<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the fiscal year ended December 31, 1998
------------------------------------------------------
OR
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from_____________ to__________
Commission file number 0-22375
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American Stone Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Delaware 13-3704099
- --------------------------------------------- -------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) (Identification No.)
8705 Quarry Road, Amherst, Ohio 44001
- --------------------------------------------- -------------------------
(Address of Principal Executive Offices) (Zip Code)
(440) 986-4501
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
N/A N/A
- ---------------------------------- -----------------------------------
- ---------------------------------- -----------------------------------
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value per share
- --------------------------------------------------------------------------------
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for past 90 days. Yes X No
--- ---
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Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [_]
Issuer's revenues for its most recent fiscal year: $3,221,762
The aggregate market value of the Common Stock held by non-affiliates
of the Registrant as of March 15, 1999 was approximately $5,483,357, computed on
the basis of the last reported sale price per share ($7.125) of such stock on
the Nasdaq Bulletin Board. For purposes of this information, shares of Common
Stock that were owned beneficially by executive officers, Directors and persons
who may be deemed to own 10% or more of the outstanding Common Stock were deemed
to be held by affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
The number of shares of the Registrant's Common Stock outstanding as of
March 15, 1999 was 1,716,364.
DOCUMENTS INCORPORATED BY REFERENCE
Form 10-KSB Reference Documents
- --------------------- ---------
Part III (Items 9, 10, 11 and 12) Portions of the Registrant's
Definitive Proxy Statement to be
used in connection with its Annual
Meeting of Stockholders to be held
on June 23, 1999.
Except as otherwise stated, the information contained in this Form
10-KSB is as of December 31, 1998.
<PAGE> 3
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
General.
American Stone Industries, Inc. ("ASI" or the "Company") is a
holding company that conducts its business through its two wholly-owned
subsidiaries, American Stone Corporation ("ASC") and Tyrrell Stone Design, Ltd.
("Tyrrell"). ASC quarries, purchases and sells stone for use in the building
construction industry. Tyrrell provides design services to architects and stone
processing centers and serves as the Company's Canadian sales office. ASC
produces two types of natural stone: (1) dimensional stone, which is natural
stone that is cut to size as specified in architectural designs and is primarily
used as architectural accents to buildings, although dimensional stone is also
used for funeral monuments, landscape and ornamental objects; and (2)
construction stone, which is natural stone primarily used for road base, back
fill and erosion control.
The Company was incorporated in the State of Delaware on
November 11, 1992 as Viva Designs U.S.A., Inc. The Company at that time was a
distributor of a line of jewelry and fragrances. Beginning in 1994 and until a
business combination in August 1995, ASI was a distributor of medical equipment
in the United States. In conjunction with the 1995 business combination, the
medical equipment distributorship business was transferred to a related party.
On August 9, 1995, the Company changed its name to American Stone Industries,
Inc. Concurrent with the 1995 business combination, ASI became a holding company
that conducts business through ASC and Tyrrell.
American Stone Corporation.
ASC is a Delaware corporation, which was incorporated in 1992.
ASC accounts for about 74% of the Company's revenue, and about 96% of its
assets. The balance of the assets are cash and other liquid assets owned by ASI
and Tyrrell. ASC acquired the operating assets of Cleveland Quarries, L.P. in
February 1996, and thereafter began operating the 145-year old quarry situated
near Amherst, Ohio known as the "Cleveland Sandstone Quarries" (the "Cleveland
Quarries"). Consisting of an estimated 300,000,000 cubic feet of reserve
deposits located on over 1,000 acres of ASC-owned property, management of the
Company ("Management") believes, based upon various industry reports and surveys
since the initial discovery in 1853, that the Cleveland Quarries are among the
World's largest sandstone quarries.
The Business of ASC.
ASC quarries, purchases and markets sandstone and manages the
operation of the Cleveland Quarries. The Cleveland Quarries produce sandstone,
which is known in the industry as "Berea Sandstone." For more than 100 years,
sandstone from the Cleveland Quarries has been utilized throughout Ohio, the
United States and Canada in such products as the following:
<PAGE> 4
<TABLE>
<CAPTION>
Facility/
Building Location Date
--------- --------- ----
<S> <C> <C>
The John Hancock Building Boston, Mass. (U.S.A.) 1948
U.S. Post Office Cleveland, Ohio (U.S.A.) 1934
Parliament Building Ottawa, Ontario (Canada) 1865
(rebuilt 1917)
City Hall Buffalo, New York (U.S.A.) 1930
U.S. Bankruptcy Court Little Rock, Ark. (U.S.A.) 1918
Oberlin College Campus Oberlin, Ohio (U.S.A.) 1885-1943
Osgoode Hall -- Law courts of Toronto, Ontario (Canada) 1857
Upper Canada
NHL Hockey Hall of Fame Toronto, Ontario (Canada) 1885
County Courthouse Savannah, Ga. (U.S.A.) 1889
St. James Cathedral Toronto, Ontario (Canada) 1853
University of Pennsylvania Philadelphia, Penn. (U.S.A.) 1874-1910
</TABLE>
Berea Sandstone has been used in the construction of numerous
additional facilities over the past 100 years, including government buildings,
banks, churches and prestigious private residential dwellings throughout the
United States and Canada. One of the most current personal residences of note is
that of Mr. William Gates in Seattle, Washington.
Industry Structure.
All natural stone products go through several stages prior to
final consumption. The various stages can be defined as follows: (1) Quarrying,
which is the extraction of large blocks of stone; (2) Primary Processing, which
involves sawing the large blocks into smaller blocks or large slabs; (3)
Secondary Processing, which is the conversion of smaller blocks or slabs into
finished product; and (4) Installation, which involves assembling and installing
finished product. ASC owns and operates its own quarries. ASC is also a primary
processor, as the Company owns and operates its own slabbing mills. In addition,
the Company has its own secondary processing mill. All three processes are
performed at the ASC's South Amherst location in Ohio.
<TABLE>
<CAPTION>
BLOCKS ARE TURNED BLOCKS ARE TURNED INTO
INTO SLABS TO MAKE SMALLER BLOCKS TO MAKE
------------------ ----------------------
<S> <C>
Table Tops Coping
Tile Cut Stone
Patio Stone Grindstones
Garden Stone Curbing
Sills Building Stone
Step Treads Breakwater
House Ashlar Laboratory Samples
Landscape Pieces
</TABLE>
2
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Companies operate in diverse ways within the natural stone
industry. They are usually involved in more than one of these disciplines.
Companies operating at the ends of the process, (i.e., the quarrying and
installation) tend to locate geographically. Quarry operations locate where the
raw material is found and installers operate in the area in which the finished
product is to be installed. Primary processors often locate at or near the
quarries. For this reason, the same company is often involved in both the quarry
and primary processing segment. Similarly, secondary processors locate at or
near the installers' premises. Therefore, companies that do installation are
also usually capable of secondary processing. Management believes that few
companies operate in all segments of the industry.
The primary and secondary processing segments are the most
mechanized and therefore the most capital intensive. The machinery can be very
sophisticated and very expensive. There have been major advancements in quarry
technology, and these operations are also becoming very capital intensive. These
expenses have been a barrier to entry into these segments of the industry for
many and, for those that have failed to keep up, it has been a factor creating
adverse consequences.
This change is evidenced by a new phenomenon in the industry.
Raw blocks of stone are being shipped from North America to processing centers
located in Italy, and the final product is returned to North America for
installation. Transportation is strictly limited to water and road, but the
portion of the final product cost attributable to transportation has steadily
fallen as the cost of processing has risen. The rising cost of processing has
only been offset by the efficiencies of modern machinery. Management believes
that the processing centers can compete internationally, if they are as
sophisticated as those in Italy, and benefit from some of the other cost saving
elements available to the industry today.
Even though a large portion of the labor component of the
processing has been eliminated, labor continues to be a problem in Italy. The
processing segment can benefit even further in an inexpensive labor pool
location; however, most third-world or underdeveloped countries offering
inexpensive labor pools also lack the sophisticated labor pool that is necessary
to maintain and operate the equipment. This is one of the reasons processing
centers still locate in countries like Italy, Germany and Japan.
Another important element in the cost of processing with
modern machinery has been access to a continuous source of fresh water. This
element will become increasingly more important as water jet technology emerges.
Through its various on-site wells, Management believes that ASC would be assured
access to a continuous source of fresh water.
Marketing Structure.
The market for dimensional stone products is served by many
more companies than those involved in production and installation. They include
government agencies, distributors, marketing agencies, architectural and
engineering firms and designers. The company that has the closest contact with
the final consumer is often most responsible for the sale of stone products.
These other companies are often more important to the stone producer than the
stone itself. The illustration below indicates how many layers are potentially
between the end-user and the companies involved in the four levels of the stone
industry. The additional layers between end-user and producer require a
sophisticated marketing department capable of dealing with these companies. The
marketing department may use in-house employees for estimating and drafting
functions or form strategic alliances with outside companies that perform these
functions.
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QUARRY TO END-USER
|---------------- Quarry -----------------|
| ----------- |
V V
Secondary Processor Primary Processor
-------------------------- ------------------------
| |
|---------------} Installer {----------------|
-----------
|---------- General Contractor -----------|
| ----------------------- |
V V
Architect Distributor
-------------- ---------------
| |
|-------------} Designer {----------------|
-------------
|
V
Purchasing Agent
---------------------
|
V
End-User
-------------
For the period from 1996 to 1998, the Company's annual
production of natural stone was as follows:
<TABLE>
<CAPTION>
Raw dimensional stone:
----------------------
(tons)
<S> <C>
1996 8,460
1997 9,566
1998 10,696
</TABLE>
4
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Management currently intends to target the following segments
after expanding the sales of its Berea Sandstone:
Building Stone:
---------------
- Slabs Ashlar Landscaping
- Sills Patio Stone Tile
- Steps Wallstone Cutstone Restoration (Cut Stone)
Specialty Products:
-------------------
- Cores (Oil & Gas Research) Grindstones
- Breakwater Stone Ornamental
Employees.
ASC has approximately 51 full-time employees, of which about
45 are hourly. The average hourly wage of the quarry personnel is less than ten
dollars per hour. The quarries are situated in geographic regions that have a
large labor pool, and Management does not believe that securing additional labor
will be difficult or expensive. In Management's opinion, ASC has a positive
relationship with its employees.
Competition.
ASC competes in the natural dimensional stone market. More
specifically, ASC competes against limestones and other sandstones. ASC's two
biggest competitors consist of Briar Hill Stone Co. (Glenmont, OH -- about 50
employees) and Indiana Limestone Company (Bedford, IN -- about 50 employees). As
a practical matter, when submitting proposals to provide Berea Sandstone to
larger commercial sites, ASC is in competition with quarries throughout the
United States and abroad.
ASC intends to compete within this environment utilizing a
strategy that embodies the following:
* Ownership of what Management believes to be one of
the largest sandstone reserves in the world, which
assures that ASC has access to the raw material;
* Access to a large supply of fresh water through
various on-site wells, which will assist in the
conversion to diamond technology;
* A strategic geographic location from which the
Company can serve about 66% of the domestic United
States market within a 500 mile radius from the
quarries;
* Low cost of raw materials; and
* Low cost provider, which is attributable, in part, to
ASC's access to a large labor pool.
Marketing by ASC.
The marketing of ASC products from Ohio is primarily done
through an in-house salaried sales staff. In addition, ASC is represented by 32
distributors in 14 States and Provinces who deal directly with the end-user by
purchasing products from ASC at discounted rates and selling them to the
end-user at a markup.
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The Company's historical market has been the United States and
Canada. Within the United States, the Midwest and Northeast regions have
traditionally accounted for more than 80% of the sales in the United States. In
Canada, sales have occurred almost exclusively in the Provinces of Ontario,
Quebec and British Columbia. The Company's objective is to develop a world-wide
market with primary emphasis upon the warmer weather sections of the United
States. Costs of transportation become more relevant when the construction site
is more than 500 miles from the quarries.
Business Strategy of ASC.
ASC intends to expand its current market and financial base
through a business strategy that focuses on:
* Dedication to the core business of ASC, i.e., the
Cleveland Quarries;
* Development of ancillary assets, i.e., the sale,
lease or joint venture of surplus or nonessential
lands; and
* Selective acquisition of compatible assets or
businesses.
Backlog.
As of December 31, 1998, ASC's backlog of orders was
$1,029,022, as compared to a backlog of $551,942 for the period ending December
31, 1997. The Company is careful not to generate too large of a backlog of
orders to assure that commitments can be fulfilled and to avoid supply problems.
In order to reduce the backlog of orders, the Company
purchased a second Gaspari Menotti gang saw and two computerized Zambon bridge
saws, all of which should be operational by the end of the second quarter of
1999.
In the opinion of Management, the increase in the Company's
backlog is a positive reflection of Management's efforts to stimulate
incremental improvement in marketing efforts, particularly among new
distributors of products in Michigan, Connecticut, Ohio, Pennsylvania, Colorado,
Tennessee, West Virginia, New Mexico and Washington in the United States and
Ontario, British Columbia, and Quebec in Canada.
Seasonality.
ASC's sales are cyclical in nature. Historically, the
Company's sales have been highest during the second and third quarters, which
usually account for more than 70% of the fiscal year's sales. However, due to
increased sales during the Company's fourth quarter, sales for the second and
third quarters of fiscal year 1998 accounted for only 54% of the fiscal year's
sales. The first quarter typically has the lowest sales due to inclement weather
in the Northern Ohio region and the difficulty of operating a quarry in such an
environment.
Intellectual Property/Proprietary Rights.
ASC owns intellectual property and does not license any such
rights to others. ASC copyrights its marketing materials, but such copyrights
are not deemed to have any significant value in the marketplace.
Except as noted above, ASC does not own or license any
proprietary rights.
6
<PAGE> 9
Regulation.
ASC's operations are subject to a variety of statutes, rules
and regulations, which are applicable to any business operating in the United
States. These statutes, rules and regulations range from record keeping (e.g.,
the duty to maintain tax-related records for specific time periods as required
by the Internal Revenue Code of 1986, as amended) to employment (e.g., the duty
to comply with the Equal Employment Opportunity Act of 1972).
Due to its quarry operations, ASC is also subject to certain
more specific statutes, rules and regulations, the most significant of which
include:
* Mines Safety and Health Act ("MSHA"), which mandates
certain safety rules and regulations governing mining
operations.
* Occupational Safety and Health Act of 1970 ("OSHA"),
which requires that the Company provide its employees
with a safe workplace.
* Resource Conservation and Recovery Act of 1976
("RCRA"), which prohibits the transportation and/or
disposal of "hazardous waste" except pursuant to
certain standards.
* The Department of Transportation, which adopts
regulations governing the safe transportation of
goods over interstate highways.
In the opinion of Management, ASC is in compliance with all
applicable regulations. Material changes in these regulations or the adoption of
new regulations could have a material impact on the operations of ASC.
Research and Development.
In the fiscal years ended December 31, 1998 and 1997, there
were no research and development expenses.
Methods Of Distribution And Costs Of Transportation.
All of the stone is shipped via flatbed truck. The current
trucking rate is approximately $0.15 per mile per load. This allows the Company
to ship to 2/3 of the population of the United States and Canada at an average
of $1.00 per cubic foot. Customers are generally charged for shipping. Customs
duties between Canada and the United States are minimal.
Tyrrell Stone Design.
ASI agreed to acquire Tyrrell in February 1996 and closed the
acquisition on May 23, 1996 in exchange for 20,000 shares of Common Stock, $.001
par value per share (the "Common Stock"), of the Company. In accordance with the
share purchase agreement, the value assigned for the shares was the closing
price on the date of acquisition, or $8.00 per share. Tyrrell, as a wholly-owned
subsidiary of ASI, provides sales in Canada as the Canadian arm of the Company.
Tyrrell provides design drawings to architects and stone
processing centers throughout North America. Through this acquisition, ASC has
expanded the scope and magnitude of services that it can offer to customers and
has become more involved in the design phase of projects, thereby being in a
position to suggest
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<PAGE> 10
the use of Berea Sandstone as part of a project. Tyrrell is also the main
distributor in Canada of the Company's products.
The revenue of Tyrrell is limited to job bills and mark-up on
stone sales. Tyrrell has four full-time employees. All work is performed in
Toronto, Canada. For the twelve months ending December 31, 1998, Tyrrell's
revenue was approximately 26% of the aggregate revenue of ASC.
The assets of Tyrrell include computers and office equipment
for its drafting services and stone inventory for sale in the Canadian market.
Material Developments.
The Company acquired ASC in August 1995. As a result of this
transaction, TMT Masonry, Ltd., the former parent of ASC, received shares
representing approximately fifty-five percent (55%) of the Company's outstanding
Common Stock, thereby effecting a change in control of the Company.
In February 1996, ASC purchased all inventories, real estate,
equipment, intangible assets, rights in leases, and all other operational items
of Cleveland Quarries, L.P., in exchange for cash, the assumption of certain
liabilities, and certain other consideration. The total purchase price was
$2,320,259. In negotiating this purchase price, Management took into
consideration, among other things: (1) the benefit to the Company of acquiring
title to the quarries owned by Cleveland Quarries, L.P.; (2) the potential
economic benefits to the Company of securing title to these assets, especially
the land and reserves of stone; and (3) the value of the assets to be acquired.
At the time of the transaction, the General Partner of Cleveland Quarries, L.P.
was Slate and Stone Corporation of America, Ltd., which held a 1.0% interest in
the limited partnership. The two limited partners were Walter Molnar (9.9%) and
ASC (89.1%).
In August 1996, the Company issued 400,000 shares of its
Common Stock, representing 25% of the Company's total voting power, to Roulston
Venture Partners, Ltd. The sale provided the Company with working capital and
access to a Board of Directors of sophisticated business people.
In September 1998, the Company issued 60,000 shares of its
Common Stock to Roulston Venture Partners, Ltd. The proceeds from the sale of
the shares were used to acquire new equipment for the Company.
ITEM 2. DESCRIPTION OF PROPERTY.
ASC owns two separate parcels of land in the Counties of
Lorain and Erie, Ohio. The property contains both dimensional and construction
stone. On the basis of the reserve estimates obtained by the previous owner of
Cleveland Quarries, L.P., Management has reached certain conclusions regarding
the Company's reserves.
From approximately 1960 to 1992 the reserves of Cleveland
Quarries, L.P. have been estimated by the then owner (Stancorp), which drilled
samples of Berea Sandstone on the Company-owned properties. The volume of Berea
Sandstone has been estimated on the basis of the length, width and depth of
quarry holes. There are currently more than 600,000 square feet of exposed
quarry face. At this time, the quarry is more than 60 feet deep and 120 feet in
length. In 1996, one section (360' x 120') was prepared for finishing and this
section is expected to last about eight years at current projected sales rates.
Based upon the exposed quarry face and the depth of Berea Sandstone as evidenced
by quarry holes, Management estimates that the total reserves are adequate to
meet the needs of the Company for more than 100 years at current projected sales
rates.
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<PAGE> 11
In summary, Management projects that the property has a total
estimated dimensional stone reserve of 336 million cubic feet. In fiscal 1998,
the Company extracted 149,601 cubic feet of dimensional stone and sold 85,655
cubic feet. In fiscal 1997, the Company extracted 133,797 cubic feet of
dimensional stone and sold 67,282 cubic feet.
The parcel in Erie County is in Birmingham Township, and is
strictly a quarry operation (the "Birmingham Quarry"). Dimensional stone reserve
estimates were projected to be 126 million cubic feet based on a deposit of at
least 30 acres indicated by topographic studies. The Birmingham Quarry yields
both Gray and Buff Sandstone with a higher compressive strength than that of the
quarries located in the main parcel. The main parcel is in Amherst Township
(Lorain County) and is the site of numerous quarries, the mills and offices. The
main parcel fronts the Ohio State Turnpike approximately twenty minutes west of
downtown Cleveland. The Company estimates that the property contains 210 million
cubic feet of dimensional stone and 21 million cubic feet of construction stone.
Many of the quarries on this section of land are currently unused and dormant.
The same stone that has been used in thousands of applications around the
country is still available for renovation, restoration and expansion of existing
buildings. All of the properties have permits for use as quarries and all
permits are in good standing. The Birmingham property also contains a supply of
natural gas, which is leased to a local utility.
The following is a list of the main buildings on the property:
<TABLE>
<CAPTION>
MILL # SIZE S.F. YEAR BUILT CURRENT USE FUTURE USE
------ --------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
3 18,175 1946 Processing Processing
6 45,000 1923 Storage Processing
8 44,165 1926 Gang Sawing Gang Sawing
Office & Showroom 11,305 1900 Office & Showroom Office & Showroom
</TABLE>
ASC's ownership of the two parcels in Ohio is subject to a
mortgage between ASC and FirstMerit Bank, N.A. in the principal amount of
$1,278,000 to secure borrowings under a line of credit of up to $750,000 and
promissory notes in the amount of $528,000.
Equipment.
ASC's equipment consists of saws, cranes, trucks, tow motors,
grinders, stone cutting equipment and haul tools. Older equipment is in the
process of being overhauled, upgraded and replaced with new equipment.
ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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<PAGE> 12
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT*
The executive officers are elected each year and serve at the
pleasure of the Board of Directors. The following is a list of the executive
officers of the Company as of March 15, 1999.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Enzo Costantino 37 Enzo Costantino has served as Treasurer of the Company and as a Director
since 1996. Mr. Costantino has been Secretary and Treasurer of TMT since
1994. Prior to joining TMT, Mr. Costantino was the controller of Daicon
Contractors, a general contractor located in Toronto, Ontario, from 1989 to
1994, and the cost accounting manager for Canada Packers, a meat processor
located in Toronto, Ontario, from 1983 to 1989.
Michael J. Meier 44 Michael J. Meier has served as Secretary of the Company and as a Director
since 1996. Mr. Meier was Vice President, Chief Financial Officer,
Secretary and Treasurer of Defiance, Inc. from 1990 until February 1999,
when Defiance, Inc. was purchased by The General Chemical Group Inc.
(NYSE:GCG). Defiance, Inc. is a supplier of tooling systems, testing
services, specialty anti-friction bearings and precision-machined products
to the U.S. transportation industry, with headquarters in Cleveland, Ohio.
David Tyrrell 38 David Tyrrell has served as President and Chief Executive Officer of the
Company since November 21, 1997 and as President of ASC since February 7,
1996. Mr. Tyrrell was the Owner and Operator of Tyrrell from 1990 to 1996.
</TABLE>
* The information under this Item 4A is furnished pursuant to
Instruction 3 to Item 401(b) of Regulation S-K.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is currently traded in the
over-the-counter market via the "Bulletin Board" maintained through the National
Association of Securities Dealers, Inc. ("NASD"). The following quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions. The quotations are adjusted to reflect
the one-for-ten reverse stock split on May 30, 1997.
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<TABLE>
<CAPTION>
Year Ended December 31, 1997 High Bid Low Bid
- ---------------------------- -------- -------
<S> <C> <C>
First Quarter........................................ $8.750 $4.375
Second Quarter....................................... 16.250 3.750
Third Quarter........................................ 5.250 3.125
Fourth Quarter....................................... 5.50 1.750
<CAPTION>
Year Ended December 31, 1998 High Bid Low Bid
- ---------------------------- -------- -------
First Quarter........................................ $3.3125 $1.75
Second Quarter....................................... 4.375 3.00
Third Quarter........................................ 4.00 3.00
Fourth Quarter....................................... 3.6875 1.875
</TABLE>
As of March 15, 1999, there were approximately 101 holders of
record of the Common Stock of the Company. The Company has paid no dividends on
the Common Stock and it is the Company's present intention to reinvest earnings
internally to finance the expansion of its business. The Company's ability to
pay dividends is limited by the Company's credit facility and is directly
related to the Company's future profitability and need for capital to support
growth.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Set forth below is a discussion of the principal factors that
affected the Company's results of operations during each of the two most recent
fiscal periods. This discussion should be read in conjunction with the Company's
Consolidated Financial Statements and the notes thereto included elsewhere in
this report.
COMPANY OVERVIEW
- ----------------
Total Revenue
- -------------
Total revenue increased by $1,043,555, or by 48% from
$2,178,207 in 1997 to $3,221,762 in 1998. Sales growth in 1998 was propelled by
continued strong demand from the high-end residential construction market, where
the Company supplies stone facing, custom fabrication and landscaping stone.
Additionally, late in 1998, revenues began from several commercial construction
contracts awarded to the Company during the second half of 1998.
Gross Profit
- ------------
Gross profit increased by $336,658 or almost 44.3% from
$760,455 in 1997 to $1,097,113 in 1998. Gross margin as a percentage of sales
decreased from 35% in 1997 to 34% in 1998. The Company's new Gang Saw, which was
introduced early in 1998, did not become an effective part of operations until
the end of the third quarter. As a result, stock items needed to service the
Company's growing number of customers were produced on less cost effective
machines until the new technology could take over. Gross profit benefited from
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<PAGE> 14
a nonrecurring gain of $82,907 during the second quarter of 1998 from a
statewide rebate to employers from the Ohio Bureau of Workers' Compensation.
Selling General and Administrative Expenses
- -------------------------------------------
Selling, general and administrative expenses increased by
$169,402 or 24% from $719,497 in 1997 to $888,899 in 1998. As a percentage of
total revenue, selling, general and administrative expenses decreased by 5%.
Other Income (Expense)
- ----------------------
Interest expense increased from $46,135 in 1997 to $88,170 in
1998. Long-term debt increased by $577,564 in 1998 to finance new equipment
purchases. Interest income declined from $17,183 in 1997 to $4,203 in 1998.
Income
- ------
Net income of the Company for fiscal 1998 was $124,247,
compared to net income of $7,106 in fiscal 1997.
Cash Flow and Liquidity
- -----------------------
The Company's primary source of liquidity is the Company's
line of credit under an agreement between the Company and FirstMerit Bank, N.A.
(the "Credit Agreement"). The Credit Agreement provides for maximum borrowings
of $750,000, with interest payable monthly at a rate equivalent to the prime
lending rate (7.75% and 8.5% at December 31, 1998 and 1997, respectively).
Borrowings under the Credit Agreement are secured by substantially all of the
real estate, inventory and equipment of the Company. The outstanding balance at
December 31, 1998 and 1997 was $450,000 and $350,000 respectively.
Cash flow activity for fiscal 1998 and 1997 is presented in
the Consolidated Statements of Cash Flows. During fiscal 1998, cash in the
amount of $220,900 was used in operating activities primarily to increase trade
receivables and for working capital purposes.
Management believes that the Company does not currently have
and is not expected to have within the next 12 calendar months any cash flow or
liquidity problems. Management believes that the Company is not in default with
respect to any note, loan, lease or other indebtedness or financing agreement.
The Company is not subject to any unsatisfied judgments, liens or settlement
obligations.
FORWARD-LOOKING STATEMENTS
- --------------------------
The Company is making this statement in order to satisfy the
"safe harbor" provisions contained in the Private Securities Litigation Reform
Act of 1995. This Annual Report on Form 10-KSB includes forward-looking
statements relating to the business of the Company. Forward-looking statements
contained herein or in other statements made by the Company are made based on
Management's expectations and beliefs concerning future events impacting the
Company and are subject to uncertainties and factors relating to the Company's
operations and business environment, all of which are difficult to predict and
many of which are beyond the control of the Company, that could cause actual
results of the Company to differ materially from those matters expressed in or
implied by forward-looking statements. The Company believes that the following
factors, among others, could affect its future performance and cause actual
results of the Company to differ materially from those expressed in or implied
by forward-looking statements made by or on behalf of the Company; (a) general
economic, business and market conditions; (b) competition; (c) the success of
advertising
12
<PAGE> 15
and promotional efforts; (d) trends within the building construction industry;
(e) the existence or absence of adverse publicity; (f) changes in relationships
with the Company's major customers or in the financial condition of those
customers; and (g) the adequacy of the Company's financial resources and the
availability and terms of any additional capital.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 issue -- software, hardware or an embedded chip that does
not correctly process date information for years after 1999 -- results from the
practice of storing date information with only the last two digits of the year.
The Year 2000 issue affects virtually all companies and organizations, including
government agencies, utilities and other basic service providers, which are
outside the Company's control. Like most business enterprises, the Company is
taking steps to identify and address the potential effects of the Year 2000
issue.
The Company has initiated an internal review of Year 2000 issues, which
addresses (i) internal information technology ("IT") systems such as any
hardware and software used to process daily operational data and information;
(ii) non-IT systems or embedded technology such as micro-controllers; and (iii)
the Year 2000 compliance of key service providers and customers.
The Company utilizes standard non-customized hardware and software in
its IT systems. To the extent such hardware or software is not Year 2000
compliant, Management believes that the disruption to the operations of the
Company and the cost of replacement of the hardware or software would be
minimal. In addition, the Company has evaluated the impact of the Year 2000
issue on the Company's non-IT systems and believes the Company's operations will
not be materially adversely impacted by non-compliant non-IT systems.
The Company is in the process of evaluating the impact of Year 2000
issues on key third parties. The Company has recently requested assurances from
its electrical power supplier and its largest customer that such parties are
Year 2000 compliant. To the extent such parties are not Year 2000 compliant, the
Company's operations or business may be materially adversely impacted.
Substantial interruption of electrical power supplied to the Company's operating
quarries due to the electrical power supplier's failure to achieve Year 2000
compliance has been identified as having the greatest potential adverse impact.
In such an event, the Company would need to seek alternative sources of
electrical power to meet the demands of the quarry operations. Management
believes that to the extent other service providers are not Year 2000 compliant,
such services may be obtained from other sources with minimal disruption to the
operations of the Company.
To date, the Company has spent approximately $5,000 in evaluating the
impact of Year 2000 on the operations of the Company and expects future costs to
be minimal.
Although the Company expects to be Year 2000 compliant, statements with
regard to such expectations are subject to various factors that may materially
affect the Company's Year 2000 compliance efforts. These factors include the
ability to detect, locate and correct system codes and the failure of key third
parties to achieve Year 2000 compliance. The Company has taken actions that it
believes are appropriate and reasonable to determine the readiness of third
parties; however, it must in part rely on representations made by such third
parties.
ITEM 7. FINANCIAL STATEMENTS.
The following pages contain the Financial Statements and
Supplementary Data as specified by Item 7 of Form 10-KSB.
13
<PAGE> 16
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of American Stone Industries, Inc. and Subsidiaries
Amherst, Ohio
We have audited the consolidated balance sheets of American Stone
Industries, Inc. and Subsidiaries as of December 31, 1998 and 1997, and the
related statements of operations, stockholders' equity, and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of American Stone
Industries, Inc. and Subsidiaries as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
Hobe & Lucas
Independence, Ohio
February 12, 1999
F-1
<PAGE> 17
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
<TABLE>
<CAPTION>
ASSETS
1998 1997
----------- -----------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 196,942 $ 144,443
Accounts receivable, net of allowance for
doubtful accounts of $15,025 - 1998 and
$9,967 - 1997 820,271 462,703
Prepaid expenses 30,414 37,112
Inventory 812,224 797,758
----------- -----------
Total current assets 1,859,851 1,442,016
----------- -----------
Property, Plant and Equipment, Net 2,652,704 2,107,823
----------- -----------
Other Assets
Intangibles, Net of amortization 188,185 196,334
Restricted cash11,670 11,116
Deposits 1,000 4,000
----------- -----------
200,855 211,450
----------- -----------
$ 4,713,410 $ 3,761,289
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank line of credit $ 450,000 $ 350,000
Current portion of notes payable 228,813 126,480
Accounts payable 402,344 441,372
Accrued and withheld payroll
and payroll taxes 72,445 27,388
Accrued liabilities 118,446 146,665
----------- -----------
Total Current Liabilities 1,272,048 1,091,905
----------- -----------
Long Term Liabilities
Notes payable 411,959 36,728
----------- -----------
Stockholders' equity
Common stock, $.001 par value
20 million shares authorized
1,716,364 - 1998 and 1,631,364 - 1997
shares issued and outstanding 1,716 1,631
Additional paid-in capital 3,849,958 3,577,543
Accumulated deficit (822,271) (946,518)
----------- -----------
3,029,403 2,632,656
----------- -----------
$ 4,713,410 $ 3,761,289
=========== ===========
</TABLE>
See notes to consolidated financial statements
F-2
<PAGE> 18
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Sales $ 3,221,762 $ 2,178,207
Cost of goods sold 2,124,649 1,417,752
----------- -----------
Gross profit 1,097,113 760,455
----------- -----------
Selling and administrative expenses 888,899 719,497
----------- -----------
Income from operations 208,214 40,958
----------- -----------
Other Income/(Expense)
Interest income4,203 17,183
Interest expense (88,170) (46,135)
----------- -----------
(83,967) (28,952)
----------- -----------
Income before provision for income taxes 124,247 12,006
Provision for income taxes -- 4,900
----------- -----------
Net income $ 124,247 $ 7,106
=========== ===========
Net income per Common Share
Basic $ .07 $ .00
=========== ===========
Diluted $ .07 $ .00
=========== ===========
</TABLE>
See notes to consolidated financial statements
F-3
<PAGE> 19
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
Common Stock
----------------- Additional Total
Issued Paid-In Accumulated Stockholders'
Shares Par Value Capital Deficit Equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1997 16,313,628 $ 16,314 $ 3,562,860 $ (953,624) $ 2,625,550
Shares retired in ten to one
reverse stock split effective
May 30, 1997 (14,682,264) (14,683) 14,683 -- --
Net Income -- -- -- 7,106 7,106
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 1,631,364 $ 1,631 3,577,543 (946,518) 2,632,656
Issuance of common stock 85,000 85 272,415 -- 272,500
Net Income -- -- -- 124,247 124,247
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 1,716,364 $ 1,716 $ 3,849,958 $ (822,271) $ 3,029,403
=========== =========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements
F-4
<PAGE> 20
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Net Income $ 124,247 $ 7,106
--------- ---------
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation, amortization and depletion 117,604 118,659
Gain on sale of equipment (77,671) (14,145)
Changes in assets and liabilities:
Increase in accounts receivable (357,568) (175,075)
Increase in inventory (14,466) (365,948)
Decrease (Increase) in prepaid expenses 6,698 (399)
Decrease in payables and accrued liabilities (22,190) (14,840)
Other, net 2,446 (3,216)
--------- ---------
Total Adjustments (345,147) (454,964)
--------- ---------
Net Cash Used in Operating Activities (220,900) (447,858)
--------- ---------
Cash Flows from Investing Activities:
Proceeds from notes receivable -- 39,886
Proceeds from sale of equipment 203,676 99,939
Purchase of property, plant and equipment (780,341) (288,975)
--------- ---------
Net Cash Used in Investing Activities (576,665) (149,150)
--------- ---------
Cash Flows from Financing Activities:
Net borrowings (repayment) under line of credit
arrangements 100,000 (250,000)
Proceeds from long term debt 531,924 72,460
Repayment of long term debt (54,360) (64,722)
Proceeds from issuance of common stock 272,500 --
--------- ---------
Net Cash Provided by (Used In) Financing Activities 850,064 (242,262)
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 52,499 (839,270)
Cash and Cash Equivalents at Beginning of Year 144,443 983,713
--------- ---------
Cash and Cash Equivalents at End of Year $ 196,942 $ 144,443
========= =========
Supplemental Disclosure of Cash Flows
Information:
Interest paid $ 88,000 $ 43,000
Taxes paid $ -- $ --
See notes to consolidated financial statements
</TABLE>
F-5
<PAGE> 21
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
This summary of significant accounting policies of American Stone
Industries, Inc., (hereinafter "ASI" or the "Company") is presented to assist in
understanding the financial statements. The financial statements and notes are
representations of the Company's management, which is responsible for their
integrity and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the period.
Actual results could differ from those estimates.
Business Activity
- -----------------
American Stone Industries, Inc. (a Delaware corporation) is a
publicly-held company whose stock is traded on the OTC Bulletin Board. American
Stone Industries, Inc. ("ASI") is a holding company that mines and sells stone
predominantly for the building stone market through its wholly owned
subsidiaries, American Stone Corporation ("ASC") and Tyrrell Stone Design, Ltd.
("Tyrrell"). ASC owns and operated the Cleveland Quarries in Amherst, Ohio.
Tyrrell provides design drawings to architects and acts as the Company's
Canadian sales office.
Property, Plant and Equipment - At Cost
- ---------------------------------------
Property, plant and equipment at December 31, 1998 and 1997 consisted of:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Land $ 446,869 $ 449,493
Buildings and improvements 814,029 806,594
Equipment 1,347,126 856,814
Computers 33,370 21,942
Vehicle 11,000 2,500
Construction in progress 279,263 129,542
---------- ----------
2,931,657 2,266,885
Less: Accumulated depreciation 278,953 159,062
---------- ----------
Net property, plant and equipment $2,652,704 $2,107,823
========== ==========
</TABLE>
F-6
<PAGE> 22
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
- ---------------------------------------------------------------
Depletion is being calculated based on management's estimate of sandstone
reserves. There is no engineer's estimate available for such reserves. Depletion
amounted to $1,268 and $1,051 for the year ended December 31, 1998 and 1997,
respectively.
The cost of depreciable property is being depreciated over the estimated
useful lives of the assets using the straight-line method for financial
reporting. Depreciation expense was $164,668 and $109,455 for the year ended
December 31, 1998 and 1997, respectively.
Construction in progress for 1998 represents costs incurred to date for
the purchase and installation of a gang saw with an estimated cost of $500,000.
Construction in progress for 1997 represents the cost of another gang saw which
was placed in service during 1998.
Routine maintenance and repairs are charged to operations when incurred.
Expenditures which materially increase value or extend lives are capitalized.
Principles of Consolidation
- ---------------------------
The accompanying financial statements include the accounts of American
Stone Industries, Inc. and its wholly-owned subsidiaries American Stone
Corporation and Tyrrell Stone Design, Ltd. for the years ended December 31, 1998
and 1997.
Cash and Cash Equivalents
- -------------------------
For purposes of financial reporting, the Company considers all
highly-liquid debt instruments purchased with an original maturity date of three
months or less to be cash equivalents.
Intangibles
- -----------
Goodwill is being amortized on the straight-line method over a twenty and
thirty year period. Other intangible assets, including trademarks are amortized
over their economic lives. Amortization expense for the year ended December 31,
1998 and 1997 is $8,149 and $8,158, respectively. At December 31, 1998 and 1997,
intangibles are net of accumulated amortization of $23,368 and $15,219,
respectively.
F-7
<PAGE> 23
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
- ---------------------------------------------------------------
Concentration of Credit Risk
- ----------------------------
Financial instruments, which potentially subject the Company to
concentration of credit risk, principally consist of accounts receivable. The
Company's policies do not require collateral to support customer accounts
receivables.
Income Per Common Share
- -----------------------
Income per common share is based on the weighted average number of shares
outstanding which was 1,661,364 and 1,631,364 for the years ended December 31,
1998 and 1997, respectively.
The exercise of outstanding stock options would not result in material
dilution.
Inventory
- ---------
The inventories which consist of sandstone are stated at the lower of
first-in, first-out (FIFO) cost or market.
Restricted Cash
- ---------------
The Company's certificate of deposit is assigned to the Ohio Department
of Natural Resources Division of Reclamation.
Reclassifications
- -----------------
Certain accounts related to the prior year have been reclassified to
conform to the current year presentation.
NOTE 2 - STOCKHOLDERS' EQUITY
- -----------------------------
Effective May 30, 1997, all stockholders of record received one share of
stock for every ten shares of stock held.
Suncrest Management Services, S.A. ("Suncrest") had an option to purchase
25,000 shares of the Company's common stock at $2.50 per share. Suncrest
exercised its option on August 4, 1998. The options were issued in 1995 as part
of a debt cancellation agreement.
F-8
<PAGE> 24
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
NOTE 2 - STOCKHOLDERS' EQUITY (Continued)
- -----------------------------------------
On September 30, 1998, the Company issued 60,000 shares of Common Stock
to Roulston Ventures Limited Partnership in a private placement transaction for
an aggregate purchase price of $210,000, or $3.50 per share.
At December 31, 1998, the Company has outstanding stock options to an
officer totaling 25,000 shares at $5.00 per share which were awarded in
February, 1997 at the then fair market value of the shares. These options are
not part of the options plans adopted June 24, 1998 (Note 3). These options
expire in February, 2000. None of these options were exercised during 1998 and
1997.
NOTE 3 - STOCK OPTION PLANS
- ---------------------------
Effective June 24, 1998, the Company adopted the 1998 Management Stock
Option Plan (management plan). Options granted under the management plan may be
either incentive stock options or non-statutory stock options. The options
expire on the fifth anniversary of the date of grant with remaining terms to be
determined by the sole discretion of a committee of members of the Company's
Board of Directors. The management plan provides that the Company may grant
options (generally at fair market value of the date of grant) for not more than
300,000 shares of common stock to management employees. Options granted are
generally exercisable one year after the date of grant. At December 31, 1998,
30,000 shares at $3.50 per share have been granted, none of which are
exercisable.
Additionally, effective June 24, 1998, the Company adopted the 1998
Non-Employee Director Stock Option Plan (director plan). The director plan
provides for the granting of stock options to members of the Board of Directors
who are not employees of the Company. There are 300,000 shares available for
grants under the plan. Each option is exercisable one year after the date of the
grant and expires five years after the date of the grant. Each eligible director
receives an option to purchase 1,500 shares (3,000 shares for the Board's
Chairman) of common stock on the date of the annual meeting and 150 shares (300
shares for the Board's Chairman) of common stock for each Director or Committee
meeting attended. Each option shall be at fair market value on the date of the
grant. At December 31, 1998, 17,100 shares with exercise prices ranging from
$2.37 to $3.75 ($3.51 weighted average) were outstanding, none of which are
exercisable.
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APBO No. 25), and related
interpretations, in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123), requires use of highly subjective assumptions in
option valuation models. Under APBO No. 25, because the exercise price of the
Company's employee stock options granted is not less than fair market price of
the shares at the date of grant, no compensation is recognized in the financial
statements.
F-9
<PAGE> 25
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
NOTE 3 STOCK OPTION PLAN (Continued)
- ------------------------------------
Pro forma information regarding net income and earnings per share, determined as
if the Company had accounted for its employee stock options under the fair value
method of SFAS No. 123, is required by that statement. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following assumptions for all options granted: a risk free
interest rate of 4.52% , an expected life of the options of five years, no
expected dividend yield and a volatility factor of 50%.
Had compensation cost been determined on the basis of fair value pursuant
to SFAS No. 123, net income and earnings per share for 1998 would have been as
follows:
<TABLE>
<S> <C>
Net Income
As reported $ 124,247
============
Pro forma $ 103,739
============
Basic earnings per share:
As reported $ .07
============
Pro forma $ .06
============
Diluted earnings per share:
As reported $ .07
============
Pro forma $ .06
============
</TABLE>
NOTE 4 - LINE OF CREDIT
- -----------------------
The Company has a line of credit with maximum borrowings of $750,000. The
note provides for borrowing with interest payable monthly at a rate equivalent
to the bank's prime lending rate (7.75% and 8.5% at December 31, 1998 and 1997,
respectively). The debt agreement contains certain restrictive terms and
covenants. The Company was in compliance with its covenants at December 31, 1998
and 1997. The debt is secured by substantially all real estate, inventory, and
equipment of the Company. The outstanding balance at December 31, 1998 and 1997
was $450,000 and $350,000, respectively.
NOTE 5 - LONG TERM DEBT
- -----------------------
<TABLE>
<CAPTION>
1998 1997
----------- ------------
<S> <C> <C>
9%, note payable to bank with interest only
until March, 1998 then payable in monthly
installments of $10,407 including interest,
final payment due February, 2003, secured
by substantially all real estate, inventory and
equipment of the Company. $406,982 $ 72,460
</TABLE>
F-10
<PAGE> 26
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
<TABLE>
<CAPTION>
1998 1997
----------- --------
NOTE 5 - LONG TERM DEBT (Continued)
- -----------------------------------
<S> <C> <C>
9.8% various equipment loans repaid
during 1998. $ -- $ 3,285
Note payable to bank payable in monthly
installments of $3,143 including interest at
prime plus 0.75% ( prime was 7.75% at
December 31, 1998), final payment due May,
2004, secured by substantially all real estate,
inventory and equipment of the Company. 147,251 --
7.76%, note payable to bank with maximum
borrowings of $378,000. Advances to date of
$45,418, final payment will be due April, 2002,
secured by substantially all real estate, inventory
and equipment of the Company. 45,418 --
8.31%, secured by equipment, payable in
monthly installments of $4,675 including
interest, final payment due September, 1999 41,121 87,463
--------- --------
640,772 163,208
Less: Current Portion 228,813 126,480
--------- --------
$411,959 $ 36,728
========= ========
</TABLE>
Following is a summary of future maturities of long term debt as of
December 31, 1998:
<TABLE>
<S> <C>
1999 $228,813
2000 131,212
2001 143,366
2002 111,669
2003 25,712
----------
$640,772
==========
</TABLE>
NOTE 6- FAIR VALUE OF FINANCIAL STATEMENTS
- ------------------------------------------
The carrying amounts of cash, accounts receivable, accounts payable, and
long-term debt approximate the fair value reported in the balance sheet. The
fair value of long-term debt is based on current rates at which the Company
could borrow funds with similar remaining maturities.
F-11
<PAGE> 27
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
NOTE 7 - FINANCIAL REPORTING FOR SEGMENTS OF THE COMPANY
- --------------------------------------------------------
The Company and its subsidiaries operated predominantly in one industry,
the design, quarrying and cutting of sandstone primarily used in the
construction industry.
Following is the information regarding the Company's continuing
operations by geographic location. Transfers between geographic areas are
accounted for on a cost plus profit margin basis.
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Net sales, including geographic transfers
United States $ 2,556,634 $ 1,847,268
Canada 845,643 574,804
Geographic transfers (180,515) (243,865)
----------- -----------
$ 3,221,762 $ 2,178,207
=========== ===========
Income (Loss) from operations:
United States $ 209,212 $ 31,801
Canada (998) 9,157
----------- -----------
Income from operations 208,214 40,958
Interest expense (88,170) (46,135)
Interest income 4,203 17,183
----------- -----------
Income from operations before income taxes $ 124,247 $ 12,006
=========== ===========
Identifiable assets:
United States $ 4,595,411 $ 3,632,246
Canada 117,999 129,043
----------- -----------
$ 4,713,410 $ 3,761,289
=========== ===========
</TABLE>
NOTE 8-INCOME TAXES
- -------------------
Income taxes on continuing operations include the following:
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Canadian:
Currently payable $ -- $4,900
Deferred -- --
------ ------
Total $ -- $4,900
====== ======
</TABLE>
F-12
<PAGE> 28
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
NOTE 8 - INCOME TAXES (Continued)
A reconciliation of the effective tax rate with the statutory U.S. income
tax rate is as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------ ----------------------
% of % of
Pretax Pretax
Income Amount Income Amount
<S> <C> <C> <C> <C>
Income taxes per
statement of income $ -0- 0% $ 4,900 76%
Tax rate differences resulting from:
Income taxes applicable to
Canadian income at rate
different from U.S. rate -- --% (4,900) (76)%
Income (loss) for financial reporting
purpose without tax expense or
benefit. Utilization of loss carry-
forward (unavailable for carryback
against prior income taxes paid) 42,244 34% 4,082 34%
-------- -- -------- --
Income taxes at statutory rate $42,244 34% $ 4,082 34%
======= == ======= ==
</TABLE>
For United States tax purposes, the Company has available at December 31,
1998, unused operating loss carryforwards that may be applied against future
taxable income and that expire as follows:
<TABLE>
<CAPTION>
Amount of Unused Operating Expiration During Year Ended
Loss Carryforwards December 31,
------------------ ------------
<S> <C>
$ 48,000 2007
1,553,000 2008
480,000 2009
773,000 2010
131,000 2012
-----------
$2,985,000
</TABLE>
Future United States taxes may also be reduced by a capital loss
carryforwards of approximately $59,000 which expire in 2000. Utilization of the
net operating loss and capital loss carryforwards is contingent upon the Company
having sufficient taxable income and capital gains, in the future.
F-13
<PAGE> 29
AMERICAN STONE INDUSTRIES, INC. AND SUBSIDIARIES
------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
------------------------------------------------------
DECEMBER 31, 1998 AND 1997
--------------------------
NOTE 8 - INCOME TAXES (Continued)
- ---------------------------------
The Company's deferred tax assets and liabilities at December 31, 1998
and 1997 consist of:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Deferred tax asset $ 1,035,000 $ 1,035,000
Valuation allowance (923,000) (958,000)
Deferred tax liability (112,000) (77,000)
----------- -----------
$ -- $ --
=========== ===========
</TABLE>
Deferred taxes are provided for temporary differences in
deducting expenses for financial statement and tax purposes. The principal
source for deferred tax assets are different methods for recovering depreciation
and net operating loss and capital loss carryforwards. No deferred taxes are
reflected in the balance sheet at December 31, 1998 and 1997 due to a valuation
allowance. As of December 31, 1998 and 1997, the Company recognized a $35,000
decrease and $531,000 increase in the valuation allowance.
NOTE 9 - RELATED PARTY TRANSACTIONS
- -----------------------------------
In November 1997, the Company entered into an agreement with a company,
of which a board member is the executive vice president, to construct a
foundation for a new gang saw. The total contract was for $62,142 of which
$35,000 was completed and invoiced as of December 31, 1997. The contract was
completed in 1998. The contract was selected by the Board of Directors from
among three bids, of which this was the lowest. The related party board member
abstained from the Board's vote. The Board believes this contract was entered
into on terms as favorable to the Company as would have been available from an
unrelated party.
NOTE 10 - PROFIT SHARING PLAN
- -----------------------------
Effective January 1, 1999, American Stone Corporation adopted a 401(k)
profit-sharing plan (the Plan) offered to employees with more than one year of
service. Contributions under the Plan are discretionary and are determined
annually by the Company's Board of Directors. In addition, the Plan provides for
a discretionary match of employee contributions to the Plan.
F-14
<PAGE> 30
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
The information required by this Item 9 as to the Directors of
the Company is incorporated herein by reference to the information set forth
under the caption "Election of Directors" in the Company's definitive Proxy
Statement for the Annual Meeting of Stockholders to be held on June 23, 1999,
since such Proxy Statement will be filed with the Securities and Exchange
Commission not later than 120 days after the end of the Company's fiscal year
pursuant to Regulation 14A. Information required by this Item 9 as to the
executive officers of the Company is included as Item 4A of Part I of this
Annual Report on Form 10-KSB as permitted by Instruction 3 to Item 401(b) of
Regulation S-K. Information required by Item 405 of Regulation S-B is
incorporated by reference to the information set forth under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's
definitive Proxy Statement for the Annual Meeting of Stockholders to be held on
June 23, 1999.
ITEM 10. EXECUTIVE COMPENSATION.
The information required by this Item 10 is incorporated by
reference to the information set forth under the caption "Executive
Compensation" in the Company's definitive Proxy Statement for the Annual Meeting
of Stockholders to be held on June 23, 1999, since such Proxy Statement will be
filed with the Securities and Exchange Commission not later than 120 days after
the end of the Company's fiscal year pursuant to Regulation 14A.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item 11 is incorporated by
reference to the information set forth under the caption "Common Stock
Ownership" in the Company's definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on June 23, 1999, since such Proxy Statement will be
filed with the Securities and Exchange Commission not later than 120 days after
the end of the Company's fiscal year pursuant to Regulation 14A.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item 12 is incorporated by
reference to the information set forth under the caption "Certain Relationships
and Related Party Transactions" in the Company's definitive Proxy Statement for
the Annual Meeting of Stockholders to be held on June 23, 1999, since such Proxy
Statement will be filed with the Securities and Exchange Commission not later
than 120 days after the end of the Company's fiscal year pursuant to Regulation
14A.
15
<PAGE> 31
ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K.
(a) Exhibits
Reference is made to the Exhibit Index set forth
herein beginning at page E-1.
(b) Reports on Form 8-K.
None.
16
<PAGE> 32
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AMERICAN STONE INDUSTRIES, INC.
By: /s/ David Tyrrell
-------------------------------------------
David Tyrrell, President and
Chief Executive Officer
Date: March 31, 1999
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
<TABLE>
<S> <C>
By: /s/ David Tyrrell By: /s/ Jacquita K. Hauserman
------------------------------------------------- -----------------------------------------------
David Tyrrell, President and Jacquita K. Hauserman, Director
Chief Executive Officer (Principal Date: March 31, 1999
Executive Officer)
Date: March 31, 1999
By: /s/ Enzo Costantino By: /s/ Michael J. Meier
------------------------------------------------- -----------------------------------------------
Enzo Costantino, Treasurer and Director Michael J. Meier, Secretary and Director
(Principal Accounting Officer and Date: March 31, 1999
Principal Financial Officer)
Date: March 31, 1999
By: /s/ Thomas H. Roulston, II By: /s/ Timothy I. Panzica
------------------------------------------------- -----------------------------------------------
Thomas H. Roulston II, Chairman Timothy I. Panzica, Director
of the Board Date: March 31, 1999
Date: March 31, 1999
By: /s/ Glen Gasparini By: /s/ Louis Stokes
------------------------------------------------- -----------------------------------------------
Glen Gasparini, Director Louis Stokes, Director
Date: March 31 , 1999 Date: March 31, 1999
</TABLE>
17
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description of Document
-------------- -----------------------
<S> <C> <C>
3.1 Certificate of Incorporation of the Company, dated November 13, 1992 (A)
3.2 Certificate of Amendment of the Certificate of Incorporation of the Company,
dated March 9, 1993 (A)
3.3 Certificate of Amendment of the Certificate of Incorporation of the Company,
dated December 14, 1993 (A)
3.4 Certificate for Renewal and Revival of Charter, dated May 31, 1994 (A)
3.5 Certificate of Amendment of the Certificate of Incorporation of the Company,
dated August, 1995 (A)
3.6 Certificate of Amendment of the Certificate of Incorporation of American
Stone Industries, Inc., dated June 24, 1998 (B)
3.7 By-laws of the Company (A)
10.1 Business Loan Agreement between American Stone Corporation and First
National Bank of Ohio, dated September 13, 1996 (A)
10.2 Amendment to Loan Agreement between American Stone Corporation and First
National Bank of Ohio, dated February 26, 1997 (A)
10.3 Asset Purchase Agreement between American Stone Corporation and Cleveland
Quarries L.P., dated February 1, 1996 (A)
10.4 Amendment to and Restatement of Asset Purchase Agreement of February, 1996,
between American Stone Corporation and Cleveland Quarries L.P., dated
December 20, 1996 (A)
*10.5 Share Purchase Agreement between David Tyrrell and the Company, dated May
22, 1996 (A)
10.6 Stock Purchase Agreement between Roulston Ventures Limited Partnership and
the Company, dated August 27, 1996 (A)
10.7 Indemnification Agreement between Cleveland Quarries, L.P., Slate and Stone
Corporation of America, and American Stone Corporation, dated December 20,
1996 (A)
10.8 Share Purchase Option Agreement between TMT Masonry, Ltd., Roulston Ventures
Limited Partnership and the Company (A)
</TABLE>
18
<PAGE> 34
<TABLE>
<CAPTION>
Exhibit Number Description of Document
-------------- -----------------------
<S> <C> <C>
10.9 Interim Management Agreement between Robert Graham Nash, William Purvis
Houston, E. Victor Artuso, Nichols Investments Inc., 237894 Ontario Limited,
Grenville Aggregate Specialties Limited and the Company, dated August 30,
1996 (A)
10.10 Share Purchase Option Agreement between TMT Masonry, Ltd., Roulston Ventures
Limited Partnership and the Company, dated November 22, 1996
(C)
10.11 Business Loan Agreement between American Stone Corporation and FirstMerit
Bank, N.A. dated November 10, 1997 (D)
10.12 Modification of Mortgage between American Stone Corporation and FirstMerit
Bank, N.A., dated November 10, 1997 (D)
10.13 Modification of Mortgage between American Stone Corporation and FirstMerit
Bank, N.A., dated November 10, 1997 (D)
10.14 Commercial Security Agreement between American Stone Corporation and
FirstMerit Bank, N.A., dated November 10, 1997 (D)
*10.15 Agreement between American Stone Corporation and David Tyrrell, dated May 1,
1998
*10.16 Stock Subscription Agreement between Roulston Ventures Limited Partnership
and the Company, dated September 30, 1999
*10.17 American Stone Industries, Inc. 1998 Management Stock Option Plan (B)
*10.18 American Stone Industries, Inc. 1998 Non-Employee Director Stock Option Plan (B)
10.19 FirstMerit Bank, N.A., Defined Contribution Master Plan and Trust Agreement
10.20 Adoption Agreement #009 Standardized Code ss401(k) Plan (Paired Profit
Sharing Plan)
10.21 Appendix B to General Instructions Checklist of Employer Administrative
Elections
21.1 Subsidiaries of the Company
23.1 Consent of Hobe & Lucas
27.1 Financial Data Schedule
</TABLE>
* Management contract or compensatory plan or arrangement.
19
<PAGE> 35
(A) Incorporated herein by reference to the appropriate exhibit to the
Company's registration statement on Form 10-SB filed on April 11, 1997.
(B) Incorporated herein by reference to the appropriate exhibit to the
Company's quarterly report on Form 10-QSB for the period ended
September 30, 1998.
(C) Incorporated herein by reference to the appropriate exhibit to the
amendment filed on July 30, 1997 to Company's registration statement on
From 10-SB filed on April 11, 1997.
(D) Incorporated herein by reference to the appropriate exhibit to the
Company's annual report on Form 10-KSB for the period ended December
31, 1997.
20
<PAGE> 1
EXHIBIT 10.15
AGREEMENT
---------
THIS AGREEMENT is made and effective as of this / day of May,
1998 ("Effective Date of Agreement"), by and between AMERICAN STONE CORPORATION,
a corporation duly organized under the laws of the State of Delaware (the
"Company"), and DAVID TYRRELL of the City of Toronto in the Province of Ontario
("Employee").
W I T N E S S E T H
-------------------
WHEREAS, Employee and the Company are desirous of mutually
extinguishing the Employment Agreement between the Company and Employee which
was effective February 7, 1996 ("Previous Agreement"); and
WHEREAS, Employee and the Company desire to waive any and all
rights and/or benefits under the Previous Agreement;
NOW, THEREFORE in consideration of the mutual promises and
covenants contained herein, the Company and Employee agree as follows:
1. WAIVER. Consistent with paragraph 5.5 of the Previous
Agreement, the parties hereby agree in writing to a complete waiver of the terms
of the Previous Agreement. Notwithstanding any provision of the Previous
Agreement, as of the Effective Date of Agreement, neither the Company nor
Employee shall be entitled to any of the rights and/or benefits set forth
therein. Further, neither the Company nor the Employee shall be subject to any
of the obligations set forth therein.
2. AT-WILL EMPLOYMENT. As of Effective Date of
Agreement, Employee shall be employed by the Company on an "at-will" basis.
Specifically, just as Employee may terminate his relationship with the Company
at any time for any reason, the Company reserves the right to terminate Employee
at its sole discretion. The parties further agree that no one except the
Chairman of the Board of the Company has any authority to change that
relationship on behalf of the Company, and then, only in writing. Employee
expressly recognizes that any reliance on any representations, oral or
otherwise, contrary to "employment at-will" is unreasonable.
3. MISCELLANEOUS. The mutual extinguishment of the Previous
Agreement provided in this Agreement shall not be interpreted as a "termination"
as that term is utilized in the Previous Agreement. Specifically, the mutual
extinguishment does not activate any entitlement to severance or any other
benefits under the Previous Agreement. As of Effective Date of Agreement, the
Previous Agreement shall be a nullity, and any employment of Employee is simply
on an at will basis.
4. ENTIRE AGREEMENT. This Agreement supersedes and
replaces any existing agreement or understanding between Employee and the
Company relating to the subject matters addressed herein. Employee and the
Company recognize and agree that this is the entire agreement between them
concerning the topics expressly addressed herein. Any modification of this
Agreement must be in writing signed by both parties.
1
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
DATE OF EXECUTION: AMERICAN STONE CORPORATION
(Company)
April 20, 1998 /s/ Thomas H. Roulston II
- ------------------------- -----------------------------------
By: Thomas H. Roulston II
Its: Chairman of the Board
June 1, 1998 /s/ David Tyrrell
- ------------------------- -----------------------------------
David Tyrrell
(Employee)
2
<PAGE> 1
EXHIBIT 10.16
STOCK SUBSCRIPTION AGREEMENT
AMERICAN STONE INDUSTRIES, INC.
The undersigned hereby subscribes for 60,000 shares of Common
Stock, $.01 par value per share (the "Stock"), of American Stone Industries,
Inc., a Delaware corporation (the "Corporation"), and hereby agrees to pay in
cash therefor the aggregate price of Two Hundred and Ten Thousand Dollars
($210,000), or Three Dollars and Fifty Cents ($3.50) per share.
The undersigned hereby acknowledges that the Stock has not been registered under
the Securities Act of 1933, as amended (the "Act"), and may not be sold,
transferred or otherwise disposed of unless a registration statement under the
Act with respect to the Stock has become effective or unless the undersigned
establishes to the satisfaction of the Corporation that an exemption from such
registration is available. The undersigned acknowledges that all certificates
for the Stock shall bear the following legend regarding restrictions on
transfer:
THE SHARES REPRESENTED BY THIS CERTIFICATE AND ANY SHARES THAT
MAY BE ISSUED UPON THE CONVERSION OF SUCH SHARES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR UNDER ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY PORTION HEREOF OR INTEREST HEREIN MAY BE
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
UNLESS THE SAME IS REGISTERED UNDER THE SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE AND THE COMPANY SHALL HAVE
RECEIVED, AT THE EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF
SUCH EXEMPTION REASONABLY SATISFACTORY TO THE COMPANY (WHICH
MAY INCLUDE, AMONG OTHER THINGS, AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY).
The undersigned represents and warrants that (i) the Stock is
not being acquired on behalf of any other person, (ii) the Stock is being
acquired for investment and not with a view to distribution or to divide the
undersigned's participation with others or resell or otherwise transfer the
Stock, and (iii) neither the undersigned nor anyone acting on the undersigned's
behalf has paid any commission or other remuneration to any person in connection
with the purchase of the Stock.
The undersigned represents and warrants that it is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D
promulgated under the Act.
<PAGE> 2
Name Roulston Ventures Limited Partnership Taxpayer I.D. No. 34-1759043
------------------------------------- ----------
Address 4000 Chester Avenue
-------------------------------------
City Cleveland State OH Zip 44103
------------------------------------- ---- ------
Date: September 30, 1998 /s/ Thomas H. Roulston II
-------------------------------------
Roulston Ventures Limited Partnership
By: Thomas H. Roulston II
General Partner
ACCEPTANCE
----------
This Subscription Agreement is hereby accepted on behalf of
American Stone Industries, Inc.
Date: September 30, 1998 /s/ David Tyrrell
------------------------------
David Tyrrell
President
<PAGE> 1
EXHIBIT 10.19
FirstMerit Bank, N.A.
DEFINED CONTRIBUTION MASTER PLAN
AND
TRUST AGREEMENT
<PAGE> 2
TABLE OF CONTENTS
ALPHABETICAL LISTING OF DEFINITIONS............................................v
ARTICLE I, DEFINITIONS
1.01 Employer........................................................ 1.01
1.02 Trustee..........................................................1.01
1.03 Plan.............................................................1.01
1.04 Adoption Agreement...............................................1.01
1.05 Plan Administrator...............................................1.02
1.06 Advisory Committee...............................................1.02
1.07 Employee.........................................................1.02
1.08 Self-Employed Individual/Owner-Employee..........................1.02
1.09 Highly Compensated Employee......................................1.02
1.10 Participant......................................................1.03
1.11 Beneficiary......................................................1.03
1.12 Compensation.....................................................1.03
1.13 Earned Income....................................................1.04
1.14 Account..........................................................1.05
1.15 Accrued Benefit..................................................1.05
1.16 Nonforfeitable...................................................1.05
1.17 Plan Year/Limitation Year........................................1.05
1.18 Effective Date...................................................1.05
1.19 Plan Entry Date..................................................1.05
1.20 Accounting Date..................................................1.05
1.21 Trust............................................................1.05
1.22 Trust Fund.......................................................1.05
1.23 Nontransferable Annuity..........................................1.05
1.24 ERISA............................................................1.05
1.25 Code.............................................................1.05
1.26 Service..........................................................1.05
1.27 Hour of Service..................................................1.05
1.28 Disability.......................................................1.06
1.29 Service for Predecessor Employer.................................1.07
1.30 Related Employers................................................1.07
1.31 Leased Employees.................................................1.07
1.32 Special Rules for Owner-Employers................................1.08
1.33 Determination of Top Heavy Status................................1.08
1.34 Paired Plans.....................................................1.10
ARTICLE II, EMPLOYEE PARTICIPANTS
2.01 Eligibility......................................................2.01
2.02 Year of Service - Participation..................................2.01
2.03 Break in Service - Participation.................................2.01
2.04 Participation upon Re-employment.................................2.02
2.05 Change in Employee Status........................................2.02
2.06 Election Not to Participate......................................2.02
<PAGE> 3
ARTICLE III, EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 Amount...........................................................3.01
3.02 Determination of Contribution....................................3.01
3.03 Time of Payment of Contribution..................................3.01
3.04 Contribution Allocation..........................................3.01
3.05 Forfeiture Allocation............................................3.03
3.06 Accrual of Benefit...............................................3.03
3.07 - 3.16 Limitations on Allocations................................3.05
3.17 Special Allocation Limitation....................................3.06
3.18 Defined Benefit Plan Limitation..................................3.07
3.19 Definitions - Article III........................................3.07
ARTICLE IV, PARTICIPANT CONTRIBUTIONS
4.01 Participant Nondeductible Contributions..........................4.01
4.02 Participant Deductible Contributions.............................4.01
4.03 Participant Rollover Contributions...............................4.01
4.04 Participant Contribution - Forfeitability........................4.02
4.05 Participant Contribution - Withdrawal/Distribution...............4.02
4.06 Participant Contribution - Accrued Benefit.......................4.02
ARTICLE V, TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 Normal Retirement Age............................................5.01
5.02 Participant Disability or Death..................................5.01
5.03 Vesting Schedule.................................................5.01
5.04 Cash-Out Distributions to Partially-Vested Participants/
Restoration of Forfeited Accrued Benefit.........................5.01
5.05 Segregated Account for Repaid Amount.............................5.03
5.06 Year of Service - Vesting........................................5.03
5.07 Break in Service - Vesting.......................................5.03
5.08 Included Years of Service - Vesting..............................5.03
5.09 Forfeiture Occurs................................................5.03
ARTICLE VI, TIME AND METHOD OF PAYMENT OF BENEFITS
6.01 Time of Payment of Accrued Benefit...............................6.01
6.02 Method of Payment of Accrued Benefit.............................6.02
6.03 Benefit Payment Elections........................................6.04
6.04 Annuity Distributions to Participants and Surviving Spouses......6.05
6.05 Waiver Election - Qualified Joint and Survivor Annuity...........6.07
6.06 Waiver Election - Preretirement Survivor Annuity.................6.08
6.07 Distributions Under Domestic Relations Orders....................6.08
ARTICLE VII, EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 Information to Committee.........................................7.01
7.02 No Liability.....................................................7.01
7.03 Indemnity of Plan Administrator and Committee....................7.01
7.04 Employer Direction of Investment.................................7.01
7.05 Amendment to Vesting Schedule....................................7.01
ii
<PAGE> 4
ARTICLE VIII, PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 Beneficiary Designation..........................................8.01
8.02 No Beneficiary Designation/Death of Beneficiary..................8.01
8.03 Personal Data to Committee.......................................8.02
8.04 Address for Notification.........................................8.02
8.05 Assignment or Alienation.........................................8.02
8.06 Notice of Change in Terms........................................8.02
8.07 Litigation Against the Trust.....................................8.02
8.08 Information Available............................................8.02
8.09 Appeal Procedure for Denial of Benefits..........................8.02
8.10 Participant Direction of Investment..............................8.03
ARTICLE IX, ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.01 Members' Compensation, Expenses..................................9.01
9.02 Term.............................................................9.01
9.03 Powers.. ........................................................9.01
9.04 General..........................................................9.01
9.05 Funding Policy...................................................9.02
9.06 Manner of Action.................................................9.02
9.07 Authorized Representative........................................9.02
9.08 Interested Member................................................9.02
9.09 Individual Accounts..............................................9.02
9.10 Value of Participant's Accrued Benefit...........................9.02
9.11 Allocation and Distribution of Net Income Gain or Loss...........9.03
9.12 Individual Statement.............................................9.03
9.13 Account Charged..................................................9.03
9.14 Unclaimed Account Procedure......................................9.03
ARTICLE X, CUSTODIAN/TRUSTEE, POWERS AND DUTIES
10.01 Acceptance.....................................................10.01
10.02 Receipt of Contributions.......................................10.01
10.03 Investment Powers..............................................10.01
10.04 Records and Statements.........................................10.05
10.05 Fees and Expenses from Fund....................................10.06
10.06 Parties to Litigation..........................................10.06
10.07 Professional Agents............................................10.06
10.08 Distribution of Cash or Property...............................10.06
10.09 Distribution Directions........................................10.06
10.10 Third Party/Multiple Trustees..................................10.06
10.11 Resignation....................................................10.06
10.12 Removal........................................................10.06
10.13 Interim Duties and Successor Trustee...........................10.07
10.14 Valuation of Trust.............................................10.07
10.15 Limitation on Liability - If Investment Manager, Ancillary
Trustee or Independent Fiduciary...............................10.07
10.16 Investment in Group Trust Fund.................................10.07
iii
<PAGE> 5
10.17 Appointment of Ancillary Trustee or Independent Fiduciary..... 10.08
ARTICLE XI, PROVISIONS RELATING TO INSURANCE AND INSURANCE COMPANY
11.01 Insurance Benefit..............................................11.01
11.02 Limitation on Life Insurance Protection........................11.01
11.03 Definitions....................................................11.02
11.04 Dividend Plan..................................................11.02
11.05 Insurance Company Not a Party to Agreement.....................11.02
11.06 Insurance Company Not Responsible for Trustee's Actions........11.02
11.07 Insurance Company Reliance on Trustee's Signature..............11.03
11.08 Acquittance....................................................11.03
11.09 Duties of Insurance Company....................................11.03
ARTICLE XII, MISCELLANEOUS
12.01 Evidence.......................................................12.01
12.02 No Responsibility for Employer Action..........................12.01
12.03 Fiduciaries Not Insurers.......................................12.01
12.04 Waiver of Notice...............................................12.01
12.05 Successors.....................................................12.01
12.06 Word Usage.....................................................12.01
12.07 State Law......................................................12.01
12.08 Employer's Right to Participate................................12.01
12.09 Employment Not Guaranteed......................................12.02
ARTICLE XIII, EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
13.01 Exclusive Benefit..............................................13.01
13.02 Amendment By Employer..........................................13.01
13.03 Amendment By Master Plan Sponsor...............................13.02
13.04 Discontinuance.................................................13.02
13.05 Full Vesting on Termination....................................13.02
13.06 Merger/Direct Transfer.........................................13.02
13.07 Termination....................................................13.03
ARTICLE XIV, CODE ss.401(k) & CODE ss.401(m) ARRANGEMENTS
14.01 Application....................................................14.01
14.02 Code ss.401(k) Arrangement.....................................14.01
14.03 Definitions....................................................14.01
14.04 Matching Contributions/Employee Contributions..................14.03
14.05 Time of Payment of Contributions...............................14.03
14.06 Special Allocation Provisions - Deferral Contributions,
Matching Contributions and Qualified Nonelective
Contributions..................................................14.04
14.07 Annual Elective Deferral Limitation............................14.05
14.08 Actual Deferral Percentage ("ADP") Test........................14.05
14.09 Nondiscrimination Rules for Employer Matching Contributions
and Participant Nondeductible Contributions....................14.07
14.10 Multiple Use Limitation........................................14.09
14.11 Distribution Restrictions......................................14.10
iv
<PAGE> 6
14.12 Special Allocation Rules.......................................14.11
ARTICLE A - APPENDIX TO PLAN AND TRUST AGREEMENT........................A-1
ARTICLE B - APPENDIX TO BASIC PLAN DOCUMENT.............................B-1
v
<PAGE> 7
ALPHABETICAL LISTING OF DEFINITIONS
Plan Definition Section Reference
(Page Number)
100% Limitation....................................................3.19(l)(3.09)
Account...............................................................1.14(1.05)
Accounting Date.......................................................1.20(1.05)
Accrued Benefit.......................................................1.15(1.05)
Actual Deferral Percentage ("ADP") Test.............................14.08(14.06)
Adoption Agreement....................................................1.04(1.01)
Advisory Committee....................................................1.06(1.02)
Annual Addition....................................................3.19(a)(3.07)
Average Contribution Percentage Test................................14.09(14.07)
Beneficiary...........................................................1.11(1.03)
Break in Service for Eligibility Purposes.............................2.03(2.01)
Break in Service for Vesting Purposes.................................5.07(5.03)
Cash-out Distribution.................................................5.04(5.01)
Code..................................................................1.25(1.06)
Code ss.411(d)(6) Protected Benefits................................13.02(13.01)
Compensation..........................................................1.12(1.03)
Compensation for Code ss.401(k) Purposes.........................14.03(f)(14.02)
Compensation for Code ss.415 Purposes..............................3.19(b)(3.07)
Compensation for Top Heavy Purposes.............................1.33(B)(3)(1.10)
Contract(s)......................................................11.03(c)(11.02)
Custodian Designation............................................10.03[B](10.02)
Deemed Cash-out Rule...............................................5.04(C)(5.02)
Deferral Contributions...........................................14.03(g)(14.02)
Deferral Contributions Account......................................14.06(14.04)
Defined Benefit Plan...............................................3.19(i)(3.08)
Defined Benefit Plan Fraction......................................3.19(j)(3.08)
Defined Contribution Plan..........................................3.19(h)(3.08)
Defined Contribution Plan Fraction.................................3.19(k)(3.09)
Determination Date..............................................1.33(B)(7)(1.10)
Disability............................................................1.28(1.07)
Distribution Date.....................................................6.01(6.01)
Distribution Restrictions........................................14.03(m)(14.03)
Earned Income.........................................................1.13(1.05)
Effective Date........................................................1.18(1.05)
Elective Deferrals...............................................14.03(h)(14.02)
Elective Transfer................................................13.06(A)(13.02)
Eligible Employee................................................14.03(c)(14.02)
Employee..............................................................1.07(1.02)
Employee Contributions...........................................14.03(n)(14.03)
Employer..............................................................1.01(1.01)
vi
<PAGE> 8
Employer Contribution Account.......................................14.06(14.04)
Employer for Code ss.415 Purposes..................................3.19(c)(3.08)
Employer for Top Heavy Purposes.................................1.33(B)(6)(1.10)
Employment Commencement Date..........................................2.02(2.01)
ERISA.................................................................1.24(1.06)
Excess Aggregate Contributions......................................14.09(14.07)
Excess Amount......................................................3.19(d)(3.08)
Excess Contributions................................................14.08(14.06)
Exempt Participant....................................................8.01(8.01)
Forfeiture Break in Service...........................................5.08(5.03)
Group Trust Fund....................................................10.16(10.07)
Hardship........................................................6.01(A)(4)(6.02)
Hardship for Code ss.401(k) Purposes................................14.11(14.10)
Highly Compensated Employee...........................................1.09(1.02)
Highly Compensated Group.........................................14.03(d)(14.02)
Hour of Service.......................................................1.27(1.06)
Incidental Insurance Benefits.......................................11.01(11.01)
Insurable Participant............................................11.03(d)(11.02)
Investment Manager.................................................9.04(i)(9.01)
Issuing Insurance Company........................................11.03(b)(11.02)
Joint and Survivor Annuity.........................................6.04(A)(6.06)
Key Employee....................................................1.33(B)(1)(1.10)
Leased Employees......................................................1.31(1.08)
Limitation Year................................1.17 and 3.19(e)(1.05) and (3.08)
Loan Policy........................................................9.04(A)(9.02)
Mandatory Contributions.............................................14.04(14.03)
Mandatory Contributions Account.....................................14.04(14.03)
Master or Prototype Plan...........................................3.19(f)(3.08)
Matching Contributions...........................................14.03(i)(14.03)
Maximum Permissible Amount.........................................3.19(g)(3.08)
Minimum Distribution Incidental Benefit (MDIB).....................6.02(A)(6.03)
Multiple Use Limitation.............................................14.10(14.09)
Named Fiduciary..................................................10.03[D](10.04)
Nonelective Contributions........................................14.03(j)(14.03)
Nonforfeitable........................................................1.16(1.05)
Nonhighly Compensated Employee...................................14.03(b)(14.02)
Nonhighly Compensated Group......................................14.03(e)(14.02)
Non-Key Employee................................................1.33(B)(2)(1.10)
Nontransferable Annuity...............................................1.23(1.05)
Normal Retirement Age.................................................5.01(5.01)
Owner-Employee........................................................1.08(1.02)
Paired Plans..........................................................1.34(1.10)
Participant...........................................................1.10(1.03)
Participant Deductible Contributions..................................4.02(4.01)
Participant Forfeiture................................................3.05(3.03)
Participant Loans................................................10.03[E](10.05)
Participant Nondeductible Contributions...............................4.01(4.01)
vii
<PAGE> 9
Permissive Aggregation Group....................................1.33(B)(5)(1.10)
Plan..................................................................1.03(1.01)
Plan Administrator....................................................1.05(1.02)
Plan Entry Date.......................................................1.19(1.05)
Plan Year.............................................................1.17(1.05)
Policy...........................................................11.03(a)(11.02)
Predecessor Employer..................................................1.29(1.07)
Preretirement Survivor Annuity.....................................6.04(B)(6.06)
Qualified Domestic Relations Order....................................6.07(6.09)
Qualified Matching Contributions.................................14.03(k)(14.03)
Qualified Nonelective Contributions..............................14.03(l)(14.03)
Qualifying Employer Real Property................................10.03[F](10.05)
Qualifying Employer Securities...................................10.03[F](10.05)
Related Employers.....................................................1.30(1.07)
Required Aggregation Group......................................1.33(B)(4)(1.10)
Required Beginning Date............................................6.01(B)(6.02)
Rollover Contributions................................................4.03(4.01)
Self-Employed Individual..............................................1.08(1.02)
Service...............................................................1.26(1.06)
Term Life Insurance Contract........................................11.03(11.02)
Top Heavy Minimum Allocation.......................................3.04(B)(3.01)
Top Heavy Ratio.......................................................1.33(1.09)
Trust.................................................................1.21(1.05)
Trustee...............................................................1.02(1.01)
Trustee Designation..............................................10.03[A](10.01)
Trust Fund............................................................1.22(1.05)
Weighted Average Allocation Method..................................14.12(14.11)
Year of Service for Eligibility Purposes..............................2.02(2.01)
Year of Service for Vesting Purposes..................................5.06(5.03)
viii
<PAGE> 10
FirstMerit Bank, N.A.
DEFINED CONTRIBUTION MASTER PLAN AND TRUST AGREEMENT
BASIC PLAN DOCUMENT # 01
FirstMerit Bank, N.A., in its capacity as Master Plan Sponsor, establishes
this Master Plan intended to conform to and qualify under ss.401 and ss.501 of
the Internal Revenue Code of 1986, as amended. An Employer establishes a Plan
and Trust under this Master Plan by executing an Adoption Agreement. If the
Employer adopts this Plan as a restated Plan in substitution for, and in
amendment of, an existing plan, the provisions of this Plan, as a restated Plan,
apply solely to an Employee whose employment with the Employer terminates on or
after the restated Effective Date of the Employer's Plan. If an Employee's
employment with the Employer terminates prior to the restated Effective Date,
that Employee is entitled to benefits under the Plan as the Plan existed on the
date of the Employee's termination of employment.
ARTICLE I
DEFINITIONS
1.01 "Employer" means each employer who adopts this Plan by executing an
Adoption Agreement.
1.02 "Trustee" means the person or persons who as Trustee execute the
Employer's Adoption Agreement, or any successor in office who in writing accepts
the position of Trustee. The Employer must designate in its Adoption Agreement
whether the Trustee will administer the Trust as a discretionary Trustee or as a
nondiscretionary Trustee. If a person acts as a discretionary Trustee, the
Employer also may appoint a Custodian. See Article X. If the Master Plan Sponsor
is a bank, savings and loan, credit union or similar financial institution, a
person other than the Master Plan Sponsor (or its affiliate) may not serve as
Trustee or as Custodian of the Employer's Plan without the written consent of
the Master Plan Sponsor.
1.03 "Plan" means the retirement plan established or continued by the
Employer in the form of this Agreement, including the Adoption Agreement under
which the Employer has elected to participate in this Master Plan. The Employer
must designate the name of the Plan in its Adoption Agreement. An Employer may
execute more than one Adoption Agreement offered under this Master Plan, each of
which will constitute a separate Plan and Trust established or continued by that
Employer. The Plan and the Trust created by each adopting Employer is a separate
Plan and a separate Trust, independent from the plan and the trust of any other
employer adopting this Master Plan. All section references within the Plan are
Plan section references unless the context clearly indicates otherwise.
1.04 "Adoption Agreement" means the document executed by each Employer
adopting this Master Plan. The terms of this Master Plan as modified by the
terms of an adopting Employer's Adoption Agreement constitute a separate Plan
and Trust to be construed as a single Agreement. Each elective provision of the
Adoption Agreement corresponds by section reference to the section of the Plan
which grants the election. Each Adoption Agreement offered under this Master
Plan is either a Nonstandardized Plan or a Standardized Plan, as identified in
the preamble to that Adoption Agreement. The provisions of this Master Plan
apply equally to Nonstandardized Plans and to Standardized Plans unless
otherwise specified.
1.01
<PAGE> 11
1.05 "Plan Administrator" is the Employer unless the Employer designates
another person to hold the position of Plan Administrator. In addition to his
other duties, the Plan Administrator has full responsibility for compliance with
the reporting and disclosure rules under ERISA as respects this Agreement.
1.06 "Advisory Committee" means the Employer's Advisory Committee as from
time to time constituted.
1.07 "Employee" means any employee (including a Self-Employed Individual)
of the Employer. The Employer must specify in its Adoption Agreement any
Employee, or class of Employees, not eligible to participate in the Plan. If the
Employer elects to exclude collective bargaining employees, the exclusion
applies to any employee of the Employer 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 or more employers unless the
collective bargaining agreement requires the employee to be included within the
Plan. The term "employee representatives" does not include any organization more
than half the members of which are owners, officers, or executives of the
Employer.
1.08 "Self-Employed Individual/Owner-Employee." "Self-Employed Individual"
means an individual who has Earned Income (or who would have had Earned Income
but for the fact that the trade or business did not have net earnings) for the
taxable year from the trade or business for which the Plan is established.
"Owner-Employee" means a Self-Employed Individual who is the sole proprietor in
the case of a sole proprietorship. If the Employer is a partnership,
"Owner-Employee" means a Self-Employed Individual who is a partner and owns more
than 10% of either the capital or profits interest of the partnership.
1.09 "Highly Compensated Employee" means an Employee who, during the Plan
Year or during the preceding 12-month period:
(a) is a more than 5% owner of the Employer (applying the constructive
ownership rules of Code ss.318, and applying the principles of Code ss.318,
for an unincorporated entity);
(b) has Compensation in excess of $75,000 (as adjusted by the Commissioner
of Internal Revenue for the relevant year);
(c) has Compensation in excess of $50,000 (as adjusted by the Commissioner
of Internal Revenue for the relevant year) and is part of the top-paid 20%
group of employees (based on Compensation for the relevant year); or
(d) has Compensation in excess of 50% of the dollar amount prescribed in
Code ss.415(b)(1)(A) (relating to defined benefit plans) and is an officer
of the Employer.
If the Employee satisfies the definition in clause (b), (c) or (d) in the
Plan Year but does not satisfy clause (b), (c) or (d) during the preceding
12-month period and does not satisfy clause (a) in either period, the Employee
is a Highly Compensated Employee only if he is one of the 100 most highly
compensated Employees for the Plan Year. The number of officers taken into
account under clause (d) will not exceed the greater of 3 or 10% of the total
number (after application of the Code ss.414(q) exclusions) of Employees, but no
more than 50 officers. If no Employee satisfies the Compensation requirement in
clause (d) for the relevant year, the Advisory Committee will treat the highest
paid officer as satisfying clause (d) for that year.
For purposes of this Section 1.09, "Compensation" means Compensation as
defined in Section 1.12, except any exclusions from Compensation elected in the
Employer's Adoption Agreement Section 1.12 do not apply, and Compensation must
include "elective contributions" (as defined in Section 1.12). The Advisory
Committee must make the determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of the top paid 20%
group, the top 100 paid Employees, the number of officers includible in clause
(d) and the relevant Compensation, consistent with Code ss.414(q) and
regulations issued under that Code section. The Employer may make a calendar
year election to determine the Highly Compensated Employees for the Plan Year,
as prescribed by Treasury regulations. A calendar year election must apply to
all plans and arrangements of the
1.02
<PAGE> 12
Employer. For purposes of applying any nondiscrimination test required under the
Plan or under the Code, in a manner consistent with applicable Treasury
regulations, the Advisory Committee will treat a Highly Compensated Employee and
all family members (a spouse, a lineal ascendant or descendant, or a spouse of a
lineal ascendant or descendant) as a single Highly Compensated Employee, but
only if the Highly Compensated Employee is a more than 5% owner or is one of the
10 Highly Compensated Employees with the greatest Compensation for the Plan
Year. This aggregation rule applies to a family member even if that family
member is a Highly Compensated Employee without family aggregation.
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 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 1.09 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.
1.10 "Participant" is an Employee who is eligible to be and becomes a
Participant in accordance with the provisions of Section 2.01.
1.11 "Beneficiary" is a person designated by a Participant who is or may
become entitled to a benefit under the Plan. A Beneficiary who becomes entitled
to a benefit under the Plan remains a Beneficiary under the Plan until the
Trustee has fully distributed his benefit to him. A Beneficiary's right to (and
the Plan Administrator's, the Advisory Committee's or a Trustee's duty to
provide to the Beneficiary) information or data concerning the Plan does not
arise until he first becomes entitled to receive a benefit under the Plan.
1.12 "Compensation" means, except as provided in the Employer's Adoption
Agreement, the Participant's Earned Income, wages, salaries, fees for
professional service and other amounts received for personal services actually
rendered in the course of employment with the Employer maintaining the plan
(including, but not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses). The Employer must elect in its Adoption Agreement
whether to include elective contributions in the definition of Compensation.
"Elective contributions" are amounts excludible from the Employee's gross income
under Code ss.ss.125, 402(a)(8), 402(h) or 403(b), and contributed by the
Employer, at the Employee's election, to a Code ss.401(k) arrangement, a
Simplified Employee Pension, cafeteria plan or tax-sheltered annuity. The term
"Compensation" does not include:
(a) Employer contributions (other than "elective contributions," if
includible in the definition of Compensation under Section 1.12 of the
Employer's Adoption Agreement) to a plan of deferred compensation to the
extent the contributions are not included in the gross income of the
Employee for the taxable year in which contributed, on behalf of an
Employee to a Simplified Employee Pension Plan to the extent such
contributions are excludible from the Employee's gross income, and any
distributions from a plan of deferred compensation, regardless of whether
such amounts are includible in the gross income of the Employee when
distributed.
(b) Amounts realized from the exercise of a non-qualified stock option, or
when restricted stock (or property) held by an Employee either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture.
(c) Amounts realized from the sale, exchange or other disposition of stock
acquired under a stock option described in Part II, Subchapter D, Chapter 1
of the Code.
(d) Other amounts which receive special tax benefits, such as premiums for
group term life insurance (but only to the extent that the premiums are not
includible in the gross income of the Employee), or contributions made by
an Employer (whether or not under a salary reduction agreement) towards the
purchase of an annuity contract described in Code ss.403(b) (whether or not
the contributions are excludible from the gross income of the Employee),
other than "elective contributions," if elected in the Employer's Adoption
Agreement.
1.03
<PAGE> 13
Any reference in this Plan to Compensation is a reference to the definition
in this Section 1.12, unless the Plan reference specifies a modification to this
definition. The Advisory Committee will take into account only Compensation
actually paid for the relevant period. A Compensation payment includes
Compensation by the Employer through another person under the common paymaster
provisions in Code ss.ss.3121 and 3306.
(A) Limitations on Compensation.
(1) Compensation dollar limitation. For any Plan Year beginning after
December 31, 1988, the Advisory Committee must take into account only the first
$200,000 (or beginning January 1, 1990, such larger amount as the Commissioner
of Internal Revenue may prescribe) of any Participant's Compensation. For any
Plan Year beginning prior to January 1, 1989, this $200,000 limitation (but not
the family aggregation requirement described in the next paragraph) applies only
if the Plan is top heavy for such Plan Year or operates as a deemed top heavy
plan for such Plan Year.
(2) Application of compensation limitation to certain family members. The
$200,000 Compensation limitation applies to the combined Compensation of the
Employee and of any family member aggregated with the Employee under Section
1.09 who is either (i) the Employee's spouse; or (ii) the Employee's lineal
descendant under the age of 19. If, for a Plan Year, the combined Compensation
of the Employee and such family members who are Participants entitled to an
allocation for that Plan Year exceeds the $200,000 (or adjusted) limitation,
"Compensation" for each such Participant, for purposes of the contribution and
allocation provisions of Article III, means his Adjusted Compensation. Adjusted
Compensation is the amount which bears the same ratio to the $200,000 (or
adjusted) limitation as the affected Participant's Compensation (without regard
to the $200,000 Compensation limitation) bears to the combined Compensation of
all the affected Participants in the family unit. If the Plan uses permitted
disparity, the Advisory Committee must determine the integration level of each
affected family member Participant prior to the proration of the $200,000
Compensation limitation, but the combined integration level of the affected
Participants may not exceed $200,000 (or the adjusted limitation). The combined
Excess Compensation of the affected Participants in the family unit may not
exceed $200,000 (or the adjusted limitation) minus the affected Participants'
combined integration level (as determined under the preceding sentence). If the
combined Excess Compensation exceeds this limitation, the Advisory Committee
will prorate the Excess Compensation limitation among the affected Participants
in the family unit in proportion to each such individual's Adjusted Compensation
minus his integration level. If the Employer's Plan is a Nonstandardized Plan,
the Employer may elect to use a different method in determining the Adjusted
Compensation of the affected Participants by specifying that method in an
addendum to the Adoption Agreement, numbered Section 1.12.
(B) Nondiscrimination. For purposes of determining whether the Plan
discriminates in favor of Highly Compensated Employees, Compensation means
Compensation as defined in this Section 1.12, except: (1) the Employer may elect
to include or to exclude elective contributions, irrespective of the Employer's
election in its Adoption Agreement regarding elective contributions; and (2) the
Employer will not give effect to any elections made in the "modifications to
Compensation definition" section of Adoption Agreement Section 1.12. The
Employer's election described in clause (1) must be consistent and uniform with
respect to all Employees and all plans of the Employer for any particular Plan
Year. If the Employer's Plan is a Nonstandardized Plan, the Employer,
irrespective of clause (2), may elect to exclude from this nondiscrimination
definition of Compensation any items of Compensation excludible under Code
ss.414(s) and the applicable Treasury regulations, provided such adjusted
definition conforms to the nondiscrimination requirements of those regulations.
1.13 "Earned Income" means net earnings from self-employment in the trade
or business with respect to which the Employer has established the Plan,
provided personal services of the individual are a material income producing
factor. The Advisory Committee will determine net earnings without regard to
items excluded from gross income and the deductions allocable to those items.
The Advisory Committee will determine net earnings after the deduction allowed
to the Self-Employed Individual for all contributions made by the Employer to a
qualified plan and, for Plan Years beginning after December 31, 1989, the
deduction allowed to the Self-Employed under Code ss.164(f) for self-employment
taxes.
1.04
<PAGE> 14
1.14 "Account" means the separate account(s) which the Advisory Committee
or the Trustee maintains for a Participant under the Employer's Plan.
1.15 "Accrued Benefit" means the amount standing in a Participant's
Account(s) as of any date derived from both Employer contributions and Employee
contributions, if any.
1.16 "Nonforfeitable" means a Participant's or Beneficiary's unconditional
claim, legally enforceable against the Plan, to the Participant's Accrued
Benefit.
1.17 "Plan Year" means the fiscal year of the Plan, the consecutive month
period specified in the Employer's Adoption Agreement. The Employer's Adoption
Agreement also must specify the "Limitation Year" applicable to the limitations
on allocations described in Article III. If the Employer maintains Paired Plans,
each Plan must have the same Plan Year.
1.18 "Effective Date" of this Plan is the date specified in the Employer's
Adoption Agreement.
1.19 "Plan Entry Date" means the date(s) specified in Section 2.01 of the
Employer's Adoption Agreement.
1.20 "Accounting Date" is the last day of an Employer's Plan Year. Unless
otherwise specified in the Plan, the Advisory Committee will make all Plan
allocations for a particular Plan Year as of the Accounting Date of that Plan
Year.
1.21 "Trust" means the separate Trust created under the Employer's Plan.
1.22 "Trust Fund" means all property of every kind held or acquired by the
Employer's Plan, other than incidental benefit insurance contracts.
1.23 "Nontransferable Annuity" means an annuity which by its term
provides that it may not be sold, assigned, discounted, pledged as collateral
for a loan or security for the performance of an obligation or for any purpose
to any person other than the insurance company. If the Plan distributes an
annuity contract, the contract must be a Nontransferable Annuity.
1.24 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.25 "Code" means the Internal Revenue Code of 1986, as amended.
1.26 "Service" means any period of time the Employee is in the employ of
the Employer, including any period the Employee is on an unpaid leave of absence
authorized by the Employer under a uniform, nondiscriminatory policy applicable
to all Employees. "Separation from Service" means the Employee no longer has an
employment relationship with the Employer maintaining this Plan.
1.27 "Hour of Service" means:
(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. The Advisory Committee credits
Hours of Service under this paragraph (a) to the Employee for the
computation period in which the Employee performs the duties, irrespective
of when paid;
(b) Each Hour of Service for back pay, irrespective of mitigation of
damages, to which the Employer has agreed or for which the Employee has
received an award. The Advisory Committee credits Hours of Service under
this paragraph (b) to the Employee for the computation period(s) to which
the award or the agreement pertains rather than for the computation period
in which the award, agreement or payment is made; and
1.05
<PAGE> 15
(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
computation period, such as leave of absence, vacation, holiday, sick
leave, illness, incapacity (including disability), layoff, jury duty or
military duty. The Advisory Committee will credit no more than 501 Hours of
Service under this paragraph (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 computation period). The
Advisory Committee credits Hours of Service under this paragraph (c) in
accordance with the rules of paragraphs (b) and (c) of Labor Reg.
ss.2530.200b-2, which the Plan, by this reference, specifically
incorporates in full within this paragraph (c).
The Advisory Committee will not credit an Hour of Service under more than
one of the above paragraphs. A computation period for purposes of this
Section 1.27 is the Plan Year, Year of Service period, Break in Service period
or other period, as determined under the Plan provision for which the Advisory
Committee is measuring an Employee's Hours of Service. The Advisory Committee
will resolve any ambiguity with respect to the crediting of an Hour of Service
in favor of the Employee.
(A) Method of crediting Hours of Service. The Employer must elect in its
Adoption Agreement the method the Advisory Committee will use in crediting an
Employee with Hours of Service. 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.
If the Employer elects to apply an "equivalency" method, for each equivalency
period for which the Advisory Committee would credit the Employee with at least
one Hour of Service, the Advisory Committee will credit the Employee with:
(i) 10 Hours of Service for a daily equivalency; (ii) 45 Hours of Service for a
weekly equivalency; (iii) 95 Hours of Service for a semimonthly payroll period
equivalency; and (iv) 190 Hours of Service for a monthly equivalency.
(B) Maternity/paternity leave. Solely for purposes of determining whether the
Employee incurs a Break in Service under any provision of this Plan, the
Advisory Committee must credit Hours of Service during an Employee's unpaid
absence period due to maternity or paternity leave. The Advisory Committee
considers an Employee on maternity or paternity leave if the Employee's absence
is due to the Employee's pregnancy, the birth of the Employee's child, the
placement with the Employee of an adopted child, or the care of the Employee's
child immediately following the child's birth or placement. The Advisory
Committee credits Hours of Service under this paragraph on the basis of the
number of Hours of Service the Employee would receive if he were paid during the
absence period or, if the Advisory Committee cannot determine the number of
Hours of Service the Employee would receive, on the basis of 8 hours per day
during the absence period. The Advisory Committee will credit only the number
(not exceeding 501) of Hours of Service necessary to prevent an Employee's Break
in Service. The Advisory Committee credits all Hours of Service described in
this paragraph to the computation period in which the absence period begins or,
if the Employee does not need these Hours of Service to prevent a Break in
Service in the computation period in which his absence period begins, the
Advisory Committee credits these Hours of Service to the immediately following
computation period.
1.28 "Disability" means 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 Advisory Committee considers will be of long
continued duration. A Participant also is disabled if he incurs the permanent
loss or loss of use of a member or function of the body, or is permanently
disfigured, and incurs a Separation from Service. The Plan considers a
Participant disabled on the date the Advisory Committee determines the
Participant satisfies the definition of disability. The Advisory Committee may
require a Participant to submit to a physical examination in order to confirm
disability. The Advisory Committee will apply the provisions of this
Section 1.28 in a nondiscriminatory, consistent and uniform manner. If the
Employer's Plan is a Nonstandardized Plan, the Employer may provide an alternate
definition of disability in an addendum to its Adoption Agreement, numbered
Section 1.28.
1.06
<PAGE> 16
1.29 SERVICE FOR PREDECESSOR EMPLOYER. If the Employer maintains the plan
of a predecessor employer, the Plan treats service of the Employee with the
predecessor employer as service with the Employer. If the Employer does not
maintain the plan of a predecessor employer, the Plan does not credit service
with the predecessor employer, unless the Employer identifies the predecessor in
its Adoption Agreement and specifies the purposes for which the Plan will credit
service with that predecessor employer.
1.30 RELATED EMPLOYERS. A related group is a controlled group of
corporations (as defined in Code ss.414(b)), trades or businesses (whether or
not incorporated) which are under common control (as defined in Code ss.414(c))
or an affiliated service group (as defined in Code ss.414(m) or in Code
ss.414(o)). If the Employer is a member of a related group, the term "Employer"
includes the related group members for purposes of crediting Hours of Service,
determining Years of Service and Breaks in Service under Articles II and V,
applying the Participation Test and the Coverage Test under Section 3.06(E),
applying the limitations on allocations in Part 2 of Article III, applying the
top heavy rules and the minimum allocation requirements of Article III, the
definitions of Employee, Highly Compensated Employee, Compensation and Leased
Employee, and for any other purpose required by the applicable Code section or
by a Plan provision. However, an Employer may contribute to the Plan only by
being a signatory to the Execution Page of the Adoption Agreement or to a
Participation Agreement to the Employer's Adoption Agreement. If one or more of
the Employer's related group members become Participating Employers by executing
a Participation Agreement to the Employer's Adoption Agreement, the term
"Employer" includes the participating related group members for all purposes of
the Plan, and "Plan Administrator" means the Employer that is the signatory to
the Execution Page of the Adoption Agreement.
If the Employer's Plan is a Standardized Plan, all Employees of the
Employer or of any member of the Employer's related group, are eligible to
participate in the Plan, irrespective of whether the related group member
directly employing the Employee is a Participating Employer. If the Employer's
Plan is a Nonstandardized Plan, the Employer must specify in Section 1.07 of its
Adoption Agreement, whether the Employees of related group members that are not
Participating Employers are eligible to participate in the Plan. Under a
Nonstandardized Plan, the Employer may elect to exclude from the definition of
"Compensation" for allocation purposes any Compensation received from a related
employer that has not executed a Participation Agreement and whose Employees are
not eligible to participate in the Plan.
1.31 LEASED EMPLOYEES. The Plan treats a Leased Employee as an Employee of
the Employer. A Leased Employee is 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 Code
ss.144(a)(3)) 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. If a Leased Employee is treated as an Employee by reason of this Section
1.31 of the Plan, "Compensation" includes Compensation from the leasing
organization which is attributable to services performed for the Employer.
(A) Safe harbor plan exception. The Plan does not treat a Leased Employee as an
Employee if the leasing organization covers the employee in a safe harbor plan
and, prior to application of this safe harbor plan exception, 20% or less of the
Employer's Employees (other than Highly Compensated Employees) are Leased
Employees. A safe harbor plan is a money purchase pension plan providing
immediate participation, full and immediate vesting, and a nonintegrated
contribution formula equal to at least 10% of the employee's compensation
without regard to employment by the leasing organization on a specified date.
The safe harbor plan must determine the 10% contribution on the basis of
compensation as defined in Code ss.415(c)(3) plus elective contributions (as
defined in Section 1.12).
(B) Other requirements. The Advisory Committee must apply this Section 1.31 in
a manner consistent with Code ss.ss.414(n) and 414(o) and the regulations issued
under those Code sections. The Employer must specify in the Adoption Agreement
the manner in which the Plan will determine the allocation of Employer
contributions and Participant forfeitures on behalf of a Participant if the
Participant is a Leased Employee covered by a plan maintained by the leasing
organization.
1.07
<PAGE> 17
1.32 SPECIAL RULES FOR OWNER-EMPLOYEES. The following special provisions
and restrictions apply to Owner-Employees:
(a) If the Plan provides contributions or benefits for an Owner-Employee
or for a group of Owner-Employees who controls the trade or business with
respect to which this Plan is established and the Owner-Employee or
Owner-Employees also control as Owner-Employees one or more other trades or
businesses, plans must exist or be established with respect to all the
controlled trades or businesses so that when the plans are combined they
form a single plan which satisfies the requirements of Code ss.401(a) and
Code ss.401(d) with respect to the employees of the controlled trades or
businesses.
(b) The Plan excludes an Owner-Employee or group of Owner-Employees if the
Owner-Employee or group of Owner-Employees controls any other trade or
business, unless the employees of the other controlled trade or business
participate in a plan which satisfies the requirements of Code ss.401(a)
and Code ss.401(d). The other qualified plan must provide contributions and
benefits which are not less favorable than the contributions and benefits
provided for the Owner-Employee or group of Owner-Employees under this
Plan, or if an Owner-Employee is covered under another qualified plan as an
Owner-Employee, then the plan established with respect to the trade or
business he does control must provide contributions or benefits as
favorable as those provided under the most favorable plan of the trade or
business he does not control. If the exclusion of this paragraph (b)
applies and the Employer's Plan is a Standardized Plan, the Employer may
not participate or continue to participate in this Master Plan and the
Employer's Plan becomes an individually-designed plan for purposes of
qualification reliance.
(c) For purposes of paragraphs (a) and (b) of this Section 1.32, an
Owner-Employee or group of Owner-Employees controls a trade or business if
the Owner-Employee or 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% of either the capital interest or the
profits interest in the partnership.
1.33 DETERMINATION OF TOP HEAVY STATUS. If this Plan is the only qualified
plan maintained by the Employer, the Plan is top heavy for a Plan Year if the
top heavy ratio as of the Determination Date exceeds 60%. The top heavy ratio is
a fraction, the numerator of which is the sum of the present value of Accrued
Benefits of all Key Employees as of the Determination Date and the denominator
of which is a similar sum determined for all Employees. The Advisory Committee
must include in the top heavy ratio, as part of the present value of Accrued
Benefits, any contribution not made as of the Determination Date but includible
under Code ss.416 and the applicable Treasury regulations, and distributions
made within the Determination Period. The Advisory Committee must calculate the
top heavy ratio by disregarding the Accrued Benefit (and distributions, if any,
of the Accrued Benefit) of any Non-Key Employee who was formerly a Key Employee,
and by disregarding the Accrued Benefit (including distributions, if any, of the
Accrued Benefit) of an individual who has not received credit for at least one
Hour of Service with the Employer during the Determination Period. The Advisory
Committee must calculate the top heavy ratio, including the extent to which it
must take into account distributions, rollovers and transfers, in accordance
with Code ss.416 and the regulations under that Code section.
If the Employer maintains other qualified plans (including a simplified
employee pension plan), or maintained another such plan which now is terminated,
this Plan is top heavy only if it is part of the Required Aggregation Group, and
the top heavy ratio for the Required Aggregation Group and for the Permissive
Aggregation Group, if any, each exceeds 60%. The Advisory Committee will
calculate the top heavy ratio in the same manner as required by the first
paragraph of this Section 1.33, taking into account all plans within the
Aggregation Group. To the extent the Advisory Committee must take into account
distributions to a Participant, the Advisory Committee must include
distributions from a terminated plan which would have been part of the Required
Aggregation Group if it were in existence on the Determination Date. The
Advisory Committee will calculate the present value of accrued benefits under
defined benefit plans or simplified employee pension plans included within the
group in accordance with the terms of those plans, Code ss.416 and the
regulations under that Code section. If a Participant in a defined benefit plan
is a Non-Key Employee, the Advisory Committee will determine his accrued benefit
under the accrual method, if any, which is applicable uniformly to all defined
benefit plans maintained by the Employer or, if there is no uniform method, in
accordance with the slowest accrual rate permitted under the fractional rule
accrual method
1.08
<PAGE> 18
described in Code ss.411(b)(1)(C). If the Employer maintains a defined benefit
plan, the Employer must specify in Adoption Agreement Section 3.18 the actuarial
assumptions (interest and mortality only) the Advisory Committee will use to
calculate the present value of benefits from a defined benefit plan. If an
aggregated plan does not have a valuation date coinciding with the Determination
Date, the Advisory Committee must value the Accrued Benefits in the aggregated
plan as of the most recent valuation date falling within the twelve-month period
ending on the Determination Date, except as Code ss.416 and applicable Treasury
regulations require for the first and second plan year of a defined benefit
plan. The Advisory Committee will calculate the top heavy ratio with reference
to the Determination Dates that fall within the same calendar year.
(A) Standardized Plan. If the Employer's Plan is a Standardized Plan, the Plan
operates as a deemed top heavy plan in all Plan Years, except, if the
Standardized Plan includes a Code ss.401(k) arrangement, the Employer may elect
to apply the top heavy requirements only in Plan Years for which the Plan
actually is top heavy. Under a deemed top heavy plan, the Advisory Committee
need not determine whether the Plan actually is top heavy. However, if the
Employer, in Adoption Agreement Section 3.18, elects to override the 100%
limitation, the Advisory Committee will need to determine whether a deemed top
heavy Plan's top heavy ratio for a Plan Year exceeds 90%.
(B) Definitions. For purposes of applying the provisions of this Section 1.33:
(1) "Key Employee" means, as of any Determination Date, any Employee or
former Employee (or Beneficiary of such Employee) who, for any Plan Year in
the Determination Period: (i) has Compensation in excess of 50% of the
dollar amount prescribed in Code ss.415(b)(1)(A) (relating to defined
benefit plans) and is an officer of the Employer; (ii) has Compensation in
excess of the dollar amount prescribed in Code ss.415(c)(1)(A) (relating to
defined contribution plans) and is one of the Employees owning the ten
largest interests in the Employer; (iii) is a more than 5% owner of the
Employer; or (iv) is a more than 1% owner of the Employer and has
Compensation of more than $150,000. The constructive ownership rules of
Code ss.318 (or the principles of that section, in the case of an
unincorporated Employer,) will apply to determine ownership in the
Employer. The number of officers taken into account under clause (i) will
not exceed the greater of 3 or 10% of the total number (after application
of the Code ss.414(q) exclusions) of Employees, but no more than 50
officers. The Advisory Committee will make the determination of who is a
Key Employee in accordance with Code ss.416(i)(1) and the regulations under
that Code section.
(2) "Non-Key Employee" is an employee who does not meet the definition of
Key Employee.
(3) "Compensation" means Compensation as determined under Section 1.09 for
purposes of identifying Highly Compensated Employees.
(4) "Required Aggregation Group" means: (i) each qualified plan of the
Employer in which at least one Key Employee participates at any time during
the Determination Period; and (ii) any other qualified plan of the Employer
which enables a plan described in clause (i) to meet the requirements of
Code ss.401(a)(4) or of Code ss.410.
(5) "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 Code ss.401(a)(4)
and of Code ss.410. The Advisory Committee will determine the Permissive
Aggregation Group.
(6) "Employer" means the Employer that adopts this Plan and any related
employers described in Section 1.30.
(7) "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. The "Determination Period" is the 5 year
period ending on the Determination Date.
1.09
<PAGE> 19
1.34 "Paired Plans" means the Employer has adopted two Standardized Plan
Adoption Agreements offered with this Master Plan, one Adoption Agreement being
a Paired Profit Sharing Plan and one Adoption Agreement being a Paired Pension
Plan. A Paired Profit Sharing Plan may include a Code ss.401(k) arrangement. A
Paired Pension Plan must be a money purchase pension plan or a target benefit
pension plan. Paired Plans must be the subject of a favorable opinion letter
issued by the National Office of the Internal Revenue Service. This Master Plan
does not pair any of its Standardized Plan Adoption Agreements with Standardized
Plan Adoption Agreements under a defined benefit master plan.
* * * * * * * * * * * * * * *
1.10
<PAGE> 20
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY. Each Employee becomes a Participant in the Plan in
accordance with the participation option selected by the Employer in its
Adoption Agreement. If this Plan is a restated Plan, each Employee who was a
Participant in the Plan on the day before the Effective Date continues as a
Participant in the Plan, irrespective of whether he satisfies the participation
conditions in the restated Plan, unless otherwise provided in the Employer's
Adoption Agreement.
2.02 YEAR OF SERVICE - PARTICIPATION. For purposes of an Employee's
participation in the Plan under Adoption Agreement Section 2.01, the Plan takes
into account all of his Years of Service with the Employer, except as provided
in Section 2.03. "Year of Service" means an eligibility computation period
during which the Employee completes not less than the number of Hours of Service
specified in the Employer's Adoption Agreement. The initial eligibility
computation period is the first 12 consecutive month period measured from the
Employment Commencement Date. The Plan measures succeeding eligibility
computation periods in accordance with the option selected by the Employer in
its Adoption Agreement. If the Employer elects to measure subsequent periods on
a Plan Year basis, an Employee who receives credit for the required number of
Hours of Service during the initial eligibility computation period and during
the first applicable Plan Year will receive credit for two Years of Service
under Article II. "Employment Commencement Date" means the date on which the
Employee first performs an Hour of Service for the Employer. If the Employer
elects a service condition under Adoption Agreement Section 2.01 based on
months, the Plan does not apply any Hour of Service requirement after the
completion of the first Hour of Service.
2.03 BREAK IN SERVICE - PARTICIPATION. An Employee incurs a "Break in
Service" if during any 12 consecutive month period he does not complete more
than 500 Hours of Service with the Employer. The "12 consecutive month period"
under this Section 2.03 is the same 12 consecutive month period for which the
Plan measures "Years of Service" under Section 2.02.
(A) 2-year Eligibility. If the Employer elects a 2 years of service condition
for eligibility purposes under Adoption Agreement Section 2.01, the Plan treats
an Employee who incurs a one year Break in Service and who has never become a
Participant as a new Employee on the date he first performs an Hour of Service
for the Employer after the Break in Service.
(B) Suspension of Years of Service. The Employer must elect in its Adoption
Agreement whether a Participant will incur a suspension of Years of Service
after incurring a one year Break in Service. If this rule applies under the
Employer's Plan, the Plan disregards a Participant's Years of Service (as
defined in Section 2.02) earned prior to a Break in Service until the
Participant completes another Year of Service and the Plan suspends the
Participant's participation in the Plan. If the Participant completes a Year of
Service following his Break in Service, the Plan restores that Participant's
pre-Break Years of Service (and the Participant resumes active participation in
the Plan) retroactively to the first day of the computation period in which the
Participant earns the first post-Break Year of Service. The initial computation
period under this Section 2.03(B) is the 12 consecutive month period measured
from the date the Participant first receives credit for an Hour of Service
following the one year Break in Service period. The Plan measures any subsequent
periods, if necessary, in a manner consistent with the computation period
selection in Adoption Agreement Section 2.02. This Section 2.03(B) does not
affect a Participant's vesting credit under Article V and, during a suspension
period, the Participant's Account continues to share fully in Trust Fund
allocations under Section 9.11. Furthermore, this Section 2.03(B) will not
result in the restoration of any Year of Service disregarded under the Break in
Service rule of Section 2.03(A).
2.01
<PAGE> 21
2.04 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose employment with
the Employer terminates will re-enter the Plan as a Participant on the date of
his re-employment, subject to the Break in Service rule, if applicable, under
Section 2.03(B). An Employee who satisfies the Plan's eligibility conditions but
who terminates employment with the Employer prior to becoming a Participant will
become a Participant on the later of the Plan Entry Date on which he would have
entered the Plan had he not terminated employment or the date of his
re-employment, subject to the Break in Service rule, if applicable, under
Section 2.03(B). Any Employee who terminates employment prior to satisfying the
Plan's eligibility conditions becomes a Participant in accordance with Adoption
Agreement Section 2.01.
2.05 CHANGE IN EMPLOYEE STATUS. If a Participant has not incurred a
Separation from Service but ceases to be eligible to participate in the Plan, by
reason of employment within an employment classification excluded by the
Employer under Adoption Agreement Section 1.07, the Advisory Committee must
treat the Participant as an Excluded Employee during the period such a
Participant is subject to the Adoption Agreement exclusion. The Advisory
Committee determines a Participant's sharing in the allocation of Employer
contributions and Participant forfeitures, if applicable, by disregarding his
Compensation paid by the Employer for services rendered in his capacity as an
Excluded Employee. However, during such period of exclusion, the Participant,
without regard to employment classification, continues to receive credit for
vesting under Article V for each included Year of Service and the Participant's
Account continues to share fully in Trust Fund allocations under Section 9.11.
If an Excluded Employee who is not a Participant becomes eligible to
participate in the Plan by reason of a change in employment classification, he
will participate in the Plan immediately if he has satisfied the eligibility
conditions of Section 2.01 and would have been a Participant had he not been an
Excluded Employee during his period of Service. Furthermore, the Plan takes into
account all of the Participant's included Years of Service with the Employer as
an Excluded Employee for purposes of vesting credit under Article V.
2.06 ELECTION NOT TO PARTICIPATE. If the Employer's Plan is a Standardized
Plan, the Plan does not permit an otherwise eligible Employee nor any
Participant to elect not to participate in the Plan. If the Employer's Plan is a
Nonstandardized Plan, the Employer must specify in its Adoption Agreement
whether an Employee eligible to participate, or any present Participant, may
elect not to participate in the Plan. For an election to be effective for a
particular Plan Year, the Employee or Participant must file the election in
writing with the Plan Administrator not later than the time specified in the
Employer's Adoption Agreement. The Employer may not make a contribution under
the Plan for the Employee or for the Participant for the Plan Year for which the
election is effective, nor for any succeeding Plan Year, unless the Employee or
Participant re-elects to participate in the Plan. After an Employee's or
Participant's election not to participate has been effective for at least the
minimum period prescribed by the Employer's Adoption Agreement, the Employee or
Participant may re-elect to participate in the Plan for any Plan Year and
subsequent Plan Years. An Employee or Participant may re-elect to participate in
the Plan by filing his election in writing with the Plan Administrator not later
than the time specified in the Employer's Adoption Agreement. An Employee or
Participant who re-elects to participate may again elect not to participate only
as permitted in the Employer's Adoption Agreement. If an Employee is a
Self-Employed Individual, the Employee's election (except as permitted by
Treasury regulations without creating a Code ss.401(k) arrangement with respect
to that Self-Employed Individual) must be effective no later than the date the
Employee first would become a Participant in the Plan and the election is
irrevocable. The Plan Administrator must furnish an Employee or a Participant
any form required for purposes of an election under this Section 2.06. An
election timely filed is effective for the entire Plan Year.
A Participant who elects not to participate may not receive a distribution
of his Accrued Benefit attributable either to Employer or to Participant
contributions except as provided under Article IV or under Article VI. However,
for each Plan Year for which a Participant's election not to participate is
effective, the Participant's Account, if any, continues to share in Trust Fund
allocations under Article IX. Furthermore, the Employee or the Participant
receives vesting credit under Article V for each included Year of Service during
the period the election not to participate is effective.
2.02
<PAGE> 22
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
Part 1. Amount of Employer Contributions and Plan Allocations: Sections 3.01
through 3.06
3.01 AMOUNT. For each Plan Year, the Employer contributes to the Trust the
amount determined by application of the contribution option selected by the
Employer in its Adoption Agreement. The Employer may not make a contribution to
the Trust for any Plan Year to the extent the contribution would exceed the
Participants' Maximum Permissible Amounts.
The Employer contributes to this Plan on the condition its contribution is
not due to a mistake of fact and the Revenue Service will not disallow the
deduction for its contribution. The Trustee, upon written request from the
Employer, must return to the Employer the amount of the Employer's contribution
made by the Employer by mistake of fact or the amount of the Employer's
contribution disallowed as a deduction under Code ss.404. The Trustee will not
return any portion of the Employer's contribution under the provisions of this
paragraph more than one year after:
(a) The Employer made the contribution by mistake of fact; or
(b) The disallowance of the contribution as a deduction, and then, only to
the extent of the disallowance.
The Trustee will not increase the amount of the Employer contribution
returnable under this Section 3.01 for any earnings attributable to the
contribution, but the Trustee will decrease the Employer contribution returnable
for any losses attributable to it. The Trustee may require the Employer to
furnish it whatever evidence the Trustee deems necessary to enable the Trustee
to confirm the amount the Employer has requested be returned is properly
returnable under ERISA.
3.02 DETERMINATION OF CONTRIBUTION. The Employer, from its records,
determines the amount of any contributions to be made by it to the Trust under
the terms of the Plan.
3.03 TIME OF PAYMENT OF CONTRIBUTION. The Employer may pay its
contribution for each Plan Year in one or more installments without interest.
The Employer must make its contribution to the Plan within the time prescribed
by the Code or applicable Treasury regulations. Subject to the consent of the
Trustee, the Employer may make its contribution in property rather than in cash,
provided the contribution of property is not a prohibited transaction under the
Code or under ERISA.
3.04 CONTRIBUTION ALLOCATION.
(A) Method of Allocation. The Employer must specify in its Adoption Agreement
the manner of allocating each annual Employer contribution to this Trust.
(B) Top Heavy Minimum Allocation. The Plan must comply with the provisions of
this Section 3.04(B), subject to the elections in the Employer's Adoption
Agreement.
(1) Top Heavy Minimum Allocation Under Standardized Plan. Subject to the
Employer's election under Section 3.04(B)(3), the top heavy minimum allocation
requirement applies to a Standardized Plan for each Plan Year, irrespective of
whether the Plan is top heavy.
(a) Each Participant employed by the Employer on the last day of the
Plan Year will receive a top heavy minimum allocation for that Plan
Year. The Employer may elect in Section 3.04 of its Adoption Agreement
to apply this paragraph (a) only to a Participant who is a Non-Key
Employee.
3.01
<PAGE> 23
(b) Subject to any overriding elections in Section 3.18 of the
Employer's Adoption Agreement, the top heavy minimum allocation is the
lesser of 3% of the Participant's Compensation for the Plan Year or the
highest contribution rate for the Plan Year made on behalf of any
Participant for the Plan Year. However, if the Employee participates in
Paired Plans, the top heavy minimum allocation is 3% of his
Compensation. If, under Adoption Agreement Section 3.04, the Employer
elects to apply paragraph (a) only to a Participant who is a Non-Key
Employee, the Advisory Committee will determine the "highest
contribution rate" described in the first sentence of this paragraph
(b) by reference only to the contribution rates of Participants who are
Key Employees for the Plan Year.
(2) Top Heavy Minimum Allocation Under Nonstandardized Plan. The top heavy
minimum allocation requirement applies to a Nonstandardized Plan only in Plan
Years for which the Plan is top heavy. Except as provided in the Employer's
Adoption Agreement, if the Plan is top heavy in any Plan Year:
(a) Each Non-Key Employee who is a Participant and is employed by the
Employer on the last day of the Plan Year will receive a top heavy
minimum allocation for that Plan Year, irrespective of whether he
satisfies the Hours of Service condition under Section 3.06 of the
Employer's Adoption Agreement; and
(b) The top heavy minimum allocation is the lesser of 3% of the
Non-Key Employee's Compensation for the Plan Year or the highest
contribution rate for the Plan Year made on behalf of any Key Employee.
However, if a defined benefit plan maintained by the Employer which
benefits a Key Employee depends on this Plan to satisfy the
antidiscrimination rules of Code ss.401(a)(4) or the coverage rules of
Code ss.410 (or another plan benefiting the Key Employee so depends on
such defined benefit plan), the top heavy minimum allocation is 3% of
the Non-Key Employee's Compensation regardless of the contribution rate
for the Key Employees.
(3) Special Election for Standardized Code ss.401(k) Plan. If the
Employer's Plan is a Standardized Code ss.401(k) Plan, the Employer may elect in
Adoption Agreement Section 3.04 to apply the top heavy minimum allocation
requirements of Section 3.04(B)(1) only for Plan Years in which the Plan
actually is a top heavy plan.
(4) Special Definitions. For purposes of this Section 3.04(B), the term
"Participant" includes any Employee otherwise eligible to participate in the
Plan but who is not a Participant because of his Compensation level or because
of his failure to make elective deferrals under a Code ss.401(k) arrangement or
because of his failure to make mandatory contributions. For purposes of
subparagraph (1)(b) or (2)(b), "Compensation" means Compensation as defined in
Section 1.12, except Compensation does not include elective contributions,
irrespective of whether the Employer has elected to include these amounts in
Section 1.12 of its Adoption Agreement, any exclusion selected in Section 1.12
of the Adoption Agreement (other than the exclusion of elective contributions)
does not apply, and any modification to the definition of Compensation in
Section 3.06 does not apply.
(5) Determining Contribution Rates. For purposes of this Section 3.04(B), a
Participant's contribution rate is the sum of all 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 entire Plan Year. However, for purposes of satisfying a Participant's top
heavy minimum allocation in Plan Years beginning after December 31, 1988, the
Participant's contribution rate does not include any elective contributions
under a Code ss.401(k) arrangement nor any Employer matching contributions
allocated on the basis of those elective contributions or on the basis of
employee contributions, except a Nonstandardized Plan may include in the
contribution rate any matching contributions not necessary to satisfy the
nondiscrimination requirements of Code ss.401(k) or of Code ss.401(m).
If the Employee is a Participant in Paired Plans, the Advisory Committee
will consider the Paired Plans as a single Plan to determine a Participant's
contribution rate and to determine whether the Plans satisfy this top heavy
minimum allocation requirement. To determine a Participant's contribution rate
under a Nonstandardized Plan, the Advisory Committee must treat all qualified
top heavy defined contribution plans maintained by the Employer (or by any
related Employers described in Section 1.30) as a single plan.
3.02
<PAGE> 24
(6) No Allocations. If, for a Plan Year, there are no allocations of
Employer contributions or forfeitures for any Participant (for purposes of
Section 3.04 (B)(1)(b)) or for any Key Employee (for purposes of Section
3.04(B)(2)(b)), the Plan does not require any top heavy minimum allocation for
the Plan Year, unless a top heavy minimum allocation applies because of the
maintenance by the Employer of more than one plan.
(7) Election of Method. The Employer must specify in its Adoption
Agreement the manner in which the Plan will satisfy the top heavy minimum
allocation requirement.
(a) If the Employer elects to make any necessary additional contribution
to this Plan, the Advisory Committee first will allocate the Employer
contributions (and Participant forfeitures, if any) for the Plan Year in
accordance with the provisions of Adoption Agreement Section 3.04. The
Employer then will contribute an additional amount for the Account of any
Participant entitled under this Section 3.04(B) to a top heavy minimum
allocation and whose contribution rate for the Plan Year, under this Plan
and any other plan aggregated under paragraph (5), is less than the top
heavy minimum allocation. The additional amount is the amount necessary to
increase the Participant's contribution rate to the top heavy minimum
allocation. The Advisory Committee will allocate the additional
contribution to the Account of the Participant on whose behalf the Employer
makes the contribution.
(b) If the Employer elects to guarantee the top heavy minimum allocation
under another plan, this Plan does not provide the top heavy minimum
allocation and the Advisory Committee will allocate the annual Employer
contributions (and Participant forfeitures) under the Plan solely in
accordance with the allocation method selected under Adoption Agreement
Section 3.04.
3.05 FORFEITURE ALLOCATION. The amount of a Participant's Accrued Benefit
forfeited under the Plan is a Participant forfeiture. The Advisory Committee
will allocate Participant forfeitures in the manner specified by the Employer in
its Adoption Agreement. The Advisory Committee will continue to hold the
undistributed, non-vested portion of a terminated Participant's Accrued Benefit
in his Account solely for his benefit until a forfeiture occurs at the time
specified in Section 5.09 or if applicable, until the time specified in
Section 9.14. Except as provided under Section 5.04, a Participant will not
share in the allocation of a forfeiture of any portion of his Accrued Benefit.
3.06 ACCRUAL OF BENEFIT. The Advisory Committee will determine the accrual
of benefit (Employer contributions and Participant forfeitures) on the basis of
the Plan Year in accordance with the Employer's elections in its Adoption
Agreement.
(A) Compensation Taken Into Account. The Employer must specify in its Adoption
Agreement the Compensation the Advisory Committee is to take into account in
allocating an Employer contribution to a Participant's Account for the Plan Year
in which the Employee first becomes a Participant. For all other Plan Years, the
Advisory Committee will take into account only the Compensation determined for
the portion of the Plan Year in which the Employee actually is a Participant.
The Advisory Committee must take into account the Employee's entire Compensation
for the Plan Year to determine whether the Plan satisfies the top heavy minimum
allocation requirement of Section 3.04(B). The Employer, in an addendum to its
Adoption Agreement numbered 3.06(A), may elect to measure Compensation for the
Plan Year for allocation purposes on the basis of a specified period other than
the Plan Year.
(B) Hours of Service Requirement. Subject to the applicable minimum allocation
requirement of Section 3.04, the Advisory Committee will not allocate any
portion of an Employer contribution for a Plan Year to any Participant's Account
if the Participant does not complete the applicable minimum Hours of Service
requirement specified in the Employer's Adoption Agreement.
3.03
<PAGE> 25
(C) Employment Requirement. If the Employer's Plan is a Standardized Plan, a
Participant who, during a particular Plan Year, completes the accrual
requirements of Adoption Agreement Section 3.06 will share in the allocation of
Employer contributions for that Plan Year without regard to whether he is
employed by the Employer on the Accounting Date of that Plan Year. If the
Employer's Plan is a Nonstandardized Plan, the Employer must specify in its
Adoption Agreement whether the Participant will accrue a benefit if he is not
employed by the Employer on the Accounting Date of the Plan Year. If the
Employer's Plan is a money purchase plan or a target benefit plan, whether
Nonstandardized or Standardized, the Plan conditions benefit accrual on
employment with the Employer on the last day of the Plan Year for the Plan Year
in which the Employer terminates the Plan.
(D) Other Requirements. If the Employer's Adoption Agreement includes options
for other requirements affecting the Participant's accrual of benefits under the
Plan, the Advisory Committee will apply this Section 3.06 in accordance with the
Employer's Adoption Agreement selections.
(E) Suspension of Accrual Requirements Under Nonstandardized Plan. If the
Employer's Plan is a Nonstandardized Plan, the Employer may elect in its
Adoption Agreement to suspend the accrual requirements elected under Adoption
Agreement Section 3.06 if, for any Plan Year beginning after December 31, 1989,
the Plan fails to satisfy the Participation Test or the Coverage Test. A Plan
satisfies the Participation Test if, on each day of the Plan Year, the number of
Employees who benefit under the Plan is at least equal to the lesser of 50 or
40% of the total number of Includible Employees as of such day. A Plan satisfies
the Coverage Test if, on the last day of each quarter of the Plan Year, the
number of Nonhighly Compensated Employees who benefit under the Plan is at least
equal to 70% of the total number of Includible Nonhighly Compensated Employees
as of such day. "Includible" Employees are all Employees other than: (1) those
Employees excluded from participating in the Plan for the entire Plan Year by
reason of the collective bargaining unit exclusion or the nonresident alien
exclusion under Adoption Agreement Section 1.07 or by reason of the
participation requirements of Sections 2.01 and 2.03; and (2) any Employee who
incurs a Separation from Service during the Plan Year and fails to complete at
least 501 Hours of Service for the Plan Year. A "Nonhighly Compensated Employee"
is an Employee who is not a Highly Compensated Employee and who is not a family
member aggregated with a Highly Compensated Employee pursuant to Section 1.09 of
the Plan.
For purposes of the Participation Test and the Coverage Test, an Employee
is benefiting under the Plan on a particular date if, under Adoption Agreement
Section 3.04, he is entitled to an allocation for the Plan Year. Under the
Participation Test, when determining whether an Employee is entitled to an
allocation under Adoption Agreement Section 3.04, the Advisory Committee will
disregard any allocation required solely by reason of the top heavy minimum
allocation, unless the top heavy minimum allocation is the only allocation made
under the Plan for the Plan Year.
If this Section 3.06(E) applies for a Plan Year, the Advisory Committee
will suspend the accrual requirements for the Includible Employees who are
Participants, beginning first with the Includible Employee(s) employed with the
Employer on the last day of the Plan Year, then the Includible Employee(s) who
have the latest Separation from Service during the Plan Year, and continuing to
suspend in descending order the accrual requirements for each Includible
Employee who incurred an earlier Separation from Service, from the latest to the
earliest Separation from Service date, until the Plan satisfies both the
Participation Test and the Coverage Test for the Plan Year. If two or more
Includible Employees have a Separation from Service on the same day, the
Advisory Committee will suspend the accrual requirements for all such Includible
Employees, irrespective of whether the Plan can satisfy the Participation Test
and the Coverage Test by accruing benefits for fewer than all such Includible
Employees. If the Plan suspends the accrual requirements for an Includible
Employee, that Employee will share in the allocation of Employer contributions
and Participant forfeitures, if any, without regard to the number of Hours of
Service he has earned for the Plan Year and without regard to whether he is
employed by the Employer on the last day of the Plan Year. If the Employer's
Plan includes Employer matching contributions subject to Code ss.401(m), this
suspension of accrual requirements applies separately to the Code ss.401(m)
portion of the Plan, and the Advisory Committee will treat an Employee as
benefiting under that portion of the Plan if he is an Eligible Employee for
purposes of the Code ss.401(m) nondiscrimination test. The Employer may modify
the operation of this Section 3.06(E) by electing appropriate modifications in
Section 3.06 of its Adoption Agreement.
3.04
<PAGE> 26
Part 2. Limitations On Allocations: Sections 3.07 through 3.19
[Note: Sections 3.07 through 3.10 apply only to Participants in this Plan
who do not participate, and who have never participated, in another qualified
plan or in a welfare benefit fund (as defined in Code ss.419(e)) maintained by
the Employer.]
3.07 The amount of Annual Additions which the Advisory Committee may
allocate under this Plan on a Participant's behalf for a Limitation Year may not
exceed the Maximum Permissible Amount. If the amount the Employer otherwise
would contribute to the Participant's Account would cause the Annual Additions
for the Limitation Year to exceed the Maximum Permissible Amount, the Employer
will reduce the amount of its contribution so the Annual Additions for the
Limitation Year will equal the Maximum Permissible Amount. If an allocation of
Employer contributions, pursuant to Section 3.04, would result in an Excess
Amount (other than an Excess Amount resulting from the circumstances described
in Section 3.10) to the Participant's Account, the Advisory Committee will
reallocate the Excess Amount to the remaining Participants who are eligible for
an allocation of Employer contributions for the Plan Year in which the
Limitation Year ends. The Advisory Committee will make this reallocation on the
basis of the allocation method under the Plan as if the Participant whose
Account otherwise would receive the Excess Amount is not eligible for an
allocation of Employer contributions.
3.08 Prior to the determination of the Participant's actual Compensation
for a Limitation Year, the Advisory Committee may determine the Maximum
Permissible Amount on the basis of the Participant's estimated annual
Compensation for such Limitation Year. The Advisory Committee must make this
determination on a reasonable and uniform basis for all Participants similarly
situated. The Advisory Committee must reduce any Employer contributions
(including any allocation of forfeitures) based on estimated annual Compensation
by any Excess Amounts carried over from prior years.
3.09 As soon as is administratively feasible after the end of the
Limitation Year, the Advisory Committee will determine the Maximum Permissible
Amount for such Limitation Year on the basis of the Participant's actual
Compensation for such Limitation Year.
3.10 If, pursuant to Section 3.09, or because of the allocation of
forfeitures, there is an Excess Amount with respect to a Participant for a
Limitation Year, the Advisory Committee will dispose of such Excess Amount as
follows:
(a) The Advisory Committee will return any nondeductible voluntary
Employee contributions to the Participant to the extent the return would
reduce the Excess Amount.
(b) If, after the application of paragraph (a), an Excess Amount still
exists, and the Plan covers the Participant at the end of the Limitation
Year, then the Advisory Committee will use the Excess Amount(s) to reduce
future Employer contributions (including any allocation of forfeitures)
under the Plan for the next Limitation Year and for each succeeding
Limitation Year, as is necessary, for the Participant. If the Employer's
Plan is a profit sharing plan, the Participant may elect to limit his
Compensation for allocation purposes to the extent necessary to reduce his
allocation for the Limitation Year to the Maximum Permissible Amount and
eliminate the Excess Amount.
(c) If, after the application of paragraph (a), an Excess Amount still
exists, and the Plan does not cover the Participant at the end of the
Limitation Year, then the Advisory Committee will hold the Excess Amount
unallocated in a suspense account. The Advisory Committee will apply the
suspense account to reduce Employer Contributions (including allocation of
forfeitures) for all remaining Participants in the next Limitation Year,
and in each succeeding Limitation Year if necessary. Neither the Employer
nor any Employee may contribute to the Plan for any Limitation Year in
which the Plan is unable to allocate fully a suspense account maintained
pursuant to this paragraph (c).
(d) The Advisory Committee will not distribute any Excess Amount(s) to
Participants or to former Participants.
3.05
<PAGE> 27
[Note: Sections 3.11 through 3.16 apply only to Participants who, in
addition to this Plan, participate in one or more plans (including Paired
Plans), all of which are qualified Master or Prototype defined contribution
plans or welfare benefit funds (as defined in Code ss.419(e)) maintained by the
Employer during the Limitation Year.]
3.11 The amount of Annual Additions which the Advisory Committee may
allocate under this Plan on a Participant's behalf for a Limitation Year may not
exceed the Maximum Permissible Amount, reduced by the sum of any Annual
Additions allocated to the Participant's Accounts for the same Limitation Year
under this Plan and such other defined contribution plan. If the amount the
Employer otherwise would contribute to the Participant's Account under this Plan
would cause the Annual Additions for the Limitation Year to exceed this
limitation, the Employer will reduce the amount of its contribution so the
Annual Additions under all such plans for the Limitation Year will equal the
Maximum Permissible Amount. If an allocation of Employer contributions, pursuant
to Section 3.04, would result in an Excess Amount (other than an Excess Amount
resulting from the circumstances described in Section 3.10) to the Participant's
Account, the Advisory Committee will reallocate the Excess Amount to the
remaining Participants who are eligible for an allocation of Employer
contributions for the Plan Year in which the Limitation Year ends. The Advisory
Committee will make this reallocation on the basis of the allocation method
under the Plan as if the Participant whose Account otherwise would receive the
Excess Amount is not eligible for an allocation of Employer contributions.
3.12 Prior to the determination of the Participant's actual Compensation
for the Limitation Year, the Advisory Committee may determine the amounts
referred to in 3.11 above on the basis of the Participant's estimated annual
Compensation for such Limitation Year. The Advisory Committee will make this
determination on a reasonable and uniform basis for all Participants similarly
situated. The Advisory Committee must reduce any Employer contribution
(including allocation of forfeitures) based on estimated annual Compensation by
any Excess Amounts carried over from prior years.
3.13 As soon as is administratively feasible after the end of the
Limitation Year, the Advisory Committee will determine the amounts referred to
in 3.11 on the basis of the Participant's actual Compensation for such
Limitation Year.
3.14 If pursuant to Section 3.13, or because of the allocation of
forfeitures, a Participant's Annual Additions under this Plan and all such other
plans result in an Excess Amount, such Excess Amount will consist of the Amounts
last allocated. The Advisory Committee will determine the Amounts last allocated
by treating the Annual Additions attributable to a welfare benefit fund as
allocated first, irrespective of the actual allocation date under the welfare
benefit fund.
3.15 The Employer must specify in its Adoption Agreement the Excess Amount
attributed to this Plan, if the Advisory Committee allocates an Excess Amount to
a Participant on an allocation date of this Plan which coincides with an
allocation date of another plan.
3.16 The Advisory Committee will dispose of any Excess Amounts attributed
to this Plan as provided in Section 3.10.
[Note: Section 3.17 applies only to Participants who, in addition to this
Plan, participate in one or more qualified plans which are qualified defined
contribution plans other than a Master or Prototype plan maintained by the
Employer during the Limitation Year.]
3.17 SPECIAL ALLOCATION LIMITATION. The amount of Annual Additions which
the Advisory
Committee may allocate under this Plan on behalf of any Participant are
limited in accordance with the provisions of Section 3.11 through 3.16, as
though the other plan were a Master or Prototype plan, unless the Employer
provides other limitations in an addendum to the Adoption Agreement, numbered
Section 3.17.
3.06
<PAGE> 28
3.18 DEFINED BENEFIT PLAN LIMITATION. If the Employer maintains a defined
benefit plan, or has ever maintained a defined benefit plan which the Employer
has terminated, then the sum of the defined benefit plan fraction and the
defined contribution plan fraction for any Participant for any Limitation Year
must not exceed 1.0. The Employer must provide in Adoption Agreement Section
3.18 the manner in which the Plan will satisfy this limitation. The Employer
also must provide in its Adoption Agreement Section 3.18 the manner in which the
Plan will satisfy the top heavy requirements of Code ss.416 after taking into
account the existence (or prior maintenance) of the defined benefit plan.
3.19 DEFINITIONS - ARTICLE III. For purposes of Article III, the following
terms mean:
(a) "Annual Addition" - The sum of the following amounts allocated on
behalf of a Participant for a Limitation Year, of (i) all Employer
contributions; (ii) all forfeitures; and (iii) all Employee contributions.
Except to the extent provided in Treasury regulations, Annual Additions
include excess contributions described in Code ss.401(k), excess aggregate
contributions described in Code ss.401(m) and excess deferrals described in
Code ss.402(g), irrespective of whether the plan distributes or forfeits
such excess amounts. Annual Additions also include Excess Amounts reapplied
to reduce Employer contributions under Section 3.10. Amounts allocated
after March 31, 1984, to an individual medical account (as defined in
Code ss.415(l)(2)) included as part of a defined benefit plan maintained by
the Employer are Annual Additions. Furthermore, Annual Additions include
contributions paid or accrued after December 31, 1985, for taxable years
ending after December 31, 1985, attributable to post-retirement medical
benefits allocated to the separate account of a key employee (as defined in
Code ss.419A(d)(3)) under a welfare benefit fund (as defined in
Code ss.419(e)) maintained by the Employer.
(b) "Compensation" - For purposes of applying the limitations of Part 2 of
this Article III, "Compensation" means Compensation as defined in
Section 1.12, except Compensation does not include elective contributions,
irrespective of whether the Employer has elected to include these amounts
as Compensation under Section 1.12 of its Adoption Agreement, and any
exclusion selected in Section 1.12 of the Adoption Agreement (other than
the exclusion of elective contributions) does not apply.
(c) "Employer" - The Employer that adopts this Plan and any related
employers described in Section 1.30. Solely for purposes of applying the
limitations of Part 2 of this Article III, the Advisory Committee will
determine related employers described in Section 1.30 by modifying
Code ss.ss.414(b) and (c) in accordance with Code ss.415(h).
(d) "Excess Amount" - The excess of the Participant's Annual Additions for
the Limitation Year over the Maximum Permissible Amount.
(e) "Limitation Year" - The period selected by the Employer under Adoption
Agreement Section 1.17. All qualified plans of the Employer must use the
same Limitation Year. If the Employer amends the Limitation Year to a
different 12 consecutive month period, the new Limitation Year must begin
on a date within the Limitation Year for which the Employer makes the
amendment, creating a short Limitation Year.
(f) "Master or Prototype Plan" - A plan the form of which is the subject
of a favorable notification letter or a favorable opinion letter from the
Internal Revenue Service.
(g) "Maximum Permissible Amount" - The lesser of (i) $30,000 (or, if
greater, one-fourth of the defined benefit dollar limitation under
Code ss.415(b)(1)(A)), or (ii) 25% of the Participant's Compensation for
the Limitation Year. If there is a short Limitation Year because of a
change in Limitation Year, the Advisory Committee will multiply the $30,000
(or adjusted) limitation by the following fraction:
Number of months in the short Limitation Year
---------------------------------------------
12
3.07
<PAGE> 29
(h) "Defined contribution plan" - A retirement plan which provides for an
individual account for each participant and for benefits based solely on
the amount contributed to the participant's account, and any income,
expenses, gains and losses, and any forfeitures of accounts of other
participants which the plan may allocate to such participant's account. The
Advisory Committee must treat all defined contribution plans (whether or
not terminated) maintained by the Employer as a single plan. Solely for
purposes of the limitations of Part 2 of this Article III, the Advisory
Committee will treat employee contributions made to a defined benefit plan
maintained by the Employer as a separate defined contribution plan. The
Advisory Committee also will treat as a defined contribution plan an
individual medical account (as defined in Code ss.415(l)(2)) included as
part of a defined benefit plan maintained by the Employer and, for taxable
years ending after December 31, 1985, a welfare benefit fund under
Code ss.419(e) maintained by the Employer to the extent there are
post-retirement medical benefits allocated to the separate account of a key
employee (as defined in Code ss.419A(d)(3)).
(i) "Defined benefit plan" - A retirement plan which does not provide for
individual accounts for Employer contributions. The Advisory Committee must
treat all defined benefit plans (whether or not terminated) maintained by
the Employer as a single plan.
[Note: The definitions in paragraphs (j), (k) and (l) apply only if the
limitation described in Section 3.18 applies to the Employer's Plan.]
(j) "Defined benefit plan fraction" -
Projected annual benefit of the Participant under the defined
benefit plan(s)
----------------------------------------------------------------
The lesser of (i) 125% (subject to the "100% limitation" in
paragraph (l)) of the dollar limitation in effect under
Code ss. 415(b)(1)(A) for the Limitation Year, or
(ii) 140% of the Participant's average Compensation for his high
three (3) consecutive Years of Service
To determine the denominator of this fraction, the Advisory Committee
will make any adjustment required under Code ss.415(b) and will determine a
Year of Service, unless otherwise provided in an addendum to Adoption
Agreement Section 3.18, as a Plan Year in which the Employee completed at
least 1,000 Hours of Service. The "projected annual benefit" is the annual
retirement benefit (adjusted to an actuarially equivalent straight life
annuity if the plan expresses such benefit in a form other than a straight
life annuity or qualified joint and survivor annuity) of the Participant
under the terms of the defined benefit plan on the assumptions he continues
employment until his normal retirement age (or current age, if later) as
stated in the defined benefit plan, his compensation continues at the same
rate as in effect in the Limitation Year under consideration until the date
of his normal retirement age and all other relevant factors used to
determine benefits under the defined benefit plan remain constant as of the
current Limitation Year for all future Limitation Years.
Current Accrued Benefit. If the Participant accrued benefits in one or
more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the dollar limitation used in the denominator of
this fraction will not be less than the Participant's Current Accrued
Benefit. A Participant's Current Accrued Benefit is the sum of the annual
benefits under such defined benefit plans which the Participant had accrued
as of the end of the 1986 Limitation Year (the last Limitation Year
beginning before January 1, 1987), determined without regard to any change
in the terms or conditions of the Plan made after May 5, 1986, and without
regard to any cost of living adjustment occurring after May 5, 1986. This
Current Accrued Benefit rule applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code ss.415
as in effect at the end of the 1986 Limitation Year.
3.08
<PAGE> 30
(k) "Defined contribution plan fraction" -
The sum, as of the close of the Limitation Year, of the
Annual Additions to the Participant's Account under
the defined contribution plan(s)
---------------------------------------------------------------------
The sum of the lesser of the following amounts
determined for the Limitation Year and for each prior Year of
Service with the Employer:(i) 125%
(subject to the "100% limitation" in paragraph (l)) of the
dollar limitation in effect under Code ss.415(c)(1)(A)
for the Limitation Year (determined without regard to
the special dollar limitations for employee stock ownership plans),
or (ii) 35% of the Participant's Compensation for the Limitation Year
For purposes of determining the defined contribution plan fraction, the
Advisory Committee will not recompute Annual Additions in Limitation Years
beginning prior to January 1, 1987, to treat all Employee contributions as
Annual Additions. If the Plan satisfied Code ss.415 for Limitation Years
beginning prior to January 1, 1987, the Advisory Committee will redetermine the
defined contribution plan fraction and the defined benefit plan fraction as of
the end of the 1986 Limitation Year, in accordance with this Section 3.19. If
the sum of the redetermined fractions exceeds 1.0, the Advisory Committee will
subtract permanently from the numerator of the defined contribution plan
fraction an amount equal to the product of (1) the excess of the sum of the
fractions over 1.0, times (2) the denominator of the defined contribution plan
fraction. In making the adjustment, the Advisory Committee must disregard any
accrued benefit under the defined benefit plan which is in excess of the Current
Accrued Benefit. This Plan continues any transitional rules applicable to the
determination of the defined contribution plan fraction under the Employer's
Plan as of the end of the 1986 Limitation Year.
(l) "100% limitation." If the 100% limitation applies, the Advisory Committee
must determine the denominator of the defined benefit plan fraction and the
denominator of the defined contribution plan fraction by substituting 100% for
125%. If the Employer's Plan is a Standardized Plan, the 100% limitation applies
in all Limitation Years, subject to any override provisions under Section 3.18
of the Employer's Adoption Agreement. If the Employer overrides the 100%
limitation under a Standardized Plan, the Employer must specify in its Adoption
Agreement the manner in which the Plan satisfies the extra minimum benefit
requirement of Code ss.416(h) and the 100% limitation must continue to apply if
the Plan's top heavy ratio exceeds 90%. If the Employer's Plan is a
Nonstandardized Plan, the 100% limitation applies only if: (i) the Plan's top
heavy ratio exceeds 90%; or (ii) the Plan's top heavy ratio is greater than 60%,
and the Employer does not elect in its Adoption Agreement Section 3.18 to
provide extra minimum benefits which satisfy Code ss.416(h)(2).
* * * * * * * * * * * * * * *
3.09
<PAGE> 31
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. This Plan does not permit
Participant nondeductible contributions unless the Employer maintains its Plan
under a Code ss.401(k) Adoption Agreement. If the Employer does not maintain its
Plan under a Code ss.401(k) Adoption Agreement and, prior to the adoption of
this Master Plan, the Plan accepted Participant nondeductible contributions for
a Plan Year beginning after December 31, 1986, those contributions must satisfy
the requirements of Code ss.401(m). This Section 4.01 does not prohibit the
Plan's acceptance of Participant nondeductible contributions prior to the first
Plan Year commencing after the Plan Year in which the Employer adopts this
Master Plan.
4.02 PARTICIPANT DEDUCTIBLE CONTRIBUTIONS. A qualified Plan may not accept
Participant deductible contributions after April 15, 1987. If the Employer's
Plan includes Participant deductible contributions ("DECs") made prior to
April 16, 1987, the Advisory Committee must maintain a separate accounting for
the Participant's Accrued Benefit attributable to DECs, including DECs which are
part of a rollover contribution described in Section 4.03. The Advisory
Committee will treat the accumulated DECs as part of the Participant's Accrued
Benefit for all purposes of the Plan, except for purposes of determining the top
heavy ratio under Section 1.33. The Advisory Committee may not use DECs to
purchase life insurance on the Participant's behalf.
4.03 PARTICIPANT ROLLOVER CONTRIBUTIONS. Any Participant, with the
Employer's written consent and after filing with the Trustee the form prescribed
by the Advisory Committee, may contribute cash or other property to the Trust
other than as a voluntary contribution if the contribution is a "rollover
contribution" which the Code permits an employee to transfer either directly or
indirectly from one qualified plan to another qualified plan. Before accepting a
rollover contribution, the Trustee may require an Employee to furnish
satisfactory evidence that the proposed transfer is in fact a "rollover
contribution" which the Code permits an employee to make to a qualified plan. A
rollover contribution is not an Annual Addition under Part 2 of Article III.
The Trustee will invest the rollover contribution in a segregated investment
Account for the Participant's sole benefit unless the Trustee (or the Named
Fiduciary, in the case of a nondiscretionary Trustee designation), in its sole
discretion, agrees to invest the rollover contribution as part of the Trust
Fund. The Trustee will not have any investment responsibility with respect to a
Participant's segregated rollover Account. The Participant, however, from time
to time, may direct the Trustee in writing as to the investment of his
segregated rollover Account in property, or property interests, of any kind,
real, personal or mixed; provided however, the Participant may not direct the
Trustee to make loans to his Employer. A Participant's segregated rollover
Account alone will bear any extraordinary expenses resulting from investments
made at the direction of the Participant. As of the Accounting Date (or other
valuation date) for each Plan Year, the Advisory Committee will allocate and
credit the net income (or net loss) from a Participant's segregated rollover
Account and the increase or decrease in the fair market value of the assets of a
segregated rollover Account solely to that Account. The Trustee is not liable
nor responsible for any loss resulting to any Beneficiary, nor to any
Participant, by reason of any sale or investment made or other action taken
pursuant to and in accordance with the direction of the Participant. In all
other respects, the Trustee will hold, administer and distribute a rollover
contribution in the same manner as any Employer contribution made to the Trust.
An eligible Employee, prior to satisfying the Plan's eligibility conditions,
may make a rollover contribution to the Trust to the same extent and in the same
manner as a Participant. If an Employee makes a rollover contribution to the
Trust prior to satisfying the Plan's eligibility conditions, the Advisory
Committee and Trustee must treat the Employee as a Participant for all purposes
of the Plan except the Employee is not a Participant for purposes of sharing in
Employer contributions or Participant forfeitures under the Plan until he
actually becomes a Participant in the Plan. If the Employee has a Separation
from Service prior to becoming a Participant, the Trustee will distribute his
rollover contribution Account to him as if it were an Employer contribution
Account.
4.01
<PAGE> 32
4.04 PARTICIPANT CONTRIBUTION - FORFEITABILITY. A Participant's Accrued
Benefit is, at all times, 100% Nonforfeitable to the extent the value of his
Accrued Benefit is derived from his Participant contributions described in this
Article IV.
4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION. A Participant, by
giving prior written notice to the Trustee, may withdraw all or any part of the
value of his Accrued Benefit derived from his Participant contributions
described in this Article IV. A distribution of Participant contributions must
comply with the joint and survivor requirements described in Article VI, if
those requirements apply to the Participant. A Participant may not exercise his
right to withdraw the value of his Accrued Benefit derived from his Participant
contributions more than once during any Plan Year. The Trustee, in accordance
with the direction of the Advisory Committee, will distribute a Participant's
unwithdrawn Accrued Benefit attributable to his Participant contributions in
accordance with the provisions of Article VI applicable to the distribution of
the Participant's Nonforfeitable Accrued Benefit.
4.06 PARTICIPANT CONTRIBUTION - ACCRUED BENEFIT. The Advisory Committee
must maintain a separate Account(s) in the name of each Participant to reflect
the Participant's Accrued Benefit under the Plan derived from his Participant
contributions. A Participant's Accrued Benefit derived from his Participant
contributions as of any applicable date is the balance of his separate
Participant contribution Account(s).
* * * * * * * * * * * * * * *
4.02
<PAGE> 33
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT AGE. The Employer must define Normal Retirement Age
in its Adoption Agreement. A Participant's Accrued Benefit derived from Employer
contributions is 100% Nonforfeitable upon and after his attaining Normal
Retirement Age (if employed by the Employer on or after that date).
5.02 PARTICIPANT DISABILITY OR DEATH. The Employer may elect in its
Adoption Agreement to provide a Participant's Accrued Benefit derived from
Employer contributions will be 100% Nonforfeitable if the Participant's
Separation from Service is a result of his death or his disability.
5.03 VESTING SCHEDULE. Except as provided in Sections 5.01 and 5.02, for
each Year of Service, a Participant's Nonforfeitable percentage of his Accrued
Benefit derived from Employer contributions equals the percentage in the vesting
schedule completed by the Employer in its Adoption Agreement.
(A) Election of Special Vesting Formula. If the Trustee makes a distribution
(other than a cash-out distribution described in Section 5.04) to a
partially-vested Participant, and the Participant has not incurred a Forfeiture
Break in Service at the relevant time, the Advisory Committee will establish a
separate Account for the Participant's Accrued Benefit. At any relevant time
following the distribution, the Advisory Committee will determine the
Participant's Nonforfeitable Accrued Benefit derived from Employer contributions
in accordance with the following formula: P(AB + (R x D)) - (R x D).
To apply this formula, "P" is the Participant's current vesting percentage
at the relevant time, "AB" is the Participant's Employer-derived Accrued Benefit
at the relevant time, "R" is the ratio of "AB" to the Participant's
Employer-derived Accrued Benefit immediately following the earlier distribution
and "D" is the amount of the earlier distribution. If, under a restated Plan,
the Plan has made distribution to a partially-vested Participant prior to its
restated Effective Date and is unable to apply the cash-out provisions of
Section 5.04 to that prior distribution, this special vesting formula also
applies to that Participant's remaining Account. The Employer, in an addendum to
its Adoption Agreement, numbered Section 5.03, may elect to modify this formula
to read as follows: P(AB + D) - D.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION
OF FORFEITED ACCRUED BENEFIT. If, pursuant to Article VI, a partially-vested
Participant receives a cash-out distribution before he incurs a Forfeiture Break
in Service (as defined in Section 5.08), the cash- out distribution will result
in an immediate forfeiture of the nonvested portion of the Participant's Accrued
Benefit derived from Employer contributions. See Section 5.09. A
partially-vested Participant is a Participant whose Nonforfeitable Percentage
determined under Section 5.03 is less than 100%. A cash-out distribution is a
distribution of the entire present value of the Participant's Nonforfeitable
Accrued Benefit.
(A) Restoration and Conditions upon Restoration. A partially-vested Participant
who is re-employed by the Employer after receiving a cash-out distribution of
the Nonforfeitable percentage of his Accrued Benefit may repay the Trustee the
amount of the cash-out distribution attributable to Employer contributions,
unless the Participant no longer has a right to restoration by reason of the
conditions of this Section 5.04(A). If a partially-vested Participant makes the
cash-out distribution repayment, the Advisory Committee, subject to the
conditions of this Section 5.04(A), must restore his Accrued Benefit
attributable to Employer contributions to the same dollar amount as the dollar
amount of his Accrued Benefit on the Accounting Date, or other valuation date,
immediately preceding the date of the cash-out distribution, unadjusted for any
gains or losses occurring subsequent to that Accounting Date, or other valuation
date. Restoration of the Participant's Accrued Benefit includes restoration of
all Code ss.411(d)(6) protected benefits with respect to that restored Accrued
Benefit, in accordance with applicable Treasury regulations. The Advisory
Committee will not restore a re-employed Participant's Accrued Benefit under
this paragraph if:
5.01
<PAGE> 34
(1) 5 years have elapsed since the Participant's first re-employment date
with the Employer following the cash- out distribution; or
(2) The Participant incurred a Forfeiture Break in Service (as defined in
Section 5.08). This condition also applies if the Participant makes
repayment within the Plan Year in which he incurs the Forfeiture Break in
Service and that Forfeiture Break in Service would result in a complete
forfeiture of the amount the Advisory Committee otherwise would restore.
(B) Time and Method of Restoration. If neither of the two conditions preventing
restoration of the Participant's Accrued Benefit applies, the Advisory Committee
will restore the Participant's Accrued Benefit as of the Plan Year Accounting
Date coincident with or immediately following the repayment. To restore the
Participant's Accrued Benefit, the Advisory Committee, to the extent necessary,
will allocate to the Participant's Account:
(1) First, the amount, if any, of Participant forfeitures the Advisory
Committee would otherwise allocate under Section 3.05;
(2) Second, the amount, if any, of the Trust Fund net income or gain for
the Plan Year; and
(3) Third, the Employer contribution for the Plan Year to the extent made
under a discretionary formula.
In an addendum to its Adoption Agreement numbered 5.04(B), the Employer may
eliminate as a means of restoration any of the amounts described in clauses (1),
(2) and (3) or may change the order of priority of these amounts. To the extent
the amounts described in clauses (1), (2) and (3) are insufficient to enable the
Advisory Committee to make the required restoration, the Employer must
contribute, without regard to any requirement or condition of Section 3.01, the
additional amount necessary to enable the Advisory Committee to make the
required restoration. If, for a particular Plan Year, the Advisory Committee
must restore the Accrued Benefit of more than one re-employed Participant, then
the Advisory Committee will make the restoration allocations to each such
Participant's Account in the same proportion that a Participant's restored
amount for the Plan Year bears to the restored amount for the Plan Year of all
re-employed Participants. The Advisory Committee will not take into account any
allocation under this Section 5.04 in applying the limitation on allocations
under Part 2 of Article III.
(C) 0% Vested Participant. The Employer must specify in its Adoption Agreement
whether the deemed cash-out rule applies to a 0% vested Participant. A 0% vested
Participant is a Participant whose Accrued Benefit derived from Employer
contributions is entirely forfeitable at the time of his Separation from
Service. If the Participant's Account is not entitled to an allocation of
Employer contributions for the Plan Year in which he has a Separation from
Service, the Advisory Committee will apply the deemed cash-out rule as if the 0%
vested Participant received a cash-out distribution on the date of the
Participant's Separation from Service. If the Participant's Account is entitled
to an allocation of Employer contributions or Participant forfeitures for the
Plan Year in which he has a Separation from Service, the Advisory Committee will
apply the deemed cash-out rule as if the 0% vested Participant received a
cash-out distribution on the first day of the first Plan Year beginning after
his Separation from Service. For purposes of applying the restoration provisions
of this Section 5.04, the Advisory Committee will treat the 0% vested
Participant as repaying his cash-out "distribution" on the first date of his
re-employment with the Employer. If the deemed cash-out rule does not apply to
the Employer's Plan, a 0% vested Participant will not incur a forfeiture until
he incurs a Forfeiture Break in Service.
5.02
<PAGE> 35
5.05 SEGREGATED ACCOUNT FOR REPAID AMOUNT. Until the Advisory Committee
restores the Participant's Accrued Benefit, as described in Section 5.04, the
Trustee will invest the cash-out amount the Participant has repaid in a
segregated Account maintained solely for that Participant. The Trustee must
invest the amount in the Participant's segregated Account in Federally insured
interest bearing savings account(s) or time deposit(s) (or a combination of
both), or in other fixed income investments. Until commingled with the balance
of the Trust Fund on the date the Advisory Committee restores the Participant's
Accrued Benefit, the Participant's segregated Account remains a part of the
Trust, but it alone shares in any income it earns and it alone bears any expense
or loss it incurs. Unless the repayment qualifies as a rollover contribution,
the Advisory Committee will direct the Trustee to repay to the Participant as
soon as is administratively practicable the full amount of the Participant's
segregated Account if the Advisory Committee determines either of the conditions
of Section 5.04(A) prevents restoration as of the applicable Accounting Date,
notwithstanding the Participant's repayment.
5.06 YEAR OF SERVICE - VESTING. For purposes of vesting under
Section 5.03, Year of Service means any 12-consecutive month period designated
in the Employer's Adoption Agreement during which an Employee completes not less
than the number of Hours of Service (not exceeding 1,000) specified in the
Employer's Adoption Agreement. A Year of Service includes any Year of Service
earned prior to the Effective Date of the Plan, except as provided in Section
5.08.
5.07 BREAK IN SERVICE - VESTING. For purposes of this Article V, a
Participant incurs a "Break in Service" if during any vesting computation period
he does not complete more than 500 Hours of Service. If, pursuant to
Section 5.06, the Plan does not require more than 500 Hours of Service to
receive credit for a Year of Service, a Participant incurs a Break in Service in
a vesting computation period in which he fails to complete a Year of Service.
5.08 INCLUDED YEARS OF SERVICE - VESTING. For purposes of determining
"Years of Service" under Section 5.06, the Plan takes into account all Years of
Service an Employee completes with the Employer except:
(a) For the sole purpose of determining a Participant's Nonforfeitable
percentage of his Accrued Benefit derived from Employer contributions which
accrued for his benefit prior to a Forfeiture Break in Service, the Plan
disregards any Year of Service after the Participant first incurs a
Forfeiture Break in Service. The Participant incurs a Forfeiture Break in
Service when he incurs 5 consecutive Breaks in Service.
(b) The Plan disregards any Year of Service excluded under the Employer's
Adoption Agreement. The Plan does not apply the Break in Service rule under
Code ss.411(a)(6)(B). Therefore, an Employee need not complete a Year of
Service after a Break in Service before the Plan takes into account the
Employee's otherwise includible Years of Service under this Article V.
5.09 FORFEITURE OCCURS. A Participant's forfeiture, if any, of his Accrued
Benefit derived from Employer contributions occurs under the Plan on the earlier
of:
(a) The last day of the vesting computation period in which the
Participant first incurs a Forfeiture Break in Service; or
(b) The date the Participant receives a cash-out distribution.
The Advisory Committee determines the percentage of a Participant's Accrued
Benefit forfeiture, if any, under this Section 5.09 solely by reference to the
vesting schedule of Section 5.03. A Participant does not forfeit any portion of
his Accrued Benefit for any other reason or cause except as expressly provided
by this Section 5.09 or as provided under Section 9.14.
* * * * * * * * * * * * * * *
5.03
<PAGE> 36
ARTICLE VI
TIME AND METHOD OF PAYMENT OF BENEFITS
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT. Unless, pursuant to Section 6.03,
the Participant or the Beneficiary elects in writing to a different time or
method of payment, the Advisory Committee will direct the Trustee to commence
distribution of a Participant's Nonforfeitable Accrued Benefit in accordance
with this Section 6.01. A Participant must consent, in writing, to any
distribution required under this Section 6.01 if the present value of the
Participant's Nonforfeitable Accrued Benefit, at the time of the distribution to
the Participant, exceeds $3,500 and the Participant has not attained the later
of Normal Retirement Age or age 62. Furthermore, the Participant's spouse also
must consent, in writing, to any distribution, for which Section 6.04 requires
the spouse's consent. For all purposes of this Article VI, the term "annuity
starting date" means the first day of the first period for which the Plan pays
an amount as an annuity or in any other form. A distribution date under this
Article VI, unless otherwise specified within the Plan, is the date or dates the
Employer specifies in the Adoption Agreement, or as soon as administratively
practicable following that distribution date. For purposes of the consent
requirements under this Article VI, if the present value of the Participant's
Nonforfeitable Accrued Benefit, at the time of any distribution, exceeds $3,500,
the Advisory Committee must treat that present value as exceeding $3,500 for
purposes of all subsequent Plan distributions to the Participant.
(A) Separation from Service For a Reason Other Than Death.
(1) Participant's Nonforfeitable Accrued Benefit Not Exceeding $3,500. If
the Participant's Separation from Service is for any reason other than death,
the Advisory Committee will direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit in a lump sum, on the distribution date the
Employer specifies in the Adoption Agreement, but in no event later than the
60th day following the close of the Plan Year in which the Participant attains
Normal Retirement Age. If the Participant has attained Normal Retirement Age at
the time of his Separation from Service, the distribution under this paragraph
will occur no later than the 60th day following the close of the Plan Year in
which the Participant's Separation from Service occurs.
(2) Participant's Nonforfeitable Accrued Benefit Exceeds $3,500. If the
Participant's Separation from Service is for any reason other than death, the
Advisory Committee will direct the Trustee to commence distribution of the
Participant's Nonforfeitable Accrued Benefit in a form and at the time elected
by the Participant, pursuant to Section 6.03. In the absence of an election by
the Participant, the Advisory Committee will direct the Trustee to distribute
the Participant's Nonforfeitable Accrued Benefit in a lump sum (or, if
applicable, the normal annuity form of distribution required under
Section 6.04), on the 60th day following the close of the Plan Year in which the
latest of the following events occurs: (a) the Participant attains Normal
Retirement Age; (b) the Participant attains age 62; or (c) the Participant's
Separation from Service.
(3) Disability. If the Participant's Separation from Service is because of
his disability, the Advisory Committee will direct the Trustee to pay the
Participant's Nonforfeitable Accrued Benefit in lump sum, on the distribution
date the Employer specifies in the Adoption Agreement, subject to the notice and
consent requirements of this Article VI and subject to the applicable mandatory
commencement dates described in Paragraphs (1) and (2).
(4) Hardship. Prior to the time at which the Participant may receive
distribution under Paragraphs (1), (2) or (3), the Participant may request a
distribution from his Nonforfeitable Accrued Benefit in an amount necessary to
satisfy a hardship, if the Employer elects in the Adoption Agreement to permit
hardship distributions. Unless the Employer elects otherwise in the Adoption
Agreement, a hardship distribution must be on account of any of the following:
(a) medical expenses; (b) the purchase (excluding mortgage payments) of the
Participant's principal residence; (c) post-secondary education tuition, for the
next semester or quarter, for the Participant or for the Participant's spouse,
children or dependents; (d) to prevent the eviction of the Participant from his
principal residence or the foreclosure on the mortgage of the Participant's
principal residence; (e) funeral expenses of the Participant's family member; or
(f) the Participant's disability. A partially-vested Participant may not receive
a hardship distribution described in this Paragraph (A)(4) prior to incurring a
Forfeiture Break in Service, unless the
6.01
<PAGE> 37
hardship distribution is a cash-out distribution (as defined in Article V). The
Advisory Committee will direct the Trustee to make the hardship distribution as
soon as administratively practicable after the Participant makes a valid request
for the hardship distribution.
(B) Required Beginning Date. If any distribution commencement date described
under Paragraph (A) of this Section 6.01, either by Plan provision or by
Participant election (or nonelection), is later than the Participant's Required
Beginning Date, the Advisory Committee instead must direct the Trustee to make
distribution on the Participant's Required Beginning Date, subject to the
transitional election, if applicable, under Section 6.03(D). A Participant's
Required Beginning Date is the April 1 following the close of the calendar year
in which the Participant attains age 70 1/2. However, if the Participant, prior
to incurring a Separation from Service, attained age 70 1/2 by January 1, 1988,
and, for the five Plan Year period ending in the calendar year in which he
attained age 70 1/2 and for all subsequent years, the Participant was not a more
than 5% owner, the Required Beginning Date is the April 1 following the close of
the calendar year in which the Participant separates from Service or, if
earlier, the April 1 following the close of the calendar year in which the
Participant becomes a more than 5% owner. Furthermore, if a Participant who was
not a more than 5% owner attained age 70 1/2 during 1988 and did not incur a
Separation from Service prior to January 1, 1989, his Required Beginning Date is
April 1, 1990. A mandatory distribution at the Participant's Required Beginning
Date will be in lump sum (or, if applicable, the normal annuity form of
distribution required under Section 6.04) unless the Participant, pursuant to
the provisions of this Article VI, makes a valid election to receive an
alternative form of payment.
(C) Death of the Participant. The Advisory Committee will direct the Trustee,
in accordance with this Section 6.01(C), to distribute to the Participant's
Beneficiary the Participant's Nonforfeitable Accrued Benefit remaining in the
Trust at the time of the Participant's death. Subject to the requirements of
Section 6.04, the Advisory Committee will determine the death benefit by
reducing the Participant's Nonforfeitable Accrued Benefit by any security
interest the Plan has against that Nonforfeitable Accrued Benefit by reason of
an outstanding Participant loan.
(1) Deceased Participant's Nonforfeitable Accrued Benefit Does Not Exceed
$3,500. The Advisory Committee, subject to the requirements of Section 6.04,
must direct the Trustee to distribute the deceased Participant's Nonforfeitable
Accrued Benefit in a single sum, as soon as administratively practicable
following the Participant's death or, if later, the date on which the Advisory
Committee receives notification of or otherwise confirms the Participant's
death.
(2) Deceased Participant's Nonforfeitable Accrued Benefit Exceeds $3,500.
The Advisory Committee will direct the Trustee to distribute the deceased
Participant's Nonforfeitable Accrued Benefit at the time and in the form elected
by the Participant or, if applicable by the Beneficiary, as permitted under this
Article VI. In the absence of an election, subject to the requirements of
Section 6.04, the Advisory Committee will direct the Trustee to distribute the
Participant's undistributed Nonforfeitable Accrued Benefit in a lump sum on the
first distribution date following the close of the Plan Year in which the
Participant's death occurs or, if later, the first distribution date following
the date the Advisory Committee receives notification of or otherwise confirms
the Participant's death.
If the death benefit is payable in full to the Participant's surviving
spouse, the surviving spouse, in addition to the distribution options provided
in this Section 6.01(C), may elect distribution at any time or in any form
(other than a joint and survivor annuity) this Article VI would permit for a
Participant.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. Subject to the annuity
distribution requirements, if any, prescribed by Section 6.04, and any
restrictions prescribed by Section 6.03, a Participant or Beneficiary may elect
distribution under one, or any combination, of the following methods: (a) by
payment in a lump sum; or (b) by payment in monthly, quarterly or annual
installments over a fixed reasonable period of time, not exceeding the life
expectancy of the Participant, or the joint life and last survivor expectancy of
the Participant and his Beneficiary. The Employer may elect in its Adoption
Agreement to modify the methods of payment available under this Section 6.02.
6.02
<PAGE> 38
The distribution options permitted under this Section 6.02 are available
only if the present value of the Participant Nonforfeitable Accrued Benefit, at
the time of the distribution to the Participant, exceeds $3,500. To facilitate
installment payments under this Article VI, the Advisory Committee may direct
the Trustee to segregate all or any part of the Participant's Accrued Benefit in
a separate Account. The Trustee will invest the Participant's segregated Account
in Federally insured interest bearing savings account(s) or time deposit(s) (or
a combination of both), or in other fixed income investments. A segregated
Account remains a part of the Trust, but it alone shares in any income it earns,
and it alone bears any expense or loss it incurs. A Participant or Beneficiary
may elect to receive an installment distribution in the form of a
Nontransferable Annuity Contract. Under an installment distribution, the
Participant or Beneficiary, at any time, may elect to accelerate the payment of
all, or any portion, of the Participant's unpaid Nonforfeitable Accrued Benefit,
subject to the requirements of Section 6.04.
(A) Minimum Distribution Requirements for Participants. The Advisory Committee
may not direct the Trustee to distribute the Participant's Nonforfeitable
Accrued Benefit, nor may the Participant elect to have the Trustee distribute
his Nonforfeitable Accrued Benefit, under a method of payment which, as of the
Required Beginning Date, does not satisfy the minimum distribution requirements
under Code ss.401(a)(9) and the applicable Treasury regulations. The minimum
distribution for a calendar year equals the Participant's Nonforfeitable Accrued
Benefit as of the latest valuation date preceding the beginning of the calendar
year divided by the Participant's life expectancy or, if applicable, the joint
and last survivor expectancy of the Participant and his designated Beneficiary
(as determined under Article VIII, subject to the requirements of the
Code ss.401(a)(9) regulations). The Advisory Committee will increase the
Participant's Nonforfeitable Accrued Benefit, as determined on the relevant
valuation date, for contributions or forfeitures allocated after the valuation
date and by December 31 of the valuation calendar year, and will decrease the
valuation by distributions made after the valuation date and by December 31 of
the valuation calendar year. For purposes of this valuation, the Advisory
Committee will treat any portion of the minimum distribution for the first
distribution calendar year made after the close of that year as a distribution
occurring in that first distribution calendar year. In computing a minimum
distribution, the Advisory Committee must use the unisex life expectancy
multiples under Treas. Reg. ss.1.72-9. The Advisory Committee, only upon the
Participant's written request, will compute the minimum distribution for a
calendar year subsequent to the first calendar year for which the Plan requires
a minimum distribution by redetermining the applicable life expectancy. However,
the Advisory Committee may not redetermine the joint life and last survivor
expectancy of the Participant and a nonspouse designated Beneficiary in a manner
which takes into account any adjustment to a life expectancy other than the
Participant's life expectancy.
If the Participant's spouse is not his designated Beneficiary, a method of
payment to the Participant (whether by Participant election or by Advisory
Committee direction) may not provide more than incidental benefits to the
Beneficiary. For Plan Years beginning after December 31, 1988, the Plan must
satisfy the minimum distribution incidental benefit ("MDIB") requirement in the
Treasury regulations issued under Code ss.401(a)(9) for distributions made on or
after the Participant's Required Beginning Date and before the Participant's
death. To satisfy the MDIB requirement, the Advisory Committee will compute the
minimum distribution required by this Section 6.02(A) by substituting the
applicable MDIB divisor for the applicable life expectancy factor, if the MDIB
divisor is a lesser number. Following the Participant's death, the Advisory
Committee will compute the minimum distribution required by this Section 6.02(A)
solely on the basis of the applicable life expectancy factor and will disregard
the MDIB factor. For Plan Years beginning prior to January 1, 1989, the Plan
satisfies the incidental benefits requirement if the distributions to the
Participant satisfied the MDIB requirement or if the present value of the
retirement benefits payable solely to the Participant is greater than 50% of the
present value of the total benefits payable to the Participant and his
Beneficiaries. The Advisory Committee must determine whether benefits to the
Beneficiary are incidental as of the date the Trustee is to commence payment of
the retirement benefits to the Participant, or as of any date the Trustee
redetermines the payment period to the Participant.
The minimum distribution for the first distribution calendar year is due by
the Participant's Required Beginning Date. The minimum distribution for each
subsequent distribution calendar year, including the calendar year in which the
Participant's Required Beginning Date occurs, is due by December 31 of that
year. If the Participant receives distribution in the form of a Nontransferable
Annuity Contract, the distribution satisfies this Section 6.02(A) if the
contract complies with the requirements of Code ss.401(a)(9) and the applicable
Treasury regulations.
6.03
<PAGE> 39
(B) Minimum Distribution Requirements for Beneficiaries. The method of
distribution to the Participant's Beneficiary must satisfy Code ss.401(a)(9) and
the applicable Treasury regulations. If the Participant's death occurs after his
Required Beginning Date or, if earlier, the date the Participant commences an
irrevocable annuity pursuant to Section 6.04, the method of payment to the
Beneficiary must provide for completion of payment over a period which does not
exceed the payment period which had commenced for the Participant. If the
Participant's death occurs prior to his Required Beginning Date, and the
Participant had not commenced an irrevocable annuity pursuant to Section 6.04,
the method of payment to the Beneficiary, subject to Section 6.04, must provide
for completion of payment to the Beneficiary over a period not exceeding: (i) 5
years after the date of the Participant's death; or (ii) if the Beneficiary is a
designated Beneficiary, the designated Beneficiary's life expectancy. The
Advisory Committee may not direct payment of the Participant's Nonforfeitable
Accrued Benefit over a period described in clause (ii) unless the Trustee will
commence payment to the designated Beneficiary no later than the December 31
following the close of the calendar year in which the Participant's death
occurred or, if later, and the designated Beneficiary is the Participant's
surviving spouse, December 31 of the calendar year in which the Participant
would have attained age 70 1/2. If the Trustee will make distribution in
accordance with clause (ii), the minimum distribution for a calendar year equals
the Participant's Nonforfeitable Accrued Benefit as of the latest valuation date
preceding the beginning of the calendar year divided by the designated
Beneficiary's life expectancy. The Advisory Committee must use the unisex life
expectancy multiples under Treas. Reg. ss.1.72-9 for purposes of applying this
paragraph. The Advisory Committee, only upon the written request of the
Participant or of the Participant's surviving spouse, will recalculate the life
expectancy of the Participant's surviving spouse not more frequently than
annually, but may not recalculate the life expectancy of a nonspouse designated
Beneficiary after the Trustee commences payment to the designated Beneficiary.
The Advisory Committee will apply this paragraph by treating any amount paid to
the Participant's child, which becomes payable to the Participant's surviving
spouse upon the child's attaining the age of majority, as paid to the
Participant's surviving spouse. Upon the Beneficiary's written request, the
Advisory Committee must direct the Trustee to accelerate payment of all, or any
portion, of the Participant's unpaid Accrued Benefit, as soon as
administratively practicable following the effective date of that request.
6.03 BENEFIT PAYMENT ELECTIONS. Not earlier than 90 days, but not later
than 30 days, before the Participant's annuity starting date, the Advisory
Committee must provide a benefit notice to a Participant who is eligible to make
an election under this Section 6.03. The benefit notice must explain the
optional forms of benefit in the Plan, including the material features and
relative values of those options, and the Participant's right to defer
distribution until he attains the later of Normal Retirement Age or age 62.
If a Participant or Beneficiary makes an election prescribed by this
Section 6.03, the Advisory Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in accordance with that election.
Any election under this Section 6.03 is subject to the requirements of Section
6.02 and of Section 6.04. The Participant or Beneficiary must make an election
under this Section 6.03 by filing his election with the Advisory Committee at
any time before the Trustee otherwise would commence to pay a Participant's
Accrued Benefit in accordance with the requirements of Article VI.
(A) Participant Elections After Separation from Service. If the present value
of a Participant's Nonforfeitable Accrued Benefit exceeds $3,500, he may elect
to have the Trustee commence distribution as of any distribution date permitted
under the Employer's Adoption Agreement Section 6.03. The Participant may
reconsider an election at any time prior to the annuity starting date and elect
to commence distribution as of any other distribution date permitted under the
Employer's Adoption Agreement Section 6.03. If the Participant is
partially-vested in his Accrued Benefit, an election under this Paragraph (A) to
distribute prior to the Participant's incurring a Forfeiture Break in Service
(as defined in Section 5.08), must be in the form of a cash-out distribution (as
defined in Article V). A Participant may not receive a cash-out distribution if,
prior to the time the Trustee actually makes the cash- out distribution, the
Participant returns to employment with the Employer. Following his attainment of
Normal Retirement Age, a Participant who has separated from Service may elect
distribution as of any distribution date, irrespective of the elections under
Adoption Agreement Section 6.03.
6.04
<PAGE> 40
(B) Participant Elections Prior to Separation from Service. The Employer must
specify in its Adoption Agreement the distribution election rights, if any, a
Participant has prior to his Separation from Service. A Participant must make an
election under this Section 6.03(B) on a form prescribed by the Advisory
Committee at any time during the Plan Year for which his election is to be
effective. In his written election, the Participant must specify the percentage
or dollar amount he wishes the Trustee to distribute to him. The Participant's
election relates solely to the percentage or dollar amount specified in his
election form and his right to elect to receive an amount, if any, for a
particular Plan Year greater than the dollar amount or percentage specified in
his election form terminates on the Accounting Date. The Trustee must make a
distribution to a Participant in accordance with his election under this Section
6.03(B) within the 90 day period (or as soon as administratively practicable)
after the Participant files his written election with the Trustee. The Trustee
will distribute the balance of the Participant's Accrued Benefit not distributed
pursuant to his election(s) in accordance with the other distribution provisions
of this Plan.
(C) Death Benefit Elections. If the present value of the deceased Participant's
Nonforfeitable Accrued Benefit exceeds $3,500, the Participant's Beneficiary may
elect to have the Trustee distribute the Participant's Nonforfeitable Accrued
Benefit in a form and within a period permitted under Section 6.02. The
Beneficiary's election is subject to any restrictions designated in writing by
the Participant and not revoked as of his date of death.
(D) Transitional Elections. Notwithstanding the provisions of Sections 6.01 and
6.02, if the Participant (or Beneficiary) signed a written distribution
designation prior to January 1, 1984, the Advisory Committee must distribute the
Participant's Nonforfeitable Accrued Benefit in accordance with that
designation, subject however, to the survivor requirements, if applicable, of
Sections 6.04, 6.05 and 6.06. This Section 6.03(D) does not apply to a pre-1984
distribution designation, and the Advisory Committee will not comply with that
designation, if any of the following applies: (1) the method of distribution
would have disqualified the Plan under Code ss.401(a)(9) as in effect on
December 31, 1983; (2) the Participant did not have an Accrued Benefit as of
December 31, 1983; (3) the distribution designation does not specify the timing
and form of the distribution and the death Beneficiaries (in order of priority);
(4) the substitution of a Beneficiary modifies the payment period of the
distribution; or, (5) the Participant (or Beneficiary) modifies or revokes the
distribution designation. In the event of a revocation, the Plan must
distribute, no later than December 31 of the calendar year following the year of
revocation, the amount which the Participant would have received under Section
6.02(A) if the distribution designation had not been in effect or, if the
Beneficiary revokes the distribution designation, the amount which the
Beneficiary would have received under Section 6.02(B) if the distribution
designation had not been in effect. The Advisory Committee will apply this
Section 6.03(D) to rollovers and transfers in accordance with Part J of the Code
ss.401(a)(9) Treasury regulations.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
(A) Joint and Survivor Annuity. The Advisory Committee must direct the Trustee
to distribute a married or unmarried Participant's Nonforfeitable Accrued
Benefit in the form of a qualified joint and survivor annuity, unless the
Participant makes a valid waiver election (described in Section 6.05) within the
90 day period ending on the annuity starting date. If, as of the annuity
starting date, the Participant is married, a qualified joint and survivor
annuity is an immediate annuity which is purchasable with the Participant's
Nonforfeitable Accrued Benefit and which provides a life annuity for the
Participant and a survivor annuity payable for the remaining life of the
Participant's surviving spouse equal to 50% of the amount of the annuity payable
during the life of the Participant. If, as of the annuity starting date, the
Participant is not married, a qualified joint and survivor annuity is an
immediate life annuity for the Participant which is purchasable with the
Participant's Nonforfeitable Accrued Benefit. On or before the annuity starting
date, the Advisory Committee, without Participant or spousal consent, must
direct the Trustee to pay the Participant's Nonforfeitable Accrued Benefit in a
lump sum, in lieu of a qualified joint and survivor annuity, in accordance with
Section 6.01, if the Participant's Nonforfeitable Accrued Benefit is not greater
than $3,500. This Section 6.04(A) applies only to a Participant who has
completed at least one Hour of Service with the Employer after August 22, 1984.
6.05
<PAGE> 41
(B) Preretirement Survivor Annuity. If a married Participant dies prior to his
annuity starting date, the Advisory Committee will direct the Trustee to
distribute a portion of the Participant's Nonforfeitable Accrued Benefit to the
Participant's surviving spouse in the form of a preretirement survivor annuity,
unless the Participant has a valid waiver election (as described in Section
6.06) in effect, or unless the Participant and his spouse were not married
throughout the one year period ending on the date of his death. A preretirement
survivor annuity is an annuity which is purchasable with 50% of the
Participant's Nonforfeitable Accrued Benefit (determined as of the date of the
Participant's death) and which is payable for the life of the Participant's
surviving spouse. The value of the preretirement survivor annuity is
attributable to Employer contributions and to Employee contributions in the same
proportion as the Participant's Nonforfeitable Accrued Benefit is attributable
to those contributions. The portion of the Participant's Nonforfeitable Accrued
Benefit not payable under this paragraph is payable to the Participant's
Beneficiary, in accordance with the other provisions of this Article VI. If the
present value of the preretirement survivor annuity does not exceed $3,500, the
Advisory Committee, on or before the annuity starting date, must direct the
Trustee to make a lump sum distribution to the Participant's surviving spouse,
in lieu of a preretirement survivor annuity. This Section 6.04(B) applies only
to a Participant who dies after August 22, 1984, and either (i) completes at
least one Hour of Service with the Employer after August 22, 1984, or (ii)
separated from Service with at least 10 Years of Service (as defined in Section
5.06) and completed at least one Hour of Service with the Employer in a Plan
Year beginning after December 31, 1975.
(C) Surviving Spouse Elections. If the present value of the preretirement
survivor annuity exceeds $3,500, the Participant's surviving spouse may elect to
have the Trustee commence payment of the preretirement survivor annuity at any
time following the date of the Participant's death, but not later than the
mandatory distribution periods described in Section 6.02, and may elect any of
the forms of payment described in Section 6.02, in lieu of the preretirement
survivor annuity. In the absence of an election by the surviving spouse, the
Advisory Committee must direct the Trustee to distribute the preretirement
survivor annuity on the first distribution date following the close of the Plan
Year in which the latest of the following events occurs: (i) the Participant's
death; (ii) the date the Advisory Committee receives notification of or
otherwise confirms the Participant's death; (iii) the date the Participant would
have attained Normal Retirement Age; or (iv) the date the Participant would have
attained age 62.
(D) Special Rules. If the Participant has in effect a valid waiver election
regarding the qualified joint and survivor annuity or the preretirement survivor
annuity, the Advisory Committee must direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in accordance with Sections 6.01,
6.02 and 6.03. The Advisory Committee will reduce the Participant's
Nonforfeitable Accrued Benefit by any security interest (pursuant to any offset
rights authorized by Section 10.03[E]) held by the Plan by reason of a
Participant loan to determine the value of the Participant's Nonforfeitable
Accrued Benefit distributable in the form of a qualified joint and survivor
annuity or preretirement survivor annuity, provided any post-August 18, 1985,
loan satisfied the spousal consent requirement described in Section 10.03[E] of
the Plan. For purposes of applying this Article VI, the Advisory Committee
treats a former spouse as the Participant's spouse or surviving spouse to the
extent provided under a qualified domestic relations order described in Section
6.07. The provisions of this Section 6.04, and of Sections 6.05 and 6.06, apply
separately to the portion of the Participant's Nonforfeitable Accrued Benefit
subject to the qualified domestic relations order and to the portion of the
Participant's Nonforfeitable Accrued Benefit not subject to that order.
6.06
<PAGE> 42
(E) Profit Sharing Plan Election. If this Plan is a profit sharing plan, the
Employer must elect the extent to which the preceding provisions of Section 6.04
apply. If the Employer elects to apply this Section 6.04 only to a Participant
described in this Section 6.04(E), the preceding provisions of this Section 6.04
apply only to the following Participants: (1) a Participant as respects whom the
Plan is a direct or indirect transferee from a plan subject to the Code ss.417
requirements and the Plan received the transfer after December 31, 1984, unless
the transfer is an elective transfer described in Section 13.06; (2) a
Participant who elects a life annuity distribution (if Section 6.02 or Section
13.02 of the Plan requires the Plan to provide a life annuity distribution
option); and (3) a Participant whose benefits under a defined benefit plan
maintained by the Employer are offset by benefits provided under this Plan. If
the Employer elects to apply this Section 6.04 to all Participants, the
preceding provisions of this Section 6.04 apply to all Participants described in
the first two paragraphs of this Section 6.04, without regard to the limitations
of this Section 6.04(E). Sections 6.05 and 6.06 only apply to Participants to
whom the preceding provisions of this Section 6.04 apply.
6.05 WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY. Not earlier
than 90 days, but not later than 30 days, before the Participant's annuity
starting date, the Advisory Committee must provide the Participant a written
explanation of the terms and conditions of the qualified joint and survivor
annuity, the Participant's right to make, and the effect of, an election to
waive the joint and survivor form of benefit, the rights of the Participant's
spouse regarding the waiver election and the Participant's right to make, and
the effect of, a revocation of a waiver election. The Plan does not limit the
number of times the Participant may revoke a waiver of the qualified joint and
survivor annuity or make a new waiver during the election period.
A married Participant's waiver election is not valid unless (a) the
Participant's spouse (to whom the survivor annuity is payable under the
qualified joint and survivor annuity), after the Participant has received the
written explanation described in this Section 6.05, has consented in writing to
the waiver election, the spouse's consent acknowledges the effect of the
election, and a notary public or the Plan Administrator (or his representative)
witnesses the spouse's consent, (b) the spouse consents to the alternate form of
payment designated by the Participant or to any change in that designated form
of payment, and (c) unless the spouse is the Participant's sole primary
Beneficiary, the spouse consents to the Participant's Beneficiary designation or
to any change in the Participant's Beneficiary designation. The spouse's consent
to a waiver of the qualified joint and survivor annuity is irrevocable, unless
the Participant revokes the waiver election. The spouse may execute a blanket
consent to any form of payment designation or to any Beneficiary designation
made by the Participant, if the spouse acknowledges the right to limit that
consent to a specific designation but, in writing, waives that right. The
consent requirements of this Section 6.05 apply to a former spouse of the
Participant, to the extent required under a qualified domestic relations order
described in Section 6.07.
The Advisory Committee will accept as valid a waiver election which does
not satisfy the spousal consent requirements if the Advisory Committee
establishes the Participant does not have a spouse, the Advisory Committee is
not able to locate the Participant's spouse, the Participant is legally
separated or has been abandoned (within the meaning of State law) and the
Participant has a court order to that effect, or other circumstances exist under
which the Secretary of the Treasury will excuse the consent requirement. If the
Participant's spouse is legally incompetent to give consent, the spouse's legal
guardian (even if the guardian is the Participant) may give consent.
6.07
<PAGE> 43
6.06 WAIVER ELECTION - PRERETIREMENT SURVIVOR ANNUITY. The Advisory
Committee must provide a written explanation of the preretirement survivor
annuity to each married Participant, within the following period which ends
last: (1) the period beginning on the first day of the Plan Year in which the
Participant attains age 32 and ending on the last day of the Plan Year in which
the Participant attains age 34; (2) a reasonable period after an Employee
becomes a Participant; (3) a reasonable period after the joint and survivor
rules become applicable to the Participant; or (4) a reasonable period after a
fully subsidized preretirement survivor annuity no longer satisfies the
requirements for a fully subsidized benefit. A reasonable period described in
clauses (2), (3) and (4) is the period beginning one year before and ending one
year after the applicable event. If the Participant separates from Service
before attaining age 35, clauses (1), (2), (3) and (4) do not apply and the
Advisory Committee must provide the written explanation within the period
beginning one year before and ending one year after the Separation from Service.
The written explanation must describe, in a manner consistent with Treasury
regulations, the terms and conditions of the preretirement survivor annuity
comparable to the explanation of the qualified joint and survivor annuity
required under Section 6.05. The Plan does not limit the number of times the
Participant may revoke a waiver of the preretirement survivor annuity or make a
new waiver during the election period.
A Participant's waiver election of the preretirement survivor annuity is
not valid unless (a) the Participant makes the waiver election no earlier than
the first day of the Plan Year in which he attains age 35 and (b) the
Participant's spouse (to whom the preretirement survivor annuity is payable)
satisfies the consent requirements described in Section 6.05, except the spouse
need not consent to the form of benefit payable to the designated Beneficiary.
The spouse's consent to the waiver of the preretirement survivor annuity is
irrevocable, unless the Participant revokes the waiver election. Irrespective of
the time of election requirement described in clause (a), if the Participant
separates from Service prior to the first day of the Plan Year in which he
attains age 35, the Advisory Committee will accept a waiver election as respects
the Participant's Accrued Benefit attributable to his Service prior to his
Separation from Service. Furthermore, if a Participant who has not separated
from Service makes a valid waiver election, except for the timing requirement of
clause (a), the Advisory Committee will accept that election as valid, but only
until the first day of the Plan Year in which the Participant attains age 35. A
waiver election described in this paragraph is not valid unless made after the
Participant has received the written explanation described in this Section 6.06.
6.07 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing contained in
this Plan prevents the Trustee, in accordance with the direction of the Advisory
Committee, from complying with the provisions of a qualified domestic relations
order (as defined in Code ss.414(p)). This Plan specifically permits
distribution to an alternate payee under a qualified domestic relations order at
any time, irrespective of whether the Participant has attained his earliest
retirement age (as defined under Code ss.414(p)) under the Plan. A distribution
to an alternate payee prior to the Participant's attainment of earliest
retirement age is available only if: (1) the order specifies distribution at
that time or permits an agreement between the Plan and the alternate payee to
authorize an earlier distribution; and (2) if the present value of the alternate
payee's benefits under the Plan exceeds $3,500, and the order requires, the
alternate payee consents to any distribution occurring prior to the
Participant's attainment of earliest retirement age. The Employer, in an
addendum to its Adoption Agreement numbered 6.07, may elect to limit
distribution to an alternate payee only when the Participant has attained his
earliest retirement age under the Plan. Nothing in this Section 6.07 gives a
Participant a right to receive distribution at a time otherwise not permitted
under the Plan nor does it permit the alternate payee to receive a form of
payment not otherwise permitted under the Plan.
The Advisory Committee must establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Advisory Committee promptly will notify the Participant and
any alternate payee named in the order, in writing, of the receipt of the order
and the Plan's procedures for determining the qualified status of the order.
Within a reasonable period of time after receiving the domestic relations order,
the Advisory Committee must determine the qualified status of the order and must
notify the Participant and each alternate payee, in writing, of its
determination. The Advisory Committee must provide notice under this paragraph
by mailing to the individual's address specified in the domestic relations
order, or in a manner consistent with Department of Labor regulations.
6.08
<PAGE> 44
If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during the period the Advisory Committee is making its determination of
the qualified status of the domestic relations order, the Advisory Committee
must make a separate accounting of the amounts payable. If the Advisory
Committee determines the order is a qualified domestic relations order within 18
months of the date amounts first are payable following receipt of the order, the
Advisory Committee will direct the Trustee to distribute the payable amounts in
accordance with the order. If the Advisory Committee does not make its
determination of the qualified status of the order within the 18-month
determination period, the Advisory Committee will direct the Trustee to
distribute the payable amounts in the manner the Plan would distribute if the
order did not exist and will apply the order prospectively if the Advisory
Committee later determines the order is a qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the qualified
domestic relations order, the Advisory Committee may direct the Trustee to
invest any partitioned amount in a segregated subaccount or separate account and
to invest the account in Federally insured, interest-bearing savings account(s)
or time deposit(s) (or a combination of both), or in other fixed income
investments. A segregated subaccount remains a part of the Trust, but it alone
shares in any income it earns, and it alone bears any expense or loss it incurs.
The Trustee will make any payments or distributions required under this Section
6.07 by separate benefit checks or other separate distribution to the alternate
payee(s).
* * * * * * * * * * * * * * *
6.09
<PAGE> 45
ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 INFORMATION TO COMMITTEE. The Employer must supply current information
to the Advisory Committee as to the name, date of birth, date of employment,
annual compensation, leaves of absence, Years of Service 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
Advisory Committee considers necessary. The Employer's records as to the current
information the Employer furnishes to the Advisory Committee are conclusive as
to all persons.
7.02 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 Advisory Committee (unless the Employer is the
Advisory Committee), the Trustee, the Custodian, if any, or the Plan
Administrator (unless the Employer is the Plan Administrator).
7.03 INDEMNITY OF CERTAIN FIDUCIARIES. The Employer indemnifies and saves
harmless the Plan Administrator and the members of the Advisory Committee, and
each of them, from and against any and all loss resulting from liability to
which the Plan Administrator and the Advisory Committee, or the members of the
Advisory Committee, may be subjected by reason of any act or conduct (except
willful misconduct or gross negligence) in their official capacities in the
administration of this Trust or Plan 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 7.03 do not relieve the Plan
Administrator or any Advisory Committee member from any liability he may have
under ERISA for breach of a fiduciary duty. Furthermore, the Plan Administrator
and the Advisory Committee members and the Employer may execute a letter
agreement further delineating the indemnification agreement of this
Section 7.03, provided the letter agreement must be consistent with and does not
violate ERISA. The indemnification provisions of this Section 7.03 extend to the
Trustee (or to a Custodian, if any) solely to the extent provided by a letter
agreement executed by the Trustee (or Custodian) and the Employer.
7.04 EMPLOYER DIRECTION OF INVESTMENT. The Employer has the right to direct
the Trustee with respect to the investment and re-investment of assets
comprising the Trust Fund only if the Trustee consents in writing to permit such
direction. If the Trustee consents to Employer direction of investment, the
Trustee and the Employer must execute a letter agreement as a part of this Plan
containing such conditions, limitations and other provisions they deem
appropriate before the Trustee will follow any Employer direction as respects
the investment or re-investment of any part of the Trust Fund.
7.05 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves the right
to amend the vesting schedule at any time, the Advisory Committee will not apply
the amended vesting schedule to reduce the Nonforfeitable percentage of any
Participant's Accrued Benefit derived from Employer contributions (determined as
of the later of the date the Employer adopts the amendment, or the date the
amendment becomes effective) to a percentage less than the Nonforfeitable
percentage computed under the Plan without regard to the amendment. An amended
vesting schedule will apply to a Participant only if the Participant receives
credit for at least one Hour of Service after the new schedule becomes
effective.
If the Employer makes a permissible amendment to the vesting schedule, each
Participant having at least 3 Years of Service with the Employer may elect to
have the percentage of his Nonforfeitable Accrued Benefit computed under the
Plan without regard to the amendment. For Plan Years beginning prior to
January 1, 1989, the election described in the preceding sentence applies only
to Participants having at least 5 Years of Service with the Employer. The
Participant must file his election with the Advisory Committee within 60 days of
the latest of (a) the Employer's adoption of the amendment; (b) the effective
date of the amendment; or (c) his receipt of a copy of the amendment. The
Advisory Committee, as soon as practicable, must forward a true copy of any
amendment to the vesting schedule to each affected Participant, together with an
explanation of the effect of the amendment, the appropriate form upon which the
Participant may make an election to remain under the vesting schedule
7.01
<PAGE> 46
provided under the Plan prior to the amendment and notice of the time within
which the Participant must make an election to remain under the prior vesting
schedule. The election described in this Section 7.05 does not apply to a
Participant if the amended vesting schedule provides for vesting at least as
rapid at all times as the vesting schedule in effect prior to the amendment. For
purposes of this Section 7.05, an amendment to the vesting schedule includes any
Plan amendment which directly or indirectly affects the computation of the
Nonforfeitable percentage of an Employee's rights to his Employer derived
Accrued Benefit. Furthermore, the Advisory Committee must treat any shift in the
vesting schedule, due to a change in the Plan's top heavy status, as an
amendment to the vesting schedule for purposes of this Section 7.05.
* * * * * * * * * * * * * * *
7.02
<PAGE> 47
ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 BENEFICIARY DESIGNATION. Any Participant may from time to time
designate, in writing, any person or persons, contingently or successively, to
whom the Trustee will pay his Nonforfeitable Accrued Benefit (including any life
insurance proceeds payable to the Participant's Account) in the event of his
death and the Participant may designate the form and method of payment. The
Advisory Committee will prescribe the form for the written designation of
Beneficiary and, upon the Participant's filing the form with the Advisory
Committee, the form effectively revokes all designations filed prior to that
date by the same Participant.
(A) Coordination with survivor requirements. If the joint and survivor
requirements of Article VI apply to the Participant, this Section 8.01 does not
impose any special spousal consent requirements on the Participant's Beneficiary
designation. However, in the absence of spousal consent (as required by
Article VI) to the Participant's Beneficiary designation: (1) any waiver of the
joint and survivor annuity or of the preretirement survivor annuity is not
valid; and (2) if the Participant dies prior to his annuity starting date, the
Participant's Beneficiary designation will apply only to the portion of the
death benefit which is not payable as a preretirement survivor annuity.
Regarding clause (2), if the Participant's surviving spouse is a primary
Beneficiary under the Participant's Beneficiary designation, the Trustee will
satisfy the spouse's interest in the Participant's death benefit first from the
portion which is payable as a preretirement survivor annuity.
(B) Profit sharing plan exception. If the Plan is a profit sharing plan, the
Beneficiary designation of a married Exempt Participant is not valid unless the
Participant's spouse consents (in a manner described in Section 6.05) to the
Beneficiary designation. An "Exempt Participant" is a Participant who is not
subject to the joint and survivor requirements of Article VI. The spousal
consent requirement in this paragraph does not apply if the Exempt Participant
and his spouse are not married throughout the one year period ending on the date
of the Participant's death, or if the Participant's spouse is the Participant's
sole primary Beneficiary.
8.02 NO BENEFICIARY DESIGNATION/DEATH OF BENEFICIARY. If a Participant
fails to name a Beneficiary in accordance with Section 8.01, or if the
Beneficiary named by a Participant predeceases him, then the Trustee will pay
the Participant's Nonforfeitable Accrued Benefit in accordance with Section 6.02
in the following order of priority, unless the Employer specifies a different
order of priority in an addendum to its Adoption Agreement, to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including adopted children, in
equal shares;
(c) The Participant's surviving parents, in equal shares; or
(d) The Participant's estate.
If the Beneficiary does not predecease the Participant, but dies prior to
distribution of the Participant's entire Nonforfeitable Accrued Benefit, the
Trustee will pay the remaining Nonforfeitable Accrued Benefit to the
Beneficiary's estate unless the Participant's Beneficiary designation provides
otherwise or unless the Employer provides otherwise in its Adoption Agreement.
If the Plan is a profit sharing plan, and the Plan includes Exempt Participants,
the Employer may not specify a different order of priority in the Adoption
Agreement unless the Participant's surviving spouse will be first in the
different order of priority. The Advisory Committee will direct the Trustee as
to the method and to whom the Trustee will make payment under this Section 8.02.
8.01
<PAGE> 48
8.03 PERSONAL DATA TO COMMITTEE. Each Participant and each Beneficiary of
a deceased Participant must furnish to the Advisory Committee such evidence,
data or information as the Advisory 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 Advisory Committee, provided the Advisory
Committee advises each Participant of the effect of his failure to comply with
its request.
8.04 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary of a
deceased Participant must file with the Advisory 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 Advisory Committee, or as shown
on the records of the Employer, binds the Participant, or Beneficiary, for all
purposes of this Plan.
8.05 ASSIGNMENT OR ALIENATION. Subject to Code ss.414(p) relating to
qualified domestic relations orders, neither a Participant nor a Beneficiary may
anticipate, assign or alienate (either at law or in equity) any benefit provided
under the Plan, and the Trustee will 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.
8.06 NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the time
prescribed by ERISA and the applicable regulations, must furnish all
Participants and Beneficiaries 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.
8.07 LITIGATION AGAINST THE TRUST. A court of competent jurisdiction may
authorize any appropriate equitable relief to redress violations of ERISA or to
enforce any provisions of ERISA or the terms of the Plan. A fiduciary may
receive reimbursement of expenses properly and actually incurred in the
performance of his duties with the Plan.
8.08 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, contract or any other instrument under which the
Plan was established or is operated. The Plan Administrator will maintain all of
the items listed in this Section 8.08 in his office, or in such other place or
places as he 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 Plan
Administrator must furnish him with a copy of any item listed in this Section
8.08. The Plan Administrator may make a reasonable charge to the requesting
person for the copy so furnished.
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. A Participant or a
Beneficiary ("Claimant") may file with the Advisory Committee a written claim
for benefits, if the Participant or Beneficiary determines the distribution
procedures of the Plan have not provided him his proper Nonforfeitable Accrued
Benefit. The Advisory Committee must render a decision on the claim within 60
days of the Claimant's written claim for benefits. The Plan Administrator must
provide adequate notice in writing to the Claimant whose claim for benefits
under the Plan the Advisory Committee has denied. The Plan Administrator's
notice to the Claimant must set forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provisions on which the Advisory
Committee based its denial;
(c) A description of any additional material and information needed for
the Claimant to perfect his claim and an explanation of why the material or
information is needed; and
8.02
<PAGE> 49
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Advisory Committee within 75 days
after receipt of the Plan Administrator's notice of denial of benefits. The
Plan Administrator's notice must further advise the Claimant that his
failure to appeal the action to the Advisory Committee in writing within the
75-day period will render the Advisory Committee's determination final,
binding and conclusive.
If the Claimant should appeal to the Advisory 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
Advisory Committee will re-examine all facts related to the appeal and make a
final determination as to whether the denial of benefits is justified under the
circumstances. The Advisory Committee must advise the Claimant of its decision
within 60 days of the Claimant's written request for review, unless special
circumstances (such as a hearing) would make the rendering of a decision within
the 60-day limit unfeasible, but in no event may the Advisory Committee render a
decision respecting a denial for a claim for benefits later than 120 days after
its receipt of a request for review.
The Plan Administrator's notice of denial of benefits must identify the name
of each member of the Advisory Committee and the name and address of the
Advisory Committee member to whom the Claimant may forward his appeal.
8.10 PARTICIPANT DIRECTION OF INVESTMENT. A Participant has the right to
direct the Trustee with respect to the investment or re-investment of the assets
comprising the Participant's individual Account only if the Trustee consents in
writing to permit such direction. If the Trustee consents to Participant
direction of investment, the Trustee will accept direction from each Participant
on a written election form (or other written agreement), as a part of this Plan,
containing such conditions, limitations and other provisions the parties deem
appropriate. The Trustee or, with the Trustee's consent, the Advisory Committee,
may establish written procedures, incorporated specifically as part of this
Plan, relating to Participant direction of investment under this Section 8.10.
The Trustee will maintain a segregated investment Account to the extent a
Participant's Account is subject to Participant selfdirection. The Trustee is
not liable for any loss, nor is the Trustee liable for any breach, resulting
from a Participant's direction of the investment of any part of his directed
Account.
The Advisory Committee, to the extent provided in a written loan policy
adopted under Section 9.04, will treat a loan made to a Participant as a
Participant direction of investment under this Section 8.10. To the extent of
the loan outstanding at any time, the borrowing Participant's Account 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 any principal or
interest paid on the borrowing Participant's loan in an interest bearing
segregated Account on behalf of the borrowing Participant until the Trustee (or
the Named Fiduciary, in the case of a nondiscretionary Trustee) deems it
appropriate to add the amount paid to the Participant's separate Account under
the Plan.
If the Trustee consents to Participant direction of investment of his
Account, the Plan treats any post-December 31, 1981, investment by a
Participant's directed Account in collectibles (as defined by Code ss.408(m)) as
a deemed distribution to the Participant for Federal income tax purposes.
* * * * * * * * * * * * *
8.03
<PAGE> 50
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS
9.01 MEMBERS' COMPENSATION, EXPENSES. The Employer must appoint an
Advisory Committee to administer the Plan, the members of which may or may not
be Participants in the Plan, or which may be the Plan Administrator acting
alone. In the absence of an Advisory Committee appointment, the Plan
Administrator assumes the powers, duties and responsibilities of the Advisory
Committee. The members of the Advisory Committee will serve without compensation
for services as such, but the Employer will pay all expenses of the Advisory
Committee, except to the extent the Trust properly pays for such expenses,
pursuant to Article X.
9.02 TERM. Each member of the Advisory Committee serves until the
appointment of his successor.
9.03 POWERS. In case of a vacancy in the membership of the Advisory
Committee, the remaining members of the Advisory Committee may exercise any and
all of the powers, authority, duties and discretion conferred upon the Advisory
Committee pending the filling of the vacancy.
9.04 GENERAL. The Advisory Committee has the following powers and duties:
(a) To select a Secretary, who need not be a member of the Advisory
Committee;
(b) To determine the rights of eligibility of an Employee to participate
in the Plan, the value of a Participant's Accrued Benefit and the
Nonforfeitable percentage of each Participant's Accrued Benefit;
(c) To adopt rules of procedure and regulations necessary for the proper
and efficient administration of the Plan provided the rules are not
inconsistent with the terms of this Agreement;
(d) To construe and enforce the terms of the Plan and the rules and
regulations it adopts, including interpretation of the Plan documents and
documents related to the Plan's operation;
(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 service of agents whom it may deem advisable to assist
it with the performance of its duties;
(i) To engage the services of an Investment Manager or Managers (as
defined in ERISA ss.3(38)), each of whom will have full power and authority
to manage, acquire or dispose (or direct the Trustee with respect to
acquisition or disposition) of any Plan asset under its control;
(j) To establish, in its sole discretion, a nondiscriminatory policy (see
Section 9.04(A)) which the Trustee must observe in making loans, if any, to
Participants and Beneficiaries; and
(k) To establish and maintain a funding standard account and to make
credits and charges to the account to the extent required by and in
accordance with the provisions of the Code.
The Advisory Committee must exercise all of its powers, duties and
discretion under the Plan in a uniform and nondiscriminatory manner.
9.01
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(A) Loan Policy. If the Advisory Committee adopts a loan policy, pursuant to
paragraph (j), the loan policy must be a written document and must include:
(1) the identity of the person or positions authorized to administer the
participant loan program; (2) a procedure for applying for the loan; (3) the
criteria for approving or denying a loan; (4) the limitations, if any, on the
types and amounts of loans available; (5) the procedure for determining a
reasonable rate of interest; (6) the types of collateral which may secure the
loan; and (7) the events constituting default and the steps the Plan will take
to preserve plan assets in the event of default. This Section 9.04 specifically
incorporates a written loan policy as part of the Employer's Plan.
9.05 FUNDING POLICY. The Advisory Committee will review, not less often
than annually, all pertinent Employee information and Plan data in order to
establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Advisory Committee must
communicate periodically, as it deems appropriate, to the Trustee and to any
Plan Investment Manager the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.
9.06 MANNER OF ACTION. The decision of a majority of the members appointed
and qualified controls.
9.07 AUTHORIZED REPRESENTATIVE. The Advisory Committee may authorize any
one of its members, or its Secretary, to sign on its behalf any notices,
directions, applications, certificates, consents, approvals, waivers, letters or
other documents. The Advisory Committee must evidence this authority by an
instrument signed by all members and filed with the Trustee.
9.08 INTERESTED MEMBER. No member of the Advisory Committee may decide or
determine any matter concerning the distribution, nature or method of settlement
of his own benefits under the Plan, except in exercising an election available
to that member in his capacity as a Participant, unless the Plan Administrator
is acting alone in the capacity of the Advisory Committee.
9.09 INDIVIDUAL ACCOUNTS. The Advisory Committee will maintain, or direct
the Trustee to maintain, a separate Account, or multiple Accounts, in the name
of each Participant to reflect the Participant's Accrued Benefit under the Plan.
If a Participant re-enters the Plan subsequent to his having a Forfeiture Break
in Service, the Advisory Committee, or the Trustee, must maintain a separate
Account for the Participant's pre-Forfeiture Break in Service Accrued Benefit
and a separate Account for his post-Forfeiture Break in Service Accrued Benefit,
unless the Participant's entire Accrued Benefit under the Plan is 100%
Nonforfeitable.
The Advisory Committee will make its allocations, or request the Trustee to
make its allocations, to the Accounts of the Participants in accordance with the
provisions of Section 9.11. The Advisory Committee may direct the Trustee to
maintain a temporary segregated investment Account in the name of a Participant
to prevent a distortion of income, gain or loss allocations under Section 9.11.
The Advisory Committee must maintain records of its activities.
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
Participant's Accrued Benefit consists of that proportion of the net worth (at
fair market value) of the Employer's Trust Fund which the net credit balance in
his Account (exclusive of the cash value of incidental benefit insurance
contracts) bears to the total net credit balance in the Accounts (exclusive of
the cash value of the incidental benefit insurance contracts) of all
Participants plus the cash surrender value of any incidental benefit insurance
contracts held by the Trustee on the Participant's life.
For purposes of a distribution under the Plan, the value of a Participant's
Accrued Benefit is its value as of the valuation date immediately preceding the
date of the distribution. Any distribution (other than a distribution from a
segregated Account) made to a Participant (or to his Beneficiary) more than 90
days after the most recent valuation date may include interest on the amount of
the distribution as an expense of the Trust Fund. The interest, if any, accrues
from such valuation date to the date of the distribution at the rate established
in the Employer's Adoption Agreement.
9.02
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9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. A "valuation
date" under this Plan is each Accounting Date and each interim valuation date
determined under Section 10.14. As of each valuation date the Advisory Committee
must adjust Accounts to reflect net income, gain or loss since the last
valuation date. The valuation period is the period beginning the day after the
last valuation date and ending on the current valuation date.
(A) Trust Fund Accounts. The allocation provisions of this paragraph apply to
all Participant Accounts other than segregated investment Accounts. The Advisory
Committee first will adjust the Participant Accounts, as those Accounts stood at
the beginning of the current valuation period, by reducing the Accounts for any
forfeitures arising under Section 5.09 or under Section 9.14, for amounts
charged during the valuation period to the Accounts in accordance with Section
9.13 (relating to distributions) and Section 11.01 (relating to insurance
premiums), and for the cash value of incidental benefit insurance contracts. The
Advisory Committee then, subject to the restoration allocation requirements of
Section 5.04 or of Section 9.14, will allocate the net income, gain or loss pro
rata to the adjusted Participant Accounts. The allocable net income, gain or
loss is the net income (or net loss), including the increase or decrease in the
fair market value of assets, since the last valuation date.
(B) Segregated investment Accounts. A segregated investment Account receives
all income it earns and bears all expense or loss it incurs. The Advisory
Committee will adopt uniform and nondiscriminatory procedures for determining
income or loss of a segregated investment Account in a manner which reasonably
reflects investment directions relating to pooled investments and investment
directions occurring during a valuation period. As of the valuation date, the
Advisory Committee must reduce a segregated Account for any forfeiture arising
under Section 5.09 after the Advisory Committee has made all other allocations,
changes or adjustments to the Account for the Plan Year.
(C) Additional rules. An Excess Amount or suspense account described in Part 2
of Article III does not share in the allocation of net income, gain or loss
described in this Section 9.11. If the Employer maintains its Plan under a Code
ss.401(k) Adoption Agreement, the Employer may specify in its Adoption Agreement
alternate valuation provisions authorized by that Adoption Agreement. This
Section 9.11 applies solely to the allocation of net income, gain or loss of the
Trust. The Advisory Committee will allocate the Employer contributions and
Participant forfeitures, if any, in accordance with Article III.
9.12 INDIVIDUAL STATEMENT. As soon as practicable after the Accounting
Date of each Plan Year, but within the time prescribed by ERISA and the
regulations under ERISA, the Plan Administrator will deliver to each Participant
(and to each Beneficiary) a statement reflecting the condition of his Accrued
Benefit in the Trust as of that date and such other information ERISA requires
be furnished the Participant or Beneficiary. No Participant, except a member of
the Advisory Committee, has the right to inspect the records reflecting the
Account of any other Participant.
9.13 ACCOUNT CHARGED. The Advisory Committee will charge a Participant's
Account for all distributions made from that Account to the Participant, to his
Beneficiary or to an alternate payee. The Advisory Committee also will charge a
Participant's Account for any administrative expenses incurred by the Plan
directly related to that Account.
9.14 UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require either the
Trustee or the Advisory Committee to search for, or to ascertain the whereabouts
of, any Participant or Beneficiary. At the time the Participant's or
Beneficiary's benefit becomes distributable under Article VI, the Advisory
Committee, by certified or registered mail addressed to his last known address
of record with the Advisory Committee or the Employer, must notify any
Participant, or Beneficiary, that he is entitled to a distribution under this
Plan. The notice must quote the provisions of this Section 9.14 and otherwise
must comply with the notice requirements of Article VI. If the Participant, or
Beneficiary, fails to claim his distributive share or make his whereabouts known
in writing to the Advisory Committee within 6 months from the date of mailing of
the notice, the Advisory Committee will treat the Participant's or Beneficiary's
unclaimed payable Accrued Benefit as forfeited and will reallocate the unclaimed
payable Accrued Benefit in accordance with Section 3.05. A forfeiture under this
paragraph will occur
9.03
<PAGE> 53
at the end of the notice period or, if later, the earliest date applicable
Treasury regulations would permit the forfeiture. Pending forfeiture, the
Advisory Committee, following the expiration of the notice period, may direct
the Trustee to segregate the Nonforfeitable Accrued Benefit in a segregated
Account and to invest that segregated Account in Federally insured interest
bearing savings accounts or time deposits (or in a combination of both), or in
other fixed income investments.
If a Participant or Beneficiary who has incurred a forfeiture of his
Accrued Benefit under the provisions of the first paragraph of this Section 9.14
makes a claim, at any time, for his forfeited Accrued Benefit, the Advisory
Committee must restore the Participant's or Beneficiary's forfeited Accrued
Benefit to the same dollar amount as the dollar amount of the Accrued Benefit
forfeited, unadjusted for any gains or losses occurring subsequent to the date
of the forfeiture. The Advisory Committee will make the restoration during the
Plan Year in which the Participant or Beneficiary makes the claim, first from
the amount, if any, of Participant forfeitures the Advisory Committee otherwise
would allocate for the Plan Year, then from the amount, if any, of the Trust
Fund net income or gain for the Plan Year and then from the amount, or
additional amount, the Employer contributes to enable the Advisory Committee to
make the required restoration. The Advisory Committee must direct the Trustee to
distribute the Participant's or Beneficiary's restored Accrued Benefit to him
not later than 60 days after the close of the Plan Year in which the Advisory
Committee restores the forfeited Accrued Benefit. The forfeiture provisions of
this Section 9.14 apply solely to the Participant's or to the Beneficiary's
Accrued Benefit derived from Employer contributions.
* * * * * * * * * * * * * * *
9.04
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ARTICLE X
CUSTODIAN/TRUSTEE, POWERS AND DUTIES
10.01 ACCEPTANCE. The Trustee accepts the Trust created under the Plan and
agrees to perform the obligations imposed. The Trustee must provide bond for the
faithful performance of its duties under the Trust to the extent required by
ERISA.
10.02 RECEIPT OF CONTRIBUTIONS. The Trustee is accountable to the Employer
for the funds contributed to it by the Employer, but does not have any duty to
see that the contributions received comply with the provisions of the Plan. The
Trustee is not obliged to collect any contributions from the Employer, nor is
obliged to see that funds deposited with it are deposited according to the
provisions of the Plan.
10.03 INVESTMENT POWERS.
[A] Discretionary Trustee Designation. If the Employer, in Adoption Agreement
Section 1.02, designates the Trustee to administer the Trust as a discretionary
Trustee, then the Trustee has full discretion and authority with regard to the
investment of the Trust Fund, except with respect to a Plan asset under the
control or direction of a properly appointed Investment Manager or with respect
to a Plan asset properly subject to Employer, Participant or Advisory Committee
direction of investment. The Trustee must coordinate its investment policy with
Plan financial needs as communicated to it by the Advisory Committee. The
Trustee is authorized and empowered, but not by way of limitation, with the
following powers, rights and duties:
(a) To invest any part or all of the Trust Fund in any common or preferred
stocks, open-end or closed-end mutual funds, put and call options traded on
a national exchange, United States retirement plan bonds, corporate bonds,
debentures, convertible debentures, commercial paper, U.S. Treasury bills,
U.S. Treasury notes and other direct or indirect obligations of the United
States Government or its agencies, improved or unimproved real estate
situated in the United States, limited partnerships, insurance contracts of
any type, mortgages, notes or other property of any kind, real or personal,
to buy or sell options on common stock on a nationally recognized exchange
with or without holding the underlying common stock, to buy and sell
commodities, commodity options and contracts for the future delivery of
commodities, and to make any other investments the Trustee deems
appropriate, as a prudent man would do under like circumstances with due
regard for the purposes of this Plan. Any investment made or retained by
the Trustee in good faith is proper but must be of a kind constituting a
diversification considered by law suitable for trust investments.
(b) To retain in cash so much of the Trust Fund as it may deem advisable
to satisfy liquidity needs of the Plan and to deposit any cash held in the
Trust Fund in a bank account at reasonable interest.
(c) To invest, if the Trustee is a bank or similar financial institution
supervised by the United States or by a State, in any type of deposit of
the Trustee (or of a bank related to the Trustee within the meaning of
Code ss.414(b)) at a reasonable rate of interest or in a common trust fund,
as described in Code ss.584, or in a collective investment fund, the
provisions of which govern the investment of such assets and which the Plan
incorporates by this reference, which the Trustee (or its affiliate, as
defined in Code ss.1504) maintains exclusively for the collective
investment of money contributed by the bank (or the affiliate) in its
capacity as trustee and which conforms to the rules of the Comptroller of
the Currency.
(d) To manage, sell, contract to sell, grant options to purchase, convey,
exchange, transfer, abandon, improve, repair, insure, lease for any term
even though commencing in the future or extending beyond the term of the
Trust, and otherwise deal with all property, real or personal, in such
manner, for such considerations and on such terms and conditions as the
Trustee decides.
10.01
<PAGE> 55
(e) To credit and distribute the Trust as directed by the Advisory
Committee. The Trustee is not obliged to inquire as to whether any payee or
distributee is entitled to any payment or whether the distribution is
proper or within the terms of the Plan, or as to the manner of making any
payment or distribution. The Trustee is accountable only to the Advisory
Committee for any payment or distribution made by it in good faith on the
order or direction of the Advisory Committee.
(f) To borrow money, to assume indebtedness, extend mortgages and encumber
by mortgage or pledge.
(g) To compromise, contest, arbitrate or abandon claims and demands, in
its discretion.
(h) To have with respect to the Trust all of the rights of an individual
owner, including the power to give proxies, to participate in any voting
trusts, mergers, consolidations or liquidations, and to exercise or sell
stock subscriptions or conversion rights.
(i) To lease for oil, gas and other mineral purposes and to create mineral
severances by grant or reservation; to pool or unitize interests in oil,
gas and other minerals; and to enter into operating agreements and to
execute division and transfer orders.
(j) To hold any securities or other property in the name of the Trustee or
its nominee, with depositories or agent depositories or in another form as
it may deem best, with or without disclosing the trust relationship.
(k) To perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management, investment and
distribution of the Trust.
(l) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment or
delivery of the funds or property until final adjudication is made by a
court of competent jurisdiction.
(m) To file all tax returns required of the Trustee.
(n) To furnish to the Employer, the Plan Administrator and the Advisory
Committee an annual statement of account showing the condition of the Trust
Fund and all investments, receipts, disbursements and other transactions
effected by the Trustee during the Plan Year covered by the statement and
also stating the assets of the Trust held at the end of the Plan Year,
which accounts are conclusive on all persons, including the Employer, the
Plan Administrator and the Advisory Committee, except as to any act or
transaction concerning which the Employer, the Plan Administrator or the
Advisory Committee files with the Trustee written exceptions or objections
within 90 days after the receipt of the accounts or for which ERISA
authorizes a longer period within which to object.
(o) To begin, maintain or defend any litigation necessary in connection
with the administration of the Plan, except that the Trustee is not obliged
or required to do so unless indemnified to its satisfaction.
[B] Nondiscretionary Trustee Designation/Appointment of Custodian. If the
Employer, in its Adoption Agreement Section 1.02, designates the Trustee to
administer the Trust as a nondiscretionary Trustee, then the Trustee will not
have any discretion or authority with regard to the investment of the Trust
Fund, but must act solely as a directed trustee of the funds contributed to it.
A nondiscretionary Trustee, as directed trustee of the funds held by it under
the Employer's Plan, is authorized and empowered, by way of limitation, with the
following powers, rights and duties, each of which the nondiscretionary Trustee
exercises solely as directed trustee in accordance with the written direction of
the Named Fiduciary (except to the extent a Plan asset is subject to the control
and management of a properly appointed Investment Manager or subject to Advisory
Committee or Participant direction of investment):
(a) To invest any part or all of the Trust Fund in any common or preferred
stocks, open-end or closed-end
10.02
<PAGE> 56
mutual funds, put and call options traded on a national exchange, United
States retirement plan bonds, corporate bonds, debentures, convertible
debentures, commercial paper, U.S. Treasury bills, U.S. Treasury notes and
other direct or indirect obligations of the United States Government or its
agencies, improved or unimproved real estate situated in the United States,
limited partnerships, insurance contracts of any type, mortgages, notes or
other property of any kind, real or personal, to buy or sell options on
common stock on a nationally recognized options exchange with or without
holding the underlying common stock, to buy and sell commodities, commodity
options and contracts for the future delivery of commodities, and to make
any other investments the Named Fiduciary deems appropriate.
(b) To retain in cash so much of the Trust Fund as the Named Fiduciary may
direct in writing to satisfy liquidity needs of the Plan and to deposit any
cash held in the Trust Fund in a bank account at reasonable interest,
including, specific authority to invest in any type of deposit of the
Trustee (or of a bank related to the Trustee within the meaning of
Code ss.414(b)) at a reasonable rate of interest.
(c) To sell, contract to sell, grant options to purchase, convey,
exchange, transfer, abandon, improve, repair, insure, lease for any term
even though commencing in the future or extending beyond the term of the
Trust, and otherwise deal with all property, real or personal, in such
manner, for such considerations and on such terms and conditions as the
Named Fiduciary directs in writing.
(d) To credit and distribute the Trust as directed by the Advisory
Committee. The Trustee is not obliged to inquire as to whether any payee or
distributee is entitled to any payment or whether the distribution is
proper or within the terms of the Plan, or as to the manner of making any
payment or distribution. The Trustee is accountable only to the Advisory
Committee for any payment or distribution made by it in good faith on the
order or direction of the Advisory Committee.
(e) To borrow money, to assume indebtedness, extend mortgages and encumber
by mortgage or pledge.
(f) To have with respect to the Trust all of the rights of an individual
owner, including the power to give proxies, to participate in any voting
trusts, mergers, consolidations or liquidations, and to exercise or sell
stock subscriptions or conversion rights, provided the exercise of any such
powers is in accordance with and at the written direction of the Named
Fiduciary.
(g) To lease for oil, gas and other mineral purposes and to create mineral
severances by grant or reservation; to pool or unitize interests in oil,
gas and other minerals; and to enter into operating agreements and to
execute division and transfer orders, provided the exercise of any such
powers is in accordance with and at the written direction of the Named
Fiduciary.
(h) To hold any securities or other property in the name of the
nondiscretionary Trustee or its nominee, with depositories or agent
depositories or in another form as the Named Fiduciary may deem best, with
or without disclosing the custodial relationship.
(i) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment or
delivery of the funds or property until a court of competent jurisdiction
makes final adjudication.
(j) To file all tax returns required of the Trustee.
10.03
<PAGE> 57
(k) To furnish to the Named Fiduciary, the Employer, the Plan
Administrator and the Advisory Committee an annual statement of account
showing the condition of the Trust Fund and all investments, receipts,
disbursements and other transactions effected by the nondiscretionary
Trustee during the Plan Year covered by the statement and also stating the
assets of the Trust held at the end of the Plan Year, which accounts are
conclusive on all persons, including the Named Fiduciary, the Employer, the
Plan Administrator and the Advisory Committee, except as to any act or
transaction concerning which the Named Fiduciary, the Employer, the Plan
Administrator or the Advisory Committee files with the nondiscretionary
Trustee written exceptions or objections within 90 days after the receipt
of the accounts or for which ERISA authorizes a longer period within which
to object.
(l) To begin, maintain or defend any litigation necessary in connection
with the administration of the Plan, except that the Trustee is not obliged
or required to do so unless indemnified to its satisfaction.
Appointment of Custodian. The Employer may appoint a Custodian under the
Plan, the acceptance by the Custodian indicated on the execution page of the
Employer's Adoption Agreement. If the Employer appoints a Custodian, the
Employer's Plan must have a discretionary Trustee, as described in Section
10.03[A]. A Custodian has the same powers, rights and duties as a
nondiscretionary Trustee, as described in this Section 10.03[B]. The Custodian
accepts the terms of the Plan and Trust by executing the Employer's Adoption
Agreement. Any reference in the Plan to a Trustee also is a reference to a
Custodian where the context of the Plan dictates. A limitation of the Trustee's
liability by Plan provision also acts as a limitation of the Custodian's
liability. Any action taken by the Custodian at the discretionary Trustee's
direction satisfies any provision in the Plan referring to the Trustee's taking
that action.
Modification of Powers/Limited Responsibility. The Employer and the
Custodian or nondiscretionary Trustee, by letter agreement, may limit the powers
of the Custodian or nondiscretionary Trustee to any combination of powers listed
within this Section 10.03[B]. If there is a Custodian or a nondiscretionary
Trustee under the Employer's Plan, then the Employer, in adopting this Plan
acknowledges the Custodian or nondiscretionary Trustee has no discretion with
respect to the investment or re-investment of the Trust Fund and that the
Custodian or nondiscretionary Trustee is acting solely as custodian or as
directed trustee with respect to the assets comprising the Trust Fund.
[C] Limitation of Powers of Certain Custodians. If a Custodian is a bank which,
under its governing state law, does not possess trust powers, then paragraphs
(a), (c), (e), (f), (g) of Section 10.03[B], Section 10.16 and Article XI do not
apply to that bank and that bank only has the power and authority to exercise
the remaining powers, rights and duties under Section 10.03[B].
[D] Named Fiduciary/Limitation of Liability of Nondiscretionary Trustee or
Custodian. Under a nondiscretionary Trustee designation, the Named Fiduciary
under the Employer's Plan has the sole responsibility for the management and
control of the Employer's Trust Fund, except with respect to a Plan asset under
the control or direction of a properly appointed Investment Manager or with
respect to a Plan asset properly subject to Participant or Advisory Committee
direction of investment. If the Employer appoints a Custodian, the Named
Fiduciary is the discretionary Trustee. Under a nondiscretionary Trustee
designation, unless the Employer designates in writing another person or persons
to serve as Named Fiduciary, the Named Fiduciary under the Plan is the president
of a corporate Employer, the managing partner of a partnership Employer or the
sole proprietor, as appropriate. The Named Fiduciary will exercise its
management and control of the Trust Fund through its written direction to the
nondiscretionary Trustee or to the Custodian, whichever applies to the
Employer's Plan.
10.04
<PAGE> 58
The nondiscretionary Trustee or Custodian has no duty to review or to make
recommendations regarding investments made at the written direction of the Named
Fiduciary. The nondiscretionary Trustee or Custodian must retain any investment
obtained at the written direction of the Named Fiduciary until further directed
in writing by the Named Fiduciary to dispose of such investment. The
nondiscretionary Trustee or Custodian is not liable in any manner or for any
reason for making, retaining or disposing of any investment pursuant to any
written direction described in this paragraph. Furthermore, the Employer agrees
to indemnify and to hold the nondiscretionary Trustee or Custodian harmless from
any damages, costs or expenses, including reasonable counsel fees, which the
nondiscretionary Trustee or Custodian may incur as a result of any claim
asserted against the nondiscretionary Trustee, the Custodian or the Trust
arising out of the nondiscretionary Trustee's or Custodian's compliance with any
written direction described in this paragraph.
[E] Participant Loans. This Section 10.03[E] specifically authorizes the
Trustee to make loans on a nondiscriminatory basis to a Participant or to a
Beneficiary in accordance with the loan policy established by the Advisory
Committee, provided: (1) the loan policy satisfies the requirements of Section
9.04; (2) loans are available to all Participants and Beneficiaries on a
reasonably equivalent basis and are not available in a greater amount for Highly
Compensated Employees than for other Employees; (3) any loan is adequately
secured and bears a reasonable rate of interest; (4) the loan provides for
repayment within a specified time; (5) the default provisions of the note
prohibit offset of the Participant's Nonforfeitable Accrued Benefit prior to the
time the Trustee otherwise would distribute the Participant's Nonforfeitable
Accrued Benefit; (6) the amount of the loan does not exceed (at the time the
Plan extends the loan) the present value of the Participant's Nonforfeitable
Accrued Benefit; and (7) the loan otherwise conforms to the exemption provided
by Code ss.4975(d)(1). If the joint and survivor requirements of Article VI
apply to the Participant, the Participant may not pledge any portion of his
Accrued Benefit as security for a loan made after August 18, 1985, unless,
within the 90 day period ending on the date the pledge becomes effective, the
Participant's spouse, if any, consents (in a manner described in Section 6.05
other than the requirement relating to the consent of a subsequent spouse) to
the security or, by separate consent, to an increase in the amount of security.
If the Employer is an unincorporated trade or business, a Participant who is an
Owner- Employee may not receive a loan from the Plan, unless he has obtained a
prohibited transaction exemption from the Department of Labor. If the Employer
is an "S Corporation," a Participant who is a shareholder-employee (an employee
or an officer) who, at any time during the Employer's taxable year, owns more
than 5%, either directly or by attribution under Code ss.318(a)(1), of the
Employer's outstanding stock may not receive a loan from the Plan, unless he has
obtained a prohibited transaction exemption from the Department of Labor. If the
Employer is not an unincorporated trade or business nor an "S Corporation," this
Section 10.03[E] does not impose any restrictions on the class of Participants
eligible for a loan from the Plan.
[F] Investment in qualifying Employer securities and qualifying Employer real
property. The investment options in this Section 10.03[F] include the ability to
invest in qualifying Employer securities or qualifying Employer real property,
as defined in and as limited by ERISA. If the Employer's Plan is a
Nonstandardized profit sharing plan, it may elect in its Adoption Agreement to
permit the aggregate investments in qualifying Employer securities and in
qualifying Employer real property to exceed 10% of the value of Plan assets.
10.04 RECORDS AND STATEMENTS. The records of the Trustee pertaining to the
Plan must be open to the inspection of the Plan Administrator, the Advisory
Committee and the Employer at all reasonable times and may be audited from time
to time by any person or persons as the Employer, Plan Administrator or Advisory
Committee may specify in writing. The Trustee must furnish the Plan
Administrator or Advisory Committee with whatever information relating to the
Trust Fund the Plan Administrator or Advisory Committee considers necessary.
10.05
<PAGE> 59
10.05 FEES AND EXPENSES FROM FUND. A Trustee or Custodian will receive
reasonable annual compensation as may be agreed upon from time to time between
the Employer and the Trustee or Custodian. No person who is receiving full pay
from the Employer may receive compensation for services as Trustee or as
Custodian. The Trustee will pay from the Trust Fund all fees and expenses
reasonably incurred by the Plan, to the extent such fees and expenses are for
the ordinary and necessary administration and operation of the Plan, unless the
Employer pays such fees and expenses. Any fee or expense paid, directly or
indirectly, by the Employer is not an Employer contribution to the Plan,
provided the fee or expense relates to the ordinary and necessary administration
of the Fund.
10.06 PARTIES TO LITIGATION. Except as otherwise provided by ERISA, no
Participant or Beneficiary is a necessary party or is required to receive notice
of process in any court proceeding involving the Plan, the Trust Fund or any
fiduciary of the Plan. Any final judgment entered in any proceeding will be
conclusive upon the Employer, the Plan Administrator, the Advisory Committee,
the Trustee, Custodian, Participants and Beneficiaries.
10.07 PROFESSIONAL AGENTS. The Trustee may employ and pay from the Trust
Fund reasonable compensation to agents, attorneys, accountants and other persons
to advise the Trustee as in its opinion may be necessary. The Trustee may
delegate to any agent, attorney, accountant or other person selected by it any
non-Trustee power or duty vested in it by the Plan, and the Trustee may act or
refrain from acting on the advice or opinion of any agent, attorney, accountant
or other person so selected.
10.08 DISTRIBUTION OF CASH OR PROPERTY. The Trustee may make distribution
under the Plan in cash or property, or partly in each, at its fair market value
as determined by the Trustee. For purposes of a distribution to a Participant or
to a Participant's designated Beneficiary or surviving spouse, "property"
includes a Nontransferable Annuity Contract, provided the contract satisfies the
requirements of this Plan.
10.09 DISTRIBUTION DIRECTIONS. If no one claims a payment or distribution
made from the Trust, the Trustee must promptly notify the Advisory Committee and
then dispose of the payment in accordance with the subsequent direction of the
Advisory Committee.
10.10 THIRD PARTY/MULTIPLE TRUSTEES. No person dealing with the Trustee is
obligated to see to the proper application of any money paid or property
delivered to the Trustee, or to inquire whether the Trustee has acted pursuant
to any of the terms of the Plan. Each person dealing with the Trustee may act
upon any notice, request or representation in writing by the Trustee, or by the
Trustee's duly authorized agent, and is not liable to any person in so acting.
The certificate of the Trustee that it is acting in accordance with the Plan
will be conclusive in favor of any person relying on the certificate. If more
than two persons act as Trustee, a decision of the majority of such persons
controls with respect to any decision regarding the administration or investment
of the Trust Fund or of any portion of the Trust Fund with respect to which such
persons act as Trustee. However, the signature of only one Trustee is necessary
to effect any transaction on behalf of the Trust.
10.11 RESIGNATION. The Trustee or Custodian may resign its position at any
time by giving 30 days' written notice in advance to the Employer and to the
Advisory Committee. If the Employer fails to appoint a successor Trustee within
60 days of its receipt of the Trustee's written notice of resignation, the
Trustee will treat the Employer as having appointed itself as Trustee and as
having filed its acceptance of appointment with the former Trustee. The
Employer, in its sole discretion, may replace a Custodian. If the Employer does
not replace a Custodian, the discretionary Trustee will assume possession of
Plan assets held by the former Custodian.
10.12 REMOVAL. The Employer, by giving 30 days' written notice in advance
to the Trustee, may remove any Trustee or Custodian. In the event of the
resignation or removal of a Trustee, the Employer must appoint a successor
Trustee if it intends to continue the Plan. If two or more persons hold the
position of Trustee, in the event of the removal of one such person, during any
period the selection of a replacement is pending, or during any period such
person is unable to serve for any reason, the remaining person or persons will
act as the Trustee.
10.06
<PAGE> 60
10.13 INTERIM DUTIES AND SUCCESSOR TRUSTEE. Each successor Trustee succeeds
to the title to the Trust vested in his predecessor by accepting in writing his
appointment as successor Trustee and by filing the acceptance with the former
Trustee and the Advisory Committee without the signing or filing of any further
statement. The resigning or removed Trustee, upon receipt of acceptance in
writing of the Trust by the successor Trustee, must execute all documents and do
all acts necessary to vest the title of record in any successor Trustee. Each
successor Trustee has and enjoys all of the powers, both discretionary and
ministerial, conferred under this Agreement upon his predecessor. A successor
Trustee is not personally liable for any act or failure to act of any
predecessor Trustee, except as required under ERISA. With the approval of the
Employer and the Advisory Committee, a successor Trustee, with respect to the
Plan, may accept the account rendered and the property delivered to it by a
predecessor Trustee without incurring any liability or responsibility for so
doing.
10.14 VALUATION OF TRUST. The Trustee must value the Trust Fund as of each
Accounting Date to determine the fair market value of each Participant's Accrued
Benefit in the Trust. The Trustee also must value the Trust Fund on such other
valuation dates as directed in writing by the Advisory Committee or as required
by the Employer's Adoption Agreement.
10.15 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER, ANCILLARY
TRUSTEE OR INDEPENDENT FIDUCIARY APPOINTED. The Trustee is not liable for the
acts or omissions of any Investment Manager the Advisory Committee may appoint,
nor is the Trustee under any obligation to invest or otherwise manage any asset
of the Plan which is subject to the management of a properly appointed
Investment Manager. The Advisory Committee, the Trustee and any properly
appointed Investment Manager may execute a letter agreement as a part of this
Plan delineating the duties, responsibilities and liabilities of the Investment
Manager with respect to any part of the Trust Fund under the control of the
Investment Manager.
The limitation on liability described in this Section 10.15 also applies to
the acts or omissions of any ancillary trustee or independent fiduciary properly
appointed under Section 10.17 of the Plan. However, if a discretionary Trustee,
pursuant to the delegation described in Section 10.17 of the Plan, appoints an
ancillary trustee, the discretionary Trustee is responsible for the periodic
review of the ancillary trustee's actions and must exercise its delegated
authority in accordance with the terms of the Plan and in a manner consistent
with ERISA. The Employer, the discretionary Trustee and an ancillary trustee may
execute a letter agreement as a part of this Plan delineating any
indemnification agreement between the parties.
10.16 INVESTMENT IN GROUP TRUST FUND. The Employer, by adopting this Plan,
specifically authorizes the Trustee to invest all or any portion of the assets
comprising the Trust Fund in any group trust fund which at the time of the
investment provides for the pooling of the assets of plans qualified under
Code ss.401(a). This authorization applies solely to a group trust fund exempt
from taxation under Code ss.501(a) and the trust agreement of which satisfies
the requirements of Revenue Ruling 81-100. The provisions of the group trust
fund agreement, as amended from time to time, are by this reference incorporated
within this Plan and Trust. The provisions of the group trust fund will govern
any investment of Plan assets in that fund. The Employer must specify in an
attachment to its adoption agreement the group trust fund(s) to which this
authorization applies. If the Trustee is acting as a nondiscretionary Trustee,
the investment in the group trust fund is available only in accordance with a
proper direction, by the Named Fiduciary, in accordance with Section 10.03[B].
Pursuant to paragraph (c) of Section 10.03[A] of the Plan, a Trustee has the
authority to invest in certain common trust funds and collective investment
funds without the need for the authorizing addendum described in this
Section 10.16.
Furthermore, at the Employer's direction, the Trustee, for collective
investment purposes, may combine into one trust fund the Trust created under
this Plan with the Trust created under any other qualified retirement plan the
Employer maintains. However, the Trustee must maintain separate records of
account for the assets of each Trust in order to reflect properly each
Participant's Accrued Benefit under the plan(s) in which he is a Participant.
10.07
<PAGE> 61
10.17 APPOINTMENT OF ANCILLARY TRUSTEE OR INDEPENDENT FIDUCIARY. The
Employer, in writing, may appoint any person in any State to act as ancillary
trustee with respect to a designated portion of the Trust Fund, subject to the
consent required under Section 1.02 if the Master Plan Sponsor is a financial
institution. An ancillary trustee must acknowledge in writing its acceptance of
the terms and conditions of its appointment as ancillary trustee and its
fiduciary status under ERISA. The ancillary trustee has the rights, powers,
duties and discretion as the Employer may delegate, subject to any limitations
or directions specified in the instrument evidencing appointment of the
ancillary trustee and to the terms of the Plan or of ERISA. The investment
powers delegated to the ancillary trustee may include any investment powers
available under Section 10.03 of the Plan including the right to invest any
portion of the assets of the Trust Fund in a common trust fund, as described in
Code ss.584, or in any collective investment fund, the provisions of which
govern the investment of such assets and which the Plan incorporates by this
reference, but only if the ancillary trustee is a bank or similar financial
institution supervised by the United States or by a State and the ancillary
trustee (or its affiliate, as defined in Code ss.1504) maintains the common
trust fund or collective investment fund exclusively for the collective
investment of money contributed by the ancillary trustee (or its affiliate) in a
trustee capacity and which conforms to the rules of the Comptroller of the
Currency. The Employer also may appoint as an ancillary trustee, the trustee of
any group trust fund designated for investment pursuant to the provisions of
Section 10.16 of the Plan.
The ancillary trustee may resign its position at any time by providing at
least 30 days' advance written notice to the Employer, unless the Employer
waives this notice requirement. The Employer, in writing, may remove an
ancillary trustee at any time. In the event of resignation or removal, the
Employer may appoint another ancillary trustee, return the assets to the control
and management of the Trustee or receive such assets in the capacity of
ancillary trustee. The Employer may delegate its responsibilities under this
Section 10.17 to a discretionary Trustee under the Plan, but not to a
nondiscretionary Trustee or to a Custodian, subject to the acceptance by the
discretionary Trustee of that delegation.
If the U.S. Department of Labor ("the Department") requires engagement of an
independent fiduciary to have control or management of all or a portion of the
Trust Fund, the Employer will appoint such independent fiduciary, as directed by
the Department. The independent fiduciary will have the duties, responsibilities
and powers prescribed by the Department and will exercise those duties,
responsibilities and powers in accordance with the terms, restrictions and
conditions established by the Department and, to the extent not inconsistent
with ERISA, the terms of the Plan. The independent fiduciary must accept its
appointment in writing and must acknowledge its status as a fiduciary of the
Plan.
* * * * * * * * * * * * *
10.08
<PAGE> 62
ARTICLE XI
PROVISIONS RELATING TO INSURANCE AND INSURANCE COMPANY
11.01 INSURANCE BENEFIT. The Employer may elect to provide incidental life
insurance benefits for insurable Participants who consent to life insurance
benefits by signing the appropriate insurance company application form. The
Trustee will not purchase any incidental life insurance benefit for any
Participant prior to an allocation to the Participant's Account. At an insured
Participant's written direction, the Trustee will use all or any portion of the
Participant's nondeductible voluntary contributions, if any, to pay insurance
premiums covering the Participant's life. This Section 11.01 also authorizes the
purchase of life insurance, for the benefit of the Participant, on the life of a
family member of the Participant or on any person in whom the Participant has an
insurable interest. However, if the policy is on the joint lives of the
Participant and another person, the Trustee may not maintain that policy if that
other person predeceases the Participant.
The Employer will direct the Trustee as to the insurance company and
insurance agent through which the Trustee is to purchase the insurance
contracts, the amount of the coverage and the applicable dividend plan. Each
application for a policy, and the policies themselves, must designate the
Trustee as sole owner, with the right reserved to the Trustee to exercise any
right or option contained in the policies, subject to the terms and provisions
of this Agreement. The Trustee must be the named beneficiary for the Account of
the insured Participant. Proceeds of insurance contracts paid to the
Participant's Account under this Article XI are subject to the distribution
requirements of Article V and of Article VI. The Trustee will not retain any
such proceeds for the benefit of the Trust.
The Trustee will charge the premiums on any incidental benefit insurance
contract covering the life of a Participant against the Account of that
Participant. The Trustee will hold all incidental benefit insurance contracts
issued under the Plan as assets of the Trust created under the Plan.
(A) Incidental insurance benefits. The aggregate of life insurance premiums
paid for the benefit of a Participant, at all times, may not exceed the
following percentages of the aggregate of the Employer's contributions allocated
to any Participant's Account: (i) 49% in the case of the purchase of ordinary
life insurance contracts; or (ii) 25% in the case of the purchase of term life
insurance or universal life insurance contracts. If the Trustee purchases a
combination of ordinary life insurance contract(s) and term life insurance or
universal life insurance contract(s), then the sum of one-half of the premiums
paid for the ordinary life insurance contract(s) and the premiums paid for the
term life insurance or universal life insurance contract(s) may not exceed 25%
of the Employer contributions allocated to any Participant's Account.
(B) Exception for certain profit sharing plans. If the Employer's Plan is a
profit sharing plan, the incidental insurance benefits requirement does not
apply to the Plan if the Plan purchases life insurance benefits only from
Employer contributions accumulated in the Participant's Account for at least two
years (measured from the allocation date).
11.02 LIMITATION ON LIFE INSURANCE PROTECTION. The Trustee will not
continue any life insurance protection for any Participant beyond his annuity
starting date (as defined in Article VI). If the Trustee holds any incidental
benefit insurance contract(s) for the benefit of a Participant when he
terminates his employment (other than by reason of death), the Trustee must
proceed as follows:
(a) If the entire cash value of the contract(s) is vested in the
terminating Participant, or if the contract(s) will have no cash value at
the end of the policy year in which termination of employment occurs, the
Trustee will transfer the contract(s) to the Participant endorsed so as to
vest in the transferee all right, title and interest to the contract(s),
free and clear of the Trust; subject however, to restrictions as to
surrender or payment of benefits as the issuing insurance company may
permit and as the Advisory Committee directs;
11.01
<PAGE> 63
(b) If only part of the cash value of the contract(s) is vested in the
terminating Participant, the Trustee, to the extent the Participant's
interest in the cash value of the contract(s) is not vested, may adjust the
Participant's interest in the value of his Account attributable to Trust
assets other than incidental benefit insurance contracts and proceed as in
(a), or the Trustee must effect a loan from the issuing insurance company on
the sole security of the contract(s) for an amount equal to the difference
between the cash value of the contract(s) at the end of the policy year in
which termination of employment occurs and the amount of the cash value that
is vested in the terminating Participant, and the Trustee must transfer the
contract(s) endorsed so as to vest in the transferee all right, title and
interest to the contract(s), free and clear of the Trust; subject however,
to the restrictions as to surrender or payment of benefits as the issuing
insurance company may permit and the Advisory Committee directs;
(c) If no part of the cash value of the contract(s) is vested in the
terminating Participant, the Trustee must surrender the contract(s) for cash
proceeds as may be available.
In accordance with the written direction of the Advisory Committee, the
Trustee will make any transfer of contract(s) under this Section 11.02 on the
Participant's annuity starting date (or as soon as administratively practicable
after that date). The Trustee may not transfer any contract under this Section
11.02 which contains a method of payment not specifically authorized by Article
VI or which fails to comply with the joint and survivor annuity requirements, if
applicable, of Article VI. In this regard, the Trustee either must convert such
a contract to cash and distribute the cash instead of the contract, or before
making the transfer, require the issuing company to delete the unauthorized
method of payment option from the contract.
11.03 DEFINITIONS. For purposes of this Article XI:
(a) "Policy" means an ordinary life insurance contract or a term life
insurance contract issued by an insurer on the life of a Participant.
(b) "Issuing insurance company" is any life insurance company which has
issued a policy upon application by the Trustee under the terms of this
Agreement.
(c) "Contract" or "Contracts" means a policy of insurance. In the event of
any conflict between the provisions of this Plan and the terms of any
contract or policy of insurance issued in accordance with this Article XI,
the provisions of the Plan control.
(d) "Insurable Participant" means a Participant to whom an insurance
company, upon an application being submitted in accordance with the Plan,
will issue insurance coverage, either as a standard risk or as a risk in an
extra mortality classification.
11.04 DIVIDEND PLAN. The dividend plan is premium reduction unless the
Advisory Committee directs the Trustee to the contrary. The Trustee must use all
dividends for a contract to purchase insurance benefits or additional insurance
benefits for the Participant on whose life the insurance company has issued the
contract. Furthermore, the Trustee must arrange, where possible, for all
policies issued on the lives of Participants under the Plan to have the same
premium due date and all ordinary life insurance contracts to contain guaranteed
cash values with as uniform basic options as are possible to obtain. The term
"dividends" includes policy dividends, refunds of premiums and other credits.
11.05 INSURANCE COMPANY NOT A PARTY TO AGREEMENT. No insurance company,
solely in its capacity as an issuing insurance company, is a party to this
Agreement nor is the company responsible for its validity.
11.06 INSURANCE COMPANY NOT RESPONSIBLE FOR TRUSTEE'S ACTIONS. No insurance
company, solely in its capacity as an issuing insurance company, need examine
the terms of this Agreement nor is responsible for any action taken by the
Trustee.
11.02
<PAGE> 64
11.07 INSURANCE COMPANY RELIANCE ON TRUSTEE'S SIGNATURE. For the purpose
of making application to an insurance company and in the exercise of any right
or option contained in any policy, the insurance company may rely upon the
signature of the Trustee and is saved harmless and completely discharged in
acting at the direction and authorization of the Trustee.
11.08 ACQUITTANCE. An insurance company is discharged from all liability
for any amount paid to the Trustee or paid in accordance with the direction of
the Trustee, and is not obliged to see to the distribution or further
application of any moneys it so pays.
11.09 DUTIES OF INSURANCE COMPANY. Each insurance company must keep such
records, make such identification of contracts, funds and accounts within funds,
and supply such information as may be necessary for the proper administration of
the Plan under which it is carrying insurance benefits.
Note: The provisions of this Article XI are not applicable, and the Plan
may not invest in insurance contracts, if a Custodian signatory to the Adoption
Agreement is a bank which has not acquired trust powers from its governing state
banking authority.
* * * * * * * * * * * * * * *
11.03
<PAGE> 65
ARTICLE XII
MISCELLANEOUS
12.01 EVIDENCE. Anyone required to give evidence under the terms of the
Plan may do so by certificate, affidavit, document or other information which
the person to act in reliance may consider pertinent, reliable and genuine, and
to have been signed, made or presented by the proper party or parties. The
Advisory Committee and the Trustee are fully protected in acting and relying
upon any evidence described under the immediately preceding sentence.
12.02 NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the Trustee nor the
Advisory Committee has any obligation or responsibility with respect to any
action required by the Plan to be taken by the Employer, any Participant or
eligible Employee, or for the failure of any of the above persons to act or make
any payment or contribution, or to otherwise provide any benefit contemplated
under this Plan. Furthermore, the Plan does not require the Trustee or the
Advisory Committee to collect any contribution required under the Plan, or to
determine the correctness of the amount of any Employer contribution. Neither
the Trustee nor the Advisory Committee need inquire into or be responsible for
any action or failure to act on the part of the others, or on the part of any
other person who has any responsibility regarding the management, administration
or operation of the Plan, whether by the express terms of the Plan or by a
separate agreement authorized by the Plan or by the applicable provisions of
ERISA. Any action required of a corporate Employer must be by its Board of
Directors or its designate.
12.03 FIDUCIARIES NOT INSURERS. The Trustee, the Advisory Committee, the
Plan Administrator and the Employer in no way guarantee the Trust Fund from loss
or depreciation. The Employer does not guarantee the payment of any money which
may be or becomes due to any person from the Trust Fund. The liability of the
Advisory Committee and the Trustee to make any payment from the Trust Fund at
any time and all times is limited to the then available assets of the Trust.
12.04 WAIVER OF NOTICE. Any person entitled to notice under the Plan may
waive the notice, unless the Code or Treasury regulations prescribe the notice
or ERISA specifically or impliedly prohibits such a waiver.
12.05 SUCCESSORS. The Plan is binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal representatives, upon
the Employer, its successors and assigns, and upon the Trustee, the Advisory
Committee, the Plan Administrator and their successors.
12.06 WORD USAGE. Words used in the masculine also apply to the feminine
where applicable, and wherever the context of the Employer's Plan dictates, the
plural includes the singular and the singular includes the plural.
12.07 STATE LAW. The law of the state of the Employer's principal place of
business (unless otherwise designated in an addendum to the Employer's Adoption
Agreement) will determine all questions arising with respect to the provisions
of this Agreement except to the extent superseded by Federal law.
12.08 EMPLOYER'S RIGHT TO PARTICIPATE. If the Employer's Plan fails to
qualify or to maintain qualification or if the Employer makes any amendment or
modification to a provision of this Plan (other than a proper completion of an
elective provision under the Adoption Agreement or the attachment of an addendum
authorized by the Plan or by the Adoption Agreement), the Employer may no longer
participate under this Master Plan. The Employer also may not participate (or
continue to participate) in this Master Plan if the Trustee or Custodian (or a
change in the Trustee or Custodian) does not satisfy the requirements of
Section 1.02 of the Plan. If the Employer is not entitled to participate under
this Master Plan, the Employer's Plan is an individually-designed plan and the
reliance procedures specified in the applicable Adoption Agreement no longer
will apply.
12.01
<PAGE> 66
12.09 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan, or with
respect to the establishment of the Trust, or any modification or amendment to
the Plan or Trust, or in the creation of any Account, or the payment of any
benefit, gives any Employee, Employee-Participant or any Beneficiary any right
to continue employment, any legal or equitable right against the Employer, or
Employee of the Employer, or against the Trustee, or its agents or employees, or
against the Plan Administrator, except as expressly provided by the Plan, the
Trust, ERISA or by a separate agreement.
* * * * * * * * * * * * * * *
12.02
<PAGE> 67
ARTICLE XIII
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
13.01 EXCLUSIVE BENEFIT. Except as provided under Article III, the
Employer has no beneficial interest in any asset of the Trust and no part of any
asset in the Trust may 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, may any part
of the corpus or income of the Trust Fund, or any asset of the Trust, be (at any
time) used for, or diverted to, purposes other than the exclusive benefit of the
Participants or their Beneficiaries. However, if the Commissioner of Internal
Revenue, upon the Employer's request for initial approval of this Plan,
determines the Trust created under the Plan is not a qualified trust exempt from
Federal income tax, then (and only then) the Trustee, upon written notice from
the Employer, will return the Employer's contributions (and increment
attributable to the contributions) to the Employer. The Trustee must make the
return of the Employer contribution under this Section 13.01 within one year of
a final disposition of the Employer's request for initial approval of the Plan.
The Employer's Plan and Trust will terminate upon the Trustee's return of the
Employer's contributions.
13.02 AMENDMENT BY EMPLOYER. The Employer has the right at any time and
from time to time:
(a) To amend the elective provisions of the Adoption Agreement in any
manner it deems necessary or advisable in order to qualify (or maintain
qualification of) this Plan and the Trust created under it under the
provisions of Code ss.401(a);
(b) To amend the Plan to allow the Plan to operate under a waiver of the
minimum funding requirement; and
(c) To amend this Agreement in any other manner.
No amendment may authorize or permit any of the Trust Fund (other than the
part which is required to pay taxes and administration 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 may cause or permit any portion
of the Trust Fund to revert to or become a property of the Employer. The
Employer also may not make any amendment which affects the rights, duties or
responsibilities of the Trustee, the Plan Administrator or the Advisory
Committee without the written consent of the affected Trustee, the Plan
Administrator or the affected member of the Advisory Committee. The Employer
must make all amendments in writing. Each amendment must state the date to which
it is either retroactively or prospectively effective. See Section 12.08 for the
effect of certain amendments adopted by the Employer.
(A) Code ss.411(d)(6) protected benefits. An amendment (including the adoption
of this Plan as a restatement of an existing plan) may not decrease a
Participant's Accrued Benefit, except to the extent permitted under
Code ss.412(c)(8), and may not reduce or eliminate Code ss.411(d)(6) protected
benefits determined immediately prior to the adoption date (or, if later, the
effective date) of the amendment. An amendment reduces or eliminates
Code ss.411(d)(6) protected benefits if the amendment has the effect of either
(1) eliminating or reducing an early retirement benefit or a retirement-type
subsidy (as defined in Treasury regulations), or (2) except as provided by
Treasury regulations, eliminating an optional form of benefit. The Advisory
Committee must disregard an amendment to the extent application of the amendment
would fail to satisfy this paragraph. If the Advisory Committee must disregard
an amendment because the amendment would violate clause (1) or clause (2), the
Advisory Committee must maintain a schedule of the early retirement option or
other optional forms of benefit the Plan must continue for the affected
Participants.
13.01
<PAGE> 68
13.03 AMENDMENT BY MASTER PLAN SPONSOR. The Master Plan Sponsor (or PPD,
as agent of the Master Plan Sponsor), without the Employer's consent, may amend
the Plan and Trust, from time to time, in order to conform the Plan and Trust to
any requirement for qualification of the Plan and Trust under the Internal
Revenue Code. The Master Plan Sponsor may not amend the Plan in any manner which
would modify any election made by the Employer under the Plan without the
Employer's written consent. Furthermore, the Master Plan Sponsor may not amend
the Plan in any manner which would violate the proscription of Section 13.02. A
Trustee does not have the power to amend the Plan or Trust.
13.04 DISCONTINUANCE. The Employer has the right, at any time, to suspend
or discontinue its contributions under the Plan, and to terminate, at any time,
this Plan and the Trust created under this Agreement. The Plan will terminate
upon the first to occur of the following:
(a) The date terminated by action of the Employer;
(b) The dissolution or merger of the Employer, unless the successor makes
provision to continue the Plan, in which event the successor must
substitute itself as the Employer under this Plan. Any termination of the
Plan resulting from this paragraph (b) is not effective until compliance
with any applicable notice requirements under ERISA.
13.05 FULL VESTING ON TERMINATION. Upon either full or partial termination
of the Plan, or, if applicable, upon complete discontinuance of profit sharing
plan contributions to the Plan, an affected Participant's right to his Accrued
Benefit is 100% Nonforfeitable, irrespective of the Nonforfeitable percentage
which otherwise would apply under Article V.
13.06 MERGER/DIRECT TRANSFER. The Trustee may 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 Code ss.401(a), including an elective transfer,
and to accept the direct transfer of plan assets, or to transfer plan assets, as
a party to any such agreement.
The Trustee may accept a direct transfer of plan assets on behalf of an
Employee prior to the date the Employee satisfies the Plan's eligibility
conditions. If the Trustee accepts such a direct transfer of plan assets, the
Advisory Committee and Trustee must treat the Employee as a Participant for all
purposes of the Plan except the Employee is not a Participant for purposes of
sharing in Employer contributions or Participant forfeitures under the Plan
until he actually becomes a Participant in the Plan.
(A) Elective transfers. The Trustee, after August 9, 1988, may not consent to,
or be a party to a merger, consolidation or transfer of assets with a defined
benefit plan, except with respect to an elective transfer, or unless the
transferred benefits are in the form of paid-up individual annuity contracts
guaranteeing the payment of the transferred benefits in accordance with the
terms of the transferor plan and in a manner consistent with the Code and with
ERISA. The Trustee will hold, administer and distribute the transferred assets
as a part of the Trust Fund and the Trustee must maintain a separate Employer
contribution Account for the benefit of the Employee on whose behalf the Trustee
accepted the transfer in order to reflect the value of the transferred assets.
Unless a transfer of assets to this Plan is an elective transfer, the Plan will
preserve all Code ss.411(d)(6) protected benefits with respect to those
transferred assets, in the manner described in Section 13.02. A transfer is an
elective transfer if: (1) the transfer satisfies the first paragraph of this
Section 13.06; (2) the transfer is voluntary, under a fully informed election by
the Participant; (3) the Participant has an alternative that retains his
Code ss.411(d)(6) protected benefits (including an option to leave his benefit
in the transferor plan, if that plan is not terminating); (4) the transfer
satisfies the applicable spousal consent requirements of the Code; (5) the
transferor plan satisfies the joint and survivor notice requirements of the
Code, if the Participant's transferred benefit is subject to those requirements;
13.02
<PAGE> 69
(6) the Participant has a right to immediate distribution from the transferor
plan, in lieu of the elective transfer; (7) the transferred benefit is at least
the greater of the single sum distribution provided by the transferor plan for
which the Participant is eligible or the present value of the Participant's
accrued benefit under the transferor plan payable at that plan's normal
retirement age; (8) the Participant has a 100% Nonforfeitable interest in the
transferred benefit; and (9) the transfer otherwise satisfies applicable
Treasury regulations. An elective transfer may occur between qualified plans of
any type. Any direct transfer of assets from a defined benefit plan after
August 9, 1988, which does not satisfy the requirements of this paragraph will
render the Employer's Plan individually-designed. See Section 12.08.
(B) Distribution restrictions under Code ss.401(k). If the Plan receives a
direct transfer (by merger or otherwise) of elective contributions (or amounts
treated as elective contributions) under a Plan with a Code ss.401(k)
arrangement, the distribution restrictions of Code ss.ss.401(k)(2) and
(10) continue to apply to those transferred elective contributions.
13.07 TERMINATION.
(A) Procedure. Upon termination of the Plan, the distribution provisions of
Article VI remain operative, with the following exceptions:
(1) if the present value of the Participant's Nonforfeitable Accrued
Benefit does not exceed $3,500, the Advisory Committee will direct the
Trustee to distribute the Participant's Nonforfeitable Accrued Benefit to
him in lump sum as soon as administratively practicable after the Plan
terminates; and
(2) if the present value of the Participant's Nonforfeitable Accrued
Benefit exceeds $3,500, the Participant or the Beneficiary, in addition to
the distribution events permitted under Article VI, may elect to have the
Trustee commence distribution of his Nonforfeitable Accrued Benefit as soon
as administratively practicable after the Plan terminates.
To liquidate the Trust, the Advisory Committee will purchase a deferred
annuity contract for each Participant which protects the Participant's
distribution rights under the Plan, if the Participant's Nonforfeitable Accrued
Benefit exceeds $3,500 and the Participant does not elect an immediate
distribution pursuant to Paragraph (2).
If the Employer's Plan is a profit sharing plan, in lieu of the preceding
provisions of this Section 13.07 and the distribution provisions of Article VI,
the Advisory Committee will direct the Trustee to distribute each Participant's
Nonforfeitable Accrued Benefit, in lump sum, as soon as administratively
practicable after the termination of the Plan, irrespective of the present value
of the Participant's Nonforfeitable Accrued Benefit and whether the Participant
consents to that distribution. This paragraph does not apply if: (1) the Plan
provides an annuity option; or (2) as of the period between the Plan termination
date and the final distribution of assets, the Employer maintains any other
defined contribution plan (other than an ESOP). The Employer, in an addendum to
its Adoption Agreement numbered 13.07, may elect not to have this paragraph
apply.
The Trust will continue until the Trustee in accordance with the direction
of the Advisory Committee has distributed all of the benefits under the Plan. On
each valuation date, the Advisory Committee will credit any part of a
Participant's Accrued Benefit retained in the Trust with its proportionate share
of the Trust's income, expenses, gains and losses, both realized and unrealized.
Upon termination of the Plan, the amount, if any, in a suspense account under
Article III will revert to the Employer, subject to the conditions of the
Treasury regulations permitting such a reversion. A resolution or amendment to
freeze all future benefit accrual but otherwise to continue maintenance of this
Plan, is not a termination for purposes of this Section 13.07.
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(B) Distribution restrictions under Code ss.401(k). If the Employer's Plan
includes a Code ss.401(k) arrangement or if transferred assets described in
Section 13.06 are subject to the distribution restrictions of
Code ss.ss.401(k)(2) and (10), the special distribution provisions of this
Section 13.07 are subject to the restrictions of this paragraph. The portion of
the Participant's Nonforfeitable Accrued Benefit attributable to elective
contributions (or to amounts treated under the Code ss.401(k) arrangement as
elective contributions) is not distributable on account of Plan termination, as
described in this Section 13.07, unless: (a) the Participant otherwise is
entitled under the Plan to a distribution of that portion of his Nonforfeitable
Accrued Benefit; or (b) the Plan termination occurs without the establishment of
a successor plan. A successor plan under clause (b) is a defined contribution
plan (other than an ESOP) maintained by the Employer (or by a related employer)
at the time of the termination of the Plan or within the period ending twelve
months after the final distribution of assets. A distribution made after
March 31, 1988, pursuant to clause (b), must be part of a lump sum distribution
to the Participant of his Nonforfeitable Accrued Benefit.
* * * * * * * * * * * * * * *
13.04
<PAGE> 71
ARTICLE XIV
CODE ss.401(k) AND CODE ss.401(m) ARRANGEMENTS
14.01 APPLICATION. This Article XIV applies to an Employer's Plan only if
the Employer is maintaining its Plan under a Code ss.401(k) Adoption Agreement.
14.02 CODE ss.401(k) ARRANGEMENT. The Employer will elect in Section 3.01
of its Adoption Agreement the terms of the Code ss.401(k) arrangement, if any,
under the Plan. If the Employer's Plan is a Standardized Plan, the Code
ss.401(k) arrangement must be a salary reduction arrangement. If the Employer's
Plan is a Nonstandardized Plan, the Code ss.401(k) arrangement may be a salary
reduction arrangement or a cash or deferred arrangement.
(A) Salary Reduction Arrangement. If the Employer elects a salaryreduction
arrangement, any Employee eligible to participate in the Plan may file a salary
reduction agreement with the Advisory Committee. The salary reduction agreement
may not be effective earlier than the following date which occurs last: (i) the
Employee's Plan Entry Date (or, in the case of a reemployed Employee, his
reparticipation date under Article II); (ii) the execution date of the
Employee's salary reduction agreement; (iii) the date the Employer adopts the
Code ss.401(k) arrangement by executing the Adoption Agreement; or (iv) the
effective date of the Code ss.401(k) arrangement, as specified in the Employer's
Adoption Agreement. Regarding clause (i), an Employee subject to the Break in
Service rule of Section 2.03(B) of the Plan may not enter into a salary
reduction agreement until the Employee has completed a sufficient number of
Hours of Service to receive credit for a Year of Service (as defined in Section
2.02) following his reemployment commencement date. A salary reduction agreement
must specify the amount of Compensation (as defined in Section 1.12) or
percentage of Compensation the Employee wishes to defer. The salary reduction
agreement will apply only to Compensation which becomes currently available to
the Employee after the effective date of the salary reduction agreement. The
Employer will apply a reduction election to all Compensation (and to increases
in such Compensation) unless the Employee specifies in his salary reduction
agreement to limit the election to certain Compensation. The Employer will
specify in Adoption Agreement Section 3.01 the rules and restrictions applicable
to the Employees salary reduction agreements.
(B) Cash or deferred arrangement. If the Employer elects a cash or deferred
arrangement, a Participant may elect to make a cash election against his
proportionate share of the Employer's Cash or Deferred Contribution, in
accordance with the Employer's elections in Adoption Agreement Section 3.01. A
Participant's proportionate share of the Employer's Cash or Deferred
Contribution is the percentage of the total Cash or Deferred Contribution which
bears the same ratio that the Participant's Compensation for the Plan Year bears
to the total Compensation of all Participants for the Plan Year. For purposes of
determining each Participant's proportionate share of the Cash or Deferred
Contribution, a Participant's Compensation is his Compensation as determined
under Section 1.12 of the Plan (as modified by Section 3.06 for allocation
purposes), excluding any effect the proportionate share may have on the
Participant's Compensation for the Plan Year. The Advisory Committee will
determine the proportionate share prior to the Employer's actual contribution to
the Trust, to provide the Participants the opportunity to file cash elections.
The Employer will pay directly to the Participant the portion of his
proportionate share the Participant has elected to receive in cash.
(C) Election not to participate. A Participant's or Employee's election not to
participate, pursuant to Section 2.06, includes his right to enter into a salary
reduction agreement or to share in the allocation of a Cash or Deferred
Contribution, unless the Participant or Employee limits the effect of the
election to the non-401(k) portions of the Plan.
14.03 DEFINITIONS. For purposes of this Article XIV:
(a) "Highly Compensated Employee" means an Eligible Employee who satisfies
the definition in Section 1.09 of the Plan. Family members aggregated as a
single Employee under Section 1.09 constitute a single Highly Compensated
Employee, whether a particular family member is a Highly Compensated
Employee or a Nonhighly Compensated Employee without the application of
family aggregation.
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<PAGE> 72
(b) "Nonhighly Compensated Employee" means an Eligible Employee who is not
a Highly Compensated Employee and who is not a family member treated as a
Highly Compensated Employee.
(c) "Eligible Employee" means, for purposes of the ADP test described in
Section 14.08, an Employee who is eligible to enter into a salary reduction
agreement for the Plan Year, irrespective of whether he actually enters
into such an agreement, and a Participant who is eligible for an allocation
of the Employer's Cash or Deferred Contribution for the Plan Year. For
purposes of the ACP test described in Section 14.09, an "Eligible Employee"
means a Participant who is eligible to receive an allocation of matching
contributions (or would be eligible if he made the type of contributions
necessary to receive an allocation of matching contributions) and a
Participant who is eligible to make nondeductible contributions,
irrespective of whether he actually makes nondeductible contributions. An
Employee continues to be an Eligible Employee during a period the Plan
suspends the Employee's right to make elective deferrals or nondeductible
contributions following a hardship distribution.
(d) "Highly Compensated Group" means the group of Eligible Employees who
are Highly Compensated Employees for the Plan Year.
(e) "Nonhighly Compensated Group" means the group of Eligible Employees
who are Nonhighly Compensated Employees for the Plan Year.
(f) "Compensation" means, except as specifically provided in this Article
XIV, Compensation as defined for nondiscrimination purposes in Section
1.12(B) of the Plan. To compute an Employee's ADP or ACP, the Advisory
Committee may limit Compensation taken into account to Compensation
received only for the portion of the Plan Year in which the Employee was an
Eligible Employee and only for the portion of the Plan Year in which the
Plan or the Code ss.401(k) arrangement was in effect.
(g) "Deferral contributions" are Salary Reduction Contributions and Cash
or Deferred Contributions the Employer contributes to the Trust on behalf
of an Eligible Employee, irrespective of whether, in the case of Cash or
Deferred Contributions, the contribution is at the election of the
Employee. For Salary Reduction Contributions, the terms "deferral
contributions" and "elective deferrals" have the same meaning.
(h) "Elective deferrals" are all Salary Reduction Contributions and that
portion of any Cash or Deferred Contribution which the Employer contributes
to the Trust at the election of an Eligible Employee. Any portion of a Cash
or Deferred Contribution contributed to the Trust because of the Employee's
failure to make a cash election is an elective deferral. However, any
portion of a Cash or Deferred Contribution over which the Employee does not
have a cash election is not an elective deferral. Elective deferrals do not
include amounts which have become currently available to the Employee prior
to the election nor amounts designated as nondeductible contributions at
the time of deferral or contribution.
(i) "Matching contributions" are contributions made by the Employer on
account of elective deferrals under a Code ss.401(k) arrangement or on
account of employee contributions. Matching contributions also include
Participant forfeitures allocated on account of such elective deferrals or
employee contributions.
(j) "Nonelective contributions" are contributions made by the Employer
which are not subject to a deferral election by an Employee and which are
not matching contributions.
(k) "Qualified matching contributions" are matching contributions which
are 100% Nonforfeitable at all times and which are subject to the
distribution restrictions described in paragraph (m). Matching
contributions are not 100% Nonforfeitable at all times if the Employee has
a 100% Nonforfeitable interest because of his Years of Service taken into
account under a vesting schedule. Any matching contributions allocated to a
Participant's Qualified Matching Contributions Account under the Plan
automatically satisfy the definition of qualified matching contributions.
(l) "Qualified nonelective contributions" are nonelective contributions
which are 100% Nonforfeitable at
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<PAGE> 73
all times and which are subject to the distribution restrictions described
in paragraph (m). Nonelective contributions are not 100% Nonforfeitable at
all times if the Employee has a 100% Nonforfeitable interest because of his
Years of Service taken into account under a vesting schedule. Any
nonelective contributions allocated to a Participant's Qualified
Nonelective Contributions Account under the Plan automatically satisfy the
definition of qualified nonelective contributions.
(m) "Distribution restrictions" means the Employee may not receive a
distribution of the specified contributions (nor earnings on those
contributions) except in the event of (1) the Participant's death,
disability, termination of employment or attainment of age 59 1/2,
(2) financial hardship satisfying the requirements of Code ss.401(k) and
the applicable Treasury regulations, (3) a plan termination, without
establishment of a successor defined contribution plan (other than an
ESOP), (4) a sale of substantially all of the assets (within the meaning of
Code ss.409(d)(2)) used in a trade or business, but only to an employee who
continues employment with the corporation acquiring those assets, or (5) a
sale by a corporation of its interest in a subsidiary (within the meaning
of Code ss.409(d)(3)), but only to an employee who continues employment
with the subsidiary. For Plan Years beginning after December 31, 1988, a
distribution on account of financial hardship, as described in clause (2),
may not include earnings on elective deferrals credited as of a date later
than December 31, 1988, and may not include qualified matching
contributions and qualified nonelective contributions, nor any earnings on
such contributions, credited after December 31, 1988. A plan does not
violate the distribution restrictions if, instead of the December 31, 1988,
date in the preceding sentence the plan specifies a date not later than the
end of the last Plan Year ending before July 1, 1989. A distribution
described in clauses (3), (4) or (5), if made after March 31, 1988, must be
a lump sum distribution, as required under Code ss.401(k)(10).
(n) "Employee contributions" are contributions made by a Participant on an
after-tax basis, whether voluntary or mandatory, and designated, at the
time of contribution, as an employee (or nondeductible) contribution.
Elective deferrals and deferral contributions are not employee
contributions. Participant nondeductible contributions, made pursuant to
Section 4.01 of the Plan, are employee contributions.
14.04 MATCHING CONTRIBUTIONS/EMPLOYEE CONTRIBUTIONS. The Employer may
elect in Adoption Agreement Section 3.01 to provide matching contributions. The
Employer also may elect in Adoption Agreement Section 4.01 to permit or to
require a Participant to make nondeductible contributions.
(A) Mandatory contributions. Any Participant nondeductible contributions
eligible for matching contributions are mandatory contributions. The Advisory
Committee will maintain a separate accounting, pursuant to Section 4.06 of the
Plan, to reflect the Participant's Accrued Benefit derived from his mandatory
contributions. The Employer, under Adoption Agreement Section 4.05, may
prescribe special distribution restrictions which will apply to the Mandatory
Contributions Account prior to the Participant's Separation from Service.
Following his Separation from Service, the general distribution provisions of
Article VI apply to the distribution of the Participant's Mandatory
Contributions Account.
14.05 TIME OF PAYMENT OF CONTRIBUTIONS. The Employer must make Salary
Reduction Contributions to the Trust within an administratively reasonable
period of time after withholding the corresponding Compensation from the
Participant. Furthermore, the Employer must make Salary Reduction Contributions,
Cash or Deferred Contributions, Employer matching contributions (including
qualified Employer matching contributions) and qualified Employer nonelective
contributions no later than the time prescribed by the Code or by applicable
Treasury regulations. Salary Reduction Contributions and Cash or Deferred
Contributions are Employer contributions for all purposes under this Plan,
except to the extent the Code or Treasury regulations prohibit the use of these
contributions to satisfy the qualification requirements of the Code.
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<PAGE> 74
14.06 SPECIAL ALLOCATION PROVISIONS - DEFERRAL CONTRIBUTIONS, MATCHING
CONTRIBUTIONS AND QUALIFIED NONELECTIVE CONTRIBUTIONS. To make allocations under
the Plan, the Advisory Committee must establish a Deferral Contributions
Account, a Qualified Matching Contributions Account, a Regular Matching
Contributions Account, a Qualified Nonelective Contributions Account and an
Employer Contributions Account for each Participant.
(A) Deferral contributions. The Advisory Committee will allocate to each
Participant's Deferral Contributions Account the amount of Deferral
Contributions the Employer makes to the Trust on behalf of the Participant. The
Advisory Committee will make this allocation as of the last day of each Plan
Year unless, in Adoption Agreement Section 3.04, the Employer elects more
frequent allocation dates for salary reduction contributions.
(B) Matching contributions. The Employer must specify in its Adoption Agreement
whether the Advisory Committee will allocate matching contributions to the
Qualified Matching Contributions Account or to the Regular Matching
Contributions Account of each Participant. The Advisory Committee will make this
allocation as of the last day of each Plan Year unless, in Adoption Agreement
Section 3.04, the Employer elects more frequent allocation dates for matching
contributions.
(1) To the extent the Employer makes matching contributions under a fixed
matching contribution formula, the Advisory Committee will allocate the
matching contribution to the Account of the Participant on whose behalf the
Employer makes that contribution. A fixed matching contribution formula is
a formula under which the Employer contributes a certain percentage or
dollar amount on behalf of a Participant based on that Participant's
deferral contributions or nondeductible contributions eligible for a match,
as specified in Section 3.01 of the Employer's Adoption Agreement. The
Employer may contribute on a Participant's behalf under a specific matching
contribution formula only if the Participant satisfies the accrual
requirements for matching contributions specified in Section 3.06 of the
Employer's Adoption Agreement and only to the extent the matching
contribution does not exceed the Participant's annual additions limitation
in Part 2 of Article III.
(2) To the extent the Employer makes matching contributions under a
discretionary formula, the Advisory Committee will allocate the
discretionary matching contributions to the Account of each Participant who
satisfies the accrual requirements for matching contributions specified in
Section 3.06 of the Employer's Adoption Agreement. The allocation of
discretionary matching contributions to a Participant's Account is in the
same proportion that each Participant's eligible contributions bear to the
total eligible contributions of all Participants. If the discretionary
formula is a tiered formula, the Advisory Committee will make this
allocation separately with respect to each tier of eligible contributions,
allocating in such manner the amount of the matching contributions made
with respect to that tier. "Eligible contributions" are the Participant's
deferral contributions or nondeductible contributions eligible for an
allocation of matching contributions, as specified in Section 3.01 of the
Employer's Adoption Agreement.
If the matching contribution formula applies both to deferral contributions
and to Participant nondeductible contributions, the matching contributions apply
first to deferral contributions. Furthermore, the matching contribution formula
does not apply to deferral contributions that are excess deferrals under Section
14.07. For this purpose: (a) excess deferrals relate first to deferral
contributions for the Plan Year not otherwise eligible for a matching
contribution; and (2) if the Plan Year is not a calendar year, the excess
deferrals for a Plan Year are the last elective deferrals made for a calendar
year. Under a Standardized Plan, an Employee forfeits any matching contribution
attributable to an excess contribution or to an excess aggregate contribution,
unless distributed pursuant to Sections 14.08 or 14.09. Under a Nonstandardized
Plan, this forfeiture rule applies only if specified in Adoption Agreement
Section 3.06. The provisions of Section 3.05 govern the treatment of any
forfeiture described in this paragraph, and the Advisory Committee will compute
a Participant's ACP under 14.09 by disregarding the forfeiture.
(C) Qualified nonelective contributions. If the Employer, at the time of
contribution, designates a contribution to be a qualified nonelective
contribution for the Plan Year, the Advisory Committee will allocate that
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<PAGE> 75
qualified nonelective contribution to the Qualified Nonelective Contributions
Account of each Participant eligible for an allocation of that designated
contribution, as specified in Section 3.04 of the Employer's Adoption Agreement.
The Advisory Committee will make the allocation to each eligible Participant's
Account in the same ratio that the Participant's Compensation for the Plan Year
bears to the total Compensation of all eligible Participants for the Plan Year.
The Advisory Committee will determine a Participant's Compensation in accordance
with the general definition of Compensation under Section 1.12 of the Plan, as
modified by the Employer in Sections 1.12 and 3.06 of its Adoption Agreement.
(D) Nonelective contributions. To the extent the Employer makes nonelective
contributions for the Plan Year which, at the time of contribution, it does not
designate as qualified nonelective contributions, the Advisory Committee will
allocate those contributions in accordance with the elections under Section 3.04
of the Employer's Adoption Agreement. For purposes of the special
nondiscrimination tests described in Sections 14.08 and 14.09, the Advisory
Committee may treat nonelective contributions allocated under this paragraph as
qualified nonelective contributions, if the contributions otherwise satisfy the
definition of qualified nonelective contributions.
14.07 ANNUAL ELECTIVE DEFERRAL LIMITATION.
(A) Annual Elective Deferral Limitation. An Employee's elective deferrals for a
calendar year beginning after December 31, 1986, may not exceed the 402(g)
limitation. The 402(g) limitation is the greater of $7,000 or the adjusted
amount determined by the Secretary of the Treasury. If, pursuant to a salary
reduction agreement or pursuant to a cash or deferral election, the Employer
determines the Employee's elective deferrals to the Plan for a calendar year
would exceed the 402(g) limitation, the Employer will suspend the Employee's
salary reduction agreement, if any, until the following January 1 and pay in
cash the portion of a cash or deferral election which would result in the
Employee's elective deferrals for the calendar year exceeding the 402(g)
limitation. If the Advisory Committee determines an Employee's elective
deferrals already contributed to the Plan for a calendar year exceed the 402(g)
limitation, the Advisory Committee will distribute the amount in excess of the
402(g) limitation (the "excess deferral"), as adjusted for allocable income, no
later than April 15 of the following calendar year. If the Advisory Committee
distributes the excess deferral by the appropriate April 15, it may make the
distribution irrespective of any other provision under this Plan or under the
Code. The Advisory Committee will reduce the amount of excess deferrals for a
calendar year distributable to the Employee by the amount of excess
contributions (as determined in Section 14.08), if any, previously distributed
to the Employee for the Plan Year beginning in that calendar year.
If an Employee participates in another plan under which he makes elective
deferrals pursuant to a Code ss.401(k) arrangement, elective deferrals under a
Simplified Employee Pension, or salary reduction contributions to a
tax-sheltered annuity, irrespective of whether the Employer maintains the other
plan, he may provide the Advisory Committee a written claim for excess deferrals
made for a calendar year. The Employee must submit the claim no later than the
March 1 following the close of the particular calendar year and the claim must
specify the amount of the Employee's elective deferrals under this Plan which
are excess deferrals. If the Advisory Committee receives a timely claim, it will
distribute the excess deferral (as adjusted for allocable income) the Employee
has assigned to this Plan, in accordance with the distribution procedure
described in the immediately preceding paragraph.
(B) Allocable income. For purposes of making a distribution of excess deferrals
pursuant to this Section 14.07, allocable income means net income or net loss
allocable to the excess deferrals for the calendar year in which the Employee
made the excess deferral, determined in a manner which is uniform,
nondiscriminatory and reasonably reflective of the manner used by the Plan to
allocate income to Participants' Accounts.
14.08 ACTUAL DEFERRAL PERCENTAGE ("ADP") TEST. For each Plan Year, the
Advisory Committee must determine whether the Plan's Code ss.401(k) arrangement
satisfies either of the following ADP tests:
(i) The average ADP for the Highly Compensated Group does not exceed 1.25
times the average ADP of the Nonhighly Compensated Group; or
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<PAGE> 76
(ii) The average ADP for the Highly Compensated Group does not exceed the
average ADP for the Nonhighly Compensated Group by more than two percentage
points (or the lesser percentage permitted by the multiple use limitation
in Section 14.10) and the average ADP for the Highly Compensated Group is
not more than twice the average ADP for the Nonhighly Compensated Group.
(A) Calculation of ADP. The average ADP for a group is the average of the
separate ADPs calculated for each Eligible Employee who is a member of that
group. An Eligible Employee's ADP for a Plan Year is the ratio of the Eligible
Employee's deferral contributions for the Plan Year to the Employee's
Compensation for the Plan Year. For aggregated family members treated as a
single Highly Compensated Employee, the ADP of the family unit is the ADP
determined by combining the deferral contributions and Compensation of all
aggregated family members. A Nonhighly Compensated Employee's ADP does not
include elective deferrals made to this Plan or to any other Plan maintained by
the Employer, to the extent such elective deferrals exceed the 402(g) limitation
described in Section 14.07(A).
The Advisory Committee, in a manner consistent with Treasury regulations,
may determine the ADPs of the Eligible Employees by taking into account
qualified nonelective contributions or qualified matching contributions, or
both, made to this Plan or to any other qualified Plan maintained by the
Employer. The Advisory Committee may not include qualified nonelective
contributions in the ADP test unless the allocation of nonelective contributions
is nondiscriminatory when the Advisory Committee takes into account all
nonelective contributions (including the qualified nonelective contributions)
and also when the Advisory Committee takes into account only the nonelective
contributions not used in either the ADP test described in this Section 14.08 or
the ACP test described in Section 14.09. For Plan Years beginning after
December 31, 1989, the Advisory Committee may not include in the ADP test any
qualified nonelective contributions or qualified matching contributions under
another qualified plan unless that plan has the same plan year as this Plan. The
Advisory Committee must maintain records to demonstrate compliance with the ADP
test, including the extent to which the Plan used qualified nonelective
contributions or qualified matching contributions to satisfy the test.
For Plan Years beginning prior to January 1, 1992, the Advisory Committee
may elect to apply a separate ADP test to each component group under the Plan.
Each component group separately must satisfy the commonality requirement of the
Code ss.401(k) regulations and the minimum coverage requirements of Code
ss.410(b). A component group consists of all the allocations and other benefits,
rights and features provided that group of Employees. An Employee may not be
part of more than one component group. The correction rules described in this
Section 14.08 apply separately to each component group.
(B) Special aggregation rule for Highly Compensated Employees. To determine the
ADP of any Highly Compensated Employee, the deferral contributions taken into
account must include any elective deferrals made by the Highly Compensated
Employee under any other Code ss.401(k) arrangement maintained by the Employer,
unless the elective deferrals are to an ESOP. If the plans containing the Code
ss.401(k) arrangements have different plan years, the Advisory Committee will
determine the combined deferral contributions on the basis of the plan years
ending in the same calendar year.
(C) Aggregation of certain Code ss.401(k) arrangements. If the Employer treats
two plans as a unit for coverage or nondiscrimination purposes, the Employer
must combine the Code ss.401(k) arrangements under such plans to determine
whether either plan satisfies the ADP test. This aggregation rule applies to the
ADP determination for all Eligible Employees, irrespective of whether an
Eligible Employee is a Highly Compensated Employee or a Nonhighly Compensated
Employee. For Plan Years beginning after December 31, 1989, an aggregation of
Code ss.401(k) arrangements under this paragraph does not apply to plans which
have different plan years and, for Plan Years beginning after December 31, 1988,
the Advisory Committee may not aggregate an ESOP (or the ESOP portion of a plan)
with a non-ESOP plan (or non-ESOP portion of a plan).
(D) Characterization of excess contributions. If, pursuant to this
Section 14.08, the Advisory Committee has elected to include qualified matching
contributions in the average ADP, the Advisory Committee will treat excess
contributions as attributable proportionately to deferral contributions and to
qualified matching contributions
14.06
<PAGE> 77
allocated on the basis of those deferral contributions. If the total amount of a
Highly Compensated Employee's excess contributions for the Plan Year exceeds his
deferral contributions or qualified matching contributions for the Plan Year,
the Advisory Committee will treat the remaining portion of his excess
contributions as attributable to qualified nonelective contributions. The
Advisory Committee will reduce the amount of excess contributions for a Plan
Year distributable to a Highly Compensated Employee by the amount of excess
deferrals (as determined in Section 14.07), if any, previously distributed to
that Employee for the Employee's taxable year ending in that Plan Year.
(E) Distribution of excess contributions. If the Advisory Committee determines
the Plan fails to satisfy the ADP test for a Plan Year, it must distribute the
excess contributions, as adjusted for allocable income, during the next Plan
Year. However, the Employer will incur an excise tax equal to 10% of the amount
of excess contributions for a Plan Year not distributed to the appropriate
Highly Compensated Employees during the first 2 1/2 months of that next Plan
Year. The excess contributions are the amount of deferral contributions made by
the Highly Compensated Employees which causes the Plan to fail to satisfy the
ADP test. The Advisory Committee will distribute to each Highly Compensated
Employee his respective share of the excess contributions. The Advisory
Committee will determine the respective shares of excess contributions by
starting with the Highly Compensated Employee(s) who has the greatest ADP,
reducing his ADP (but not below the next highest ADP), then, if necessary,
reducing the ADP of the Highly Compensated Employee(s) at the next highest ADP
level (including the ADP of the Highly Compensated Employee(s) whose ADP the
Advisory Committee already has reduced), and continuing in this manner until the
average ADP for the Highly Compensated Group satisfies the ADP test. If the
Highly Compensated Employee is part of an aggregated family group, the Advisory
Committee, in accordance with the applicable Treasury regulations, will
determine each aggregated family member's allocable share of the excess
contributions assigned to the family unit.
(F) Allocable income. To determine the amount of the corrective distribution
required under this Section 14.08, the Advisory Committee must calculate the
allocable income for the Plan Year in which the excess contributions arose.
"Allocable income" means net income or net loss. To calculate allocable income
for the Plan Year, the Advisory Committee will use a uniform and
nondiscriminatory method which reasonably reflects the manner used by the Plan
to allocate income to Participants' Accounts.
14.09 NONDISCRIMINATION RULES FOR EMPLOYER MATCHING
CONTRIBUTIONS/PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. For Plan Years beginning
after December 31, 1986, the Advisory Committee must determine whether the
annual Employer matching contributions (other than qualified matching
contributions used in the ADP under Section 14.08), if any, and the Employee
contributions, if any, satisfy either of the following average contribution
percentage ("ACP") tests:
(i) The ACP for the Highly Compensated Group does not exceed 1.25 times
the ACP of the Nonhighly Compensated Group; or
(ii) The ACP for the Highly Compensated Group does not exceed the ACP for
the Nonhighly Compensated Group by more than two percentage points (or the
lesser percentage permitted by the multiple use limitation in Section
14.10) and the ACP for the Highly Compensated Group is not more than twice
the ACP for the Nonhighly Compensated Group.
(A) Calculation of ACP. The average contribution percentage for a group is the
average of the separate contribution percentages calculated for each Eligible
Employee who is a member of that group. An Eligible Employee's contribution
percentage for a Plan Year is the ratio of the Eligible Employee's aggregate
contributions for the Plan Year to the Employee's Compensation for the Plan
Year. "Aggregate contributions" are Employer matching contributions (other than
qualified matching contributions used in the ADP test under Section 14.08) and
employee contributions (as defined in Section 14.03). For aggregated family
members treated as a single Highly Compensated Employee, the contribution
percentage of the family unit is the contribution percentage determined by
combining the aggregate contributions and Compensation of all aggregated family
members.
14.07
<PAGE> 78
The Advisory Committee, in a manner consistent with Treasury regulations,
may determine the contribution percentages of the Eligible Employees by taking
into account qualified nonelective contributions (other than qualified
nonelective contributions used in the ADP test under Section 14.08) or elective
deferrals, or both, made to this Plan or to any other qualified Plan maintained
by the Employer. The Advisory Committee may not include qualified nonelective
contributions in the ACP test unless the allocation of nonelective contributions
is nondiscriminatory when the Advisory Committee takes into account all
nonelective contributions (including the qualified nonelective contributions)
and also when the Advisory Committee takes into account only the nonelective
contributions not used in either the ADP test described in Section 14.08 or the
ACP test described in this Section 14.09. The Advisory Committee may not include
elective deferrals in the ACP test, unless the Plan which includes the elective
deferrals satisfies the ADP test both with and without the elective deferrals
included in this ACP test. For Plan Years beginning after December 31, 1989, the
Advisory Committee may not include in the ACP test any qualified nonelective
contributions or elective deferrals under another qualified plan unless that
plan has the same plan year as this Plan. The Advisory Committee must maintain
records to demonstrate compliance with the ACP test, including the extent to
which the Plan used qualified nonelective contributions or elective deferrals to
satisfy the test. For Plan Years beginning prior to January 1, 1992, the
component group testing rule permitted under Section 14.08(A) also applies to
the ACP test under this Section 14.09.
(B) Special aggregation rule for Highly Compensated Employees. To determine the
contribution percentage of any Highly Compensated Employee, the aggregate
contributions taken into account must include any matching contributions (other
than qualified matching contributions used in the ADP test) and any Employee
contributions made on his behalf to any other plan maintained by the Employer,
unless the other plan is an ESOP. If the plans have different plan years, the
Advisory Committee will determine the combined aggregate contributions on the
basis of the plan years ending in the same calendar year.
(C) Aggregation of certain plans. If the Employer treats two plans as a unit
for coverage or nondiscrimination purposes, the Employer must combine the plans
to determine whether either plan satisfies the ACP test. This aggregation rule
applies to the contribution percentage determination for all Eligible Employees,
irrespective of whether an Eligible Employee is a Highly Compensated Employee or
a Nonhighly Compensated Employee. For Plan Years beginning after December 31,
1989, an aggregation of plans under this paragraph does not apply to plans which
have different plan years and, for Plan Years beginning after December 31, 1988,
the Advisory Committee may not aggregate an ESOP (or the ESOP portion of a plan)
with a non-ESOP plan (or nonESOP portion of a plan).
(D) Distribution of excess aggregate contributions. The Advisory Committee will
determine excess aggregate contributions after determining excess deferrals
under Section 14.07 and excess contributions under Section 14.08. If the
Advisory Committee determines the Plan fails to satisfy the ACP test for a Plan
Year, it must distribute the excess aggregate contributions, as adjusted for
allocable income, during the next Plan Year. However, the Employer will incur an
excise tax equal to 10% of the amount of excess aggregate contributions for a
Plan Year not distributed to the appropriate Highly Compensated Employees during
the first 2 1/2 months of that next Plan Year. The excess aggregate
contributions are the amount of aggregate contributions allocated on behalf of
the Highly Compensated Employees which causes the Plan to fail to satisfy the
ACP test. The Advisory Committee will distribute to each Highly Compensated
Employee his respective share of the excess aggregate contributions. The
Advisory Committee will determine the respective shares of excess aggregate
contributions by starting with the Highly Compensated Employee(s) who has the
greatest contribution percentage, reducing his contribution percentage (but not
below the next highest contribution percentage), then, if necessary, reducing
the contribution percentage of the Highly Compensated Employee(s) at the next
highest contribution percentage level (including the contribution percentage of
the Highly Compensated Employee(s) whose contribution percentage the Advisory
Committee already has reduced), and continuing in this manner until the ACP for
the Highly Compensated Group satisfies the ACP test. If the Highly Compensated
Employee is part of an aggregated family group, the Advisory Committee, in
accordance with the applicable Treasury regulations, will determine each
aggregated family member's allocable share of the excess aggregate contributions
assigned to the family unit.
14.08
<PAGE> 79
(E) Allocable income. To determine the amount of the corrective distribution
required under this Section 14.09, the Advisory Committee must calculate the
allocable income for the Plan Year in which the excess aggregate contributions
arose. "Allocable income" means net income or net loss. The Advisory Committee
will determine allocable income in the same manner as described in Section
14.08(F) for excess contributions.
(F) Characterization of excess aggregate contributions. The Advisory Committee
will treat a Highly Compensated Employee's allocable share of excess aggregate
contributions in the following priority: (1) first as attributable to his
Employee contributions which are voluntary contributions, if any; (2) then as
matching contributions allocable with respect to excess contributions determined
under the ADP test described in Section 14.08; (3) then on a pro rata basis to
matching contributions and to the deferral contributions relating to those
matching contributions which the Advisory Committee has included in the ACP
test; (4) then on a pro rata basis to Employee contributions which are mandatory
contributions, if any, and to the matching contributions allocated on the basis
of those mandatory contributions; and (5) last to qualified nonelective
contributions used in the ACP test. To the extent the Highly Compensated
Employee's excess aggregate contributions are attributable to matching
contributions, and he is not 100% vested in his Accrued Benefit attributable to
matching contributions, the Advisory Committee will distribute only the vested
portion and forfeit the nonvested portion. The vested portion of the Highly
Compensated Employee's excess aggregate contributions attributable to Employer
matching contributions is the total amount of such excess aggregate
contributions (as adjusted for allocable income) multiplied by his vested
percentage (determined as of the last day of the Plan Year for which the
Employer made the matching contribution). The Employer will specify in Adoption
Agreement Section 3.05 the manner in which the Plan will allocate forfeited
excess aggregate contributions.
14.10 MULTIPLE USE LIMITATION. For Plan Years beginning after December 31,
1988, if at least one Highly Compensated Employee is includible in the ADP test
under Section 14.08 and in the ACP test under Section 14.09, the sum of the
Highly Compensated Group's ADP and ACP may not exceed the multiple use
limitation.
The multiple use limitation is the sum of (i) and (ii):
(i) 125% of the greater of: (a) the ADP of the Nonhighly Compensated Group
under the Code ss.401(k) arrangement; or (b) the ACP of the Nonhighly
Compensated Group for the Plan Year beginning with or within the Plan Year
of the Code ss.401(k) arrangement.
(ii) 2% plus the lesser of (i)(a) or (i)(b), but no more than twice the
lesser of (i)(a) or (i)(b).
The Advisory Committee, in lieu of determining the multiple use limitation
as the sum of (i) and (ii), may elect to determine the multiple use limitation
as the sum of (iii) and (iv):
(iii) 125% of the lesser of: (a) the ADP of the Nonhighly Compensated Group
under the Code ss.401(k) arrangement; or (b) the ACP of the Nonhighly
Compensated Group for the Plan Year beginning with or within the Plan Year
of the Code ss.401(k) arrangement.
(iv) 2% plus the greater of (iii)(a) or (iii)(b), but no more than twice
the greater of (iii)(a) or (iii)(b).
The Advisory Committee will determine whether the Plan satisfies the
multiple use limitation after applying the ADP test under Section 14.08 and the
ACP test under Section 14.09 and after making any corrective distributions
required by those Sections. If, after applying this Section 14.10, the Advisory
Committee determines the Plan has failed to satisfy the multiple use limitation,
the Advisory Committee will correct the failure by treating the excess amount as
excess contributions under Section 14.08 or as excess aggregate contributions
under Section 14.09, as it determines in its sole discretion. This Section 14.10
does not apply unless, prior to application of the multiple use limitation, the
ADP and the ACP of the Highly Compensated Group each exceeds 125% of the
respective percentages for the Nonhighly Compensated Group.
14.09
<PAGE> 80
14.11 DISTRIBUTION RESTRICTIONS. The Employer must elect in Section 6.03
the Adoption Agreement the distribution events permitted under the Plan. The
distribution events applicable to the Participant's Deferral Contributions
Account, Qualified Nonelective Contributions Account and Qualified Matching
Contributions Account must satisfy the distribution restrictions described in
paragraph (m) of Section 14.03.
(A) Hardship distributions from Deferral Contributions Account. The Employer
must elect in Adoption Agreement Section 6.03 whether a Participant may receive
hardship distributions from his Deferral Contributions Account prior to the
Participant's Separation from Service. Hardship distributions from the Deferral
Contributions Account must satisfy the requirements of this Section 14.11. A
hardship distribution option may not apply to the Participant's Qualified
Nonelective Contributions Account or Qualified Matching Contributions Account,
except as provided in paragraph (3).
(1) Definition of hardship. A hardship distribution under this Section
14.11 must be on account of one or more of the following immediate and heavy
financial needs: (1) medical care described in Code ss.213(d) incurred by the
Participant, by the Participant's spouse, or by any of the Participant's
dependents, or necessary to obtain such medical care; (2) the purchase
(excluding mortgage payments) of a principal residence for the Participant;
(3) the payment of post-secondary education tuition and related educational
fees, for the next 12-month period, for the Participant, for the Participant's
spouse, or for any of the Participant's dependents (as defined in Code ss.152);
(4) to prevent the eviction of the Participant from his principal residence or
the foreclosure on the mortgage of the Participant's principal residence; or
(5) any need prescribed by the Revenue Service in a revenue ruling, notice or
other document of general applicability which satisfies the safe harbor
definition of hardship.
(2) Restrictions. The following restrictions apply to a Participant who
receives a hardship distribution: (a) the Participant may not make elective
deferrals or employee contributions to the Plan for the 12-month period
following the date of his hardship distribution; (b) the distribution is not in
excess of the amount of the immediate and heavy financial need (including any
amounts necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the distribution); (c) the Participant
must have obtained all distributions, other than hardship distributions, and all
nontaxable loans (determined at the time of the loan) currently available under
this Plan and all other qualified plans maintained by the Employer; and (d) the
Participant agrees to limit elective deferrals under this Plan and under any
other qualified Plan maintained by the Employer, for the Participant's taxable
year immediately following the taxable year of the hardship distribution, to the
402(g) limitation (as described in Section 14.07), reduced by the amount of the
Participant's elective deferrals made in the taxable year of the hardship
distribution. The suspension of elective deferrals and employee contributions
described in clause (a) also must apply to all other qualified plans and to all
nonqualified plans of deferred compensation maintained by the Employer, other
than any mandatory employee contribution portion of a defined benefit plan,
including stock option, stock purchase and other similar plans, but not
including health or welfare benefit plans (other than the cash or deferred
arrangement portion of a cafeteria plan).
(3) Earnings. For Plan Years beginning after December 31, 1988, a hardship
distribution under this Section 14.11 may not include earnings on an Employee's
elective deferrals credited after December 31, 1988. Qualified matching
contributions and qualified nonelective contributions, and any earnings on such
contributions, credited as of December 31, 1988, are subject to the hardship
withdrawal only if the Employer specifies in an addendum to this Section 14.11.
The addendum may modify the December 31, 1988, date for purposes of determining
credited amounts provided the date is not later than the end of the last Plan
Year ending before July 1, 1989.
(B) Distributions after Separation from Service. Following the Participant's
Separation from Service, the distribution events applicable to the Participant
apply equally to all of the Participant's Accounts, except as elected in Section
6.03 of the Employer's Adoption Agreement.
(C) Correction of Annual Additions Limitation. If, as a result of a reasonable
error in determining the amount of elective deferrals an Employee may make
without violating the limitations of Part 2 of Article III, an Excess Amount
results, the Advisory Committee will return the Excess Amount (as adjusted for
allocable income) attributable to the elective deferrals. The Advisory Committee
will make this distribution before taking any
14.10
<PAGE> 81
corrective steps pursuant to Section 3.10 or to Section 3.16. The Advisory
Committee will disregard any elective deferrals returned under this
Section 14.11(C) for purposes of Sections 14.07, 14.08 and 14.09.
14.12 SPECIAL ALLOCATION RULES. If the Code ss.401(k) arrangement provides
for salary reduction contributions, if the Plan accepts Employee contributions,
pursuant to Adoption Agreement Section 4.01, or if the Plan allocates matching
contributions as of any date other than the last day of the Plan Year, the
Employer must elect in Adoption Agreement 9.11 whether any special allocation
provisions will apply under Section 9.11 of the Plan. For purposes of the
elections:
(a) A "segregated Account" direction means the Advisory Committee will
establish a segregated Account for the applicable contributions made on the
Participant's behalf during the Plan Year. The Trustee must invest the
segregated Account in Federally insured interest bearing savings account(s)
or time deposits, or a combination of both, or in any other fixed income
investments, unless otherwise specified in the Employer's Adoption
Agreement. As of the last day of each Plan Year (or, if earlier, an
allocation date coinciding with a valuation date described in Section
9.11), the Advisory Committee will reallocate the segregated Account to the
Participant's appropriate Account, in accordance with Section 3.04 or
Section 4.06, whichever applies to the contributions.
(b) A "weighted average allocation" method will treat a weighted portion
of the applicable contributions as if includible in the Participant's
Account as of the beginning of the valuation period. The weighted portion
is a fraction, the numerator of which is the number of months in the
valuation period, excluding each month in the valuation period which begins
prior to the contribution date of the applicable contributions, and the
denominator of which is the number of months in the valuation period. The
Employer may elect in its Adoption Agreement to substitute a weighting
period other than months for purposes of this weighted average allocation.
* * * * * * * * * * * * * * *
14.11
<PAGE> 82
ARTICLE A
APPENDIX TO PLAN AND TRUST AGREEMENT
This Article is necessary to comply with the Unemployment Compensation
Amendments Act of 1992 and is an integral part of the basic plan document.
Section 12.08 applies to any modification or amendment of this Article.
A-1. APPLICATIONS. This Article 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 Article, a
distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
A-2. DEFINITIONS.
(a) "Eligible rollover distribution." An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: 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 Code ss.401(a)(9); and the portion of any distribution that is
not includible in gross income (determined without regard to the exclusion of
net unrealized appreciation with respect to employer securities).
(b) "Eligible retirement plan." An eligible retirement plan is an
individual retirement account described in Code ss.408(a), an individual
retirement annuity described in Code ss.408(b), an annuity plan described in
Code ss.403(a), or a qualified trust described in Code ss.401(a), 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 Code ss.414(p),
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.
A-1
<PAGE> 83
ARTICLE B
APPENDIX TO BASIC PLAN DOCUMENT
This Article is necessary to comply with the Omnibus Budget Reconciliation
Act of 1993 (OBRA '93) and is an integral part of the basic plan document.
Section 12.08 applies to any modification or amendment of this Article.
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, for plan years
beginning on or after January 1, 1994, the annual compensation of each employee
taken into account under the plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in this
plan to the limitation under Section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into account in
determining an employee's benefits accruing in the current plan year, the
compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination period 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.
B-1
<PAGE> 84
ARTICLE C
APPENDIX TO BASIC PLAN DOCUMENT
This amendment is effective on the first day of the first Plan Year
beginning on or after December 12, 1994, or if later, March 12, 1995.
Notwithstanding any provision of this Plan to the contrary, to the extent
that any optional form of benefit under this Plan permits a distribution prior
to the Employee's retirement, death, disability, or severance from employment,
and prior to plan termination, the optional form of benefits is not available
with respect to benefits attributable to assets (including the post-transfer
earnings thereon) and liabilities that are transferred, within the meaning of
Code ss.414(l), to this Plan from a money purchase pension plan qualified under
Code ss.401(a) (other that any portion of those assets and liabilities
attributable to voluntary Employee contributions).
C - 1
<PAGE> 85
ARTICLE D
APPENDIX TO BASIC PLAN DOCUMENT
USERAA Model Amendment
This amendment is effective as of December 12, 1994.
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Code ss.414(u). Loan repayments will be suspended
under this Plan as permitted under Code ss.414(u)(4).
D - 1
<PAGE> 1
EXHIBIT 10.20
ADOPTION AGREEMENT #009
STANDARDIZED CODE ss401(k) PLAN
(PAIRED PROFIT SHARING PLAN)
The undersigned, American Stone Corporation ("Employer"), by executing this
Adoption Agreement, elects to become a participating Employer in the FirstMerit
Bank, N.A. Defined Contribution Master Plan (basic plan document #01) by
adopting the accompanying Plan and Trust in full as if the Employer were a
signatory to that Agreement. The Employer makes the following elections granted
under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is: (Choose
(a) or (b))
[x] (a) A discretionary Trustee. See Section 10.03[A] of the Plan.
[ ] (b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan.
[Note: The Employer may not elect Option (b) if a Custodian executes the
Adoption Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is American
Stone Corporation 401(k) Profit Sharing Plan.
1.07 EMPLOYEE. The following Employees are not eligible to participate in
the Plan: (Choose (a) or at least one of (b) or (c))
[x] (a) No exclusions.
[ ] (b) Collective bargaining employees (as defined in Section 1.07 of
the Plan). [Note: If the Employer excludes union employees from the
Plan, the Employer must be able to provide evidence that retirement
benefits were the subject of good faith bargaining.]
[ ] (c) Nonresident aliens who do not receive any earned income (as defined
in Code ss.911(d)(2)) from the Employer which constitutes United States
source income (as defined in Code ss.861(a)(3)).
Related Employers/Leased Employees. An Employee of any member of the Employer's
related group (as defined in Section 1.30 of the Plan), and any Leased Employee
treated as an Employee under Section 1.31 of the Plan, is eligible to
participate in the Plan, unless excluded by reason of Options (b) or (c).
[Note: A related group member may not contribute to this Plan unless it executes
a Participation Agreement, even if its Employees are Participants in the Plan.]
1.12 COMPENSATION.
Treatment of elective contributions. (Choose (a) or (b))
[x] (a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.
[ ] (b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least one of (d)
and (e))
[x] (c) No modifications other than as elected under Options (a) or (b).
[ ] (d) The Plan excludes Compensation in excess of $_______________.
<PAGE> 2
[ ] (e) In lieu of the definition in Section 1.12 of the Plan,
Compensation means any earnings reportable as W- 2 wages for Federal
income tax withholding purposes, subject to any other election under
this Adoption Agreement Section 1.12.
Special definition for salary reduction contributions. An Employee's salary
reduction agreement applies to his Compensation determined prior to the
reduction authorized by that salary reduction agreement, with the following
exceptions: (Choose (f) or any combination of (g) and (h), if applicable)
[x] (f) No exceptions.
[ ] (g) The dollar limitation described in Option (d) does not apply.
[ ] (h) If the Employee makes elective contributions to another plan
maintained by the Employer, the Advisory Committee will determine the
amount of the Employee's salary reduction contribution for the
withholding period: (Choose (1) or (2))
[ ] (1) After the reduction for such period of elective
contributions to the other plan(s).
[ ] (2) Prior to the reduction for such period of elective
contributions to the other plan(s).
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
[x] (a) The 12 consecutive month period ending every December 31.
[ ] (b) (Specify)_________________________________________________________.
Limitation Year. The Limitation Year is: (Choose (c) or (d))
[x] (c) The Plan Year.
[ ] (d) The 12 consecutive month period ending every .
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is January 1, 1999.
Restated Plan. The restated Effective Date is _______________.
This Plan is a substitution and amendment of an existing retirement plan(s)
originally established ___________________.
[Note: See the Effective Date Addendum.]
1.27 HOUR OF SERVICE. The crediting method for Hours of Service is:
(Choose (a) or (b))
[x] (a) The actual method.
[ ] (b) The equivalency method, except:
[ ] (1) No exceptions.
[ ] (2) The actual method applies for purposes of: (Choose at
least one)
[ ] (i) Participation under Article II.
2
<PAGE> 3
[ ] (ii) Vesting under Article V.
[ ] (iii) Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the predecessor
service the Plan must credit by reason of Section 1.29 of the Plan, the Plan
credits Service with the following predecessor employer(s): n/a
___________________________. Service with the designated predecessor
employer(s) applies: (Choose at least one of (a) or (b))
[ ] (a) For purposes of participation under Article II.
[ ] (b) For purposes of vesting under Article V.
[Note: If the Plan does not credit any predecessor service under this provision,
insert "N/A" in the first blank line. The Employer may attach a schedule to this
Adoption Agreement, in the same format as this Section 1.29, designating
additional predecessor employers and the applicable service crediting
elections.]
1.31 LEASED EMPLOYEES. If a Leased Employee participates in a safe harbor
money purchase plan (as described in Section 1.31) maintained by the leasing
organization, but the Employer is not eligible for the safe harbor plan
exception: (Choose (a) or (b))
[ ] (a) The Advisory Committee will determine the Leased Employee's
allocation of Employer contributions under Article III without taking
into account the Leased Employee's allocation under the safe harbor
plan.
[x] (b) The Advisory Committee will reduce the Leased Employee's allocation
of Employer nonelective contributions (other than designated qualified
nonelective contributions) under this Plan by the Leased Employee's
allocation under the safe harbor plan, but only to the extent that
allocation is attributable to the Leased Employee's service provided to
the Employer. [Note: The Employer may not elect Option (b) if a Paired
Plan or any other plan of the Employer makes a similar reduction for the
same plan of the leasing organization.]
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions: (Choose (a) or (b) or both)
[x] (a) Attainment of age 18 (specify age, not exceeding 21).
[x] (b) Service requirement. (Choose (1), (2) or (3))
[x] (1) One Year of Service.
[ ] (2) ___ months (not exceeding 12) following the Employee's
Employment Commencement Date.
[ ] (3) One Hour of Service.
3
<PAGE> 4
Plan Entry Date. "Plan Entry Date" means the Effective Date and: (Choose (c),
(d) or (e))
[ ] (c) Semi-annual Entry Dates. The first day of the Plan Year and the
first day of the seventh month of the Plan Year.
[ ] (d) The first day of the Plan Year.
[x] (e) (Specify entry dates) January 1, April 1, July 1, or October 1.
Time of Participation. An Employee will become a Participant, unless excluded
under Adoption Agreement Section 1.07, on the Plan Entry Date (if employed on
that date): (Choose (f), (g) or (h))
[x] (f) immediately following
[ ] (g) immediately preceding
[ ] (h) nearest
the date the Employee completes the eligibility conditions described in Options
(a) and (b) of this Adoption Agreement Section 2.01. [Note: The Employer must
coordinate the selection of (f), (g) or (h) with the "Plan Entry Date" selection
in (c), (d) or (e). Unless otherwise excluded under Section 1.07, the Employee
must become a Participant by the earlier of: (1) the first day of the Plan Year
beginning after the date the Employee completes the age and service requirements
of Code ss.410(a); or (2) 6 months after the date the Employee completes those
requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01 apply to:
(Choose (i) or (j))
[x] (i) All Employees of the Employer, except: (Choose (1) or (2))
[x] (1) No exceptions.
[ ] (2) Employees who are Participants in the Plan as of the
Effective Date.
[ ] (j) Solely to an Employee employed by the Employer after _______. If
the Employee was employed by the Employer on or before the specified
date, the Employee will become a Participant: (Choose (1) or (2))
[ ] (1) On the latest of the Effective Date, his Employment
Commencement Date or the date he attains age ________
(not to exceed 21).
[ ] (2) Under the eligibility conditions in effect under the Plan
prior to the restated Effective Date. If the restated Plan
required more than one Year of Service to participate, the
eligibility condition under this Option (2) for participation in
the Code ss.401(k) arrangement under this Plan is one Year of
Service for Plan Years beginning after December 31, 1988. [For
restated plans only]
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
[x] (a) 1,000 Hours of Service
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[ ] (b) ____ Hours of Service
during an eligibility computation period to receive credit for a Year of
Service. [Note: The Hours of Service requirement may not exceed 1,000.]
Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))
[ ] (c) The 12 consecutive month period beginning with each anniversary of
an Employee's Employment Commencement Date.
[x] (d) The Plan Year, beginning with the Plan Year which includes the
first anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule described
in Section 2.03(B) of the Plan: (Choose (a) or (b))
[x] (a) Does not apply to the Employer's Plan.
[ ] (b) Applies to the Employer's Plan.
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
Part I. [Options (a) through (g)] Amount of Employer's contribution. The
Employer's annual contribution to the Trust will equal the total amount of
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions, as determined under this Section
3.01. (Choose any combination of (a), (b), (c) and (d), or choose (e))
[x] (a) Deferral contributions (Code ss.401(k) arrangement). The Employer
must contribute the amount by which the Participants have reduced their
Compensation for the Plan Year, pursuant to their salary reduction
agreements on file with the Advisory Committee. A reference in the Plan
to salary reduction contributions is a reference to these amounts.
[x] (b) Matching contributions. The Employer will make matching
contributions in accordance with the formula(s) elected in Part II of
this Adoption Agreement Section 3.01.
[x] (c) Designated qualified nonelective contributions. The Employer, in
its sole discretion, may contribute an amount which it designates as a
qualified nonelective contribution.
[x] (d) Nonelective contributions.
[x] (1) Discretionary contribution. The amount (or additional
amount) the Employer may from time to time deem advisable.
[ ] (2) __% of the Compensation of all Participants under the
Plan, determined for the Employer's taxable year for which it
makes the contribution. [Note: The percentage selected may
not exceed 15%.]
[ ] (3) __% of Net Profits but not more than $__________.
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<PAGE> 6
[ ] (e) Frozen Plan. This Plan is a frozen Plan effective
__________. The Employer will not contribute to the Plan with respect
to any period following the stated date.
Net Profits. The Employer: (Choose (f) or (g))
[x] (f) Need not have Net Profits to make its annual contribution under
this Plan.
[ ] (g) Must have current or accumulated Net Profits exceeding $________
to make the following contributions: (Choose at least one of
(1), (2) and (3))
[ ] (1) Matching contributions described in Option (b),
except:___________________________________.
[ ] (2) Qualified nonelective contributions described in
Option (c).
[ ] (3) Nonelective contributions described in Option ________.
"Net Profits" means the Employer's net income or profits for any taxable year
determined by the Employer upon the basis of its books of account in accordance
with generally accepted accounting practices consistently applied without any
deductions for Federal and state taxes upon income or for contributions made by
the Employer under this Plan or under any other employee benefit plan the
Employer maintains. The term "Net Profits" specifically excludes n/a. [Note:
Enter "N/A" if no exclusions apply.]
If the Employer requires Net Profits for matching contributions and the Employer
does not have sufficient Net Profits under Option (g), it will reduce the
matching contribution under a fixed formula on a prorata basis for all
Participants. A Participant's share of the reduced contribution will bear the
same ratio as the matching contribution the Participant would have received if
Net Profits were sufficient bears to the total matching contribution all
Participants would have received if Net Profits were sufficient. If more than
one member of a related group (as defined in Section 1.30) exec ute this
Adoption Agreement, each participating member will determine Net Profits
separately but will not apply this reduction unless, after combining the
separately determined Net Profits, the aggregate Net Profits are insufficient to
satisfy the matching contribution liability. "Net Profits" includes both current
and accumulated Net Profits.
Part II. [Options (h) and (i)] Matching contribution formula. [Note: If the
Employer elected Option (b), complete Options (h) and (i).]
[x] (h) Amount of matching contributions. Subject to Option (i), for
each Plan Year, the Employer's matching contribution is: (Choose any
combination of (1), (2), (3) and (4))
[x] (1) An amount equal to 50% of each Participant's salary
reduction contributions for the Plan Year.
[ ] (2) An amount equal to __% of each Participant's first tier
of salary reduction contributions for the Plan Year, plus
the following matching percentage(s) for the following
subsequent tiers of salary reduction contributions for the
Plan Year:________________________________________________
________________________________________________________.
[ ] (3) Discretionary formula.
[ ] (i) An amount (or additional amount) equal to a
matching percentage the Employer from time to time
may deem advisable of the Participant's salary
reduction contributions for the Plan Year.
[ ] (ii) An amount (or additional amount) equal to a
matching percentage the Employer from time to time
may deem advisable of each tier of the Participant's
salary reduction contributions for the Plan Year.
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<PAGE> 7
[Note: Under Options (2) or (3)(ii), the matching percentage for any
subsequent tier of salary reduction contributions may not exceed the
matching percentage for any prior tier.]
[ ] (4) A Participant's matching contributions may not:
[ ] (i) Exceed _________________________________________.
[ ] (ii) Be less than ___________________________________.
[x] (i) Amount of salary reduction contributions taken into account. When
determining a Participant's salary reduction contributions taken into
account under the matching contributions formula(s), the following
rules apply: (Choose any combination of (1) through (3))
[ ] (1) The Advisory Committee will take into account all salary
reduction contributions credited for the Plan Year.
[x] (2) The Advisory Committee will disregard salary reduction
contributions exceeding six percent of compensation.
[ ] (3) The Advisory Committee will treat as the first tier of
salary reduction contributions, an amount not exceeding:_______.
The subsequent tiers of salary reduction contributions
are: ____________________________________________.
Part III. [Option (j).]. Special rules for Code ss.401(k) Arrangement.
(Choose (j), if applicable)
[x] (j) Salary Reduction Agreements. The following rules and
restrictions apply to an Employee's salary reduction agreement:
(Make a selection under (1), (2), (3) and (4))
(1) Limitation on amount. The Employee's salary reduction
contributions: (Choose (i) or at least one of (ii) or (iii))
[ ] (i) No maximum limitation other than as provided in the
Plan.
[x] (ii) May not exceed 15% of Compensation for the Plan
Year, subject to the annual additions limitation
described in Part 2 of Article III and the 402(g)
limitation described in Section 14.07 of the Plan.
[ ] (iii) Based on percentages of Compensation must equal at
least ________________________________________________.
(2) An Employee may revoke, on a prospective basis, a salary reduction
agreement: (Choose (i), (ii), (iii) or (iv))
[ ] (i) Once during any Plan Year but not later than
________________________________ of the Plan Year.
[x] (ii) As of any Plan Entry Date.
[ ] (iii) As of the first day of any month.
[ ] (iv) (Specify, but must be at least once per Plan Year)
____________________.
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<PAGE> 8
(3) An Employee who revokes his salary reduction agreement may file a new
salary reduction agreement with an effective date: (Choose (i), (ii), (iii)
or (iv))
[ ] (i) No earlier than the first day of the next Plan Year.
[x] (ii) As of any subsequent Plan Entry Date.
[ ] (iii) As of the first day of any month subsequent to the
month in which he revoked an Agreement.
[ ] (iv) Specify, but must be at least once per Plan Year
following the Plan Year of revocation) ________________
___________________________________________.
(4) A Participant may increase or may decrease, on a prospective basis,
his salary reduction percentage or dollar amount: (Choose (i), (ii), (iii)
or (iv))
[ ] (i) As of the beginning of each payroll period.
[ ] (ii) As of the first day of each month.
[x] (iii) As of any Plan Entry Date.
[ ] (iv) (Specify, but must permit an increase or a decrease at
least once per Plan Year) .
3.04 CONTRIBUTION ALLOCATION. The Advisory Committee will allocate
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions in accordance with Section 14.06 of
the Plan and the elections under this Adoption Agreement Section 3.04.
Part I. [Options (a) through (d)]. Special Accounting Elections. (Choose
whichever elections are applicable to the Employer's Plan)
[x] (a) Matching Contributions Account. The Advisory Committee will
allocate matching contributions to a Participant's: (Choose (1) or (2);
(3) is available only in addition to (1))
[x] (1) Regular Matching Contributions Account.
[ ] (2) Qualified Matching Contributions Account.
[ ] (3) Except, matching contributions under Option(s) of
Adoption Agreement Section 3.01 are allocable to the Qualified
Matching Contributions Account.
[x] (b) Special Allocation Dates for Salary Reduction Contributions. The
Advisory Committee will allocate salary reduction contributions as of
the Accounting Date and as of the following additional allocation
dates: as of each pay period for which a contribution was made pursuant
to a salary reduction agreement.
[x] (c) Special Allocation Dates for Matching Contributions. The Advisory
Committee will allocate matching contributions as of the Accounting
Date and as of the following additional allocation dates: as of each
pay period for which a contribution was made pursuant to a salary
reduction agreement.
[x] (d) Designated Qualified Nonelective Contributions - Definition of
Participant. For purposes of allocating the designated qualified
nonelective contribution, "Participant" means: (Choose (1) or (2))
[ ] (1) All Participants.
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<PAGE> 9
[x] (d) Designated Qualified Nonelective Contributions - Definition of
Participant. For purposes of allocating the designated qualified
nonelective contribution, "Participant" means: (Choose (1) or (2))
[ ] (1) All Participants.
[x] (2) Participants who are Nonhighly Compensated Employees.
Part II. Method of Allocation - Nonelective Contribution. Subject to any
restoration allocation required under Section 5.04, the Advisory Committee will
allocate and credit the annual nonelective contributions (and Participant
forfeitures treated as nonelective contributions) to the Employer Contributions
Account of each Participant who satisfies the conditions of Section 3.06, in
accordance with the method selected under this Part II. (Choose an allocation
method under (e), (f), (g) or (h); (i) is mandatory if the Employer elects (f),
(g) or (h))
[x] (e) Nonintegrated Allocation Formula. The Advisory Committee will
allocate the annual nonelective contributions in the same ratio that
each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.
[ ] (f) Two-Tiered Integrated Allocation Formula - Maximum Disparity.
First, the Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total
Compensation plus Excess Compensation of all Participants for the Plan
Year. The allocation under this paragraph, as a percentage of each
Participant's Compensation plus Excess Compensation, must not exceed
the applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum
Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for
the Plan Year.
[ ] (g) Three-Tiered Integrated Allocation Formula. First, the Advisory
Committee will allocate the annual nonelective contributions in the same
ratio that each Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants for the Plan Year. The
allocation under this paragraph, as a percentage of each Participant's
Compensation may not exceed the applicable percentage (5.7%, 5.4% or
4.3%) listed under the Maximum Disparity Table following Option (i).
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's
Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Excess
Compensation, may not exceed the allocation percentage in the first
paragraph.
Finally, the Advisory Committee will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for
the Plan Year.
[ ] (h) Four-Tiered Integrated Allocation Formula. First, the Advisory
Committee will allocate the annual nonelective contributions in the same
ratio that each Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants for the Plan Year, but not
exceeding 3% of each Participant's Compensation.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's
Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding 3%
of each Participant's Excess Compensation.
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<PAGE> 10
As a third tier allocation, the Advisory Committee will allocate the
annual contributions in the same ratio that each Participant's
Compensation plus Excess Compensation for the Plan Year bears to the
total Compensation plus Excess Compensation of all Participants for the
Plan Year. The allocation under this paragraph, as a percentage of each
Participant's Compensation plus Excess Compensation, must not exceed the
applicable percentage (2.7%, 2.4% or 1.3%) listed under the Maximum
Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for
the Plan Year.
[ ] (i) Excess Compensation. For purposes of Option (f), (g) or (h),
"Excess Compensation" means Compensation in excess of the following
Integration Level: (Choose (1) or (2))
[ ] (1) ___% (not exceeding 100%) of the taxable wage base, as
determined under Section 230 of the Social Security Act, in
effect on the first day of the Plan Year: (Choose any
combination of (i) and (ii) or choose (iii))
[ ] (i) Rounded to ______________________ (but not
exceeding the taxable wage base).
[ ] (ii) But not greater than $____.
[ ] (iii) Without any further adjustment or limitation.
[ ] (2) $______ [Note: Not exceeding the taxable wage base for the
Plan Year in which this Adoption Agreement first is effective.]
Maximum Disparity Table. For purposes of Options (f), (g) and (h), the
applicable percentage is:
<TABLE>
<CAPTION>
Integration Level (as Applicable Percentages for Applicable Percentages
percentage of taxable wage base) Option (f) or Option (g) for Option (h)
<S> <C> <C>
100% 5.7% 2.7%
More than 80% but less than 100% 5.4% 2.4%
More than 20% (but not less than $10,001)
and not more than 80% 4.3% 1.3%
20% (or $10,000, if greater) or less 5.7% 2.7%
</TABLE>
Top Heavy Minimum Allocation - Application of Requirement. The Plan applies the
top heavy minimum allocation requirements of Section 3.04(B)(1): (Choose (j) or
(k))
[x] (j) In all Plan Years. A Participant is entitled to the top heavy
minimum allocation if he is employed by the Employer on the last day of
the Plan Year, unless: (Choose (1) or (2))
[x] (1) No exceptions.
[ ] (2) The Participant is a Key Employee for the Plan Year. [Note:
If the Employer selects this Option (2), it will have to
determine for each Plan Year who are the Key Employees under the
Plan.]
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<PAGE> 11
[ ] (k) Only in Plan Years for which the Plan is top heavy. A Participant
is entitled to the top heavy minimum allocation if he is employed by the
Employer on the last day of the Plan Year, unless he is a Key Employee.
[Note: Option (k) will require the Advisory Committee to determine
whether the Plan is top heavy for a Plan Year.]
Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (Choose (l) or (m))
[x] (l) The Employer will make any necessary additional contribution to
the Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.
[ ] (m) The Employer will satisfy the top heavy minimum allocation under
the Paired Pension Plan the Employer also maintains under this Master Plan.
However, the Employer will make any necessary additional contribution to satisfy
the top heavy minimum allocation for an Employee covered only under this Plan
and not under the Paired Pension Plan. See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan which is not a Paired Pension Plan
offered under this Master Plan, the Employer may provide in an addendum to this
Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
contributions and forfeitures to each Participant in the Plan, in accordance
with the elections in this Adoption Agreement Section 3.04, without regard to
which contributing related group member employs the Participant. A Participant's
Compensation includes Compensation from all related employers, irrespective of
which related employers are contributing to the Plan. The signatory Employer and
any Participating Employer(s) will satisfy any fixed matching contribution
formula under Adoption Agreement Section 3.01 as agreed upon by those Employers.
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required
under Sections 5.04 or 9.14, the Advisory Committee will allocate a Participant
forfeiture in accordance with Section 3.04: (Choose (a) or (b); (c) and (d) are
optional in addition to (a) or (b))
[ ] (a) As an Employer nonelective contribution for the Plan Year in
which the forfeiture occurs, as if the Participant forfeiture were an
additional nonelective contribution for that Plan Year.
[x] (b) To reduce the Employer matching contributions and nonelective
contributions for the Plan Year: (Choose (1) or (2))
[ ] (1) in which the forfeiture occurs.
[x] (2) immediately following the Plan Year in which the forfeiture
occurs.
[ ] (c) To the extent attributable to matching contributions: (Choose (1),
(2) or (3))
[ ] (1) In the manner elected under Options (a) or (b).
[ ] (2) First to reduce Employer matching contributions for the Plan
Year: (Choose (i) or (ii))
[ ] (i) in which the forfeiture occurs,
[ ] (ii) immediately following the Plan Year in which
the forfeiture occurs, then as elected in Options (a)
or (b).
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<PAGE> 12
[ ] (3) As a discretionary matching contribution for the Plan Year
in which the forfeiture occurs, in lieu of the manner elected
under Options (a) or (b).
[ ] (d) First to reduce the Plan's ordinary and necessary administrative
expenses for the Plan Year, and then will allocate any remaining
forfeitures in the manner described in Options (a), (b) or (c),
whichever applies. If the Employer elects Option (c), the forfeitures
used to reduce Plan expenses: (Choose (1) or (2))
[ ] (1) relate proportionately to forfeitures described in Option
(c) and to forfeitures described in Options (a) or (b).
[ ] (2) relate first to forfeitures described in Option .
Allocation of forfeited excess aggregate contributions. The Advisory Committee
will allocate any forfeited excess aggregate contributions (as described in
Section 14.09): (Choose (e), (f) or (g))
[ ] (e) To reduce Employer matching contributions for the Plan Year:
(Choose (1) or (2))
[ ] (1) in which the forfeiture occurs.
[ ] (2) immediately following the Plan Year in which the forfeiture
occurs.
[ ] (f) As Employer discretionary matching contributions for the Plan
Year in which forfeited, except the Advisory Committee will not
allocate these forfeitures to the Highly Compensated Employees who
incurred the forfeitures.
[x] (g) In accordance with Options (a) through (d), whichever applies,
except the Advisory Committee will not allocate these forfeitures
under Option (a) or under Option (c)(3) to the Highly Compensated
Employees who incurred the forfeitures.
3.06 ACCRUAL OF BENEFIT.
Compensation taken into account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory Committee will determine the allocation of
any designated qualified nonelective contribution or nonelective contribution by
taking into account: (Choose (a) or (b))
[ ] (a) The Employee's Compensation for the entire Plan Year.
[x] (b) The Employee's Compensation for the portion of the Plan Year in
which the Employee actually is a Participant in the Plan, except:
(Choose (1) or (2))
[ ] (1) No exceptions.
[x] (2) For purposes of the first 3% of Compensation allocated
under Option (e), (g) or (h) of Adoption Agreement Section
3.04, whichever applies, the Advisory Committee will take into
account the Employee's Compensation for the entire Plan Year.
Accrual Requirements. To receive an allocation of designated qualified
nonelective contributions, nonelective contributions and Participant forfeitures
treated as nonelective contributions for the Plan Year, a Participant must
satisfy the accrual requirements of this paragraph. If the Participant is
employed by the Employer on the last day of the Plan Year, the Participant must
complete at least one Hour of Service for that Plan Year. If the Participant
terminates employment with the Employer during the Plan Year, the Participant
must complete at least 501 Hours of Service (not exceeding 501) during the Plan
Year, except: (Choose (c) or (d))
[ ] (c) No exceptions.
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<PAGE> 13
[x] (d) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of: (Choose at least one of (1), (2)
and (3))
[x] (1) Death.
[x] (2) Disability.
[x] (3) Attainment of Normal Retirement Age in the current Plan Year
or in a prior Plan Year.
Special accrual requirements for matching contributions. To receive an
allocation of matching contributions (and forfeitures applied to reduce matching
contributions) a Participant must satisfy the following condition(s): (Choose
(e) or any combination of (f), (g) and (h))
[x] (e) No conditions other than making salary reduction contributions.
[ ] (f) The accrual requirements prescribed for an allocation of
nonelective contributions.
[ ] (g) The Participant does not revoke his salary reduction agreement
effective during the Plan Year.
[ ] (h) The Participant is not a Highly Compensated Employee for the Plan
Year. This Option (h) applies to:
(Choose (1) or (2))
[ ] (1) All matching contributions.
[ ] (2) Matching contributions described in Option(s) of Adoption
Agreement Section 3.01.
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15
apply, the Excess Amount attributed to this Plan equals: (Choose (a), (b) or
(c))
[ ] (a) The product of:
(i) the total Excess Amount allocated as of such date
(including any amount which the Advisory Committee would have
allocated but for the limitations of Code ss.415), times
(ii) the ratio of (1) the amount allocated to the Participant
as of such date under this Plan divided by (2) the total
amount allocated as of such date under all qualified defined
contribution plans (determined without regard to the
limitations of Code ss.415).
[x] (b) The total Excess Amount.
[ ] (c) None of the Excess Amount.
[Note: If the Employer adopts Paired Plans available under this Master Plan, the
Employer must coordinate its elections under Section 3.15 of each
Adoption Agreement.]
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of the Plan:
(Choose (a) or (b))
[x] (a) Does not apply to the Employer's Plan because the Employer does
not maintain and never has maintained a defined benefit plan covering
any Participant in this Plan.
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<PAGE> 14
[ ] (b) Applies to the Employer's Plan. To the extent necessary to
satisfy the limitation under Section 3.18, the Employer will reduce:
(Choose (1) or (2))
[ ] (1) The Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
[ ] (2) Its contribution or allocation on behalf of the
Participant to the defined contribution plan under which the
Participant participates and then, if necessary, the
Participant's projected annual benefit under the defined
benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section 3.18
do not apply to the Employer's Plan.]
Override of 100% Limitation. The Employer elects: (Choose (c) or (d))
[ ] (c) To apply the 100% limitation described in Section 3.19(l) of the
Plan in all Limitation Years. [Note: This election will avoid having to
calculate the Plan's top heavy ratio for any year, unless the
Employer has elected Adoption Agreement Section 3.04(k).]
[ ] (d) Not to apply the 100% limitation for Limitation Years in which
the Plan's top heavy ratio (as determined under Section 1.33 of the
Plan) does not exceed 90%, but only if the defined benefit plan
satisfies the extra minimum benefit requirements of Codess.416(h)(2)
(and the applicable Treasury regulations) after taking into account the
Employer's election under Options (e), (f), (g) or (h) of this Section
3.18. To determine the top heavy ratio, the Advisory Committee will use
the following interest rate and mortality assumptions to value accrued
benefits under a defined benefit plan: ________________________________.
[Note: This election will require the Advisory Committee to calculate
the Plan's top heavy ratio.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of
the Plan with the following modifications: (Choose (e), (f), (g) or (h))
[ ] (e) No modifications.
[ ] (f) By substituting 4% for 3% in Paragraph (b) of Section 3.04(B)(1)
or of Section 3.04(B)(2) of the Plan, whichever applies, but only for
any Plan Year in which Option (d) applies to override the 100%
limitation.
[ ] (g) By increasing the top heavy minimum allocation to 5% for any
Plan Year in which the 100% limitation applies, and to 7 1/2% for any
Plan Year in which Option (d) applies to override the 100% limitation.
The increased percentage under this Option (g) applies irrespective of
whether the highest contribution rate for the Plan Year is less than
that increased percentage.
[ ] (h) By eliminating the top heavy minimum allocation. [Note: The
Employer may not select this Option (h) if the defined benefit plan does
not guarantee the top heavy minimum benefit under Code ss.416 for every
Participant in this Plan who is a Non-Key Employee.]
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. The Plan: (Choose (a) or
(b))
[x] (a) Does not permit Participant nondeductible contributions.
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<PAGE> 15
[ ] (b) Permits Participant nondeductible contributions, pursuant to
Section 14.04 of the Plan.
Allocation dates. The Advisory Committee will allocate nondeductible
contributions for each Plan Year as of the Accounting Date and the following
additional allocation dates: (Choose (c) or (d))
[ ] (c) No other allocation dates.
[ ] (d) (Specify) ________________________________________________.
As of an allocation date, the Advisory Committee will credit all nondeductible
contributions made for the relevant allocation period. Unless otherwise
specified in (d), a nondeductible contribution relates to an allocation period
only if actually made to the Trust no later than 30 days after that allocation
period ends.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))
[x] (a) 65 [State age, but may not exceed age 65].
[ ] (b) The later of the date the Participant attains ______ years of age
or the ______ anniversary of the first day of the Plan Year in which the
Participant commenced participation in the Plan. [The age selected may
not exceed age 65 and the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under
Section 5.02 of the Plan: (Choose (a) or choose one or both of (b) and (c))
[ ] (a) Does not apply.
[x] (b) Applies to death.
[x] (c) Applies to disability.
5.03 VESTING SCHEDULE.
Deferral Contributions Account/Qualified Matching Contributions
Account/Qualified Nonelective Contributions Account. A Participant has a 100%
Nonforfeitable interest at all times in his Deferral Contribution Account, his
Qualified Matching Contributions Account and in his Qualified Nonelective
Contributions Account.
Regular Matching Contributions Account/Employer Contributions Account. With
respect to a Participant's Regular Matching Contributions Account and Employer
Contributions Account, the Employer elects the following vesting schedule:
(Choose (a) or (b); (c) and (d) are available only as additional options)
[ ] (a) Immediate vesting. 100% Nonforfeitable at all times.
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<PAGE> 16
[x] (b) Graduated Vesting Schedules.
<TABLE>
<CAPTION>
Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)
Years of Nonforfeitable Years of Nonforfeitable
Service Percentage Service Percentage
-------- -------------- -------- --------------
<S> <C> <C> <C>
Less than 1.............. 0% Less than 1...................... 0%
1.................... 0% 1........................... 0%
2.................... 20% 2........................... 0%
3.................... 40% 3........................... 20%
4.................... 60% 4........................... 40%
5.................... 80% 5........................... 60%
6 or more............ 100% 6........................... 80%
7 or more................... 100%
</TABLE>
[ ] (c) Special vesting election for Regular Matching Contributions
Account. In lieu of the election under Options (a) or (b), the Employer
elects the following vesting schedule for a Participant's Regular
Matching Contributions Account: (Choose (1) or (2))
[ ] (1) 100% Nonforfeitable at all times.
[ ] (2) In accordance with the vesting schedule described in the
addendum to this Adoption Agreement, numbered 5.03(c). [Note: If
the Employer elects this Option (c)(2), the addendum must
designate the applicable vesting schedule(s) using the same
format as used in Option (b).]
[Note: Under Options (b) and (c)(2), the Employer must complete a Top Heavy
Schedule which satisfies Code ss.416. The Employer, at its option, may complete
a Non Top Heavy Schedule only if the Employer elected Adoption Agreement
Section 3.04(k). The Non Top Heavy Schedule must satisfy Code ss.411(a)(2). Also
see Section 7.05 of the Plan.]
[x] (d) The Top Heavy Schedule under Option (b) (and, if applicable, under
Option (c)(2)) applies: (Choose (1) or (2))
[ ] (1) Only in a Plan Year for which the Plan is top heavy.
[x] (2) In the Plan Year for which the Plan first is top heavy and
then in all subsequent Plan Years. [Note: The Employer may not
elect Option (d) unless it has completed a Non Top Heavy
Schedule.]
Minimum vesting. (Choose (e) or (f))
[x] (e) The Plan does not apply a minimum vesting rule.
[ ] (f) A Participant's Nonforfeitable Accrued Benefit will never be less
than the lesser of $__ or his entire Accrued Benefit, even if the
application of a graduated vesting schedule under Options (b) or (c)
would result in a smaller Nonforfeitable Accrued Benefit.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION
OF FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in
Section 5.04(C) of the Plan: (Choose (a) or (b))
[ ] (a) Does not apply.
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<PAGE> 17
[x] (b) Will apply to determine the timing of forfeitures for 0% vested
Participants. A Participant is not a 0% vested Participant if he has a
Deferral Contributions Account.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis
of the following 12 consecutive month periods: (Choose (a) or (b))
[x] (a) Plan Years.
[ ] (b) Employment Years. An Employment Year is the 12 consecutive month
period measured from the Employee's Employment Commencement Date and
each successive 12 consecutive month period measured from each
anniversary of that Employment Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (Choose (c) or (d))
[x] (c) 1,000 Hours of Service.
[ ] (d) __ Hours of Service. [Note: The Hours of Service requirement may
not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically
excludes the following Years of Service: (Choose (a) or at least one of (b),
(c) and (d))
[ ] (a) None other than as specified in Section 5.08(a) of the Plan.
[ ] (b) Any Year of Service before the Participant attained the age of ___.
[Note: The age selected may not exceed age 18.]
[x] (c) Any Year of Service during the period the Employer did not
maintain this Plan or a predecessor plan.
[ ] (d) Any Year of Service before a Break in Service if the number of
consecutive Breaks in Service equals or exceeds the greater of 5 or the
aggregate number of the Years of Service prior to the Break. This
exception applies only if the Participant is 0% vested in his Accrued
Benefit derived from Employer contributions at the time he has a Break
in Service. Furthermore, the aggregate number of Years of Service
before a Break in Service do not include any Years of Service not
required to be taken into account under this exception by reason of any
prior Break in Service.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the effective date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means the first day of
each calendar month _____________________. [Note: The Employer must specify the
appropriate date(s). The specified distribution dates primarily establish
annuity starting dates and the notice and consent periods prescribed by the
Plan. The Plan allows the Trustee an administratively practicable period of time
to make the actual distribution relating to a particular distribution date.]
17
<PAGE> 18
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the limitations
of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d))
[ ] (a) _____________________________________________ of the _____________
Plan Year beginning after the Participant's Separation from Service.
[x] (b) any distribution date following the Participant's Separation from
Service.
[ ] (c) _________________________________________ of the Plan Year after
the Participant incurs __ Break(s) in Service (as defined in Article V).
[ ] (d) _________________________ following the Participant's attainment of
Normal Retirement Age, but not earlier than _________ days following his
Separation from Service.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to the limitations of
Section 6.01(A)(3), is: (Choose (e) or (f))
[ ] (e) _____________________________________________ after the Participant
terminates employment because of disability.
[x] (f) The same as if the Participant had terminated employment without
disability.
Hardship. (Choose (g) or (h))
[ ] (g) The Plan does not permit a hardship distribution to a Participant
who has separated from Service.
[x] (h) The Plan permits a hardship distribution to a Participant who has
separated from Service in accordance with the hardship distribution
policy stated in: (Choose (1) or (2))
[ ] (1) Section 6.01(A)(4) of the Plan.
[x] (2) Section 14.11 of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to
Section 9.04, the Plan: (Choose (i) or (j))
[x] (i) Treats the default as a distributable event. The Trustee, at the
time of the default, will reduce the Participant's Nonforfeitable
Accrued Benefit by the lesser of the amount in default (plus accrued
interest) or the Plan's security interest in that Nonforfeitable Accrued
Benefit. To the extent the loan is attributable to the Participant's
Deferral Contributions Account, Qualified Matching Contributions Account
or Qualified Nonelective Contributions Account, the Trustee will not
reduce the Participant's Nonforfeitable Accrued Benefit unless the
Participant has separated from Service or unless the Participant has
attained age 59 1/2.
[ ] (j) Does not treat the default as a distributable event. When an
otherwise distributable event first occurs pursuant to Section 6.01 or
Section 6.03 of the Plan, the Trustee will reduce the Participant's
Nonforfeitable Accrued Benefit by the lesser of the amount in default
(plus accrued interest) or the Plan's security interest in that
Nonforfeitable Accrued Benefit.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will
apply Section 6.02 of the Plan with the following modifications: (Choose (a) or
(b))
[x] (a) No modifications.
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<PAGE> 19
[ ] (b) The Plan permits the following annuity options: __________________.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See
Section 6.04(E). [Note: The Employer may specify additional annuity
options in an addendum to this Adoption Agreement, numbered 6.02(b).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose (a) or
(b))
[ ] (a) As of any distribution date, but not earlier than ______________ of
the ________________________ Plan Year beginning after the
Participant's Separation from Service.
[x] (b) As of the following date(s): (Choose at least one of Options (1)
through (5))
[ ] (1) As of any distribution date after the close of the Plan
Year in which the Participant attains Normal Retirement Age.
[x] (2) Any distribution date following his Separation from
Service.
[ ] (3) Any distribution date in the _________________ Plan Year(s)
beginning after his Separation from Service.
[ ] (4) Any distribution date in the Plan Year after the
Participant incurs _____________ Break(s) in Service (as defined
in Article V).
[ ] (5) Any distribution date following attainment of age ________
and completion of at least _____ Years of Service (as defined
in Article V).
The distribution events described in the election(s) made under Options (a)
or (b) apply equally to all Accounts maintained for the Participant.
Participant Elections Prior to Separation from Service - Regular Matching
Contributions Account and Employer Contributions Account. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Regular Matching Contributions Account and Employer Contributions
Account prior to his Separation from Service: (Choose (c) or at least one of (d)
through (f))
[ ] (c) No distribution options prior to Separation from Service.
[ ] (d) Attainment of Specified Age. Until he retires, the Participant has
a continuing election to receive all or any portion of his
Nonforfeitable interest in these Accounts after he attains: (Choose (1)
or (2))
[ ] (1) Normal Retirement Age.
[ ] (2) _____________ years of age and is at least ________% vested
in these Accounts. [Note: If the percentage is less than 100%,
see the special vesting formula in Section 5.03.]
[ ] (e) After a Participant has participated in the Plan for a period of
not less than __________ years and he is 100% vested in these Accounts,
until he retires, the Participant has a continuing election to receive
all or any portion of the Accounts. [Note: The number in the blank space
may not be less than 5.]
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<PAGE> 20
[x] (f) Hardship. A Participant may elect a hardship distribution prior to
his Separation from Service in accordance with the hardship
distribution policy: (Choose (1) or (2); (3) is available only in
addition to (1) or (2))
[ ] (1) Under Section 6.01(A)(4) of the Plan.
[x] (2) Under Section 14.11 of the Plan.
[ ] (3) In no event may a Participant receive a hardship
distribution before he is at least _____% vested in these
Accounts. [Note: If the percentage in the blank is less than
100%, see the special vesting formula in Section 5.03.]
Participant Elections Prior to Separation from Service - Deferral Contributions
Account, Qualified Matching Contributions Account and Qualified Nonelective
Contributions Account. Subject to the restrictions of Article VI, the following
distribution options apply to a Participant's Deferral Contributions Account,
Qualified Matching Contributions Account and Qualified Nonelective Contributions
Account prior to his Separation from Service:
(Choose (g) or at least one of (h) or (i))
[ ] (g) No distribution options prior to Separation from Service.
[ ] (h) Until he retires, the Participant has a continuing election to
receive all or any portion of these Accounts after he attains:
(Choose (1) or (2))
[ ] (1) The later of Normal Retirement Age or age 59 1/2.
[ ] (2) Age ____ (at least 59 1/2).
[x] (i) Hardship. A Participant, prior to this Separation from Service,
may elect a hardship distribution in accordance with the hardship
distribution policy under Section 14.11 of the Plan.
Sale of trade or business/subsidiary. If the Employer sells substantially all of
the assets (within the meaning of Code ss.409(d)(2)) used in a trade or business
or sells a subsidiary (within the meaning of Code ss.409(d)(3)), a Participant
who continues employment with the acquiring corporation is eligible for
distribution from his Deferral Contributions Account, Qualified Matching
Contributions Account and Qualified Nonelective Contributions Account: (Choose
(j) or (k))
[x] (j) Only as described in this Adoption Agreement Section 6.03 for
distributions prior to Separation from Service.
[ ] (k) As if he has a Separation from Service. After March 31, 1988, a
distribution authorized solely by reason of this Option (k) must
constitute a lump sum distribution, determined in a manner consistent
with Code ss.401(k)(10) and the applicable Treasury regulations.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
The annuity distribution requirements of Section 6.04: (Choose (a) or (b))
[x] (a) Apply only to a Participant described in Section 6.04(E) of the
Plan (relating to the profit sharing exception to the joint and
survivor requirements).
[ ] (b) Apply to all Participants.
20
<PAGE> 21
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than
a distribution from a segregated Account and other than a corrective
distribution described in Sections 14.07, 14.08, 14.09 or 14.10 of the Plan)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at:
(Choose (a) or (b))
[x] (a) 0% per annum. [Note: The percentage may equal 0%.]
[ ] (b) The 90 day Treasury bill rate in effect at the beginning of the
current valuation period.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. Pursuant to
Section 14.12, to determine the allocation of net income, gain or loss: (Choose
only those items, if any, which are applicable to the Employer's Plan)
[x] (a) For salary reduction contributions, the Advisory Committee will:
(Choose (1), (2), (3) or (4))
[x] (1) Apply Section 9.11 without modification.
[ ] (2) Use the segregated account approach described in
Section 14.12.
[ ] (3) Use the weighted average method described in Section 14.12,
based on a ______________ weighting period.
[ ] (4) Treat as part of the relevant Account at the beginning of
the valuation period ___% of the salary reduction contributions:
(Choose (i) or (ii))
[ ] (i) made during that valuation period.
[ ] (ii) made by the following specified
time: ________________________.
[x] (b) For matching contributions, the Advisory Committee will:
(Choose (1), (2) or (3))
[x] (1) Apply Section 9.11 without modification.
[ ] (2) Use the weighted average method described in Section 14.12,
based on a _____________ weighting period.
[ ] (3) Treat as part of the relevant Account at the beginning of
the valuation period % of the matching contributions allocated
during the valuation period.
[ ] (c) For Participant nondeductible contributions, the Advisory Committee
will: (Choose (1), (2), (3) or (4))
[ ] (1) Apply Section 9.11 without modification.
[ ] (2) Use the segregated account approach described in
Section 14.12.
[ ] (3) Use the weighted average method described in Section 14.12,
based on a ___________ weighting period.
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<PAGE> 22
[ ] (4) Treat as part of the relevant Account at the beginning of the
valuation period % of the Participant nondeductible
contributions: (Choose (i) or (ii))
[ ] (i) made during that valuation period.
[ ] (ii) made by the following specified time: ____________.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee
must value the Trust Fund on the following valuation date(s): (Choose (a)
or (b))
[ ] (a) No other mandatory valuation dates.
[x] (b) (Specify) every business day in an administratively reasonable time
_______________________________________.
22
<PAGE> 23
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective
Date specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
[ ] (a) Compensation definition. The Compensation definition of
Section 1.12 (other than the $200,000 limitation) is effective for Plan
Years beginning after __________. [Note: May not be effective later than
the first day of the first Plan Year beginning after the Employer
executes this Adoption Agreement to restate the Plan for the Tax Reform
Act of 1986, if applicable.]
[ ] (b) Eligibility conditions. The eligibility conditions specified in
Adoption Agreement Section 2.01 are effective for Plan Years beginning
after ____________.
[ ] (c) Suspension of Years of Service. The suspension of Years of Service
rule elected under Adoption Agreement Section 2.03 is effective for Plan
Years beginning after ____________.
[ ] (d) Contribution/allocation formula. The contribution formula elected
under Adoption Agreement Section 3.01 and the method of allocation
elected under Adoption Agreement Section 3.04 is effective for Plan
Years beginning after _____________.
[ ] (e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ____________. [Note: If the
effective date is later than Plan Years beginning after December 31,
1989, the accrual requirements in the Plan prior to its restatement may
not be more restrictive for post-1989 Plan Years than the requirements
permitted under Adoption Agreement Section 3.06.]
[ ] (f) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ____________. [Note: The date specified may not be
earlier than December 31, 1985.]
[ ] (g) Vesting Schedule. The vesting schedule elected under Adoption
Agreement Section 5.03 is effective for Plan Years beginning after
______________.
[ ] (h) Allocation of Earnings. The special allocation provisions elected
under Adoption Agreement Section 9.11 are effective for Plan Years
beginning after _______________.
For Plan Years prior to the special Effective Date, the terms of the Plan
prior to its restatement under this Adoption Agreement will control for purposes
of the designated provisions. A special Effective Date may not result in the
delay of a Plan provision beyond the permissible Effective Date under any
applicable law requirements.
23
<PAGE> 24
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance, on this 18th day of November, 1998.
Name and EIN of Employer: American Stone Corporation 34-1764820
Signed: /s/ David Tyrrell
-----------------
David Tyrrell, President
Name(s) of Trustee: FirstMerit Bank, N.A. , 123 West Prospect Avenue ,
Cleveland, Ohio 44115
Signed: /s/ Albert J. Barrabei
----------------------
Albert J. Barrabei, Vice President and Trust Officer
Name of Custodian: ____________________________________
Signed: ______________________________________________________
[Note: A Trustee is mandatory, but a Custodian is optional. See Section 10.03 of
the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this Plan for ERISA
reporting purposes (Form 5500 Series) is: 001.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
The Master Plan Sponsor offers the following Paired Pension Plan(s) with this
Paired Profit Sharing Plan, identified by 3-digit adoption agreement number:
____.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of any amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: 121 SOUTH MAIN STREET, SUITE 200 AKRON, OHIO 44308-1440 (330)
384-7300.
Reliance on Opinion Letter. If the Employer does not maintain (and has never
maintained) any other plan other than this Plan and a Paired Pension Plan, it
may rely on the Master Plan Sponsor's opinion letter covering this Plan for
purposes of plan qualification. For this purpose, the Employer has not
maintained another plan if this Plan, or the Paired Pension Plan, amended and
restated that prior plan and the prior plan was the same type of plan as the
restated plan. If the Employer maintains or has maintained another plan other
than a Paired Pension Plan, including a welfare benefit fund, as defined in Code
ss.419(e), which provides post-retirement medical benefits for key employees (as
defined in Code ss.419A(d)(3)), or an individual medical account (as defined in
Code ss.415(l)(2)), the Employer may not rely on this Plan's qualified status
unless it obtains a determination letter from the applicable IRS Key District
office.
24
<PAGE> 25
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects
to become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by American Stone Corporation, the Signatory Employer to the
Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is: ________________________.
2. The undersigned Employer's adoption of this Plan constitutes:
[ ] (a) The adoption of a new plan by the Participating Employer.
[ ] (b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as ___________________, and
having an original effective date of ____________________.
Dated this __________ day of _____________, ________________.
Name of Participating Employer: __________________
Signed: __________________________
Participating Employer's EIN: _________________
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: American Stone Corporation
Accepted:______________
[Date] Signed: ______________________
Name(s) of Trustee: ______________________
Accepted:______________
[Date] Signed: ________________________
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important
Master Plan information.]
25
<PAGE> 1
EXHIBIT 10.21
APPENDIX B TO GENERAL INSTRUCTIONS
CHECKLIST OF EMPLOYER ADMINISTRATIVE ELECTIONS
American Stone Corporation 401(k) Profit Sharing Plan
The Prototype Plan permits the adopting employer (or the advisory
committee) to make certain administrative elections not reflected in the
adoption agreement. This form lists those administrative elections and provides
a means of recording your decision.
1. Section 1.09 - Definition of highly compensated employee. The plan
permits the employer to make a calendar year election for purposes of
identifying highly compensated employees.
[ ] The plan will use the calendar year election.
[x] The plan will not use the calendar year election.
2. Section 1.12(B) - Nondiscrimination definition of compensation. When
testing discrimination under the plan, the plan permits the employer to
elect to "gross up" an employees compensation by the amount of his
elective contributions for the year.
[x] The plan will "gross up" compensation for elective
contributions.
[ ] The plan will exclude elective contributions.
[Note: This election solely is for purposes of testing discrimination.
The election does not affect the employer's election under Option (a)
or (b) of Adoption Agreement Section 1.12. The elections under Adoption
Agreement Section 1.12 apply to the definition of compensation for
purposes of making allocations of employer contributions and
participant forfeitures.]
3. Section 4.03. Rollover contributions.
[x] The plan accepts rollover contributions.
[ ] The plan does not accept rollover contributions.
4. Section 7.04. If your plan has a discretionary trustee, Section 7.04
authorizes the employer to enter into a written agreement with the
trustee permitting the employer to direct investments. Legal counsel
should assist you in this arrangement.
5. Section 8.10. If the trustee agrees, the plan authorizes participant
direction of investment. The adopting employer, the advisory committee
and the trustee should agree to the conditions and limitations of
participant direction of investment. Legal counsel should assist you
with this election.
[x] The plan will permit participant direction of investment.
[ ] The plan will not permit participant direction of investment.
6. Section 9.04. The plan authorizes the advisory committee to adopt a
written loan policy to permit participant loans.
[ ] The plan will permit participant loans.
[x] The plan will not permit participant loans.
7. Section 11.01. The plan may invest in life insurance on behalf of a
participant's account, subject to participant consent.
[ ] The plan will invest in life insurance contracts.
[x] The plan will not invest in life insurance contracts.
/s/ David Tyrrell 18th Nov '98
------------------------ ------------
David Tyrrell, President Date
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF REGISTRANT
As of March 15, 1998, the following entities were subsidiaries of
American Stone Industries, Inc.:
1. American Stone Corporation, a Delaware corporation, which does business
as "American Stone Corporation" and "Cleveland Quarries."
2. Tyrrell Stone Design, Ltd., an Ontario, Canada corporation, which does
business as "Tyrrell Stone Design."
<PAGE> 1
EXHIBIT 23.1
March 26, 1999
Mr. David Tyrrell
President and Chief Executive Officer
American Stone Industries, Inc.
8705 Quarry Road
P.O. Box 261
Amherst, OH 44001
RE: Consent to Incorporation of
Independent Auditors' Report
Dear Mr. Tyrrell:
This firm was the independent auditor for American Stone Industries, Inc.
(The "Company") for the fiscal year ended December 31, 1998. In this context,
we understand that the Company has filed a Form S-8 with the Securities &
Exchange Commission (registration number 333-74899).
Pursuant to Rule 601(b)(23), this letter will serve as our consent for the
Company to incorporate by reference in the Form S-8, our Independent Auditors'
Report dated February 12, 1999 for fiscal year ended December 31, 1998 filed
with the annual report Form 10-KSB and to the reference of Hobe & Lucas,
Certified Public Accountants, Inc., therein.
/s/ Hobe & Lucas
Hobe & Lucas,
Certified Public Accountants, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 196,942
<SECURITIES> 0
<RECEIVABLES> 835,296
<ALLOWANCES> 15,025
<INVENTORY> 812,224
<CURRENT-ASSETS> 1,859,851
<PP&E> 2,931,657
<DEPRECIATION> 278,953
<TOTAL-ASSETS> 4,713,410
<CURRENT-LIABILITIES> 1,272,048
<BONDS> 0
0
0
<COMMON> 1,716
<OTHER-SE> 3,027,687
<TOTAL-LIABILITY-AND-EQUITY> 4,713,410
<SALES> 3,221,762
<TOTAL-REVENUES> 3,225,965
<CGS> 2,124,649
<TOTAL-COSTS> 858,899
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88,170
<INCOME-PRETAX> 124,247
<INCOME-TAX> 0
<INCOME-CONTINUING> 124,247
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 124,247
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
