<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 28, 1999
REGISTRATION NO. 333-_____
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------------------------
SCHLUMBERGER N.V.
(SCHLUMBERGER LIMITED)
(Exact name of registrant as specified in its charter)
NETHERLANDS ANTILLES 52-0684746
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
277 PARK AVENUE
NEW YORK, NEW YORK 10172-2066
42, RUE SAINT-DOMINIQUE
PARIS, FRANCE 75007
PARKSTRAAT 83,
THE HAGUE,
THE NETHERLANDS 2514 JG
(Addresses of Principal Executive Offices) (Zip Codes)
- --------------------------------------------------------------------------------
PRODUCTION OPERATORS THRIFT PLAN
(Full title of the plan)
- --------------------------------------------------------------------------------
JAMES L. GUNDERSON, ESQ.
GENERAL COUNSEL AND SECRETARY
SCHLUMBERGER LIMITED
277 PARK AVENUE
NEW YORK, NEW YORK 10172-2066
(Name and address of agent for service)
Telephone number, including area code,
of agent for service:
(212) 350-9400
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================
Proposed
Proposed maximum
Title of securities Amount to be maximum offering aggregate offering Amount of
to be registered registered(1) price per share(2) price(2) registration fee
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (par value
$.01 per share)........ 600,000 $60.157 $36,094,200 $10,034
==================================================================================================
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this registration
statement also covers an indeterminate amount of interests to be offered or sold pursuant to
the employee benefit plan described herein.
(2) Estimated in accordance with Rule 457(c) and (h) solely for the purpose of calculating the
registration fee and based upon the average of the high and low sales price of the shares of
Common Stock of Schlumberger Limited quoted on the New York Stock Exchange on June 24, 1999.
==================================================================================================
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Schlumberger Limited, a corporation organized under the laws of the
Netherlands Antilles (the "Company"), and the Production Operators Thrift Plan,
as amended (the "Plan"), incorporate by reference in this registration statement
the following documents:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1998;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999;
3. The Plan's Annual Report on Form 11-K for the Plan year ended
December 31, 1998 being filed concurrently herewith; and
4. The description of the Schlumberger Common Stock contained in the
Company's registration statement on Form 20 dated January 8, 1962, filed under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
any amendment or report filed for the purpose of updating such description.
Each document filed by the Company or the Plan pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, subsequent to the date of this
registration statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date
of filing such documents.
Any statement 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 herein or in any subsequently filed document which
also is or is deemed to be 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
AUTHORIZED, ISSUED AND TREASURY SHARES
The Company is authorized to issue 1,000,000,000 shares of common stock, par
value $0.01 per share ("Schlumberger Common Stock"), of which 665,712,058 shares
were issued; 547,193,933 shares were outstanding; and 118,518,125 shares were
held by the Company as treasury stock on May 31, 1999. In addition, the Company
is authorized to issue, subject to certain limitations with respect to voting
rights, liquidation and dividend preferences, 200,000,000 shares of cumulative
preferred stock, par value $0.01 per share ("Schlumberger Preferred Stock"),
which may be issued in one or more separate series. If issued, the Schlumberger
Preferred Stock may contain provisions allowing it to be converted into
Schlumberger Common Stock under terms and conditions specified by the Board of
Directors of the Company. No shares of Schlumberger Preferred Stock have been
issued as of the date hereof.
DIVIDEND RIGHTS
All outstanding shares of Schlumberger Common Stock (i.e., shares not held by
the Company and its subsidiaries), are entitled to participate equally and
receive dividends which may be paid out of available profits of the preceding
fiscal year or years. All accumulated and unpaid dividends payable on
Schlumberger Preferred Stock (if issued and outstanding) must be paid prior to
the payment of any dividends on Schlumberger Common Stock. The amount of
dividends payable with respect to any fiscal year is determined by the
stockholders at the annual general meeting held within nine months of such
fiscal year following such fiscal year, except that the Board of Directors may
declare interim dividends.
VOTING RIGHTS
Each holder of shares of Schlumberger Common Stock is entitled to one vote for
each share registered in such holder's name. Voting rights may be exercised in
person or by proxy. No action to amend the Deed of Incorporation or to sell all
or substantially all of the Company's assets or to dissolve the Company can be
taken except upon the authorization of the holders of at least a majority of the
outstanding shares eligible to vote. In addition, holders of Schulmberger
Preferred Stock (if issued and outstanding) would have additional rights to vote
as a class on certain amendments to the Company's Deed of Incorporation that
would adversely affect Schlumberger Preferred Stock. Any other action requiring
the approval of the stockholders may be authorized by a majority of the votes
cast at any meeting at which a quorum is present, except that, if a quorum is
not present at any meeting, a second meeting may be called, to be held within
two months, at which second meeting, despite the absence of a quorum, valid
resolutions may be adopted with respect to any matter stated in the notice of
the original meeting and of the second meeting. A quorum consists of not less
than 50% of the shares outstanding and eligible to vote.
The Board of Directors of the Company is authorized to effect reorganizations
or rearrangements of the corporate structure of the Company or its subsidiaries
without the vote of stockholders if such reorganization or rearrangement does
not result in any diminution of the beneficial interest of the stockholders in
the assets of the Company. The Board of Directors may change the Company's
corporate domicile from the Netherlands Antilles to another jurisdiction without
the necessity of any stockholder action or approval.
PREEMPTIVE AND OTHER RIGHTS
The shares of Schlumberger Common Stock do not carry any preemptive or
conversion rights, and there are no redemption provisions with respect to
Schlumberger Common Stock. The shares of Schlumberger Preferred Stock (if
issued and outstanding) would not carry any preemptive rights, but the Board of
Directors could specify conversion rights, redemption provisions and (within
limits) liquidation preferences with respect to one or more series of Preferred
Stock. The Company may for its own account purchase shares of Schlumberger
Common Stock so long as at least one-fifth of the authorized capital stock of
the Company remains outstanding with holders other than the Company. In the
event of liquidation, each share of Schlumberger Common Stock is entitled to
equal rights after satisfaction of any Schlumberger Preferred Stock liquidation
preference.
LISTING, TRANSFER AGENTS AND REGISTRARS
Schlumberger Common Stock is listed for trading on the New York, London,
Paris, Amsterdam and Swiss stock exchanges. The Transfer Agent and Registrar
for Schlumberger Common Stock is Boston EquiServe LP, Boston, Massachusetts.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article IX, Section 7 of the Company's Deed of Incorporation and Article V
of the Company's By-Laws provide that:
The Company has the power 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 investigative
(other than an action by or in the right of the Company) by reason of the fact
that he or she is or was a director, officer, employee or agent of the Company,
or is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise or entity, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the Company, and, with respect to any criminal action
or proceeding, had
II-1
<PAGE>
no reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
The Company has the power 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
or suit by or in the right of the Company to procure a judgment in its favor by
reason of the fact that he or she is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise or entity against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with the defense or settlement
of such action or suit if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best interests of the
Company and except that no indemnification may be made in respect of any claim,
issue or matter as to which that person has been finally adjudged to be liable
to the Company for improper conduct unless and only to the extent that the court
in which that action or suit was brought or any other court having appropriate
jurisdiction determines upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, that person is
fairly and reasonably entitled to indemnity for those expenses, judgments, fines
and amounts paid in settlement which the court in which the action or suit was
brought or such other court having appropriate jurisdiction deems proper.
To the extent that a director, officer, employee or agent of the Company has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in the two preceding paragraphs, or in defense of any
claim, issue or matter therein, the Company will indemnify that person against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection therewith.
Any indemnification under the first two paragraphs in this item (unless
ordered by a court) may be made by the Company only as authorized by contract
approved, or by-laws, resolution or other action adopted or taken, by the Board
of Directors or by the stockholders.
Expenses incurred in defending a civil or criminal action, suit or
proceeding will be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amount if it is
ultimately determined that he or she is not entitled to be indemnified by the
Company as authorized by Article V of the By-Laws or Article IX, Section 7 of
the Deed of Incorporation.
The indemnification and advancement of expenses provided by or granted
pursuant to the other Sections of Article V of the By-Laws and Article IX,
Section 7 of the Deed of Incorporation are not exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any law, by-law, agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in his or her official capacity and
as to action in another capacity while holding such office, and continues as to
a person who has ceased to be a director, officer, employee or agent and inures
to the benefit of the heirs, executors and administrators of that person.
The Company has the power to purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the Company,
or is or was serving at the request of the Company in such a capacity for
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against that person and incurred by that person
in any of those capacities or arising out of his status as such, whether or not
the Company may indemnify him or her against such liability under the provisions
of Article V of the By-Laws or Article IX, Section 7 of the Deed of
Incorporation.
For purposes of Article V of the By-Laws and Article IX, Section 7 of the
Deed of Incorporation, reference to the Company includes, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or Merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
II-2
<PAGE>
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, stands in the same position under the provisions of
Article V of the By-Laws and Article IX, Section 7 of the Deed of Incorporation
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
In addition, the Company maintains directors' and officers' liability
insurance which insures against certain liabilities that the officers and
directors of the Company may incur in such capacities.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
The following documents are filed as a part of this registration statement
or incorporated by reference herein:
Exhibit
No. Description
- ------- -----------------------------------------------------------------
4.1 -- Deed of Incorporation of the Company, as amended (incorporated by
reference to Exhibit 3(i) to the Company's Form 10-Q for the
quarter ended March 31, 1997).
4.2 -- By-laws of the Company, as amended (incorporated by reference to
Exhibit 3 to the Company's Form 10-K for the year ended December
31, 1993).
4.3 -- Production Operators Thrift Plan.
23 -- Consent of PricewaterhouseCoopers LLP.
24 -- Powers of Attorney (incorporated by reference to Exhibit 24 to
the Company's Registration Statement on Form S-8, Reg.
No. 333-62545).
The registrant has submitted the Plan to the Internal Revenue Service
("IRS") and hereby undertakes to submit any amendment 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;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) of the Securities Act if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
II-3
<PAGE>
(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 the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) above 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 registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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 provisions described under Item 6 above, or
otherwise, the registrant has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<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 New York, State of New York, on June 28, 1999.
SCHLUMBERGER N.V.
(Schlumberger Limited)
By: /s/ JACK LIU
-----------------------------------------
Jack Liu
Executive Vice President - Finance,
Chief Financial Officer and Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on June 28, 1999
in the capacities indicated.
* *
- -------------------------------- ------------------------------
D. Euan Baird William T. McCormick, Jr.
Director, Chairman, President Director
and Chief Executive Officer
* *
- -------------------------------- ------------------------------
Victor Grijalva Didier Primat
Director, Vice Chairman Director
/s/ JACK LIU *
- -------------------------------- ------------------------------
Jack Liu Nicolas Seydoux
Executive Vice President - Finance,
Chief Financial Officer and
Chief Accounting Officer
* *
- -------------------------------- ------------------------------
Don E. Ackerman Linda G. Stuntz
Director Director
* *
- -------------------------------- ------------------------------
John Deutch Sven Ullring
Director Director
* *
- -------------------------------- ------------------------------
Denys Henderson Yoshihiko Wakumoto
Director Director
*
- --------------------------------
Andre Levy-Lang
Director
*By: /s/ ELLEN S. SUMMER
----------------------------
Ellen S. Summer
Attorney-in-Fact
<PAGE>
The Plan. Pursuant to the requirements of the Securities Act of 1933, the
trustees (or other persons who administer the Plan) have duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on June 28, 1999.
PRODUCTION OPERATORS THRIFT PLAN
By: /s/ JOHN A. KLUEPFEL
-------------------------------
John A. Kluepfel
Trustee
By: /s/ BRIAN E. TAYLOR
-------------------------------
Brian E. Taylor
Trustee
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------- ------------------------------------------------------------------
4.1 -- Deed of Incorporation of the Company as amended (incorporated by
reference to Exhibit 3(i) to the Company's Form 10-Q for the
quarter ended March 31, 1997).
4.2 -- By-laws of the Company as amended (incorporated by reference to
Exhibit 3 to the Company's Form 10-K for the year ended
December 31, 1993).
4.3 -- Production Operators Thrift Plan.
23 -- Consent of PricewaterhouseCoopers LLP.
24 -- Powers of Attorney (incorporated by reference to Exhibit 24 to the
Company's Registration Statement on Form S-8, Reg. No. 333-62545).
II-7
<PAGE>
EXHIBIT 4.3
PRODUCTION OPERATORS THRIFT PLAN
(Amended and Restated Effective July 1, 1998)
<PAGE>
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS...................................... I-2
1.1. Account........................................... I-2
1.2. Act............................................... I-2
l.3. Active Service.................................... I-2
1.4. Affiliated Employer............................... I-2
1.5. Beneficiary....................................... I-2
1.6. Board............................................. I-2
1.7. Code.............................................. I-2
1.8. Committee......................................... I-3
1.9. Compensation Deferral Agreement................... I-3
1.10. Considered Compensation........................... I-3
1.11. Contribution...................................... I-4
1.12. Effective Date.................................... I-4
1.13. Elective Contribution............................. I-4
1.14. Employee.......................................... I-4
1.15. Employee Account.................................. I-4
1.16. Employee Voluntary Contribution................... I-5
1.17. Employer.......................................... I-5
1.18. Employer Account.................................. I-5
1.19. Entry Date........................................ I-5
1.20. Highly Compensated Employee....................... I-5
1.21. Leased Employee................................... I-5
1.22. Matching Contribution............................. I-6
1.23. Net Income........................................ I-6
1.24. Non-Highly Compensated Employee................... I-6
1.25. Participant....................................... I-6
1.26. Plan.............................................. I-6
1.27. Plan Sponsor...................................... I-6
1.28. Plan Year......................................... I-6
1.29. Prior Plan........................................ I-6
1.30. Prior Plan Account................................ I-6
1.31. Prior Plan After-Tax Contribution................. I-7
1.32. Prior Plan After-Tax Contributions Account........ I-7
1.33. Prior Plan Profit Sharing Contributions Account... I-7
1.34. Prior Plan Rollover Contributions................. I-7
1.35. Prior Plan Rollover Contributions Account......... I-7
1.36. Profit Sharing Contribution....................... I-7
1.37. Qualified Non-Elective Contribution............... I-7
1.38. Retired Participant............................... I-7
1.39. Rollover Account.................................. I-7
1.40. Rollover Contribution............................. I-8
1.41. Telephonic Procedures............................. I-8
1.42. Total and Permanent Disability.................... I-8
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1.43. Transferred....................................... I-8
1.44. Trust............................................. I-8
1.45. Trustee........................................... I-8
1.46. Trust Fund........................................ I-8
1.47. Valuation Date.................................... I-8
ARTICLE II. EMPLOYEES ELIGIBLE TO PARTICIPATE............... II-1
2.1. Eligibility Requirements.......................... II-1
2.2. Frozen Participation.............................. II-2
2.3. Active Service.................................... II-3
ARTICLE III. CONTRIBUTIONS.................................. III-1
3.1. Employee Voluntary Contributions.................. III-1
3.2. Compensation Deferral Agreements for Elective
Contributions................................... III-1
3.3. Rollover Contributions............................ III-6
3.4. Employer Contributions............................ III-6
3.5. Highly Compensated Employee........................ III-24
3.6. Composition of and Deadline for Payment of
Employer Contributions........................... III-30
3.7. Return of Contributions for Mistake,
Disqualification or Disallowance of Deduction.... III-30
3.8. Qualified Military Service......................... III-31
ARTICLE IV. PARTICIPATION.................................... IV-1
4.1. Periodic Certification by Employer................. IV-1
4.2. Allocation of Employer Contributions............... IV-1
4.3. Limitation on Additions to Account................. IV-2
4.4. Periodic Valuation of Trust Fund................... IV-10
4.5. Daily Valuation of Trust Fund...................... IV 11
4.6. Forfeitures and Allocation Thereof................. IV-12
4.7. Effective Date of Allocations and Adjustments...... IV-14
4.8. Accounting for Transferred Participant............. IV-15
4.9. No Vesting, Unless Otherwise Prescribed............ IV-15
4.10. Investment Elections with Respect to
Commingled Funds................................. IV-15
4.11. Special Transition Rule............................ IV-18
ARTICLE V. RETIREMENT........................................ V-1
5.1. Early Retirement................................... V-1
5.2. Normal Retirement.................................. V-1
5.3. Late Retirement.................................... V-1
5.4. Rights of Participants and Prohibition of
Unauthorized Distribution........................ V-1
ARTICLE VI. DISTRIBUTION OF BENEFITS......................... VI-1
6.1. Death Benefit...................................... VI-1
6.2. Retirement Benefit................................. VI-3
6.3. Total and Permanent Disability Benefit............. VI-3
6.4. Severance Benefit.................................. VI-3
6.5. Accounting for Distributions; Offsets in
Special Circumstances............................ VI-4
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6.6. Distributions-Settlement Options................... VI-5
6.7. Lost Participants or Beneficiaries; Escheat........ VI-17
6.8. Withdrawals by Participants........................ VI-18
6.9. Claims Procedure for Benefits...................... VI-24
6.10. Loans to Participants and Beneficiaries............ VI-25
6.11. Distributions to Divorced Spouse................... VI-30
6.12. Special Transition Rule............................ VI-31
ARTICLE VII. TOP-HEAVY PLAN PROVISIONS....................... VII-1
7.1. General Rules for Determining Top-Heavy Status..... VII-1
7.2. Computation of Present Value of Accrued Benefits... VII-2
7.3. Special Rules for Plan Years that Plan is
Top-Heavy........................................ VII-3
7.4. Definitions........................................ VII-5
ARTICLE VIII. COMMITTEE...................................... VIII-1
8.1. Appointment, Term of Service and Removal........... VIII-1
8.2. Powers............................................. VIII-1
8.3. Organization....................................... VIII-3
8.4. Quorum and Majority Action......................... VIII-3
8.5. Signatures......................................... VIII-3
8.6. Disqualification of Committee Participant.......... VIII-3
8.7. Disclosure to Participants......................... VIII-3
8.8. Standard of Performance............................ VIII-3
8.9. Liability of Committee and Liability Insurance..... VIII-4
8.10. Exemption from Bond................................ VIII-4
8.11. No Compensation.................................... VIII-4
8.12. Persons Serving in Dual Fiduciary Roles............ VIII-4
8.13. Administrator...................................... VIII-4
8.14. Indemnification of Participants of Committee....... VIII-5
ARTICLE IX. TRUSTEE.......................................... IX-1
9.1. Appointment ....................................... IX-1
9.2. Authority.......................................... IX-1
9.3 Investment Powers.................................. IX-1
9.4. Voting Company Stock............................... IX-4
9.5. Tender Offer for Company Stock .................... IX-5
9.6. Standard of Performance............................ IX-7
9.7. Liability for Investments.......................... IX-7
9.8. Reliance on Directions............................. IX-7
9.9. General Liability of the Trustee................... IX-8
9.10. Proof of Trustee's Authority....................... IX-8
9.11. Accounting Required by Trustee..................... IX-8
9.12. Resignation or Removal of Trustee.................. IX-9
9.13. Appointment and Power of Successor Trustee......... IX-9
9.14. Compensation of Trustee............................ IX-9
9.15. Bonding............................................ IX-9
9.16. Assignment of Trusteeship.......................... IX-10
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ARTICLE X. ADOPTION OF PLAN BY OTHER EMPLOYERS............... X-1
10.1. Adoption Procedure................................. X-1
10.2. No Joint Venture Implied........................... X-1
10.3. Transfer of Participants........................... X-1
ARTICLE XI. AMENDMENT AND TERMINATION........................ XI-1
11.1. Right to Amend and Limitations Thereon............. XI-1
11.2. Mandatory Amendments............................... XI-2
11.3. Withdrawal of an Employer.......................... XI-2
11.4. Voluntary and Involuntary Termination.............. XI-2
11.5. Vesting Upon Discontinuance of Employer
Contributions, Total or Partial Termination...... XI-5
11.6. Continuance Permitted Upon Sale or Transfer of
Assets........................................... XI-5
11.7. Requirement on Merger, Transfer, etc............... XI-6
ARTICLE XII. MISCELLANEOUS................................... XII-l
12.1. Plan Not An Employment Contract.................... XII-1
12.2. Benefits Provided Solely From Trust Fund........... XII-1
12.3. Spendthrift Provision.............................. XII-1
12.4. Gender, Tense and Headings......................... XII-2
12.5. General Transition Rules Relating to Amendment,
Restatement and Continuation of Plan............. XII-2
12.6. Severability....................................... XII-3
12.7. Governing Law; Parties to Legal Actions............ XII-3
12.8. Notices............................................ XII-4
12.9. Counterparts....................................... XII-4
iv
<PAGE>
PRODUCTION OPERATORS THRIFT PLAN
THIS AGREEMENT made the 17th day of June 1998, by and between Production
Operators, Inc., a Florida corporation, and Ronald R. Randall and Herbert S.
Yates, hereinafter collectively referred to as the Trustee,
WITNESSETH:
WHEREAS, for the exclusive benefit of its eligible employees and their
beneficiaries, Production Operators, Inc., heretofore adopted the profit sharing
plan and trust which were embodied in the instrument entitled "Production
Operators Thrift Plan" (the "Prior Plan") which instrument was intended to meet
the requirements for qualification and exemption under applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code") and to comply with
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended (the "Act"); and
WHEREAS, Production Operators, Inc. is a wholly owned subsidiary of
Production Operators Corp., and 100 percent of the Production Operators Corp.
was acquired by Camco International Inc.; and
WHEREAS, it had been determined that said Prior Plan should be completely
amended, restated and continued without a gap or lapse in coverage, time or
effect of a qualified plan and exempt trust under applicable provisions of the
Code in order (i) to effect numerous technical changes for the benefit of
eligible employees and beneficiaries thereof, (ii) to ensure that the terms and
provisions of the Prior Plan continue to meet the requirements for qualification
and exemption under applicable provisions of the Code and to comply with
applicable provisions of the Act following amendment of the Code and the Act by
the Uniformed Services Employment and Reemployment Rights Act of 1994, as
amended, the Small Business Job Protection Act of 1996, as amended, and the
Taxpayer Relief Act of 1997, as amended, and the applicable guidance issued by
appropriate governmental authorities under such legislation or otherwise, and
(iii) to change the name of the Plan to the "Production Operators Thrift Plan,"
and to make such other chances as are appropriate to make the Plan substantially
similar to the Camco Thrift Plan; and
WHEREAS, it is intended that certain other business organizations may adopt
the form of the Plan for the exclusive benefit of their eligible employees and
their eligible employees' beneficiaries; and
WHEREAS, it is intended that the benefits offered under the form of the
Plan will help retain and attract the highest quality employees by providing
additional financial incentives and financial security for eligible employee and
their beneficiaries;
NOW, THEREFORE, the parties hereto enter this agreement, as a complete
amendment, restatement and continuation of the Prior Plan under the form of the
Plan hereinafter set forth, without a gap or lapse in coverage, time or effect
of a qualified plan and exempt trust under applicable provision of the Code,
as follows:
<PAGE>
ARTICLE I.
DEFINITIONS
As used herein, the words and phrases set forth below shall have the
meaning attributed to them unless the context in which any such word or phrase
appears reasonably requires broader, narrower or different meaning:
1.1. Account: "Account" shall mean, with respect to a Participant, all of
the ledger accounts maintained by the Committee to set out such Participant's
proportionate interest in the Trust Fund. With respect to periods beginning
prior to July 1, 1998, accounts shall be maintained in accordance with the
requirements of the Prior Plan. Should the Committee in its absolute discretion
so direct, any of the Accounts maintained under the Plan may be divided into
subaccounts in order to facilitate administration of the Plan.
1.2. Act: "Act" shall mean the Employee Retirement Income Security Act of
1974, as amended, and regulations and other authority issued thereunder by the
appropriate governmental authority. Reference to any section of the Act shall
include reference to any successor section or provision of the Act.
1.3. Active Service: "Active Service" shall mean such term as defined
in Section 2.3 of the Plan.
1.4. Affiliated Employer: "Affiliated Employer" shall mean an employer
which is a member of the same controlled up of corporations (within the meaning
of Section 414(b) of the Code), or which is a trade or business (whether or not
incorporated) which is under common control (within the meaning of Section
414(c) of the Code), or which is a member of an affiliated service group of
employers (within the meaning of Section 414(m) of the Code), which related
group of corporations, businesses or employers includes an Employer; and any
other entity required to be aggregated with an Employer pursuant to regulations
under Section 414(o) of the Code.
1.5. Beneficiary: "Beneficiary" or "Beneficiaries" shall mean the
person(s), the trust(s) created for the benefit of a person or persons who are
the natural object of the Participant's or Retired Participant's bounty, or the
Participant's or Retired Participant's estate, whichever is designated by the
Participant or Retired Participant to receive the benefits payable hereunder
upon his death.
1.6. Board: "Board" shall mean the Board of Directors (or equivalent
governing authority) of the Plan Sponsor.
1.7. Code: "Code" shall mean the Internal Revenue Code of 19S6, as amended,
and regulations and other authority issued thereunder by the appropriate
governmental authority. References to any section of the Code or the income tax
regulations shall include reference to any successor section or provision of the
Code or income tax regulations, as applicable.
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<PAGE>
1.8. Committee: "Committee" shall mean the committee appointed by the
Board pursuant to Article VIII hereof.
1.9. Compensation Deferral Agreement: "Compensation Deferral Agreement"
shall mean a written agreement between a Participant and an Employer in a form
satisfactory to the Committee to permit an Employer, in lieu of paying such
amounts to the Participant in cash, to reduce such Participant's current
Considered Compensation and contribute the amount of the reduction to the Plan
as an Elective Contribution made by the Employer for the benefit of the
Participant.
1.10. Considered Compensation: "Considered Compensation" shall mean
(subject to the top-heavy rules under Section 7.3(b)), as to each Employee, the
regular compensation that is paid to him by an Employer during the Plan Year for
services performed and which is currently includible in the Employee's gross
income under the Code, including regular or base salary, hourly wages and/or
commissions, plus overtime pay and bonuses, but excluding any non-cash forms of
compensation and credits or benefits under the Plan or any other deferred
compensation plan maintained by an Employer. Considered Compensation shall be
determined before reduction under a compensation deferral agreement under (i)
the Plan or another plan described in Section 401(k) or 408(k) of the Code,
(ii) an annuity described in Section 403(b) of the Code or (iii) an election
under a cafeteria plan described in Section 125 of the Code. With respect to
Plan Years commencing after December 31, 1988 and before January 1, 1994,
Considered Compensation in excess of $200,000 (as adjusted, as may be determined
by the Commissioner of Internal Revenue, at the same time and in the same manner
as prescribed in Section 415(d) of the Code) shall be disregarded; and with
respect to Plan Years commencing after December 31, 1993, Considered
Compensation in excess of $150,000 (as adjusted, as may be determined by the
Commissioner of Internal Revenue, at such time and in such manner as is
prescribed in Section 401(a)(17)(B) of the Code) (hereinafter each applicable
dollar limitation shall be referred to as the "applicable compensation
limitation") shall be disregarded. For Plan Years beginning prior to January 1,
1997, in determining the applicable compensation limitation, the rules
pertaining to treatment of family members set out in the third paragraph of the
definition of Highly Compensated Employee shall apply, except that in applying
such rules, the term "family" shall include only the spouse and any lineal
descendants of the Employee who have not attained age 19 before the close of the
applicable Plan Year.
For purposes of this definition of "Considered Compensation," and for
purposes of the corresponding, limitations on compensation in Sections 3.4(h);
3.4(j); 7.3(b); and 7.4(l), the following provisions shall apply:
(a) The cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which compensation is
determined ("determination period"') beginning in such calendar year. If a
determination period consists of fewer than 12 months, the applicable
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;
I-3
<PAGE>
(b) 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 applicable compensation limit in effect for that prior determination
period, and for this purpose, for determination periods beginning before
the first day of the first plan year beginning on or after January 1, 1994,
the applicable compensation limit is $150,000.
1.11. Contribution: "Contribution" shall mean as to an Employer, all
amounts which an Employer contributes to the Trust Fund under the terms of the
Plan. "Contribution" shall mean as to an Employee, an Employee Voluntary
Contribution as defined below.
1.12. Effective Date: "Effective Date" shall mean, subject to the
transitional dates set forth in various sections of the Plan, July 1, 1998, the
effective date of the complete amendment, restatement and continuation of the
Production Operators Thrift Plan under the form of this Plan.
1.13. Elective Contribution: "Elective Contribution" shall mean the amount
which an Employer contributes to the Trust Fund on behalf of Participants
pursuant to Compensation Deferral Agreements.
1.14. Employee: "Employee" shall mean every person employed as a common law
employee by an Employer, including, in the case of a corporation, officers (but
excluding any director unless the director is also a salaried officer or other
common law employee). In accordance with the requirements of Section 414(n) of
the Code, any Leased Employee shall be treated as an Employee of the recipient
Employer, however, contributions or benefits provided by the Leasing
Organization (described in the definition of Leased Employee) which are
attributable to services performed for the recipient Employer shall be treated
as provided by the recipient Employer. Provided that Leased Employees do not
comprise more than 20 percent of the recipient's nonhighly compensated work
force (described in Section 414(n)(5)(C) of the Code), the preceding sentence
shall not apply if such Leased Employee is covered by a money purchase pension
plan providing: (i) a nonintegrated employer contribution rate of at least 10
percent of compensation, (ii) immediate participation by each employee of the
Leasing Organization other than (a) employees who perform substantially all of
their services for the Leasing Organization and (b) any individual whose
compensation (as defined in Section 415(c)(3) of the Code, including, also
amounts contributed pursuant to a salary reduction agreement which are
excludible from the individual's gross income under Section 125, Section
402(a)(8), Section 402(h) or Section 403(b) of the Code) from the Leasing
Organization in each Plan Year during the 4-year period ending with the Plan
Year is less than $1,000, and (iii) full and immediate vesting.
1.15. Employee Account: "Employee Account" shall mean, to the extent
applicable for each Participant, an account which reflects (i) the Participant's
after-tax Employee Voluntary Contributions as well, if any, and (ii) the portion
of any Employer Contributions which, pursuant to Section 3.4, have been
recharacterized as after-tax Employee Voluntary Contributions, regardless of
whether any Matching Contributions were made with respect thereto, and the
appreciation or depreciation of the Trust Fund and the income earned or loss
incurred by the Trust Fund allocated to the Employee Account.
I-4
<PAGE>
1.16. Employee Voluntary Contribution: "Employee Voluntary Contribution"
shall mean as to each Participant (i) the amount, if any, which a Participant
contributes (in his capacity as a Participant) to the Trustee as an after-tax
Employee Voluntary Contribution under Section 3.1, and (ii) the portion of any
Elective Contributions which (pursuant to Section 31.4) has been recharacterized
as an after-tax Employee Voluntary Contribution.
1.17. Employer: "Employer" shall mean the Plan Sponsor and any other
person (described in Section 7701(a) of the Code) which adopts the Plan in
accordance with applicable provisions thereof
1.18. Employer Account: "Employer Account" shall mean, to the extent
applicable for each Participant, an account which reflects the portion of an
Employer's Contributions allocated to the Participant, and the appreciation or
depreciation and income or loss incurred by the Trust Fund allocated to such
Employer Account. The Employer Account maintained for each Participant shall
consist of (i) an Employer Nonforfeitable Contributions Account which shall
separately reflect (a) any Elective Contributions which are authorized by the
Participant and made by an Employer on behalf of such Participant, and (b) any
Qualified Non-Elective Contributions which are made by an Employer on behalf of
the Participant, and (c) the portion of any Profit Sharing Contributions which
are made by an Employer on behalf of the Participant and are designated (in
resolutions adopted by the Board and communicated to Participants) as allocable
to the Employer Nonforfeitable Contributions Account; and/or (ii) an Employer
Contributions Account which shall reflect (a) any Matching Contributions which
are made by an Employer on behalf of the Participant in order to match Elective
Contributions, and (b) any portion of the Profit Sharing Contributions which are
made by an Employer on behalf of such Participant and not specifically
designated (in resolutions adopted by the Board and communicated to
Participants) as allocable to the Employer Nonforfeitable Contributions Account.
1.19. Entry Date: "Entry Date" shall mean the date on which an Employee
satisfies the eligibility requirements of the Plan. For periods beginning prior
to July 1, 1998, Entry Dates shall be maintained in accordance with the
requirements of the Prior Plan.
1.20. Highly Compensated Employee: "Highly Compensated Employee" shall mean
such term as defined in Section 3.5 of the Plan.
1.21. Leased Employee: "Leased Employee" shall mean any person (i) who is
not a common law employee of the recipient Employer and (ii),who (pursuant to an
agreement between an Employer (or Affiliated Employer) and any other person
("Leasing Organization")) has performed services for an Employer (or for an
Employer and related persons determined in accordance with Section 414(n)(6) of
the Code) (a) on a substantially full time basis for a period of at least one
year (including, periods of service for the recipient Employer for which such
person would have been a Leased Employee but for the requirements of this
subclause (a)) and (b) such services are performed under the primary direction
or control of the recipient Employer (and for Plan Years beginning prior to
January 1, 1997, such services must be of a type historically performed by
employees in the business field of the recipient Employer).
I-5
<PAGE>
1.22. Matching Contribution: "Matching Contribution" means the amount, if
any, which an Employer contributes to the Trust Fund pursuant to applicable
provisions of the Plan in order to match Elective Contributions.
1.23. Net Income: "Net Income" shall mean, as to an Employer, its net
profit for any given year as determined by its accountant or accounting firm and
reflected on its profit and loss statement for such year, without reduction for
contributions under the Plan or payments of, or reserves for, federal and state
taxes based on income.
1.24. Non-Highly Compensated Employee: "Non-Highly Compensated Employee"
shall mean an Employee who is neither a Highly Compensated Employee nor a family
member thereof described in Section 414(q)(6) of the Code.
1.25. Participant: "Participant" shall mean an Employee who is
participating in the Plan during the Plan Year and, if consistent with the
context in which such term is used, a Participant of the Plan who is a former
Employee of an Employer.
1.26. Plan: "Plan" shall mean the Production Operators Thrift Plan, as
amended and restated effective as of July 1, 1998, herein set forth and all
subsequent amendments hereto. The Plan is hereby designated as a profit sharing
plan for purposes of Sections 401, 402, 412 and 417 of the Code.
1.27. Plan Sponsor: "Plan Sponsor" shall mean Production Operators, Inc.
and any successor thereto which adopts and continues the Plan.
1.28. Plan Year: "Plan Year" shall mean, effective as of July 1, 1998, the
fiscal year of the Plan which shall end on the last day of December of each
calendar year. Prior to July 1, 1998, the Plan Year was a fiscal year that ended
on the last day of September of each calendar year.
1.29. Prior Plan: "Prior Plan" shall mean the "Production Operators, Inc.
Thrift Plan" as in effect prior to its amendment, restatement and continuation
under the form of this Plan, but subject to any transitional dates as set forth
in various sections of this Plan. The term "Prior Plan" shall also include any
other defined contribution plan described in Section 414(i) of the Code
(excluding any plan that is subject to the minimum funding standards of Section
412 of the Code or that is required to provide a qualified joint and survivor
annuity or a qualified preretirement survivor annuity described in Sections
401(a)(11) and 417 of the Code), which plan at all times relevant met the
requirements for qualification under Section 401(a) or 403(a) of the Code as in
effect on the date immediately prior to the date that such plan was completely
amended, restated and continued under the form of the Plan, without a gap or
lapse in coverage, time or effect of a qualified plan and exempt trust under
applicable provisions of the Code.
1.30. Prior Plan Account: "Prior Plan Account" shall mean, to the extent
applicable for each Participant, an account which reflects (1) the portion of
the Participant's accrued benefit derived from such Participant's contributions
and/or the Participant's accrued benefit derived from employer contributions
under the Prior Plan, and (ii) the appreciation or depreciation of the
I-6
<PAGE>
Trust Fund, and the income earned or loss incurred by the Trust Fund which is
allocated to the Prior Plan Account.
1.31. Prior Plan After-Tax Contribution: "Prior Plan After-Tax
Contribution" means a "Member Contribution" that was made to the Prior Plan and
allocated to the Participant's Member Contribution Account under the Prior Plan
with respect to a period beginning before January 1, 1990.
1.32. Prior Plan After-Tax Contributions Account: "Prior Plan After-Tax
Contributions Account" shall mean, to the extent applicable for each
Participant, an account which reflects the Participant's Prior Plan After-Tax
Contributions, and the appreciation or depreciation of the Trust Fund and the
income earned or loss incurred by the Trust Fund allocated to the Prior Plan
After-Tax Contributions Account.
1.33. Prior Plan Profit Sharing Contributions Account: "Prior Plan Profit
Sharing Contributions Account" shall mean, to the extent applicable for each
Participant, an account which reflects amounts that were transferred to the
Prior Plan from the Production Operators, Inc. Profit Sharing Plan, and the
appreciation or depreciation of the Trust Fund and the income earned or loss
incurred by the Trust Fund allocated to the Prior Plan Profit Sharing
Contributions Account.
1.34. Prior Plan Rollover Contributions: "Prior Plan Rollover Contribution"
shall mean an amount, if any, that the Participant contributed to the Prior Plan
as a rollover contribution in accordance with Section 402(c), 402(e) or
408(d)(3) of the Code.
1.35. Prior Plan Rollover Contributions Account: "Prior Plan Rollover
Contributions Account" shall mean, to the extent applicable for each
Participant, an account which reflects the Participant's Prior Plan Rollover
Contributions and the appreciation or depreciation of the Trust Fund and the
income earned or loss incurred by the Trust Fund allocated to the Prior Plan
Rollover Contributions Account.
1.36. Profit Sharing Contribution: "Profit Sharing Contribution" means the
amount, if any, which an Employer contributes to the Trust Fund pursuant to
applicable provisions of the Plan.
1.37. Qualified Non-Elective Contribution: "Qualified Non-Elective
Contribution" means the amount, if any, which an Employer contributes to the
Trust Fund on behalf of the Non-Highly Compensated Employees who are
Participants in order to satisfy the actual deferral percentage test and/or the
actual contribution percentage test under Section 3.4.
1.38. Retired Participant: "Retired Participant" shall mean a person who
was at one time a Participant and who has retired in accordance with applicable
provisions of the Plan.
1.39. Rollover Account: "Rollover Account" shall mean, to the extent
applicable for a Participant, the account established to hold a Participant's
Rollover Contribution to the Plan, which account shall reflect the amount of the
Rollover Contribution and the appreciation or depreciation and income or loss
incurred by the Trust Fund allocated to the Rollover Account.
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<PAGE>
1.40. Rollover Contribution: "Rollover Contribution" shall mean an amount
(i) which the Committee determines may be deposited in the Trust Fund in
accordance with Section(s) 402(c), 402(e) or 408(d)(3) of the Code and the
regulations issued thereunder without endangering the qualification and
exemption of the Plan and the Trust under Sections 401(a) and 501(a) of the
Code, respectively, and (ii) which is contributed by a Participant to his
Rollover Account or received in a "direct rollover" (as described in Section
401(a)(31) of the Code) that is made to the Plan.
1.41. Telephonic Procedures: "Telephonic Procedures" shall mean the
procedures established by the Committee and described in Section 4.10(b),
pursuant to which a Participant may effect contribution and investment changes
by telephone.
1.42. Total and Permanent Disability: "Total and Permanent Disability"
shall mean a mental or physical disability which entitles the Participant to
disability benefits under the Federal Social Security Act, as amended, as being
totally disabled.
1.43. Transferred: "Transferred" as used with respect to an Employee and
"Transfer of an Employee" shall mean the termination of employment with one
Employer and the contemporaneous commencement of employment with another
Employer.
1.44. Trust: "Trust" shall mean the trust estate created under the Plan.
1.45. Trustee: "Trustee" shall mean the trustee or trustees qualified and
acting hereunder or any successor or successors appointed by the Board.
1.46. Trust Fund: "Trust Fund" shall mean the cash, bonds, stock and other
assets or liabilities held by the Trustee under the terms of the Trust.
1.47. Valuation Date: "Valuation Date" shall mean the date or dates upon
which a Participant's Account may be valued in accordance with Sections 4.4 or
4.5, as applicable.
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<PAGE>
ARTICLE II.
EMPLOYEES ELIGIBLE TO PARTICIPATE
2.1. Eligibility Requirements: Subject to compliance with applicable
provisions of Section 3.2, every Employee who was a participant in a Prior Plan
on the date immediately prior to the date such Prior Plan was amended, restated
and continued under the form of the Plan, shall be deemed to be a Participant
hereunder as of the date such Prior Plan was amended, restated and continued
under the form of the Plan. Every other Employee shall be eligible to
participate in the Plan as of the Entry Date coincident with or next following
the later of (i) the effective date of the adoption of the Plan by his Employer,
or (ii) the date that the Employee completes one hour of Active Service.
In addition, pursuant to uniform and nondiscriminatory rules established
by the Committee with the consent or approval of the Board, the Committee may
vote to allow Employees (including Employees who would otherwise be excluded
because they are not working in covered employment) to enter the Plan as
Participants on any date which would not otherwise be permitted under the terms
of the Plan. Any such decision shall be evidenced by formal minutes reflecting
such action of the Committee or by a unanimous written consent of the members of
the Committee and shall be appropriately communicated to the affected
Participants, and must be approved or ratified by the Board, unless pursuant to
the rules described in the preceding sentence, approval or ratification by the
Board is not required.
If an individual who satisfies the requirements for participation in the
Plan separates from service of an Employer, but subsequently returns to active
employment with an Employer prior to incurring a period of five (or more)
consecutive one year periods of severance for eligibility, such person shall
become a Participant on the later of (i) the Entry Date on which such person
would otherwise initially be entitled to participate in the Plan or (ii) the
date he ended the above described period of separation from service. Upon an
individual's return to employment, (i) an Employee who had a vested and
nonforfeitable right to any portion of any amount credited to his Employer
Account at the time of his termination of employment and who incurred a period
of five (or more) consecutive one year periods of severance, or (ii) an Employee
Who had no vested and nonforfeitable right to any amount credited to his
Employer Account at the time of his termination of employment and who has
incurred a period of five (or more) consecutive one year periods of severance,
which aggregate period is less than the aggregate number of years of Active
Service for eligibility (whether or not consecutive) completed prior to such
period, shall be eligible to participate in the Plan immediately as of his
return to the employ of an Employer; provided, however, this sentence shall not
apply in the case of an Employee who completes at least one hour of service
under the Plan or Prior Plan on or after the Plan Year commencing after
December 31, 1984 if the Employee's prior period of Active Service would have
been disregarded under applicable provisions of the Plan or Prior Plan as of the
date immediately prior to the first day of the Plan Year beginning after
December 31, 1984. Except with respect to those situations specifically
described in the preceding provisions of this paragraph, upon an individual's
return to covered employment, he wi11 be treated as a new Employee for
eligibility purposes.
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<PAGE>
Except as otherwise provided above, Employees who are included in a unit of
Employees covered by an agreement which the U.S. Secretary of Labor finds to be
a collective bargaining by an agreement between an Employees' representative and
an Employer shall be excluded from participation in the Plan if (i) there is
evidence that retirement benefits were the subject of good faith bargaining,
between the Employees' representative and an Employer and (ii) the agreement
does not require an Employer to include such Employees in this Plan. For
purposes of the preceding sentence the term "Employees' representative" shall
not include any organization more than one-half of the members of which are
Employees who are owners, officers or executives of an Employer.
Notwithstanding any other provision of the Plan to the contrary, but
subject to the provisions of this paragraph, (i) any individual who was
considered by an Employer to be an independent contractor, but who is later
reclassified as a common-law Employee (excluding any Leased Employee described
in clause (ii) below) of an Employer with respect to any portion of the period
in which such individual was paid by an Employer as an independent contractor,
or (ii) any Leased Employee, shall be excluded from participation in the Plan
with respect to the period in which any individual described in clause (i) was
considered to be an independent contractor, or the period in which any
individual described in clause (ii) is a Leased Employee. The immediately
preceding sentence shall fully apply only with respect to Plan Years (or
portions thereof) in which none of the individuals described in such sentence is
required to be covered in order to ensure that the Plan is operated in
compliance with the requirements of Sections 401(a) and 410(b) of the Code. In
the event that any individual who is included in the class of reclassified
independent contractors described in clause (i) of the first sentence of this
paragraph, or who is a Leased Employee described in clause (ii) of the first
sentence of this paragraph, must be covered with respect to a Plan Year (or
portion thereof) in order to ensure that the requirements of the immediately
preceding sentence are met, starting with the class of reclassified independent
contractors, only such number of individuals within the class which includes
the individual (beginning with the individuals with the lowest Considered
Compensation determined on an annualized basis) as is necessary to ensure
compliance with the requirements of the immediately preceding, sentence shall be
covered in the Plan only for the Plan Year (or portion thereof) that is
necessary to ensure that the requirements of the immediately preceding sentence
are met.
2.2. Frozen Participation: While service with an Affiliated Employer which
is not an Employer is counted for purposes of determining Active Service, no
person shall authorize Elective Contributions to the Plan except for the
period(s) of service that he is actually employed in covered employment with and
paid by an Employer. If an Employee is (i) transferred from an Employer to an
Affiliated Employer which is not an Employer or (ii) otherwise ceases to be
employed in covered employment with and paid by an Employer (but does not have a
severance from service), his Account shall thereupon be frozen: he shall not be
permitted to authorize contribution to the Plan, and his Account shall not share
in the allocation of any Employer Contribution (except for the period(s) of
service that he is actually employed in covered employment with and paid by an
Employer), but his Account will continue to share in any appreciation or
depreciation of the Trust Fund and in any income or losses incurred by the
Trust Fund during the period of time that he employed by an Affiliated Employer
which is not an
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<PAGE>
Employer or that he is otherwise excluded from covered employment; provided,
however, he shall continue to accrue Active Service.
2.3. Active Service: For eligibility, vesting and all other pertinent
purposes of the Plan, "Active Service" shall mean, subject to the transition
rules set out in the last paragraph of this Section, as to each Employee, the
number of whole years and complete months of the Employee's period(s) of service
with any Employer or Affiliated Employer, whether or not such period(s) of
service were completed consecutively. Except as otherwise provided below, in
determining the number of whole years and complete months of an Employee's
period of service, non-successive periods of service shall be aggregated, and
less than whole year periods of service (whether or not consecutive) shall be
aggregated on the basis that twelve complete months of service (thirty days
shall be deemed to be a complete month in the case of aggregation of fractional
months) equal a whole year of Active Service.
If an Employee severs from service by reason of a quit, discharge, or
retirement, and the Employee then performs an hour of service within twelve
months of the severance from service date, such Employee's period of severance
shall be deemed to have been a period of service. If an Employee severs from
service by reason of a quit, discharge, or retirement during an absence from
service for any reason other than a quit, discharge, or retirement, and then
performs an hour of service within twelve months of the date on which the
Employee was first absent from service, such Employee's period of severance
shall be deemed to have been a period of service.
Periods of severance taken into account as periods of service shall not be
taken into account for purposes of determining whether an Employee is in the
employ of the Employer for purposes of allocating Employer contributions in
accordance with Section 4.2.
For purposes of the Plan, all service with any Affiliated Employer shall
be deemed to be service with the Employer. Furthermore, all covered service and
contiguous noncovered service with an Employer which has adopted the Plan but
which is not an Affiliated Employer shall be deemed to be service with the
Employer.
In the event that an Employer assumes and maintains the plan of a
predecessor employer described in Section 414(a)(2) of the Code, Active Service
for such predecessor employer shall be treated as Active Service for the
Employer in accordance with the provisions of Section 414(a)(1) of the Code.
However, if the Employer does not maintain the plan of a predecessor employer,
the Plan shall treat any Employee's service with the predecessor employer as
service with the Employer only to the extent prescribed in Section 414(a)(2) of
the Code.
In addition, pursuant to uniform and nondiscriminatory, rules established
by the Committee with the consent or approval of the Board, the Committee may
vote to allow Employees to be credited with Active Service for eligibility or
vesting with respect to periods of service which would otherwise be disregarded
under the Plan. Any such decision shall be evidenced by formal minutes
reflecting such action of the Committee, or by unanimous written consent of the
members of the Committee, and must be approved or ratified by the Board, unless
pursuant to the rules described in the preceding sentence, approval or
ratification by the Board
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<PAGE>
is not required. Any such decision shall be appropriately communicated to the
affected Participants.
Notwithstanding any other provision hereof, any period of service occurring
prior to the effective date of the adoption of the Plan by an Employer shall be
taken into account for purposes of determining vesting credit hereunder. Except
as otherwise provided in Section 2.1, in the case of an Employee who has
incurred a one year period of severance, the period of service completed before
such period of severance shall not be taken into account until the Employee has
completed a one year period of service after his return to service. With respect
to Plan Years beginning after December 31, 1984, in the case of an Employee who
completes at least one hour of service under the Plan or any prior Plan on or
after the beginning of any Plan Year commencing after December 31, 1984, (i) if
he has incurred five (or more) consecutive periods of severance, the period of
service completed after such period of severance shall not be taken into account
for purposes of determining the Participant's vested percentage in amounts
credited to his Employer Contributions Account prior to such five (or more)
consecutive periods of severance, and (ii) if he does not have any vested right
under the Plan to Employer Contributions credited to his Account at the time he
incurs a period of five (or more) consecutive one year periods of severance, the
period of service completed by such Employee before such period of severance
shall not be taken into account for any reason when the period of five (or more)
consecutive periods of severance equals or exceeds his period of service,
whether or not consecutive, completed before such period of severance; provided,
however, in the case of an Employee who completes at least one hour of service
under the Plan on or after the first day of the Plan Year commencing after
December 31, 1984, any period of service which would have been disregarded under
the Plan or any Prior Plan, as of the date immediately prior to the first day of
any Plan Year after December 31, 1984, shall not be recognized under the Plan.
In computing the aggregate period of service prior to any such period of
severance, any periods of service which may be disregarded by reason of any
prior periods of severance shall be disregarded.
Subject to the transition rules set out in the last paragraph of this
Section, a "period of service" shall mean a period of service with any Employer
or Affiliated Employer commencing on the Employee's employment commencement date
or reemployment commencement date, whichever is applicable, and ending on the
severance from service date. "Employment commencement date" shall mean the date
on which the Employee first performs an hour of service initially. "Reemployment
commencement date" shall mean the date on which the Employee first performs an
hour of service following a period of severance not deemed to have been a period
of service.
A "period of severance" shall mean the period of time commencing on the
severance from service date and ending on the date on which the Employee again
performs an hour of service. A "one year period of severance" shall mean a 12-
consecutive-month period beginning on the severance from service date and ending
on the first anniversary of such date, if the Employee does not perform an hour
of service during such 12-consecutive-month period; provided, however, solely
for purposes of determining whether an Employee has incurred a one year
period of severance, any Employee who is absent from employment with the
Employer or Affiliated Employer for a period of absence which (1) begins after
the first day of the Plan Year
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<PAGE>
beginning after December 31, 1984, and which is incurred by reason of (i) the
pregnancy of the Employee, (ii) the birth of a child of the Employee, (iii) the
placement of a child with the Employee in connection with adoption of such child
by the Employee or (iv) for purposes of caring for such child for a period
beginning immediately following such birth or placement, or (2) begins on or
after August 5, 1993, and to which the Employee is entitled under the Family and
Medical Leave Act of 1993), shall not be charged with a period of severance
with respect to (a) the 12-consecutive-month period beginning on the first day
of such absence or (b) the 12-consecutive-month period commencing on the first
anniversary of the first day of the period described in clause (a) if the period
in clause (a) is included in the Employee's period of service. The applicable
12-consecutive-month period described in clause (a) or (b) shall be subtracted
from any period of severance which would otherwise include the period described
in clause (a) or (b), as applicable.
An Employee's "severance from service date" shall occur on the earlier of
(i) the date on which the Employee quits, retires, is discharged, or dies; or
(ii) the first anniversary of the first day of a period in which the Employee
remains absent from service (with or without pay) for any reason other than a
quit, retirement, discharge, or death, such as vacation, holiday, sickness,
disability, leave of absence, or layoff. In addition, any period of absence
which is not described in the preceding sentence, which (1) begins on or after
the first day of the Plan Year beginning after December 31, 1984, and which is
incurred by reason of (i) the pregnancy of the Employee, (ii) the birth of a
child of the Employee, (iii) the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for purposes
of caring, for such child for a period beginning immediately following such
birth or placement, or (2) begins on or after August 5, 1993, and to which the
Employee is entitled under Family and Medical Leave Act of 1993, shall be deemed
to be a period of absence described in clause (ii) of the preceding sentence.
An "hour of service" shall mean an hour for which an Employee is paid, or
entitled to payment, for the performance of duties for any Employer or
Affiliated Employer. "Covered service" shall mean service within a job
classification or class of employees covered under the Plan. "Contiguous
noncovered service" shall mean service other than covered service, which
precedes or follows covered service, if no quit, discharge, or retirement occurs
between such covered service and such other service.
Notwithstanding any other provision of the Plan to the contrary, the
provisions of this paragraph shall govern the method for determining and
crediting Active Service with respect to any Employee covered under any Prior
Plan. For purposes of determining the Active Service of a Participant who was a
participant in and had an interest under a Prior Plan as of the date immediately
prior to the date that the Prior Plan was amended and continued under the form
of the Plan, such Participant shall be credited with Active Service (for his
period(s) of service prior to the date that the Prior Plan was amended and
continued under the form of the Plan) equal to the service determined and
credited to such Participant under applicable provisions of the Prior Plan as of
the date immediately prior to the date that the Prior Plan was amended and
continued under the form of the Plan. For purposes of determining such
Participant's Active Service for the period(s) of service continuing or
commencing on or after the date that the Prior Plan was amended and continued
under the form of the Plan, such Participant's Active Service shall be
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<PAGE>
determined using the methods set out under applicable provisions of the Plan,
unless the Plan is retroactively effective as of a date which occurs within a
computation period of a Prior Plan (under which service credit was determined
with reference to computation periods and hours of service credited thereto). In
such event, Active Service shall be determined and credited with respect to such
computation period under applicable provisions of the Prior Plan if necessary
to ensure that a Participant does not lose service credit otherwise recognizable
under the Prior Plan with respect to such computation period, and then Active
Service of any such Participant for period(s) of service continuing or
commencing on or after the end of such computation period shall be determined
using the methods set out under applicable provisions of the Plan.
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<PAGE>
ARTICLE III.
CONTRIBUTIONS
3.1. Employee Voluntary Contributions: Employee Voluntary Contributions
(defined below) on the part of the Participants shall be permitted from time to
time as determined by the Board. "Employee Voluntary Contributions" shall mean
after-tax amounts contributed to the Plan by a Participant which are not
required as a condition of employment, as a condition of participation in the
Plan or as a condition to obtaining benefits (or additional benefits) under the
Plan attributable to Employer Contributions. Employee Voluntary Contributions
shall not be deductible or excludible from the Participant's gross income.
In the event Employee Voluntary Contributions are permitted, the
opportunity to contribute shall be announced and made available to all
Participants upon an equal basis in the manner hereinafter set out. Once
Employee Voluntary Contributions have been permitted, if the Committee
determines to stop Employee Voluntary Contributions, an announcement shall be
made to all Employees and the Contributions to the effective date of the
announcement shall be retained in the Plan subject to the terms and provisions
of the Plan including the right of withdrawal by the Participants under
Section 6.8.
From and after the date, if any, established by the Board, or the Entry
Date or other date with respect to which a Participant is eligible to
participate, if later, each Participant may execute a written agreement in a
form satisfactory to the Committee whereunder the Participant shall agree,
subject to any necessary adjustments pursuant to Sections 3.4 and 4.3, (i) to a
reduction of not less than one percent (1%) nor more than ten percent (10%) of
his Considered Compensation attributable to the applicable pay periods, and (ii)
to contribute the amount of the authorized reduction to the Plan as an Employee
Voluntary Contribution. Any such reduction authorized by the Participant within
the limits set forth in the previous sentence may be either a percentage or a
dollar amount of Considered Compensation each applicable payroll period.
All Employee Voluntary Contributions shall be made by periodic payroll
deductions on such uniform basis as shall be determined from time to time by the
Committee. An Employer shall deposit each Participant's Employee Voluntary
Contribution with the Trustee within thirty (30) days after its deduction. The
Committee shall credit the Participant's Employee Voluntary Contribution to his
Employee Account. A Participant shall be allowed to increase, decrease, or cease
his Voluntary Employee Contributions at any time, with any such change being
effective as of the first day of the first pay period thereafter that is
administratively feasible.
3.2. Compensation Deferral Agreements for Elective Contributions:
(a) Compensation Deferral Agreements: Subject to applicable
conditions and limitations of the Plan, at such time or times as may be
permitted by the Board, and in such manner and amounts as shall be
consistent with the provisions of this Section, in lieu of receipt of such
amounts in cash, Participants may authorize an Employer to make Elective
Contributions to the Plan on their behalf. Elective Contributions shall be
held, invested and distributed as provided under applicable provisions of
the Plan. Provided,
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<PAGE>
however, no Compensation Deferral Agreement (or any other deferral mechanism
that may be permitted under the Plan) may be adopted retroactively. In the event
Elective Contributions are permitted, the opportunity to authorize Elective
Contributions hereunder shall be announced and made available to all
Participants upon an equal basis. Once Elective Contributions have been
permitted, if the Committee determines to stop Elective Contributions, an
announcement shall be made to all Employees and the Elective Contributions to
the effective date of the announcement shall be retained in the Plan subject to
the other terms and provisions of the Plan including, any right of withdrawal
under Section 6.8.
From and after the date, if any, established by the Board pursuant to the
preceding paragraph of this Section, or the Entry Date or other date with
respect to which a Participant is eligible to participate, if later, each
Participant may execute a Compensation Deferral Agreement in a form satisfactory
to the Committee whereunder the Participant shall agree, subject to any
necessary adjustments pursuant to this Section and Sections 3.4 and 4.3, (i)
to a reduction of not less than one percent (1%) nor more than fifteen percent
(15%) of his Considered Compensation (before such authorized reduction)
attributable to the applicable pay periods, and (ii) to have an Employer
contribute (as an Elective Contribution) to the Plan an amount equal to the
amount of the authorized reduction, which Elective Contribution shall be
allocated and credited to the Participant's Employer Nonforfeitable
Contributions Account. The election shall separately specify the reduction, if
any, applicable to any Considered Compensation to be received on a non-periodic
basis, or on the basis of periods no more frequent than calendar quarters. Any
reduction authorized by the Participant within the limits set forth in the
previous two sentences may be either a percentage or a dollar amount of
Considered Compensation each applicable payroll period. The term "payroll
period" shall mean the regular pay periods at the end of which compensation is
paid, whether that compensation is a regular or a non-periodic payment.
Reductions authorized under Compensation Deferral Agreements shall be
irrevocable, except that Elective Contributions may be discontinued, increased
or decreased by a Participant at any time, with any such change being effective
as of the first day of the first pay period thereafter that is administratively
feasible. Under special circumstances, pursuant to uniformly applied
nondiscriminatory rules established by the Committee, the Committee may permit
different or additional effective dates for increases or decreases of Elective
Contributions authorized under Compensation Deferral Agreements, or may waive
the otherwise applicable notice requirement, in order to prevent hardship to any
Participant, provided that the waiver is not contrary to the best interests of
the other Participants.
(b) Special Compensation Deferral Agreements: Notwithstanding the
preceding subsection, unless the Committee otherwise determines in its sole
discretion, prior to the first day of the last month of the Plan Year, each
Participant may execute a Compensation Deferral Agreement (in such form as is
satisfactory to the Committee and hereinafter referred to as a "Special
Compensation Deferral Agreement") providing for an increase or a reduction of
Elective Contributions with respect to any part or all of the
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<PAGE>
Participant's Considered Compensation for any part or all of the last month of
the Plan Year; provided, however, (i) that such Special Compensation Deferral
Agreement shall be deemed to modify and override any prior Compensation Deferral
Agreement during the period covered by the Special Compensation Deferral
Agreement, (ii) that the deferrals authorized under the Special Compensation
Deferral Agreement may be increased, reduced or revoked only if permitted by the
Committee in accordance with uniformly applied nondiscriminatory rules which may
be established by the Committee, and (iii) that the Special Compensation
Deferral Agreement shall automatically terminate as of the earlier of such time
(a) it is revoked by the Participant in accordance with uniformly applied
nondiscriminatory rules established by the Committee or (b) the last day of the
period with respect to which authorized reductions thereunder are contributed to
the Plan. All deferrals required as a result of the execution of a Special
Compensation Deferral Agreement shall be subject to all applicable terms,
conditions, and limitations of the Plan. As of the date that the Special
Compensation Deferral Agreement ceases to be operative, the Participant's then
otherwise operative Compensation Deferral Agreement shall govern deferrals to be
made on behalf of the Participant.
(c) Dollar Limit On Elective Deferrals: Notwithstanding any other provision
of the Plan to the contrary, with respect to any taxable year of any
Participant beginning after December 31, 1986, deferrals under the Plan in
lieu of cash Considered Compensation, pursuant to any Compensation Deferral
Agreement and Special Compensation Deferral Agreement, when added to (i) any
employer contribution under any other cash or deferred arrangement (described in
Section 401(k) of the Code) to the extent not includible in gross income for
the taxable year under Section 402(a)(8) of the Code, (ii) any employer
contribution (to a simplified pension plan under a salary reduction agreement)
to the extent not includible in gross income for the taxable year under Section
402(h)(1)(B) of the Code, (iii) any employer contribution to purchase an annuity
contract (described in Section 403(b) of the Code) under a salary reduction
agreement (within the meaning) of Section 3121(a)(5)(D) of the Code) to the
extent not includible in gross income for the taxable year under Section 403(b)
of the Code, and (iv) any employer contribution (pursuant to any election to
defer under any eligible deferred compensation plan) to the extent not
includible in gross income under Section 457 of the Code, are limited to $7,000
(as adjusted, as may be determined by the Commissioner of Internal Revenue, at
the same time and in the same manner as prescribed in Section 415(d) of the
Code). In addition, without limiting the scope of the immediately preceding
sentence, with respect to any Plan Year or taxable year of any Participant which
begins after December 31, 1987, Elective Contributions and/or any similar
elective deferrals (described in Section 402(g)(3) of the Code) to the Plan
and/or any other qualified plan, contract or arrangement, which is described
in the immediately preceding sentence and maintained by an Employer and/or any
Affiliated Employer, shall not in the aggregate exceed the dollar limitation (as
adjusted) of the immediately preceding sentence and Section 402(g) of the Code
as in effect at the beginning of such taxable year.
(d) Remedying Excess Deferrals: To the extent that a Participant's elective
deferrals, authorized pursuant to the Sections of the Code referenced in the
immediately preceding subsection, exceed the applicable limit for the applicable
year so that any
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<PAGE>
amount otherwise excludable from such Participant's gross income for federal
income tax purposes is includible in his gross income, then, not later than the
first March 1 following, the close of the taxable year of such excess deferral,
the Participant shall notify the Committee in writing of any portion of any such
excess deferrals which the Participant has elected to allocate to the Plan. Such
notice shall include the Participant's certified written claim for a specified
amount of excess deferrals for the preceding calendar year and shall be
accompanied by the Participant's certified written statement that if such
amounts are not distributed, such excess deferrals, when added to amounts
deferred under other plans or arrangements described in Sections 401(k), 408(k),
403(b) or 457 of the Code, exceeds the limit imposed under Section 402(g) of the
Code for the year in which the deferral occurred. In accordance with Section
1.402(g)-1(e)(2) of the income tax regulations, to the extent that the
Participant only has elective deferrals for the taxable year under the Plan and
any other plan or arrangement described in the previous sentence which is
maintained by the same Employer, such Employer may notify the Committee of any
excess deferrals made on behalf of the Participant.
Following actual receipt by the Committee of the notice described in the
immediately preceding paragraph, (notwithstanding any other provision of law or
the Plan relating to spousal consent), not later than the first April 15
immediately following such March 1 deadline for written notification of the
Committee, the Plan shall distribute to such Participant in a lump sum (in cash
or in kind) the amount of excess elective deferrals allocated to the Plan (and
any income allocable to such amount). Such distribution shall be made first by
distribution of nonmatched Elective Contributions, if any, allocated to the
Participant's Employer Nonforfeitable Contributions Account, and, if necessary,
next by distribution of Elective Contributions which were made on behalf of the
Participant and were matched by Matching Contributions. Subject to the
subsequent provisions of this paragraph, to the extent that such excess
deferrals are attributable to matched Elective Contributions (and any income
allocable thereto) which amounts are distributed to the Participant pursuant to
the preceding provisions of this Section, Matching Contributions (and any income
allocable thereto) will be appropriately reduced and such reduced Matching
Contributions (and any income allocable thereto) shall be applied as forfeitures
pursuant to Section 4.6. Such reduction shall be made first by reduction of
Matching Contributions allocated to the Participant's Employer Nonforfeitable
Contributions Account, and, if necessary, next by reduction of Matching
Contributions allocated to the Participant's Employer Contributions Account. The
provisions of this paragraph (which provide for reduction of Matching
Contributions made with respect to Elective Contributions which are distributed
hereunder) are intended to comply with the requirements of Sections 401(a),
401(k), 401(m) and 411 of the Code and regulations or other authority issued
thereunder by the appropriate governmental authority. To the extent that any
provision of this paragraph is inconsistent with the preceding sentence, such
provision shall be deemed to be inoperative and the plan shall be operated in a
manner that complies with the requirements of the immediately preceding
sentence.
Income or loss allocable to the portion of the Participant's Employer
Nonforfeitable Contributions Account that is attributable to excess elective
deferrals
III-4
<PAGE>
(described below) shall be income or loss for the taxable year allocable to the
portion of Participant's Employer Nonforfeitable Contributions Account that is
attributable to elective deferrals multiplied by a fraction, the numerator of
which is the Participant's excess elective deferrals for the year and the
denominator of which is the balance as of the end of such year of the portion of
the Participant's Employer Nonforfeitable Contributions Account that is
attributable to elective deferrals reduced by any gain and increased by any loss
allocable to such balance for the taxable year. In the event that a separate
subaccount is not maintained with respect to elective deferrals attributable to
Elective Contributions (and any income allocable thereto), the portion of an
Employer Nonforfeitable Contributions Account which is attributable to elective
deferrals is determined by multiplying the balance of the Participant's Employer
Nonforfeitable Contributions Account by a fraction, the numerator of which is an
Elective Contributions made to the Plan on behalf of the Participant and
allocated and credited to the Participant's Employer Nonforfeitable
Contributions Account less any permitted withdrawals, and the denominator of
which is the sum of all Employer Contributions made to the Plan on behalf of the
Participant and allocated and credited to the Participant's Employer
Nonforfeitable Contributions Account less any permitted withdrawals. Similar
rules apply with respect to determination of Matching Contributions allocated to
an Employer Contributions Account and any income allocable thereto. No income or
loss will be allocated for the gap period between the end of the taxable year to
the date of distribution for Plan Years beginning on or after January 1, 1992
and, with respect to Plan Years beginning before such date, income or loss shall
be allocated in accordance with the applicable income tax regulations and Plan
document as then in effect.
Notwithstanding the preceding provisions of this subsection, any
Participant who has excess elective deferrals for a taxable year may receive a
corrective distribution of such deferrals (and income attributable thereto)
during the same year if the Participant notifies the Committee of an excess
deferral, the correcting distribution is made after the date on which the Plan
received the excess deferral and the Plan designates and treats the distribution
as a distribution of an excess deferral. Any distribution described in the
immediately preceding sentence shall be made as soon as practicable, but absent
circumstances beyond the control of the Committee, not later than 60 days after
the first day of the month that occurs on or after the later of (i) the actual
receipt by Committee of the Participant's notification of an excess deferral or
(ii) the date that the Plan actually receives the excess elective deferral. The
income allocable to elective deferrals from the first day of the taxable year to
the date of the distribution shall be determined by using the method described
in the immediately preceding paragraph.
Notwithstanding any other provision of this Section to the contrary, with
respect to taxable years that began in 1987, the method employed by the Plan (of
such time) for computing the income allocable to excess deferrals for such
taxable year, shall supersede and override any inconsistent provisions of this
Section. Provided, however, the provisions of the immediately preceding
sentence shall not apply with respect to taxable years beginning after 1987.
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<PAGE>
Notwithstanding any other provision of this subsection to the contrary, the
amount of excess deferrals that may be distributed under this subsection shall
be reduced by any excess contributions over the ADP limit (described in Section
3.4) previously distributed or recharacterized with respect to a Participant for
the Plan Year beginning with or within such Participant's taxable year. In no
event shall any Participant receive from the Plan a corrective distribution for
the taxable year of an amount in excess of the Participant's total elective
deferrals under the Plan for the taxable year. Except as may be otherwise
required under Section 3.4, any excess deferral not timely distributed shall
remain in the Plan and shall be subject to otherwise applicable terms,
provisions, conditions and limitations thereof. In addition, any excess elective
deferrals shall be treated as annual additions under Section 4.3. In addition,
any excess deferrals which are timely distributed under the preceding provisions
of this subsection shall not be treated as an annual addition under Section 4.3.
Also, excess deferrals by Non-Highly Compensated Employees shall not be taken
into account under the actual deferral percentage test of Section 3.4 to the
extent such excess deferrals are made under the Plan or any other qualified plan
of an Employer or any Affiliated Employer. A distribution of elective deferrals
(and allocable income thereon) under this subsection shall not be considered as
a distribution for purposes of compliance with the minimum distribution
provisions of Section 6.6.
3.3. Rollover Contributions: Rollover Contributions on the part of the
Employees shall be permitted from time to time as determined by the Committee.
In the event Rollover Contributions are permitted, the opportunity to contribute
shall be made available to Employees upon a nondiscriminatory basis. An Employee
who is permitted to make a Rollover Contribution shall not be entitled to
authorize Elective Contributions to the Plan or share in the allocation of any
Employer Contributions unless and until the Employee meets the requirements of
Sections 2.1, 3.2 and 4.2 of the Plan. Any such Rollover Contribution made by an
Employee shall be held in a separate Rollover Account for such Employee which
will share in any income or losses and/or appreciation or depreciation of the
Trust Fund. Rollover Contributions shall not be considered Employee Voluntary
Contributions under this Plan and shall have no effect upon any limitation under
the Plan based upon a Participant's Contributions.
3.4. Employer Contributions:
(a) Elective Contributions: Subject to the applicable limitations of
the Plan set forth below, each periodic pay period an Employer shall
contribute to the Trust Fund (without regard to its Net Income or
accumulated earnings and profits) Elective Contributions for each
Participant in an amount equal to the amount by which the Participant's
Considered Compensation was reduced pursuant to a Compensation Deferral
Agreement (and, if applicable, Special Compensation Deferral Agreement)
executed by the Participant pursuant to Section 3.2.
(b) Matching Contributions: Subject to the applicable limitations of
the Plan set forth below, in addition to the Elective Contributions
described in the preceding subparagraph, with respect to each month of the
Plan Year (or such other period as may be prescribed by the Board), an
Employer may, in the discretion of the Board, contribute
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<PAGE>
to the Trust Fund (without regard to its Net Income or accumulated earnings
and profits) Matching Contributions on behalf of each eligible Participant
in an amount equal to the lesser of fifty percent (50%) of the amount by
which the Participant's Considered Compensation was reduced for the month
(or such other period as may be prescribed by the Board) pursuant to a
Compensation Deferral Agreement (and, if applicable, Special Compensation
Deferral Agreement) under Section 3.2, not to exceed the "maximum dollar
amount" as defined in the immediately succeeding sentence for the month (or
such other period as may be prescribed by the Board), or such other
percentage or dollar amount as may be established by the Board pursuant to
uniformly applied nondiscriminatory rules. The "maximum dollar amount"
shall be the first $3,000 of Elective Contributions made on behalf of the
Participant during the applicable calendar year. Any decision to provide a
Matching Contribution for any Plan Year (or such other period as may be
prescribed by the Board) or any increase or decrease in the percentage or
dollar amount in effect from time to time, shall be communicated to all
eligible Employees at least seven (7) days prior to the date on which
eligible Employees are required to inform the Committee of an increase or
decrease in their Elective Contributions under a Compensation Deferral
Agreement (and, if applicable, a Special Compensation Deferral Agreement)
pursuant to Section 3.2.
(c) Profit Sharing Contributions: Subject to applicable limitations of
the Plan set forth below, with respect to each Plan Year, an Employer may
contribute to the Trust Fund (from its Net Income or accumulated earnings
and profits) Profit Sharing Contributions in such amount as shall be
determined by the Board in its discretion. Profit-Sharing Contributions, if
any, shall be made on behalf of each Participant who remains in the employ
of an Employer on the last day of the Plan Year, notwithstanding the fact
that the Participant did not elect to reduce his Considered Compensation
pursuant to a Compensation Deferral Agreement (and, if applicable, a
Special Compensation Deferral Agreement) under Section 3.2 at any time
during such Plan Year. For purposes of the preceding sentence, any
Participant whose employment terminates on account of retirement, Total and
Permanent Disability or death, shall be deemed to be in the employ of an
Employer on the last day of the Plan Year in which such termination of
employment occurs.
In addition, notwithstanding any other provision of the Plan to the
contrary, (i) any Participant whose employment terminates prior to the last
day of the Plan Year or who would otherwise not be treated as employed in
covered employment on the last day of the Plan Year, shall, nevertheless,
be treated as employed on the last day of the Plan Year to the extent
necessary to ensure compliance with Section 401(a)(4), Section 401(a)(26)
and/or Section 410(b) of the Code; and (ii) any Participant who is, on the
last day of the Plan Year (or applicable shorter period), on a leave of
absence to which such Participant is entitled under the Family and Medical
Leave Act of 1993 ("FMLA") shall be deemed to be in the employ of the
Employer on such last day unless final regulations issued under the
FMLA do not require such treatment for this purpose.
(d) Qualified Non-Elective Contributions: At the election of the
Board, in lieu of distributing or recharacterizing excess Employer
Contributions to Highly
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Compensated Employees in order to satisfy the actual deferral percentage
test or the actual contribution percentage test, as described below in this
Section, an Employer may make Qualified Non-Elective Contributions on
behalf of Non-Highly Compensated Employees who are Participants in such
amounts as are sufficient to satisfy the actual deferral percentage test or
the actual contribution percentage test, as applicable. Qualified Non-
Elective Contributions, if any, shall be made on behalf of each Participant
who (i) is a Non-Highly Compensated Employee and (ii) remains in the employ
of an Employer as of the last day of the Plan Year. For purposes of the
preceding sentence, any Participant whose employment terminates on account
of retirement, Total and Permanent Disability, or death, shall be deemed to
be in the employ of an Employer on the last day of the Plan Year in which
the termination of employment occurred.
In addition, notwithstanding any other provision of the Plan to the
contrary, any Participant whose employment terminates prior to the last day
of the Plan Year or who would otherwise not be treated as employed in
covered employment on the last day of the Plan Year, shall, nevertheless,
be treated as employed on the last day of the Plan Year to the extent
necessary to ensure compliance with Section 401(a)(4), Section 401(a)(26)
and/or Section 410(b) of the Code; and (ii) any Participant who is, on the
last day of the Plan Year (or applicable shorter period), on a leave of
absence to which such Participant is entitled under the Family and Medical
Leave Act of 1993 ("FMLA") shall be deemed to be in the employ of the
Employer on such last day unless final regulations issued under the FMLA do
not require such treatment for this purpose.
(e) Restoration of Forfeited Benefits: Not later than the last day of
the Plan Year in which occurs any repayment described in Section 4.6, an
Employer shall contribute (without regard to its Net Income or accumulated
earnings and profits) an amount which, when added to previously unapplied
and unallocated forfeitures, shall be equal to the amount previously
forfeited under applicable provisions of the Plan by any Participant
entitled to have his Account restored in accordance with Section 4.6. In
addition, as soon as administratively practicable following receipt of a
claim under circumstances described in Section 6.7, an Employer
shall contribute (without regard to its Net Income or accumulated earnings
and profits) an amount equal to the value of the forfeited benefits
described in and payable under Section 6.7.
(f) Top-Heavy Minimum Contribution: In the event that the Plan is a
Top-Heavy Plan described in Article VII with respect to any Plan Year, an
Employer shall contribute (without regard to its Net Income or accumulated
earnings and profits) any amount necessary to ensure that Participants who
are entitled to a minimum allocation pursuant to Section 7.3(c) in fact
receive such allocation.
(g) Contribution Limits: No Contribution by an Employer shall exceed a
sum equal to fifteen percent (15%) of the total compensation paid or
accrued during its taxable year ending with or within the Plan Year to all
Participants.
No Contribution shall be made to the Plan under circumstances which
would result in any violation of the limitations of Section 3.2, this
Section 3.4 or Section 4.3 of
III-8
<PAGE>
the Plan. An Employer shall maintain such records as may be necessary to
demonstrate compliance with the nondiscrimination tests set forth below in this
Section.
(h) Actual Deferral Percentage Test: The actual deferral percentage
("ADP") for all eligible Highly Compensated Employees shall not exceed the
greater of:
(i) the actual deferral percentage for the group of all eligible
Non-highly Compensated Employees multiplied by 1.25, or
(ii) the actual deferral percentage of the group of all eligible
Non-highly Compensated Employees multiplied by 2.0; provided,
however, that the actual deferral percentage for the group of eligible
Highly Compensated Employees may not exceed the actual deferral
percentage of the group of all eligible Non-Highly Compensated
Employees by more than two percentage points (2%).
Unless otherwise elected by the Employer, the relationship of the ADP for all
eligible Highly Compensated Employees for a specific Plan Year shall be
determined with respect to the ADP for all eligible Non-Highly Compensated
Employees for the Plan Year preceding such Plan Year. For Plan Years commencing
after December 31, 1986, the provisions of Section 401(k)(3) of the Code and
Section 1.401(k)-l(b) of the income tax regulations are hereby incorporated into
the Plan for all purposes. In addition, for Plan Years beginning after December
31, 1988, if (i) any Highly Compensated Employee is eligible to authorize
Elective Contributions under the Plan and to have Matching Contributions
allocated with respect to an Elective Contributions or (ii) such Highly
Compensated Employee is eligible to make elective deferrals (described in
Section 402(g)(3) of the Code) under any other cash or deferred arrangement
(described in Section 401(k) of the Code) and/or to make employee contributions
(described in Section 401(m) of the Code) or to receive matching contributions
(described in Section 401(m)(4)(A) of the Code) under any other qualified plan
of an Employer and/or any Affiliated Employer regardless of whether such plan
contains a cash or deferred arrangement, the disparities between the actual
deferral percentages of the respective groups of eligible Highly Compensated
Employees and Non-Highly Compensated Employees shall be reduced as described in
Section 1.401(m)-2 the income tax regulations, and the provisions of
subsection (k) below.
Subject to the provisions of the Plan set forth below, the actual deferral
percentage for a specified group of eligible Employees for a Plan Year shall be
the average of the actual deferral ratios (calculated separately for each
Employee in such group) of the sum of Elective Contributions, Qualified Non-
Elective Contributions, if any, and Profit Sharing Contributions, if any,
actually paid over to the Trust Fund on behalf of each such Employee for such
Plan Year, and allocated to the Employee's Employer Nonforfeitable
Contributions Account for such Plan Year, to the Employee's Compensation
(described in the immediately succeeding sentence) for the Plan Year. For the
purposes of performing the ADP test, Compensation shall mean all remuneration:
III-9
<PAGE>
(i) that is (a) received during the Plan Year by the eligible
Employee from an Employer and is required to be reported as wages on the
eligible Employee's form W-2 (or its successor) for federal income tax
withholding purposes (or, in the case of a nonresident alien employee, is
the type of income that would be required to be reported as wages on form
W-2 if such employee were subject to such reporting requirements), but
determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in
Section 3401(a)(2) of the Code), plus (b) any reduction under a
compensation deferral agreement under (1) a plan described in Section
401(k) or 408(k) of the Code, (2) an annuity described in Section 403(b)
of the Code or (3) an election under a cafeteria plan described in Section
125 of the Code,
(ii) that, subject to clause (iv) below, is actually paid to or is
includible (within the meaning of Section 1.415-2(d)(3) and (4) of the
income tax regulations) in the gross income of the eligible Employee
within the relevant Plan Year, or would have been so paid or includible
but for a reduction described in clause (i) immediately above,
(iii) that does not exceed (A) for Plan Years beginning on or after
January 1, 1989 and before January 1, 1994, $200,000 and (B) for Plan
Years beginning on or after January 1, 1994, $150,000 (as adjusted at such
time and in such manner as is prescribed in Section 401(a)(17)(B) of the
Code), and
(iv) that is received by the eligible Employee during the entire
Plan Year and not only while he is a Participant.
For the purposes of the immediately preceding paragraph, provided that the
actual deferral percentage test is satisfied both with and without exclusion of
these Elective Contributions, Elective Contributions shall include excess
elective deferrals described in Section 3.2 (even if distributed under Section
3.3) made by Highly Compensated Employees, as well as all Elective Contributions
made by all Participants that are not taken into account in the ACP test
described in a subsection below. In accordance with Section 1.402(g)-1(e)(iii)
of the income tax regulations, excess elective deferrals described in Section
3.2 made by Non-Highly Compensated Employees, to the extent made under the Plan
or a plan maintained by an Affiliated Employer, shall not be taken into account
under the ADP test described in this subsection.
For the purpose of calculating the actual deferral percentages hereunder,
subject to and in accordance with regulations or other authority issued under
Sections 401(k) and/or 401(m) of the Code by the appropriate governmental
authority, only such portion of the applicable Contributions (as described in
the second previous paragraph) as may be necessary to ensure compliance with the
actual deferral percentage test shall be taken into
III-10
<PAGE>
account for purposes of that test. With respect to Plan Years commencing after
December 31, 1988, such actual deferral ratios of each eligible Employee and the
actual deferral percentage of each group shall be calculated to the nearest one-
hundredth of one percent of the eligible Employee's Compensation. The actual
deferral ratio of an eligible Employee is zero if no applicable Contributions
were allocated to such Employee's Employer Nonforfeitable Contributions Account
for the Plan Year.
In accordance with the requirements of Section 1.401(k)-1(b)(3) of the
income tax regulations, two or more cash or deferred arrangements (as defined in
Section 401(k) of the Code) may be considered one such arrangement for purposes
of determining whether such arrangements satisfy the requirements of Sections
401(a)(4), Section 401(k) and 410(b) of the Code. In such case, the cash or
deferred arrangements included in such plans and the plans including such
arrangements shall be treated as one arrangement and as one plan for purposes of
applying this Section and Sections 401(a)(4), 401(k) and 410(b) of the Code. If
an Employer and any Affiliated Employer individually or collectively maintain
two or more plans that are treated as a single plan for purposes of Section
401(a)(4) or 410(b) of the Code (other than Section 410(b)(2)(A)(ii) of the Code
as in effect for Plan Years which begin after December 31, 1988), all cash or
deferred arrangements that are included in such plans are to be treated as a
single arrangement for purposes of this Section and Sections 401(a)(4), 401(k)
and 410(b) of the Code. For Plan Years beginning after December 31, 1989, plans
may be aggregated under the preceding provisions of this paragraph only if they
have the same Plan Year. With respect to Plan Years beginning after December 31,
1986, if any Highly Compensated Employee is a participant under two or more cash
or deferred arrangements (as defined in Section 401(k) of the Code) of an
Employer, for purposes of determining the actual deferral ratio with respect to
such Highly Compensated Employee, all such cash or deferred arrangements shall
be treated as one cash or deferred arrangement. For Plan Years beginning after
December 31, 1988, if a Highly Compensated Employee participates in two or more
cash or deferred arrangements that have different plan years, the immediately
preceding sentence shall be applied by treating all cash or deferred
arrangements with years ending with or within the same calendar year as a single
arrangement. For Plan Years beginning after 1988, contributions and allocations
under an employee stock ownership plan described in Section 4975(e)(7) of the
Code may not be combined with contributions or allocations under any plan not
described in Section 4975(e)(7) of the Code.
With respect to Plan Years beginning prior to January 1, 1992, the Plan
or, if the Plan is aggregated with another cash or deferred arrangement pursuant
to the previous paragraph, such aggregated Plan may, in the discretion of the
Committee, be restructured (in accordance with Sections 1.40l(k)-l(h)(3))(iii),
1.401(a)(4)-1(c)(8)(iii) and 1.401(a)(4)-9(c) of the income tax regulations into
two or more component plans for purposes of determining whether the Plan or
aggregated Plan satisfies Section 401(a)(4) of the Code and the actual
deferral percentage test set forth above. If each of the component plans of the
Plan or aggregated Plan satisfies all of the requirements of Sections 401(a)(4)
and 410(b) of the Code as if it were a separate Plan or aggregated Plan, then
the Plan or aggregated Plan is treated as satisfying Section 401(a)(4) of the
III-11
<PAGE>
Code. If the Plan or aggregate Plan is restructured into component plans for
purposes of testing for compliance with Section 401(a)(4) of the Code and the
actual deferral percentage test, each component plan resulting from such
restructuring shall consist of all of the allocations, accruals, and other
benefits, rights and features provided to a group of Employees under the Plan or
aggregated Plan. Each Employee is permitted to be included in only one such
component plan.
With respect to Plan Years beginning after December 31, 1986, if an
eligible Highly Compensated Employee is subject to the family aggregation rules
of Section 414(q)(6) of the Code (as described in the third paragraph of the
Highly Compensated Employee definition in Section 3.5) because such person is
either a 5-percent owner (described in the Highly Compensated Employee
definition) or a Highly Compensated Employee in the group consisting of the ten
Highly Compensated Employees paid the greatest compensation (as described in the
Highly Compensated Employee definition), the combined actual deferral ratio of
the family group (which is treated as one Highly Compensated Employee) shall be
determined by combining the Compensation, as well as the applicable
Contributions (described above) which are allocated to the Employer
Nonforfeitable Contributions Account of all such eligible family members
described in this sentence. The Compensation, as well as the applicable
Contributions (described above) allocated to the Employer Nonforfeitable
Contributions Accounts of all eligible family members, are disregarded for
purposes of determining the ADP of the group of Non-Highly Compensated
Employees. If any eligible Employee is required to be aggregated as a member of
more than one family group, all eligible Employees who are members of those
family groups that include such Employee are aggregated as one family group in
accordance with the preceding provisions of this paragraph.
(i) Excess Employer Contributions Over ADP Limits:
(i) Distribution of Excess Employer Contributions: In the
event that with respect to any Plan Year, the aggregate amount of Employer
Contributions (taken into account in computing the actual deferral
percentage of Highly Compensated Employees for the Plan Year) exceeds the
maximum amount of such Employer Contributions permitted under the actual
deferral percentage tests set out above, then (to the extent that another
means of satisfying the ADP test is not implemented by the Committee),
within two and one-half months from the end of the Plan Year or as soon as
practicable, but not later than the end of the Plan Year immediately
following the Plan Year to which any such excess Employer Contributions
pertain, such excess (plus allocable income or loss) shall be distributed
to Highly Compensated Employees, as provided below. In lieu of distribution
of excess Contributions, within twelve (12) months after the end of the
Plan Year, an Employer may make Qualified Non-Elective Contributions on
behalf of Non-Highly Compensated Employees pursuant to Section 3.4(d) in an
amount sufficient to satisfy the ADP test for the Plan Year.
III-12
<PAGE>
For Plan Years beginning prior to January 1, 1997, the amount of
such excess Employer Contributions for a Highly Compensated Employee for a Plan
Year shall be determined by the following leveling method, under which the
actual deferral ratio of the Highly Compensated Employee with the highest actual
deferral ratio is reduced to the extent required to (i) enable the Plan to
satisfy the actual deferral percentage test set out above, or (ii) cause such
Highly Compensated Employee's actual deferral ratio to equal the ratio of the
Highly Compensated Employee with the next highest actual deferral ratio. This
process shall be repeated until the Plan satisfies the actual deferral
percentage test. For Plan Years beginning on and after January 1, 1997, the
amount of such excess contributions for a Highly Compensated Employee for a Plan
Year shall be determined by the following leveling method, under which Elective
Contributions of the Highly Compensated Employee with the largest dollar amount
of Elective Contributions is reduced to the extent required to (i) enable the
Plan to satisfy the ADP test set out above, or (ii) cause such Highly
Compensated Employee's Elective Contribution amount for the Plan Year to equal
the Elective Contribution amount of the Highly Compensated Employee with the
next largest dollar amount of Elective Contributions for the Plan Year. This
process shall be repeated until the Plan satisfies the ADP test. This correction
method shall be performed in accordance with Section 401(k)(8)(c) of the Code.
For each Highly Compensated Employee, the amount of such excess Employer
Contributions is equal to the applicable Contributions that were allocated to
such Employee's Employer Nonforfeitable Contributions Account and taken into
account in computing his actual deferral ratio (determined prior to the
application of this and the immediately preceding sentence), minus the amount
determined by multiplying such Employee's actual deferral ratio (determined
after application of this and the immediately preceding sentence) by his
Compensation used in determining such ratio.
For Plan Years beginning prior to January 1, 1997, any such excess
Employer Contributions shall be allocated to Participants who are subject to the
family member aggregation rules of Section 414(q)(6) of the Code (described in
the third paragraph of the Highly Compensated Employee definition) in the manner
prescribed under Section 1.401(k)-l(f)(5) of the income tax regulations. Any
such excess Employer Contributions (including any amounts that are
recharacterized under applicable provisions of the Plan) shall be treated as
annual additions under Section 4.3 of the Plan. In no event shall the amount of
such excess Employer Contributions to be recharacterized for a Plan Year with
respect to any Highly Compensated Employee exceed the amount of Employer
Contributions made on behalf of such Highly Compensated Employee for such Plan
Year.
III-13
<PAGE>
For purposes of this subsection, in accordance with
Section 1.401(k)-l(f)(4)(ii)(C) of the income tax regulations, income or loss
that is allocable to excess Employer Contributions (described above) for the
Plan Year shall be the income or loss allocable to the Participant's Employer
Nonforfeitable Contributions Account (to the extent attributable to applicable
Contributions (described above) used in the ADP test), multiplied by a fraction.
The numerator of the fraction is the Participant's excess Employer Contributions
for the Plan Year. The denominator is the balance of the Participant's Employer
Nonforfeitable Contributions Account (to the extent attributable to applicable
Contributions (described above) used in the ADP test), as of the beginning of
that Plan Year, plus the applicable Contributions (described above) allocated to
his Employer Nonforfeitable Contributions Account for the Plan Year. No income
or loss will be allocated for the gap period between the end of the Plan Year to
the date of distribution for Plan Years beginning on or after January 1, 1992
and, with respect to Plan Years beginning before such date, income or loss shall
be allocated in accordance with the applicable income tax regulations and Plan
document as then in effect.
Excess Employer Contributions (and any income allocable thereto)
shall be distributed from the portion of an Employer Nonforfeitable
Contributions Account attributable to the Contributions used in the ADP test. If
the Plan has Qualified Matching Contributions ("QMC"), distribution of Elective
Contributions (plus earnings) and QMC (plus earnings) shall be made in
proportion to the Participant's Elective Contributions and QMC (to the extent
used in the ADP test) for the Plan Year, unless the Code permits and the
committee elects otherwise. In addition, to the extent that such excess Employer
Contributions are attributable to Elective Contributions (and any income
allocable thereto) which amounts are distributed to the Participant pursuant to
the preceding provisions of this subsection, Matching Contributions (and any
income allocable thereto determined in the same manner as for other
contributions) will be appropriately reduced and the reduced Matching
Contributions (and any income allocable thereto) shall be applied as forfeitures
pursuant to Section 4.6. Such reduction shall be made first by reduction of
Matching Contributions allocated to the Participant's Employer Nonforfeitable
Contributions Account, and, if necessary, next by reduction of Matching
Contributions allocated to the Participant's Employer Contributions Account. The
provisions of this paragraph (which provide for reduction of Matching
Contributions made with respect to excess Elective Contributions which are
distributed hereunder) are intended to comply with the requirements of Sections
401(a), 401(k), 401(m) and 411 of the Code. To the extent that any provision of
this paragraph is inconsistent with the preceding sentence, such provision shall
be deemed to be inoperative and the plan shall be operated in a manner
III-14
<PAGE>
that complies with the requirements of the immediately preceding sentence.
(ii) Recharacterization of Excess Employer Contributions:
Recharacterization of excess Employer Contributions in accordance with
provisions of this paragraph shall be permitted from time to time as determined
by the Committee with respect to any Plan Year in which Employee Voluntary
Contributions are permitted under the Plan. In the event that such
recharacterization is permitted, the opportunity to elect to recharacterize
excess Employer Contributions shall be announced and made available to all
affected Participants on a uniform basis. If a determination is made to permit
recharacterization, pursuant to uniformly applied nondiscriminatory rules which
shall be established from time to time by the Committee, and subject to the
provisions of this paragraph, following a Participant's receipt of written
notification of excess Employer Contributions allocable thereto, such
Participant may elect (at such time and in such manner as shall be prescribed
under nondiscriminatory rules established from time to time by the Committee)
whether or not all or any portion of such excess Employer Contributions shall be
recharacterized as after-tax Employee Voluntary Contributions; provided,
however, that the Committee may effect the recharacterization of a Participant's
excess Employer Contributions without such Participant's election or consent if
the Committee determines, in its sole discretion, that it is not feasible under
the circumstances to obtain the Participant's election and that it is necessary
or desirable to promptly effect such recharacterization in order to ensure
compliance with plan qualification requirements. The amount of excess Employer
Contributions that may be recharacterized with respect to an affected
Participant for a Plan Year shall be reduced by any excess deferrals that were
previously distributed to such Participant with respect to his taxable year
ending with or within such Plan Year.
Recharacterized amounts shall remain nonforfeitable and, except
as provided in regulations issued under Section 401(k) of the Code, shall be
treated as Employee Contributions for purposes of Section 401(a)(4) of the Code
and Section 1.401(k)-l(b) of the income tax regulations (including, the
continued application of the same limits on distributions that apply to Elective
Contributions), however, for all other purposes, such amounts shall be treated
as Elective Contributions. Elective Contributions shall be reduced by the amount
recharacterized and related earnings. Notwithstanding any other provision of
this subsection to the contrary, recharacterization of excess Employer
Contributions allocable to a Participant shall not be permitted to the extent
that such amount, in combination with any other Employee Contributions made by
the affected Participant, would exceed any limit under the Plan affecting
Employee Contributions. If less than all such excess Employer Contributions are
III-15
<PAGE>
recharacterized, the amount that must otherwise be distributed under the Plan in
order to correct such excess shall be reduced by the amount recharacterized and
related earnings. Earnings related to any recharacterized amount shall not be
treated as a recharacterized amount.
Recharacterization must occur no later than two and one-half
months after the last day of the Plan Year in which such excess Employer
Contributions arose, and shall be deemed to occur no earlier than the date that
the last Highly Compensated Employee is informed (by the Committee) in writing
of the amount recharacterized and the consequences thereof. Recharacterized
amounts will be taxable to the Participant for the Participant's tax year in
which the Participant would have received them in cash.
(j) Actual Contribution Percentage Test: The actual contribution percentage
("ACP"), as determined for a Plan Year pursuant to this subsection, for all
eligible Highly Compensated Employees shall not exceed the greater of:
(i) the actual contribution percentage for the group of all eligible
Non-Highly Compensated Employees multiplied by 1.25, or
(ii) the actual contribution percentage of the group of all eligible
Non-Highly Compensated Employees multiplied by 2.0; provided, however, that
the actual contribution percentage for the group of eligible Highly
Compensated Employees may not exceed the actual contribution percentage of
the group of all eligible Non-Highly Compensated Employees, by more than
two percentage points (2%).
Unless otherwise elected by the Employer, the relationship of the ACP for all
eligible Highly Compensated Employees for a specific Plan Year shall be
determined with respect to the ACP for all eligible Non-Highly Compensated
Employees for the Plan Year preceding such Plan Year. For Plan Years commencing
after December 31, 1986, the provisions of Section 401(m) of the Code and
Section 1.401(m)-l of the income tax regulations are hereby incorporated into
the Plan for all purposes. In addition, for Plan Years beginning after December
31, 1988, if any Highly Compensated Employee is eligible to authorize Elective
Contributions under the Plan and to have Matching Contributions allocated with
respect thereto, or if such Highly Compensated Employee is eligible to make
elective contributions (described in Section 402(g)(3) of the Code) under any
other cash or deferred arrangement (described in Section 401(k) of the Code)
and/or to make employee contributions (described in Section 401(m) of the Code)
or to receive matching contributions (described in Section 401(m)(4)(A) of the
Code) under any other qualified plan of an Employer and/or any Affiliated
Employer regardless of whether such plan contains a cash or deferred
arrangement, the disparities between the actual contribution percentages of the
respective groups of eligible Highly Compensated Employees and Non-Highly
Compensated Employees shall be reduced as described in
III-16
<PAGE>
Section 1.401(m)-2 of the income tax regulations and subsequent provisions of
this subsection.
Subject to the limitations set forth below, the actual contribution
percentage for a specified group of eligible Employees for a Plan Year shall be
the average of the actual contribution ratios (calculated separately for each
Employee in such group) of the sum of any (i) Employer Matching Contributions
allocated to the Employee's Employer Contributions Account for the Plan Year,
(ii) Employee Voluntary Contributions, including any amounts recharacterized as
Employee Voluntary Contributions and allocated to the Employee's Employee
Account, and (iii) to the extent taken into account under Section
1.401(m)-l(b)(5) of the income tax regulations and this subsection, any Elective
Contributions, Qualified Non-Elective Contributions, and Profit Sharing
Contributions allocated to the Employee's Employer Nonforfeitable Contributions
Account for such Plan Year, to the Employee's Compensation (defined below) for
the Plan Year. Notwithstanding anything in the preceding sentence to the
contrary, the ACP described in the preceding sentence shall not include Matching
Contributions that are forfeited either to correct excess aggregate
contributions or because the contributions to which they relate are excess
deferrals, excess contributions or excess aggregate contributions. To the extent
that any Contribution is required to satisfy the ADP test set forth above in
this Section, it may not be used to satisfy the ACP test. For the purposes of
performing the ACP test, Compensation shall mean all remuneration:
(i) that is (a) received during the Plan Year by the eligible
Employee from an Employer and is required to be reported as wages on the
eligible Employee's form W-2 (or its successor) for federal income tax
withholding purposes (or, in the case of a nonresident alien employee, is
the type of income that would be required to be reported on form W-2 if
such employee were subject to such reporting requirements), but determined
without regard to any rules that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Section 3401(a)(2) of the
Code), plus (b) any reduction under a compensation deferral agreement under
(1) a plan described in Section 401(k) or 408(k) of the Code, (2) an
annuity described in Section 403(b) of the Code or (3) an election under a
cafeteria plan described in Section 125 of the Code,
(ii) that subject to clause (iv) below, is actually paid to or is
includible (within the meaning of Section 1.415-2(d)(3) and (4) of the
income tax regulations) in the gross income of the eligible Employee within
the relevant Plan Year, or would have been so paid or includible but for a
reduction described in clause (i) immediately above,
(iii) that does not exceed (A) for Plan Years beginning on or
after January 1, 1989 and before January 1, 1994, $200,000; and (B) for
Plan Years beginning on or after January 1, 1994, $150,000 (as such dollar
III-17
<PAGE>
amounts are adjusted at such time and in such manner as may be prescribed
in Section 401(a)(17)(B) of the Code), and
(iv) that is received by the eligible Employee during the entire
Plan Year and not only while he is a Participant.
For the purposes of computing the actual contribution percentage ratios,
Elective Contributions shall include excess elective deferrals described in
Section 3.2 and any Elective Contributions that are not taken into account in
the actual deferral percentage test, provided that the actual deferral
percentage test is satisfied both with and without exclusion of these Elective
Contributions. Any Qualified Non-Elective Contributions and any Profit Sharing
Contributions allocated to the Participant's Employer Nonforfeitable
Contributions Account, as provided above, shall be taken into account for
purposes of the actual contribution percentage test to the extent that such
amounts are not needed to pass the actual deferral percentage test. With respect
to Plan Years commencing after December 31, 1988, such actual contribution
ratios of each eligible Employee and the actual contribution percentage of each
group shall be calculated to the nearest one-hundredth of one percent of the
eligible Employee's Compensation. The actual contribution ratio of an eligible
Employee is zero if no Contributions which are used in computing actual
contribution ratios are allocated on behalf of such Employee.
If an Employer and any Affiliated Employer, individually or collectively,
maintain two or more plans that are treated as a single plan for purposes of
Section 401(a)(4) or 410(b) of the Code (other than Section 410(b)(2)(A)(ii) of
the Code as in effect for Plan Years which began after December 31, 1988), all
employee and matching contributions described in Section 1.401(m)-l(f) of the
Proposed income tax regulations (or any successor thereto) are to be treated as
made under a single plan for purposes of this Section and Sections 401(a)(4),
401(k) and 410(b) of the Code. For Plan Years beginning after December 31, 1989,
plans may be aggregated under the preceding provisions of this paragraph only if
they have the same Plan Year. With respect to Plan Years beginning after
December 31, 1986, if any Highly Compensated Employee is a participant under two
or more plans of an Employer or any Affiliated Employer which are subject to
Section 401(m) of the Code, for purposes of determining the actual contribution
ratio with respect to such Highly Compensated Employee, all employee and/or
matching contributions described in Section 1.401(m)-l(f) of the Proposed income
tax regulations (or any successor thereto) made under such plans must be
aggregated. For Plan Years beginning after 1988, contributions and allocations
under an employee stock ownership plan described in Section 4975(e)(7) of the
Code may not be combined with contributions or allocations under any plan not
described in Section 4975(e)(7) of the Code.
With respect to Plan Years beginning prior to January 1, 1992, the Plan or,
if the Plan is aggregated with another plan pursuant to the previous paragraph,
such aggregated Plan may, in the discretion of the Committee, be restructured
(in accordance with Sections 1.401(m)-l(g)(5), 1.401(a)(4)-l(c)(8)(iii) and
1.401(a)(4)-9(c) of the income tax regulations into two or more component plans
for purposes of determining whether the
III-18
<PAGE>
Plan or aggregated Plan satisfies Section 401(a)(4) of the Code and the actual
contribution percentage test set forth above. If each of the component plans of
the Plan or aggregated Plan satisfies all of the requirements of Sections
401(a)(4) and 410(b) of the Code as if it were a separate Plan or aggregated
Plan, then the Plan or aggregated Plan is treated as satisfying Section
401(a)(4) of the Code. If the Plan or aggregated Plan is restructured into
component plans for purposes of testing for compliance with Section 401(a)(4) of
the Code and the actual contribution percentage test, each component plan
resulting from such restructuring shall consist of all the allocations,
accruals, and other benefits, rights and features provided to a group of
Employees under the Plan or aggregated Plan. Each Employee is permitted to be
included in only one such component plan.
With respect to Plan Years beginning after December 31, 1986, if an
eligible Highly Compensated Employee is subject to the family aggregation rules
of Section 414(q)(6) of the Code (described in the third paragraph of the Highly
Compensated Employee definition in Article I) because such person is either a
5-percent owner (as described in the Highly Compensated Employee definition) or
a Highly Compensated Employee in the group consisting of the ten Highly
Compensated Employees paid the greatest compensation (as described in the Highly
Compensated Employee definition), the combined actual contribution ratio of the
family group (which is treated as one Highly Compensated Employee) shall be
determined by combining the Compensation, as well as the applicable
Contributions (described above) which are allocated to the appropriate Accounts
of all eligible family members described in this sentence. The Compensation, as
well as the applicable Contributions (described above) which are allocated to
the appropriate Accounts of all eligible family members are disregarded for
purposes of determining the ACP of the group of Non-Highly Compensated
Employees. If any eligible Employee is required to be aggregated as a member of
more than one family group, all eligible Employees who are members of those
family groups that include that Employee shall be aggregated as one family group
in accordance with the preceding provisions of this paragraph.
(k) Prohibited Multiple Use of 2.0/2% Alternative Limits for the ADP and
ACP Tests: Any disparity between the actual deferral percentage or actual
contribution percentage of the respective groups of Highly Compensated Employees
and Non-Highly Compensated Employees shall be reduced as described in Section
1.401(m)-2 of the income tax regulations (or any successor regulations). Without
limiting the scope of the immediately preceding sentence, any multiple use of
the alternative method of compliance with the ADP and ACP tests (i.e., the
2.0/2% alternative limit which is described in clauses (ii) and (iv) below and
in Sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) of the Code) shall be
determined and corrected, as appropriate, in accordance with the provisions of
this subsection.
Multiple use of such alternative limitation shall occur if the sum of (a)
the actual deferral percentage of the entire group of eligible Highly
Compensated Employees under the Plan or any other cash or deferred arrangement
(described in Section 401(k) of the Code) of an Employer or an Affiliated
Employer and (b) the actual contribution
III-19
<PAGE>
percentage of the entire group of eligible Highly Compensated Employees under
the Plan or any other qualified plan of an Employer or an Affiliated Employer
that is subject to Section 401(m) of the Code, exceeds the greater of:
(i) 125 percent of the greater of (1) the actual deferral
percentage of the group of Non-Highly Compensated Employees eligible under
the Plan (or other arrangement of an Employer or Affiliated Employer that
is subject to Section 401(k) of the Code) for the Plan Year, or (2) the
actual contribution percentage of the group of Non-Highly Compensated
Employees under the Plan (or other plan of an Employer or Affiliated
Employer that is subject to Section 401(m) of the Code) for the Plan Year
beginning with the Plan Year of the Plan (or other arrangement that is
subject to Section 401(k) of the Code), plus
(ii) the number two (2) plus the lesser of clause (1) or (2) of (i)
above; provided, however, in no event shall the amount computed under this
(ii) exceed 200 percent of the lesser of clause (1) or (2) of (i) above; or
(iii) 125 percent of the lesser of (1) the actual deferral
percentage of the group of Non-Highly Compensated Employees eligible under
the Plan (or other arrangement of an Employer or Affiliated Employer that
is subject to Section 401(k) of the Code) for the Plan Year, or (2) the
actual contribution percentage of the group of Non-Highly Compensated
Employees under the Plan (or other plan of an Employer or Affiliated
Employer that is subject to Section 401(m) of the Code) for the Plan Year
beginning with the Plan Year of the Plan (or other arrangement that is
subject to Section 401(k) of the Code), plus
(iv) the number two (2) plus the greater of clause (1) or (2)
of (iii) above; provided, however, in no event shall the amount computed
under this (iv) exceed 200 percent of the lesser of clause (1) or (2) of
(iii) above.
Notwithstanding the previous paragraph, multiple use of the alternative
limitation does not occur if (i) the ADP of the group of Highly Compensated
Employees does not exceed the product of 1.25 multiplied by the ADP of the group
of Non-Highly Compensated Employees, or (ii) the ACP of the group of Highly
Compensated Employees does not exceed the product of 1.25 multiplied by the ACP
of the group of Non-Highly Compensated Employees.
The actual deferral percentage and actual contribution percentage of the
group of eligible Highly Compensated Employees shall be determined after the use
of all applicable Contributions to meet the actual deferral percentage test and
after use of all applicable Contributions to meet the requirements of the actual
contribution percentage test. In addition, the actual deferral percentage and
the actual contribution percentage of the group of eligible Highly Compensated
Employees shall be determined after any
III-20
<PAGE>
required corrective distribution of excess deferrals, excess Employer
Contributions or excess aggregate Contributions (described below), and after any
required recharacterization of excess Employer Contributions, without regard to
the rules hereunder relating to multiple use of the alternative methods of
compliance contained in this subsection and Sections 401(k)(3)(A)(ii)(II) and
401(m)(2)(A)(ii) of the Code.
If a multiple use of the alternative method of compliance with Sections
401(k) and 401(m) occurs, in order to eliminate the multiple use of such
alternative method of compliance, the amount of reduction to the actual deferral
percentage of the entire group of eligible Highly Compensated Employees under
the Plan (and each other arrangement subject to Section 401(k) of the Code)
shall be calculated in the manner described in this Section 3.4(k) of the Plan
and Section 1.401(k)-1(f)(2) of the income tax regulations. Such required
reduction shall be treated as an excess contribution under the arrangement
subject to Section 401(k) of the Code. However, if any excess contribution is
recharacterized as an Employee Voluntary Contribution, such recharacterized
amount shall be treated as an excess aggregate Contribution. Instead of reducing
the actual deferral ratios of Highly Compensated Employees, the Employer may
eliminate the multiple use of the alternative limitation by making Qualified
Non-Elective Contributions on behalf of Non-Highly Compensated Employees
(pursuant to Section 3.4(d)) within twelve (12) months after the end of the Plan
Year.
(l) Excess Aggregate Contributions Over ACP Limits: In the event that with
respect to any Plan Year, the aggregate amount of applicable Contributions taken
into account under the actual contributions percentage test (set forth above) on
behalf of Highly Compensated Employees exceeds the maximum amount of such
Contributions permitted under the actual contribution percentage test set out
above (determined by reducing such Contributions made on behalf of Highly
Compensated Employees in order of actual contribution percentages beginning with
the highest of such percentages), then, within two and one-half months from the
end of the Plan Year or as soon as practicable, but not later than the end of
the Plan Year immediately following the Plan Year to which any such excess
aggregate Contributions pertain, as described below, such excess (plus allocable
income loss) shall be forfeited, if forfeitable, or distributed to Highly
Compensated Employees on the basis of the respective portions of such excess
aggregate Contributions attributable to each of the Highly Compensated Employees
as provided below. In lieu of forfeiture or distribution of such excess
aggregate contributions, within twelve (12) months after the end of the Plan
Year, the Employer may make Qualified Non-Elective Contributions on behalf of
Non-Highly Compensated Employees pursuant to Section 3.4(d) in an amount
sufficient to satisfy the ACP test for the Plan Year.
For Plan Years beginning prior to January 1, 1997, the amount of such
excess aggregate Contributions for a Highly Compensated Employee for a Plan Year
shall be determined by the following leveling method, under which the actual
contribution ratio of the Highly Compensated Employee with the highest actual
contribution ratio is reduced to the extent required to (i) enable the Plan to
satisfy the actual contributions percentage test set out above, or (ii) cause
such Highly Compensated Employee's actual contribution ratio to equal the ratio
of the Highly Compensated Employee with the next highest actual
III-21
<PAGE>
contribution ratio. This leveling process shall be repeated until the Plan
satisfies the actual contributions percentage test. For Plan Years beginning on
and after January 1, 1997, the amount of such excess aggregate contributions for
a Highly Compensated Employee for a Plan Year shall be determined by the
leveling method prescribed in Section 401(m)(6)(C) of the Code beginning with
the Highly Compensated Employee who has the greatest amount of Employee
Voluntary Contributions, Matching Contributions and other Contributions
allocated to his Account for the Plan Year that are taken into account for
purposes of the ACP test. This leveling process shall be repeated until the Plan
satisfies the ACP test.
For each Highly Compensated Employee, the amount of such excess aggregate
Contributions is equal to the applicable Contributions (described above) that
were taken into account in computing his actual contribution ratio (determined
prior to the application of this and the immediately preceding sentence), minus
the amount determined by multiplying such Employee's actual contribution ratio
(determined after application of this and the immediately preceding sentence) by
his Compensation used in determining such ratio. For Plan Years beginning prior
to January 1, 1997, any such excess aggregate Contributions shall be allocated
to Participants who are subject to the family member aggregation rules of
Section 414(q)(6) of the Code (described in the third paragraph of the Highly
Compensated Employee definition) in the manner prescribed under Section
1.401(k)-1(f)(5) of the income tax regulations.
For purposes of this subsection, in accordance with Section
1.401(m)l(e)(3)(ii)(C) of the income tax regulations, income or loss that is
allocable to excess aggregate Contributions (described above) for the Plan Year
shall be the income or loss allocable to the applicable Contributions (described
above) used in the ACP test multiplied by a fraction. The numerator of this
fraction is the Participant's excess aggregate Contributions for the Plan Year.
The denominator is the balance of the Participant's Account to the extent used
in the ACP test as of the beginning of the Plan Year, plus the applicable
Contributions (described above) used in the ACP test for the Plan Year. Income
or loss allocable to excess aggregate contributions that are recharacterized as
after-tax Employee Voluntary Contributions is determined as if the
recharacterized amounts had been distributed as Elective Contributions. No
income or loss will be allocated for the gap period between the end of the Plan
Year and the date of distribution for Plan Years beginning on or after January
1, 1992 and, with respect to Plan Years beginning before such date, income or
loss shall be allocated in accordance with the income tax regulations and Plan
document as then in effect.
The Committee (on or before the fifteenth day of the third month following
the end of the Plan Year but, in any event, before the end of the next Plan
Year) shall direct the Trustee to distribute to the Highly Compensated Employee
having the highest actual contribution ratio, his portion of the excess
aggregate contributions (and income allocable thereto) or, if forfeitable,
forfeit such non-vested excess aggregate contributions attributable to Matching
Contributions (and income allocable thereto) pursuant to Section 4.6. This
process shall be repeated until the ACP test is satisfied, or until the actual
contribution ratio of such Highly Compensated Employee equals the actual
contribution
III-22
<PAGE>
ratio of the Highly Compensated Employee having the next highest actual
contribution ratio. Vested Matching Contributions may not be forfeited to
correct excess aggregate contributions; provided, however, an otherwise vested
Matching Contribution may be forfeited if the Elective Contribution to which
such Matching Contribution relates is an excess contribution (above the ADP
limits of Section 401(k)(3) of the Code) or an excess deferral (above the annual
dollar limit of Section 402(g) of the Code). The forfeiture or distribution of
excess aggregate contributions (and allocable income) shall be made in the
following order:
(i) Distribution of Elective Contributions recharacterized as Employee
Voluntary Contributions, if any;
(ii) Forfeiture of non-vested Matching Contributions, if any; and
(iii) Distribution of vested Matching Contributions, if any.
Forfeitures of excess aggregate contributions (and income allocable
thereto) shall be administered in accordance with Section 4.6; provided,
however, if forfeitures are allocated to Participants under Section 4.6, no
forfeitures may be allocated to a Highly Compensated Employee whose excess
aggregate contributions were reduced pursuant to the previous paragraph.
Excess aggregate contributions are still counted as Employer
Contributions, for purposes of Sections 404 and 415 of the Code, for the Plan
Year when made, even if distributed from the Plan. In addition, forfeitures of
excess Matching Contributions to satisfy the ACP test are still counted as
annual additions under Section 415 of the Code for the Plan Year when made on
behalf of the applicable Highly Compensated Employees from whose Accounts such
amounts were forfeited. If forfeitures are re-allocated to Participants'
Accounts pursuant to Section 4.6, such forfeitures are also treated as annual
additions under Section 415 of the Code on behalf of such Participants for the
Plan Year in which such amounts are re-allocated.
(m) Mandatory Disaggregation of Certain Plans: Notwithstanding any
provision of this Section 3.4 to the contrary, the Plan shall be operated in
accordance with Section 1.401(k)-1(g)(11) of the income tax regulations
concerning mandatory disaggregation of certain types of plans. Subject to all
the requirements of Section 1.401(k)-1(g)(11)(iii) of the income tax
regulations, the following plans shall be treated as comprising separate plans:
(i) Plans benefiting collective bargaining unit employees. A
plan that benefits employees who are included in a unit of employees
covered by a collective bargaining agreement and employees who are not
included in such a collective bargaining unit treated as comprising
separate plans.
III-23
<PAGE>
(ii) ESOPS and non-ESOPs. For Plan Years beginning on or
after January 1, 1991, the portion of a plan that is an employee stock
ownership plan described in Section 4975(e) or 409 of the Code (an ESOP)
and the portion of the plan that is not an ESOP are treated as separate
plans, except as otherwise permitted under Section 54.4975-11(e) of the
income tax regulations.
(iii) Plans benefiting employees of qualified separate lines of
business. If an Employer is treated as operating qualified separate lines
of business for purposes of Section 410(b) of the Code, the portion of a
plan that benefits employees of one qualified separate line of business is
treated as a separate plan from the portions of the same plan that benefit
employees of the other qualified separate lines of business of the
Employer.
(iv) Plans maintained by more than one employer--
(A) Multiple employer plans. If a plan benefits
employees of more than one Employer and the employees are not included
in a unit of employees covered by a collective bargaining agreement (a
multiple employer plan), the plan is treated as comprising separate
plans each of which is maintained by a separate Employer.
(B) Multiemployer plans. The portion of a plan
that benefits employees who are included in a collective bargaining
unit, the portion of a plan that benefits employees who are included
in another collective bargaining unit and the portion of a plan that
benefits non-collective bargaining unit employees are all treated as
separate plans. Consistent with Section 413(b) of the Code, the
portion of a plan that is maintained pursuant to a collective
bargaining agreement is treated as a single plan maintained by a
single employer that employs all the employees benefiting under the
same benefit computation formula and covered pursuant to that
collective bargaining agreement. The non-collectively bargained
portion of the plan is treated as maintained by one or more employers,
depending on whether the non-collective bargaining unit employees who
benefit under the plan are employed by one or more employers.
3-5. Highly Compensated Employee: For all purposes of the Plan, "Highly
Compensated Employee" shall mean, for Plan Years beginning prior to January 1,
1997, (subject to the subsequent provisions hereof) any Employee, who during
the Plan Year for which the
III-24
<PAGE>
determination is being made (the "determination year") or during the 12-month
period immediately preceding the Plan Year (the "look-back year"):
(a) was at any time a 5-percent owner (as defined in Section
416(i)(1) of the Code and Section 7.4),
(b) received compensation (described below) from an Employer in
excess of $75,000 (as adjusted at such time and in such manner as may be
prescribed under Section 414(q) and Section 415(d) of the Code,
(c) received compensation from an Employer in excess of $50,000 (as
adjusted at such time and in such manner as may be prescribed under Section
414(q) and Section 415(d) of the Code, and was in the top-paid group of
Employees consisting of the top 20-percent of the Employees when ranked on
the basis of compensation paid during such year, excluding, however, for
purposes of determining the number (but, except for Employees covered by
collective bargaining agreements described below, not identity) of
Employees which comprise such top-paid group of Employees, (i) any Employee
who has not completed six months of service as of the end of the current
year after aggregating the Employee's service for an Employer during the
current year and the immediately preceding year, (ii) any Employee who
normally works less than 17-1/2 hours per week for 50% or more of the total
weeks worked during such year (excluding weeks during which an Employee did
not work for an Employer), (iii) any Employee who normally works during not
more than six months during any year (an Employee who works on one day
during a month is deemed to have worked during that month), (iv) any
Employee who has not attained age 21 as of the end of the applicable year,
and (v) except to the extent provided in regulations issued under Section
414(q) of the Code by the appropriate governmental authority, any Employee
who is included in a unit of Employees covered by an agreement which the
Secretary of Labor finds to be a collective bargaining agreement between
Employee representatives and an Employer, if at least 90 percent of the
Employees of an Employer are covered under one or more such collective
bargaining agreements and the Plan does not cover any Employee who is
covered by any such collective bargaining agreement.
(d) was at any time an officer (within the meaning of Section 416(i)
of the Code) and received compensation greater than 50-percent of the
dollar amount in effect under Section 415(b)(1)(A) of the Code for the
calendar year in which the determination year or look-back year begins.
With respect to the exclusions for Employees who normally work less than
17-1/2 hours per week or during not more than six months during any year (as
described in clauses (c)(ii) and (c)(iii), respectively, above), such exclusion
determinations may be made separately with respect to each Employee, or on the
basis of groups of Employees who fall within particular job categories as
established by an Employer on a reasonable and consistent basis. For purposes of
clause (c)(ii) above, an Employer may exclude Employees who are members of a
particular job
III-25
<PAGE>
category if (i) 80% of the positions within that job category are filled by
Employees who normally work less than 17 1/2 hours per week, or (ii) the median
number of hours of service credited to Employees in that job category during a
determination year or look-back year, as the case may be, is less than or equal
to 500. Any Employee who is a non-resident alien who receives no earned income
(within the meaning of Section 911(d)(2) of the Code) from an Employer which
constitutes income from sources within the United States (within the meaning of
Section 861(a)(3) of the Code) shall not be treated as an Employee for the
purpose of determining whether an Employee is a Highly Compensated Employee or a
Non-Highly Compensated Employee.
An Employee shall not be treated as described in Sections 3.5(a), (b) or
(c) for the determination year unless such Employee is also a member of the
group consisting of the 100 Employees paid the greatest compensation (described
below) during the determination year. For purposes of Section 3.5(d), without
regard to any exclusions applicable for purposes of determining the number of
Employees in the top-paid group of Employees, no more than 50 Employees (or, if
lesser, the greater of (i) three Employees who perform services during the
determination or look back year or (ii) 10% of such Employees) shall be treated
as officers with respect to the determination year or the look-back year,
whichever may be applicable. Provided, however, that if for either such year the
number of officers of an Employer who satisfy the requirements of Section 3.5(d)
(as limited by the first sentence of this paragraph) exceeds the 50-Employee
limitation of the immediately preceding sentence, then the officers who receive
the greatest compensation during the determination year or look-back year will
be considered includible officers; and, further provided, that if for any such
year, no officer of an Employer is described in Section 3.5(d), the highest paid
officer of an Employer for such year (without regard to the amount of
compensation paid to such officer in relation to the dollar limit of Section
415(c)(1)(A) of the Code for the year) shall be treated as described in such
Section 3.5(d) whether or not such Employee is also a Highly Compensated
Employee on any other basis. An individual who a Highly Compensated Employee for
the determination year or the look-back year by reason of being described in
two or more of Sections 3.5(a), (b), (c), or (d) shall not be disregarded in
determining whether another individual is a Highly Compensated Employee. The
Committee shall prescribe reasonable and nondiscriminatory rules which shall be
uniformly and consistently applied for the purposes of (i) rounding calculations
incident to determining the number of Employees in the top-paid group of
Employees and (ii) breaking ties among two or more Employees incident to
identifying particular Employees who are in the top paid group of Employees, who
are among the top-10 Highly Compensated Employees, or who are among the 100
Employees paid the greatest compensation during the determination year.
For Plan Years beginning on and after January 1, 1997, "Highly Compensated
Employee" shall mean (subject to the subsequent provisions hereof) any Employee
who
(i) was a 5-percent owner (as defined in Section 416(i)(1) of the Code
and Section 7.4 of the Plan) at any time during the Plan Year for which
the determination is being made (the "determination year") or during the
12-month period immediately preceding the Plan Year (the "look-back year");
or
III-26
<PAGE>
(ii) received compensation (described below) from the Employer in
excess of $80,000 (as adjusted at such time and in such manner as may be
prescribed under Section 414(q) or Section 415(d) of the Code) during the
look-back year.
If the Plan Sponsor so elects for a Plan Year, the group described in
clause (ii) above shall be limited to the top-paid group of Employees consisting
of the top 20-percent of the Employees when ranked on the basis of compensation
paid during the look-back year, determined in the same manner as for Plan
Years beginning prior to January 1, 1997, described above.
For Plan Years beginning prior to January 1, 1997, if, on any single day
during any determination year or look-back year, an Employee is a member of the
family (described below) of another individual who is (i) a 5-percent owner who
is a current or former Employee or (ii) a Highly Compensated Employee (including
former Employees) in the group consisting of the 10 Highly Compensated Employees
paid the greatest compensation during the determination year or the look-back
year, then such family member and 5-percent owner or top-10 Highly Compensated
Employee shall be considered to be a single Employee receiving an amount of
compensation and a Plan contribution that is based on the compensation and Plan
contribution attributable to such family member and the 5-percent owner or top-
10 Highly Compensated Employee. For purposes of the immediately preceding
sentence, family members of any Employee or former Employee include the
Employee's or former Employee's spouse and lineal ascendants or descendants and
the spouses of lineal ascendants and descendants. Family members are subject to
the aggregation rule described in the second preceding sentence whether or not
(i) they fall within the categories of Employees that may be excluded for
purposes of determining the number of Employees in the top-paid group consisting
of the top 20-percent of the Employees when ranked on the basis of compensation
(as such top-paid group is described in Section 3.5(c) above), or (ii) they are
Highly Compensated Employees when considered separately.
A former Employee who, with respect to an Employer, had a "separation
year" (described below) or a "deemed separation year" (described below) prior to
the determination will be treated as a Highly Compensated Employee for the
determination year if such year if such former Employee was (i) a Highly
Compensated Employee for such former Employee's separation year or deemed
separation year, or (ii) a Highly Compensated Employee for any determination
year ending on or after such former Employee attained age 55. For purposes of
the immediately preceding sentence, an Employee who performs no services for an
Employer during a determination year (including a leave of absence throughout
the determination year) is treated as a former Employee. A "separation year" is
the determination year during which the Employee separates from service with an
Employer; provided, however, an Employee who performs no services for an
Employer during a determination year will be treated as having separated from
service with an Employer in the year in which such Employee last performed
services for an Employer. An Employee who performs services for an Employer
during a determination year will incur a "deemed separation year" if, in any
determination year which ends prior to such Employee's attainment of age 55, the
Employee receives compensation in an amount less than 50% of the Employee's
average annual compensation for the three consecutive calendar years preceding
such determination year during which the Employee received the
III-27
<PAGE>
greatest amount of compensation from an Employer; provided, however, an Employee
will not be treated as a Highly Compensated Employee (solely by reason of a
deemed separation in a deemed separation year) if, after such deemed separation
and before the year of the Employee's actual separation, such Employee's
compensation increased sufficiently to permit the Employee to be treated as
having a deemed resumption of employment with respect to a determination year,
as prescribed in regulations issued under Section 414(q) of the Code by the
appropriate governmental authority.
Former Employees are not counted for purposes of determining the top-paid
group consisting of the top 20-percent of the Employees when ranked on the basis
of compensation (as such top-paid group is described in Section 3.5(c) above).
Furthermore, with respect to the determination year, former Employees are not
included in (i) the group consisting of the 100 Employees paid the greatest
compensation, or (ii) the group of includible officers of an Employer, as such
groups are described in the second paragraph of this Section.
For purposes of this Section, "compensation" shall mean the wages (as
defined in Section 3401(a) of the Code for purposes of income tax withholding
at the source) that are paid (within the meaning of Section 1.415-2(d)(3) and
(4) of the income tax regulations) to the Employee by an Employer during the
Plan Year for services performed and reportable on the Employee's form W-2 (or
its successor), determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of the employment
or the services performed (such as the exception for agricultural labor in
Section 3401(a)(2) of the Code), plus any salary reduction contributions to tax-
sheltered annuities under Section 403(b) of the Code, and for Plan Years
beginning prior to January 1, 1998, plus elective or salary reduction
contributions to cafeteria plans under Section 125 of the Code, or to cash or
deferred arrangements under Sections 402(e) and 402(h)(1)(B) of the Code. Only
compensation received by the Employee from an Employer, or deemed to be received
pursuant to the preceding sentence, shall be considered for purposes of this
Section; therefore, compensation shall not be annualized in order to compute an
Employee's compensation in the determination year or the look-back year.
The rules of Section 414(b), (c), (m), (n) and (o) of the Code shall be
applied before the above provisions of this Section are applied. The rules
described in the immediately preceding sentence do not apply for purposes of
determining who is a 5-percent owner. Notwithstanding any provision hereof to
the contrary, the determination of who is a Highly Compensated Employee shall
be made in accordance with Section 414(q) of the Code and the regulations or
other authority issued thereunder by the appropriate governmental authority.
In the event that the Committee elects to have one or more of the
provisions of this paragraph apply for purposes of determining the status of an
Employee as a Highly Compensated Employee or a Non-Highly Compensated Employee,
the Committee shall adopt a resolution which shall specifically identify the
provision or provisions of this paragraph which shall apply and the effective
date of such application, and a certified copy of such resolution shall be
attached to the Plan as an exhibit which shall be referenced to this Section and
shall be deemed to be an amendment of the Plan which is incorporated in and made
a part of this Section for all purposes of the Plan. Any provision of this
paragraph which becomes operative by virtue of application of the preceding
sentence shall override or supersede and control over any provision
III-28
<PAGE>
or provisions of this Section which may be inconsistent with the operative
provision or provisions of this paragraph. Accordingly, to the extent elected by
the Committee in compliance with the requirements of the first sentence of
this paragraph, the following provision or provisions shall apply:
(x) To the extent permitted in regulations issued under Section
414(q) of the Code by the appropriate governmental authority, the look-
back year calculation for a determination year shall be made on the basis
of the calendar year ending, with or within the applicable determination
year (or, in the case of a determination year that is shorter than twelve
months, the calendar year ending with or within the twelve month period
ending with the end of the applicable determination year); provided,
however, the computation contemplated hereunder shall apply only if the
Committee elects, as described above, to apply the same computation
provisions to all plans, entities and arrangements of an Employer which
are required to apply the definition of Highly Compensated Employee set
forth in Section 414(q) of the Code.
(y) To the extent permitted in regulations issued under Section
414(q) of the Code, Leased Employees covered under a qualified money
purchase pension plan maintained by a leasing organization and not covered
under a qualified retirement plan of an Employer (including the Plan),
shall be included for purposes of determining the group of Highly
Compensated Employees hereunder.
(z) To the extent permitted in regulations issued under Section
414(q) of the Code, the special definition (described in such regulations)
for purposes of determining whether former Employees who separated from
service with an Employer prior to January 1, 1987 are Highly Compensated
Employees shall apply; provided, however, the special definition
contemplated hereunder shall apply orly if the Committee elects, as
described above, to apply the special definition to all plans, entities
and arrangements of an Employer which are required to apply the definition
of Highly Compensated Employee set forth in Section 414(q) of the Code,
and further, provided that such election to use such special definition
may not be changed by an Employer without the consent of the Internal
Revenue Service.
Subject to any governmental approval as may be required under applicable
regulations or other authority issued by the appropriate governmental authority,
any operative provision of this paragraph may be changed by attaching a
certified resolution of the Committee (which resolution shall be attached to
the Plan as an exhibit) which (i) shall identify the provision or provisions of
the paragraph that are to be changed and the effective date of such change,
(ii) shall be referenced to this Section, and (iii) shall be deemed to be an
amendment of the Plan which is incorporated in and made part of this Section for
all purposes of the Plan.
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<PAGE>
3.6. Composition of and Deadline for Payment of Employer Contributions:
Employer Contributions shall be paid to the Trust Fund in cash or in kind
(including shares of common stock of the Plan Sponsor).
Any Elective Contributions made pursuant to Compensation Deferral
Agreements for the Plan Year shall be paid to the Trust Fund (in installments
based on an Employer's pay period and in an amount equal to the amount by which
all Participants' Considered Compensation was reduced pursuant to Compensation
Deferral Agreements applicable to the pay period) not later than thirty (30)
days after the end of an Employer's pay period to which such Contributions are
attributable, while all other Contributions of an Employer for each Plan Year
shall be paid to the Trustee in one or more installments as the Committee may
from time to time determine; provided, however, the Contribution may be paid not
later than the time prescribed by law for filing an Employer's federal income
tax return (including extensions thereof) for such Employer's taxable year
ending with or within the Plan Year if (i) the Contribution is treated by the
Plan in the same manner that the Plan would treat a Contribution actually
received on the last day of such taxable year and (ii) either of the following
conditions are satisfied: (1) an Employer designates the Contribution in writing
to the Trustee as a payment on account of such taxable year, or (2) an Employer
claims such Contribution as a deduction on its federal income tax return for
such taxable year; and, further provided, that to the extent required under
regulations or other authority prescribed by the appropriate governmental
authority, any Contributions (other than Elective Contributions) which are to be
taken into account for purposes of determining the actual deferral percentage or
actual contribution percentage (defined in Section 3.4) shall (in addition to
the limitations thereon under the Plan with respect to vesting and withdrawals)
be paid to the Trust Fund not later than the last day of the 12-month period
that immediately follows the end of the Plan Year to which such Contributions
pertain. To the extent required under regulations or other authority prescribed
by the appropriate governmental authority, Matching Contributions which are
taken into account for the actual contribution percentage (defined in Section
3.4) shall similarly be paid to the Trustee not later than the last day of
the 12-month period that immediately follows the end of the Plan Year to which
such Contributions pertain.
3.7. Return of Contributions for Mistake, Disqualification or Disallowance
of Deduction: The assets of the Trust Fund shall in no event be paid to or
revert to any Employer or be used for any purpose other than the exclusive
benefit of the Participants and their Beneficiaries and the reasonable expenses
of administering the Plan except that:
(a) If an Employer makes a Contribution by mistake of fact, such
mistaken Contribution shall revert and be repaid to an Employer within one
year after the payment of the Contribution;
(b) An Employer's Contribution for each Plan Year is conditioned on
the Plan's initial qualification under Section 401 of the Code and an
Employer's Contribution shall revert and be repaid to an Employer within
one year after the date of denial of the initial qualification of the Plan;
and
(c) An Employer's Contribution is conditioned upon the deductibility
thereof under Section 404 of the Code and, to the extent the deduction is
disallowed, the
III-30
<PAGE>
Contribution shall revert and be repaid to an Employer within one year
after the disallowance of the deduction.
In any case hereinabove described in clauses (a), (b), or (c) of this
Section, an Employer shall, subject to the limitations set forth below, have
exclusive authority and absolute discretion to determine whether a Contribution,
or any part thereof, shall revert and be repaid to it or shall instead remain a
part of the Trust Fund. The amount which may be repaid to an Employer under
clauses (a) or (c) of this Section may not exceed the excess of (i) the amount
contributed over (ii) the amount that would have been contributed had there not
occurred a mistake of fact or a mistake in determining the deduction. Earnings
attributable to such excess contribution shall not be repaid, and losses
attributable thereto shall reduce the amount which may be returned. If the
repayment of the amount attributable to the mistaken Contribution would cause
the balance of any Participant's Account to be reduced to less than the balance
which would have been in the Account had the mistaken amount not been
contributed, then the amount which may be repaid to an Employer shall be limited
so as to avoid such reduction.
3.8. Qualified Military Service: Notwithstanding any provision of this
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Section 414(u) of
the Code. To the extent that the Employer chooses to suspend loan payments
during participants' periods of qualified military service, loan payments will
be suspended under this Plan as permitted under Section 414(u) of the Code.
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<PAGE>
ARTICLE IV.
PARTICIPATION
4.1. Periodic Certification by Employer. As soon as practicable after such
Contribution is made, each Employer shall certify to the Committee the amount of
any Elective, Matching, Qualified Non-Elective, and/or Profit Sharing
Contribution that it made for the period then ended, the names of its
Participants entitled to share in each type of Contribution, the amount of each
of its Participant's Voluntary Contributions, if any, for such period, the
number of years of Active Service of its Participants, the amount of Considered
Compensation paid to each such Participant for such period, and the amount of
Considered Compensation paid to all its Participants for such period. Such
certification shall be conclusive evidence of such facts.
4.2. Allocation of Employer Contributions:
(a) Elective Contributions: As of the end of each month to which
Elective Contributions apply, Elective Contributions authorized by the
Participant for such month pursuant to a Compensation Deferral Agreement
(and permitted under applicable provisions of the Plan to be made by an
Employer on behalf of the Participant) shall be allocated to the
Participant's Employer Nonforfeitable Contributions Account.
(b) Matching Contributions: As of the last day of each applicable
month, Matching Contributions described in Section 3.4(b) shall be credited
to the Participant's Employer Contributions Account.
(c) Profit Sharing Contributions: As of the end of the Plan Year to
which any Profit Sharing Contribution applies, the Committee shall allocate
any Profit Sharing Contribution for the Plan Year to each Participant who
satisfies the requirements of Section 3.4(c) in the proportion that the
total Considered Compensation of each such Participant for such Plan Year
bears to the total Considered Compensation for all such Participants for
such Plan Year, and shall credit each such Participant's proportionate
share to the Participant's Employer Nonforfeitable Contributions Account
and/or Employer Contributions Account, as specified in resolutions adopted
by the Board and communicated to Participants; provided, however, absent
such specification, the Committee shall credit each Participant's
proportionate share to the Participant's Employer Contributions Account.
(d) Qualified Non-Elective Contributions: As of the end of the Plan
Year to which any Qualified Non-Elective Contribution applies, the
Committee shall allocate any Qualified Non-Elective Contribution for the
Plan Year to each eligible Participant who satisfies the requirements of
Section 3.4(d) in the proportion that total Considered Compensation of
each such Participant for the Plan Year bears to total Considered
Compensation for all such Participants for such Plan Year, and shall
credit each such Participant's proportionate share to the Participant's
Employer Nonforfeitable Contributions Account.
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<PAGE>
(e) Top-Heavy Minimum Contribution: Notwithstanding any other
provision of the Plan to the contrary, if the Plan is a Top-Heavy Plan
described in Article VII for the Plan Year, such portion of an Employer's
Contribution (made pursuant to applicable provisions of Section 3.4(f))
shall be allocated among an Employer's Participants who are in its employ
at the end of the Plan Year (including Participants who, except for
Section 7.4(f) of the Plan, may not otherwise be entitled to share in the
allocation) as may be required to ensure that each such Participant is
credited with an amount which when added to any other portion of an
Employer Contribution allocated to his Account will equal the minimum
allocation required under Section 7.3(c) of the Plan. Any such amount
allocated hereunder shall be specially allocated pursuant hereto and
credited to the Participant's Employer Contributions Account.
(f) Restoration of Forfeited Amounts: The Committee shall allocate
any Employer Contribution (made in accordance with applicable provisions
of Section 3.4(e) to restore an Account in accordance with the
requirements of Section 4.6) to the Account required to be restored under
applicable provisions of Section 4.6. The Committee shall temporarily hold
any Employer Contribution (made in accordance with Section 3.4 to restore
an Account in accordance with the requirements of Section 6.7) in an
unallocated distribution account until it can be paid out in accordance
with the provisions of Section 6.7. Distribution from the unallocated
distribution account to the appropriate person shall be made as soon as
practicable.
If a Participant has been Transferred during a pay period or the Plan
Year, such Participant shall be entitled to have allocated to his Account
a portion of an Employer Contribution made by each Employer by whom such
Participant was employed during such pay period or Plan Year, and such
Participant's share of each Employer's Contribution shall be computed with
respect to each such Employer in the manner hereinabove provided.
4.3. Limitation on Additions to Account:
Capitalized terms used in this Section which are not otherwise defined in
Article I of the Plan are defined in Section 4.3(d).
(a) Participant Covered Solely in This Plan: This Section 4.3(a)
applies only if the Participant does not participate in, and has never
participated in another qualified plan, a welfare benefit fund, as defined
in Section 419(e) of the Code, or an individual medical account, as defined
in Section 415(l)(2) of the Code, maintained by an Employer, which provides
an Annual Addition.
(i) If the Participant does not participate in, and has never
participated in another qualified plan, a welfare benefit fund, as
defined in Section 419(e) of the Code, or an individual medical
account, as defined in Section 415(1)(2) of the Code, maintained by
an Employer, the amount of Annual Additions which may be credited to
the Participant's Account as of any allocation date for any
Limitation Year will not exceed the lesser of
IV-2
<PAGE>
(1) the Maximum Permissible Amount or (2) any other limitation
contained in the Plan. If an Employer Contribution that would
otherwise be contributed or allocated to the Participant's Account
would cause the Annual Additions for the Limitation Year to exceed
the Maximum Permissible Amount, the amount contributed or allocated
will be reduced so that the Annual Additions for the Limitation Year
will equal the Maximum Permissible Amount.
(ii) Prior to the determination of the Participant's actual
compensation for a Limitation Year, an Employer may determine the
Maximum Permissible Amount on the basis of a reasonable estimation of
the Participant's annual Compensation for such Limitation Year,
uniformly determined for all Participants similarly situated.
(iii) As soon as is administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount for such
Limitation Year shall be determined on the basis of the Participant's
actual Compensation for such Limitation Year.
(iv) Pursuant to Section 1.415-6(b)(6) of the income tax
regulations, if, as a result of the allocation of forfeitures, a
reasonable error in estimating a Participant's annual compensation, a
reasonable error in determining the amount of elective deferrals
(within the meaning of Section 3.2 of the Plan and Section 402(g)(3)
of the Code) that may be made with respect to a Participant under the
limits of Section 415 of the Code, or any other facts and
circumstances as the Internal Revenue Service determines justify the
availability of this Section 4.3(a)(iv), there is an Excess Amount
with respect to a Participant for a Limitation Year, such Excess
Amount shall be disposed of as follows:
(1) First, if the Participant is in the service of an
Employer at the end of the Limitation Year, then such Excess
Amounts in the Participant's Account must not be distributed to
the Participant, but shall be reallocated to a temporary
suspense account and shall be reapplied to reduce future
Employer Contributions under the Plan for such Participant in
the next Limitation Year, and for each succeeding Limitation
Year, if necessary.
(2) If after application of Section 4.3(a)(iv)(1) an
Excess Amount still exists, and the Participant is not in the
service of an Employer at the end of the Limitation Year, then
such Excess Amounts in the Participant's Account must not be
distributed to the Participant, but shall be reallocated to a
temporary suspense account and shall be reapplied to reduce
future Employer
IV-3
<PAGE>
Contributions for all remaining Participants in the next
Limitation Year and each succeeding Limitation Year if
necessary.
(3) If a temporary suspense account is in existence at
any time during, the Limitation Year pursuant to this Section,
it will not participate in the allocation of the Trust Fund's
investment gains and losses. If a temporary suspense account
is in existence at any time during a Limitation Year, all
amounts in the suspense account must be applied as set forth
above before any Employer or Employee Contributions may be made
to the Plan for that Limitation Year. Excess Amounts may not be
distributed to Participants.
If due to a reasonable error in determining the amount of
Elective Contributions that may be made within the limits of Section
415 of the Code, in accordance with Section 1.415-6(b)(6) of the
income tax regulations, the Plan shall first return any Employee
Voluntary Contributions (and distribute any earnings attributable
thereto) to the extent that the return reduces the Excess Amount, and
if after such return and distribution, an Excess Amount still exists,
the Plan shall next distribute Elective Contributions (and any
earnings attributable thereto) to the extent that such distribution
reduces the Excess Amount. Earnings shall be determined in the same
manner as for remedying excess Employer Contributions under Section
3.4(i) and excess Contributions under Section 3.4(l), as applicable.
Any such amounts returned or distributed shall not be taken into
account for purposes of computing (i) the dollar limit on Elective
Contributions under Section 3.2 of the Plan and Section 402(g) of the
Code, (ii) the ADP test under Section 3.4 of the Plan and Section
401(k)(3) of the Code, and (iii) the ACP test under Section 3.4 of
the Plan and Section 401(m)(2) of the Code.
(b) Participant Covered Under Defined Contribution Plan: This
Section 4.3(b) applies if, in addition to the Plan, the Participant
is covered under another qualified plan which is a defined
contribution plan, a welfare benefit fund, as defined in Section
419(e) of the Code, or an individual medical account, as defined in
Section 415(l)(2) of the Code, maintained by an Employer during any
Limitation Year, which provides an Annual Addition during the
Limitation Year.
(i) The Annual Additions which may be credited to a
Participant's Account under the Plan for any such Limitation Year
will not exceed the lesser of (1) the Maximum Permissible Amount
reduced by the Annual Additions credited to a Participant's account
under the other plans, welfare benefit funds and individual medical
accounts for the same Limitation Year or (2) any other limitation
contained in the Plan. If the Annual Additions with respect to the
Participant under other defined contribution plans, welfare benefit
funds, and individual medical accounts, maintained by an Employer are
less than the Maximum Permissible Amount and an Employer Contribution
that would otherwise be contributed or allocated to the Participant's
Account under the Plan would
IV-4
<PAGE>
cause the Annual Additions for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be reduced so
that the Annual Additions under all such plans and funds for the
Limitation Year will equal the Maximum Permissible Amount. If the
Annual Additions with respect to the Participant under such other
defined contribution plans, welfare benefit funds, and individual
medical accounts, in the aggregate are equal to or greater than the
Maximum Permissible Amount, no amount will be contributed or
allocated to the Participant's Account under the Plan for the
Limitation Year.
(ii) Prior to determining the Participant's actual Compensation
for the Limitation Year, an Employer may determine the Maximum
Permissible Amount in the manner described in Section 4.3(a)(ii).
(iii) As soon as is administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount for the
Limitation Year shall be determined on the basis of the Participant's
actual Compensation for such Limitation Year.
(iv) Pursuant to Section 1.415-6(b)(6) of the income tax
regulations, if, as a result of the allocation of forfeitures, a
reasonable error in estimating a Participant's annual compensation,
a reasonable error in determining the amount of elective deferrals
(within the meaning of Section 3.2 of the Plan and Section 402(g)(3)
of the Code) that may be made with respect to a Participant under
the limits of Section 415 of the Code, or any other facts and
circumstances as the Internal Revenue Service determines justify the
availability of this Section 4.3(b)(iv), a Participant's Annual
Additions under the Plan and all such other plans result in an Excess
Amount, such Excess Amount shall be deemed to consist of the Annual
Additions last allocated, except that Annual Additions attributable
to a welfare benefit fund will be deemed to have been allocated
first regardless of the actual allocation date.
(v) If an Excess Amount was allocated to a Participant's
Account on an allocation date of the Plan which coincides with an
allocation date of another plan, the Excess Amount attributed to the
Plan will be the product of,
(1) the total Excess Amount allocated as of such date,
multiplied by
(2) the ratio of (A) the Annual Additions allocated to
the Participant's Account for the Limitation Year as of such
date under the Plan, divided by (B) the total Annual Additions
allocated to the Participant's Account for the Limitation Year
as of such date under the Plan and all qualified defined
contribution plans.
IV-5
<PAGE>
(vi) Any Excess Amounts attributed to the Plan shall be
disposed of as provided in Section 4.3(a)(iv).
If due to a reasonable error in determining the amount of Elective
Contributions that may be made within the limits of Section 415 of the
Code, in accordance with Section 1.415-6(b)(6) of the income tax
regulations, the Plan shall distribute Elective Contributions to the
extent that such distribution reduces the Excess Amount. Any such amounts
distributed shall not be taken into account for purposes of computing (i)
the dollar limit on Elective Contributions under Section 3.2 of the Plan
and Section 402(c) of the Code, (ii) the ADP test under Section 3.4 of
the Plan and Section 401(k)(3) of the Code, and (iii) the ACP test under
Section 3.4 of the Plan and Section 401(m)(2) of the Code.
(c) Participant Covered Under Defined Benefit Plan: If an Employer
maintains, or at any time maintained, a qualified defined benefit plan
covering any Participant of the Plan, the sum of the Participant's
Defined Benefit Fraction and Defined Contribution Fraction will not exceed
1.0. For purposes of this Section 4.3, all defined contribution plans of
an Employer are to be treated as one defined contribution plan and all
defined benefit plans of an Employer are to be treated as one defined
benefit plan, whether or not such plans have been terminated. If the sum
of the Defined Contribution Fraction and Defined Benefit Plan Fraction
exceeds 1.0, the rate of accrual of the annual benefit of the defined
benefit plan(s) will be reduced so that the sum of the fractions will not
exceed 1.0. In no event will the annual benefit be decreased below the
amount of the accrued benefit to date. If additional reductions are
required for the sum of the fractions to equal 1.0, the reductions will
then be made to the Annual Additions of the defined contribution plans. If
the defined benefit plan does not contain provisions which correspond to
this provision, the Annual Addition to the defined contribution plans for
the Limitation Year will be reduced so that the sum of the fractions will
not exceed 1.0.
(d) Definitions: For purposes of this Section 4.3, the following
terms shall be defined as follows:
(i) Annual Addition -- With respect to any Participant an
Annual Addition shall be the sum, for the Limitation Year, of (1) all
Employer Contributions allocated to his Account; (2) all forfeitures
allocated to his Account; and (3) the amount of any nondeductible
after-tax Participant Voluntary Contributions allocated to his
Account. Moreover, any Excess Amounts applied under Section
4.3(a)(iv) or 4.3(b)(vi) during the Limitation Year to reduce
Employer Contributions shall be considered to be Annual Additions for
such Limitation Year. Subject to the correction rules of Section
4.3(a)(iv), Contributions do not fail to be Annual Additions merely
because they are excess deferrals (described in Section 3.2(c) of the
Plan), excess contributions above the ADP limits (described in
Section 3.4(h) of the Plan), or excess aggregate contributions above
the ACP limits (described in Section 3.4(j) of the Plan); provided,
however, excess deferrals which are timely distributed by April 15
IV-6
<PAGE>
following the year of deferral to the applicable Participant pursuant
to Section 3.2(d) of the Plan are not Annual Additions.
Amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Section 415(l) of the Code, which is
part of a defined benefit-plan maintained by an Employer, are treated
as Annual Additions to a defined contribution plan. Also, amounts
derived from contributions paid or accrued after December 31, 1985,
in taxable years ending after such date, which are attributable to
postretirement medical benefits allocated to the separate account of
a key employee, as defined in Section 419A(d)(3) of the Code, under a
welfare benefit fund, as defined in Section 419(e) of the Code,
maintained by an Employer, are treated as Annual Additions to a
defined contribution plan. The Annual Addition for any Limitation
Year beginning before January 1, 1987 shall not be recomputed to
treat all Employee Contributions as Annual Additions.
(ii) Compensation -- For each Limitation Year commencing after
December 31, 1989, a Participant's wages (as defined in Section
3401(a) of the Code for purposes of income tax withholding at the
source) that are paid (within the meaning of Section 1.415-2(d)(3)
and (4) of the income tax regulations) to the Participant by an
Employer during the Limitation Year for services performed and
reportable on the Participant's form W-2 (or its successor), but
determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment
or the services performed (such as the exception for agricultural
labor in Section 3401(a)(2) of the Code). For each Limitation Year
commencing prior to January 1, 1990, Compensation for purposes of
this Section shall be defined by reference to Section 1.415-2(d)(1)
and (2) of the income tax regulations.
Notwithstanding any contrary provision of this Plan, for Plan Years
beginning on and after January 1, 1998, Compensation for purposes of
this Section 4.3 of the Plan shall include (A) any elective deferral
as described in Section 402(g)(3) of the Code and (B) any amount
which is contributed or deferred by the Employer at the election of
the Employee and which is not includible in the gross income of the
Employee by reason of Section 125 or Section 457 of the Code.
(iii) Defined Benefit Fraction -- A fraction, the numerator of
which is the sum of the Participant's Projected Annual Benefits under
all the defined benefit plans (whether or not terminated) maintained
by an Employer and, subject to application of Section 416(h) of the
Code and Article VII of the Plan relating to Top-Heavy Plans, the
denominator of which is the lesser of 125 percent of the dollar
limitation in effect for the Limitation Year under Section
415(b)(1)(A) and Section 415(d) of the
IV-7
<PAGE>
Code or 140 percent of the Highest Average Compensation, including
any adjustments under Section 415(b) of the Code.
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 an 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 had 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 of the
Code and regulations or other authority issued thereunder by the
appropriate governmental authority for all Limitation Years beginning
before January 1, 1987.
(iv) Defined Contribution Fraction -- A fraction, the numerator
of which is the sum of the Annual Additions to the Participant's
account under all the defined contribution plans (whether or not
terminated) maintained by an Employer for the current and all prior
Limitation Years (including the Annual Additions attributable to the
Participant's nondeductible employee contributions to all defined
benefit plans, whether or not terminated, maintained by an Employer,
and the Annual Additions to all welfare benefit funds as defined in
Section 419(e) of the Code, and individual medical accounts, as
defined in Section 415(1)(2) of the Code, maintained by an Employer),
and the denominator of which is the sum of the Maximum Aggregate
Amounts for the current and all prior Limitation Years of service
with an Employer (regardless of whether a defined contribution plan
was maintained by an Employer). Subject to application of Section
416(h) of the Code and Article VII of the Plan relating to Top-Heavy
Plans, the Maximum Aggregate Amount in any Limitation Year is the
lesser of 125 percent of the dollar limitation in effect under
Section 415(c)(1)(A) of the Code or 35 percent of the Participant's
Compensation for such year.
If the Participant was a Participant as of the end of the first
day of the first Limitation Year beginning after December 31, 1986,
in one or more defined contribution plans maintained by an 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 the
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
IV-8
<PAGE>
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 415 limitation
applicable to the first Limitation Year beginning on or after
January 1, 1987.
The Annual Addition for any Limitation Year beginning before
January 1, 1987, shall not be recomputed to treat any Employee
Contributions as Annual Additions.
(v) Employer -- An Employer that adopts the Plan. In the case
of a group of Employers which constitutes a controlled group of
corporations (as defined in Section 414(b) of the Code as modified by
Section 415(h) of the Code) or which constitutes trades or businesses
(whether or not incorporated) which are under common control (as
defined in Section 414(c) as modified by Section 415(h) of the Code)
or all members of an affiliated service group (as defined in Section
414(m) of the Code) or any other entity required to be aggregated
with an Employer pursuant to regulations under Section 414(o) of the
Code, all such Employers shall be considered a single Employer for
purposes of applying the limitations of this Section 4.3.
(vi) Excess Amount -- The excess of the Annual Additions
credited to the Participant's Account for the Limitation Year over
the Maximum Permissible Amount.
(vii) Highest Average Compensation -- The average compensation
for the three consecutive years of service with an Employer that
produces the highest average. A year of service with an Employer is
the 12-consecutive-month period which corresponds with the Limitation
Year.
(viii) Limitation Year -- The 12-consecutive-month period which
begins on the first day of the Plan Year and anniversaries thereof.
All qualified plans maintained by an Employer must use the same
Limitation Year. If the Limitation Year is amended to a different
12-consecutive-month period, the new Limitation Year must begin on a
date within the Limitation Year in which the amendment is made.
(ix) Maximum Permissible Amount -- The Maximum Permissible
Amount with respect to any Participant shall be the lesser of
(1) $30,000 (or, if greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the Code as in effect
for the Limitation Year) or (2) except as otherwise provided below,
25 percent of his actual Compensation for the Limitation Year.
Effective on January 1 of the calendar year prescribed in Section
415(d) of the Code and each January 1 thereafter, the $30,000
limitation above will be automatically
IV-9
<PAGE>
adjusted to the new dollar limitation determined by the Commissioner
of Internal Revenue for that calendar year in accordance with
applicable provisions of Sections 415(b), 415(c) and 415(d) of the
Code. The new limitation will apply to Limitation Years ending within
the calendar year of the date of the adjustment. The 25 percent of
actual Compensation limitation referred to above shall not apply to
any contribution for medical benefits (within the meaning of Section
401(h) or Section 419A(d)(2) of the Code) after separation from
service which is otherwise treated as an Annual Addition, or to any
other amount otherwise treated as an Annual Addition under Section
415(l)(1) or Section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment
changing the limitation to a different 12-consecutive-month period,
the Maximum Permissible Amount shall not exceed the defined
contribution dollar limitation for the short Limitation Year
determined as follows: the dollar limitation in effect for the
calendar year in which the short Limitation Year ends will be
multiplied by a fraction, the numerator of which is the number of
months in the short Limitation Year, and the denominator of which is
12.
(x) Projected Annual Benefit -- A Participant's annual
retirement benefit (adjusted to the actuarial equivalent of a
straight life annuity if expressed in a form other than a straight
life or qualified joint and survivor annuity) to which the
Participant would be entitled under the respective plan, assuming
that the Participant will continue employment until the later of
current age or normal retirement age under the respective plan, and
that the participant's compensation for the current Limitation Year
and all other relevant factors used to determine benefits under the
respective plan will remain constant for all future Limitation Years.
4.4. Periodic Valuation of Trust Fund: Subject to Sections 4.5 and 4.10,
as of the last day of each Plan Year (or such other date or dates as may be
prescribed by the Committee), the Trustee shall determine the amount of income
earned or loss incurred by the Trust Fund during the period since the last
Valuation Date, taking into account estimated expenses, and shall provide such
information to the Committee. The Committee shall then allocate the income or
loss among the Participants based upon the daily compound interest earned or
lost by each Participant's Account during the period. Additionally, as of the
end of the Plan Year, the Trustee shall revalue the Trust Fund at fair market
value, determining appreciation or depreciation, if any, and shall determine the
exact income or loss of the Trust Fund, taking into account any understatement
or overstatement of income because the estimated investment fees and other
expenses differed from the actual expenses for the Plan Year. The Trustee then
shall provide such information to the Committee. The Committee shall then
allocate all such appreciation or depreciation and all such understatement or
overstatement of income or loss among the Participants in the same ratio that
the income or loss was allocated to each Participant's Account during the Plan
Year as compared to the income allocated to all Participants' Accounts during
the Plan Year who are Participants of the Plan on the last day of the Plan Year,
crediting each
IV-10
<PAGE>
such Participant's individual accounts and subaccounts with their proportionate
share based upon the income or loss allocated to such accounts for the Plan
Year, as compared to the income or loss allocated to the whole of the
Participant's Account for that Plan Year.
Prior to the allocations described in this Section and subject to Section
4.10, Account balances shall be reduced as appropriate by forfeitures,
withdrawals, payments or distributions, or other amounts properly chargeable to
Participants' Accounts under the Plan during the applicable accounting period.
Notwithstanding the above, solely for purposes of the allocations made under
this Section pursuant to nondiscriminatory rules which may be established by the
Committee, any Rollover Contributions allocated and credited on or after the
first day of the applicable accounting period to the Participant's Rollover
Account, if any, and/or any Contributions allocated and credited on or after the
first day of the applicable accounting period to the Participant's Employee
Account, if any, and/or Employer Account, if any, shall be taken into account to
ensure that such amounts transferred or contributed to the Plan share in the
allocations hereunder with respect to such accounting period; provided, however,
the Committee shall not be required to establish any such rules pursuant hereto.
4.5. Daily Valuation of Trust Fund: To the extent that the Plan invests in
assets that are subject to daily valuation, the following provisions shall
apply. For purposes of valuation of the Trust Fund and distribution of the
accrued vested benefit of each Participant, the term "Valuation Date" shall mean
the date upon which a Participant's Account may be valued for purposes of
investment direction and accrued vested benefit distribution. Each business day
of the Plan Year shall be considered as a Valuation Date. The Trustee shall,
following the end of each business day, value all assets of the Trust Fund as
of that business day in the following manner:
(a) The Trustee shall first compute the fair market value of the
securities and/or the other assets in each investment fund, designated by
the Committee for direction of investment by the Participants of this Plan.
This market value shall be equal to the market price of the fund on the
prior business day applied to the balance of the fund as of the close of
business on the current business day.
(b) The Trustee shall, following, the computation of the fair market
value, compute each Participant's share of the fund and assign a gain or
loss to each Participant's account.
(c) The Trustee shall then account for any requests for additions or
withdrawals made to or from a specific designated investment fund by any
Participant, including allocations of Employer contributions and
forfeitures made as of the date of such allocations and received by the
Trustee prior to the stated deadline on such business day.
In completing the valuation procedure described above, such adjustments in
the amounts credited to such accounts shall be deemed to have been made on the
business day to which the investment activity relates. No Employer profit
sharing contribution or Employer deferred pay contribution made by an Employer
pursuant to this Plan shall be taken into account until the allocation date
coinciding with or next following the date such contribution was both actually
IV-11
<PAGE>
paid to the Trustee by an Employer and allocated among the accounts of
Participants. It is intended that this Section operate to allocate among each
Participant Account in the Trust Fund, all income of the Trust Fund and changes
in the value of the Trust Fund's assets.
4.6. Forfeitures and Allocation Thereof:
(a) General Rule: In the event that a Participant terminates
employment with any Employer and all Affiliated Employers, his vested
interest in his Account will be paid (or deemed to be paid in the case of
a nonvested Participant, as described below) in accordance with this
Section and Section 6.6, and any nonvested amount shall be forfeited at
such time as is provided under subsequent provisions of this Section. Not
later than the last day of the Plan Year in which such distribution (or
deemed distribution) occurred, such forfeiture shall be applied first to
reinstate any Account required to be reinstated during the Plan Year under
the subsequent provisions of this Section, and any remaining forfeitures
shall then be applied to reduce any subsequent Contributions of the
Employer that contributed with respect to the amounts forfeited.
(b) Actual and Deemed Cash-outs of Nonvested or Partially Vested
Accounts Within Two Plan Years After the Participant's Termination of
Employment; Reinstatement of Such Accounts: For Plan Years beginning on
and after January 1, 1987, with respect to any Participant who terminates
employment with any Employer and all Affiliated Employers and who (i)
either (A) has a zero percent (0%) vested interest in his Employer
Contributions Account or (B) has a vested interest in his Employer
Contributions Account that is greater than zero percent (0%), but is less
than one hundred percent (100%) and (ii) pursuant to Section 6.6, receives
a distribution (including a direct rollover pursuant to Section 6.6(c) of
all or part of the amount distributable) of the full amount of his entire
vested interest in his Employer Account in the form of a lump sum
distribution by the close of the second Plan Year following the Plan Year
in which his employment terminated (or is deemed under this Section and
Section 6.6 to have received such distribution of zero dollars on the
date his employment terminated in the case of a nonvested terminated
Participant described in subclause (i)(A) above), which distribution (i)
includes the full amount of his entire vested interest in his Employer
Account as a result of his termination of participation in the Plan, and
(ii) is $3,500 (or for Plan Years beginning on and after January 1, 1998,
$5,000) or less, or is more than $3,500 (or for Plan Years beginning on and
after January 1, 1998, $5,000) but is consented to, then, the nonvested,
forfeitable amount credited to his Employer Contributions Account (as of
the Valuation Date with respect to which the amount of the distribution is
determined) shall become a forfeiture as of the distribution date (or as of
the date his employment terminated if no amount is payable from Employer
Contributions made to the Plan on his behalf, but such Participant is
deemed under this Section and Section 6.6 to have received a distribution
of zero dollars on the date his employment terminated). Provided, however,
in the event that a partially vested terminated Participant (described in
subclause (1)(B) of the first sentence of this Section 4.6(b)) who
received a distribution described in the immediately preceeding sentence
resumes employment covered under the Plan, his Employer Account shall be
restored pursuant to Section 4.6(c) if he repays to the Trustee the full
amount of such distribution attributable to Employer Contributions
IV-12
<PAGE>
prior to the earlier of (i) the date on which the Participant incurs a
period of five (5) consecutive one year periods of severance, or (ii) five
(5) years after the first date that he is subsequently re-employed by the
Employer. If a terminated Participant with no amount payable from Employer
Contributions made to the Plan on his behalf had a zero percent (0%) vested
interest in his Employer Contributions Account at the time of his
termination of employment and thus is deemed under this Section and Section
6.6 to have received a distribution of a vested interest in his Employer
Contributions Account equal to zero dollars (thus actually receiving no
distribution from his Employer Contributions Account as a result of his
termination of employment), his Employer Contributions Account will be
restored if he resumes employment covered under the Plan prior to incurring
a period of five (5) consecutive one year periods of severance. Such
reemployed Participant shall be deemed to have repaid a distribution of
zero dollars on the date of his reemployment with the Employer.
(c) Amount and Timing of Restoration of Accounts: With respect to
Employer Accounts which are entitled to be restored as a result of
compliance with all of the requirements of Section 4.6(b), the amount to be
restored under the provisions of this Section 4.6(c) shall be the amount
credited to the Participant's Employer Account, both the vested and the
nonvested portions, immediately prior to the rehired Participant's
distribution (or deemed distribution), unadjusted by any subsequent gains
or losses. Such restoration shall be made as soon as administratively
practicable after the later of the date the Participant resumes employment
covered under the Plan or the date on which any required repayment is
completed and shall be effective as of the end of the Plan Year (or other
period designated by the Committee) coincident with or next following the
occurrence of the event which gives rise to the restoration of the
Participant's Employer Account.
Except as otherwise provided above, a Participant's Employer Account
shall not be restored upon resumption of employment covered under the Plan.
Any portion of the Trust Fund attributable to Active Service prior to
resumption of employment by a Participant whose Employer Account has not
been restored shall be held and distributed in accordance with applicable
provisions of the Plan and elections made thereunder. Separate accounts may
be established and maintained for Contributions allocable to such a
Participant after his resumption of employment covered under the Plan.
(d) Cash-outs of Fully Vested Accounts Within Two Plan Years After
the Participant's Termination of Employment; Non-Reinstatement of Such
Accounts: With respect to any Participant (i) who terminates employment
with any Employer and all Affiliated Employers, (ii) who has a vested
interest in his Employer Contributions Account equal to 100% and (iii) who
received a distribution from his Employer Account in the form of a lump sum
distribution by the close of the second Plan Year following the Plan Year
in which his employment terminated, which distribution (i) includes the
full amount of his entire vested interest in his Employer Account as a
result of his termination of participation in the Plan, and (ii) is $3,500
(or for Plan Years beginning on and after January 1, 1998, $5,000) or less,
or is more than $3,500 (or for Plan Years beginning on and after January
1, 1998, $5,000) but is consented to, shall not be permitted to repay to
IV-13
<PAGE>
the Trustee the full amount of such distribution attributable to Employer
Contributions in order to restore his Employer Account.
(e) Distributions Other than Lump Sum Payments Made After the
Participant's Termination of Employment: For Plan Years beginning on and
after January 1, 1987, with respect to a Participant (i) who terminates
employment with any Employer and all Affiliated Employers with greater than
a zero percent (0%), but less than a one hundred percent (100%), vested
interest in his Employer Contributions Account and (ii) who received
payment or commenced to receive payments of a termination distribution from
his Employer Account in a form other than a lump sum distribution subject
to the provisions of Section 4.6(b), any amount remaining in his Employer
Contributions Account shall continue to be maintained as a separate
account. At any relevant time, such Participant's nonforfeitable portion of
his separate account shall be determined in accordance with the following
formula:
X = P (AB + D) - D
For purposes of applying the formula: X is the nonforfeitable portion of
such separate account at the relevant time; P is the Participant's vested
interest in his Employer Contributions Account at the relevant time; AB is
the balance of such separate account at the relevant time; and D is the
amount of the distribution. For all other purposes of the Plan, a
Participant's separate account shall be treated as an Employer
Contributions Account. The forfeitable portion of a terminated
Participant's separate Employer Contributions Account that is subject to
such formula shall be forfeited on the date on which such Participant
incurs a period of five (5) consecutive severance.
(f) Deferred Distributions of Partially Vested Accounts: With respect
to a Participant (i) who terminates employment with any Employer and all
Affiliated Employers with greater than a zero percent (0%), but less than a
one hundred percent (100%), vested interest in his Employer Contributions
Account and (ii) who is not otherwise subject to the forfeiture provisions
of Sections 4.6(b) or (e) above, the forfeitable portion of such terminated
Participant's Employer Contributions Account shall be forfeited on the date
on which such Participant incurs a period of five (5) consecutive one year
periods of severance.
4.7. Effective Date of Allocations and Adjustments: The Committee will
credit to each eligible Participant's Account the Participant's portion of an
Employer Contributions referred to in Section 4.2 so that all Employer
Contributions will become effective and will be credited to each Participant's
Account as of the end of the Plan Year (or such shorter accounting period as may
be prescribed in Sections 4.2, 4.5, or by the Committee) for which they are
attributable.
In addition, any amounts contributed to any Participant's Employee
Account, shall be credited as of the last day of the month in which the
Employee Voluntary Contribution was made. Furthermore, any amount contributed
to any Participant's Rollover Account shall be
IV-14
<PAGE>
credited to the appropriate Account as of the end of the Plan Year (or such
shorter accounting period as may be prescribed by the Committee) to which they
are attributable.
The Committee shall credit to each Participant's Account such
Participant's portion of the (i) income or loss incurred by the Trust Fund as
referred to in Section 4.4, and (ii) appreciation or depreciation of the Trust
Fund and any understatement or overstatement referred to in Section 4.4, as of
the end of the Plan Year (or such shorter accounting period as ID may be
prescribed by the Committee) for which they are attributable.
In the event that interim adjustments and allocations are required by
Section 4.5, they will become effective and will be entered in each
Participant's Account as of the end of the applicable accounting period next
preceding the event requiring the interim adjustment and, additionally,
allocation and distribution of benefits during the applicable accounting period
in which the interim adjustment or allocation is made shall take into account
the interim adjustments and allocations.
4.8. Accounting for Transferred Participant: In the case of a Participant
who is Transferred during, a Plan Year, the Committee, as of the date the
Participant is Transferred, shall transfer on their books such Participant's
Account (including that portion of the Trust Fund allocated thereto) so that
such Participant's Account will always be reflected on the Committee's books as
being, attributable to an Employer with whom such Participant is currently
employed.
4.9. No Vesting Unless Otherwise Prescribed: No allocations, adjustments,
credits or transfers shall ever vest in any Participant any right, title or
interest in the Trust Fund except at the times and upon the terms and conditions
herein set forth. The Trust Fund shall be, as to all Participant's Accounts, a
commingled fund.
4.10. Investment Elections with Respect to Commingled Funds:
(a) Investment Funds Established: The assets of the Plan shall be
invested in one or more categories of assets (which conform to any
portfolio standards and guidelines established by the Trustee), including
common stock issued by the Plan Sponsor, as may be determined from time to
time in the discretion of the Committee and announced and made available on
an equal basis to all Participants subject to the provisions of this
Section 4.10. When the Trustee or any agent thereof (i) receives funds to
be invested or determines that assets from those funds, if applicable,
should be sold and the proceeds held for a period of time pending
reinvestment or other purpose, or (ii) has notice that required or
appropriate filings with the Securities and Exchange Commission have not
been timely accepted as filed and funds received have been designated to be
invested in shares of common stock issued by the Plan Sponsor, then, Prior
to completion of required or appropriate filings with the Securities and
Exchange Commission, such funds may be held in cash or invested in short-
term, investments such as U.S. Treasury bills, commercial paper, demand
notes, money market funds, any savings accounts, money market accounts,
certificates of deposit or like investments with the commercial department
of any bank, including any bank serving as Trustee, as long as they bear a
reasonable rate of interest and the bank is supervised by the United States
IV-15
<PAGE>
or a state, any common, pooled or collective or group trust funds, mutual
funds or insurance contracts, any of which any bank, including any bank
serving as Trustee or any of its affiliates, or any other corporation may
now have or in the future may adopt for such short-term investments (the
governing document of such common, pooled or collective trust fund(s) being
hereby incorporated herein by reference), and other similar assets which
may be offered by the federal government, or any national or state bank
(whether or not serving as Trustee hereunder), and as may be determined by
the Trustee, in its discretion, which assets will remain a part of the fund
to which they would otherwise relate.
(b) Election Procedures Established: If Participants are given the
right to designate the funds in which their Accounts are invested pursuant
to Section 4.10(a), on such form as shall be prescribed by the Committee,
each Participant shall designate the percentage of his Account (as such
Account presently exists and the percentage of future contributions, if
any, to be allocated to such Account) to be invested in any one or more
funds, as such funds may be established from time to time as set forth in
Section 4.10(a). At such times as shall be prescribed by the Committee in
its discretion, the percentage elected to be placed in any one fund may be
changed by the Participant, which change will be effective after such
period of time as shall be established by the Committee. The Committee
shall determine whether any such change as to investments will change the
Participant's Account as it presently exists or whether it will be only
effective as to succeeding investments of Contributions; however, any such
change, when made, shall continue to be effective for all succeeding
investments of Contributions until revoked or changed in a like manner. The
rules established and the discretion exercised by the Committee hereunder
shall apply to all Participants on a nondiscriminatory basis. The rules and
procedures that are prescribed by the Committee as described herein may
include Telephone Procedures, and in such case the Trustee shall be
authorized to accept elections made by Participants pursuant to such
Telephone Procedures.
(c) Investment in Employer Securities: Notwithstanding anything, to
the contrary herein, except as otherwise may be determined by the Committee
in its sole discretion, no investment shall be made by the Trustee in any
securities other than those permitted under applicable provisions of The
Securities Act of the State of Texas, as amended from time to time, and so
long as the transactions contemplated by this Plan remain otherwise
exempt from The Securities Act of the State of Texas and the Trustee is not
required to register the Plan as a security under applicable provisions of
such act. In addition, except as otherwise may be determined by the
Committee in its sole discretion, unless the Plan would not have to be
registered under the federal Securities Act of 1933, no amount in
excess of an Employer's Contribution (other than Elective Contributions)
shall be allocated to the purchase of securities issued by an Employer or
any company directly or indirectly controlling, controlled by or under
common control with an Employer. Any such determination by the Committee
shall be evidenced by formal minutes reflecting such action of the
Committee or by a unanimous written consent of the members of the Committee
and shall be appropriately communicated to the affected Participants, and
must be preapproved by the Board or ratified by the Board at the next
regularly scheduled meeting of the Board.
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<PAGE>
In the event that common stock of the Plan Sponsor ("Company Stock")
is authorized by the Committee for investment through a fund ("Company
Stock Fund") under which shares of Company Stock are allocated to the
Accounts of Participants and Beneficiaries, who pursuant to the Plan,
direct the Trustee to invest in the Company Stock Fund Sections 9.4 and 9.5
shall govern the rights of the affected Participants and Beneficiaries with
respect to voting and tending, shares of Company Stock allocated to their
Accounts.
Notwithstanding anything to the contrary herein, in order to assure
compliance with rules promulgated under the Securities Exchange Act of 1934
(the "Exchange Act"), the Committee may, in its sole discretion, impose
additional restrictions on investment in the Company Stock Fund by any
Participant who at any time during any give Plan Year is subject to the
provisions of Section 16 of the Exchange Act. Such restrictions may
include, without limitation, an unqualified prohibition on investment in
the Company Stock Fund by any Participant described in the immediately
preceding sentence. Any such decision by the Committee shall be evidenced
by formal minutes reflecting such action of the Committee or by a
unanimous written consent of the members of the Committee and shall be
appropriately communicated to the affected Participants, and must be pre-
approved by the Board or ratified by the Board at the next regularly
scheduled meeting of the Board.
(d) Allocations Attributable to Directed Investments in Commingled
Funds: If Participants are given the right to designate the funds in which
their Accounts are invested pursuant to Section 4.10(a), each valuation and
determination of income or loss and appreciation or depreciation provided
for hereunder shall reflect the value of the different categories of assets
separately. The Committee shall allocate appreciation, depreciation,
income, and loss attributable to each such category of assets among the
Participants' various Accounts (each type of Account being considered
separately) in the ratio that the amount in each Account which was invested
in a particular category as of the first day of the applicable accounting
period bears to the amount in all Accounts which was invested in such
category as of the first day of such applicable accounting period.
(e) Valuation Dates: Pursuant to nondiscriminatory rules established
by the Committee and uniformly applied to similarly situated Participants,
separate valuation dates may be established (with respect to one
Participant's Account which may not apply to another Account) as necessary
or appropriate to facilitate measurement of investment performance, changes
in investments or distribution of Accounts of Participants who direct (or
are deemed to direct) investment thereof pursuant to the provisions of this
Section 4.10.
(f) Section 404(c) of the Act: Except as may otherwise be prescribed
by the, Committee, categories of assets, election procedures and other
rules relating to investment elections under this Section shall comply with
the requirements of Section 404(c) of the Act.
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<PAGE>
4.11. Special Transition Rule: Notwithstanding any other provisions of the
Plan to the contrary, if the Plan is retroactively effective with respect to any
Plan Year (or other applicable accounting, period) of a Prior Plan, the Account
of any individual who was a participant or Participant during such Plan Year (or
other applicable accounting period) shall be credited with any Employer
Contributions under the Plan attributable to such Plan Year if such
Participant's Account would have been entitled to such an allocation under the
Prior Plan immediately prior to the later of (i) the adoption of or (ii) the
effective date of the amendment and continuation of the Prior Plan under the
form of the Plan. In addition, notwithstanding, any other provision of the Plan
to the contrary, if the participant or Participant described in the preceding
sentence would have been so entitled under the Prior Plan immediately prior to
the later of (i) the adoption of or (ii) the effective date of, its amendment
and continuation under the form of the Plan, the Account of such Participant
shall be charged or credited with its proportionate share of the Trust Fund's
income, gains, losses, appreciation or depreciation attributable to the Plan
Year or other applicable accounting period (or portion thereof).
IV-18
<PAGE>
ARTICLE V.
RETIREMENT
5.1. Early Retirement: A participant may retire on the first day of any
month coincident with or next following the date on which he has attained age
fifty-five (55) years or older and has completed at least five (5) years of
Active Service for vesting purposes.
5.2. Normal Retirement: A Participant may retire on the first day of the
month coincident with or immediately following his attainment of normal
retirement age. A Participant's normal retirement age shall be his sixty-fifth
(65th) birthday, from which time he shall henceforth be one hundred percent
(100%) vested in his Account.
5.3. Late Retirement: A Participant may continue his employment after he
attains normal retirement age (subject to satisfactory performance of his
assigned duties); provided, that he shall have the right to retire on any
subsequent date.
5.4. Rights of Participants and Prohibition of Unauthorized Distribution:
Until a Participant retires or otherwise terminates service he shall be accorded
all rights as a Participant under the Plan, but, subject to Section 6.6, he
shall receive no distribution until he actually retires or otherwise becomes
entitled to a distribution under the provisions of Article VI.
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<PAGE>
ARTICLE VI.
DISTRIBUTION OF BENEFITS
Distributions under the Trust Fund shall be made to Participants, spouses,
Beneficiaries, executors or administrators, as the case may be, only upon the
following, conditions and in the manner specified.
6.1. Death Benefit: On the death of a Participant or a Retired Participant
prior to complete distribution of such Participant's or Retired Participant's
Account, his death benefit shall be (i) 100% of the amount credited to his
Account as of the end of the applicable accounting period coincident with or
next preceding the date of the Participant's death, (ii) an amount equal to any
(a) Rollover Contributions, and (b) Elective Contributions recharacterized as
Employee Voluntary Contributions, (iii) an amount equal to any Employee
Voluntary Contributions or Employer Contributions made by, or on behalf of, such
Participant after the end of such accounting period, and, if applicable, (iv) to
the extent that the Participant's Account has any undistributed balance which
has not been paid as of the end of the applicable accounting period (for which
the last valuation was made), that portion of the periodic adjustments and
allocations required by Article IV to be credited to the Participant's Account
as of the end of the applicable accounting period next preceding or coincident
with payment of the benefits payable. In accordance with Section 6.10, the death
benefit described in the immediately preceding sentence shall be reduced by any
security interest held by the Plan by reason of any outstanding loan to the
Participant.
The death benefit shall be paid to the Participant's surviving spouse, or
if there is no surviving spouse or the surviving spouse consents in the manner
described below, to such Participant's designated Beneficiary (other than such
surviving spouse). At any time, subject to the following provisions of this
Section, each Participant shall have the right to designate any Beneficiary
or Beneficiaries to receive his death benefit and shall have the unrestricted
right to revoke any such designation; provided, however, subject to the
subsequent provisions hereof which permit the spouse to consent to the
Participant's waiver of the requirements of this sentence, any new designation
of a Beneficiary (other than the Participant's spouse) by a Participant who is
lawfully married (or deemed to be married under applicable local law) shall
require a new spousal consent. Provided further that (i) any waiver by any
married Participant (with spousal consent as required hereunder) of the spousal
death benefit otherwise payable hereunder is not required to specify any
optional form of benefit payment, (ii) any such married Participant may change
any optional form of spousal death benefit payment available under the Plan
without obtaining spousal consent, and (iii) a Beneficiary may elect any
optional form of payment available under the Plan to the extent permitted under
applicable provisions of the Plan. Each such designation or revocation by a
Participant shall be evidenced by a written instrument which shall be (i)
limited to a benefit for at least one specific Beneficiary (including nonspouse
Beneficiary, or any class of Beneficiaries or any contingent Beneficiaries),
(ii) (filed with the Committee, (iii) signed by the Participant, and (iv) bear
the signature of at least two persons (at least one of which shall be a
representative designated by the Committee or a Notary Public) as witnesses to
his signature.
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<PAGE>
With respect to any Participant who is lawfully married (or deemed to be
married under applicable local law), any such Participant's designation of a
Beneficiary (other than the Participant's spouse) to receive any portion of such
death benefit shall be deemed to be ineffective, unless the Participant's spouse
consents to such designation and acknowledges the effect of such election, which
consent and acknowledgement shall be evidenced by a written instrument which
shall be (i) limited to a benefit for at least one specific Beneficiary which
may not be changed without spousal consent (or the spouse's consent expressly
permits at least one additional designation of another Beneficiary without any
requirement of further consent by such spouse if such spouse's consent expressly
acknowledges that a more limited consent could be provided), (ii) filed with the
Committee, (iii) signed by the spouse and (iv) bear the signature of at least
two persons (at least one of which must be a representative designated by the
Committee or a Notary Public) as witnesses to the signature. Notwithstanding the
immediately preceding sentence, a Participant's designation of a Beneficiary
(other than the Participant's spouse) shall be effective if it is established to
the satisfaction of the Committee that the consent required in the preceding
sentence may not be obtained because (i) there is no spouse, (ii) the spouse
cannot be located, (iii) the Participant has provided a duly certified copy of a
court order issued by a court of competent jurisdiction which recognizes that
the Participant is legally separated or has been abandoned (under applicable
local law) and the Committee has not received a duly certified copy of a
qualified domestic relations order (described in Section 414(p) of the Code)
which requires spousal consent, or (iv) there exists such other circumstance (as
are prescribed in regulations or other authority issued under Sections
401(a)(11) and 417(a)(2) of the Code) which obviate the necessity of obtaining
the consent described in the preceding sentence. In addition, if the surviving
spouse is not legally competent to give consent, such spouse's legal guardian,
which may be the Participant, may give the consent required hereunder. Any
consent by a Participant's spouse (or establishment that the consent of a
Participant's spouse may not be obtained) shall be effective only with respect
to such spouse.
Notwithstanding any other provision hereof to the contrary, commencing
with Plan Years beginning, after October 22, 1986, any spousal consent which
expressly acknowledges that a more limited consent could be provided may
expressly provide that the spouse consents to the designation by the Participant
of any Beneficiary (or any number of specified Beneficiaries) without any
requirement of further consent by the spouse and, in such event, no further
spousal consent shall be required, provided that any change of Beneficiary by
the Participant does not exceed any limit contained in the spouse's consent on
such Participant's right to change his Beneficiary. Any spousal consent shall be
deemed to be revocable unless it is expressly made irrevocable at the election
of the Participant's spouse.
Any designation of a Beneficiary (other than the Participant's spouse)
which otherwise meets the above requirements of this Section shall become
inoperative in the event that (i) the Participant subsequently marries (or
subsequently is deemed to be married under applicable local law), (ii) any
missing spouse is located or (iii) any other circumstance which earlier
precluded the necessity of obtaining consent of the Participant's spouse no
longer exists. If no designation of Beneficiary is on file with the Committee at
the time of the Participant's death, or if the Committee for any reason
determines that such designation is ineffective, then, such Participant's
spouse, if then living, or if not, then the executor, administrator, or other
personal
VI-2
<PAGE>
representative of the estate of such Participant shall be conclusively deemed to
be the Beneficiary designated to receive such Participant's death benefit.
The provisions of this Section are intended to comply with the
requirements of Sections 401(a)(11) and 417(a)(2) of the Code. To the extent any
provision hereof is inconsistent with the preceding sentence, such provision
shall be deemed to be inoperative and the Plan shall be operated in a manner
which complies with the requirements of the immediately preceding sentence.
Whenever the Trustee is authorized by this Plan or by a designation of
Beneficiary to pay funds to a minor or an incompetent, the Trustee shall be
authorized to pay such funds to a parent of such minor, to a guardian of such
minor or incompetent, or directly to such minor, or to apply such funds for the
benefit of such minor or incompetent in such manner as the Committee may in
writing direct. The Trustee, Committee, and Employer shall be fully discharged
with respect to any payment made in accordance with the preceding sentence.
6.2. Retirement Benefit: Upon the retirement of a Participant, his
retirement benefit shall be 100% of the amount credited to his Account as of the
end of the applicable accounting period coincident with or next preceding, his
retirement, plus an aggregate amount equal to the sum of the amounts described
in clauses (ii), (iii) and (iv) of the first paragraph of Section 6.1. Provided,
however, in accordance with the provisions of Section 6.10, the retirement
benefit described in the preceding sentence shall be reduced by any security
interest held by the Plan by reason of any outstanding loan to the Participant.
6.3. Total and Permanent Disability Benefit: In the event that the
Committee determines that a Participant is suffering from a Total and Permanent
Disability, his disability benefit shall be 100% of the amount credited to his
Account as of the end of the applicable accounting period coincident with or
next preceding such determination, plus an aggregate amount equal to the sum of
the amounts described in clauses (ii), (iii) and (iv) of the first paragraph of
Section 6.1. In accordance with Section 6.10, the disability benefit described
in the preceding sentence shall be reduced by any security interest held by the
Plan by reason of any outstanding loan to the Participant.
6.4. Severance Benefit: Upon a Participant's severance from employment
with an Employer and all Affiliated Employers, for any reason other than death,
retirement, or Total and Permanent Disability, his severance benefit shall be an
amount equal to the sum of: (i) 100% of the total amount credited to his
Employee Account, if any, Employer Nonforfeitable Contributions Account and
Rollover Account, if any, as of the end of the applicable accounting period (for
which the last valuation was made) coincident with or next preceding the date of
such Participant's severance, together with an amount equal to any Employee
Voluntary Contributions made or recharacterized after the end of such accounting
period, any Contributions, Rollover Contributions or direct transfers made by or
on behalf of the Participant after the end of such accounting period which were
allocated to any of the above-listed Accounts, and (ii) the percentage of the
total amount credited to his Employer Contributions Account, as of the end of
such accounting period coincident with or next preceding the date of such
Participant's severance, together with the percentage of the amount of any
Contributions made on behalf of
VI-3
<PAGE>
such Participant after the end of such accounting period which were allocated to
an Employer Contributions Account, as such percentage is shown in the table set
out below for the total number of years of Active Service credited to the
Participant prior to his date of severance of employment, and, if applicable,
(iii) to the extent that the Participant's Account has any undistributed balance
which has not been paid as of the end of the applicable accounting period (for
which the last valuation was made), that portion of the periodic adjustments and
allocations required by Article IV to be credited to the Participant's Account
as of the end of the applicable accounting period next preceding, or coincident
with payment of benefits described above. In accordance with Section 6.10, the
severance benefit described in the immediately preceding sentence shall be
reduced by any security interest held by the Plan by reason of any outstanding
loan to the Participant.
Less than one year...........................................................0%
One year, but less than two years ..........................................20%
Two years, but less than three years .......................................40%
Three years, but less than four years ......................................60%
Four years, but less than five years .......................................80%
Five years, or more .......................................................100%
A Participant who is a former Employee of an Employer shall be entitled to
benefits under the vesting schedule and other terms and provisions of the Plan
or Prior Plan as in effect on the date that the Participant's employment with an
Employer was terminated. The above vesting schedule is subject to automatic 100%
vesting in the event of a full or partial termination of the Plan pursuant to
Section 11.5. The amount credited to such Participant's Account which is not
vested upon distribution shall be forfeited and reallocated as provided in
Section 4.6.
6.5. Accounting for Distributions: Offsets in Special Circumstances:
Subject to the provisions of Section 4.6 governing restoration of Participants'
Accounts and to Section 4.10 concerning individual investment direction, if
applicable, any distribution of any benefits under the Plan (and any forfeitures
arising incident thereto) shall be subtracted from the affected Participant's
Account balance as of the end of the Plan Year (or such shorter accounting
period as may be prescribed by the Committee) coincident with or next preceding
the applicable accounting period in which such distribution was paid. Moreover,
notwithstanding any other provision of the Plan to the contrary, if after a
Participant's employment with an Employer and all other Affiliated Employers
terminates, such person is reemployed by an Employer after receiving a
distribution pursuant to Section 6.6 and again becomes eligible for membership,
and has his Employer Account restored pursuant to Section 4.6, then any benefits
that such Participant may become entitled to receive hereunder after reentry in
the Plan shall be reduced by any amounts distributed from his Employer Account
which were not repaid by such Participant incident to restoration of his
Employer Account pursuant to Section 4.6.
VI-4
<PAGE>
6.6. Distributions-Settlement Options:
(a) General Rules:
(i) Form and Method of Payment of Benefits: Subject to Sections
3.2, 3.4, 6.8, 6.11, 11.4, 11.7 and 12.3, distributions shall be made
under the Plan only upon the occurrence of one of the events described
in Sections 6.1 through 6.4. To the extent required by Section 401(k)
of the Code, the limitations of the preceding sentence shall continue
to apply even if Trust Fund assets attributable to any Participant's
Account are transferred to another plan pursuant to applicable
provisions of Section 8.2, 9.2 or 11.7. Subject to the following
provisions of this Section 6.6(a) and Section 6.6(b), distributions
provided for in the Plan shall be made in cash under one of the
settlement options available under the Plan as elected by the
Participant; provided, however, in the absence of such election,
settlement shall be made in the form of a lump sum payment or, to the
extent elected by the distributee, in the form of a direct rollover as
described in Section 6.6(c) if the requirements of that section are
satisfied.
With respect to any amounts invested in common stock of the
Plan Sponsor, distribution shall be paid in cash in an amount equal to
the value (as of the date or dates shares of common stock of the Plan
Sponsor allocated and credited to the Participant's Account are
converted into cash) of the Participant's vested interest in shares of
common stock of the Plan Sponsor allocated and credited to such
Participants Account, or in whole shares of common stock of the Plan
Sponsor, or in any combination thereof as elected by the Participant;
provided, however, that any fractional shares of the Plan Sponsor to
which the Participant or Beneficiary may be entitled shall be valued
(as of the date immediately prior to the date of distribution) and
paid in cash.
A Participant must consent, in writing, to any distribution
required hereunder if the present value of the Participant's vested
Account balance (derived from Employer and any Employee Contributions)
distributable under the Plan exceeds $3,500 (or for Plan Years
beginning on and after January 1, 1998, $5,000) and the Participant
has not attained the normal retirement age described in Article V.
After the Participant's death, benefits may be paid in accordance with
applicable provisions of the Plan without regard to the requirements
of the immediately preceding sentence. The present value of the
settlement under any option shall be no less than the amount that
would be payable as an immediate lump-sum distribution. The settlement
options available under the Plan are as follows:
(1) A lump-sum payment; or
(2) Periodic installments payments. The amount payable to the
Participant under this option shall be paid in equal monthly or
quarterly installments for a certain period of time that does not
exceed the life
VI-5
<PAGE>
expectancy of the Participant or joint life and last survivor
expectancy of the Participant and a designated Beneficiary (determined
as of the date that payment of benefits commences). At the election of
the Participant, the Participant's Account from which such
installments are payable may be (a) maintained as a part of the Trust
Fund and be subject to its proportionate share of the income,
appreciation or depreciation of the Trust Fund as a whole, but not
subject to any further Contributions, or (b) segregated and placed on
deposit at interest in an insured depository.
A Participant who elects periodic installments under this option and
begins to receive such periodic payments may, at a future date but not more
often than once in each calendar year, file a new election with the
Committee under which such Participant may (i) modify the certain period of
time over which such installment payments are payable (but in no event over
a period that exceeds: (A) the life expectancy of the participant or the
joint life expectancy of the participant and a designated Beneficiary, as
determined as of the date that such periodic installments originally began
under this option) or (B) in the case of a Participant who has reached his
Required Beginning Date (as defined in Section 6-6(a)(1)(iv)(1) below), a
period that is longer than the period over which payments were being made
at the time such Participant reached his Required Beginning Date); or (ii)
elect to receive a lump sum payment of his entire remaining Account balance
under the Plan, payable as soon as administratively feasible after the
Committee receives such election.
None of the above described settlement options may be made in the form of
an annuity payable for the life of any Participant, Beneficiary or any
other person.
(ii) Distributable Account Balance Does Not Exceed $3,500 (Or For
Plan Years Beginning On And After January 1, 1998, $5,000). If the present
value of a Participant's vested Account balance (derived from Employer
Contributions and any Employee Contributions) which is distributable under
the Plan does not exceed $3,500 (or for Plan Years beginning on and after
January 1, 1998, $5,000), then except to the extent that the distributee
has properly elected a direct rollover pursuant to Section 6.6(c) hereof,
the Participant's vested interest in his Account balance shall be
distributed in a single sum in cash. Any Participant who receives a
distribution pursuant to the preceding sentence and who does not have a
vested interest in his Account balance (derived from Employer
Contributions) distributable under the Plan, shall be deemed to have
received a distribution of a vested Account balance (derived from Employer
Contributions) equal to zero. Such distribution may be made without the
necessity of obtaining the consent of the Participant and/or his spouse or
any Beneficiary other than such Participant's spouse, if applicable. Such
payment may be made as soon as practicable, but (absent circumstances
beyond the control of the Committee) in no event later than one year after
the last day of the Plan Year in which the Participant's employment with an
Employer and all Affiliated Employers is terminated.
VI-6
<PAGE>
(iii) Distributable Account Balance Exceeds $3,500 (Or For Plan Years
Beginning On And After January 1, 1998, $5,000): If the present value of a
Participant's vested Account balance (derived from Employer Contributions
and any Employee Contributions) which is distributable under the Plan is in
excess of $3,500 (or for Plan Years beginning on and after January 1, 1998,
$5,000) and if the Participant provides the Committee written consent to
the distribution, the Committee shall direct the Trustee to make settlement
of the Participant's Account within the 60-day period (or as soon as
practicable) after the Committee receives such consent, but (absent
circumstances beyond the control of the Committee) in no event later than
sixty (60) days after the last day of the Plan Year in which the
Participant's employment with an Employer and all Affiliated Employers is
terminated. Except as provided in the immediately succeeding paragraph of
this Section 6.6(a)(iii), no such written consent shall be considered valid
unless (within the period which shall begin no more than ninety (90) days
before the annuity starting date (described below) and shall end no less
than thirty (30) days before the annuity starting date) such participant
has received a general written explanation of the general features and
values of each optional form of payment available under the Plan, and has
been informed in writing of his right to defer receipt of the distribution.
Such written explanation may be provided by mail, personal delivery, or
other means which would normally ensure or facilitate the continued
attention of the Participant during the period prescribed below in which
the Participant is to consent to the distribution or otherwise be deemed to
have elected to defer receipt (as set out below). Written consent of the
Participant shall be invalid unless it is given after receipt of the
written explanation described above and not more than ninety (90) days
before the annuity starting date. The term "annuity starting date" means
the first day of the first period for which an amount is paid pursuant to
any settlement option available under the Plan.
Notwithstanding the provisions of the immediately preceding paragraph
of this Section 6.6(a)(iii), if a distribution is one to which sections 401
(a)(11) and 417 of the Code do not apply, such distribution may commence
less than 30 days after the notice required under section 1.411(a)-l1(c) of
the Regulations is given, provided that:
(1) the Committee clearly informs the participant that the
participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution
(and, if applicable, a particular distribution option, and
(2) the participant, after receiving the notice, affirmatively
elects a distribution.
In addition, subject to a designated Beneficiary's right to elect the date
of settlement in the case of a Participant who dies prior to receipt of any
benefits under the Plan, a valid written consent to such distribution may be
made by a Participant without the necessity of obtaining the consent of the
Participant's
VI-7
<PAGE>
spouse or any Beneficiary other than such Participant's spouse, if applicable.
If the present value of such Participant's vested Account balance which is
distributable under the Plan is in excess of $3,500 (or for Plan Years beginning
on and after January 1, 1998, $5,000) at the time of any distribution, the
present value of such Account balance at any subsequent time shall be deemed to
exceed $3,500 (or for Plan Years beginning on and after January 1, 1998,
$5,000).
If the Committee fails to receive the Participant's written consent to the
distribution within 60 days after his receipt of the written explanation
described above, subject to the distribution requirements of Section 6.6(a)(iv)
below, such Participant shall be deemed to have irrevocably elected to defer
receipt of settlement of his Account to a date that is not earlier than the
earlier of the date of his death or of his attainment of normal retirement age
hereunder; except that (i) such a Participant who, on the above described
termination date, met any service requirement for early retirement may file a
claim with the Committee requesting settlement to be made or commence on any
date which is after his early retirement date or (ii) any other Participant may
file a claim with the Committee requesting settlement to be made or commence on
any date which is after his normal retirement date, provided that in either case
such a claim for settlement is filed with the Committee within a reasonable time
before such date. The balance credited to the Account of any Participant during
any period of deferral of his settlement shall continue to be part of the
commingled Trust Fund and thus shall continue to share in any appreciation or
depreciation of the Trust Fund and in any income or losses incurred by the Trust
Fund pending distribution of such Account balance; provided, however, no further
Contributions shall be credited to his Account.
If Participants are permitted to direct the investment of their Accounts
in accordance with Section 4.10, unless the Committee otherwise prescribes
pursuant to uniformly applied nondiscriminatory rules established by the
Committee, a Participant who is a former Employee of an Employer shall be
entitled to direct the investment of such Participant's Account after the
Participant becomes entitled to a distribution under Article VI of the Plan.
(iv) Distribution Requirements: Capitalized terms used in this Section
6.6(a)(iv) which are not otherwise defined in Article I are defined in Section
6.6(a)(iv)(5). The requirements of this Section 6.6(a)(iv) shall apply to any
distribution of a Participant's or Beneficiary's vested Benefit and will take
precedence over any inconsistent provisions of the Plan. All distributions
required under Article VI shall be determined and made in accordance with
Section 401(a)(9) of the Code, including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the proposed Income Tax
Regulations or any successor or final regulation issued with respect thereto.
Unless otherwise specified, the provisions of this Section 6.6(a)(iv) apply to
calendar years beginning after December 31, 1984.
VI-8
<PAGE>
(1) Required Beginning Date. Notwithstanding any other provision of the
Plan to the contrary, but subject to the immediately succeeding sentence, unless
the Participant otherwise elects, the Trustee must make full settlement or begin
Benefit payments to the Participant not later than the 60th day after the latest
of the close of the Plan Year in which: (a) the Participant attains the normal
retirement age set out in Article V, (b) occurs the tenth (10th) anniversary of
the year in which the Participant commenced participation in the Plan, or (c)
the Participant terminates employment with an Employer. The entire vested
Benefit payable to a Participant must be distributed or commence to be
distributed no later than the Required Beginning Date.
(2) Limits on Distribution Periods. As of the first Distribution Calendar
Year, distributions, if not made in a single-sum, may only be made over a
period which shall not extend beyond one of the following periods (or a
combination thereof):
(A) the Life Expectancy of the Participant, or
(B) the Life Expectancy of the Participant and a Designated
Beneficiary.
(3) Determination of Amount to be Distributed Each Year. If the
Participant's vested Benefit is to be distributed in other than a single sum,
the following minimum distribution rules shall apply on or after the Required
Beginning Date.
(A) If a Participant's vested Benefit is to be distributed over (i) 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 (ii) 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 vested Benefit
by the Applicable Life Expectancy.
(B) 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.
(C) For calendar years beginning after December 3l, 1988, the amount
to be distributed each year, beginning with the
VI-9
<PAGE>
distribution for the first Distribution Calendar Year shall not be less
than the quotient obtained by dividing the Participant's vested Benefit by
the lesser of (i) the Applicable Life Expectancy or (ii) if the
Participant's spouse is not the Designated Beneficiary, the applicable
divisor determined from the table set forth in Q & A-4 of Section
1.401(a)(9)-2 of the proposed Income Tax Regulations or any successor or
final regulation issued with respect thereto. Distributions after the
death of the Participant shall be distributed using the Applicable Life
Expectancy in Section 6.6(a)(iv)(3)(A) above as the relevant divisor
without regard to Section 1.401(a)(9)-2 of the proposed Income Tax
Regulations or any successor or final regulation issued with respect
thereto.
(D) 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 Required Beginning Date occurs, must be made on or
before December 31 of that Distribution Calendar Year.
(4) Participant's Death Prior to Receipt of All Vested Benefits.
(A) 5-Year Rule. In the event that the Participant dies prior to
payment or commencement of payment of benefits hereunder, such
Participant's entire vested Benefit shall be distributed following the
Participant's date of death on, or as soon as is administratively
practicable following, the date elected by the Participant's Designated
Beneficiary (but in any event not later than December 31 of the calendar
year in which occurs the fifth (5th) anniversary of the date of the
Participant's death) in any of the optional forms permitted hereunder as
the Participant's Designated Beneficiary may elect in writing or, in the
absence of such written election, in the form of a lump sum payment
in cash. Any such election must be made (and shall be deemed irrevocable)
as of the earlier of (i) December 31 of the calendar year in which occurs
the fifth (5th) anniversary of the Participant's date of death or (ii) the
date on which payment must commence under applicable provisions of this
Section set out below. Provided, however, if the present value of the
Participant's vested Account balance (derived from Employer Contributions
and any Employee Contributions) which is distributable on account of the
death of the Participant does not exceed $3,500 (or for Plan Years
beginning on and after January 1, 1998, $5,000), such Participant's
entire vested interest shall be distributed in a single sum payment in
cash, which payment shall be made as soon as practicable, but (absent
VI-10
<PAGE>
circumstances beyond the control of the Committee) in no event later than
sixty (60) days after the last day of the Plan Year in which the
Participant's date of death occurs.
(B) Distribution Commencing Before Participant's Death. In the event
that the Participant dies after distribution of his vested Benefit has
begun over a period certain, the remaining portion of such Benefit will
continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death; provided,
however, that the Committee shall accelerate payments under said payment
option if acceleration is requested in writing by the Designated
Beneficiary.
(C) Distribution Commencing After Participant's Death.
(i) Notwithstanding the first sentence of Section
6.6(a)(iv)(4)(A), and except as otherwise provided below, if any
portion of the Participant's vested Benefit is payable to (or for the
benefit of) his surviving spouse (or other Designated Beneficiary),
payments attributable to such portion may be made to such surviving
spouse (or other Designated Beneficiary) under one of the optional
forms permitted hereunder in substantially equal installments over a
period not to exceed such surviving spouse's (or other Designated
Beneficiary's) Life Expectancy, provided that such payments shall
commence not later than December 3l of the calendar year immediately
following the calendar year in which the Participant died.
(ii) If the payments described in Section 6.6(a)(iv)(4)(C)(i)
are payable to the deceased Participant's surviving spouse, the
payments need not begin earlier than December 31 of the calendar
year in which the deceased Participant would have attained age 70 1/2.
The Participant's surviving spouse may elect writing that the
Committee postpone such payment to any date within the time period
which is permitted under the previous sentence.
(iii) Notwithstanding Section 6.6(a)(1v)(4)(C)(ii), if the
Participant dies prior to commencement of Benefits, the Participant*s
Designated Beneficiary is his surviving spouse, and such surviving
spouse dies before distributions to the surviving spouse begin, the
rules under applicable provisions of the first two sentences of
VI-11
<PAGE>
Section 6.6(a)(iv)(4)(A) shall apply as if the surviving spouse were
the Participant so that Plan benefits otherwise payable to the
deceased surviving spouse of the deceased Participant shall in all
events be distributed to the Designated Beneficiary of the deceased
spouse of the deceased Participant not later than December 31 of the
calendar year in which occurs the fifth (5th) anniversary of the date
of death of the deceased spouse of the deceased Participant.
(iv) For purposes of this Section 6.6(a)(iv)(4)(C),
distribution of a Participant's vested Benefit is considered to beg on
the Participant's Required Beginning Date (or, if applicable, any
earlier date distribution is required under this Section to begin to
the surviving spouse).
(5) Definitions.
(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) Designated Beneficiary. The individual who is designated as the
Beneficiary under the Plan in accordance with Section 401(a)(9) of the
Code.
(C) 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
allocated to the Account 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.
(ii) For purposes of Section 6.6(a)(1v)(5) (C)(i) above. if any
portion of the minimum distribution for the
VI-12
<PAGE>
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.
(D) Distribution Calendar Year. A calendar year for which a minimum
distribution is required. 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. 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 6.6(a)(iv)(4).
(E) 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 6.6(a)(iv)(4)(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 cannot be recalculated.
(F) Required Beginning Date.
(i) General rule. For Plan Years beginning prior to December 31, 1996,
the Required Beginning Date of a Participant is the first day of April of
the calendar year following the calendar year in which the Participant
attains age 70 1/2. For Plan Years beginning after December 31, 1996,
unless the Member otherwise elects, the Required Beginning, Date of a
Member is the first day of April of the calendar year following the later
of either: (1) the calendar years in which the Member attains age 70 1/2,
or (2) the calendar year which the Member retires.
(ii) Transitional rules. The Required Beginning Date of a Participant
who attains age 70 1/2 before January 1, 1988, shall be determined in
accordance With (1) or (2) below:
VI-13
<PAGE>
(1) Non-5-percent Owners. The Required Beginning
Date of a Participant who is not a 5-percent Owner
(defined below) is the first day of April of the
calendar year following the calendar year in which
the later of retirement or attainment of age 70 1/2
occurs.
The Required Beginning, Date of a Participant
who is not a 5-percent Owner who attains age 70 1/2
during 1988 and who has not retired as of January 1,
1989, is April 1, 1990.
(2) 5-percent Owners. The Required Beginning
Date of a Participant who is a 5-percent Owner during
any year beginning after December 31, 1979, is the
first day of April following the later of:
(A) the calendar year in which the
Participant attains age 70 1/2, or
(B) the earlier of the calendar year with or
within which ends the Plan Year in which the
Participant becomes a 5-percent Owner, or the
calendar year in which the Participant retires.
(iii) 5-percent Owner. A Participant is treated as a
5-percent Owner for purposes of this Section if such
Participant is a 5-percent Owner (as defined in Section
416(i) of the Code determined in accordance with Section
416 but without regard to whether the Plan is Top-Heavy) at
any time during the Plan Year ending with or within the
calendar year in which such owner attains age 66 1/2 or any
subsequent Plan Year.
(iv) Distributions Begun to 5-percent Owner. Once
distributions have begun to a 5-percent Owner under this
Section, they must continue to be distributed, even if the
Participant ceases to be a 5-percent Owner in a subsequent
year.
(b) Special Transition Rules: Notwithstanding the above requirements of
Sections 6.6(a), if applicable, distribution on behalf of any Participant,
including a Key Employee in a Top-Heavy plan (as such terms are defined In
Section 7.4), may be made
VI-14
<PAGE>
in accordance with the following requirements of this Section 6.6(b) (regardless
of when such distribution commences):
(i) The distribution by the Plan is one which would not have
disqualified such Plan under Section 401(a)(9) of the Code as in effect
prior to amendment by the Tax Reform Act of 1984;
(ii) The distribution is in accordance with a method of distribution
designated by the Participant whose interest in the Plan is being
distributed or, if the Participant is deceased, by a Beneficiary of such
Participant;
(iii) Such designation was in writing, was signed by the Participant
or the Beneficiary, and was made before January 1, 1984;
(iv) The Participant had accrued a benefit under the Plan or any
Prior Plan as of December 31, 1998, and
(v) The method of distribution designated by the Participant or the
Beneficiary specifies the time at which distribution will commence, the
period over which distributions will be made, and in the case of any
distribution upon the Participant's death, the Beneficiaries of the
Participant listed in order of priority.
A distribution upon death will not be covered by this Section 6.6(b) unless the
information in the designation contains the required information described above
with respect to distribution to be made upon the death of the Participant. For
any distribution which commences before January 1, 1984, but continues after
December 31, 1983, the Participant, or the Beneficiary, to whom such
distribution is being made, will be presumed to have designated that method of
distribution if the method of distribution was specified in writing and the
distribution satisfies the requirements of applicable law. If a designation is
revoked, any subsequent distribution must satisfy the requirements of Section
401(a)(9) of the Code and regulations or other authority issued thereunder. If a
designation is revoked subsequent to the date distributions are required to
begin, the Plan must distribute by the end of the calendar year following in 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 regulations or other authority issued
thereunder, but for the Section 242(b)(2) election. For calendar years beginning
after December 3l, 1998, such distributions must meet the minimum distribution
incidental benefit requirements set forth in Section 1.401(a)(9)-2 of the
proposed Income Tax Regulations or any successor regulation. Any changes in the
destination will be considered to be a revocation of the designation.
However, the mere substitution or addition of another Beneficiary (one not named
in the designation) under the designation will not be considered to be a
revocation of the designation, so long as such substitution or addition does not
alter the period over which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant measuring life).
In the event that an amount is transferred or rolled over from one plan to
VI-15
<PAGE>
another plan, the rules set forth in the regulations or other authority issued
under Section 401(a)(9) of the Code shall apply.
(c) Special Rules Regarding Direct Rollovers:
(i) General Rule: This Section 6.6(c) applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's election under this
Section 6.6(c), a distributee may elect, at the time and in the manner
prescribed by the Committee, to have all or any portion (provided that
such portion is at least $500) of an eligible rollover distribution paid,
in a direct rollover, directly to an eligible retirement plan specified by
the distributee. Only one direct rollover shall be allowed for each
eligible rollover distribution. Prior to any direct rollover pursuant to
this Section 6.6(c), the distributee shall furnish to the Committee a
statement from the plan administrator or trustee of the qualified plan, or
the trustee or custodian of the individual retirement account or annuity,
to which the direct rollover is to be transferred that such plan,
account or annuity is, or is intended to be an eligible retirement plan.
(ii) Definitions.
(1) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion (that is at
least $500) of the balance to the credit of the distributee, except
that an eligible rollover distribution does not include: (A) any
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made (i) for the life
(or life expectancy) of the distributee or the joint lives (or joint
life expectancies) of the distributee and the distributee's
designated beneficiary, or (ii) for a specified period of ten years
or more; (B) any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; (C) the portion of any
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities) (D) any distribution that, when
aggregated with all other eligible rollover distributions within the
same taxable year of the distributee from this Plan, are reasonably
expected to total less than $200; and (E) any other amounts that are
treated as not being eligible rollover distributions under Temporary
Regulation Section 1.401(a)(31)-1T or other guidance issued by
applicable authority under Section 401(a)(31) of the Code.
(2) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b) of
the Code, an annuity plan described in Section 403(a) of the Code,
or a qualified trust described in Section 401(a) of the Code, that
accepts the distributee's eligible rollover distribution. However, in
the case of an eligible rollover
VI-16
<PAGE>
distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual
retirement annuity.
(3) Distributee: A distributee includes a Participant who
is an Employee or former Employee. In addition, such Employee's
spouse or former Employee's surviving spouse and such Employee's
or former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as
defined in Section 414(p) of the Code, are distributees with
regard to the interest of the spouse or former spouse.
(4) Direct rollover: A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the
distributee.
(iii) Effect of Failure to Make Direct Rollover Election: In the event
that a distributee entitled to an eligible rollover distribution under
this Plan fails to elect, in the time and manner prescribed by the
Committee, that a direct rollover be made on his behalf to an eligible
retirement plan, such distributee shall be deemed to have elected that no
such direct rollover be made and that distribution of his interest under
the Plan be made in accordance with otherwise applicable provisions of the
Plan, but such deemed elections will only be treated as having been made
if such distributee was provided with the notice and explanation described
in Section 402(f) of the Code not more than 90 days and not less than 30
days, before making such distribution.
6.7. Lost Participants or Beneficiaries; Escheat: If a Participant or
Beneficiary thereof cannot be located within sixty (60) days of the date any
benefits payable under the Plan should be paid or commence to be paid pursuant
to Section 6.6, the Participant's entire Account may be forfeited and allocated
as any other forfeiture pursuant to applicable provisions of Section 4.6.
Notwithstanding the preceding sentence, if the Participant or Beneficiary files
a valid claim pursuant to Section 6.10 for the forfeited benefits payable under
the Plan, then (i) as soon as administratively practicable, the forfeited
benefits payable to such Participant or Beneficiary shall be reinstated
effective as of the date of receipt of the claim and (ii) as soon as
administratively practicable following an Employer's Contribution (pursuant to
applicable provisions of Section 3.4) of an amount equal in value to the value
of such forfeited benefits, the value of the reinstated benefits shall be paid
pursuant to Section 6.6.
Should the Plan be joined as a part to any escheat proceedings concerning
rights to any benefits payable to a Participant or Beneficiary thereof, the Plan
shall comply with any final judgment (of the appropriate court declaring that
title to any benefits payable under the Plan to a Participant or Beneficiary
thereof vests in the State) by (i) treating the judgment as if it were a claim
filed by the Participant or Beneficiary thereof on the effective date of the
final judgment and (ii) paying the State as if it were the Participant or
Beneficiary who filed the claim for benefits which the court determined have
escheated to the State.
VI-17
<PAGE>
6.8. Withdrawals by Participants:
(a) (1) Withdrawal of Employer Contributions: Subject to the conditions of
this Section, upon giving thirty (30) days' written notice to the Committee, any
Participant who has withdrawn the maximum permissible amount under Section
6.8(b) and (i) who has attained age 59 1/2 and has been a Participant for at
least five (5) years, or (ii) who is suffering an immediate and heavy financial
hardship (a) because of expenses previously incurred, or necessary to be
incurred, for medical care described in Section 213(d) of the Code (not covered
by insurance or otherwise reimbursable from any other source) of the
Participant, the Participant's spouse or any other person who qualifies as a
dependent of the Participant under Section 152 of the Code, (b) due to lack of
funds required to pay expenses and/or other amounts required (excluding mortgage
payments) to effect the purchase of a principal residence for the Participant,
(c) due to a lack of funds required to make any payment required to avoid
eviction from the Participant's principal residence, (d) due to lack of funds
required to make any payment required to avoid foreclosure on the Participant's
principal residence, or (e) due to a lack of funds to pay amounts demanded by
the trustee in bankruptcy or other appropriate representative of the
Participant's creditors in any bankruptcy, insolvency or similar proceeding in
which the Participant's Account is properly subject to claims of such creditors
as required by applicable law, shall be entitled to withdraw from his Account,
in the order of priority set out below, an amount equal to the lesser of (A) the
amount needed to alleviate the hardship or (B) the Distributable Amount
(defined below) then credited to the Participant's Account. Any Participant who
has attained age 59 1/2, but who has not been a Participant for at least five
(5) years, and who is not making a hardship withdrawal described in the
immediately preceding sentence, shall be entitled to make a withdrawal from his
Employer Account in the same amount as set forth in the immediately preceding
sentence, and priority as set forth in second paragraph below, except that such
Participant shall be entitled to withdraw only those vested Matching
Contributions (and any earnings attributable thereto) which have been credited
to the Participant's Account for at least two (2) years before the withdrawal.
The requested withdrawal under clause (A) above may include an additional amount
necessary to pay any federal, state or local income taxes or penalties
(including additional taxes under Section 72(t) of the Code) that are reasonably
expected to result from the withdrawal. For purposes of clause (B) above in
accordance with Section 1.401(k)-1(d)(2)(ii) of the income tax regulations,
the Distributable Amount shall be equal to the Participant's total Elective
Contributions credited to his Employer Nonforfeitable Contributions Account as
of the date of withdrawal; provided, however, the Distributable Amount shall be
increased by any Qualified Non-Elective Contributions and net earnings and
appreciation on Elective Contributions and Qualified Non-Elective Contributions
that were credited to the Participant's Nonforfeitable Contributions Account as
of December 31, 1988. The Distributable Amount shall not include any (i)
Qualified Non-Elective Contributions and (ii) earnings and appreciation, that
were credited to the Participant's Nonforfeitable Contributions Account after
December 31, 1988. The Distributable Amount shall include the Participant's
Rollover Contributions Account.
VI-18
<PAGE>
Except as may otherwise be prescribed bv the Committee under
nondiscriminatory rules uniformly applied and announced to Participants,
withdrawals permitted hereunder shall be made in the following order:
(i) the Employee Account, if any;
(ii) the Rollover Account, if any;
(iii) the Employer Contributions Account whereunder the Participant shall
effect such withdrawal
(1) from any Profit Sharing, Contributions and any income and
increments thereon; and lastly
(2) from any Matching Contributions and any income and increments
thereon.
(iv) the Employer Nonforfeitable Contributions Account whereunder the
Participant shall effect withdrawal
(1) from amounts attributable to any Qualified Non-Elective
Contributions and any income and increments thereon;
(2) from any Profit Sharing, Contributions and any income and
increments thereon;
(3) from any income or increment on Elective Contributions; and
lastly
(4) from any Elective Contributions.
The entire withdrawable balance then credited to the applicable account
described in the preceding sentence must be withdrawals before withdrawals may
be made from the succeeding account. All other amounts credit to such
Participant's Account and not withdrawn shall remain in such Participant's
Account.
(2) Withdrawals from Prior Plan Account: The provisions of this Section
6.8(a)(2) apply only to a Participant's Prior Plan Account, if any, and will
take precedence over any inconsistent provisions of this Section 6.8(a) with
respect to a Participant's Prior Plan Account. If this Section 6.8(a)(2) does
apply to a Participant, withdrawals shall be made under the provisions of this
Section 6.8(a)(2) before application of any other provisions of Section 6.8(a).
Subject to the conditions of this Section, upon giving thirty (30) days'
written notice to the Committee, any Participant who has attained age 59 1/2,
shall be entitled to withdraw from his Prior Plan Account the amount equal to
the Participant's total elective
VI-19
<PAGE>
contributions credited to his Prior Plan Account as of the date of withdrawal
(and any earnings attributable thereto).
Subject to the conditions of this Section, upon giving thirty (30) days'
written notice to the Committee, any Participant who is suffering an immediate
and heavy financial hardship (a) because of expenses previously incurred, or
necessary to be incurred, for medical care described in Section 213(d) of the
Code (not covered by insurance or otherwise reimbursable from any other source)
of the Participant, the Participant's spouse or any other person who qualifies
as a dependent of the Participant under Section 152 of the Code, (b) due to
lack of funds required to pay expenses and/or other amounts required (excluding
mortgage payments) to effect the purchase of a principal residence for the
Participant, (c) due to a lack of funds required to make any payment required
to avoid eviction from the Participant's principal residence, (d) due to lack
of funds required to make any payment required to avoid foreclosure on the
Participant's principal residence, or (e) due to a lack of funds to pay tuition
and related educational fees for the next twelve (12) months of post-secondary
education for the Participant, the Participant's spouse or any other person who
qualifies as a dependent of the Participant under Section 152 of the Code,
shall be entitled to withdraw from his Prior Plan Account, an amount equal to
the lesser of (A) the amount needed to alleviate the hardship or (B) the Prior
Plan Distributable Amount (defined below) then credited to the Participant's
Prior Plan Account. The requested withdrawal under clause (A) above may include
an additional amount necessary to pay any federal, state or local income taxes
or penalties (including additional taxes under Section 72(t) of the Code) that
are reasonably expected to result from the withdrawal. For purposes of clause
(B) above in accordance with Section 1.401(k)-1(d)(2)(ii) of the income tax
regulations, the Prior Plan Distributable Amount shall be equal to the total
amount credited to the Participant's Prior Plan Account as of the date of
withdrawal.
If any such withdrawal is made at a time when the member is not fully
vested in the portion of his Employer Contributions Account and such Participant
can increase his vested percentage in his Employer Contributions Account, such
Participant's vested interest in his Employer Contributions Account at any
relevant time will be determined under the following formula: X = P(AB + D)-D.
For purposes of applying the formula: P is the vested percentage at the relevant
time; AB is an Employer Contributions Account balance at the relevant time; and
D is the amount of the withdrawal.
A Participant shall not be considered as suffering an immediate and heavy
financial hardship unless such Participant submits to the Committee (i) written
evidence (satisfactory to the Committee) of such hardship and the amount needed
to alleviate the hardship (ii) any other written agreement or other
documentation which the Committee deems to be necessary or appropriate in order
to ensure that the Participant understands and will comply with the requirements
of this Section. Absent actual knowledge to the contrary, any Participant shall
be deemed to have met the requirements of the immediately preceding sentence if
the Participant complies with the requirements of the immediately succeeding
sentence and if he submits a written request in which he specifically identifies
the hardship and attaches a photocopy of (i) bills for medical care
VI-20
<PAGE>
(described in the first paragraph of this Section) previously incurred or
physician's reports and other evidence of medical care to be incurred, (ii) a
contract to purchase property which he represents to be his principal residence,
(iii) a notice or other evidence of imminent eviction from property which the
Participant represents to be his principal residence, (iv) a notice or other
evidence of imminent foreclosure action with respect to property which the
Participant represents to be his principal residence, (v) a certified copy of
the order of the court or other authority with jurisdiction over the trustee in
bankruptcy or other appropriate representative of the Participant's creditors in
any bankruptcy, insolvency or similar proceeding, to the effect that the amounts
demanded by such trustee or other appropriate representative have been
determined by such court or other authority to be due and payable to or for the
benefit of such creditors, (vi) a photocopy of enrollment registration forms or
other evidence of tuition or related educational fees due for the next 12 months
of post-secondary education, or (vii) other evidence of the claimed hardship and
the amount of funds required to alleviate such hardship.
In addition, the Participant must represent in writing that (i) his
financial need cannot be relieved through reimbursement or compensation by
insurance or otherwise, (ii) his financial need cannot be relieved through
liquidation of any of his remaining assets (or any remaining assets of his
spouse or minor children that are readily available to the Participant) without
such liquidation itself causing an immediate and heavy financial hardship, (iii)
his financial need cannot be relieved through his cessation of any contributions
made by or on behalf of such Participant to the Plan, (iv) such Participant has
received or applied for all other distributions available to him from plans
maintained by an Employer and any other employer, and such distributions have
not or will not relieve the claimed financial hardship, and (v) such Participant
has received or applied for all nontaxable loans available to him from plans
maintained by an Employer or any other employer and from commercial sources, and
such loans have not or will not relieve the claimed financial hardship. However,
the purpose of permitting withdrawals under this Section is to reduce the
specific need. Therefore, if requiring, one of the actions listed in items (i)
through (v) above would have the effect of increasing, the amount needed, then
the action will not be required. For example, if a participant needs funds to
purchase a principal residence, but receiving a Plan loan would disqualify the
employee from obtaining other necessary financing, then obtaining the Plan
loan will not be required even though it is listed as item (v) above.
The Committee shall have no duty or obligation to independently investigate
or verify the truth or accuracy of any representation of the Participant or the
authenticity or accuracy of any documentary evidence provided by the Participant
and, absent actual knowledge to the contrary, the Committee shall assume that
any such representation is true and correct and any such documentary evidence is
authentic and correct.
Any withdrawal hereunder shall result in suspension (for a period of 12
months after the Participant's receipt of amounts withdrawn hereunder) of
Elective Contributions and Employee Voluntary Contributions under the Plan and
any elective deferrals (described in Section 402(g)(3) of the Code) and any
employee contributions described in
VI-21
<PAGE>
Section 401(m) of the Code under any other plan of deferred compensation
maintained by an Employer and/or any Affiliated Employer. The term "any other
plan of deferred compensation" as used in the immediately preceding, sentence
shall mean any plan of deferred compensation maintained by an Employer or any
Affiliated Employer, including stock option, stock purchase and similar plans,
as well as a cash or deferred arrangement under a cafeteria plan described in
Section 125 of the Code, but excluding health or welfare benefit plans, and
excluding the mandatory contributions portion of any defined benefit plan
maintained by an Employer or any Affiliated Employer. Accordingly, as a prior
condition of any hardship withdrawal, the Participant shall execute any written
agreement or other document that the Committee deems necessary to ensure that
during the one-year suspension period, the Participant is on notice and will
comply with requirements of Section 401(k) of the Code.
In addition, under the Plan and any other plan maintained by an Employer
and/or any Affiliated Employer, the Participant may not authorize Elective
Contributions or any other elective deferrals (described in Section 402(g)(3)
of the Code) for the Participant's taxable year immediately following the
taxable year of receipt of the amount withdrawn hereunder in excess of the
applicable dollar limit under Section 402(g) of the Code for such next taxable
year, less the amount of such Elective Contributions and any other elective
deferrals (described above) for the Participant's taxable year of receipt of
the amount withdrawn hereunder.
No withdrawal hereunder shall result in any forfeiture of a Participant's
vested Account balance and no repayment of amounts withdrawn in order to wholly
or partially restore a withdrawing Participant's Account shall be permitted.
The Participant's Account shall be credited with the income of the Trust
Fund pursuant to Section 4.4 until the day of withdrawal, as provided above.
Amounts eligible to be withdrawn under this Section shall be made available as
soon as practical after the Participant's withdrawal request is approved. No
more than one withdrawal can be made during any quarter of a Plan Year.
(b) (1) Withdrawal of Participant Contributions: Subject to the conditions
of this Section, each Participant, upon giving written notice to the Committee
and the Trustee, shall be entitled to withdraw from his Employee Account an
amount equal to the balance of such Employee Account. Any portion of the
Participant's Employee Account that is derived from recharacterized Elective
Contributions shall be subject to the same conditions, limitations and penalty
provisions as are set out in Section 6.8(a). The Participant's Employee Account
shall be credited with the income of the Trust Fund in accordance with Section
4.4 until the day of withdrawal. The appreciation or depreciation of the Trust
Fund and any understatement or overstatement of income shall be allocated as of
the end of the Plan Year pursuant to Section 4.4 but based on only the income
remaining in the Account after the withdrawal. Amounts eligible to be withdrawn
under this Section 6.8(b)(1) shall be made available as soon as practical after
the Participant's withdrawal request is approved. No more than one withdrawal
can be made during any quarter of a Plan Year.
VI-22
<PAGE>
Subject to the requirements of Section 411(d)(6) of the Internal Revenue
Code and regulations and other guidance issued thereunder by the Internal
Revenue Service, to the extent that a Participant would be entitled to withdraw
any portion of his Account balance (immediately prior to the most recent
effective date of this Section 6.8) under the provisions of this Section as in
effect immediately prior to the most recent effective date of this Section, but
may not withdraw such portion under the currently operative provisions of this
Section, the provisions of this Section as in effect immediately prior to the
most recent effective date of this Section shall apply with respect to the
Participant's Account balance immediately prior to the effective date of this
Section.
(2) Withdrawals from Prior Plan After-Tax Contributions Account: The
provisions of this Section 6.8(b)(2) apply only to a Participant's Prior Plan
Account, if any, and will take precedence over any inconsistent provisions of
this Section 6.8(b) with respect to a Participant's Prior Plan Account. If this
Section 6.8(b)(2) does apply to a Participant, withdrawals shall be made under
the provisions of this Section 6.8(b)(2) before application of any other
provisions of Section 6.8(b).
Subject to the conditions of this Section, each Participant, upon giving
written notice to the Committee and the Trustee, shall be entitled to withdraw
from his Prior Plan After-Tax Contributions Account an amount equal to the
balance of such Prior Plan After-Tax Contributions Account. The Participant's
Prior Plan After-Tax Contributions Account shall be credited with the income of
the Trust Fund in accordance with Section 4.4 until the day of withdrawal. The
appreciation or depreciation of the Trust Fund and any understatement or
overstatement of income shall be allocated as of the end of the Plan Year
pursuant to Section 4.4 but based only on the income remaining in the Account
after the withdrawal. Amounts eligible to be withdrawn under this Section
6.8(b)(2) shall be made available as soon as practicable after the Participant's
withdrawal request is approved. Prior to July 1, 1998, no more than one
withdrawal can be made pursuant to this Section 6.8(b)(2) during any Plan Year;
provided, however, that on and after July 1, 1998, no more than one withdrawal
can be made during any quarter of a Plan Year.
Any withdrawal under this Section 6.8(b)(2) shall result in suspension (for
a period of six months after the Participant's receipt of amounts withdrawn
hereunder) of Elective Contributions and Employee Voluntary Contributions under
the Plan and any elective deferrals (described in section 402(g)(3) of the Code
and any employee contributions described in Section 401(m) of the Code under any
other plan of deferred compensation maintained by an Employer and/or any
Affiliated Employer. The term "any other plan of deferred compensation
maintained by an Employer or any Affiliated Employer, including stock option,
stock purchase and similar plans, as well as a cash or deferred arrangement
under a cafeteria plan described in Section 125 of the Code, but excluding
health or welfare benefit plans, and excluding the mandatory contributions
portion of any defined benefit plan maintained by an Employer or any
Affiliated Employer. Accordingly, as a prior condition of any withdrawal of
Prior Plan After-Tax Contributions, the Participant shall execute any
written agreement or other document that
VI-23
<PAGE>
the Committee deems necessary to ensure that during the one-year suspension
period, the Participant is on notice and will comply with the suspension
provisions of this paragraph.
(c) Withdrawals from Prior Plan Rollover Contributions Account:
Subject to the conditions of this Section, each Participant who was a
Participant in the Prior Plan on October 1, 1994, upon giving written
notice to the Committee and the Trustee, shall be entitled to withdraw
from his Prior Plan Rollover Contributions Account an amount equal to the
balance of such Prior Plan Rollover Contributions Account. The
Participant's Prior Plan After-Tax Contributions Account shall be
credited with the income of the Trust Fund in accordance with Section 4.4
until the day of withdrawal. The appreciation or depreciation of the Trust
Fund and any understatement or overstatement of income shall be allocated
as of the end of the Plan Year pursuant to Section 4.4 but based only on
the income remaining in the Account after the withdrawal. Amounts
eligible to be withdrawn under this Section 6.8(b)(2) shall be made
available as soon as practicable after the Participant's withdrawal
request is approved. No more than one withdrawal can be made pursuant to
this Section 6.8(c) during any Plan Year.
Subject to the requirements of Section 411(d)(6) of the Internal
Revenue Code and regulations and other guidance issued thereunder by the
Internal Revenue Service, to the extent that a Participant would be
entitled to withdraw any portion of his Account balance (immediately prior
to the most recent effective date of this Section 6.8 or its equivalent
under the Prior Plan) under the provisions of this Section as in effect
immediately prior to the most recent effective date of this Section, but
may not withdraw such portion under the currently operative provisions of
this Section, the provisions of this Section as in effect immediately
prior to the most recent effective date of this Section shall apply with
respect to the Participant's Account balance immediately prior to the
effective date of this Section.
6.9. Claims Procedure for Benefits: When a benefit is due under the Plan,
a claim should be submitted to the personnel office of an Employer by which the
Participant is or was employed. Under normal circumstances a final decision on a
claimant's request for benefits shall be made within ninety (90) days after
receipt of the claim. However, if special circumstances require an extension of
time to process a claim, a final decision may be deferred up to one hundred
eighty (180) days after receipt of the claim if, prior to the end of the initial
ninety (90) day period, the claimant is furnished with written notice of the
special circumstances requiring the extension and the anticipated date of a
final decision. If the claim is denied, within the applicable period of time set
out above, the claimant shall receive written notification of the denial, which
notice shall set forth the specific reasons for the denial, the relevant Plan
provisions on which the denial is based, and the claim review procedure under
the Plan. In the event that a claim is denied, or in the event no action is
taken on the claim within the above-described period(s) of time, the following
procedure shall be used:
(a), First, in the event that the claimant does not timely receive
the above-described written notification, the claimant's request for
benefits shall be deemed to be denied as of the last day of the relevant
period and the claimant shall be entitled to a full review of his claim in
accordance with the 'following provisions of this Section.
VI-24
<PAGE>
(b) Second, a claimant is entitled to a full review of his claim
after actual or constructive notification of a denial. A claimant desiring
a review must make a written request to the Committee requesting such a
review, which may include whatever comments or arguments the claimant
wishes to submit. Incident to the review, the claimant may represent
himself or appoint a representative to do so, and will have the right to
inspect all documents pertaining to the issue. The Committee, in its
sole discretion, may schedule any meeting(s) with the claimant and/or the
claimant's representative that it deems necessary or appropriate to
facilitate or expedite its review of a denied claim.
A request for a review must be filed with the Committee within ninety (90) days
after the denial of the claim for benefits was actually or constructively
received by the claimant. If no request is received within the 90-day time
limit, the denial of benefits will be final. However, if a request for review of
a denied claim is timely filed, the Committee must render its decision under
normal circumstances within sixty (60) days of the receipt of the request for
review. In special circumstances the decision may be delayed if, prior to
expiration of the initial 60-day period, the claimant is notified of the
extension, but must in any event be rendered no later than one hundred twenty
(120) days after the receipt of the request. If the decision on review is not
furnished to the claimant within the applicable time period(s) set above, the
claim shall be deemed denied on the last day of the relevant period. All
decisions of the Committee shall be in writing and shall include specific
reasons for whatever action has been taken, including the specific Plan
provisions on which the decision is based.
6.10. Loans to Participants and Beneficiaries:
(a) Loans may be permitted from time to time, as determined by the
Committee, to (i) any Participant or (ii)after October 18, 1989, any
Participant's Beneficiary or alternate payee under a qualified domestic
relations order described in Section 414(p) of the Code, who is a "party in
interest", as defined in Section 3(14) of the Act, or a "disqualified
person," as defined in Section 4975(e)(2) of the Code, and (iii) on whose
behalf an Account or subaccount is maintained under the Plan (hereinafter
an individual described in clause (i) or (ii) and (iii) shall be referred
to as a "Qualified Participant"). For purposes of this Section, a "loan"
shall include any renewal or modification to an existing loan hereunder
long as, at the time of any such modification or extension, the
requirements of this Section are met. Any action taken by the Committee
shall be taken pursuant to applicable provisions of Article VIII and shall
be communicated to Qualified Participants at such time and in such manner
as shall be prescribed by the Committee.
In order to relieve any demonstrated financial hardship, as described
under the provisions of the Plan which cover in-service withdrawals, or for
any other suitable purpose (such as financing the purchase of a home or
paying education expenses) as determined by the Committee and announced to
Qualified Participants, a Qualified Participant may borrow from his vested
Account balance under the Plan, subject to the following provisions of
this Section and to such additional rules or guidelines as the Committee
may adopt hereunder, by making prior written application to the
Committee
V1-25
<PAGE>
on forms provided for that purpose by the Committee. Such forms (hereinafter
referred to as the "application forms") shall (i) specify the terms pursuant to
which the loan is requested to be made, (ii) designate the extent, if any, that
the loan will be made from any one or more of any funds as may have been
established under Section 4.10 in which the Qualified Participant has an
interest, (iii) authorize the repayment of the loan through payroll deductions
in accordance with subsection (c) of this Section if the Qualified Participant
is an Employee, or authorize a procedure whereby the Qualified Participant is to
be invoiced monthly in accordance with subsection (c) of this Section if the
Qualified Participant is not an Employee, (iv) provide such additional
information and documentation (including but not limited to demonstration of
financial hardship or any other suitable purpose of the loan) as the Committee
shall require, and (v) include a note and security agreement, duly executed by
the Qualified Participant, pursuant to which the Qualified Participant promises
to repay the note and grants a security interest, as described in subsection (c)
of this Section, to secure repayment of the loan and the note.
(b) The Committee shall issue rules or guidelines ("Standards") which
shall not be inconsistent with applicable provisions of the Code and the Act,
and regulations or other authority issued thereunder by the appropriate
governmental authority and which shall be uniformly applicable to all Qualified
Participants similarly situated and shall govern the Committee's approval or
disapproval of completed application forms. Under such Standards, the Committee
shall consider the Qualified Participant's creditworthiness and credit history,
fair market value and liquidity of the Qualified Participant's collateral to be
pledged as security for the loan, and any other factors which the Committee
determines are considered in a normal commercial setting by a commercial lender.
To the extent not inconsistent with the requirements of applicable provisions of
the Code and the Act, the Standards shall prescribe the manner for determining
the annual rate of interest to be charged on each loan to a Qualified
Participant under the Plan. Without limiting the scope of the immediately
preceding sentence, such annual rate of interest for such loans must provide the
Plan with an annual rate of return commensurate with the prevailing interest
rate charged on similar commercial loans by persons in the business of lending
money for loans which would be made under similar circumstances. In addition,
the Standards may provide for assessment of a fee for processing loan
application forms, obtaining credit reports, collection and processing late
payments, and similar administrative expenses, which amounts shall be charged
directly to the Account of the affected Qualified Participant. The Committee
shall from time to time prescribe such additional Standards that it deems to be
necessary or appropriate and which are consistent with proper lending practices.
(c) To the extent that loans are permitted under this Section, subject
to applicable provisions of this Section, following receipt by the Committee of
a properly completed application form, each Qualified Participant who, pursuant
to the above-described Standards, the Committee determines to be credit worthy
and to be able to provide the requisite security shall be entitled to borrow
from his Account an amount which (when added to the outstanding balance of all
other loans to the Qualified Participant under all "qualified employer plans,"
as defined in Section 72(p)(4) of the Code, of an Employer and any Affiliated
Employers) is not in excess of the lesser of
VI-26
<PAGE>
(1) $50,000, reduced by the excess, if any, of (a) the highest outstanding
balance of such loans during the one-year period ending on the day before the
latest date on which a loan was made, over (b) the outstanding balance of such
loans on the latest date on which a loan was made, or (ii) one-half (1/2) of the
present value of the vested account balance of the Qualified Participant under
the Plan as of the most recent Valuation Date. Any renewal or modification of an
existing loan hereunder shall be deemed to be a new loan for purposes of this
Section. Any such loan shall be secured by such Qualified Participant's vested
interest in his Account balance; provided however, with respect to any loan made
after October 18, 1989, such security interest may not exceed one-half of such
Account balance immediately after the origination of each loan hereunder. In
addition, any loan originated, renewed or modified hereunder with respect to a
Qualified Participant who is an Employee shall be repaid by payroll deduction
pursuant to a substantially level amortization schedule as provided in the
Standards issued by the Committee (with payments not less frequently than
quarterly) over the term of the loan. Any such loan issued hereunder to a
Qualified Participant who is not an Employee shall be repaid pursuant to a
monthly invoice issued by the Committee requiring payment by the Qualified
Participant within 30 days of the Qualified Participant's receipt of the monthly
invoice and in accordance with a substantially level amortization schedule as
provided in the Standards issued by the Committee (with payments not less
frequently than quarterly) over the term of the loan. No loan shall have a
maturity date in excess of five (5) years, unless the loan is used to acquire
any dwelling unit which within a reasonable time is to be used (determined at
the time the loan is made) as a principal residence of the Participant.
Any loan may be prepaid without penalty, if the Qualified Participant
repays the full amount of the loan, plus all interest accrued and unpaid
thereon; provided, however, partial payments on a loan may be permitted by the
Committee in the nondiscriminatory exercise of its discretion pursuant to rules
established by the Committee which are applicable to similarly situated
Qualified Participants.
Notwithstanding any other provision to the contrary, (i) no loan shall be
made to any Qualified Participant who is or was either an "owner employee" or
is a "shareholder employee" of any Employer that is an S corporation within the
meaning of such terms under Section 4975(d) of the Code, (ii) no Qualified
Participant shall be entitled to a loan from the Trust Fund if the amount of the
loan is less than S1,000, except in the case of a loan for the purpose of paying
amounts demanded in connection with any bankruptcy, insolvency or similar
proceeding described in Section 6.8(a)(1), in which event, no minimum loan
amount shall apply, and (iii) to the extent applicable, no Qualified Participant
shall be entitled to a loan from the Trust Fund if the making of the loan would
interfere with the orderly management of the Plan for the benefit of all the
Qualified Participants or otherwise contravene any applicable law or regulation.
(d) Any loan or loans to a Qualified Participant hereunder shall not be
made as an investment of the Trust Fund but instead shall be considered to be an
earmarked investment of the Qualified Participant's Account. A subaccount shall
be established for the Qualified Participant and shall be maintained until the
loan or loans are repaid in full.
VI-27
<PAGE>
Such loan or loans shall be the only investment of such subaccount and thus such
subaccount shall not be taken into account for purposes of determining or
allocating income, gains or losses of any commingled portion of the Trust Fund
and all costs, charges, fees or expenses in connection with acquisition and
disposition of such investment of the subaccount shall be charged directly to
such subaccount; provided however, such subaccount shall not be charged with any
portion of comparable costs, charges, fees or expenses incurred on behalf of
Accounts which are part of the commingled portion of the Trust Fund.
(e) The Committee shall, in accordance with its established Standards,
review and approve or disapprove completed application forms as soon as
practicable after its receipt thereof, and shall promptly notify the applying
Qualified Participant of the disposition of his application form. The Committee
shall have the authority to delegate the power to review and approve or
disapprove loans under this Section to such agents or committees composed of
persons appointed by the Committee as the Committee shall deem proper, provided
that any such agents or committees shall act only in accordance with the
Standards established by the Committee pursuant to this Section. If the Trustee,
in its sole discretion, determines that it is not reasonably and prudently able,
in the interest of Qualified Participants, to liquidate the necessary amount
from any funds that may have been established under Section 4.10, the Trustee
shall notify the Committee, and the amount to be paid to each Qualified
Participant whose completed application form designated that a loan be made from
such fund shall be reduced in proportion to the ratio which the aggregate
amount, if any, that the Trustee has advised the Committee may prudently be
liquidated bears to the aggregate amount which all such Qualified Participants
designated to be paid from such fund.
(f) Subject to subsection (e), the Committee, upon approval of a completed
application, shall direct the Trustee to convert all or any part of the
Qualified Participant's interest in the Trust Fund, or in each affected fund
which may have been established pursuant to Section 4.10, in the aggregate
amount necessary to make payment of the loan proceeds from the Trust Fund, or
each such fund as may have been established pursuant to Section 4.10, to the
extent designated in the completed application form, and shall direct the
Trustee to transfer cash to the Qualified Participant in such aggregate amount.
The Committee shall maintain sufficient records to permit an accurate crediting
of repayments of the loan in accordance with Subsection (j) of this Section.
(g) The unpaid balance owed by a Qualified Participant on a loan under the
Plan shall not reduce the amount credited to his Account under the Plan.
However, from the time of payment of the proceeds of the loan to the Qualified
Participant, his Account balance shall be deemed invested, to the extent of such
unpaid loan balance, in such loan until the complete repayment thereof or
distribution from such Account. At the time a loan is made, the amount loaned
shall
(i) first be deemed an investment of, and allocated to the
Participant's Prior Plan Account, except for the Prior Plan
Profit Sharing
VI-28
<PAGE>
Contributions Account, to the extent that amounts allocated
thereto are not already allocated to a loan; and
(ii) to the extent that such loan is in excess of such amounts, it
shall then be deemed an investment of, and allocated to, the
Qualified Participant's Employer Nonforfeitable Contributions
Account to the extent that amounts allocated thereto are not
already allocated to a loan, assuming that such loan is derived
first from Elective Contributions and any income and increments
thereon; next, from any Profit Sharing Contributions and any
income and increments thereon; and lastly, from any Qualified
Non-Elective Contributions and any earnings and increments
thereon; and
(iii) to the extent that such loan is in excess of such amounts, it
shall then be deemed an investment of, and allocated to, the
remaining vested portion of the Qualified Participant's Employer
Account to the extent that amounts allocated thereto are not
already allocated to a loan; assuming that such loan is derived
first from any Matching Contributions and any income and
increments thereon; and
(iv) to the extent that such loan is in excess of such amounts, it
shall then be deemed an investment of, and allocated to, the
Qualified Participant's Rollover Account, if any, to the extent
that amounts allocated thereto are not already allocated to a
loan; and
(v) to the extent that such loan is in excess of such amounts, it
shall then be deemed an investment of, and allocated to the
Qualified Participant's Employee Account to the extent that
amounts allocated thereto are not already allocated to a loan.
(h) Except in the event of application of a Qualified Participant's Account
balance to repayment of a loan in the event of a default in accordance with
subsection (k) of this Section, no withdrawal may be made by a Qualified
Participant under this Article VI of any amount deemed invested in the
outstanding balance of any loan made pursuant to this Section.
(i) The amount of any distribution otherwise payable to a Qualified
Participant shall be reduced by the amount owed (including any accrued interest)
on all loans of the Qualified Participant at the time of such distribution. The
Trustee shall apply the pledged portion of the Qualified Participant's Account
to be distributed or paid toward the liquidation of the Qualified Participant's
indebtedness to the Plan and the Trust Fund. Such reduction shall constitute a
complete discharge of all liability to the Plan and the Trust Fund for the loan
to the extent of such reduction.
VI-29
<PAGE>
(j) Repayment of all loans under the Plan shall be secured by the Qualified
Participant's vested Account balance in accordance with applicable provisions of
subsection (c) of this Section; provided, however, that repayment shall be
secured by the Qualified Participant's vested interest in his Account only for
such time, and to the extent that, a portion of such loan is allocated to such
Account. Any loan repayment shall first be credited as soon as practicable to
the Qualifying Participant's segregated subaccount and to that portion of the
loan allocated to the Qualified Participant's individual accounts in the same
order of priority as described in subsection (g) of this Section. Such credited
amounts shall be transferred as soon as practicable following receipt thereof to
the individual accounts of the Qualified Participant from which the assets were
released upon establishment of the segregated subaccount, and shall thereafter
be invested as part of the Trust Fund. A Qualified Participant may prepay his
loan at any time, without penalty, provided that he pays the full amount of the
loan, plus all interest accrued and unpaid thereon.
With respect to any loan made prior to October 19, 1989, if, at any time
prior to the full repayment of a loan to a Participant under the Plan, the
Participant should cease to be a Participant by reason of his termination of
employment for any reason, or the Plan should terminate, the unpaid balance
owed by the Participant on the loan and all accrued but unpaid interest shall be
due and payable immediately. With respect to any loan made after October 18,
1989, if the Qualified Participant should cease to be an Employee for any
reason, but no distribution is made under the Plan with respect to such
Qualified Participant, or if the loan is to a Qualified Participant who is a
former Employee or a Beneficiary, and no distribution is made under the Plan
with respect to such Qualified Participant, such Qualified Participant may
make all repayments due on outstanding loans of such Qualified Participant by
personal check or money order in accordance with the Qualified Participant's
repayment schedule. Pursuant to applicable provisions of subsection (c), such
repayment shall be made within 30 days of receipt of a monthly invoice.
(k) In the event of failure to make any payment of principal or interest
under a loan when due, the loan shall be in default ("Default") and all the
unpaid balance owed by the Qualified Participant and all accrued but unpaid
interest shall be due and payable immediately. Following a Default, the
Committee and the Trustee may apply any pledged portion of the vested Account
balance of the Qualified Participant to pay the loan, in whole or in part, and
take any other action or remedy as allowed by law, provided that no application
of a Qualified Participant's vested Account balance shall occur prior to the
time such vested Account balance is otherwise distributable under the terms of
the Plan, except as permitted by the Code and the Act. The amount of any
withdrawal or distribution from the vested Account balance of a Qualified
Participant or Beneficiary following a Default shall then be reduced by the
amount of any loan in Default and such amount shall be applied to the unpaid
loan balance and any accrued but unpaid interest thereon.
6.11. Distributions to Divorced Spouse: Subject to the provisions of Section
12.3 which pertain to qualified domestic relations orders ("QDRO") and pursuant
to the qualified
VI-30
<PAGE>
domestic relations order procedures of the Plan, in the event that the Committee
receives a domestic relations order that it determines to be a valid QDRO, and
if such QDRO provides that distribution of vested benefits to an alternate payee
described therein is not to commence or be made immediately, but the QDRO
provides for the apportionment of such benefits to be made immediately, the
Committee shall establish a separate account under the Plan for the alternate
payee. Subject to Section 12.3 and the qualified domestic relations order
procedures of the Plan, if the Committee receives a domestic relations order
that it determines to be a valid QDRO, and if the QDRO provides that
distribution of vested benefits to an alternative payee described therein is to
commence or to be made immediately, then the Committee shall direct the Trustee
to effect distribution to the alternate payee who, for the purpose of effecting
such distribution, shall be considered and treated as any other Participant who
is entitled to receive the benefit payable under the Plan.
If any such distribution is made at a time when the Participant is not
fully vested in the Participant's Employer Account and the Participant can
increase his or her vested percentage in such Employer Account, the
Participant's vested interest in his Employer Account shall be determined by the
following formula: X = P(AB + D)-D. For purposes of applying the formula: P is
the vested percentage at the relevant time; AB is an Employer Account balance at
the relevant time; and D is the amount of the distribution. For purposes of
allocating appreciation or depreciation of the Trust Fund and income or loss of
the Trust Fund, such distribution shall be subtracted from the Participant's
Account balance at the beginning of the Plan Year in which the distribution is
made.
Notwithstanding the provisions of the preceding paragraph, the Committee
shall comply with the terms and provisions of any order which requires
distribution to an alternate payee prior to the affected Participant's "earliest
retirement age," as such term is defined in Section 206(d)(3)(E)(ii) of the Act
and Section 414(p)(4)(B) of the Code, if the order would have been determined to
be a valid QDRO if the order had required distribution at or after the
Participant's "earliest retirement date."
6.12. Special Transition Rule: Notwithstanding any other provisions of the
Plan to the contrary, if the Plan is retroactively effective with respect to any
Plan Year (or other applicable accounting period) of a Prior Plan, the benefit
payable under the Plan to any Participant who terminated employment during
such Plan Year (or other applicable accounting period shall) be determined with
reference to the special transition rules of Sections 2.3, 4.12 and 12.5.
VI-31
<PAGE>
ARTICLE VII.
TOP-HEAVY PLAN PROVISIONS
Capitalized terms used in this Article VII which are not otherwise defined
in Article I of the Plan are defined in Section 7.4.
7.1. General Rules for Determining Top-Heavy Status: In order to
determine whether the Plan is Top-Heavy for a Plan Year, it is necessary to
determine (i) whether an Employer must be aggregated with other employers which
will be treated as a single employer, (ii) what the Determination Date is for
the Plan Year, (iii) which Employees or former Employees or other individuals
who perform or performed services as owners or employees of any Affiliated
Employer which is not an Employer (whether or not Qualified Plan participants)
are, or formerly were, Key Employees, (iv) which former Employees or other
individuals who performed services as owners or employees of any Affiliated
Employer which is not an Employer (whether or not Qualified Plan participants)
have not performed any service for an Employer (or any Affiliated Employer which
is not an Employer) at any time during the five-year period ending on the
Determination Date, (v) if, at any time during the five-year period ending on
the Determination Date, an Employer and the Affiliated Employers maintain or
maintained Qualified Plans (whether or not terminated) in addition to the Plan,
which Qualified Plans (including the Plan) are required or permitted to be
aggregated to determine Top-Heavy status and (vi) the present value of accrued
benefits (including distributions made during the plan year of the Qualified
Plan(s) and the four preceding plan years of the Qualified Plan(s)) of Key
Employees, former Key Employees and non-Key Employees. For this purpose, an
Employer and all Affiliated Employers must be treated as one employer and the
Employees or former Employees or other individuals who perform or performed
services as owners or employees of any Affiliated Employer which is not an
Employer (whether or not participants in all Qualified Plans maintained by an
Employer and the Affiliated Employers) must be categorized as Key Employees,
former Key Employees or non-Key Employees. Former Key Employees are non-Key
Employees and are excluded entirely from the calculation used to determine if a
plan or aggregation group of plans is Top-Heavy.
With respect to plan years beginning after December 31, 1984, the accrued
benefit of any individual who has not performed any services for an Employer or
any Affiliated Employer at any time during the five-year period ending on the
Determination Date shall be excluded from the calculation used to determine if
the plan or aggregation group of plans is Top-Heavy. In addition, incident to
testing whether any such Plan or group of plans is Top-Heavy, an individual's
present value of accrued benefits is used only once. All Qualified Plans (of an
Employer and the Affiliated Employers) in which a Key Employee participates, and
certain other Qualified Plans, must be aggregated to form the Required
Aggregation Group. Other Qualified Plans may be aggregated with the Required
Aggregation Group to form a Permissive Aggregation Group. Once aggregated, all
Qualified Plans that are required to be aggregated will be Top-Heavy Plans only
if the aggregation group is Top-Heavy. No Qualified Plan in the Required
Aggregation Group will be Top-Heavy if the Required Aggregation Group is not
Top-Heavy. If a Permissive Aggregation Group is Top-Heavy, only those Qualified
Plans which are
VII-1
<PAGE>
part of the Required Aggregation Group shall be treated as Top-Heavy Plans
subject to the provisions of this Article VII.
7.2. Computation of Present Value of Accrued Benefits:
(a) Defined Contribution Plan(s): The present value of accrued
benefits as of the Determination Date for any individual who is a
participant in a Qualified Plan which is (or is treated as) a defined
contribution plan is the sum of (i) the account balance as of the most
recent Valuation Date occurring within a 12-month period ending on the
Determination Date, and (ii) an adjustment for contributions due as of the
Determination Date. In the case of such a Qualified Plan not subject to the
minimum funding requirements of Section 412 of the Code, the adjustment in
(ii) is generally the amount of any contributions actually made after the
Valuation Date but on or before the Determination Date. However, in the
first plan year of the Qualified Plan, the adjustment in (ii) should also
reflect the amount of any contributions made after the Determination Date
that are allocated as of a date in that first plan year of the plan. In the
case of a Qualified Plan that is a defined contribution plan and is subject
to the minimum funding requirements, the account balance in (i) should
include contributions that would be allocated as of a date not later than
the Determination Date, even though those amounts are not yet required to
be contributed. Thus, the account balance will include contributions waived
in prior years as reflected in the adjusted account balance and
contributions not paid that resulted in a funding deficiency. The adjusted
account balance is described in Rev. Rul. 78-223, 1978-1 C.B. 125. Also,
the adjustment in (ii) should reflect the amount of any contribution
actually made (or due to be made) after the Valuation Date but before the
expiration of the extended payment period in Section 412(c)(10) of the
Code. The account balance of any individual who has not performed services
for an Employer at any time during the 5-year period ending on the
Determination Date shall be disregarded.
(b) Defined Benefit Plans: The present value of an accrued benefit
under a Qualified Plan that is a defined benefit plan as of the
Determination Date must be determined as of the most recent Valuation Date
which is within a 12-month period ending on the Determination Date. In the
first plan year of a plan, the accrued benefit for a current participant
must be determined either (i) as if the individual terminated service as of
the Determination Date (i.e., the last day of plan year of the plan) or,
(ii) as if the individual terminated service as of the Valuation Date, but
taking into account the estimated accrued benefit as of the Determination
Date. However, for any other year, the accrued benefit for a current
participant must be determined as if the individual terminated service as
of such Valuation Date. For this purpose, the Valuation Date must be the
same Valuation Date used for computing plan costs for minimum funding
regardless of whether a valuation is performed that year. For purposes of
this paragraph, present value shall be determined with reference to the
interest rate and mortality table used to determine Actuarial Equivalent
optional benefits under the defined benefit plan. The accrued benefit of a
Participant (other than a Key Employee) shall be determined (i) under the
method which is used for accrual purposes for all plans of an Employer or
(ii) or if there is no method described in clause (i), as if such benefit
occurred not more rapidly than the slowest accrual rate permitted under
Section 411(b)(1)(c) of the Code.
VII-2
<PAGE>
The accrued benefit of any individual who has not performed services for
an Employer at any time during the 5-year period ending on the
Determination Date shall be disregarded.
(c) Employee Contributions: For purposes of determining the present
value of accrued benefits in either a defined benefit or defined
contribution plan, the accrued benefits attributable to employee
contributions are considered to be part of the accrued benefits whether
such contributions are mandatory or voluntary. However, the amounts
attributable to deductible employee contributions are not considered to be
part of the accrued benefits.
(d) Distributions: For purposes of determining the present value of
accrued benefits, distributions made within the plan year of the Qualified
Plan that includes the Determination Date or within the four preceding
plan years of such plan are added to the present value of accrued benefits
in testing for top-heaviness. However, in the case of distributions
made after the Valuation Date and prior to the Determination Date, such
distributions are not included as distributions in Section 416(g)(3)(A) of
the Code to the extent that such distributions are included in the present
value of the accrued benefits as of the Valuation Date. In the case of the
distribution of an annuity contract, the amount of such distribution is
deemed to be the current actuarial value of the contract, determined on
the date of the distribution. Benefits paid on account of death are
treated as distributions hereunder to the extent such benefits do not
exceed the present value of accrued benefits immediately prior to death.
(e) Rollover Contributions and Plan-to-Plan Transfers: With respect
to proper treatment of rollover contributions and plan-to-plan transfers
incident to determining the present value of accrued benefits, it must
first be determined whether the rollovers and plan-to-plan transfers are
unrelated (both initiated by the employee and made from a plan maintained
by one employer to a plan maintained by another employer) or whether they
are related (a rollover either not initiated by the employee or made to a
plan maintained by the same employer). For purposes of determining whether
the employer is the same employer, all employers aggregated under Section
414(b), (c), (m) or (o) of the Code are treated as the same employer.
Thus, an Employer and all Affiliated Employers are to be treated as a
single employer. In the case of unrelated rollovers, (i) the plan
providing the distributions shall count the distribution as a distribution
under Section 416(g)(3)(B) of the Code and (ii) the plan accepting the
rollover shall not consider the rollover part of the accrued benefit if
such rollover was accepted after December 31, 1983, but must consider
it part of the accrued benefit if such rollover was accepted prior to
January 1, 1984. In the case of related rollovers, the plan providing the
rollover shall not count the rollover as a distribution under Section
416(g)(3)(B) of the Code and the plan accepting the rollover counts the
rollover in the present value of the accrued benefits. Rules for related
rollovers do not depend on whether the rollover was accepted prior to
January 1, 1984. The provisions of this Section 7.2 shall not apply to
direct rollovers described in Section 6.6(c).
7.3. Special Rules for Plan Years that Plan is Top-Heavy: Notwithstanding
any other provision of the Plan and Trust to the contrary, if the Plan is Top-
Heavy for any Plan Year
VII-3
<PAGE>
beginning after December 31, 1983, then the following provisions shall be
applicable and shall supersede and override any conflicting provision of the
Plan for such Plan Year:
(a) Vesting: Vesting of accrued benefits (described in Section
411(a)(7) of the Code, except those attributable to any Employee Voluntary
Contributions, including benefits accrued before the effective date of
Section 416 of the Code and benefits accrued before the Plan became Top-
Heavy) under the Plan shall be determined in accordance with the vesting
table set out in Section 6.4.
(b) Top-Heavy Compensation: Considered Compensation and Top-Heavy
Compensation for any one Participant for such Plan Year in excess of (i)
for Plan Years beginning on or after January 1, 1989, $200,000.00; and (ii)
for Plan Years beginning on or after January 1, 1994, $150,000, as both of
such dollar amounts are adjusted at such time and in such manner as is
prescribed in Section 401(a)(17)(B) of the Code, shall be disregarded for
any Plan Year in which the Plan is Top-Heavy.
(c) Minimum Allocations: Subject to the following provisions hereof,
for any Plan Year in which the Plan is Top-Heavy, each Participant shall
receive an allocation of an Employer Contribution and forfeitures, if any,
for the Plan Year in an amount equal to the lesser of (i) three percent
(3%) of the Participants' Top-Heavy Compensation and (ii) the largest
percentage of Top-Heavy Compensation provided on behalf of any Key
Employee. The minimum allocation shall be made without regard to any
contribution to Social Security. To the extent permitted under applicable
law or other authority issued thereunder by the appropriate governmental
authority, in determining whether an allocation of Employer Contributions
equal to the required percentage of Top-Heavy Compensation meets the
requirements of this Section, all benefits allocated under defined
contribution plans required to be aggregated under Section 7.1 shall be
considered benefits allocated under the Plan and, with respect to Plan
Years beginning after December 31, 1984, any Employer Contribution
attributable to a salary reduction or similar arrangement shall be taken
into account. Accordingly, for the purpose of clarity and without limiting
the scope of the immediately preceding sentence, (i) with respect to Plan
Years beginning after December 31, 1988, any elective deferral (described
in Section 402(g)(3) of the Code) under the Plan or any plan described in
the immediately preceding sentence on behalf of any Participant who is not
a key Employee shall not be treated as an Employer Contribution for
purposes of this Section, but will be treated as an Employer Contribution
for purposes of determining the percentage at which Contributions are made
for the Key Employee with the highest percentage; (ii) qualified
nonselective contributions (described in Section 401(m)(4)(C) of the Code)
under the Plan or any plan described in the immediately preceding sentence
on behalf of any Participant shall be treated as an Employer Contribution
for purposes of this Section; and (iii) with respect to Plan Years
beginning after December 31, 1988, any matching contribution (described in
Section 401(m)(4)(A) of the Code) under the Plan or any plan described in
the immediately preceding sentence on behalf of any Participant who is not
a Key Employee shall not be treated as an Employer Contribution for
purposes of this Section to the extent such matching contribution is
treated as an elective deferral for purposes of satisfying the actual
deferral percentage test of Section 401(k)(3) of the Code
VII-4
<PAGE>
or a matching contribution for purposes of satisfying the actual
contribution percentage of Section 401(m)(2) of the Code.
Notwithstanding the preceding paragraph, in the event that an
Employee is a Participant of the Plan and another Qualified Plan which is a
defined benefit plan maintained by an Employer and/or any Affiliated
Employer, such Employee shall not receive both the minimum benefit provided
hereunder and the minimum benefit provided under the defined benefit plan
on account of such plans being Top-Heavy. Instead, the aggregate minimum
benefit requirement for any Employee who is a Participant under the Plan,
and any defined benefit plan described in the preceding sentence, shall be
provided under the defined benefit plan, which defined benefit minimum
shall be offset by the value of the Participant's vested and nonforfeitable
interest in his accrued benefit derived from Employer Contributions under
the Plan. If the defined benefit minimum will be paid in the form of an
annuity, the offset shall be effected by converting the Participant's
vested accrued benefit derived from Employer Contributions under the Plan
into an annuity (payable in the same form and commencing at the same time
as the defined benefit minimum) which can be provided by the Participant's
vested accrued benefit derived from Employer Contributions using the
interest rate and mortality table for immediate annuities published by the
Pension Benefit Guaranty Corporation as in effect on the date the defined
benefit minimum is to commence. If the defined benefit minimum is paid in
the form of a lump sum, the lump sum value of the Participant's accrued
benefit derived from Employer Contributions under the Plan shall be offset
against the single sum value of the defined benefit minimum calculated in
accordance with the applicable provisions of the defined benefit plan. For
purposes of this Section, a Participant's accrued benefit derived from
Employer Contributions shall include any prior withdrawals or distributions
attributable thereto.
(d) Special Rules: For any Plan Year that the Plan is (i) Top-Heavy
and the additional minimum benefit described in Section 416(h) of the Code
is not provided or (ii) Super Top-Heavy, the limitations of Section
4.3(d)(iv) and (v) shall be applied by substituting "100 percent" for "125
percent" wherever it appears therein. Such substitution shall not cause a
reduction in any account balances attributable to Contributions for a Plan
Year prior to the Plan Year in which the Plan is Top-Heavy or Super Top-
Heavy.
7.4. Definitions: For purposes of this Article VII, the following terms
shall be defined as follows:
(a) Affiliated Employer: "Affiliated Employer" shall mean the
Affiliated Employer described in Article I of the Plan.
(b) Determination Date: "Determination Date" shall mean with respect
to a single Qualified Plan, (i) the last day of the preceding plan year of
the Qualified Plan, or (ii) in the case of the first plan year of the
Qualified Plan, the last day of such plan year. When aggregating Qualified
Plans, the value of accrued benefits will be calculated with reference to
the Determination Dates that fall within the same calendar year.
VII-5
<PAGE>
(c) Employee: "Employee" shall mean the Employee described in Article
I of the Plan.
(d) Employer: "Employer" shall mean an Employer described in Article
I of the Plan.
(e) Key Employee: "Key Employee" shall mean with respect to any
Qualified Plan, any Employee or former Employee (or any other person (i)
who is or was employed by any Affiliated Employer or (ii) who owns or owned
any interest in any Affiliated Employer and who derives or derived earned
income from such Affiliated Employer or would have derived earned income
had such Affiliated Employer had net profits), including any beneficiary
described below, who, at any time during the Qualified Plan's plan year
containing the Determination Date or any of the four (4) preceding plan
years of such Qualified Plan, is:
(i) An officer of any Employer or any Affiliated Employer
treated separately, if such individual earns annual compensation for a
plan year (for services rendered to an Employer and any Affiliated
Employer during the relevant plan year of the Qualified Plan) greater
than fifty percent (50%) of the amount in effect under Section
415(b)(1)(A) of the Code as in effect for the calendar year in which
such plan year ends for plan years beginning after December 31, 1986
(one hundred fifty percent (150%) of the maximum dollar limitation set
forth under Section 415(c)(1)(A) of the Code as in effect for the
calendar year in which such plan year ends for plan years beginning
prior to January 1, 1987); provided, however, subject to the last
paragraph of this Section 7.4(e), no more than fifty (50) individuals
who are or were Employees of an Employer and/or employees of an
Affiliated Employer or, if less, the greater of three (3) individuals
who are Employees of an Employer and/or employees of an Affiliated
Employer or ten percent (10%) of all such individuals, shall be
considered Key Employees by reason of being officers;
(ii) One of the ten (10) individuals owning (or considered as
owning within the meaning of Section 318 of the Code) both more than a
1/2 percent interest and the largest interests in an Employer or any
Affiliated Employer, treated separately, if such individual earns
annual compensation for a plan year (for services rendered to an
Employer and any Affiliated Employer during the relevant plan year of
the Qualified Plan) more than the maximum dollar limitation set forth
under Section 415(c)(1)(A) of the Code as in effect for the calendar
year in which such plan year ends; provided, however, if two such
individuals have the same interest in an Employer or Affiliated
Employer, treated separately, the individual earning the greater
compensation (for purposes of this Section 7.4(e)(ii)) shall be
treated as having a larger interest;
VII-6
<PAGE>
(iii) Any individual owning (or considered as owning within the
meaning of Section 318 of the Code) more than five percent (5%) of
the outstanding stock of any corporate Employer or any corporate
Affiliated Employer treated separately, or stock possessing more than
five percent (5%) of the total combined voting power of all stock of
any corporate Employer or any corporate Affiliated Employer, treated
separately, or, if an Employer or Affiliated Employer is not a
corporation, any individual owning more than five percent (5%) of the
capital or profits interest of such Employer, or Affiliated Employer
treated separately; or
(iv) Any individual whose aggregate annual compensation for a
plan year (for services rendered to an Employer and any Affiliated
Employer during the relevant plan year of the Qualified PIP) is more
than $150,000.00 and who would be described in Section 7.4(e)(iii) if
one percent (1%) were substituted for five percent (5%) therein.
Any Beneficiary of an Employee who is a Key Employee or a former Key
Employee and any Beneficiary of any other individual described above who is
a Key Employee or former Key Employee shall be treated as a Key Employee or
former Key Employee, whichever is applicable. Similarly, any Beneficiary of
an Employee who is a former non-Key Employee and any Beneficiary of any
other individual described above who is a former non-Key Employee shall be
treated as a former non-Key Employee.
For purposes of applying Section 318 of the Code to the provisions of
this Section, subparagraph (C) of Section 318(a)(2) of the Code shall be
applied by substituting five percent (5%) for fifty percent (50%). For
purposes of this Section, annual compensation for the plan year of the
Qualified Plan shall include all remuneration described in Treasury
Regulation Section 1.415-2(d) and any successor thereto, but including
amounts contributed by an Employer or Affiliated Employer pursuant to a
salary reduction agreement which are excludible from the individual's gross
income under Section 125, Section 402(a)(8), Section 402(h) or Section
403(b) of the Code.
In the event that the number of Key Employees determined under Subsection
(e)(1) of this Section would, but for the numerical limitations of that
Subsection, exceed the number determined under that Subsection, then those
officers having, the largest annual compensation during the plan year of the
Qualified Plan and the four (4) preceding plan years of such Qualified Plan
shall be the Key Employees. Such term shall not include any officer or employee
of an entity referred to in Section 414(d) of the Code. Notwithstanding any
provision hereof to the contrary, determination of who is a Key Employee shall
be made in accordance with Section 416(i)(1) of the Code and the regulations
thereunder.
(f) Participant: "Participant" shall mean any Participant described
in Article I of the Plan except that if the Plan is Top-Heavy, in addition
to Employees who would otherwise be considered to be Participants under the
Plan, the following Employees shall be considered to be Participants
solely for purposes of determining the individuals entitled to share in
the minimum benefit described in Section 73(c): (i) Participants who
VII-7
<PAGE>
have not separated from service at the end of the Plan Year, (ii)
individuals who are otherwise eligible to participate in the Plan but who
have failed to complete 1000 hours of service (or the equivalent) during
the Plan Year, (iii) individuals who are otherwise eligible to participate
in the Plan but who declined to make any required Contributions to the
Plan or, in the case of a cash or deferred arrangement, any elective
contributions permitted or required under the Plan, or (iv) individuals who
are eligible to participate in the Plan but who have been excluded from the
Plan because each such individual's Considered Compensation is less than a
stated amount.
(g) Permissive Aggregation Group: "Permissive Aggregation Group"
shall mean a Required Aggregation Group plus one or more Qualified Plans
which are not part of the Required Aggregation Group but which satisfy the
requirements of Section 401(a)(4) and 410 when considered together with the
Required Aggregation Group.
(h) Qualified Plan: "Qualified Plan" shall mean the Plan and any
other defined contribution plan (whether or not terminated) described in
Section 414(i) of the Code and/or any defined benefit plan (whether or not
terminated) described in Section 414(j) of the Code which is/are (or with
respect to any such plan which has been terminated, was/were) maintained at
any time during the five-year period ending on the Determination Date by an
Employer and/or the Affiliated Employers and intended to meet the
requirements of Section 401(a) of the Code; provided, however, a simplified
employee pension plan described in Section 408(k) of the Code shall be
treated as a defined contribution plan.
(i) Required Aggregation Group: "Required Aggregation Group" shall
mean a group of Qualified Plans, which group shall include each Qualified
Plan maintained by an Employer and/or the Affiliated Employers in which a
Key Employee participates in the relevant plan year including the
Determination Date, or any of the four preceding plan years, and which
group shall exclude any Qualified Plan in which a Key Employee does not
participate at any time during the plan year, or any of the four preceding
plan years, unless during such period such Qualified Plan enables
any Qualified Plan in which a Key Employee participates to meet the
requirements of Sections 401(a)(4) or 410 of the Code.
(j) Super Top-Heavy: "Super Top-Heavy" shall mean Top-Heavy except
for purposes of this Section 7.4(j), "ninety percent (90%)" shall be
substituted for "sixty percent (60%)" wherever the latter percent appears
in Section 7.4(k).
(k) Top-Heavy: "Top-Heavy" shall mean with respect to any Qualified
Plan, which is not included in any aggregation group, any such Qualified
Plan whereunder, as of the Determination Date, the sum of the present value
of the accrued benefits for Key Employees is more than sixty percent (60%)
of the sum of the present value of the accrued benefits of all Employees of
an Employer plus, if applicable, all employees (and self-employed
individuals) of all Affiliated Employers, excluding former Key Employees,
and shall mean with respect to any aggregation group, Required Aggregation
Group or Permissive Aggregation Group, whereunder as of the Determination
Date, the sum of the present value of the accrued benefits for Key
Employees is more than sixty
VII-8
<PAGE>
percent (60%) of the sum of the present value of accrued benefits of all
Employees of an Employer plus all employees (and self-employed individuals)
of all Affiliated Employers, excluding former Key Employees. For purposes
of this Section 7.4(k), the accrued benefit of any individual who is not a
Key Employee, but who is a former Key Employee will be disregarded, and,
with respect to Plan Years beginning after December 31, 1984, the
accrued benefit of any individual described in this Section 7.4(k) who has
not performed any service for an Employer and any Affiliated Employer(s)
maintaining any Qualified Plan at any time during the five-year period
ending on the Determination Date shall be disregarded. In addition, when
aggregating Qualified Plans, the value of accrued benefits will be
calculated with reference to the Determination Dates that fall within the
same calendar year.
(1) Top-Heavy Compensation: "Top-Heavy Compensation" shall mean (i)
the wages (as defined in Section 3401(a) of the Code for purposes of
income tax withholding at the source) that are paid (within the meaning of
Section 1.415-2(d)(3) and (4) of the Income Tax Regulations) to the
Employee by an Employer during the Plan Year for services performed and
reportable on the Employee's form W-2 (or its successor), determined
without regard to any rules that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Section 3401(a)(2) of
the Code), plus, with respect to Plan Years beginning after December 31,
1988, any reduction under a compensation deferral agreement under (a) a
plan described in Section 401(k) or 408(k) of the Code, (b) an annuity
described in Section 403(b) of the Code or (c) an election under a
cafeteria plan described in Section 125 of the Code, (ii) that is actually
paid to or is includible in the gross income of the Participant within the
relevant Plan Year, or would have been so paid or includible but for a
reduction described in clause (i) immediately above, and (iii) that does
not exceed (A) for Plan Years beginning on or after January 1, 1989,
$200,000; and (B) for Plan Years beginning on or after January 1, 1994,
$150,000, as both of such amounts are adjusted at such time and in such
manner as is prescribed in Section 401(a)(17)(B) of the Code.
VII-9
<PAGE>
ARTICLE VIII.
COMMITTEE
8.1. Appointment. Term of Service and Removal: The Board of the Plan
Sponsor shall appoint an Committee of not less than three (3) persons, the
members of which shall serve until their resignation, death or removal. Any
member of the Committee may resign at any time by mailing or delivering written
notice of such resignation to the Board. Any member of the Committee may be
removed by the Board, with or without cause, at any time by mailing, or
delivering written notice to such person at the address set forth in the records
of an Employer. Vacancies in the Committee arising by resignation, death,
removal or otherwise shall be filled by such persons as may be appointed by the
Board.
8.2. Powers: The Committee shall be a fiduciary and shall, in that
capacity, have the exclusive responsibility for the general administration of
the Plan, according to its terms and provisions, and shall have all discretion
and power necessary to accomplish such purposes, including, but not by way of
limitation, the right, power, and authority:
(a) To make rules and regulations for the administration of the Plan
which are not inconsistent with the terms and provisions hereof,
(b) To construe all terms, provisions, conditions, and limitations of
the Plan; and its construction thereof, shall be final and conclusive on
all persons or entities;
(c) To correct any defect, supply any omission, or reconcile any
inconsistency which may appear in the Plan in such manner and to such
extent as it shall deem necessary or appropriate, and its judgment in such
matters shall be final and conclusive as to all persons or entities;
(d) To select, employ, and compensate from time to time such
consultants, actuaries, accountants, attorneys, and other agents and
employees as the Committee may deem necessary or advisable for the proper
and efficient administration of the Plan; any agent, firm or employee so
selected by the Committee may be a disqualified person or a party in
interest but only if the requirements of Section 4975(d) of the Code and
the regulations issued thereunder, and Section 408(b) of the Act and the
regulations issued thereunder, have been satisfied;
(e) To determine all questions relating to the eligibility of
Employees to become Participants, and to determine the period of Active
Service and the amount of Considered Compensation upon which the benefits
of each Participant shall be calculated;
(f) To determine all controversies relating to the administration of
the Plan, including, but not limited to: (i) differences of opinion arising
between an Employer and the Trustee or a Participant, or any combination
thereof, and (ii) any questions it deems
VIII-1
<PAGE>
advisable to determine in order to promote the non-discriminatory administration
of the Plan for the benefit of the Participants and Beneficiaries;
(g) Subject to portfolio standards and guidelines which may be established
by the Trustee from time to time, to direct and instruct (or to appoint an
investment manager which would have the power to direct and instruct) the
Trustee in all matters relating to the preservation, investment, reinvestment,
management and disposition of the Trust Fund; provided, however that the
Committee shall not have any authority to direct the Trustee with respect to
preservation, investment, reinvestment or disposition of common stock of the
Plan Sponsor;
(h) To direct and instruct the Trustee in all matters relating to the
payment of Plan benefits and to determine the entitlement of a Participant or
Beneficiary to a benefit should he appeal a denial of his claim, or any portion
thereof,
(i) If, incident to a divestiture or other reorganization of any Employer,
a Participant who is a former Employee of such Employer requests in writing and
if the Committee has satisfied itself that the employer representations herein
described are true and correct, to direct the Trustee to transfer such
Participant's vested interest, if any, in the Plan directly to the trustee of
the trust used to fund any other plan which is maintained by such Participant's
new employer and which is represented in writing by such employer (i) to satisfy
the requirements for qualification and exemption under Sections 401(a) and
501(a) of the Code and (ii) to expressly permit such transfer to be made
thereto;
(j) With the consent or ratification of the Board, to direct the Trustee to
enter into any agreement that the Committee deems to be necessary or appropriate
to effect any transaction described in Section 8.2(i), 8.2(j) or 11.7;
(k) To delegate by written notice such clerical and recordation duties of
the Committee under the Plan as the Committee may deem necessary or advisable
for the proper and efficient administration of the Plan or the Trust;
(1) To determine whether the requirements of Section 6.6(c) have been
satisfied and, if it so determines, to direct and instruct the Trustees to
effect the direct rollover of an eligible rollover distribution (as defined in
Section 6.6(c) hereof) to the trustee or custodian of an eligible retirement
plan, as elected by the distributee of such eligible rollover distribution;
(m) To delegate the power to review applications for withdrawals under
Section 6.8(a) and to determine whether the requirements of such section are
satisfied, and in the event that the Committee delegates such power, references
in Section 6.8(a) to the Committee, shall be deemed to be references to the
person or persons to whom such power has been delegated; and
VIII-2
<PAGE>
(n) To delegate the power to review, and approve or disapprove,
applications for loans hereunder in accordance with Section 6.10(e), and in the
event that the Committee delegates such power, references in Section 6.10(e)
and (f) to the Committee shall be deemed to be references to the person or
persons to whom such power has been delegated.
8.3. Organization: The Committee shall select from among its members a
chairman, who shall preside at all of its meetings, and shall select a
secretary, who need not be a member of the Committee and who shall keep all
records, documents and data pertaining to its supervision of the administration
of the Plan.
8.4. Quorum and Majority Action: A majority of the members of the
Committee constitutes a quorum for the transaction of business. The majority
vote of the members present at any meeting called by the chairman of the
Committee at which there is a quorum will decide any question brought before
that meeting. In addition, the Committee may decide any other question, which is
not brought before a meeting called by the chairman of the Committee, by a
majority vote taken of all of the members, or by a consent executed by a
majority of the members.
8.5. Signatures: The chairman, the secretary and any one or more of the
members of the Committee to which the Committee has delegated the power, shall
each, severally, have the power to execute any document on behalf of the
Committee, to execute any certificate or other written evidence of the action of
the Committee, and to delegate any authority or responsibility of the Committee
to an officer of an Employer. The Trustee, after being notified of any such
delegation of power in writing shall thereafter accept and may rely upon any
document executed by any such person as representing the action of the Committee
until the Committee files with the Trustee a written revocation of that
delegation of power.
8.6. Disqualification of Committee Participant: A member of the Committee
who is also a Participant, Retired Participant or Beneficiary shall not vote or
act upon any matter relating solely to himself With respect to any other matter
before the Committee, no member of the Committee shall be deemed disqualified by
reason of being a Participant, Retired Participant or Beneficiary or by reason
of any interest in any matter to be acted upon by the Committee unless expressly
so disqualified as to such matter by a resolution adopted by the Board.
8.7. Disclosure to Participants: The Committee shall make available to
each Participant and Beneficiary for his examination such records, documents and
other data as are required under the Act, but only at reasonable times during
business hours. No Participant or Beneficiary shall have the right to examine
any data or records reflecting the compensation paid to any other Participant or
Beneficiary, and the Committee shall not be required to make any other data or
records available other than those required by the Act.
8.8. Standard of Performance: The Committee, and each of its members,
shall (i) use the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and familiar with
such matters would use in conducting his business as the administrator of the
Plan; (ii) when exercising its power to direct investments, diversify
VIII-3
<PAGE>
the investments of the Plan so as to minimize the risk of large losses unless
under the circumstances it is clearly prudent not to do so; and (iii) otherwise
act in accordance with the provisions of the Plan and the Act.
The Committee shall exercise its responsibility and authority hereunder in
a uniform and non-discriminatory manner with respect to all Participants.
8.9. Liability of Committee and Liability Insurance: No member of the
Committee shall be liable for any act or omission of any other member of the
Committee, the Trustee, any investment manager appointed by the Committee, or
any other agent or representative appointed by the Committee, except to the
extent required by the Act, and any other applicable state or federal law, which
liability cannot be waived. No member of the Committee shall be liable for any
act or omission on his own part except to the extent required by the Act, and
any other applicable state or federal law, and then only if and to the extent
such liability cannot be waived. It is the express intent of the Plan to waive
any such liability to the fullest extent permitted by law.
Further, it is specifically provided that, if directed by the Committee,
the Trustee may purchase out of the Trust Fund insurance for the members of the
Committee, any other fiduciaries appointed by the Committee, and for the Trust
Fund itself, to cover liability or losses occurring by reason of the act or
omission of any one or more of the members of the Committee or any other
appointed fiduciary under the Plan or any other agents; provided, however, such
insurance permits recourse by the insurer against the members of the Committee
or the other concerned fiduciaries in the case of a breach of a fiduciary
obligation by one or more members of the Committee or other fiduciary covered
thereby.
8.10. Exemption from Bond: No member of the Committee shall be required to
give bond for the performance of his duties hereunder, unless required by law
which cannot be waived.
8.11. No Compensation: The Committee shall serve without compensation for
its services, but shall be reimbursed by the Employer(s) for all expenses
properly and actually incurred in the performance of its duties under the Plan,
unless the Employer(s) elects to have such expenses paid out of the Trust Fund.
Each Employer shall bear such portion of such expense as shall be determined by
the Committee based upon the approximate total amount in the Accounts of
Participants employed by it as compared to the approximate total amount in the
Accounts of all Participants.
8.12. Persons Serving in Dual Fiduciary Roles: Any person, group of
persons, corporation, firm or other entity, may serve in more than one fiduciary
capacity with respect to the Plan, including the ability to serve both as
Trustee and as a member of the Committee.
8.13. Administrator: For all purposes of the Act, the Administrator of the
Plan shall be the Plan Sponsor. The Administrator of the Plan shall have final
responsibility for compliance with all reporting and disclosure requirements
imposed with respect to the Plan under any
VIII-4
<PAGE>
applicable federal or state law, or under any regulations or other authority
promulgated thereunder by the appropriate governmental authority.
8.14. Indemnification of Participants of Committee. To the full extent
permitted by law, the Plan Sponsor and each other Employer, jointly and
severally, shall indemnify each present and future member of the Committee
against, and each member of the Committee shall be entitled without further act
on his part to indemnity from each Employer for, any and all losses,
liabilities, costs and expenses (including the amount of judgments, court
costs, reasonable attorney's fees, and the amount of approved settlements made
with a view to the curtailment of costs of litigation, other than amounts paid
to an Employer itself) incurred by such member in connection with or arising out
of any pending, threatened or anticipated possible action, suit, or other
proceeding including any investigation that might lead to such a proceeding, in
which he is or may be involved by reason of or in connection with his being or
having been a member of the Committee, whether or not he continues to be a
member of the Committee at the time of incurring any such losses, liabilities,
costs and expenses; provided, however, that such indemnity shall not include any
losses, liabilities, costs and expenses incurred by such member of the Committee
(i) with respect to any matters as to which he is finally adjudged in any such
action, suit or proceeding to have been guilty of gross negligence or willful
and culpable misconduct in the performance of his duties as a member of the
Committee, or (ii) with respect to any matter to the extent that a settlement
thereof is effected in an amount in excess of the amount approved by the Plan
Sponsor (or by the affected Employer if not an Affiliated Employer), which
consent shall not be unreasonably withheld. No right of indemnification
hereunder shall be available to, or enforceable by, any such member of the
Committee unless, within sixty (60) days after his actual receipt of service of
process in any such action, suit or other proceeding (or such longer period as
may be approved by the Board), he shall have offered the Plan Sponsor (or
affected Employer if not an Affiliated Employer), in writing, the opportunity to
handle and defend same at its sole expense. The decision by the Plan Sponsor or
other affected Employer to handle the proceeding shall conclusively determine
that such person is entitled to the indemnity provided herein unless then
otherwise expressly agreed by the person. Until and unless a final judicial
determination has been made that indemnity is not applicable, all such person's
expenses shall be promptly and fully paid or reimbursed by the Plan Sponsor and
each other Employer upon demand by such person. The foregoing right of
indemnification shall inure to the benefit of the heirs, executors,
administrators and personal representatives of each such member of the Committee
and shall be in addition to all other rights to which such member of the
Committee may be entitled as a matter of law, contract, or otherwise.
VIII-5
<PAGE>
ARTICLE IX.
TRUSTEE
9.1. Appointment: The office of the Trustee shall be composed of one or
more individuals, or one corporation which is authorized to conduct a trust
business under applicable state law, as appointed from time to time by the
Board. When there are individual trustees, action by the individual trustees
shall be determined by the majority vote of the individuals then acting taken
with or without a meeting. Such action shall be binding upon all parties at
interest. Any act of the individual trustee or trustees shall be sufficiently
evidenced if certified by the individual trustee or trustees, and, if there is
more than one individual trustee, one of the individual trustees may be given
the authority to certify such acts and, generally, to perform all administrative
and ministerial duties on behalf of the individual trustees. An individual
trustee otherwise eligible to participate in the Plan shall not be excluded on
the basis that he is an individual trustee, however, in such event, he shall not
participate in any decisions pertaining solely to himself as a Participant or a
Beneficiary.
9.2. Authority: The Trustee shall also be a fiduciary and, in that
capacity, shall have the exclusive responsibility for and all powers necessary
to receive, hold, preserve, manage, invest and reinvest the Trust Fund as
provided generally in this Article IX, and to pay all costs and expenses
incident thereto. However, if the Committee, as a co-fiduciary, or an investment
manager appointed by the Committee, shall exercise its power given hereunder at
any time, by written notice to the Trustee to direct the Trustee (i) in the
management, investment and reinvestment of the Trust Fund or (ii) with respect
to the transfer or acceptance of assets pursuant to Sections 1.1, 8.2(i), 8.2(j)
or 11.7, then, in that event, the Trustee shall be subject to all proper
directions of the Committee or its appointed investment manager, provided that
such directions are made in accordance with the Plan and the Act.
9.3. Investment Powers: Subject to applicable provisions of Section 4.10,
the Trustee shall have the following powers relating to the receipt,
preservation, management, investment and reinvestment of both the principal and
income of the Trust Fund, as it may be composed from time to time in addition
to all of the powers, rights, options and privileges now or hereafter provided
for, vested in, or granted the Trustee under common law and applicable
provisions of the Texas Trust Code, as amended from time to time and all other
applicable laws, except such as conflict with the terms and provisions of the
Plan; and, as far as possible, no subsequent legislation or regulation shall be
in limitation of the rights, powers or privileges granted the Trustee hereunder
or in the Texas Trust Code as it exists at the time of the execution of the Plan
and Trust;
(a) To handle, deal with, and dispose of the Trust Fund property and
estate as if the Trustee were the fee simple owner of such property and
estate;
(b) Except where prohibited by applicable law which cannot be waived,
to keep any and all securities or other property in the name of some other
person or entity, with a power of attorney for their transfer attached,
in bearer or Federal Reserve Book-
IX-1
<PAGE>
Entry form, or in the name of the Trustee, without disclosing the
fiduciary capacity of the Trustee;
(c) Subject to Sections 9.4 and 9.5, to exercise all voting
rights, with respect to any investments held in the Trust Fund and to
grant proxies, discretionary or otherwise, with or without the power of
substitution, with respect thereto, but only according to the directions
of the Committee or investment manager; or, to the extent that such rights
are exercisable by Participants in the Plan, according to the directions
of such Participants. The Trustee shall deliver or cause to be executed
and delivered to the named fiduciary, all notices, prospectuses, finance
statements, proxies and proxy soliciting materials relating to
investments held hereunder. Trustee shall not vote any proxy except in
accordance with the timely written instructions of the Committee or the
Investment Manager. If no such written instructions are received, such
proxies shall not be voted.
The Committee may assign to the Participants the right to vote
proxies. To the extent the right to vote is vested in whole or in part in
the Participants, the Trustee shall act in this regard only in accordance
with the timely written instructions received from the Participants.
Solely for this purpose, each Participant shall act as the named fiduciary
in providing direction to the Trustee. To the extent practicable, all
unallocated or unvoted shares held hereunder shall, solely for the purpose
of this section, be voted in the same proportion as such Participant's
allocated proportion of shares bear to the aggregate of all like shares
for which instructions have been issued by the Participants as named
fiduciaries to the Trustee.
(d) To collect the principal and income of the Trust Fund as the same
may become due and payable and to give binding receipt therefor;
(e) To take any action, whether by legal proceeding, compromise, or
otherwise, as the Trustee, in its sole discretion deems to be in the best
interest of the Trust; to settle, compromise or submit to arbitration any
claims, debts or damages due or owing the Trust; to commence or defend
suits or legal proceedings to protect any interests of the Trust, and to
represent the Trust in all suits and other legal proceedings in any court
or before any body, board, agency, panel or tribunal;
(f) To hold uninvested at any time, without liability for interest
thereon for a reasonable period of time, any amount of money received by
the Trustee or raised by the Trustee from the sale of investments or
otherwise until same can be reinvested or disbursed;
(g) To invest and reinvest the Trust Fund assets, or any part
thereof, in any property of any kind or nature whatsoever, whether real,
personal or mixed, whether tangible or intangible or productive of income,
or in any rights or interests in property, or in any evidence or indicia
of property, including, but not limited to, the following types of
properties or interests therein, or anything of a similar kind, character,
or class: common or preferred stock, interests in so-called Massachusetts
trusts, insurance contracts, key-man or otherwise (provided that no
payment under any such contracts shall
IX-2
<PAGE>
be made in contravention of applicable provisions of Article VI of the
Plan), fees, beneficial interests, leaseholds, bonds, mortgages, leases,
notes (including, but not limited to secured or unsecured notes of any
kind), obligations, oil and gas payments, oil and gas contracts, savings
accounts, certificates of deposit or like investments with the commercial
department of any bank (including any bank acting as Trustee or its
affiliates so long as they bear a reasonable interest rate and the bank is
supervised by the United States or a state), common, pooled, collective or
group trust funds, mutual funds or insurance contracts, any of which the
Trustee or any of its affiliates or any other entity may now have or in
the future may manage, distribute or adopt for the collective investment
of funds of trusts of employee benefit plans qualified under Section
401(a) of the Code and exempt from federal income taxes under Section
501(a) of the Code (the instrument creating such common, pooled,
collective or group trust fund, together with any amendments thereto,
being hereby incorporated in and made a part of the Trust), in money
market funds, or qualifying employer securities and/or qualifying employer
real property of an Employer up to one hundred percent (100%) of the Trust
Fund; provided, however, subject, to the right of the Committee under
Section 4.10(c) of the Plan to override clause (i) below, (i) unless the
Plan would not have to be registered under the federal Securities Act of
1933, only amounts attributable to Employer Contributions (other than
Elective Contributions) shall be used to purchase qualifying employer
securities and, (ii) to the extent the Trustee is not independent of the
issuer of such employer securities, the issuer shall retain the services
of an "agent independent of the issuer" (as such term is defined in Rule
l0b-18 promulgated under the Securities Exchange Act of 1934) to effect
such purchase and, further provided, that the purchases are made in
accordance with the provisions of the Act.
(h) To lease and let all or any portion of the properties possessed
by the Trust Fund for the development or production of oil, gas, sulphur
or other minerals, or for any other purpose, on such terms, times and
conditions (including a term which will extend beyond the term of this
Trust), and for such consideration or royalties as the Trustee deems
proper;
(i) To borrow from or loan such sums as the Trustee considers
necessary or desirable (but not including loans to members without the
express direction from the Committee) and, for that purpose, to mortgage
or pledge all or any part of the Trust Fund property;
(j) If specifically directed in writing by the Committee, to purchase
deposit administration contracts, individual annuity contracts, or group
annuity contracts from any insurance company licensed in the State of
Texas; provided, however, no payment under any such contract shall be made
in contravention of applicable provisions of the Plan; and
(k) To employ such lawyers, accountants, actuaries, brokers, banks,
investment counsel or other agents or employees and to delegate to them
such duties, rights and powers of the Trustee hereunder (including the
power to vote shares of stock) as the Trustee deems advisable in
administering the Trust Fund.
IX-3
<PAGE>
The Trustee shall not be required to take any legal action to collect, preserve
or maintain any Trust Fund property unless the Trustee has been indemnified
either by the Trust itself, with the approval of the Committee, or by an
Employer, with respect to any expenses or losses to which the Trustee may be
subjected by taking such action. Any property acquired by the Trustee through
the enforcement or compromise of any claim the Trustee has as Trustee will
become a part of the Trust Fund. The Trustee shall be responsible only for the
property actually received by it hereunder. It shall have no duty or authority
to compute any amount to be paid to it by an Employer or a Participant, or to
bring any action or proceeding to enforce the collection of any contribution to
the Trust Fund.
9.4. Voting Company Stock: This Section applies in the event that common
stock of the Plan Sponsor ("Company Stock") is authorized by the Committee,
pursuant to Section 4.10, for investment through a fund ("Company Stock Fund")
under which shares of Company Stock are allocated to the Accounts of
Participants and Beneficiaries who, pursuant to the Plan, direct the Trustee to
invest in the Company Stock Fund.
(a) Registration-Type Class of Securities: During such time as the
Plan Sponsor has a "registration-type class of securities" (defined below),
each Participant or Beneficiary, as applicable, will be entitled to
instruct the Trustee on how to vote the shares of Company Stock allocated
to his Account on the record date of each annual or special meeting of the
Plan Sponsor's shareholders. For purposes of the Plan, in accordance with
Section 409(e)(4) (or any successor provision) of the Code, the term
"registration-type class of securities" means: a class of securities (1)
required to be registered under Section 12 of the Securities Exchange Act
of 1934 (the "Exchange Act") or (2) that would be required to be so
registered except for the exemption from registration provided in
subsection (g)(2)(H) of Section 12 of the Exchange Act.
(b) No Registration-Type Class of Securities: If the Plan Sponsor
does not have a "registration-type class of securities" (defined in (a)
above), each Participant or Beneficiary, as applicable, shall be entitled
to instruct the Trustee on how to vote the shares of Company Stock
allocated to his Account on the record date of each annual or special
meeting of the Plan Sponsor's shareholders, but only with respect to the
approval or disapproval of any corporate merger or consolidation,
recapitalization, reclassification, liquidation, dissolution, sale of
substantially all assets of a trade or business, or any such similar
transaction as shall be prescribed by the Secretary of the Treasury in
regulations or other authority issued under Section 409(e)(3) (or any
successor provision) of the Code.
With respect to all matters involving the voting of Company Stock not
described in the immediately preceding paragraph, unless the Committee
determines otherwise, all Company Stock held in the Trust Fund (both
allocated and any unallocated shares) shall be voted by the Trustee in
accordance with the Committee's instructions. The Committee may, in its
discretion pursuant to Sections 405(c) and 404(a)(1) of the Act, delegate
any power or duty allocated to it pursuant to immediately preceding
sentence to another person or entity who, with the consent of such other
person or entity, shall act as an independent fiduciary and shall exercise
such power or duty to the same extent as it could
IX-4
<PAGE>
have been exercised by the Committee. The persons or entities to which
such powers and duties may be delegated shall include, without limitation,
the Board or any committee of the Board, the Trustee, any person or entity
that meets the requirements of an investment manager under Section 3(38)
of the Act, or any other person or entity that the Committee determines in
good faith has the requisite knowledge and experience concerning the
matter with respect to which the delegation is made. The Committee may in
its discretion remove any fiduciary to whom it has delegated any power or
duty and exercise such power or duty itself or appoint a successor
fiduciary.
(c) Voting Procedure: Before each annual or special meeting of the
Plan Sponsor's shareholders, the Committee shall direct the Trustee to
send to each Participant and Beneficiary who is entitled to exercise
voting rights, as provided in this Section, a copy of the proxy
solicitation materials therefor, together with a form requesting
confidential, written instructions on how to vote the shares of Company
Stock allocated to his Account with respect to such matters on which he is
entitled to vote. The proxy solicitation materials described in the
preceding sentence shall be the same as those for shareholders of Company
Stock generally, and shall comply with applicable state and federal law
and the Plan Sponsor's charter and bylaws as generally applicable to
shareholders of Company Stock. The Trustee shall not make recommendations
to Participants and Beneficiaries on whether to vote or how to vote. The
individual instructions received by the Trustee shall be held in strict
confidence and shall not be divulged or released to any person, including
Employees of any Employer or Affiliated Employer; provided, however, the
Trustee shall advise any officer of the Plan Sponsor, at any time upon
request, of the total number of shares of Company Stock that it has been
instructed to vote in favor of each matter for which a vote was solicited,
the total number of shares of Company Stock that it has been instructed
not to vote in favor of each such matter and the total number of shares in
respect of which it has received no instructions.
(d) Voting by Trustee Proportionate to Direction: The Trustee shall
aggregate the instructions timely received pursuant to (c) above and vote
allocated whole shares of Company Stock and, to the same extent permitted
for shareholders of the Plan Sponsor generally, allocated fractional
shares of Company Stock specifically in accordance with the valid
instructions so received from the Participants and Beneficiaries or from
the Committee (or its delegate), pursuant to subsections (a) or (b) above
as applicable. Additionally, the Trustee shall vote any whole shares, and
fractional shares to the extent permitted, of Company Stock allocated to
the Accounts for which it does not receive valid instructions in the same
proportion as are voted the shares of Company Stock allocated to the
Accounts with respect to which the Trustee has received valid instructions
from the Participants and Beneficiaries or from the Committee (or its
delegate), pursuant to subsections (a) or (b) above as applicable.
9.5. Tender Offer for Company Stock. This Section applies in the event
that common stock of the Plan Sponsor ("Company Stock") is authorized by the
Committee, pursuant to Section 4.10, for investment through a fund ("Company
Stock Fund") under which shares of Company Stock are allocated to the Accounts
of Participants and Beneficiaries who, pursuant to the Plan, direct the Trustee
to invest in the Company Stock Fund. For purposes of this Section,
IX-5
<PAGE>
"Tender Offer" shall collectively mean (i) a cash tender offer, which includes a
tender offer for, or request or invitation for tenders of, shares of Company
Stock in exchange for cash, as made to the Trustee or to the shareholders of
Company Stock generally, and (ii) an exchange offer, which includes a tender
offer for, or request or invitation for tenders of, any shares of Company Stock
in exchange for any consideration other than all cash, as made to the Trustee
or to the shareholders of Company Stock generally.
(a) Allocated Shares of Company Stock: In the event of a Tender
Offer, the Committee shall direct the Trustee to take those steps
reasonably necessary to furnish information to, and request instructions
from, each Participant or Beneficiary, as applicable, who has shares of
Company Stock allocated to his Company Stock Account in substantially the
same manner as with respect to the shareholders of Company Stock generally.
In that regard, the Trustee shall:
(i) Inform each Participant (or Beneficiary) as to the
existence of the Tender Offer; however, the Trustee shall not make
any recommendations with respect to such Tender Offer;
(ii) Transmit to each Participant (or Beneficiary) such written
information and other materials relative to the Tender Offer as are
made available by the persons or entities making such Tender Offer to
the shareholders of Company Stock generally;
(iii) Request written instructions from each Participant (or
Beneficiary) as to whether or not to tender or exchange the shares of
Company Stock allocated to his Account; and
(iv) Use reasonably diligent efforts to effect, on a
nondiscriminatory basis, the tender or exchange of allocated shares
of Company Stock in accordance with the written instructions received
from the Participants and Beneficiaries.
The number of shares to which a Participant's (or Beneficiary's)
instructions apply will be the total number of shares allocated to his
Account, regardless of whether the shares are vested, as of the close of
business on the day preceding the date on which the tender offer commences.
In accordance with the terms and conditions of the Tender Offer, the
Trustee will tender or exchange those shares of Company Stock that it has
been properly instructed to tender or exchange, and it will not tender or
exchange those shares that it has not been properly instructed to tender or
exchange. Instructions to the Trustee from a Participant or Beneficiary to
tender or exchange shares will not be deemed a withdrawal or suspension
from the Plan or a forfeiture of any portion of such person's interest
in the Plan. Shares of Company Stock which are not tendered or exchanged
pursuant to valid instructions shall remain invested in Company Stock.
The individual instructions received by the Trustee shall be held in
strict confidence and shall not be divulged or released to any person,
including Employees of
IX-6
<PAGE>
any Employer or Affiliated Employer; provided, however, the Trustee shall
advise any officer of the Plan Sponsor, at any time upon request, of the
total number of shares of Company Stock that it has been instructed to
tender or exchange, the total number of shares that it has been instructed
not to tender or exchange and the total number of shares for which it has
received no instructions.
(b) Fractional and any Unallocated Shares of Company Stock: The
Trustee shall accumulate all fractional shares of Company Stock allocated
to the Accounts and tender or exchange such fractional shares in the same
proportion as the whole shares of Company Stock allocated to the Accounts
(for which the Trustee received valid instructions to tender or exchange)
were tendered or exchanged pursuant to subsection (a) above. Likewise, the
Trustee shall tender or exchange any unallocated shares of Company Stock
held in the Trust Fund in the same proportion as the whole shares of
Company Stock allocated to the Company Stock Accounts (for which the
Trustee received valid instructions to tender or exchange) were tendered or
exchanged pursuant to subsection (a) above. Any shares of Company Stock
which are not tendered or exchanged pursuant to the provisions of this
subsection (b) shall remain invested in Company Stock.
(c) Funds Received for Tendered Company Stock: Cash or other
consideration received in exchange for tendered or exchanged Company Stock
shall be held in accordance with Section 4.10(a) pending instructions from
the Committee.
9.6. Standard of Performance: The Trustee in discharging the duties of
Trustee with respect to the management, investment and reinvestment of the Trust
Fund assets shall do so solely in the interest of the Participants and
Beneficiaries, using the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character; shall diversify the investments of the Trust Fund so as to minimize
the risk of large losses unless under the circumstances it is clearly prudent
not to do so; and shall otherwise act in accordance with the provisions of the
Plan and the Act.
9.7. Liability for Investments: The Trustee shall not be liable to the
Trust, or to any person or entity having a beneficial interest in the Trust, for
any loss or decline in value which may be incurred upon any investment of the
Trust Fund assets, including, but not limited to, qualifying employer securities
and qualifying employer real property, or for failure of such assets to produce
any or greater earnings, interest, or profits, so long, as the Trustee acts in
good faith and in accordance with the responsibilities, obligations and duties
placed on the Trustee under the Plan and the Act.
9.8. Reliance on Directions: When the Trustee acts in good faith, the
Trustee, in all matters pertaining to the Trustee's management and investment of
the Trust Fund, may rely upon any notice, resolution, instruction, direction,
order, certificate, opinion, letter, telegram or other document believed by the
Trustee to be genuine, to have been signed by a proper representative of the
Committee or an investment manager, if one is appointed, and to be the act of
the Committee or the investment manager, as the case may be. The Trustee shall
accept any
IX-7
<PAGE>
certificate or other instrument duly signed by a proper representative of the
Committee or an investment manager, if one is appointed, which purports to
evidence an instruction, direction, or order of the Committee or the investment
manager, as the case may be, as conclusive evidence thereof.
9.9. General Liability of the Trustee: The Trustee shall not be liable for
any act or omission by the Trustee because of a direction of the Committee or an
investment manager appointed by the Committee; nor for any act or omission of
the Committee, an investment manager appointed by the Committee, or any other
agent appointed by the Committee, except to the extent required by the Act and
any other applicable state or federal law, which liability cannot be waived. The
Trustee shall not be liable for any act or omission on the Trustee's own part
except to the extent required by the Act and any other applicable state or
federal law, which liability cannot be waived. Further, it is specifically
provided that the Trustee may, with the written approval of the Committee,
purchase out of the Trust Fund insurance for the Trustee and for the Trust Fund
itself to cover liability and losses occurring by reason of the act or omission
of the Trustee, provided that such insurance permits recourse by the insurer
against the Trustee in the case of a breach of a fiduciary obligation by the
Trustee.
9.10. Proof of Trustee's Authority: All persons dealing with the Trustee
are entitled to rely upon the representations of the Trustee as to the Trustee's
authority and are released from any duty to inquire into the Trustee's authority
for taking or omitting any action, or to verify that any money paid for other
property delivered to the Trustee is used by the Trustee for Trust purposes. Any
action of the Trustee under the Plan shall be conclusively evidenced for all
purposes by a certificate or other document signed by the Trustee, and any such
certificate or document shall be conclusive evidence of the facts recited
therein. Any person shall be fully protected when acting or relying upon any
notice, resolution, instruction, direction, order, certificate, opinion, letter,
telegram or other document believed by such person to be genuine, to have been
signed by the Trustee, and to be the act of the Trustee.
9.11. Accounting Required by Trustee. Within a reasonable time (as
determined in the sole discretion of the Committee) after the close of each Plan
Year, and at such other times (or shorter accounting periods) as requested in
writing by the Committee, and as of the date of the removal or resignation of
the Trustee, the Trustee shall render to each Employer and the Committee, an
accounting report of the Trust Fund covering the period since the previous
accounting report. The report shall reflect the transactions, expenses, and
earnings or losses for the period covered, and, as of the last day of such
period, the cost basis of the assets, the fair market value of the assets, and
the liabilities of the Trust Fund. The written approval of such accounting
report by the Committee or the affected Employer, or the failure of the
Committee or the affected Employer to notify the Trustee of its disapproval of
such report within ninety (90) days after receipt thereof, shall be final and
binding as to the Trustee's administration of the Trust for such period upon
such Employer and all Participants (and Beneficiaries thereof) of such Employer
who have or may thereafter have an interest in the Trust, except with respect to
(i) any matter that the Committee or affected Employer could not reasonably be
expected to discover upon review of such accounting report, (ii) any actions or
omissions in violation of the Act or other applicable law, and (iii) any
actions or omissions that are determined by a court of competent jurisdiction to
constitute gross negligence or intentional or willful misconduct.
IX-8
<PAGE>
9.12. Resignation or Removal of Trustee: The Trustee may resign at any
time by giving at least sixty (60) days prior written notice to the Board,
unless the Board agrees to a shorter notice period. The Board may remove the
Trustee at any time by giving at least thirty (30) days prior written notice to
the Trustee, unless the Trustee agrees to a shorter notice period. Upon the
resignation or removal of the Trustee, the Trustee shall render to the Committee
and to each Employer a written account of the administration of the Trust for
the period following the period that was covered by the last accounting report.
Notwithstanding, any provision of this Plan, it is agreed that in the
event of the resignation or removal of the Trustee, the Board shall promptly
appoint a successor. If no appointment of a successor is made by the Board
within sixty (60) days after the resignation or removal of the Trustee, after
notice to the other party, the Trustee may apply to any court of competent
jurisdiction for appointment of a successor. The Trustee shall be entitled to
reasonable compensation and reimbursement for costs associated with bringing
such action. The Trustee shall be furnished with written notice from the Plan
Sponsor or the court, as the case may be, of the appointment of the successor,
and shall also be furnished with written evidence of the successor's acceptance
of trusteeship.
9.13. Appointment and Power of Successor Trustee: Any vacancy in the
office of Trustee created by the resignation or removal of the Trustee shall not
terminate the Trust. In the event of any such vacancy, the Board shall appoint a
successor Trustee. Any successor Trustee, after acknowledging acceptance of the
Trust and accepting the Trust Fund assets and liabilities and the accounting of
the retiring Trustee, shall be vested with all the estates, titles, rights,
powers, duties, and discretions which were granted to the retiring Trustee. The
retiring Trustee shall execute and deliver all assignments or other instruments
as may be necessary or advisable in the discretion of the successor Trustee.
9.14. Compensation of Trustee: Any corporate Trustee shall be reimbursed
for expenses properly and actually incurred in the performance of its duties
under the Plan and shall receive reasonable compensation for services rendered
as may be agreed upon, from time to time, between the Trustee and the Committee
with the consent and approval of the Board. Any individual serving as Trustee
shall not receive any compensation for his services, but shall be reimbursed for
all expenses properly and actually incurred in the performance of his duties
under the Plan.
The Trustee's compensation, if any, and the expenses of the Trust shall
be paid by an Employer(s) unless an Employer elects to have the Trustee's
compensation and the expenses of the Trust paid out of the Trust Fund. Until
such compensation and expense is actually paid, it shall constitute a charge or
lien on the Trust Fund. Each Employer shall bear that portion of such
compensation and expense as shall be determined by the Committee based upon the
approximate total amount in the Accounts of Participants employed by it as
compared to the approximate total amount in the Accounts of all Participants.
9.15. Bonding. The Trustee and each other fiduciary pursuant to the Act,
except a bank, insurance company or another person or entity which is exempted
under the Act, shall be bonded in an amount not less than ten percent (10%) of
the amount of funds that such fiduciary
IX-9
<PAGE>
handles; provided, however, the minimum bond shall be $1,000 and the maximum
bond shall be $500,000. The amount of funds handled shall be determined at the
beginning of each Trust Year by the amount of funds handled by each covered
fiduciary and their predecessors, if any, during, the preceding Plan Year, or if
there is no preceding Plan Year, then by the amount of funds to be handled
during the current Plan Year. The bond shall provide protection to the Trust
against any loss by reason of the fraud or dishonesty of the fiduciary acting
alone or in connivance with others. The surety shall be a corporate surety
company (as such term is used in Section 412(a)(2) of the Act), and the bond
shall be in a form approved by the U.S. Secretary of Labor in regulations or
other authority issued under the Act.
9.16. Assignment of Trusteeship. No assignment (as defined in the
Investment Advisors Act of 1940) of this Agreement shall be made by the Trustee
without the written consent of the Plan Sponsor; provided, however, that the
Trustee may assign this Agreement to another wholly-owned subsidiary of the
Trustee which is organized and chartered as a trust company if the Trustee first
gives the Plan Sponsor forty-five days advance notice and the Plan Sponsor does
not object within the forty-five day period.
IX-10
<PAGE>
ARTICLE X.
ADOPTION OF PLAN BY OTHER EMPLOYERS
10.1. Adoption Procedure: Any business organization may, with the
approval of the Board, adopt the Plan for all or any classification of its
Employees, as permitted by Section 401 (a) of the Code, by delivering to the
Committee:
(a) A certified resolution or consent of the sole proprietor,
managing partner(s) or board of directors (or equivalent governing
authority) of the adopting, Employer, or a duly executed adoption
instrument (adopted and approved by the sole proprietor, managing
partner(s) or board of directors (or equivalent governing authority) of the
adopting Employer)) setting forth its agreement to be bound as an Employer
by all the terms, provisions, conditions and limitations of the Plan,
except those, if any, specifically set forth in the adoption instrument;
(b) All information required by the Committee and the Trustee with
reference to Employees or Participants; and
(c) The written consent of the Board to the adoption of this Plan.
Any adoption may be made retroactive to the beginning of a Plan Year by
complying with the foregoing conditions on or before the last day of that
Plan Year.
10.2. No Joint Venture Implied: The adoption instrument executed by an
Employer shall become, as to it and its Employees, a part of the Plan. However,
except as otherwise provided under the Plan, neither the adoption of the Plan by
an Employer, nor any act performed by it in relation to the Plan shall ever
create a joint venture or partnership relation between it and any other
Employer. Although the Accounts of Participants employed by an Employers which
adopt the Plan shall be commingled for purposes of investment thereof, unless
the Committee and the Trustee are otherwise directed by the Board, amounts held
in the Trust Fund allocable to a particular Employer shall, on an ongoing basis,
be available to pay benefits to Participants employed by that Employer,
and to pay benefits to Participants employed by any other Employer which is an
Affiliated Employer required to be aggregated with the first such Employer, but
not otherwise. In addition, unless the Committee and Trustee are otherwise
directed by the Board, the Committee shall maintain completely separate
accounts and records for the Plan Sponsor and each other Employer which is an
Affiliated Employer required to be aggregated with the Plan Sponsor (and
Employees thereof who are Participants), but otherwise the Plan shall be
maintained on a consolidated basis for the Plan Sponsor and all such other
Affiliated Employers. The Committee shall maintain completely separate accounts
and records for any Employer that is not an Affiliated Employer, as
distinguished from maintaining the Plan on a consolidated basis with such
other Employer.
10.3. Transfer of Participants: If an Employee of one Employer is
Transferred to the service of another Employer, the Employee shall maintain all
of his rights under the Plan. Contributions to the Transferred Employee's
Employer Account shall be handled in accordance with the provisions of Sections
4.2 and 4.8, and his Active Service shall be considered
X-1
<PAGE>
uninterrupted, as if no Transfer had occurred. Unless otherwise provided
hereunder, Active Service with any Employer or Affiliated Employer shall count
as Active Service with all Employers, whether before or after the date that an
Employer adopts the Plan.
X-2
<PAGE>
ARTICLE XI.
AMENDMENT AND TERMINATION
11.1. Right to Amend and Limitations Thereon: The Board shall have the
sole right to amend the Plan. Any amendment shall (i) be made by a written
instrument and executed by an appropriate officer of the Plan Sponsor, (ii) set
forth the nature of the amendment and its effective date (which may be
retroactive), and (iii) be supported by a certified copy of the resolution or
direction which authorized or ratified it. Although the Trustee shall be
expected to execute each amendment of the Plan, failure of the Trustee to
execute any such amendment shall not adversely affect the Plan Sponsor's
exclusive right to effectively amend the Plan without regard to any act or
forbearance on the part of the Trustee. No amendment shall:
(a) Except as otherwise specifically provided in the Plan, cause or
permit any Trust Fund assets to be diverted to any purpose other than the
exclusive benefit of the Participants and their Beneficiaries;
(b) Decrease the accrued benefit of any Participant, or after
July 30, 1984, eliminate a protected form of benefit in violation of
Section 411(d)(6) of the Code;
(c) Increase the duties or liabilities of the Trustee without its
prior written consent; or
(d) Change the vesting schedule to one which would result in the
nonforfeitable percentage of the accrued benefit derived from Employer
Contributions (determined as of the later of the amendment's adoption date
or effective date) of any Participant being less than such nonforfeitable
percentage computed under the Plan without regard to such amendment. If the
Plan's vesting schedule is amended, or if the Plan is amended in any way
that directly or indirectly affects the computation of the Participant's
nonforfeitable percentage, or if the Plan is deemed amended by an automatic
change to or from a Top-Heavy vesting schedule, each Participant with at
least three years of service with an Employer may elect, within a
reasonable period after the adoption of the amendment or change, to have
the nonforfeitable percentage computed under the Plan without regard to
such amendment or change. With respect to Participants who are not entitled
to be credited with at least one hour of service in any Plan Year
beginning, after December 31, 1988, the immediately preceding sentence
shall be applied by substituting "five years of service" for "three years
of service". The period during which the election may be made shall begin
no later than the date upon which the amendment is adopted or deemed to be
made and shall end no later than the latest of the following dates: (1) the
date which is sixty (60) days after the day that the amendment is adopted
or deemed to be made; (2) the date which is sixty (60) days after the day
that the amendment becomes effective; or (3) the date which is sixty (60)
days after the day the Participant is issued written notice of the
amendment by an Employer.
In the event of an amendment, each Employer will be deemed to have
consented to and adopted the amendment unless an Employer notifies the Plan
Sponsor, the Committee, and the
XI-1
<PAGE>
Trustee to the contrary in writing within thirty (30) days after receipt of a
copy of the amendment, in which case the rejection will constitute a withdrawal
from the Plan by that Employer.
11.2. Mandatory Amendments: Except as otherwise provided the Plan, or
except as otherwise prescribed by applicable law or other authority prescribed
thereunder by the appropriate governmental authority, the Contributions of each
Employer to the Plan are intended to be:
(a) Deductible under applicable provisions of the Code;
(b) Exempt from the federal Social Security Act, as amended;
(c) Exempt from withholding under the Code; and
(d) Excludible from any Employee's regular rate of pay, as that term
is defined under the Fair Labor Standards Act of 1938, as amended.
The Plan Sponsor shall make such amendments to the Plan as may be
necessary to carry out this intention, and all such amendments may be made
retroactively.
11.3. Withdrawal of an Employer: An Employer may withdraw from the Plan
either by rejecting an amendment or by giving written notice of its intent to
withdraw to the Plan Sponsor, the Committee and the Trustee. The Committee shall
then determine, within ninety (90) days following the receipt of the rejection
or notice, the portion of the Trust Fund that is attributable to the
Participants employed by the withdrawing Employer and shall forward a copy of
such determination to the Trustee. Upon receipt of the determination, the
Trustee shall immediately segregate those assets attributable to the
Participants employed by the withdrawing Employer and shall transfer those
assets to the successor trustee when it receives a designation of such successor
from the withdrawing Employer.
The withdrawal from the Plan will not terminate the Plan with respect to
the withdrawing Employer. Instead, the withdrawing Employer shall, as soon as
practical, either appoint a successor trustee or trustees and reaffirm the Plan
as a new and separate plan and trust intended to qualify under Sections 401(a)
and 501(a) of the Code, or establish another plan and trust intended to qualify
under Sections 401(a) and 501(a) of the Code.
The determination of the Committee, in its sole discretion, of the portion
of the Trust Fund that is attributable to the Participants employed by the
withdrawing Employer shall be final and binding upon all persons or entities;
and, the Trustee's transfer of those assets to the designated successor trustee
shall relieve the Trustee of any further obligation, liability or duty to the
withdrawing Employer, the Participants employed by that Employer and their
Beneficiaries, and the successor Trustee.
11.4. Voluntary and Involuntary Termination: Any Employer may terminate
its participation in the Plan by executing and delivering to the Committee and
the Trustee a notice
XI-2
<PAGE>
which specifies the date on which its participation in the Plan shall terminate.
Likewise, participation of an Employer in the Plan will automatically terminate
upon the general assignment by that Employer of substantially all of its assets
to or for the benefit of its creditors, or the liquidation or dissolution of
that Employer without a successor (whether or not as the result of a bankruptcy
proceeding).
Upon termination of participation in the Plan by any Employer without
provision for continuation of the portion thereof attributable to such Employer,
subject to the provisions of this Section, the Trustee shall distribute to each
Participant employed by the terminating Employer the vested amounts certified by
the Committee as then credited to the Accounts of the Participants employed by
the terminating Employer. If a Participant's vested Account balance (derived
from Employer and any Employee Contributions) which is distributable hereunder
does not exceed $3,500 (or for Plan Years beginning on and after January 1,
1998, $5,000), such Account balance shall be distributed in the form of a lump
sum payment which may be paid in cash or in kind (other than an annuity based on
the life of the Participant or any Beneficiary). Such distribution may be made
without the necessity of obtaining the consent of the Participant. If a
Participant's vested Account balance (derived from Employer and any Employee
Contributions) which is distributable hereunder is in excess of $3,500 (or for
Plan Years beginning on and after January 1, 1998, $5,000), and if the
Participant consents to the distribution hereunder in the form of a lump sum
payment, the Committee shall direct the Trustee to make settlement of a
Participant's Account as provided in the second preceding sentence. If a
Participant's vested Account balance (derived from Employer and any Employee
Contributions) which is distributable hereunder is in excess of $3,500 (or for
Plan Years beginning on and after January 1, 1998, $5,000), and if the
Participant fails to consent to the distribution hereunder, the Committee shall
direct the Trustee to make settlement of the Participant's Account by
distribution of a deferred commercial annuity which can be purchased (with the
net proceeds of the Participant's vested Account balance) from any life
insurance company licensed to conduct business in the State of the situs of the
Trust, provided that such annuity (i) shall provide the same settlement
provisions as are set out in Article VI and (ii) shall be issued or endorsed as
nontransferable so that the owner thereof cannot sell, assign, discount, or
pledge as collateral for a loan or as security for the performance of an
obligation or for any other purpose his interest in such contract to any person,
other than the issuer of such annuity upon the surrender thereof, and, further
provided, that in the event of any conflict between applicable provisions of the
Plan (regarding the timing or manner of payment of benefit) and the terms and
provisions of any such commercial annuity purchased hereunder, the terms and
provisions of the Plan shall control. Subject to subsequent provisions hereof,
distributions hereunder shall be made as soon as administratively practicable,
but in no event later than the time required under applicable provisions of the
Code.
In the event that (i) the Plan is maintained by the Plan Sponsor and at
least one other Employer which is an Affiliated Employer required to be
aggregated with the Plan Sponsor, (ii) on an ongoing basis, assets of the Plan
are available to pay benefits to any Employee who is a Participant (and
Beneficiaries thereof) and thus the Plan should be viewed as a single plan for
purposes of Section 414(l) of the Code, and (iii) the Plan is operated on a
consolidated basis, then, in that event, should any Employer which is an
Affiliated Employer terminate participation in the Plan without provision for
continuation of the portion thereof attributable to such
XI-3
<PAGE>
Employer, subject to application of Section 11.5 (relating to partial
terminations), any forfeitures arising incident to the distributions described
above shall be allocated in accordance with Section 4.6 ratably among the Plan
Sponsor and each remaining Employer which is an Affiliated Employer, to reduce
future Contributions of each such Employer. Any unapplied portion (comprised of
excess amounts arising from or attributable to Contributions of such terminating
Affiliated Employer) of any suspense account described in Section 4.3 shall be
applied pro-rata to reduce future Contributions of the Plan Sponsor and any
remaining Employer which is an Affiliated Employer.
Regardless of whether the Plan is operated on an ongoing basis which
should result in the Plan being viewed as a single plan for purposes of Section
414(l) of the Code, in the event that the Plan is not operated on a consolidated
basis and separate accounts and records are maintained for each separate
Employer under the Plan, then should any Employer which is an Affiliated
Employer terminate participation in the Plan without provision for continuation
of the portion thereof attributable to such Employer, Participant employed by
such terminating Employer as of the date of such termination of participation in
the Plan shall have a 100% vested and nonforfeitable interest in their Accounts.
Similar rules shall apply with respect to any other Employer with respect to
which the Plan is not operated on a consolidated basis.
If the Plan should terminate, or should an Employer terminate its
participation in the Plan without causing the Plan to terminate, the Trustee, as
directed by the Committee, shall notify the Internal Revenue Service of such
termination of the Plan or termination of participation in the Plan by an
Employer, and the Plan Sponsor shall apply to the Internal Revenue Service for a
determination letter with respect to said termination of the Plan or termination
of participation in the Plan by an Employer. The Trustee shall not distribute
the assets in the Trust Fund in violation of applicable provisions of Article VI
of the Plan or prior to receipt of a copy of a determination letter from the
Internal Revenue Service to the effect that an immediate distribution of Plan
assets will not adversely affect the prior qualification of the Plan under
Sections 401(a) of the Code and the exemption of the Trust under Section 501(a)
of the Code. Provided further, notwithstanding, any other provision of the Plan
to the contrary, amounts allocated and credited to the affected Participants'
Accounts may be distributed in any form authorized hereunder which constitutes a
lump sum distribution described in Section 401(k)(10) of the Code prior to such
time such amounts would otherwise be distributed if (i) the Plan is terminated
without establishment of a successor plan in contravention of Section
401(k)(10)(A)(i) of the Code and regulations or other authority issued
thereunder by the appropriate governmental authority, (ii) the Plan Sponsor or
other Employer effects a disposition (to an employer which is not an Affiliated
Employer) of substantially all of the assets (within the meaning of Section
409(d)(2) of the Code) used by such Plan Sponsor or other Employer in a trade or
business of such Plan Sponsor or other Employer with respect to any former
Participant who continues employment with the employer which acquires such
assets, and the Plan Sponsor or other Employer continues to maintain the Plan
after such disposition, or (iii) the Plan Sponsor or other Employer effects a
disposition (to an employer which is not an Affiliated Employer) of its interest
in a subsidiary (within the meaning of Section 409(d)(3) of the Code) with
respect to any Participant who is a former Employee of such Employer who
continues employment with the subsidiary, and the Plan Sponsor or other Employer
continues to maintain the Plan after such disposition. A distribution may be
made under Section 401(k)(l0) of the Code and clauses (ii)
XI-4
<PAGE>
and (iii) of this paragraph only if the Plan Sponsor or Employer continues to
maintain the Plan after the disposition. This requirement is satisfied only if
the purchaser does not maintain the Plan after the disposition. A purchaser
maintains the Plan if it adopts the Plan or otherwise becomes an employer whose
employees accrue benefits under the Plan. A purchaser also maintains the Plan if
the Plan is merged or consolidated with, or any assets or liabilities are
transferred from the Plan to, a plan maintained by the purchaser in a
transaction subject to Section 414(l)(1) of the Code. A purchaser is not treated
as maintaining the Plan merely because a plan that it maintains accepts rollover
contributions of amounts distributed by the Plan.
For purposes of the previous paragraph, in accordance with Section
1.401(k)-1(d)(3) of the Income Tax Regulations, a successor plan is any other
defined contribution plan maintained by the same employer. However, if fewer
than two percent (2%) of the employees who are eligible under the Plan at the
time of its termination are or were eligible under another defined contribution
plan at any time during the 24-month period beginning 12 months before the time
of the termination, the other plan is not a successor plan. The term "defined
contribution plan" means a plan that is a defined contribution plan as defined
in Section 414(i) of the Code, but does not include an employee stock ownership
plan as defined in Section 4975(e) or 409 of the Code or a simplified employee
pension as defined in Section 408(k) of the Code. A plan is a successor plan
only if it exists at the time the Plan is terminated or within the period ending
12 months after distribution of all assets from the Plan.
Pursuant to Section 11.5, the termination of participation in the Plan by
any one or more of an Employers will not constitute a termination of the Plan
with respect to any other remaining Employers. Upon satisfaction of all
liabilities to all Participants and Beneficiaries hereunder, the Trust shall
terminate.
11.5. Vesting Upon Discontinuance of Employer Contributions, Total or
Partial Termination: Notwithstanding any other provision of the Plan, in the
event that there is a total or partial termination, or complete discontinuance
of an Employer Contributions hereunder, the vesting schedule contained in
Sections 6.4 shall be inapplicable to the affected Participants and each
affected Participant thereupon shall have a full 100% vested interest in the
amount credited to his Account as of the end of the last Plan Year for which a
substantial Employer Contribution was made and in any amounts thereafter
credited or allocated to his Account; provided, however, that if an Employer
shall thereafter resume making substantial Contributions hereunder, all amounts
credited or allocated to an affected Participant's Account with respect to the
Plan Year for which such Contributions are resumed, and the Plan Years for which
they are continued, shall vest only in accordance with the vesting schedules
contained in Sections 6.4. During, any such period of termination or complete
discontinuance of Employer Contributions, all other provisions of the Plan shall
nevertheless continue in full force and effect, other than provisions for
Employer Contributions and the allocation thereof to the affected Participants'
Accounts. Except as otherwise provided in Section 11.4, the Plan shall not
terminate earlier than the effective date as of which the Plan is voluntarily
terminated by the Plan Sponsor or by the Plan Sponsor and the other Employers
maintaining the Plan.
11.6. Continuance Permitted Upon Sale or Transfer of Assets: An Employer's
participation in the Plan will not automatically terminate in the event that it
consolidates, merges,
XI-5
<PAGE>
and is not the surviving corporation; sells substantially all of its assets; is
a party to a reorganization and its Employees and substantially all of its
assets are transferred to another entity; or liquidates or dissolves, if there
is a successor entity. Instead, the resulting successor person, firm,
corporation, or other entity may assume and continue the Plan and the Trust by
executing a direction, entering into a contractual commitment or adopting a
resolution as the case may be, providing for the continuance of the Plan and the
Trust simultaneous with or within one hundred twenty (120) days after such
consolidation, merger, sale, reorganization, liquidation or dissolution. If
after such one hundred twenty (120) day period, the successor entity has not
assumed and continued the Plan and otherwise complied with the provisions of
Section 11.3, the successor entity shall be deemed to have given notice under
Section 11.4 and its participation in the Plan will then automatically terminate
on the one hundred twenty-first (121st) day and, in that event, the appropriate
portion of the Trust Fund will be distributed exclusively to the affected
Participants or their Beneficiaries as soon as practicable pursuant to Section
11.4.
11.7. Requirement on Merger, Transfer, etc: Notwithstanding any other
provision hereof, in accordance with Section 414(l) of the Code and regulations
or other authority issued thereunder by the appropriate governmental authority,
the Plan will not be merged or consolidated with, nor shall any assets or
liabilities of the Plan be transferred to, any other plan unless each
Participant would receive (if the Plan then terminated) a benefit immediately
after the merger, consolidation, or transfer which is equal to or greater than
the benefit that he would have been entitled to receive immediately before the
merger, consolidation, or transfer (if the Plan had then terminated). In
addition, any accrued benefits under the Plan which are subject to and protected
under Section 411(d)(6) of the Code shall not be reduced or eliminated in
violation of Section 411(d)(6) of the Code (or regulations or other authority
issued thereunder by the appropriate governmental authority) incident to (i) any
merger, consolidation, spin-off or transfer of such accrued benefits or (ii) any
transaction involving an amendment or having the effect of an amendment of the
Plan to transfer such accrued benefits.
Subject to Sections 8.2(i), 8.2(j), 8.2(k) and 9.2, the Trustee, as
directed by the Committee, shall have the authority to enter into (i) an
agreement to merge or consolidate the Plan with another plan which meets the
requirements of Sections 401(a) and 501(a) of the Code or (ii) an agreement to
accept the direct transfer of assets from any such plan or to transfer Plan
assets to any such plan. Except in cases in which the Plan accepts direct
rollovers of eligible rollover distributions in accordance with Section
401k(a)(31) of the Code and Section 6.6(c) hereof, to the extent that any such
assets that are directly transferred to the Plan are composed of amounts
attributable to elective contributions (described in Section 402(g)(3) of the
Code), or qualified nonelective contributions (described in Section
401(m)(4)(C) of the Code), or matching contributions (described in Section
401(m)(4)(A) of the Code) that are treated as elective contributions under
Section 401(k) of the Code, such amounts shall remain subject to any limitations
on distribution thereof and, thus, shall not be distributed under the Plan prior
to such time as is permitted under the transferor plan and Section 401(k) of the
Code. Subject to the Code Sections described in the immediately preceding
sentence, if assets are accepted on behalf of any Employee prior to the date
that such Employee is eligible to enter the Plan as an active Participant, such
Employee shall be deemed to be a Participant; provided however, such Employee
shall not be entitled to make or authorize Contributions to the Plan or share in
the
XI-6
<PAGE>
allocation of any Employer Contributions unless and until such Employee meets
the requirements of Sections 2.1, 3.2 and 4.2 of the Plan.
The Trustee shall not consent or be a party to a merger, consolidation or
transfer of assets with a defined benefit plan, except with respect to a
Rollover Contribution or a transfer which the Committee has determined to be an
"elective transfer" (described below). The Trustee shall hold, administer and
distribute the transferred assets as a part of the Trust Fund. Unless a transfer
of assets to the Plan is a Rollover Contribution or an "elective transfer"
(defined below), the Plan shall apply the optional forms of benefit protections
described in this Section and in Section 11.1 to all of the transferred assets.
A transfer is an elective transfer if: (1) the transfer satisfies the preceding
provisions of this Section; (ii) the transfer is voluntary, under a fully
informed election by the Participant; (iii) the Participant has an alternative
that retains his Code Section 411(d)(6) protected benefits (including an option
to leave his benefit in the transferor plan if that plan is not terminating and
the Participant's transferor plan account exceeds $3,500 (or for Plan Years
beginning on and after January 1, 1998, $5,000)); (iv) the transfer satisfies
the applicable spousal consent requirements of the Code; (v) the transferor plan
satisfies the qualified joint and survivor annuity notice requirements of the
Code, if the Participant's transferred benefit is subject to those requirements;
(vi) the Participant has the right to immediate distribution from the transferor
plan in lieu of the elective transfer; (vii) the transferred benefit is the
entire nonforfeitable accrued benefit under the transferor plan (1) calculated
to be at least the greater of the single sum distribution provided by the
transferor plan for which the Participant is eligible or the present value of
the Participant's accrued benefit under the transferor plan payable at that
plan's normal retirement age and (2) calculated by using, an interest rate that
complies with the requirements of Section 417(e) of the Code and subject to the
overall limitations of Section 415 of the Code; (viii) the Participant has 100%
vested interest in the transferred benefit; and (ix) the transfer otherwise
satisfies applicable regulations or other guidance issued under applicable
provisions of the Code by the appropriate governmental authority.
XI-7
<PAGE>
ARTICLE XII.
MISCELLANEOUS
12.1. Plan Not An Employment Contract: The adoption and maintenance of
the Plan shall not be deemed to be a contract between any Employer and its
Employees which gives any Employee the right to be retained in the employment of
any Employer; to interfere with the rights of any Employer to discharge any
Employee at any time; or to interfere with any Employee's right to terminate his
employment at any time.
12.2. Benefits Provided Solely From Trust Fund: All benefits payable
under the Plan shall be paid or provided for solely from the Trust Fund; neither
the Committee nor any Employer assumes any liability or responsibility therefor.
Each Participant assumes all risks in connection with any decrease in the market
value of any common stocks or other investments held on his behalf in accordance
with the provisions of the Plan.
12.3. Spendthrift Provision: No principal or income payable, or to
become payable, from the Trust Fund will be subject to: (i) anticipation or
assignment by any Participant or by any Beneficiary; (ii) attachment by,
interference with, or control of any creditor of a Participant or Beneficiary;
or (iii) being taken or reached by any legal or equitable process in
satisfaction of any debt or liability of a Participant or Beneficiary prior to
its actual receipt by such Participant or Beneficiary. Any attempted conveyance,
transfer, assignment, mortgage, pledge, hypothecate or encumbrance of the Trust
Fund, or any part or interest in it, by a Participant or Beneficiary prior to
distribution will be void, whether that conveyance, transfer, assignment,
mortgage, pledge, hypothecation or encumbrance is intended to take place or
become effective before or after any distribution of Trust Fund assets or the
termination of the Trust. Furthermore, the Trustee shall not be required to
recognize any conveyance, transfer, assignment, mortgage, pledge, hypothecate or
encumbrance by a Participant or Beneficiary of the Trust, or any part or
interest in it, or to pay any money or thing of value to any creditor or
assignee of a Participant or Beneficiary for any cause whatsoever.
This Section shall also apply to the creation, assignment, or recognition
of a right to any benefit payable with respect to a Participant pursuant to a
domestic relations order, unless such order is determined to be a qualified
domestic relations order (as defined in Section 414(p) of the Code). In
addition, in the event that, pursuant to a qualified domestic relations order
described above, an Account or subaccount is established for the benefit of the
former spouse or dependent of a Participant ("alternate payee"), and in the
further event that Participants are entitled to direct the investment of their
Accounts in accordance with Section 4.10, unless the Committee otherwise
prescribes pursuant to uniformly applied nondiscriminatory rules formulated by
the Committee, any alternate payee shall be considered to be a Participant for
purposes of Section 4.10 and, thus, shall be entitled to direct the investment
of such Account or subaccount.
In the event that the Committee receives notice that a domestic relations
order that is intended to be qualified domestic relations order is being
prepared and will be provided to the Committee within a reasonably short time,
the Committee may place a temporary hold on the distribution of benefits under
the Plan to the affected Participant, pending (a) the determination
XII-1
<PAGE>
of whether such order is a qualified domestic relations order within the meaning
of Section 414(p) of the Code, and (b) the rights of the alternate payee under
such order; provided that no such temporary hold shall prevent the Plan from
making any distributions required by Section 6.6(a)(iv) hereof.
12.4. Gender, Tense and Headings: Whenever the context so requires, words
of the masculine gender used herein shall include the feminine and neuter, and
words used in the singular shall include the plural. The words "herein,"
"hereof," "hereunder," and other similar compounds of the word "here" shall
refer to the entire Plan, not to any particular Section or provision of the
Plan. Headings of Articles, Sections and subsections as used herein are inserted
solely for convenience and reference and constitute no part of the Plan.
12.5. General Transition Rules Relating to Amendment, Restatement and
Continuation of Plan: This Section shall generally apply to any Prior Plan.
(a) Application of Plan: Except as otherwise provided under the Plan,
in the event that an Employer adopts the Plan as an amendment, restatement
and continuation of a Prior Plan, the provisions of the Plan shall apply
only to Employees whose employment with an Employer terminates after the
effective date of the Plan. If an Employee's employment with an Employer
terminates prior to the effective date of an Employer's adoption of the
Plan, the former Employee shall be entitled to benefits under the terms and
provisions of Employer's Prior Plan as that plan existed on the date of the
termination of employment.
(b) Maintenance of Accounts: Amounts credited to a Participant's
accounts under the Prior Plan as in effect immediately prior to the
effective date of its amendment, restatement and continuation hereunder
shall constitute the opening balances of corresponding Accounts established
under the Plan. To the extent that individual direction of investment of
individual Accounts is no longer permitted under the Plan after the
effective date of an Employer's adoption thereof, the Committee may direct
that such Accounts shall be liquidated and the proceeds shall establish
opening Account balances as of the date specified by the Committee,
whereupon such Accounts shall become part of the commingled Trust Fund
subject to otherwise applicable rules for allocating income, gain, loss,
appreciation or depreciation to Accounts.
(c) Employee Elections: Employee elections (under the Prior Plan as
in effect immediately prior to the effective date of its amendment,
restatement and continuation hereunder) with respect to Employee
contribution rates, investment thereof, etc., shall continue in effect
under the Plan unless the Committee otherwise directs. Similarly, any
beneficiary designation in effect under the Prior Plan immediately prior to
its amendment, restatement and continuation hereunder shall be deemed to be
a valid designation filed with the Committee under applicable provisions of
the Plan, to the extent consistent with the Plan and applicable law and
regulations or other authority issued thereunder by the appropriate
governmental authority, unless and until the Participant revokes such
Beneficiary designation under applicable provisions of the Plan.
XII-2
<PAGE>
(d) Contributions: With respect to Plan Years that commenced prior
to July 1, 1998, the terms and provisions of the Prior Plan document (as in
effect at such time) which govern determination of the amount of (i) any
contributions (therein described) and (ii) the Participants entitled to
share in the allocation of contributions shall apply to Participants who
were subject thereto during such Plan Years solely for the purpose of
determining, (i) the amount of any such contribution and (ii) the
Participants who are entitled to share in the allocations thereof for any
such Plan Year.
(e) Withdrawals and Loans: Except to the extent inconsistent with
applicable law and regulations or other authority issued thereunder by the
appropriate governmental authority, and unless the Committee otherwise
directs, any withdrawals authorized and loans made under the Prior Plan, as
in effect immediately prior to the effective date of its amendment,
restatement and continuation hereunder, shall continue to be governed by
the terms and provisions of the Prior Plan as it existed on the date of the
withdrawal and/or loan. Provided, however, any withdrawals or loans
permitted under the Plan after its effective date shall be governed solely
by terms and provisions of the Plan.
(f) Accounting: Unless the Committee otherwise directs, Trust Fund
accounting for income, gain, loss, appreciation and depreciation and
forfeitures under the Prior Plan, as in effect immediately prior to the
effective date of its amendment, restatement and continuation hereunder,
shall not be affected by the adoption of the Plan.
(g) Distribution of Benefits: Amounts being paid to a Participant who
is a former Employee of an Employer, or such person's Beneficiary under the
Prior Plan, as in effect immediately prior to the effective date of its
amendment, restatement and continuation hereunder, shall continue to be
paid in accordance with the terms and provisions of the Prior Plan.
(h) Continued Term of Plan Officials: Unless the Committee otherwise
directs, members of the committee (or comparable administrator or governing
authority) and the agent for service of legal process under the Prior Plan
shall not continue in such capacities under the Plan.
12.6. Severability: Each term and provision of the Plan is severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of any other term or provision.
12.7. Governing Law: Parties to Legal Actions: The terms and provisions of
the Plan shall be construed, administered, and governed under the laws of the
State of Texas and, to the extent applicable, by the laws of the United States.
The Trustee or any Employer may at any time initiate a legal action or
proceeding for the settlement of the account of the Trustee, for the
determination of any question, or for instructions. The only necessary parties
to any such action or proceeding are the Trustee, the Plan Sponsor or other
affected Employer; however, any other person may be included as a party at the
election of the Trustee, the Plan Sponsor or other affected Employer.
XII-3
<PAGE>
12.8. Notices: Except as otherwise specifically provided under the Plan,
any notice, description, explanation, direction, consent, election, waiver or
other information required or permitted to be given under the Plan shall be
sufficient if it is in writing and otherwise complies with the requirements of
applicable provisions of the Plan and rules established by the Committee and if
hand-delivered to the Participant, Beneficiary, member of the Committee, Trustee
or other person to whom such communication is to be given, or if sent by
registered mail (return receipt requested) or by any other reasonable method to
such person at the address last furnished by such person. Any such communication
described in the immediately preceding sentence shall be effective as of the
date of the postmark if mailed via registered mail and the return receipt is
received by the sender, or upon actual receipt by the party receiving such
communication in the event that (i) such return receipt is not received by the
sender or (ii) such communication was given by in-hand delivery or by any
other reasonable method.
12.9. Counterparts: This Plan and Trust may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument. It shall not be necessary
that any single counterpart hereof be executed by all parties so long as each
party executes at least one counterpart.
IN WITNESS WHEREOF, the Plan Sponsor and the Trustee have caused this
Agreement to be executed this 17th day of June, 1998, to be effective as of the
Effective Date of July 1, 1998, except as otherwise provided under certain terms
or provisions of the Plan.
ATTEST: PRODUCTION OPERATORS, INC.
By: /s/ J. Christopher Holland By: /s/ Ronald R. Randall
---------------------------- ---------------------------
Name: J. Charistopher Holland Name: Ronald R. Randall
--------------------------- -------------------------
Title: Assistant Treasurer Title: Vice-President
------------------------- ------------------------
By: /s/ Ronald R. Randall
--------------------------------
Ronald R. Randall, as Trustee
By: /s/ Herbert S. Yates
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Herbert S. Yates, as Trustee
XII-4
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 20, 1999 appearing on page 50
of Schlumberger Limited's Annual Report on Form 10-K for the year ended
December 31, 1998.
PricewaterhouseCoopers LLP
New York, New York
June 25, 1999
