As filed with the Securities and Exchange Commission on December 31, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
Dendrite International, Inc.
(Exact Name of Registrant as Specified in Its Charter)
New Jersey
(State or Other Jurisdiction of Incorporation or Organization)
22-2786386
(I.R.S. Employer Identification Number)
1200 Mount Kemble Avenue, Morristown, New Jersey 07960-6797
Telephone: (201) 425-1200
(Address of Principal Executive Offices) (Zip Code)
401(k) Retirement Savings Plan
(Full Title of the Plans)
John E. Bailye
President and Chief Executive Officer
Dendrite International, Inc.
1200 Mount Kemble Avenue
Morristown, New Jersey 07960-6797
(Name and Address of Agent for Service)
(201) 425-1200
(Telephone Number, Including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Each Maximum Maximum Amount
Class of Amount to be Offering Aggregate of
Securities to be Registered Price Per Offering Registration
Registered (1)(3) Share Price(2) Fee
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Common Stock, no 50,000 $7.9375 $396,875.00 $121.00
par value
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(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) Calculated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) based upon the average of the high and low sales
prices of the Company's common stock, no par value ("Common Stock"), as
quoted through NASDAQ National Market, on December 24, 1996.
(3) This registration statement also registers an indeterminate number of
shares of Common Stock which may be purchased by the ERISA trustee on
behalf of the Plan on the open market.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
EXPLANATORY NOTE
As permitted by Rule 428 under the Securities Act of 1933, as amended
(the "Securities Act"), this registration statement omits the information
specified in Part I of Form S-8. The documents containing the information
specified in Part I will be delivered to the participants in the plan covered by
this registration statement (the "Plan") as required by Rule 428(b). Such
documents are not being filed with the Securities and Exchange Commission (the
"Commission") as part of this registration statement or as prospectuses or
prospectus supplements pursuant to Rule 424 of such Act.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents By Reference
The following documents filed with the Commission by the registrant,
Dendrite International, Inc., a New Jersey corporation (the "Company"), pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated by reference in this registration statement.
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1995 filed with the Commission on March 29, 1996.
2. The Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996 filed with the Commission
on May 15, 1996, August 15, 1996 and November 13, 1996, respectively.
3. The description of the Company's Common Stock, no par value ("Common
Stock") contained in the Company's Registration Statement on Form 8-A filed with
the Commission on May 24, 1995.
4. The description of the Common Stock contained in the Company's
Amendment No. 1 to the Registration Statement on Form 8-A filed with the
Commission on June 9, 1995.
5. The description of the Common Stock contained in the Company's
Amendment No. 2 to the Registration Statement on Form 8-A filed with the
Commission on June 21, 1995.
6. The Company's Prospectus relating to the sale of 2,700,000 shares of
Common Stock, filed with the Commission on March 8, 1996.
7. The Plan's Annual Report on Form 11-K for year ended December 31,
1995 filed with the Commission on December 31, 1996.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all shares of Common Stock offered
hereby have been sold or which deregisters all such shares then remaining
unsold, shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be 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 other subsequently filed document which also is incorporated or deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this registration statement.
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Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Section 14A:3-5 of the New Jersey Business Corporation Act ("NJBCA")
gives the Company power to indemnify each of its directors and officers against
expenses and liabilities in connection with any proceeding involving him by
reason of his being or having been a director or officer if (a) he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Company and (b) with respect to any criminal proceeding,
he had no reasonable cause to believe his conduct was unlawful. However, in a
proceeding by or in the right of the Company, there shall be no indemnification
in respect of any liabilities or expenses if the officer or director shall have
been adjudged liable to the Company unless the court in such proceeding
determines he is entitled to indemnification for such liabilities and/or
expenses. Furthermore, no indemnification shall be made to or on behalf of a
director or officer if a judgment or other final adjudication adverse to such
director or officer establishes that his acts or omissions (a) were in breach of
his duty of loyalty to the Company and its stockholders, (b) were not in good
faith or involved a knowing violation of law or (c) resulted in receipt by the
director or officer of an improper personal benefit. The NJBCA defines an act or
omission in breach of a person's duty of loyalty as an act or omission which
that person knows or believes to be contrary to the best interests of the
Company or its stockholders in connection with a matter in which he has a
material conflict of interest. If a director or officer is successful in a
proceeding, the statute mandates that the Company indemnify him against
expenses.
The Company's Restated Certificate of Incorporation, as permitted by
New Jersey law, eliminates the personal liability of the directors and officers
to the Company or its shareholders for monetary damages for breaches of such
director's or officer's duty of care or other duties as a director or officer;
except liabilities for any breach of duty based upon an act or omission (a) in
breach of such person's duty of loyalty to the corporation or its shareholders,
(b) not in good faith or involving a knowing violation of law or (c) resulting
in receipt by such person of an improper personal benefit. In addition, the
Company's Restated By-laws provide broad indemnification rights to directors and
officers so long as the director or officer acted in a manner believed in good
faith to be in or not opposed to the best interest of the Company and with
respect to criminal proceedings if the director had no reasonable cause to
believe his or her conduct was unlawful. The Company believes that the
protection provided by these provisions will help the Company attract and retain
qualified individuals to serve as officers and directors. These provisions also
will limit the remedies available to a stockholder who is dissatisfied with a
Board decision protected by these provisions, and such stockholder's only remedy
may be to bring a suit to prevent the Board's action.
The Company maintains a directors' and officers' liability insurance
policy.
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Item 7. Exemption from Registration Claimed
Not Applicable
Item 8. Exhibits
Exhibit
No. Description
3.1 Restated Certificate of Incorporation of the
Company dated November 30, 1995 (incorporated by
reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q, filed with the
Commission on August 15, 1996).
3.2 By-laws of the Company, as amended (incorporated
herein by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995, filed with the
Commission on November 13, 1995).
4.1 Specimen of Stock Certificate (incorporated by
reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1 filed with the
Commission on May 17, 1995).
4.2 Dendrite Inc. 401(K) Retirement Savings Plan dated
as of July 1, 1990, as amended.
5.1 Opinion of Sullivan & Cromwell as to compliance
of the provisions of the Plan with the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
23.1 Consent of Sullivan & Cromwell (contained in
Exhibit 5.1 attached hereto).
23.2 Consent of Arthur Andersen LLP, independent
public accountants.
23.3 Consent of Gregory J. Mosley, C.P.A.
24.1 Power of Attorney is included in the signature
page of the Registration Statement.
Item 9. Required 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 to
include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration
II-3
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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; and
(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, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
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.
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SIGNATURES
Pursuant to the requirements of the Securities Act, 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, hereunto duly
authorized, in the Township of Harding, State of New Jersey, on the 31st day of
December, 1996.
DENDRITE INTERNATIONAL, INC.
By: /s/ John E. Bailye
John E. Bailye
Chief Executive Officer
and President
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints John E. Bailye and Charles C.
Warczakowski, and each of them acting individually, as his attorneys-in-fact and
agents, each with full power of substitution, for him in any and all capacities,
to sign the registration statement on Form S-8 of Dendrite International, Inc.
and any and all amendments thereto under the Securities Act of 1933, including
any and all pre-effective or post-effective amendments, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully as he
might or could do in person, and hereby ratifies, approves and confirms all that
his said attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Name Title Date
/s/ John E. Bailye
John E. Bailye Chief Executive December 31, 1996
Officer, President
and Director
/s/Charles C. Warczakowski
Charles C. Warczakowski Vice President, December 31, 1996
Finance, Secretary
and Treasurer (Chief
Financial Officer
and Principal
Accounting Officer)
/s/ Bernard Goldsmith
Bernard Goldsmith Director December 31, 1996
/s/ John H. Martinson
John H. Martinson Director December 31, 1996
/s/ Paul Margolis
Paul Margolis Director December 31, 1996
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EXHIBIT INDEX
Exhibits
No. Description
3.1 Restated Certificate of Incorporation of the
Company dated November 30, 1995 (incorporated by
reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q, filed with the
Commission on August 15, 1996).
3.2 By-laws of the Company, as amended (incorporated
herein by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995, filed with the
Commission on November 13, 1995).
4.1 Specimen of Stock Certificate (incorporated by
reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1 filed with the
Commission on May 17, 1995).
4.2 Dendrite Inc. 401(k) Retirement Savings Plan
dated as of July 1, 1990, as amended.
5.1 Opinion of Sullivan & Cromwell as to compliance
of the provisions of the Plan with ERISA.
23.1 Consent of Sullivan & Cromwell (contained in
Exhibit 5.1 attached hereto).
23.2 Consent of Arthur Andersen LLP, independent
public accountants.
23.3 Consent of Gregory J. Mosley, C.P.A.
24.1 Power of Attorney is included in the signature
page of the Registration Statement.
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Exhibit 4.2
DENDRITE 401(k) RETIREMENT SAVINGS PLAN
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 1 - DEFINITIONS
1.01 Account 1
1.02 Anniversary Date 2
1.03 Annuity Starting Date 2
1.04 Applicable Computation Period 2
1.05 Beneficiary 3
1.06 Board of Directors 3
1.07 Committee 3
1.08 Company 3
1.09 Compensation 3
1.10 Controlled or Affiliated Service Group 4
1.11 Disability 5
1.12 Effective Date/Supplemental Effective Date 5
1.13 Election Period 5
1.14 Employee/Eligible Employee/Leased Employee 5
1.15 Employer 6
1.16 Highly Compensated Employee/
Nonhighly Compensated Employee 6
1.17 Internal Revenue Code or Code 8
1.18 Participant 8
1.19 Plan 8
1.20 Plan Year 9
1.21 Protected Spouse 9
1.22 Qualified Annuity 9
1.23 Qualified Domestic Relations Order 9
1.24 Retirement 9
1.25 Retirement Dates 9
1.26 Service (Break-in-Service -
Year of Service - Hour of Employment) 10
1.27 Trust Agreement 11
1.28 Trustee 11
1.29 Trust Fund 11
1.30 Valuation Date 11
ARTICLE 2 - ELIGIBILITY AND PARTICIPATION
2.01 Eligibility for Participation 12
2.02 Change in Employment Status 12
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 3 - CONTRIBUTIONS
3.01 Elective Deferral Contributions 14
3.02 Reduction of Excess Elective
Deferral Contributions 14
3.03 Matching and Regular Contributions 14
3.04 Voluntary Contributions 17
3.05 Contribution Changes 17
3.06 Discontinuance of Contributions 17
3.07 Rollover Contributions from Other
Qualified Plans 18
3.08 Transfer of Assets from Other
Qualified Plans 19
3.09 Deposit of Contributions 19
3.10 Payment of Expenses 19
ARTICLE 4 - CONTRIBUTIONS LIMITATIONS
4.01 $7,000 Limitation on Elective
Deferral Contributions 20
4.02 Limitation on Elective Deferral, Matching
and/or Voluntary Contributions 20
4.03 Limitation on Allocations 24
ARTICLE 5 - MAINTENANCE OF ACCOUNTS, INVESTMENT FUNDS AND
VALUATION OF THE TRUST FUND
5.01 Maintenance of Accounts 29
5.02 Investment Election 29
5.03 Investment Funds 30
5.04 Valuation of Trust Fund 30
5.05 Allocation of Investment Earnings and
Expenses 30
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 6 - BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT
6.01 Upon Retirement 31
6.02 Upon Disability 31
6.03 Upon Death 31
6.04 Upon Other Termination of Employment 33
6.05 Reemployment and Repayment of Benefits 35
ARTICLE 7 - DISTRIBUTION OF BENEFITS
7.01 Claim Procedure For Benefits 36
7.02 Commencement of Benefits 36
7.03 Method and Form of Payment of Benefits 40
7.04 Spousal Consent Requirements With Respect
to Participant Elections 42
7.05 Disposition of Unclaimed Benefits 44
7.06 Non-Assignability 44
7.07 Substitute Payee 44
7.08 Satisfaction of Liability 44
7.09 Direct Rollover to Eligible Retirement Plans 44
7.10 Waiver of 30-Day Notice Requirement 45
ARTICLE 8 - ADMINISTRATION OF THE PLAN
8.01 Assignment of Administrative Authority 47
8.02 Organization and Operation of the Committee 47
8.03 Authority and Responsibility 48
8.04 Records and Reports 49
8.05 Required Information 49
8.06 Fiduciary Liability 49
8.07 Payment of Expenses 50
8.08 Indemnification 50
8.09 Qualified Domestic Relations Orders 50
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 9 - AMENDMENT AND TERMINATION
9.01 Amendment 54
9.02 Termination 54
9.03 Vesting Upon Termination 55
9.04 Distribution of Benefits After Termination 55
ARTICLE 10 - PARTICIPATING COMPANIES
10.01 Adoption by Other Entities 56
10.02 Alternative Provisions 56
10.03 Right to Withdraw (Plan Spinoff) 56
10.04 Procedure Upon Withdrawal 56
ARTICLE 11 - TOP-HEAVY PROVISIONS
11.01 Definition of Top-Heavy and Super Top-Heavy 58
11.02 Definition of Key Employee 59
11.03 Minimum Employer Contribution 60
11.04 Limitation of Allocations 61
ARTICLE 12 - WITHDRAWAL OF FUNDS DURING EMPLOYMENT
12.01 Withdrawals from Elective Deferral, Matching
and Regular Contribution Accounts 62
12.02 Withdrawals from Rollover, Transfer
and Voluntary Accounts 62
12.03 Withdrawals from Qualified Matching
Contribution and Qualified Nonelective
Contribution Accounts 62
12.04 Financial Hardship Rules 62
12.05 General Withdrawal Rules 63
<PAGE>
TABLE OF CONTENTS
Page No.
ARTICLE 13 - LOANS
13.01 Amount of Loans and Terms of Repayment 65
ARTICLE 14 - GENERAL PROVISIONS
14.01 Exclusiveness of Benefits 68
14.02 Limitation of Rights 68
14.03 Limitation of Liability and Legal Actions 68
14.04 Construction of Agreement 68
14.05 Title to Assets 69
14.06 Severability 69
14.07 Titles and Headings 69
14.08 Counterparts as Original 69
14.09 Merger of Plans 69
<PAGE>
DENDRITE 401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF PURPOSE
Dendrite International, Inc. has had in effect since July 1, 1990 the Dendrite
Inc. 401(k) Profit Sharing Plan, established under the Standardized regional
Prototype Cash or Deferred Profit-Sharing Plan and Trust Sponsored by USF&G
Business Services, Inc., to which it made contributions for the purpose of
sharing its profits with its employees in order to provide for the accumulation
of funds for the benefit of eligible employees and their beneficiaries in the
manner and to the extent set forth in such plan.
The Dendrite 401(k) Retirement Savings Plan, hereinafter set forth, and its
related trust agreement, constitutes an amendment in its entirety to said plan
which is continued effective as of October 1, 1996 with respect to employees and
participants who had not yet retired, terminated employment or died as of such
date. The rights of anyone covered under the plan prior to October 1, 1996, who
retired, terminated employment or died before that date, shall be determined in
accordance with the terms and provisions of the plan in effect on the date of
such retirement, termination of employment or death, except as otherwise
specifically provided herein.
ARTICLE 1
DEFINITIONS
For purposes of the Plan, the following words and phrases shall have the
following meanings unless a different meaning is plainly required by the
context. Wherever used, the masculine pronoun shall include the feminine pronoun
and the feminine pronoun shall include the masculine and the singular shall
include the plural and the plural shall include the singular.
1.01 "Account"
The interest of a Participant in the Trust Fund as represented by his
accounts as designated below.
(a) "Elective Deferral Contribution Account" - Portion of Trust Fund
attributable to a Participant's Elective Deferral Contributions in
accordance with the provisions of Section 3.01 and the provisions of
the Plan in effect prior to the Supplemental Effective Date.
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(b) "Matching Contribution Account" - Portion of Trust Fund attributable to
the Company's
(i) Matching Contributions in accordance with the provisions of
Subsection 3.03(a) and with the provisions of the Plan in effect
prior to the Supplemental Effective Date; and
(ii) Additional Matching Contributions in accordance with the
provisions of Subsection 3.03(b).
(c) "Regular Contribution Account" - Portion of Trust Fund attributable to
the Company's Regular Contributions in accordance with the provisions
of Subsection 3.03(c) and the provisions of the Plan in effect prior to
the Supplemental Effective Date, and Top-Heavy Contributions in
accordance with Article 11.
(d) "Rollover Account" - Portion of Trust Fund attributable to funds rolled
over from another qualified plan in accordance with Section 3.07.
(e) "Transfer Account" - Portion of Trust Fund attributable to the
Company's contributions during a Participant's participation under
another qualified plan and transferred in accordance with the
provisions of Section 3.08.
(f) "Voluntary Contribution Account" - Portion of Trust Fund attributable
to a Participant's Voluntary Contributions in accordance with the
provisions of Section 3.04 and the provisions of the Plan in effect
prior to the Supplemental Effective Date.
(g) "Qualified Matching Contribution Account" - Portion of Trust Fund
attributable to the Company's Qualified Matching Contributions in
accordance with the provisions of Subsection 3.03(b).
(h) "Qualified Nonelective Contribution Account" - Portion of Trust Fund
attributable to the Company's Qualified Nonelective Contributions in
accordance with the provisions of Subsection 3.03(d).
1.02 "Anniversary Date"
Each January commencing January 1, 1991.
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1.03 "Annuity Starting Date"
The first day of the first period for which an amount is payable as an
annuity. If a benefit is not payable in the form of an annuity, the first
day on which all events have occurred which entitle the Participant to such
benefit.
1.04 "Applicable Computation Period"
An Eligible Employee's Applicable Computation Period shall be the 12-month
period beginning as of the date a person first completed an Hour of
Employment with an Employer and each anniversary thereof.
1.05 "Beneficiary"
The person designated to receive benefits payable under the Plan in the
event of death. In the event a Beneficiary is not designated, the
Participant's surviving spouse shall be deemed his Beneficiary or in the
absence of a surviving spouse, the benefits shall be paid to the
Participant's estate.
1.06 "Board of Directors"
The Board of Directors of Dendrite International, Inc.
1.07 "Committee"
The persons appointed in accordance with Section 8.01 to administer the
Plan. In the absence of such designation, the Company shall serve as the
Committee and in such case all references herein to the Committee shall be
deemed a reference to the Company.
1.08 "Company"
(a) Dendrite International, Inc. and any successor which shall maintain
this Plan; and
(b) any other business entity which duly adopts the Plan with the approval
of the Board of Directors.
1.09 "Compensation"
(a) Unless otherwise indicated, for purposes of Sections 3.01, 3.03 and
3.04, the amount described in Subsection (c), exclusive of any (i)
amount which is paid by the Employer but not by the Company,(ii)
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amount paid by the Company for any period during which the
Participant's employment status did not meet the requirements of
Section 1.14; and (iii) amount paid before an Eligible Employee was
eligible to become a Participant in accordance with Section 2.01. For
purposes of Section 3.01, third party insurance payments shall be
excluded.
(b) For purposes of Section 4.03, the Participant's wages for the Plan Year
paid by the Employer of the type reported in box 10 of Form W-2 (1991).
Such wages shall include amounts within the meaning of Section 3401(a)
of the Code plus any other amounts paid to the Participant by the
Employer for which the Employer is required to furnish a written
statement under Section 6041(d) and 6051(a)(3) of the Code, determined
without regard to any rules that limit the amount required to be
reported based on the nature or location of the employment or services
performed, exclusive of
(i) severance pay on a non payroll basis;
(ii) non-qualified deferred compensation payments;
(iii) any amounts paid or reimbursed by the Employer for moving
expenses which the Employer reasonably believes at the time of
such payment to be deductible by the Employee under Section 217
of the Code;and
(iv) welfare benefits, fringe benefits (cash and non-cash),
reimbursements of other expense allowances, moving expenses and
deferred compensation.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of
each Employee taken into account under the Plan shall not exceed the OBRA
'93 annual compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with section 401(a)(17)(B) of the Internal Revenue
Code. The cost-of-living adjustment in effect for a calendar year applies
to any period, not exceeding 12 months, over which Compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the OBRA '93 annual
compensation limit will be multiplied by a fraction, the numerator of which
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is the number of months in the determination period, and the denominator of
which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period.
For this purpose, for the determination periods beginning before the first
day of the first Plan Year beginning on or after January 1, 1994, the OBRA
'93 annual compensation limit is $150,000.
1.10 "Controlled or Affiliated Service Group"
(a) "Controlled Group" - Any group of business entities under common
control, including but not limited to proprietorships and partnerships,
or a controlled group of corporations within the meaning of Sections
414(b), (c) and (o) of the Code. For purposes of Section 4.03, the
phrase "more than 50%" is substituted for the phrase "at least 80%"
each place it appears in Section 1563(a)(1) of the Code.
(b) "Affiliated Service Group" - Any group of business entities within the
meaning of Section 414(m) of the Code.
1.11 "Disability"
Any physical or mental condition which may reasonably be expected to be
permanent and which renders the Participant incapable of continuing as an
Eligible Employee for his customary Hours of Employment.
1.12 "Effective Date"
July 1, 1990, the date as of which the Plan was established.
"Supplemental Effective Date"
October 1, 1996, the last date as of which the Plan was amended in its
entirety.
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1.13 "Election Period"
The period commencing 90 days before the Annuity Starting Date and ending
on such Annuity Starting Date.
1.14 "Employee"
Any person in the employ of the Company.
Leased Employees shall be included as Employees unless (i) such individual
is covered by a money purchase pension plan providing (A) a nonintegrated
employer contribution rate of at least 10 percent of compensation, as
defined in Section 415(c)(3) of the Code, but including amounts contributed
by the employer pursuant to a salary reduction agreement which are
excludable from the Leased Employee's gross income under Section 125,
402(a)(8), 403(h) or 403(b) of the Code; (B) immediate participation; and
(C) full and immediate vesting; and (ii) Leased Employees do not constitute
more than 20% of the Employer's Nonhighly Compensated Employee workforce.
"Eligible Employee"
An Employee for whom the Company is required to contribute Federal
Insurance Contributions Act taxes excluding persons who are Leased
Employees.
Notwithstanding the above, Leased Employees shall be included in the
definition of Eligible Employee if the requirements of Section 414(n)(2) of
the Code require such inclusion in order to meet the plan qualification
requirements enumerated in Section 414(n) and then only if the coverage
requirements of Section 410(b) of the Code would otherwise not be met.
"Leased Employee"
Any person (other than an Employee of the recipient) who pursuant to an
agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the
recipient and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full time basis for a period of
at least one year, and such services are of a type historically performed
by employees in the business field of the recipient employer. Contributions
or benefits provided a Leased Employee by the leasing organization which
are attributable to services performed for the recipient employer shall be
treated as provided by the recipient employer.
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1.15 "Employer"
The Company and any other business entity in a Controlled or Affiliated
Service Group which includes the Company.
1.16 "Highly Compensated Employee"
(a) An Employee who is a Highly Compensated Active Employee or a Highly
Compensated Former Employee.
(b) A Highly Compensated Active Employee is any Employee who performs
Service with the Employer during the Determination Year and is
described in either the Look-back Year Group or the Determination Year
Group or both such groups.
(i) The Look-back Year Group includes any Employee who (A) was at
any time during the Look-back Year a 5% owner, as defined in
Section 416(i)(1) of the Code; (B) received Compensation from
the Employer in excess of $75,000; (C) received Compensation
from the Employer in excess of $50,000 and was in the Top-Paid
Group, as defined in Section 414(q) of the Code, of Employees
for such Look-back Year; or (D) was at any time an officer and
received Compensation greater than 50% of the maximum dollar
limitation under Section 415(b)(1)(A) of the Code.
The 415(b)(1)(A) limitation and the $75,000 and $50,000
thresholds set forth above shall be adjusted annually for
increases in the cost-of-living in accordance with Section
415(d) of the Code, effective as of January 1 of the calendar
year such increase is promulgated and applicable to the Plan
Year which begins with or within such calendar year.
(ii) The Determination Year Group includes any Employee who (A) was
at any time during the Determination Year a 5% owner, as defined
in Section 416(i)(1) of the Code; or (B) is both (1) described
in Subparagraphs (i)(B), (i)(C) or (i)(D) above substituting the
Determination Year for the Look-back Year; and (2) a member of
the group consisting of the 100 Employees paid the greatest
Compensation during the Determination Year of reference.
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(c) A Highly Compensated Former Employee for a Determination Year is any
former Employee who separated from Service prior to such Determination
Year and was a Highly Compensated Active Employee for either the year
in which such Employee separated from Service or any Determination Year
ending on or after such Employee's 55th birthday.
(d) For purposes of this definition, the following shall be applicable:
(i) The Determination Year is the applicable Plan Year for which a
determination is being made and the Look-back Year is the 12-
month period immediately preceding such Plan Year.
(ii) If there are no officers as described above in either the
Determination Year or the Look-back Year, then the highest paid
officer of the Employer in each such year shall be deemed a
Highly Compensated Employee with respect to such year.
(iii) The determination of Highly Compensated Employees, including the
determinations of the number and identity of Employees in the
Top-Paid Group, the top 100 Employees and the number of
Employees treated as officers shall be governed by Section
414(q) of the Code and Treasury Regulation 1.414(q)-1T.
(iv) The Compensation and contributions under the Plan of a Highly
Compensated Employee who is a 5% owner or in the group
consisting of the 10 Highly Compensated Employees paid the
greatest Compensation during any Determination Year or Look-
back Year shall be determined by aggregating such amounts with
the Compensation and contributions of each other Employee who is
the spouse, lineal ascendant or descendant or spouse of a lineal
ascendant or descendant of such Highly Compensated Employee.
(e) The Company may make the following elections as provided for in
Treasury Regulation 1.414(q)-1T:
(i) the special rule for determining Highly Compensated Former
Employees who separated from Service before January 1, 1987 in
accordance with Treasury Regulation 1.414(q)-1T, Q&A 4(d).
However, once such an election is made it may not be changed
without the consent of the Commissioner;
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(ii) the calendar year election for the Look-back Year in accordance
with Treasury Regulation 1.414(q)-lT, Q&A 14(b);
(iii) the modification on a consistent and uniform basis of the
permissible age and service exclusions in accordance with
Treasury Regulation 1.414(q)-1T, Q&A 9(b)(2);
(iv) the inclusion of employees covered under a collective bargaining
agreement in accordance with Treasury Regulation 1.414(q)-1T,
Q&A 9(b)(2);
(v) the inclusion of leased employees in determining the highly
compensated group in accordance with Treasury Regulation
1.414(q)-1T, Q&A 7(b)(4); and
(vi) the transitional rule in accordance with Treasury Regulation
1.414(q)-IT, Q&A 15.
"Nonhighly Compensated Employee"
An Employee who is not deemed to be a Highly Compensated Employee.
1.17 "Internal Revenue Code" or "Code"
The Internal Revenue Code of 1986, and any amendments thereto.
1.18 "Participant"
(a) An Eligible Employee who participates under the Plan in accordance with
Section 2.01.
(b) Each other Eligible Employee or former Eligible Employee for whom an
Account is maintained.
1.19 "Plan"
The plan of the Company, as herein set forth and as from time to time
supplemented and amended, which Plan is intended to be a profit-sharing
plan for purposes of Sections 401 (a), 402, 412 and 417 of the Code.
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1.20 "Plan Year"
A period of 12 consecutive months commencing on the January 1, 1991 and
each Anniversary Date thereof.
However, "Plan Year" prior to January 1, 1991, shall be a period of six
consecutive months commencing on the Effective Date and ending on December
31, 1990.
1.21 "Protected Spouse"
The spouse to whom the Participant had been legally married on the earlier
of the date of the Participant's death or the Participant's Annuity
Starting Date.
1.22 "Qualified Annuity"
(a) in the case of a married Participant, an immediate annuity payable for
the life of the Participant with a survivorship benefit payable to the
Participant's spouse (on the Annuity Starting Date) for life. Such
survivorship benefit shall not be less than 50% or greater than 100% of
the benefit payable to the Participant. In the absence of a specific
election, 100% shall be applicable.
(b) In the case of a Participant who is not married on his Annuity Starting
Date, an immediate annuity payable for the life of the Participant.
Upon the Participant's death, all benefits cease.
1.23 "Qualified Domestic Relations Order"
A domestic relations order as defined in Section 8.09 in accordance with
Section 414(p) of the Code.
1.24 "Retirement"
The termination of employment of a Participant on his Early, Normal or
Deferred Retirement Date.
1.25 "Retirement Dates"
(a) "Normal Retirement Date" - The date on which the Participant attains
age 65.
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(b) "Early Retirement Date" - The first day of any month coincident with or
following the date on which the Participant attains age 55, provided he
has completed five Years of Service as of such date.
(c) "Deferred Retirement Date" - The first day of any month subsequent to
the Participant's Normal Retirement Date.
1.26 "Service"
(a) All Hours of Employment with the Employer during an Applicable
Computation Period.
(b) "Break-in-Service" -An Applicable Computation Period during which an
Employee fails to receive credit for 501 Hours of Employment.
If an Employee is absent 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 an adoption
of such child by such Employee, or (iv) caring for such child
immediately following such birth or placement, such Employee will be
credited with the number of Hours of Employment which would normally
have been credited but for such absence, or, in any case in which the
Committee is unable to determine such hours normally credited, eight
Hours of Employment per day. The Hours of Employment required to be
credited for such absence shall not exceed 501.
Hours of Employment shall be credited for the Plan Year in which the
absence from work begins, only if credit is necessary to prevent the
Employee from incurring a Break-in-Service, or, in any other case, in
the immediately following Plan Year.
(c) "Year of Service" - An Applicable Computation Period during which the
Employee receives credit for at least 1,000 Hours of Employment.
(d) "Hour of Employment"
(i) Each hour during an Applicable Computation Period for which the
person is directly or indirectly paid or entitled to payment for
the performance of duties or for the period of time when no
duties are performed, irrespective of whether the employment
relationship has terminated, such as vacation, holiday, lay-off,
jury duty or approved Leave of Absence.
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As used herein and Section 3.03, Leave of Absence shall mean a
leave granted for pregnancy, Disability, illness, death or any
other family obligation or status; personal or family hardship
or special business circumstances; educational purposes; and/or
civic, charitable or governmental services, provided that all
Employees under similar circumstances shall be treated in a
similar manner.
No more than 501 Hours of Employment are required to be credited
to an Employee on account of any single continuous period during
which the Employee performs no duties (whether or not such
period occurs in a single computation period).
(ii) A person shall receive an Hour of Employment for each hour for
which back pay has been awarded or agreed to irrespective of
mitigation of damages, provided that each such hour shall be
credited to the Applicable Computation Period to which it
pertains, rather than the Applicable Computation Period in which
the award or agreement is made, and further provided that no
such award or agreement shall have the effect of crediting an
Hour of Employment for any hour for which the person previously
received credit under (i) above.
(iii) Notwithstanding the foregoing, Hours of Employment shall be
computed and credited in accordance with Department of Labor
Regulation 2530.200b-2, Subparagraphs (b) and (c).
(iv) A person shall be credited with 95 Hours of Employment for each
semi-monthly payroll period for which he would have been
required to be credited with at least one Hour of Employment.
(e) An Employee shall receive credit for the period of his employment with
another business entity to which he had been transferred by the Company
solely for purposes of determining his vested interest in accordance
with Section 6.04.
1.27 "Trust Agreement"
The instrument executed by the Company and the Trustee fixing the rights
and liabilities of each with respect to holding and administering the Trust
Fund, which instrument shall be incorporated by reference into this Plan.
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1.28 "Trustee"
The Trustee or any successor Trustee, appointed by the Board of Directors,
acting in accordance with the terms of the Trust Agreement.
1.29 "Trust Fund"
All assets held by the Trustee for the purposes of the Plan in accordance
with the terms of the Trust Agreement.
1.30 "Valuation Date"
The last day of each March, June, September and December or such other
dates as the Committee may determine from time to time.
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ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.01 Eligibility for Participation
(a) Each Eligible Employee on the Supplemental Effective Date who was a
Participant of the Plan shall continue as a Participant as of the
Supplemental Effective Date.
(b) For purposes of Elective Deferral contributions in accordance with
Section 3.01, each other Eligible Employee shall become a Participant
as of the Supplemental Effective Date or the January, April, July or
October 1 coincident with or next following the later of the date his
employment commenced or attains age 21.
(c) For all other purposes of the Plan, each other Eligible Employee shall
become a Participant as of the Supplemental Effective Date or the
January, April, July or October 1 coincident with or next following the
later of the date he completes one Year of Service and he attains age
21.
(d) If a former Participant is reemployed, he shall be eligible to resume
his participation as of the date of his reemployment. Such Participant
may elect to comply with the provisions of Section 3.01 as of the date
of his reemployment or any subsequent January, April, July or October
1.
2.02 Change in Employment Status
(a) In the event a Participant ceases to be an Eligible Employee as the
result of becoming part of an excluded class, only Compensation up to
the date he ceased to be an Eligible Employee shall be considered for
purposes of contributions in accordance with Article 3. Such Employee
shall remain a Participant but shall not be permitted to contribute in
accordance with Article 3 or share in any Company contributions or
forfeitures allocated in accordance with Article 3 for the period
beyond the date he ceased to be an Eligible Employee.
In the event such Participant returns to an eligible class and again
becomes an Eligible Employee, he shall be permitted to share in Company
contributions or forfeitures allocated in accordance with
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Article 3 as of the date he again became an Eligible Employee and may
elect to comply with the provisions of Section 3.01 as of such date or
any subsequent January, April, July, or October 1. Only Compensation
from the date he again became an Eligible Employee shall be considered
for purposes of such contributions.
(b) If a Person otherwise satisfied the eligibility requirements of Section
2.01 and subsequently becomes an Eligible Employee, he shall be
eligible to become a Participant as of the date he became an Eligible
Employee and may elect to comply with the provisions of Section 3.01 as
of such date or any subsequent January, April, July or October 1.
(c) In the event a collective bargaining agreement is entered into between
the Company and a representative for any class of Employees in the
employ of the Company subsequent to the Supplemental Effective Date,
eligibility for participation in the Plan by such Employees who are not
Participants shall not be extended beyond the effective date of the
collective bargaining agreement unless the agreement extends
participation in the Plan to such Employees. The provisions of
Subsection (a) shall apply to those Employees who are currently
Participants.
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ARTICLE 3
CONTRIBUTIONS
3.01 Elective Deferral Contributions
A Participant may, when first eligible or as of any subsequent January,
April, July or October 1 elect to save, through pay reduction each payroll
period, no less than 1 % nor more than 15%, in whole percentages, of that
portion of his Compensation attributable to such payroll period, subject to
the limitations on Elective Deferral Contributions under Sections 4.01 and
4.02 and the limitations on annual additions under Section 4.03.
Such contributions shall take the form of before tax contributions
(hereinafter known as "Elective Deferral Contributions") and shall be
deemed to be Company contributions for purposes of Section 414(h) of the
Code.
(a) An initial written election must be made by an Eligible Employee and
submitted to the Committee at least 30 days (or such other period as
the Committee may fix from time to time) prior to the first date the
Eligible Employee would be eligible to become a Participant of the Plan
in accordance with Section 2.01.
(b) An election, once made, shall remain in effect until subsequently
changed by the Eligible Employee in accordance with the provisions of
Section 3.05 or 3.06.
3.02 Reduction of Excess Elective Deferral Contributions
If Elective Deferral Contributions under Section 3.01 are projected to
exceed the limitations of Sections 4.01 or 4.02 at any time during a Plan
Year, the Committee, in a good faith effort to comply with such
limitations, retains the right to reduce the rate of elective deferrals
made by Highly Compensated Employees. Such reduction shall be made in the
sole discretion of the Committee and for purposes of Section 4.02 shall be
accomplished by progressively reducing the Elective Deferral Contributions
of those Highly Compensated Employees with the highest deferral percentage
until the limitations are met.
Contributions made prior to the date of such reduction shall be deemed to
be made pro rata throughout the Plan Year of reference for purposes of
entitlement to a Matching Contribution under Section 3.03.
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3.03 Matching and Regular Contributions
Subject to the limitations on annual additions under Section 4.03, the
Company shall contribute the following amounts:
(a) Matching Contributions - 50% of that portion of the Participant's
Elective Deferral Contributions each payroll period which does not
exceed 6% of the Participant's Compensation for such payroll period.
Only Elective Deferral Contributions which are not required to be
restricted under Sections 3.02, 4.01 or 4.02 shall be matched. No
Matching Contribution will be provided in excess of the limitations
under Subsections 4.02(b) and (c).
(b) Additional Matching Contributions - For any Plan Year, the Company may
contribute such additional amounts as it shall determine. Such
Additional Matching Contributions shall be allocated to Participants in
the employ of the Company on the last business day of such Plan Year in
the same proportion that the Elective Deferral Contributions of each
such Participant for such Plan Year bears to the aggregate Elective
Deferral Contributions of all Participants for such Plan Year, taking
into consideration only that portion of each Participant's Elective
Deferral Contributions which does not exceed 6% of such Participant's
Compensation for each payroll period during such Plan Year.
Qualified Matching Contributions - For any Plan Year, the Company may
contribute such additional amounts as it shall determine. Such
Qualified Matching Contributions shall be allocated to those
Participants who are Nonhighly Compensated Employees in the employ of
the Company on the last business day of such Plan Year in the same
proportion that the Elective Deferral Contributions of each such
Participant for such Plan Year bears to the aggregate Elective Deferral
Contributions of all such Participants for such Plan Year, taking into
consideration only that portion of each Participant's Elective Deferral
Contributions which does not exceed 6% of such Participant's
Compensation for each payroll period during such Plan Year.
Such contributions shall be subject to Treasury Regulation 1.401(k)-
1(g)(13).
Notwithstanding the foregoing provision, a Participant otherwise
eligible shall share in such Additional or Qualified Matching
Contributions for the Plan Year of (i) his Retirement, Disability or
death, (ii) the commencement of a Leave of Absence authorized by the
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Company or (iii) his transfer to another business entity to which such
Participant had been transferred by the Company, even if the
Participant is not in the employ of the Company on the last business
day of such Plan Year.
(c) Regular Contributions - Such amount as the Company shall determine for
each Plan Year, which, along with forfeitures, shall be allocated to
each Participant in the same proportion that his Compensation bears to
the aggregate Compensation of all Participants for such Plan Year,
provided the Participant is in the employ of the Company on the last
business day of such Plan Year, which amount shall be credited at the
end of the Plan Year.
Notwithstanding the foregoing provision, a Participant shall be
entitled to a share of the Company's Regular Contributions plus
forfeitures, if any, for the Plan Year of (i) his Retirement,
Disability or death, (ii), the commencement or end of a Leave of
Absence authorized by the Company or (iii) his transfer to another
business entity to which such Participant had been transferred by the
Company, even if the Participant is not in the employ of the Company on
the last business day of such Plan Year.
A Participant shall not share in the allocation of the Company's
Regular Contributions or forfeitures for any Plan Year during which he
terminated his employment for reasons other than specified in (i), (ii)
or (iii).
Notwithstanding the above, in the event the Plan fails to meet the
requirements of Section 401(a)(26) or 410(b) of the Code, those
Participants who are not in the employ of the Company on the last
business day of the Plan Year shall share in the allocation of the
Company's Regular Contribution to the extent necessary by progressively
including those Participants with the greatest number of Months of
Service to a minimum of four until the requirements are met.
(d) Qualified Nonelective Contributions - Such amount as the Company shall
determine for any Plan Year, which shall be allocated to those
Participants who are Nonhighly Compensated Employees in the same
proportion that his Compensation bears to the aggregate Compensation of
all such Participants for such Plan Year, provided the Participant is
in the employ of the Company on the last business day
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of such Plan Year, which amount shall be credited at the end of the
Plan Year.
Such contributions shall be subject to Treasury Regulation 1.401(k)-
1(g)(13).
Notwithstanding the foregoing provision, a Participant otherwise
eligible shall be entitled to a share of the Company's Qualified
Nonelective Contributions for the Plan Year of (i) his Retirement,
Disability or death, (ii) the commencement or end of a Leave of Absence
authorized by the Company or (iii) his transfer to another business
entity to which such Participant had been transferred by the Company,
even if the Participant is not in the employ of the Company on the last
business day of such Plan Year.
A Participant shall not share in the allocation of the Company's
Qualified Nonelective Contributions for any Plan Year during which he
terminated his employment for reasons other than specified in (i), (ii)
or (iii).
3.04 Voluntary Contributions
(a) The Committee, solely at its discretion, may elect to provide
Participants with the option of making Voluntary aftertax contributions
for each Plan Year any amount from 2% to 10%, in whole percentages, of
Compensation.
(b) The Committee may also, solely at its discretion, permit such
Participants to contribute the difference between (i) 10% of such
Participant's Compensation while a Participant of the Plan and (ii) the
sum of all previous Voluntary Contributions actually made by the
Participant.
(c) All contributions under this Section shall be subject to the
limitations on Voluntary Contributions under Section 4.02 and the
limitations on annual additions under Section 4.03.
(d) The Committee shall promulgate such specific rules and regulations as
may be required with respect to the implementation and operation of
these provisions.
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3.05 Contribution Changes
A Participant may, subject to the minimum and maximum percentages as
specified in Section 3.01, increase or reduce the percentage rate of his
Elective Deferral Contributions and/or, if applicable, his Voluntary
Contributions four times during a Plan Year, as of any January, April, July
or October 1 (or as of such other dates as the Committee may fix from time
to time), by written notification to the Committee at least 15 days (or
such other period as the Committee may fix from time to time) prior to the
effective date of such change.
3.06 Discontinuance of Contributions
(a) A Participant may discontinue his Elective Deferral Contributions
and/or, if applicable, his Voluntary Contributions at any time, but
limited to four times during a Plan Year, by written notification to
the Committee at least 15 days (or such other period as the Committee
may fix from time to time) prior to the effective date of such
discontinuance.
(b) A Participant may resume his Elective Deferral Contributions and/or, if
applicable, his Voluntary Contributions as of any subsequent January,
April, July or October 1 (or such other dates as the Committee may fix
from time to time) by written notification to the Committee at least 15
days (or such other period as the Committee may fix from time to time)
prior to the effective date of such resumption.
(c) The discontinuance of Elective Deferral Contributions will
automatically include a discontinuance of the Matching Contributions. A
discontinuance only of the Participant's Voluntary Contributions will
not affect contributions to the Participant's other accounts.
3.07 Rollover Contributions from Other Qualified Plans
(a) Any Eligible Employee upon commencement of employment may make a
rollover contribution to the Trust Fund of all or any portion of the
entire amount (including money or any other property acceptable to the
Committee and Trustee) which is an eligible rollover distribution, as
defined in Section 402(c)(4) of the Code and temporary Treasury
Regulation 1.402(C)-2T, Q&A 3 and 4, provided such rollover
contribution is either (i) a direct transfer from another qualified
plan or (ii) received on or before the 60th day immediately following
the date
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the Employee received such distribution from a qualified plan or
conduit Individual Retirement Account or Annuity.
Such Eligible Employee must complete and sign the Plan's rollover
request form and provide such evidence as is requested by the
Committee, including evidence supporting the satisfaction of the
remaining provisions of this Section.
(b) The distribution intended to be rolled over must be an eligible
rollover distribution from a
(i) qualified trust, as verified by written evidence from the
administrator of the distributing plan;
(ii) conduit IRA, as verified in writing by the custodian or
insurance company that the original distribution from the
qualified trust was an eligible rollover distribution; or
(iii) qualified trust as a direct rollover as provided for in Section
402(c) of the Code.
(c) The Committee shall credit the fair market value of any rollover
contribution and investment earnings attributable thereto to the
Participant's Rollover Account. Such rollover contributions shall not
be considered annual additions for purposes of Section 4.03.
(d) An Eligible Employee who becomes a Participant by virtue of the
acceptance of such rollover contribution, but who is not otherwise
eligible for participation in accordance with Section 2.01, shall not
be entitled to make contributions or share in any Company contribution
allocated in accordance with this Article 3 or Article 11.
(e) The Committee may promulgate specific rules and regulations governing
all aspects of this Section.
3.08 Transfer of Assets from Other Qualified Plans
(a) The Committee may accept the direct transfer to the Trust Fund from
another qualified trust fund of those assets (including money or any
other property acceptable to the Committee and Trustee) attributable to
a Participant's participation in any qualified plan to which such trust
relates. Such transferred amounts shall not be considered annual
additions for purposes of Section 4.03.
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(b) The amount transferred shall be credited to the Participant's Accounts
as determined by the Committee, taking into account the applicable
vesting schedules, amounts subject to special tax treatment and
withdrawal rules. Additional Transfer Accounts will be established, if
required, to accommodate these objectives.
(c) An Eligible Employee who becomes a Participant by virtue of a transfer
of assets, but who is not otherwise eligible for participation in
accordance with Section 2.01, shall not be entitled to make
contributions or share in any Company contribution allocated in
accordance with this Article 3 or Article 11.
(d) The Committee may promulgate specific rules and regulations governing
all aspects of this Section but until promulgated, all other provisions
of the Plan shall be applicable based on the Account to which such
assets were transferred.
3.09 Deposit of Contributions
The Company shall deposit the Elective Deferral Contributions and Voluntary
Contributions with the Trustee as soon as practicable (in no event to
exceed 90 days) following the date on which such amounts would otherwise
have been paid to the Participant. In no event shall Voluntary
Contributions be deposited later than 30 days after the end of the Plan
Year. All other Company contributions must be deposited by the earlier of
the end of the subsequent Plan Year or after the end of the period
described in Code Section 404(a)(6) applicable to the tax year of the
Company with or within which the Plan Year ends.
3.10 Payment of Expenses
In addition to its contributions, the Company may elect to pay all the
administrative expenses of the Plan and all fees and retainers of the
Plan's Trustee, accountant, counsel, consultant, administrator or other
specialist so long as the Plan or Trust Fund remains in effect. If the
Company does not pay all or part of such expenses, the Trustee shall pay
these expenses from the Trust Fund. All expenses relating directly to the
investments of the Trust Fund, including taxes, brokerage commissions and
registration charges, must be paid from the Trust Fund.
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ARTICLE 4
CONTRIBUTION LIMITATIONS
4.01 $7,000 Limitation on Elective Deferral Contributions
Each Participant's Elective Deferral Contributions under Section 3.01, when
added to any additional elective deferrals, as defined in Section 402(g) of
the Code, under all other plans maintained by the Employer, shall be
limited to $7,000 during any calendar year, adjusted annually for increases
in the cost- of-living in accordance with Section 415(d) of the Code, or
such other maximum permitted under Section 402(g) of the Code.
To the extent a Participant's Elective Deferral Contributions exceed the
above limitation the Employer will notify the Plan of such excess and such
amount will be designated as an excess deferral. Such excess deferral will
be distributed to such Participant with investment experience no later than
April 15 following the close of the calendar year to which such excess
relates. Such excess may be distributed prior to the close of the calendar
year of reference provided the correcting distribution is made after the
date on which the plan received the excess deferral and is specifically
designated as an excess deferral.
Investment experience will be determined in accordance with the fourth
paragraph of Section 4.02(d) below.
4.02 Limitation on Elective Deferral, Matching and/or Voluntary Contributions
(a) The Actual Deferral Percentage of Highly Compensated Employees in the
Testing Group for any Plan Year shall be limited to the greater of
(i) the Actual Deferral Percentage for the Nonhighly Compensated
Employees in the Testing Group multiplied by 1.25; or
(ii) the Actual Deferral Percentage for the Nonhighly Compensated
Employees in the Testing Group multiplied by 2.00, provided,
however, that the Actual Deferral Percentage for the Highly
Compensated Employees in the Testing Group may not exceed the
Actual Deferral Percentage for such Nonhighly Compensated
Employees by more than two percentage points.
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(b) The Actual Contribution Percentage of Highly Compensated Employees in
the Testing Group for any Plan Year shall be limited to the greater of
(i) the Actual Contribution Percentage for Nonhighly Compensated
Employees in the Testing Group multiplied by 1.25; or
(ii) the Actual Contribution Percentage for Nonhighly Compensated
Employees in the Testing Group multiplied by 2.00, provided,
however, that the Actual Contribution Percentage for the Highly
Compensated Employees in the Testing Group may not exceed the
Actual Contribution Percentage for such Nonhighly Compensated
Employees by more than two percentage points.
(c) If one or more Highly Compensated Employees are eligible for both
Elective Deferral Contributions and to receive Matching Contributions
or to make Voluntary Contributions, such contributions shall be limited
to the greater of (i) or (ii) below. Notwithstanding the above, this
Subsection (c) shall only be applicable if both the Actual Deferral
Percentage and the Actual Contribution Percentage of the Highly
Compensated Employees exceeds 1.25 multiplied by the respective
Nonhighly Compensated Employee percentages.
(i) The sum of
(A) 1.25 times the greater of
(1) the Actual Deferral Percentage for the Nonhighly
Compensated Employees, or
(2) the Actual Contribution Percentage for the Nonhighly
Compensated Employees; and
(B) two plus the lesser of Subparagraph (1) or (2) above,
provided that such amount may not exceed 200% of the lesser
of Subparagraph (1) or (2).
(ii) The sum of
(A) 1.25 times the lesser of
(1) the Actual Deferral Percentage for the Nonhighly
Compensated Employees, or
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(2) the Actual Contribution Percentage for the Nonhighly
Compensated Employees; and
(B) two plus the greater of Subparagraph (1) or (2) above,
provided that such amount may not exceed 200% of the greater
of Subparagraph (1) or (2).
(d) To the extent the otherwise applicable Elective Deferral, Voluntary and
Matching Contributions for any Plan Year must be limited due to the
restrictions described in Subsections (a), (b) and (c), such
limitations shall be applied to the Highly Compensated Employees'
Elective Deferral, Matching and/or Voluntary Contribution percentages,
whichever applicable, beginning with the highest of such percentages
until the limitations are met. [In satisfying the limited percentages
applicable to any individual Highly Compensated Employee, reductions
will first be made to Voluntary Contributions. Additional reductions to
satisfy Subsection (c) shall be applied first to unmatched Elective
Deferral Contributions, if any, and then to matched Elective Deferral
Contributions and Matching Contributions proportionately.
Excess Elective Deferral, Voluntary and Matching Contributions shall be
allocated to Participants who are subject to the family aggregation
rules of Section 414(q)(6) of the Code in proportion to their
unadjusted deferrals and contributions.
Any excess Elective Deferral or Voluntary Contributions that result
from the above limitations shall be refunded to such Highly Compensated
Employees with investment experience, no later than the last day of the
Plan Year subsequent to the Plan Year to which the excess relates. The
limitation on Matching Contributions is effected by limiting the
otherwise applicable Matching Contributions in accordance with
Subsection 3.03(a).
Investment experience shall be the income or loss allocable to the
Participant's Elective Deferral Contribution Account or Voluntary
Contribution Account for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's excess Elective Deferral or
Voluntary Contributions for the year and the denominator is the sum of
(i) the Participant's Elective Deferral Contribution Account or
Voluntary Contribution Account balance as of the beginning of the Plan
Year and (ii) the Participant's Elective Deferral or Voluntary
Contributions for the Plan Year.
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(e) Definitions and Special Rules
(i) The Actual Deferral Percentage for the Highly Compensated
Employees and Nonhighly Compensated Employees for a Plan Year
shall be the average of the ratios (calculated separately for
each such Employee in the Testing Group) of
(A) the amount of contributions credited to the Elective
Deferral Contribution Account on behalf of each such
Employee in the Testing Group during such Plan Year, to
(B) the Compensation of each such Employee in the Testing Group
for such Plan Year.
For purposes of the above, Qualified Matching Contributions and
Qualified Nonelective Contributions may be taken into account in
determining the Actual Deferral Percentage for each Employee in
the Testing Group for such Plan Year provided such amounts
comply with the provisions of Treasury Regulation 1.401(k)-1(b).
Qualified Matching Contributions, Qualified Nonelective
Contributions and Elective Deferral Contributions included in
the calculation of the Actual Contribution Percentages will not
be included in the calculation of Actual Deferral Percentages.
(ii) The Actual Contribution Percentage for the Highly Compensated
and Nonhighly Compensated Employees in the Testing Group for a
Plan Year shall be the average of the ratios (calculated
separately for each such Employee in the Testing Group) of
(A) the amount of Matching and Voluntary Contributions credited
on behalf of each such Employee in the Testing Group during
such Plan Year, to
(B) the Compensation of each such Employee in the Testing Group
for such Plan Year.
For purposes of the above, Qualified Matching Contributions,
Qualified Nonelective Contributions and Elective Deferral
Contributions may be taken into account in determining the
Actual Contribution Percentage for each Employee in the Testing
Group for such Plan Year provided such amounts
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comply with the provisions of Treasury Regulation 1.401(m)-
1(b).
Qualified Matching Contributions, Qualified Nonelective
Contributions and Elective Deferral Contributions included in
the calculation of the Actual Deferral Percentages will not be
included in the calculation of Actual Contribution Percentages.
(iii) Testing Group shall mean the group of all Eligible Employees
eligible for participation in accordance with Section 2.01.
(iv) All Eligible Employees in the Testing Group will be included in
determining the Actual Deferral Percentages and/or the Actual
Contribution Percentages, whichever is applicable. The ratio
averaged into the respective percentages will be zero for any
Eligible Employee in the Testing Group if the otherwise
applicable numerator is zero.
(v) All such ratios and the average of such ratios shall be
calculated to the nearest one-hundredth of one percent.
(vi) The deferral percentage and/or contribution percentage for a
Plan Year for any Highly Compensated Employee who is eligible to
participate under two or more plans or arrangements described in
Section 401(a) or 401(k) of the Code that are maintained by the
Employer shall be determined as if all contributions were made
under a single plan.
(vii) In the event that this Plan satisfies the requirements of
Section 401(k), 401(a)(4) or 410(b) of the Code only if
aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such Sections of the Code only
if aggregated with this Plan, deferral and contribution
percentages shall be determined as if all such plans were a
single plan. Any other plan may be aggregated with this Plan at
the discretion of the Company. Plans may be aggregated in order
to satisfy Section 401(k) of the Code only if they have the same
Plan Year.
(viii) The ratio for any 5% owner, as defined in Section 416(i)(1) of
the Code, and for any Highly Compensated Employee in the group
consisting of the 10 Highly Compensated Employees paid the
greatest Compensation shall be determined by aggregating
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the Elective Deferral Contributions or Matching and Voluntary
Contributions and Compensation of such individual with the
respective amounts of each other Eligible Employee who is a
family member of such Highly Compensated Employee.
Once the ratio for the family group is determined, the
individual ratios of the family members are not taken into
account.
For purposes of this paragraph, family member shall mean the
spouse, lineal ascendant or descendant or spouse of a lineal
ascendant or descendant of the Highly Compensated Employee.
4.03 Limitation on Allocations
(a) The "annual addition" for any Participant shall not exceed the amount
determined hereunder. Annual addition shall mean the sum of Employer
contributions, Employee contributions and forfeitures allocated on
behalf of a Participant for a Plan Year, which is defined to be the
limitation year.
Annual additions shall also include excess deferrals, excess
contributions and excess aggregate contributions, other than excess
deferrals distributed in accordance with Treasury Regulation 1.402(g)-
1(e)(2) or (3).
The determination of the annual addition will be made as if all defined
contribution plans of the Employer were one plan and any Participant
contributions to defined benefit plans will be treated as contributions
to defined contribution plans. Annual additions will be applied to the
applicable Plan Year in accordance with Section 1.415-6(b) of the
Treasury Regulations.
For purposes of Subsection (b)(i), annual addition shall also include
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 the Employer and amounts derived
from contributions paid or accrued after December 31, 1985, in taxable
years ending after such date, which are attributable to post-retirement
medical benefits allocated to the separate account of a Key Employee
(as defined in Section 11.02) under a welfare benefit plan (as defined
in Section 419A(d) of the Code) maintained by the Employer.
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(b) The annual addition for any Participant shall not exceed the lesser of
(i) or (ii) below:
(i) $30,000, or if greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1)(A) of the Code as in
effect for the limitation year.
In the event of a short Plan Year, the maximum dollar limitation
shall be divided by 12 and multiplied by the number of months in
the short Plan Year.
(ii) 25% of the Participant's Compensation.
(c) If a Participant also is or has been a participant in one or more
defined benefit plans of the Employer, whether or not terminated, the
projected annual benefit from such defined benefit plans shall be
reduced so that a "combined benefit factor" in excess of 1.0 shall not
result. The combined benefit factor is the sum of (i) the defined
benefit factor and (ii) the defined contribution factor where
(i) the defined benefit factor is a fraction
(A) the numerator of which is the Participant's projected annual
benefit under all defined benefit plans of the Employer at
the end of the limitation year of the Plan, and
(B) the denominator of which is the lesser of
(1) 1.25 multiplied by the maximum allowable annual
benefit under Sections 415(b)(1)(A) and 415(d) of the
Code at the end of the limitation year of the Plan, or
(2) 1.4 multiplied by the maximum allowable annual benefit
under Section 415(b)(1)(B) of the Code at the end of
the limitation year of the Plan, and
(ii) the defined contribution factor is a fraction
(A) the numerator of which is the sum of the annual additions
for such Participant under all defined contribution plans of
the Employer, whether or not
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terminated, for all such years during which he was a
participant in such plans, and
(B) the denominator of which is the sum of the lesser of the
amounts determined in (1) or (2) for the current year and
each prior year during which the Participant was employed by
the Employer, regardless of whether or not a plan was in
existence during those years:
(1) 1.25 multiplied by the maximum dollar limitation as
defined in Subsection (b)(i), or
(2) 1.4 multiplied by the compensation limitation as
defined in Subsection (b)(ii).
(d) A Participant shall not be permitted to defer Compensation or
contribute amounts, nor shall he be entitled to an allocation of any
Employer contributions or forfeitures under any qualified defined
contribution plan which exceeds the limitations described herein.
(e) The limitations on allocations to a Participant's Account will be
applied by limiting otherwise allocable amounts starting with the
latest allocations during the limitation year. To the extent more than
one type of addition is allocated as of any date, the limitation will
be applied in the following order:
(i) forfeitures;
(ii) Employer contributions under profit-sharing plans other than
matching contributions;
(iii) Employer contributions under money purchase plans other than
matching contributions;
(iv) Employer matching contributions under money purchase plans.
(v) Employer matching contributions under profit-sharing plans;
(vi) Employee contributions; and
(vii) elective deferrals.
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Amounts listed above which would have been added to a Participant's
Account based on an allocation method specified in a Plan will be
reallocated among the remaining Participants eligible to share under
the Plan.
Amounts listed above which would have been added to the Participant's
Account based on an individually defined entitlement will reduce the
Employer's contribution commitment.
Employee contributions and elective deferrals will be limited at the
time deposited and will not be permitted to the extent the limits of
this Section would be violated.
In the event annual additions on behalf of a Participant participating
in more than one plan of the same type during a Plan Year are required
to be limited under this Section, the limitation shall be ratably
apportioned among all such plans.
(f) Notwithstanding the above, if an excess allocation occurs as a result
of
(i) an allocation of forfeitures;
(ii) a reasonable error in determining a Participant's Compensation;
(iii) a reasonable error in determining the amount of elective
deferrals that may be made under this Section; or
(iv) any other reason acceptable to the Internal Revenue Service,
the resulting additions to the Participant's Account will be reduced by
first eliminating Employee contributions and elective deferrals to the
extent otherwise required to be refunded under Sections 402(g),
401(k)(3) or 401(m)(2) of the Code. Any additional reductions permitted
under this Subsection will be applied in the manner described in
Subsection (e).
However, any amounts paid to the Trust for the limitation year which
are not allocated to other Participants will be held in a suspense
account, without investment earnings, and allocated and reallocated in
the following limitation year and, to the extent necessary, each
subsequent limitation year. Allocations from a suspense account in a
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money purchase plan will be viewed as an allocation of accrual
requirement for the year in which the amount is ultimately allocated.
In the event a plan is terminated, suspense accounts shall revert to
the Employer to the extent such accounts may not then be allocated on
behalf of any remaining eligible Participants.
(g) Notwithstanding any provision of the Plan to the contrary,
(i) the annual addition for any Plan Years beginning before January
1, 1987 shall not be recomputed to include all Employee
contributions.
(ii) if the Employee was a Participant as of the first day of the
first limitation year beginning after December 31, 1986, in one
or more defined benefit plans maintained by the Employer which
were in existence on May 6, 1986, the denominator of the defined
benefit 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 for all limitation years beginning before January 1,
1987.
(iii) if the Employee was a Participant as of the end of the first day
of the first limitation year beginning after December 31, 1986,
in one or more defined contribution plans maintained by the
Employer which were in existence on May 6, 1986, the numerator
of the defined contribution fraction will be adjusted if the sum
of this fraction and the defined benefit fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (A) the excess of
the sum of the fractions over 1.0 times (B) the denominator of
the defined contribution fraction, will be permanently
subtracted from the numerator of the defined contribution
fraction. The adjustment is calculated using the fractions as
they would be computed as of the end of the last limitation year
beginning before January 1, 1987, and disregarding any changes
in the terms and conditions of the Plan made after May 5, 1986,
but using the Code Section 415 limitation
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applicable to the first limitation year beginning on or after
January 1, 1987.
(iv) transitional rules provided in conjunction with legislative
changes and changes in the Plan's top-heavy status will be
applied in accordance with Internal Revenue Service
promulgations and legislative history.
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ARTICLE 5
MAINTENANCE OF ACCOUNTS, INVESTMENT FUNDS AND
VALUATION OF THE TRUST FUND
5.01 Maintenance of Accounts
The Committee shall establish and maintain a separate accounting in the
name of each Participant to which it shall credit all amounts contributed
in accordance with Articles 3 and 11.
5.02 Investment Election
(a) Initial Election - Each Participant shall designate one or more of the
investment funds established in accordance with Section 5.03 for the
investment of his Account. The percentage elected for investment in any
one of the investment funds must be a multiple of 5%, and the same
percentage shall be applied equally to each of the Participant's
Accounts.
Such initial election may only be made as of January, April, July or
October 1. Contributions or transfers to the Participant's Account (i)
prior to such date or (ii) if no initial election is made, shall
automatically be invested in the Goldman Money Market Trust Fund until
the next January, April, July or October 1.
(b) Subsequent Election - A Participant may, by written notice to the
Committee at least 15 days prior to the January, April, July or October
1 as of which such election is to be effective, change his investment
fund election with respect to subsequent contributions but, until
changed, an investment fund election, once made, shall remain in effect
for all subsequent Plan Years.
(c) Transfer Election - A Participant may by written notice to the
Committee at least 15 days prior to the January, April, July or October
1 as of which such election is to be effective, elect a change in
investment funds applicable to his then existing Accounts, provided
such change (i) results in multiples of 5% in any one investment fund;
(ii) is applied to the ending balance determined as of the applicable
Valuation Date; and (iii) is applicable equally to each of the
Participant's Accounts. Such change shall become effective within
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such period of time as may be administratively required for the orderly
liquidation of investments following the applicable Valuation Date.
(d) The Committee may promulgate any additional rules and regulations it
deems necessary or appropriate to govern all aspects of this Section.
5.03 Investment Funds
The Trust Fund shall be divided into such investment funds as designated by
the Committee and approved by the Trustee for the investment of all
Accounts, which shall be administered as a unit. Until changed, the
investment funds shall include, but not be limited to, the following:
(a) Goldman Money Market Trust Fund
(b) Goldman Balanced Fund
(c) Goldman Growth & Income Fund
(d) Goldman Capital Growth Fund
(e) Goldman International Equity Fund
(f) Dendrite International, Inc. Common Stock Fund
5.04 Valuation of Trust Fund
(a) The Trust Fund shall be valued by the Trustee as of each Valuation Date
on the basis of its fair market value.
(b) The Trust Fund may also be valued by the Trustee as of any other date
as the Committee may authorize for any reason the Committee deems
appropriate.
5.05 Allocation of Investment Earnings and Expenses
On the basis of the valuation as of a Valuation Date, subject to the
provisions of Subsection 7.03(h), the Accounts of all Participants, shall
be (a) proportionately adjusted to reflect expenses in accordance with
Section 3.10 and investment earnings, other than those credited to a
specific Account; and (b) directly adjusted to reflect all other applicable
transactions during the Plan Year attributable to such Accounts including,
but not limited to, any contributions or distributions.
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ARTICLE 6
BENEFITS PAYABLE UPON TERMINATION OF EMPLOYMENT
6.01 Upon Retirement
A Participant shall be 100% vested in his Account at all times after first
becoming eligible for Retirement.
A Participant shall be eligible to retire on his Early, Normal or Deferred
Retirement Date.
In the event a Participant does not retire on his Early or Normal
Retirement Date, he shall continue to be credited with contributions in
accordance with Articles 3 and 11 until his actual retirement.
6.02 Upon Disability
(a) A Participant who incurs a Disability prior to termination of
employment shall be 100% vested in his Account.
(b) In determining the existence of a Participant's Disability, the
Committee may select a physician to examine such Participant and render
a medical opinion. The final determination shall be made by the
Committee on the basis of the evidence requested and made available.
(c) If such Participant returns to the employ of the Company, he shall
resume his participation as of the date of his return. The
Participant's vested interest in that portion of his Account
attributable to Service from the date of his last reemployment shall be
determined in accordance with the provisions of Article 6, without
regard to his prior Disability.
6.03 Upon Death
(a) A Participant who dies prior to termination of employment shall be 100%
vested in his Account.
(b) Upon the death of a Participant before his Annuity Starting Date, the
Participant's Protected Spouse shall be entitled to 100% of such
Participant's vested Account. If the Participant is not survived by a
Protected Spouse, the Participant's vested Account shall be payable
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to his Beneficiary. Such vested Account shall take into account any
Participant loans made in accordance with Article 13.
Notwithstanding the above, subject to Subsection (c), such Participant
may waive the death benefit otherwise payable to the Protected Spouse
in favor of a different Beneficiary. Such waiver must specify such
other Beneficiary and include the written acknowledgment and
irrevocable consent of the Participant's spouse and be witnessed by a
Plan representative or a notary public.
(c) Any waiver of death benefits to the Participant's Protected Spouse with
respect to 50% of any Account which includes funds transferred without
the required spousal consent, directly or indirectly, to the Plan from
a plan subject to Section 412 of the Code, prior to termination of
employment or the first day of the Plan Year during which the
Participant attains age 35 will be null and void as of the earlier of
such dates, but may be renewed by executing a new waiver which meets
the requirement of Subsection (b).
In the event of the Participant's death on or subsequent to the
indicated dates and prior to the submission of a new waiver, the
Protected Spouse shall be entitled to 50% of any such Account.
The designation of a Beneficiary other than the Protected Spouse to
receive the balance of benefits payable remains valid after the earlier
of the dates described above.
Any waiver prior to the first day of the Plan Year during which such
Participant attains age 35 which is made by a Participant whose
employment was terminated but who is subsequently reemployed is not
revoked by this rule at any time but applies solely to benefits accrued
before the date of termination.
(d) The Committee shall provide to Participants within the Applicable
Period notice of the availability of any election which results in a
waiver of any death benefit payable to the Protected Spouse. Such
notice shall be in such terms and such manner as would be comparable to
the notice described in Subsection 7.04(e).
For purposes of this Subsection, the term Applicable Period means, with
respect to a Participant, whichever of the following periods ends last:
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(i) The period beginning with the first day of the Plan Year in
which the Participant attains age 32 and ending with the close
of the Plan Year preceding the Plan Year in which the
Participant attains age 35.
(ii) A reasonable period ending after the individual becomes a
Participant.
(iii) A reasonable period ending after this Section first applies to
the Participant.
(iv) A reasonable period ending after separation from service in the
case of a Participant who separates before attaining age 35.
A reasonable period ending after the events described in
Paragraphs (ii), (iii) and (iv) is the end of the two-year
period beginning one year prior to the date the applicable event
occurs, and ending one year after that date. In the case of a
Participant who separates from service before the Plan Year in
which age 35 is attained, notice shall be provided within the
two-year period beginning one year prior to separation and
ending one year after separation. If such Participant thereafter
returns to employment with the Company, the Applicable Period
for such Participant shall be redetermined.
(e) Upon the death of a Participant after his Annuity Starting Date, his
Beneficiary shall be entitled to receive the death benefit, if any, as
determined by the provisions of the benefit elected in accordance with
Section 7.03.
(f) Each Participant, upon becoming eligible for participation in the Plan,
may designate a primary Beneficiary to receive the benefits payable in
the event of his death, or, absent the applicability of a survivor
annuity, may designate a secondary Beneficiary to receive any benefits
payable in the event of the death of the primary Beneficiary. If a
Participant designates a primary Beneficiary but not a secondary
Beneficiary or if any such secondary Beneficiary dies, the Beneficiary
last in receipt of or entitled to any benefit shall have the right to
designate a successor Beneficiary to receive any benefits payable in
the event of his death. In the absence of any such designation,
benefits payable upon the death of the last living Beneficiary shall be
paid in a lump sum to such Beneficiary's estate. A
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Participant may change his Beneficiary designation at any time. All
Beneficiary designations and changes shall be made on an appropriate
form and filed with the Committee. If the primary Beneficiary
designated by the Participant is anyone other than the Participant's
Protected Spouse, such designation must include the written
acknowledgment and consent of such spouse and be witnessed by a Plan
representative or a notary public, to the extent required by law and
the Committee. Such consent will be limited to a specific alternate
Beneficiary and any change in such alternate Beneficiary will require a
new spousal consent.
6.04 Upon Other Termination of Employment
(a) Upon a Participant's termination of employment for reasons other than
Retirement, Disability or death, the following provisions shall be
applicable:
(i) Such Participant shall have a 100% vested interest in his
Elective Deferral Contribution, Voluntary Contribution,
Rollover, Transfer, Qualified Matching Contribution and
Qualified Nonelective Contribution Accounts.
(ii) Such Participant's vested interest in his Matching Contribution
and Regular Contribution Accounts shall, subject to Subsection
6.05(a), be determined in accordance with the following schedule
on the basis of such Participant's full Years of Service.
Number of Years Percentage of Account
Less than 1 full year 0%
1 full year 20%
2 full years 40%
3 full years 60%
4 full years 80%
5 or more full years 100%
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(b) The portion of a Participant's Account which is not vested shall be
forfeited on the earlier of the date on which the Participant receives
a distribution of his vested benefits or the date on which such
Participant incurs five consecutive Breaks-in-Service, but in no event
shall such forfeiture occur earlier than the Anniversary Date next
following the date on which the Participant terminated employment. If a
Participant does not have a vested interest in his Account, he shall be
deemed to have received an immediate distribution as of the Anniversary
Date next following the date on which such Participant terminated
employment.
That portion of the Participant's
(i) Matching Contribution Account which is not vested shall be
reallocated as an Additional Matching Contribution in accordance
with Subsection 3.03(a).
(ii) Regular Contribution Account which is not vested shall be
reallocated as in accordance with Subsection 3.03(c) and Article
11.
(c) If a withdrawal in accordance with Article 12 is made when a
Participant has less than a 100% vested interest in his Matching or
Regular Contribution Accounts, a separate Matching and/or Regular
Contribution Account, whichever is applicable, will be established for
the Participant as of the time of the withdrawal. At any relevant time
the Participant's vested interest in such separate account will be
equal to an amount ("X") determined by the formula:
X = P [AB + (R x D)] - (R x D)
For purposes of applying the formula, "P" is the vested percentage at
the relevant time, "AB" is the applicable account balance at the
relevant time, "D" is the amount of the withdrawal and "R" is the ratio
of the account balance at the relevant time to the account balance
after the withdrawal.
6.05 Reemployment and Repayment of Benefits
(a) If a Participant is reemployed by the Employer prior to incurring five
consecutive Breaks-in-Service, the dollar amount which was subject to
forfeiture in accordance with Subsection 6.04(b) will be restored to
the Participant's Account if the Participant repays the amount
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distributed, if any, from Elective Deferral Contribution, Matching
Contribution, Regular Contribution, Qualified Matching Contribution and
Qualified Nonelective Contribution Accounts. Such amounts must be
repaid to the Trust Fund in a lump sum within five years from the date
such Participant resumes his employment with the Employer. If a
Participant who is deemed to receive a distribution pursuant to
Subsection 6.04(b) is reemployed by the Employer prior to incurring
five consecutive Breaks-in-Service, the dollar amount which was subject
to forfeiture in accordance with such Subsection will be restored to
the Participant's Account. The funds required for the restoration of
such Account may, as determined by the Committee, be paid from
forfeitures, Company Regular Contributions, or investment gains of the
Trust Fund attributable to the Regular Contribution Accounts of all
Participants.
Such repaid amounts shall be credited to the Participant's Accounts as
determined by the Committee, taking into account the applicable vesting
schedules, amounts subject to special tax treatment and withdrawal
rules. Additional Accounts will be established, if required, to
accommodate these objectives. Amounts repaid and restored in accordance
with this Subsection will not be treated as annual additions for
purposes of Section 4.03.
(b) Notwithstanding the above, no restoration shall be made to a
Participant's Account and no repayment will be permitted with respect
to funds accumulated prior to reemployment in the case of
(i) any Participant who was fully vested, or
(ii) any Participant who is reemployed after incurring five
consecutive Breaks-in-Service.
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ARTICLE 7
DISTRIBUTION OF BENEFITS
7.01 Claim Procedure For Benefits
(a) Any request for specific information with respect to benefits under the
Plan must be made to the Committee in writing by a Participant or his
Beneficiary. Oral communications will not be recognized as a formal
request or claim for benefits.
(b) The Committee shall provide adequate notice in writing to any
Participant or Beneficiary whose claim for benefits under the Plan has
been denied, (i) setting forth the specific reasons for such denial;
specific references to pertinent plan provisions; a description of any
material and information which had been requested but not received by
the Committee; and, (ii) advising such Participant or Beneficiary that
any appeal of such adverse determination must be in writing to the
Committee, within such period of time designated by the Committee but,
until changed, not more than 60 days after receipt of such
notification, and must include a full description of the pertinent
issues and basis of claim.
(c) If the Participant or Beneficiary fails to appeal such action to the
Committee in writing within the prescribed period of time, the
Committee's adverse determination shall be final.
(d) If an appeal is filed with the Committee, the Participant or
Beneficiary shall submit such issues he feels are pertinent and the
Committee shall re-examine all facts, make a final determination as to
whether the denial of benefits is justified under the circumstances,
and advise the Participant or Beneficiary in writing of its decision
and the specific reasons on which such decision was based, within 60
days of receipt of such written request, unless special circumstances
require a reasonable extension of such 60-day period.
7.02 Commencement of Benefits
The following provisions shall be applicable for determining when
distribution of benefits shall be made. These provisions are intended to
conform to the requirements of Section 401(a)(9) of the Code, including the
minimum
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distribution incidental benefit proposed Treasury Regulation 1.401(a)(9)-2,
and shall be construed accordingly.
(a) Unless otherwise provided in Subsection (c), in the event of
termination of employment, benefits which total $3,500 or less will
commence as soon as administratively feasible following such
termination.
(b) Unless otherwise provided in this Section, in the event of termination
of employment, benefits which total more than $3,500 will commence as
soon as administratively feasible following such termination, provided
that, if the Participant has not attained his Normal Retirement Date,
the Participant consents to such distribution within his Election
Period. If a Participant had funds transferred without the required
spousal consent, directly or indirectly, from a plan subject to Code
Section 412, any distribution of benefits attributable to such
transferred funds, if more than $3,500, to the Protected Spouse as
Beneficiary prior to the date the Participant would have attained his
Normal Retirement Date will require the written acknowledgment and
irrevocable consent of such spouse within 90 days of the Annuity
Starting Date.
Notwithstanding the above, no consent to a distribution prior to the
date the Participant attained or would have attained his Normal
Retirement Date shall be valid until after written notification of the
right to defer is received by the Participant or Protected Spouse, if
applicable. The Committee shall provide such written notification of
the right to defer any benefit payable no less than 30 days nor more
than 90 days before the Annuity Starting Date.
If a Participant does not consent to the distribution at the time
specified above and fails to elect deferral in accordance with
Subsection (d), benefits will commence as of the 60th day following the
last day of the Plan Year during which the Participant's Normal
Retirement Date occurs.
If the Participant's Protected Spouse as Beneficiary does not consent
to the distribution of a Participant's transferred funds at the time
specified above, and if such funds exceed $3,500, benefits attributable
to such transferred funds will commence as of the 60th day following
the last day of the Plan Year during which the Participant's Normal
Retirement Date would have occurred.
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(c) The amount of any benefit payable will be determined as of the
Valuation Date preceding the date such benefit is processed, adjusted
to reflect intervening contributions and withdrawals but not investment
experience.
If the amount of any payment under this Section would adversely affect
the Trust Fund by forcing the premature liquidation of assets, such
payment may be delayed until the timely and orderly liquidation of
investments can be accomplished, but in no event later than the 60th
day following the last day of the Plan Year during which occurs the
latest of
(i) the date a Participant attains the earlier of his Normal
Retirement Date or age 65;
(ii) the tenth anniversary of the year during which the Participant
commenced participation in the Plan; or
(iii) the date the Participant terminates his employment.
If the amount of any payment under this Section would adversely affect
the Trust Fund by permitting former Participants to enter into direct
competition with the Company, such payment will be delayed until the
60th day after the end of the Plan Year during which the Participant's
Normal Retirement Date occurs.
If the amount of any payment under this Section cannot be ascertained
by the applicable commencement date, payment shall be made no later
than 60 days after the earliest date on which the amount of such
payment can be ascertained.
(d) A Participant who terminates employment may elect that benefit payments
commence at a date later than specified in Subsection (b) by submitting
a signed, written statement describing the benefit and the date on
which the payment of such benefit shall commence, provided such date is
not later than the April 1 following the calendar year during which the
Participant attains age 70-12 or such later date as may be promulgated
by the Internal Revenue Service.
(d) Effective for Plan Years beginning [after December 31, 1984 but] before
January 1, 1989, distribution of benefits to a 5% owner, within the
meaning of Section 416(i)(1)(B)(i) of the Code, must commence not later
than the April 1 following the calendar year in which the
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Participant attains age 70-1/2, or such later date as promulgated by
the Internal Revenue Service, whether or not the Participant terminates
employment in that year and whether or not the Participant applies for
benefit payment.
Effective for Plan Years beginning after December 31, 1988,
distribution of benefits must commence not later than the April 1
following the calendar year in which the Participant attains age
70-1/2, or such later date as promulgated by the Internal Revenue
Service, whether or not the Participant terminates employment in that
year and whether or not the Participant applies for benefit payment.
(e) Distribution of benefits must commence not later than the April 1
following the calendar year in which the Participant attains age
70-1/2, or such later date as promulgated by the Internal Revenue
Service, whether or not the Participant terminates employment in that
year and whether or not the Participant applies for benefit payment.
The foregoing shall not apply to a Participant (i) who attains age
70-1/2 before January 1, 1988 unless such Participant was or becomes a
5% owner, within the meaning of Section 416(i)(1)(B)(i) of the Code, at
any time during the Plan Year ending with or within the calendar year
in which he attains age 66-1/2 or any subsequent Plan Year, or (ii) who
had made a valid election under Section 242(b) of the Tax Equity and
Fiscal Responsibility Act of 1982 (TEFRA) to commence his benefits at a
later date.
(f) If the designated Beneficiary is,
(i) the Participant's spouse, such spouse may elect that benefit
payments commence at a date later than specified in Subsection
(b) by submitting a signed written statement describing the
benefit and the date on which the payment of such benefit shall
commence, provided such date is not later than the latest of (A)
December 31 of the calendar year in which the Participant dies,
(B) December 31 of the calendar year during which the
Participant would have attained age 70-1/2, or (C) such later
date as may be promulgated by the Internal Revenue Service.
If such spouse dies prior to the commencement of benefits, and
if the distribution of any death benefit payable to the spouse's
Beneficiary is made in a form that may extend beyond the
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December 31 of the calendar year during which the fifth
anniversary of such spouse's death occurs, such distribution
must commence no later than the December 31 of the calendar year
immediately following the date of such spouse's death or such
later date as may be promulgated by the Internal Revenue
Service.
(ii) other than the Participant's spouse, and the death benefit
payable is made in a form that may extend beyond the December 31
of the calendar year during which the fifth anniversary of such
Participant's death occurs, such distribution must commence no
later than the December 31 of the calendar year immediately
following the date of such Participant's death or such later
date as may be promulgated by the Internal Revenue Service.
(g) If a Participant is in receipt of benefits from the Company's insured
long-term disability program, if applicable, payment of the
Participant's Elective Deferral Contribution, Matching Contribution,
Regular Contribution, Transfer, Qualified Matching Contribution and
Qualified Nonelective Contribution Accounts shall be deferred to the
first day of the month in which such Participant is no longer eligible
to receive such benefits or, if earlier, the 60th day following the
last day of the Plan Year during which the Participant's Normal
Retirement Date occurs, provided the benefits payable under the
long-term disability program would otherwise be reduced by the benefits
payable under the Plan.
7.03 Method and Form of Payment of Benefits
The following provisions shall be applicable for determining the method and
form of payment of all benefits. These provisions are intended to conform
to the requirements of Section 401(a)(9) of the Code, including the minimum
distribution incidental benefit proposed Treasury Regulation 1.401(a)(9)-2,
and shall be construed accordingly.
(a) Subject to Section 7.02, any benefit payable to a Participant who has
terminated employment or Beneficiary which in total is $3,500 or less
will be distributed in a lump sum.
(b) Subject to Section 7.02, any benefit payable to a Participant who has
terminated employment which is more than $3,500 will be distributed at
the Participant's election as follows:
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(i) All or any portion of such amount may be distributed in a lump
sum, subject to the provisions below.
(ii) The balance, if any, may be used to purchase an immediate or
deferred annuity in accordance with the provisions of
Subsections (e), (f) and (g).
Unless otherwise provided in Subsection (g), in the absence of an
election by the Participant, benefits will be distributed in a lump
sum. If such benefits are deferred in accordance with Section 7.02, the
provisions of Subsection (h) will be applicable.
(c) Subject to Section 7.02, if a Participant's benefits are required to
commence in accordance with Subsection 7.02(d) or (e), such Participant
shall make an irrevocable election as to the optional form of payment.
Such benefit shall reflect the Participant's elections regarding
Beneficiary and recalculation of life expectancies in accordance with
regulations under Code Section 401(a)(9). A Participant whose Account
includes funds transferred without the required spousal consent,
directly or indirectly, from a plan subject to Code Section 412, must
elect to recalculate life expectancies unless his spouse consents to
waive the Qualified Annuity. The options available will include the
options available under Subsection (f), with lifetime option benefits
determined using the rules provided by regulations under Code Section
401(a)(9) and will be payable through the purchase of an annuity
contract. Upon subsequent termination of employment, the optional form
previously elected will remain in effect. In lieu of the options
available under Subsection (f), the Participant may elect to have the
value of his Account each year payable in a lump sum or to have the
minimum amount required to be distributed each year under Code Section
401(a)(9) payable directly from the Trust Fund with the remaining
balance payable in a lump sum upon termination of employment.
In the absence of an election by the Participant, the form of payment
shall irrevocably be the minimum amount required to be distributed each
year under Code Section 401(a)(9) payable directly from the Trust Fund
with the remaining balance payable in a lump sum upon such
Participant's termination of employment and life expectancies shall not
be recalculated. If the Participant's Account includes funds
transferred without the required spousal consent, directly or
indirectly, from a plan subject to Code Section 412, the form of
payment shall
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irrevocably be a Qualified Annuity and life expectancies shall be
recalculated.
(d) Subject to Section 7.02 and before the Participant's Annuity Starting
Date, any benefit payable to a Participant's Beneficiary other than the
Participant's Protected Spouse which is more than $3,500 may be
distributed in a lump sum or used to purchase an immediate annuity in
accordance with the provisions of Subsections (e) and (f), as elected
by the Participant while in the employ of the Company. In the absence
of such an election by the Participant, or if the Participant's
Protected Spouse is the Beneficiary, such Beneficiary may make the
election.
In the absence of an election by the Beneficiary, benefits will be
payable in a lump sum unless the Protected Spouse is the Beneficiary
and the Participant had funds transferred without the required spousal
consent, directly or indirectly, to the Plan from a plan subject to
Section 412 of the Code, in which case, benefits will be payable to the
Protected Spouse in the form of a life annuity.
(e) Any benefit payable as an annuity will be distributed (i) by the
purchase of a nontransferable single premium annuity contract,
including an annuity purchased under a group annuity contract, on
behalf of a Participant or Beneficiary from an insurance company,
provided at least $3,500 is available for the purchase of the annuity,
or (ii) directly from the Trust Fund.
Any annuity contract purchased and distributed to a Participant or
Beneficiary shall comply with the requirement of this Plan.
In the absence of a requirement or an election indicating the type of
annuity preferred, a deferred annuity will be provided upon the
Participant's termination of employment unless the Participant had
attained his Normal Retirement Date, in which event an immediate
annuity shall be provided. If the payment of benefits to a Participant
is deferred in accordance with Subsection 7.02(g), a deferred annuity
will be provided on behalf of such Participant.
(f) The annuity options available include the Life, Joint and 50% or 100%
Survivor, 15 or 20 Year Certain and Continuous, and 10, 15 or 20 Year
Certain Installments.
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The election of the annuity option under the above provisions shall be
at the discretion of the Participant or his Beneficiary, provided that
no method shall be permitted which would (i) result in the benefits
being payable over a period extending beyond the life of such
Participant or the lives of such Participant and his Beneficiary or
life expectancy of such Participant or the life expectancy of such
Participant and his Beneficiary; or (ii) distribute any remaining
balance, in the event of a Participant's death after the commencement
of his benefits, less rapidly than the method of distribution in effect
prior to his death.
In no event may the Participant or Beneficiary change any annuity
option subsequent to the Annuity Starting Date.
(g) Subject to Section 7.04,
(i) if a Participant elects to receive his benefits in the form of a
life annuity, such benefits shall be distributed under a
Qualified Annuity unless the Participant elects to receive his
retirement income under any other optional form of distribution
as made available to such Participant.
(ii) if a Participant has had funds transferred without the required
spousal consent, directly or indirectly, from a plan subject to
Code Section 412 and the portion of the Participant's Account
attributable to such transferred funds is more than $3,500, such
funds will be distributed in the form of a Qualified Annuity
unless the Participant elects to receive his retirement income
under any other optional form of distribution as made available
to such Participant.
(iii) the Participant shall have the right to elect, revoke or change
any election under this Subsection at any time during his
Election Period.
(h) Any benefits payable under this Article may be paid in cash,
securities, or such other assets of the Trust Fund as the Committee may
direct.
The distribution of a lump sum payment and/or annuity contract to the
Participant or his Beneficiary will constitute the complete discharge
of all obligations of the Plan.
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7.04 Spousal Consent Requirements With Respect to Participant Elections
(a) If a Participant is married and has elected to receive his benefits in
the form of a life annuity, any election by such Participant to
commence a benefit payment in a form other than a Qualified Annuity at
any time will require the written acknowledgment and irrevocable
consent of the Protected Spouse as witnessed by a Plan representative
or a notary public during the Election Period.
(b) If a Participant is married and has had funds transferred without the
required spousal consent, directly or indirectly, to the Plan from a
plan subject to Section 412 of the Code, any election by such
Participant to commence a benefit payment in a form other than a
Qualified Annuity at any time, will require the written acknowledgment
and irrevocable consent of the Protected Spouse as witnessed by a Plan
representative or a notary public during the Election Period.
Notwithstanding the above, if such transferred funds are accounted for
separately, the above consent requirement will only apply to payments
attributable to such funds and then only if the value of such funds at
the Annuity Starting Date exceeds $3,500.
(c) Any spousal consent will be limited to a specific alternate Beneficiary
and form of payment and any change in such Beneficiary or form will
require a new spousal consent.
(d) If it is established to the satisfaction of the Committee that there is
no spouse because the spouse cannot be located or such other
circumstances as may be promulgated by the Internal Revenue Service or
established by law, such consent will not be required. Spousal consent
may additionally be required at the Committee's request.
(e) Notwithstanding the above, no consent to a distribution or election of
an optional form shall be valid until written notification of the
provisions of this Section and Subsection 7.03(g) is received by the
Participant. The Committee shall provide such written notification no
less than 30 days nor more than 90 days before the Annuity Starting
Date.
Such notice shall contain a written explanation of
(i) the terms and conditions of a Qualified Annuity;
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(ii) the Participant's right to make and the effect of an election to
waive the Qualified Annuity form of benefit;
(iii) the rights of the Protected Spouse;
(iv) the right to make, and the effect of, a revocation of a previous
election to waive the Qualified Annuity; and
(v) a description of the optional forms available under Subsection
7.03(f).
7.05 Disposition of Unclaimed Benefits
In the event that any check or notice with respect to the payment of
benefits under the Plan remains outstanding at the expiration of six months
from the date of mailing of such check to the last known address of the
payee, the Committee shall notify the Trustee to stop payment of all such
outstanding checks and to suspend the issuance of any further checks, if
any, to such payee. If, during the three-year period (or such other period
as specified in the Trust Agreement) from the date of mailing of the first
such check or of notice that a benefit is due under the Plan, the Committee
cannot establish contact with the payee by taking such action as it deems
appropriate and the payee does not make contact with the Committee, the
remaining benefits shall be forfeited and used to reduce the Company's
contributions in accordance with Section 3.03. In the event the payee is
located subsequent to the date the benefits were forfeited, the dollar
amount of such benefits shall be restored in accordance with the provisions
of Article 6.
7.06 Non-Assignability
No benefit under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge, and
any such action shall be void for all purposes of the Plan. No benefit
shall in any manner be subject to the debts, contracts, liabilities,
engagements or torts of any person, nor shall it be subject to attachments
or other legal process for or against any person, except with respect to a
Qualified Domestic Relations Order and in such other instances and to such
extent as may be required by law and except as provided in Article 13.
7.07 Substitute Payee
If a Participant or Beneficiary entitled to receive any benefits hereunder
is in his minority or is, in the judgment of the Committee, legally,
physically, or
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mentally incapable of personally receiving and receipting any distribution,
the Committee may instruct the Trustee to make distributions to his legally
appointed guardian.
7.08 Satisfaction of Liability
After all benefits have been distributed in full to a Participant or to his
Beneficiary, all liability to such Participant or to his Beneficiary shall
cease.
7.09 Direct Rollover to Eligible Retirement Plans
(a) Notwithstanding any provisions of the Plan to the contrary that would
otherwise limit a Distributee's election under this Section, a
Distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover Distribution
paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
(b) Definitions
(i) Eligible Rollover Distribution
An Eligible Rollover Distribution is any distribution of all or
any portion of the balance to the credit of the Distributee,
except that an Eligible Rollover Distribution does not include:
(A) any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee and
the Distributee's designated Beneficiary, or for a specified
period of ten years of more; (B) any distribution to the extent
such distribution is required under Section 401 (a)(9) of the
Code; and (C) the portion of any distribution that is not
includable in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
Employer securities).
(ii) 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
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accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
(iii) Distributee
A Distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse
who is the alternate payee under a Qualified Domestic Relations
Order, are Distributees with regard to the interest of the
spouse or former spouse.
(iv) Direct Rollover
A Direct Rollover is a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
7.10 Waiver of 30 Day Notice Requirement
Notwithstanding any provisions of the Plan to the contrary, 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)-11(c) of the Treasury Regulations is given,
provided that:
(a) 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
(b) the Participant, after receiving the notice, affirmatively elects a
distribution.
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ARTICLE 8
ADMINISTRATION OF THE PLAN
8.01 Assignment of Administrative Authority
The Board of Directors shall appoint a Committee to administer the Plan.
The Committee may consist of directors, officers, Employees, or any other
individuals, who, upon acceptance of such appointment, shall serve at the
pleasure of the Board of Directors. Any member may resign by delivering his
written resignation to the Board of Directors and to the Committee.
Vacancies in the Committee arising from resignation, death or removal shall
be filled by the Board of Directors. The Board of Directors shall also
appoint the Trustee and may appoint an investment manager.
8.02 Organization and Operation of the Committee
(a) The Committee shall act, in carrying out its duties and
responsibilities, in the interest of the Participants and Beneficiaries
with 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 like character and aims.
(b) The Committee shall act by a majority of its members unless unanimous
consent is required by the Plan or by unanimous approval of its members
if there are two or less members in office at the time. In the event of
a Committee deadlock, the Committee shall determine the method for
resolving such deadlock. If there are two or more Committee members, no
member shall act upon any question pertaining solely to himself, and
the other member or members shall make any determination required by
the Plan in respect thereof.
(c) The Committee may authorize any one or more of its members to execute
documents on behalf of the Committee and shall notify the Trustee in
writing of such action and the name or names of the member or members
so designated.
(d) The Committee may, by unanimous consent, delegate specific authority
and responsibilities to one or more of its members. The member or
members so designated shall be solely liable, jointly and severally,
for their acts or omissions with respect to such delegated authority
and responsibilities. Members not so designated, except as
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provided under Subsection 8.06(b), shall be relieved from liability for
any act or omission resulting from such delegation.
(e) The Committee shall endeavor not to engage in any prohibited
transactions, as specified in the Employee Retirement Income Security
Act of 1974, or any successor act. However, any member of the Committee
who is a Participant or Beneficiary shall not be precluded from
receiving benefits payable under the Plan.
8.03 Authority and Responsibility
The Committee and its delegates shall have full discretionary authority and
responsibility for administration of the Plan. Such authority and
responsibility shall include, but shall not be limited to, the following
areas.
(a) Appointment of qualified accountants, consultants, administrators,
counsel or other persons it deems necessary or advisable, who shall
serve the Committee as advisors only and shall not exercise any
discretionary authority, responsibility or control with respect to the
management or administration of the Plan.
Any action of the Committee on the basis of advice, opinion, reports,
etc. furnished by such qualified accountants, consultants,
administrators and counsel shall be the sole responsibility of the
Committee.
Members of the Committee shall not be precluded from serving the
Committee in any other capacity, provided any compensation paid for
such services is reasonable.
(b) Determination of eligibility to participate and all benefits, and
resolution of all questions arising from the administration,
interpretation and application of the Plan, including the determination
of the validity of any Qualified Domestic Relations Order in accordance
with Section 8.09.
(c) Notification to the Trustee of all benefits payable under the Plan and
the manner in which such benefits are to be paid.
(d) Adoption of forms and regulations for the administration of the Plan.
(e) Remedy of any inequity resulting from incorrect information received or
communicated, or of administrative error.
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(f) Assurance that its members, the Trustee and other persons who handle
funds or other property of the Trust Fund are bonded as required by
law.
(g) Settlement or compromise of any claims or debts arising from the
operation of the Plan and the commencement of any legal actions or
administrative proceeding.
(h) Direction to the Trustee as to specific investments which, under the
terms of the Trust Agreement, may be made only upon written direction
of the Committee or which are made in accordance with specific
provisions of the Plan, such as annuity or group investment contracts,
loans to Participants, or earmarked investments selected by
Participants.
(i) Action as agent for the service of legal process.
(j) Communication regarding the liquidity needs of the Plan so that
investment discretion can be exercised to effect specific objectives.
8.04 Records and Reports
(a) The Committee shall keep a record of its proceedings and acts and shall
keep books of account, records and other data necessary for the proper
administration of the Plan.
(b) The Committee shall make its records available for examination by the
Employer, or any Participant or Beneficiary during business hours at
the principal place of business of the Company. However, a Participant
or Beneficiary may examine only records pertaining exclusively to
himself and such other records specified by law.
(c) The Committee shall make available to any Participant or Beneficiary
any material required by law without cost. The Committee may, upon
written request by any Participant or Beneficiary, provide copies of
such material as it deems appropriate and shall furnish copies of such
material required by law. The Participant or Beneficiary may be
required to pay the reasonable cost as determined by the Committee of
preparing and furnishing such material or the cost as prescribed by
law.
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8.05 Required Information
The Company and Participants or Beneficiaries entitled to benefits shall
furnish forms, including but not limited to annuity applications, and any
information or evidence, as requested by the Committee for the proper
administration of the Plan. Failure on the part of any Participant or
Beneficiary to comply with such request within a reasonable period of time
shall be sufficient grounds for delay in the payment of benefits until the
information or evidence requested is received.
8.06 Fiduciary Liability
(a) A member of the Committee who breaches the responsibilities,
obligations, or duties imposed by law shall be liable to the Plan for
any losses resulting from such breach.
(b) A member of the Committee shall be liable for a breach of fiduciary
responsibility by another Committee member or Trustee, with respect to
the Plan or Trust Fund, under the following circumstances.
(i) The member knowingly participates in or undertakes to conceal an
act or omission of another member of the Committee or Trustee,
with knowledge that the act or omission is such a breach.
(ii) If the member's failure to comply with Subsection 8.02(a) has
enabled another member or Trustee to commit such a breach.
(iii) The member has knowledge of such a breach by another member or
Trustee and does not make reasonable efforts under the
circumstances to remedy the breach.
8.07 Payment of Expenses
Those members of the Committee who are full-time paid employees of the
Company shall serve without compensation. The expenses of the Committee,
including reasonable compensation as may be agreed upon in writing between
the Company and the Committee for members of the Committee who are not
full-time employees of the Company, shall be deemed administrative expenses
payable in accordance with Article 3.
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8.08 Indemnification
The Company shall indemnify members of the Committee against personal
financial loss resulting from liability incurred in the administration of
the Plan, unless such liability and loss were caused by such individual's
gross negligence or willful misconduct.
8.09 Qualified Domestic Relations Orders
(a) Qualified Domestic Relations Order
(i) A Qualified Domestic Relations Order (hereinafter referred to as
"QDRO") is a Domestic Relations Order which creates or
recognizes the existence of an Alternate Payee's right to, or
assigns to an Alternate Payee the right to, receive all or a
portion of the benefits payable with respect to a Participant
under the Plan, and which the Committee has determined meets the
requirements of Paragraphs (ii) and (iii).
(ii) A Domestic Relations Order meets the requirements of a QDRO only
if the order clearly specifies
(A) the name and the last known mailing address (if any) of the
Participant and the name and mailing address of each
Alternate Payee covered by the order;
(B) the amount or percentage of the Participant's benefits to be
paid by the Plan to each such Alternate Payee, or the manner
in which such amount or percentage is to be determined;
(C) the number of payments or period to which such order
applies; and
(D) that the order applies to this Plan.
(iii) A Domestic Relations Order meets the requirements of a QDRO only
if the order
(A) does not require the Plan to provide any type or form of
benefits, or any option, not otherwise provided under the
Plan;
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(B) does not require the Plan to provide increased benefits
(determined on the basis of actuarial value); and
(C) does not require the payment of benefits to an Alternate
Payee which are required to be paid to another Alternate
Payee under another Domestic Relations Order previously
determined to be a QDRO.
(iv) In the case of any payment before a Participant has separated
from service, a QDRO shall not be treated as failing to meet the
requirements of Paragraph (iii)(A) above solely because the
order requires the payment of benefits to an Alternate Payee
(A) on or after the date on which the Participant attains (or
would have attained) the Earliest Retirement Age;
(B) as if the Participant had retired on the date such payment
is to begin under such order; and
(C) in any form in which such benefits may be paid under the
Plan to the Participant (other than in the form of a joint
and survivor annuity with respect to the Alternate Payee and
his or her subsequent spouse).
(v) For purposes of Paragraph (iv), Earliest Retirement Age means
the earlier of
(A) the date on which the Participant is entitled to a
distribution under the Plan; or
(B) the later of (1) the date the Participant attains age 50 or
(2) the earliest date on which the Participant could begin
receiving benefits under the Plan if such Participant
separated from service.
Notwithstanding any provisions of the Plan to the contrary,
for purposes of Subparagraph (A) above, a distribution to an
Alternate Payee may be made prior to the date on which the
Participant is entitled to a distribution under Section 7.02
or Article 12 if requested by the Alternate Payee to the
extent such distribution is permitted under the QDRO.
Nothing in this provision shall permit the Participant to
receive a distribution at a date otherwise not permitted
under Section 7.02 or Article 12
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nor shall it permit the Alternate Payee to receive a form of
payment not permitted in Section 7.03.
(b) Procedures
Upon receipt of a Domestic Relations Order, the Committee shall take,
or cause to be taken, the following actions:
(i) The Committee shall promptly notify the Participant, each
Alternate Payee covered by the order and each representative for
these parties of the receipt of the Domestic Relations Order.
Such notice shall include a copy of the order and these QDRO
Procedures for determining whether such order is a QDRO.
(ii) Once a Domestic Relations Order has been received (A) the
affected Participant will not be permitted to request a
withdrawal or a loan from the Plan and (B) no distributions will
be made from the Plan to the Participant upon a subsequent
termination until after the payment to the Alternate Payee has
been determined, unless the Committee determines the order not
to be a QDRO.
(iii) Within a reasonable period after receipt of a Domestic Relations
Order, the Committee shall determine whether it is a QDRO and
shall notify the parties indicated in Paragraph (i) of such
determination. Such notice shall indicate whether the benefits
payable to the Alternate Payee in accordance with the QDRO are
subject to a previously existing QDRO.
(iv) Pending the Committee's determination of whether a Domestic
Relations Order is a QDRO, if payments are due to be paid to the
Participant, the Committee shall withhold payment and separately
account for the amounts otherwise payable to the Alternate Payee
during such period if the order is subsequently determined to be
a QDRO (hereinafter referred to as the "segregated amounts").
If, within the 18-month period beginning with the date the first
payment would have been required to be made under the Domestic
Relations Order, the Committee determines the order to be a
QDRO, the Committee shall pay the segregated amounts, including
any interest thereon, to the person or persons entitled thereto.
If, within such 18-month period, the Committee determines an
order is not a QDRO or the Committee fails to reach a decision,
the
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Committee shall pay the segregated amounts to the Participant.
If, after the 18-month period, the Committee subsequently
determines that the order is a QDRO, the Committee shall pay
benefits subsequent to such determination in accordance with the
order. If action is taken in accordance with this Subsection
(b), the Plan's obligation to the Participant and each Alternate
Payee shall be discharged to the extent of any payment made
pursuant to the QDRO.
(v) In determining the segregated amount in accordance with
Paragraph (iv), the Participant's vested interest shall be
prorated between the Participant and Alternate Payee and the
entire amount of any nonvested interest or any outstanding Plan
loans will be credited to the Participant and not taken into
consideration in making such determination. Any future
contributions or loan repayment will be credited to the
Participant and not the Alternate Payee.
(vi) Upon a determination by the Committee that a Domestic Relations
Order is a QDRO, the Committee shall arrange for benefits to be
paid to the Alternate Payee in accordance with such order and
Sections 7.02 and 7.03 as if the Participant had terminated
employment at such time.
(vii) If benefits are not immediately distributable to the Alternate
Payee, such amount shall be separately accounted for until such
time as the distribution is made. Any amount subject to a QDRO
will not be available to the Participant under the Plan
withdrawal provisions nor will it be available as collateral for
a Plan loan.
(viii) The Alternate Payee shall be treated as a Beneficiary for all
purposes of the Plan. The Alternate Payee will be eligible for
the same investment election option in accordance with Article 5
as the Participant.
The foregoing provisions are effective for QDROs entered into on or after
January 1, 1985, except that, in the case of a Domestic Relations Order
entered into before January 1, 1985, the Committee (i) may treat such order
as a QDRO even though such order fails to meet the requirements of
Subsections (a)(ii) and (iii) above, and (ii) must treat such order as a
QDRO if benefits were being paid pursuant to such order on January 1, 1985.
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ARTICLE 9
AMENDMENT AND TERMINATION
9.01 Amendment
(a) The Plan may be amended or otherwise modified by the Board of
Directors, or the Committee to the extent authorized in accordance with
Subsection (c). Copies of any such amendment or modification shall be
sent to the governing body of each Company. It shall be deemed each
Company consented to such amendment or modification unless its
governing body delivers written notice to the contrary to the Board of
Directors, the Committee and the Trustee within 30 days of its receipt
of such amendment or modification.
(b) No amendment or modification shall
(i) permit any part of the Trust Fund, other than such part as is
required to pay taxes, administrative expenses and expenses
incurred in effectuating such changes, to be used for or
diverted to purposes other than the exclusive benefit of the
Participants or Beneficiaries and/or persons entitled to
benefits under the Plan or permit any portion of the Trust Fund
to revert to or become the property of the Company;
(ii) have the effect of reducing the Account of any Participant as of
the date of such amendment or deprive any Participant or
Beneficiary of a benefit accrued and payable; or
(iii) eliminate any option which constitutes a valuable right
available to a Participant with respect to benefits previously
accrued to the extent the Participant satisfied, either before
or after the amendment, the conditions for the form of payment
except as otherwise permitted by applicable law and regulations.
(c) The Committee may amend or modify the Plan in order to bring the Plan
into compliance with applicable law or regulations, provided said
amendment or modification does not have a material effect on the
estimated cost of maintaining the Plan and does not create a new class
of benefits or entitlements.
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9.02 Termination
While the Plan and Trust Fund are intended to be permanent, they may be
terminated at the discretion of the Board of Directors. Written
notification of such action shall be given to each Company, the Trustee and
the Committee. Thereafter, no further contributions shall be made to the
Trust Fund.
9.03 Vesting Upon Termination
Upon the complete discontinuance of Company contributions or the
termination or partial termination of the Plan and Trust Fund, the Account
of each affected Participant shall become fully vested and shall not be
reduced except
(a) for adjustments resulting from a valuation in accordance with Article
5, which valuation shall also reflect the expenses incurred for
administration of the Plan and/or Trust Fund after such discontinuance
or termination date, and all expenses incurred in effectuating the
complete discontinuance of Company contributions or termination or
partial termination of the Plan and Trust Fund, such as the fees and
retainers of the Plan's Trustee, accountant, custodian, administrator,
consultant, counsel and other specialists if such expenses are not paid
by the Company;
(b) for distributions of benefits by the Trustee to the Participant in
accordance with the Plan and at the written direction of the Committee;
and
(c) as provided in Section 14.01.
9.04 Distribution of Benefits After Termination
As soon as administratively feasible following the termination of the Plan
and Trust Fund, the Trustee, as authorized and directed by the Committee,
shall, provided there is no successor defined contribution plan within the
meaning of Section 401(k)(10)(A)(i) of the Code, distribute each Account,
after adjustment in accordance with Subsection 9.03(a), in a manner
consistent with the provisions of Article 7.
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ARTICLE 10
PARTICIPATING COMPANIES
10.01 Adoption by Other Entities
Any corporation or other business entity may, by resolution of its own
governing body, and with the approval of the Board of Directors, adopt the
Plan and thereby become a Company. Notwithstanding the adoption of the
Plan by other entities, the Plan will be administered as a single plan and
all Plan assets will be available to pay benefits to all Participants
under the Plan.
10.02 Alternative Provisions
No Company may adopt alternative provisions as to itself or its Employees.
Upon request of the governing body of a Company, the Board of Directors
may amend the Plan with respect to the Employees of such Company provided
that any change will only apply if any inequity resulting from such
changed Plan provisions is not found to be discriminatory on behalf of
Highly Compensated Employees.
10.03 Right to Withdraw (Plan Spinoff)
Each Company having adopted the Plan shall have the right as of the last
day of any month to withdraw from the Plan and/or Trust Agreement by
delivering to the Board of Directors, the Committee and the Trustee
written notification from its own governing body of such action and
setting forth the date as of which the withdrawal shall be effective. The
date specified in such written notice shall be deemed a Valuation Date.
10.04 Procedure Upon Withdrawal
(a) If a Company withdraws from the Plan and Trust Agreement as the result
of its adoption of a different plan, the Trustee shall segregate the
portion of the Trust Fund attributable to the Accounts of Participants
employed solely by such Company.
As soon as administratively feasible, the Trustee shall transfer the
segregated assets to the insurance carrier or fiduciary designated by
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the Company as the agency through which the benefits of such successor
plan are to be disbursed.
(b) If a Company withdraws from the Plan and Trust Agreement as the result
of its adoption of a resolution to terminate its participation in the
Plan and to distribute assets to its Employees who are Participants,
the Trustee shall segregate the portion of the Trust Fund attributable
to the Accounts of the Participants who are employed solely by such
Company, and the termination provisions of Section 9.03 and 9.04 shall
apply with respect to such segregated assets.
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ARTICLE 11
TOP-HEAVY PROVISIONS
11.01 Definition of Top-Heavy and Super Top-Heavy
(a) The Plan will be Top-Heavy for a Plan Year if, as of the final
Valuation Date of the preceding Plan Year (or the final Valuation Date
of the current Plan Year, if such year is the first Plan Year),
hereinafter referred to as the Determination Date,
(i) the aggregate value of the Accounts of all Participants who are
Key Employees (as defined in Section 11.02) exceeds 60% of the
aggregate value of such Accounts of all Participants and the
Plan cannot be aggregated with any other plans which would
result in the formation of a non-Top-Heavy aggregation group of
plans; or
(ii) the Plan is required to be part of an aggregation group of
plans and the aggregation group is Top-Heavy. The group will be
deemed Top-Heavy if the aggregate value of all defined
contribution plan accounts and the value of all defined benefit
plan accrued benefits attributable to Key Employees exceeds 60%
of such values attributable to all participants of the
aggregated plans. Such benefit values and accounts shall be
aggregated using the Determination Dates of the individual
plans which fall within the same calendar year.
For purposes of this Section, aggregation group means all
plans, including terminated plans, maintained by the Employer
if maintained within the last five years ending on the
Determination Date, in which a Key Employee is a participant or
which enables any plan in which a Key Employee is a participant
to meet the requirements of Section 401 (a)(4) or Section 410
of the Code, as well as all other plans maintained by the
Employer, provided that inclusion of such other plans in the
aggregation group would not prevent the group of plans from
continuing to meet the requirements of such sections of the
Code.
(b) The Plan will be Super Top-Heavy for a Plan Year if the aggregate
value of all defined contribution plan accounts and the value of all
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defined benefit plan accrued benefits attributable to all
Participants who are Key Employees exceeds 90% of such values
attributable to all Participants in lieu of 60% as stated in
Subsection (a).
(c) For purposes of determining the aggregate value of the benefit
values and accounts under this Section, distributions, other
than rollovers or direct transfers to another qualified plan
maintained by the Employer or rollovers or direct transfers not
initiated by the Participant, made during the five-year period
ending on the Determination Date of the plan from which such
distributions were made, shall be included to the extent such
distributions are not otherwise reflected in the value of any
accrued benefit under a defined benefit plan as determined with
respect to such plan's Determination Date. Such aggregate value
shall not include any (i) assets rolled over or transferred at
the initiation of the Participant directly from a qualified
plan maintained by a business entity other than an Employer to
the Plan, (ii) amounts attributable to former Key Employees,
(iii) amounts attributable to Participants not employed during
such five-year period, or (iv) amounts attributable to
deductible employee contributions under former Section
219(e)(2) of the Code.
A Participant's accounts under any defined contribution plan as
of any Determination Date, other than the Determination Date
which falls within the first Plan Year, shall not include any
Employer contributions due and not yet paid as of the
Determination Date, if the plan under which the account is
maintained is not subject to Section 412 of the Code.
Accrued benefit values under defined benefit plans aggregated
with this Plan shall be determined, subject to the rules set
forth in Section 416(g)(4)(F)(ii) of the Code, as of the dates
of the most recent valuations preceding or coincident with such
defined benefit plans' Determination Dates, in accordance with
the interest and mortality rate assumptions specified in such
defined benefit plans for this purpose or, if not specified,
shall be determined using an interest rate of 5% and mortality
rates in accordance with Group Annuity Mortality Table for 1951
(Projection "C" to 1970, set back five years for females). Such
accrued benefit values shall be determined under the method of
accrual used for all plans of the Employer or, if such method
is not identical, as if such benefit accrued under the
fractional rule as described in Section 41 1 (b)(1)(C) of the
Code.
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11.02 Definition of Key Employee
An Employee or a former Employee will be considered to be a Key Employee
for a Plan Year if, at any time during the Plan Year or the preceding four
Plan Years, he is an officer of the Employer earning more than 50% of the
maximum dollar limitation under Section 415(b)(1)(A) of the Code; one of
the 10 employees owning the largest interests (minimum 1/2%) in the
Employer earning more than the maximum dollar limitation under Section
415(c)(1)(A) of the Code; a 5% owner; or a 1% owner whose compensation
exceeds $150,000. This definition of Key Employee shall be governed by
Section 416 of the Code and Regulations thereunder. For purposes of this
definition, but only to the extent required by law, a Key Employee's
Beneficiary shall be treated as a Key Employee, and ownership percentages
shall be determined without regard to aggregation of entities under common
control within the meaning of Sections 414(b), (c) and (m) of the Code. In
no event shall more than 50 employees (or, if less, the greater of three
employees or 10 percent of the employees) be deemed officers for purposes
of this definition.
11.03 Minimum Employer Contribution
(a) Unless otherwise provided in this Section, for any Plan Year in which
the Plan is determined to be Top-Heavy, the sum of the Company
contribution and forfeitures, if any, allocated to any non Key
Employee Participant in the employ of the Company on the last business
day of that Plan Year, shall not be less than an amount which, in
combination with all other such amounts allocated to him under all
other defined contribution plans maintained by the Employer, is equal
to the lesser of
(i) 3% of the Participant's Compensation or
(ii) the highest percentage of Compensation (net of amounts
contributed under a qualified salary reduction or similar
arrangement) at which contributions (including Employer
matching contributions and forfeitures) are allocated for the
Plan Year under the Plan and under any other defined
contribution plan required to be aggregated with the Plan on
behalf of any Key Employee, times the Participant's
Compensation.
(b) Any contributions made solely to comply with the provisions of this
Section shall be credited at the end of the Plan Year.
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(c) If any Participant is also covered by a defined benefit plan or plans
maintained by the Employer, then for each year the Plan is determined
to be Top-Heavy, 5% will be substituted in lieu of the 3% minimum
allocation under Paragraph (a)(i) for such Participant and Paragraph
(a)(ii) shall not be applicable, unless the Participant receives the
Top-Heavy defined benefit minimum under the defined benefit plan or
plans in accordance with Section 416(c)(1) of the Code,
notwithstanding any offset attributable to defined contribution
account balances, in which event no minimum contribution will be
required under the Plan.
(d) For purposes of this Section, only benefits derived from Employer
contributions under the Plan, or any other defined contribution plan
or plans are to be taken into account to determine whether the minimum
Employer contribution or benefit has been satisfied, excluding
matching contributions and any contributions attributable to a salary
reduction or similar arrangement, but including contributions as
defined in Treasury Regulation 1.401(k)-l(g)(13). Such salary
reduction contributions will be taken into account to determine the
Employer contribution made on behalf of any Key Employee under
Subsection 11.03(a)(ii), but not to determine whether the minimum
Employer contribution or benefit has been satisfied.
(e) An Eligible Employee who has not met the 1,000 Hours of Employment
requirement for eligibility in accordance with Article 2, shall not be
considered a Participant for purposes of this Section.
(f) An employee of a business entity which has not adopted the Plan shall
not be considered a Participant for purposes of this Section unless
also employed by the Company.
(g) An Eligible Employee who becomes a Participant by virtue of the
acceptance of a rollover contribution in accordance with Section 3.07
or a transfer of assets in accordance with Section 3.08 but who is not
otherwise eligible in accordance with Section 2.01, shall not be
entitled to share in any Company contribution allocated in accordance
with this Article.
11.04 Limitation of Allocations
For any Plan Year in which the Plan is determined to be Top-Heavy or Super
Top-Heavy, the reference to "1.25" in Item (1) of Paragraph (B) of
Subsection 4.03(c) will be changed to read "1.0".
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ARTICLE 12
WITHDRAWAL OF FUNDS DURING EMPLOYMENT
12.01 Withdrawals from Elective Deferral, Matching and
Regular Contribution Accounts
Subject to the general withdrawal rules below, a Participant may withdraw
up to 100% of the vested portion of his Elective Deferral, Matching and
Regular Contribution Accounts (a) after attaining age 59-1/2 or (b) before
attaining age 59-1/2, provided such withdrawal meets the Financial
Hardship Rules below.
12.02 Withdrawals from Rollover, Voluntary and Transfer Accounts
Subject to the general withdrawal rules below, a Participant may elect to
withdraw up to 100% of his Rollover, Voluntary and Transfer Accounts.
12.03 Withdrawals from Qualified Matching Contribution and Qualified
Nonelective Contribution Accounts
Subject to the general withdrawal rules below, a Participant who has
attained age 59-1/2 may withdraw up to 100% of his Qualified Matching
Contribution and Qualified Nonelective Contribution Accounts.
12.04 Financial Hardship Rules
(a) For purposes of this Article, a Financial Hardship withdrawal may be
made only if it is on account of an immediate and heavy financial need
of the Participant and is necessary to satisfy such financial need.
(b) The following needs shall be recognized as immediate and heavy
financial needs:
(i) medical expenses, as described in Section 213(d) of the Code,
previously incurred by the Participant, the Participant's
spouse or the Participant's dependents, or funds necessary for
these persons to obtain medical care described in Section
213(d) of the Code,
(ii) purchase of a principal residence for the Participant,
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(iii) tuition payments, related educational fees and room and board
expenses for the next 12 months of post-secondary education for
the Participant or the Participant's spouse, children or other
dependents,
(iv) the need to prevent eviction from or foreclosure on the
mortgage of the Participant's principal residence, and
(v) any other financial need as may be promulgated by the internal
Revenue Service, and
(c) The following requirements will be applicable:
(i) The Participant must have obtained all other distributions and
loans available under all plans maintained by the Employer.
(ii) Elective Deferral Contributions and any other Employee
contributions under all plans maintained by the Employer will
be suspended for 12 months following the receipt of the
Financial Hardship withdrawal. The Participant's Elective
Deferral Contributions under Section 3.01 will automatically be
resumed following the required period of suspension, unless the
Participant elects otherwise.
(iii) The limitation of Section 4.01 which is imposed on a
Participant's Elective Deferral Contributions for the calendar
year immediately following the calendar year of the Financial
Hardship withdrawal will be reduced by the amount of such
contributions and/or deferrals for the calendar year of such
withdrawal.
(e) The amount of such Financial Hardship withdrawal may not exceed the
amount required to meet the specified need plus any amounts necessary
to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the withdrawal. In addition, the
amount of such withdrawal from a Participant's Elective Deferral
Contribution Account shall be limited to the sum of the Participant's
Elective Deferral Contributions made.
(f) A Financial Hardship withdrawal from a Participant's Elective Deferral
Contribution Account will be available only after the total amount
available from all other Accounts has been withdrawn.
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12.05 General Withdrawal Rules
Any withdrawal shall be subject to the following requirements:
(a) If a Participant elected to receive his benefits in the form of a life
annuity in accordance with the provisions of Sections 7.03 and 7.04 at
any time, any withdrawal will be distributed under a Qualified Annuity
unless such Participant elects to receive such withdrawal in a lump
sum. All withdrawals will be considered separate Annuity Starting
Dates for purposes of Sections 7.02 and 7.04. Spousal consent may
additionally be required at the Committee's request.
(b) Only two non-hardship withdrawals will be permitted during any Plan
Year.
(c) A written request for a withdrawal must be submitted to the Committee
at least 15 days prior to the withdrawal date. Withdrawals will be
taken from the investment funds proportionately, exclusive of the
Dendrite International, Inc. Common Stock Fund.
(d) A withdrawal may be requested as of the first day of any month, or at
such other dates as the Committee may fix from time to time, providing
that if the Participant's Account includes any investment in a fund
other than the Goldman Money Market Trust Fund, withdrawal of such
portion of the Participant's Account will be permitted only if the
market value of Trust Fund assets invested in such fund, adjusted for
contributions and payment activity has not declined and there is no
significant adverse economic effect on the Trust Fund. If requested as
of any date other than the day after a Valuation Date, no investment
earnings will be credited on the amount withdrawn for the period from
the last Valuation Date to the date specified for the withdrawal.
(e) The minimum amount that may be withdrawn is $500 or the balance in the
Participant's Accounts from which a current withdrawal is permitted,
if less. The minimum amount limitation shall not apply in the case of
a hardship withdrawal.
(f) If a loan is outstanding at the time a withdrawal is requested, such
withdrawal shall be permitted only to the extent that the remaining
vested Account balance under the Plan will be at least 100% of the
outstanding loan balance as of the date of the withdrawal.
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ARTICLE 13
LOANS
13.01 Amount of Loans and Terms of Repayment
The Committee shall promulgate any additional specific rules and
regulations governing all aspects of this Article as it deems necessary.
The following general rules shall serve as the basis for any specific
rules and regulations:
(a) Upon written application on forms provided by the Committee, the
Committee may grant a loan to a Participant who has completed one year
of Plan participation, except shareholder employees or owner employees
as referred to in Section 4975(d) of the Code.
(b) The minimum amount of any loan shall be $1,000.
(c) In no event shall a loan exceed the lesser of
(i) $50,000, reduced by the highest outstanding loan balance during
the one-year period ending on the day before the date on which
any new loan is to be granted, or
(ii) 50% of the amount to which the Participant is vested under this
Plan on the date the loan is granted.
(d) Each loan granted to a Participant must be repaid in full before any
subsequent loan is granted to such Participant.
(e) All loans issued under this Article shall be considered investments of
the Account of the Participant to whom the loan is granted and shall
be charged to the investment funds proportionately, exclusive of the
Dendrite International, Inc. Common Stock Fund.
The Participant's Accounts shall be charged in the following order:
Regular Contribution, Matching Contribution, Elective Deferral
Contribution, Transfer, Voluntary and Rollover Accounts.
If a loan is granted as of any date other than the day after a
Valuation Date, no investment earnings will be credited on the amount
of the
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loan for the period from the last Valuation Date to the date the loan
is granted.
Interest shall be charged thereon at a rate equal to the prime rate
reported in The Wall Street journal on the first day of the month
during which the loan application was made.
(f) Each loan shall be secured by the assignment of not more than 50% of
the Participant's vested Account balance on the date the loan is
granted, a promissory note executed by the Participant and such
additional collateral as the Committee shall require to assure
repayment of the loan and all interest payable thereon.
(g) Each loan shall be repaid by the Participant either through payroll
deductions or in such other manner as the Committee shall determine,
provided such payment schedule does not permit payment less frequently
than quarterly. All payment schedules shall be calculated to amortize
principal and interest in level payments over the period of the loan
as agreed to by the Committee and the Participant not to exceed five
years from the date of such loan. Notwithstanding the foregoing in the
event a loan is approved for the purchase of a principal residence,
the repayment requirement may not exceed 10 years.
Principal and interest payments shall be credited to the Account of
the Participant to whom the loan is granted and shall be invested in
accordance with the Participant's current investment election.
(h) Except as provided in Subsection (k), upon a Participant's termination
of employment for any reason, the entire unpaid balance of the loan
shall be due and payable.
(i) If a Participant should fail to make a payment when due, the entire
unpaid balance of the loan shall be in default and the Committee shall
take any one or more of the following steps, as it deems necessary, to
secure repayment of such loan:
(i) Deduct the amount of the outstanding indebtedness from the
Participant's Account, to the extent permitted and available
under law and in accordance with the terms of the Plan. Such
deduction will not occur until a distributable event occurs
under the terms of the Plan.
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(ii) Instruct the Trustee to sell any property held as collateral
for such loan.
(iii) Take such other steps as may be required.
(j) Each loan will require that within the 90-day period before the
granting of the loan, the Participant and, if married, his spouse,
consent to such loan in writing and acknowledge the reduction in the
Participant's Account in the event the loan is in default.
(k) Any Participant who is a "party in interest" as defined in ERISA
Section 3(14) and who ceases to be an active Eligible Employee may be
eligible to borrow from the Plan under terms and conditions reflecting
valid differences between active Participants and other Participants
which would be considered in a normal commercial setting such as the
unavailability of payroll deductions for repayment. In addition, there
will be an annual fee for the administration of each of such loans of
$100. In no event will loans be unreasonably withheld from any
eligible applicant.
(l) No distribution from the Plan upon termination of employment for any
reason shall be made to any Participant or Beneficiary unless and
until all loans, including interest thereon, have been fully repaid.
(m) A nonrefundable processing fee of $75 shall be charged for each loan
processed.
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ARTICLE 14
GENERAL PROVISIONS
14.01 Exclusiveness of Benefits
The Plan has been created for the exclusive benefit of the Participants
and their Beneficiaries. No part of the Trust Fund shall ever revert to
the Company nor shall such Trust Fund ever be used other than for the
exclusive benefit of the Participants and their Beneficiaries, except as
provided in Sections 3.10 and 9.03 and Subsection 4.03(d) provided,
however, that contributions made by the Company by mistake of fact or
which are not deductible under Section 404 of the Code, may be returned to
the Company within one year of the mistaken payment of the contribution or
the date of disallowance of the deduction, as the case may be. All
contributions made by the Company shall be conditional upon their
deductibility under Section 404 of the Code. No person shall have any
interest in or right to any part of the Trust Fund, or any equitable right
under the Trust Agreement, except to the extent expressly provided in the
Plan or Trust Agreement.
14.02 Limitation of Rights
Neither the establishment of the Plan, nor any modification thereof, nor
the creation of any fund, trust or account, nor the purchase of any
policy, nor the payment of any benefits shall be construed as giving any
Participant, Beneficiary, or any other person whomsoever, any legal or
equitable right against the Company, the Committee, or the Trustee, unless
such right shall be specifically provided for in the Plan or conferred by
affirmative action of the Committee or the Company in accordance with the
terms and provisions of the Plan; or as giving any Participant or any
other employee of the Company the right to be retained in the service of
the Company and all Participants and other employees shall remain subject
to discharge to the same extent as if the Plan had never been adopted.
14.03 Limitation of Liability and Legal Actions
In any action or proceeding involving the Trust Fund, or any part thereof,
or the administration thereof, the Company, the Committee, and the Trustee
shall be the only necessary parties. Any final judgment entered in any
such action or proceeding which is not appealed or appealable, shall be
binding and conclusive on the parties thereto, and all persons having or
claiming to have an interest in the Trust Fund or under the Plan.
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14.04 Construction of Agreement
The Plan shall be construed according to the laws of the State in which
the Company named under Article 1 has its principal place of business, and
all provisions hereof shall be administered according to, and its validity
shall be determined under, the laws of such State except where preempted
by Federal law.
14.05 Title to Assets
No Participant, Beneficiary or any other person shall have any legal or
equitable right or interest in the funds set aside by the Company, or
otherwise received or held under the Plan, or in any assets of the Trust
Fund, except as expressly provided in the Plan, and no Participant,
Beneficiary or any other person shall be deemed to possess a right to any
assets except as herein provided.
14.06 Severability
Should any provision of the Plan or any regulations adopted thereunder be
deemed or held to be unlawful or invalid for any reason, such fact shall
not adversely affect the other provisions or regulations unless such
invalidity shall render impossible or impractical the functioning of the
Plan and, in such case, the appropriate parties shall immediately adopt a
new provision or regulation to take the place of the one held illegal or
invalid.
14.07 Titles and Headings
The titles and headings of the Sections in this instrument are for
convenience of reference only and, in the event of any conflict, the text
rather than such titles or headings shall control.
14.08 Counterparts as Original
The Plan has been prepared in counterparts, each of which so prepared
shall be construed an original.
14.09 Merger of Plans
Upon the merger or consolidation of any other plan with this Plan or the
transfer of assets or liabilities from this Plan to any other plan, all
Participants of this Plan shall be entitled to a benefit immediately after
the merger, consolidation or transfer (if the merged, consolidated or
transferee plan had
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then been terminated) at least equal to the benefit they would have been
entitled to immediately prior to such merger, consolidation or transfer
(if the Plan had then terminated).
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1296
Exhibit 5.1
[SULLIVAN & CROMWELL LETTERHEAD]
December 30, 1996
Mr. Chris French
General Counsel & Vice President
Dendrite International, Inc.,
1200 Mt. Kemble Avenue,
Morristown, NJ 07960.
Re: Dendrite 401(k) Retirement
Savings Plan
Dear Mr. French:
The Dendrite 401(k) Retirement Savings Plan (the "Plan") offers as one
of its investment options the purchase of common stock in Dendrite
International, Inc. (the "Company"). As a result of the addition of this
investment option, the Company is filing a Form S-8 Registration Statement with
the Securities Exchange Commission. As part of this filing, you have requested
our opinion as to whether the Plan, as amended, complies with the requirements
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
We have examined and relied upon originals or copies of such documents
as we have deemed necessary or appropriate as a basis for the opinion set forth
herein,
<PAGE>
Mr. Chris French -2-
including the (i) Plan and Trust Agreement as adopted July 1, 1990, (ii)
Amendment to the Plan dated November 15, 1991, (iii) Amendment to the Plan dated
January 1, 1993, (iv) Amendment to the Plan dated December 13, 1993, (v)
Amendment to the Plan dated October 1, 1995, (vi) Amendment to the Plan dated
May 1, 1996, (vii) Amendment to the Plan dated December 4, 1996 and (viii)
Amendment and Restatement of the Plan dated December 30, 1996.
The Company adopted the Plan as a standardized regional prototype plan
sponsored by USF&G Business Services, Inc. Section 6.01 of Revenue Procedure
89-9 provides that an employer adopting such a plan may rely on the sponsor's
opinion letter regarding the plan's tax qualified status. Therefore, the Company
did not submit a request to the Internal Revenue Service (the "IRS") for a
determination on the qualification of the Plan under Section 401(a) of the Code.
In a letter dated February 8, 1991, USF&G notified the Company that
they were abandoning the Plan. Section 16 of Revenue Procedure 89-9 provides
that an "abandoned plan" becomes an "individually designed plan" of the adopting
employer unless the employer adopts another prototype plan. The Company did not
adopt another prototype plan, and the Plan became an individually designed plan
of the Company. The Company has not submitted a request to the IRS for a
<PAGE>
Mr. Chris French -3-
determination on the qualification of the Plan under Section 401(a) of the Code.
Based on our review of the Plan and subsequent amendments thereto, and
subject to the proper administration of the Plan in accordance with the terms of
the Plan and ERISA, it is our opinion that the Plan, as of December 4, 1996,
complies with the requirements of ERISA, as they relate to the Plan.
We are not admitted to the Bar of the State of New Jersey and express
no opinion as to the laws of New Jersey, or any other jurisdiction, other than,
to the extent specifically referred to herein, the Federal laws of the United
States.
We hereby consent to the use of this opinion as an exhibit to the Form
S-8 Registration Statement. In giving such consent, we do not thereby admit that
we come within the category of persons whose consent is required by the
Securities Act of 1933 and the rules promulgated thereunder.
Very truly yours,
/s/ SULLIVAN & CROMWELL
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this S-8 Registration Statement of our report dated February 5,
1996 included in Dendrite International, Inc.'s Form 10-K for the year ended
December 31, 1995 and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Philadelphia, Pa.
December 31, 1996
Exhibit 23.3
Consent of Independent Auditors
We consent to the incorporation by reference in this Registration Statement
pertaining to the report dated October 11, 1996, with respect to the financial
statements of the Dendrite Americas/International, Inc. 401(k) Profit Sharing
Plan included in this Annual Report (Form 11-K) for the year ended December 31,
1995.
/s/ Gregory J. Mosley
Gregory J. Mosley, C.P.A.
Tulsa, Oklahoma
December 26, 1996
