstanding borrowings and the conversion in October,
1996 of 252 tractors from operating lease to capital lease.
Income taxes. The effective tax rates for the December 31, 1996 and 1995
periods were 40% and 53% respectively. The higher effective tax rate during the
1995 period is principally due to additional tax expense related to the
non-deductible portion of expense allowances paid to drivers, which pay practice
was discontinued in September, 1995.
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Liquidity and Capital Resources
The Company's primary capital requirements in fiscal 1997 have been
funding the acquisition of revenue equipment for the trucking division. These
requirements have been met primarily by equipment leasing arrangements. At
December 31, 1996, the Company had a credit facility of $35.0 million from its
banks, of which $13.7 million was utilized as outstanding borrowings, and $2.1
million was utilized for standby letters of credit. The average balance
outstanding during the six months was $20.9 million and the highest balance
outstanding was $32.4 million.
The credit facilities bear interest at either a margin over LIBOR or the
bank's prime rate, at the option of the Company. The weighted average interest
rate charged on outstanding borrowings was 7.70% at December 31, 1996. The
standby letter of credit portion of the Company's facility collaterizes the
Company's obligations under insurance policies for liability coverage relating
to its trucking operations.
The Company's flatbed operation has routinely used a third party to
process credit requests and cash collections on accounts receivable. In the
quarter, the Company sold to the third party $800,000 of accounts receivable
with limited recourse. The Company may use this financing vehicle from
time-to-time in the future.
The trucking division has financed some of its capital requirements by
obtaining lease financing and notes payable on revenue equipment. At December
31, 1996, the Company had an aggregate of $59.2 million in such financing at
interest rates ranging from 6.1% to 11.5%, maturing at various dates through
2003. Of this amount, $10.5 million is due within one year.
During the quarter, the Company declared its option to purchase certain
revenue equipment previously financed with operating leases at the end of the
lease term. As a result of this conversion, fixed assets and capital lease
obligations increased $10.4 million. The Company also completed a sale leaseback
of certain revenue equipment previously owned. The proceeds from the sale and
the increase to capital lease obligations was $6.6 million.
As of December 31, 1996, the Company had on order revenue equipment
representing an aggregate capital commitment of $10 million. All of the new
equipment has been or will be financed using a combination of operating and
capital leases and the Company's credit facility.
The Company's accounts receivable balance relating to continuing
operations at December 31, 1996, increased $1.8 million to $26.7 million from
$24.9 million at June 30, 1996. The net increase represented a $2.2 million
increase in the truckload division and a $0.4 million decrease in the flatbed
division. The 10% increase in accounts receivable for the truckload division
reflects the 13% increase in revenues for fiscal 1997.
Effective September 19, 1996, the Company completed a sale/leaseback
transaction relating to its new headquarters facility in Indianapolis, Indiana.
The proceeds from the transaction were used to reduce by approximately $6
million the borrowings outstanding under its bank credit facility.
The Company purchases fuel contracts from time-to-time for a portion of
its projected fuel needs. At December 31, 1996, the Company had contracts to
purchase for future delivery approximately 35% of its fuel requirements through
February 1997. The Company's fuel price management program has not significantly
impacted the Company's recent operating results and has not adversely impacted
the Company's liquidity.
On September 24, 1996, the Company's Board of Directors extended to
November 1, 1997, the expiration date for the stock purchase warrant originally
issued to International Bancshares Corporation in August 1990 pursuant to the
Employee Stock Ownership Plan loan agreement.
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Management believes that there are presently adequate sources of secured
equipment financing together with its existing credit facilities and cash flow
from operations to provide sufficient funds to meet the Company's anticipated
working capital requirements and fund the acquisition of tractors and trailers
presently on order. Additional growth in the tractor and trailer fleet beyond
the Company's existing orders will require additional sources of financing.
Seasonality
To date, the Company's revenues have not shown any significant seasonal
pattern. However, because the Company's trucking subsidiary's primary traffic
lane is between the Midwest United States and Mexico, a severe winter generally
may have an unfavorable impact upon the Company's results of operations.
Inflation
Many of the Company's operating expenses are sensitive to the effects of
inflation, which could result in higher operating costs. The effects of
inflation on the Company's businesses during fiscal 1997 and 1996 generally were
not significant.
16
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Part II - Other Information
Item 5. Other
In January 1997, the Company filed a Form 10Q/A for the period
ending September 30, 1996. The filing supplies further information pertaining to
various exhibits.
Item 6. Exhibits and Reports on Form 8K
(a) Exhibits
Exhibit 10.45 - 401(k) Profit Sharing Plan and Adoption Agreement
of the Company
Exhibit 11 - Computation of per share earnings
Exhibit 27 - Financial Data Schedule
(b) Form 8-K Reports on Form 8-K were listed in Form 10-K filed
September 26, 1996.
17
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Celadon Group, Inc.
(Registrant)
/s/ Stephen Russell
----------------------------------------
Stephen Russell, Chief Executive Officer
/s/ Don S. Snyder
----------------------------------------
Don S. Snyder, Executive Vice President
Chief Financial Officer
Date: February 12, 1997
18
STATEMENT OF DIFFERENCES
The service mark symbol shall be expressed as .........'sm'
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Exhibit 10.45
The CORPORATEplan for Retirement'sm'
PROFIT SHARING / 401(k) PLAN
ARTICLE 1......................................................................6
ADOPTION AGREEMENT
ARTICLE 2......................................................................6
DEFINITIONS
2.01 - Definitions
ARTICLE 3.....................................................................14
PARTICIPATION
3.01 - Date of Participation
3.02 - Resumption of Participation Following Reemployment
3.03 - Cessation or Resumption of Participation Following a Change in Status
3.04 - Participation by Owner-Employee; Controlled Businesses
3.05 - Omission of Eligible Employee
ARTICLE 4.....................................................................15
CONTRIBUTIONS
4.01 - Deferral Contributions
4.02 - Additional Limit on Deferral Contributions
4.03 - Matching Contributions
4.04 - Limit on Matching Contributions and Employee Contributions
4.05 - Special Rules
4.06 - Fixed/Discretionary Employer Contributions
4.07 - Time of Making Employer Contributions
4.08 - Return of Employer Contributions
4.09 - Employee Contributions
4.10 - Rollover Contributions
4.11 - Deductible Voluntary Employee Contributions
4.12 - Additional Rules for Paired Plans
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ARTICLE 5.....................................................................28
PARTICIPANTS' ACCOUNTS
5.01 - Individual Accounts
5.02 - Valuation of Accounts
5.03 - Code Section 415 Limitations
ARTICLE 6
INVESTMENT OF CONTRIBUTIONS...................................................34
6.01 - Manner of Investment
6.02 - Investment Decisions
6.03 - Participant Directions to Trustee
ARTICLE 7.....................................................................35
RIGHT TO BENEFITS
7.01 - Normal or Early Retirement
7.02 - Late Retirement
7.03 - Disability Retirement
7.04 - Death
7.05 - Other Termination of Employment
7.06 - Separate Account
7.07 - Forfeitures
7.08 - Adjustment for Investment Experience
7.09 - Participant Loans
7.10 - In-Service/Hardship Withdrawals
7.11 - Prior Plan In-Service Distribution Rules
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ARTICLE 8.....................................................................43
DISTRIBUTION OF BENEFITS PAYABLE AFTER TERMINATION OF SERVICE
8.01 - Distribution of Benefits to Participants and Beneficiaries
8.02 - Annuity Distributions
8.03 - Joint and Survivor Annuities/Preretirement Survivor Annuities
8.04 - Installment Distributions
8.05 - Immediate Distributions
8.06 - Determination of Method of Distribution
8.07 - Notice to Trustee
8.08 - Time of Distribution
8.09 - Whereabouts of Participants and Beneficiaries
ARTICLE 9.....................................................................52
TOP-HEAVY PROVISIONS
9.01 - Application
9.02 - Definitions
9.03 - Minimum Contribution
9.04 - Adjustment to the Limitation on Contributions and Benefits
9.05 - Minimum Vesting
ARTICLE 10....................................................................56
AMENDMENT AND TERMINATION
10.01 - Amendment by Employer
10.02 - Amendment by Prototype Sponsor
10.03 - Amendments Affecting Vested and/or Accrued Benefits
10.04 - Retroactive Amendments
10.05 - Termination
10.06 - Distribution upon Termination of the Plan
10.07 - Merger or Consolidation of Plan; Transfer of Plan Assets
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ARTICLE 11....................................................................59
AMENDMENT AND CONTINUATION OF PREDECESSOR PLAN;
TRANSFER OF FUNDS TO OR FROM OTHER QUALIFIED PLANS
11.01 - Amendment and Continuation of Predecessor Plan
11.02 - Transfer of Funds from an Existing Plan
11.03 - Acceptance of Assets by Trustee
11.04 - Transfer of Assets from Trust
ARTICLE 12....................................................................61
MISCELLANEOUS
12.01 - Communication to Participants
12.02 - Limitation of Rights
12.03 - Non-alienability of Benefits and Qualified Domestic Relations Orders
12.04 - Facility of Payment
12.05 - Information Between Employer and Trustee
12.06 - Effect of Failure to Qualify Under Code
12.07 - Notices
12.08 - Governing Law
ARTICLE 13....................................................................63
PLAN ADMINISTRATION
13.01 - Powers and Responsibilities of the Administrator
13.02 - Nondiscriminatory Exercise of Authority
13.03 - Claims and Review Procedures
13.04 - Named Fiduciary
13.05 - Costs of Administration
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ARTICLE 14....................................................................65
TRUST AGREEMENT
14.01 - Acceptance of Trust Responsibilities
14.02 - Establishment of Trust Fund
14.03 - Exclusive Benefit
14.04 - Powers of Trustee
14.05 - Accounts
14.06 - Approving of Accounts
14.07 - Distribution from Trust Fund
14.08 - Transfer of Amounts from Qualified Plan
14.09 - Transfer of Asset from Trust
14.10 - Separate Trust or Fund for Existing Plan Assets
14.11 - Voting; Delivery of Information
14.12 - Compensation and Expense of Trustee
14.13 - Reliance by Trustee on Other Persons
14.14 - Indemnification by Employer
14.15 - Consultation by Trustee with Counsel
14.16 - Persons Dealing with the Trustee
14.17 - Resignation or Removal of Trustee
14.18 - Fiscal Year of the Trust
14.19 - Discharge of Duties by Fiduciaries
14.20 - Amendment
14.21 - Plan Termination
14.22 - Permitted Reversion of Funds to Employer
14.23 - Governing Law
AMENDMENT ONE.................................................................73
ADDENDUM......................................................................74
RE: RETROACTIVE EFFECTIVE DATES
5
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ARTICLE 1 ADOPTION AGREEMENT
ARTICLE 2 DEFINITIONS
2.01 DEFINITIONS:
(a) Wherever used herein, the following terms have the meanings set forth below,
unless a different meaning is clearly required by the context:
(1) 'Account' means an account established on the books of the Trust for
the purpose of recording contributions made on behalf of a Participant and
any income, expenses, gains or losses incurred thereon.
(2) 'Administrator' means the Employer adopting this Plan, or other person
designated by the Employer in Section 1.01(c).
(3) 'Adoption Agreement' means Article 1, under which the Employer
establishes and adopts, or amends, the Plan and Trust and designates the
optional provisions selected by the Employer, and the Trustee accepts its
responsibilities under Article 14. The provisions of the Adoption Agreement
shall be an integral part of the Plan.
(4) 'Annuity Starting Date' means the first day of the first period for
which an amount is payable as an annuity or in any other form.
(5) 'Beneficiary' means the person or persons entitled under Section 7.04
to receive benefits under the Plan upon the death of a Participant,
provided that for purposes of Section 7.04 such term shall be applied in
accordance with Section 401(a)(9) of the Code and the regulations
thereunder.
(6) 'Code' means the Internal Revenue Code of 1986, as amended from time to
time.
(7) 'Compensation' shall mean
(A) for purposes of Article 4 (Contributions), compensation as defined in
Section 5.03(e)(2) excluding any items elected by the Employer in Section
1.04(a), reimbursements or other expense allowances, fringe benefits (cash
and non-cash), moving expenses, deferred compensation and welfare benefits,
but including amounts that are not includable in the gross income of the
Participant under a salary reduction agreement by reason of the application
of Sections 125, 402(a)(8), 402(h), or 403(b) of the Code; and
(B) for purposes of Section 2.01(a)(16) (Highly Compensated Employees),
Section 5.03 (Code Section 415 Limitations), and Section 9.03 (Top-Heavy
Plan Minimum Contribution), compensation as defined in Section 5.03(e)(2).
Compensation shall generally be based on the amount actually paid to the
Participant during the Plan Year or, for purposes of Article 4 if so elected by
the Employer in Section 1.04(b), during that portion
6
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of the Plan Year during which the Employee is eligible to participate.
Notwithstanding the preceding sentence, compensation for purposes of Section
5.03 (Code Section 415 Limitations) shall be based on the amount actually paid
or made available to the Participant during the Limitation Year. Compensation
for the initial Plan Year for a new plan shall be based upon eligible
Participant Compensation, subject to Section 1.04(b), from the Effective Date
listed in Section 1.01(g)(1) through the end of the first Plan Year.
In the case of any Self-Employed Individual, Compensation shall mean the
Individual's Earned Income.
For years beginning after December 31, 1988, the annual Compensation of each
Participant taken into account for determining all benefits provided under the
Plan for any determination period shall not exceed $200,000. This limitation
shall be adjusted by the Secretary at the same time and in the same manner as
under Section 415(d) of the Code, except that the dollar increase in effect on
January 1 of any calendar year is effective for years beginning in such calendar
year and the first adjustment to the $200,000 limitation is effected on January
1, 1990. If a Plan determines Compensation on a period of time that contains
fewer than 12 calendar months, then the annual Compensation limit is the amount
equal to the annual Compensation limit for the calendar year in which the
Compensation period begins multiplied by the ratio obtained by dividing the
number of full months in the period by 12.
If Compensation for any prior determination period is taken into account in
determining an Employee's allocations or benefits for the current determination
period, the Compensation for such prior year is subject to the applicable annual
compensation limit in effect for that prior year. For this purpose, for years
beginning before January 1, 1990, the applicable annual compensation limit is
$200,000.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply, except that
in applying such rules, the term 'family' shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the year. If the $200,000 limitation is exceeded as a
result of the application of these rules, 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.
(8) 'Earned Income' means the net earnings of a Self-Employed Individual derived
from the trade or business with respect to which the Plan is established and for
which the personal services of such individual are a material income-providing
factor, excluding any items not included in gross income and the deductions
allocated to such items, except that for taxable years beginning after December
31, 1989, net earnings shall be determined with regard to the deduction allowed
under Section 164(f) of the Code, to the extent applicable to the employer. Net
earnings shall be reduced by contributions of the Employer to any qualified
plan, to the extent a deduction is allowed to the Employer for such
contributions under Section 404 of the Code.
7
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(9) 'Eligibility Computation Period' means each 12-consecutive-month period
beginning with the Employment Commencement Date and each anniversary thereof or,
in the case of an Employee who, before completing the eligibility requirements
set forth in Section 1.03(a)(1), incurs a break in service for participation
purposes and thereafter returns to the employ of the Employer or Related
Employer, each 12-consecutive-month period beginning with the first day of
reemployment and each anniversary thereof.
A 'break in service for participation purposes' shall means an Eligibility
Computation Period during which the Participant does not complete more than 500
Hours of Service with the Employer.
(10) 'Employee' means any employee of the Employer, any Self-Employed Individual
or Owner-Employee. The Employer must specify in Section 1.03(a)(3) any Employee
or class of Employees not eligible to participate in the Plan. If the Employer
elects to exclude collective bargaining employees, the exclusion applies to any
employee of the Employer included in a unit of employees covered by an agreement
which the Secretary of Labor finds to be a collective bargaining agreement
between employee representatives and one or more employers unless the collective
bargaining agreement requires the employee to be included within the Plan. The
term 'employee representatives' does not include any organization more than half
the members of which are owners, officers, or executives of the Employer.
For purposes of the plan, an individual shall be considered to become an
Employee on the date on which he first completes an Hour of Service and he shall
be considered to have ceased to be an Employee on the date on which he last
completes an Hour of Service. The term also includes a Leased Employee, such
that contributions or benefits provided by the leasing organization which are
attributable to services performed for the Employer shall be treated as provided
by the employer. Notwithstanding the above, a Leased Employee shall not be
considered an Employee if Leased Employees do not constitute more than 20
percent of the Employer's non-highly compensated work-force (taking into account
all Related Employers) and the Leased Employee is covered by a money purchase
pension plan maintained by the leasing organization and providing (A) a
non-integrated employer contribution rate of at least 10 percent of
compensation, as defined for purposes of Section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction agreement which are
excludable from gross income under Section 125, Section 402(2)(8), Section
402(h), or Section 403(b) of the Code, (B) full and immediate vesting, and (C)
immediate participation by each employee of the leasing organization.
(11) 'Employer' means the employer named in Section 1.02(a) and any Related
Employers required by this Section 2.01(a)(11). If Article 1 of the Employer's
Plan is the Standardized Adoption Agreement, the term 'employer' includes all
Related Employers. If Article 1 of the Employer's Plan is the Non-standardized
Adoption Agreement, the term 'Employer' includes those Related Employers
designated in Section 1.02(b).
(12) 'Employment Commencement Date' means the date on which the Employee first
performs an Hour of Service.
8
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(13) 'ERISA' means the Employee Retirement Income Security Act of 1974, as from
time to time amended.
(14) 'Fidelity Fund' means any Registered Investment Company or Managed Income
Portfolio of the Fidelity Group Trust for Employee Benefit Plans which is made
available to plans utilizing The CORPORATEplan for Retirement'sm'.
(15) 'Fund Share' means the share, unit, or other evidence of ownership in a
Fidelity Fund.
(16) 'Highly Compensated Employee' mean both highly compensated active Employees
and highly compensated former Employees.
A highly compensated active Employee includes any Employee who performs service
for the Employer during the determination year and who, during the 'look-back
year,' (A) received compensation from the Employer in excess of $75,000 (as
adjusted pursuant to Section 415(d) of the Code), (B) received Compensation from
the Employer in excess of $50,000 (as adjusted pursuant to Section 415(d of the
Code) and was a member of the top-paid group for such year, or (C) was an
officer of the Employer and received Compensation during such year that is
greater than 50 percent of the dollar limitation in effect under Section
415(b)(1)(A) of the code. The term 'Highly Compensated Employee' also includes
(i) Employees who are both described in the preceding sentence if the term
'determination year' is substituted for the term 'look-back year' and the
Employee is one of the 100 Employees who received the most Compensation from the
employer during the determination year and (ii) Employees who are 5-percent
owners at any time during the look-back year or determination year.
If no officer has satisfied the compensation requirement of (C) above during
either a determination year or look-back year, the highest paid officer for such
year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The look-back
year shall be the twelve-month period immediately preceding the determination
year. The Employer may elect to make the look-back year calculation for a
determination on the basis of the calendar year ending with or within the
applicable determination year, as prescribed by Section 414(q) of the Code and
the regulations issued thereunder.
A Highly Compensated former Employee includes any Employee who separated from
service (or was deemed to have separated) prior to the determination year,
performs no service for the Employer during the determination year, and was a
Highly Compensated active Employee for either the separation year or any
determination year ending on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a family
member of either a 5-percent owner who is an active or former Employee or a
Highly Compensated Employee who is one of the 10 most Highly Compensated
Employees ranked on the basis of Compensation paid by the
9
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Employer during such year, then the family member and the 5-percent owner or
top-ten Highly Compensated Employees shall be aggregated. In such case, the
family member and 5-percent owner or top-ten Highly Compensated Employees shall
be treated as a single Employee receiving Compensation and plan contributions or
benefits equal to the sum of such Compensation and contributions or benefits of
the family member and 5-percent owner or top-ten Highly Compensated Employees.
For purposes of this Section, family member includes the spouse, lineal
ascendants and descendants of the Employee, or former Employee and the spouses
of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid group,
the top 100 Employees, the number of Employees treated as officers, and the
Compensation that is considered, will be made in accordance with Section 414(q)
of the Code and the regulations thereunder.
(17) 'Hour of Service' means, with respect to any Employee,
(A) Each hour for which the Employee is directly or indirectly paid, or entitled
to payment, for the performance of duties for the Employer or a Related
Employer, each such hour to be credited to the Employee for the Eligibility
Computation Period in which the duties were performed;
(B) Each hour for which the Employee is directly or indirectly paid, or entitled
to payment, by the Employer or Related Employer (including payments made or due
from a trust fund or insurer to which the Employer contributes or pays premiums)
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, disability, layoff, jury duty, military
duty, or leave of absence, each such hour to be credited to the Employee for the
Eligibility Computation Period in which such period of time occurs, subject to
the following rules:
(i) No more than 501 Hours of Service shall be credited under this
paragraph (B) on account of any single continuous-period during which the
Employee performs no duties:
(ii) Hours of Service shall not be credited under this paragraph (B) for a
payment which solely reimburses the Employee for medically related
expenses, or which is made or due under a plan maintained solely for the
purpose of complying with applicable workmen's compensation, unemployment
compensation, or disability insurance laws; and
(iii) If the period during which the Employee performs no duties falls
within two or more Eligibility Computation Periods and if the payment made
on account of such period is not calculated on the basis of units of time,
the Hours of Service credited with respect to such period shall be
allocated between not more than the first two such Eligibility Computation
Periods on any reasonable basis consistently applied with respect to
similarly situated Employees; and
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(C) Each hour not counted under paragraph (A) or (B) for which back pay,
irrespective of mitigation of damages, has been either awarded or agreed to be
paid by the Employer or a Related Employer, shall be credited to the Employee
for the Eligibility Computation Period to which the award or agreement pertains
rather than the Eligibility Computation Period in which the award agreement or
payment is made.
For purposes of determining Hours of Service, Employees of the Employer and of
all Related Employers will be treated as employed by a single employer. For
purposes of paragraphs (B) and (C) above, Hours of Service will be calculated in
accordance with the provisions of Section 2530.200b-2(b) of the Department of
Labor regulations, which are incorporated herein by reference.
Solely for purposes of determining whether a break in service for participation
purposes has occurred in a computation period, an individual who is absent from
work for maternity or paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such individual but for such
absence, or in any case in which such hours cannot be determined, 8 Hours of
Service per day of such absence. For purposes of this paragraph, an absence from
work for maternity or paternity reasons means an absence (i) by reason of the
pregnancy of the individual, (ii) by reason of a birth of a child of the
individual, (iii) by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or (iv) for
purposes of caring for such child for a period beginning immediately following
such birth or placement. The Hours of Service credited under this paragraph
shall be credited (a) in the computation period in which the absence begins if
the crediting is necessary to prevent a break in service in that period, or (b)
in all other cases, in the following computation period.
(18) 'Leased Employee' means any individual who provides services to the
Employer or a Related Employer (the 'recipient') but is not otherwise an
employee of the recipient if (A) such services are provided pursuant to an
agreement between the recipient and any other person (the 'leasing
organization'), (B) such individual has performed services for the recipient (or
for the recipient and any related persons within the meaning of Section
414(n)(6) of the Code) on a substantially full-time basis for at least one year,
and (C) such services are of a type historically performed by employees in the
business field of the recipient.
(19) 'Normal Retirement Age' means the normal retirement age specified in
Section 1.06(a) of the Adoption Agreement. If the Employer enforces a mandatory
retirement age, the Normal Retirement Age is the lesser of that mandatory age or
the age specified in Section 1.06(a).
(20) 'Owner-Employee' means, if the Employer is a sole proprietorship, the
individual who is the sole proprietor, or if the Employer is a partnership, a
partner who owns more than 10 percent of either the capital interest or the
profits interest of the partnership.
(21) 'Participant' means any Employee who participates in the Plan in accordance
with Article 3 hereof.
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(22) 'Plan' means the plan established by the Employer in the form of the
prototype plan, as set forth herein as a new plan or as an amendment to an
existing plan, by executing the Adoption Agreement, together with any and all
amendments hereto.
(23) 'Plan Year' means the 23-consecutive-month period ending on the date
designated by the Employer in Section 1.01(f).
(24) 'Prototype Sponsor' means Fidelity Management and Research Company or its
successor.
(25) 'Registered Investment Company' means any one or more corporations,
partnerships, or trusts registered under the Investment Company Act of 1940 for
which Fidelity Management and Research Company serves as investment advisor.
(26) 'Related Employer' means any employer other than the Employer named in
Section 1.02(a) if the Employer and such other employer are members of a
controlled group of corporations (as defined in Section 414(b) of the Code) or
an affiliated service group (as defined in Section 414(m)), or are trades or
businesses (whether or not incorporated) which are under common control (as
defined in Section 414(c)), or such other employer is required to be aggregated
with the Employer pursuant to regulations issued under Section 414(o).
(27) 'Self-Employed Individual' means an individual who has Earned Income for
the taxable year from the Employer or who would have had Earned Income but for
the fact that the trade or business had no net profits for the taxable year.
(28) 'Trust' means the trust created by the Employer in accordance with the
provisions of Section 14.01.
(29) 'Trust Agreement' means the agreement between the Employer and the Trustee,
as set forth in Article 14, under which the assets of the Plan are held,
administered, and managed.
(30) 'Trust Fund' means the property held in Trust by the Trustee for the
Accounts of the Participants and their Beneficiaries.
(31) 'Trustee' means the Fidelity Management Trust Company, or its successor.
(32) 'Year of Service for Participation' means, with respect to any Employee, an
Eligibility Computation Period during which the Employee has been credited with
at least 1,000 Hours of Service. If the Plan maintained by the Employer is the
plan of a Predecessor Employer, an Employee's Years of Service for Participation
shall include years of service with such Predecessor Employer. In any case in
which the Plan maintained by the Employer is not the plan maintained by a
Predecessor Employer, service for such predecessor shall be treated as service
for the Employer, to the extent provided in Section 1.08.
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(33) 'Years of Service for Vesting' means, with respect to any Employee, the
number of whole years of his periods of service with the Employer or a Related
Employer (the elapsed time method to compute vesting service), subject to any
exclusions elected by the Employer in Section 1.07(b). An Employee will receive
credit for the aggregate of all time period(s) commencing with the Employee's
Employment Commencement Date and ending on the date a break in service begins,
unless any such years are excluded by Section 1.07(b). An Employee will also
receive credit for any period of severance of less than 12 consecutive months.
Fractional periods of a year will be expressed in terms of days.
In the case of a Participant who has 5 consecutive one-year breaks in service,
all years of service after such breaks in service will be disregarded for the
purpose of vesting the Employer-derived account balance that accrued before such
breaks, but both pre-break and post-break service will count for the purposes of
vesting the Employer-derived account balance that accrues after such breaks.
Both accounts will share in the earnings and losses of the fund.
In the case of a Participant who does not have 5 consecutive one-year breaks in
service, both the pre-break and post-break service will count in vesting both
the pre-break and post-break Employer-derived account balance.
A break in service is a period of severance of at least 12 consecutive months.
Period of severance is a continuous period of time during which the Employee is
not employed by the Employer. Such period begins on the date the Employee
retires, quits or is discharged, or if earlier, the 12-month anniversary of the
date on which the Employee was otherwise first absent from service.
In the case of an individual who is absent from work for maternity or paternity
reasons, the 12-consecutive-month period beginning on the first anniversary of
the first date of such absence shall not constitute a break in service. For
purposes of this paragraph, an absence from work for maternity or paternity
reasons means an absence (A) by reason the the pregnancy of the individual, (B)
by reason of the birth of a child of the individual, (C) by reason of the
placement of a child with the individual in connection with the adoption of such
child by such individual, or (D) for purposes of caring for such child for a
period beginning immediately following such birth or placement.
If the Plan maintained by the Employer is the plan of a Predecessor Employer, an
Employee's Years of Service for Vesting shall include years of service with such
Predecessor Employer. In any case in which the Plan maintained by the Employer
is not the plan maintained by a Predecessor Employer, service for such
predecessor shall be treated as service for the Employer to the extent provided
in Section 1.08.
(b) Pronouns in the Plan are in the masculine gender but include the feminine
gender unless the context clearly indicates otherwise.
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ARTICLE 3 PARTICIPATION
3.01 DATE OF PARTICIPATION
All Employees in the eligible class (as defined in Section 1.03(a)(3)) who are
in the service of the Employer on the Effective Date will become Participants on
the date elected by the Employer in Section 1.03(c). Any other Employee will
become a Participant in the Plan as of the first Entry Date on which he first
satisfies the eligibility requirements set forth in Section 1.03(a). In the
event that an Employee who is not a member of an eligible class (as defined in
Section 1.03(a)(3)) becomes a member of an eligible class, the individual shall
participate immediately if such individual had already satisfied the eligibility
requirements and would have otherwise previously become a Participant.
If an eligibility requirement other than one Year of Service is elected in
1.03(a)(1), an Employee may not be required to complete a minimum number of
Hours of Service before becoming a Participant. An otherwise eligible Employee
subject to a minimum months of service requirement shall become a Participant on
the first Entry Date following his completion of the required number of
consecutive months of employment measured from his Employment Commencement Date
to the coinciding date in the applicable following month. For purposes of
determining consecutive months of service, the Related Employer and Predecessor
Employer rules contained in SEctions 2.01(a)(17) and 2.01(a)(32) shall apply.
3.02 RESUMPTION OF PARTICIPATION FOLLOWING REEMPLOYMENT:
If a Participant ceases to be an Employee and thereafter returns to the employ
of the Employer, he will be treated as follows:
(a) he will again become a Participant on the first date on which he
completes an Hour of Service for the Employer following his reemployment
and is in the eligible class of Employees as defined in Section 1.03(a)(3),
and
(b) any distribution which he is receiving under the Plan will cease except
as otherwise required under Section 8.08.
3.03 CESSATION OR RESUMPTION OF PARTICIPATION FOLLOWING A CHANGE IN STATUS:
If any Participant continues in the employ of the Employer or Related Employer
but ceases to be a member of an eligible class as defined in Section 1.03(a)(3),
the individual shall continue to be a Participant for most purposes until the
entire amount of his benefit is distributed: however, the individual shall not
be entitled to receive an allocation of contributions or forfeitures during the
period that he is not a member of the eligible class. Such Participant shall
continue to receive credit for service completed during the period for purposes
of determining his vested interest in his Accounts. In the event that the
individual subsequently again becomes a member of an eligible class of
Employees, the individual shall resume full participation immediately upon the
date of such change in status.
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3.04 PARTICIPATION BY OWNER-EMPLOYEE; CONTROLLED BUSINESSES:
If the Plan provides contributions or benefits for one or more Owner-EMployees
who control both the trade or business with respect to which the Plan is
established and one or more other trades or businesses, the Plan and any plan
established with respect to such other trades or businesses must, when looked at
as a single plan, satisfy Sections 401(a) and 401(d) of the Code with respect to
the employees of this and all such other trades or businesses. If the Plan
provides contributions or benefits for one or more Owner-Employees who control
one or more other trades or businesses, the Employees of each such other trade
or business must be included in a plan which satisfies Sections 401(a) and
401(d) of the Code and which provides contributions and benefits not less
favorable than provided for Owner-Employees under the Plan.
If an individual is covered as an Owner-Employee under the plans of two or more
trades or businesses which are not controlled and the individual controls a
trade or business, then the contributions or benefits of the Employees under the
plan of the trades or businesses which are controlled must be as favorable as
those provided for him under the most favorable plan of the trade or business
which is not controlled.
For purposes of this Section, an Owner-Employee, or two or more Owner-Employees,
shall be considered to control a trade or business if such Owner-Employee, or
such Owner-Employees together, (a) own the entire interest in an unincorporated
trade or business or (b) in the case of a partnership, own more than 50 percent
of either the capital interest or the profits interest in such partnership. For
this purpose, an Owner-Employee, or two or more Owner-Employees, shall be
treated as owning any interest in a partnership which is owned, directly or
indirectly, by a partnerhsip controlled by such Owner-Employee or such
Owner-Employees.
3.05 OMISSION OF ELIGIBLE EMPLOYEE:
If 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 his Employer for the year has been made, the Employer shall make
a subsequent contribution, if necessary, so that the omitted Employee receives
the total amount which the said Employee would have received had he not been
omitted. For purposes of this Section 3.05, the term 'contribution' shall not
include Deferral Contributions and Matching Contributions made pursuant to
Sections 4.01 and 4.03, respectively.
ARTICLE 4 CONTRIBUTIONS
4.01 DEFERRAL CONTRIBUTIONS:
(a) If so provided by the Employer in Section 1.05(b), each Participant may
elect to execute a salary reduction agreement with the Employer to reduce his
Compensation by a specified percentage not exceeding 15% per payroll period,
subject to any exemptions elected by the Employer in Section
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105(b)(2) and 1.05(b)(3) and equal to a whole number multiple of one (1)
percent. Such agreement shall become effective on the first day of the first
payroll period for which the Employer can reasonably process the request. The
Employer shall make a Deferral Contribution on behalf of the Participant
corresponding to the amount of said reduction, subject to the restrictions set
forth below. Under no circumstances may a salary reduction agreement be adopted
retroactively.
(b) A Participant may elect to change or discontinue the percentage by which his
Compensation is reduced by notice to the Employer as provided in Section
1.05(b)(1).
(c) No Participant shall be permitted to have Deferral Contributions made under
the Plan, or any other qualified plan maintained by the Employer, during the
taxable year, in excess of the dollar limitation contained in Section 402(g) of
the Code in effect at the beginning of such taxable year.
A Participant may assign to the Plan any Excess Deferrals made during the
taxable year of the Participant by notifying the Plan Administrator on or before
March 15 following the taxable year of the amount of the Excess Deferrals to be
assigned to the Plan. A Participant is deemed to notify the Administrator of any
Excess Deferrals that arise by taking into account only those Deferral
Contributions made to the Plan and any other plan of the Employer.
Notwithstanding any other provision of the Plan, Excess Deferrals, plus any
income and minus any loss allocable thereto, shall be distributed no later than
April 15 to any Participant to whose Account Excess Deferrals were so assigned
for the preceding year and who claims Excess Deferrals for such taxable year.
'Excess Deferrals' shall mean those Deferral Contributions that are includable
in a Participant's gross income under Section 402(g) of the Code to the extent
such Participant's Deferral Contributions for a taxable year exceed the dollar
limitation under such Code section. For purposes of determining Excess
Deferrals, the term 'Deferral Contributions' shall include the sum of all
Employer contributions made on behalf of such Participant pursuant to an
election to defer under any qualified CODA as described in Section 401(k) of the
Code, any simplified employee pension cash or deferred arrangement as described
in Section 402(h)(1)(B) of the Code, any eligible deferred compensation plan
under Section 457 of the Code, any plan as described under Section 501(c)(18) of
the Code, and any Employer contributions made on the behalf of a Participant for
the purchase of an annuity contract under Section 403(b) of the Code pursuant to
a salary reduction agreement. Deferral Contributions shall not include any
deferrals properly distributed as excess Annual Additions. Excess Deferrals
shall be treated as Annual Additions under the Plan, unless such amounts are
distributed no later than the first April 15 following the close of the
Participant's taxable year.
Excess Deferrals shall be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess Deferrals is (1) income or
loss allocable to the Participant's Deferral Contributions Account for the
taxable year multiplied by a fraction, the numerator of which is such
Participant's Excess Deferrals for the year and the denominator is the
Participant's Account balance
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attributable to Deferral Contributions without regard to any income or loss
occurring during such taxable year, or (2) such other amount determined under
any reasonable method, provided that such method is used consistently for all
Participants in calculating the distributions required under this Section
4.01(c) and Sections 4.02(d) for the Plan Year, and is used by the Plan in
allocating income or loss to Participants' Accounts. Income or loss allocable to
the period between the end of the Plan Year and the date of distribution shall
be disregarded in determining income or loss.
(d) In order for the Plan to comply with the requirements of Sections 401(k),
402(g) and 415 of the Code and the regulations promulgated thereunder, at any
time in a Plan Year the Administrator may reduce the rate of Deferral
Contributions to be made on behalf of any Participant, or class of Participants,
for the remainder of that Plan Year, or the Administrator may require that all
Deferral Contributions to be made on behalf of a Participant be discontinued for
the remainder of that Plan Year. Upon the close of the Plan Year or such earlier
date as the Administrator may determine, any reduction or discontinuance in
Deferral Contributions shall automatically cease until the Administrator again
determines that such a reduction or discontinuance of Deferral Contributions is
required.
4.02 ADDITIONAL LIMIT ON DEFERRAL CONTRIBUTIONS:
(a) The Actual Deferral Percentage (hereinafter 'ADP') for Participants who are
Highly Compensated Employees for each Plan Year and the ADP for participants who
are Non-Highly Compensated Employees for the same Plan Year must satisfy one of
the following tests:
(1) The ADP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ADP for Participants who are Non-Highly
Compensated Employees for the same Plan Year multiplied by 1.25; or
(2) The ADP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ADP for Participants who are Non-Highly
Compensated EMployees for the same Plan Year multiplied by 2.0, provided
that the ADP for Participants who are Highly Compensated Employees does not
exceed the ADP for Participants who are Non-Highly Compensated EMployees by
more than two (2) percentage points.
(b) The following special rules apply for the purposes of this Section:
(1) The ADP for any Participant who is a Highly Compensated Employee for
the Plan Year and who is elegible to have Deferral Contributions (and
Qualified Discretionary Contributions if treated as Deferral Contributions
for purposes of the ADP test) allocated to his/her accounts under two or
more arrangements described in Section 401(k) of the Code that are
maintained by the Employer, shall be determined as if such Deferral
Contributions (and, if applicable, such Qualified Discretionary
Contributions) were made under a single arrangement. If a Highly
Compensated EMployee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred
arrangements ending
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with or within the same calendar year shall be treated as a single
arrangement. Notwithstanding the foregoing, certain plans shall be treated
as separate if mandatorily disaggregated under regulations under section
401(k) of the Code.
(2) In the event that this Plan satisfies the requirements of Sections
401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of such
Sections of the Code only if aggregated with this plan, then this Section
shall be applied by determining the ADP of Employees as if all such plans
were a single plan. For Plan Years beginning after December 31, 1989, plans
may be aggregated in order to satisfy section 401(k) of the Code only if
they have the same Plan Year.
(3) For purposes of determining the ADP of a Participant who is a 5-percent
owner of one of the ten most highly paid Highly Compensated Employees, the
Deferral Contributions (and Qualified Discretionary Contributions if treated
as Deferral Contributions for purposes of the ADP test) and Compensation of
such Participant shall include the Deferral Contributions (and, if
applicable, Qualified Discretionary Contributions) and Compensation for the
Plan Year of Family Members (as defined in Section 414(q)(6) of the Code).
Family Members, with respect to such Highly Compensated Employees, shall be
disregarded as separate employees in determining the ADP both for
Participants who are Non-Highly Compensated Employees and for Participants
who are Highly Compensated Employees.
(4) For purposes of determining the ADP test, Deferral Contributions and
Qualified Discretionary Contributions must be made before the last day of
the twelve-month period immediately following the Plan Year to which
contributions relate.
(5) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Discretionary
Contributions used in such test.
(6) the determination and treatment of the ADP amounts of any Participant
shall satisfy such other requirements as may be prescribed by the Secretary
of the Treasury.
(c) The following definitions shall apply for purposes of this Section:
(1) 'Actual Deferral Percentage' shall mean, for a specified group of
Participants for a Plan Year, the average of the ratios (calculated
separately for each Participant in such group) of (A) the amount of
Employer contributions actually paid over to the Trust on behalf of such
Participant for the Plan Year to (B) the Participant's Compensation for
such Plan Year. Employer contributions on behalf of any Participant shall
include (i) any Deferral Contributions made pursuant to the Participant's
deferral election, including Excess Deferrals of Highly Compensated
Employees, but excluding (a) Excess Deferrals of Non-Highly Compensated
Employees that arise solely from Deferral Contributions made under the Plan
or plans of the Employer and (b) Deferral Contributions that are taken into
account in the Contribution Percentage test (provided the ADP test is
satisfied both with and without exclusion of these Deferral Contributions)
and (ii) at the election of the Employer, Qualified Discretionary
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Contributions. Matching Contributions, whether or not non-forfeitable when
made, shall not be considered as Employer contributions for purposes of
this paragraph. For purposes of computing Actual Deferral Percentages, an
Employee who would be a Participant but for the failure to make Deferral
Contributions shall be treated as a Participant on whose behalf no Deferral
Contributions are made.
(2) 'Excess Contributions' shall mean, with respect to any Plan Year, the
excess of
(a) The aggregate amount of Employer contributions actually taken into
account in computing the ADP of Highly Compensated Employees for such Plan
Year, over
(b) The maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of the ADPs, beginning with the highest of such
percentages).
(3) 'Qualified Discretionary Contributions' shall mean contributions made
by the Employer as elected in Section 1.05(b)(4) and allocated to
Participant Accounts of Non-Highly Compensated Employees that such
Participants may not elect to receive in cash until distributed from the
Plan, that are nonforfeitable when made, and that are distributable only in
accordance with the distribution provisions that are applicable to Deferral
Contributions. Participants shall not be required to satisfy any Hours of
Service or employment requirement in order to receive an allocation of such
contributions.
(d) Notwithstanding any other provision of this Plan, Excess Contributions, plus
any income and minus any loss allocable thereto, shall be distributed no later
than the last day of each Plan Year to Participants to whose Accounts such
Excess Contributions were allocated for the preceding Plan Year. If such excess
amounts are distributed more than 2 1/2 months after the last day of the Plan
Year in which such excess amounts arose, a ten- (10-) percent excise tax will be
imposed on the Employer maintaining the Plan with respect to such amounts. Such
distributions shall be made to Highly Compensated Employees on the basis of the
respective portions of the Excess Contributions attributable to each of such
Employees. Excess Contributions of Participants who are subject to the family
member aggregation rules of Section 414(q)(6) of the Code shall be allocated
among the family members in proportion to the Deferral Contributions (and
amounts treated as Deferral Contributions) of each family member that is
combined to determine the combined ADP.
Excess Contributions shall be treated as Annual Additions under the Plan.
Excess Contributions shall be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess Contributions is (1) income
or loss allocable to the Participant's Deferral Contribution Account (and if
applicable, the Qualified Discretionary Contributions Account) for the Plan Year
multiplied by a fraction, the numerator of which is such Participant's Excess
Contributions for the year and the denominator is the Participant's Account
balance attributable to Deferral Contributions without regard to any income or
loss occurring during such Plan Year, or (2) an amount determined
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under any reasonable method, provided that such method is used consistently for
all Participants in calculating any distributions required under Section 4.02(d)
and Section 4.01(c) and 4.04(d) for the Plan Year, and is used by the Plan in
allocating income or loss to the Participants' Accounts. Income or loss
allocable to the period between the end of the Plan year and the date of
distribution shall be disregarded in determining income or loss.
Excess Contributions shall be distributed from the Participant's Qualified
Discretionary Contribution Account only to the extent that such Excess
Contributions exceed the balance in the Participant's Deferral Contributions
Account.
4.03 MATCHING CONTRIBUTIONS:
If so provided by the Employer in Section 1.05(c), the Employer shall make a
Matching Contribution on behalf of each Participant who had Deferral
Contributions made on his behalf during the year and who meets the requirement,
if any, of Section 1.05(c)(4). The amount of the Matching Contribution shall be
determined in accordance with Section 1.05(c), subject to the limitations set
forth in Section 4.04 and Section 404 of the Code. Matching Contributions will
not be allowed to be made by the Employer on any voluntary non-deductible
Employee Contributions.
4.04 LIMIT ON MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS:
The Average Contribution Percentage (hereinafter 'ACP') for Participants who are
Highly Compensated Employees for each Plan Year and the ACP for Participants who
are Non-Highly Compensated Employees for the same Plan Year must satisfy one of
the following tests:
(1) The ACP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ACP for Participants who are non-Highly
Compensated Employees for the same Plan Year multiplied by 1.25; or
(2) The ACP for Participants who are Highly Compensated Employees for the
Plan Year shall not exceed the ACP for Participants who are Non-Highly
Compensated Employees for the same Plan Year multiplied by two (2),
provided that the ACP for Participants who are Highly Compensated Employees
does not exceed the ACP for Participants who are Non-Highly Compensated
Employees by more than two (2) percentage points.
(b) The following special rules apply for purposes of this Section:
(1) If one or more Highly Compensated Employees participate in both a
qualified cash or deferred arrangement described in Section 401(k) of the
Code (hereafter 'CODA') and a plan subject to the ACP rest maintained by
the Employer and the sum of the ADP and ACP of those Highly Compensated
employees subject to either or both tests exceeds the Aggregate Limit, then
the ACP of those Highly Compensated Employees who also participate in a
CODA will be reduced (beginning with such Highly
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Compensated Employee whose ACP is the highest) so that the limit is not
exceeded. The amount by which each Highly Compensated Employee's
Contribution Percentage Amounts is reduced shall be treated as an Excess
Aggregate Contribution. The ADP and ACP of the Highly Compensated Employees
are determined after any corrections required to meet the ADP and ACP
tests. Multiple use does not occur if either the ADP or ACP of the Highly
Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of
the Non-Highly Compensated Employees.
(2) For purposes of this section, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible to
have Contribution Percentage Amounts allocated to his/her account under two
or more plans described in section 401(a) of the Code, or arrangements
described in section 401(k) of the Code that are maintained by the
Employer, shall be determined as if the total of such Contribution
Percentage Amounts was made under each plan. If a Highly Compensated
Employee participates in two or more cash or deferred arrangements that
have different Plan Years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be treated as separate
if mandatorily disaggregated under regulations under Section 104(m) of the
Code.
(3) In the event that this Plan satisfies the requirements of Sections
401(m), 401(a)(4), or 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements of
such sections of the Code only if aggregated with this Plan, then this
Section shall be applied by determining the Contribution Percentage of
Employees as if all such plans were a single plan. For Plan Years beginning
after December 31, 1989, plans may be aggregated in order to satisfy
Section 401(m) of the Code only if they have the same Plan Year.
(4) For purposes of determining the Contribution percentage of a
Participant who is a five-percent owner or one of the ten most highly paid
Highly Compensated Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include the Contribution Percentage
Amounts and Compensation for the Plan Year of family members (as defined in
Section 414(q)(6) of the Code). Family members, with respect to Highly
Compensated Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for Participants who are
Non-Highly Compensated Employees and for Participants who are Highly
Compensated Employees.
(5) For purposes of determining the Contribution Percentage test, Employee
contributions made pursuant to Section 1.05(d)(1) are considered to have
been made in the Plan Year in which contributed to the Trust. Matching
Contributions and Qualified Discretionary Contributions will be considered
made for a Plan Year if made no later than the end of the twelve-month
period beginning on the day after the close of the Plan Year.
(6) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Discretionary
Contributions used in such test.
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(7) The determination and treatment of the Contribution Percentage of any
Participant of any Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
(c)The following definitions hall apply for purposes of this Section:
(1) 'Aggregate Limit' shall mean the greater of (A) or (B) where (A) is the
sum of (i) 125 percent of the greater of the ADP of the Non-Highly
Compensated Employees for the Plan Year or the ACP of Non-Highly
Compensated Employees under the Plan subject to Section 401(m) of the Code
for the Plan Year beginning with or within the Plan Year of the CODA and
(ii) the lesser of 200% or two plus the lesser of such ADP or ACP and where
(B) is the sum of (i) 125 percent of the lesser of the ADP of the
Non-Highly Compensated Employees for the Plan Year or the ACP of Non-Highly
Compensated Employees under the Plan subject to Section 401(m) of the code
for the Plan Year beginning with or within the Plan Year of the CODA and
(ii) the lesser of 200% or two plus the greater of such ADP or ACP.
(2) 'Average Contribution Percentage' or 'ACP' shall mean the average of
the Contribution Percentages of the Eligible Participants in a group.
(3) 'Contribution Percentage' shall mean the ratio (expressed as a
percentage) of the Participant's Contribution Percentage Amounts to the
Participant's Compensation for the Plan Year.
(4) 'Contribution Percentage Amounts' shall mean the sum of the Employee
Contributions and Matching Contributions made under the plan on behalf of
the Participant for the Plan Year. Such Contribution Percentage Amounts
shall not include Matching Contributions that are forfeited either to
correct Excess Aggregate Contributions or because the contributions to
which they relate are Excess Deferrals, Excess Contributions or Excess
Aggregate Contributions. If so elected by the Employer in Section
1.05(b)(4), the Employer may include Qualified Discretionary Contributions
in the Contribution Percentage Amounts. The Employer also may elect to use
Deferral Contributions in the Contribution Percentage Amounts so long as
the ADP test is met before the Deferral Contributions are used in the ACP
test and continues to be met following the exclusion of those Deferral
Contributions that are used to meet the ACP test.
(5) 'Deferral Contribution' shall mean any contribution made at the
election of the Participant pursuant to a salary reduction agreement in
accordance with Section 4.01(a).
(6) 'Eligible Participant' shall mean any Employee who is eligible to make
an Employee Contribution, or a Deferral Contribution (if the Employer takes
such contributions into account in the calculation of the Contribution
Percentage), or to receive a Matching Contribution.
(7) 'Employee Contribution' shall mean any voluntary non-deductible
contribution made to the plan by or on behalf of a Participant that is
included in the Participant's gross income in the year in which made and
that is maintained in a separate Account to which earnings and losses are
allocated.
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(8) 'Matching Contribution' shall mean an Employer contribution made to
this or any other defined contribution plan on behalf of a Participant on
account of a Participant's Deferral Contribution.
(9) 'Excess Aggregate Contributions' shall mean, with respect to any Plan
Year, the excess of
(A) The aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made on
behalf of Highly Compensated Employees for such Plan Year, over
(B) The maximum Contribution Percentage Amounts permitted by the ACP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in the order of the their Contribution Percentages beginning with
the highest of such percentages).
Such determination shall be made after first determining Excess Deferrals
pursuant to Section 4.01 and then determining Excess Contributions pursuant to
Section 4.02.
(d) Nothwithstanding any other provision of the Plan, Excess Aggregate
Contributions, plus any income and minus any loss allocable thereto, shall be
forfeited, if forfeitable, or if not forfeitable, distributed no later than the
last day of each Plan Year to Participants to whose Accounts such Excess
Aggregate Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions of Participants who are subject to the family member
aggregation rules of Section 414(q)(6) of the Code shall be allocated among the
family members in proportion to the Employee and Matching Contributions of each
family member that is combined to determine the combined ACP. If such Excess
Aggregate Contributions are distributed more than 2 1/2 months after the last
day of the Plan Year in which such excess amounts arose, a ten (10) percent
excise tax will be imposed on the Employer maintaining the Plan with respect to
those amounts. Excess Aggregate Contributions shall be treated as Annual
Additions under the Plan.
Excess Aggregate Contributions shall be adjusted for any income or loss up to
the date of distribution. The income or loss allocable to Excess Aggregate
Contributions is (1) income or loss allocable to the Participant's Employee
Contribution Account, Matching Contribution Account (if any, and if all amounts
therein are not used in the ADP test) and if applicable, Qualified Non-elective
Contribution Account for the Plan Year multiplied by a fraction, the numerator
of which is such Participant's Excess Aggregate Contributions for the year and
the denominator is the Participant's Account balance(s) attributable to
Contribution Percentage Amounts without regard to income or loss occurring
during such Plan Year, or (2) such other amount determined under any reasonable
method, provided that such method is used consistently for all Participants in
calculating any distributions required under Section 4.04(d) and Sections
4.01(c) and 4.02(d) for the Plan Year, and is used by the Plan in allocating
income or loss to the Participants' Accounts, Income or loss allocable to the
period between the end of the Plan Year and the date of distribution shall be
disregarded in determining income or loss.
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Forfeitures of Excess Aggregate Contributions shall be applied to reduce
Employer contributions; the forfeitures shall be held in the money market fund,
if any, listed in Section 1.14(b) pending such application.
Excess Aggregate Contributions shall be forfeited, if forfeitable, or
distributed on a prorata basis from the Participant's Employee Contribution
Account, Matching Contribution Account and if applicable, the Participant's
Deferral Contributions Account or Qualified Discretionary Contribution Account
or both.
4.05 SPECIAL RULES:
Deferral Contributions and Qualified Discretionary Contributions and income
allocable to each are not distributable to a Participant or his/her Beneficiary
or Beneficiaries, in accordance with such Participant's or Beneficiary's or
Beneficiaries' election, earlier than upon separation from service, death or
disability, except as otherwise provided in Section 7.10, 7.11, or 10.06. Such
amounts may also be distributed, but after March 31, 1988, in the form of a lump
sum only, upon
(a) Termination of the Plan without establishment of another defined
contribution plan, other than an employee stock ownership plan (as defined
in Section 4975(e) or Section 409 of the Code) or a simplified employee
pension plan as defined in Section 408(k) of the Code.
(b) The disposition by a corporation to an unrelated corporation of
substantially all of the assets (within the meaning of Section 409(d)(2) of
the Code) used in a trade or business of such corporation if such
corporation continues to maintain this Plan after the disposition, but only
with respect to Employees who continue employment with the corporation
acquiring such assets.
(c) The disposition by the corporation to an unrelated entity of such
corporation's interest in a subsidiary (within the meaning of Section
409(d)(2) of the Code) if such corporation continues to maintain this Plan,
but only with respect to Employees who continue employment with such
subsidiary.
The Participant's accrued benefit derived form Deferral Contributions, Qualified
Discretionary Contributions, and Employee Contributions (as defined in Section
4.09) is nonforfeitable. Separate Accounts for Deferral Contributions, Qualified
Discretionary Contributions, Employee Contributions, and Matching Contributions
will be maintained for each Participant. Each Account will be credited with the
applicable contributions and earnings thereon.
4.06 FIXED/DISCRETIONARY EMPLOYER CONTRIBUTIONS:
If so provided by the Employer in Sections 1.05(a)(1) or 1.05(a)(2), for the
Plan Year in which the Plan is adopted and for each Plan Year Thereafter, the
Employer will make Fixed or Discretionary Employer contributions to the Trust in
accordance with Section 1.05 to be allocated as follows:
(a) Fixed Employer contributions shall be allocated among eligible
Participants (as determined in accordance with Section 1.05(a)(3)) in the
manner specified in Secption 1.05(a).
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(b) Discretionary Employer contributions shall be allocated among eligible
Participants, as determined in accordance with Section 1.05(a)(3), as
follows:
(1) If the Non-Integrated Formula is elected in Section 1.05(a)(2)(A),
such contributions shall be allocated to eligible Participants in the
ratio that each Participant's Compensation bears to the total
Compensation paid to all eligible Participants for the Plan Year; or
(2) If the Integrated Formula is elected in section 1.05(a)(2)(B), such
contributions shall be allocated in the following steps:
(A) First, to each eligible Participant in the same ratio that the sum
of the Participant's Compensation and Excess Compensation for the Plan
Year bears to the sum of the Compensation and Excess Compensation of all
Particpants for the Plan Year. This allocation as a percentage of the
sum of each Partipcant's Compensation and Excess Compensation shall not
exceed 5.7%.
(B) Any remaining Discretionary Employer Contribution shall be allocated
to each eligible Participant in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
For purposes of this Section, 'Excess Compensation' means Compensation in excess
of the taxable wage base, as determined under Section 230 of the Social Security
Act, in effect on the first day of the Plan Year, Further, this Section
4.06(b)(2) shall be modified as provided in Section 9.03 for years in which the
Plan is Top-Heavy under Article 9.
4.07 TIME OF MAKING EMPLOYER CONTRIBUTIONS:
The Employer will pay its contribution for each Plan Year not later than the
time prescribed by law for filing the Employer's federal income tax return for
the fiscal (or taxable) year with or within which such Plan Year ends (including
extensions thereof). The Trustee will have no authority to inquire into the
correctness of the amounts contributed and paid over to the Trustee, to
determine whether any contribution is payable under this Article 4, or to
enforce, by suit or otherwise, the Employer's obligation, if any, to make a
contribution to the Trustee.
4.08 RETURN OF EMPLOYER CONTRIBUTIONS:
The Trustee shall, upon request by the Employer, return to the Employer the
amount (if any) determined under Section 14.22. Such amount shall be reduced by
amounts attributable thereto which have been credited to the Accounts of
Participants who have since received distributions from the Trust, except to the
extent such amounts continue to be credited to such Participants' Accounts at
the time the amount is returned to the Employer. Such amount shall also be
reduced by the losses of the Trust attributable thereto, if and to the extent
such losses exceed the gains and income attributable thereto, but will not be
increased by the gains and income of the Trust attributable thereto, if and to
the extent such
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gains and income exceed the losses attributable thereto. In no event will the
return of a contribution hereunder cause the balance of the individual Account
of any Participant to be reduced to less than the balance which would have been
credited to the Account had the mistaken amount not been contributed.
4.09 EMPLOYEE CONTRIBUTIONS:
If the Employer elected to permit Deferral Contributions in Section 1.05(b) and
if so provided by the Employer in Section 1.05(d), each Participant may elect to
make Employee Contributions to the Plan in accordance with the rules and
procedures established by the Employer and in an amount not less than one
percent (1%) and not greater than ten percent (10%) of such Participant's
Compensation for the Plan Year. Such contributions and all Employee
Contributions for Plan Years beginning after December 31, 1986, shall be subject
to the nondiscrimination requirements of Section 401(m) of the Code as set forth
in Section 4.04.
For purposes of this Plan, 'Employee Contributions' shall mean any voluntary
non-deductible contribution made to a plan by or on behalf of a Participant that
is or was included in the Participant's gross income in the year in which made
and that is maintained under a separate account to which applicable earnings and
losses are allocated. Excess Contributions may not be recharacterized as
Employee Contributions.
Employee Contributions shall be paid over to the Trustee not later than thirty
(30) days following the end of the month in which the Participant makes the
contribution. A Participant shall have a fully vested 100% nonforfeitable right
to his Employee Contributions and the earnings or losses allocated thereon.
Distributions of Employee Contributions shall be made in accordance with Section
7.10
4.10 ROLLOVER CONTRIBUTIONS:
(a)Rollover of Eligible Rollover Distributions.
(1) An Employee who is or was a distributee of an 'Eligible rollover
distribution' (as defined in Section 402(c))4) of the Code and the regulations
issued thereunder) from a qualified plan may directly transfer all or any
portion of such distribution to the Trust or transfer all or any portion of such
distribution to the Trust within sixty (60) days of payment. The transfer shall
be made in the form of cash or allowable Fund Shares only.
(2) The Employer may refuse to accept rollover contributions or instruct the
Trustee not to accept Rollover Contributions under the Plan.
(b) Treatment of Rollover Amount.
(1) an account will be established for the transferring Employee under Article
5, the rollover amount will be credited to the account and such amount will be
subject to the terms of the Plan, including
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Section 8.01, except as otherwise provided in this Section 4.10.
(2) The rollover account will at all times be fully vested in and nonforfeitable
by the Employee.
(c) Entry into Plan by Transferring Employee.
Although an amount may be transferred to the Trust Fund under this Section 4.10
by an Employee who has not yet become a Participant in accordance with Article
3, and such amount is subject to the terms of the Plan as described in paragraph
(b) above, the Employee will not become a Participant entitled to share in
Employer contributions until he has satisfied such requirements.
(d) Monitoring of Rollovers.
(1) The Administrator shall develop such procedures and require such information
from transferring EMployees as it deems necessary to insure that amounts
transferred under this Section 4.10 meet the requirements for tax-free rollovers
established by such Section and by Section 402(c) of the Code. No such amount
may be transferred until approved by the Administrator.
(2) If a transfer made under this Section 4.10 is later determined by the
Administrator not to have met the requirements of this Section or of the Code or
Treasury regulations, the Trustee shall, within a reasonable time after such
determination is made, and on instructions from the Administrator, distribute to
the Employee the amounts then held in the Trust attributable to the transferred
amount.
4.11 DEDUCTIBLE VOLUNTARY EMPLOYEE CONTRIBUTIONS:6L The Administrator will not
accept deductible Employee Contributions which are made for a taxable year
beginning after December 31, 1986. Contributions made prior to that date will be
maintained in a separate Account which will be nonforfeitable at all times and
which will share in the gains and losses of the trust in the same manner as
described in Section 502. No part of the deductible voluntary contribution
Account will be used to purchase life insurance. Subject to Article 8, the
Participant may withdraw any part of the deductible voluntary contribution
Account upon request.
4.12 ADDITIONAL RULES FOR PAIRED PLANS:
If the Employer has adopted a qualified plan under Fidelity Basic Plan Document
No. 09 which is to be considered as a paired plan with this Plan, the elections
in Section 1.03 must be identical to the Employer's corresponding elections for
the other plan. When the paired plans are Top-Heavy or are deemed to be
Top-Heavy as provided in Section 9.01, the plan paired with this Plan will
provide a minimum contribution to each Non-key Employee which is equal to 3
percent (or such other percent elected by the Employer in Section 1.12(c)) of
such Employee's Compensation. Notwithstanding the preceding sentence, the
minimum contribution shall be provided by this Plan if contributions under the
other plan paired with this Plan are frozen.
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ARTICLE 5 PARTICIPANTS' ACCOUNTS
5.01 INDIVIDUAL ACCOUNTS:
The Administrator will establish and maintain an Account for each Participant
which will reflect Employer and Employee Contributions made on behalf of the
Participant and earnings, expenses, gains and losses attributable thereto, and
investments made with amounts in the Participant's Account. The Administrator
will establish and maintain such other accounts and records as it decides in its
discretion to be reasonably required or appropriate in order to discharge its
duties under the Plan.
5.02 VALUATION OF ACCOUNTS:
Participant Accounts will be valued at their fair market value at least annually
as of a date specified by the Administrator in accordance with a method
consistently followed and uniformly applied, and on such date earnings,
expenses, gains and losses on investments made with amounts in each
Participant's Account will be allocated to such Account. Participants will be
furnished statements of their Account values at least once each Plan Year.
5.03 CODE SECTION 415 LIMITATIONS:
Notwithstanding any other provisions of the Plan:
Subsections (a)(1) through (a)(4) -- (These Subsections apply to Employers who
do not maintain any qualified plan, including a Welfare Benefit Fund, an
Individual Medical Account, or a simplified employee pension in addition to this
Plan.)
(a) (1) If the Participant does not participate in, and has never participated
in any other qualified plan, Welfare Benefit Fund, Individual Medical Account,
or a simplified employee pension, as defined in section 408(k) of the Code,
maintained by the Employer, which provides an annual addition as defined in
Section 5.03(3)(1), the amount of Annual Additions to a Participant's Account
for a Limitation Year shall not exceed the lesser of the Maximum Permissible
Amount or any other limitation contained in this Plan. If the Employer
contribution that would otherwise be contributed or allocated to the
Participant's Account would cause the Annual Additions for the Limitation Year
to exceed the Maximum Permissible Amount, the amount contributed to allocated
will be reduced so that the Annual Additions for the Limitation Year will equal
the Maximum Permissible Amount.
(2) Prior to the determination of the Participant's actual Compensation for a
Limitation Year, the Maximum Permissible Amount may be determined on the basis
of a reasonable estimation of the Participant's compensation for such Limitation
Year, uniformly determined for all Participants similarly situated. Any Employer
contributions based on estimated annual compensation shall be reduced by any
Excess Amounts carried over from prior years.
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(3) As soon as is administratively feasible after the end of the Limitation
Year, the Maximum Permissible Amount for such Limitation Year shall be
determined on the basis of the Participant's actual Compensation for such
Limitation Year.
(4) If, pursuant to Subsection (a)(3) or as a result of the allocation of
forfeitures or a reasonable error in determining the total Elective Deferrals
there is an Excess Amount with respect to a Participant for a Limitation Year,
such Excess Amount shall be disposed of as follows:
(A) Any nondeductible voluntary Employee Contributions ('Employee
Contributions') or Elective Deferrals, to the extent they would reduce the
Excess Amount, will be returned to the Participant. Any gains attributable to
returned Employee contributions will also be returned or will be treated as
additional Employee Contributions for the Limitation Year in which the EMployee
Contributions were made.
(B) If after the application of paragraph (A) an Excess amount still exists and
the Participant is in the service of the Employer which is covered by the Plan
at the end of the Limitation Year, then such Excess Amount shall be reapplied to
reduce future Employer contributions under this Plan for the next Limitation
Year (and for each succeeding year, as necessary) for such Participant, so that
in each such Year the sum of actual Employer contributions plus the reapplied
amount shall equal the amount of Employer contributions which would otherwise be
made to such Participant's Account.
(C) If after the application of paragraph (A) an Excess Amount still exists and
the Participant is not in the service of the EMployer which is covered by the
Plan at the end of a Limitation Year, then such Excess Amount will be held
unallocated in a suspense account. The suspense account will be applied to
reduce future Employer contributions for all remaining Participants in the next
Limitation Year and each succeeding Limitation Year if necessary.
(D) If a suspense account is in existence at any time during the Limitation Year
pursuant to this Subsection, it will not participate in the allocation of the
Trust Fund's investment gains and losses. All amounts in the suspense account
must be allocated to the Accounts of Participants before any Employer
contribution may be made for the Limitation Year. Except as provided in
paragraph (A), Excess Amounts may not be distributed to Paritcipants or former
Participants.
Subsections (b)(1) through (b)(6) -- (These Subsections apply to Employers who,
in addition to this Plan, maintain one or more plans, all of which are qualified
Master or Prototype defined contribution Plans, any Welfare Benefit Fund, any
Individual Medical Account, or any simplified employee pension.)
(b) (1) If, in addition to this Plan, the Participant is covered under any other
qualified defined contribution plans (all of which are qualified Master or
Prototype Plans), Welfare Benefit Funds, Individual Medical Accounts, or
simplified employee pension Plans, maintained by the Employer, that provide an
annual addition as defined in Section 5.03(e)(1), the amount of Annual Additions
to a Participant's Account for a Limitation Year shall not exceed the lesser of:
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(A) the Maximum Permissible Amount, reduced by the sum of any Annual
Additions to the Participant's Accounts for the same Limitation Year under
such other qualified Master or Prototype defined contribution plans, and
Welfare Benefit Funds. Individual Medical Accounts, and simplified employee
pensions, or
(B) any other limitation contained in this Plan.
If the Annual Additions with respect to the Participant under other qualified
Master or Prototype defined contribution Plans, Welfare Benefit Funds,
Individual Medical Accounts, and simplified employee pensions maintained by the
Employer are less than the Maximum Permissible Amount and the Employer
contribution that would otherwise be contributed or allocated to the
Participant's Account under this plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or allocated
will be reduced so that the Annual Additions under all such plans and funds for
the Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other qualified Master or
Prototype defined contribution Plans, Welfare Benefit Funds, Individual Medical
Accounts, and simplified employee pensions in the aggregate are equal to or
greater than the Maximum Permissible Amount, no amount will be contributed or
allocated to the Participant's Account under this Plan for the Limitation Year.
(2) Prior to the determination of the Participant's actual Compensation for the
Limitation Year, the amounts referred to in (b)(1)(A) above may be determined on
the basis of a reasonable estimation of the Participant's Compensation for such
Limitation Year, uniformly determined for all Participants similarly situated.
Any employer contribution based on estimated annual Compensation shall be
reduced by any Excess Amounts carried over from prior years.
(3) As soon as is administratively feasible after the end of the Limitation
Year, the amounts referred to in (b)(1)(A) shall be determined on the basis of
the Participant's actual Compensation for such Limitation Year.
(4) If a Participant's Annual Additions under this Plan and all such other plans
result in an Excess Amount, such Excess Amount shall be deemed to consist of the
Annual Additions last allocated, except that Annual Additions attributable to a
simplified employee pension will be deemed to have been allocated first,
followed by Annual Additions to a Welfare Benefit Fund or Individual Medical
Account regardless of the actual allocation date.
(5) If an Excess Amount was allocated to a Participant on an allocation date of
this Plan which coincides with an allocation date of another plan, the Excess
amount attributed to this Plan will be the product of
(A) the total Excess Amount allocated as of such date (including any amount
which would have been allocated but for the limitations of Section 415 of the
Code) and
(B) the ratio of (i) the Annual Additions allocated to the Participant as of
such date under this Plan.
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and (ii) the Annual Additions allocated as of such date under all qualified
contribution plans (determined without regard to the limitations of Section 415
of the Code).
(6) Any Excess Amounts attributed to this Plan shall be disposed of as provided
in subsection (a)(4).
Subsection (c) -- (This Subsection applies only to Employers who, in addition to
this Plan, maintain one or more qualified plans which are qualified defined
contribution plans other than Master or Prototype Plans.)
(c) If the Employer also maintains another plan which is a qualified defined
contribution plan other than a Master or Prototype Plan. Annual Additions
allocated under this Plan on behalf of any Participant shall be limited in
accordance with the provisions of (b)(1) through (b)(6), as though the other
plan were a Master or Prototype Plan, unless the Employer provides other
limitations in the Adoption Agreement.
Subsection (d) -- (This subsection applies only to Employers who, in addition to
this Plan, maintain or at any time maintained a qualified defined benefit plan.)
(d) If the Employer maintains, or at any time maintained, a qualified defined
benefit plan, the sum of any Participant's Defined Benefit Fraction and Defined
Contribution Fraction shall not exceed the combined Plan Limitation of 1.0 in
any Limitation Year. The combined Plan Limitation will be met as provided by the
Employer in the Adoption Agreement.
Subsections (e)(1) through (e)(11) -- (Definitions.)
(e) (1) 'Annual Additions' means the sum of the following amounts credited to a
Participant for a Limitation Year:
(A) all Employer contributions.
(B) all Employee Contributions.
(C) all forfeitures.
(D) amounts allocated, after March 31, 1984, to an Individual Medical
Account which is part of a pension or annuity plan maintained by the
Employer are treated as Annual Additions to a defined contribution plan.
Also, amounts derived from contributions paid or accrued after December 31,
1985, in taxable years ending after such date, which are attributable to
post-retirement medical benefits allocated to the separate account of a Key
Employee, as defined in Section 419A(d)(3) of the Code, under a Welfare
Benefit fund maintained by the Employer are treated as Annual Additions to
a defined contribution plan, and
(E) allocations under a simplified employee pension.
For purposes of this Section 5.03, amounts reapplied to reduce Employer
contributions under subsection (a)(4) shall also be included as Annual
Additions.
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(2) 'Compensation' means wages as defined in Section 3401(a) of the Code and all
other payments of compensation to an Employee by the Employer (in the course of
the Employer's trade or business) for which the Employer is required to furnish
the Employee a written statement under Sections (6041)(d) and 6051(a)(3) of the
Code. Compensation must be determined without regard to any rules under Section
3401(a) of the Code that limit the remuneration included in wages based on the
nature or location of the employment or the services performed (such as the
exception for agricultural labor in Section 3401(a)(2) of the Code).
For any Self-Employed Individual compensation will mean Earned Income.
For Limitation Years beginning after December 31, 1991, for purposes of applying
the limitations of this article, Compensation for a Limitation Year is the
Compensation actually paid or made available during such Limitation Year.
(3) 'Defined Benefit Fraction' means a fraction, the numerator of which is the
sum of the Participant's annual benefits (adjusted to an actuarially equivalent
straight life annuity if such benefit is expressed in a form other than a
straight life annuity or qualified joint and survivor annuity) under all the
defined benefit plans (whether or not terminated) maintained by the Employer,
each such annual benefit computed on the assumptions that the Participant will
remain in employment until the normal retirement age under each such plan (or
the Participant's current age, if later) and that all other factors used to
determine benefits under such plan will remain constant for all future
Limitation Years, and the denominator of which is the lesser of 125 percent of
the dollar limitation determined for the Limitation Year under Section
415(b)(1)(A) and 415(d) of the Code or 140 percent of the Participant's highest
average Compensation for the 3 consecutive calendar years of service during
which the Participant was active in each such plan, including any adjustments
under Section 415(b) of the Code.
However, if the Participant was a participant as of the first day of the first
Limitation Year beginning after December 31, 1986, in one or more defined
benefit plans maintained by the Employer which were in existence on May 6, 1986,
then the denominator of the Defined Benefit Fraction shall not be less than 125
percent of the Participant's total accrued benefit as of the close of the last
Limitation Year beginning before January 1, 1987, disregarding any changes in
the terms and conditions of the plan after May 5, 1986, under all such defined
benefit plans that met, individually and in the aggregate, the requirements of
Section 415 of the Code for all Limitation Years beginning before January 1,
1987.
(4) 'Defined Contribution Fraction' means a fraction, the numerator of which is
the sum for the current and all prior Limitation Years of (A) all Annual
Additions (if any) to the Participant's accounts under each defined contribution
plan (whether or not terminated) maintained by the Employer and (B) all Annual
Additions attributable to the Participant's nondeductible Employer Contributions
to all defined benefit plans (whether or not terminated) maintained by the
Employer, and the Participant's Annual Additions attributable to all Welfare
Benefit Funds, Individual Medical Accounts, and simpli-
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fied employee pensions, maintained by the Employer and the denominator of which
is the sum of the maximum aggregate amounts for the current and all prior
Limitation Years during which the Participant was an Employee (regardless of
whether the Employer maintained a defined contribution plan in any such year).
The maximum aggregate amount in any Limitation Year is the lesser of 125 percent
of the dollar limitation in effect under Section 415(c)(1)(A) of the Code for
each such year or 35 percent of the Participant's Compensation for each such
year.
If the Participant was a participant as of the first day of the first Limitation
Year beginning after December 31, 1986, in one or more defined contribution
plans maintained by the Employer which were in existence on May 6, 1986, then
the numerator of the Defined contribution Fraction shall be adjusted if the sum
of this fraction and the Defined Benefit Fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment an amount equal to the
product of (i) the excess of the sum of the fractions over 1.0 and (ii) the
denominator of this fraction will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the fractions as they would
be computed as of the end of the last Limitation Year beginning before January
1, 1987, and disregarding any changes in the terms and conditions of the plan
made after May 6, 1986, but using the Section 415 limitation applicable to the
first Limitation Year beginning on or after January 1, 1987.
The Annual Addition for any Limitation Year beginning before January 1, 1987
shall not be recomputed to treat all Employee contributions as Annual Additions.
(5) 'Employer' means the Employer and any Related Employer that adopts this
Plan. In the case of a group of employers which constitutes a controlled group
of corporations (as defined in Section 414(b) of the Code as modified by Section
415(h)) or which constitutes trades or businesses (whether or not incorporated)
which are under common control (as defined in Section 414(c) of the Code as
modified by Section 415(h) of the Code) or which constitutes an affiliated
service group (as defined in Section 414(m) of the Code) and any other entity
required to be aggregated with the Employer pursuant to regulations issued under
Section 414(o) of the Code, all such employers shall be considered a single
employer for purposes of applying the limitations of this Section 5.03.
(6) 'Excess Amount' means the excess of the Participant's Annual Additions for
the Limitation Year over the Maximum Permissible Amount.
(7) 'Individual Medical Account' means an individual medical account as defined
in Section 415(1)(2) of the Code.
(8) 'Limitation Year' means the Plan Year. All qualified plans of the Employer
must use the same Limitation Year. If the Limitation Year is amended to a
different 12-consecutive-month period, the new Limitation Year must begin on a
date within the Limitation Year in which the amendment is made.
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(9) 'Master or Prototype Plan' means a plan the form of which is the subject of
a favorable opinion letter from the Internal Revenue Service.
(10) 'Maximum Permissible Amount' means for a Limitation Year with respect to
any Participant the lesser of (A) $30,000 or, if greater, 25 percent of the
dollar limitation set forth in Section 515(b)(1) of the Code, as in effect for
the Limitation Year, or (B) 25 percent of the Participant's Compensation for the
Limitation Year. If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different 12-consecutive-month period, the
Maximum Permissible Amount will not exceed the limitation in (e)(10)(A)
multiplied by a fraction whose numerator is the number of months in the short
Limitation Year and whose denominator is 12.
The Compensation limitation referred to in subsection (e)(10)(B) shall not apply
to any contribution for medical benefits within the meaning of Section 401(h) or
Section 419A(f)(2) of the Code after separation from service which is otherwise
treated as an Annual Addition under Section 419A(d)(2) or Section 415(l)(1) of
the Code.
(11) 'Welfare Benefit Fund' means a welfare benefit fund as defined in Section
419(e) of the Code.
ARTICLE 6 INVESTMENT OF CONTRIBUTIONS
6.01 MANNER OF INVESTMENT:
All contributions made to the Accounts of Participants shall be held for
investment by the Trustee. The Accounts of Participants shall be invested and
reinvested only in eligible investments selected by the Employer in Section
1.14(b), subject to Section 14.10.
6.02 INVESTMENT DECISIONS:
Investments shall be directed by the Employer or by each Participant or both, in
accordance with the Employer's election in Section 1.14(a). Pursuant to Section
14.04, the Trustee shall have no discretion or authority with respect to the
investment of the Trust Fund.
(a) With respect to those Participant Accounts for which Employer investment
direction is elected, the Employer has the right to direct the Trustee in
writing with respect to the investment and reinvestment of assets comprising the
Trust Fund in the Fidelity Fund(s) designated in Section 1.14(b) and as allowed
by the Trustee.
(b) If Participant investment direction is elected, each Participant shall
direct the investment of his Account among the Fidelity Funds listed in Section
1.14(b). The Participant shall file initial investment instructions with the
Administrator, on such form as the Administrator may provide, selecting the
Funds in which amounts credited to his Account will be invested.
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(1) except as provided in this Section 6.02, only authorized Plan contacts and
the Participant shall have access to a Participant's Account. While any balance
remains in the Account of a Participant after his death, the Beneficiary of the
Participant shall make decisions as to the investment of the Account as though
the Beneficiary were the Participant. To the extent required by a qualified
domestic relations order as defined in Section 414(p) of the Code, an alternate
payee shall make investment decisions with respect to a Participant's Account as
though such alternate payee were the Participant.
(2) If the Trustee receives any contribution under the Plan as to which
investment instructions have not been provided, the Trustee shall promptly
notify the Administrator and the Administrator shall take steps to elicit
instructions from the Participant. The Trustee shall credit any such
contribution to the Participant's Account and such amount shall be invested in
the Fidelity Fund selected by the Employer for such purposes or, absent Employer
selection, in the most conservative Fidelity Fund listed in Section 1.14(b),
until investment instructions have been received by the Trustee.
(c) All dividends, interest, gains and distributions of any nature received in
respect of Fund Shares shall be reinvested in additional shares of that Fidelity
Fund.
(d) Expenses attributable to the acquisition of investments shall be charged to
the Account of the Participant for which such investment is made.
6.03 PARTICIPANT DIRECTIONS TO TRUSTEE:
All Participant initial investment instructions filed with the Administrator
pursuant to the provisions of Section 6.02 shall be promptly transmitted by the
Administrator to the Trustee. A Participant shall transmit subsequent investment
instructions directly to the Trustee by means of the telephone exchange system
maintained by the Trustee for such purposes. The method and frequency for change
of investments will be determined under the (a) rules applicable to the
investments selected by the Employer in Section 1.14(b) and (b) the additional
rules of the Employer, if any, limiting the frequency of investment changes,
which are included in a separate written administrative procedure adopted by the
Employer and accepted by the Trustee. The Trustee shall have no duty to inquire
into the investment decisions of a Participant or to advise him regarding the
purchase, retention or sale of assets credited to his Account.
ARTICLE 7 RIGHT TO BENEFITS
7.01 NORMAL OR EARLY RETIREMENT:
Each Participant who attains his Normal Retirement Age or, if so provided by the
Employer in Section 1.06(b), Early Retirement Age, will have a 100-percent
nonforfeitable interest in his Account regardless of any Vesting Schedule
elected in Section 1.07. If a Participant retires upon the attainment of Normal
or Early Retirement Age, such retirement is referred to as a normal retirement.
Upon his
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normal retirement, the balance of the Participant's Account, plus any amounts
thereafter credited to his account, subject to the provisions of Section 7.08
will be distributed to him in accordance with Article 8.
If a Participant separates from service before satisfying the age requirements
for early retirement, but has satisfied the service requirement, the Participant
will be entitled to elect an early retirement distribution upon satisfaction of
such age requirement.
7.02 LATE RETIREMENT:
If a Participant continues in the service of the Employer after attainment of
Normal Retirement Age, he will continue to have a 100-percent nonforfeitable
interest in his Account and will continue to participate in the Plan until the
date he establishes with the Employer for his late retirement. Until he retires,
he has a continuing election to receive all or any portion of his Account. Upon
the earlier of his late retirement or the distribution date required under
Section 8.08, the balance of his Account, plus any amounts thereafter credited
to his Account, subject to the provisions of Section 7.08, will be distributed
to him in accordance with Article 8 below.
7.03 DISABILITY RETIREMENT:
If so provided by the Employer in Section 1.06(c), a Participant who becomes
disabled will have a 100-percent nonforfeitable interest in his Account, the
balance of which Account, plus any amounts thereafter credited to his Account,
subject to the provisions of Section 7.08, will be distributed to him in
accordance with Article 8 below. A Participant is considered disabled if he
cannot engage in any substantial, gainful activity because of a medically
determinable physical or mental impairment likely to result in death or to be of
a continuous period of not less than 12 months, and terminates his employment
with the Employer. Such termination of employment is referred to as a disability
retirement. Determinations with respect to disability shall be made by the
Administrator who may rely on the criteria set forth in Section 1.06(c) as
evidence that the Participant is disabled.
7.04 DEATH:
Subject, if applicable, to Section 8.04, if a Participant dies before the
distribution of his Account has commenced, or before such distribution has been
completed, his Account shall become 100 percent vested and his designated
Beneficiary or Beneficiaries will be entitled to receive the balance or
remaining balance of his Account, plus any amounts thereafter credited to his
Account, subject to to provisions of Section 7.08. Distribution to the
Beneficiary or Beneficiaries will be made in accordance with Article 8.
A Participant may designate a Beneficiary or Beneficiaries, or change any prior
designation of Beneficiary or Beneficiaries by giving notice to the
Administrator on a form designated by the Administrator. If more than one person
is designated as the beneficiary, their respective interests shall
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be as indicated on the designation form. In the case of a married Participant,
the participant's spouse shall be deemed to be the designated Beneficiary unless
the Participant's spouse has consented to another designation in the manner
described in Section 8.03(d).
A copy of the death notice or other sufficient documentation must be filed with
and approved by the Administrator. If upon the death of the Participant there
is, in the opinion of the Administrator, no designated Beneficiary for part or
all of the Participant's Account, such amount will be paid to his surviving
spouse or, if none, to his estate (such spouse or estate shall be deemed to be
the Beneficiary for purposes of the Plan). If a Beneficiary dies after benefits
to such Beneficiary have commenced, but before they have been completed, and, in
the opinion of the Administrator, no person has been designated to receive such
remaining benefits, then such benefits shall be paid in a lump sum to the
deceased Beneficiary's estate.
7.05 OTHER TERMINATION OF EMPLOYMENT:
If a Participant terminates his employment for any reason other than death or
normal, late or disability retirement, he will be entitled to a termination
benefit equal to the sum of (a) the vested percentage(s) of the value of the
Matching and/or Fixed/Discretionary Contributions to his Account, as adjusted
for income, expense, gain or loss, such percentage(s) determined in accordance
with the vesting schedule(s) selected by the Employer in Section 1.07, and (b)
the value of the Deferral, Employee, Qualified Discretionary, and Rollover
Contributions to his Account as adjusted for income, expense, gain or loss. The
amount payable under this Section 7.05 will be subject to the provisions of
Section 7.08 and will be distributed in accordance with Article 8 below.
7.06 SEPARATE ACCOUNT:
If a distribution from a Participant's Account has been made to him at a time
when he has a nonforfeitable right to less than 100 percent of his Account, the
Vesting Schedule in Section 1.07 will thereafter apply only to amounts in his
Account attributable to Employer contributions allocated after such
distribution. The balance of his Account immediately after such distribution
will be transferred to a seperate account which will be maintained for the
purpose of determining his interest therein according to the following
provisions.
At any relevant time prior to a forfeiture of any portion thereof under Section
7.07, a Participant's nonforfeitable interest in his Account held in a separate
account described in the preceding paragraph will be equal to P(AB+(RxD))-(RxD),
where P is the nonforfeitable percentage at the relevant time determined under
Section 7.05; AB is the account balance of the separate account at the relevant
time; D is the amount of the distribution; and R is the ratio of the account
balance at the relevant time to the account balance after distribution.
Following a forfeiture of any portion of such separate account under Section
7.07 below, any balance in the Participant's separate account will remain fully
vested and nonforfeitable.
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7.07 FORFEITURES:
If a Participant terminates his employment, any portion of his Account
(including any amounts credited after his termination of employment) not payable
to him under Section 7.05 will be forfeited by him upon the complete
distribution to him of the vested portion of his Account, if any, subject to the
possibility of reinstatement as described in the following paragraph. For
purposes of this paragraph, if the value of an Employee's vested Account balance
is zero, the Employee shall be deemed to have received a distribution of his
vested interest immediately following termination of employment. Such
forfeitures will be applied to reduce the contributions of the Employer next
payable under the Plan (or administrative expenses of the Plan); the forfeitures
shall be held in a money market fund pending such application.
If a Participant forfeits any portion of his Account under the preceding
paragraph but again becomes an Employee after such date, then the amount so
forfeited, without any adjustment for the earnings, expenses, losses or gains of
the assets credited to his Account since the date forfeited, will be recredited
to his Account (or to a separate account as described in Section 7.06, if
applicable) but only if he repays to the Plan before the earlier of five years
after the date of his reemployment or the date he incurs 5 consecutive 1-year
breaks in service following the date of the distribution the amount previously
distributed to him, without interest, under Section 7.05. If an Employee is
deemed to receive a distribution pursuant to this Section 7.07, and the Employee
resumes employment before 5 consecutive one-year breaks in service, the Employee
shall be deemed to have repaid such distribution on the date of his
reemployment. Upon such an actual or deemed repayment, the provisions of the
Plan (including Section 7.06) will thereafter apply as if no forfeiture had
occurred. The amount to be recredited pursuant to this paragraph will be derived
first from the forfeitures, if any, which as of the date of recrediting have yet
to be applied as provided in the preceding paragraph and, to the extent such
forfeitures are insufficient, from a special Employer contribution to be made by
the Employer.
If a Participant elects not to receive the nonforfeitable portion of his Account
following his termination of employment, the non-vested portion of his Account
shall be forfeited after the Participant has incurred five consecutive one-year
breaks in service as defined in Section 2.01(a)(33).
No forfeitures will occur solely as a result of a Participant's withdrawal of
Employee contributions.
7.08 ADJUSTMENT FOR INVESTMENT EXPERIENCE:
If any distribution under this Article 7 is not made in a single payment, the
amount retained by the Trustee after the distribution will be subject to
adjustment until distributed to reflect the income and gain or loss on the
investments in which such amount is invested and any expenses properly charged
under the Plan and Trust to such amounts.
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7.09 PARTICIPANT LOANS:
If permitted under Section 1.09, the Administrator shall allow Participants to
apply for a loan from the Plan, subject to the following:
(a) Loan Application.
All Plan loans shall be administered by the Administrator. Applications for
loans shall be made to the Administrator on forms available from the
Administrator. Loans shall be made available to all Participants on a
reasonably equivalent basis. For this purpose, the term 'Participant' means
any Participant or Beneficiary, including an alternate payee under a
qualified domestic relations order, as defined in Section 414(p) of the
Code, who is a party-in-interest (as determined under ERISA Section 3(14))
with respect to the Plan except no loans will be made to (1) an Employee
who makes a Rollover Contribution in accordance with Section 4.10 who has
not satisfied the requirements of Section 3.01 or (2) a
shareholder-employee or Owner-Employee. For purposes of this requirement, a
shareholder-employee means an employee or officer of an electing small
business (Subchapter S) corporation who owns (or is considered as owning
within the meaning of Section 318(a)(1) of the Code), on any day during the
taxable year of such corporation, more than 5% of the outstanding stock of
the corporation.
Participant with an existing loan may not apply for another loan until the
existing loan is paid in full and may not refinance an existing loan or
attain a second loan for the purpose of paying off the existing loan. a
Participant may not apply for more than one loan during each Plan Year.
(b) Limitation of Loan Amount/Purpose of Loan.
Loans shall not be made available to Highly Compensated Employees in an
amount greater than the amount made available to other Employees. No loan
to any Participant or Beneficiary can be made to the extent that such loan
when added to the outstanding balance of all other loans to the Participant
or Beneficiary would exceed the lesser of (1) $50,000 reduced by the excess
(if any) of the highest outstanding balance of loans during the one-year
period ending on the day before the loan is made over the outstanding
balance of loans from the plan on the date the loan is made, or (2)
one-half the present value of the nonforfeitable Account of the
Participant. For the purpose of the above limitation, all loans from all
plans of the Employer and Related Employers are aggregated. A Participant
may not request a loan for less than $1,000. The Employer may provide that
loans only be made from certain contribution sources within Participant
Account(s) by notifying the Trustee in writing of the restricted source.
Loans may be made for any purpose or if elected by the Employer in Section
1.09(a), on account of hardship only. A loan will be considered to be made
on account of hardship only if made on account of an immediate and heavy
financial need described in Section 7.10(b)(1).
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(c) Terms of Loan.
All loans shall bear a reasonable rate of interest as determined by the
Administrator based on the prevailing interest rates charged by persons in
the business of lending money for loans which would be made under similar
circumstances. The determination of a reasonable rate of interest must be
based on appropriate regional factors unless the Plan is administered on a
national basis in which case the Administrator may establish a uniform
reasonable rate of interest applicable to all regions.
All loans shall by their terms require that repayment (principal and
interest) be amortized in level payments, not less than quarterly, over a
period not extending beyond five years from the date of the loan unless
such loan is for the purchase of a Participant's primary residence, in
which case the repayment period may not extend beyond ten years from the
date of the loan. A Participant may prepay the outstanding loan balance
prior to maturity without penalty.
(d) Security.
Loans must be secured by the Participant's Accounts not to exceed 50
percent of the Participant's vested Account. A Participant must obtain the
consent of his/her spouse, if any, to use a Participant Account as security
for the loan, if the provisions of Section 8.03 apply to the Participant.
Spousal consent shall be obtained no earlier than the beginning of the
90-day period that ends on the date on which the loan is to be so secured.
The consent must be in writing, must acknowledge the effect of the loan,
and must be witnessed by a Plan representative or notary public. Such
consent shall thereafter be binding with respect to the consenting spouse
or any subsequent spouse with respect to that loan.
(e) Default.
The Administrator shall treat a loan in default if
(1) any scheduled repayment remains unpaid more than 90 days or
(2) there is an outstanding principal balance existing on a loan after the
last scheduled repayment date.
Upon default or termination of employment, the entire outstanding principal
and accrued interest shall be immediately due and payable. If a
distributable event (as defined by the Code) has occurred, the
Administrator shall direct the Trustee to foreclose on the promissory note
and offset the Participant's vested Account by the outstanding balance of
the loan. If a distributable event has not occurred, the Administrator
shall direct the Trustee to foreclose on the promissory note and offset the
Participant's vested Account as soon as a distributable event occurs.
(f) Pre-existing loans.
The provision in paragraph (a) of this Section 7.09 limiting a Participant
to one outstanding loan shall not apply to loans made before the Employer
adopted this prototype plan document. A Participant may
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not apply for a new loan until all outstanding loans made before the
Employer adopted this prototype plan have been paid in full. The Trustee
may accept any loans made before the Employer adopted this prototype plan
document except such loans which require the Trustee to hold as security
for the loan property other than the Participant's vested Account.
As of the Effective Date of amendment of this Plan in Section 1.01(g)(2),
the Trustee shall have the right to reamortize the outstanding principal
balance of any Participant loan that is delinquent. Such reamortization
shall be based upon the remaining life of the loan and the orginal maturity
date may not be extended.
Notwithstanding any other provision of this Plan, the portion of the
Participant's vested Account used as a security interest held by the Plan
by reason of a loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the Account payable at
the time of death or distribution, but only if the reduction is used as
repayment of the loan. If less than 100% of the Participant's vested
Account (determined without regard to the preceding sentence) is payable to
the surviving spouse, then the Account shall be adjusted by first reducing
the vested Account by the amount of the security used as repayment of the
loan, and then determining the benefit payable to the surviving spouse.
No loan to any Participant or Beneficiary can be made to the extent that
such loan when added to the outstanding balance of all other loans to the
Participant or Beneficiary would exceed the lesser of (1) $50,000 reduced
by the excess (if any) of the highest outstanding balance of loans during
the one-year period ending on the day before the loan is made over the
outstanding balance of loans from the plan on the date the loan is made or
(2) one-half the present value of the nonforfeitable Account of the
Participant. For the purpose of the above limitation, all loans from all
plans of the Employer and Related Employers are aggregated.
7.10 In-Service/Hardship Withdrawals:
Subject to the provisions of Article 8, a Participant shall not be permitted to
withdraw any Employer or Employee Contributions (and earnings thereon) prior to
retirement or termination of employment, except as follows:
(a) Age 59 1/2.
If permitted under Section 1.11(b), a Participant who has attained the age
of 59 1/2 is permitted to withdraw upon request all or any portion of the
Accounts specified by the Employer in 1.11(b).
(b) Hardship.
If permitted under Section 1.10, a Participant may apply to the
Administrator to withdraw some or all of his Deferral Contributions (and
earnings thereon accrued as of December 31, 1988) and, if applicable,
Rollover Contributions and such other amounts allowed by a predecessor
plan, if such
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withdrawal is made on account of a hardship. For purposes of this Section, a
distribution is made on account of hardship if made on account of an
immediate and heavy financial need of the Employee where such Employee lacks
other available resources. Determinations with respect to hardship shall be
made by the Administrator and shall be conclusive for purposes of the Plan,
and shall be based on the following special rules:
(1) The following are the only financial needs considered immediate and
heavy: expenses incurred or necessary for medical care (within the meaning
of Section 213(d) of the Code) of the Employee, the Employee's spouse,
children, or dependents; the purchase (excluding mortgage payments) of a
principal residence for the Employee; payment of tuition and related
educational fees for the next twelve (12) months of post-secondary education
for the Employee, the Employee's spouse, children, or dependents; or the
need to prevent the eviction of the Employee from, or a foreclosure on the
mortgage of, the Employee's principal residence.
(2) A distribution will be considered as necessary to satisfy an immediate
and heavy financial need of the Employee only if:
(i) The Employee has obtained all distributions, other than the hardship
distributions, and all nontaxable (at the time of the loan) loans currently
available under all plans maintained by the Employer:
(ii) The Employee suspends Deferral Contributions and Employee Contributions
to the Plan for the 12-month period following the date of his hardship
distribution. The suspension must also apply to all elective contributions
and Employee Contributions to all other qualified plans and non-qualified
plans maintained by the Employer, other than any mandatory Employer
contribution portion of a defined benefit plan, including stock option,
stock purchase and other similar plans, but not including health and welfare
benefit plans (other than the cash or deferred arrangement portion of a
cafeteria plan);
(iii) the Distribution is not excess of the amount of the immediate and
heavy financial need (including amounts necessary to pay any Federal, state
or local income taxes or penalties reasonably anticipated to result for the
distribution); and
(iv) The Employee agrees to limit Deferral Contributions (elective
contributions) to the Plan and any other qualified plan maintained by the
employer for the Employee's taxable year immediately following the taxable
year of the hardship distribution to the applicable limit under Section
402(g) of the Code for such taxable year less the amount of such Employee's
Deferral Contributions for the taxable year of the hardship distribution.
(3) A Participant must obtain the consent of his/her spouse, if any, to
obtain a hardship withdrawal, if the provisions of Section 8.03 apply to the
Participant.
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(c) Employee Contributions.
A Participant may elect to withdraw, in cash, up to one hundred percent of
the amount then credited to his Employee Contribution Account. Such
withdrawals shall be limited to one (1) per Plan Year unless this prototype
plan document is an amendment of a prior plan document, in which case the
rule and restrictions governing Employee Contribution withdrawals, if any,
are incorporated herein by reference.
7.11 PRIOR PLAN IN-SERVICE DISTRIBUTION RULES:
If designated by the Employer in Section 1.11(c), a Participant shall be
entitled to withdraw at anytime prior to his termination of employment, subject
to the provisions of Article 8 and the prior plan, any vested Employer
Contributions maintained in a Participant's Account for the specified period of
time.
ARTICLE 8 DISTRIBUTION OF BENEFITS PAYABLE AFTER TERMINATION OF SERVICE
8.01 DISTRIBUTION OF BENEFITS TO PARTICIPANTS AND BENEFICIARIES:
(a) Distributions from the Trust to a Participant or to the Beneficiary of the
Participant shall be made in a lump sum in cash or, if elected by the Employer
in Section 1.11, under a systematic withdrawal plan (installment(s)) upon
retirement, death, disability, or other termination of employment, unless
another form of distribution is required or permitted in accordance with
paragraph (d) of this section 8.01 or Sections 1.11(c), 8.02, 8.03, 8.04, or
11.02. A distribution may be made in Fund Shares, at the election of the
Participant, pursuant to the qualifying rollover of such distribution to a
Fidelity Investments individual retirement account.
(b) Distributions under a systematic withdrawal plan must be made in
substantially equal annual, or more frequent, installments, in cash, over a
period certain which does not extend beyond the life expectancy of the
Participant or the joint life expectancies of the Participant and his
Beneficiary, or, if the Participant dies prior to the commencement of his
benefits the life expectancy of the Participant's Beneficiary, as further
described in Section 8.04.
(c) Notwithstanding the provisions of Section 8.01(b) above, if a Participant's
Account is, and at the time of any prior distribution(s) was, $3,500 or less,
the balance of such account shall be distributed in a lump sum as soon as
practicable following retirement, disability, death, or other termination of
employment.
(d) This paragraph (d) 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 Article 8, a distributee may
elect, at the time and in the manner prescribed by the Administrator, to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover. The following
definitions shall apply for purposes of this paragraph (d):
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(1) Eligible rollover distribution: An eligible rollover distribution is any
distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a specified
period of ten year or more; any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to Employer
securities).
(2) Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code an annuity plan
described in Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to a
surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
(3) Distributee: A distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(4) Direct rollover: A direct rollover is a payment by the plan to the eligible
retirement plan specified by the distributee.
8.02 ANNUITY DISTRIBUTIONS:
If so provided in Section 1.11(c), a Participant may elect distributions made in
whole or in part in the form of an annuity contract subject to the provisions of
Section 8.03.
(a) An annuity contract distributed under the Plan must be purchased from an
insurance company and must be nontransferable. The terms of an annuity contract
shall comply with the requirements of the Plan and distributions under such
contract shall be made in accordance with Section 401(a)(9) of the Code and the
regulations thereunder.
(b)The payment period of an annuity contract distributed to the Participant
pursuant to this Section may be as long as the Participant lives. If the annuity
is payable to the Participant and his spouse or designated Beneficiary, the
payment period of an annuity contract may be for as long as either the
Participant or his spouse or designated Beneficiary lives. Such an annuity may
provide for an annuity certain feature for a period not exceeding the life
expectancy of the participant. If the annuity is payable certain feature for a
period not exceeding the life expectancy of the Participant. If the annuity is
payable to the participant and his spouse, such period may not exceed the joint
life and last survivor expectancy of the Participant and his spouse, or, if the
annuity is payable to the Participant and a designated
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Beneficiary, the joint life and last survivor expectancy of the Participant and
such Beneficiary. If the Participant dies prior to the commencement of his
benefits, the payment period of an annuity contract distributed to the
Beneficiary of the Participant may be as long as the Particpant's Beneficiary
lives, and may provide for an annuity certain feature for a period not exceeding
the life expectancy of the Beneficiary. Any annuity contract distributed under
the Plan must provide for nonincreasing payments.
8.03 JOINT AND SURVIVOR ANNUITIES/PRERETIREMENT SURVIVOR ANNUITIES:
(a) Application.
The provisions of this Section supersede any conflicting provisions of the Plan;
however, paragraph (b) of this Section shall not apply if the Participant's
Account does not exceed or at the time of any prior distribution did not exceed
$3,500. A Participant is described in this Section only if (i) the Participant
has elected distribution of his Account in the form of an Annuity Contract in
accordance with Section 8.02 or (ii) the Trustee has directly or indirectly
received a transfer of assets from another plan (including a predecessor plan)
to which Section 401(a)(11) of the Code applies with respect to such
Participant.
(b) Retirement Annuity.
Unless the Participant elects to waive the application of this Subsection in a
manner satisfying the requirements of Subsection (d) below, to the extent
applicable to the Participant, with the 90-day period preceding his Annuity
Starting Date (which election may be revoked, and if revoked, remade, at any
time in such period), the vested Account due any Participant to whom this
Subsection (b) applies will be paid to him by the purchase and delivery to him
of an Annuity Contract described in Section 8.02 providing a life annuity only
form of benefit or, if the Participant is married as of his Annuity Starting
Date, providing an immediate annuity for the life of the Participant with a
survivor annuity for the life of the Participant's spouse (determined as of the
date of distribution of the contract) which is 50 percent of the amount of the
annuity which is payable during the joint lives of the Participant and such
spouse. The Participant may elect to receive distribution of his benefits in the
form of such annuity as of the earliest date on which he could elect to receive
retirement benefits under the Plan. Within the period beginning 90 days prior to
the Participant's Annuity Starting Date and ending 3o days prior to such Date,
the Administrator will provide such Participant with a written explanation of
(1) the terms and conditions of the Annuity Contract described herein, (2 the
Participant's right to make, and the effect of, election to waive application of
this Subsection, (3) the rights of the Participant's spouse under subsection
(d), and (4) the right to revoke and the period of time necessary to revoke the
election to waive application of this Subsection.
(c) Annuity Death Benefit.
Unless the Participant elects to waive the application of this Subsection in a
manner satisfying the
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requirements of Subsection (d) below at any time within the applicable election
period (which election may be revoked, and if revoked, remade, at any time in
such period), if a married Participant to whom this Section applies dies before
his Annuity Starting Date, then notwithstanding any designation of a Beneficiary
to the contrary, 50 percent of his vested Account will be applied to purchase an
Annuity Contract described in Section 8.02 providing an annuity for the life of
the Participant's surviving spouse, which contract will then be promptly
distributed to such spouse. In lieu of the purchase of such an Annuity Contract,
the spouse may elect in writing to receive distributions under the Plan as if he
or she had been designated by the Participant as his Beneficiary with respect to
50 percent of his Account. For purposes of this Subsection, the applicable
election period will commence on the first day of the Plan Year in which the
Participant attains age 35 and will end on the date of the Participant's death,
provided that in the case of a Participant who terminates his employment the
applicable election period with respect to benefits accrued prior to the date of
such termination will in no event commence later than the date of his
termination of employment. A Participant may elect to waive the application of
this Subsection prior to the Plan Year in which he attains age 35, provided that
any such waiver will cease to be effective as of the first day of the Plan Year
in which the Participant attains age 35.
The Administrator will provide a Participant to whom this Subsection applies
with a written explanation with respect to the annuity death benefit described
in this Subsection (c) comparable to that required under Subsection (b) above.
Such explanation shall be furnished within whichever of the following periods
ends last: (1) the period beginning with the first day of the Plan Year in which
the Participant reaches age 32 and ending with the end of the Plan Year
preceding the Plan Year in which he reaches age 35, (2) a reasonable period
ending after the Employee becomes a Participant, (3) a reasonable period ending
after this Section 8.04 first becomes applicable to the Participant in
accordance with Section 8.04(a), (4) in the case of a Participant who separates
from service before age 35, a reasonable period of time ending after separation
from service. For purposes of the preceding sentence, the two-year period
beginning one year prior to the date of the event described in clause (2), (3)
or (4), whichever is applicable, and ending one year after such date shall be
considered reasonable, provided, that in the case of a Participant who separates
from service under (4) above and subsequently recommences employment with the
Employer, the applicable period for such Participant shall be redetermined in
accordance with this Subsection.
(d) Requirements of Elections.
This Subsection will be satisfied with respect to a waiver or designation which
is required to satisfy this Subsection if such waiver or designation is in
writing and either
(1) the Participant's spouse consents thereto in writing, which consent must
acknowledge the effect of such waiver or designation and be witnessed by a
notary public or Plan representative, or
(2) the Participant establishes to the satisfaction of the Administrator that
the consent of the
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Participant's spouse cannot be obtained because there is no spouse, because the
spouse cannot be located, or because of such other circumstances as the
Secretary of Treasury may prescribe.
Any consent by a spouse, or establishment that the consent of a spouse may not
be obtained, will be effective only with respect to a specific Beneficiary
(including any class of Beneficiaries or any contingent Beneficiaries) or form
of benefits identified in the Participant's waiver or designation, unless the
consent of the spouse expressly permits designations by the Participant without
any requirement of further consent by the spouse. A consent which permits such
designations by the Participant shall acknowledge that the spouse has the right
to limit consent to a specific Beneficiary and form of benefits and that the
spouse voluntarily elects to relinquish both such rights. A consent by a spouse
shall be irrevocable once made. Any consent, or establishment that such consent
may not be obtained, will be effective only with respect to such spouse. For
purposes of Subsections (b) and (c) above, no consent of a spouse shall be valid
unless the notice required by whichever Subsection is applicable has been
provided to the Participant.
(e) Former Spouse.
For purposes of this Section 8.03, a former spouse of a Participant will be
treated as the spouse or surviving spouse of the Participant, and a current
spouse will not be so treated, to the extent required under a qualified domestic
relations order, as defined in Section 414(p) of the Code.
(f) Vested Account Balance.
For purposes of this Section, vested Account shall include the aggregate value
of the Participant's vested Account derived from Employer and Employee
Contributions (including rollovers), whether vested before or upon death. The
provisions of this Section shall apply to a Participant who is vested in amounts
attributable to Employer contributions, Employee Contributions, or both, upon
death or at the time of distribution.
8.04 INSTALLMENT DISTRIBUTIONS:
This Section shall be interpreted and applied in accordance with the regulations
under Section 401(a)(9) of the Code, including the minimum distribution
incidental benefit requirement of Section 1.401(a)(9)-2 of the Proposed Treasury
Regulations, or any successor regulations of similar import.
(a) In General.
If a Participant's benefit may be distributed in accordance with Section
8.01(b), the amount to be distributed for each calendar year for which a minimum
distribution is required shall be at least an amount equal to the quotient
obtained by dividing the Participant's interest in his Account by the life
expectancy of the Participant or Beneficiary or the joint life and last survivor
expectancy of the Participant and his Beneficiary, whichever is applicable. For
calendar years beginning before January
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1, 1989, if a Participant's Beneficiary is not his spouse, the method of
distribution selected must insure that at least 50 percent of the present value
of the amount available for distribution is paid within the life expectancy of
the Participant. For calendar years beginning after December 31, 1988, the
amount to be distributed for each calendar year shall not be less than an amount
equal to the quotient obtained by dividing the Participant's interest in his
Account by the lesser of (1) the applicable life expectancy under Section
8.01(b), or (2) if a Participant's Beneficiary is not his spouse, the applicable
divisor determined under Section 1.401(a)(9)-2, Q&A 4 of the Proposed Treasury
Regulations, or any successor regulations of similar import. Distributions after
the death of the Participant shall be made using the applicable life expectancy
under (1) above, without regard to Section 1.401(a)(9)-2 of such regulations.
The minimum distribution required under this Subsection (a) for the calendar
year immediately preceding the calendar year in which the Participant's required
beginning date, as determined under Section 8.08(b), occurs shall be made on or
before the Participant's required beginning date, as so determined. Minimum
distributions for other calendar years shall be made on or before the close of
such calendar year.
(b) Additional Requirements for Distributions after Death of Participant.
(1) Distribution beginning before Death.
If the Participant dies before distribution of his benefits has begun,
distributions shall be made in accordance with the provisions of this paragraph.
Distributions under Section 8.01(a) shall be completed by the close of the
calendar year in which the fifth anniversary of the death of the Participant
occurs. Distributions under Section 8.01(b) shall commence, if the Beneficiary
is not the Participant's spouse, not later than the close of the calendar year
immediately following the calendar year in which the death of the Participant
occurs. Distributions under Section 8.01(b) to a Beneficiary who is the
Participant's surviving spouse shall commence not later than the close of the
calendar year in which the Participant would have attained age 70 1/2 or, if
later, the close of the calendar year immediately following the calendar year in
which the death of the Participant occurs. In the event such spouse dies prior
to the date distribution to him or her commences, he or she will be treated for
purposes of this Subsection (other then the preceding sentence) as if he/she
were the Participant. If the Participant has not designated a Beneficiary, or
the Participant or Beneficiary has not effectively selected a method of
distribution, distribution of the Participant's benefit shall be completed by
the close of the calendar year in which the fifth anniversary of the death of
the Participant occurs.
Any amount paid to a child of the Participant will be treated as if it had been
paid to the surviving spouse if the amount becomes payable to the surviving
spouse when the child reaches the age of majority.
For purposes of this Subsection (b)(1), the life expectancy of a Beneficiary who
is the Participant's surviving spouse shall be recalculated annually unless the
Participant's spouse irrevocably elects otherwise
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prior to the time distributions are required to begin. Life expectancy shall be
computed in accordance with the provisions of Subsection (a) above.
(2) Distribution beginning after Death.
If the Participant dies after distribution of his benefits has begun,
distributions to the Participant's Beneficiary will be made at least as rapidly
as under the method of distribution being used as of the date of the
Participant's death.
For purposes of this Section 8.04(b), distribution of a Participant's interest
in his Account will be considered to begin as of the Participant's required
beginning date, as determined under Section 8.08(b). If distribution in the form
of an annuity irrevocably commences prior to such date, distribution will be
considered to begin as of the actual date distribution commences.
(c) Life Expectancy.
For purposes of this Section, life expectancy shall be recalculated annually in
the case of the Participant or a Beneficiary who is the Participant's spouse
unless the Participant or Beneficiary irrevocably elects otherwise prior to the
time distributions are required to begin. If not recalculated in accordance with
the foregoing, life expectancy shall be calculated using the attained age of the
Participant or Beneficiary, whichever is applicable, as of such individual's
birth date in the first year for which a minimum distribution is required
reduced by one for each elapsed calendar year since the date life expectancy was
first calculated. For purposes of this Section, life expectancy and joint life
and last survivor expectancy shall be computed by use of the expected return
multiples in Table V and VI of Section 1.72-9 of the income tax Regulations.
A Participant's interest in his Account for purposes of this Section 8.04 shall
be determined as of the last valuation date in the calendar year immediately
preceding the calendar year for which a minimum distribution is required,
increased by the amount of any contributions allocated to, and decreased by any
distributions from, such Account after the valuation date. Any distribution for
the first year for which a minimum distribution is required made after the close
of such year shall be treated as if made prior to the close of such year.
8.05 IMMEDIATE DISTRIBUTIONS:
If the Account distributable to a Participant exceeds, or at the time of any
prior distribution exceeded, $3,500, no distribution will be made to the
Participant before he reaches his Normal Retirement Age (or age 62, if later),
unless the written consent of the Participant has been obtained. Such consent
shall be made in writing within the 90-day period ending on the Participant's
Annuity Starting Date. Within the period beginning 90 days before the
participant's Annuity Starting Date and ending 30 days before such Date, the
Administrator will provide such Participant with written notice comparable to
the notice
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described in Section 8.03(b) containing a general description of the material
features and an explanation of the relative values of the optional forms of
benefit available under the Plan and informing the Participant of his right to
defer receipt of the distribution until his Normal Retirement Age (or age 62, if
later).
The consent of the Participant's spouse must also be obtained if the Participant
is subject to the provisions of Section 8.03(a), unless the distribution will be
made in the form of the applicable retirement Annuity Contract described in
Section 8.03(b). A spouse's consent to early distribution, if required, must
satisfy the requirements of Section 8.03(d).
Neither the consent of the Participant nor the Participant's spouse shall be
required to the extent that a distribution is required to satisfy Section
401(a)(9) or Section 415 of the Code. In addition, upon termination of the Plan
if it does not offer an annuity option (purchased from a commercial provider)
and if the Employer or any Related Employer does not maintain another defined
contribution plan (other than an employee stock ownership plan as defined in
Code Section 4975(e)(7), the Participant's Account will, without the
Participant's consent, be distributed to the Participant. However, if any
Related Employer maintains another defined contribution play (other than an
employee stock ownership plan as defined in Section 4975(e)(7) of the Code),
then the Participant's Account will be transferred, without the Participant's
consent, to the other plan if the Participant does not consent to an immediate
distribution.
8.06 DETERMINATION OF METHOD OF DISTRIBUTION:
The Participant will determine the method of distribution of benefits to himself
and may determine the method of distribution to his Beneficiary. Such
determination will be made prior to the time benefits become payable under the
Plan. If the Participant does not determine the method of distribution to his
Beneficiary or if the Participant permits his Beneficiary to override his
determination, the Beneficiary, in the event of the Participant's death, will
determine the method of distribution of benefits to himself as if he were the
Participant. A determination by the Beneficiary must be made no later than the
close of the calendar year in which distribution would be required to begin
under Section 8.04(b) or, if earlier, the close of the calendar year in which
the fifth anniversary of the death of the Participant occurs.
8.07 NOTICE TO TRUSTEE:
The Administrator will notify the Trustee in writing whenever any Participant o
Beneficiary is entitled to receive benefits under the Plan. The Administrator's
notice shall indicate the form of benefits that such Participant or Beneficiary
shall receive and (in the case of distributions to a Participant) the name of
any designated Beneficiary or Beneficiaries.
8.08 TIME OF DISTRIBUTION:
In no event will distribution to a Participant be made later than the earlier of
the dates described in (a)
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and (b) below:
(a) Absent the consent of the Participant (and his spouse, if appropriate),
the 60th day after the close of the Plan Year in which occurs the latest of
the date on which the Participant attains age 65, the date on which the
Participant ceases to be employed by the Employer, or the 10th anniversary
of the year in which the Participant commenced participation in the Plan;
and
(b) April 1 of the calendar year first following the calendar year in which
the Participant attains age 70 1/2 or, in the case of a Participant who had
attained age 70 1/2 before January 1, 1988, the required beginning date
determined in accordance with (1) or (2) below:
(1) The required beginning date of a Participant who is not a 5-percent
owner is the first day of April of the calendar year following the calendar
year in which the later of retirement or attainment of age 70 1/2 occurs.
(2) The required beginning date of a Participant who is a 5-percent owner
during any year beginning after December 31, 1979, is the first day of
April following the later of
(A) the calender year in which the Participant attains age 70 1/2 or
(B) the earlier of the calender year with or within which ends the Plan
Year in which the Participant becomes a 5-percent owner, or the calendar
year in which the Participant retires.
Notwithstanding the foregoing, in the case of a Participant who attained age 70
1/2 during 1988 and who had not retired prior to January 1, 1989, the required
beginning date described in this paragraph shall be April 1, 1990.
Nothwithstanding (a) above, the failure of a Participant (and spouse) to consent
to a distribution while a benefit is immediately distributable, within the
meaning of Section 8.05, shall be deemed to be an election to defer commencement
of payment of any benefit sufficient to satisfy (a) above.
Once distributions have begun to a 5-percent owner under (b) above, they must
continue to be distributed, even if the Participant ceases to be a 5-percent
owner in a subsequent year.
For purposes of (b) above, a Participant is treated as a 5-percent owner if such
Participant is a 5-percent owner as defined in Section 416(i) of the Code
(determined in accordance with Section 416 but without regard to whether the
Plan is Top-Heavy) at any time during the Plan Year ending with or within the
calendar year in which such owner attains age 66 1/2 or any subsequent Plan
Year.
The Administrator shall notify the Trustee in writing whenever a distribution is
necessary in order to comply with the minimum distribution rules set forth in
this Section.
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8.09 WHEREABOUTS OF PARTICIPANTS AND BENEFICIARIES:
The Administrator will at all times be responsible for determining the
whereabouts of each Participant or Beneficiary who may be entitled to benefits
under the Plan and will at all times be responsible for instructing the Trustee
in writing as to the current address of each such Participant or Beneficiary.
The Trustee will be entitled to rely on the latest written statement received
from the Administrator as to such addresses.The Trustee will be under no duty to
make any distributions under the Plan unless and until it has received written
instructions from the Administrator satisfactory to the Trustee containing the
name and address of the distributee, the time when the distribution is to occur;
and the form which the distribution will take. Notwithstanding the foregoing, if
the Trustee attempts to make a distribution in accordance with the
Administrator's instructions but is unable to make such distribution because the
whereabouts of the distributee is unknown, the Trustee will notify the
Administrator of such situation and thereafter the Trustee will be under no duty
to make any further distributions to such distributee until it receives further
written instructions from the Administrator. If a benefit is forfeited because
the Administrator determines that the Participant or Beneficiary cannot be
found, such benefit will be reinstated by the Sponsor if a claim is filed by the
Participant or Beneficiary with the Administrator and the Administrator confirms
the claim to the Sponsor.
ARTICLE 9 TOP-HEAVY PROVISIONS
9.01 APPLICATION:
If the Plan is or becomes a Top-Heavy Plan in any Plan Year or is automatically
deemed to be Top-Heavy in accordance with the Employer's election in Section
1.12(a)(1) of the Adoption Agreement, the provisions of this Article 9 shall
supersede any conflicting provision in the Plan.
9.02 DEFINITIONS:
For purposes of this Article 9, the following terms have the meanings set forth
below:
(a) Key Employee.
Any Employee or former Employee (and the Beneficiary of any such Employee) who
at any time during the determination period was (1) an officer of the Employer
whose annual Compensation exceeds 50 percent of the dollar limitation under
Section 415(b)(1)(A) of the Code, (2) an owner (or considered an owner under
Section 318 of the Code) of one of the ten largest interests in the Employer if
such individual's annual Compensation exceeds the dollar limitation under
Section 415(c)(1)(A) of the Code, (3) a 5-percent owner of the Employer, or (4)
a 1-percent owner of the Employer who has annual Compensation of more than
$150,000. For purposes of this paragraph, the determination period is the Plan
Year containing the Determination Date and the four preceding Plan Years. The
determination of who is a Key Employee shall be made in accordance with Section
416(i)(1) of the
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Code and the regulations thereunder. Annual Compensation means compensation as
defined in Section 5.03(e)(2), but including amounts contributed by the Employer
pursuant to a salary reduction agreement which are excludable from the
Employee's gross income under Section 125, Section 402(a)(8), and Section 403(b)
of the Code.
(b) Top-Heavy Plan.
The Plan is a Top-Heavy Plan if any of the following conditions exist:
(1) the Top-Heavy Ration for the Plan exceeds 60 percent and the Plan is
not part of any Required Aggregation Group or Permissive Aggregation Group,
(2) the Plan is a part of a Required Aggregation Group but not part of a
Permissive Aggregation Group and the Top-Heavy Ratio for the Required
Aggregation Group exceeds 60 percent, or
(3) the Plan is a part of a Required Aggregation Group and a Permissive
Aggregation Group and the Top-Heavy Ratio for both Groups exceeds 60
percent.
(c) Top-Heavy Ratio.
(1) With respect to this Plan, or with respect to any Required Aggregation Group
or Permissive Aggregation Group that consists solely of defined contribution
plans (including any simplified Employee pension plans) and the Employer has not
maintained any defined benefit plan which during the 5-year period ending on the
determination date(s) has or has had accrued benefits, the Top-Heavy Ratio is a
fraction, the numerator of which is the sum of the account balances of all Key
Employees under the plans as of the Determination Date (including any part of
any account balance distributed in the 5-year period ending on the Determination
Date), and the denominator of which is the sum of all account balances
(including any part of any account balance distribute din the 5-year period
ending on the Determination Date) of all participants under the plans as of the
Determination Date. Both the numerator and denominator of the Top-Heavy Ratio
shall be increased, to the extent required by Section 416 of the Code, to
reflect any contribution which is due but unpaid as of the Determination Date.
(2) With respect to any Required Aggregation Group or Permissive Aggregation
Group that includes one or more defined benefit plans which, during the 5-year
period ending on the Determination Date, has covered or could cover a
Participant in this Plan, the Top-Heavy Ratio is a fraction, the numerator of
which is the sum of the account balances under the defined contribution plans
for all Key Employees and the present value of accrued benefits under the
defined benefit plans for all Key Employees, and the denominator of which is the
sum of the account balances under the defined contribution plans for all
Participants and the present value of accrued benefits under the defined benefit
plans for all Participants. Both the numerator and denominator of the Top-Heavy
Ratio shall be increased for any distribution of an account balance or an
accrued benefit made in the 5-year period ending on the Determination Date and
any contribution due but unpaid as of the Determination Date.
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(3) For purposes of (1) and (2) above, the value of Accounts and the present
value of accrued benefits will be determined as of the most recent Valuation
Date that falls within or ends with the 12-month period ending on the
Determination Date, except as provided in Section 416 of the Code and the
regulations thereunder for the first and second plan years of a defined benefit
plan. The Account and accrued benefits of a Participant (A) who is not a Key
Employee but who was a Key Employee in a prior year, or (B) who has not been
credited with at least one Hour of Service with the Employer at any time during
the 5-year period ending on the Determination Date, will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to which distributions,
rollovers, and transfers are taken into account, shall be made in accordance
with Section 416 of the Code and the regulations thereunder. Deductible employee
contributions shall not be taken into account for purposes of computing the Top-
Heavy Ratio. When aggregating plans, the value of Accounts and accrued benefits
shall be calculated with reference to the Determination Dates that fall within
the same calendar year.
For purposes of determining if the Plan, or any other plan included in a
Required Aggregation Group of which this Plan is a part, is a Top-Heavy Plan,
the accrued benefit in a defined benefit plan of an Employee other than a Key
Employee shall be determined under (i) the method, if any, that uniformly
applies for accrual purposes under all plans maintained by the Employer, or (ii)
if there is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional accrual rate of Section
411(b)(1)(C) of the Code.
(d) Permissive Aggregation Group.
The Required Aggregation Group plus any other qualified plans of the Employer or
a Related Employer which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of Sections
491(a)(4) and 410 of the Code.
(e) Required Aggregation Group.
(1) Each qualified plan of the Employer or Related Employer in which at least
one Key Employee participates, or has participated at any time during the
determination period (regardless of whether the plan has terminated), and
(2) any other qualified plan of the Employer or Related Employer which enables a
plan described in (1) above to meet the requirements of Sections 401(a)(4) or
410 of the Code.
(f) Determination Date.
For any Plan Year of the Plan subsequent to the first Plan Year, the last day of
the preceding Plan Year. For the first Plan Year of the Plan, the last day of
that Plan Year.
(g) Valuation Date.
The Determination Date.
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(h) Present Value.
Present value shall be based only on the interest rate and mortality table
specified in the Adoption Agreement.
9.03 MINIMUM CONTRIBUTION:
(a) Except as otherwise provided in (b) and (c) below, the Fixed/Discretionary
Contributions made on behalf of any Participant who is not a Key Employee shall
not be less than the lesser of 3 percent (or such other percent elected by the
Employer in Section 1.12(c)) of such Participant's Compensation or, in the case
where the Employer has no defined benefit plan which designates this Plan to
satisfy Section 401 of the Code, the largest percentage of Employer
contributions, as a percentage of the first $200,000 of the Key Employee's
Compensation, made on behalf of any Key Employee for that year. If the Employer
selected the Integrated Formula in Section 1.05(a)(2), the minimum contribution
shall be determined under paragraph (e) of this Section 9.03. Further, the
minimum contribution under this Section 9.03 shall be made even though, under
other Plan provisions, the Participant would not otherwise be entitled to
receive a contribution, or would have received a lesser contribution for the
year, because (1) the Participant failed to complete 1,000 Hours of Service or
any equivalent service requirement provided in the Adoption Agreement or (2) the
Participant's Compensation was less than a stated amount.
(b) The provisions of (a) above shall not apply to any Participant who was not
employed by the Employer on the last day of the Plan Year.
(c) The Employer contributions for the Plan Year made on behalf of each
Participant who is not a Key Employee and who is a Participant in a defined
benefit plan maintained by the Employer shall not be less than 5 percent of such
Participant's Compensation, unless the Employer has provided in Section 1.12(c)
that the minimum contribution requirement will be met in the other plan or plans
of the Employer.
(d) The minimum contribution required under (a) above (to the extent required to
be nonforfeitable under Section 416(b) of the Code) may not be forfeited under
Section 411(a)(3)(B) or 411(a)(3)(D) of the Code.
(e) If the Employer elected an Integrated Formula in Section 1.05(a)(2), the
allocation steps in Section 4.06(b)(2) shall be preceded by the following steps:
(1) The Discretionary Employer Contributions will be allocated to each
eligible Participant (as determined under this Section 9.03) in the ratio
that the Participant's Compensation bears to all Participants'
Compensation, but not in excess of 3% (or such other percent elected by the
Employer in Section 1.12(c).
(2) Any Discretionary Employer Contributions remaining after (e)(1) above
will be allocated to each eligible Participant in the ratio that the
Participant's Excess Compensation for the Plan Year bears to the Excess
Compensation of all eligible Participants, but not in excess of 3% (or such
other percent elected by the Employer in Section 1.12(c)).
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9.04 ADJUSTMENT TO THE LIMITATION ON CONTRIBUTIONS AND BENEFITS:
If this Plan is in Top-Heavy status, the number 100 shall be substituted for the
number 125 in subsections (e)(3) and (e)(4) of Section 5.03. However, this
substitution shall not take effect with respect to this Plan in any Plan Year in
which the following requirements are satisfied:
(a) The Employer contributions for such Plan Year made on behalf of each
Participant who is not a Key Employee and who is a Participant in a defined
plan maintained by the Employer is not less than 7 1/2 percent of such
Participant's Compensation.
(b) The sum of the present value as of the Determination Date of (1) the
aggregate accounts of all Key Employees under all defined contribution
plans of the Employer and (2) the cumulative accrued benefits of all Key
Employees under all defined benefit plans of the Employer does not exceed
90 percent of the same amounts determined for all Participants under all
plans of the Employer that are Top-Heavy Plans, excluding Accounts and
accrued benefits for Employees who formerly were but are no longer Key
Employees.
The substitutions of the number 100 for 125 shall take effect in any Limitation
Year with respect to any Participant for whom no benefits are accrued or
contributions made for such Year.
9.05 MINIMUM VESTING:
For any Plan Year in which the Plan is a Top-Heavy Plan and all Plan Years
thereafter, the Top-Heavy Vesting Schedule elected in Section 1.12(d) will
automatically apply to the Plan. The Top-Heavy Vesting Schedule applies to all
benefits within the meaning of Section 411(a)(7) of the Code except those
attributable to Employee Contributions or those already subject to a Vesting
Schedule which vests at least as rapidly in all cases as the schedule elected in
Section 1.12(d), including benefits accrued before the Plan becomes a Top-Heavy
Plan. Further, no decrease in a Participant's nonforfeitable percentage may
occur in the event the Plan's status as a Top-Heavy Plan changes for any Plan
Year. However, this Section 9.05 does not apply to the Account of any Employee
who does not have an Hour of Service after the Plan has initially become a
Top-Heavy Plan and such Employee's Account attributable to Employer
Contributions will be determined without regard to this Section 9.05.
ARTICLE 10 AMENDMENT AND TERMINATION
10.01 AMENDMENT BY EMPLOYER:
The Employer reserves the authority, subject to the provisions of Article 1 and
Section 10.03, to amend the Plan:
(a) Changes to Elections Contained in the Adoption Agreement.
By filing with the Trustee an amended Adoption Agreement, executed by the
Employer only, on which said Employer has indicated a change or changes in
provisions previously elected by it. Such changes are
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to be effective on the Effective Date of such amended Adoption Agreement
except that retroactive changes to a previous election or elections
pursuant to the regulations issued under Section 401(a)(4) of the Code
shall be permitted. Any such change notwithstanding, no Participant's
Account shall be reduced by such change below the amount to which the
Participant would have been entitled if he had voluntarily left the employ
of the Employer immediately prior to the date of the change. The Employer
may from time to time make any amendment to the Plan that may be necessary
to satisfy Sections 415 or 416 of the Code because of the required
aggregation of multiple plans by completing overriding plan language in the
Adoption Agreement. The Employer may also add certain model amendments
published by the Internal Revenue Service which specifically provide that
their adoption will not cause the Plan to be treated as an individually
designed plan; or
(b) Other Changes.
By amending any provision of the Plan for any reason other than those specified
in (a) above. However, upon making such amendment, including a waiver of the
minimum funding requirement under Section 412(d) of the Code, the Employer may
no longer participate in this prototype plan arrangement and will be deemed to
have an individually designed plan. Following such amendment, the Trustee may
transfer the assets of the Trust to the trust forming part of such newly adopted
plan upon receipt of sufficient evidence (such as a determination letter or
opinion letter from the Internal Revenue Service or an opinion of counsel
satisfactory to the Trustee) that such trust will be a qualified trust under the
Code.
10.02 AMENDMENT BY PROTOTYPE SPONSOR:
The Prototype Sponsor may in its discretion amend the Plan or the Adoption
Agreement at any time, subject to the provisions of Article 1 and Section 10.03,
and provided that the Prototype Sponsor mails a copy of such amendment to the
Employer at its last known address as shown on the books of the Prototype
Sponsor.
10.03 AMENDMENTS AFFECTING VESTED AND/OR ACCRUED BENEFITS:
(a) Except as permitted by Section 10.04, no amendment to the Plan shall be
effective to the extent that it has the effect of decreasing a Participant's
Account or eliminating an optional form of benefit with respect to benefits
attributable to service fore the amendment. Furthermore, if the Vesting Schedule
of the Plan is amended, the nonforfeitable interest of a Participant in his
Account, determined as of the later of the date the amendment is adopted or the
date it becomes effective, will not be less than the Participant's
nonforfeitable interest in his Account determined without regard to such
amendment.
(b) If the Plan's Vesting Schedule is amended, including any amendment resulting
from a change to or from Top-Heavy Plan status, or the Plan is amended in any
way that directly or indirectly affects the computation of a Participant's
nonforfeitable interest in his Account, each Participant with at least three (3)
Years of Service for Vesting with the Employer may elect, within a reasonable
period after the adoption
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of the amendment, to have the nonforfeitable percentage of his Account computed
under the Plan without regard to such amendment. The Participant's election may
be made within 60 days from the latest of (1) the date the amendment is adopted,
(2) the date the amendment becomes effective, or (3) the date the Participant is
issued written notice of the amendment by the Employer or the Administrator.
10.04 RETROACTIVE AMENDMENTS:
An amendment made by the Prototype Sponsor in accordance with Section 10.02 may
be made effective on a date prior to the first day of the Plan Year in which it
is adopted if such amendment is necessary or appropriate to enable the Plan and
Trust to satisfy the applicable requirements of the Code or to conform the Plan
to any change in federal law, or to any regulations or ruling thereunder. Any
retroactive amendment by the Employer shall be subject to the provisions of
Section 10.01.
10.05 TERMINATION:
The Employer has adopted the Plan with the intention and expectation that
contributions will be continued indefinitely. However, said Employer has no
obligation or liability whatsoever to maintain the Plan for any length of time
and may discontinue contributions under the Plan or terminate the Plan at any
time by written notice delivered to the Trustee without any liability hereunder
for any such discontinuance or termination.
10.06 DISTRIBUTION UPON TERMINATION OF THE PLAN:
Upon termination or partial termination of the Plan or complete discontinuance
of contributions thereunder, each Participant (including a terminated
Participant with respect to amounts not previously forfeited by him) who is
affected by such termination or partial termination or discontinuance will have
a fully vested interest in his Account, and, subject to Section 4.05 and Article
8, the Trustee will distribute to each Participant or other person entitled to
distribution the balance of the Participant's Account in a single lump sum
payment. In the absence of such instructions, the Trustee will notify the
Administrator of such situation and the Trustee will be under no duty to make
any distributions under the Plan until it receives written instructions from the
Administrator. Upon the completion of such distributions, the Trust will
terminate, the Trustee will be relieved from all liability under the Trust, and
no Participant or other person will have any claims thereunder, except as
required by applicable law.
10.07 MERGER OR CONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS:
In case of any merger or consolidation of the Plan with, or transfer of assets
and liabilities of the Plan to, any other plan, provision must be made so that
each Participant would, if the 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 the Plan had then terminated.
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ARTICLE 11 AMENDMENT AND CONTINUATION OF PREDECESSOR PLAN;
TRANSFER OF FUNDS TO OR FROM OTHER QUALIFIED PLANS.
11.01 AMENDMENT AND CONTINUATION OF PREDECESSOR PLAN:
In the event the Employer has previously established a plan (the 'predecessor
plan') which is a defined contribution plan under the Code and which on the date
of adoption of the Plan meets the applicable requirements of section 401(a) of
the Code, the Employer may, in accordance with the provisions of the predecessor
plan, amend and continue the predecessor plan in the form of the Plan and become
the Employer hereunder, subject to the following:
(a) Subject to the provisions of the Plan, each individual who was a Participant
or former Participant in the predecessor plan immediately prior to the effective
date of such amendment and continuation will become a Participant or former
Participant in the Plan;
(b) No election may be made under the vesting provisions of the Adoption
Agreement if such election would reduce the benefits of a Participant under the
Plan to less than the benefits to which he would have been entitled if he
voluntarily separated from the service of the Employer immediately prior to such
amendment and continuation:
(c) No amendment to the Plan shall decrease a Participant's accrued benefit or
eliminate an optional form of benefit and if the amendment of the predecessor
plan in the form of the Plan results in a change in the method of crediting
service for vesting purposes between the general method set forth in Section
2530.200b-2 of the Department of Labor Regulations and the elapsed-time method
in Section 2.01(a)(33) of the Plan, each Participant with respect to whom the
method of crediting vesting service is changed shall be treated in the manner
set forth by the provisions of Section 1.410(a)-7(f)(1) of the Treasury
Regulations which are incorporated herein by reference;
(d) The amounts standing to the credit of a Participant's Account immediately
prior to such amendment and continuation which represent the amounts properly
attributable to (1) contributions by the Participant and (2) contributions by
the Employer and forfeitures will constitute the opening balance of his Account
or Accounts under the Plan;
(e) Amounts being paid to a former Participant or to a Beneficiary in accordance
with the provisions of the predecessor plan will continue to be paid in
accordance with such provisions;
(f) Any election and waiver of the qualified pre-retirement annuity in effect
after August 23, 1984, under the predecessor plan immediately before such
amendment and continuation will be deemed a valid election and waiver of
Beneficiary under Section 8.04 if such designation satisfies the requirements of
Section 8.04(d), unless and until the Participant revokes such election and
waiver under the Plan: and
(g) Unless the Employer and the Trustee agree otherwise, all assets of the
predecessor trust will be deemed
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to be assets of the Trust as of the effective date of such amendment. Such
assets will be invested by the Trustee as soon as reasonably practicable
pursuant to Article 6. The Employer agrees to assist the Trustee in any way
requested by the Trustee in order to facilitate the transfer of assets from the
predecessor trust to the Trust Fund.
11.02 TRANSFER OF FUNDS FROM AN EXISTING PLAN
The employer may from time to time direct the Trustee, in accordance with such
rules as the Trustee may establish, to accept cash, allowable Fund Shares or
Participant loan promissory notes transferred for the benefit of Participants
from a trust forming part of another qualified plan under the Code, provided
such plan is a defined contribution plan. Such transferred assets will become
assets of the Trust as of the date they are received by the Trustee. Such
transferred assets will be credited to Participants' Accounts in accordance with
their respective interests immediately upon receipt by the Trustee. A
Participant's interest under the Plan in transferred assets which were fully
vested and nonforfeitable under the transferring plan will be fully vested and
nonforfeitable at all times. Such transferred assets will be invested by the
Trustee in accordance with the provisions of paragraph (g) of Section 11.01 as
if such assets were transferred from a predecessor plan. No transfer of assets
in accordance with this Section may cause a loss of an accrued or optional form
of benefit protected by Section 411(d)(6) of the Code.
11.03 ACCEPTANCE OF ASSETS BY TRUSTEE:
The Trustee will not accept assets which are not either in a medium proper for
investment under the Plan, as set forth in Section 1.14(b), or in cash. Such
assets shall be accompanied by written instructions showing separately the
respective contributions by the prior employer and by the Employee, and
identifying the assets attributable to such contributions. The Trustee shall
establish such accounts as may be necessary or appropriate to reflect such
contributions under the Plan. The Trustee shall hold such assets for investment
in accordance with the provisions of Article 6, and shall in accordance with the
written instructions of the Employer make appropriate credits to the Accounts of
the Participants for whose benefit assets have been transferred.
11.04 TRANSFER OF ASSETS FROM TRUST:
The Employer may direct the Trustee to transfer all or a specified portion of
the Trust assets to any other plan or plans maintained by the Employer or the
employer or employers of a former Participant or Participants, provided that the
Trustee has received evidence satisfactory to it that such other plan meets all
applicable requirements of the Code. The assets so transferred shall be
accompanied by written instructions from the Employer naming the persons for
whose benefit such assets have been transferred, showing separately the
respective contributions by the Employer and by each Participant, if any, and
identifying the assets attributable to the various contributions. The Trustee
shall have no further liabilities with respect to assets so transferred.
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ARTICLE 12 MISCELLANEOUS:
12.01 COMMUNICATION TO PARTICIPANTS:
The Plan will be communicated to all Participants by the Employer promptly after
the Plan is adopted.
12.02 LIMITATION OF RIGHTS:
Neither the establishment of the Plan and the Trust, nor any amendment thereof,
nor the creation of any fund or account, nor the payment of any benefits, will
be construed as giving to any Participant or other person any legal or equitable
right against the Employer, Administrator, or Trustee, except as provided
herein; and in no event will the terms of employment or service of any
Participant be modified or in any way affected hereby. It is a condition of the
Plan, and each Participant expressly agrees by his participation herein, that
each Participant will look solely to the assets held in the Trust for the
payment of any benefit to which he is entitled under the Plan.
12.03 NON-ALIENABILITY OF BENEFITS AND QUALIFIED DOMESTIC RELATIONS ORDERS:
The benefits provided hereunder will not be subject to alienation, assignment,
garnishment, attachment, execution, or levy of any kind, either voluntarily or
involuntarily, and any attempt to cause such benefits to be so subjected will
not be recognized, except to such extent as may be required by law. The
preceding sentence shall also apply to the creation, assignment, or recognition
of a right to any benefit payable with respect to a Participant pursuant to a
domestic relations order, unless such order is determined by the Plan
Administrator to be a qualified domestic relations order, as defined in Section
414(p) of the Code, or any domestic relations order entered before January 1,
1985. The Administrator must establish reasonable procedures to determine the
qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Administrator will promptly notify the Participant and any
alternate payee named in the order, in writing, of the receipt of the order and
the Plan's procedures for determining the qualified status of the order. Within
a reasonable period of time after receiving the domestic relations order, the
Administrator must determine the qualified status of the order and must notify
the Participant and each alternate payee, in writing, of its determination. The
Administrator must provide notice under this paragraph by mailing to the
individual's address specified in the domestic relations order, or in a manner
consistent with the Department of Labor relations.
If any portion of the Participant's Account is payable during the period the
Administrator is making its determination of the qualified status of the
domestic relations order, the Administrator must make a separate accounting of
the amounts payable. If the Administrator determines the order is a qualified
domestic relations order within 18 months of the date amounts first are payable
following receipt of the order, the Administrator will direct the Trustee to
distribute the payable amounts in accordance with the order. If the
Administrator does not make his determination of the qualified status of the
order within the 18-month determination period, the Administrator will direct
the Trustee to distribute the payable
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amounts in the manner the Plan would distribute if the order did not exist and
will apply the order prospectively if the Administrator later determines the
order is a qualified domestic relations order.
A domestic relations order will not fail to be deemed a qualified domestic
relations order merely because it requires the distribution or segregation of
all or part of a Participant's Account with respect to an alternate payee prior
to the Participant's earliest retirement age (as defined in Section 414(p) of
the Code) under the Plan. A distribution to an alternate payee prior to the
Participant's attainment of the earliest retirement age is available only if (a)
the order specifies distribution at that time and (b) if the present value of
the alternate payee's benefits under the Plan exceeds $3,500, and the order
requires, and the alternate payee consents to, a distribution occurring prior to
the Participant's attainment of earliest retirement age.
12.04 FACILITY OF PAYMENT:
In the event the Administrator determines, on the basis of medical reports or
other evidence satisfactory to the Administrator, that the recipient of any
benefit payments under the Plan is incapable of handling his affairs by reason
of minority, illness, infirmity, or other incapacity, the Administrator may
direct the trustee to disburse such payments to a person or institution
designated by a court which has jurisdiction over such recipient or a person or
institution otherwise having the legal authority under state law for the care
and control of such recipient. The receipt by such person or institution of any
such payments shall be complete acquittance therefore, and any such payment to
the extent thereof, shall discharge the liability of the Trust for the payment
of benefits hereunder to such recipient.
12.05 INFORMATION BETWEEN EMPLOYER AND TRUSTEE:
The Employer agrees to furnish the Trustee, and the Trustee agrees to furnish
the Employer, with such information relating to the Plan and Trust as may be
required by the other in order to carry out their respective duties hereunder,
including without limitation information required under the Code and any
regulations issued or forms adopted by the Treasury Department thereunder or
under the provisions of ERISA and any regulations issued or forms adopted by the
Labor Department thereunder.
12.06 EFFECT OF FAILURE TO QUALIFY UNDER CODE:
Notwithstanding any other provision contained herein, if the Employer fails to
obtain or retain approval of the Plan by the Internal Revenue Service as a
qualified Plan under the Code, the Employer may no longer participate in this
prototype Plan arrangement and will be deemed to have an individually designed
plan.
12.07 NOTICES:
Any notice or other communication in connection with this Plan shall be deemed
delivered in writing if addressed as provided below and if either actually
delivered at said address or, in the case of a letter,
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three business days shall have elapsed after the same shall have been deposited
in the United States mails, first-class postage prepaid and registered or
certified:
(a) If to the Employer or Administrator, to it at the address set forth in
the Adoption Agreement, to the attention of the person specified to receive
notice in the Adoption Agreement;
(b) If to the Trustee, to it at the address set forth in the Adoption
Agreement; or, in each case at such other address as the addressee shall
have specified by written notice delivered in accordance with the foregoing
to the addressor's then effective notice address.
12.08 GOVERNING LAW:
The Plan and the accompanying Adoption Agreement will be construed,
administered, and enforced according to ERISA, and to the extent not preempted
thereby, the laws of the Commonwealth of Massachusetts.
ARTICLE 13 PLAN ADMINISTRATION
13.01 POWERS AND RESPONSIBILITIES OF THE ADMINISTRATOR:
The Administrator has the full power and the full responsibility to administer
the Plan in all of its details, subject, however, to the requirements of ERISA.
The Administrator's powers and responsibilities include, but are not limited to,
the following:
(a) To make and enforce such rules and regulations as it deems necessary or
proper for the efficient administration of the plan;
(b) To interpret the Plan, its interpretation thereof in good faith to be
final and conclusive on all persons claiming benefits under the Plan;
(c) To decide all questions concerning the Plan and the eligibility of any
person to participate in the Plan;
(d) To administer the claims and review procedures specified in Section
13.03;
(e) To compute the amount of benefits which will be payable to any
Participant, former Participant, or Beneficiary in accordance with the
provisions of the Plan;
(f) To determine the person or persons to whom such benefits will be paid;
(g) To authorize the payment of benefits and provide for the distribution
of Code Section 402(f) notices;
(h) To comply with the reporting and disclosure requirements of Part 1 of
Subtitle B of Title I of ERISA;
(i) To appoint such agents, counsel, accountants, and consultants as may
be required to assist in administering the Plan;
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(j) By written instrument, to allocate and delegate its fiduciary
responsibilities in accordance with Section 405 of ERISA including the
formation of an Administrative Committee to administer the Plan;
(k)To provide bonding coverage as required under Section 412 of ERISA.
13.02 NONDISCRIMINATORY EXERCISE OF AUTHORITY:
Whenever, in the administration of the Plan, any discretionary action by the
Administrator is required, the Administrator shall exercise its authority in a
nondiscriminatory manner so that all persons similarly situated will receive
substantially the same treatment.
13.03 CLAIMS AND REVIEW PROCEDURES:
(a) Claims Procedure.
If any person believes he is being denied any rights or benefits under the Plan,
such person may file a claim in writing with the Administrator. If any such
claim is wholly or partially denied, the Administrator will notify such person
of its decision in writing. Such notification will contain (1) specific reasons
for the denial, (2) specific reference to pertinent Plan provisions, (3) a
description of any additional material or information necessary or such person
to perfect such claim and an explanation of why such material or information is
necessary, and (4) information as to the steps to be taken if the person wishes
to submit a request for review. Such notification will be given within 90 days
after the claim is received by the Administrator (or within 30 days, if special
circumstances require an extension of time for processing the claim, and if
written notice of such extension and circumstances is given to such person
within the initial 90-day period). If such notification is not given within such
period, the claim will be considered denied as of the last day of such period
and such person may request a review of his claim.
(b) Review Procedure.
Within 60 days after the date on which a person receives a written notice of a
denied claim (or, if applicable, within 60 days after the date on which such
denial is considered to have occurred), such person (or his duly authorized
representative) may (1) file a written request with the Administrator for a
review of his denied claim and of pertinent documents and (2) submit written
issues and comments to the Administrator. The Administrator will notify such
person of its decision in writing. Such notification will be written in a manner
calculated to be understood by such person and will contain specific reasons for
the decision as well as specific references to pertinent Plan provisions. The
decision on review will be made within 60 days after the request for review is
received by the Administrator (or within 120 days, if special circumstances
require an extension of time for processing the request, such as an election by
the Administrator to hold a hearing, and if written notice of such extension and
circumstances is given to such person within the initial 60-day period). If the
decision on review is not made within such period, the claim will be considered
denied.
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13.04 NAMED FIDUCIARY:
The Administrator is a 'named fiduciary' for purposes of Section 402(a)(1) of
ERISA and has the powers and responsibilities with respect to the management and
operation of the Plan described herein.
13.05 COSTS OF ADMINISTRATION:
Unless some or all are paid by the Employer, all reasonable costs and expenses
(including legal, accounting, and employee communication fees) incurred by the
Administrator and the Trustee in administering the Plan and Trust will be paid
first from the forfeitures (if any) resulting under Section 7.07, then from the
remaining Trust Fund. All such costs and expenses paid from the Trust will,
unless allocable to the Accounts of particular Participants, be charged against
the Accounts of all Participants on a prorata basis or in such other reasonable
manner as may be directed by the Employer.
ARTICLE 14 TRUST AGREEMENT
14.01 ACCEPTANCE OF TRUST RESPONSIBILITIES:
By executing the Adoption Agreement, the Employer establishes a trust to hold
the assets of the Plan. By executing the Adoption Agreement, the Trustee agrees
to accept the rights, duties and responsibilities set forth in this Article 14.
14.02 ESTABLISHMENT OF TRUST FUND:
A trust is hereby established under the Plan and the Trustee will open and
maintain a trust account for the Plan and, as part thereof, Participants'
Accounts for such individuals as the Employer shall from time to time give
written notice to the Trustee are Participants in the Plan. The Trustee will
accept and hold in the Trust Fund such contributions on behalf of Participants
as it may receive from time to time from the Employer. The Trust Fund shall be
fully invested and reinvested in accordance with the applicable provisions of
the Plan in Fund Shares or as otherwise provided in Section 14.10
14.03 EXCLUSIVE BENEFIT:
The Trustee shall hold the assets of the Trust Fund for the exclusive purpose of
providing benefits to Participants and Beneficiaries and defraying the
reasonable expenses of administering the Plan. No assets of the Plan shall
revert to the Employer except as specifically permitted by the terms of the
Plan.
14.04 POWERS OF TRUSTEE:
The Trustee shall have no discretion or authority with respect to the investment
of the Trust Fund but shall act solely as a directed trustee of the funds
contributed to it. In addition to and not in limitation of such powers as the
Trustee has by law or under any other provisions of the Plan, the Trustee will
have
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the following powers, each of which the Trustee exercises solely as directed
Trustee in accordance with the written direction of the Employer except to the
extent a Plan asset is subject to Participant direction of investment and
provided that no such power shall be exercised in any manner inconsistent with
the provisions of ERISA:
(a) to deal with all or any part of the Trust Fund and to invest all or a
part of the Trust Fund in investments available under the Plan, without
regard to the law of any state regarding proper investment;
(b)to retain uninvested such cash as it may deem necessary or advisable,
without liability for interest thereon, for the administration of the
Trust;
(c) to sell, convert, redeem, exchange, or otherwise dispose of all or any
part of the assets constituting the Trust Fund;
(d) to enforce by suit or otherwise, or to waive, its rights on behalf of
the Trust, and to defend claims asserted against it or the Trust, provided
that the Trustee is indemnified to its satisfaction against liability and
expenses;
(e) to employ such agents and counsel as may reasonably necessary in
collecting, managing, administering, investing, distributing, and
protecting the Trust Fund or the assets thereof and to pay them reasonable
compensation;
(f) to compromise, adjust, and settle any and all claims against or in
favor of it or the Trust;
(g) to oppose, or participate in and consent to the reorganization, merger,
consolidation, or readjustment of the finances of any enterprise, to pay
assessments and expenses in connection therewith, and to deposit securities
under deposit agreements;
(h) to apply for or purchase Annuity Contracts in accordance with Section
8.02;
(i) to hold securities unregistered, or to register them in its own name or
in the name of nominees;
(j) to appoint custodians to hold investments within the jurisdiction of
the district courts of the United States and to deposit securities with
stock clearing corporations or depositories or similar organizations;
(k) to make, execute, acknowledge, and deliver any and all instruments that
it deems necessary or appropriate to carry out the powers herein granted;
and
(l) generally, to exercise any of the powers of an owner with respect to
all or any part of the Trust Fund.
The Employer specifically acknowledges and authorizes that affiliates of the
Trustee may act as its agent in the performance of ministerial, nonfiduciary
duties under the Trust. The expenses and compensation of such agent shall be
paid by the Trustee.
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The Trustee shall provide the Employer with reasonable notice of any claim filed
against the Plan or Trust or with regard to any related matter, or of any claim
filed by the Trustee on behalf of the Plan or Trust or with regard to any
related matter.
14.05 ACCOUNTS:
The Trustee will keep full accounts of all receipts and disbursements and other
transactions hereunder. Within 60 days after the close of each Plan Year, within
60 days after termination of the Trust, and at such other times as may be
appropriate, the Trustee will determine the then net fair market value of the
Trust Fund as of the close of the Plan Year, as of the termination of the Trust,
or as of such other time, whichever is applicable, and will render to the
Employer and Administrator on account of its administration of the Trust during
the period since the last such accounting, including all allocations made by it
during such period.
14.06 APPROVING OF ACCOUNTS:
To the extent permitted by law, the written approval of any account by the
Employer or Administrator will be final and binding, as to all matters and
transactions stated or shown therein, upon the Employer, Administrator,
Participants, and all persons who then are or thereafter become interested in
the Trust. The failure of the Employer or Administrator to notify the Trustee
within six (6) months after the receipt of any account of its objection to the
account will, to the extent permitted by law, by the equivalent of written
approval. If the Employer or Administrator files any objections within six- (6-)
month period with respect to any matters or transactions stated or shown in the
account, and the Employer or Administrator and the Trustee cannot amicably
settle the question raised by such objections, the Trustee will have the right
to have such questions settled by judicial proceedings.
Nothing herein contained will be construed so as to deprive the Trustee of the
right to have judicial settlement of its accounts. In any proceeding for a
judicial settlement of any account or for instructions, the only necessary
parties will be the Trustee, the Employer and the Administrator.
14.07 DISTRIBUTION FROM TRUST FUND:
The Trustee shall make such distribution from the Trust Fund as the Employer or
Administrator may in writing direct, as provided by the terms of the Plan, upon
certification by the Employer or Administrator that the same is for the
exclusive benefit of Participants or their Beneficiaries, or for the payment of
expenses of administering the Plan.
14.08 TRANSFER OF AMOUNTS FROM QUALIFIED PLAN:
If the Plan provides that amounts may be transferred to the Plan from another
qualified plan or trust under Section 401(a) of the Code, such transfer shall be
made in accordance with the provisions of the Plan and with such rules as may be
established by the Trustee. The Trustee will only accept assets which
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are in a medium proper for investment under this agreement or in cash. Such
amounts shall be accompanied by written instructions showing separately the
respective contributions by the prior employer and the transferring Employee,
and identifying the assets attributable to such contributions. The Trustee shall
hold such assets for investment in accordance with the provisions of this
agreement.
14.09 TRANSFER OF ASSETS FROM TRUST:
Subject to the provisions of the Plan, the Employer may direct the Trustee to
transfer all or a specified portion of the Trust assets to any other plan or
plans maintained by the Employer or the employer or employers of a former
Participant or Participants, provided that the Trustee has received evidence
satisfactory to it that such other plan meets all applicable requirements of the
Code. The assets so transferred shall be accompanied by written instructions
from the Employer naming the persons for whose benefit such assets have been
transferred, showing separately the respective contributions by the Employer and
by each Participant, if any, and identifying the assets attributable to the
various contributions. The Trustee shall have no further liabilities with
respect to assets so transferred.
14.10 SEPARATE TRUST OR FUND FOR EXISTING PLAN ASSETS:
With the consent of the Trustee, the Employer may maintain a trust or fund
(including a group Annuity Contract) under this prototype plan document separate
from the Trust Fund for Plan assets purchased prior to the adoption of this
prototype plan document which are not Fidelity Funds listed in Section 1.14(b).
The Trustee shall have no authority and no responsibility for the Plan assets
held in such separate trust or fund. The duties and responsibilities of the
trustee of a separate trust shall be provided by a separate trust agreement,
between the Employer and the trustee.
Notwithstanding the preceding paragraph, the Trustee or an affiliate of the
Trustee may agree in writing to provide ministerial recordkeeping services for
guaranteed investment contracts held in the separate trust or fund. The
guaranteed investment contract(s) shall be valued as directed by the Employer or
the Trustee of the separate trust.
The trustee of the separate trust (hereafter referred to as 'trustee') will be
the owner of any insurance contract purchased prior to the adoption of this
prototype plan document. The insurance contract(s) must provide that proceeds
will be payable to the trustee; however, the trustee shall be required to pay
over all proceeds of the contract(s) to the Participant's designed Beneficiary
in accordance with the distribution provisions of this plan. A Participant's
spouse will be the designated Beneficiary of the proceeds in all circumstances
unless a qualified election has been made in accordance with Article 8. Under no
circumstances shall the trust retain any part of the proceeds. In the event of
any conflict between the terms of this plan and the terms of any insurance
contract purchased hereunder, the plan provisions shall control. Any life
insurance contracts held in the Trust Fund or in the separate trust are subject
to the following limits:
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(a) Ordinary life -- For purposes of these incidental insurance
provisions, ordinary life insurance contracts are contracts with both
nondecreasing death benefits and nonincreasing premiums. If such contracts
are held, less than 1/2 of the aggregate employer contributions allocated
to any Participant will be used to pay the premiums attributable to them.
(b) Term and universal life -- No more than 1/4 of the aggregate
employer contributions allocated to any participant will be used to pay the
premiums on term life insurance contracts, universal life insurance
contracts, and all other life insurance contracts which are not ordinary
life.
(c) Combination -- The sum of 1/2 of the ordinary life insurance
premiums and all other life insurance premiums will not exceed 1/4 of the
aggregate employer contributions allocated to any Participant.
14.11 VOTING; DELIVERY OF INFORMATION:
The Trustee shall deliver, or cause to be executed and delivered, to the
Employer or Plan Administrator all notices, prospectuses, financial statements,
proxies, and proxy soliciting materials received by the Trustee relating to
securities held by the Trust or, if applicable, deliver these materials to the
appropriate Participant or the Beneficiary of a deceased Participant. The
Trustee shall not vote any securities held by the Trust except in accordance
with the written instructions of the Employer, Participant, or the Beneficiary
of the Participant, if the Participant is deceased; however, the Trustee may, in
the absence of instructions, vote 'present' for the sole purpose of allowing
such shares to be counted for establishment of a quorum at a shareholders'
meeting. The Trustee shall have no duty to solicit instructions from
Participants, Beneficiaries, or the Employer.
14.12 COMPENSATION AND EXPENSES OF TRUSTEE:
The Trustee's fee for performing its duties hereunder will be such reasonable
amounts as the Trustee may from time to time specify by written agreement with
the Employer. Such fee, any taxes of any kind which may be levied or assessed
upon or with respect to the Trust Fund, and any and all expenses, including
without limitation legal fees and expenses of administrative and judicial
proceedings, reasonably incurred by the Trustee in connection with its duties
and responsibilities hereunder will, unless some or all have been paid by said
Employer, be paid first from forfeitures resulting under Section 7.07, then from
the remaining Trust Fund and will, unless allocable to the Accounts of
particular Participants, be charged against the respective Accounts of all
Participants, in such reasonable manner as the Trustee may determine.
14.13 RELIANCE BY TRUSTEE ON OTHER PERSONS:
The Trustee may rely upon and act upon any writing from any person authorized by
the Employer or Administrator to give instructions concerning the Plan and may
conclusively rely upon and be protected in acting upon any written order from
the Employer or Administrator or upon any other notice,
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request, consent, certificate, or other instructions or paper reasonably
believed by it to have been executed by a duly authorized person, so long as it
acts in good faith in taking or omitting to take any such action. The Trustee
need not inquire as to the basis in fact of any statement in writing received
from the Employer or Administrator.
The Trustee will be entitled to rely on the latest certificate it has received
from the Employer or Administrator as to any person or persons authorized to act
for the Employer or Administrator hereunder and to sign on behalf of the
Employer or Administrator any directions or instructions, until it receives from
the Employer or Administrator written notice that such authority has been
revoked.
Notwithstanding any provision contained herein, the Trustee will be under no
duty to take any action with respect to any Participant's Account (other than as
specified herein) unless and until the Employer or Administrator furnishes the
Trustee with written instructions on a form acceptable to the Trustee, and the
Trustee agrees thereto in writing. The Trustee will not be liable for any action
taken pursuant to the Employer's or administrator's written instructions (nor
for the collection of contributions under the Plan, nor the purpose or propriety
of any distribution made thereunder).
14.14 INDEMNIFICATION BY EMPLOYER:
The Employer shall indemnify and save harmless the Trustee from and against any
and all liability to which the Trustee may be subjected by reason of any act or
conduct (except willful misconduct or negligence) in its capacity as Trustee,
including all expenses reasonably incurred in its defense.
14.15 CONSULTATION BY TRUSTEE WITH COUNSEL:
The Trustee may consult with legal counsel (who may be but need not be counsel
for the Employer or the Administrator) concerning any question which may arise
with respect to its rights and duties under the Plan and Trust, and the opinion
of such counsel will, to the extent permitted by law, be full and complete
protection in respect of any action taken or omitted by the Trustee hereunder in
good faith and in accordance with the opinion of such counsel.
14.16 PERSONS DEALING WITH THE TRUSTEE:
No person dealing with the Trustee will be bound to see to the application of
any money or property paid or delivered to the Trustee or to inquire into the
validity or propriety of any transactions.
14.17 RESIGNATION OR REMOVAL OF TRUSTEE:
The Trustee may resign at any time by written notice of the Employer, which
resignation shall be effective 60 days after delivery to the Employer. The
Trustee may be removed by the Employer by written notice to the Trustee, which
removal shall be effective 60 days after delivery to the Trustee.
Upon resignation or removal of the Trustee, the Employer may appoint a successor
trustee. Any such
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successor trustee will, upon written acceptance of his appointment, become
vested with the estate, rights, powers, discretion, duties, and obligations of
the Trustee hereunder as if he had been originally named as Trustee in this
Agreement.
Upon resignation or removal of the Trustee, the Employer will no longer
participate in this prototype plan and will be deemed to have adopted an
individually designed plan. In such event, the Employer shall appoint a
successor trustee within said 60-day period and the Trustee will transfer the
assets of the Trust to the successor trustee upon receipt of sufficient evidence
(such as a determination letter or opinion letter from the Internal Revenue
Service or an opinion of counsel satisfactory to the Trustee) that such trust
will be a qualified trust under the Code.
The appointment of a successor trustee shall be accomplished by delivery to the
Trustee of written notice that the Employer has appointed such successor
trustee, and written acceptance of such appointment by the successor trustee.
The Trustee may, upon transfer and delivery of the Trust Fund to a successor
trustee, reserve such reasonable amount as it shall deem necessary to provide
for its fees, compensation, costs and expenses, or for the payment of any other
liabilities chargeable against the Trust Fund for which it may be liable. The
Trustee shall not be liable for the acts or omissions of any successor trustee.
14.18 FISCAL YEAR OF THE TRUST:
The fiscal year of the Trust will coincide with the Plan Year.
14.19 DISCHARGE OF DUTIES BY FIDUCIARIES:
The Trustee and the Employer and any other fiduciary shall discharge their
duties under the Plan and this Trust Agreement solely in the interests of
Participants and their Beneficiaries in accordance with the requirements of
ERISA.
14.20 AMENDMENT:
In accordance with provisions of the Plan, and subject to the limitations set
forth therein, this Trust Agreement may be amended by an instrument in writing
signed by the Employer and the Trustee. No amendment to this Trust Agreement
shall divert any part of the Trust Fund to any purpose other than as provided in
Section 2 hereof.
14.21 PLAN TERMINATION:
Upon termination or partial termination of the Plan or complete discontinuance
of contributions thereunder, the Trustee will make distributions to the
Participants or other persons entitled to distributions as the Employer or
Administrator directs in accordance with the provisions of the Plan. In the
absence of such instructions and unless the Plan otherwise provides, the Trustee
will notify the Employer or Administrator
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of such situation and the Trustee will be under no duty to make any
distributions under the Plan until it receives written instructions from the
Employer or Administrator. Upon the completion of such distributions, the Trust
will terminate, the Trustee will be relieved from all liability under the Trust,
and no Participant or other person will have any claims thereunder, except as
required by applicable law.
14.22 PERMITTED REVERSION OF FUNDS TO EMPLOYER:
If it is determined by the Internal Revenue Service that the Plan does not
initially qualify under Section 401 of the Code, all assets then held under the
Plan will be returned by the Trustee, as directed by the Administrator, to the
Employer, but only if the application for determination is made by the time
prescribed by law for filing the Employer's return for the taxable year in which
the Plan was adopted or such later date as may be prescribed by regulations.
Such distribution will be made within one year after the date the initial
qualification is denied. Upon such distribution, the Plan will be considered to
be rescinded and to be of no force or effect.
Contributions under the Plan are conditioned upon their deductibility under
Section 404 of the Code. In the event the deduction of a contribution made by
the Employer is disallowed under Section 404 of the Code, such contribution (to
the extent disallowed) must be returned to the Employer within one year of the
disallowance of the deduction.
Any contribution made by the Employer because of a mistake of fact must be
returned to the Employer within one year of the contribution.
14.23 GOVERNING LAW:
This Trust Agreement will be construed, administered, and enforced according to
ERISA and, to the extent not preempted thereby, the laws of the Commonwealth of
Massachusetts.
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AMENDMENT ONE
SECTION 2.01(A)(7) 'COMPENSATION' IS AMENDED TO INCLUDE:
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, for plan years
beginning on or after January 1, 1994, the annual compensation of each Employee
taken into account under the plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation will be multiplied by a fraction, the
numerator of which is the number of months in the determination period, and the
denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in this plan
to the limitation under section 401(a)(17) of the Code shall mean the OBRA '93
annual compensation limit set forth in this provision. Notwithstanding
2.01(a)(7)(A), for purpose of Section 4.02 (Additional Limit on Deferral
Contributions) and Section 4.04 (Limit on Matching Contributions), the Employer
may use Compensation as defined in Section 5.03(e)(2) excluding reimbursements
or other expense allowances, fringe benefits (cash and non-cash), moving
expenses, deferred compensation and welfare benefits, but including amounts that
are not includable in the gross income of the Participant under a salary
reduction agreement by reason of the application of Section 125, 402(a)(8),
402(h) or 403(b) of the Code.
If compensation for any prior determination period is taken into account in
determining an Employee's benefits accruing in the current plan year, the
compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first plan year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
SECTION 8.01(d) 'DISTRIBUTION OF BENEFITS TO PARTICIPANTS AND BENEFICIARIES' IS
AMENDED TO INCLUDE:
(5) If a distribution is one to which sections 401(a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence less than 30
days after the notice required under section 1.14(a)-11(c) of the Income Tax
Regulations is given, provided that:
(1) the administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution
(and, if applicable, a particular distribution option), and
(2) the Participant, after receiving the notice, affirmatively elects
a distribution.
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ADDENDUM
RE: RETROACTIVE EFFECTIVE DATES
This Addendum is intended to clarify and set forth the effective dates of
certain provisions of the Plan with respect to the adopting Employer. This
Addendum applies only to the extent that the Employer has not amended the Plan
with respect to the applicable provisions of the Tax Reform Act of 1986 ('TRA
'86'). Unless otherwise specifically provided by the terms of the Plan, this
amendment and restatement is effective with respect to each change made to
satisfy the provisions of (i) TRA '86, (ii) any other change in the Code or
ERISA, or (iii) regulations, rulings, or other published guidance issued under
the Code, ERISA, or TRA '86, the first day of the first period (which may or may
not be the first day of a Plan year) with respect to which such change became
required because of such provision (including any day that became such as a
result of an election or waiver by an Employer or a waiver or exemption issued
under the Code, ERISA, or TRA '86), including but not limited to, the following:
(a) The following changes as required by TRA '86 are effective for Plan
Years beginning after December 31, 1986, unless a delayed effective date
applies because the Plan is collectively-bargained or because of an
applicable exemption or waiver:
(1) Changes in the definition of Employee in Section 2.01(a)(10) to reflect
changes in the safe harbor exclusion for Leased Employees;
(2) Changes in the definition of Highly Compensated Employee in Section
2.01(a)(16)
(3) Addition of the aggregate deferral limit under Section 402(g) of the
Code in Section 402(g) of the Code in Section 4.01(c);
(4) Changes to the Code Section 401(k) discrimination test in Section 4.02;
(5) Addition of the Code Section 401(m) discrimination test and application
of the Aggregate Limit in Section 4.04;
(6) Compliance with the Code Section 414(s) compensation definition
requirements in Sections 5.03 and 9.03;
(7) Changes in the Participant Loan provisions in Section 7.09; if
applicable, to reflect new dollar limitations, repayment requirements, and
restrictions applicable to Highly Compensated Employees under Section 72(p)
of the Code;
(8) Changes in the definition of Key Employee in Section 9.02(a); and
(9) Changes in the definition of Top-Heavy Ratio in Section 9.02(c)(3) to
provide for ratable accrual.
(b) Changes in the 415 limitations in Section 5.03 as required by TRA '86
are effective for limitation years beginning after December 31, 1986,
unless a delayed effective date applies because the Plan is collec-
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tively-bargained or because of an applicable waiver or exemption;
provided, however, that Annual Additions shall not be recalculated to take
into account all Employee contributions for limitation years beginning
before the effective date.
(c) The following changes as required by TRA '86 are effective for Plan
years beginning after December 31, 1987, unless a delayed effective date
applies because the Plan is collectively-bargained or because of an
applicable waiver or exemption:
(1) Changes required to provide that allocations shall not be decreased or
discontinued because of attainment of any age, if any; and
(2) Changes in the definition of Normal Retirement Age in Section 1.06(a),
if any, to reflect the five years of participation rule.
(d) The following changes as required by TRA '86 are effective for
Plan Years beginning after December 31, 1988, unless a delayed effective
date applies because the Plan is collectively-bargained or because of an
applicable waiver or exemption:
(1) Changes in the vesting schedule specified in Section 1.07, if
applicable;
(2) Changes in the permitted disparity rules in Section 4.06(b)(2),
if applicable; and
(3) Changes in the requirements for electing a former vesting
schedule in Section 10.03, if applicable.
Notwithstanding the foregoing and subject to applicable law, with respect to
Plan years beginning after December 31, 1986, and before the date of this
restatement of the Plan, the Employer may elect to operate the Plan in
accordance with any transitional rule published by the Internal Revenue Service
or a reasonable, good faith interpretation of TRA '86 and related applicable
law, in which event such transitional rule or good faith interpretation shall
prevail over the provisions in this restatement of the Plan with respect to such
Plan Year.
Each other change made under the Plan is effective as of the date specified in
Section 1.01(g) of the Adoption Agreement, unless otherwise specifically
provided by the terms of the Plan.
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ADOPTION AGREEMENT - ARTICLE 1
NON-STANDARDIZED PROFIT SHARING PLAN
1.01 PLAN INFORMATION
(a) NAME OF PLAN: This is the Celadon Group, Inc. 401K Profit Sharing
Plan (the "Plan").
(b) TYPE OF PLAN:
(1) [X] 401(k) and Profit Sharing
(2) [ ] Profit Sharing Only
(3) [ ] 401(k) Only
(c) NAME OF PLAN ADMINISTRATOR, IF NOT THE EMPLOYER:
Name: Celadon Group, Inc.
Address: One Celadon Drive, 9503 E. 33rd Street,
Indianapolis, IN 46236
Phone Number: (317) 972-7000
The Plan Administrator is the agent for service of legal process
for the Plan.
(d) LIMITATION YEAR (CHECK ONE):
(1) [ ] Calendar Year
(2) [X] Plan Year
(3) [ ] Other:
(e) THREE-DIGIT PLAN NUMBER: 001
(f) PLAN YEAR END (MONTH/DAY): 6/30
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(g) PLAN STATUS (CHECK ONE):
(1) [ ] Effective Date of new Plan:
(2) [X] Amendment Effective Date: 7/1/96 This is
(check one):
(a) [ ] An amendment of The CORPORATEplan for
Retirement Adoption Agreement previously executed
by the Employer: or
(b) [X] A conversion from another plan document into
The CORPORATEplan for Retirement.
The original Effective Date of the plan: 7/1/90
The substantive provisions of the Plan shall apply prior to the
Effective Date to the extent required by the Tax Reform Act of
1986 or other applicable laws.
1.02 EMPLOYER:
(a) THE EMPLOYER IS: Celadon Group, Inc.
Address: One Celadon Drive, 9503 E. 33rd Street
Indianapolis, IN 46236
Contact's Name: Tom Miley
Telephone Number: (317) 972-7018
(1) Employer's Tax Identification Number: 13-3276138
(2) Business form of Employer (check one):
<TABLE>
<S> <C> <C> <C>
(A) [X] Corporation (D) [ ] Governmental
(B) [ ] Sole Proprietor or Partnership (E) [ ] Tax-exempt Organization
(C) [ ] Subchapter S Corporation (F) [ ] Rural Electric Cooperative
</TABLE>
(3) Employer's fiscal year end: 6/30
(4) Date business commenced: 5/85
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(b) THE TERM "EMPLOYER" INCLUDES THE FOLLOWING RELATED EMPLOYER(S)
(AS DEFINED IN SECTION 2.01(a)(26)):
CJM
Trucking of Indiana-Group - Cheetah - Logistics - Express
1.03 COVERAGE:
(a) ALL EMPLOYEES WHO MEET THE CONDITIONS SPECIFIED BELOW WILL BE
ELIGIBLE TO PARTICIPATE IN THE PLAN:
(1) Service requirement (check one):
(A) [ ] No service requirement.
(B) [ ] Three consecutive months of service
(no minimum number Hours of Service can be
required).
(C) [X] Six consecutive months of service
(No minimum number Hours of Service can be
required).
(D) [ ] One Year of Service.
(1,000 Hours of Service is required during the
Eligibility Computation Period.)
(2) Age requirement (check one):
(A) [ ] No age requirement.
(B) [x] Must have attained age 18 (not to exceed 21).
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(3) The class of Employees eligible to participate in the plan
(check one):
(A) [X] Includes all Employees of the Employer.
(B) [ ] Includes all Employees of the Employer
except for (check the appropriate box(es)):
(i) [ ] Employees covered by a collective
bargaining agreement
(ii) [ ] Highly Compensated Employees as defined
in Code Section 414(q).
(iii) [ ] Leased Employees as defined in Section
2.01(a) (18).
(iv) [ ] Nonresident aliens who do not receive
any earned income from the Employer
which constitutes United States source
income.
(v) [ ] Other:
Note: No exclusion in this section may create a discriminatory
class of Employees. An Employer's Plan must still pass the
Internal Revenue Code coverage and participation requirements if
one or more of the above groups of Employees have been excluded
from the Plan.
(b) THE ENTRY DATE(S) SHALL BE (CHECK ONE):
(1) The first day of each Plan year (do not select if Section
1.03(a)(1)(D) is elected or if there is an age requirement
of greater than 20 1/2 in Section 1.03(a)(2)(B)).
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(2) [X] The first day of each Plan Year and the date six
months later.
(3) [ ] The first day of each Plan Year and the first day
of the fourth, seventh, and tenth months.
(4) [ ] The first day of each month.
(c) DATE OF INITIAL PARTICIPATION - AN EMPLOYEE WILL BECOME A
PARTICIPANT UNLESS EXCLUDED BY SECTION 1.03(a)(3) ABOVE ON THE
ENTRY DATE IMMEDIATELY FOLLOWING THE DATE THE EMPLOYEE COMPLETES
THE SERVICE AND AGE REQUIREMENT(S) IN SECTION 1.03(a). IF ANY,
EXCEPT (CHECK ONE):
(1) [X] No exceptions.
(2) [ ] Employees employed on the Effective Date in Section
1.01(g) will become Participants on that date.
(3) [ ] Employees who meet the age and service requirement(s)
of Section 1.03(a) on the Effective Date in Section
1.01(g) will become Participants on that date.
1.04 COMPENSATION:
(a) FOR PURPOSES OF DETERMINING CONTRIBUTIONS UNDER THE PLAN.
COMPENSATION SHALL BE AS DEFINED IN SECTION 2.01(a)(7). BUT
EXCLUDING (CHECK THE APPROPRIATE BOX(ES)):
(1) [ ] Overtime Pay
(2) [X] Bonuses
(3) [X] Commissions
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(4) [X] The value of a qualified or a non-qualified stock option
granted to an Employee by the Employer to the extent
such value is includable in the Employee's taxable
income.
Note: These exclusions shall not apply for purposes of the
"Top-Heavy" requirements in Section 9.03 or for allocating
Discretionary Employer Contributions if an Integrated Formula is
elected in Section 1.05(a)(2).
(5) [X] No exclusions. (Exclude Stock Options)
(b) COMPENSATION FOR THE FIRST YEAR OF PARTICIPATION
Contributions for the Plan Year in which an Employee first
becomes a Participant shall be determined based on the Employee's
Compensation (check one):
(1) [ ] For the entire Plan Year.
(2) [ ] For the portion of the Plan Year in which the
Employee is eligible to participate in the Plan.
1.05 CONTRIBUTIONS:
(a) [X] EMPLOYER CONTRIBUTIONS:
(1) Fixed Formula - Nonintegrated Formula (check (A) or (B) and
fill in the blank):
(A) Fixed Percentage Employer Contribution: For each
Plan Year, the Employer will contribute for each
eligible Participant an amount equal to ______%
not to exceed 15% of such Participant's
Compensation.
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(B) Fixed Flat Dollar Employer Contribution: For each
Plan Year, the Employer will contribute for each
eligible Participant an amount equal to $________.
(2) [X] Discretionary Formula
The Employer may decide each Plan Year whether to make a
discretionary Employer contribution on behalf of eligible
Participants in accordance with Section 4.06. Such
contributions shall be allocated to eligible Participants
based upon the following (check (A) or (B)):
(A) [ ] Nonintegrated Allocation Formula: In the ratio
that each eligible Participant's Compensation
bears to the total Compensation paid to all
eligible Participants for the Plan Year.
(B) [X] Integrated Allocation Formula: In accordance
with Section 4.06.
Note: An Employer who maintains any other plan that
provides for Social Security Integration (permitted
disparity) may not elect (2)(B).
(3) Eligibility Requirements
A Participant shall be entitled to Employer contributions
for a Plan Year under this Subsection (a) if the
Participant satisfies the following requirement(s) (check
the appropriate box(es) - Options (B) and (C) may not be
elected together):
(A) [X] Is employed by the Employer on the last day of
the Plan Year.
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(B) [ ] Earns at least 500 Hours of Service during the
Plan Year.
(C) [ ] Earns at least 1,000 Hours of Service during the
Plan Year.
(D) [ ] No requirements.
Note: If option (A) (B) or (C) above is selected, then Employer
contributions can only be funded by the Employer after Plan Year
end. Employer contributions funded during the Plan Year Shall not
be subject to the eligibility requirements of this section
1.05(a)(3).
(B) [ ] DEFERRAL CONTRIBUTIONS
(1) Regular Contributions
The Employer shall make a Deferral Contribution in accordance
with Section 4.01 on behalf of each Participant who has an
executed salary reduction agreement in effect with the Employer
for the payroll period in question, not to exceed 15% (NO MORE
THAN 15%) of Compensation for that period.
(A) A participant may increase or decrease, on a
prospective basis, his salary reduction agreement
percentage (check one):
(i) [ ] As of the beginning of each payroll
period.
(ii) [ ] As of the First day of each month.
(iii) [X] As of the next Entry Date.
(iv) [ ] (Specify but must be at least once
per Plan Year.)
January/July (twice)
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(B) A Participant may revoke, on a prospective basis,
a salary reduction agreement at any time upon
proper notice to the Administrator but in such
case may not file a new salary reduction agreement
until (check one):
(I) [ ] The first day of the next Plan Year.
(ii) [ ] Any subsequent Plan Entry Date.
(iii) [ ] (Specify but must be at least once
per Plan Year)
January/July (twice)
(2) [ ] Catch-Up Contributions
The Employer may allow Participants upon proper notice
and approval to enter into a special salary reduction
agreement to make additional Deferral Contributions in
an amount up to 100% of their Compensation for the
payroll period(s) in the final month of the plan Year.
(3) [ ] Bonus Contributions
The Employer may allow Participants upon proper notice
and approval to enter into a special salary reduction
agreement to make Deferral Contributions in an amount up
to 100% of any Employer-paid cash bonuses made for such
Participants during the plan Year. The Compensation
definition elected by the Employer in Section 1.04(a)
must include bonuses if bonus contributions are
permitted. Note: A Participant's contributions under
(2) and/or (3) may not cause the Participant to exceed
the percentage limit specified by the Employer in (1)
after the Plan Year. The Employer has the right to
restrict a Participant's right to
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make Deferral Contributions if they will adversely
affect the Plan's ability to pass the actual deferral
percentage test and/or the actual contribution
percentage test.
(4) [ ] Qualified Discretionary Contributions
The Employer may contribute an amount which it
designates as a Qualified Discretionary Contribution to
be included in the actual deferral percentage or actual
contribution percentage test. Qualified Discretionary
Contributions shall be allocated to Non-highly
Compensated Employees (check one):
(A) [ ] In the ratio which each such Participant's
Compensation for the Plan Year bears to the total
of all such Participants Compensation for the Plan
Year.
(B) [ ] As a flat dollar amount for each such Participant
for the Plan Year.
(c) [X] MATCHING CONTRIBUTIONS (ONLY IF SECTION 1.05(b) IS CHECKED)
(1) The Employer shall make a Matching Contribution on behalf
of each Participant in an amount equal to the following
percentage of a Participant's Deferral Contributions during
the Plan Year (check one):
(A) [ ] 50%
(B) [ ] 100%
(C) [X] 25%
(D) [ ] Tiered Match; ______% of the first _____% of the
Participant's Compensation contributed to the
plan. ____% of the next ____% of the Participant's
Compensation
10
<PAGE>
<PAGE>
contributed to the Plan. _____% of the next _____%
of the Participant's Compensation contributed to
the Plan.
Note: The percentages specified above for Matching Contributions
may not increase as the percentage of Compensation contributed
increases.
(E) [ ] The percentage declared for the year, if any, by a
Board of Directors' Resolution or by a Letter of
Intent for a Sole Proprietor of Partnership.
(2) [X] The Employer may at Plan Year end make an additional
Matching Contribution equal to a percentage declared by the
Employer, through a Board of Directors' Resolution or by a
Letter of Intent for a Sole Proprietor or Partnership, of
the Deferral Contributions made by each Participant during
the Plan Year (only if an option is checked under Section
1.05(c)(1)).
(3) [X] Matching Contribution Limits (check the appropriate
box):
(A) [X] Deferral Contributions in excess of 5% of the
Participants Compensation for the period in
question shall not be considered for Matching
Contributions.
Note: If the Employer elects a percentage limit in (A) above and
requests the Trustee to account separately for matched and
unmatched Deferral Contributions, the Matching Contributions
allocated to each Participant must be computed, and the
percentage limit applied, based upon each payroll period.
(B) [ ] Matching Contributions for each Participant for
each Plan Year shall be limited to $ .
11
<PAGE>
<PAGE>
(4) Eligibility Requirement(s)
A Participant who makes Deferral Contributions during the Plan
Year under Section 1.05(b) shall be entitled to Matching
Contributions for that Plan Year if the Participant satisfies the
following requirements. Check the appropriate box(es), Options
(B) and (C) may not be elected together:
(A) [ ] Is employed by the Employer on the last day of the
Plan Year.
(B) [ ] Earns at least 500 Hours of Service during the
Plan Year.
(C) [ ] Earns at least 1,000 Hours of Service during the
Plan Year.
(D) [ ] Is not a Highly Compensation Employee for the
Plan Year.
(E) [ ] Is not a Partner of the Employer, if the Employer
is a Partnership.
(F) [X] No requirements.
Note: If option (A), (B), or (C) above is selected, then Matching
Contributions can only be funded by the Employer after the Plan
Year ends. Any matching Contribution funded before Plan Year end
shall not be subject to the eligibility requirements of this
Section 1.05(c)(4)). If option (A), (B), or (C) is adopted during
a Plan Year, such option shall not become effective until the
first day of the next Plan Year.
(d) [ ] EMPLOYEE AFTER-TAX CONTRIBUTIONS (CHECK ONE):
(1) [ ] Future Contributions
Participants may make voluntary non-deductible Employee
contributions pursuant
12
<PAGE>
<PAGE>
to Section 4.09 of the Plan. This option
may only be elected if the Employer has elected to permit
Deferral Contributions under Section 1.05(b), Matching
Contributions by the Employer are not allowed on any voluntary
non-deductible Employee contributions. Withdrawals are limited to
one per year unless Employee contributions were allowed under a
previous plan document which authorized more frequent
withdrawals.
(2) [ ] Frozen Contributions
Participants may not make voluntary non-deductible Employee
contributions, but the Employer does maintain frozen Participant
voluntary non-deductible Employee Contribution Accounts.
1.06 RETIREMENT AGE(S):
(a) [ ] THE NORMAL RETIREMENT AGE UNDER THE PLAN IS (CHECK ONE):
(1) [X] Age 65
(2) [ ] Age (Specify between 55 and 64).
(3) [ ] Later of the age (Cannot exceed 65) or the fifth
anniversary of the Participant's Employment Commencement
Date.
(b) [X] THE EARLY RETIREMENT AGE ___ IS THE FIRST DAY OF THE MONTH
AFTER THE PARTICIPANT ATTAINS AGE 55 (SPECIFY 55 OR GREATER)
AND COMPLETES 5 YEARS OF SERVICE FOR VESTING.
(c) [X] A PARTICIPANT IS ELIGIBLE FOR DISABILITY RETIREMENT IF
HE/SHE(CHECK THE APPROPRIATE BOX(ES)):
13
<PAGE>
<PAGE>
(1) [X] Satisfies the requirements for benefits under the
Employer's Long-Term Disability Plan.
(2) [X] Satisfies the requirements for Social Security
disability benefits.
(3) [X] Is determined of be disabled by a physical approved by
the Employer.
1.07 VESTING SCHEDULE:
(a) THE PARTICIPANT'S VESTED PERCENTAGE IN EMPLOYER CONTRIBUTIONS
(FIXED OR DISCRETIONARY) ELECTED IN SECTION 1.05(a) AND/OR
MATCHING CONTRIBUTIONS ELECTED IN SECTION 1.05(c) SHALL BE BASED
UPON THE SCHEDULE(S) SELECTED BELOW, EXCEPT WITH RESPECT TO ANY
PLAN YEAR DURING WHICH THE PLAN IS TOP-HEAVY. THE SCHEDULE
ELECTED IN SECTION 1.12(d) SHALL AUTOMATICALLY APPLY FOR A
TOP-HEAVY PLAN YEAR AND ALL PLAN YEARS THEREAFTER UNLESS THE
EMPLOYER HAS ALREADY ELECTED A MORE FAVORABLE VESTING SCHEDULE
BELOW:
<TABLE>
<S> <C>
(1) Employer Contributions (2) Matching Contributions
(Check one) (Check one)
(A) [ ] N/A - No Employer (A) [ ] N/A - No Matching
Contributions Contributions
(B) [ ] 100% Vesting (B) [ ] 100% Vesting
immediately immediately
(C) [ ] 3-year cliff (C) [ ] 3-year cliff
(see C below) (see C below)
(D) [ ] 5-year cliff (D) [ ] 5-year cliff
(see D below) (see D below)
(E) [ ] 6-year graduated (E) [ ] 6-year graduated
(see E below) (see E below)
(F) [ ] 7-year graduated (F) [ ] 7-year graduated
(see F below) (see F below)
(G) [X] Other vesting (G) [X] Other vesting
(complete G1 below) (complete G2 below)
</TABLE>
14
<PAGE>
<PAGE>
VESTING SCHEDULE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Years of
Service for C D E F G1 G2
Vesting
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0 0% 0% 0% 0% 0 0
- --------------- --------------------------------------------------------------------------------
1 0% 0% 0% 0% 20 20
- -----------------------------------------------------------------------------------------------
2 0% 0% 20% 0% 40 40
- -----------------------------------------------------------------------------------------------
3 100% 0% 40% 20% 60 60
- -----------------------------------------------------------------------------------------------
4 100% 0% 60% 40% 80 80
- -----------------------------------------------------------------------------------------------
5 100% 100% 80% 60% 100 100
- -----------------------------------------------------------------------------------------------
6 100% 100% 100% 80% 100 100
- -----------------------------------------------------------------------------------------------
7 100% 100% 100% 100% 100% 100%
- -----------------------------------------------------------------------------------------------
</TABLE>
Note: A schedule elected under G1 or G2 above must be at least as
favorable as one of the schedules in C, D, E, or F above.
(b) [ ] YEARS OF SERVICE FOR VESTING SHALL EXCLUDE (CHECK ONE):
(1) [ ] For new plans, service prior to the Effective Date as
defined in Section 1.01(g)(1).
(2) [ ] For existing plans converting from another plan
document, service prior to the original Effective Date
as defined in Section 1.01(g)(2).
1.08 PREDECESSOR EMPLOYER SERVICE:
Service for purposes of eligibility in Section 1.03(a)(1) and vesting
in Section 1.07(a) of this plan shall include service with the
following employer(s):
(a)
15
<PAGE>
<PAGE>
(b)
(c)
(d)
1.09 PARTICIPANT LOANS:
Participant loans (check (a) or (b)):
(a) [ ] WILL BE ALLOWED IN ACCORDANCE WITH SECTION 7.09, SUBJECT TO A
$1,000 MINIMUM AMOUNT, AND WILL BE GRANTED (CHECK (1) OR (2)):
(1) [ ] For any purpose
(2) [ ] For hardship withdrawal as defined in Section 7.10
purposes only
(b) [X] WILL NOT BE ALLOWED
1.10 HARDSHIP WITHDRAWALS:
Participant withdrawals for hardship prior to termination of employment
(check one):
(a) [X] WILL BE ALLOWED IN ACCORDANCE WITH SECTION 7.10, SUBJECT
TO A $1,000 MINIMUM AMOUNT.
(b) [ ] WILL NOT BE ALLOWED
1.11 DISTRIBUTIONS:
(a) SUBJECT TO ARTICLES 7 AND 8 AND (b) BELOW, DISTRIBUTIONS UNDER
THE PLAN WILL BE PAID (CHECK THE APPROPRIATE BOX(ES)):
(1) [X] As a lump sum.
16
<PAGE>
<PAGE>
(2) [ ] Under a systematic withdrawal plan installments.
(b) [X] CHECK IF A PARTICIPANT WILL BE ENTITLED TO RECEIVE A
DISTRIBUTION OF ALL OR ANY PORTION OF THE FOLLOWING ACCOUNTS
WITHOUT TERMINATING EMPLOYMENT UPON ATTAINMENT OF AGE 59 1/2
(CHECK ONE):
(1) [ ] Deferral Contribution Account.
(2) [X] All Accounts
(c) [ ] CHECK IF THE PLAN WAS CONVERTED (BY PLAN AMENDMENT) FROM ANOTHER
DEFINED CONTRIBUTION PLAN, AND THE BENEFITS WERE PAYABLE AS
(CHECK THE APPROPRIATE BOX(ES)):
(1) [ ] A form of single or joint and survivor life annuity.
(2) [ ] An in-service withdrawal of vested Employer contributions
maintained in a Participant's Account (check (A) and/or (B)):
(a) [ ] For at least ______________(24 or more) months.
(b) [ ] After the Participant has at least 60 months of
participation.
(3) [ ] Another distribution option that is a "protected benefit"
under Section 411(d)(6) of the Internal Revenue Code. Please
attach a separate page identifying the distribution option(s).
These additional forms of benefit may be provided for such plans
under Articles 7 or 8.
Note: Under Federal Law, distributions to Participants must
generally begin no later than April 1 following the year in which
the Participant attains age 70 1/2.
17
<PAGE>
<PAGE>
1.12 TOP-HEAVY STATUS:
(a) THE PLAN SHALL BE SUBJECT TO THE TOP-HEAVY PLAN REQUIREMENTS OF
ARTICLE 9 (CHECK ONE):
(1) [ ] For each Plan Year.
(2) [X] For each Plan Year, if any, for which the Plan is
Top-Heavy as defined in Section 9.02.
(3) [ ] Not applicable. (This option is available for plans
covering only employees subject to a collective
bargaining agreement and there are no Employer or
Matching Contributions elected in Section 1.05.)
(b) IN DETERMINING TOP-HEAVY STATUS, IF NECESSARY, FOR AN EMPLOYER
WITH AT LEAST ONE DEFINED BENEFIT PLAN, THE FOLLOWING ASSUMPTIONS
SHALL APPLY:
(1) [ ] Interest rate: ______% per annum.
(2) [ ] Mortality table: ________
(3) [ ] Not applicable.
(c) IN THE EVENT THAT THE PLAN IS TREATED AS TOP-HEAVY FOR A PLAN
YEAR, EACH NON-KEY EMPLOYEE SHALL RECEIVE AN EMPLOYER
CONTRIBUTION OF AT LEAST 3 % (3, 4, 5, OR 7 1/2) % OF
COMPENSATION FOR THE PLAN YEAR IN ACCORDANCE WITH SECTION 9.03
(CHECK ONE):
(1) [X] Under this plan in any event.
(2) [ ] Under this plan only if the participant is not entitled
to such contribution under another qualified plan of the
employer.
18
<PAGE>
<PAGE>
(3) [ ] Not applicable. (This option is available for plans
covering only Employees subject to a collective
bargaining agreement and there are no Employer or
Matching Contributions elected in Section 1.05.)
Note: Such minimum Employer contribution may be less than the
percentage indicated in (c) above to the extent provided in
Section 9.03(a).
(d) IN THE EVENT THAT THE PLAN IS TREATED AS TOP-HEAVY FOR A PLAN
YEAR, THE FOLLOWING VESTING SCHEDULE SHALL APPLY INSTEAD OF THE
SCHEDULES ELECTED IN SECTION 1.07(a) FOR SUCH PLAN YEAR AND EACH
PLAN YEAR THEREAFTER (CHECK ONE):
(1) [ ] 100% vested after ________ not in excess of 3 Years of
Service for Vesting.
<TABLE>
<CAPTION>
(2) [X] Years of Service Vesting % Must be at Least
for Vesting
<S> <C> <C>
0 0 0%
---
1 20 0%
---
2 40 20%
---
3 60 40%
---
4 80 60%
---
5 100 80%
---
6 100 100%
---
</TABLE>
Note: If the schedule(s) elected in Section 1.07(a) is(are) more favorable
in all cases than the schedule elected in (d) above, then the schedule(s) in
Section 1.07(a) will continue to apply
19
<PAGE>
<PAGE>
even in Plan Years in which the Plan is Top-Heavy.
1.13 TWO OR MORE PLANS
Code Section 415 limitation on annual additions:
If the Employer maintains or ever maintained another qualified
plan in which any Participant in this Plan is (or was) a
participant or could become a participant, the Employer must
complete this section. The Employer must also complete this
section if it maintains a welfare benefit fund, as defined in
Section 419(c) of the Code, or an individual medical account, as
defined in Section 415(1)(2) of the Code, under which amounts are
treated as Annual Additions with respect to any Participant in
this Plan.
(a) IF THE EMPLOYER MAINTAINS, OR MAINTAINED, ANY OTHER DEFINED
CONTRIBUTION PLAN WHICH IS NOT A MASTER OR PROTOTYPE PLAN. ANNUAL
ADDITIONS FOR ANY LIMITATION YEAR TO THIS PLAN WILL BE LIMITED
(CHECK ONE):
(1) [ ] In accordance with Section 5.03 of this Plan.
(2) [ ] In accordance with another method set forth on an
attached separate sheet
(3) [X] Not applicable.
(b) IF THE EMPLOYER MAINTAINS, OR MAINTAINED, ANY DEFINED BENEFIT
PLAN(S), THE SUM OF THE DEFINED CONTRIBUTION FRACTION AND DEFINED
BENEFIT FRACTION FOR A LIMITATION YEAR MAY NOT EXCEED THE
LIMITATION SPECIFIED IN CODE SECTION 415(e). MODIFIED BY SECTION
416(h)(1) OF THE CODE. THIS COMBINED PLAN LIMIT WILL BE MET AS
FOLLOWS (CHECK ONE):
20
<PAGE>
<PAGE>
(1) [ ] Annual Additions to this Plan are limited so that the sum of
the Defined Contribution Fraction and the Defined Benefit
Fraction does not exceed 1.0.
(2) [ ] Another method of limiting Annual Additions or reducing
projected annual benefits is set forth on an attached
schedule.
(3) [X] Not applicable.
1.14 ESTABLISHMENT OF TRUST AND INVESTMENT DECISIONS:
(a) INVESTMENT DIRECTIONS
Participant Accounts will be invested (check one):
(1) [ ] In accordance with investment directions provided to the
Trustee by the Employer for allocating all Participant
Accounts among the options listed in (b) below:
(2) [X] In accordance with investment directions provided to the
Trustee by each Participant for allocating his entire
Account among the options listed in (b) below:
(3) [ ] In accordance with investment directions provided to the
Trustee by each Participant for all contribution sources
in a Participant's Account except the following sources
shall be invested as directed by the Employer (check A
and/or B):
(A) [ ] Fixed or Discretionary Employer contributions:
(B) [ ] Employer Matching Contributions
The Employer must direct the applicable sources among the same
investment
21
<PAGE>
<PAGE>
options made available for Participant-directed sources listed in
(b) below:
(B) PLAN INVESTMENT OPTIONS
The Employer hereby establishes a Trust under the Plan in
accordance with the provisions of Article 14, and the Trustee
signifies acceptance of its duties under Article 14 by its
signature below. Participant Accounts under the Trust will be
invested among the Fidelity Funds listed below pursuant to
Participant and/or Employer directions.
<TABLE>
<CAPTION>
Fund Name Fund Number
--------- -----------
<S> <C>
(1) Manage Income Portfolio 0632
(2) Intermediate Bond Fund 0032
(3) Puritan 0004
(4) Growth & Income 0027
(5) Magellan 0021
(6) Contrafund 0022
(7) OTC Portfolio 0093
(8)
(9)
(10)
</TABLE>
Note: An additional annual record keeping fee will be charged for each
fund in excess of five funds.
To the extent that the Employer selects as an investment option the
Managed Income Portfolio of the Fidelity Group Trust for Employee
Benefit Plans (the "Group Trust"), the
22
<PAGE>
<PAGE>
Employer hereby (A), agrees to the terms of the Group Turst and adopts
said terms as a part of this Agreement and (B) acknowledges that it has
received from the Trustee a copy of the Group Trust, the Declaration of
Separate Fund for the Managed Income Portfolio of the Group Trust, and
the Circular for the Managed Income Portfolio.
Note: The method and frequency for change of investments will be
determined under the rules applicable to the selected funds or, if
applicable, the rules of the Employer adopted in accordance with
Section 6.03. Information wil be provided regarding expenses, if any,
for changes in investment options.
1.15 RELIANCE ON OPINION LETTER:
An adopting Employer may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this
Plan is qualified under Section 401 of the Code. If the Employer wishes
to obtain reliance that his/her Plan(s) are qualified, application for
a determination letter should be made to the appropriate Key District
Director of the Internal Revenue Service, Failure to fill out the
Adoption Agreement properly may result in disqualification of the Plan.
This Adoption Agreement may be used only in conjunction with Fidelity
Prototype Plan Basic Plan Document No. 07. The Prototype Sponsor shall
inform the adopting Employer of any amendments made to the Plan or of
the discontinuance or abandonment of the prototype plan document.
23
<PAGE>
<PAGE>
1.16 PROTOTYPE INFORMATION:
Name of Prototype Sponsor: FIDELITY MANAGEMENT & RESEARCH CO.
Address of Prototype Sponsor: 82 DEVONSHIRE STREET
BOSTON, MA 02109
Questions regarding this prototype document may be directed to
the following telephone number:
1 800 343-9184
24
<PAGE>
<PAGE>
E X E C U T I O N P A G E
(F I D E L I T Y ` S C O P Y)
IN WITNESS WHEREOF, THE EMPLOYER HAS CAUSED THIS ADOPTION AGREEMENT TO BE
EXECUTED
THIS 15TH DAY OF MARCH , 1996.
------------- -------------------------- ---
EMPLOYER CELADON GROUP, INC.
BY /S/ PETER J. BENNETT
TITLE EXECUTIVE VICE PRESIDENT ADMINISTRATION
EMPLOYER
BY
TITLE
ACCEPTED BY FIDELITY MANAGEMENT TRUST COMPANY, AS TRUSTEE
BY DATE
TITLE
25
<PAGE>
<PAGE>
E X E C U T I O N P A G E
(E M P L O Y E R` S C O P Y)
IN WITNESS WHEREOF, THE EMPLOYER HAS CAUSED THIS ADOPTION AGREEMENT TO BE
EXECUTED
THIS 15TH DAY OF MARCH ,1996 .
------------------ ---------------- ---
EMPLOYER CELADON GROUP, INC.
BY /S/ PETER J. BENNETT
TITLE EXECUTIVE VICE PRESIDENT ADMINISTRATION
EMPLOYER
BY
TITLE
ACCEPTED BY FIDELITY MANAGEMENT TRUST COMPANY, AS TRUSTEE
BY /S/ GARY L. YERKE DATE 4/19/96
TITLE SENIOR LEGAL COUNSEL/AUTHORIZED SIGNATORY
26
<PAGE>
<PAGE>
EXHIBIT 11
CELADON GROUP, INC.
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
For the three months ended
December 31,
-------------------------
1996 1995
---- ----
<S> <C> <C>
Primary:
Weighted average shares issued .......................... 7,750,580 7,950,580
Weighted average shares in treasury ..................... (122,391) --
Dilutive effect of options and warrants using the average
market price under the treasury stock method .......... 22,849 --
----------- -----------
Shares used to compute primary earnings per share ....... 7,651,038 7,950,580
=========== ===========
Net income (loss) attributable to common stockholders ........ $ 1,274,312 $(7,983,739)
=========== ===========
Net income per common share .................................. $ 0.17 $ (1.00)
=========== ===========
<CAPTION>
For the six months ended
December 31,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
Primary:
Weighted average shares issued .......................... 7,750,580 7,949,699
Weighted average shares in treasury ..................... (116,734) --
Dilutive effect of options and warrants using the average
market price under the treasury stock method .......... 14,586 --
----------- -----------
Shares used to compute primary earnings per share ....... 7,648,432 7,949,699
=========== ===========
Net income (loss) attributable to common stockholders ........ $ 2,171,138 $(7,367,330)
=========== ===========
Net income per common share .................................. $ 0.28 $ (0.93)
=========== ===========
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information
extracted from the condensed consolidated financial
statements of Celadon Group, Inc. as of December 31,
1996 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<PERIOD-TYPE> 3-MOS
<CASH> 4,473
<SECURITIES> 0
<RECEIVABLES> 30,082
<ALLOWANCES> (333)
<INVENTORY> 0
<CURRENT-ASSETS> 51,138
<PP&E> 114,202
<DEPRECIATION> (25,547)
<TOTAL-ASSETS> 151,675
<CURRENT-LIABILITIES> 40,103
<BONDS> 73,985
<COMMON> 256
0
0
<OTHER-SE> 43,021
<TOTAL-LIABILITY-AND-EQUITY> 151,675
<SALES> 0
<TOTAL-REVENUES> 46,743
<CGS> 0
<TOTAL-COSTS> 43,278
<OTHER-EXPENSES> (37)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,378
<INCOME-PRETAX> 2,124
<INCOME-TAX> 850
<INCOME-CONTINUING> 1,274
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,274
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
