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EXHIBIT 99.3
THE RETIREMENT PLAN OF
SCHEIN PHARMACEUTICAL, INC. AND AFFILIATES
AMENDED AND RESTATED AS OF JANUARY 1, 1998
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TABLE OF CONTENTS
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PAGE
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ARTICLE 1 DEFINITIONS.....................................................1
ARTICLE 2 PARTICIPATION...................................................8
ARTICLE 3 PARTICIPANT SALARY REDUCTION....................................9
ARTICLE 4 EMPLOYER CONTRIBUTIONS.........................................13
ARTICLE 5 PARTICIPANT CONTRIBUTIONS......................................18
ARTICLE 6 TERMINATION OF SERVICE.........................................19
ARTICLE 7 TIME AND METHOD OF PAYMENT OF BENEFITS.........................21
ARTICLE 8 WITHDRAWALS....................................................24
ARTICLE 9 INVESTMENT OF CONTRIBUTIONS....................................25
ARTICLE 10 LOANS..........................................................27
ARTICLE 11 EMPLOYER ADMINISTRATIVE PROVISIONS.............................29
ARTICLE 12 PARTICIPANT ADMINISTRATIVE PROVISIONS..........................30
ARTICLE 13 COMMITTEE DUTIES WITH RESPECT TO PARTICIPANT'S ACCOUNT.........32
ARTICLE 14 FIDUCIARY DUTIES AND RESPONSIBILITIES..........................34
ARTICLE 15 TOP HEAVY RULES................................................35
ARTICLE 16 EXCLUSIVE BENEFIT, AMENDMENT AND TERMINATION...................38
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PREAMBLE
Schein Pharmaceutical, Inc. (the "Company") established the Schein
Pharmaceutical, Inc. Profit Sharing Plan (the "Plan") for the benefit of its
eligible employees effective December 27, 1987. The Plan was subsequently
amended. Effective January 1, 1992, four other plans were merged into the Plan,
Danbury Pharmacal, Inc. 401(k) Plan, Danbury Pharmacal, Inc. Profit-Sharing
Plan, Steris Laboratories, Inc. 401(k) Plan and Steris Laboratories, Inc.
Profit-Sharing Plan, collectively (the "Merged Plans"). Each of the Merged Plans
were either originally effective January 1, 1989 or amended to comply with the
law in effect at the time of the merger. The Plan was also redesignated as The
Retirement Plan of Schein Pharmaceutical, Inc. & Affiliates.
The Plan was again amended and restated in its entirety effective
January 1, 1992 in order to comply with the Tax Reform Act of 1986, the Omnibus
Budget Reconciliation Acts of 1989 and 1993, the Revenue Reconciliation Act of
1990 and the Unemployment Compensation Amendments Act of 1992. Thereafter, the
Plan was amended several times. Effective as of July 1, 1996, the Marsam
Pharmaceuticals, Inc. 401(k) Retirement Savings Plan merged into the Plan.
Effective as of January 1, 1998, the Plan is hereby again amended and
restated in its entirety, in order to comply with certain provisions of the
Small Business Job Protection Act of 1996 and the Taxpayer Relief Act of 1997.
The restated Plan contained herein will apply to participants, or beneficiaries
of such participants, who retire, die or terminate employment at any time on or
after January 1, 1997.
ARTICLE 1
DEFINITIONS
Whenever the following words and phrases appear in the Plan, they shall
have the respective meaning set forth below, unless the context clearly
indicates otherwise:
1.1 "Accounting Date" shall be any day that the New York Stock Exchange
is open for business, or any other date chosen by the Committee. The fair market
value of the Trust's assets will be determined on the Accounting Date. All
contributions, earnings and losses under the Plan will be allocated as of the
Accounting Date.
1.2 "Account Balance" shall mean the aggregate of the amount in the
Participant's Salary Reduction Contribution Account, Voluntary Contribution
Account, Rollover Contribution Account, Matching Contribution Account, Historic
Account, Qualified Non-Elective Contribution Account and Base Contribution
Account as of any date, less any Excess Amounts which must be returned to the
Participant in order to avoid exceeding the limitations of Article 4.
1.3 "Annual Addition" shall mean for any Plan Year the sum of (a)
Employer contributions, (b) Employee contributions, (c) forfeitures, and (d)
amounts allocated to an individual medical account, as defined in Section
415(l)(2) of the Code which is part of a pension or annuity plan maintained by
the Employer, and amounts derived from contributions paid or accrued which are
attributable to post-retirement medical benefits allocated to the
1.
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separate account of a key employee, as defined in Section 419A(d)(3) of the
Code, under a welfare benefit fund, as defined in Section 419(e) of the Code,
maintained by the Employer.
1.4 "Base Contribution Account" shall mean the account maintained for a
Participant to record base contributions made by the Employer pursuant to
Article 4.
1.5 "Beneficiary" is a person designated by a Participant who is or may
become entitled to a benefit under the Plan.
1.6 "Break in Service" shall mean a Plan Year during which an Employee
completes less than 501 Hours of Service.
1.7 "Code" means the Internal Revenue Code of 1986, as amended.
1.8 "Committee" shall mean the Plan Committee appointed by the Company
to administer this Plan pursuant to Article 8 hereof. In addition to its other
duties, the Committee shall have full responsibility for compliance with the
reporting and disclosure rules under ERISA as respects this Plan. Each Committee
member is designated a Named Fiduciary under the Plan.
1.9 "Company" means Schein Pharmaceutical, Inc.
1.10 "Compensation" shall mean the total remuneration paid by the
Employer to an Employee for services rendered to the Employer as reflected on
Form W-2 for Federal income tax withholding purposes, including salary,
commissions, overtime and bonuses, reduced by reimbursements or other expense
allowances, fringe benefits (cash and non-cash), moving expenses, deferred
compensation (e.g. stock options), and welfare benefits, but including amounts
deferred pursuant to Article 3. In the case of any self-employed individual,
Compensation shall mean Earned Income.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation of each Employee
taken into account under the Plan shall not exceed the OBRA'93 Annual
Compensation Limit. The OBRA'93 Annual Compensation Limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the OBRA'93
Annual Compensation Limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall mean the
OBRA'93 Annual Compensation Limit set forth in this provision.
If Compensation for any prior determination period is taken into account
in determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA'93
Annual Compensation Limit in effect for that
2.
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prior determination period. For this purpose, for determination periods
beginning before the first day of the first Plan Year beginning on or after
January 1, 1994, the OBRA'93 Annual Compensation Limit is $150,000.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the Plan Year. If, as a result of the application of
such rules the OBRA'93 Annual Compensation Limit is exceeded, then the
limitation shall be prorated among the affected individuals in proportion to
each such individual's Compensation prior to the application of this limitation.
1.11 "Earned Income" shall mean the net earnings from self-employment in
the trade or business with respect to which the Plan is established, for which
personal services of the individual are a material income-producing factor. Net
earnings will be determined without regard to items not included in gross income
and the deductions allocable to such items. Net earnings are reduced by (1)
contributions by the Employer to a qualified plan to the extent deductible under
Section 404 of the Code, and (2) the deduction allowed to the employer by
Section 164(f) of the Code.
1.12 "Effective Date" of this Plan is January 1, 1998.
1.13 "Employee" shall mean any employee of the Employer or of any other
employer required to be aggregated under Sections 414(b), (c), (m), (n) or (o)
of the Code.
1.14 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.15 "Employer" shall mean the Company and any Participating Employer
which adopts this Plan, as well as any predecessors or successors to the
Employer.
1.16 "Employment Commencement Date" shall mean the date on which the
Employee first performs an Hour of Service for the Employer.
1.17 "Enrollment Period" shall mean the twenty-one (21) day period
preceding the Plan Entry Date.
1.18 "Highly Compensated Employee" shall mean an Employee who:
(a) at any time during the Plan year or the preceding year is a
more than 5% owner of the Employer (applying the constructive ownership rules of
Section 318 of the Code); or
(b) for the preceding year has Compensation in excess of $80,000
(as adjusted by the Commissioner of Internal Revenue for the relevant year).
The term "Highly Compensated Employee" also includes any former Employee
who separated from service (or has a deemed separation from service, as
determined under Treasury
3.
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regulations) prior to the Plan Year, performs no service for the Employer during
the Plan Year, and was a Highly Compensated Employee either for the separation
year or any Plan Year ending on or after his 55th birthday. If the former
Employee's separation from service occurred prior to January 1, 1987, he is a
Highly Compensated Employee only if he satisfied clause (a) of this Section 1.18
or received Compensation in excess of $50,000 during: (1) the year of his
separation from service (or the prior year); or (2) any year ending after his
54th birthday.
The Committee shall also have discretion to use any other definition of
"Highly Compensated Employee" promulgated by the Secretary of Treasury.
1.19 "Historic Account" shall mean the account maintained for a
Participant to record any interest as of December 31, 1991 in any Merged Plan,
and earnings and losses thereon.
1.20 "Hour of Service" shall mean:
(a) Each hour of service for which the Employer, either directly
or indirectly, pays an Employee, or for which the Employee is entitled to
payment, for the performance of duties during the Plan Year. The Committee shall
credit Hours of Service under this subsection (a) to the Employee for the Plan
Year in which the Employee performs the duties, irrespective of when paid;
(b) Each hour of service for back pay, irrespective of mitigation
of damages, which the Employer has agreed to pay, or for which the Employee has
received an award. The Committee shall credit Hours of Service under this
subsection (b) to the Employee for the Plan Year(s) to which the award of the
agreement pertains, rather than for the Plan Year in which the award, agreement
or payment is made; and
(c) Each hour of service for which the Employer, either directly
or indirectly, pays an Employee, or for which the Employee is entitled to
payment (irrespective of whether the employment relationship is terminated), for
reasons other than for the performance of duties during a Plan Year, such as
Leave of Absence, vacation, holiday, sick leave, illness, incapacity (including
disability), layoff, jury duty, Military Leave of Absence, or Maternity and
Paternity Leave. The Committee shall not credit more than five hundred one (501)
Hours of Service under this subsection (c) to an Employee on account of any
single continuous period during which the Employee does not perform any duties
(whether or not such period occurs during a single Plan Year). Notwithstanding
the above, the Committee shall credit an Employee with a Military Leave of
Absence to the extent required by law. The Committee shall credit Hours of
Service under this subsection (c) in accordance with the rules of subsections
(b) and (c) of Department of Labor Reg. Section 2530.200(b)-2, which the Plan,
by this reference, specifically incorporates in full within this subsection (c).
The Committee shall not credit an Hour of Service under more than one of
the above subsections. Furthermore, if the Committee is to credit Hours of
Service to an Employee for the twelve month period beginning with the Employee's
Employment Commencement Date or with an anniversary of such date, then such
twelve month period shall be substituted for the term "Plan Year" wherever the
latter term appears in this Section 1.20. The Committee shall resolve any
ambiguity with respect to the crediting of an Hour of Service in favor of the
Employee.
4.
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The Committee shall credit every Employee compensated on an hourly basis
with Hours of Service on the basis of the "actual" method. For purposes of the
Plan, "actual" method means the determination of Hours of Service from records
of hours worked and hours for which the Employer makes payment or for which
payment is due from the Employer.
Employees compensated on other than an hourly basis and for whom hours
are not required to be counted and recorded by any other federal law, such as
the Fair Labor Standards Act, shall be credited with forty-five (45) hours per
week for any week during which the Employee is credited with one (1) Hour of
Service.
1.21 "Investment Committee" shall mean the Committee appointed by the
Company to manage the assets of the Plan pursuant to Articles 9 and 13 hereof.
Each Investment Committee member is designated a Named Fiduciary under the
Plan.**
1.22 "Leased Employee" shall mean an individual (who otherwise is not an
Employee of the Employer) who, pursuant to a leasing agreement between the
Employer and any other person, has performed services for the Employer (or for
the Employer and any persons related to the Employer within the meaning of
Section 414(n)(6) of the Code) on a substantially full time basis for at least
one year and who performs services historically performed by employees in the
Employer's business field. The Plan does not treat a Leased Employee as an
Employee of the Employer.
1.23 A "Leave of Absence" shall mean any absence approved by the
Employer, other than absence which qualifies as a Maternity and Paternity Leave
or Military Leave of Absence, including but not limited to, sick or disability
time.
1.24 "Matching Contribution Account" shall mean the account maintained
for a Participant to record matching contributions made by the Employer pursuant
to Article 4.
1.25 "Maternity and Paternity Leave" shall mean an absence from work for
any period by reason of the Employee's pregnancy, birth of the Employee's child,
placement of the child with the Employee in connection with the adoption of such
child, or any absence for the purpose of caring for such child for a period
immediately following the birth or placement. For this purpose, Hours of Service
shall be credited for the computation period in which the absence from work
begins only if credit therefore is necessary to prevent the Employee from
incurring a one year Break in Service, or in the immediately following
computation period. The Hours of Service credited for a Maternity and Paternity
Leave shall be those which would have normally been credited but for such
absence, or, in any case in which the Committee is unable to determine such
hours normally credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a Maternity and Paternity Leave shall not
exceed 501.
1.26 "Merged Plans" shall mean the Danbury Pharmacal, Inc. 401(k) Plan,
the Danbury Pharmacal, Inc. Profit-Sharing Plan, the Schein Pharmaceutical, Inc.
Profit-Sharing Plan, the Steris Laboratories, Inc. 401(k) Plan, the Steris
Laboratories, Inc. Profit-Sharing Plan, and the Marsam Pharmaceuticals, Inc.
401(k) Retirement Savings Plan or any of them individually.
5.
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1.27 "Military Leave of Absence" shall mean the absence of an Employee
in military service for the United States of America, provided that the Employee
returns to the employ of the Employer prior to the end of any period prescribed
by the laws of the United States during which he has reemployment rights with
the Employer.
1.28 "Named Fiduciary" shall mean a person designated a fiduciary under
this Plan.
1.29 "Nonforfeitable" shall mean a Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to the Participant's
Account Balance.
1.30 "Normal Retirement Date" shall mean the date the Participant
attains age 65 and five (5) Years of Service.
1.31 "Owner-Employee" shall mean an individual who is a sole proprietor,
or who is a partner owning more than 10 percent of either the capital or profits
interest of the partnership. If this Plan provides contributions or benefits for
one or more Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and the plan
established for other trades or businesses must, when looked at as a single
plan, satisfy Sections 401(a) and (d) of the Code for the employees of this and
all other trades or businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan which
satisfies Sections 401(a) and (d) of the Code and which provides contributions
and benefits not less favorable than provided for Owner-Employees under this
plan.
If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which are not controlled and the individual
controls a trade or business, then the contributions or benefits of the
employees under the plan of the trades or businesses which are controlled must
be as favorable as those provided for him under the most favorable plan of the
trade or business which is not controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control a trade or businesses if the
Owner-Employee, or two or more Owner-Employees together:
(1) own the entire interest in an unincorporated trade or business,
or
(2) in the case of a partnership, own more than 50 percent of either
the capital interest or the profits interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or
more Owner-Employees shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
6.
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1.32 "Participant" is an Employee who is eligible to be and becomes a
Participant in accordance with the provisions of Article 2.
1.33 "Participating Employer" shall mean any member of a controlled
group of corporations, as defined in Section 1563(a) of the Code, of which the
Company is a member, which, with the written consent of the Company, adopts this
Plan.
1.34 "Payment Starting Date" shall mean the first day of the first
period for which the Plan pays an amount in any form.
1.35 "Plan" shall mean The Retirement Plan of Schein Pharmaceutical,
Inc. & Affiliates.
1.36 "Plan Entry Dates" shall mean the Effective Date and thereafter the
first day of the first pay period coincident with, or next following, the date
on which an Employee completes Six Months of Service.
1.37 "Plan Year" shall mean the twelve (12) consecutive month period
commencing on January 1 and ending on December 31.
1.38 "Qualified Non-Elective Contribution Account" shall mean the
account maintained for a Participant to record Qualified Non-Elective
Contributions made by the Employer pursuant to Section 3.5.
1.39 "Rollover Contribution Account" shall mean the account maintained
for an Employee to record any Rollover Contributions accepted pursuant to
Section 5.2.
1.40 "Salary Reduction Contribution" shall mean the amount by which the
Participant elects to reduce his Compensation which is then contributed to the
Trust by the Employer.
1.41 "Salary Reduction Contribution Account" shall mean the account
maintained for a Participant to record Salary Reduction Contributions made on
his behalf by the Employer.
1.42 "Salary Reduction Agreement" shall mean the agreement between the
Participant and the Employer whereby the Participant directs the Employer to
contribute a designated percentage of his Compensation to the Trust.
1.43 "Self-Employed Individual" shall mean an individual who has Earned
Income for the taxable year from the trade or business for which the Plan is
established or an individual who would have had Earned Income but for the fact
that the trade or business has no net profits for the taxable year.
1.44 "Six Months of Service" shall mean a period of six (6) consecutive
calendar months during which an Employee completes at least 500 Hours of
Service.
1.45 A "Temporary Employee" shall mean a Leased Employee, any agent or
an independent contractor.
7.
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1.46 "Trust" shall mean the trust created under the Plan, known as the
Henry Schein, Inc. Affiliates' 401(k) Trust. Effective July 1, 1994, the Trust
is known as the Employee Benefit Plan Trust, as well as any successor thereto.
1.47 "Trust Fund" shall mean all property of every kind held or acquired
by the Trustee pursuant to this Plan. Trust assets will be valued at fair market
value.
1.48 "Trustee" shall mean the person or entity appointed as trustee
under the governing Trust document.
1.49 "Voluntary Contribution Account" shall mean the account maintained
for a Participant to record any voluntary contributions made by the Participant
pursuant to Section 5.1 and any amount recharacterized as voluntary
contributions.
1.50 "Year of Service" shall mean a twelve-month period, beginning on an
Employee's date of hire or any anniversary thereof, during which an Employee has
at least one thousand (1,000) Hours of Service. For purposes of eligibility and
vesting, service with SB Pharma, Ltd. shall be considered to be service with the
Company.
1.51 Wherever used herein, the singular shall include the plural and the
masculine shall include the feminine and the neuter, unless the context clearly
indicates otherwise.
ARTICLE 2
PARTICIPATION
2.1 ELIGIBILITY. Each Participant in the Plan or in any of the Merged
Plans as of December 31, 1991 who is in the employ of the Employer on the
Effective Date shall become a Participant on the Effective Date. Each other
Employee shall become a Participant on the Plan Entry Date.
Notwithstanding the foregoing, any person who is a non-resident alien
(within the meaning of Code Section 7701(b)), a Temporary Employee or is a
member of a collective bar-gaining unit is excluded from participation. If a
Participant does not terminate employment but becomes a member of a collective
bargaining unit, then unless the applicable collective bargaining agreement
provides otherwise, during the period that such Participant is a member of a
collective bargaining unit, the Committee shall limit that Participant's sharing
in the allocation of Employer contributions and Participant forfeitures, if any,
under the Plan to the extent of his Compensation paid by the Employer for
services rendered while he is not a member of a collective bargaining unit.
However, during such period, the Participant's Account Balance shall continue to
share fully in Trust Fund earnings and losses.
If an Employee who is not a Participant ceases to be a member of a
collective bargaining unit, he shall participate in the Plan immediately if he
has satisfied the service condition of this Section 2.1 and would have been a
Participant had he not been a member of a collective bargaining unit during his
period of service with the Employer. Furthermore, an Employee shall receive
vesting credit under Article 6 for each included Year of Service during his
period of
8.
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service with the Employer without regard to whether the Employee is a member of
a collective bargaining unit.
For purposes of this Section 2.1, an Employee is a member of a
collective bargaining unit if he is included in a unit of Employees covered by
an agreement which the Secretary of Labor finds to be a collective bargaining
agreement between employee representatives and one (1) or more employers if
there is evidence that retirement benefits were the subject of good faith
bargaining between such employee representatives and such employer or employers.
The term "employee representatives" does not include an organization of which
more than one half the members are owners, officers or executives of the
Employer.
If an individual, who is not participating in the Plan by virtue of his
or her not being considered to be an Employee by the Company, is later
recharacterized as an employee of the Company by the Internal Revenue Service or
other governmental authority, that individual will not be entitled to benefits
hereunder on a retroactive basis. Rather, he or she shall be considered for
eligibility on a prospective basis only.
2.2 MONTH OF SERVICE - PARTICIPATION. For purposes of participation
under Section 2.1, the Plan shall take into account all of an Employee's
consecutive calendar Months of Service with the Employer. Months of Service
shall include all consecutive calendar Months of Service an Employee completes
with an Employer or any entity which is required to be aggregated with the
Employer pursuant to Sections 414(b), (c), (m), (n), or (o) of the Code.
2.3 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose employment
terminates shall re-enter the Plan as a Participant on the date of his
re-employment. An Employee who has satisfied the eligibility condition of
Section 2.1, but who terminates employment prior to becoming a Participant,
shall become a Participant in the Plan on the date of his re-employment. Any
other Employee whose employment terminates and who is subsequently re-employed
shall become a Participant in accordance with the provisions of Section 2.1 and
Section 2.2.
ARTICLE 3
PARTICIPANT SALARY REDUCTION
3.1 SALARY REDUCTION AGREEMENT. A Participant may elect to enter into a
Salary Reduction Agreement with the Employer which will be applicable to all
payroll periods within such Plan Year after the Plan Entry Date following
execution of the Salary Reduction Agreement. The terms of any such Salary
Reduction Agreement shall provide that the Participant agrees to a reduction in
Compensation from the Employer equal to any whole percentage from one percent
(1%) to fourteen percent (14%) of his Compensation for each payroll period
within such Plan Year. A Participant who does not elect to enter into a Salary
Reduction Agreement with the Employer shall continue to receive his entire
amount of Compensation in cash.
3.2 CHANGE IN SALARY REDUCTION RATE. A Participant may suspend his
contributions under his Salary Reduction Agreement at any time. A Participant
may amend his
9.
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Salary Reduction Agreement during any Plan Year as of the first day of the first
pay period in any calendar quarter by filing twenty-one (21) days advance
written notice of any change. Salary Reduction Agreement amendments shall be
effective as of the first day of the first pay period after the twenty-one (21)
days advance notice. Notwithstanding the above limitations, the Employer may
decrease at any time the Salary Reduction Contribution of any Participant by any
percentage, whether whole or fractional, if the Committee notifies the Employer
that such decrease is necessary to ensure that the limitations of Sections 3.4,
3.5 or 4.7 are met for the Plan Year.
3.3 VESTING - SALARY REDUCTION CONTRIBUTION ACCOUNTS. Amounts credited
to a Participant's Salary Reduction Contribution Account shall be 100% vested
and Nonforfeitable at all times. The Committee shall pay all Salary Reduction
Contributions over to the Trust no later than ninety (90) days after the date
the funds were withheld from the Participant's Compensation.
3.4 SALARY REDUCTION CONTRIBUTION LIMITATIONS. Notwithstanding Section
3.1 hereof, the maximum amount of Compensation a Participant is permitted to
defer during any calendar year is limited to $7,000 as adjusted by the Secretary
of Treasury pursuant to Section 402(g)(5) of the Code. Any amount that cannot be
credited to the Participant's Salary Reduction Contribution Account due to the
foregoing limit shall be paid to the Participant in cash. For purposes of the
limitation of this Section 3.4, the amount contributed to a Participant's Salary
Reduction Contribution Account shall not include any Salary, Reduction
Contributions properly returned to the Participant as excess Annual Additions
under Section 4.7.
If a Participant would exceed the limitation of this Section 3.4 when
the amount the Participant elects to contribute to his Salary Reduction
Contribution Account is aggregated with the amounts deferred by the Participant
under other plans or arrangements described in Sections 401(k), 408(k), 403(b),
457 or 501(c)(18) of the Code, the Participant may request that the Committee
distribute the excess deferrals to him. Such excess deferrals and income or loss
allocable thereto may be distributed no later than April 15 of the year
following the year in which any such excess deferrals are contributed, to
Participants who claim such allocable deferral contributions for the preceding
calendar year. The Participant's claim shall be in writing; shall be submitted
to the Committee no later than March 1; shall specify the Participant's deferral
contribution amount for the preceding calendar year; and shall be accompanied by
the Participant's written statement that if such amounts are not distributed,
such deferral contributions, when added to amounts deferred under other plans or
arrangements described in Sections 401(k), 408(k), 403(b), 457 or 501(c)(18) of
the Code, exceed the limit imposed on the Participant in accordance with the
applicable provisions of the Code for the year in which the deferral occurred.
To the extent the excess deferral arises under this Plan when combined with
other plans of the Employer, the individual will be deemed to have notified the
Committee of the excess deferral and requested distribution of the excess
deferral.
The income or loss allocable to the excess deferrals shall be the sum of
(1) the amount determined by multiplying the income or loss allocable to the
Participant's accounts containing the excess deferrals for the calendar year by
a fraction, the numerator of which is the excess deferrals on behalf of the
Participant for the calendar year and the denominator of which is the
Participant's account balance in his accounts containing the excess deferrals as
of the last day of
10.
<PAGE> 13
the calendar year in which the excess deferrals are made without regard to any
gain or loss allocable to such total amount for the calendar year; and (2) ten
(10) percent of the amount determined under (1) multiplied by the number of
whole calendar months between the end of the calendar year in which the excess
deferrals were made and the date of distribution, counting the month of
distribution if distribution occurs after the 15th day of such month. Excess
deferrals shall be treated as Annual Additions, unless such amounts are
distributed to the Participant no later than April 15 of the year following the
year in which any such excess deferrals are contributed.
3.5 SALARY REDUCTION DISCRIMINATION LIMITATION. The Employer shall not
permit a Participant to defer an amount of Compensation that would cause the
Plan to not satisfy at least one of the following tests in any Plan Year:
(a) The Actual Deferral Percentage for the group of Highly
Compensated Employees shall not exceed the Actual Deferral Percentage of all
other eligible Employees multiplied by 1.25; or
(b) The Actual Deferral Percentage for the group of Highly
Compensated Employees shall not exceed the Actual Deferral Percentage for all
other eligible Employees multiplied by 2.0, provided that the Actual Deferral
Percentage for the group of Highly Compensated Employees does not exceed the
Actual Deferral Percentage of all other eligible Employees by more than two (2)
percentage points or such lesser amount as the Secretary of the Treasury shall
prescribe to prevent the multiple use of this alternative limitation with
respect to any Highly Compensated Employee.
The Actual Deferral Percentage for a specified group of Employees for a
Plan Year shall be the average of ratios (calculated separately for each
Employee in such group) of (i) the amount of Salary Reduction Contributions
actually paid over to the Trust on behalf of each such Employee for such Plan
Year, to (ii) the Employee's Compensation for that portion of the Plan Year
during which the Employee was eligible to participate. In computing the Actual
Deferral Percentage, Salary Reduction Contributions shall not include any
amounts properly returned to (i) the Participant as excess Annual Additions
under Section 4.7; or (ii) a non-Highly Compensated Employee as excess deferrals
under Section 3.4. The Actual Deferral Percentage for a Participant who makes no
Salary Reduction Contributions during a Plan Year shall be 0%. Contributions
taken into account for purposes of determining the Actual Deferral Percentage
test must be made before the last day of the twelve-month period immediately
following the Plan Year to which the contributions relate. In computing the
Actual Deferral Percentage, the Committee may include in subparagraph (i) above,
the amount of any Employer contributions which are 100% vested when made and are
subject to the same withdrawal restrictions applicable to Salary Reduction
Contributions. These contributions shall be named "Qualified Non-Elective
Contributions" and shall be placed in the Qualified Non-Elective Contribution
Account of only the non- Highly Compensated Employees. If matching contributions
are taken into account for purposes of this subparagraph (i), they must meet the
requirements applicable to Employer contributions in the preceding sentence and
cannot be taken into account under Section 4.2(i). In the event Salary Reduction
Contributions are used to satisfy the Annual Contribution Percentage test under
Section 4.2, the Actual Deferral Percentage test must be satisfied both with and
11.
<PAGE> 14
without inclusion of the Salary Reduction Contributions used in the Actual
Contribution Percentage test.
The Actual Deferral Percentage for any Employee who is a Highly
Compensated Employee for the Plan Year and who has Salary Reduction
Contributions allocated to his account under two or more plans of the Employer
shall be determined as if all such contributions were made under a single plan.
If the above plans have different plan years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement.
In the event that this Plan satisfies the requirements of Sections
401(k), 401(a)(4) or 410(b) of the Code only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of Sections
401(k), 401(a)(4) or 410(b) of the Code only if aggregated with this Plan, then
this Section 3.5 shall be applied by determining the Actual Deferral Percentages
of Participants as if all such plans were a single plan. Plans may be aggregated
to satisfy Section 4010c) of the Code only if they have the same plan year.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the Actual Deferral Percentage test. The determination and
treatment of the Actual Deferral Percentage amounts of any Participant shall
satisfy such other requirements as may be prescribed by the Secretary of the
Treasury.
3.6 EXCESS CONTRIBUTIONS. Notwithstanding the fore-going paragraph, with
respect to any Plan Year in which Salary Reduction Contributions on behalf of
Highly Compensated Employees exceed the applicable limit, the Committee shall
reduce the amount of the Excess Contributions made on behalf of the Highly
Compensated Employees (by reducing such contributions in order of Actual
Deferral Percentages beginning with the highest), and shall distribute any
Excess Contributions which exist after such reduction, as adjusted by the income
or loss allocable to such Excess Contributions, to the affected Highly
Compensated Employees no later than March 15 of the year following the Plan Year
in which any such Excess Contributions are made, but in no event shall such
amounts be distributed later than the end of the Plan Year following the Plan
Year in which such Excess Contributions were contributed.
For purposes of Section 3.6, "Excess Contributions" shall mean, with
respect to any Plan Year, the aggregate amount of Employer contributions
actually taken into account in computing the Actual Deferral Percentage of the
Highly Compensated Employees over the maximum amount of such contributions
permitted by the Actual Deferral Percentage test. The income or loss allocable
to the Excess Contributions shall be the sum of (1) the amount determined by
multiplying the income or loss allocable to the Participant's accounts
containing the Excess Contributions for the Plan Year by a fraction, the
numerator of which is the Excess Contributions on behalf of the Participant for
the Plan Year and the denominator of which is the Participant's account balance
in his accounts containing the Excess Contributions as of the Accounting Date of
the Plan Year in which the Excess Contribution is made without regard to any
gain or loss allocable to such total amount for the Plan Year; and (2) ten (10)
percent of the amount determined under (1) multiplied by the number of whole
calendar months between the end of the Plan Year in which the Excess
Contributions were made and the date of distribution, counting the month of
distribution if distribution occurs after the 15th day of such month.
12.
<PAGE> 15
ARTICLE 4
EMPLOYER CONTRIBUTIONS
4.1 MATCHING CONTRIBUTION. The Employer shall make a fixed matching
contribution to each Participant's Matching Contribution Account equal to 50% of
the first 6% of such Participant's Salary Reduction Contribution. The Employer
may also elect to make a discretionary matching contribution. Although the
amount to be contributed for each Plan Year by the Employer as a discretionary
matching contribution under this Section 4.1 is purely discretionary, any such
contributed amounts will be allocated `to the Matching Contribution Accounts of
each Participant on the basis of a fraction, the numerator of which is equal to
the amount of the Participant's Salary Reduction Contribution, and the
denominator of which is the sum total of all Participants' Salary Reduction
Contributions.
4.2 LIMITATIONS ON MATCHING CONTRIBUTIONS. The Employer shall not make
matching contributions to the Plan which would cause the Plan not to satisfy at
least one of the following tests in any Plan Year:
(a) The Actual Contribution Percentage for the group of Highly
Compensated Employees shall not exceed the Actual Contribution Percentage for
all other eligible Employees multiplied by 1.25; or
(b) The Actual Contribution Percentage for the group of Highly
Compensated Employees shall not exceed the Actual Contribution Percentage for
all other eligible Employees multiplied by 2.0, provided that the Actual
Contribution Percentage for the group of Highly Compensated Employees does not
exceed the Actual Contribution Percentage for all other eligible Employees by
more than two (2) percentage points or such lesser amount as the Secretary of
the Treasury shall prescribe to prevent the multiple use of this alternative
limitation with respect to any Highly Compensated Employee.
For purposes of this Section 4.2, the Actual Contribution Percentage for
a specified group of Employees shall be the average of the ratios (calculated
separately as a Contribution Percentage for each Employee in the group) of (i)
Employee voluntary contributions and the matching contributions under the Plan
on behalf of the Employee for the Plan Year, to (ii) the Employee's Compensation
for that portion of the Plan Year during which the Employee was eligible to
participate. The Contribution Percentage for a Participant who is not allocated
a matching contribution shall be 0%. For purposes of determining Contribution
Percentages, Salary Reduction Contributions are considered to have been made in
the Plan Year in which contributed to the Trust. Employer contributions will be
considered made for a Plan Year if made no later than the end of the
twelve-month period beginning on the day after the close of the Plan Year. In
computing Contribution Percentages, the Committee may include in subparagraph
(i) above, Salary Reduction Contributions, except for Salary Reduction
Contributions which are properly distributed as excess Annual Additions under
Section 4.7, and base contributions which are 100% vested when made and are not
available for withdrawal under any circumstances.
In computing Contribution Percentages, the Committee shall not include
matching contributions that arc forfeited either to correct Excess Aggregate
Contributions under Section
13.
<PAGE> 16
4.3 or because the contributions to which the matching contributions relate are
excess deferrals under Section 3.4, Excess Contributions under Section 3.6 or
Excess Aggregate Contributions under Section 4.3.
The Contribution Percentage for any Employee who is a Highly Compensated
Employee for the Plan Year and who has matching contributions allocated to his
account under two or more plans of the Employer shall be determined as if all
such contributions were made under a single plan. If the above plans have
different plan years, the plans ending with or within the same calendar year
shall be treated as a single plan.
In the event that this Plan satisfies the requirements of Sections
401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more
other plans, or if one or more other plans satisfy the requirements of Sections
401(m), 401(a)(4) or 410(b) of the Code only if aggregated with this Plan, then
this Section 4.2 shall be applied by determining the Contribution Percentages of
Employees as if all such plans were a single plan. Plans may be aggregated in
order to satisfy Section 401(m) of the Code only if they have the same plan
year.
The determination and treatment of the Contribution Percentage of any
Employee shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury. The Employer shall maintain records sufficient to
demonstrate satisfaction of the Actual Contribution Percentage test.
4.3 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. Excess Aggregate
Contributions and income allocable thereto shall be distributed no later than
March 15 of the Plan Year following the Plan Year in which any such Excess
Aggregate Contribution were made, but in no event shall the Excess Aggregate
Contributions be distributed later than the last day of the Plan Year following
the Plan Year in which the contributions giving rise to the Excess Aggregate
Contributions were allocated. If Excess Aggregate Contributions are distributed
more than 2_ months after the last day of the Plan Year in which such excess
amounts arose, a ten (10) percent excise tax will be imposed on the Employer
maintaining the Plan with respect to those mounts. Excess Aggregate
Contributions shall be treated as Annual Additions under the Plan.
For purposes of Section 4.3, "Excess Aggregate Contributions" shall
mean, with respect to any Plan Year, the excess of the aggregate Contribution
Percentage amounts taken into account in computing the numerator of the
Contribution Percentage actually made on behalf of Highly Compensated Employees
for such Plan Year, over the maximum Contribution Percentage amounts permitted
by the Actual Contribution Percentage test (determined by reducing contributions
made on behalf of Highly Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages). Such determination
shall be made after first determining Excess Contributions pursuant to Section
3.6 and then determining Excess Aggregate Contributions pursuant to this Section
4.3. The Excess Aggregate Contributions to be distributed to a Participant shall
be adjusted by the income or loss allocable to such Excess Aggregate
Contribution. The income or loss allocable to the Excess Aggregate Contributions
shall be the sum of (1) the amount determined by multiplying the income or loss
allocable to the Participant's accounts containing the excess amounts for the
Plan Year by a fraction, the numerator of which is the Excess Aggregate
Contributions on behalf of the Participant for the
14.
<PAGE> 17
Plan Year and the denominator of which is the Participant's account balance in
the accounts containing the excess amounts as of the Accounting Date of the Plan
Year in which the Excess Aggregate Contribution is made without regard to any
gain or loss allocable to such total amount for the Plan Year; and (2) ten (10)
percent of the amount determined under (1) multiplied by the number of whole
calendar months between the end of the Plan Year in which the Excess Aggregate
Contributions were made and the date of distribution, counting the date of
distribution if distribution occurs after the 15th day of such month.
4.4 FORFEITURE OF MATCHING CONTRIBUTIONS. In the event a matching
contribution relates to an excess deferral under Section 3.4, or an Excess
Contribution under Section 3.6, the matching contribution and income allocable
thereto shall be forfeited. The income allocable to a matching contribution
shall be determined in accordance with the procedure for determining income
allocable to Excess Aggregate Contributions set forth in Section 4.3. Forfeited
matching contributions and the income allocable thereto shall be used first for
the payment of Plan expenses, and any remaining forfeitures shall be allocated
in the manner described in Section 6.5. The forfeited amounts are treated as
Annual Additions under the Plan for those Participants from whose Accounts the
amounts are forfeited.
4.5 DISCRETIONARY BASE CONTRIBUTIONS. For each Plan Year, the Employer
may contribute to the Trust a discretionary base contribution amount if the
Employer deems it advisable. The Employer's base contribution amount will be
allocated only to Participants who are employed by the Employer on the last day
of the Plan Year and who have been credited with one thousand (1,000) Hours of
Service for that Plan Year, except that a Participant whose service with the
employer terminates in a Plan Year due to:
(a) retirement on or after reaching his Normal Retirement Date,
(b) death or disability, or
(c) upon termination of employment with the Employer pursuant to
an employment reduction plan during the period November 1, 1996 through and
including December 31, 1997, will also share in the allocation of the Employer's
base contribution for the Plan Year. Notwithstanding the foregoing, if a
Participant completes 501 or more Hours of Service, regardless of whether he is
employed on the last day of the Plan Year, he will receive a base contribution
if such contribution is necessary to enable the Plan to satisfy the minimum
coverage test of Section 410(b) of the Code or the minimum participation test of
Section 401(a)(26) of the Code. The allocation of the Employer's base
contribution shall be based on a ratio, the numerator of which is the
Participant's Compensation for the Plan Year, and the denominator of which is
the total Compensation for all Participants for that Plan Year.
4.6 EMPLOYER CONTRIBUTIONS. This Plan is intended to be a profit sharing
plan to which Employer contributions shall be made without regard to current or
accumulated profits. All contributions by the Employer shall be paid to the
Trustee not later than the time prescribed by law for filing the federal income
tax return of the Employer, including any extensions which have been granted for
the filing of such return.
15.
<PAGE> 18
4.7 LIMITATION ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. If an Employee
does not and has not ever received an allocation of Annual Additions, the amount
of Annual Additions which the Committee may allocate under this Plan on a
Participant's behalf for a Limitation Year shall not exceed the Maximum
Permissible Amount. Prior to the determination of the Participant's actual
Compensation for a Limitation Year, the Committee may determine the Maximum
Permissible Amount on the basis of the Participant's estimated annual
Compensation for such Limitation Year. The Committee shall make this
determination on a uniform and reasonable basis for all Participants similarly
situated. As soon as is administratively feasible after the end of the
Limitation Year, the Committee shall determine the Maximum Permissible Amount
for the Limitation Year on the basis of the Participant's Compensation for the
Limitation Year.
If, as a result of the Committee's estimation of the Participant's
Compensation, as a result of a forfeiture allocation, or as a result of a
reasonable error in determining the amount of Salary Reduction Contributions
that may be made with respect to any Participant under the limits of Section 415
of the Code, an Excess Amount exists, any Salary Reduction Contributions or
nondeductible voluntary contributions will be returned to the Participant. To
the extent an Excess Amount still exists, the Committee shall reduce any
Employer contributions and forfeitures to the Participant's Accounts at the end
of the Limitation Year by the Excess Amount, and any remaining Excess Amount
shall be carded over to the next Limitation Year. If the Participant is not
covered by the Plan as of the end of the Limitation Year, then the Excess Amount
will be allocated to the Accounts of all other Participants in the Plan for the
Limitation Year before any other amounts are allocated for such Limitation Year.
If an Employee is a Participant at any time in both a defined benefit
plan and a defined contribution plan maintained by the Employer, the sum of the
defined benefit plan fraction and the defined contribution plan fraction for any
Plan Year may not exceed 1.0.
The defined benefit plan fraction for any Plan Year is a fraction, the
numerator of which is the Participant's projected annual benefit under the plan
(determined at the close of the Plan Year) and the denominator of which is the
lesser of (1) 1.25 multiplied by the dollar limitation in effect for such Plan
Year under Section 415(b)(1)(A) of the Code as adjusted by Section 415(d) of the
Code; or (2) 1.4 multiplied by one-hundred percent (100%) of the Participant's
average monthly Compensation during the three consecutive years when the total
Compensation paid to him was highest, including any adjustment under Section
415(b) of the Code. Notwithstanding the above, if the Participant was a
participant as of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans maintained by the
Employer which were in existence on May 6, 1986, the denominator of this
fraction will not be less than 125 percent of the sum of the annual benefits
under such plans which the Participant had accrued as of the close of the last
Limitation Year beginning before January 1, 1987, disregarding any changes in
the terms and conditions of the plan after May 5, 1986. The preceding sentence
applies only if the defined benefit plans individually and in the aggregate
satisfied the requirements of Section 415 for all Limitation Years beginning
before January 1, 1987.
The defined contribution plan fraction for any Plan Year is a fraction,
the numerator of which is the sum of the Annual Additions to the Participant's
Account Balance as of the close of
16.
<PAGE> 19
the Plan Year, (including the Annual Additions attributable to the Participant's
nondeductible employee contributions to all defined benefit plans, whether or
not terminated, maintained by the Employer, and the Annual Additions
attributable to all welfare benefit funds, as defined in Section 419(e) of the
Code and individual medical accounts, as defined in Section 415(1)(2) of the
Code, maintained by the Employer) and the denominator of which is the sum of the
applicable maximum amounts of Annual Additions which could have been made under
Section 415(c) of the Code for such Plan Year and for all prior years of such
Participant's employment. If the employee was a Participant as of the end of the
first day of the first Limitation Year beginning after December 31, 1986, in one
or more defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the defined benefit fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal to the
product of (1) of the excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted from the numerator
of this fraction. The adjustment is calculated using the fractions as they would
be computed as of the end of the last Limitation Year beginning before January
1, 1987, and disregarding any changes in the terms and conditions of the Plan
made after May 5, 1986, but using the Section 415 limitation applicable to the
first Limitation Year beginning on or after January 1, 1987.
The applicable maximum amount for any Plan Year shall be equal to the
lesser of (1) 1.25 multiplied by the dollar limitation in effect for such Plan
Year under Section 415(c)(1)(A) of the Code; or (2) 1.4 multiplied by
twenty-five percent (25%) of the Participant's Compensation for such Plan Year.
For purposes of this limitation, all defined benefit plans of the Employer,
whether or not terminated, are to be treated as one defined benefit plan and all
defined contribution plans of the Employer, whether or not terminated, are to be
treated as one defined contribution plan.
The following definitions apply to this Section only:
(a) "Maximum Permissible Amount" - For a Limitation Year, the
Maximum Permissible Amount with respect to any Participant shall be the lesser
of (i) $30,000 (or, if greater, 25% of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code), or (ii) twenty-five percent (25%) of the
Participant's Compensation for the Limitation Year.
(b) "Compensation" - Compensation as defined in Section
1.415-2(d)(10) of the Treasury Regulations.
(c) "Employer" - The Employer which adopts this Plan as well as
any entity which must be aggregated with the Employer pursuant to Sections
414(b), (c), (m), (n) or (o) of the Code.
(d) "Excess Amount" - The excess of the Participant's Annual
Additions credited to the Participant's Account for the Limitation Year over the
Maximum Permissible Amount. Any Excess Amount shall be held in a suspense
account which does not participate in the allocation of the Trust's investment
gains and losses. Excess Amounts may not be distributed to Participants or
former Participants, except as otherwise provided in Section 4.7.
17.
<PAGE> 20
Any Excess Amount which is allocated shall be deemed to be an Annual Addition
for the Limitation Year in which it is allocated.
(e) "Limitation Year" - The Plan Year.
(f) "Projected Annual Benefit" - The annual retirement benefit
(adjusted if such benefit is expressed in a form other than a straight life
annuity or qualified joint and survivor annuity) to which the Participant would
be entitled under the terms of the plan assuming:
(1) the Participant will continue employment until
normal retirement age under the plan (or current
age, if later), and
(2) the Participant's Compensation for the current
Limitation Year and all other relevant factors used
to determine benefits under the Plan will remain
constant for all future Limitation Years.
ARTICLE 5
PARTICIPANT CONTRIBUTIONS
5.1 VOLUNTARY CONTRIBUTIONS. Effective as of the Effective Date no
voluntary contributions may be rendered. All voluntary contributions made after
December 31, 1986 and the income allocable thereto shall be treated as a
separate contract for purposes of the distribution rules under Section 72 of the
Code. The Committee shall maintain records of withdrawals, contributions,
earnings and losses attributable to each contract.
Each Participant shall have the right to make withdrawals of his
voluntary contributions from the Voluntary Contribution Account, upon prior
written notice to the Plan Committee. No withdrawal shall be for less than Two
Hundred Fifty Dollars ($250) and only one withdrawal may be made under this
Section 5.1 in any Plan Year. For purposes of this Section 5.1, the Voluntary
Contribution Account shall be deemed to include the corresponding sub-accounts,
if any, of the Historic Account.
Withdrawals shall be made from pre-1987 voluntary contributions first.
After the contract attributable to pre-1987 voluntary contributions is depleted,
withdrawals can be made from the other contract.
5.2 ROLLOVER CONTRIBUTIONS. Any Employee, with the Committee's consent,
may contribute cash to the Trust Fund, if the contribution is a Rollover
Contribution. For this purpose a Rollover Contribution means (a) an Eligible
Rollover Distribution within the meaning of Section 402(c)(4) of the Code; (b) a
contribution by an Employee of a distribution received from the qualified plan
of another employer, provided the Employee makes the contribution within 60 days
of his receipt of a distribution which satisfied the requirements of Section
402(a)(5) of the Code before January 1, 1993 and which satisfied the
requirements of Section 402(c)(1) after December 31, 1992; (c) a contribution by
an Employee under Section 408(d)(3) of the Code of the balance in an individual
retirement account or annuity which amount is attributable to a prior rollover
distribution which satisfied the requirements of Section
18.
<PAGE> 21
402(a)(5) of the Code before January 1, 1993 and which satisfied the
requirements of Section 402(c)(1) after December 31, 1992; or (d) a direct
transfer of the Employee's interest from the trustee of a qualified plan
maintained by another employer. Before accepting the Rollover Contribution, the
Committee may require the Employee to furnish satisfactory evidence that the
proposed transfer is in fact a Rollover Contribution that the Code permits a
Employee to make to a qualified plan. The Committee shall not accept any amount
from or attributable to any defined benefit plan or other plan which would
require the Plan to offer or to provide automatic survivor benefits under
Section 401(a)(11) of the Code. A Rollover Contribution is not an Annual
Addition under Section 1.3 or Section 4.7.
Rollover Contributions are 100% vested at all times and, effective April
1, 1994, follow the distribution restrictions applicable to base contributions.
ARTICLE 6
TERMINATION OF SERVICE
6.1 NORMAL RETIREMENT DATE. Upon reaching his Normal Retirement Date, a
Participant shall be fully vested in his Account Balance. A Participant who
remains employed after reaching his Normal Retirement Date shall continue to
fully participate in this Plan. Upon termination of a Participant's employment
for any reason after Normal Retirement Date, the Committee shall direct the
Trustee to commence payment of the Participant's Account Balance to him (or to
his Beneficiary if the Participant is deceased), in accordance with the
provisions of Article 7 no later than sixty (60) days after the close of the
Plan Year in which the Participant's employment terminates.
6.2 PARTICIPANT DISABILITY. A Participant shall be fully vested in his
Account Balance if he is deemed disabled by the Committee. The Committee shall
direct the Trustee to commence payment of the Participant's Account Balance to
him in accordance with the provisions of Article 7 no later than sixty (60) days
after the close of the Plan Year in which the Participant is deemed disabled.
The Plan shall consider a Participant disabled on the date the Committee
determines the Participant, because of a physical or mental disability, will be
unable to perform the duties of his customary position of employment (or is
unable to engage in any substantial gainful activity) for an indefinite period
which the Committee considers will be of long and continued duration. The
Committee may require a Participant to submit to a physical examination in order
to confirm disability. If the disabled Participant is a member of the Committee,
a disinterested third party shall be appointed by the Committee to evaluate the
Committee member's condition. The Committee shall apply the provisions of this
Section 6.2 in a non-discriminatory, consistent and uniform manner.
6.3 TERMINATION OF SERVICE PRIOR TO NORMAL RETIREMENT DATE. Upon
termination of a Participant's employment prior to Normal Retirement Date (for
any reason other than death or disability), the Committee shall direct the
Trustee to commence payment of the Participant's vested Account Balance to him
(or to his Beneficiary if the Participant is deceased), in accordance with the
provisions of Article 7, no later than sixty (60) days after the close of the
Plan Year in which the Participant's employment terminates.
19.
<PAGE> 22
6.4 VESTING-EMPLOYER CONTRIBUTIONS. Amounts credited to a Participant's
Matching Contribution Account shall be one hundred percent (100%) vested at all
times. A Participant's Base Contribution Account and Historic Account
attributable to similar Employer base contribution amounts, shall be one hundred
percent (100%) vested upon:
(a) reaching his Normal Retirement Date (if employed by the
Employer on or after that date),
(b) termination of his employment with the Employer as a result
of death or disability, or
(c) termination of employment with the Employer pursuant to an
employment reduction plan during the period November 1, 1996 through and
including December 31, 1997.
If a Participant's employment with the Employer terminates prior to his
Normal Retirement Date for any reason other than those mentioned above, then for
each Year of Service he shall earn a Nonforfeitable percentage of his Base
Contribution Account as determined by the following vesting schedule:
<TABLE>
<CAPTION>
Percent of Nonforfeitable
Years of Service Base Contribution Account
<S> <C>
0 0%
1 10%
2 20%
3 30%
4 40%
5 60%
6 80%
7 or more 100%
</TABLE>
Notwithstanding the above, the Account Balance of a Participant who as
of December 31, 1991 was a participant in the Danbury Pharmacal, Inc. Profit
Sharing Plan and who had at least three (3) Years of Service as of such date
shall be 50% vested upon completion of four (4) Years of Service.
For purposes of determining Years of Service under Section 6.4, the Plan
shall take into account all Years of Service an Employee completes with the
Employer or any entity which is required to be aggregated with the Employer
pursuant to Sections 414(b), (c), (m), (n) or (o) of the Code.
Solely for purposes of determining a Participant's Nonforfeitable
percentage of his Base Contribution Account and Historic Account which accrued
prior to a Forfeiture Break in Service, the Plan shall disregard any Years of
Service after the Participant first incurs a Forfeiture Break in Service. A
Participant incurs a Forfeiture Break in Service when he incurs five (5)
consecutive one-year Breaks in Service.
20.
<PAGE> 23
If a Participant who has no vested interest incurs a Break in Service,
the Committee shall disregard the Participant's pre-break Years of Service for
purposes of determining his vested interest in his post-break Account Balance if
the number of the Participant's aggregate one-year Breaks in Service equals or
exceeds the greater of five (5) or the number of the Participant's aggregate
Years of Service.
6.5 FORFEITURE AND REPAYMENT. If a Participant terminates employment
before his interest in his Base Contribution Account or Historic Account are
fully vested, that portion which has not vested shall be forfeited as of the
date of his termination of employment. If the value of the Participant's vested
Base Contribution Account or Historic Account is zero, the Participant shall be
deemed to have received a distribution of such vested Account Balance. If a
Participant who has received a distribution of the Nonforfeitable portion of his
Account Balance is rehired before he incurs a Forfeiture Break in Service, he
may repay to the Trustees an amount equal to the distribution amount. The
Participant must make repayment prior to the earlier of the date he would incur
a Forfeiture Break in Service after such distribution, or five (5) years after
the date on which he is re-employed. Such repayment shall be credited to his
Account Balance and an additional amount equal to the forfeited portion of his
Base Contribution Account and Historic Account will either be allocated to the
Participant's Account Balance out of current forfeitures or contributed by the
Employer as of the last day of that Plan Year. It shall be the duty of the
Employer to give timely notification to any rehired Employee if such Employee is
eligible to make a repayment, of his right to make such a repayment, and of the
consequences of not making such repayment. In the case of a terminated
Participant who is deemed to have received a distribution, or who did not
receive a distribution of his vested account balance upon termination of
employment, and who is rehired before he incurs a Forfeiture Break in Service,
his forfeited Base Contribution Account and Historic Account shall be restored
upon reemployment. In the case of a terminated Participant who does not receive
a distribution of the Nonforfeitable portion of his Account Balance and whose
service resumes after five (5) consecutive one-year Breaks in Service, the
Nonforfeitable Account Balance shall be maintained as a fully vested subaccount
within his Base Contribution Account and Historic Account.
Subject to any restoration allocation of forfeited amounts on behalf of
a Participant who repays a distribution as described above, and the payment of
Plan expenses, remaining forfeiture amounts will be allocated to all
Participants employed on the last day of the Plan Year who have completed one
thousand (1,000) Hours of Service on a per capita basis.
ARTICLE 7
TIME AND METHOD OF PAYMENT OF BENEFITS
7.1 TIME OF PAYMENT OF ACCOUNT BALANCE. Unless the Participant elects in
writing, if distribution has not yet commenced pursuant to Sections 6.2 or 6.3,
the Committee shall direct the Trustee to commence distribution of a
Participant's Account Balance determined as of the Accounting Date coincident
with or preceding the event causing distribution no later than sixty (60) days
after the close of the Plan Year in which the later of the following events
occurs:
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(a) The date the Participant reaches his Normal Retirement Date,
or
(b) The date the participant terminates service with the
Employer.
The Committee shall, however, direct the Trustee to commence
distribution no later than the Participant's Required Beginning Date. The
Required Beginning Date is April 1 of the calendar year following the calendar
year in which the Participant attains age 70 1/2, notwithstanding the
Participant's continued employment; except that any Participant who attained age
70 1/2 before January 1, 1988, and who is not a five percent owner in the Plan
Year in which he attained age 66 1/2 or any later Plan Year, need not commence
receiving payments hereunder until April 1 of the year following the year in
which he actually retires.
7.2 DEFERRED DISTRIBUTION. A Participant who separates from service
prior to attaining age 70 1/2 may request that the Committee direct the Trustee
to defer commencement of his distribution until his Required Beginning Date.
7.3 FORMS OF PAYMENT. The Participant may elect one of the optional
forms of payment described herein. The election of such option must be in
writing, in such form as the Committee shall prescribe, signed by the
Participant and filed with the Committee during the 90 day period preceding the
Payment Starting Date. Any election may be revoked by written notice filed with
the Committee at least 30 days prior to the Participant's Payment Starting Date.
Such distribution may commence less than 30 days after the Participant is
advised that he may elect an immediate distribution, provided that:
(a) the Committee clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and
(b) the Participant, after receiving the notice, affirmatively
elects a distribution.
The following optional forms of distribution will be available:
(a) a lump sum payment;
(b) installment payments over a period of five years; or
(c) installment payments over a period often years.
7.4 PAYMENT UPON DEATH. If distribution of the Participant's Account
Balance has commenced in accordance with a method selected pursuant to Section
7.3 and the Participant dies before his entire interest is distributed to him,
the remaining portion of such interest shall be distributed at least as rapidly
as under the method of distribution selected by the Participant as of his date
of death.
If a Participant dies prior to the commencement of distribution of his
Account Balance, distribution of his Account Balance to his designated
Beneficiary shall be completed by
22.
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December 31 of the calendar year containing the fifth anniversary of his death,
unless one of the following exceptions apply:
(a) If the Participant's Account Balance is payable to or for the
benefit of a designated Beneficiary, it may be distributed over a period not
extending beyond the life expectancy of such Beneficiary, provided such
distribution commences no later than the December 31 following the close of the
calendar year in which the Participant's death occurred.
(b) In the event that the Participant's spouse is his designated
Beneficiary, distribution to the spouse must commence no later than the later of
the December 31 of the calendar year in which the de-ceased Participant would
have attained age 70 1/2 had he survived or the December 31 following the close
of the calendar year in which the Participant's death occurred. If the surviving
spouse dies before distribution to such spouse has commenced, then the five year
distribution requirement of this Section shall apply as if the spouse were the
Participant.
If the Participant has not designated a method of distribution in
accordance with (a) or (b) above, the Participant's designated Beneficiary must
elect the method of distribution no later than the earlier of (1) December 31 of
the calendar year in which distributions would be required to begin under this
Section, or (2) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant. If the Participant has no
designated Beneficiary, or if the designated Beneficiary does not elect a method
of distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth anniversary
of the Participant's death.
For purposes of this Section, any amount paid to a child of the
Participant will be treated as if it had been paid to the surviving spouse if
the amount becomes payable to the surviving spouse when the child reaches the
age of majority. For purposes of this Section only, distribution of a
Participant's interest is considered to begin on the Participant's Required
Beginning Date (or, if (b) above is applicable, the date distribution is
required to begin to the surviving spouse).
If the Trustee makes distribution in accordance with the exceptions in
either clause (a) or (b), the minimum distribution for a calendar year equals
the Participant's Nonforfeitable Account Balance as of the latest Accounting
Date preceding the beginning of the calendar year (adjusted by distributions
made after the Accounting Date but prior to the end of the calendar year),
divided by the designated Beneficiary's life expectancy without recalculation.
The Committee shall use the unisex life expectancy multiples under
Treasury regulation Section 1.72-9 for purposes of applying this paragraph. In
construing this Section 7.4, the method of distribution to the Participant's
Beneficiary must satisfy Section 401(a)(9) of the Code and the applicable
Treasury regulations.
7.5 MINIMUM DISTRIBUTION REQUIREMENTS. Notwithstanding anything else to
the contrary herein, the Committee may not direct the Trustee to distribute the
Participant's Nonforfeitable Account Balance, nor may the Participant elect to
have the Trustee distribute his Account Balance over a period extending beyond
the Participant's life expectancy or over a
23.
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period extending beyond the joint life and last survivor life expectancy of the
Participant and his designated Beneficiary. The minimum distribution for a
calendar year equals the Participant's Nonforfeitable Account Balance as of the
most recent Accounting Date preceding the calendar year (adjusted for
allocations of contributions, forfeitures and distributions made after the
Accounting Date but prior to the end of the calendar year, if applicable),
divided by the applicable life expectancy or, if the Participant's spouse is not
his designated Beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of Section 1.401(a)(9)-2 of the proposed regulations. The
applicable life expectancy shall be the life expectancy (or joint and last
survivor expectancy) calculated using the attained age of the Participant (or
designated Beneficiary) as of the Participant's (or designated Beneficiary's)
birthday in the first distribution calendar year reduced by one for each
calendar year which elapsed since the date life expectancy was first calculated.
Applicable life expectancies will be determined under the unisex life expectancy
multiples under Treasury regulation Section 1.72-9, and will not be recomputed.
The minimum distribution required for the Participant's first distribution
calendar year must be made on or before the Participant's Required Beginning
Date. The minimum distribution for other calendar years, including the minimum
distribution for the distribution calendar year in which the Participant's
Required Beginning Date occurs, must be made on or before December 31 of that
distribution calendar year. The first distribution calendar year is the calendar
year immediately preceding the calendar year which contains the Participant's
Required Beginning Date. All distributions under the Plan must be made in
accordance with Section 401(a)(9) of the Code and the Treasury regulations
thereunder. To the extent provisions of this Plan are inconsistent with Section
401(a)(9) of the Code, Section 401(a)(9) of the Code will override such
provisions.
7.6 IMMEDIATE DISTRIBUTION. If the Participant's Nonforfeitable Account
Balance is $3,500 or less, including voluntary contributions, if applicable, the
Committee will immediately distribute such amount to the Participant without his
consent upon his termination of employment. Effective as of January 1, 1998, the
preceding reference to $3,500 will be changed to $5,000.
ARTICLE 8
WITHDRAWALS
8.1 HARDSHIP WITHDRAWAL. If an Employee elects to withdraw all or any
part of his Rollover, Salary Reduction Contribution Account, Qualified
Non-Elective Contribution Account, Nonforfeitable Base Contribution Account and
his Matching Contribution Account prior to the date he attains age 59 1/2, such
withdrawal will require the consent of the Committee and such consent shall be
given only if, under uniform rules of application, the Committee determines that
the purpose of the withdrawal is to meet heavy and immediate financial needs of
the Participant, the amount of the withdrawal does not exceed such financial
needs, and the amount of the withdrawal is not reasonably available from the
other resources of the Participant. Permitted withdrawals include distributions
for (1) payment of college or graduate school tuition and related educational
fees for college or graduate school for the next 12 months for the Participant,
the Participant's spouse, children or dependents; (2) costs directly related to
the purchase of a principal residence for the Participant, excluding mortgage
payments; (3) payments necessary to prevent the Participant's eviction from, or
foreclosure on the mortgage of, the
24.
<PAGE> 27
Participant's principal residence; and (4) expenses for medical care, to the
extent not covered by insurance, which have either been previously incurred by
the Participant, the Participant's spouse or dependents or are necessary for the
Participant, the Participant's spouse or dependents to obtain medical care.
Other withdrawals will be approved by the Committee on the basis of uniform,
nondiscriminatory standards.
The foregoing definition of hardship may be altered by the Committee, as
may the time, amount and manner of distributions under this Section, to the
extent required by the Code or applicable regulations. No distributions may be
made under this Section with respect to income allocable to Rollover, Salary
Reduction Contribution Account, Qualified Non-Elective Contribution Account,
Nonforfeitable Base Contribution Account or the Matching Contribution Account
amounts. A hardship withdrawal must be at least $250 and limited to only one in
any Plan Year.
8.2 AGE 59 1/2 WITHDRAWALS. A Participant may withdraw any portion of
his Salary Reduction Contribution Account and Matching Contribution Account and
his Qualified Non-Elective Contribution Account for any reason after attainment
of age 59 1/2. Effective June 1, 1996, a Participant may also withdraw any
portion of his Rollover Contribution Account for any reason after attainment of
age 59 1/2. Only one such withdrawal will be permitted in any Plan Year.
ARTICLE 9
INVESTMENT OF CONTRIBUTIONS
9.1 FUNDING VEHICLE. The Employer has entered into a Trust Agreement
with the Trustee providing for the establishment of a Trust to which all Salary
Reduction Contributions, matching contributions, base contributions, Qualified
Non-Elective Contributions, rollover contributions, historic contributions and
voluntary contributions, if any, shall be contributed and from which all
benefits under the Plan shall be paid.
9.2 INVESTMENT FUNDS. The Trustee may, pursuant to the direction of the
Investment Committee, establish and maintain separate subfunds into which the
Participants may direct the investment of their Accounts.
9.3 INVESTMENT ELECTIONS. If the Trustee maintains separate subfunds
pursuant to Section 9.2, each Participant's Account Balance attributable to
Salary Reduction Contributions, matching Contributions, rollover contributions
and voluntary, contributions shall be allocated to any or all of the subfunds,
in multiples of five percent (5%), as the Participant shall elect. Effective as
of October 1, 1997, the above reference to five percent (5%) is changed to one
percent (1%). Such election shall be made by the Participant in writing and
shall be filed with the Committee. A Participant's initial election shall be
made during the Enrollment Period preceding his entry into the Plan. Separate
accounts will be maintained reflecting the interest of each Participant
attributable to each subfund.
9.4 CHANGE IN INVESTMENT ELECTION. Any investment election made by the
Participant shall be deemed to be a continuing election until changed. A
Participant may change
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<PAGE> 28
his investment elections on a daily basis. Such change shall be effective only
with respect to future amounts deferred from the Participant's Compensation,
future matching contributions, and future rollover contributions.
9.5 TRANSFERS BETWEEN FUNDS. A Participant may direct the Trustee to
transfer designated amounts from one subfund to another. A Participant may not
direct any money in the Historic Account. A Participant may transfer all amounts
on a daily basis. Notwithstanding any provision in this Plan to the contrary,
investment elections, changes or transfers, loans, withdrawals decisions, and
any other decision or election by a Participant (or Beneficiary) under this Plan
may be accomplished by electronic or telephonic means which are not otherwise
prohibited by law and which are in accordance with procedures and/or systems
permitted by the Committee.
9.6 INVESTMENT OF EARNINGS. All earnings (whether denominated income,
capital gain or otherwise) from investments in each subfund shall be reinvested
in the same subfund.
9.7 LOAN FUNDS. Notwithstanding anything in this Article 9 to the
contrary, any Employee who borrows from the Trust Fund pursuant to Article 10
will be treated as having directed the Trustee to allocate such portion of his
Account Balance as is equal to the borrowed amount to the Employee's Loan Fund.
The Loan Fund, and the promissory note executed by the Employee held therein,
remains a part of the Trust Fund, but to the extent of the loan outstanding at
any time, the borrowing Employee's Loan Fund alone shares in any interest paid
on the loan, and it alone bears any expense or loss it incurs in connection with
the loan. The Trustee may retain in an interest-bearing account any interest and
principal paid on the borrowing Employee's loan in the Loan Fund on behalf of
the borrowing Employee until the Trustee deems it appropriate to add the amount
paid to the Employee's Loan Fund under the Plan (plus interest, if any) back to
the Employee's Account Balance, at the same time reducing the amount treated as
having been allocated to the Employee's Loan Fund by the amount of principal
payments made with respect to the loan.
9.8 UNIT ACCOUNTING. The Trustee or Administrative Delegate may, for
administrative purposes, establish unit values for one or more investment fund
(or any portion thereof) and maintain the accounts setting forth each
Participant's interest in such investment fund (or any portion there) in. terms
of such units, all in accordance with such rules and procedures as such Trustee
or Administrative Delegate shall deem to be fair, equitable and administratively
practicable. In the event that unit accounting is thus established for any
investment fund (or any portion thereof) the value of a Participant's interest
in that investment fund (or any portion thereof) at any time shall be an amount
equal to the then value of a unit in such investment fund (or any portion
thereof) multiplied by the number of units then credited to the Participant.
9.9 PASS-THROUGH OF VOTING RIGHTS.
(a) To the extent that a Participant directs the investment of
some portion of his Account Balance under this Article in Employer Stock, all
voting, tender, and similar rights shall be passed through to the Participant,
and the Participant shall direct the Trustee as to how
26.
<PAGE> 29
said rights shall be exercised. With respect to the portion of the Participant's
account which has been invested in the other investment options offered under
the Plan, the Trustee shall vote all interests held by the Trust in investment
options other than Employer Stock and shall do so in the sole interest of
Participants and Beneficiaries. For purposes of this Section, "Employer Stock"
shall mean qualifying employer securities of the Company (as defined in Section
408(e) of ERISA).
(b) Procedures shall be established and maintained to ensure the
confidentiality of all information regarding Participants' purchase, holding,
and sale of such securities of the Company under this Article as well as
Participants' exercise of appurtenant rights under this Section, except to the
extent necessary to comply with federal or state law not preempted by ERISA. The
Trustee is hereby designated as the fiduciary responsible for ensuring that
these confidentiality procedures are adequate and are followed, and shall be
further responsible for appointment of an independent fiduciary, who shall not
be an affiliate of the Employer, to carry out all activities relating to
securities of the Company under this Article which the Trustee determines
involve the potential for undue employer influence with respect to the direct or
indirect exercise of shareholder rights.
ARTICLE 10
LOANS
10.1 LOAN APPLICATIONS. An Employee or a Qualified Beneficiary may make
application to the Trustees to borrow from the Trust Fund, and the Trustees may,
in their sole discretion, permit such loan, provided that such loans shall be
made available to all such Employees and Qualified Beneficiaries on a reasonably
equivalent basis. For purposes of determining the maximum loan amount available
to an Employee, amounts credited to the Employee's Base Contribution Account
will be considered to be a part of his or her Account Balance for purposes of
Section 10.2(a)(ii) only if the Employee demonstrates that the reason for the
requested loan satisfies the conditions for hardship withdrawal under Section
8.1. A Qualified Beneficiary for this purpose, is a designated Beneficiary who
is a party-in-interest as defined in Section 3(14) of the Employee Retirement
Income Security Act of 1974, as amended. The authority herein granted to the
Trustees to approve loans from the Trust Fund shall not be used as a means of
distributing benefits before they otherwise become due. A loan must be in the
amount of at least two hundred fifty dollars ($250), and will be made only in
multiples of fifty dollars ($50). Only one loan will be granted in any twelve
consecutive month period, and no more than two loans may be outstanding at any
time.
10.2 LOAN TERMS AND CONDITIONS.
(a) The aggregate amount of all such loans to an Employee from
this Plan shall not, at the time any such loan is made, exceed the lesser of (i)
$50,000 reduced by the excess (if any) of the highest outstanding balance of
loans from the Plan during the one year period ending on the day before the date
on which such loan was made, over the outstanding balance of loans from the Plan
on the date on which such loan was made, or (ii) fifty percent (50%) of the
vested portion of the Employee's Account Balance at the time of the making of
such loan. For purposes of this limitation, all loans from all qualified plans
maintained by the
27.
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Employer or by any entity which is required to be aggregated with the Employer
pursuant to Sections 414(b), (c), (m) or (o) of the Code must be aggregated.
(b) Loans shall be made pursuant to notes approved by the
Trustees which shall bear a reasonable interest rate equal to the prevailing
rate charged by lenders for similar loans and shall specify the time and manner
of repayment, as determined by the Trustees.
(c) Loans shall not be made available to Employees who are Highly
Compensated Employees in an amount greater than the amount made available to
other Employees.
(d) For all loans, the Employee must consent in writing within
the 90 day period before the making of the loan, to the possible reduction in
the Employee's Account Balance if the terms of the loan are not properly
fulfilled and fully executed. The consent must be in writing, must acknowledge
the effect of the loan, and must be witnessed by a Plan representative or notary
public. A new consent shall be required if the Account Balance is used for
renegotiation, extension, renewal, or other revision of the loan.
Notwithstanding any other provisions of this Plan, the portion of the
Employee's vested Account Balance used as a security interest held by the Plan
by reason of a loan outstanding to the Employee shall be taken into account for
purposes of determining the amount of the Account Balance payable at the time of
death or distribution, but only if the reduction is used as repayment of the
loan. If less than 100% of the Employee's vested Account Balance (determined
without regard to the preceding sentence) is payable to the Beneficiary, then
the Account Balance shall be adjusted by first reducing the vested Account
Balance by the amount of the security used as repayment of the loan, and then
determining the benefit payable to the Beneficiary.
(e) All loans shall be adequately secured. A loan shall be deemed
to be adequately secured if the aggregate amount of all such loans to an
Employee does not exceed fifty percent (50%) of the vested amount of the
Employee's Account Balance at the time of the making of such loan. If, at any
time, the aggregate amount of outstanding loans to an Employee does exceed that
limitation, then the Trustees shall require the Employee to repay the amount of
principal balance due on such loans to an amount not in excess of such
limitation, or to adequately secure with collateral other than the vested amount
of the Employee's Account Balance the amount by which such loans exceed the
limitation. The Trustees shall have sole discretion to determine the nature and
amount of security required.
(f) The period for repayment of a loan issued pursuant to this
Section must, by the terms of the note, not exceed five (5) years.
Notwithstanding the above, if the purpose or use of the loan, as determined at
the time of issuance, is to acquire any dwelling unit which within a reasonable
time is to be used as the principal residence of the Employee, the period for
repayment of the loan may be extended to ten (10) years. Repayment of a loan
shall be made through payroll deduction, or if an Employee's employment
terminates, the Employee may elect, in the manner prescribed by the Trustees, to
make loan repayments directly to the Plan on a substantially level basis (not
less frequently than quarterly) within the time period set forth in the
promissory note representing the loan. Any loan may be prepaid in full or part
at any time. Any
28.
<PAGE> 31
loan shall, by its terms, require that repayment of principal and interest be
amortized at least quarterly over the period of the loan on a substantially
level basis.
(g) In the event the Employee's employment terminates, the loan
shall be accelerated and any amount due shall be paid from the Loan Fund, unless
the Employee elects, in the manner prescribed by the Trustees to make, and does
make in accordance with such election, loan repayments on a substantially level
basis to the Plan (not less frequently than quarterly). Any loan shall be
subject to such additional acceleration provisions as shall be determined by the
Trustees to be commercially reasonable.
(h) In the event of default of an active Employee, foreclosure on
the note and attachment of security will not occur until a distributable event
occurs in the Plan. In the event of default of a terminated Employee, the
Trustee shall deduct the total amount of the loan outstanding and any interest
and other charges then due and owing from the terminated Employee's Loan Fund
securing the Loan.
(i) No loans will be made to any shareholder-employee or
Owner-Employee. For purposes of this requirement, a shareholder-employee means
an employee or officer of an electing small business (Subchapter S) corporation
who owns (or is considered as owning within the meaning of Section 318(a)(1) of
the Code), on any day during the taxable year of such corporation, more than 5%
of the outstanding stock of the corporation.
(j) Except to the extent otherwise prohibited by law, the
deduction of the loan shall be made from the Employee's Account Balance in the
following order of priority: Rollover Contribution Account, Salary Reduction
Contribution Account, Matching Contribution Account, and Base Contribution
Account. For purposes of this Section 10.2(j), the Rollover Contribution
Account, Salary Reduction Contribution Account, Matching Contribution Account
and Base Contribution Account shall be deemed to include the corresponding
subaccounts, if any, of the Historic Account.
ARTICLE 11
EMPLOYER ADMINISTRATIVE PROVISIONS
11.1 INFORMATION TO COMMITTEE. The Employer shall supply current
information to the Committee as to the name, date of birth, date of employment,
annual Compensation, leaves of absence and date of termination of employment of
each Employee who is, or who will be eligible to become, a Participant under the
Plan, together with any other information which the Committee considers
necessary. The Employer's records as to the current information the Employer
furnishes to the Committee shall be conclusive as to all persons.
11.2 NO LIABILITY. The Employer assumes no obligation or responsibility
to any of its Employees, Participants or Beneficiaries for any act of, or
failure to act, on the part of its Committee or the Trustees.
11.3 INDEMNITY OF COMMITTEE. The Employer indemnifies and holds harmless
the members of the Committee, and each of them, from and against any and all
loss resulting from liability to which the Committee or members of the Committee
may be subjected by reason
29.
<PAGE> 32
of any act or conduct (except willful misconduct or gross negligence) in their
official capacities in the administration of this Plan or Trust or both,
including all expenses reasonably incurred in their defense in case the Employer
fails to provide such defense. The indemnification provisions of this Section
11.3 shall not relieve any Committee member from any liability he may have under
the Code or ERISA for breach of a fiduciary duty.
11.4 FACILITY OF PAYMENT. If satisfactory evidence is received that a
person entitled to receive any benefits is physically incapable or mentally
incompetent to receive such payment and give a valid release therefor, and
another person or institution has been maintaining or has custody of such
person, payment of such benefit may be made to such person or institution and
the release of such person or institution shall be a valid and complete
discharge of any liability under this Plan.
11.5 MISSING RECIPIENTS. If the Committee is unable, within three years
after any benefit becomes due under the Plan to a Participant or Beneficiary, to
make payment because the identity and/or whereabouts of such person cannot be
ascertained notwithstanding the mailing of due notice to any last known address
or addresses, the Committee shall direct that any such benefits shall be
forfeited and used to reduce future contributions; provided, however, that such
benefit shall be restored (in an amount equal to the amount forfeited) upon
proper claim made by such Participant or Beneficiary prior to the termination of
the Plan. In the event a proper claim is made, benefits under this Section shall
be restored first from forfeitures, and then from additional Employer
contributions made in order to restore such benefits.
ARTICLE 12
PARTICIPANT ADMINISTRATIVE PROVISIONS
12.1 BENEFICIARY DESIGNATION. The Beneficiary of a married Participant
shall be the surviving spouse. A married Participant may designate a Beneficiary
other than the spouse only if the Participant obtains the written consent of the
spouse to the alternate beneficiary, the spouse acknowledges the effect of the
consent and the spouse's signature is witnessed by a notary public or Plan
representative. Subject to the foregoing limitation, any Participant may from
time to time designate, in writing, any person or persons, contingently or
successively, to whom the Trustees shall pay his Account Balance in the event of
his death. The Committee shall prescribe the form for the written designation of
Beneficiary and, upon the Participant's filing the form with the Committee, it
effectively shall revoke all designations filed prior to that date by the same
Participant.
12.2 NO BENEFICIARY DESIGNATION. If a Participant fails to name a
Beneficiary, or if the Beneficiary named by a Participant predeceases him, then
the Trustees shall pay the Participant's Account Balance (subject to the
provisions of Articles 6 and 7) in the following order of priority to:
(a) The Participant's surviving spouse:
(b) The Participant's surviving children, including adopted
children, in equal shares;
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(c) The Participant's surviving parents, in equal shares; or
(d) The legal representative of the estate of the last to die of
the Participant and his Beneficiary.
The Committee shall direct the Trustees as to whom the Trustees shall
make payment under this Section 12.2.
12.3 PERSONAL DATA TO COMMITTEE. Each Participant and each Beneficiary
of a deceased Participant must furnish to the Committee such evidence, data or
information as the Committee considers necessary or desirable for the purpose of
administering the Plan. The provisions of this Plan are effective for the
benefit of each Participant upon the condition precedent that each Participant
will furnish promptly full, true and complete evidence, data and information
when requested by the Committee, provided that the Committee shall advise each
Participant of the effect of his failure to comply with its request.
12.4 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary of
a deceased Participant shall file with the Committee from time to time, in
writing, his post office address and any change of post office address. Any
communication, statement or notice addressed to a Participant or Beneficiary at
his last post office address filed with the Committee, or as shown on the
records of the Employer, shall bind the Participant, or Beneficiary, for all
purposes of this Plan.
12.5 ASSIGNMENT OR ALIENATION. Neither a Participant nor a Beneficiary
shall anticipate, assign or alienate (either at law or in equity) any benefit
provided under the Plan, and the Trustees shall not recognize any such
anticipation, assignment or alienation. Furthermore, a benefit under the Plan is
not subject to attachment, garnishment, levy, execution or other legal or
equitable process. The Committee shall, however, abide by any Qualified Domestic
Relations Order as defined in Section 414(p) of the Code and Section 206(d)(3)
of ERISA which is served upon the Plan. Procedures relating to any Qualified
Domestic Relations Order received by the Committee shall be administered
pursuant to Appendix A, attached to this Plan document.
12.6 NOTICE OF CHANGE IN TERMS. The Committee, within the time
prescribed by ERISA and the applicable regulations thereunder, shall furnish all
Participants and Beneficiaries with a summary description of any material
amendment to the Plan or notice of discontinuance of the Plan and all other
information required by ERISA to be furnished without charge.
12.7 INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan description, latest annual report,
any bargaining agreement, this Plan and Trust, as well as any contract or other
instrument under which the Plan was established or is operated. The Committee
will maintain all of the items listed in this Section 12.7 in its office, or in
such other place or places as it may designate from time to time in order to
comply with the regulations issued under ERISA, for examination during
reasonable business hours. Upon the written request of a Participant or
Beneficiary the Committee shall furnish him with a copy of any item listed in
this Section 12.7. The Committee may make a reasonable charge to the requesting
person for the copy so furnished.
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12.8 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Committee shall
provide adequate notice in writing to any Participant or to any Beneficiary
("Claimant") whose claim for benefits under the Plan the Committee has denied.
The Committee's notice to the Claimant shall set forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provisions on which the
Committee based its denial;
(c) A description of any additional material and information that
is needed; and
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Committee within seventy-five (75) days
after receipt of the Committee's notice of denial of benefits. The Committee's
notice must further advise the Claimant that his failure to appeal the action to
the Committee in writing within the seventy-five (75) day period will render the
Committee's determination final, binding and conclusive.
If the Claimant should appeal to the Committee, he, or his duly
authorized representative, may submit, in writing, whatever issues and comments
he or his duly authorized representative feels are pertinent. The Claimant, or
his duly authorized representative, may review pertinent Plan documents. The
Committee shall re-examine all facts to the appeal and make a final
determination as to whether the denial of benefits is justified under the
circumstances. The Committee shall advise the Claimant of its decision within
sixty (60) days of the Claimant's written request for review, unless special
circumstances (such as a heating) would make the rendering of a decision within
the sixty (60) day limit unfeasible, but in no event shall the Committee render
a decision respecting a denial for a claim for benefits later than one hundred
twenty (120) days after its receipt of a request for review.
The Committee's notice of denial of benefits shall identify the name and
address of each member of the Committee to whom the Claimant may forward his
appeal.
ARTICLE 13
COMMITTEE DUTIES WITH RESPECT TO PARTICIPANT'S ACCOUNT
13.1 MEMBERS' COMPENSATION AND EXPENSES. The Company shall appoint a
Committee to administer the Plan, and an Investment Committee to manage the
assets of the Plan, the members of which may or may not be Participants in the
Plan. The members of the Committee and the Investment Committee shall serve
without compensation for services as such, but the Employer shall pay all
expenses of the Committee and the Investment Committee, including the expense
for any bond required under ERISA.
13.2 TERM. Each member of the Committee and the Investment Committee
shall serve until his successor is appointed.
32.
<PAGE> 35
13.3 POWERS. In case of a vacancy in the membership of the Committee and
Investment Committee, the remaining members of the Committee may exercise any
and all of the powers, authority, duties and discretion conferred upon the
Committee and Investment Committee pending the filling of the vacancy.
13.4 GENERAL. The Committee shall have the following powers and duties:
(a) To select a Secretary, who need not be a member of the
Committee;
(b) To determine the rights of eligibility of an Employee to
participate in the Plan;
(c) To adopt rules of procedure and regulations necessary for the
proper and efficient administration of the Plan;
(d) To enforce the terms of the Plan and the rules and
regulations it adopts;
(e) To direct the Trustee as respects the crediting and
distribution of the Trust;
(f) To review and render decisions respecting a claim for (or
denial of a claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the Employer
may require for tax or other purposes;
(h) To engage the services of agents whom it may deem advisable
to assist it with the performance of its duties; and
(i) To exercise broad discretionary authority to determine
Employees' and Participants' eligibility for benefits as well as to construe the
terms of the Plan.
The Committee shall exercise all of its powers, duties and discretion
under the Plan in a uniform and nondiscriminatory manner.
13.5 MANNER OF ACTION. The decision of a majority of the members
appointed and qualified shall control.
13.6 DELEGATION OF FIDUCIARY DUTIES. In accordance with Section 405(c)
of ERISA, the Committee is authorized to delegate to specific persons or
officers any of its fiduciary responsibilities. Without limiting the foregoing
grant of authority, the Committee is specifically authorized to delegate the
duties assigned to it under Section 13.4(b)-(i) hereof. Any delegation of
fiduciary duty pursuant to this Section must be made in writing and agreed to by
a majority of the Committee's members. Such delegation shall not be effective
unless and until it is consented to in writing by the persons appointed to
perform the fiduciary duty being delegated. Any person or entity to whom the
Committee has delegated any administrative functions pursuant to a written
agreement shall be referred to as an Administrative Delegate.
33.
<PAGE> 36
13.7 INDIVIDUAL STATEMENT. As soon as practicable after each calendar
quarter of the Plan Year but within the time prescribed by ERISA and the
regulations under ERISA, the Committee will deliver to each Participant a
statement reflecting the condition of his Account Balance in the Trust as of
that date and such other information ERISA requires be furnished to the
Participant or Beneficiary. No Participant, except a member of the Committee,
shall have the right to inspect the records reflecting the Account Balance of
any other Participant.
13.8 LOAN POLICY. This Section 13.8 specifically authorizes the Trustee
of the Plan to establish an Employee loan program and to make loans on a
nondiscriminatory basis in accordance with this Plan and the loan policy
established by the Committee. The loan policy must be a written document and
must include the identity of the person authorized to administer the Employee
loan program, a procedure for applying for a loan, the criteria for approving or
denying a loan, the limitations, if any, on the types and amounts of loans
available, the procedure for determining a reasonable rate of interest, the
types of collateral which may secure a loan, and the events constituting default
and the steps the Plan will take to preserve Plan assets in the event of
default.
ARTICLE 14
FIDUCIARY DUTIES AND RESPONSIBILITIES
14.1 GENERAL FIDUCIARY STANDARD OF CONDUCT. Each Fiduciary of the Plan
shall discharge his duties hereunder solely in the interest of the Participants
and their Beneficiaries and for the exclusive purpose of providing benefits to
Participants and their Beneficiaries and defraying reasonable expenses of
administering the Plan. Each Fiduciary shall act with the care, skill, prudence
and diligence under the circumstances that a prudent man acting in a like
capacity and familiar with such matters would use in conducting an enterprise of
like character and with like aims, in accordance with the documents and
instruments governing this Plan, insofar as such documents and instruments are
consistent with this standard.
14.2 SERVICE IN MULTIPLE CAPACITIES. Any person or group of persons may
serve in more than one Fiduciary capacity with respect to this Plan.
14.3 LIMITATIONS ON FIDUCIARY LIABILITY. Nothing in this Plan shall be
construed to prevent any Fiduciary from receiving any benefit to which he may be
entitled as a Participant or Beneficiary under this. Plan, so long as the
benefit is computed and paid on a basis which is consistent with the terms of
this Plan as applied to all other Participants and Beneficiaries. This Plan
shall not be interpreted to prevent any Fiduciary from receiving any reasonable
compensation for services rendered, or for the reimbursement of expenses
properly and actually incurred in the performance of his duties with the Plan;
except that no person so serving who already receives full-time pay from the
Employer shall receive compensation from this Plan, except for reimbursement of
expenses properly and actually incurred.
ARTICLE 15
TOP HEAVY RULES
34.
<PAGE> 37
15.1 MINIMUM EMPLOYER CONTRIBUTION. If this Plan becomes top heavy, the
Plan guarantees a minimum contribution of three percent (3%) of Compensation for
each Non-Key Employee who is a Participant employed by the Employer on the
Accounting Date of the Plan Year. For purposes of determining whether the
minimum contribution is satisfied, Salary Reduction Contributions and matching
contributions shall be disregarded. The minimum contribution shall not be
forfeited under Sections 411(a)(3)(B) or (D) of the Code. The Plan satisfies the
guaranteed minimum contribution for the Non-Key Employee if the Non-Key
Employee's contribution rate is at least equal to the minimum contribution.
Notwithstanding the above, if the contribution rate for the Key Employee
with the highest contribution rate is less than three percent (3%), the
guaranteed minimum contribution for Non-Key Employees shall equal the highest
contribution rate received by a Key Employee (provided that the Employer does
not also sponsor a defined benefit plan which has designated this Plan to
provide the top heavy minimum). The contribution rate is the sum of Employer
contributions (not including Employer contributions to Social Security) and
forfeitures allocated to the Participant's account for the Plan Year divided by
his Compensation for the Plan Year. To determine the contribution rate, the
Committee shall consider all qualified defined contribution plans maintained by
the Employer as a single plan.
15.2 ADDITIONAL CONTRIBUTION. If the contribution rate for the Plan Year
with respect to a Non-Key Employee described in Section 15.1 is less than the
minimum contribution the Employer will increase its contribution for such
Employee to the extent necessary so that his contribution rate for the Plan Year
will equal the guaranteed minimum contribution. The Committee shall allocate the
additional contribution to the Base Contribution Account of the Non-Key Employee
for whom the Employer makes the contribution.
15.3 DETERMINATION OF TOP HEAVY STATUS. The Plan is top heavy for a Plan
Year if the top heavy ratio as of the Determination Date exceeds sixty percent
(60%). The top heavy ratio is a fraction, the numerator of which is the sum of
the present value of the Account Balances of all Key Employees as of the
Determination Date and distributions made within the five (5) Plan Year period
ending on the Determination Date, and the denominator of which is a similar sum
determined for all Employees. The Committee shall calculate the top heavy ratio
without regard to the Account Balance attributable to any Non-Key Employee who
was formerly a Key Employee. The Committee shall calculate the top heavy ratio,
including the extent to which it must take into account contributions not made
as of the Determination Date, distributions, rollovers and transfers, in
accordance with Section 416 of the Code and the regulations thereunder.
If the Employer maintains other qualified plans (including a simplified
employee pension plan) this Plan is top heavy only if it is part of the Required
Aggregation Group, and the top heavy ratio for both the Required Aggregation
Group and the Permissive Aggregation Group exceeds sixty percent (60%). The
Committee will calculate the top heavy ratio in the same manner as required by
the first paragraph of this Section 15.3, taking into account all plans within
the aggregation group. The Committee shall calculate the present value of
accrued benefits and the other amounts the Committee must take into account
under defined benefit plans or simplified employee pension plans included within
the group in accordance with the terms of those plans, Section 416 of the Code
and the regulations thereunder. The Committee shall
35.
<PAGE> 38
calculate the top heavy ratio with reference to the Determination Dates that
fall within the same calendar year.
15.4 LIMITATION ON ALLOCATIONS. If, during any Limitation Year, the
Participant is a participant in both a defined contribution plan and a defined
benefit plan which are a part of a top heavy group, the Committee shall apply
the limitations of Article 4 to such Participant by substituting "1.0" for
"1.25" each place it appears in Section 4.7. This Section 15.4 shall not apply
if:
(a) The Plan would satisfy Section 15.1 if the guaranteed minimum
contribution was one percent (1%) greater than the guaranteed minimum
contribution the Committee otherwise would calculate; and
(b) The top heavy ratio does not exceed ninety percent (90%).
15.5 TOP HEAVY VESTING SCHEDULE. Notwithstanding the vesting schedule
set forth in Section 6.4, if the Plan becomes top heavy as defined in Section
15.3 for any top heavy Plan Year, a Participant shall earn a Nonforfeitable
percentage of his Base Contribution Account as determined by the following
vesting schedule:
<TABLE>
<CAPTION>
Percent of Nonforfeitable
Years of Service Base Contribution Account
<S> <C>
0 0%
1 10%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
This Section 15.5 does not apply to any Participant who does not have an
Hour of Service after the Plan has initially become top heavy. Therefore, such
Participant's Nonforfeitable percentage of his Base Contribution Account shall
be determined without regard to this Section 15.5.
If the Plan subsequently ceases to be top heavy, the vesting schedule
set forth in Section 6.4 shall again become applicable to all benefits accruing
thereafter. Notwithstanding the foregoing, any Participant who has three (3) or
more Years of Service when the Plan ceases to be top heavy may elect to have the
vesting schedule set forth in this Section 15.5 continue to apply to benefits
accruing in the future. The Participant's election shall be made in accordance
with Section 16.2. In no event will the change from the vesting schedule set
forth in this Section 15.5 to the vesting schedule set forth in Section 6.4
operate to reduce the Nonforfeitable benefits the Participant accrued while the
Plan was in top heavy status.
15.6 DEFINITIONS. For purposes of applying the provisions of this
Article 15:
36.
<PAGE> 39
(a) "Key Employee" shall mean, as of any Determination Date, any
Employee or former Employee, or any Beneficiary thereof, who, at any time during
the Plan Year (which includes the Determination Date) or during the preceding
four Plan Years,
(i) is an officer of the Employer who has annual
Compensation in excess of 50% of the amount in effect under Section 415(b)(1)(A)
of the Code;
(ii) one of the ten Employees owning the largest interests
in the Employer with annual Compensation in excess of the dollar limit on Annual
Additions to a defined contribution plan under Section 415 of the Code;
(iii) a more than five percent (5%) owner of the Employer;
or
(iv) a more than one percent (1%) owner of the Employer
who has annual Compensation of more than $150,000.
The constructive ownership rules of Section 318 of the Code will apply
to determine ownership in the Employer. The Committee will make the
determination of who is a Key Employee in accordance with Section 416(i)(1) of
the Code and the regulations thereunder.
(b) "Non-Key Employee" is an Employee who does not meet the
definition of Key Employee.
(c) "Required Aggregation Group" means: (1) Each qualified plan
of the Employer in which at least one Key Employee participates; and (2) Any
other qualified plan of the Employer which enables a plan described in (1) to
meet the requirements of Sections 401(a)(4) or 410 of the Code. Any terminated
plan that covered a Key Employee and was maintained within the five year period
ending on the Determination Date shall also be included in the Required
Aggregation Group.
(d) "Permissive Aggregation Group" is the Required Aggregation
Group plus any other qualified plans maintained by the Employer, but only if
such group would satisfy in the aggregate the requirements of Sections 401(a)(4)
and 410 of the Code. The Committee shall determine which plan to take into
account in determining the Permissive Aggregation Group.
(e) "Determination Date" for any Plan Year is the Accounting Date
of the preceding Plan Year or, in the case of the first Plan Year of the Plan,
the Accounting Date of that Plan Year.
ARTICLE 16
EXCLUSIVE BENEFIT, AMENDMENT AND TERMINATION
16.1 EXCLUSIVE BENEFIT. The Employer shall have no beneficial interest
in any asset of the Trust and no part of any asset in the Trust shall ever
revert to or be repaid to an Employer, either directly or indirectly; nor prior
to the satisfaction of all liabilities with respect to the Participants and
their Beneficiaries under the Plan, shall any part of the corpus or income of
the Trust Fund, or any asset of the Trust, be used for, or diverted to, purposes
other than for the
37.
<PAGE> 40
exclusive benefit of the Participants or their Beneficiaries. Notwithstanding
anything else herein to the contrary, expenses of administering the Plan, to the
extent not paid by the Employer or otherwise, may be satisfied by payment from
the Trust Fund.
Notwithstanding the foregoing, if the Commissioner of Internal Revenue,
upon the Employer's timely request for initial approval of this Plan, determines
that the Trust created under the Plan is not a qualified trust exempt from
Federal income tax, then the Trustees, upon written notice from the Employer,
shall return the Employer's contributions and increments attributable to the
contributions to the Employer. The Trustees must make the return of the Employer
contribution under this Section 16.1 within one (1) year of a final disposition
of the Employer's request for initial approval of the Plan. The Plan and Trust
shall terminate upon the Trustees' return of the Employer's contributions.
The Employer contributes to this Plan on the condition that its
contribution is deductible under Section 404 of the Code. If the Employer's
contribution is disallowed as a deduction, or if the Employer's contribution is
attributable to a mistake of fact, the Trustee shall return to the Employer the
amount contributed over, as relevant, the amount that would have been
contributed had no mistake of fact occurred, or the amount of the deductible
contribution. Earnings attributable to the excess contribution may not be
returned to the Employer, but losses attributable thereto must reduce the amount
returned. The excess contributions must be returned within one year of the
disallowance or mistake. Further, if the amount returned to the Employer would
cause any Participant's Account Balance to be reduced to less than the balance
which would have been in his Account had the mistaken or nondeductible amount
not been contributed, then the amount to be returned to the Employer must be
limited so as to avoid the reduction. The Trustee may require the Employer to
furnish it with whatever evidence the Trustee deems necessary to enable the
Trustee to confirm that the amount the Employer has demanded be returned as
properly returnable under the Code and ERISA.
16.2 AMENDMENT BY COMPANY. The Company, through duly authorized action
of its Board of Directors, shall have the right at any time and from time to
time to amend this Agreement in any manner it deems necessary or advisable
including any amendment in order to qualify (or maintain qualification of) this
Plan and the Trust created under it under the appropriate provisions of the
Code. An amendment to the Plan's vesting shall not decrease any Participant's
Nonforfeitable Account Balance as of the later of the date the amendment is
adopted or becomes effective. If the Plan's vesting schedule is amended, each
Participant with three (3) or more Years of Service may elect to have the
vesting schedule applicable immediately prior to the amendment continue to
apply. The period during which such election may be made shall commence with the
date the amendment is adopted or deemed to be made and shall end on the latest
of:
(1) 60 days after the amendment is adopted;
(2) 60 days after the amendment becomes effective; or
(3) 60 days after the Participant is issued written notice of
the amendment by the Employer or Committee.
38.
<PAGE> 41
No amendment shall authorize or permit any of the Trust Fund (other than
the part required to pay taxes and administrative expenses) to be used for or
diverted to purposes other than for the exclusive benefit of the Participants or
their Beneficiaries or estates. No amendment shall cause or permit any portion
of the Trust Fund to revert to or become the property of the Employer; and the
Company shall not make any amendment which affects the rights, duties or
responsibilities of the Trustees or the Committee without the written consent of
the affected Trustee or the affected member of the Committee. No amendment shall
decrease a Participant's Account Balance or eliminate an optional form of
benefit to which the Participant is entitled as a result of service prior to the
amendment. The Company shall make all amendments in writing. Each amendment
shall state the date to which it is either retroactively or prospectively
effective.
16.3 DISCONTINUANCE. The Company, through duly authorized action of its
Board of Directors, shall have the right, at any time, to suspend or discontinue
its contributions under the Plan, and to terminate, at any time, this Plan. Upon
complete discontinuance of contributions, the Account Balance of each affected
Participant shall be one hundred (100%) percent Nonforfeitable.
16.4 FULL VESTING ON TERMINATION. Notwithstanding any other provision of
this Plan to the contrary, upon either full or partial termination of the Plan,
an affected Participant's right to his Account Balance shall be one hundred
percent (100%) Nonforfeitable. The Plan shall terminate upon the first to occur
of the following:
(a) The date terminated by action of the Employer provided the
Employer gives the Trustee thirty (30) days' prior notice of termination;
(b) The date the Employer shall be judicially declared bankrupt
or insolvent; or
(c) The dissolution, merger, consolidation or reorganization of
the Employer or the sale by the Employer of all or substantially all of its
assets, unless the successor or purchaser makes provision to continue the Plan,
in which event the successor or purchaser shall substitute itself as the
Employer under this Plan.
16.5 MERGER. The Trustee shall not consent to, or be a party to, any
merger or consolidation with another plan, or to a transfer of assets or
liabilities to another plan, unless immediately after the merger, consolidation
or transfer, the surviving plan provides each Participant a benefit equal to or
greater than the benefit each Participant would have received had the Plan
terminated immediately before the merger or consolidation or transfer. The
Trustee possesses the specific authority to enter into merger agreements or
direct transfer of assets agreements with the trustees of other retirement plans
described in Section 401(a) of the Code and to accept the direct transfer of
plan assets, or to transfer plan assets, as a party to any such agreement.
16.6 DIRECT ROLLOVERS. This Section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the plan to the contrary
that would otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the
39.
<PAGE> 42
manner prescribed by the Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
Definitions:
(a) Eligible rollover distributions: An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life expectancies)
of the distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code; and the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities).
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section 401(a) of the
Code, that accepts the distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or individual
retirement annuity.
(c) Distributee: A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(d) Direct rollover: A direct rollover is a payment by the plan
to the eligible retirement plan' specified by the distributee.
16.7 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan or any
modification or amendment to the Plan, or in the creation of any Salary
Reduction Contribution Account, or the payment of any benefit, shall give any
Participant the right to continued employment, or any legal or equitable right
against the Employer, an Employee of the Employer, the Trustee, or their agents
or employees, except as expressly provided by the Plan, the Trust, ERISA or the
Code or by a separate agreement.
16.8 STATE LAW. New Jersey law shall determine all questions arising
with respect to the provisions of this Plan, except to the extent Federal
statute supersedes New Jersey law.
40.
<PAGE> 43
AMENDMENT NO. 1 TO THE
RETIREMENT PLAN OF SCHEIN PHARMACEUTICAL, INC. AND AFFILIATES
AS AMENDED AND RESTATED AS OF JANUARY 1, 1998
Reference is made to the restated Retirement Plan of Schein
Pharmaceutical, Inc. and Affiliates (the "Plan"). Capitalized terms not
otherwise defined herein shall have the meaning ascribed thereto in the Plan.
I. Section 6.4 of the Plan is amended to include the following:
A. Delete the fourth paragraph which begins with the text "For
purposes of determining Years of Service..." and ends with the text "...Sections
414(b), (c), (m), (n) or (o) of the Code."
B. Include the following text in place of the text deleted
1. "Effective as of January 1, 1996, for purposes of
determining Years of Service under Section 6.4, the
Plan shall take into account all Years of Service
an Employee completes with i) the employer or any
entity which is required to be aggregated with the
Employer pursuant to Sections 414(b), (c), (m),
(n), or (o) of the Code or ii) Bayer AG or any
subsidiary thereof which is controlled by at least
50% of the voting rights therein, provided such
employment occurred immediately prior to employment
with the Company or its subsidiaries."
Except as amended hereby, the Plan shall continue in full force and
effect.
41.
<PAGE> 44
AMENDMENT NO. 2 TO
THE RETIREMENT PLAN OF
SCHEIN PHARMACEUTICAL, INC. & AFFILIATES
(Amended and Restated as of January 1, 1998)
Effective as of the dates set forth herein, the Retirement Plan of
Schein Pharmaceutical, Inc. & Affiliates (Amended and Restated as of January 1,
1998) (the "Plan"), is amended as follows:
Effective as of September 1, 1998, Section 6.4 of the Plan is
amended by deleting the word "or" from subsection (b), deleting the
period at the end of subsection (c) and adding ", or" to the end of such
subsection (c), and adding the following new subsection (d):
"(d) termination of employment with the Employer pursuant
to an employment reduction plan during the period
September 1, 1998 through and including August 31, 1999."
42.
<PAGE> 45
AMENDMENT NO. 3 TO
THE RETIREMENT PLAN OF
SCHEIN PHARMACEUTICAL, INC. & AFFILIATES
(Amended and Restated as of January 1, 1998)
Effective as of the dates set forth herein, the Retirement Plan of
Schein Pharmaceutical, Inc. & Affiliates (Amended and Restated as of January 1,
1998) (the "Plan"), is amended as follows:
Effective as of September 1, 1999, Section 6.4 of the Plan is amended by
deleting the word "or" from subsection (b), deleting the period at the end of
subsection (c) and adding ", or" to the end of such subsection (c), and adding
the following new subsection (d):
"(d) termination of employment with the Employer pursuant to an
employment reduction plan or a voluntary employee reduction plan during the
period September 1, 1999 through and including August 31, 2000."
43.
<PAGE> 46
The Retirement Plan of
Schein Pharmaceutical, Inc. and Affiliates
Amendment No. 4
Effective as of the dates set forth herein, The Retirement Plan of
Schein Pharmaceutical, Inc. and Affiliates (the "Plan") is amended as follows:
1. Effective as of January 1, 1998, Section 1.10 of the Plan is amended
by adding the following to the end of the first sentence thereof:
"and including amounts contributed by the Employer pursuant to a
salary reduction agreement that are excluded from a Participant's gross
income under Section 125 of the Code."
2. Effective as of January 1 2000, Section 1.36 is deleted in its
entirety, and the following is substituted in its place:
"1.36 "Plan Entry Date" shall mean, for purposes of making salary
reduction deferrals under Article 3, the first day of the first pay
period coincident with, or next following, the date on which an Employee
completes three Months of Service. For purposes of eligibility for
Employer Contributions under Article 4, Plan Entry Date shall mean the
first day of the first pay period coincident with, or next following,
the date on which the Employee completes Six Months of Service. Salary
deferrals made prior to the Plan Entry Date for purposes of Article 4
will not be considered for matching contributions."
3. Effective as of January 1, 2000, Section 6.4 is amended by deleting
the vesting schedule in the second paragraph thereof and replacing it with the
following:
<TABLE>
<CAPTION>
Percent of Nonforfeitable
Years of Service Base Contribution Account
<S> <C>
0 0%
1 20%
2 40%
3 60%
4 80%
5 100%
</TABLE>
44.
<PAGE> 47
AMENDMENT NO. 5 TO
THE RETIREMENT PLAN OF
SCHEIN PHARMACEUTICAL, INC. & AFFILIATES
(Amended and Restated as of January 1, 1998)
Effective as of the dates set forth herein, the Retirement Plan of
Schein Pharmaceutical, Inc. & Affiliates (Amended and Restated as of January 1,
1998) (the "Plan"), is amended as follows:
Effective as of January 27, 2000, Sections 6.4 of the Plan is
amended by deleting the word "or" from subsection (c), deleting the
period at the end of subsection (d) and adding ", or" to the end of such
subsection (d), and adding the following new subsection (e):
"(e) termination of employment with the Employer
pursuant to an employment reduction plan during the
period January 27, 2000 through and including
December 31, 2000."
45.
