<PAGE>
As filed with the Securities and Exchange Commission on September 20, 1999
Registration No. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------
CEPHALON, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2484489
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
145 Brandywine Parkway
West Chester, Pennsylvania 19380
(Address of principal executive offices) (Zip Code)
CEPHALON, INC. 401(k) PROFIT SHARING PLAN
(Full title of the plan)
-------------
JOHN E. OSBORN, ESQ.
Senior Vice President, General Counsel and Secretary
Cephalon, Inc.
145 Brandywine Parkway
West Chester, PA 19380
(Name and address of agent for service)
(610) 344-0200
(Telephone number, including area code, of agent for service)
-------------
Copies to:
DAVID R. KING, ESQ.
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103-6993
(215) 963-5371
-------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
Amount Proposed maximum Proposed maximum Amount of
Title of each class of to be offering price aggregate registration
securities to be registered (1) registered (1) per unit(2) offering price(2) fee(3)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value..... 500,000 shares $21.25 $10,625,000 $2,953.75
============================================================================================================================
</TABLE>
(1) This registration statement covers shares of Common Stock of Cephalon, Inc.
which may be offered or sold pursuant to the Cephalon, Inc. 401(k) Profit
Sharing Plan. In addition, pursuant to Rule 416(c) under the Securities Act
of 1933, this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein. Pursuant to Rule 457(h)(2), no separate registration fee
is required with respect to the interests in the plan. This registration
statement also relates to an indeterminate number of shares of Common Stock
that may be issued upon stock splits, stock dividends or similar
transactions in accordance with Rule 416.
(2) Calculated pursuant to Rule 457(h) under the Securities Act of 1933 (the
"Act"), based on the average of the reported high and low prices of the
Common Stock reported on the Nasdaq National Market on September 15, 1999.
(3) Calculated pursuant to Section 6(b) of the Act as follows: proposed
maximum aggregate offering price multiplied by .000278.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.*
* Information required by Part I to be contained in the Section 10(a) prospectus
is omitted from this Registration Statement in accordance with Rule 428 under
the Securities Act of 1933, as amended, and the Introductory Note to Part I of
Form S-8.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, as filed by Cephalon, Inc. (the "Company")
with the Securities and Exchange Commission (the "Commission"), are incorporated
by reference in this Registration Statement and made a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, as amended by amendments filed on Form
10-K/A on May 24, 1999 and July 17, 1999;
(b) Quarterly reports on Form 10-Q for the quarters ended March 31,
1999 and June 30, 1999;
(c) Current reports on Form 8-K filed on December 28, 1998; March 1,
1999; July 17, 1999, as amended by amendments filed on Form 8-K/A
on August 3, 1999; and August 18, 1999;
(d) The description of the Company's Common Stock contained in a
registration statement filed on Form 8-A under the Securities and
Exchange Act (the "Exchange Act") filed on March 15, 1991,
including any amendment or report filed for the purpose of
updating such description; and
(e) The description of the Company's stockholder rights plan that is
contained in its Form 8-A Registration Statement filed with the
SEC on January 20, 1999, including any amendments or reports
filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be part
hereof from the date of filing of such documents. Any statement contained in any
document, all or a portion of which is incorporated by reference herein, shall
be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained or incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law ("Section 145")
permits indemnification of directors, officers, agents and controlling persons
of a corporation under certain conditions and subject to certain limitations.
Article 9 of the Company's By-Laws provides for the indemnification of
directors, officers, employees and agents of the Company to the maximum extent
permitted by the Delaware General Corporation Law. Section 145 empowers a
corporation to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or
<PAGE>
investigative, by reason of the fact that he is or was a director, officer or
agent of the corporation or another enterprise if serving at the request of the
corporation. Depending on the character of the proceeding, a corporation may
indemnify against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
such action, suit or proceeding if the person indemnified acted in good faith
and in respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. In the case of an action by or in the right of
the corporation, no indemnification may be made with respect to any claim, issue
or matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine that despite the
adjudication of liability such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper. Section 145
further provides that to the extent a director, officer, employee or agent of a
corporation has been successful in the defense of any action, suit or proceeding
referred to above or in the defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
The Company's By-laws permit it to purchase insurance on behalf of such
person against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the Company
would have the power to indemnify him against such liability under the foregoing
provision of the By-laws.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following is a list of exhibits filed as part of this Registration
Statement.
Exhibit
Number Exhibit (1)
------ -----------
5.1 Opinion of Morgan, Lewis & Bockius LLP
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit
5.1)
23.2 Consent of Arthur Andersen LLP
24.1 Powers of Attorney (included as part of the signature page
of this Registration Statement)
99.1 Cephalon, Inc. 401(k) Profit Sharing Plan
_____________
(1) In lieu of an opinion of counsel concerning compliance with the
requirements of the Employee Income Security Act of 1974, as amended
("ERISA"), and an Internal Revenue Service ("IRS") determination letter
that the Plan is qualified under Section 401(k) of the Internal Revenue
Code of 1986, as amended, the Registrant hereby undertakes to submit
the Plan and any amendments thereto to the IRS in a timely manner and
will make all changes required by the IRS in order to qualify the Plan.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports filed
by the Company pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of 1933,
--------------
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of West Chester, Commonwealth of Pennsylvania on
the 10th day of September, 1999.
CEPHALON, INC.
By: /s/ Frank Baldino, Jr, Ph.D.
------------------------------------
Frank Baldino, Jr., Ph.D.
President, Chief Executive
Officer and Director
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
--------
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of West Chester, Commonwealth of Pennsylvania on the
10th day of September, 1999.
CEPHALON, INC. 401(k) PROFIT
SHARING PLAN
By: /s/ Carl A. Savini
------------------------------------
Carl A. Savini
Plan Administrator
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person in so signing also makes,
constitutes and appoints Frank Baldino, Jr., his true and lawful attorney-in-
fact, with full power of substitution, to execute and cause to be filed with the
Securities and Exchange Commission, any and all amendments or post-effective
amendments to this Registration Statement, with exhibits thereto and other
documents in connection therewith, as the Registrant deems appropriate.
<TABLE>
Name Title Date
---- ----- ----
<S> <C> <C>
By: /s/ Frank Baldino, Jr., Ph.D. President, Chief Executive Officer and September 10, 1999
--------------------------------------
Frank Baldino, Jr., Ph.D. Director (Principal executive officer)
By: /s/ William P. Egan Director September 10, 1999
--------------------------------------
William P. Egan
By: /s/ Robert J. Feeney, Ph.D. Director September 10, 1999
--------------------------------------
Robert J. Feeney, Ph.D.
By: /s/ Martyn D. Greenacre Director September 10, 1999
--------------------------------------
Martyn D. Greenacre
By: /s/ Kevin E. Moley Director September 10, 1999
--------------------------------------
Kevin E. Moley
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
By: /s/ Horst Witzel, Dr.-Ing. Director September 10, 1999
--------------------------------------
Horst Witzel, Dr.-Ing.
By: /s/ J. Kevin Buchi Senior Vice President, Finance and Chief September 10, 1999
--------------------------------------
J. Kevin Buchi Financial Officer (Principal financial and
accounting officer)
</TABLE>
<PAGE>
CEPHALON, INC.
REGISTRATION STATEMENT ON FORM S-8
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Page
Number Document Number
------- ---------------------------------------------------------------------------------------- ------
<S> <C> <C>
5.1 Opinion of Morgan, Lewis & Bockius LLP
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
24.1 Powers of Attorney (included as part of the signature page of this Registration
Statement)
99.1 Cephalon, Inc. 401(k) Profit Sharing Plan
</TABLE>
<PAGE>
EXHIBIT 5.1
-----------
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
September 17, 1999
Cephalon, Inc.
145 Brandywine Parkway
West Chester, PA 19380
Re: Cephalon, Inc. - Registration Statement on Form S-8 Relating to the
Cephalon, Inc. 401(k) Profit Sharing Plan
-------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Cephalon, Inc., a Delaware corporation (the
"Company"), in connection with the preparation of the subject Registration
Statement on Form S-8 (the "Registration Statement") to be filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), relating to 500,000 shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), issuable under the
Cephalon, Inc. 401(k) Profit Sharing Plan (the "Plan").
In rendering the opinion set forth below, we have examined the Registration
Statement and the exhibits thereto, including the Plan, certain records of the
Company's corporate proceedings as reflected in its minute books and such
statutes, records and other documents as we have deemed relevant. In our
examination, we have assumed the genuineness of documents submitted to us as
originals and the conformity with the originals of all documents submitted to us
as copies thereof.
Based on the foregoing, it is our opinion that the shares of Common Stock
issuable under the Plan will be, when issued in accordance with the terms of the
Plan, validly issued, fully paid and nonassessable.
The opinion set forth above is limited to the General Corporation Law of the
State of Delaware, as amended.
We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration
Statement. In giving such consent, we do not thereby admit that we are acting
within the category of persons whose consent is required under Section 7 of the
Act and the rules or regulations of the Commission thereunder.
The opinion expressed herein is solely for your benefit and may be relied upon
only by you.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
<PAGE>
EXHIBIT 23.2
------------
[LETTERHEAD OF ARTHUR ANDERSEN LLP]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated February 25, 1999
incorporated by reference in Cephalon, Inc.'s Form 10-K for the year ended
December 31, 1998 and to all references to our firm included in this
registration statement.
/s/ Arthur Andersen LLP
Philadelphia, PA
September 17, 1999
<PAGE>
CEPHALON, INC.
401(K) PROFIT SHARING PLAN
<PAGE>
TABLE OF CONTENTS
INTRODUCTION
<TABLE>
<S> <C>
ARTICLE I - DEFINITIONS.................................................... 3
1.01 "ACTUAL DEFERRAL PERCENTAGE"................................. 3
1.02 "BENEFICIARY"................................................ 4
1.03 "CASH-OUT DISTRIBUTION"...................................... 4
1.04 "CODE"....................................................... 4
1.05 "COMPENSATION"............................................... 4
1.06 "DATE OF PARTICIPATION"...................................... 7
1.07 "EARLY RETIREMENT AGE"....................................... 11
1.08 "EARNED INCOME".............................................. 11
1.09 "EFFECTIVE DATE"............................................. 12
1.10 "ELIGIBLE PARTICIPANT"....................................... 12
1.11 "EMPLOYEE"................................................... 12
1.12 "EMPLOYEE COMPENSATION"...................................... 12
1.13 "EMPLOYER"................................................... 12
1.14 "EMPLOYER CONTRIBUTION ACCOUNT".............................. 13
1.16 "EMPLOYER MATCHING CONTRIBUTION ACCOUNT"..................... 14
1.17 "EMPLOYMENT COMMENCEMENT DATE"............................... 14
1.18 "EXCESS CONTRIBUTIONS"....................................... 14
1.19 "EXCESS DEFERRALS"........................................... 14
1.20 "FAMILY MEMBER".............................................. 16
1.21 "FIVE PERCENT OWNER"......................................... 16
1.23 "HOUR OF SERVICE"............................................ 18
1.24 "NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS"...................... 20
1.25 "NON-HIGHLY COMPENSATED EMPLOYEE"............................ 20
1.26 "NORMAL FORM OF BENEFIT"..................................... 20
1.27 "NORMAL RETIREMENT AGE"...................................... 21
1.28 "NORMAL AND EARLY RETIREMENT DATE"........................... 21
1.29 "ONE YEAR BREAK IN SERVICE".................................. 24
1.30 "OWNER-EMPLOYEE"............................................. 24
1.31 "PARTICIPANT"................................................ 24
1.32 "PARTICIPANT LOANS".......................................... 24
1.33 "PLAN"....................................................... 24
1.34 "PLAN ADMINISTRATOR"......................................... 24
1.35 "PLAN YEAR".................................................. 24
1.36 "SALARY DEFERRAL AGREEMENT".................................. 24
1.37 "SELF-EMPLOYED INDIVIDUAL.................................... 26
1.38 "TRUST"or "TRUST FUND"....................................... 26
1.39 "TRUSTEE".................................................... 26
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
1.40 "VESTED PORTION"............................................ 26
1.41 "VOLUNTARY SALARY DEFERRAL CONTRIBUTION ACCOUNT"............ 29
1.42 "YEAR OF SERVICE"........................................... 29
1.43 "YEAR OF VESTED SERVICE".................................... 31
ARTICLE II - PARTICIPATION................................................. 32
2.01 COMMENCEMENT OF PARTICIPATION............................... 32
2.02 CONTINUOUS EMPLOYMENT....................................... 32
2.03 TERMINATION OF PARTICIPATION................................ 32
2.04 PARTICIPATION AFTER ONE YEAR BREAK IN SERVICE............... 33
2.05 EMPLOYEES SUBJECT TO COLLECTIVE BARGAINING.................. 33
2.06 OWNER-EMPLOYEE LIMITATION................................... 35
ARTICLE III - CONTRIBUTIONS................................................ 37
3.01 AMOUNT OF EMPLOYER CONTRIBUTION............................. 37
3.02 LIMITATION ON EMPLOYER CONTRIBUTIONS........................ 37
3.03 VOLUNTARY SALARY DEFERRAL CONTRIBUTIONS..................... 38
3.04 AMENDMENT OF SALARY DEFERRAL AGREEMENTS..................... 39
3.05 ACTUAL DEFERRAL PERCENTAGE LIMITATION....................... 39
3.06 CORRECTIVE DISTRIBUTION OF EXCESS CONTRIBUTIONS............. 45
3.07 TREATMENT OF EXCESS DEFERRALS............................... 47
3.08 LIMITATIONS ON WITHDRAWALS AND DISTRIBUTIONS................ 49
3.09 HARDSHIP DISTRIBUTIONS...................................... 50
3.10 EMPLOYER MATCHING CONTRIBUTIONS............................. 53
3.11 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS....................... 53
3.12 ACTUAL CONTRIBUTION PERCENTAGE LIMITATIONS.................. 53
3.13 MULTIPLE USE OF ALTERNATE LIMITATIONS....................... 59
ARTICLE IV - ALLOCATIONS................................................... 62
4.01 ALLOCATION OF EMPLOYER CONTRIBUTIONS........................ 62
4.02 APPLICATION OF FORFEITURES AND SUSPENSE ACCOUNT............. 65
4.03 CREDITING GAINS AND LOSSES ON GENERAL
TRUST INVESTMENTS........................................... 66
4.04 PARTICIPANT'S CONTROL....................................... 67
4.05 PLAN MAINTAINED BY MORE THAN ONE EMPLOYER................... 67
ARTICLE V - BENEFITS....................................................... 69
5.01 RETIREMENT BENEFIT.......................................... 69
5.02 DISABILITY BENEFIT.......................................... 69
5.03 DEATH BENEFIT............................................... 69
5.04 DEFERRED VESTED BENEFIT..................................... 70
5.05 VALUATION DATE.............................................. 70
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI - COMMENCEMENT OF BENEFITS...................................... 71
6.01 MANDATORY COMMENCEMENT DATE................................. 71
6.02 CASH-OUT DISTRIBUTION....................................... 75
6.03 DISTRIBUTION PURSUANT TO A QUALIFIED
DOMESTIC RELATIONS ORDER.................................... 78
ARTICLE VII - FORM OF BENEFITS............................................. 79
7.01 METHOD OF PAYMENT........................................... 79
7.02 DISTRIBUTION OF BENEFITS UPON DEATH......................... 80
7.03 DEFINITIONS................................................. 83
ARTICLE VIII - INSURANCE CONTRACTS......................................... 86
8.01 TRUSTEE'S OPTION............................................ 86
8.02 LIMITATION ON PURCHASE OF INSURANCE......................... 86
8.03 INSURANCE COMPANY........................................... 87
ARTICLE IX - CLAIMS........................................................ 88
9.01 CLAIMS...................................................... 88
9.02 REVIEW OF CLAIM............................................. 88
ARTICLE X - TOP HEAVY PROVISIONS........................................... 89
10.01 DEFINITIONS................................................. 89
10.02 DETERMINATION OF TOP HEAVY STATUS........................... 93
10.03 MINIMUM ALLOCATIONS......................................... 94
10.04 MINIMUM VESTING............................................. 98
ARTICLE XI - AMENDMENT AND TERMINATIONS.................................... 100
11.01 GENERAL..................................................... 100
11.02 AMENDMENT................................................... 100
11.03 TERMINATION................................................. 101
11.04 FAILURE TO QUALIFY.......................................... 101
ARTICLE XII - PARTICIPANTS' RIGHTS......................................... 103
12.01 MERGER AND CONSOLIDATION.................................... 103
12.02 EMPLOYMENT RIGHTS........................................... 103
12.03 SPENDTHRIFT................................................. 103
12.04 INABILITY TO LOCATE PARTICIPANT OR BENEFICIARY.............. 104
ARTICLE XIII - TRANSFER OF ACCOUNTS
TO AND FROM OTHER QUALIFIED PLANS.......................................... 106
13.01 TRANSFER FROM PLAN.......................................... 106
13.02 TRANSFER TO PLAN............................................ 107
13.03 REQUIREMENT OF TRUST........................................ 107
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
13.04 RESTRICTIONS ON TRANSFERRED ACCOUNTS........................ 107
ARTICLE XIV - LOANS FROM EMPLOYER CONTRIBUTION ACCOUNTS.................... 109
14.01 PROCEDURE................................................... 109
14.02 INTEREST.................................................... 109
14.03 REPAYMENT UPON TERMINATION OF EMPLOYMENT.................... 110
14.04 GENERAL..................................................... 110
ARTICLE XV - LOANS FROM VOLUNTARY SALARY REDUCTION
CONTRIBUTION ACCOUNTS...................................................... 113
15.01 PROCEDURE................................................... 113
15.02 INTEREST.................................................... 113
15.03 GENERAL..................................................... 114
ARTICLE XVI - QUALIFIED DOMESTIC RELATIONS ORDERS.......................... 117
16.01 DEFINITIONS................................................. 117
16.02 NOTICE...................................................... 118
16.03 DETERMINATION OF QUALIFIED STATUS........................... 118
16.04 APPLICABLE INTEREST RATE.................................... 119
</TABLE>
APPENDIX I LIMITATIONS SECTION 415
APPENDIX II IMPLEMENTING SECTION 4.04 - EARMARKING OF
VOLUNTARY SALARY DEFERRAL CONTRIBUTION
ACCOUNTS AND EMPLOYER MATCHING CONTRIBUTION
ACCOUNTS
iv
<PAGE>
CEPHALON, INC.
401(K) PROFIT SHARING PLAN
By resolution dated November 18, 1991, Cephalon, Inc., hereinafter referred
to as the "Employer," adopted a retirement program (the "Plan") for the benefit
if its employees, to be effective as of January 1, 1990, hereinafter referred to
as the "Effective Date." The fiscal year of the Plan, herein referred to as the
"Plan Year" shall begin on January I and end on December 31 of each year. The
Employer establishes this Plan to comply with all applicable statutes including
the Employee Retirement Income Security Act of 1974 (ERISA), the Tax Equity and
Fiscal Responsibility Act of 1982, the Tax Reform Act of 1974, the Retirement
Equity Act of 1984, the Tax Reform Act of 1986, the Omnibus Budget
Reconciliation Act of 1987, the Technical and Miscellaneous Revenue Act of 1988,
the Omnibus Budget Reconciliation Act of 1989, and the Omnibus Budget
Reconciliation Act of 1990.
The basic purpose of the Plan is to give retirement income to the employees
to supplement the benefits they will receive under the Social Security laws.
The plan gives an additional measure of security to participants and their
beneficiaries by providing benefits which help to insure against loss caused by
disability. In addition, the Plan provides for payments to employees, under
certain circumstances, if they die or terminate their employment prior to their
retirement.
The Plan is intended to be a "qualified" Plan under Section 401(a) of the
Internal Revenue Code and any amendments to that section, so that payments for
the employees made in
CEPHALON, INC.
401(K) PROFIT SHARING PLAN
1
<PAGE>
accordance with the Plan will be deductible by the Employer and nontaxable to
the participants until distributed.
By a separate document, the Employer entered into a Trust Agreement which
established a trust to hold, invest and administer the cash, securities and
other property set aside for the employees in accordance with the Plan. The
term "Trust" as used in this Plan means the Trust established by that Agreement.
This Plan may be executed in any number of counterparts, each of which
shall be deemed an original.
The Employer signifies its intention to be legally bound by the provisions
of the Plan, as hereinafter set forth, by signing it this eighteenth day of
November, 1991.
ATTEST: CEPHALON, INC.
______________________________ _______________________________
President
CEPHALON, INC.
401(K) PROFIT SHARING PLAN
2
<PAGE>
ARTICLE I - DEFINITIONS
------------------------
As used in this Plan and the Trust Agreement adopted in connection
therewith, the following words and phrases shall have the meanings set forth in
this Article I, unless the context clearly indicates otherwise. Whenever
appropriate, words used in the singular shall include the plural, words used in
the plural shall include the singular, and the masculine shall include the
feminine.
1.01 "ACTUAL DEFERRAL PERCENTAGE" shall mean the average (for a specified
group of employees for a Plan Year) of the ratios, calculated separately for
each employee in the group, of the amount of Employer contributions, actually
paid over to the Trust on behalf of each such employee for such Plan Year, to
his Employee Compensation for such Plan Year. Employer contributions on behalf
of any participant shall include:
(i) any Elective Deferrals made pursuant to the participant's
deferral election including Excess Elective Deferrals, but excluding Elective
Deferrals that are taken into account in the contribution percentage test
(provided the ADP test is satisfied both with and without exclusion of these
Elective Deferrals); and,
(ii) at the election of the Employer, Qualified Non-elective
Contributions and Qualified Matching Contributions.
In calculating the Actual Deferral Percentage for any Highly Compensated
Employee who is a participant in two (2) or more cash or deferred arrangements
of the Employer, all such cash or deferred arrangements shall be treated as one
(1). For purposes of computing Actual Deferral Percentages, an employee who
would be a participant but for the failure to make
CEPHALON, INC.
401(K) PROFIT SHARING PLAN
3
<PAGE>
Elective Deferrals, shall be treated as a participant on whose behalf no
Elective Deferrals are made.
1.02 "BENEFICIARY" shall mean any person or persons, other than the
Participant, entitled to receive benefits under this Plan by designation, under
law, or in accordance with the provisions of this Plan.
1.03 "CASH-OUT DISTRIBUTION" shall mean a distribution made, in accordance
with the provisions of Section 6.02, to a Participant whose employment has been
terminated for reasons other than death, disability or retirement and which is
made as follows:
(a) A Participant's distribution from his Voluntary Salary Deferral
Contribution Account will be made as soon as administratively possible after the
end of the periodic valuation period in which the Participant has terminated
employment.
(b) A Participant's distribution from his Employer Matching
Contribution Account will be made as soon as administratively possible after the
end of the periodic valuation period in which the Participant has terminated
employment.
(c) A Participant's distribution from his Employer Optional
Contribution Account will be made as soon as administratively possible after the
end of the periodic valuation period in which the Participant has terminated
employment.
1.04 "CODE" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
1.04A "COMPANY" shall mean Cephalon, Inc. or any successor thereto.
1.04B "COMPANY STOCK" shall mean the common stock of the Company.
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1.05 "COMPENSATION" shall mean a Participant's total nondeferred
compensation reportable for federal income tax purposes which is received from
the Employer during the Plan Year and which is determined before reduction for
any contribution to a qualified cash or deferred arrangement under Code Section
401(k); provided, however, that for any Self-Employed Individual, Compensation
shall mean his Earned Income. Notwithstanding the foregoing, Compensation in
excess of Two Hundred Thousand Dollars ($200,000.00) or such other amount as the
Secretary of the Treasury may designate, shall be disregarded 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 twelve (12) calendar months, then the
annual compensation limit is an 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 twelve
(12).
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Notwithstanding the above, compensation shall include any amount which is
contributed by the employer pursuant to a salary reduction agreement and which
is not includible in the gross income of the employee under Sections 125,
402(a)(8), 402(h), or 403(b) of the Code.
In determining the compensation of a participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply except in
applying such rules, the term "family member" shall be as defined by Section
1.20.
If, as a result of the application of the family aggregation rules, the
adjusted Two Hundred Thousand Dollars ($200,000) limitation is exceeded, then
(except for purposes of determining the portion of compensation up to the
integration level if this plan provides if this plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's compensation as determined under this
section prior to the application of this limitation. However, the Plan
Administrator may irrevocably elect to apply the limitation towards the
compensation for the highest paid Family Member or towards the compensation for
the lowest paid Family member.
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
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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 limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.
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.
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.
During a Participant's initial year of participation in the Plan,
Compensation paid or accrued prior to his Date of Participation shall be
disregarded.
1.06 "DATE OF PARTICIPATION" All employees employed on or before September
4, 1990 will enter the Plan immediately. Employees employed after September 4,
1990, Date of Participation shall mean January 1 or July 1 coincident with or
subsequent to the date on which the following requirements have been satisfied:
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(a) Attainment of age twenty-one (21), and
(b) Completion of one (1) Year of Service (Effective January 1, 1993,
completion of three (3) months of Service).
Effective January 1, 1995, "Date of Participation" shall mean January 1,
April 1, July 1 or October 1 coincident with or next following the date on which
the Participant attains age twenty-one (21).
Notwithstanding the foregoing, leased employees (as defined in Code Section
414(n)(2)), employees who are members of any collective bargaining unit, or
"Post Doc" employees shall not be eligible for participation in this Plan.
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Notwithstanding the above, compensation shall include any amount which is
contributed by the employer pursuant to a salary reduction agreement and which
is not includible in the gross income of the employee under Sections 125,
402(a)(8), 402(h), or 403(b) of the Code.
In determining the compensation of a participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply except in
applying such rules, the term "family member" shall be as defined by Section
1.20.
If, as a result of the application of the family aggregation rules, the
adjusted Two Hundred Thousand Dollars ($200,000) limitation is exceeded, then
(except for purposes of determining the portion of compensation up to the
integration level if this plan provides. if this plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's compensation as determined under this
section prior to the application of this limitation. However, the Plan
Administrator may irrevocably elect to apply the limitation towards the
compensation for the highest paid Family Member or towards the compensation for
the lowest paid Family member.
During a Participant's initial year of participation in the Plan,
Compensation paid or accrued prior to his Date of Participation shall be
disregarded.
1.06 "DATE OF PARTICIPATION" All employees employed on or before September
4, 1990 will enter the Plan immediately. Employees employed after September 4,
1990, Date of Participation shall mean the January 1 or July 1 coincident with
or subsequent to the date on which the following requirements have been
satisfied:
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(a) Attainment of age twenty-one (21), and
(b) Completion of three (3) Months of Service.
Notwithstanding the foregoing, neither leased employees (as defined in Code
Section 414(n)(2)) nor employees who are members of any collective bargaining
unit shall be eligible for participation in this Plan.
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The term "leased employee" means any person (other than an employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full time basis for a period of at
least one year and such services are of a type historically performed by
employees in the business field of the recipient employer.
A leased employee shall not be considered an employee of the recipient if:
(i) such employee is covered by a money purchase pension plan providing: (1) a
non-integrated employer contribution rate of at least ten percent (10%) of
compensation, as defined in Section 415(c)(3) of the Code, but including amounts
contributed pursuant to a reduction agreement which are excludable from the
employee's gross income under Section 125, Section 402(a)(8), Section 402(h) or
Section 403(b) of the Code; (2) immediate participation, and (3) full and
immediate vesting; and (ii) leased employees do not constitute more than twenty
percent (20%) of the recipient's non-highly compensated workforce.
1.07 "EARLY RETIREMENT AGE" shall mean the later of the Participant's
attainment of age fifty-five (55) or the tenth (10th) anniversary of his
Employment Commencement Date.
1.08 "EARNED INCOME" shall mean net earnings from self-employment in the
trade or business with respect to which the Employer has established the Plan,
provided that personal services of the individual are a material income-
producing factor. Such net earnings shall be determined without regard to items
not included in gross income and deductions allocable to
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those items and after reduction for the Employer's deductible contribution made
on behalf of such individual for such year. Net earnings shall be determined
with regard to the deduction allowed to the employer by Code Section 164(f) for
taxable years beginning after December 31, 1989.
1.09 "EFFECTIVE DATE" shall mean January 1, 1990.
1.10 "ELIGIBLE PARTICIPANT" shall mean a Participant who, in any Plan
Year, is eligible to share in the Employer contributions for that year m
accordance with the provisions of Section 4.01.
1.11 "EMPLOYEE" shall mean any person who is employed by the Employer
maintaining the plan or any other employer required to be aggregated with such
employer under Code Sections 414(b), (c), (m) or (o), any Self-Employed
Individual and any Owner-Employee.
1.12 "EMPLOYEE COMPENSATION" shall mean, for any Plan Year, the amount of
the Employee's Compensation which is taken into account under the Plan in
calculating the contribution which may be made on his behalf for such Plan Year.
Any compensation paid to, or on behalf of, a Family Member, as defined in
Section 1.20, shall be treated as if it were paid to, or on behalf of, the Five
Percent (5%) Owner or Highly Compensated Employee with respect to whom the
individual is deemed to be a Family Member.
1.13 "EMPLOYER" shall mean the employer named in the Introduction to this
Plan, any other employer adopting this Plan by resolution or other appropriate
action, and any successor or predecessor of such employer. In the event the
Employer is a member of a commonly controlled group of business organizations
within the definitions of Code Section
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414(b) or 414(c), or an affiliated service group, as defined Code Section
414(m), the term "Employer" shall also mean the other members of such group.
1.14 "EMPLOYER CONTRIBUTION ACCOUNT" shall mean the account(s) established
within the Trust in the name of a Participant to which the Participant's share
of any Employer contributions is credited and which is adjusted, in accordance
with the provisions of Section 4.03, for any gains or losses on the investments
of the Trust.
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1.15 "EMPLOYER MATCHING CONTRIBUTIONS" the employer may contribute a
Matching Contribution equal to a discretionary percentage, to be determined by
the Employer, of the participant's salary deferrals. A portion of the matching
contribution may be contributed in Company stock. A participant must be
employed on the last day of each valuation period to receive a matching
contribution for that period.
1.16 "EMPLOYER MATCHING CONTRIBUTION ACCOUNT" shall mean the account
established within the Trust in the name of a Participant to which the
Participant's share of Employer Matching Contributions, if any are made, are
credited and which is adjusted, in accordance with the provisions of Section
4.03, for any gains or losses on the investments of the Trust.
1.17 "EMPLOYMENT COMMENCEMENT DATE" shall mean the date on which the
Employee first completes an Hour of Service.
1.18 "EXCESS CONTRIBUTIONS" shall mean, with respect to any Plan Year, the
excess of the aggregate amount of Employer contributions and voluntary salary
deferral contributions actually taken into account in computing the Actual
Deferral Percentage of Highly Compensated Employees over the maximum amount of
such contributions permitted under the limitations of Section 3.05, determined
by reducing contributions made on behalf of Highly Compensated Employees in
order of the Actual Deferral Percentages beginning with the highest of such
Percentages.
1.19 "EXCESS DEFERRALS" shall mean, with respect to any calendar year, a
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Participant's voluntary salary deferral contributions to this Plan, aggregated
with all elective deferrals, as defined in Code Section 402(g)(3), under any
other cash or deferred arrangement, simplified employee pension plan or tax
shelter annuity plan, which exceed Seven Thousand Dollars ($7,000.00), or such
other amount as the Secretary of the Treasury may designate. Excess Elective
Deferrals shall mean those Elective Deferrals that are
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includible in a participant's gross income under Code Section 402(g) to the
extent such participant's Elective Deferrals for a taxable year exceed the
dollar limitation under such Code Section. Excess Elective Deferrals shall be
treated as annual additions under the Plan.
1.20 "FAMILY MEMBER" shall mean, with respect to any Employee who is (a) a
Five Percent Owner, or (b) a Highly Compensated Employee in the group consisting
of the ten (10) Highly Compensated Employees paid the greatest compensation
during the Plan Year, a member of the group including such Employee's spouse,
lineal ascendants and descendants, and the spouses of such lineal ascendants and
descendants; provided, however, that for purposes of determining the
Compensation of such an Employee, Family Member shall mean the spouse of the
Employee and any lineal descendants of the Employee who have not attained the
age of nineteen (19) prior to the end of the Plan Year. In such case, the
family member and five percent (5%) owner or top-ten highly compensated employee
shall be treated as a single employee receiving compensation and plan
contributions or benefits equal to the sum of such compensation and
contributions or benefits of the family member and five percent (5%) owner or
top-ten highly compensated employee.
1.21 "FIVE PERCENT OWNER" shall mean any person who owns or is considered
(within the meaning of Code Section 318) to own more than five percent (5%) of
the outstanding stock of the Employer, stock possessing more than five percent
(5%) of the total combined voting power of all stock of the Employer, or more
than five percent (5%) of the capital or profits interest in the Employer. For
purposes of determining ownership in the Employer, the aggregation rules of Code
Sections 414(b), (c) and (m) shall not apply.
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1.22 "HIGHLY COMPENSATED EMPLOYEE' shall mean any employee who, during the
Plan Year or the preceding Plan Year: (a) was at any time a Five Percent Owner,
as defined in Section 1.21, (b) received compensation from the Employer in
excess of $75,000-00, or such other amount as the Secretary of the Treasury may
designate, (c) received compensation from the Employer in excess of $50,000.00
(or such other amount as the Secretary of the Treasury may designate) and was
among the top twenty percent (20%) of employees when ranked on the basis of
compensation paid during such year, or (d) was at any time an officer of the
Employer, as defined in Code Section 416, who received compensation from the
Employer in excess of fifty percent (50%) of the dollar limitation imposed by
Code Section 415(b)(1)(A) on annual benefits from a defined benefit pension
plan. The term highly compensated employee also includes: (a) employees who are
both described in the preceding sentence if the plan year is substituted for
preceding year and the employee is one of the one hundred (100) employees who
received the most compensation from the employer during the plan year; and (b)
employees who are five percent (5%) owners at any time during the preceding year
or plan year.
If no officer has satisfied the compensation requirement during either the
Plan Year or the preceding Plan Year, the highest paid officer for such year
shall be treated as a highly compensated employee.
A former employee shall be treated as a Highly Compensated Employee, if
such individual separated from service (or was deemed to have separated) prior
to the Plan Year, performs no service for the Employer during the Plan Year and,
if such individual was a Highly Compensated Employee when he separated from
service or if he was a Highly Compensated
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Employee at any time after attaining age fifty-five (55). If an employee is,
during the plan year or the preceding plan year, a family member of either a
five percent (5%) owner who is an active or former employee or a highly
compensated employee who is one of the ten (10) most highly compensated
employees ranked on the basis of compensation paid by the employer during such
year, then the family member aid the five percent (5%) owner or top-ten highly
compensated employees shall be aggregated. In such case, the family member and
five percent (5%) 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 five percent (5%) 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 determination of the number and
identity of the employees in the top-paid group, the top one hundred (100)
employees, the number of employees treated as officers and the compensation that
is considered will be made in accordance with Code Section 414(q) and the
regulations thereunder.
1.23 "HOUR OF SERVICE" shall mean each hour for which the Employee is
either directly or indirectly paid or entitled to payment by the Employer,
whether for the performance of duties or for any other reason, or each hour for
which back pay, regardless of mitigation of damages, is either awarded or agreed
to by the Employer. The calculation of hours hereunder will be computed and
credited in accordance with United States Department of Labor Regulation
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2530.200b-2.
Notwithstanding the foregoing, not more than five hundred one (501) hours
of service shall be credited to an Employee on account of any Plan Year during
which the Employee performs no duties.
In calculating Hours of Service, records of each such hour shall be
maintained, and each Employee may inspect such records at such reasonable times
and places as the Employer shall designate; provided, however, that such right
of inspection shall be limited to those completed Plan Years in which the
Employee has been credited with less than one thousand (1,000) hours.
Hours of Service will be credited for employment with other members of an
affiliated service group (under Section 414(m)), a controlled group of
corporations (under Code Section 414(b)), or a group of trades or businesses
under common control (under Code Section 414(c)) of which the adopting employer
is a member and any other entity required to be aggregated with the employer
pursuant to Section 414(o) and the regulations thereunder.
Hours of Service will also be credited for any individual considered an
employee for purposes of this plan under Section 414(n) or Section 414(o) and
the regulations thereunder.
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Solely for purposes of determining whether a One Year Break in Service has
occurred, a Participant who is on a "maternity or paternity leave of absence'
shall be credited with the Hours of Service with which he would normally be
credited but for the absence. In the event such hours cannot be determined, the
Participant shall be credited with eight (8) Hours of Service per normal workday
of absence; provided, however, that no more than five hundred one (501) hours of
service shall be credited for any single maternity or paternity leave of
absence. Such Hours of Service shall be credited only (a) in the Plan Year in
which the maternity or paternity leave of absence begins, if the crediting of
such Hours of Service is necessary to prevent the occurrence of a One Year Break
in Service, or (b) in any other case, in the year immediately following the year
in which the maternity or paternity leave begins. For purposes of this section
"maternity or paternity leave of absence" shall mean an absence due to (a)
pregnancy, (b) birth of a child, (c) placement of a child with the Participant
in connection with the adoption of such child, or (d) caring for a child
immediately following such birth or placement.
1.24 "NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS" shall not be required or
permitted under the Plan.
1.25 "NON-HIGHLY COMPENSATED EMPLOYEE" shall mean any employee who is not
a Highly Compensated Employee or a Family Member.
1.26 "NORMAL FORM OF BENEFIT" shall mean a single lump sum payment.
Distributions representing salary deferrals and the vested cash portion of
employer matching contributions will be made in cash. Distributions
representing the vested Company stock portion of Employer Matching
Contributions, the Company stock portion of Voluntary Salary Deferral
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Contributions and any Company stock representing the repayment of a loan from
the Plan pursuant to Section 15.04 will be made in Company stock; provided,
however, that cash will be distributed in lieu of any fractional shares of
Company stock.
1.27 "NORMAL RETIREMENT AGE" shall mean the later of the Participant's
attainment of age sixty-five (65) or the fifth (5th) anniversary of his
Employment.
1.28 "NORMAL AND EARLY RETIREMENT DATE" shall mean the anniversary date
preceding attainment of Normal and Early Retirement Age.
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1.29 "ONE YEAR BREAK IN SERVICE" shall mean a Plan Year during which the
Employee does not complete more than five hundred (500) Hours of Service with
the Employer.
1.30 "OWNER-EMPLOYEE" shall mean a Self-Employed Individual who is the sole
proprietor or a partner who owns more than ten percent (10%) of either the
capital or profit interest in the Employer.
1.31 "PARTICIPANT" shall mean any Employee who has attained his Date of
Participation and has not become ineligible for any reason to participate
further in the Plan.
1.32 "PARTICIPANT LOANS" shall be permitted under the Plan in accordance
with Article XV.
1.33 "PLAN" shall mean the retirement plan sponsored by the Employer as
embodied herein.
1.34 "PLAN ADMINISTRATOR" shall mean the Employer or such other individual,
group or entity as shall be designated by the Employer.
1.35 "PLAN YEAR" shall mean the twelve (12) month consecutive month period
beginning on January 1 of each year and ending on December 31.
1.36 "SALARY DEFERRAL AGREEMENT" shall mean a written agreement providing
for voluntary salary deferral contributions to be made by a Participant in
accordance with the provisions of Section 3.03 and subject to the following
conditions :
(a) A Salary Deferral Agreement shall be effective for the payroll
period next following the date on which the agreement is executed by the
Participant and Employer and shall remain effective unless and until amended.
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(b) A Salary Deferral Agreement may be amended by a Participant
effective as of the first payroll period within the months of January, April,
July or October of each Plan Year, or any other time designated by the Plan
Administrator.
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(c) In addition to the foregoing, a Salary Deferral Agreement may be
implemented by a Participant to provide for a single lump sum voluntary salary
deferral during the month of December, in lieu of or in addition to, any other
Salary Deferral Agreement.
(d) In addition to the foregoing, the amount of Salary Deferral
Contribution shall be equal to at least one percent (1%) but no more than
fifteen percent (15%) of the Participant's compensation.
1.37 "SELF-EMPLOYED INDIVIDUAL " shall mean an individual who has Earned
Income, or who would have had Earned Income but for the fact that the trade or
business for which the Plan is established did not have net profits for the
taxable year.
1.38 "TRUST" or "TRUST FUND " shall mean the assets of the Plan as shall
exist from time to time and as shall be administered by the Trustee pursuant to
the terms of the Trust Agreement.
1.39 "TRUSTEE " shall mean the person, persons or entities who, from time
to time, are serving as trustees under the Trust Agreement adopted in connection
with the Plan. The Trustee is the Named Fiduciary under the provision of the
Employee Retirement Income Security Act of 1974.
1.40 "VESTED PORTION " shall mean the portion of a Participant's account
which is nonforfeitable and which is determined as follows:
(a) A Participant's vested portion of his Employer Contribution
Account is determined in accordance with the following schedule:
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Years of Vested Service Vested Portion
----------------------- --------------
Less than 3 years 0%
3 but less than 4 years 50%
4 but less than 5 years 50%
5 years or more 100%
(b) A Participant's Vested Portion of his Employer Matching
Contribution Account is determined in accordance with the following schedule:
Years of Vested Service Vested Portion
----------------------- --------------
Less than 3 years 0%
3 but less than 4 years 50%
4 but less than 5 years 50%
5 years or more 100%
(c) A Participant's vested portion of his Voluntary Salary Deferral
Contribution Account is one hundred percent (100%) at all times.
1.41 "VOLUNTARY SALARY DEFERRAL CONTRIBUTION ACCOUNT" shall mean the
account established within the Trust in the name of a Participant to which the
Participant's voluntary salary deferral contributions are credited and which is
adjusted, in accordance with the provisions of Section 4.03, for any gains or
losses on the investments of the Trust.
1.42 "YEAR OF SERVICE" An employee has completed a year of service for
eligibility purposes when he is credited with one thousand (1,000) or more hours
of service during any eligibility computation period. The initial eligibility
computation period shall be the twelve (12) consecutive month period beginning
with the date on which the employee first
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performs an hour of service.
Subsequent eligibility computation periods shall be the Plan Year that
includes such employee's employment commencement date. After an employee becomes
a participant, all further measurements shall be made on the basis of a Plan
Year which includes the Plan Year in which his employment commenced. An employee
who is credited with one thousand (1,000) hours of service in both the initial
eligibility computation period and the first plan year which commences prior to
the first anniversary of the employee's initial eligibility computation period
will be credited with two years of service for purposes of eligibility to
participate.
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(b) A Participant's Vested Portion of his Employer Matching
Contribution Account is determined in accordance with the following schedule:
Years of Vested Service Vested Portion
----------------------- --------------
Less than 1 years 0%
1 but less than 2 years 25%
2 but less than 3 years 50%
3 but less than 4 years 75%
4 years or more 100%
(c) A Participant's vested portion of his Voluntary Salary Deferral
Contribution Account is one hundred percent (100%) at all times.
1.41 "VOLUNTARY SALARY DEFERRAL CONTRIBUTION ACCOUNT " shall mean the
account established within the Trust in the name of a Participant to which the
Participant's voluntary salary deferral contributions are credited and which is
adjusted, in accordance with the provisions of Section 4.03, for any gains or
losses on the investments of the Trust.
1.42 "YEAR OF SERVICE " An employee has completed a year of service for
eligibility purposes when he is credited with one thousand (1,000) or more hours
of service during any eligibility computation period. The initial eligibility
computation period shall be the twelve (12) consecutive month period beginning
with the date on which the employee first performs an hour of service.
Subsequent eligibility computation periods shall be the Plan Year that
includes such employee's employment commencement date. After an employee
becomes a participant, all
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further measurements shall be made on the basis of a Plan Year which includes
the Plan Year in which his employment commenced. An employee who is credited
with one thousand (1,000) hours of service in both the initial eligibility
computation period and the first plan year which commences prior to the first
anniversary of the employee's initial eligibility computation period will be
credited with two years of service for purposes of eligibility to participate.
FORTH AMENDMENT TO THE CEPHALON, INC.
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For eligibility purposes, an employee may also be given credit for service
completed, prior to employment with the Employer, for such other entities, if
any, as are identified by resolution or other appropriate action of the
Employer.
1.43 "YEAR OF VESTED SERVICE " shall mean a Plan Year during which the
Participant has been credited with at least one thousand (1,000) Hours of
Service with the Employer.
For vesting purposes, an employee may also be given credit for service
completed, prior to employment with the Employer, for such other entities, if
any, as are identified by resolution or other appropriate action of the
Employer. If the employer maintains the plan of a predecessor employer, service
with such employer will be treated as service for the employer.
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ARTICLE II - PARTICIPATION
2.01 COMMENCEMENT OF PARTICIPATION : An Employee shall commence
participation in the plan as of his Date of Participation, as defined in Section
1.06
2.02 CONTINUOUS EMPLOYMENT : Leave of absence, temporary layoff, service
in the Armed Forces of the United States, and service on jury duty shall not be
considered to be a termination of employment or a break in the continuity of
employment for purposes of this Plan provided that the absence does not exceed
twelve (12) months, or the ___ enlistment period in the case of absence due to
service in the Armed Forces, and _____ the Participant returns to his employment
with the Employer within sixty (60) days _______. If the Participant does not
return to his employment with the Employer _________, he shall be deemed to have
terminated his employment as of the date on which his leave of absence ceases.
2.03 TERMINATION OF PARTICIPATION :
(a) If a Participant is credited with five hundred (500) or fewer
Hours of Service in any Plan Year, his participation shall cease as of the first
day of that Plan Year.
(b) If a Participant's employment is terminated, voluntarily (by
resignation or involuntarily (by discharge or as a result of failure to return
after an _______ provided in Section 2.02, his participation shall cease.
(i) on the first day of the Plan Year during which the employment
of the Participant has been credited with five hundred (500) or fewer hours of
service _______;
(ii) on the last day of the Plan Year during which employment of
the Participant has been credited with more than five hundred (500) Hours of
Service _______ Year.
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Notwithstanding anything herein to the contrary, in the event the
_______ any voluntary salary deferral contribution during the Plan Year in which
Participation cases in accordance with the provisions of this Section 20.03,
such contributions shall be retained within the Plan, and the Participant shall
be entitled to an Employer Matching Contribution, if any is made under the terms
of the Plan, in accordance with Section 3.10, with respect to those voluntary
salary deferral contributions.
2.04 PARTICIPATION AFTER ONE YEAR BREAK IN SERVICE:
(a) In the event an Employee incurs a One Year Break in Service prior
to becoming a Participant, he shall be treated thereafter as a new employee for
purposes of participation under Sections 1.06 and 2.01.
(b) In the event a Participant incurs a One Year Break in Service, he
shall be treated as a new employee under Sections 1.06 and 2.01, for purposes of
reparticipation. Once he has satisfied the service conditions of Section 1.06,
if any, he shall resume participation in this Plan, retroactively, as of his
Employment Commencement Date following the One Year Break in Service; provided,
however, that from the time his initial participation ceases until he has
completed any period of service required for reparticipation, he shall not share
in any allocation of Employer contributions, except as otherwise specifically
provided in Section 4.01. A vested participant's service will be restored upon
reemployment.
2.05 EMPLOYEES SUBJECT TO COLLECTIVE BARGAINING:
Notwithstanding any provision in this Article to the contrary, no employee who
is a member of a collective bargaining unit shall be eligible for participation
in this Plan.
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(a) In the event an employee who has been ineligible for participation
under this Section 2.05 subsequently becomes eligible by reason of a change in
status to a category of employment eligible for participation, he shall commence
participation on the day of his change in status, if on such date he has
satisfied the conditions of Section 1.06. If on such date he has not satisfied
the condition of Section 1.06, his participation will commence on his Date of
Participation, as defined in Section 1.06.
(b) In the event that a Participant becomes ineligible for continued
participation by reason of change in status to a category of employment
ineligible for participation, he shall cease to be a Participant hereunder as of
the day immediately preceding his change in status.
(c) Under this Section, it is contemplated that an individual could be
a participant in two (2) plans to which the Employer contributes in a single
year, being in each for a portion of said year. For such year, all Hours of
Service, wages, and other compensation shall be aggregated and apportioned such
that the individual
(i) shall not be deprived of any benefit, and
(ii) shall not receive a duplication of benefits.
(d) Upon a change to ineligible status by any Participant hereunder,
the Participant's accounts shall remain within the Trust hereunder, and the
employee will continue to accrue vested rights therein, plus gains and losses
thereon, under the provisions hereof, until such time he shall terminate service
with the Employer and become entitled to benefits under Article V.
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2.06 OWNER-EMPLOYEE LIMITATION
(a) If this Plan provides contributions or benefits for one or more
Owner Employees who control both the business for which this Plan is established
and one or more other trades or businesses, this Plan and the plan established
for other trades or businesses must, when looked at as a single plan, satisfy
Code Sections 401(a) and (d) for the employees of this and all other trades or
businesses.
(b) 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 the other trades or businesses must be included in a plan which
satisfies Code Sections 401(a) and (d) and which provides contributions and
benefits not less favorable than provided for Owner-Employees under this Plan.
(c) 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.
(d) For purposes of the preceding paragraphs, an Owner-Employee, or
two or more Owner-Employees, will be considered to control a trade or business
if the Owner Employee, or two or more Owner-Employees together:
(i) own the entire interest in an unincorporated trade or
business, or
(ii) in the case of a partnership, own more than fifty percent
(50%) of
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either the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner Employees, shall be treated as owning any interest in a partnership which
is owner, directly or indirectly, by a partnership which such Owner-Employee, or
such two or more OwnerEmployees, are considered to control within the meaning of
the preceding sentence.
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ARTICLE III - CONTRIBUTIONS
---------------------------
3.01 AMOUNT OF EMPLOYER CONTRIBUTION: The amount to be contributed to the
Plan shall be determined for each Plan Year by the Employer. Such Employer
contribution, if any, shall be paid to the Trust within the time period and
manner permitted by the Code. All or a portion of an employer contribution that
is not deductible under Code Section 404, must be returned to the Employer
within one year of the contribution according to regulations promulgated by the
Internal Revenue Service.
3.02 LIMITATION ON EMPLOYER CONTRIBUTIONS: In no event shall a
contribution be made on behalf of any Participant which would result in a
violation of Code Section 415. (See Plan Appendix "Limitations - Section 415.")
If, for any reason, a Participant would be or has been credited with annual
additions in excess of the maximum set out in Code Section 415, by virtue of
Employer contributions, the excess will be disposed of as follows:
(i) any nondeductible voluntary employee contributions, to the
extent they would reduce the excess amount, will be returned to the participant;
(ii) the employer may elect to recover the same under Article I,
Section 2(a) or 2(c) of the Trust Agreement;
(iii) If not so recovered or recoverable, the amount shall be
allocated to a suspense account and shall be used to reduce the Employer
contributions in succeeding years-
If a suspense account is in existence at any time during a plan year
pursuant to this section, it will not participate in the allocation of the
trust's investment gains and losses.
If a suspense account is in existence at any time during a particular plan
year, all amounts
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in the suspense account must be allocated and reallocated to participants'
accounts before any employer or employee contributions may be made to the plan
for that plan year. Excess amounts may not be distributed to participants or
former participants.
For purposes of the top-heavy requirement, Salary Deferrals may be taken
into account for the purpose of satisfying the minimum top-heavy contribution
requirement for key employees only.
3.03 VOLUNTARY SALARY DEFERRAL CONTRIBUTIONS:
(a) Each Plan Year, any Participant may elect to make a voluntary
salary deferral contribution to the Trust by entering into a Salary Deferral
Agreement with the Employer. The terms of any such Salary Deferral Agreement
shall provide that the Participant agrees to accept a reduction in his
Compensation in an amount or percentage thereof as specified by the Participant,
subject to the limitations set forth in Sections 1.36 and 3.05; provided,
however, that in no event shall a voluntary salary deferral contribution be
permitted by a Participant to the extent it would result in a violation of Code
Section 415 (See Plan Appendix, "Limitations - Sections 415") or Code Section
401(k).
(b) In consideration of such agreement, an amount equal to the total
amount by which the Participant's Compensation was reduced, pursuant to the
Salary Deferral Agreement, will be allocated, no later than as of the last day
of the Plan Year, to the Participant's Voluntary Salary Deferral Account,
subject to the following conditions:
(i) The allocation shall be made without regard to the
Participant's performance of services or participation in the Plan on any date
subsequent to the date of the
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allocation, and
(ii) The voluntary salary deferral contributions so allocated
shall be paid to the Trust no later than ninety (90) days following the date the
voluntary salary deferral contributions were withheld from the participant's
salary. For this purpose voluntary salary deferral contributions are deemed to
relate to Compensation that either
(A) would have been received by the Participant during the
Plan Year, but for the election to defer pursuant to the Agreement, or
(B) is attributable to services performed by the Participant
during the Plan Year and, but for the election to defer, would have been
received by the Participant within two and one-half (2-1/2) months after the
close of the Plan Year.
(c) All voluntary salary deferral contributions of the Participant
and all gains and losses on those contributions shall be credited or charged, as
the case may be, to the Participant's separate Voluntary Salary Deferral
Contribution Account.
3.04 AMENDMENT OF SALARY DEFERRAL AGREEMENTS: The Employer may amend any
Salary Deferral Agreement at any time, if the Employer determines that such
amendment is necessary to insure that the limitations of Section 3.05 will not
be exceeded or to insure that the nondiscrimination tests of Code Section 401(k)
are met for the Plan Year. This is in addition to, and not a limitation of, the
provisions of Section 1.36.
3.05 ACTUAL DEFERRAL PERCENTAGE LIMITATION:
(a) Actual Deferral Percentage Test: For each Plan Year the Actual
-------------------------------
Deferral Percentage, as defined in Section 1.01, for Highly Compensated
Employees, as defined in
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Section 1.22, must bear a relationship to the Actual Deferral Percentage for
Non-Highly Compensated Employees, as defined in Section 1.25, which satisfies
either of the following actual deferral percentage tests:
(i) The Actual Deferral Percentage for the Highly Compensated
Employees is not more than the Actual Deferral Percentage for the Non-Highly
Compensated Employees multiplied by 1.25, or
(ii) The excess of the Actual Deferral Percentage for the Highly
Compensated Employees over that of the Non-Highly Compensated Employees is not
more than two (2) percentage points, and the Actual Deferral Percentage for the
Highly Compensated Employees is not more than the Actual Deferral Percentage for
the Non-Highly Compensated Employees multiplied by 2.0.
(b) Correction of Excess Contributions: In the event that the Actual
----------------------------------
Deferral Percentage of the Highly Compensated Employees does not satisfy either
of the actual deferral percentage tests, set out in Section 3.05(a) above, the
Excess Contributions to the Plan for the Plan Year shall be distributed to the
Highly Compensated Employees, as provided in Section 3.06.
Alternatively, the Employer, may elect to make Qualified Matching
Contributions to the Plan on the behalf of all participants who are Non-highly
Compensation Employees who make salary deferrals to the Plan that are sufficient
to satisfy either the Actual Deferral Percentage test or the Average
Contribution Percentage test, or both, pursuant to regulations under the Code.
"Qualified Matching Contributions" shall mean matching contribution which are
subject to the
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distribution and nonforfeitability requirements under Code Section 401(k).
In addition, in lieu of distributing Excess Contributions, the employer may
make Qualified Non-elective Contributions on behalf of Non-highly Compensated
Employees that are sufficient to satisfy either the Actual Deferral Percentage
test or the Average Contribution Percentage test, or both, pursuant to
regulations under the Code. "Qualified Non-elective Contributions" shall mean
contributions (other than Matching Contribution or Qualified Matching
Contributions) made by the employer and allocated to participants' accounts that
the 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 provision that are applicable to Salary
Deferrals and Qualified Matching Contributions.
(c) Allocation of Excess Contributions: In the event that the
----------------------------------
Employer elects to distribute excess contributions among the Highly Compensated
Employees, the Excess Contributions for a Plan Year are to be allocated in
accordance with the following formula:
(i) The Actual Deferral Ratio of the Highly Compensated Employee
with the highest Actual Deferral Ratio is reduced to the extent necessary to
(A) Enable the Plan to satisfy one of the actual deferral
percentage tests, or
(B) Cause the Actual Deferral Ratio of that Highly
Compensated Employee to equal that of the Highly Compensated Employee with the
next highest Actual Deferral Ratio.
(ii) The above process is repeated until the Plan satisfies one
of the
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actual deferral percentage tests.
(iii) The Excess Contribution of each Highly Compensated Employee
is equal to his voluntary salary deferral contributions for the Plan Year, less
an amount equal to his deferral ratio for the Plan year (as reduced under the
method described above) multiplied by his compensation used in determining that
deferral ratio.
(d) Actual Deferral Ratio: For purposes of applying the provisions of
---------------------
this Section 3.05 and Article III, the term "Actual Deferral Ratio" shall mean,
for each Employee, the amount of his voluntary salary deferral contributions for
the Plan Year divided by his Compensation for the Plan Year.
(i) The Actual Deferral Ratio for each employee and the Average
Deferral Percentages shall be calculated to the nearest one hundredth of one
percent.
(ii) If an Employee is eligible to participate in more than one
cash or deferred arrangement of the Employer, the Actual Deferral Ratio of the
Employee shall be calculated by treating all such arrangements as one.
(iii) If a Highly Compensated Employee is either a Five Percent
Owner or one of the ten (10) most highly compensated employees, the combined
Actual Deferral Ratio for that Highly Compensated Employee and all those who are
Family Members, as defined in Section 1.20, with respect to the Highly
Compensated Employee shall be determined by combining the salary deferral
contributions and Employee Compensation of all eligible Family Members.
(iv) For purposes of computing Actual Deferral Ratios and
satisfying
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the actual deferral percentage tests of Section 3.05(a), all or any
part of the Employer contributions, and Employer Matching Contributions if any
are made under the terms of this Plan, may be treated as voluntary salary
deferral contributions provided that they are fully vested at all times are
subject to the restrictions of Section 3.09 without regard to the provisions of
Section 3.10 and are otherwise deemed to be qualified nonelective contributions
or qualified Matching contributions within the meaning of Regulation Section
1.401(k)-1(g)(7).
(e) The ADP for any participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to have Voluntary Salary Deferrals (and
Qualified Nonelective Contributions or Employer Matching Contributions, or both,
if treated as Voluntary Salary Deferrals for purposes of the ADP test) allocated
to his or 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 Voluntary Salary Deferrals (and, if applicable), such Qualified Non-
elective Contributions or Employer Matching Contributions, or both) were made
under a single arrangement. If a Highly Compensated Employee participates in
two or more cash or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
(f) 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
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aggregated in order to satisfy section 401(k) of the Code only if they have the
same Plan Year.
(g) For purposes of determining the ADP of a participant who is a five
percent (5 %) owner or one of the ten most highly-paid Highly Compensated
Employees, the Voluntary Salary Deferrals (and Qualified Non-elective
Contributions or Employer Matching Contributions, or both, if treated as
Voluntary Salary Deferrals for purposes of the ADP test) and Compensation of
such participant shall include the Voluntary Salary Deferrals (and, if
applicable, Qualified Non-elective Contributions and Employer Matching
Contributions, or both) 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.
(h) For purposes of determining the ADP test, Voluntary Salary
Deferrals, Qualified Non-elective Contributions and Employer Matching
Contributions must be made before the last day of the twelve-month period
immediately following the Plan Year to which contributions relate.
(i) The employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Non-elective
Contributions or Employer Matching Contributions, or both, used in such test.
(j) 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.
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3.06 CORRECTIVE DISTRIBUTION OF EXCESS CONTRIBUTIONS:
(a) A participant's Excess Contributions for any Plan Year, and any,
income attributable to those contributions, shall be distributed to the
Participant no later than the last day of the following Plan Year. In the event
the Plan should be terminated during a Plan Year in which Excess Contributions
are made, the Excess Contribution shall be distributed no later than twelve (12)
months following the date of termination.
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 shall be allocated to Participants
who are subject to the family member aggregation rules of Code Section 414(q)(6)
in the manner prescribed by the Excess Contributions (including the amounts
recharacterized) shall be treated as annual additions under the Plan.
(b) The income attributable to the Participant's Excess Contributions
shall be equal to the sum of (i) the allocable gain or loss for the Plan Year to
which the Excess Contributions relate and (ii) any allocable gain or loss for
the period beginning with the first day of the following Plan Year and ending of
the date of distribution (the "gap period").
(c) The income allocable to Excess Contributions for the Plan Year
shall be determined by multiplying the income for the Plan Year allocable to the
Participant's voluntary salary deferral contributions [and to any Employer
contributions or Employer Matching Contributions treated as voluntary salary
deferral contributions in accordance with Section 3.05(d)(iv)] by a fraction.
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(i) The numerator of the fraction is the Excess Contributions of
the Participant for the Plan Year.
(ii) The denominator of the fraction is the Participant's total
account balance attributable to voluntary salary deferral contributions and
amounts treated as voluntary salary deferral contributions as of the end of the
year, reduced by the gain allocable to such account for the Plan Year and
increased by the loss allocable to such account for the Plan Year.
(d) The income allocable to the Participant's Excess Contributions
during the gap period may be calculated under the fractional method set forth in
Section 3.06(c) above. Alternatively, the income allocable for that gap period
may be determined under the safe harbor method by multiplying the number of
months that have elapsed since the end of the Plan Year by ten percent (10%) of
the income allocable for the Plan Year, as calculated under Section 3.06(c)
above.
(i) For purposes of applying the safe harbor method, a
distribution occurring on or before the fifteenth (15th) day of a month will be
treated as having been made on the last day of the preceding month.
(ii) For purposes of applying the safe harbor method, a
distribution occurring after the fifteenth (15th) day of a month will be treated
as having been made on the first day of the next month.
(e) Excess contributions shall be distributed from the participant's
Salary Deferral Account and Qualified Matching Contribution Account (if
applicable) in proportion to the participant's Salary Deferrals and Qualified
Matching Contributions (to the extent used in the
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ADP test) for the Plan Year. Excess contributions shall be distributed from the
participant's Qualified Non-elective Contribution Account only to the extent
that such Excess Contributions exceed the balance in the participant's Salary
Deferral Account and Qualified Matching Account.
3.07 TREATMENT OF EXCESS DEFERRALS:
(a) In no event may a Participant make voluntary salary deferral
contributions to this Plan for any calendar year which would result in Excess
Deferrals, as defined in Section 1.19, for that year.
(b) A Participant's Excess Deferrals shall be included in the
Participant's gross income for that year.
(c) Excess Deferrals received by the Plan may be distributed to the
Participant, under the following terms and conditions:
(i) On or before March 1 following the taxable year in which the
Excess Deferrals were made (or such later date as may be provided by IRS
regulations), the Participant shall advise the Plan Administrator, in writing,
of the existence and amount of the Excess Deferrals allocated to this Plan.
(ii) On or before April 15 following the taxable year in which
the Excess Deferrals were made, the amount of the Excess Deferrals allocable to
this Plan, and any income attributable to those Excess Deferrals, shall be
distributed to the Participant.
(A) The income attributable to the Participant's Excess
Deferrals shall be equal to the sum of (I) the allocable gain or loss for that
taxable year of the Participant and (II) any allocable gain or loss for the
period between the end of the taxable year
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and the date of distributions (the "gap period").
(B) The income allocable to the Excess Deferrals for the taxable year
of the Participant shall be determined by multiplying the income for that
taxable year allocable to voluntary salary reduction contributions by a
fraction.
(I) The numerator of the fraction is the amount of Excess
Deferrals made by the Participant for the taxable year.
(II) The denominator of the fraction is the Participant's total
Voluntary Salary Deferral Contribution Account balance as of the end of the
taxable year, without regard to income or loss occurring during such taxable
year.
(C) The income allocable to the Excess Deferrals for the gap period
may be calculated under the fractional method, set forth in Section
3.07(c)(ii)(B) above; alternatively, the income for such period may be
determined under the safe harbor method, by multiplying the number of months
that have elapsed since the end of the taxable year by ten percent (10%) of the
income allocable for the taxable year, as calculated under Section
3.07(c)(ii)(B) above.
(I) For purposes of applying the safe harbor method, a
distribution occurring on or before the fifteenth (15th) day of a month will be
treated as having been made on the last day of the preceding month.
(II) For purposes of applying the safe harbor method, a
distribution occurring after the fifteenth (15th) day of the month will be
treated as having been made on the first day of the next month.
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(iii) Any corrective distribution of less than the entire amount
of Excess Deferrals and income shall be treated as a pro rata distribution of
the Excess Deferrals and income.
(iv) The amount of Excess Deferrals that may be distributed with
respect to any Participant for a taxable year shall be reduced by any Excess
Contributions previously distributed with respect to such participant under
Section 3.06 for the Plan Year beginning with or within such taxable year.
(v) Except as otherwise provided by law, notwithstanding the
distribution of Excess Deferrals under this Section 3.07, such amounts shall not
be disregarded for purposes of the nondiscrimination requirements of Section
401(a)(4), the Actual Deferral Percentage Limitations of Section 3.05 or the
limitations of Code Section 415.
3.08 LIMITATIONS ON WITHDRAWALS AND DISTRIBUTIONS:
(a) A Participant is fully vested at all times in all amounts
contributed to his Voluntary Salary Deferral Contribution Account, Qualified
Non-elective Contributions, and Qualified Matching Contributions and all
earnings thereon. However, except as provided in Section 3.09, no amounts may
be withdrawn by, or distributed to, the Participant or his Beneficiary from such
accounts prior to one of the following events:
(i) The Participant's retirement, death, disability or
termination of employment;
(ii) The Participant's attainment of age fifty-nine and one-half
(59-1/2);
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(iii) The termination of this Plan by the Employer without the
establishment of a successor plan;
(iv) If the Employer is a corporation, the sale or other
disposition to an unrelated corporation, which does not maintain the plan, of
substantially all of the assets used in a trade or business of such corporation
with respect to an Employee who continues employment with the corporation
acquiring the assets, or
(v) If the Employer is a corporation, the sale or other
disposition of its interest in a subsidiary to an unrelated entity with respect
to an Employee who continues employment with the subsidiary.
(vi) Satisfaction of the Hardship provisions by the participant
in accordance to Section 3.09.
(b) The provisions of this Section 3.08 shall apply to all Qualified
Nonelective contributions and Qualified Matching Contributions if any are made
to this Plan.
3.09 HARDSHIP DISTRIBUTIONS:
(a) General: Notwithstanding the provisions of Sections 3.08,
-------
distribution may be made to a Participant from his Voluntary Salary Deferral
Contribution Account at any time, provided that the distribution is made on
account of an immediate and heavy financial need of the Participant, is
necessary to satisfy such financial need, and is made in accordance with the
provisions of this Section 3.09. If this Plan provides for a joint and survivor
annuity as the normal form of benefit, any distribution made pursuant to this
Section shall be subject to spousal consent requirements of Code Sections
401(a)(ii) and 417 and the regulations thereunder.
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(b) Immediate and Heavy Financial Need: The determination as to the
----------------------------------
existence of a heavy and immediate financial need shall be made by the Plan
Administrator on the basis of all relevant facts and circumstances, but a
distribution will be deemed to be made on account of an immediate and heavy
financial need of the Participant, if the distribution is made on account of:
(i) Medical expenses described in Code Section 213(d) incurred
by the Participant, the Participant's spouse or any dependent of the Participant
(as defined in Code Section 152);
(ii) Purchase (excluding mortgage payments) of a principal
residence
for the Participant;
(iii) Payment of tuition for the next semester or quarter of post
secondary education for the Participant, his spouse, children or dependents;
(iv) The need to prevent the eviction of the Participant from
his principal residence or foreclosure on the mortgage of the Participant's
principal residence; or
(v) Any other circumstances which is deemed to be an immediate
and heavy financial need by the Commissioner of the Internal Revenue Service
through the publication of regulations, revenue rulings, notices and other
documents of general applicability.
(c) Distribution Necessary to Satisfy Financial Need: A distribution
------------------------------------------------
is made on account of a hardship only to the extent that the amount distributed
does not exceed the amount required to relieve the financial need and only to
the extent that the financial need cannot be satisfied from other sources which
are reasonably available to the Participant. This
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determination is to be made by the Plan Administrator on the basis of relevant
facts and circumstances. The following additional requirements must be
satisfied:
(i) Prior to receiving any amount from this Plan as a hardship
distribution, the Participant must first have obtained all distributions, other
than hardship distributions, and all non-taxable loans (including any
Participant Loans permitted under Articles XIV and XV of this Plan) currently
available under all plans maintained by the Employer.
(ii) The Participant's right to make voluntary salary deferral
contributions and non-deductible voluntary contributions, if any are permitted,
under this Plan shall be suspended for a period of twelve (12) calendar months
following the month in which the Participant receives a hardship distribution.
(iii) During the Participant's taxable year which immediately
follows the taxable year of the hardship distribution, the Participant may not
make voluntary salary deferral contributions to this or any other plan
maintained by the Employer which exceed the limits in Section 1.19 for such
year, reduced by the amount of voluntary salary deferral contributions which
were made by the participant for the taxable year of the hardship distribution.
(d) Resources Considered: A Participant's resources shall include
--------------------
those assets of his or her spouse and minor children as are reasonably
available.
(e) Additional Limitations on Distribution: The following additional
--------------------------------------
limitations shall apply to hardship distributions:
(i) In no event shall any hardship distribution exceed the
amount of
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the Participant's voluntary salary deferral contributions, plus any earnings on
such contributions accrued as of December 31, 1988 (or such other date as may be
provided by regulation).
(ii) A participant who is permitted to receive a hardship
distribution, as provided herein, may elect to do so at any time, but not more
frequently than once per Plan Year.
3.10 EMPLOYER MATCHING CONTRIBUTIONS: For each Plan Year, the Employer
Matching Contributions shall be made by the Employer in accordance with Section
1.15. The Employer Matching Contribution, if any, made with respect to each
Participant, based upon the Participant's voluntary salary deferral contribution
for the Plan Year, and all gains and losses on such Employer Matching
Contribution, shall be credited or charged, as the case may be, to the
Participant's Employer Matching Contribution Account. The Employer Matching
Contributions, if applicable, may be used to satisfy the minimum top-heavy
requirements.
3.11 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS: A participant in the Plan is
not required or permitted to make nondeductible voluntary contributions to the
Trust.
3.12 ACTUAL CONTRIBUTION PERCENTAGE LIMITATIONS:
(a) Actual Contribution Percentage Tests: For each Plan Year, the
------------------------------------
Actual Contribution Percentage for Highly Compensated Employees, as defined in
Section 1.22, must bear a relationship to the Actual Contribution Percentage for
Non-Highly Compensated Employees, as defined in Section 1.24, which satisfies
either of the following actual contribution percentage tests:
(i) The Actual Contribution Percentage for the Highly
Compensated Employees is not more than the Actual Contribution Percentage for
the Non-Highly
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Compensated Employees multiplied by 1.25, or
(ii) The excess of the Actual Contributed Percentage for the
Highly Compensated Employees over that of the Non-Highly Compensated Employees
is not more than two (2) percentage points, and the Actual Contribution
Percentage for the Highly Compensated Employees is not more than the Actual
Contribution Percentage for the Non-Highly Compensated Employees multiplied by
2.0.
(b) Correction of Excess Aggregate Contributions: In the event that
--------------------------------------------
the Actual Contribution Percentage of the Highly Compensated Employees does not
satisfy either of the actual contribution percentage tests set out in Section
3.12(a) above, the excess Employer Matching Contributions to the Plan for the
Plan Year, which shall be referred to as "Excess Aggregate Contributions," and
any income attributable to those Excess Aggregate Contributions shall be
distributed to the Participant within twelve (12) months after the close of the
Plan Year in which the excess arose. In the event the Plan should be terminated
during a Plan Year in which Excess Aggregate contributions arise, such Excess
contribution shall be distributed no later than twelve (12) months following the
date of termination.
(c) Allocation of Excess Aggregate Contributions: The Excess
--------------------------------------------
Aggregate Contributions for any Plan Year are to be allocated among Highly
Compensated Employees in accordance with the following formula:
(i) The Actual Contribution Ratio of the Highly Compensated
Employee with the highest Actual Contribution Ratio is reduced to the extent
necessary to
(A) Enable the Plan to satisfy one of the actual
contribution
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percentage tests, or
(B) Cause the Actual Contribution Ratio of that Highly
Compensated Employee to equal that of the Highly Compensated Employee with the
next highest Actual Contribution Ratio.
(ii) The above process is repeated until the Plan satisfies one
of the actual contribution percentage tests.
(iii) The Excess Aggregate Contribution of each Highly
Compensated Employee is equal to his Employer Matching Contributions for the
Plan Year, less an amount equal to his Actual Contribution Ratio for the Plan
Year (as reduced under the method described above) multiplied by his
compensation used in determining the contribution ratio.
(d) Definitions: For purposes of applying the provisions of this
-----------
Section 3.12 and Article HI,
(i) "Actual Contribution Percentage" shall mean the average of
the Actual Contribution Ratios for the group of Highly Compensated Employees, or
the group of Non-Highly Compensated Employees, as the case may be.
(ii) "Actual Contribution Ratio" shall mean, for each employee,
the sum of his Employer Matching Contributions, if any, for the Plan Year
divided by his compensation for the Plan Year.
(A) The Actual Contribution Ratio for each Employee and the
Actual Contribution Percentages shall be calculated to the nearest one hundredth
of one Percent.
(B) If a Highly Compensated Employee receives Employer
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Matching Contributions under more than one plan of the Employer, all such
contributions shall be aggregated for purposes of determining the Actual
Contribution Ratio of that Employee.
(C) If a Highly Compensated Employee is either a Five
Percent Owner or one of the ten (10) most highly compensated employees, the
combined Actual Contribution Ratio for that Highly Compensated Employee and all
those who are Family Members, as defined in Section 1.20, with respect to the
Highly Compensated Employee shall be the greater of
(I) The Actual Contribution Ratio determined by
combining Employer Matching Contributions and compensation of all eligible
Family Members who are highly compensated without regard to family aggregation,
or
(II) The Actual Contribution Ratio determined by
combining the Employer Matching Contributions and Employee Compensation of all
eligible Family Members.
(D) For purposes of computing Actual Contribution Ratios and
satisfying the actual contribution percentage tests of Section 3.12 any Employer
Matching Contributions which are treated as voluntary salary reduction
contributions, in accordance with Section 3.05(d)(iv), for purposes of
satisfying the actual deferral percentage tests of Section 3.05(a), shall be
disregarded.
(E) For purposes of computing Actual Contribution Ratios and
satisfying the actual contribution percentage tests of Section 3.12, all or any
part of the Employer contributions and voluntary salary reduction contributions
may be treated as Employer Matching
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Contributions, provided that such contributions are deemed to be qualified
nonelective contributions or qualified elective contributions, within the
meaning of Regulation Section 1.401(m)-l(b)(2).
(F) For purposes of computing Actual Contribution Ratios and
satisfying the actual contribution percentage tests of Section 3.12, Employer
Matching Contributions are to be taken into account for a Plan Year only if such
Contributions
(I) Are allocated to the Participant's account as of a
date within the Plan Year;
(II) Are actually paid to the Trust no later than the
end of the twelve (12) month period beginning on the day after the close of the
Plan Year, and
(III) Are made on behalf of the Participant based
on his voluntary salary reduction contributions for the Plan Year.
(e) Income Allocable to Excess Aggregate Contributions: The income
--------------------------------------------------
attributable to the Participant's Excess Aggregate Contributions shall be equal
to the sum of the allocable gain or loss for the Plan Year to which the Excess
Aggregate Contributions relate and any allocable gain or loss for the period
beginning with the first day of the following Plan Year and ending on the date
of distribution (the "gap period").
(i) The income allocable to Excess Aggregate Contributions for
the Plan Year shall be determined by the multiplying the income for the Plan
Year allocable to matching contributions [and amounts treated as matching
contributions in accordance with
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Section 3.12(d)(ii)(E)] by a fraction.
(A) The numerator of the fraction is the Excess Aggregate
Contributions of the Participant for the Plan Year.
(B) The denominator of the fraction is the participant's
total account balance attributable to Employer Matching Contributions and
amounts treated as Employer Matching Contributions as of the end of the Plan
Year, reduced by the gain allocable to such account for the Plan Year and
increased by the loss allocable to such account for the Plan Year.
(ii) The income allocable to the Participant's Excess Aggregate
Contributions for the gap period may be calculated under the fractional method
set forth in Section 3.12(e)(i) above. Alternatively, the income allocable for
that gap period may be determined, under the safe harbor method, by multiplying
the number of months that have elapsed since the end of the Plan Year by ten
percent (10%) of the income allocable for the Plan Year, as calculated under
Section 3.12(e)(i) above.
(A) For purposes of applying the safe harbor method, a
distribution occurring on or before the fifteenth (15th) day of a month will be
treated as having been made on the last day of the preceding month.
(B) For purposes of applying the safe harbor method, a
distribution occurring after the fifteenth (15th) day of a month will be treated
as having been made on the first day of the next month.
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3.13 MULTIPLE USE OF ALTERNATE LIMITATIONS:
(a) General Rule: In the event one or more Highly Compensated
------------
Employees of the Employer are eligible to participate in this Plan and are
eligible to receive Employer Matching Contributions under this Plan or another
qualified Plan maintained by the Employer which is subject to Code Section
401(m), the sum of the Actual Deferral Percentage of the group of such Highly
Compensated Employees and the Actual Contribution Percentage of the group of
such Highly Compensated Employees shall not exceed the aggregate limit, as
defined herein.
(b) Aggregate Limit: For purposes of this Section 3.13, the aggregate
---------------
limit is the sum of:
(i) One hundred twenty-five percent (125 %) of the greater of
(A) The Actual Deferral Percentage of the group of eligible
Non-Highly Compensated Employees under this Plan for the Plan Year, or
(B) The Actual Contribution Percentage of the group of
eligible Non-Highly Compensated Employees under this Plan or another qualified
plan of the Employer which is subject to Code Section 401(m), and
(ii) Two (2) plus the lesser of (A) or (B) above, but in no event
more than Two Hundred Percent (200%) of the lesser of (A) or (B) above.
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 or 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,
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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.
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 year 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.
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(g)(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.
For purposes of determining the Contribution Percentage test, Employee
Contributions are considered to have been made in the Plan Year in which
contributed to the trust. Matching Contributions and Qualified Non-elective
Contributions will be considered made for a Plan Year
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if made no later than the end of the twelve-month period beginning on the day
after the close of the Plan Year.
The employer shall maintain records sufficient to demonstrate satisfaction
of the ACP test and the amount of Qualified Non-elective Contributions or
Qualified Matching Contributions, or both, used in such test.
The determination and treatment of the Contribution Percentage of any
participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(c) Determination of Percentages: For purposes of determining the
----------------------------
aggregate limit, the Actual Deferral Percentage and Actual Contribution
Percentage shall be determined after application of all of the provisions of
Section 3.05 and 3.12 and after any corrective distribution of excess
contributions, as provided in Sections 3.06 and 3.12.
(d) Correction of Multiple Use: In the event the aggregate limit of
--------------------------
Section 3.13(b) is exceeded, resulting in a multiple use of the alternate
limitation, the Employer, at its election, shall reduce the Actual Deferral
Percentage of the Highly Compensated Employees, in accordance with the
provisions of Section 3.05, or the Actual Contribution Percentage of the Highly
Compensated Employees, in accordance with the provisions of Section 3.12.
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ARTICLE IV - ALLOCATIONS
4.01 ALLOCATION OF EMPLOYER CONTRIBUTIONS:
(a) Each Participant's share of Employer contributions, as determined
under Section 3.01, paid into or accrued for the Trust for each Plan Year and
any forfeitures shall be determined as follows:
(i) So much of the contribution as does not exceed the Excess
Contribution Percentage multiplied by the total Aggregate Compensation of all
Eligible Participants shall be allocated to each Eligible Participant in the
ratio which his Aggregate Compensation bears to the total Aggregate Compensation
paid to all Eligible Participants during such year.
(ii) The balance of the contribution shall be allocated to each
Eligible Participant in the ratio which his Compensation bears to the total
Compensation paid to all Eligible Participants during such year.
(b) Notwithstanding the foregoing, for any Plan Year for which the
top heavy provisions of Article X apply, each Participant's share of Employer
contributions and any forfeitures shall be determined in accordance with Section
10.03.
(c) For purposes of applying this Section 4.01;
(i) "Aggregate Compensation" shall mean a sum of the
Participant's Compensation and his Excess Compensation.
(ii) "Excess Compensation" shall mean the eligible Participant's
Compensation in excess of the Integration Level.
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(iii) "Excess Contribution Percentage" shall mean the greater of
5.7%; or the portion of the rate of tax under Code Section 3111(a) in effect as
of the first day of the Plan Year which is attributable to old-age insurance
(the "OAI rate"); provided, however, that if the Integration Level is less than
one hundred percent (100%) of the Social Security Taxable Wage Base in effect as
of the first day of the Plan Year, the Excess Contribution Percentage shall be
defined in accordance with the following schedule:
<TABLE>
<CAPTION>
If the Integration Level is: The Excess Contribution Percentage is:
- --------------------------- -------------------------------------
<S> <C>
[A] More than the greater of (I) $10,000 or [A] The greater of (I) 4.3% or (II) the OAI
(II) 20% of the Social Security Taxable Wage rate multiplied by a fraction, (.043/.057).
Base in effect as of the first day of the Plan
Year, but not more than 80% of that Taxable
Wage Base.
[B] More than 80% but less than 100% of the [B] The greater of (I) 5.4% or (II) the OAI
Social Security Taxable Wage Base in effect rate multiplied by a fraction, (.054/.057).
as of the first day of the Plan Year.
</TABLE>
(iv) "Integration Level" shall mean one hundred percent (100%) of
the Social Security Taxable Wage Base in effect as of the first day of the Plan
Year.
(d) The term "Eligible Participant" shall be defined, for purposes of
Section 4.01(a), as a Participant who has been credited with one thousand
(1,000) hours or more Hours of Service in the Plan Year and is still employed by
the Employer on the last day of that Plan Year. In addition, any Participant
whose employment is terminated during the Plan Year because of death, disability
or attainment of retirement age shall be deemed to be an Eligible Participant
for purposes of this Section 4.01.
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(i) Notwithstanding the foregoing, if, with respect to any Plan
Year, the Plan would fail to satisfy the minimum coverage requirements of Code
Section 410(b), the following provisions shall apply:
(A) If pursuant to Section 1.06, leased employees are
ineligible to participate in this plan, then for such Plan Year, the leased
employees shall be eligible to participate in the plan if they meet the
eligibility requirements under Section 1.06.
(B) In the event subparagraph (A) above does not apply or in
the event the application of subparagraph (A) is not sufficient to satisfy Code
Section 410(b) for that Plan Year, the Participant who has been credited with
the next highest Hours of Service shall be deemed to be an Eligible Participant.
This process shall be repeated until Code Section 410(b) for that Plan Year is
satisfied. If two or more Participants have the same number of Hours of Service,
all of them will be deemed to be an Eligible Participant.
(C) In the event the application of subparagraph (B) is not
sufficient to satisfy Code Section 410(b) for that Plan Year, the Participant
who has been credited with the next highest Hours of Service and who has
terminated during the Plan Year shall be deemed to be an Eligible Participant.
This process shall be repeated until Code Section 410(b) for that Plan Year is
satisfied. If two or more Participants have the same number of Hours of Service,
all of them will be deemed to be an Eligible Participant.
(ii) The provisions of this Section 4.01(d)(i) shall apply only
for those Plan Years in which the Plan would otherwise fail to satisfy the
minimum coverage requirements of Code Section 410(b) requirements of Code
Section 410(b) and only to the extent necessary to
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satisfy those requirements.
(e) Each Participant's share of the Employer contribution- shall be
allocated to his Employer Contribution Account.
4.02 APPLICATION OF FORFEITURES AND SUSPENSE ACCOUNT:
(a) Any forfeitures attributable to Employer Contributions occurring
during the Plan Year, in accordance with Section 1.40(b), shall be allocated as
of the last day of the Plan Year to reinstate amounts to Participants' accounts
under Section 4.02(b), 6.02 or 12-04; any balance remaining shall then be
credited in the same manner as Employer contributions in accordance with Section
4.01.
(b) Any forfeitures attributable to Employer Matching Contributions
occurring during the Plan Year, in accordance with Section 1.40(c), shall be
used to reduce Employer Matching Contributions in the current Plan Year or
succeeding Plan Years.
(c) If the Participant from whose account such amounts are taken
shall return to the service of the Employer without having incurred five (5)
consecutive One Year Breaks in Service, such amounts shall be reinstated to his
account. This section shall be subject to Section 6.02(e).
If a distribution is made at a time when a participant has a nonforfeitable
right to less than one hundred percent (100%) of the account balance derived
from employer contributions and the participant may increase the nonforfeitable
percentage in the account:
(i) A separate account will be established for the participant's
interest in the plan as of the time of the distribution, and
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(ii) At any relevant time the participant's nonforfeitable
portion of the separate account will be equal to an amount ("x") determined by
the formula: x = P (AB + (R x D)) - (R x D). For purposes of applying the
formula: P is the nonforfeitable percentage at the relevant time, AB is the
account balance 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.
(d) Any excess contribution held in the suspense account pursuant to
Section 3.02 shall be credited in the same manner as Employer contributions in
accordance with Section 4.01.
4.03 CREDITING GAINS AND LOSSES ON GENERAL TRUST INVESTMENTS:
The share of the gains and losses on the general investments of the Trust shall
be credited to Participants' accounts no less frequently than as of the last day
of each Plan Year. The amount to be credited or charged to each Participant's
account shall be determined by applying the formula (A/B) x C. A is the market
value of the Participant's account as of the last valuation date; B is the
market value of the total accounts of all Participants at the beginning of the
Plan Year; and C is the net gain or loss of the Trust investments for the period
beginning after the last valuation date and ending on the current valuation
date. For purposes of this computation, however, there shall be excluded from
the Participant's account balance any amounts which would otherwise be credited
under Sections 4.011 4.02, and 4.04 for the current year. No gains and losses
shall be allocated to the Section 3.02 suspense account or to any Participant's
account which has been distributed prior to the last day of the Plan Year.
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4.04 PARTICIPANT'S CONTROL: The Trustee may, on a uniform and
nondiscriminatory basis, adopt a procedure to permit Participants to exercise
control over the assets in their individual accounts. Such procedure may give
the Participant complete control or it may provide that the Participant may
choose from an enumerated series of available options. In either event, the
procedure shall be clearly communicated to each Participant and, further, shall
be attached to this Plan as an appendix. If such a procedure is adopted, all
gains and losses on the directed investment shall be credited or charged, as the
case may be, to the Participant's account.
4.05 PLAN MAINTAINED BY MORE THAN ONE EMPLOYER: In the event the
Employer, as defined in Section 1.13, includes more than one (1) employer,
notwithstanding any other provision herein to the contrary, the following rules
shall be applicable:
(a) For purposes of determining Hours of Service and Years of
Service, all Employers maintaining this Plan shall be treated as a single
Employer.
(b) The Trustee shall aggregate all Employer's contributions to the
Trust.
(c) Each Employer's contribution for each Plan Year shall be
aggregated, and shall be allocated in accordance with Section 4.01, among the
accounts of all Participants employed by all Employers.
(d) In the event this Plan shall be integrated with Social Security,
and an Employee performs services for more than one (1) Employer maintaining
this Plan, then, with respect to that Employee, the integration level shall be
determined by multiplying the integration level specified in Section 4.01 by a
fraction, the numerator of which is the Employee's
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Compensation attributable to service with the Employer and the denominator of
which is the Employee's Compensation attributable to all Employers maintaining
the Plan.
4.06 STOCK RIGHTS, SPLITS AND DIVIDENDS: The Trustee, in its discretion,
may exercise or sell any rights to purchase securities appertaining to shares of
Company stock held by the Trustee under the Plan. Participant's Accounts shall
be appropriately credited. Securities received by the Trustee by reason of a
stock split, stock dividend or other distribution shall be appropriately
allocated to Participant's Accounts holding an interest in Company stock.
4.07 VOTING OF STOCK BY THE TRUSTEE: Each Participant shall have the
right to direct the Trustee as to the exercise of voting rights with respect to
Company stock allocated to such Participant's Account. As soon as practicable
prior to the occasion for the exercise of such voting rights, the Company shall
deliver or cause to be delivered to each Participant, all notices, prospectuses,
financial statements, proxies and proxy soliciting material relating to shares
of Company stock allocated to the Participant's Account. Instructions by
Participants to the Trustee shall be on such form or in such other manner and
pursuant to such regulations as the Plan Administrator shall prescribe. Any such
instructions shall remain in the strict confidence of the Trustee. Any shares of
Company stock for which no instructions are received by the Trustee within such
time specified in the notice shall not be voted, except to the extent that the
Trustee determines otherwise consistent with the Trustee's duties under ERISA.
Any shares of Company stock which are not allocated to Participants' Accounts
shall be voted in the same proportions as the shares of Company stock for which
timely instructions were received from Participants, except to the extent that
the Trustee determines otherwise consistent with the Trustee's duties
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under ERISA.
4.08 CONFIDENTIALITY FIDUCIARY: The Company shall designate an executive
of the Company to serve as a confidentiality fiduciary to oversee the
confidentiality of the exercise of the rights of any Participant. If the
confidentiality fiduciary determines that a situation has potential for undue
influence by an Employer, such Plan fiduciary shall direct an independent
confidentiality fiduciary to perform such activities as are necessary to ensure
the confidentiality of the rights of Participants.
4.09 TENDER OFFER RESPONSE ON COMPANY STOCK: In the event of a tender
offer or a self-tender by the Company for any Company stock held in the Plan,
the Company shall as promptly as practicable request or cause to be requested of
each Participant, instructions as to the tender offer response desired by that
Participant in connection with the shares of Company stock allocated to the
Account of such Participant and the Trustee shall be bound by the instructions
received. Any such instructions shall remain in the strict confidence of the
Trustee. Any shares of Company stock for which no instructions are received by
the Trustee within such time specified in the notice shall not be tendered,
except to the extent that the Trustee determines otherwise consistent with the
Trustee's duties under ERISA. Any shares of Company stock which are not
allocated to Participants' Accounts shall be tendered by the Trustee in the same
proportion as the shares for which timely instructions were received by the
Trustee from Participants, except to the extent that the Trustee determines
otherwise consistent with the Trustee's duties under ERISA.
4.10 SHARE LEGEND: Shares of Company stock held or distributed by the
Trustee
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<PAGE>
may include such legend restrictions on transferability as the Company may
reasonably require in order to assure compliance with applicable federal and
state securities laws.
4.11 INSIDER RESTRICTIONS: In accordance with procedures established by
the Plan Administrator, the Plan Administrator shall apply any requirements or
restrictions required for the Plan to obtain the protections of Rule 16b-3 under
the Securities Exchange Act of 1934 or any successor Rule or regulation intended
to replace Rule 16b-3 and apply any requirements or restrictions to ensure
compliance with any other applicable securities law.
4.12 EXTENT OF EMPLOYEE'S RIGHTS: At the time of distribution or
withdrawal by Participant he shall be entitled to receive Company stock or cash
as provided in Section 1.26; provided, however, that the Employers do not
guarantee that the fair market value of Company stock will be equal to the
purchase price of such stock or that the total amount withdrawable in cash with
respect to any period will be equal to or greater than the amount of the
Participant's contributions for such period.
Each Participant assumes all risk in connection with any decrease in the
market price of the Company stock, other investments or cash allocated to his
Accounts in accordance with the Plan.
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<PAGE>
ARTICLE V - BENEFITS
5.01 RETIREMENT BENEFIT:
(a) Normal Retirement Benefit: A Participant who retires upon his
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attainment of Normal Retirement Age, as defined in Section 1.27, shall be
entitled to receive the entire balance in his accounts, computed as of his
Normal Retirement Date, as defined in
(b) Late Retirement Benefit: A participant whose employment
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continues beyond his Normal Retirement Date shall be entitled to receive the
entire balance in his accounts, computed as of the last day of the Plan Year in
which his employment terminates.
(c) Early Retirement Benefit: A participant who retires upon his
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attainment of his Early Retirement Age, as defined in Section 1.07, shall be
entitled to receive the entire balance in his accounts, computed as of the last
day of the Plan Year in which his employment terminates.
5.02 DISABILITY BENEFIT: A Participant whose employment with the Employer
ceases as a result of total disability shall be entitled to receive the entire
balance of his accounts computed as of the valuation date coincident with or
immediately preceding the date of distribution. A Participant is deemed to be
totally disabled if he is rendered unable to engage in his usual and customary
activities or `m any comparable activity by reason of any physical or mental
impairment which can be expected to result in death or be of long-continued and
indefinite duration. Receipt of Social Security disability benefits shall be
conclusive evidence of disability. Disability may also be proven by way of
independent medical opinion.
5.03 DEATH BENEFIT: Upon the death of a Participant, his entire account
balance,
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computed as of the Valuation Date coincident with or following the date of
death, shall be paid in accordance with the provisions of Article VII.
5.04 DEFERRED VESTED BENEFIT: In the event a Participant's employment is
terminated for any reason other than retirement, disability or death, he shall
be entitled to receive the Vested Portion of his account, determined in
accordance with Section 1.40, and distribution of such deferred vested benefit
shall be in accordance with the provisions of Articles VI and VII. If a
participant separates from service before satisfying the age requirement for
early retirement, but has satisfied the service requirement, the participant
will be entitled to elect an early retirement benefit upon satisfaction of such
age requirement. Alternatively, if a Participant separates from service before
satisfying the service requirement for early retirement, but has satisfied the
age requirement, the Participant will be entitled to elect an early retirement
benefit upon separation from service.
5.05 VALUATION DATE: The assets of the Plan shall be valued as of the
last day of each Plan Year, although more frequent valuations shall be permitted
in accordance with a consistent administrative policy adopted by the Plan
Administrator. Except as otherwise provided herein, the benefits due to any
Participant shall be determined by valuing the Participant's accounts as of the
valuation date coincident with or immediately preceding the date on which the
Participant becomes entitled to distribution.
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ARTICLE VI - COMMENCEMENT OF BENEFITS
6.01 MANDATORY COMMENCEMENT DATE:
(a) The Trustee must begin payment of each Participant's benefits not
later than sixty (60) days following the close of the Plan Year in which the
Participant reaches Normal Retirement Age, terminates employment after reaching
his Early Retirement Age, becomes disabled, or dies, unless voluntarily
postponed by the Participant. Unless the Participant elects otherwise,
distribution of benefits will begin no later than the sixtieth (60th) day after
the latest of the close of the Plan Year in which
(i) the participant attains age sixty-five (65) or normal
retirement age, if earlier;
(ii) occurs the tenth (10th) anniversary of the year in which
the participant commenced participation in the plan; or,
(iii) the participant terminates service with the employer.
Notwithstanding the foregoing, the failure of a participant and spouse, if
spousal consent is required, to consent to a distribution while a benefit is
immediately distributable, within the meaning of Section 6.02(e) of the Plan,
shall be deemed to be an election to defer commencement of payment of any
benefit sufficient to satisfy this section.
(b) Except as provided in Section 6.01(c) or 6.01(d), distribution of
benefits shall begin not later than the first (1st) day of April of the calendar
year following the calendar year in which the Participant attains age seventy
and one-half (70-1/2), which date shall be the Participant's "required
commencement date".
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(c) As to any Participant who attains age seventy and one-half (70-
1/2) prior to January 1, 1988, the required commencement date shall be
determined in accordance with the following rules:
(i) If the Participant is not a five percent (5%) owner,
distribution of his benefits shall begin not later than the first (lst) day of
April of the calendar year following the calendar year in which there occurs the
later of the Participant's retirement or his attainment of age seventy and one-
half. If the Participant is not a five percent (5%) owner, attains age seventy
and one-half (70-1/2) during 1988, and has not retired as of January 1, 1989,
distribution of his benefits shall begin not later than April 1, 1990.
(ii) If the Participant is or was a five percent (5%) owner
during any year beginning after December 31, 1979, distribution of his benefits
shall begin not later than the first (lst) day of April of the calendar year
following the later of:
(A) The calendar year in which the Participant attains
age seventy and one-half (70-1/2), or
(B) The earlier of the calendar year coincident with, or
within which, there occurs the end of the Plan Year in which the Participant
becomes a five percent (5%) owner or the calendar year in which the Participant
retires.
(iii) A Participant is treated as a five percent (5%) owner for
purposes of this Section 6.01(c), if such Participant is a five percent (5%)
owner at any time during the Plan Year ending coincident with, or within, the
calendar year in which such Participant attains age sixty-six and one-half (66-
1/2) or any subsequent Plan Year.
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(iv) Once distribution has begun to a five percent (5%) owner
pursuant to this Section 6.01(c), such distribution must continue even if the
Participant ceases to be a five percent (5 %) owner in a subsequent year.
(d) Notwithstanding the other requirements of this article and
subject to the Joint and Survivor Annuity Requirements (if applicable);
distribution on behalf of any employee, including a five percent (5%) owner, may
be made in accordance with all of the following requirements (regardless of when
such distribution commences:
(i) The distribution by the trust is one which would not have
disqualified such trust under Section 401(a)(9) of the Internal Revenue Code as
in effect prior to amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of
distribution designated by the employee whose interest in the trust is being
distributed or, if the employee is deceased, by a beneficiary of such employee.
(iii) Such designation was in writing, was signed by the
employee or the beneficiary, and was made before January 1, 1984.
(iv) The employee had accrued a benefit under the plan as of
December 31, 1983.
(v) The method of distribution designated by the employee or
the beneficiary specifies the time at which distribution will commence, the
period over which distribution will be made, and in the case of any distribution
upon the employee's death, the beneficiaries of the employee listed in order of
priority.
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A distribution upon death will not be covered by this transitional rule
unless the information in the designation contains the required information
described above with respect to the distributions to be made upon the death of
the employee.
For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the employee or the beneficiary, to whom such
distribution is being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in subsections. 7.1(a) and (e).
If a designation is revoked any subsequent distribution must satisfy the
requirements of Section 401(a)(9) of the Code and the proposed regulations
thereunder. If a designation is revoked subsequent to the date distributions are
required to begin, the trust must distribute by the end of the calendar year
following the calendar year in which the revocation occurs the total amount not
yet distributed which would have been required to have been distributed to
satisfy Section 401(a)(9) of the Code and the proposed regulations thereunder,
but for the Section 242(b)(2) election. For calendar years beginning after
December 31, 1988, such distributions must meet the minimum distribution
incidental benefit requirements in Section 1.401(a)(9)-2 of the proposed
regulations. Any changes in the designation will be considered to be a
revocation of the designation. However, the mere substitution or addition of
another beneficiary (one not named in the designation) under the designation
will not be considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which distributions are
to be made under the designation, directly or indirectly (for example, by
altering
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the relevant measuring life). In the case in which an amount is transferred or
rolled over from one plan to another plan, the rules in A&A J-2 and Q&A J-3
shall apply.
6.02 CASH-OUT DISTRIBUTION: The Trustee shall make a cash-out
distribution, as defined in Section 1.03, to a Participant in advance of the
date provided in Section 6.01 under the following terms and conditions:
(a) If the value of a Participant's vested account balance derived
from employer and employee contributions exceeds (or at the time of any prior
distribution, exceeded) three thousand five hundred dollars ($3,500) and the
account balance is immediately distributable, the participant and the
participant's spouse (or where either the participant or the spouse has died,
the survivor) must consent to any distribution of such account balance. The
consent of the participant and the participant's spouse shall be obtained in
writing within the ninety (90) day period ending on the annuity starting date.
The annuity starting date is the first day of the first period for which an
amount is paid as an annuity or any other form. The plan administrator shall
notify the participant and the participant's spouse of the right to defer any
distribution until the participant's account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features and an explanation of the relative value of, the optional
forms of benefit available under the Plan in a manner that would satisfy the
notice requirements of Section 417(a)(3), and shall be provided no less than
thirty (30) days and no more than ninety (90) days prior to the annuity starting
date.
Notwithstanding the foregoing, only the participant need consent to the
commencement of a distribution in the form of a qualified joint and survivor
annuity while the
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account balance is immediately distributable. (Furthermore, if payment in the
form of a qualified joint and survivor annuity is not required with respect to
the participant pursuant to Section 7.01 of the plan, only the participant need
consent to the distribution of an account balance that is immediately
distributable.) 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 this plan, if the plan does not offer an annuity option
(purchased from a commercial provider) and if the employer or any entity within
the same controlled group as the employer does not maintain another defined
contribution plan (other than an employee stock ownership plan as defined in
Section 4975(e)(7) of the Code), the participant's account balance may, without
the participant's consent, be distributed to the participant. However, if any
entity within the same controlled group as the employer maintains another
defined contribution plan (other than an employee stock ownership plan as
defined in Section 4975(e)(7) of the Code, then the participant's account
balance will be transferred without the participant's consent, to the other plan
if the participant does not consent to an immediate distribution.
An account balance is immediately distributable if any part of the account
balance could be distributed to the participant (or surviving spouse before the
participant attains or would have attained if not deceased) the later of normal
retirement age or age sixty-two (62).
For purposes of determining the applicability of the foregoing consent
requirements to distributions made before the first day of the first plan year
beginning after December 31, 1988, the participant's vested account balance
shall not include amounts attributable to accumulated
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deductible employer contributions within the meaning of Section 72(o)(5)(B) of
the Code.
(b) The value of the Participant's accounts shall be determined as of
the last valuation on the date preceding the date of distribution, which date
may be different from the valuation date of Section 5.05.
(c) The date of distribution shall be designated by the Participant
but shall be no earlier than the date specified in Section 1.03.
Notwithstanding the foregoing, a Participant's voluntary salary deferral
contributions, exclusive of earnings, shall be distributed to the Participant as
of the valuation date following the termination of employment, unless the
Participant elects to defer such distribution.
(d) For purposes of this Section 6.02, if the Vested Portion of a
Participant's account is zero, the Participant shall be deemed to have received
a cash-out distribution as of the earliest date permitted under Section 1.03.
(e) The Participant shall be entitled to make contributions to the
Plan for Purposes of restoring the nonvested portion, if any, of his accounts at
any time prior to the earlier of (i) the fifth (5th) anniversary of his
subsequent Employment Commencement Date with the Employer, or (ii) his incurring
five (5) consecutive One Year Breaks in Service. The restoration contributions
shall be the same amount received by the Participant as the cash-out. All such
amounts received by the Trustee shall be held in a separate subaccount until
credited to the Participant's account as of the valuation date coincident with
or next following his making of such restoration contributions. The amount of
each account to be restored shall be the nonvested portion unaffected by gains
or losses subsequent to the cash-out.
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6.03 DISTRIBUTION PURSUANT TO A QUALIFIED DOMESTIC RELATIONS ORDER:
Notwithstanding any other provision of this Plan, the Trustee may make a
distribution at any time as directed pursuant to a domestic relations order,
which has been determined to be a Qualified Domestic Relations Order under
Article XVI of this Plan, to an alternate payee without regard to whether the
Participant has separated from service with the Employer or has attained the
earliest retirement age under the Plan.
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ARTICLE VII - FORM OF BENEFITS
7.01 METHOD OF PAYMENT:
(a) All benefits hereunder shall be paid to the Participant or his
Beneficiary in the Normal Form of Benefit, as defined in Section 1.26.
(b) If the participant's interest is to be distributed in other than
a single sum, the following minimum distribution rules shall apply on or after
the required beginning date:
(i) If a participant's benefit is to be distributed over (A) a
period not extending beyond the life expectancy of the participant or the joint
life and last survivor expectancy of the participant and the participant's
designated beneficiary or (B) a period not extending beyond the life expectancy
of the designated beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the first distribution calendar
year, must at least equal the quotient obtained by dividing the participant's
benefit by the applicable life expectancy.
(ii) For calendar years beginning before January 1, 1989, if
the participant's spouse is not the designated beneficiary, the method of
distribution selected must assure that at least 50% of the present value of the
amount available for distribution is paid within the life expectancy of the
participant.
(iii) For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with distributions for the first
distribution calendar year shall not be less than the quotient obtained by
dividing the participant's benefit by the lesser of (A) the applicable life
expectancy or (B) if the participant's spouse is not the designated
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beneficiary, the applicable divisor determined from the table set forth in Q&A-4
of Section 1.401(a)(9)-2 of the Proposed Regulations. Distributions after the
death of the participant shall be distributed using the applicable life
expectancy in Section 7.01(b)(i) above as the relevant divisor without regard to
Proposed Regulations Section 1.401(a)(9)-2.
(iv) The minimum distribution required for the participant's
first distribution calendar year must be made on or before the participant's
required beginning date. The minimum distribution for other calendar years,
including the minimum distribution for the distribution calendar year in which
the employee's required beginning date occurs, must be made on or before
December 31 of that distribution calendar year.
(v) If the participant's benefit is distributed in the form of
an annuity purchased from an insurance company, distributions thereunder shall
be made in accordance with the requirements of Section 401(a)(9) of the Code and
the proposed regulations thereunder.
(c) The entire interest of a participant must be distributed or begin
to be distributed no later than the participant's required beginning date.
(d) Subject to the Joint and Survivor Annuity Requirements, the
requirements of this article shall apply to any distribution of a participant's
interest and will take precedence over any inconsistent provisions of this plan.
Unless otherwise specified, the provisions of this article apply to calendar
years beginning after December 31, 1984.
7.02 DISTRIBUTION OF BENEFITS UPON DEATH: The following distribution
provisions shall take effect upon the death of a Participant:
(a) In the event a Participant should die prior to receiving any or
all of his
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benefits, such benefits shall be paid to the Participant's surviving spouse, or
if the surviving spouse has already consented to another beneficiary designation
in writing which acknowledges the effect of such election and which is witnessed
by a representative of the Plan Administrator or a notary public, such benefits
shall be paid to the Participant's designated Beneficiary or, if none, in
accordance with Section 7.03.
(b) If the Participant's death occurs after distribution of his
benefits has commenced, any remaining portion of such benefits shall be
distributed at least as rapidly as under the method of distribution being
applied prior to his death.
(c) If the Participant's death occurs prior to the commencement of
distribution of his benefits, distribution of his entire benefit shall be
completed by December 31 of the calendar year containing the fifth (5th)
anniversary of the Participant's death, except to the extent that an election is
made to receive distributions in accordance with subparagraph (i) or (ii) below.
(i) If any portion of the Participant's benefit is payable to a
designated Beneficiary, distribution may be made in substantially equal
installments over the life of or over a period certain not greater than the life
expectancy of the Beneficiary, commencing on or before December 31 of the
calendar year immediately following the calendar year in which the Participant
died.
(ii) If the Beneficiary is the Participant's surviving spouse,
the commencement date provided in subparagraph (i) above need not be earlier
than the later of (A) December 31 of the calendar year immediately following the
calendar year in which the Participant died or (B) December 31 of the calendar
year in which the Participant would have
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attained age seventy and one-half (70-1/2).
(d) If the Participant has not elected a method of distribution
pursuant to Section 7.02(c) prior to his death, the Participant's designated
Beneficiary must elect the method of distribution no later than the earlier of
(i) December 31 of the calendar year in which the distribution
would be required to begin under this Section 7.02, or
(ii) December 31 of the calendar year which contains the fifth
(5th) anniversary of the date of the Participant's death. If the Participant
has no designated Beneficiary, or if the designated Beneficiary does not elect a
method of distribution, distribution of the Participant's entire benefit must be
completed by December 31 of the calendar year containing the fifth (5th)
anniversary of the Participant's death.
(e) For purposes of Section 7.02(c), if the Participant's surviving
spouse dies after the Participant, but before payments to such spouse begin, the
provisions of Section 7.02(c), with the exception of Subparagraph (ii) therein,
shall be applied as if the surviving spouse were the Participant.
(f) For purposes of this Section 7.02, any amount paid to a child of
the Participant will be treated as if it had been payable to the surviving
spouse, if the amount becomes payable to the surviving spouse when the child
reaches the age of majority.
(g) For purposes of this Section 7.02, distribution of a Participant's
benefit is considered to begin on the Participant's required commencement date,
as defined in Section 6.01, or, if Section 7.02(e) is applicable, the required
commencement date for distribution to the
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surviving spouse, pursuant to Section 7.02(c). If distribution in the form of an
annuity irrevocably commences to the Participant prior to his required
commencement date, distribution is considered to begin on the date distribution
actually commences.
7.03 DEFINITIONS: For purposes of applying the provisions of this Article
VIE[:
(a) Applicable Life Expectancy. The life expectancy (or joint and
last survivor expectancy) calculated using the attained age of the participant
(or designated beneficiary) as of the participant's (or designated
beneficiary's) birthday in the applicable calendar year reduced by one for each
calendar year which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the applicable life
expectancy shall be the life expectancy as so recalculated. The applicable
calendar year shall be the first distribution calendar year and if life
expectancy is being recalculated such succeeding calendar year.
(b) Designation of Beneficiary. Each participant may designate one
(1) or more primary or contingent Beneficiaries to whom his benefits are to be
paid in the event the Participant should die prior to receiving such benefits.
Notwithstanding the foregoing, in the event the Participant designates a
Beneficiary other than his surviving spouse, such designation shall not be
effective unless the Participant's spouse consents or has consented to such
designation in accordance with Section 7.02.
If, at the time of the Participant's death, no such Beneficiary is living,
or if the Participant has failed to designate one and the Participant has no
surviving spouse, the Trustee shall pay the benefits to the legal representative
of the Participant's estate.
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(c) Distribution Calendar Year. A calendar year for which a minimum
distribution is required in accordance with the provisions of Section 6.01. For
distributions beginning before the participant's death, the first distribution
calendar year is the calendar year immediately preceding the calendar year which
contains the participant's required beginning date as defined in Section 6.01.
For distributions beginning after the participant's death, the first
distribution calendar year is the calendar year in which distributions are
required to begin pursuant to Section 7.02 above.
(d) Life Expectancy. Life expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in Tables V and
VI of Section 1.72-9 of the income tax regulations.
Unless otherwise elected by the participant (or spouse, in the case of
distributions described in Section 7.02(c)(ii) above) by the time distributions
are required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the participant (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse beneficiary may not
be recalculated.
(e) Participant's Benefit.
(i) The account balance as of the last valuation date in the
calendar year immediately preceding the distribution calendar year (valuation
calendar year) increased by the amount of any contributions or forfeitures
allocated to the account balance as of dates in the valuation calendar year
after the valuation date and decreased by distributions made in the valuation
calendar year after the valuation date.
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(ii) Exception for second distribution calendar year. For
purposes of paragraph (i) above, if any portion of the minimum distribution for
the first distribution calendar year is made in the second distribution calendar
year on or before the required beginning date, the amount of the minimum
distribution made in the second distribution calendar year shall be treated as
if it had been made in the immediately preceding distribution calendar year.
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ARTICLE VII - INSURANCE CONTRACTS
8.01 TRUSTEE'S OPTION: The Trustee may offer insurance coverage to Plan
Participants on a uniform, proportionate and nondiscriminatory basis. In that
event, each Participant shall have the right to direct the Trustee to purchase
one (1) or more insurance contracts for his accounts. The Trustee shall apply
for, and will be the owner of, any insurance contract purchased under the terms
of this Section 8.01. Each insurance contract must provide that proceeds will
be payable to the Trustee; however, the Trustee shall be required to pay over
all proceeds of such contract to the Participant's spouse or other designated
beneficiary, in accordance with the provisions of Article VII.
8.02 LIMITATION ON PURCHASE OF INSURANCE: The premiums for ordinary life
insurance contracts purchased for a Participant's account shall at all times be
less than one-half (1/2) of the total contributions allocated to his accounts,
and premiums for term insurance shall at all times be less than one-fourth (1/4)
of such contributions. Further, the Trustee may not use any of the contract
value to continue life insurance for the Participant after his employment has
terminated. Subject to the Joint and Survivor Annuity requirements, if
applicable, the insurance contract on a Participant's life will be converted to
cash or an annuity or distributed to the Participant upon commencement of
benefits. In addition, a Participant whose service is terminated may purchase
from the Trust any insurance or annuity contract held as an investment of his
account. If a Participant is found to be insurable only at a mortality
classification other than standard, the Trustee shall purchase on the
Participant's life an ordinary or term life insurance contract, as the case may
be, having such face amount as the available premium will
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provide. If a Participant is determined to be uninsurable, the Trustee shall not
be required to purchase any life insurance contract on the life of such
Participant.
Any dividends or credits earned on insurance contracts will be allocated to
the participant's account derived from employer contributions for whose benefit
the contract is held.
8.03 INSURANCE COMPANY: No insurance company which issues policies under
the Plan shall be deemed to be a party to the Plan for any purpose. The
company's sole duties shall be to honor the contract terms and to provide such
information regarding the policies as is required by law. 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.
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ARTICLE IX - CLAIMS
9.01 CLAIMS: Participants and Beneficiaries shall direct all benefit
claims to the Plan Administrator. Such claims may be made either orally or in
writing. The Plan Administrator shall allow or deny the claim within sixty (60)
days after it is made. If the claim is denied, the Plan Administrator, after
consulting legal counsel, shall notify the claimant of the denial in writing
within the above sixty (60) day period. The notice of denial shall give the
specific reason or reasons for denial, shall refer to the Plan provisions upon
which the denial is based, shall describe any information or material with which
the claimant could perfect his claim and explain why such material is necessary,
and shall describe the claims review procedure.
9.02 REVIEW OF CLAIM: The Participant or Beneficiary may demand a review
of his claim within ninety (90) days after the denial of his claim. The review
shall be made, at the claimant's written request, by the Trustee, legal counsel
and the Plan Administrator. The claimant shall have access to all pertinent
documents and shall be entitled to submit oral and written arguments to the
reviewing group. Decisions on review shall be made within thirty (30) days
after the request for review. If the claim is denied after review, the decision
shall be in writing and shall contain the same information as the notice of
denial.
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ARTICLE X - TOP HEAVY PROVISIONS
10.01 DEFINITIONS: For purposes of applying the provisions of this Article
X:
(a) "Compensation" shall have the same meaning as for purposes of
applying the limitations of Code Section 415, as set forth in Appendix I to this
Plan.
(b) "Determination Date" shall mean, for any Plan Year, the last day
of the preceding Plan Year or, in the case of the first Plan Year, the last day
of such Plan Year.
(c) "Key Employee" shall mean any Employee or former Employee (and his
Beneficiaries) who, at any time during the Plan Year or any of the four (4)
preceding Plan Years, is
(i) an officer of the Employer who has annual compensation of
more than fifty percent (50%) of the dollar limitation on benefits from a
defined benefit pension plan under Code Section 415(b)(1)(A) for such Plan Year.
(ii) one of the ten (10) Employees who has annual compensation of
more than the dollar limitation on annual additions to a defined contribution
plan under Code Section 415 for such Plan Year and who owns, or is considered to
own, within the meaning of Code Section 318, more than a one-half (1/2%) percent
interest and the largest interests in the Employer; provided, however, that in
the event two (2) Employees have the same interest in the Employer, the Employee
having greater annual compensation shall be treated as having a larger interest,
(iii) a Five Percent Owner of the Employer, or
(iv) a more than one percent (1%) owner of the Employer who has
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annual compensation of more than One Hundred Fifty Thousand Dollars
($150,000.00). In addition and notwithstanding any of the foregoing to the
contrary, the term "Key Employee" shall be defined, at all times, in accordance
with Code Section 416(i) and regulations issued thereunder.
(d) "Non-Key Employee" shall mean any Employee who is not a Key
Employee.
(e) "Permissive Aggregation Group" shall mean the Required Aggregation
Group plus any other qualified plan maintained by the Employer, provided that
such group, when taken as a whole, would satisfy the requirements of Code
Sections 401(a)(4) and 410.
(f) "Required Aggregation Group' shall mean this Plan, each qualified
plan of the Employer in which a Key Employee is a Participant, and any other
qualified plan of the Employer which enables any plan in which a Key Employee
participates to meet the requirements of Code Sections 401(a)(4) or 410,
including any qualified plan which may have been terminated during the five (5)-
year period ending on the determination date.
(g) "Top Heavy Plan" shall mean a qualified plan in which the sum of
the aggregate accounts of Key Employees (or, in the case of a defined benefit
pension plan, the present value of the cumulative accrued benefits under the
plan for Key Employees) exceeds sixty percent (60%) of the aggregate accounts
(or present value of accrued benefits) of all Participants.
(h) "Top Heavy Plan Year" shall mean any Plan Year for which the Plan
is determined, under Section 10.02, to be a Top Heavy Plan.
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(i) "Super Top Heavy Plan' shall mean a qualified plan in which the
sum of the aggregate accounts of Key Employees (or, in the case of a defined
benefit pension plan, the present value of the cumulative accrued benefits under
the Plan for Key Employees) exceeds ninety percent (90%) of the aggregate
accounts (or present value of accrued benefits) of all Participants.
(j) "Super Top Heavy Plan Year" shall mean any Plan Year for which the
Plan is determined, under Section 10.02, to be a Super Top Heavy Plan.
(k) "Valuation Date" shall mean the last day of each plan year.
(l) "Top Heavy Ratio' shall mean the following:
(i) If the Employer maintains one or more defined contribution
plans, including any Simplified Employee Pension Plan, and the Employer has not
maintained any defined benefit plan which, during the five (5) year period
ending on the Determination Date has or has had accrued benefits, the Top Heavy
Ratio for this Plan alone or for the Required or Permissive Aggregation Group,
as appropriate, is a fraction, the numerator of which is the sum of the account
balances of all key Employees as of the Determination Date, and the denominator
of which is the sum of all account balances. Both the numerator and the
denominator shall include any part of the account balance distributed during the
five (5) year period ending on the Determination Date and shall be computed in
accordance with Code Section 416 and the regulations issued thereunder. In
addition, the numerator and denominator shall be increased to reflect any
contribution which is required to be taken into account on that date under Code
Section 416 and the regulations thereunder, although not actually paid as of the
Determination
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Date.
(ii) If the Employer maintains one or more defined contribution
plans, including any Simplified Employee Pension Plan, and the Employer
maintains or has maintained one or more defined benefit plans which, during the
five (5) year period ending on the Determination Date has or has had any accrued
benefits, the Top Heavy Ratio for any Required or Permissive Aggregation Group,
as appropriate, is a fraction, the numerator of which is the sum account
balances under the aggregated defined contribution plan or plans for all Key
Employees, determined in accordance with the provisions of Paragraph (i) above,
and the present value of accrued benefits under the aggregated defined benefit
plan or plans for all Key Employees as of the Determination Date, and the
denominator of which is the sum of the account balances under the aggregated
defined contribution plan or plans for all Participants, determined in
accordance with the provisions of Subparagraph (i) above, and the present value
of accrued benefits under the defined benefit plan or plans for all Participants
as of the Determination Date, all determined in accordance with Code Section 416
and the regulations issued thereunder. The accrued benefits under a defined
benefit plan in both the numerator and the denominator of the Top Heavy Ratio
shall be increased for any distribution of an accrued benefit made during the
five (5) year period ending on the Determination Date.
(ii) For purposes of Subparagraphs (i) and (ii) above,
(A) The value of account balances and the present value of
accrued benefits will be determined as of the most recent valuation date which
falls within, or ends with, the twelve (12) month period ending on the
Determination Date, except as provided in
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Code Section 416 and the regulations thereunder for the first and second plan
years of a defined benefit plan. The account balances and accrued benefits of a
Participant who is not a Key Employee but who was a Key Employee in a prior
year, or who has not been credited with at least one Hour of Service with any
Employer maintaining the Plan at any time during the five (5) year period ending
on the Determination Date will be disregarded .
(B) The calculation of the Top Heavy Ratio, and the extent
to which distributions, rollovers, and transfers are taken into account will be
made in accordance with Code Section 416 and the regulations issued thereunder.
No deductible employee contributions will be taken into account for purposes of
computing the Top Heavy Ratio.
(C) When aggregating plans, the value of account balances
and accrued benefits will be calculated with reference to the Determination
Dates that fall within the same calendar year.
(D) The accrued benefit of a Participant other than a Key
Employee shall be determined under the method, if any, that uniformly applies
for accrual purposes under all defined benefit plans maintained by the Employer,
or, if there is no such method, as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under the fractional rule of Code Section
411(b)(1)(C). The present value of accrued benefits will be determined under the
interest and mortality rates specified in the defined benefit plan.
10.02 DETERMINATION OF TOP HEAVY STATUS:
(a) An evaluation shall be made, as of each Determination Date, in
accordance with the terms of this Section 10.02, to determine whether the Plan
is a Top Heavy Plan.
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(b) If an individual is a Non-Key Employee with respect to the Plan
Year, but such individual was a Key Employee with respect to the Plan for any
prior Plan Year, the aggregate account of that individual (or, in the case of a
defined benefit pension plan, the present value of his accrued benefit) shall
not be taken into account in determining whether the Plan is a Top Heavy Plan.
(c) If an individual has not performed any service for the Employer at
any time during the five (5)-year period ending on the Determination Date, the
aggregate account of that individual (or, in the case of a defined benefit
pension plan, the present value of his accrued benefit) shall not be taken into
account in determining whether the Plan is a Top Heavy Plan.
(d) The determination of whether the Plan is a Top Heavy Plan shall be
made after aggregating the Plan with all plans in the Required Aggregation Group
and any Permissive Aggregation Group. The Plan shall not be a Top Heavy Plan
for any Plan Year in which the Plan is part of a Required or Permissive
Aggregation Group which is not top heavy.
(e) The value of each Participant's aggregate account (or present
value of accrued benefit) shall be determined with reference to such
distributions, contributions, rollovers and transfers as required by Code
Section 416 and regulations issued under that Code Section and as valued as of
the Determination Date.
10.03 MINIMUM ALLOCATIONS:
(a) For any Top Heavy Plan Year, each Participant's share of
Employer contributions (and any forfeitures, if the Plan provides for
forfeitures) shall be determined in accordance with Section 4.01, provided that
such determination results in an allocation to each
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Eligible Participant who is a Non-Key Employee which is not less than the
Minimum Allocation required in accordance with this Section 10.03(a).
(i) The Minimum Allocation required in a Top Heavy Plan Year for
each Eligible Participant who is a Non-Key Employee shall be three percent (3 %)
of such Participant's Compensation for that Plan Year, or such lesser percentage
of his Compensation as equals the largest percentage of Compensation allocated
for that Plan Year, including any voluntary salary reduction contributions, to
any Participant who is a Key Employee.
(ii) For any Plan Year in which the Plan is a Top Heavy Plan, but
not a Super Top Heavy Plan, and in which a Key Employee is a Participant in both
the Plan and a defined benefit pension plan included in Required Aggregation
Group which is Top Heavy, an increased Minimum Allocation shall be provided for
each Non-Key Employee who is a Participant in this Plan only, if such increased
allocation is necessary to avoid application of Code Section 416(h)(1), by
substituting four percent (4%) for three percent (3%) in applying Section
10.03(a)(i).
(iii) In lieu of the Minimum Allocation provided in subparagraph
(i) or (ii) above, if a Non-Key Employee is a Participant in both this Plan and
a defined benefit pension plan included in a Required Aggregation Group which is
top heavy, the Minimum Allocation required for each such Non-Key Employee who is
an Eligible Participant shall be five percent (5%) of his Compensation;
provided, however, that for any Plan Year in which this Plan is a Top Heavy Plan
but not a Super Top Heavy Plan, an increased Minimum Allocation shall be
provided to each such Non-Key Employee by substituting seven and one-half
percent (7-1/2%)
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for five percent (5%) hereunder, if such increased allocation is necessary to
avoid application of Code Section 416(h)(1).
(b) In the event the determination of Participants' shares of Employer
contributions (and any forfeitures, if the Plan provides for forfeitures) in
accordance with Section 4.01 fails to satisfy the Minimum Allocation for each
Eligible Participant who is a Non-Key Employee, as provided in Section 10.03(a),
then the Participants' shares of Employer contributions (and any forfeitures, if
the Plan provides for forfeitures) shall be determined as follows:
(i) First, the Employer contributions (and any forfeitures), or
a portion thereof, shall be allocated among the accounts of all those
Participants eligible, under Section 4.01 or 10.03(d), to share in such
allocation in the ratio that each such Participant's Aggregate Compensation for
the Plan Year bears to the total Aggregate Compensation of all such Participants
for that Plan Year; provided, however, that the portion of the Employer
contributions (and any forfeitures) allocated under this subparagraph shall not
exceed three percent (3%) or, if Section 10.03(a)(iii) applies five percent (5%)
of the Compensation of all such Participants for the Plan Year.
(ii) Second, for any Plan Year in which the Employer also
maintains a defined benefit pension plan included in a Required Aggregation
Group which is top heavy, an extra allocation shall be made, in accordance with
the provisions of Section 10.03(a)(ii) or (iii), to the account of each Non-Key
Employee to whom the provisions of Section 10.03(a)(iii), as the case may be, in
an amount equal to one percent (1 %), or, if Section 10.03(a)(iii) applies, two
and
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one-half percent (2-1/2%) of such Non-Key Employee's Compensation, if necessary
to avoid the application of Code Section 416(h)(1) and the adjusted limitation
of Code Section 416(h) would otherwise be exceeded.
(iii) Third, any part of the Employer contributions (and any
forfeitures) which is not allocated shall be allocated in accordance with the
provisions of Section 4.01; provided, however, that for purposes of Section
4.01(a)(i), the Excess Contribution Percentage, if applicable, shall be reduced
by three percent (3%) or, if Section 10.03(a)(iii) applies, by five percent
(5%).
(c) Alternatively, and notwithstanding the provisions of subparagraph
(b) above, in the event the determination of Participants' shares of the
Employer contributions (and any forfeitures, if the Plan provides for
forfeitures) in accordance with Section 4.01 fails to satisfy the Minimum
Allocation for any Eligible Participant who is a Non-Key Employee, as provided
in Section 10.03(a), the Employer, at its sole option, may elect for any Plan
Year to contribute to the account of each such Non-Key Employee the additional
amount necessary to provide the required Minimum Allocation.
(d) For purposes of this Section 10.03, the term "Eligible
Participant" shall mean a Participant who is employed by the Employer on the
last day of the Plan Year, regardless of the number of Hours of Service with
which he is credited in that year and regardless of the amount of his
Compensation for that year.
(e) Notwithstanding anything herein to the contrary, in the event the
Employer maintains another qualified plan in which a Non-Key Employee
participates, to the
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extent that, for any Plan Year, a minimum benefit or contribution is being
accrued or allocated for that Non-Key Employee, the Minimum Allocation
requirements of Section 10.03(a), as to that Non-Key Employee, shall be reduced
or disregarded.
10.04 MINIMUM VESTING:
(a) In the event Section 1.40 provides that a Participant's Vested
Portion of his account(s) derived from Employer Contributions and/or Employer
Matching Contributions is determined in accordance with a schedule under which
such contributions fully vested over a period of seven (7) years, during any Top
Heavy Plan Year, a Participant's Vested Portion of such account(s) shall be
determined in accordance with the following schedule:
Years of Vested Service Vested Portion
----------------------- --------------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(b) Alternatively, in the event Section 1.40 provides that
Participant's Vested Portion of his account(s) derived from Employer
Contributions and/or Employer Matching Contribution is determined in accordance
with a schedule under which such contributions fully vest after five (5) year,
during any Top Heavy Plan Year, a Participant's Vested Portion of such
account(s) shall be determined in accordance with the following schedule:
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Years of Vested Service Vested Portion
----------------------- --------------
Less than 3 0%
3 or more 100%
(c) If, in any subsequent Plan Year, the Plan ceases to be a Top Heavy
Plan, the Employer may elect to continue to apply the provisions of this Section
10.04, or to revert to the provisions of Section 1.40; provided, however, that
such reversion shall be treated as a Plan amendment pursuant to the provisions
of Article XI.
(d) The provisions of this Section 10.04 shall not be applicable to
the extent Section 1.40 provides that a Participant's Vested Portion of his
account(s) shall be determined in accordance with a schedule identical to one of
the schedules set forth in this Section 10.04 or shall be one hundred percent
(100%) at all times.
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ARTICLE XI - AMENDMENT AND TERMINATIONS
11.01 GENERAL: The Employer expects to continue the Plan indefinitely, but
is not contractually bound to do so. In order to protect both Employees and the
Employer against unforeseen contingencies, the Employer reserves the right to
amend or terminate the Plan or to discontinue contributions at any time without
the consent of any other party.
11.02 AMENDMENT: All amendments to the Plan or Trust, including appendices
provided for herein, shall be in writing, and, except for those items which the
Plan provides may be adopted by the Trustee alone, shall be approved by formal
action of the Employer. No amendment which affects the rights, duties or
responsibilities of the Trustee shall be effective as regards the Trustee, if
the Trustee shall, within thirty (30) days after notification of the amendment,
notify the Employer that it does not intend to be bound by such change and shall
tender its written resignation as Trustee.
No amendment shall be effective as to any Employee who is a Participant on
the later of the date such amendment is adopted or the date on which it becomes
effective, to reduce his Vested Portion, as determined under Section 1.34 or
10.04, whichever is applicable. In the event said vesting provisions shall be
amended, each Participant who has completed at least three (3) Years of Service
prior to the expiration of the election period described herein may elect to
have his Vested Portion computed without regard to the amendment; provided,
however, that as to any Participant who is not credited with at least one (1)
Hour of Service after December 31, 1988, the election period herein shall be
available to such Participant only if he has completed at least five (5) Years
of Service. Such election must be filed with the Plan Administrator within sixty
(60)
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days of the latest of.
(a) the adoption by the Sponsor of the amendment,
(b) the effective date of such amendment, and
(c) the receipt by the Participant of written notice of the amendment
from the Employer.
Furthermore, in the event said vesting provisions shall be amended, in the
case of an employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the nonforfeitable
percentage (determined as of such date) of such employee's right to his employer
derived account balance will not be less than his percentage computed under the
plan without regard to such amendment.
No amendment shall be effective to the extent that it has the effect of
decreasing a Participant's account balance or of eliminating an optional form of
benefit with respect to benefits attributable to service before the amendment.
11.03 TERMINATION: Upon complete or partial termination of the Plan or
complete discontinuance of contributions, each affected Participant shall be
fully vested in the entire balance of his accounts.
11.04 FAILURE TO QUALIFY: If the Internal Revenue Service shall initially
determine that contributions to the Trust are not deductible by the Employer
because the Plan is discriminatory or not qualified, the Employer may terminate
the Plan and recover for itself the entire fund, with the exception of insurance
and other costs which are not refundable, but only if the application for the
qualification is made by the time prescribed by law for f@g the
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employer's return for the taxable year in which the plan is adopted, or such
later date as the Secretary of the Treasury may prescribe.
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ARTICLE XII - PARTICIPANTS' RIGHTS
12.01 MERGER AND CONSOLIDATION: If this Plan is merged or consolidated
with any other plan, the Participants shall be entitled to at least as much
benefit immediately after the merger or consolidation as they were immediately
prior to such merger or consolidation. The same rule shall apply to a transfer
of assets or liabilities from this Plan to another. In deciding whether the
Participants' benefits are adversely affected, the Trustee shall assume that the
Participants' rights are fully vested in the plans after termination.
12.02 EMPLOYMENT RIGHTS: The Plan shall not confer upon any Participant or
other Employee any right of employment, and it shall not interfere with the
right of the Employer to discharge any Participant or other Employee.
12.03 SPENDTHRIFT:
(a) Except as provided by law for loans from the Plan to a
Participant or otherwise, no benefits under the Plan shall be liable for or
subject to the contracts, debts, liabilities or torts now or hereafter made,
contracted , incurred or committed by any Participant, former Participant, or
Beneficiary thereof; nor shall such benefits be liable to attachment,
garnishment or legal or equitable process; nor shall any assignment, alienation,
pledge or encumbrance of such benefit made by such person be valid; but such
benefits shall be paid by the Trustee directly to or for the benefit of such
persons entitled thereto, without regard to any assignment, order, attachment or
claims whatsoever.
(b) Subparagraph (a) of this Section 12.03 shall apply to the
creation, assignment, or recognition of a right to any benefit payable with
respect to a Participant pursuant
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to a domestic relations order, as defined in Article XVI hereof, but shall not
apply, if such order is determined, in accordance with the provisions of that
Article, to be a Qualified Domestic Relations Order.
12.04 INABILITY TO LOCATE PARTICIPANT OR BENEFICIARY:
(a) In the event the Trustee, after diligent effort, is unable to
locate any Participant or Beneficiary entitled to a distribution of benefits,
such benefits, valued as of the most recent valuation date, shall be converted
to cash and deposited into a separate, interest bearing account, to be held
there for a period of seven (7) years, or, if less, such period of time as
required for escheat under the laws of the state in which the Employer is
located, unless and until the Participant or Beneficiary shall have been
located.
(b) Upon the expiration of such period of time, or upon the
termination of the Plan, if earlier, the segregated account and all interest
accrued thereon, shall be forfeited and reallocated among the remaining
Participants in accordance with the provisions of Section 4.02(a). In the event
the Participant or Beneficiary is located subsequent to the reallocation, the
benefit, unadjusted by any gains or losses, shall be restored and distributed to
him.
(c) For purposes of this Section 12.04, the Trustee shall be deemed
to have made a diligent effort to locate the Participant or Beneficiary, if
notice has been sent by registered United States mail, return receipt requested,
to the last known address of the Participant or Beneficiary and if an
advertisement has been published once in the classified section of a newspaper
of general circulation in the locality of the last known address of the
Participant or Beneficiary.
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(d) In the event that the participant makes a claim after his benefit
is forfeited, such benefit will be reinstated.
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ARTICLE XII - TRANSFER OF ACCOUNTS
TO AND FROM OTHER QUALIFIED PLANS
13.01 TRANSFER FROM PLAN: In the event an employee, former employee,
former employee's surviving spouse, employee's or former employee's spouse or
former spouse who is the alternate payee under a qualified domestic relations
order receives an .eligible rollover distribution, they may elect, at the time
and in the manner prescribed by the plan administrator, to have any portion of
the eligible rollover distribution paid directly to 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 eligible rollover distributions by means of a direct
transfer.
For purposes of this section, an eligible rollover distribution is any
distribution of all or any portion of the balance to the credit of an
individual, except that it does not include: any distribution that is one of a
series of substantially equal -periodic payments (not less frequently) made for
the life (or life expectancy) of the employee or the joint lives (or joint life
expectancies) of the employee and the employee's designated beneficiary, or for
a specified period of ten years or more; any distribution to the extent it is
required under Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income.
A direct rollover for purposes of this section is a payment by the plan to
the individual retirement account, individual retirement annuity, an annuity
plan or a qualified trust specified by
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the employee.
13.02 TRANSFER TO PLAN: The trustee shall not accept any amounts from the
trustee of any other qualified plans with the exception of a qualified plan or
former qualified plan maintained by the Employer.
13.03 REQUIREMENT OF TRUST: The requirements of the trust referred to
above are as follows:
(a) The recipient or transferring trust must be tax-exempt under
Code Section 501 and part of a profit sharing or pension plan which is a
qualified plan under Code Section 401(a); and
(b) The trustee of the recipient trust must be willing and able to
accept the said amount pursuant to the terms of the recipient trust, such
acceptance to be in writing.
13.04 RESTRICTIONS ON TRANSFERRED ACCOUNTS: All accounts transferred to or
from this Plan pursuant to this Article XIII shall continue to be subject to all
of the provisions and limitations specifically applicable to such accounts as if
such accounts had remained in the transferring plan, including, specifically,
provisions for distribution of benefits in the form of a joint and survivor
annuity or Qualified Pre-Retirement Survivor Annuity.
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ARTICLE XIII - TRANSFER OF ACCOUNTS
TO AND FROM OTHER QUALIFIED PLANS
RESERVED
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ARTICLE XIV - LOANS FROM EMPLOYER CONTRIBUTION ACCOUNTS
14.01 PROCEDURE: After receiving a Participant's application and according
to a written administrative policy, the Trustee may make a loan to a Participant
from his Employer Contribution Account and/or his Employer Matching Contribution
Account, if any. The amount of such loan, when added to the total outstanding
balance of all other such loans to the Participant from this Plan and from all
other plans of the Employer and any other plans required to be aggregated
herewith, shall not exceed the lesser of one-half (1/2) of the Participant's
total Vested Portion of all his accounts under this Plan and all his accounts or
accrued benefits under all such other plans, or Fifty Thousand Dollars
($50,000.00), reduced by the excess of the Participant's highest outstanding
loan balance during the one (1) year period ending on the day before the new
loan is made over the outstanding balance of loans on the date of the new loan.
The loan payment (principal and interest) shall be repaid in level payments, not
less frequently than quarterly over a period not extending beyond five (5) years
from the date of the loan, unless a longer period shall be allowed by law, and
shall be evidenced by a note. The Participant shall assign, as security for the
loan, all of his right, title and interest in and to the Trust Fund, provided
that the Participant's spouse consents, in writing, to such assignment, not more
than ninety (90) days prior to the date of the loan, if such consent is required
by law. In the event the Participant's spouse does not so consent and spousal
consent is required by law, the Participant shall provide such adequate security
for the loan as the Trustee shall require.
14.02 INTEREST: Except as set forth in Section 4.04, all loans under this
Article XIV
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shall be considered investments of the Trust and shall bear interest at a
reasonable rate. Every loan applicant shall receive a clear statement of the
charges involved in each loan transaction. This statement shall include the
dollar amount and annual interest rate.
14.03 REPAYMENT UPON TERMINATION OF EMPLOYMENT:
Notwithstanding any other provision herein to the contrary, in the event a
Participant having an outstanding loan obligation hereunder terminates his
employment with the Employer, the Trustee may declare the balance of the loan to
be due and payable as of the date of such termination or may deduct the unpaid
balance from any payment or distribution from the Trust to which the Participant
may be entitled.
14.04 GENERAL:
(a) Loans shall be made available to all participants and
beneficiaries on a reasonably equivalent basis.
(b) Loans shall not be made available to highly compensated
employees in an amount greater than the amount made available to non-highly
compensated employees.
(c) Loans must be adequately secured and bear a reasonable interest
rate.
(d) No participant loan shall exceed the present value of the
participant's vested accrued benefit.
(e) No loans will be made to any shareholder-employee or owner-
employee.
If spousal consent has been obtained in accordance with 14.01, then,
notwithstanding any other provision of this plan, the portion of the
participant's vested account balance used as a
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security interest held by the plan, shall be taken into account for purposes of
determining the amount of the account balance 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 balance (determined without
regard to the preceding sentence) is payable to the surviving spouse, then the
account balance shall be adjusted by first reducing the vested account balance
by the amount of the security used as repayment of the loan, and then
determining the benefit payable to the surviving spouse.
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ARTICLE XIV - LOANS FROM EMPLOYER CONTRIBUTION ACCOUNTS
RESERVED
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ARTICLE XV - LOANS FROM VOLUNTARY SALARY REDUCTION
CONTRIBUTION ACCOUNTS
15.01 PROCEDURE: After receiving a Participant's application and
according to a written administrative policy, the Trustee may make a loan to a
Participant from his Voluntary Salary Reduction Contribution Account, in an
amount not to exceed the maximum permitted by law. The loan payment (principal
and interest) shall be repaid in level payments not less frequently than
quarterly over a period not extending beyond five (5) years from the date of the
loan, unless a longer period shall be allowed by law, and shall be evidenced by
a note. The Participant shall assign, as security for the loan, all of his
right, title and interest in and to the Trust Fund, provided that the
Participant's spouse consents, in writing, to such assignment not more than
ninety (90) days prior to the date of the loan, if such consent is required by
law. In the event the Participant's spouse does not so consent and spousal
consent is required by law, the Participant shall provide such adequate security
for the loan as the Trustee shall require.
15.02 INTEREST: Each loan to a participant under this Article XV shall be
considered an investment of that Participant's Voluntary Salary Reduction
Contribution Account, made in accordance with the investment direction of the
Participant pursuant to Section 4.04. Interest shall be charged on the loan at
a reasonable interest rate and shall be allocated solely to the Participant's
Voluntary Salary Reduction Contribution Account.
Every loan applicant shall receive a clear statement of the charges
involved in each loan transaction. This statement shall include the dollar
amount and annual interest rate.
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15.03 GENERAL:
(a) Loans shall be made available to all participants and
beneficiaries on a reasonably equivalent basis.
(b) Loans shall not be made available to highly compensated
employees in an amount greater than the amount made available to non-highly
compensated employees.
(c) Loans must be adequately secured and bear a reasonable interest
rate.
(d) No participant loan shall exceed the present value of the
participant's vested accrued benefit.
(e) No loans will be made to any shareholder-employee or owner-
employee.
If spousal consent has been obtained in accordance with 15.01, then,
notwithstanding any other provision of this plan, the portion of the
participant's vested account balance used as a security interest held by the
plan, shall be taken into account for purposes of determining the amount of the
account balance 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 balance (determined without regard to the preceding
sentence) is payable to the surviving spouse, then the account balance shall be
adjusted by first reducing the vested account balance by the amount of the
security used as repayment of the loan, and then determining the benefit payable
to the surviving spouse.
15.04 LOAN PREPAYMENT: The Participant may elect to prepay his Plan loan
in full at any time in cash, in shares of Company stock previously acquired by
the Participant and held
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outside of the Plan, or in a combination of cash and such shares of Company
stock. The value of any Company stock used to prepay the Plan loan shall be
determined in accordance with procedures established by the Plan Administrator.
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ARTICLE XV - LOANS FROM VOLUNTARY SALARY DEFERRAL
CONTRIBUTION ACCOUNTS
RESERVED
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(a) Loans must be adequately secured and bear a reasonable interest
rate.
(b) No participant loan shall exceed the present value of the
participant's vested accrued benefit.
(c) No loans will be made to any shareholder-employee or owner-
employee.
If spousal consent has been obtained in accordance with 15.01, then,
notwithstanding any other provision of this plan, the portion of the
participant's vested account balance used as a security interest held by the
plan, shall be taken into account for purposes of determining the amount of the
account balance 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 balance (determined without regard to the preceding
sentence) is payable to the surviving spouse, then the account balance shall be
adjusted by first reducing the vested account balance by the amount of the
security used as repayment of the loan, and then determining the benefit payable
to the surviving spouse.
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401(k) PROFIT SHARING PLAN
EFFECTIVE JANUARY 1, 1994
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ARTICLE XVI - QUALIFIED DOMESTIC RELATIONS ORDERS
16.01 DEFINITIONS: For purposes of applying the provisions of this
Article.
(a) "Domestic Relations Order" shall mean any judgment, decree or
order (including approval of a property settlement agreement) which
(i) relates to the provision of child support, alimony
payments, or marital property rights for a spouse, former spouse, child or other
dependent of a Participant, and
(ii) is made pursuant to a state domestic relations law,
including community property law.
(b) "Qualified Domestic Relations Order" shall mean a Domestic
Relations Order which
(i) creates or recognizes the existence of the right of an
Alternate Payee to receive all or a portion of the benefits payable with respect
to a Participant under this Plan or assigns such right to an alternative payee;
(ii) clearly specifies (A) the names and.-last known mailing
addresses, if any, of the Participant and each Alternate Payee covered by the
order, (B) the amount or percentage of the Participant's benefits to be paid by
the Plan to each alternate payee, or the manner in which such amount or
percentage is to be determined, (C) the number of payments or the period to
which it applies, and (D) each plan to which it applies;
(iii) does not require the Plan to provide any type or form of
benefits or any option for which the Plan does not otherwise provide;
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(iv) does not require the Plan to provide increased benefits,
determined on the basis of actuarial value, and
(v) does not require the payment to an Alternative Payee of
benefits which are required to be paid to another Alternative Payee under
another order previously determined to be a Qualified Domestic Relations Order.
(c) "Alternative Payee" shall mean any spouse, former spouse, child
or other dependent of a Participant who is recognized by a domestic relations
order as having a right to receive all or a portion of the benefits payable
under this Plan with respect to such Participant. Any person who is an
Alternative Payee under a Qualified Domestic Relations Order shall be considered
to be a Beneficiary under the Plan. Unless specifically provided to the contrary
by the Qualified Domestic Relations Order, by law or by regulation, the rights
of an Alternate Payee hereunder shall terminate upon the death of the Alternate
Payee.
16.02 NOTICE: In the event a Domestic Relations Order is received by the
Plan, the Plan Administrator shall promptly notify the Participant and each
Alternative Payee of the receipt of such order and of the Plan's procedures for
determining the qualified status of the Order.
16.03 DETERMINATION OF QUALIFIED STATUS:
(a) Within a reasonable period after receipt of a Domestic
Relations Order, the Plan Administrator shall determine whether such order is a
Qualified Domestic Relations Order and shall notify the Participant and each
Alternative Payee, or the designated representative, if any, of the Alternate
Payee, of its determination. Such determination shall be made in
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accordance with reasonable procedures adopted in writing by the Plan
Administrator.
(b) During such time as the determination of qualified status is
pending, the amounts which would have been payable to the Alternative Payee
during that period, if the Order had been determined to be a Qualified Domestic
Relations Order, shall be segregated in a separate account in the Plan or in an
escrow account.
(c) If, within eighteen months, the Order, or any modification
thereof, is determined to be a Qualified Domestic Relations Order, the Plan
Administrator shall direct the Trustee to pay the segregated amounts, together
with any interest accrued thereon, to the person or persons entitled thereto.
(d) If, within eighteen months, it is determined that the order is
not a Qualified Domestic Relations Order or the issue of qualified status is not
resolved, the Plan Administrator shall direct the Trustee to pay the segregated
amounts, together with any interest accrued thereon, to the person or persons
who would have been entitled to such amounts had there been no order.
(e) Any determination that an order is a Qualified Domestic
Relations Order which is made after the close of the eighteen-month period shall
be applied prospectively only.
16.04 APPLICABLE INTEREST RATE: For purposes of this Article XVI, in
determining amounts to be paid to an Alternate Payee, the interest rate to be
applied shall be the greater of the Applicable Federal Rate or Alternative
Applicable Federal Rate as of the date of payment, unless otherwise specified by
the Qualified Domestic Relations Order.
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APPENDIX - I
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LIMITATIONS - SECTION 415
This section of the Appendix states the limitations on contributions and
benefits which are applicable to Limitation Years beginning after December 31,
1986. The Limitation Year for this Plan, unless otherwise stated elsewhere in
this Plan or otherwise defined by resolution or other appropriate action, shall
be the Plan Year. These limitations are complex. This appendix is therefore
written primarily for the use of the Trustee and the Trustee's accountants,
legal counsel and other advisors. The technical terminology is that of the
Internal Revenue Code of 1986.
For each year, the annual additions credited to each Participant under this
Plan, plus the annual additions to such Participant's account in any other
defined contribution plan maintained by the Employer or an affiliate thereof, or
a defined contribution plan of another corporation which the Participant
controls, shall be limited to the lesser of (a) twenty-five percent (25%) of his
compensation or (b) Thirty Thousand Dollars ($30,000.00), or, if greater, one-
fourth (1/4) of the dollar limitation then in effect under Code Section
415(b)(1)(A) for defined benefit plans. The existence of "control' shall be
determined under Code Section 414, as modified by Code Section 415.
For purposes of these limitations, a Participant's compensation shall
include his Earned Income and all wages, salaries, fees for professional
services and other amounts received for personal services actually rendered in
the course of employment with the Employer, including, but not limited to,
commissions, compensation for services on the basis of a percentage of profits,
tips, and bonuses; a Participant's compensation shall exclude (a) Employer
contributions
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to a plan of deferred compensation which are not includible in the Participant's
gross income for the taxable year in which contributed, Employer contributions
under a simplified employee pension plan to the extent such contributions are
deductible by the Participant, or any distributions from a plan of deferred
compensation; (b) amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the Participant either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture; (c) amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; (d) other amounts which received
special tax benefits, or contributions made by the Employer (whether or not
under a salary reduction agreement) towards the purchase of an annuity described
in Code Section 403(b), whether or not the amounts are actually excludable from
the Participant's gross income, and (e) contributions for medical benefits
(within the meaning of Code Section 419(f)(2)) after separation from service
which are treated as annual additions under Code Section 4150)0) or 419A(d)(2).
The annual additions consist of the total of the Employer contribution,
employee contributions, (determined without regard to any rollover contributions
(as defined in Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)), and
forfeitures which are credited to the Participant's account(s), and any amounts
allocated after March 31, 1984, to an individual medical account, as defined in
Code Section 415(l)(2), which is part of a pension or annuity plan maintained by
the Employer. 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 Medicare benefits allocated to the separate
account of a key employee, as defined in
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Code Section 419A(d)(3) under a Welfare Benefit Fund, as defined in Code Section
419(e), maintained by the employer are treated as annual additions to a defined
contribution plan. For this purpose, any excess contributions applied in the
Plan Year to reduce employer contributions will be considered annual additional
for such Plan Year. Notwithstanding the foregoing, the annual additions for
years beginning prior to January 1, 1987, shall be computed in accordance with
the plan provisions then in effect and need not be recomputed in accordance with
this Appendix. Any adjustments to maximum dollar limitations on annual
additions, as are prescribed by appropriate regulations, shall be automatically
effective hereunder, as of January I of the calendar year for which the
adjustment is made and shall apply to any limitation year ending during that
calendar year.
If the annual additions exceed the limitations specified herein, the
Employer contribution on behalf of the Participant shall be reduced according to
Section 3.02.
If an Employee is a participant in one (1) or more defined benefit plans
and one (1) or more defined contribution plans maintained by the Employer, the
sum of the defined benefit plan fraction and the defined contribution plan
fraction for any year may not exceed one (1.0). The defined benefit plan
fraction for any year is a fraction (a) the numerator of which is the projected
annual benefit of the participant under all the defined benefit Plans whether or
not terminated (determined as of the close of the Plan Year), and (b) the
denominator of which is the lesser of: (1) the product of one and twenty-five
one-hundredths (1.25) multiplied by the maximum dollar limitation in effect
under Code Section 415(b)(1)(A) for such year, or (2) the product of one and
four-tenths (1.4) multiplied by the amount which may be taken into account under
Code Section
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415(b)(1)(B) for such year.
Notwithstanding the above, if the participant was a participant as of the
first day of the first limitation year beginning after December 31, 1986, in one
or more defined benefit plans maintained by the employer which were in existence
on May 6, 1986, the denominator of this fraction will not be less than 125
percent of the sum of the annual benefits under such plans which the participant
has accrued 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.
The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Section 415 for
all limitation years beginning before January 1, 1987. The defined contribution
plan fraction for any year is a fraction (a) the numerator of which is the sum
of the "annual additions" (as the term is defined under Code Section 415(c)(2)
and applicable regulations as in effect for the year for which such annual
additions are computed) to the Participant's account as of the close of the Plan
Year and (b) the denominator of which is the sum of the lesser of the following
amounts determined for such year and each prior year of service with the
Employer: (1) the product of one and twenty-five one-hundredths (1.25)
multiplied by the dollar limitation in effect under Code Section 415(c)o)(A) for
such year (determined without regard to Code Section 415(c)(6)), or (2) the
product of one and four-tenths (1.4) multiplied by the amount which may be taken
into account under Code Section 415(c)o)(B) for such year. If the employee was a
participant as of the end of the first day of the first limitation year
beginning after December 31, 1986, in one or more defined
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contribution plans maintained by the employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
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 (1)
the excess of the sum of the fractions over 1.0 times (2) 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 5, 1986 but using the Section 4.15 limitation applicable to the first
limitation year beginning on or after January 1, 1987. Notwithstanding the
foregoing, for any year in which the Plan is a Top Heavy Plan, the denominator
of the defined benefit plan fraction shall be computed using a factor of one
(1.0) instead of one and twenty-five one-hundredths (1.25).
At the election of the Plan Administrator, in determining the denominator
of the defined contribution fraction, the amount taken into account with respect
to a Participant for years ending prior to January 1, 1983, shall be equal to
the product of the amount determined above for the year ending in 1982,
multiplied by the "transition fraction". The transition fraction is a fraction
(a) the numerator of which is the lesser of: (1) $51,875.00, or (2) one and
four-tenths (1. 4) multiplied by twenty-five percent (25 %) of the compensation
of the Participant for the year ending in 1981, and (b) the denominator of which
is the lesser of: (1) $41,500.00, or (2) twenty-five percent (25%) of the
compensation of the Participant for the year ending in 1981.
If the sum of the defined benefit plan fraction and the defined
contribution plan fraction
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shall exceed one (1.0) in any year for any Participant in this Plan, the
Employer shall adjust the numerator of the fraction applicable to the plan
designated by the Employer as the non-primary plan, so that the sum of both
fractions shall not exceed one (1.0) in any year for such Participant.
If any of the transitional rules of the Tax Equity and Fiscal
Responsibility Act of 1982 or the Tax Reform Act of 1986 shall apply, then such
transitional rule shall take precedence over the above limitations.
For purposes of these limitations, all defined benefit plans of the
Employer, whether or not terminated, are to be treated as one defined benefit
plan, and all defined contribution plans of the Employer, whether or not
terminated, are to be treated as one defined contribution plan.
The above limitations are intended to comply with the provisions of Code
Section 415, as amended, so that the maximum benefits provided by the plan or
plans of the Employer shall be exactly equal to the maximum amounts allowed
under Section 415 and the regulations thereunder. If there is any discrepancy
between the provisions of this Appendix and Code Section 415, such discrepancy
shall be resolved so as to give full effect to the provisions of Code Section
415.
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APPENDIX II
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IMPLEMENTING SECTION 4.04
EARMARKING OF VOLUNTARY
-----------------------
SALARY DEFERRAL CONTRIBUTIONS ACCOUNTS AND
------------------------------------------
EMPLOYER MATCHING CONTRIBUTION ACCOUNTS
---------------------------------------
A Participant shall have the right to direct the investment of assets in
his Voluntary Salary Deferral Contribution Account and/or cash portion of his
Employer Matching Contribution Account.
A Participant shall have the right to direct the investment of up to 20% of
his Voluntary Salary Deferral Contributions made on or after November 1, 1999 in
shares of Company stock. A Participant shall have the right to change the
investment of his Voluntary Salary Deferral Contributions in Company stock and
any investment in Company stock representing the repayment of his Plan loan, to
another investment fund available under the Plan at the same time and in the
same manner as other investment changes; provided, however, that investment
elections relating to Company stock shall be subject to such restrictions as the
Plan Administrator deems necessary or advisable to ensure compliance with
applicable securities laws. With the exception of the foregoing Voluntary Salary
Deferral Contributions, any Employer Matching Contributions made to the Plan in
Company stock pursuant to Section 1.15 of the Plan, and any Company stock used
to repay a Participant's Plan loan pursuant to Section 15.04 of the Plan, no
other amounts held under the Plan shall be permitted to be invested in Company
Stock.
An investment direction shall be effective only if it is given by the
Participant to the Trustee in writing and is sufficiently clear as to
communicate the instructions to the Trustee.
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The Trustee shall have no liability for following the directions of the
Participant and has no duty to ascertain whether the investment is prudent. If
the Trustee believes that any investment direction may or will result in a
prohibited transaction, the Trustee, without liability to the Participant or any
other party, may refuse to implement the direction until the Trustee shall be
satisfied that the transaction is proper, based upon such opinions of counsel as
the Trustee shall desire.
All costs of administering an account hereunder, including reasonable
attorneys or accounting fees, shall be charged to that account.
The Investment Committee, as defined by Section 1.23a, shall have the
responsibility to select the funds to which the Participants may invest.
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