<PAGE>
As filed with the Securities and Exchange Commission on July 3, 1996.
Registration No. 33-86314
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
_______________
CompUSA Inc.
(Exact name of registrant as specified in its charter)
Delaware 75-2261497
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
14951 North Dallas Parkway
Dallas, Texas 75240
(Address of principal executive offices)
_______________
CompSavings Plan for Employees of CompUSA Inc.
(Full title of the Plan)
_______________
JAMES F. HALPIN
President
14951 North Dallas Parkway
Dallas, Texas 75240
(Name and address of agent for service)
(214) 982-4000
(Telephone number, including area code, of agent for service)
_______________
COPY TO:
FRED W. FULTON
Jackson & Walker, L.L.P.
901 Main Street
Suite 6000
Dallas, Texas 75202
(214) 953-5894
APPROXIMATE DATE OF PROPOSED COMMENCEMENT OF SALES PURSUANT TO THE PLAN:
From time to time after this Registration Statement becomes effective.
<PAGE>
PROSPECTUS
COMPUSA INC.
720,000 SHARES
OF
COMMON STOCK*
This Prospectus has been prepared by CompUSA Inc., a Delaware
corporation (the "Company"), for use upon resale by certain directors, officers
and employees of the Company (the "Selling Stockholders") of up to approximately
720,000 shares of the Company's common stock, par value $.01 per share ("Common
Stock"). The Selling Stockholders have acquired and/or may in the future
acquire shares of Common Stock under the CompSavings Plan for Employees of
CompUSA Inc. (the "Plan").
The Common Stock may be sold from time to time by the Selling
Stockholders or permitted transferees. Such sales may be sold on one or more
exchanges, including the New York Stock Exchange ("NYSE"), in the over-the-
counter market or in negotiated transactions, in each case at prices and at
terms then prevailing or at prices related to the then current market price or
at negotiated prices and terms. See "Plan of Distribution." Upon any sale of
the Common Stock offered hereby, the Selling Stockholders or permitted
transferees and participating agents, brokers, dealers and marketmakers may be
deemed to be underwriters as that term is defined in the Securities Act of 1933,
as amended (the "Securities Act"), and commissions or discounts or any profit
realized on the resale of such securities purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
The Common Stock is listed for trading on the NYSE under the symbol
"CPU." On July 3, 1996, the last reported sale price of the Common Stock, as
reported on the NYSE, was $37-3/4. The Company will pay all expenses in
connection with this offering, which are estimated to be approximately $22,000.
* This figure is an estimate. The Company has filed a Registration Statement on
Form S-8, Registration Number 33-86314 (of which this Prospectus is a part),
which Registration Statement covers the offer and sale of 720,000 shares of
Common Stock and an indeterminate amount of interests in the Plan. This
Prospectus covers the resale by the Selling Stockholders of up to 720,000
shares of Common Stock acquired or that may be acquired by the Selling
Stockholders under the Plan.
_________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is July 3, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and
at Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of
such materials can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Common Stock is listed on the NYSE. Reports, proxy statements and
other information concerning the Company can also be inspected and copied at the
offices of the NYSE at 20 Broad Street, New York, New York 10005.
This Prospectus constitutes part of a Registration Statement on Form
S-8 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act. This Prospectus omits certain of the information
contained in the Registration Statement and the exhibits thereto, in accordance
with the rules and regulations of the Commission. For further information
concerning the Company and the Common Stock, reference is made to the
Registration Statement and the exhibits filed therewith, which may be inspected
without charge at the office of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 and copies of which may be obtained from the Commission
at prescribed rates. Any statements contained herein concerning the provisions
of any documents are not necessarily complete, and, in each instance, reference
is made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.
The Company's principal executive offices are located at 14951 North
Dallas Parkway, Dallas, Texas 75240, and the Company's telephone number is (214)
982-4000.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus:
(i) Annual Report on Form 10-K for the year ended June 24, 1995;
(ii) Quarterly Report on Form 10-Q for the quarter ended September 23,
1995;
(iii) Quarterly Report on Form 10-Q for the quarter ended December 23,
1995;
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<PAGE>
(iv) Quarterly Report on Form 10-Q for the quarter ended March 23, 1996;
(v) Current Report on Form 8-K, filed with the Commission on May 20,
1996;
(vi) Current Report on Form 8-K, filed with the Commission on June 14,
1996; and
(vii) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A/A (No. 1-11566) filed
November 14, 1995, as amended.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date
of this Prospectus and prior to the termination of this offering (the
"Offering") shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of the filing of such documents. Any
statement contained in a document incorporated by reference shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein or in any
accompanying prospectus supplement 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 Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request, a copy of any or all
of the documents incorporated herein by reference (without exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed in writing to CompUSA Inc., 14951
North Dallas Parkway, Dallas, Texas 75240, Attention: Assistant Secretary, or
by telephone at (214) 982-4000.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby.
SELLING STOCKHOLDERS
Information relating to the Selling Stockholders will be provided by
Prospectus Supplement.
PLAN OF DISTRIBUTION
The Common Stock offered hereby may be sold from time to time by the
Selling Stockholders or permitted transferees. The Common Stock may be disposed
of from time to time in one or more transactions through any one or more of the
following: (i) to purchasers directly, (ii) in ordinary brokerage transactions
and transactions in which the broker solicits purchasers, (iii) through
underwriters or dealers who may receive compensation in the form of
-3-
<PAGE>
underwriting discounts, concessions or commissions from the Selling Stockholders
or permitted transferees and/or from the purchasers of the Common Stock for whom
they may act, (iv) the writing of options on the Common Stock, (v) the pledge of
the Common Stock as security for any loan or obligation, including pledges to
brokers or dealers who may, from time to time, themselves effect distributions
of the Common Stock or interests therein, (vi) purchases by a broker or dealer
as principal and resale by such broker or dealer for its own account pursuant to
this Prospectus, (vii) a block trade in which the broker or dealer engaged in
such block trade will attempt to sell the Common Stock as agent but may position
and resell a portion of the block as principal to facilitate the transaction and
(viii) an exchange distribution in accordance with the rules of the applicable
exchange, or in transactions in the over the counter market. Such sales may be
made at prices and at terms then prevailing or at prices related to the then
current market price or at negotiated prices and terms. In effecting sales,
brokers or dealers may arrange for other brokers or dealers to participate. The
Selling Stockholders or permitted transferees and any underwriters, brokers,
dealers or agents that participate in the distribution of the Common Stock may
be deemed to be "underwriters" within the meaning of the Securities Act and any
profit on the sale of the Common Stock by them and any discounts, commissions or
concessions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting commissions or discounts under the Securities Act. In
addition, while this Prospectus covers the offering and sale of the securities
noted above, such securities may also qualify for sale pursuant to Rule 144
promulgated under the Securities Act ("Rule 144"), and accordingly such
securities may be sold under Rule 144 rather than pursuant to this Prospectus.
The Company will pay all of the expenses incident to the offering and sale
of the Common Stock to the public other than underwriting discounts or
commissions, brokers' fees and the fees and expenses of any counsel to the
Selling Stockholders related thereto.
LEGAL MATTERS
Certain legal matters in connection with the validity of the Common Stock
offered hereby have been passed upon by Jackson & Walker, L.L.P., Dallas, Texas.
EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-K for the year ended June 24, 1995, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such
consolidated financial statements are, and audited financial statements to be
included in subsequently filed documents will be, incorporated herein in
reliance upon the reports of Ernst & Young LLP pertaining to such financial
statements (to the extent covered by consents filed with the Commission) given
upon the authority of such firm as experts in accounting and auditing.
-4-
<PAGE>
INDEMNIFICATION
The Company is a Delaware corporation and the Delaware General Corporation
Law (the "Delaware Law") empowers a corporation organized thereunder to
indemnify its directors and officers or former directors and officers and to
purchase insurance with respect to liability arising out of their capacity or
status as directors and officers.
Reference is made to Article VII of the Company's Restated and Amended
Bylaws, which provides for indemnification of directors and officers except as
to certain circumstances and except as provided by applicable law.
Additionally, Article VI ("Article VI") of the Company's Restated and
Amended Certificate of Incorporation limits the personal liability of directors
of the Company to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, notwithstanding any provision of law
imposing such liability; provided that to the extent required from time to time
by applicable law, Article VI shall not eliminate or limit the liability of a
director, to the extent such liability is provided by applicable law, (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of Title 8 of
the Delaware Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Commission,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
-5-
<PAGE>
No dealer, salesperson or other person
has been authorized to give any information
or to make any representation not contained
in this Prospectus in connection with the
offering made hereby and, if given or
made, such information or representation
must not be relied upon as having been
authorized by the Company. This
Prospectus does not constitute an offer to COMPUSA INC.
sell or a solicitation of an offer to buy any
securities in any jurisdiction to any person
to whom it would be unlawful to make
such an offer or solicitation in such
jurisdiction. Neither the delivery of this 720,000 SHARES
Prospectus nor any sale made hereunder COMMON STOCK
shall, under any circumstances, create any
implication that the information contained
herein is correct as of any time subsequent
to the date hereof or that there has been no
change in the affairs of the Company since
such date.
TABLE OF CONTENTS PROSPECTUS
July 3, 1996
Page
Incorporation of Certain Documents
by Reference......................... 2
Use of Proceeds....................... 3
Selling Stockholders.................. 3
Plan of Distribution.................. 3
Legal Matters......................... 4
Experts............................... 4
Indemnification....................... 5
467141.03/D
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed with the Securities and
Exchange Commission (the "Commission") by the Company, are incorporated herein
by reference and made a part hereof: (i) Annual Report on Form 10-K for the year
ended June 24, 1995; (ii) Quarterly Report on Form 10-Q for the quarter ended
September 23, 1995; (iii) Quarterly Report on Form 10-Q for the quarter ended
December 23, 1995; (iv) Quarterly Report on Form 10-Q for the quarter ended
March 23, 1996; (v) Current Report on Form 8-K, filed with the Commission on May
20, 1996; (vi) Current Report on Form 8-K, filed with the Commission on June 14,
1996; and (vii) the description of the Company's common stock contained
in the Company's Registration Statement on Form 8-A/A (No. 1-11566) filed
November 14, 1995, as amended.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), on or subsequent to the date of this Registration Statement and prior to
the filing of a post-effective amendment that indicates that all securities
offered have been sold or that deregisters all securities then remaining unsold,
shall be deemed to be incorporated herein by reference 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 that also is or is
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.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Delaware corporation and the Delaware General Corporation
Law (the "Delaware Law") empowers a corporation organized thereunder to
indemnify its directors and officers or former directors and officers and to
purchase insurance with respect to liability arising out of their capacity or
status as directors and officers.
II-1
<PAGE>
Reference is made to Article VII of the Company's Restated and Amended
Bylaws, which provides for indemnification of directors and officers except as
to certain circumstances and except as provided by applicable law.
Additionally, Article VI ("Article VI") of the Company's Restated and
Amended Certificate of Incorporation limits the personal liability of directors
of the Company to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, notwithstanding any provision of law
imposing such liability; provided that to the extent required from time to time
by applicable law, Article VI shall not eliminate or limit the liability of a
director, to the extent such liability is provided by applicable law, (i) for
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of Title 8 of
the Delaware Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Commission,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The following is a list of all exhibits filed as a part of this
Registration Statement on Form S-8, including those incorporated herein by
reference.
Exhibit
Number Description of Exhibit
- -------- ----------------------
4(a) Restated and Amended Certificate of Incorporation of the
Registrant./(1)/
4(b) Restated and Amended Bylaws of the Registrant./(2)/
4(c) Specimen Common Stock Certificate (as amended)./(7)/
4(d) Specimen 9 1/2% Senior Subordinated Note Due 2000./(3)/
4(e) Indenture dated June 17, 1993 among CompUSA Inc., as Issuer, Compudyne
Products, Inc., Compudyne Direct, Inc., CompFinance Inc., CompService
Inc.,
II-2
<PAGE>
as Guarantors and U.S. Trust Company of Texas, N.A., as Trustee
relating to 9 1/2% Senior Subordinated Notes Due 2000./(4)/
4(f) Rights Agreement dated April 29, 1994, between the Company and Bank
One, Texas, N.A. as Rights Agent. (First Interstate Bank of Texas,
N.A. became successor Rights Agent as of November 1, 1995). /(2)/
5 Opinion of Jackson & Walker, L.L.P./(5)/
15 None.
23(a) Consent of Ernst & Young LLP/(6)/
23(b) Consent of Jackson & Walker, L.L.P./(5)/
24 Power of Attorney./(5)/
25 None.
27 None.
28 None.
99 CompSavings Plan for Employees of CompUSA Inc. as amended and restated
effective January 1, 1996./(6)/
- -----------
(1) Previously filed as an exhibit to the Company's Registration Statement No.
33-99280 on Form S-8 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended March 26, 1994 and incorporated herein by
reference.
(3) Previously filed as an exhibit to the Company's Annual Report on Form 10-K,
as amended, for the fiscal year ended June 26, 1993 and incorporated herein
by reference.
(4) Previously filed as an exhibit to Registration Statement No. 33-62884 on
Form S-3 and incorporated herein by reference.
(5) Previously filed.
(6) Filed herewith.
(7) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended December 23, 1995.
In accordance with Form S-8 Item 8(b), the undersigned registrant has
undertaken to submit the CompSavings Plan for Employees of CompUSA Inc. (the
"Plan") to the Internal Revenue Service ("IRS") and has made or will make all
changes required by the IRS in order to qualify the Plan.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
II-3
<PAGE>
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof), which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
the prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in 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.
II-4
<PAGE>
(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 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.
467141.03/D
II-5
<PAGE>
SIGNATURES
THE REGISTRANT
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 Post-Effective
Amendment No. 1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Dallas, State of Texas on
the 30th day of April, 1996.
CompUSA Inc.
By /s/ James E. Skinner
------------------------------------------
James E. Skinner, Executive Vice President
II-6
<PAGE>
Pursuant to the requirements of the Securities Act, this Post-
Effective Amendment No. 1 to Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------------ ----------------------------------- --------------
<S> <C> <C>
/s/ James F. Halpin* President, Chief Executive April 30, 1996
- ------------------------------------ Officer and Director
James F. Halpin (Principal Executive Officer)
/s/ James E. Skinner Executive Vice President and April 30, 1996
- ------------------------------------ Chief Financial Officer
James E. Skinner (Principal Financial and
Accounting
Officer)
/s/ Giles H. Bateman* Chairman of the Board of April 30, 1996
- ------------------------------------ Directors
Giles H. Bateman
/s/ Kevin J. Roche* Director April 30, 1996
- ------------------------------------
Kevin J. Roche
/s/ Warren D. Feldberg* Director April 30, 1996
- ------------------------------------
Warren D. Feldberg
/s/ Leonard L. Berry, Ph.D.* Director April 30, 1996
- ------------------------------------
Leonard L. Berry, Ph.D.
- ------------------------------------ Director April , 1996
Lawrence Mittman
- ------------------------------------ Director April , 1996
Edith Weiner
</TABLE>
*By: /s/ James E. Skinner
-------------------------------------
James E. Skinner
ATTORNEY-IN-FACT
II-7
<PAGE>
THE PLAN
Pursuant to the requirements of the Securities Act, the Plan has duly
caused this Post-Effective Amendment No. 1 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas, on the 30th day of April, 1996.
CompSavings Plan for Employees of CompUSA Inc.
By CompSavings Plan Committee
By /s/ James E. Skinner
---------------------------------------
James E. Skinner, Committee Member
II-8
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- ----------- -------
23(a) Consent of Ernst & Young LLP /*/......................
99 CompSavings Plan for Employees of CompUSA Inc. as amended
and restated effective January 1, 1996./*/............
- -----------
* Filed herewith.
<PAGE>
Exhibit 23 (a)
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-8 of CompUSA Inc. pertaining to the CompUSA
Inc. Deferred Compensation Plan and to the incorporation by reference therein of
our report dated August 9, 1995, with respect to the consolidated financial
statements of CompUSA Inc. included in its Annual Report on Form 10-K for the
year ended June 24, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
July 3, 1996
<PAGE>
Exhibit 99
CompSavings Plan for Employees of CompUSA Inc.
Plan and Trust Agreement
as amended and restated
effective January 1, 1996
<PAGE>
COMPSAVINGS PLAN
FOR EMPLOYEES OF
COMPUSA INC.
PLAN AND TRUST AGREEMENT
AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1996
<PAGE>
CompSavings Plan for Employees of CompUSA Inc.
Plan and Trust Agreement
As Amended and Restated Effective January 1, 1996
CompUSA Inc. previously established CompSavings Plan for Employees of CompUSA
Inc. for the benefit of eligible employees of the Company and its participating
affiliates. The Plan is intended to constitute a qualified profit sharing plan,
as described in Code section 401(a), which includes a qualified cash or deferred
arrangement, as described in Code section 401(k).
The provisions of this Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between CompUSA Inc. and Wells
Fargo Bank, National Association. The Trust is intended to be tax exempt as
described under Code section 501(a).
The Plan constitutes an amendment and restatement of the CompSavings Plan for
Employees of CompUSA Inc., which was originally established effective as of
January 1, 1995, and its related trust agreement.
The CompSavings Plan for Employees of CompUSA Inc. and trust agreement, as set
forth in this document, is hereby amended and restated effective as of January
1, 1996.
Date: December 29, 1995
CompUSA Inc.
By: /s/ James F. Halpin
---------------------------------
Title: President & CEO
------------------------------
The trust agreement set forth in those provisions of this Plan and Trust which
relate to the Trustee is hereby executed.
Date: January 12, 1996
BZW Barclays Global Investors,
National Association
By: /s/ D. Lipton
---------------------------------
Title: Principal
------------------------------
Date: January 12, 1996
BZW Barclays Global Investors,
National Association
By: /s/ Gwyn E. Slack
---------------------------------
Title: Principal
------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<C> <S> <C>
1 DEFINITIONS.......................................................................... 1
-----------
2 ELIGIBILITY.......................................................................... 10
-----------
2.1 Eligibility.......................................................................... 10
2.2 Ineligible Employees................................................................. 10
2.3 Ineligible or Former Participants.................................................... 10
3 PARTICIPANT CONTRIBUTIONS............................................................ 11
-------------------------
3.1 Pre-Tax Contribution Election........................................................ 11
3.2 Changing a Contribution Election..................................................... 11
3.3 Revoking and Resuming a Contribution Election........................................ 11
3.4 Contribution Percentage Limits....................................................... 11
3.5 Refunds When Contribution Dollar Limit Exceeded...................................... 12
3.6 Timing, Posting and Tax Considerations............................................... 12
4 ROLLOVERS AND TRANSFERS FROM AND TO OTHER
-----------------------------------------
QUALIFIED PLANS...................................................................... 13
---------------
4.1 Rollovers............................................................................ 13
4.2 Transfers From and To Other Qualified Plans.......................................... 13
5 EMPLOYER CONTRIBUTIONS............................................................... 14
----------------------
5.1 Company Match Cash Contributions..................................................... 14
5.2 Company Match Stock Contributions.................................................... 15
6 ACCOUNTING........................................................................... 18
----------
6.1 Individual Participant Accounting.................................................... 18
6.2 Sweep Account is Transaction Account................................................. 18
6.3 Trade Date Accounting and Investment Cycle........................................... 18
6.4 Accounting for Investment Funds...................................................... 18
6.5 Payment of Fees and Expenses......................................................... 18
6.6 Accounting for Participant Loans..................................................... 19
6.7 Error Correction..................................................................... 19
6.8 Participant Statements............................................................... 20
6.9 Special Accounting During Conversion Period.......................................... 20
6.10 Accounts for QDRO Beneficiaries...................................................... 20
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7 INVESTMENT FUNDS AND ELECTIONS....................................................... 21
------------------------------
7.1 Investment Funds..................................................................... 21
7.2 Investment Fund Elections............................................................ 21
7.3 Responsibility for Investment Choice................................................. 21
7.4 Default if No Election............................................................... 22
7.5 Timing............................................................................... 22
7.6 Investment Fund Election Change Fees................................................. 22
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8 VESTING & FORFEITURES.............................................................. 23
---------------------
8.1 Fully Vested Contribution Accounts............................................ 23
8.2 Full Vesting Upon Certain Events.............................................. 23
8.3 Vesting Schedule.............................................................. 23
8.4 Forfeitures................................................................... 23
8.5 Rehired Employees............................................................. 24
9 PARTICIPANT LOANS.................................................................. 25
-----------------
9.1 Participant Loans Permitted................................................... 25
9.2 Loan Application, Note and Security........................................... 25
9.3 Spousal Consent............................................................... 25
9.4 Loan Approval................................................................. 25
9.5 Loan Funding Limits, Account Sources and Funding Order........................ 25
9.6 Maximum Number of Loans....................................................... 26
9.7 Source and Timing of Loan Funding............................................. 26
9.8 Interest Rate................................................................. 26
9.9 Loan Payment.................................................................. 26
9.10 Loan Payment Hierarchy....................................................... 26
9.11 Repayment Suspension......................................................... 27
9.12 Loan Default................................................................. 27
9.13 Call Feature................................................................. 27
10 IN-SERVICE WITHDRAWALS............................................................. 28
----------------------
10.1 In-Service Withdrawals Permitted............................................. 28
10.2 In-Service Withdrawal Application and Notice................................. 28
10.3 Spousal Consent.............................................................. 28
10.4 In-Service Withdrawal Approval............................................... 28
10.5 Minimum Amount, Payment Form and Medium...................................... 28
10.6 Source and Timing of In-Service Withdrawal Funding........................... 29
10.7 Hardship Withdrawals......................................................... 29
10.8 Rollover Account Withdrawals................................................. 31
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS
----------------------------------------
REQUIRED BY LAW.................................................................... 32
---------------
11.1 Benefit Information, Notices and Election.................................... 32
11.2 Spousal Consent.............................................................. 32
11.3 Payment Form and Medium...................................................... 32
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11.4 Distribution of Small Amounts.................................................. 33
11.5 Source and Timing of Distribution Funding...................................... 33
11.6 Deemed Distribution............................................................ 33
11.7 Latest Commencement Permitted.................................................. 33
11.8 Payment Within Life Expectancy................................................. 34
11.9 Incidental Benefit Rule........................................................ 34
11.10 Payment to Beneficiary........................................................ 34
11.11 Beneficiary Designation....................................................... 35
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12 ADP AND ACP TESTS...................................................................... 36
-----------------
12.1 Contribution Limitation Definitions.............................................. 36
12.2 ADP and ACP Tests................................................................ 39
12.3 Correction of ADP and ACP Tests.................................................. 39
12.4 Multiple Use Test................................................................ 40
12.5 Correction of Multiple Use Test.................................................. 41
12.6 Adjustment for Investment Gain or Loss........................................... 41
12.7 Testing Responsibilities and Required Records.................................... 41
12.8 Separate Testing................................................................. 41
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS........................................... 42
--------------------------------------------
13.1 "Annual Addition" Defined........................................................ 42
13.2 Maximum Annual Addition.......................................................... 42
13.3 Avoiding an Excess Annual Addition............................................... 42
13.4 Correcting an Excess Annual Addition............................................. 42
13.5 Correcting a Multiple Plan Excess................................................ 43
13.6 "Defined Benefit Fraction" Defined............................................... 43
13.7 "Defined Contribution Fraction" Defined.......................................... 43
13.8 Combined Plan Limits and Correction.............................................. 43
14 TOP HEAVY RULES........................................................................ 44
---------------
14.1 Top Heavy Definitions............................................................ 44
14.2 Special Contributions............................................................ 45
14.3 Adjustment to Combined Limits for Different Plans................................ 46
15 PLAN ADMINISTRATION.................................................................... 47
-------------------
15.1 Plan Delineates Authority and Responsibility..................................... 47
15.2 Fiduciary Standards.............................................................. 47
15.3 Company is ERISA Plan Administrator.............................................. 47
15.4 Administrator Duties............................................................. 47
15.5 Advisors May be Retained......................................................... 48
15.6 Delegation of Administrator Duties............................................... 48
15.7 Committee Operating Rules........................................................ 49
16 MANAGEMENT OF INVESTMENTS.............................................................. 50
-------------------------
16.1 Trust Agreement.................................................................. 50
16.2 Investment Funds................................................................. 50
16.3 Authority to Hold Cash........................................................... 51
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16.4 Trustee to Act Upon Instructions................................................. 51
16.5 Administrator Has Right
to Vote Registered Investment Company Shares..................................... 51
16.6 Custom Fund Investment Management................................................ 51
16.7 Authority to Segregate Assets.................................................... 52
16.8 Maximum Permitted Investment in Company Stock.................................... 52
16.9 Participants Have Right to Vote and Tender Company
Stock............................................................................ 52
16.10 Registration and Disclosure for Company Stock.................................... 53
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17 TRUST ADMINISTRATION................................................................... 54
--------------------
17.1 Trustee to Construe Trust........................................................ 54
17.2 Trustee To Act As Owner of Trust Assets.......................................... 54
17.3 United States Indicia of Ownership............................................... 54
17.4 Tax Withholding and Payment...................................................... 55
17.5 Trust Accounting................................................................. 55
17.6 Valuation of Certain Assets...................................................... 55
17.7 Legal Counsel.................................................................... 56
17.8 Fees and Expenses................................................................ 56
17.9 Trustee Duties and Limitations................................................... 56
18 RIGHTS, PROTECTION, CONSTRUCTION AND
------------------------------------
JURISDICTION........................................................................... 57
------------
18.1 Plan Does Not Affect Employment Rights........................................... 57
18.2 Limited Return of Contributions.................................................. 57
18.3 Assignment and Alienation........................................................ 57
18.4 Facility of Payment.............................................................. 58
18.5 Reallocation of Lost Participant's Accounts...................................... 58
18.6 Claims Procedure................................................................. 58
18.7 Construction..................................................................... 59
18.8 Jurisdiction and Severability.................................................... 59
18.9 Indemnification by Employer...................................................... 59
19 AMENDMENT, MERGER, DIVESTITURES AND
------------------------------------
TERMINATION............................................................................ 61
-----------
19.1 Amendment........................................................................ 61
19.2 Merger........................................................................... 61
19.3 Divestitures..................................................................... 61
19.4 Plan Termination................................................................. 62
19.5 Amendment and Termination Procedures............................................. 62
19.6 Termination of Employer's Participation.......................................... 63
19.7 Replacement of the Trustee....................................................... 63
19.8 Final Settlement and Accounting of Trustee....................................... 63
<CAPTION>
APPENDIX A - INVESTMENT FUNDS..................................................................... 64
APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES.................................................... 65
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APPENDIX C - LOAN INTEREST RATE .................................................................. 66
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1 DEFINITIONS
-----------
When capitalized, the words and phrases below have the following meanings
unless different meanings are clearly required by the context:
1.1 "Account". The records maintained for purposes of accounting for a
Participant's interest in the Plan. "Account" may refer to one or all
of the following accounts which have been created on behalf of a
Participant to hold specific types of Contributions under the Plan:
(a) "Pre-Tax Account". An account created to hold Pre-Tax
Contributions.
(b) "Rollover Account". An account created to hold Rollover
Contributions.
(c) "Company Match Cash Account". An account created to hold
Company Match Cash Contributions.
(d) "Company Match Stock Account". An account created to hold
Company Match Stock Contributions.
1.2 "ACP" or "Average Contribution Percentage". The percentage calculated
in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all or a portion of
the duties of the Administrator under the Plan to a Committee in
accordance with Section 15.6.
1.4 "ADP" or "Average Deferral Percentage". The percentage calculated in
accordance with Section 12.1.
1.5 "Beneficiary". The person or persons who is to receive benefits after
the death of the Participant pursuant to the "Beneficiary Designation"
paragraph in Section 11, or as a result of a QDRO.
1
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1.6 "Break in Service". The fifth anniversary (or sixth anniversary if
absence from employment was due to a Parental Leave) of the date on which a
Participant's employment ends.
1.7 "Code". The Internal Revenue Code of 1986, as amended. Reference to
any specific Code section shall include such section, any Treasury
Regulation promulgated thereunder from time to time, and any
comparable provision of any future legislation amending, supplementing
or superseding such section.
1.8 "Committee". If applicable, the committee which has been appointed by
the Company to administer the Plan in accordance with Section 15.6.
1.9 "Company". CompUSA Inc. or any successor by merger, purchase or
otherwise.
2
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1.10 "Company Stock". Shares of common stock of the Company, its
predecessor(s), or its successors or assigns, or any corporation with
or into which said corporation may be merged, consolidated or
reorganized, or to which a majority of its assets may be sold.
1.11 "Compensation". The sum of a Participant's Taxable Income and salary
reductions, if any, pursuant to Code sections 125, 402(e)(3), 402(h),
403(b), 414(h)(2) or 457.
For purposes of determining benefits under this Plan, Compensation is
limited to $150,000, (as adjusted for the cost of living pursuant to
Code sections 401(a)(17) and 415(d)) per Plan Year. For purposes of
the preceding sentence, in the case of an HCE who is a 5% Owner or one
of the 10 most highly compensated Employees, (i) such HCE and such
HCE's family group (as defined below) shall be treated as a single
employee and the Compensation of each family group member shall be
aggregated with the Compensation of such HCE, and (ii) the limitation
on Compensation shall be allocated among such HCE and his or her
family group members in proportion to each individual's Compensation
before the application of this sentence. For purposes of this
Section, the term "family group" shall mean an Employee's spouse and
lineal descendants who have not attained age 19 before the close of
the year in question.
For purposes of determining HCEs and key employees, Compensation for
the entire Plan Year shall be used. For purposes of determining ADP
and ACP, Compensation shall be limited to amounts paid to an Eligible
Employee while a Participant.
1.12 "Contribution". An amount contributed to the Plan by the Employer or
an Eligible Employee, and allocated by contribution type to
Participants' Accounts, as described in Section 1.1. Specific types
of contribution include:
3
<PAGE>
(a) "Pre-Tax Contribution". An amount contributed by an eligible
Participant in conjunction with his or her Code section 401(k)
salary deferral election which shall be treated as made by the
Employer on an eligible Participant's behalf and amounts
transferred from the Deferred Compensation Plan in accordance
with an eligible Participant's Deferred Compensation Plan 401(k)
Plan Election thereunder.
(b) "Rollover Contribution". An amount contributed by an Eligible
Employee which originated from another employer's or an
Employer's qualified plan.
(c) "Company Match Cash Contribution". An amount
contributed by the Employer on an eligible
Participant's behalf based upon the amount
contributed by the eligible Participant.
4
<PAGE>
(d) "Company Match Stock Contribution". An amount contributed by
the Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant.
1.13 "Contribution Dollar Limit". The annual limit placed on each
Participant's Pre-Tax Contributions, which shall be $7,000 per
calendar year (as adjusted for the cost of living pursuant to Code
sections 402(g)(5) and 415(d)). For purposes of this Section, a
Participant's Pre-Tax Contributions shall include (i) any employer
contribution made under any qualified cash or deferred arrangement as
defined in Code section 401(k) to the extent not includible in gross
income for the taxable year under Code section 402(e)(3) or
402(h)(1)(B) (determined without regard to Code section 402(g)), and
(ii) any employer contribution to purchase an annuity contract under
Code section 403(b) under a salary reduction agreement (within the
meaning of Code section 3121(a)(5)(D)).
1.14 "Conversion Period". The period of converting the prior accounting
system of the Plan and Trust, if such Plan and Trust were in existence
prior to the Effective Date, or the prior accounting system of any
plan and trust which is merged into this Plan and Trust subsequent to
the Effective Date, to the accounting system described in Section 6.
1.15 "Deferred Compensation Plan". The CompUSA Inc. Deferred Compensation
Plan, originally established effective November 1, 1995, as from time
to time amended.
1.16 "Deferred Compensation Plan 401(k) Plan Election". An election made
by an eligible participant under the Deferred Compensation Plan to
have the maximum amount of his or her Compensation Deferrals
Contributions under such plan for a particular Plan Year that could,
subject to the terms and conditions of the Plan, including the
limitations described in Section 3 and not otherwise causing the Plan
to fail the tests described in Section 12, otherwise have been made
for such Plan Year as a Pre-Tax Contribution to this Plan, transferred
to this Plan and treated as a Pre-Tax Contribution for such Plan Year.
The term "Compensation Deferrals Contributions" is as defined under
the Deferred Compensation Plan. The term "Plan Year" is the same as
defined under the Plan.
1.17 "Direct Rollover". An Eligible Rollover Distribution that is paid
directly to an Eligible Retirement Plan for the benefit of a
Distributee.
5
<PAGE>
1.18 "Disability". A Participant's inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or that has lasted or can be
expected to last for a continuing period of not less than 12 months. In the case
of any dispute as to whether or not a Participant is disabled within the meaning
of the preceding sentence, the determination will be made by a licensed
physician selected by the Administrator, which physician's decision will be
final and binding.
6
<PAGE>
1.19 "Distributee". An Employee or former Employee, the surviving spouse
of an Employee or former Employee and a spouse or former spouse of an
Employee or former Employee determined to be an alternate payee under
a QDRO.
1.20 "Effective Date". The date upon which the provisions of this document
become effective. This date is January 1, 1996, unless stated
otherwise. In general, the provisions of this document only apply to
Participants who are Employees on or after the Effective Date.
However, investment and distribution provisions apply to all
Participants with Account balances to be invested or distributed after
the Effective Date.
1.21 "Eligible Employee". An Employee of an Employer, except any Employee:
(a) whose compensation and conditions of employment are covered by a
collective bargaining agreement to which an Employer is a party
unless the agreement calls for the Employee's participation in
the Plan;
(b) who is treated as an Employee because he or she is a Leased
Employee; or
(c) who is a nonresident alien who (i) either receives no earned
income (within the meaning of Code section 911(d)(2)), from
sources within the United States under Code section 861(a)(3);
or (ii) receives such earned income from such sources within the
United States but such income is exempt from United States
income tax under an applicable income tax convention.
1.22 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan described in Code
section 403(a), or a qualified trust described in Code section 401(a),
that accepts a Distributee's Eligible Rollover Distribution, except
that with regard to an
7
<PAGE>
Eligible Rollover Distribution to a surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
1.23 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee,
excluding a 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 a
Distributee or the joint lives (or joint life expectancies)
of a Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or
more; a distribution to the extent such distribution is
required under Code section 401(a)(9); and the portion of a
distribution that is not includible in gross income
(determined without regard to the exclusion for net
unrealized appreciation with respect to Employer
securities).
8
<PAGE>
1.24 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom any income
for such employment is subject to withholding of income or
social security taxes, or
(b) a Leased Employee.
1.25 "Employer". The Company and any Subsidiary or other Related Company
of either the Company or a Subsidiary which adopts this Plan with the
approval of the Company.
1.26 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific ERISA section shall include such
section, any Department of Labor Regulation promulgated thereunder
from time to time, and any comparable provision of any future
legislation amending, supplementing or superseding such section.
1.27 "Fiscal Year". The Employer's annual accounting period.
1.28 "Forfeiture Account". An account holding amounts forfeited by
Participants who have terminated employment with all Related
Companies, invested in interest bearing deposits of the Trustee,
pending disposition as provided in this Plan and Trust and as directed
by the Administrator.
1.29 "HCE" or "Highly Compensated Employee". An Employee described as a
Highly Compensated Employee in Section 12.
1.30 "Hour of Service". Each hour for which an Employee is entitled to:
(a) payment for the performance of duties for any Related Company;
(b) payment from any Related Company for any period during which no
duties are performed (irrespective of
9
<PAGE>
whether the employment relationship has terminated) due to
vacation, holiday, sickness, incapacity (including disability),
layoff, leave of absence, jury duty or military service;
(c) back pay, irrespective of mitigation of damages, by award or
agreement with any Related Company (and these hours shall be
credited to the period to which the agreement pertains); or
(d) no payment, but is on a Leave of Absence (and these
hours shall be based upon his or her normally
scheduled hours per week or a 40 hour week if there
is no regular schedule).
10
<PAGE>
The crediting of hours for which no duties are performed shall be in
accordance with Department of Labor regulation sections 2530.200b-2(b)
and (c). Actual hours shall be used whenever an accurate record of
hours are maintained for an Employee. Otherwise, an equivalent number
of hours shall be credited for each payroll period in which the
Employee would be credited with at least 1 hour. The payroll period
equivalencies are 45 hours weekly, 90 hours biweekly, 95 hours
semimonthly and 190 hours monthly.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Hours of Service
for eligibility and/or vesting purposes if (1) the Company directs
that credit for such service be granted, or (2) a qualified plan of
the predecessor or acquired company is subsequently maintained by any
Employer or Related Company.
1.31 "Ineligible". The Plan status of an individual during the period in
which he or she is (1) an Employee of a Related Company which is not
then an Employer, (2) an Employee, but not an Eligible Employee, or
(3) not an Employee.
1.32 "Investment Fund" or "Fund". An investment fund as described in
Section 16.2. The Investment Funds authorized by the Administrator to
be offered under the Plan as of the Effective Date are set forth in
Appendix A.
1.33 "Leased Employee". An individual who is deemed to be an employee of
any Related Company as provided in Code section 414(n) or (o).
1.34 "Leave of Absence". A period during which an individual is deemed to
be an Employee, but is absent from active employment, provided that
the absence:
(a) was authorized by a Related Company; or
11
<PAGE>
(b) was due to military service in the United States armed forces
and the individual returns to active employment within the
period during which he or she retains employment rights under
federal law.
1.35 "Loan Account". The record maintained for purposes of accounting for
a Participant's loan and payments of principal and interest thereon.
1.36 "NHCE" or "Non-Highly Compensated Employee". An Employee described as
a Non-Highly Compensated Employee in Section 12.
1.37 "Normal Retirement Date". The later of the date of a Participant's
65th birthday or attainment of four Years of Vesting Service.
1.38 "Owner". A person with an ownership interest in the capital, profits,
outstanding stock or voting power of a Related Company within the
meaning of Code section 318 or 416 (which exclude indirect ownership
through a qualified plan).
12
<PAGE>
1.39 "Parental Leave". The period of absence from work by reason of
pregnancy, the birth of an Employee's child, the placement of a child
with the Employee in connection with the child's adoption, or caring
for such child immediately after birth or placement as described in
Code section 410(a)(5)(E).
1.40 "Participant". An Eligible Employee who begins to participate in the
Plan after completing the eligibility requirements as described in
Section 2.1. An Eligible Employee who makes a Rollover Contribution
prior to completing the eligibility requirements as described in
Section 2.1 shall also be considered a Participant, except that he or
she shall not be considered a Participant for purposes of provisions
related to Contributions, other than a Rollover Contribution, until he
or she completes the eligibility requirements as described in Section
2.1. A Participant's participation continues until his or her
employment with all Related Companies ends and his or her Account is
distributed or forfeited.
1.41 "Pay". The wages, overtime, salary, bonus and commission paid to an
Eligible Employee by an Employer while a Participant during the
current period.
Pay is neither increased by any salary credit or decreased by any
salary reduction pursuant to Code sections 125 or 402(e)(3). Pay is
limited to $150,000 (as adjusted for the cost of living pursuant to
Code sections 401(a)(17) and 415(d)) per Plan Year.
1.42 "Period of Employment". The period beginning on the date an Employee
first performs an hour of service and ending on the date his or her
employment ends. Employment ends on the date the Employee quits,
retires, is discharged, dies or (if earlier) the first anniversary of
his or her absence for any other reason. The period of absence
starting with the date an Employee's employment temporarily ends and
ending on the date he or she is subsequently reemployed is (1)
included in his or her Period of Employment if the period of absence
does
13
<PAGE>
not exceed one year, and (2) excluded if such period exceeds one year.
Period of Employment includes the period prior to a Break in Service.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Period of
Employment for eligibility and/or vesting purposes if (1) the Company
directs that credit for such service be granted, or (2) a qualified
plan of the predecessor or acquired company is subsequently maintained
by any Employer or Related Company.
1.43 "Plan". The CompSavings Plan for Employees of CompUSA Inc. set forth
in this document, as from time to time amended.
1.44 "Plan Year". The annual accounting period of the Plan and Trust which
ends on each December 31.
14
<PAGE>
1.45 "QDRO". A domestic relations order which the Administrator has
determined to be a qualified domestic relations order within the
meaning of Code section 414(p).
1.46 "Related Company". With respect to any Employer, that Employer and
any corporation, trade or business which is, together with that
Employer, a member of the same controlled group of corporations, a
trade or business under common control, or an affiliated service group
within the meaning of Code sections 414(b), (c), (m) or (o), except
that for purposes of Section 13 "within the meaning of Code sections
414(b), (c), (m) or (o), as modified by Code section 415(h)" shall be
substituted for the preceding reference to "within the meaning of Code
section 414(b), (c), (m) or (o)".
1.47 "Settlement Date". For each Trade Date, the Trustee's next business
day.
1.48 "Spousal Consent". The written consent given by a spouse to a
Participant's Beneficiary designation. The spouse's consent must
acknowledge the effect on the spouse of the Participant's designation,
and be duly witnessed by a notary public. Spousal Consent shall be
valid only with respect to the spouse who signs the Spousal Consent
and only for the particular choice made by the Participant which
requires Spousal Consent. A Participant may revoke (without Spousal
Consent) a prior designation that required Spousal Consent at any time
before payments begin. Spousal Consent also means a determination by
the Administrator that there is no spouse, the spouse cannot be
located, or such other circumstances as may be established by
applicable law.
1.49 "Subsidiary". A company which is 50% or more owned, directly or
indirectly, by the Company.
1.50 "Sweep Account". The subsidiary Account for each Participant through
which all transactions are processed, which is invested in interest
bearing deposits of the Trustee.
1.51 "Sweep Date". The cut off date and time for receiving instructions
for transactions to be processed on the next Trade Date.
1.52 "Taxable Income". Compensation in the amount reported by the Employer
or a Related Company as "Wages, tips, other
15
<PAGE>
compensation" on Form W-2, or any successor method of reporting under
Code section 6041(d).
1.53 "Trade Date". Each day the Investment Funds are valued, which is
normally every day the assets of such Funds are traded.
1.54 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the Plan
and holds the Plan assets which are comprised of the aggregate of
Participants' Accounts, any unallocated funds invested in deposit or
money market type assets pending allocation to Participants' Accounts
or disbursement to pay Plan fees and expenses and the Forfeiture
Account.
1.55 "Trustee". Wells Fargo Bank, National Association.
1.56 "Year of Vesting Service". A 12 month Period of Employment.
Years of Vesting Service shall include service credited prior to
January 1, 1995.
16
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2 ELIGIBILITY
-----------
2.1 Eligibility
All Participants as of January 1, 1996 shall continue their
eligibility to participate in the Plan. Each other Eligible Employee
shall become a Participant on the later of January 1, 1996 or, on the
first day of the next payroll period coincident with or next following
after the date he or she attains age 21 and completes a six month
eligibility period in which he or she is credited with at least 500
Hours of Service. The initial eligibility period begins on the date
an Employee first performs an Hour of Service. Subsequent eligibility
periods begin with the start of each half of the Plan Year beginning
after the first Hour of Service is performed.
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements, but is
Ineligible at the time participation would otherwise begin (if he or
she were not Ineligible), he or she shall become a Participant on the
first subsequent date on which he or she is an Eligible Employee.
2.3 Ineligible or Former Participants
A Participant may not make or share in Plan Contributions, nor
generally be eligible for a new Plan loan, during the period he or she
is Ineligible, but he or she shall continue to participate for all
other purposes. An Ineligible Participant or former Participant shall
automatically become an active Participant on the date he or she again
becomes an Eligible Employee.
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3 PARTICIPANT CONTRIBUTIONS
-------------------------
3.1 Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to reduce
his or her Pay by an amount which does not exceed the Contribution
Dollar Limit, within the limits described in the Contribution
Percentage Limits paragraph of this Section 3, and have such amount
contributed to the Plan by the Employer as a Pre-Tax Contribution.
The election shall be made as a whole percentage of Pay in such manner
and with such advance notice as prescribed by the Administrator. In
no event shall an Employee's Pre-Tax Contributions under the Plan and
comparable contributions to all other plans, contracts or arrangements
of all Related Companies exceed the Contribution Dollar Limit for the
Employee's taxable year beginning in the Plan Year.
3.2 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her Pre-
Tax Contribution election at any time, but no more frequently than
twice in any Plan Year (not including his or her initial Pre-Tax
Contribution election) in such manner and with such advance notice as
prescribed by the Administrator, and such election shall be effective
with the first payroll paid after such date. Participants'
Contribution election percentages shall automatically apply to Pay
increases or decreases.
3.3 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Contribution election at any time
in such manner and with such advance notice as prescribed by the
Administrator, and such revocation shall be effective no later than
with the second payroll paid after such date.
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<PAGE>
A Participant who is an Eligible Employee may resume Contributions by
making a new Contribution election at any time in such manner and with
such advance notice as prescribed by the Administrator, and such
election shall be effective with the first payroll paid after such
date.
3.4 Contribution Percentage Limits
The Administrator may establish and change from time to time, in
writing, without the necessity of amending this Plan and Trust, the
minimum, if applicable, and maximum Pre-Tax Contribution percentages,
prospectively or retrospectively (for the current Plan Year), for all
Participants. In addition, the Administrator may establish any lower
percentage limits for Highly Compensated Employees as it deems
necessary to satisfy the tests described in Section 12. As of the
Effective Date, the Pre-Tax Contribution minimum percentage is 1% and
the maximum percentage is 15%.
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<PAGE>
Irrespective of the limits that may be established by the
Administrator in accordance with this paragraph, in no event shall the
contributions made by or on behalf of a Participant for a Plan Year
exceed the maximum allowable under Code section 415.
3.5 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Pre-Tax Contributions for a calendar year to
this Plan and comparable contributions to any other qualified defined
contribution plan in excess of the Contribution Dollar Limit may
notify the Administrator in writing by the following March 1 (or as
late as April 14 if allowed by the Administrator) that an excess has
occurred. In this event, the amount of the excess specified by the
Participant, adjusted for investment gain or loss, shall be refunded
to him or her by April 15 and shall not be included as an Annual
Addition under Code section 415 for the year contributed. Refunds
shall not include investment gain or loss for the period between the
end of the applicable calendar year and the date of distribution.
Excess amounts shall first be taken from unmatched Pre-Tax
Contributions and then from matched Pre-Tax Contributions. Any
Company Match Cash Contributions and Company Match Stock Contributions
attributable to refunded excess Pre-Tax Contributions as described in
this Section shall be forfeited and used as described in Section 8.4.
3.6 Timing, Posting and Tax Considerations
Pre-Tax Contributions may only be made through payroll deduction.
Pre-Tax Contributions, other than Pre-Tax Contributions attributable
to a Participant's Deferred Compensation Plan 401(k) Plan Election,
shall be paid to the Trustee in cash and posted to each Participant's
Account(s) as soon as such amounts can reasonably be separated from
the Employer's general assets and balanced against the specific amount
made on behalf of each Participant and in no
20
<PAGE>
event later than 90 days after the date amounts are deducted from a
Participant's Pay. Pre-Tax Contributions attributable to a
Participant's Deferred Compensation Plan 401(k) Plan Election shall be
paid to the Trustee in cash and posted to each Participant's
Account(s) as soon as such amounts can be determined following the end
of the Plan Year and balanced against the specific amount to be
transferred on behalf of each Participant and in no event later than
the March 15 following immediately thereafter.
Pre-Tax Contributions shall be treated as Contributions made by an
Employer in determining tax deductions under Code section 404(a).
21
<PAGE>
4 ROLLOVERS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS
---------------------------------------------------------
4.1 Rollovers
The Administrator may authorize the Trustee to accept a rollover
contribution, within the meaning of Code section 402(c) or
408(d)(3)(A)(ii), in cash, directly from an Eligible Employee or as a
Direct Rollover from another qualified plan on behalf of the Eligible
Employee, even if he or she is not yet a Participant. The Employee
shall be responsible for furnishing satisfactory evidence, in such
manner as prescribed by the Administrator, that the amount is eligible
for rollover treatment. A rollover contribution received directly
from an Eligible Employee must be paid to the Trustee in cash within
60 days after the date received by the Eligible Employee from a
qualified plan or conduit individual retirement account.
Contributions described in this paragraph shall be posted to the
applicable Employee's Rollover Account as of the date received by the
Trustee.
If it is later determined that an amount contributed pursuant to the
above paragraph did not in fact qualify as a rollover contribution
under Code section 402(c) or 408(d)(3)(A)(ii), the balance credited to
the Employee's Rollover Account shall immediately be (1) segregated
from all other Plan assets, (2) treated as a nonqualified trust
established by and for the benefit of the Employee, and (3)
distributed to the Employee. Any such nonqualifying rollover shall be
deemed never to have been a part of the Plan.
4.2 Transfers From and To Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in cash
or in kind directly from another qualified plan or transfer assets in
cash or in kind directly to another qualified plan; provided that a
transfer should not be directed if:
(a) any amounts are not exempted by Code section 401(a)(11)(B) from
the annuity requirements of Code section 417 unless, in the
event of a receipt of assets, the Plan complies with such
requirements or, in the event of a transfer of assets, the
receiving Plan complies with such requirements; or
(b) any amounts include benefits protected by Code section 411(d)(6)
which would not be preserved under applicable Plan provisions,
in the event of a receipt of assets or, under the applicable
provisions of the receiving plan, in the event of a transfer of
assets.
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<PAGE>
The Trustee may refuse the receipt of any transfer if:
(a) the Trustee finds the in-kind assets unacceptable; or
(b) instructions for posting amounts to Participants' Accounts are
incomplete.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee.
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<PAGE>
5 EMPLOYER CONTRIBUTIONS
----------------------
5.1 Company Match Cash Contributions
(a) Frequency and Eligibility.
Basic Contribution: For each Plan Year, the Employer shall make
basic Company Match Cash Contributions, as described in the
following Allocation Method paragraph, on behalf of each
Participant who contributed during the Plan Year and:
(1) was an Eligible Employee on the last day of the Plan Year,
and
(2) was credited with at least 1,000 Hours of Service for the
Plan Year.
Supplemental Contribution: For each Plan Year, based on the
Employer's profitability for the Fiscal Year which ends within
the Plan Year, the Employer may make supplemental Company Match
Cash Contributions, as described in the following Allocation
Method paragraph, on behalf of each Participant who was
determined to be eligible to receive basic Company Match Cash
Contributions.
(b) Allocation Method.
Basic Contribution: The basic Company Match Cash Contributions
(including any Forfeiture Account amounts applied as basic
Company Match Cash Contributions in accordance with Section 8.4)
for each period shall total 6.25% of each eligible Participant's
Pre-Tax Contributions for the Plan Year, provided that no basic
Company Match Cash Contributions (and Forfeiture Account
amounts) shall be made based upon a Participant's Contributions
in excess of 5% of his or
24
<PAGE>
her Pay. The Employer may change the basic 6.25% matching rate
or the 5% of considered Pay to any other percentages, including
0%, generally by notifying eligible Participants in sufficient
time to adjust their Contribution elections prior to the start
of the period for which the new percentages apply.
Notwithstanding the foregoing, with regard to a Participant's
Pre-Tax Contributions attributable to his or her Deferred
Compensation Plan 401(k) Plan Election, the basic Company Match
Cash Contributions thereon shall be in an amount determined in
accordance with the preceding paragraph or, if less, the maximum
amount that together with basic Company Match Stock
Contributions (and in the same proportion that such amounts
would have otherwise been made) shall not cause the Plan to fail
the tests described in Section 12.
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<PAGE>
Supplemental Contribution: The supplemental Company Match Cash
Contributions (including any Forfeiture Account amounts applied
as supplemental Company Match Cash Contributions in accordance
with Section 8.4) for the Plan Year shall be in an amount
determined by the Employer and shall represent 25% of the total
amount determined by the Employer for supplemental Company Match
Cash Contributions and supplemental Company Match Stock
Contributions. The supplemental Company Match Cash
Contributions shall be allocated in proportion to each eligible
Participant's basic Company Match Cash Contributions for the
Plan Year, to the total of all such Contributions for all
eligible Participants.
Notwithstanding the foregoing, if supplemental Company Match
Cash Contributions are made, with regard to a Participant's Pre-
Tax Contributions attributable to his or her Deferred
Compensation Plan 401(k) Plan Election, supplemental Company
Match Cash Contributions shall only be made if the maximum
amount of basic Company Match Cash Contributions and basic
Company Match Stock Contributions were made and shall be in an
amount determined in accordance with the preceding paragraph or,
if less, the maximum amount that together with basic Company
Match Cash, basic Company Match Stock and supplemental Company
Match Stock Contributions (and in the same proportion that such
amounts would have otherwise been made) shall not cause the Plan
to fail the tests described in Section 12.
(c) Timing, Medium and Posting. The Employer shall make each
period's Company Match Cash Contribution in cash as soon as
administratively feasible, and for purposes of deducting such
Contribution, not later than the Employer's federal tax filing
date, including extensions. The Trustee shall post such amount
to
26
<PAGE>
each Participant's Company Match Cash Account once the total
Contribution received has been balanced against the specific
amount to be credited to each Participant's Company Match Cash
Account.
5.2 Company Match Stock Contributions
(a) Frequency and Eligibility.
Basic Contribution: For each Plan Year, the Employer shall make
basic Company Match Stock Contributions, as described in the
following Allocation Method paragraph, on behalf of each
Participant who contributed during the Plan Year and:
(1) was an Eligible Employee on the last day of the Plan Year,
and
(2) was credited with at least 1,000 Hours of Service for the
Plan Year.
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<PAGE>
Supplemental Contribution: For each Plan Year, based on the
Employer's profitability for the Fiscal Year which ends within
the Plan Year, the Employer may make supplemental Company Match
Stock Contributions, as described in the following Allocation
Method paragraph, on behalf of each Participant who was
determined to be eligible to receive basic Company Match Stock
Contributions.
(b) Allocation Method.
Basic Contribution: The basic Company Match Stock Contributions
(including any Forfeiture Account amounts applied as basic
Company Match Stock Contributions in accordance with Section
8.4) for each period shall total 18.75% of each eligible
Participant's Pre-Tax Contributions for the Plan Year, provided
that no basic Company Match Stock Contributions (and Forfeiture
Account amounts) shall be made based upon a Participant's
Contributions in excess of 5% of his or her Pay. The Employer
may change the basic 18.75% matching rate or the 5% of
considered Pay to any other percentages, including 0%, generally
by notifying eligible Participants in sufficient time to adjust
their Contribution elections prior to the start of the period
for which the new percentages apply.
Notwithstanding the foregoing, with regard to a Participant's
Pre-Tax Contributions attributable to his or her Deferred
Compensation Plan 401(k) Plan Election, the basic Company Match
Stock Contributions thereon shall be in an amount determined in
accordance with the preceding paragraph or, if less, the maximum
amount that together with basic Company Match Cash Contributions
(and in the same proportion that such amounts would have
otherwise been made) shall not cause the Plan to fail the tests
described in Section 12.
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<PAGE>
Supplemental Contribution: The supplemental Company Match Stock
Contributions (including any Forfeiture Account amounts applied
as supplemental Company Match Stock Contributions in accordance
with Section 8.4) for the Plan Year shall be in an amount
determined by the Employer and shall represent 75% of the total
amount determined by the Employer for supplemental Company Match
Cash Contributions and supplemental Company Match Stock
Contributions. The supplemental Company Match Stock
Contributions shall be allocated in proportion to each eligible
Participant's basic Company Match Stock Contributions for the
Plan Year, to the total of all such Contributions for all
eligible Participants.
Notwithstanding the foregoing, if supplemental Company Match
Stock Contributions are made, with regard to a Participant's
Pre-Tax Contributions attributable to his or her Deferred
Compensation Plan 401(k) Plan Election, supplemental Company
Match Stock Contributions shall only be made if the maximum
amount of basic Company Match Cash Contributions and basic
Company Match Stock Contributions were made and shall be in an
amount determined in accordance with the preceding paragraph or,
if less, the maximum amount that together with basic Company
Match Cash, basic Company Match Stock and supplemental Company
Match Cash Contributions (and in the same proportion that such
amounts would have otherwise been made) shall not cause the Plan
to fail the tests described in Section 12.
(c) Timing, Medium and Posting. The Employer shall make each
period's Company Match Stock Contribution in cash as soon as
administratively feasible, and for purposes of deducting such
Contribution, not later than the Employer's federal tax filing
date, including extensions. The Trustee shall post such amount
to
29
<PAGE>
each Participant's Company Match Stock Account once the total
Contribution received has been balanced against the specific
amount to be credited to each Participant's Company Match Stock
Account.
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<PAGE>
6 ACCOUNTING
----------
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts for
each Participant in order to reflect transactions both by type of
Contribution and investment medium. Financial transactions shall be
accounted for at the individual Account level by posting each
transaction to the appropriate Account of each affected Participant.
Participant Account values shall be maintained in shares for the
Investment Funds and in dollars for the Sweep and Loan Accounts. At
any point in time, the Account value shall be determined using the
most recent Trade Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep Account
shall be credited with interest up until the date on which it is
removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade Date.
For any transaction to be processed as of a Trade Date, the Trustee
must receive instructions for the transaction by the Sweep Date. Such
instructions shall apply to amounts held in the Account on that Sweep
Date. Financial transactions of the Investment Funds shall be posted
to Participants' Accounts as of the Trade Date, based upon the Trade
Date values provided by the Trustee, and settled on the Settlement
Date.
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<PAGE>
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in shares.
The Trustee is responsible for determining the share values of each
Investment Fund as of each Trade Date. To the extent an Investment
Fund is comprised of collective investment funds of the Trustee, or
any other fiduciary to the Plan, the share values shall be determined
in accordance with the rules governing such collective investment
funds, which are incorporated herein by reference. All other share
values shall be determined by the Trustee. The share value of each
Investment Fund shall be based on the fair market value of its
underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund management and
maintenance, as set forth below, are paid by the Employer directly, or
indirectly, through the Forfeiture Account as directed by the
Administrator, such fees and expenses shall be paid as set forth
below. The Employer may pay a lower portion of the fees and expenses
allocable to the Accounts of Participants who are no longer Employees
or who are not Beneficiaries, unless doing so would result in
discrimination.
(a) Account Maintenance: Account maintenance fees and expenses, may
include but are not limited to, administrative, Trustee,
government annual report preparation, audit, legal,
nondiscrimination testing and fees for any other special
services. Account maintenance fees shall be charged to
Participants on a per Participant basis provided that no fee
shall reduce a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include but are
not limited to, periodic installment
32
<PAGE>
payment, Investment Fund election change and loan fees.
Transaction fees shall be charged to the Participant's Account
involved in the transaction provided that no fee shall reduce a
Participant's Account balance below zero.
(c) Investment Fund Management and Maintenance: Management and
maintenance fees and expenses related to the Investment Funds
shall be charged at the Investment Fund level and reflected in
the net gain or loss of each Fund.
As of the Effective Date, a breakdown of which Plan fees and expenses
shall generally be borne by the Trust (and charged to individual
Participants' Accounts or charged at the Investment Fund level and
reflected in the net gain or loss of each Fund) and those that shall
be paid by the Employer is set forth in Appendix B and may be changed
from time to time by the Administrator, in writing, without the
necessity of amending this Plan and Trust.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from the
Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Loan Account of the
Participant and accounted for in dollars as an earmarked asset of the
borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account
balance with the amount that would be credited to the Account had no
error or omission been made. Funds necessary for any such restoration
shall be provided through
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<PAGE>
payment made by the Employer, or by the Trustee to the extent the
error or omission is attributable to actions or inactions of the
Trustee, or if the restoration involves an Account holding amounts
contributed by an Employer, the Administrator may direct the Trustee
to use amounts from the Forfeiture Account.
6.8 Participant Statements
The Administrator shall provide Participants with statements of their
Accounts as soon after the end of each quarter of the Plan Year as
administratively feasible.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting
methods in performing their respective duties during any Conversion
Period. This includes, but is not limited to, the method for
allocating net investment gains or losses and the extent, if any, to
which contributions received by and distributions paid from the Trust
during this period share in such allocation.
6.10 Accounts for QDRO Beneficiaries
A separate Account shall be established for an alternate payee
entitled to any portion of a Participant's Account under a QDRO as of
the date and in accordance with the directions specified in the QDRO.
In addition, a separate Account may be established during the period
of time the Administrator, a court of competent jurisdiction or other
appropriate person is determining whether a domestic relations order
qualifies as a QDRO. Such a separate Account shall be valued and
accounted for in the same manner as any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an alternate payee
may be distributed, in a form as permissible under Section 11,
to the alternate payee at the time specified in the QDRO,
regardless of whether the Participant is entitled to a
distribution from the Plan at such time.
(b) Participant Loans. Except to the extent required by law, an
alternate payee, on whose behalf a separate Account has been
established, shall not be entitled to borrow from such Account.
If a QDRO specifies that
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<PAGE>
the alternate payee is entitled to any portion of the Account of
a Participant who has an outstanding loan balance, all
outstanding loans shall generally continue to be held in the
Participant's Account and shall not be divided between the
Participant's and alternate payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an alternate payee and has not yet
been distributed, the alternate payee may direct the
investment of such Account in the same manner as if he or
she were a Participant.
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<PAGE>
7 INVESTMENT FUNDS AND ELECTIONS
------------------------------
7.1 Investment Funds
Except for Participants' Sweep and Loan Accounts, the Trust shall be
maintained in various Investment Funds. The Administrator shall
select the Investment Funds offered to Participants and may change the
number or composition of the Investment Funds, subject to the terms
and conditions agreed to with the Trustee. As of the Effective Date,
a list of the Investment Funds offered under the Plan is set forth in
Appendix A, and may be changed from time to time by the Administrator,
in writing, and as agreed to by the Trustee, without the necessity of
amending this Plan and Trust.
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of his or her
Contribution Accounts except for these Accounts:
Company Match Stock Account
which shall be entirely invested in the Investment Fund specified by
the Administrator, which Investment Fund as of the Effective Date is
set forth in Appendix A. However, a Participant may direct the
investment of the balances in his or her Company Match Stock Account.
Future amounts allocated to his or her Company Match Stock Account
shall continue to be entirely invested in the Investment Fund
specified by the Administrator, until otherwise directed by the
Participant.
A Participant shall make his or her investment election in any
combination of one or any number of the Investment Funds offered in
accordance with the procedures established by the Administrator and
Trustee. However, during any Conversion Period, Trust assets may be
held in any investment vehicle permitted by the Plan, as directed by
the Administrator, irrespective of Participant investment elections.
The Administrator may set a maximum percentage of the total election
that a Participant may direct into any specific Investment Fund, which
maximum, if any, as of the Effective Date is set forth in Appendix A,
and may be changed from time to time by the Administrator, in writing,
without the necessity of amending this Plan and Trust.
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<PAGE>
7.3 Responsibility for Investment Choice
Each Participant shall be solely responsible for the selection of his
or her Investment Fund choices. No fiduciary with respect to the Plan
is empowered to advise a Participant as to the manner in which his or
her Accounts are to be invested, and the fact that an Investment Fund
is offered shall not be construed to be a recommendation for
investment.
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<PAGE>
7.4 Default if No Election
The Administrator shall specify an Investment Fund for the investment
of that portion of a Participant's Account which is not yet held in an
Investment Fund and for which no valid investment election is on file.
The Investment Fund specified as of the Effective Date is set forth in
Appendix A, and may be changed from time to time by the Administrator,
in writing, without the necessity of amending this Plan and Trust.
7.5 Timing
A Participant shall make his or her initial investment election upon
becoming a Participant and may change his or her investment election
at any time in accordance with the procedures established by the
Administrator and Trustee. Investment elections received by the
Trustee by the Sweep Date shall be effective on the following Trade
Date.
7.6 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a Participant's
Account for Investment Fund election changes in excess of a specified
number per year as determined by the Administrator.
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<PAGE>
8 VESTING & FORFEITURES
---------------------
8.1 Fully Vested Contribution Accounts
A Participant shall be fully vested in these Accounts at all times:
Pre-Tax Account
Rollover Account
8.2 Full Vesting Upon Certain Events
A Participant's entire Account shall become fully vested once he or
she has attained his or her Normal Retirement Date as an Employee or
upon his or her terminating employment with all Related Companies due
to his or her death.
8.3 Vesting Schedule
In addition to the vesting provided above, a Participant's Company
Match Cash and Company Match Stock Accounts shall become vested in
accordance with the following schedule:
<TABLE>
<CAPTION>
YEARS OF VESTING VESTED
SERVICE PERCENTA GE
- ------------------- ------------
<S> <C>
Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
</TABLE>
If this vesting schedule is changed, the vested percentage for each
Participant shall not be less than his or her vested percentage
determined as of the last day prior to this change, and for any
Participant with at least three Years of Vesting
39
<PAGE>
Service when the schedule is changed, vesting shall be determined
using the more favorable vesting schedule.
8.4 Forfeitures
A Participant's non-vested Account balance shall be forfeited as of
the Settlement Date following the Sweep Date on which the
Administrator has reported to the Trustee that the Participant's
employment has terminated with all Related Companies. Forfeitures from
all Employer Contribution Accounts shall be transferred to and
maintained in a single Forfeiture Account, which shall be invested in
interest bearing deposits of the Trustee. Forfeiture Account amounts
shall be utilized to restore Accounts, to pay Plan fees and expenses
and to reduce Company Match Cash and Company Match Stock Contributions
as directed by the Administrator.
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<PAGE>
8.5 Rehired Employees
(a) Service. If a former Employee is rehired, all Periods of
Employment credited when his or her employment last terminated
shall be counted in determining his or her vested interest.
(b) Account Restoration. If a former Employee is rehired before he
or she has a Break in Service, the amount forfeited when his or
her employment last terminated shall be restored to his or her
Account. The restoration shall include the interest which would
have been credited had such forfeiture been invested in the
Sweep Account from the date forfeited until the date the
restoration amount is restored. The amount shall come from the
Forfeiture Account to the extent possible, and any additional
amount needed shall be contributed by the Employer. The vested
interest in his or her restored Account shall then be equal to:
V% times (AB + D) - D
where:
V% = current vested percentage
AB = current account balance
D = amount previously distributed
41
<PAGE>
9 PARTICIPANT LOANS
-----------------
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the terms and
conditions set forth in this Section.
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with such
advance notice as prescribed by the Administrator. All loans shall be
evidenced by a promissory note, secured only by the portion of the
Participant's Account from which the loan is made, and the Plan shall
have a lien on this portion of his or her Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order use
any portion of his or her Account as security for a loan under the
Plan.
9.4 Loan Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that a loan request conforms to the requirements described
in this Section and granting such request.
9.5 Loan Funding Limits, Account Sources and Funding Order
The loan amount must meet all of the following limits as determined as
of the Sweep Date the loan is processed and shall be funded from the
Participant's Accounts as follows:
(a) Plan Minimum Limit. The minimum amount for any loan is $500.
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<PAGE>
(b) Plan Maximum Limit, Account Sources and Funding Order. Subject to
the legal limit described in (c) below, the maximum a Participant may borrow,
including the outstanding balance of existing Plan loans, is 100% of the
following of the Participant's Accounts which are fully vested in the priority
order as follows:
Pre-Tax Account
Rollover Account
(c) Legal Maximum Limit. The maximum a Participant may borrow,
including the outstanding balance of existing Plan loans, is 50%
of his or her vested Account balance, not to exceed $50,000.
However, the $50,000 maximum is reduced by the Participant's
highest outstanding loan balance during the 12 month period
ending on the day before the Sweep Date as of which the loan is
made. For purposes of this paragraph, the qualified plans of
all Related Companies shall be treated as though they are part
of this Plan to the extent it would decrease the maximum loan
amount.
9.6 Maximum Number of Loans
A Participant may have a maximum of two loans outstanding at any given
time.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from his or her own
Account. The available assets shall be determined first by Account
type and then within each Account used for funding a loan, amounts
shall first be taken from the Sweep Account and then taken by
Investment Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund as of the Trade Date on
which the loan is processed.
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<PAGE>
The loan shall be funded on the Settlement Date following the Trade
Date as of which the loan is processed. The Trustee shall make payment
to the Participant as soon thereafter as administratively feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a fixed
reasonable rate of interest, determined from time to time by the
Administrator, which provides the Plan with a return commensurate with
the prevailing interest rate charged by persons in the business of
lending money for loans which would be made under similar
circumstances. As of the Effective Date, the interest rate is
determined as set forth in Appendix C, and may be changed from time to
time by the Administrator, in writing, without the necessity of
amending this Plan and Trust.
9.9 Loan Payment
Substantially level amortization shall be required of each loan with
payments made at least monthly, generally through payroll deduction.
Loans may be prepaid in full or in part at any time. The Participant
may choose the loan repayment period, not to exceed five years.
9.10 Loan Payment Hierarchy
Loan principal payments shall be credited to the Participant's
Accounts in the inverse of the order used to fund the loan. Loan
interest shall be credited to the Participant's Accounts in direct
proportion to the principal payment. Loan payments are credited to
the Investment Funds based upon the Participant's current investment
election for new Contributions.
9.11 Repayment Suspension
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<PAGE>
The Administrator may agree to a suspension of loan payments for up to
3 months for a Participant who is on a Leave of Absence without pay.
During the suspension period, interest shall continue to accrue on the
outstanding loan balance. At the expiration of the suspension period
all outstanding loan payments and accrued interest thereon shall be
due unless otherwise agreed upon by the Administrator.
9.12 Loan Default
A loan is treated as a default if scheduled loan payments are more
than 90 days late. A Participant shall then have 30 days from the
time he or she receives written notice of the default and a demand for
past due amounts to cure the default before it becomes final.
In the event of default, the Administrator may direct the Trustee to
report the outstanding principal balance of the loan and accrued
interest thereon as a taxable distribution from the Plan to the
Participant. As soon as a Plan withdrawal or distribution to such
Participant would otherwise be permitted, the Administrator may
instruct the Trustee to execute upon its security interest in the
Participant's Account by distributing the note to the Participant.
9.13 Call Feature
The Administrator shall have the right to call any Participant loan
once a Participant's employment with all Related Companies has
terminated or if the Plan is terminated.
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<PAGE>
10 IN-SERVICE WITHDRAWALS
----------------------
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in this
Section and as required by law as set forth in Section 11.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such manner
and with such advance notice as prescribed by the Administrator. The
Participant shall be provided the notice prescribed by Code section
402(f).
If an in-service withdrawal is one to which Code sections 401(a)(11)
and 417 do not apply, such in-service withdrawal may commence less
than 30 days after the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or she has the right
to a period of at least 30 days after receipt of such notice to
consider his or her option to elect or not elect a Direct
Rollover for all or a portion, if any, of his or her in-service
withdrawal which shall constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notice, affirmatively
elects a Direct Rollover for all or a portion, if any, of his or
her in-service withdrawal which shall constitute an Eligible
Rollover Distribution or alternatively elects to have all or a
portion made payable directly to him or her, thereby not
electing a Direct Rollover for all or a portion thereof.
10.3 Spousal Consent
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A Participant is not required to obtain Spousal Consent in order to
receive an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that an in-service withdrawal request conforms to the
requirements described in this Section and granting such request.
10.5 Minimum Amount, Payment Form and Medium
There is no minimum amount for any type of in-service withdrawal.
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The form of payment for an in-service withdrawal shall be a single
lump sum and payment shall be made in cash. With regard to the
portion of an in-service withdrawal representing an Eligible Rollover
Distribution, a Participant may elect a Direct Rollover for all or a
portion of such amount.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made solely from
the assets of his or her own Account and shall be based on the Account
values as of the Trade Date the in-service withdrawal is processed.
The available assets shall be determined first by Account type and
then within each Account used for funding an in-service withdrawal,
amounts shall first be taken from the Sweep Account and then taken by
Investment Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund (which excludes his or
her Loan Account balance) as of the Trade Date on which the in-service
withdrawal is processed.
The in-service withdrawal shall be funded on the Settlement Date
following the Trade Date as of which the in-service withdrawal is
processed. The Trustee shall make payment as soon thereafter as
administratively feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may request the
withdrawal of up to the amount necessary to satisfy a financial
need including amounts necessary to pay any federal, state or
local income taxes or penalties reasonably anticipated to result
from the withdrawal. Only requests for withdrawals (1) on
account of a Participant's "Deemed Financial Need", and (2)
which are "Deemed Necessary" to satisfy the financial need shall
be approved.
(b) "Deemed Financial Need". An immediate and heavy
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financial need relating to:
(1) the payment of unreimbursable medical expenses described
under Code section 213(d) incurred (or to be incurred) by
the Employee, his or her spouse or dependents;
(2) the purchase (excluding mortgage payments) of the
Employee's principal residence;
(3) the payment of unreimbursable
tuition, related educational fees and
room and board for up to the next 12
months of post-secondary education
for the Employee, his or her spouse
or dependents;
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(4) the payment of funeral expenses of an Employee's family
member;
(5) the payment of amounts necessary for the Employee to
prevent losing his or her principal residence through
eviction or foreclosure on the mortgage; or
(6) any other circumstance specifically permitted under Code
section 401(k)(2)(B)(i)(IV).
(c) "Deemed Necessary". A withdrawal is "deemed necessary" to
satisfy the financial need only if the withdrawal amount does
not exceed the financial need and all of these conditions are
met:
(1) the Employee has obtained all possible withdrawals (other
than hardship withdrawals) and nontaxable loans available
from this Plan and all other plans maintained by Related
Companies;
(2) the Administrator shall suspend the Employee from making
any contributions to this Plan and all other qualified and
nonqualified plans of deferred compensation and all stock
option or stock purchase plans maintained by Related
Companies for 12 months from the date the withdrawal
payment is made; and
(3) the Administrator shall reduce the Contribution Dollar
Limit for the Employee with regard to this Plan and all
other plans maintained by Related Companies for the
calendar year next following the calendar year of the
withdrawal by the amount of the Employee's Pre-Tax
Contributions for the calendar year of the withdrawal.
(d) Account Sources and Funding Order. The withdrawal
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amount shall come from the following of the Participant's fully
vested Accounts, in the priority order as follows:
Rollover Account
----------------
Pre-Tax Account
The amount that may be withdrawn from a Participant's Pre-Tax
Account shall not include any earnings credited to his or her
Pre-Tax Account.
(e) Permitted Frequency. There is no restriction on the number of
Hardship withdrawals permitted to a Participant.
(f) Suspension from Further Contributions. Upon making a Hardship
withdrawal, a Participant may not make additional Pre-Tax
Contributions (or additional contributions to all other
qualified and nonqualified plans of deferred compensation and
all stock option or stock purchase plans maintained by Related
Companies) for a period of 12 months from the date the
withdrawal payment is made.
10.8 Rollover Account Withdrawals
(a) Requirements. A Participant who is an Employee may withdraw
from the Accounts listed in paragraph (b) below.
(b) Account Sources and Funding Order. The withdrawal amount shall
come from a Participant's Rollover Account.
(c) Permitted Frequency. The maximum number of Rollover Account
withdrawals permitted to a Participant in any 12-month period is
one.
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(d) Suspension from Further Contributions. A Rollover Account
withdrawal shall not affect a Participant's ability to make or
be eligible to receive further Contributions.
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11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
---------------------------------------------------------
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or her
death, shall be provided with information regarding all optional times
and forms of distribution available, to include the notices prescribed
by Code section 402(f) and Code section 411(a)(11). Subject to the
other requirements of this Section, a Participant, or his or her
Beneficiary in the case of his or her death, may elect, in such manner
and with such advance notice as prescribed by the Administrator, to
have his or her vested Account balance paid to him or her beginning
upon any Settlement Date following the Participant's termination of
employment with all Related Companies or, if earlier, at the time
required by law as set forth in Section 11.7.
If a distribution is one to which Code sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the
aforementioned notices are provided, if:
(a) the Participant is clearly informed that he or she has the right
to a period of at least 30 days after receipt of such notices to
consider the decision as to whether to elect a distribution and
if so to elect a particular form of distribution and to elect or
not elect a Direct Rollover for all or a portion, if any, of his
or her distribution which shall constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notices, affirmatively
elects a distribution and a Direct Rollover for all or a
portion, if any, of his or her distribution which shall
constitute an Eligible Rollover Distribution or alternatively
elects to have all or a portion made payable directly to him or
her, thereby not electing a Direct Rollover for all or a portion
thereof.
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11.2 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
receive a distribution under the Plan.
11.3 Payment Form and Medium
Distributions shall be paid in the form of a single lump sum.
Notwithstanding, a Participant who is an Employee at the time he or
she is required by law to commence distribution, or anytime
thereafter, may instead elect to be paid annually in a lump sum an
amount sufficient to comply with Code section 401(a)(9).
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Distributions shall be made in cash (except to the extent a
distribution consists of a loan call as described in Section 9) or a
Participant may elect that a lump sum payment be made in the form of
whole shares of Company Stock and cash in lieu of fractional shares to
the extent invested in the Company Stock Fund. With regard to the
portion of a distribution representing an Eligible Rollover
Distribution, a Distributee may elect a Direct Rollover for all or a
portion of such amount.
11.4 Distribution of Small Amounts
If after a Participant's employment with all Related Companies ends,
the Participant's vested Account balance is $3,500 or less, and if at
the time of any prior in-service withdrawal or distribution the
Participant's vested Account balance did not exceed $3,500, the
Participant's benefit shall be paid as a single lump sum as soon as
administratively feasible in accordance with procedures prescribed by
the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from his or her
own Account and shall be based on the Account values as of the Trade
Date the distribution is processed. The available assets shall be
determined first by Account type and then within each Account used for
funding a distribution, amounts shall first be taken from the Sweep
Account and then taken by Investment Fund in direct proportion to the
market value of the Participant's interest in each Investment Fund as
of the Trade Date on which the distribution is processed.
The distribution shall be funded on the Settlement Date following the
Trade Date as of which the distribution is processed. The Trustee
shall make payment as soon thereafter as administratively feasible.
11.6 Deemed Distribution
For purposes of Section 8.4, if at the time a Participant's employment
with all Related Companies has terminated, the Participant's vested
Account balance attributable to Accounts subject to vesting as
described in Section 8, is zero, his or her vested Account balance
shall be deemed distributed as of the Settlement Date following the
Sweep Date on which the
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Administrator has reported to the Trustee that the Participant's
employment with all Related Companies has terminated.
11.7 Latest Commencement Permitted
In addition to any other Plan requirements and unless a Participant
elects otherwise, his or her benefit payments shall begin not later
than 60 days after the end of the Plan Year in which he or she attains
his or her Normal Retirement Date or retires, whichever is later.
However, if the amount of the payment or the location of the
Participant (after a reasonable search) cannot be ascertained by that
deadline, payment shall be made no later than 60 days after the
earliest date on which such amount or location is ascertained but in
no event later than as described below. A Participant's failure to
elect in such manner as prescribed by the Administrator to have his or
her vested Account balance paid to him or her, shall be deemed an
election by the Participant to defer his or her distribution.
Benefit payments shall begin by the April 1 immediately following the
end of the calendar year in which the Participant attains age 70 1/2,
whether or not he or she is an Employee.
If benefit payments cannot begin at the time required because the
location of the Participant cannot be ascertained (after a reasonable
search), the Administrator may, at any time thereafter, treat such
person's Account as forfeited subject to the provisions of Section
18.5.
11.8 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to be
completed within a period not to exceed the lives or the joint and
last survivor life expectancy of the Participant and his or her
Beneficiary. The life expectancies of a Participant and his or her
Beneficiary may not be recomputed
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annually.
11.9 Incidental Benefit Rule
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or her sole
primary Beneficiary, the minimum annual distribution for each calendar
year, beginning with the year in which he or she attains age 70 1/2,
shall not be less than the quotient obtained by dividing (a) the
Participant's vested Account balance as of the last Trade Date of the
preceding year by (b) the applicable divisor as determined under the
incidental benefit requirements of Code section 401(a)(9).
11.10 Payment to Beneficiary
Payment to a Beneficiary must be completed by the end of the calendar
year that contains the fifth anniversary of the Participant's death,
except that:
(a) If the Participant dies after the April 1
immediately following the end of the calendar
year in which he or she attains age 70 1/2,
payment to his or her Beneficiary must be made
at least as rapidly as provided in the
Participant's distribution election;
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(b) If the surviving spouse is the Beneficiary, payments need not
begin until the end of the calendar year in which the
Participant would have attained age 70 1/2 and must be completed
within the spouse's life or life expectancy; and
(c) If the Participant and the surviving spouse who is the
Beneficiary die (1) before the April 1 immediately following the
end of the calendar year in which the Participant would have
attained age 70 1/2 and (2) before payments have begun to the
spouse, the spouse shall be treated as the Participant in
applying these rules.
11.11 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's Account
at the time of his or her death. The designation may be changed at
any time. However, a Participant's spouse shall be the sole primary
Beneficiary unless the designation includes Spousal Consent for
another Beneficiary. If no proper designation is in effect at the
time of a Participant's death or if the Beneficiary does not survive
the Participant, the Beneficiary shall be, in the order listed, the:
(a) Participant's surviving spouse, or
(b) Participant's estate.
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12 ADP AND ACP TESTS
-----------------
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12 (where a
definition is contained in both Sections 1 and 12, for purposes of
Section 12 the Section 12 definition shall be controlling):
(a) "ACP" or "Average Contribution Percentage". The Average
Percentage calculated using Contributions allocated to
Participants as of a date within the Plan Year.
(b) "ACP Test". The determination of whether the ACP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(c) "ADP" or "Average Deferral Percentage". The Average Percentage
calculated using Deferrals allocated to Participants as of a
date within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(e) "Average Percentage". The average of the calculated percentages
for Participants within the specified group. The calculated
percentage refers to either the "Deferrals" or "Contributions"
(as defined in this Section) made on each Participant's behalf
for the Plan Year, divided by his or her Compensation for the
portion of the Plan Year in which he or she was an Eligible
Employee while a Participant. (Pre-Tax Contributions to this
Plan or comparable contributions to plans of Related Companies
which shall be refunded solely because they exceed the
Contribution Dollar Limit are included in the percentage for the
HCE Group but not
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for the NHCE Group.)
(f) "Contributions" shall include Company Match Cash and Company
Match Stock Contributions. In addition, Contributions may
include Pre-Tax Contributions, but only to the extent that (1)
the Employer elects to use them, (2) they are not used or
counted in the ADP Test and (3) they otherwise satisfy the
requirements as prescribed under Code section 401(m) permitting
treatment as Contributions for purposes of the ACP Test.
(g) "Deferrals" shall include Pre-Tax Contributions.
(h) "Family Member". An Employee who is, at any time during the
Plan Year or Lookback Year, a spouse, lineal ascendant or
descendant, or spouse of a lineal ascendant or descendant of (1)
an active or former Employee who at any time during the Plan
Year or Lookback Year is a more than 5% Owner (within the
meaning of Code section 414(q)(3)), or (2) an HCE who is among
the 10 Employees with the highest Compensation for such Year.
(i) "HCE" or "Highly Compensated Employee". With respect to each
Employer and its Related Companies, an Employee during the Plan
Year or Lookback Year who (in accordance with Code section
414(q)):
(1) Was a more than 5% Owner at any time during the Lookback
Year or Plan Year;
(2) Received Compensation during the Lookback Year (or in the
Plan Year if among the 100 Employees with the highest
Compensation for such Year) in excess of (i) $75,000 (as
adjusted for such Year pursuant to Code sections 414(q)(1)
and 415(d)), or (ii) $50,000 (as adjusted for such Year
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pursuant to Code sections 414(q)(1) and 415(d)) in the case
of a member of the "top-paid group" (within the meaning of
Code section 414(q)(4)) for such Year), provided, however,
that if the conditions of Code section 414(q)(12)(B)(ii)
are met, the Company may elect for any Plan Year to apply
clause (i) by substituting $50,000 for $75,000 and not to
apply clause (ii);
(3) Was an officer of a Related Company and received
Compensation during the Lookback Year (or in the Plan Year
if among the 100 Employees with the highest Compensation
for such Year) that is greater than 50% of the dollar
limitation in effect under Code section 415(b)(1)(A) and
(d) for such Year (or if no officer has Compensation in
excess of the threshold, the officer with the highest
Compensation), provided that the number of officers shall
be limited to 50 Employees (or, if less, the greater of
three Employees or 10% of the Employees); or
(4) Was a Family Member at any time during the Lookback Year or
Plan Year, in which case the Deferrals, Contributions and
Compensation of the HCE and his or her Family Members shall
be aggregated and they shall be treated as a single HCE.
A former Employee shall be treated as an HCE if (1) such former
Employee was an HCE when he separated from service, or (2) such
former Employee was an HCE in service at any time after
attaining age 55.
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The determination of who is an HCE, 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 made in accordance with Code section 414(q).
(j) "HCE Group" and "NHCE Group". With respect to each Employer and
its Related Companies, the respective group of HCEs and NHCEs
who are eligible to have amounts contributed on their behalf for
the Plan Year, including Employees who would be eligible but for
their election not to participate or to contribute, or because
their Pay is greater than zero but does not exceed a stated
minimum.
(1) If the Related Companies maintain two or more plans which
are subject to the ADP or ACP Test and are considered as
one plan for purposes of Code sections 401(a)(4) or 410(b),
all such plans shall be aggregated and treated as one plan
for purposes of meeting the ADP and ACP Tests, provided
that the plans may only be aggregated if they have the same
Plan Year.
(2) If an HCE, who is one of the top 10 paid Employees or a
more than 5% Owner, has any Family Members, the Deferrals,
Contributions and Compensation of such HCE and his or her
Family Members shall be combined and treated as a single
HCE. Such amounts for all other Family Members shall be
removed from the NHCE Group percentage calculation and be
combined with the HCE's.
(3) If an HCE is covered by more than one cash or deferred
arrangement, or more than one arrangement permitting
employee or matching contributions, maintained by the
Related
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Companies, all such plans shall be aggregated and treated
as one plan (other than those plans that may not be
permissively aggregated) for purposes of calculating the
separate percentage for the HCE which is used in the
determination of the Average Percentage.
(k) "Lookback Year". Pursuant to Code section 414(q), the Company
elects as the Lookback Year the 12 months ending immediately
prior to the start of the Plan Year.
(l) "Multiple Use Test". The test described in Section 12.4 which a
Plan must meet where the Alternative Limitation (described in
Section 12.2(b)) is used to meet both the ADP and ACP Tests.
(m) "NHCE" or "Non-Highly Compensated Employee". An Employee who is
not an HCE.
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12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group must meet either
the Basic or Alternative Limitation when compared to the respective
ADP and ACP for the NHCE Group, defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage may not
exceed 1.25 times the NHCE Group Average Percentage.
(b) Alternative Limitation. The HCE Group Average Percentage is
limited by reference to the NHCE Group Average Percentage as
follows:
IF THE NHCE GROUP THEN THE MAXIMUM HCE
AVERAGE GROUP AVERAGE
PERCENTAGE IS: PERCENTAGE IS
----------------- ------------------------
Less than 2% 2 times NHCE Group
2% to 8% Average %
More than 8% NHCE Group Average %
plus 2%
NA - Basic Limitation
applies
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a maximum
percentage to be used in place of the calculated percentage for all
HCEs that would reduce the ADP and/or ACP for the HCE group by a
sufficient amount to meet the ADP and ACP Tests. ADP and/or ACP
corrections shall be made in accordance with the leveling method as
described below.
(a) ADP Correction. The HCE with the highest Deferral
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percentage shall have his or her Deferral percentage reduced to
the lesser of the extent required to meet the ADP Test or to
cause his or her Deferral percentage to equal that of the HCE
with the next highest Deferral percentage. The process shall be
repeated until the ADP Test is met.
To the extent an HCE's Deferrals were determined to be reduced
as described in the paragraph above, Pre-Tax Contributions
shall, by the end of the next Plan Year, be refunded to the HCE
in an amount equal to the actual Deferrals minus the product of
the maximum percentage and the HCE's Compensation, except that
such amount to be refunded shall be reduced by Pre-Tax
Contributions previously refunded because they exceeded the
Contribution Dollar Limit. The excess amounts shall first be
taken from unmatched Pre-Tax Contributions and then from matched
Pre-Tax Contributions. Any Company Match Cash and Company Match
Stock Contributions attributable to refunded excess Pre-Tax
Contributions as described in this Section shall be forfeited
and used as described in Section 8.4.
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(b) ACP Correction. The HCE with the highest Contribution
percentage shall have his or her Contribution percentage reduced
to the lesser of the extent required to meet the ACP Test or to
cause his or her Contribution percentage to equal that of the
HCE with the next highest Contribution percentage. The process
shall be repeated until the ACP Test is met.
To the extent an HCE's Contributions were determined to be
reduced as described in the paragraph above, Company Match Cash
and Company Match Stock Contributions shall, by the end of the
next Plan Year, be refunded to the HCE to the extent vested, and
forfeited and used as described in Section 8.4 to the extent
such amounts were not vested, as of the end of the Plan Year
being tested, in an amount equal to the actual Contributions
minus the product of the maximum percentage and the HCE's
Compensation. The excess amounts shall be taken as a
proportional combination of Company Match Cash and Company Match
Stock Contributions.
(c) Investment Fund Sources. Once the amount of excess Deferrals
and/or Contributions is determined and with regard to excess
Contributions, allocated by type of Contribution, amounts shall
first be taken from the Sweep Account and then taken by
Investment Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund (which excludes
his or her Loan Account balance) as of the Trade Date on which
the correction is processed.
(d) Family Member Correction. To the extent any reduction is
necessary with respect to an HCE and his or her Family Members
that have been combined and treated for testing purposes as a
single Employee, the excess Deferrals and Contributions from the
ADP and/or ACP Test shall be prorated among each such
Participant in
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direct proportion to his or her Deferrals or Contributions
included in each Test.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is used to
meet both the ADP and ACP Tests, the ADP and ACP for the HCE Group
must also comply with the requirements of Code section 401(m)(9). Such
Code section requires that the sum of the ADP and ACP for the HCE
Group (as determined after any corrections needed to meet the ADP and
ACP Tests have been made) not exceed the sum (which produces the most
favorable result) of:
(a) the Basic Limitation (defined in Section 12.2) applied to either
the ADP or ACP for the NHCE Group, and
(b) the Alternative Limitation applied to the other NHCE Group
percentage.
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12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the calculated
percentage for all HCEs that would reduce either or both the ADP or
ACP for the HCE Group by a sufficient amount to meet the multiple use
limit. Any excess shall be handled in the same manner that the
distribution of excess Deferrals or Contributions are handled.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a Participant
or forfeited in accordance with Section 12.3 or 12.5 shall be adjusted
for investment gain or loss. Refunds or forfeitures shall not include
investment gain or loss for the period between the end of the
applicable Plan Year and the date of distribution.
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the Plan
meets the ADP Test, the ACP Test and the Multiple Use Test, and that
the Contribution Dollar Limit is not exceeded. In carrying out its
responsibilities, the Administrator shall have sole discretion to
limit or reduce Deferrals or Contributions at any time. The
Administrator shall maintain records which are sufficient to
demonstrate that the ADP Test, the ACP Test and the Multiple Use Test,
have been met for each Plan Year for at least as long as the
Employer's corresponding tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs, and the
performance of the ADP Test, the ACP Test and Multiple Use Test,
and any corrective action resulting therefrom, shall be made
separately with
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regard to the Employees of each Employer (and its Related
Companies) that is not a Related Company with the other
Employer(s).
(b) Collective Bargaining Units: The performance of the ADP Test,
and if applicable, the ACP Test and Multiple Use Test, and any
corrective action resulting therefrom, shall be applied
separately to Employees who are eligible to participate in the
Plan as a result of a collective bargaining agreement.
In addition, separate testing may be applied, at the discretion of the
Administrator and to the extent permitted under Treasury regulations,
to any group of Employees for whom separate testing is permissible.
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13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
--------------------------------------------
13.1 "Annual Addition" Defined
The sum of all amounts allocated to the Participant's Account for a
Plan Year. Amounts include contributions (except for rollovers or
transfers from another qualified plan), forfeitures and, if the
Participant is a Key Employee (pursuant to Section 14) for the
applicable or any prior Plan Year, medical benefits provided pursuant
to Code section 419A(d)(1). For purposes of this Section 13.1,
"Account" also includes a Participant's account in all other defined
contribution plans currently or previously maintained by any Related
Company. The Plan Year refers to the year to which the allocation
pertains, regardless of when it was allocated. The Plan Year shall be
the Code section 415 limitation year.
13.2 Maximum Annual Addition
The Annual Addition to a Participant's accounts under this Plan and
any other defined contribution plan maintained by any Related Company
for any Plan Year shall not exceed the lesser of (1) 25% of his or her
Taxable Income or (2) $30,000 (as adjusted for the cost of living
pursuant to Code section 415(d)).
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any additional
Contributions would produce an excess Annual Addition for such year,
Contributions to be made for the remainder of the Plan Year shall be
limited to the amount needed for each affected Participant to receive
the maximum Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a
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Participant's Account (resulting from forfeitures, allocations,
reasonable error in determining Participant compensation or the amount
of elective contributions, or other facts and circumstances acceptable
to the Internal Revenue Service) the excess amount (adjusted to reflect
investment gains) shall first be returned to the Participant to the
extent of his or her unmatched Pre-Tax Contributions and then to the
extent of his or her matched Pre-Tax Contributions (however to the
extent Pre-Tax Contributions were matched, the applicable Company Match
Cash and Company Match Stock Contributions shall be forfeited in
proportion to the returned matched Pre-Tax Contributions) and the
remaining excess, if any, shall be forfeited by the Participant and used
as described in Section 8.4.
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13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined contribution
plan, the excess shall be corrected by reducing the Annual Addition to
this Plan only after all possible reductions have been made to the
other defined contribution plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the "projected
annual benefit" and the denominator is the greater of 125% of the
"protected current accrued benefit" or the normal limit which is the
lesser of (1) 125% of the maximum dollar limitation provided under
Code section 415(b)(1)(A) for the Plan Year or (2) 140% of the amount
which may be taken into account under Code section 415(b)(1)(B) for
the Plan Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit provided by the
Plan determined pursuant to Code section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined benefit plan in
existence (1) on July 1, 1982, shall be the accrued annual
benefit provided for under Public Law 97-248, section 235(g)(4),
as amended, or (2) on May 6, 1986, shall be the accrued annual
benefit provided for under Public Law 99-514, section
1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the Participant's
Annual Addition for each Plan Year to date and the denominator is the
sum of the "annual amounts" for each year in which the Participant has
performed service with a Related Company. The "annual amount" for any
Plan Year is the lesser of (1) 125% of the Code section 415(c)(1)(A)
dollar limitation (determined without regard to subsection (c)(6)) in
effect for the Plan Year and (2) 140% of the Code section 415(c)(1)(B)
amount in effect for the Plan Year, where:
(a) each Annual Addition is determined pursuant to the Code section
415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-248, section
235(g)(3), as amended, or Public Law 99-
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514, section 1106(i)(4).
13.8 Combined Plan Limits and Correction
If a Participant has also participated in a defined benefit plan
maintained by a Related Company, the sum of the Defined Benefit
Fraction and the Defined Contribution Fraction for any Plan Year may
not exceed 1.0. If the combined fraction exceeds 1.0 for any Plan
Year, the Participant's benefit under any defined benefit plan (to the
extent it has not been distributed or used to purchase an annuity
contract) shall be limited so that the combined fraction does not
exceed 1.0 before any defined contribution limits shall be enforced.
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14 TOP HEAVY RULES
---------------
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the following
meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each qualified
plan of an Employer (and its Related Companies) (1) in which a
Key Employee is a participant or was a participant during the
determination period (regardless of whether such plan has
terminated), or (2) which enables another plan in the group to
meet the requirements of Code sections 401(a)(4) or 410(b). The
Employer may also treat any other qualified plan as part of the
group if the group would continue to meet the requirements of
Code sections 401(a)(4) and 410(b) with such plan being taken
into account.
(b) "Determination Date". The last Trade Date of the preceding Plan
Year or, in the case of the Plan's first year, the last Trade
Date of the first Plan Year.
(c) "Key Employee". A current or former Employee (or his or her
Beneficiary) who at any time during the five year period ending
on the Determination Date was:
(1) an officer of a Related Company whose Compensation (i)
exceeds 50% of the amount in effect under Code section
415(b)(1)(A) and (ii) places him within the following
highest paid group of officers:
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NUMBER OF NUMBER OF
EMPLOYEES HIGHEST PAID
NOT EXCLUDED UNDER OFFICERS INCLUDED
CODE ------------------
SECTION 414(Q)(8)
- --------------------
Less than 30 3
30 to 500 10% of the number
of
Employees not
excluded
More than 500 under Code section
414(q)(8)
50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose
Compensation exceeds $150,000, or
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(4) a more than 0.5% Owner who is among the 10 Employees owning
the largest interest in a Related Company and whose
Compensation exceeds the amount in effect under Code
section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date of (1) an
Employee's Account, (2) the present value of his or her other
accrued benefits provided by all qualified plans within the
Aggregation Group, and (3) the aggregate distributions made
within the five year period ending on such date. Plan Benefits
shall exclude Rollover Contributions and plan to plan transfers
made after December 31, 1983 which are both employee initiated
and from a plan maintained by a non-related employer.
(e) "Top Heavy". The Plan's status when the Plan Benefits of Key
Employees account for more than 60% of the Plan Benefits of all
Employees who have performed services at any time during the
five year period ending on the Determination Date. The Plan
Benefits of Employees who were, but are no longer, Key Employees
(because they have not been an officer or Owner during the five
year period), are excluded in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year in which
the Plan is Top Heavy, the Employer shall not allow any
contributions (other than a Rollover Contribution from a plan
maintained by a non-related employer) to be made by or on behalf
of any Key Employee unless the Employer makes a contribution
(other than contributions made by an Employer in accordance with
a Participant's salary deferral election or contributions made
by an Employer based upon the amount contributed by a
Participant) on behalf of all
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Participants who were Eligible Employees as of the last day of
the Plan Year in an amount equal to at least 3% of each such
Participant's Taxable Income. The Administrator shall remove
any such contributions (including applicable investment gain or
loss) credited to a Key Employee's Account in violation of the
foregoing rule and return them to the Employer or Employee to
the extent permitted by the Limited Return of Contributions
paragraph of Section 18.
(b) Overriding Minimum Benefit. Notwithstanding, contributions
shall be permitted on behalf of Key Employees if the Employer
also maintains a defined benefit plan which automatically
provides a benefit which satisfies the Code section 416(c)(1)
minimum benefit requirements, including the adjustment provided
in Code section 416(h)(2)(A), if applicable. If this Plan is
part of an aggregation group in which a Key Employee is
receiving a benefit and no minimum is provided in any other
plan, a minimum contribution of at least 3% of Taxable Income
shall be provided to the Participants specified in the preceding
paragraph. In addition, the Employer may offset a defined
benefit minimum by contributions (other than contributions made
by an Employer in accordance with a Participant's salary
deferral election or contributions made by an Employer based
upon the amount contributed by a Participant) made to this Plan.
14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall be
substituted for 125% in determining the Defined Benefit Fraction and
the Defined Contribution Fraction.
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15 PLAN ADMINISTRATION
-------------------
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator, the Committee
and/or the Trustee, as applicable, whose specific duties are
delineated in this Plan and Trust. In addition, Plan fiduciaries also
include any other person to whom fiduciary duties or responsibility is
delegated with respect to the Plan. Any person or group may serve in
more than one fiduciary capacity with respect to the Plan. To the
extent permitted under ERISA section 405, no fiduciary shall be liable
for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with this Plan and
Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that a
prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying reasonable
expenses of administering the Plan; and
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so as
to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so.
15.3 Company is ERISA Plan Administrator
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The Company is the plan administrator, within the meaning of ERISA
section 3(16), which is responsible for compliance with all reporting
and disclosure requirements, except those that are explicitly the
responsibility of the Trustee under applicable law. The Administrator
and/or Committee shall have any necessary authority to carry out such
functions through the actions of the Administrator, duly appointed
officers of the Company, and/or the Committee.
15.4 Administrator Duties
The Administrator shall have the discretionary authority to construe
this Plan and Trust, other than the provisions which relate to the
Trustee, and to do all things necessary or convenient to effect the
intent and purposes thereof, whether or not such powers are
specifically set forth in this Plan and Trust. Actions taken in good
faith by the Administrator shall be conclusive and binding on all
interested parties, and shall be given the maximum possible deference
allowed by law. In addition to the duties listed elsewhere in this
Plan and Trust, the Administrator's authority shall include, but not
be limited to, the discretionary authority to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of
Contributions, and the eligibility for loans, in-service
withdrawals and distributions;
(b) provide each Participant with a summary plan description no
later than 90 days after he or she has become a Participant (or
such other period permitted under ERISA section 104(b)(1)), as
well as informing each Participant of any material modification
to the Plan in a timely manner;
(c) make a copy of the following documents available to Participants
during normal work hours: this Plan and Trust (including
subsequent amendments), all annual
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and interim reports of the Trustee related to the entire Plan,
the latest annual report and the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's
Account based upon such proof and evidence as it deems
necessary;
(e) establish and review at least annually a funding policy bearing
in mind both the short-run and long-run needs and goals of the
Plan and to the extent Participants may direct their own
investments, the funding policy shall focus on which Investment
Funds are available for Participants to use; and
(f) adjudicate claims pursuant to the claims procedure described in
Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers,
investment counsel and administrative assistants) as it considers
necessary to assist it in the performance of its duties. The
Administrator shall also comply with the bonding requirements of ERISA
section 412.
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, has appointed a Committee,
the "CompSavings Plan Committee", to administer the Plan on its
behalf. The Company shall provide the Trustee with the names and
specimen signatures of any persons authorized to serve as Committee
members and act as or on its behalf. Any Committee member appointed
by the Company shall serve at the pleasure of the Company, but may
resign by written notice to the Company. Any
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Committee member who is an Employee shall be deemed to resign as a
Committee member upon his or her termination of employment with all
Related Companies, unless expressly provided to the contrary by
written notice delivered to the Committee by such Committee member.
Committee members shall serve without compensation from the Plan for
such services. Except to the extent that the Company otherwise
provides, any delegation of duties to a Committee shall carry with it
the full discretionary authority of the Administrator to complete such
duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the Company to the
Committee may be done by a majority of its members. The
majority may be expressed by a vote at a meeting or in writing
without a meeting, and a majority action shall be equivalent to
an action of all Committee members.
(b) Meetings. The Committee shall hold meetings upon such notice,
place and times as it determines necessary to conduct its
functions properly.
(c) Reliance by Trustee. The Committee may authorize one or more of
its members to execute documents on its behalf and may authorize
one or more of its members or other individuals who are not
members to give written direction to the Trustee in the
performance of its duties. The Committee shall provide such
authorization in writing to the Trustee with the name and
specimen signatures of any person authorized to act on its
behalf. The Trustee shall accept such direction and rely upon
it until notified in writing that the Committee has revoked the
authorization to give such direction. The Trustee shall not be
deemed to be on notice of any change in the membership of the
Committee, parties authorized to direct the Trustee in the
performance of its duties, or
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the duties delegated to and by the Committee until notified in
writing.
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16 MANAGEMENT OF INVESTMENTS
-------------------------
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in accordance
with those provisions of this Plan and Trust which relate to the
Trustee, for use in providing Plan benefits and paying Plan fees and
expenses not paid directly by the Employer. Plan benefits shall be
drawn solely from the Trust and paid by the Trustee as directed by the
Administrator. Notwithstanding, the Administrator may appoint, with
the approval of the Trustee, another trustee to hold and administer
Plan assets which do not meet the requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the Trustee to
invest Trust assets in one or more Investment Funds. The number and
composition of Investment Funds may be changed from time to time,
without the necessity of amending this Plan and Trust. The Trustee
may establish reasonable limits on the number of Investment Funds as
well as the acceptable assets for any such Investment Fund. Each of
the Investment Funds may be comprised of any of the following:
(a) shares of a registered investment company, whether or not the
Trustee or any of its affiliates is an advisor to, or other
service provider to, such company;
(b) collective investment funds maintained by the Trustee, or any
other fiduciary to the Plan, which are available for investment
by trusts which are qualified under Code sections 401(a) and
501(a);
(c) individual equity and fixed income securities which are readily
tradeable on the open market;
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(d) guaranteed investment contracts issued by a bank or insurance
company;
(e) interest bearing deposits of the Trustee; and
(f) Company Stock.
Any Investment Fund assets invested in a collective investment fund,
shall be subject to all the provisions of the instruments establishing
and governing such fund. These instruments, including any subsequent
amendments, are incorporated herein by reference.
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16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment manager
of each Investment Fund to maintain sufficient deposit or money market
type assets in each Investment Fund to handle the Fund's liquidity and
disbursement needs. Each Participant's and Beneficiary's Sweep
Account, which is used to hold assets pending investment or
disbursement, shall consist of interest bearing deposits of the
Trustee.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions are
received from the Administrator, Participants, or Beneficiaries. Such
instructions shall remain in effect until changed by the
Administrator, Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company Shares
The Administrator shall be entitled to vote proxies or exercise any
shareholder rights relating to shares held on behalf of the Plan in a
registered investment company. Notwithstanding, the authority to vote
proxies and exercise shareholder rights related to such shares held in
a Custom Fund is vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee, an
investment manager for any Investment Fund established by the Trustee
solely for Participants of this Plan (a "Custom Fund"). The
investment manager may be the Administrator, Trustee or an investment
manager pursuant to ERISA section 3(38). The Administrator shall
advise the Trustee in writing of the appointment of an investment
manager and shall cause the investment manager to
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acknowledge to the Trustee in writing that the investment manager is a
fiduciary to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee,
shall be established for a Custom Fund. If a Custom Fund
consists solely of collective investment funds or shares of a
registered investment company (and sufficient deposit or money
market type assets to handle the Fund's liquidity and
disbursement needs), its underlying instruments shall constitute
the guidelines.
(b) Authority of Investment Manager. The investment manager of a
Custom Fund shall have the authority to vote or execute proxies,
exercise shareholder rights, manage, acquire, and dispose of
Trust assets. Notwithstanding the foregoing, the authority to
vote proxies and exercise shareholder rights related to shares
of Company Stock held in a Custom Fund is vested as provided
otherwise in Section 16.
(c) Custody and Trade Settlement. Unless otherwise agreed to by the
Trustee, the Trustee shall maintain custody of all Custom Fund
assets and be responsible for the settlement of all Custom Fund
trades. For purposes of this section, shares of a collective
investment fund, shares of a registered investment company and
guaranteed investment contracts issued by a bank or insurance
company shall be regarded as the Custom Fund assets instead of
the underlying assets of such instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the Administrator
nor the Trustee shall be obligated to invest or otherwise manage
any Custom Fund assets for which the Trustee or Administrator is
not the investment manager nor shall the Administrator or
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Trustee be liable for acts or omissions with regard to the
investment of such assets except to the extent required by
ERISA.
16.7 Authority to Segregate Assets
The Company may direct the Trustee to split an Investment Fund into
two or more funds in the event any assets in the Fund are illiquid or
the value is not readily determinable. In the event of such
segregation, the Company shall give instructions to the Trustee on
what value to use for the split-off assets, and the Trustee shall not
be responsible for confirming such value.
16.8 Maximum Permitted Investment in Company Stock
If the Company provides for a Company Stock Fund the Fund shall be
comprised of Company Stock and sufficient deposit or money market type
assets to handle the Fund's liquidity and disbursement needs. The Fund
may be as large as necessary to comply with Participants' and
Beneficiaries' investment elections as well the total investment of
Participants' and Beneficiaries' Company Match Stock Accounts, to the
extent such Accounts are not otherwise invested in accordance in with
Section 7.
16.9 Participants Have Right to Vote and Tender Company Stock
Each Participant or Beneficiary shall be entitled to instruct the
Trustee as to the voting or tendering of any full or partial shares of
Company Stock held on his or her behalf in the Company Stock Fund.
Prior to such voting or tendering of Company Stock, each Participant
or Beneficiary shall receive a copy of the proxy solicitation or other
material relating to such vote or tender decision and a form for the
Participant or Beneficiary to complete which confidentially instructs
the Trustee to vote or tender such shares in the manner indicated by
the Participant or Beneficiary. Upon receipt of such
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instructions, the Trustee shall act with respect to such shares as
instructed. The Administrator shall instruct the Trustee with respect
to how to vote or tender any shares for which instructions are not
received from Participants or Beneficiaries.
16.10 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining the
applicability (and, if applicable, complying with) to the Plan of the
requirements of the Securities Act of 1933, as amended, and any
applicable state securities laws. The Administrator shall also
specify what restrictive legend or transfer restriction, if any, is
required to be set forth on the certificates of Company Stock
transferred from the Plan to a Participant and the procedure to be
followed by the Trustee to effectuate a transfer or resale of Company
Stock.
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17 TRUST ADMINISTRATION
--------------------
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe those
provisions of this Plan and Trust which relate to the Trustee and to
do all things necessary or convenient to the administration of the
Trust, whether or not such powers are specifically set forth in this
Plan and Trust. Actions taken in good faith by the Trustee shall be
conclusive and binding on all interested parties and shall be given
the maximum possible deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in this
Plan and Trust, the Trustee shall have all the power, authority,
rights and privileges of an absolute owner of the Trust assets and,
not in limitation but in amplification of the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge, mortgage,
lease, grant options respecting, repair, alter, insure, or
distribute any and all property in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription or
conversion privileges, exercise options and register any
securities in the Trust in the name of the nominee, in federal
book entry form or in any other form as shall permit title
thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or
otherwise, or defend against the same, any obligations or claims
in favor of or against the Trust; and
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(d) lend, through a collective investment fund, any securities
held in such collective investment fund to brokers, dealers or
other borrowers and to permit such securities to be transferred
into the name and custody and be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any Trust
assets outside the jurisdiction of the district courts of
the United States, except as authorized by ERISA section
404(b).
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17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes with regard to any
Eligible Rollover Distribution that is not paid as a Direct
Rollover in accordance with the Participant's withholding
election or as required by law if no election is made or the
election is less than the amount required by law. With regard
to any taxable distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes in accordance with the
Participant's withholding election or as required by law if no
election is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay from the
Investment Fund any taxes or assessments imposed by any taxing
or governmental authority on such Fund or its income, including
related interest and penalties.
17.5 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable period)
following the close of the Plan Year, the Trustee shall provide
the Administrator with an annual accounting of Trust assets and
information to assist the Administrator in meeting ERISA's
annual reporting and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records and
provide sufficient reporting to allow the Administrator to
monitor the Trust's assets and activity.
(c) Administrator Approval. Approval of any Trustee accounting
shall automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection with
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the Trustee within such time period. Such approval shall be
final as to all matters and transactions stated or shown therein
and binding upon the Administrator.
17.6 Valuation of Certain Assets
If the Trustee determines that the Trust holds any asset which is not
readily tradeable and listed on a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, the
Trustee may engage a qualified independent appraiser to determine the
fair market value of such property, and the appraisal fees shall be
paid from the Investment Fund containing the asset.
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17.7 Legal Counsel
The Trustee may consult with legal counsel of its choice, including
counsel for the Employer or other counsel selected by the Trustee,
upon any question or matter arising under this Plan and Trust. When
relied upon by the Trustee, the opinion of such counsel shall be
evidence that the Trustee has acted in good faith.
17.8 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as may be
mutually agreed upon by the Company and the Trustee. Trustee fees and
all reasonable expenses of counsel and advisors retained by the
Trustee shall be paid in accordance with Section 6 provided however,
that the Trustee has consulted with the Company before incurring fees
and expenses for such counsel and advisors.
17.9 Trustee Duties and Limitations
The Trustee's duties, unless otherwise agreed to by the Trustee, shall
be confined to construing the terms of the Plan and Trust as they
relate to the Trustee, receiving funds on behalf of and making
payments from the Trust, safeguarding and valuing Trust assets,
investing and reinvesting Trust assets in the Investment Funds as
directed by the Administrator, Participants or Beneficiaries and those
duties as described in this Section 17.
The Trustee shall have no duty or authority to ascertain whether
Contributions are in compliance with the Plan, to enforce collection
or to compute or verify the accuracy or adequacy of any amount to be
paid to it by the Employer. The Trustee shall not be liable for the
proper application of any part of the Trust with respect to any
disbursement made at the direction of the Administrator.
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18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
-------------------------------------------------
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any Employee. The
Employer expressly reserves the right to discharge an Employee at any
time, with or without cause, without regard to the effect such
discharge would have upon the Employee's Account in the Plan.
18.2 Limited Return of Contributions
Except as provided in this paragraph, (1) Plan assets shall not revert
to the Employer nor be diverted to any purpose other than the
exclusive benefit of Participants or their Beneficiaries; and (2) a
Participant's vested interest shall not be subject to divestment. As
provided in ERISA section 403(c)(2), the actual amount of a
Contribution made by the Employer (or the current value of the
Contribution if a net loss has occurred) may revert to the Employer
if:
(a) such Contribution is made by reason of a mistake of fact;
(b) initial qualification of the Plan under Code section 401(a) is
not received and a request for such qualification is made within
the time prescribed under Code section 401(b) (the existence of
and Contributions under the Plan are hereby conditioned upon
such qualification); or
(c) such Contribution is not deductible under Code section 404 (such
Contributions are hereby conditioned upon such deductibility) in
the taxable year of the Employer for which the Contribution is
made.
The reversion to the Employer must be made (if at all) within one year
of the mistaken payment of the Contribution, the
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date of denial of qualification, or the date of disallowance of
deduction, as the case may be. A Participant shall have no rights
under the Plan with respect to any such reversion.
18.3 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not otherwise
required by law, no benefit provided by the Plan may be anticipated,
assigned or alienated at anytime for any reason, except:
(a) to create, assign or recognize a right to any benefit with
respect to a Participant pursuant to a QDRO, or
(b) to use a Participant's vested Account balance as security for a
loan from the Plan which is permitted pursuant to Code section
4975.
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18.4 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the Administrator
reasonably believes that any payee is legally incapable of receiving
any payment due him or her, the Administrator shall have the payment
of the benefit, or any part thereof, made to the person (or persons or
institution) whom it reasonably believes is caring for or supporting
the payee, unless it has received due notice of claim therefor from a
duly appointed guardian or conservator of the payee. Any payment
shall to the extent thereof, be a complete discharge of any liability
under the Plan to the payee.
18.5 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment of a
Plan benefit after a reasonable search, the Administrator may at any
time thereafter treat such person's Account as forfeited and use such
amount as described in Section 8.4. If such person subsequently
presents the Administrator with a valid claim for the benefit, such
person shall be paid the amount treated as forfeited, plus the
interest that would have been earned in the Sweep Account to the date
of determination. The Administrator shall pay the amount through an
additional amount contributed by the Employer or direct the Trustee to
pay the amount from the Forfeiture Account.
18.6 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees with the
Administrator's determination of his or her right to Plan
benefits, or any other matter involving the Plan, must submit a
written claim and exhaust this claim procedure before legal
recourse of any type is sought. The claim must include the
important issues the interested party believes support the
claim. The Administrator, pursuant to the authority
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provided in this Plan, shall either approve or deny the claim.
(b) Process for Denying a Claim. The Administrator's partial or
complete denial of an initial claim must include an
understandable, written response covering (1) the specific
reasons why the claim is being denied (with reference to the
pertinent Plan provisions) and (2) the steps necessary to
perfect the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested party may make
a written appeal of the Administrator's initial decision, and
the Administrator shall respond in the same manner and form as
prescribed for denying a claim initially.
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(d) Time Frame. The initial claim, its review, appeal and final
review shall be made in a timely fashion, subject to the
following time table:
Days to Respond
Action From Last Action
------ ----------------
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the maximum
response time for its initial and final review if it provides an
explanation within the normal period of why an extension is
needed and when its decision shall be forthcoming.
18.7 Construction
Headings are included for reading convenience. The text shall control
if any ambiguity or inconsistency exists between the headings and the
text. The singular and plural shall be interchanged wherever
appropriate. References to Participant shall include Beneficiary when
appropriate and even if not otherwise already expressly stated.
18.8 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and administered
under ERISA and other applicable federal laws and, where not otherwise
preempted, by the laws of the State of California with respect to
issues affecting the Trustee's responsibilities and by the laws of the
State of Texas with respect to all other matters. If any provision of
this Plan and Trust shall become invalid or unenforceable, that fact
shall not affect the validity or enforceability of any other
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provision of this Plan and Trust. All provisions of this Plan and
Trust shall be so construed as to render them valid and enforceable in
accordance with their intent.
18.9 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries against
any and all liabilities resulting from any action or inaction
(including a Plan termination in which the Company fails to apply for
a favorable determination from the Internal Revenue Service with
respect to the qualification of the Plan upon its termination) in
relation to the Plan or Trust (1) including (without limitation)
expenses reasonably incurred in the defense of any claim relating to
the Plan or its assets, and amounts paid in any settlement relating to
the Plan or its assets, provided the terms of such settlement are
approved in advance by the indemnifying Employers, but (2) excluding
liability resulting from actions or inactions made in bad faith, or
resulting from the negligence or willful misconduct of the Trustee.
The Employers shall have the right, but not the obligation, to conduct
the defense of any action to which this Section applies. The Plan
fiduciaries are not entitled to indemnity from the Plan assets
relating to any such action.
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19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
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19.1 Amendment
The Company reserves the right to amend this Plan and Trust at any
time, to any extent and in any manner it may deem necessary or
appropriate. The Company (and not the Trustee) shall be responsible
for adopting any amendments necessary to maintain the qualified status
of this Plan and Trust under Code sections 401(a) and 501(a). If the
Committee is acting as the Administrator in accordance with Section
15.6, it shall have the authority to adopt Plan and Trust amendments
which have no substantial adverse financial impact upon any Employer
or the Plan. All interested parties shall be bound by any amendment,
provided that no amendment shall:
(a) become effective unless it has been adopted in accordance with
the procedures set forth in Section 19.5;
(b) except to the extent permissible under ERISA and the Code, make
it possible for any portion of the Trust assets to revert to an
Employer or to be used for, or diverted to, any purpose other
than for the exclusive benefit of Participants and Beneficiaries
entitled to Plan benefits and to defray reasonable expenses of
administering the Plan;
(c) decrease the rights of any Participant to benefits accrued
(including the elimination of optional forms of benefits) to the
date on which the amendment is adopted, or if later, the date
upon which the amendment becomes effective, except to the extent
permitted under ERISA and the Code; nor
(d) permit a Participant to be paid the balance of his or her Pre-
Tax Account unless the payment would otherwise be permitted
under Code section 401(k).
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19.2 Merger
This Plan and Trust may not be merged or consolidated with, nor may
its assets or liabilities be transferred to, another plan unless each
Participant and Beneficiary would, if the resulting plan were then
terminated, receive a benefit just after the merger, consolidation or
transfer which is at least equal to the benefit which would be
received if either plan had terminated just before such event,
adjusted for intervening investment gain or loss.
19.3 Divestitures
In the event of a sale by an Employer which is a corporation of: (1)
substantially all of the Employer's assets used in a trade or business
to an unrelated corporation, or (2) a sale of such Employer's interest
in a subsidiary to an unrelated entity or individual, lump sum
distributions shall be permitted from the Plan, except as provided
below, to Participants with respect to Employees who continue
employment with the corporation acquiring such assets or who continue
employment with such subsidiary, as applicable.
Notwithstanding, distributions shall not be permitted if the purchaser
agrees, in connection with the sale, to be substituted as the Company
as the sponsor of the Plan or to accept a transfer of the assets and
liabilities representing the Participants' benefits into a plan of the
purchaser or a plan to be established by the purchaser.
19.4 Plan Termination
The Company may, at any time and for any reason, terminate the Plan in
accordance with the procedures set forth in Section 19.5, or
completely discontinue contributions. Upon either of these events, or
in the event of a partial termination of the Plan within the meaning
of Code section 411(d)(3), the Accounts of each affected Employee who
has not yet incurred a Break in Service shall be fully vested. If no
successor plan is established or maintained, lump sum distributions
shall be made in accordance with the terms of the Plan as in effect at
the time of the Plan's termination or as thereafter amended provided
that a post-termination
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amendment shall not be effective to the extent that it violates
Section 19.1 unless it is required in order to maintain the qualified
status of the Plan upon its termination. The Trustee's and Employer's
authority shall continue beyond the Plan's termination date until all
Trust assets have been liquidated and distributed.
19.5 Amendment and Termination Procedures
The following procedural requirements shall govern the adoption of any
amendment or termination (a "Change") of this Plan and Trust:
(a) The Company may adopt any Change by action of its board of
directors in accordance with its normal procedures.
(b) The Committee, if acting as Administrator in accordance with
Section 15.6, may adopt any amendment within the scope of its
authority provided under Section 19.1 and in the manner
specified in Section 15.7(a).
(c) Any Change must be (1) set forth in writing, and (2) signed and
dated by an executive officer of the Company or, in the case of
an amendment adopted by the Committee, at least one of its
members.
(d) If the effective date of any Change is not specified in the
document setting forth the Change, it shall be effective as of
the date it is signed by the last person whose signature is
required under clause (c)(2) above, except to the extent that
another effective date is necessary to maintain the qualified
status of this Plan and Trust under Code sections 401(a) and
501(a).
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(e) No Change shall become effective until it is accepted and signed
by the Trustee (which acceptance shall not unreasonably be
withheld).
19.6 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate its Plan
participation by action of its board of directors in accordance with
its normal procedures. Written notice of such action shall be signed
and dated by an executive officer of the Employer and delivered to the
Company. If the effective date of such action is not specified, it
shall be effective on, or as soon as reasonably practicable after, the
date of delivery. Upon the Employer's request, the Company may
instruct the Trustee and Administrator to spin off all affected
Accounts and underlying assets into a separate qualified plan under
which the Employer shall assume the powers and duties of the Company.
Alternatively, the Company may treat the event as a partial
termination described above or continue to maintain the Accounts under
the Plan.
19.7 Replacement of the Trustee
The Trustee may resign as Trustee under this Plan and Trust or may be
removed by the Company at any time upon at least 90 days written
notice (or less if agreed to by both parties). In such event, the
Company shall appoint a successor trustee by the end of the notice
period. The successor trustee shall then succeed to all the powers
and duties of the Trustee under this Plan and Trust. If no successor
trustee has been named by the end of the notice period, the Company's
chief executive officer shall become the trustee, or if he or she
declines, the Trustee may petition the court for the appointment of a
successor trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as administratively feasible after
its resignation or removal as Trustee, the Trustee shall
transfer to the successor trustee all property currently held by
the Trust. However, the Trustee is authorized to reserve such
sum of money as it may deem advisable for payment of its
accounts and expenses in connection with the settlement of its
accounts or other fees or expenses payable by the Trust. Any
balance remaining after payment of such fees and expenses shall
be paid to the successor trustee.
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(b) Final Accounting. The Trustee shall provide a final accounting
to the Administrator within 90 days after the date Trust assets
are transferred to the successor trustee.
(c) Administrator Approval. Approval of the final accounting shall
automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection with the Trustee within such time period.
Such approval shall be final as to all matters and transactions
stated or shown therein and binding upon the Administrator.
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APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered under the Plan as of the Effective Date
include this set of daily valued funds:
CATEGORY FUNDS
-------- -----
INCOME Income Accumulation
------
BALANCED Asset Allocation
--------
EQUITY Company Stock
------
Growth Stock
S&P 500 Stock
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the Income
Accumulation Fund.
III. Contribution Accounts For Which Investment is Restricted
A Participant or Beneficiary may direct the investment of his or her entire
Account except for the following Contribution Accounts, and except as
otherwise provided in Section 7, which shall be invested as of the
Effective Date as follows:
Company Match Stock Account Company Stock Fund
IV. Maximum Percentage Restrictions Applicable to Certain Investment Funds
As of the Effective Date, a Participant or Beneficiary may not elect to
invest more than the following percentages in these Investment Funds.
Company Stock Fund 50%
This restriction shall not apply to, or take into account, a Participant's
or Beneficiary's Company Match Stock Account which may be entirely invested
in the Company Stock Fund without regard
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to the 50% investment percentage restriction related to the Company Stock
Fund.
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APPENDIX B - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as follows:
1) Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants.
2) Recordkeeping Fees: These are paid by the Employer on a quarterly basis,
except that with regard to a Participant who is no longer an Employee or a
Beneficiary, these are paid by the Participant and are assessed monthly and
billed/collected from Accounts quarterly.
3) Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding loan
balance.
4) Investment Fund Election Changes: For each Investment Fund election change
by a Participant, in excess of 4 changes per year, a $10 fee shall be
assessed and billed/collected quarterly from the Participant's Account.
5) Additional Fees Paid by Employer: All other Plan related fees and expenses
shall be paid by the Employer. To the extent that the Administrator later
elects that any such fees shall be borne by Participants, estimates of the
fees shall be determined and reconciled, at least annually, and the fees
shall be assessed monthly and billed/collected from Accounts quarterly.
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APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the prime rate listed in the Wall Street Journal at the time the
loan is processed, plus 1%. If multiple prime rates are published in the Wall
Street Journal, the prime rate selected shall be the rate closest to the last
prime rate used for this purpose.
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