<PAGE>
As filed with the Securities and Exchange Commission on October 15, 1996
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
Colonial Properties Trust
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Alabama 2101 Sixth Avenue North 59-7007599
(State or other jurisdiction of Suite 750 (I.R.S. Employer
incorporation or organization) Birmingham, Alabama 35202 Identification Number)
(Address of principal executive offices) (Zip code)
</TABLE>
Colonial Properties Trust 401(k)/Profit Sharing Plan
(Full title of the plan)
Thomas H. Lowder
President and Chief Executive Officer
Colonial Properties Trust
2101 Sixth Avenue North
Suite 750
Birmingham, Alabama 35202
(Name and address of agent for service)
(205) 250-8700
(Telephone number, including area code, of agent for service)
-------------------------------------------------------------
With a copy to:
J. Warren Gorrell, Jr.
Alan L. Dye
Hogan & Hartson L.L.P.
555 Thirteenth Street, N.W.
Washington, D.C. 20004
(202) 637-5600
-------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
Title of securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered offering price per share aggregate offering price registration fee
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares of
Beneficial Interest, par 400,000(1) $26.25(2) $10,500,000(2) $3,181.82
value $.01 per share
=======================================================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described herein.
(2) Estimated pursuant to Rule 457(h) under the Securities Act of 1933 as of
October 8, 1996 solely for the purpose of calculating the registration fee.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Documents containing the information required to be provided in
this Part I will be separately sent or given to employees participating in
the Colonial Properties Trust 401(k)/Profit Sharing Plan (the "Plan"), as
contemplated by Rule 428(b)(1) under the Securities Act of 1933, as amended
(the "Securities Act"). In accordance with the instructions to Part I of
Form S-8, such documents will not be filed with the Securities and Exchange
Commission (the "Commission") either as part of this Registration Statement
or as prospectuses or prospectus supplements pursuant to Rule 424 under the
Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
Colonial Properties Trust (the "Company") hereby incorporates by
reference into this Registration Statement the following documents:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995;
(b) The Company's current report on Form 8-K filed January
22, 1996;
(c) The Company's current report on Form 8-K filed July 22,
1996;
(d) All reports filed by the Company with the Commission
under Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), since December
31, 1995;
(e) The description of the Company's common stock contained
in the Company's Post-Effective Amendment to Registration
Statement on Form S-3 filed with the Commission and which
became effective on December 21, 1995 (Reg. No. 33-89612);
and
(f) All documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14, or 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or
which deregisters all securities remaining unsold.
The Plan hereby incorporates by reference into this Registration
Statement all documents subsequently filed by the Plan pursuant to Section
13(a), 13(c), 14, or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities remaining unsold.
Any statement contained in a document incorporated or deemed to
be incorporated by reference shall be deemed to be modified or superseded
to the extent that a statement contained in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such prior statement. The documents required to be
so modified or superseded shall not be deemed to constitute a part of this
Registration Statement, except as so modified or superseded.
-2-
<PAGE>
To the extent that any proxy statement is incorporated by
reference herein, such incorporation shall not include any information
contained in such proxy statement which is not, pursuant to the
Commission's rules, deemed to be "filed" with the Commission or subject to
the liabilities of Section 18 of the Exchange Act.
Item 4. Description of Securities.
A description of the Company's common shares of beneficial
interest, par value $ .01 per share, is incorporated by reference under
Item 3.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
(a) Section 8.4 of the Company's Declaration of Trust, entitled
"Indemnification," and Article XII of the Company's Bylaws, entitled
"Indemnification," are set forth as Exhibits 4.2 and 4.3, respectively, to
this registration statement and incorporated herein by reference.
(b) Sections 10-2B-8.50 to 10-2B-8.58, inclusive, Code of
Alabama, 1975, entitled "Division E. Indemnification," are set forth as
Exhibit 99.1 to this registration statement and incorporated herein by
reference.
(c) The Company has in effect a policy of liability insurance
covering its trustees and officers.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
Number Description
------ -----------
4.1 The Colonial Properties Trust 401(k)/Profit Sharing Plan, effec-
tive as of February 15, 1995, and Amendment No. 1 to such Plan,
effective as of December 27, 1995
4.2 Section 8.4 of the Company's Declaration of Trust
4.3 Article XII of the Company's Bylaws
5.1 Internal Revenue Service letter of determination, dated June 25,
1996, concerning the Plan's qualification under Section 401 of
the Internal Revenue Code
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Awareness Letter of Coopers & Lybrand L.L.P.
24.1 Power of Attorney (contained on page 7 of this Registration
Statement)
99.1 Sections 10-2B-8.50 to 10-2B-8.58 of the Code of Alabama, 1975
-3-
<PAGE>
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act and
each filing of the Plan's annual report pursuant to Section
15(d) of the Exchange Act that is incorporated by reference
in this Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to trustees, officers, and
controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of the
expenses incurred or paid by a trustee, officer or
controlling person of the
-4-
<PAGE>
Registrant of the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of
counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
-5-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company
certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Birmingham, State of Alabama on
October 15, 1996.
Colonial Properties Trust
By: /s/ Thomas H. Lowder
--------------------
Thomas H. Lowder
President, Chief Executive Officer
and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933,
Colonial Properties Services, Inc., plan administrator of the Colonial
Properties Trust 401(k)/Profit Sharing Plan, has duly caused this
registration statement to be signed on behalf of the Plan by the
undersigned, thereunto duly authorized, in the City of Birmingham, State of
Alabama, on October 15, 1996.
Colonial Properties Trust 401(k)/Profit
Sharing Plan
By: Colonial Properties Services, Inc.,
Plan Administrator
By: /s/ Thomas H. Lowder
--------------------
Thomas H. Lowder
President, Chief Executive Officer
and Chairman of the Board
-6-
<PAGE>
POWER OF ATTORNEY
We, the undersigned directors and officers of Colonial Properties
Trust, do hereby constitute and appoint Thomas H. Lowder and Douglas B.
Nunnelley, and each and either of them, our true and lawful attorneys-in-
fact and agents, to do any and all acts and things in our names and our
behalf in our capacities as directors and officers and to execute any and
all instruments for us and in our name in the capacities indicated below,
which said attorneys and agents, or either of them, may deem necessary or
advisable to enable said Corporation to comply with the Securities Act of
1933 and any rules, regulations and requirements of the Securities and
Exchange Commission, in connection with this registration statement, or any
registration statement for this offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933, including
specifically, but without limitation, any and all amendments (including
post-effective amendments) hereto; and we hereby ratify and confirm all
that said attorneys and agents, or either of them, shall do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Thomas H. Lowder President, Chief Executive Officer October
-------------------- and Chairman of the Board 15, 1996
Thomas H. Lowder
/s/ Douglas B. Nunnelley Senior Vice President and October
------------------------ Chief Financial Officer 15, 1996
Douglas B. Nunnelley (Principal Financial Officer)
/s/ Kenneth E. Howell Vice President and Controller October
--------------------- (Principal Accounting Officer) 15, 1996
Kenneth E. Howell
/s/ James K. Lowder Trustee October
------------------- 15, 1996
James K. Lowder
/s/ Carl F. Bailey Trustee October
------------------ 15, 1996
Carl F. Bailey
/s/ M. Miller Gorrie Trustee October
-------------------- 15, 1996
M. Miller Gorrie
-7-
<PAGE>
/s/ Donald T. Senterfitt Trustee October 15, 1996
------------------------
Donald T. Senterfitt
/s/ Claude B. Nielsen Trustee October 15, 1996
---------------------
Claude B. Nielsen
/s/ Harold W. Ripps Trustee October 15, 1996
-------------------
Harold W. Ripps
/s/ Herbert A. Meisler Trustee October 15, 1996
----------------------
Herbert A. Meisler
-8-
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
4.1 The Colonial Properties Trust 401(k)/Profit Sharing Plan,
effective as of February 15, 1995, and Amendment No. 1,
effective as of December 27, 1995, to such Plan
4.2 Section 8.4 of the Company's Declaration of Trust
4.3 Article XII of the Company's Bylaws
5.1 Internal Revenue Service letter of determination, dated June 25,
1996, concerning the Plan's qualification under Section 401 of the
Internal Revenue Code
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Awareness Letter of Coopers & Lybrand L.L.P.
24.1 Power of Attorney (contained on page 7 of this Registration
Statement)
99.1 Sections 10-2B-8.50 to 10-2B-8.58 of the Code of Alabama, 1975
-9-
<PAGE>
STATE OF ALABAMA
Exhibit 4.1
MONTGOMERY COUNTY -----------
COLONIAL PROPERTIES TRUST
401(k)/PROFIT SHARING PLAN
COLONIAL PROPERTIES TRUST, a Maryland Real Estate Investment Trust,
(hereinafter called the "Employer"), hereby adopts and publishes on this the
15th day of February, 1995 this 401(k)/Profit Sharing Plan for the exclusive
benefit of such of its Employees who may become Participants and their
Beneficiaries as set forth in this document, pursuant to Section 401(a) of the
Internal Revenue Code, as follows:
ARTICLE I
Definitions
-----------
As used in the Plan, the following words and phrases and any derivatives thereof
will have the meanings set forth below unless the context clearly indicates
otherwise. Definitions of other words and phrases are set forth throughout the
Plan. Section references indicate sections of the Plan unless otherwise stated.
The masculine pronoun includes the feminine, and the singular number includes
the plural and the plural the singular, whenever applicable.
1.1 ACP Test. See Subsection 7.2 (b).
--------
1.2 ADP Test. See Subsection 7.2 (a).
--------
1.3 Accounts. The Plan Administrator will maintain the following Accounts for
--------
each Participant for accounting purposes only, and will not segregate Plan
assets among Accounts.
(a) Employer Contribution Accounts. Each Participant will have one or
------------------------------
more of the following Employer Contribution Accounts, which will be
funded from his Employer's general treasury.
(1) Matching Account. The account to record the Matching
----------------
Contributions allocated to the Participant's Account under
Section 3.2, and any attributable earnings, which will be
subject to the vesting schedule set forth in Subsection 3.2(d).
(2) Profit Sharing Account. The account to record the Employer's
----------------------
Profit Sharing Contributions made from time to time within the
Employer's discretion under Section 3.2, and any attributable
earnings, which will be subject to the vesting schedule set
forth in Subsection 3.2(d).
(3) Safe-Harbor Contributions Account. The account to record the
---------------------------------
Participant's allocations of any Safe-Harbor Contributions made
from time to time under Section 3.2 as the Plan Administrator
determines to be necessary to avoid violating the ADP Test
and/or the ACP Test, and any attributable earnings, which will
be fully vested at all times.
<PAGE>
(4) Pre-1987 Vested Account from Transferor Plan. The account to
--------------------------------------------
hold the Participant's allocations of Employer Contributions made for
all Plan Years before 1987, and earnings on those allocations, which
will be fully vested at all times.
(b) Employee Contribution Accounts.
------------------------------
(1) Before-Tax Account. Each Participant will have a Before-Tax
------------------
Account to hold his own elected salary reduction contributions
made on a before-tax basis under Section 3.1, and any
attributable earnings.
(2) After-Tax Account. Each Participant who made after-tax
-----------------
contributions before the Transferor Plan stopped accepting them
effective January 1, 1986, will have an After-Tax Account to
hold those contributions and any attributable earnings.
(c) Rollover Account. The account to record any Rollover Contributions
----------------
made by the Participant under Section 3.3, and any attributable
earnings.
1.4 Actual Contribution Ratio (ACR). See Subsection 7.2(b)(1).
-------------------------------
1.5 Actual Deferral Ratio (ADR). See Subsection 7.2(a)(1).
---------------------------
1.6 Adoption Agreement. The written document by which an Employer adopts the
------------------
Plan, and which specifies any Years of Service granted for periods before
the effective date of the Employer's adoption.
1.7 Affiliated Company. Each corporation or entity with less than 80 percent
------------------
common control with the Employer or with a Controlled Group member, which
has adopted and is maintaining the Plan.
1.8 After-Tax Account. See Subsection 1.3(b)(2).
-----------------
1.9 Average Contribution Percentage (ACP). See Subsection 7.2(b)(2).
-------------------------------------
1.10 Average Deferral Percentage (ADP). See Subsection 7.2(a)(2).
---------------------------------
1.11 Before-Tax Account. See Subsection 1.3(b)(1).
------------------
1.12 Before-Tax Contribution. See Subsection 1.18(b).
-----------------------
1.13 Board. The Board of Directors of the Employer.
-----
1.14 Break in Service. See Section 1.34 Five-Year Break and Section 1.43 One-
---------------- --------------- ---
Year Break.
----------
1.15 Code. The Internal Revenue Code of 1986 as amended from time to time, and
----
regulations and rulings issued under the Code.
1.16 Company Stock. Shares of the common stock of an Employer.
-------------
2
<PAGE>
1.17 Compensation. Compensation will have the following meanings for the
------------
following purposes; provided that this definition is intended to be a
safe-harbor definition under Code Section 414(s).
(a) Contributions and Nondiscrimination Testing. The taxable earnings
-------------------------------------------
paid by the Employer to the Participant and reported on his Form W-2
for the portion of the Plan Year when he participates in the Plan.
Compensation will include (a) basic salary or wages, (b) overtime
-------
pay, (c) bonuses, (d) commissions, and (e) amounts deferred under
Code Sections 401(k) and/or 125 pursuant to the Participant's salary
reduction agreement. Compensation will exclude (a) Employer-paid
-------
contributions under this Plan and any deferred compensation plan to
the extent not currently taxable to the Participant, (b) cash and
noncash fringe benefits, (c) reimbursements and expense allowances,
(d) moving expenses, (e) welfare benefits, and (f) other amounts
which receive special tax benefits.
(b) Code Section 415 Limitations and Deductibility of Employer
----------------------------------------------------------
Contributions. For purposes of the Code Section 415 Limitations
-------------
described in Section 7.3, and the deduction limitation on Employer
Contributions described in Subsection 3.2(g), Compensation is the
amount paid by the Employer to the Participant and reported as
taxable income on his Form W-2 for the Plan Year, which amount will
exclude Before-Tax Contributions and Employer Contributions to this
-------
Plan and salary reduction amounts contributed to any other plan
maintained by an Employer under Code Sections 125 and 401(k).
(c) Statutory Cap.
-------------
(1) Each Participant's Compensation taken into account for all
purposes under the Plan will be limited to $150,000 (as indexed
under Code Section 401(a)(17))
(2) Family Unit Aggregation. For purposes of the statutory cap, the
-----------------------
Plan will aggregate the Compensation of (A) each Employee who
either is a 5-per-cent owner or is among the 10 highest-paid
Employees, and (B) his Spouse and/or his lineal descendants who
have not reached age 19 as of the last day of the Plan Year.
The Plan Administrator will allocate the statutory cap among the
members of any Family Unit in proportion to each member's actual
Compensation.
(3) No Proration. The Plan will not prorate the statutory cap on
------------
Compensation for any Participant who participates in the Plan
for less than a full Plan Year.
1.18 Contributions. The Trustee will accept the following Contributions to the
-------------
Plan:
(a) Employer Contributions. The total of the Participant's allocations
----------------------
of the following Contributions made by an Employer for the Plan Year:
(1) Matching Contribution. An amount equal to 50 percent of the
---------------------
first 6 percent of Compensation contributed by each Participant
for the Plan Year and not withdrawn during the Plan Year ,
provided that he is in active Employment on the last day of the
Plan Year. The Employer will not match any Before-Tax
3
<PAGE>
Contribution which exceeds 6 percent of the Participant's
Compensation for any pay period.
(2) Profit Sharing Contribution. An amount which, in the Plan
---------------------------
Administrator's discretion, may be contributed from the
Employers' profits from time to time under Subsection 3.2(b) and
allocated as a percentage of Compensation to each Eligible
Employee who is in Employment on the last day of the Plan Year
for which the Contribution is made.
(3) Safe-Harbor Contribution. In any Plan Year, an Employer may
------------------------
make a Safe-Harbor Contribution in the amount the Plan
Administrator determines to be necessary to avoid violating the
ADP Test and/or the ACP Test, which will be allocated under one
of the methods described in Section 3.2.
(b) Before-Tax Contributions. An amount equal to a whole percentage not
------------------------
less than 2 percent nor greater than 10 percent of the Participant's
Compensation for the Plan Year, which he elects to contribute under
Section 3.1 on a before-tax basis.
(c) Rollover Contributions. An amount transferred to this Plan from
----------------------
another qualified retirement plan or conduit individual retirement
account or plan, under Section 3.3.
1.19 Controlled Group. Each Employer and each member of the group of
----------------
corporations or entities with at least 80 percent common control by or
with the Employer, within the meaning of Code Sections 414(b) and (c), and
any affiliated service group within the meaning of Code Section 414(m)
which includes an Employer.
1.20 Disability.
----------
A physical or mental incapacity which qualifies the Participant for
benefits under an Employer's long-term disability plan. The beginning
date of the Participant's Disability is the date he stops earning
Compensation.
1.21 Effective Date. The Effective Date of the Plan is January 1, 1995.
--------------
1.22 Eligible Employee (or Employee). An Eligible Employee is any individual
-------------------------------
employed to perform personal services for an Employer, who works at least
1,000 per year, whose performance is subject to the Employer's control,
and who has met the eligibility requirements set forth in Section 2.1.
The following individuals will be treated as employees who are not
eligible to participate in the Plan: (a) those who are in a unit of
employees covered by a collective bargaining agreement between an employee
representative and an Employer, unless otherwise provided in the
agreement; (b) leased employees within the meaning of Code Section 414(n),
and (c) independent contractors.
1.23 Employer. Colonial Properties Trust, each Controlled Group member which
--------
has adopted the Plan, and each Affiliated Company which has adopted the
Plan.
1.24 Employer Contribution Accounts. See Subsection 1.3(a).
------------------------------
1.25 Employer Contributions. See Subsection 1.18(a).
----------------------
4
<PAGE>
1.26 Employment. The period during which an Eligible Employee is regularly
----------
employed by an Employer.
1.27 Employment Date. The date on which the Eligible Employee earned his first
---------------
Hour of Service during his initial Employment, or the date on which he
resumed Employment after a Five-Year Break which caused him to lose his
pre-break Years of Service.
1.28 Enrollment Date. Each January 1, April 1, July 1 and October 1.
---------------
1.29 ERISA. The Employee Retirement Income Security Act of 1974, as amended
-----
from time to time, and regulations and rulings under ERISA.
1.30 Excess ACP Contributions. Matching Contributions which have caused the
------------------------
Plan to fail the ACP Test described in Subsection 7.2(b) for the Plan
Year.
1.31 Excess ADP Deferrals. Before-Tax Contributions which have caused the Plan
--------------------
to fail the ADP Test described in Subsection 7.2(a) for the Plan Year.
1.32 Excess Dollar Deferrals. The total annual amount of Before-Tax
-----------------------
Contributions which any Participant makes under this Plan for any calendar
year, which in the aggregate exceeds $7,000 as indexed to the CPI
beginning in 1988.
1.33 Family Unit. An active or former Eligible Employee who is a 5-percent
-----------
owner of any Controlled Group member or an active Eligible Employee who is
among the 10 highest-paid employees in the Controlled Group, and such
individual's Spouse and lineal ascendants and descendants and their
spouses who are also Eligible Employees. An individual who is an HCE or
NCE and is otherwise an Eligible Employee will be included in the Family
Unit although he may be excluded for purposes of determining the Top-Paid
Group under Subsection 1.36(a)(3).
1.34 Five-Year Break. Five consecutive One-Year Breaks.
---------------
1.35 HCE Group. The Plan Administrator will determine the HCE Group for each
---------
Employer, with respect to that Employer's Controlled Group. The HCE Group
will include the entire group of Eligible Employees in each Controlled
Group who are Highly Compensated Employees (HCEs) for the Plan Year.
1.36 Highly Compensated Employee (HCE).
---------------------------------
(a) Applicable Definitions. For purposes of this Section, the following
----------------------
terms will have the meanings set forth below.
(1) Determination Year. The Plan Year for which the HCE Group is
------------------
being identified.
(2) Look-Back Year. The Plan Year preceding the Determination Year.
--------------
(3) Top-Paid Group. The highest-paid 20 percent of all active
--------------
employees in the Controlled Group for the Plan Year; provided
that to determine the number of employees who make up 20 percent
(but not the identity of the highest-paid 20-
5
<PAGE>
percent), the Plan Administrator may exclude Controlled Group
employees who either: (A) are under age 21; (B) have fewer than
6 months of service; (C) normally work fewer than 17-1/2 hours
per week; (D) normally work no more than 6 months per Plan Year;
(E) are included in a collective bargaining unit; or (F) are
nonresident aliens with no U.S. source income.
(4) Top-100 Group. The highest-paid 100 Controlled Group employees
-------------
who either (A) receive more than $75,000 Compensation (indexed),
(B) receive more than $50,000 Compensation (indexed) and are in
the Top-Paid Group, or (C) officers as described below in
Subsection (b)(1)(D).
(b) Identifying HCEs. The following three groups of Employees will be
----------------
included in the HCE Group for the Determination Year.
(1) HCE Status in the Look-Back Year. The HCE Group will include
--------------------------------
any Employee who, during the Look-Back Year, either:
(A) was a 5-percent owner of any Controlled Group member;
(B) received more than $75,000 Compensation (indexed);
(C) received more than $50,000 Compensation (indexed), and was
in the Top-Paid Group as defined in Subsection (a); or
(D) was an officer (a high-level policy-making executive) and
received more than $45,000 Compensation (indexed), provided
that the maximum number of officers will be the lesser of
(i) 50, or (ii) the greater of 3 or 10 percent of the total
number of Employees.
(2) HCE Status in the Determination Year. Regardless of his status
------------------------------------
in the Look-Back Year, the HCE Group will include any Employee
who, in the Determination Year, either:
(A) is a 5-percent owner of any Controlled Group member; or
(B) is in the Top-100 Group.
(3) HCE Status of Former Employees. The Employee who terminated
------------------------------
Employment after 1986 and who was an HCE at any time after he
reached age 55 or when he terminated, and who resumes
Employment, will be treated as an HCE for the first whole or
partial Plan Year after his rehire. After the first Plan Year
of his rehire, the Plan Administrator will determine his status
under Subsection (b)(1) or (b)(2) as applicable. Until his
rehire, the Plan Administrator will not take him into account
for purposes of determining the Top-Paid Group or the Top-100
Group, or for any other purpose.
(c) Indexing. The $75,000, $50,000 and $45,000 Compensation amounts will
--------
be indexed to the CPI under Code Section 415(d) beginning in 1988.
6
<PAGE>
(d) Family Aggregation Rule. For purposes of determining HCE status, the
-----------------------
group of Employees in a Family Unit will be treated as if they were a
single Employee receiving the amount of Compensation being received
in the aggregate by all members of the Family Unit. The Plan
Administrator will determine the highest-paid 100 employees and the
Top-Paid Group before it aggregates Compensation, and will apply the
aggregation requirement separately to the Look-Back Year and the
Determination Year.
1.37 Hours of Service.
----------------
(a) Periods of Credit. Hours of Service will be credited for the
-----------------
following:
(1) Working Hours. Each hour for which the Employee is paid or
-------------
entitled to payment by an Employer for the performance of
duties.
(2) Nonworking Hours. Each hour for which the Employee is paid or
----------------
is entitled to payment by an Employer on account of a period of
time during which no duties are performed due to vacation,
holiday, illness, incapacity, layoff, jury duty, military duty,
or leave of absence, whether or not his Employment has
terminated.
(3) Back Pay. Each hour for which back pay, without regard to
--------
mitigation of damages, is either awarded or agreed to by an
Employer.
(b) Periods of No Credit. Hours of Service will not be credited for the
--------------------
following:
(1) Nonpayment. Periods during which the Employee is neither paid
----------
nor entitled to payment by an Employer.
(2) Limited Number. Hours in excess of 501 in a single continuous
--------------
period during which no duties are performed, except as provided
in Subsection (d).
(3) Statutory Payments. Hours for which payment is made or due
------------------
under a plan maintained solely for the purpose of complying with
applicable workers' compensation, unemployment compensation, or
disability insurance laws.
(4) Back Pay. Back pay where credit has already been given for the
--------
hours to which the back pay relates.
(5) Medical Expenses. A payment which solely reimburses an Employee
----------------
for medical or medically related expenses incurred by him.
(c) Crediting Hours of Service - General Rule. Hours of Service will be
------------------------------------------
credited to the period in which the duties to which they relate are
performed, or the period when no duties are performed, as applicable.
The Plan will use payroll records to determine Hours of Service for
each Employee for whom the Employer records actual hours worked. For
the Employee for whom the Employer does not record actual hours
worked, the Plan will credit 45 Hours of Service for each week in
which he is credited with any Hours of Service.
7
<PAGE>
(d) Crediting Hours of Service - Special Rules.
------------------------------------------
(1) Parental Leave. Solely for purposes of determining whether a
--------------
One-Year Break has occurred, the Plan will credit Hours of
Service for periods during which an Employee is absent from work
by reason of pregnancy, child birth, child adoption, and/or
child care immediately following birth or adoption. The number
of Hours of Service credited to the employee will be the number
of hours that would have been credited if the absence had not
occurred, or if such number cannot be determined, then 8 Hours
of Service will be credited for each day of the absence,
provided that the total number of such Hours of Service will not
exceed 501. Such Hours of Service will be credited to the Plan
Year in which the absence begins only if that credit is
necessary to avoid a One-Year Break in that Plan Year; otherwise
credit will be given in the immediately following Plan Year. No
credit will be given under this subsection unless the Employee
timely provides to the Plan Administrator all information
reasonably required to establish (A) that the absence is for a
reason described in this subsection and (B) the number of days
of absence attributable to such reason.
(2) Military Leave. For purposes of eligibility and vesting under
--------------
the Plan, the Plan will credit each Participant who returns from
military leave with Hours of Service, as if his active
Employment had continued during the period of his military duty
with the Armed Forces of the United States of America; provided
that he retains statutory reemployment rights and resumes
Employment within 90 days after his honorable discharge from
active military duty, or during any other period prescribed by
law.
(3) Authorized Leave of Absence. Solely for purposes of determining
---------------------------
whether a Five-Year Break has occurred, the Plan will credit
each Participant with Hours of Service as if his active
Employment had continued during the period of his authorized
leave of absence granted under his Employer's standard,
uniformly-applied personnel policies; provided that he resumes
active Employment promptly upon the expiration of his authorized
leave.
1.38 Matching Account. See Subsection 1.3(a)(1).
----------------
1.39 Matching Contribution. See Subsection 1.18(a)(1).
---------------------
1.40 NCE Group. The entire group of Eligible Employees who are Nonhighly
---------
Compensated Employees (NCEs) for the Plan Year.
1.41 Nonhighly Compensated Employee (NCE). An Eligible Employee who is not
------------------------------------
within the HCE group for the Plan Year.
1.42 Normal Retirement Age. The Participant's 65th birthday.
---------------------
1.43 One-Year Break. A Plan Year during which the Participant is credited with
--------------
less than 501 Hours of Service; except that for purposes of eligibility
under Section 2.1, a One-Year Break is the first 12 consecutive months of
the Participant's Employment during which he is credited with less than
501 Hours of Service.
8
<PAGE>
1.44 Participant. An Eligible Employee participating in the Plan under Section
-----------
2.1.
1.45 Plan. The Colonial Properties Trust 401(k)/Profit Sharing Plan as amended
----
from time to time.
1.46 Plan Administrator. Colonial Properties Services, Inc.
------------------
1.47 Plan Year. The 12-month period beginning January 1 and ending December 31
---------
of each year.
1.48 Pre-1987 Vested Account from Transferor Plan. See Subsection 1.3(a)(4).
--------------------------------------------
1.49 Profit Sharing Account. See Subsection 1.3(a)(2).
----------------------
1.50 Profit Sharing Contribution. See Subsection 1.18(a)(2).
---------------------------
1.51 Required Beginning Date.
-----------------------
(a) Participant. The Required Beginning Date for the active and inactive
-----------
Participant is April 1 following the calendar year in which he
reaches age 70-1/2. A Participant will be treated as a 5-percent
owner if he owns or owned at least 5 percent of any Employer at any
time during the calendar year in which he reaches age 66-1/2 or any
subsequent year.
(b) Beneficiaries. The Required Beginning Date for the surviving Spouse
-------------
is the end of the calendar year in which the Participant would have
reached age 70-1/2. The Required Beginning Date for the non-Spouse
beneficiary is the end of the calendar year following the calendar
year in which the Participant's death occurs (or the end of the
calendar year following the calendar year in which the surviving
Spouse's death occurs if the Spouse was the primary beneficiary);
provided that if the Plan Administrator cannot make payment by that
date, the Required Beginning Date will be extended until the last day
of the fifth calendar year following the year in which the
Participant (or surviving Spouse) died and the entire Account balance
will be distributed no later than that date.
1.52 Rollover Account. See Subsection 1.3(c).
----------------
1.53 Rollover Contribution. See Subsection 1.18(c).
---------------------
1.54 Safe Harbor Account. See Subsection 1.3(a)(3).
-------------------
1.55 Safe Harbor Contribution. See Subsection 1.18(a)(3).
------------------------
1.56 Spouse. The person to whom the Participant is legally married. In the
------
event of a dispute, the identity of the surviving spouse will be
determined in accordance with applicable laws of the Participant's state
of domicile. The surviving Spouse is sometimes referred to as a
beneficiary.
1.57 Termination Date. The date when the Eligible Employee ends his Employment
----------------
for any reason.
1.58 Transferor Plan. The Colonial 401(k) and Profit Sharing Plan.
---------------
9
<PAGE>
1.59 Trust (or Trust Fund). The fund maintained under the trust agreement
---------------------
executed between the Employer and the Trustee, as amended from time to
time, which constitutes a part of this Plan.
1.60 Trustee. The individual(s) or corporation(s) or other entity(ies)
-------
selected by the Board to administer the Trust, as provided in Article IX.
1.61 Valuation Date. The last day of each calendar quarter, i.e. March 31,
--------------
June 30, September 30 and December 31 of each Plan Year, and any other day
in the Plan Year requested by the Plan Administrator, as of which the
Trustee will determine the fair market value of the Trust Fund and each
Account.
1.62 Vested Percentage. The percentage of the Participant's Matching Account
-----------------
and Profit Sharing Account which is vested under the schedule set forth in
Subsection 3.2(d).
1.63 Vesting Service. See Section 1.64 Years of Service.
--------------- ----------------
1.64 Years of Service. Each Plan Year for which the Employee earns at least
----------------
1,000 Hours of Service, subject to the following rules:
(a) Employment With A Controlled Group Member. Each Employee will
-----------------------------------------
receive credit for Years of Service for purposes of eligibility and
vesting, for the period of his employment with any Controlled Group
member, whether or not it has adopted the Plan, beginning on the date
the member became part of the Controlled Group.
(b) Period Before An Employer Adopted the Plan. The Board will determine
------------------------------------------
whether and to what extent the Plan will give credit for purposes of
eligibility and/or vesting for periods of employment with an Employer
before it adopted the Plan, to the extent credit is not required
under Subsection (a).
(c) Employment Before A Five-Year Break. The nonvested Participant who
-----------------------------------
incurs a Five-Year Break will lose all his credit for Years of
Service earned before his Five-Year Break. The vested Participant
will retain all his credit for Years of Service regardless of the
number of his One-Year Breaks.
(d) Employment with Predecessors. If the Employer acquires substantially
----------------------------
all of the assets of another company and if former employees of such
other company subsequently become Employees of the Employer due to
the acquisition, such former employees shall receive credit for Years
of Service for purposes of eligibility, but not for vesting, for the
period of his employment with the acquired company.
10
<PAGE>
ARTICLE II
Eligibility
-----------
2.1 Eligibility. Each Employee will become a Participant as of the first
-----------
Enrollment Date after he has completed at least 1,000 Hours of Service
during his first 12 months of Employment or during a Plan Year that begins
after his Employment Date.
2.2 Participation Upon Reemployment.
-------------------------------
(a) Fully Vested Participant. If a fully vested Participant terminates
------------------------
and resumes Employment at any time, he will resume participation in
the Plan as of the date when he resumes Employment, and will continue
to be fully vested.
(b) Partially Vested Participant.
----------------------------
(1) Before Five-Year Break. If a partially vested Participant
----------------------
terminates and resumes Employment before he incurs a Five-Year
Break, he will resume participation in the Plan as of the date
he resumes Employment, and the Plan Administrator will reinstate
his prebreak Years of Service and Vested Percentage. The Plan
will restore the amount he forfeited from his Matching Account
and/or Profit Sharing Account, without adjustment for gains or
losses, provided such Participant repays to the Trust Fund an
amount equal to the vested portion of such accounts which he
received as a cash-out distribution upon termination. He will
be eligible to earn additional vesting for the reinstated
amounts.
(2) After Five-Year Break (Five-Year Freeze Rule). If a partially
---------------------------------------------
vested Participant terminates and resumes Employment after he
incurs a Five-Year Break, he will resume participation in the
Plan as of the date he resumes Employment, and the Plan
Administrator will reinstate his prebreak Years of Service and
Vested Percentage for future allocations of Matching
Contributions and Profit Sharing Contributions, but will not
reinstate his forfeited Matching Account and Profit Sharing
Account balances (if any). If he received a cash-out of his
vested Matching Account and Profit Sharing Account when he
terminated, he will have a zero balance in those Accounts. He
will not be permitted to repay his cash-out.
(c) Nonvested Participants.
----------------------
(1) Before Five-Year Break. If a nonvested Participant terminates
----------------------
and resumes Employment before he incurs a Five-Year Break, he
will resume participation in the Plan as of the date he resumes
Employment, and the Plan Administrator will reinstate his
prebreak Years of Service and Vested Percentage, and his
forfeited Matching Account and Profit Sharing Account balances,
without adjustment for gains or losses. He will be eligible to
earn additional vesting for the reinstated amounts.
11
<PAGE>
(2) After Five-Year Break. If a nonvested Participant terminates
---------------------
and resumes Employment after he incurs a Five-Year Break, the
Plan Administrator will not reinstate his prebreak Years of
Service or his forfeited Matching Account and Profit Sharing
Account balances. He will be eligible to resume participation
under Section 2.1 as if he were a new Employee.
(d) Nonparticipating Employees.
--------------------------
(1) Before Five-Year Break. If the nonparticipating Employee
----------------------
terminates and resumes Employment before he incurs a Five-Year
Break, the Plan Administrator will reinstate his prebreak
Vesting Service for purposes of eligibility and vesting. If he
had met the eligibility requirement under Section 2.1 as of his
Termination Date, he will be eligible to begin participating in
the Plan as of the date he resumes Employment.
(2) After Five-Year Break. If the nonparticipating terminated
---------------------
Employee resumes Employment after he incurs a Five-Year Break,
the Plan Administrator will not reinstate his prebreak Vesting
Service. He will be eligible to begin participating in the Plan
under Section 2.1 as if he were a new Employee.
2.3 Leased Employee. Leased employees will be treated as Employees to the
---------------
extent required under Code Section 414(n), but will not be eligible to
participate in this Plan. If a leased employee becomes an Employee, the
Plan will give him credit for eligibility and Years of Service for the
period when he worked as a leased employee, under the rules described in
Sections 1.64 and 2.1 applied as if he had been an Employee during that
period. However, the Plan will not give such credit if (a) the leased
employee was covered by a money purchase plan sponsored by the leasing
organization, with 10 percent contributions and immediate participation
and vesting, and (b) leased employees constitute no more than 20 percent
of the Controlled Group's nonhighly compensated employees.
2.4 Employment with Predecessors. If the Employer acquires substantially all
----------------------------
of the assets of another company and if former employees of such other
company subsequently become Employees of the Employer due to the
acquisition, such former employees shall receive credit for Hours of
Service for purposes of eligibility for the period of his employment with
the acquired company.
12
<PAGE>
ARTICLE III
Contributions
-------------
3.1 Employee Contributions. The Plan will accept only Before-Tax
----------------------
Contributions. Participants who made After-Tax Contributions before 1986 to the
Transferor Plan will be permitted to maintain those Account balances in the
Plan.
(a) Before-Tax Only. For each Plan Year, each Participant will elect the
---------------
percentage of his Compensation to defer as Before-Tax Contributions,
within the limitations described below in Subsection (3).
(1) Amount. Each Participant may make Before-Tax Contributions in
------
an amount equal to a whole percentage not less than 2 percent
nor greater than 10 percent of his Compensation for each Plan
Year. The Participant must elect 2 percent increments for the
first 6 percent, and can elect 1 percent increments from 7 to 10
percent. However, to the extent that it considers reductions in
percentages necessary to meet the ADP for any Plan Year, the
Plan Administrator may limit the percentages that can be
contributed by the HCE Group, and may apply different limits to
different individuals within the HCE Group.
(2) Amount Matched. The first 6 percent of each Participant's
--------------
Compensation contributed for each payroll period will receive a
Matching Contribution. Any Contribution above 6 percent will
not receive Matching Contributions.
(3) Limitations on Amount. The amount of the Participant's
---------------------
Contributions may be limited for any Plan Year to avoid
exceeding the $7,000 (indexed) limitations described in Section
7.1, the ADP Test described in Section 7.2, and/or the annual
addition limitations described in Section 7.3.
(b) Vesting. All Before-Tax Contributions and all earnings allocated to
-------
Before-Tax Contribution Accounts will be fully vested at all times.
(c) Election to Participate.
-----------------------
(1) Initial Election. To begin making Before-Tax Contributions, the
----------------
Eligible Employee must complete and file with the Plan
Administrator an election form designating the whole percentage
of his Compensation to be deferred as his Before-Tax
Contributions for the Plan Year, within the limitations
described in Subsection (a)(3).
The Eligible Employee will begin contributing as of the first
Enrollment Date after he has submitted his properly completed
election form to the Plan Administrator; provided that he must
submit his form no later than the deadline established by the
Plan Administrator, uniformly applied and timely communicated.
The Employee who fails to properly elect to begin participating
as of the date when he is first eligible, may elect to begin
participating as of any subsequent Enrollment Date; provided
that he must submit his properly completed election form to the
Plan Administrator no later than the deadline
13
<PAGE>
established by the Plan Administrator, uniformly applied, and
timely communicated.
The election will remain effective until the Participant (A)
modifies, suspends, or revokes his election, or (B) ceases to be
an Eligible Employee. The elected percentage will apply to
increased or decreased Compensation.
(2) Modification. The Participant who has elected to have
-------------
contributed a percentage of his Compensation under Subsection
(c)(1) may modify his election as of the first day of any
Enrollment Date by filing with the Plan Administrator, no later
than the deadline established by the Plan Administrator and
uniformly applied, a new election form stating that he elects to
have a higher or lower percentage deducted from his
Compensation. Each modification will remain effective until a
new election form is properly completed and timely filed with
the Plan Administrator.
(3) Revocation. The Participant may revoke his election to make
----------
Before-Tax Contributions as of the beginning of any payroll
period; provided that he must submit his notice to the Plan
Administrator no later than the deadline established by the Plan
Administrator, uniformly applied and timely communicated.
(4) New Election. The Participant who revokes his election to make
------------
Before-Tax Contributions may resume Before-Tax Contributions as
of any Enrollment Date.
(5) Plan Administrator Regulations. The Plan Administrator may from
------------------------------
time to time establish and uniformly apply rules governing
elections, including rules regarding the frequency with which
elections may be modified, suspended or revoked.
3.2 Employer Contributions.
----------------------
(a) Matching Contribution. Each Employer will make a Matching
---------------------
Contribution in an amount equal to 50 percent of the first 6 percent
of Compensation contributed by each of its Participants for each Plan
Year, provided that the Participant remains in Employment until the
last day of the Plan Year. No Participant will receive a Matching
Contribution for any pay period with respect to his Before-Tax
Contributions that exceeds 6 percent of his Compensation paid in that
pay period. However, the Participant will not receive a Matching
Contribution to the extent he withdraws his Before-Tax Contributions
under Article V in the same Plan Year when he makes them. For this
purpose, the Participant's withdrawals will come first from the
earliest Contributions and earnings allocated to his Before-Tax
Account.
(b) Profit Sharing Contribution. In any Plan Year when any Employer has
---------------------------
sufficient profits, and in the Plan Administrator's discretion, the
Employer may make a Profit Sharing Contribution to be allocated as a
uniform percentage of Compensation of each of its Eligible Employees
who is in Employment on the last day of the Plan Year.
14
<PAGE>
(c) Safe-Harbor Contribution. For each Plan Year, the Plan Administrator
------------------------
will determine the amount of Safe-Harbor Contribution, if any,
necessary to satisfy the ADP Test described in Subsection 7.2(a),
and/or the ACP Test described in Subsection 7.2(b). The Plan
Administrator will cause each Safe Harbor Contribution to be
allocated by one of the following methods:
(1) Percentage-of-Compensation Method.
---------------------------------
(A) If the Safe Harbor Contribution is made to satisfy the ADP
Test, the Plan Administrator will subtract the existing
Average Deferral Percentage (ADP) of the NCEs from the ADP
needed by the NCEs to pass the ADP Test. If the Safe
Harbor Contribution is made to satisfy the ACP Test, the
Plan Administrator will subtract the existing Average
Contribution Percentage (ACP) of the NCEs from the ACP
needed by the NCEs to pass the ACP Test. The additional
percentage needed to meet the ADP Test and/or the ACP Test
is the needed percentage increase.
(B) The Plan Administrator will determine the number of NCEs
eligible to receive the Safe Harbor Contribution, if fewer
than the total, and the aggregate Compensation of the
eligible NCEs.
(C) The Plan Administrator will multiply the needed percentage
increase by the ratio of the number in the NCE Group to the
number of eligible NCEs, to determine the additional
percentage of Compensation to be allocated to each eligible
NCE (the individual needed percentage increase).
(D) The Plan Administrator will multiply the individual needed
percentage increase by the aggregate Compensation of the
eligible NCEs to determine the total amount of the Safe
Harbor Contribution.
(E) The Plan Administrator will multiply the individual needed
percentage increase by the Compensation of each eligible
NCE to determine the amount of his Safe Harbor allocation
for the Plan Year.
(2) Fixed-Dollar Method.
-------------------
(A) The Plan Administrator will follow steps (1)(A) through
(1)(D) to determine the maximum total amount of the Safe
Harbor Contribution needed to satisfy the ADP Test and/or
ACP Test for the Plan Year (the maximum fixed dollar
contribution).
(B) The Plan Administrator will divide the maximum fixed dollar
contribution by the number of eligible NCEs to determine
the maximum Safe Harbor allocation needed for each.
(C) By trial-and-error calculations, the Plan Administrator
will determine the fixed dollar amount of the actual
allocation, if lower than the
15
<PAGE>
maximum, that must be allocated to the Safe Harbor Accounts
of all eligible NCEs.
(3) Additional Matching Contributions. The Plan Administrator will
---------------------------------
direct the affected Employer(s) to make a Safe Harbor
Contribution to match the Before-Tax Contributions of all or a
selected group of NCE Participants, in the percentage necessary
to meet the ACP Test for the Plan Year.
(d) Vesting. The Participant will become vested in his Matching Account
-------
and Profit Sharing Account balances under the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Fewer than 1 0%
1 20%
2 40%
3 60%
4 80%
5 100%
</TABLE>
Regardless of the number of his Years of Service, the Participant
will become fully vested in his Matching Account and Profit Sharing
Account balance either (1) when he reaches Normal Retirement Age, (2)
on his Disability retirement date described in Subsection 6.1(c), or
(3) on his date of death. The Participant will be fully vested in
his Safe Harbor Account balance and his Pre-1987 Vested Account
balance from the Transferor Plan at all times.
(e) Forfeiture. Upon termination of employment, the nonvested portion of
----------
a Participant's Matching Account balance and Profit Sharing Account
balance shall be forfeited upon the earlier of a cash-out
distribution to the Participant or when such Participant incurs a
Five-Year Break. Forfeitures will be used to reduce Matching
Contributions for the same and/or future Plan Years. A Participant
who terminates employment with a zero Vested Matching Account balance
and/or Profit Sharing Account balance shall be deemed to have
received a cash-out distribution as of the date on which he separates
from service. If a Participant receives a cash-out distribution upon
termination and resumes Employment before incurring a Five-Year
Break, the Plan Administrator will reinstate his forfeited balance(s)
upon repayment by the Participant of the amount of the cash-out
distribution.
(f) Exclusive Benefit of Participants. All Employer Contributions will
---------------------------------
be irrevocable when made and will not revert to the Employers, except
as provided in Sections 3.2(i), 7.2 and 7.3. All Employer
Contributions and attributable earnings will be used for the
exclusive benefit of Participants and their beneficiaries and for
paying the reasonable expenses of administering the Plan.
(g) Deductibility. Each Employer will limit its Employer Contributions
-------------
for each Plan Year so that the sum of all Before-Tax Contributions
and Employer Contributions does not
16
<PAGE>
exceed an amount equal to 15 percent of the Compensation (as
calculated by excluding Before-Tax Contributions) of all of its
Participants for the Plan Year.
(h) Payment to the Trustee. Each Employer will transfer to the Trustee,
----------------------
promptly after the end of each month, the Before-Tax Contributions
withheld for all its Employees during the pay periods ending in that
month. Each Employer will transfer its Matching Contributions to the
Trustee as soon as practicable after each Contribution is made, in
accordance with procedures established by the Plan Administrator.
Each Employer will transfer its Profit Sharing Contributions and
Safe-Harbor Contributions to the Trustee no later than the extended
due date of the Employer's federal income tax return for the fiscal
year which ends in the Plan Year for which the Contribution is made.
(i) Return of Employer Contributions. Employer Contributions will be
--------------------------------
returned to the affected Employer(s) under the following
circumstances:
(1) Mistake of Fact. Employer Contributions made by a mistake of
---------------
fact will be returned to the affected Employer(s) within one
year after the Contribution is made.
(2) Nondeductible. All Employer Contributions are conditioned upon
-------------
their deductibility under Code Section 404 and will be returned
to the affected Employer(s) within one year after any
disallowance.
3.3 Rollover Contributions.
----------------------
(a) Eligible Rollover Distribution. For purposes of this Section, an
------------------------------
Eligible Rollover Distribution means a payment received by an
Employee from another qualified plan or conduit individual retirement
account or plan (IRA), that is either (1) a lump sum payment, or (2)
a payment other than one that is part of a series of substantially
equal periodic payments, made at least annually, over a period of at
least 10 years, or over the lifetime or life expectancy of the
Participant or the joint lifetimes or life expectancies of the
Participant and his named beneficiary; provided that the Plan
Administrator will not treat any distribution required under Code
Section 401(a)(9), or any refund of after-tax contributions, as an
Eligible Rollover Distribution.
(b) Rollover or Direct Plan Transfer. An Employee who receives an
--------------------------------
Eligible Rollover Distribution may roll over all or part of the
distribution to the Trustee. The Plan Administrator may accept the
distribution as a direct plan-to-plan transfer. An Employee can make
a Rollover Contribution before he completes his eligibility period
under Section 2.1, or before he elects to participate, and will have
his Rollover Account as his sole interest in the Plan until he
becomes a Participant.
(c) Timing. A rollover must be made within 60 days after the Employee
------
receives the Eligible Rollover Distribution.
(d) Required Information. The Plan Administrator will adopt such
--------------------
procedures, and may require such information from the Employee who
desires to make a Rollover Contribution, as it considers necessary to
determine whether the proposed rollover or direct plan transfer will
meet the requirements of this Section. The Plan Administrator
17
<PAGE>
may require the Employee to submit a written certification that he
received his Eligible Rollover Distribution from another qualified
plan or from a conduit IRA. Upon approval by the Plan Administrator,
the Rollover Contribution will be deposited in the Trust Fund and
will be credited to the Employee's Rollover Account.
(e) Prohibited Rollovers and Transfers. The Plan Administrator will not
----------------------------------
accept Rollover Contributions from any plan that is subject to the
joint and survivor annuity requirements set forth in Code Sections
401(a)(11) and 417, unless the Employee's Spouse consented in writing
to the distribution from such plan in a manner which complies with
the spousal consent requirements prescribed under Code Section 417.
The Plan Administrator may require the Employee to submit a written
certification either that he received his distribution from a
qualified plan that either was not subject to the spousal consent
requirements or contained an exemption for his distribution, or that
his Spouse properly consented to the distribution. The Plan
Administrator will not accept as a Rollover Contribution the portion
of a distribution which constitutes a refund of after-tax
contributions.
(f) Refund of Prohibited Rollovers. In the event the Plan Administrator
------------------------------
discovers that a Participant has made a Rollover Contribution to the
Plan which fails to comply with this Section, the Plan Administrator
will refund the Contribution and all earnings attributable to it as
soon as practicable.
(g) Reliance on Participant's Representations. The Plan Administrator
-----------------------------------------
will in good faith rely on the representations made by the eligible
Employee in his application to make a Rollover Contribution and will
not be held accountable for any misrepresentation of which it did not
have actual knowledge.
18
<PAGE>
ARTICLE IV
Individual Accounts
-------------------
4.1 Adjustments to Account Balances.
-------------------------------
(a) Regular Valuation Dates. As of each Valuation Date, the Trustee will
-----------------------
determine the fair market value of the Trust Fund and the Plan
Administrator will determine the value of each Account of each
Participant. The Account balances of each Participant will be
adjusted to reflect the following events since the preceding
Valuation Date:
(1) His Before-Tax Contributions and Rollover Contributions, if any;
(2) His allocations of Employer Contributions;
(3) Payments and inservice withdrawals from his Accounts, and
forfeitures from his Matching Account and/or Profit Sharing
Account;
(4) His pro rata share of gains/losses and expenses of the
investment funds in which his Account balances are invested; and
(5) His transfers between investment funds under Section 4.2.
(b) Special Valuation Dates. The Plan Administrator will have the
-----------------------
authority to direct special Valuation Dates as it considers necessary
for the proper administration of the Plan. Each special Valuation
Date will be treated as a regular Valuation Date.
(c) Valuations Binding. In determining the value of the Trust Fund and
------------------
each individual Account, the Trustee and the Plan Administrator will
exercise their best judgment, and all determinations of value will be
binding upon all Participants and their beneficiaries.
(d) Allocation Date. All allocations will be considered to have been
---------------
made as of the Valuation Date, regardless of when allocations are
actually made.
(e) Statement of Account Balances. As soon as practicable after the end
-----------------------------
of each Valuation Date, the Plan Administrator may in its discretion
provide to each Participant and other payee for whom an Account is
maintained, a statement of the Account balance as of the Valuation
Date; provided that statements will be issued at least once in each
Plan Year.
(f) Correction of Mistakes. In the event the Plan Administrator
----------------------
discovers that a mistake has been made in an allocation to or
distribution from any Participant's Account balance, or any other
mistake which affects an Account balance, it will correct the mistake
as soon as practicable. If an overpayment has been made, the Plan
Administrator will seek cash reimbursement. If an underpayment has
been made, the Plan Administrator will pay the amount of the
underpayment in a single sum. The Plan Administrator will treat any
other addition to the Account as an expense of the Plan, and will
treat any other subtraction from the Account as a forfeiture and will
use it to reduce the affected Employer's Matching Contributions
and/or Profit Sharing Contributions for the same or the next Plan
Year. To the extent necessary to correct
19
<PAGE>
errors in allocations that result from release of shares from the
Suspense Account, the Plan Administrator may substitute shares of
Company Stock for cash, and may substitute cash for such shares of
stock. To the extent necessary to correct errors in allocations that
result from Contributions, including Contributions that would have
been made except for the error, the Plan Administrator will permit or
require adjustments to the Contributions otherwise described in the
Plan, including make-up Contributions, accelerated Contributions,
suspensions of Contributions, and similar adjustments. If a
Participant timely makes an election for Employee Contributions under
Section 3.1 to be effective in a stated payroll period, but the Plan
Administrator is unable to effect the election until the following
payroll period, the Plan Administrator will treat the Contribution as
if it had been made in the stated payroll period, but will allocate
earnings to the Contribution only from the date when it is actually
made. The Plan Administrator will correct all other administrative
errors in the manner which it considers appropriate under the
circumstances. However, if the Plan Administrator determines that
the burden or expense of seeking recovery of any overpayment or
correcting any other mistake (except corrections that are necessary
to make a Participant or beneficiary whole) would be greater than is
warranted under the circumstances, it may in its discretion forego
recovery or other correction efforts. If a mistake in any
communication creates a risk of loss to any Participant or
beneficiary, the Plan Administrator will take reasonable steps to
mitigate such risk, such as making de minimis variances from Plan
provisions (including but not limited to medium and timing of
payment), to the extent any such variance would comply with
applicable qualification requirements if it were set forth in a
written provision of the Plan.
4.2 Investment Election.
-------------------
(a) Available Funds. The Trustee will maintain the number and type of
---------------
investment funds from time to time which it determines to be in the
best interest of Participants, including but not limited to one or
more Company Stock funds. The Plan Administrator will timely inform
Participants with respect to the funds which are available, and will
provide them sufficient information to permit them to make informed
selections among the funds.
(b) Liquidity. Each fund may hold cash and other liquid investments in
---------
such amounts as the Plan Administrator and/or Trustee consider
necessary to meet the Plan's liquidity requirements and to pay
administrative expenses.
(c) Participant Elections. Once in each calendar quarter, each
---------------------
Participant may make an investment election for his future aggregate
Contributions, and an election for his aggregate existing Account
balances. His election will become effective as of the first day of
the calendar quarter for which it is made, provided that he must
complete his investment election form and submit it to the Plan
Administrator no later than the deadline set by the Plan
Administrator, uniformly applied and timely communicated to
Participants.
(1) Future Contributions. The Participant may elect to invest the
--------------------
future allocations to his Accounts in the aggregate, in 5
percent increments among the investment funds made available
from time to time.
20
<PAGE>
(2) Existing Account Balances. The Participant may elect to invest
-------------------------
the existing balance in each of his separate Accounts in 5
percent increments among the investment funds made available
from time to time.
(d) Failure to Elect. If any Participant fails to timely submit a
----------------
properly completed investment election form, or if his elected
investments total less than 100 percent of his Account balances, the
Plan Administrator will invest the balances for which no election is
made in the investment fund which carries the least risk of loss.
(e) Allocation of Earnings. All earnings attributable to the Account
----------------------
balances invested in each investment fund will be reinvested in that
investment fund.
(f) Special Election Date. The Plan Administrator may permit more
---------------------
frequent elections and/or other election filing dates, under
regulations adopted by the Plan Administrator, uniformly applied, and
timely communicated to Participants.
(g) Voting of Company Stock. Each Participant whose Account balances are
-----------------------
invested in a Company Stock fund may direct the Trustee with respect
to the voting of his shares. The Trustee will vote the shares of any
Participant who fails to timely submit his direction, in accordance
with directions submitted by other Participants for the majority of
shares invested in that fund.
21
<PAGE>
ARTICLE V
Inservice Withdrawals
---------------------
5.1 Limitation on Frequency of Inservice Withdrawals. Each Participant may
------------------------------------------------
make only one inservice withdrawal during any 12-months period under
Sections 5.3, 5.4 or 5.5 collectively. In addition, each Participant may
make only one hardship withdrawal in any 12-months period under Sections
5.6. The Participant must submit his written application to the Plan
Administrator at least 30 days before he receives his withdrawal.
5.2 Withdrawal Fee. The Trustee will deduct from the amount of each
--------------
withdrawal under Section 5.3 (After-Tax and Pre-1987 Vested Accounts from
the Transferor Plan), 5.4 (age 59-1/2), 5.5 (age 70-1/2) and 5.6
(hardship), a processing fee in an amount determined from time to time by
the recordkeeper and the Plan Administrator and timely communicated to
Participants. The recordkeeper will reflect the deduction on the
statement that it issues with the payment.
5.3 Inservice Withdrawal from After-Tax and Pre-1987 Vested Accounts from
---------------------------------------------------------------------
Transferor Plan. Each Participant may withdraw all or part of his After-
---------------
Tax Account balance and Pre-1987 Vested Account balance during his
Employment. The Participant must submit a written request to the Plan
Administrator, specifying the amount to be withdrawn. The Trustee will
pay the amount withdrawn in a single payment in cash as promptly as
practicable after the Plan Administrator approves the request. The
Participant may not withdraw shares of Company Stock. The Trustee will
pay each withdrawal first from the Participant's After-Tax Account to the
extent possible, then from his Pre-1987 Vested Account, and will withdraw
on a pro rata basis from the investment funds in which each Account is
invested.
5.4 Inservice Withdrawal After Age 59-1/2. At any time after the Participant
-------------------------------------
reaches age 59-1/2, he may submit to the Plan Administrator a written
request to withdraw from his Account balances. The Trustee will pay the
withdrawal pro rata from all the investment funds in which the
Participant's Accounts are invested, and from his Accounts in the
following order: (a) After-Tax Account, (b) Pre-1987 Vested Account from
Transferor Plan, (c) Rollover Contribution Account, (d) vested Matching
Account, (e) vested Profit Sharing Account, (f) unmatched portion of
Before-Tax Account, and (g) matched portion of Before-Tax Account, to the
extent the Participant has such Accounts. The Participant may request his
withdrawal in the form of either cash of Company Stock.
5.5 Inservice Withdrawal After Age 70-1/2. Beginning in the calendar year
-------------------------------------
when the active Participant reaches age 70-1/2, he must withdraw from his
Account balances the minimum annual amount required by the distribution
rules described in Section 6.2 applied as if he had retired. He must make
the withdrawal no later than December 31 of each year. To determine the
required amount of each withdrawal, the Plan Administrator will determine
the Participant's aggregate Account balances as of the last day of the
previous calendar year and divide that amount by the smaller of (a) his
life expectancy or the joint and last survivor life expectancy of the
Participant and beneficiary, or (b) the applicable divisor required by the
incidental benefit rule under Code Section 401(a)(9). The Trustee will
pay the withdrawal pro rata from all the investment funds in which the
Participant's Accounts are invested, and from his Accounts in the
following order: (A) After-Tax Account, (2) Pre-1987 Vested Account from
Transferor Plan, (3) Rollover Contribution Account, (4) vested Matching
Account, (5) vested Profit
22
<PAGE>
Sharing Account, (6) unmatched portion of Before-Tax Account, and (7)
matched portion of Before-Tax Account, to the extent the Participant has
such Accounts. The Participant may request his withdrawal in the form of
either cash of Company Stock.
5.6 Hardship Withdrawals.
--------------------
(a) Application. The active Participant who wishes to make a hardship
-----------
withdrawal during his Employment must submit a written request to the
Plan Administrator, specifying the amount to be withdrawn. The
withdrawal request must include a full statement of the reasons for
the withdrawal, the amount of any other financial resources available
to the Participant, and such other information as the Plan
Administrator may request. The amount withdrawn will be paid to the
Participant as promptly as practicable after the Plan Administrator
approves his request. No Participant who has terminated Employment,
and no beneficiary, will be eligible to make a hardship withdrawal.
(b) Available Amount. The minimum amount that may be withdrawn is the
----------------
lesser of $500.00 or the Participant's available vested Account
balances. The amount withdrawn may not exceed the actual expenses
incurred or to be incurred by the Participant because of his
hardship, plus (simultaneously with the withdrawal) the reasonably
estimated amount of taxes and penalties he must pay on the
withdrawal. The Participant may withdraw from his Accounts in the
following order: (1) After-Tax Account, (2) Pre-1987 Vested Account
from Transferor Plan, (3) Rollover Contribution Account, (4) vested
Matching Account, (5) vested Profit Sharing Account, (6) unmatched
portion of Before-Tax Account, and (7) matched portion of Before-Tax
Account, to the extent the Participant has such Accounts, provided
that the Participant may not withdraw any earnings allocated to his
Before-Tax Account after 1988. He may not withdraw any of his Safe-
Harbor Contributions Account balance regardless of the date when
allocated.
(c) Immediate and Heavy Financial Need. The Participant may make a
----------------------------------
hardship withdrawal only if he incurs a hardship which creates an
immediate and heavy financial need which he cannot meet without the
withdrawal. A hardship withdrawal must be necessitated by either:
(1) Medical expenses incurred by, or medical care to be obtained
for, the Participant, his Spouse or dependents,
(2) Purchase of the Participant's principal residence,
(3) Tuition payments, room and board expenses and related
educational fees for the next 12 months of post-secondary
education (including trade school) for the Participant, his
Spouse or dependents, or
(4) Threatened imminent eviction from, or foreclosure of the
mortgage on, the Participant's principal residence.
(d) No Other Available Resources. The Participant may make a hardship
----------------------------
withdrawal only to the extent that he cannot meet his hardship from
other reasonably available financial resources.
23
<PAGE>
(1) Loans. He must have first obtained all other available
-----
distributions and nontaxable loans under all his Employer's
plans, if any.
(2) Suspension. After the Participant receives his hardship
----------
withdrawal, the Plan Administrator will suspend his Before-Tax
Contributions to this Plan and to any other plan maintained by
any Employer for a period of 12 months.
(3) $7,000 (Indexed) Limit. The Participant's $7,000 (indexed)
----------------------
annual limit on his Before-Tax Contributions described in
Section 7.1 for the calendar year following the year in which he
received his hardship withdrawal, will be reduced by the amount
of the Before-Tax Contributions he made during the year in which
he received his hardship withdrawal, with the effect that the
$7,000 (indexed) dollar limit in effect for the second calendar
year will apply to the two years as if they were a single year.
(e) Nondiscrimination. The determination of the existence of the
-----------------
Participant's immediate and heavy financial need and the necessity of
the withdrawal to meet the need, will be made by the Plan
Administrator in a uniform and nondiscriminatory manner.
(f) Reliance on Participant's Representations. The Plan Administrator
-----------------------------------------
will in good faith rely on the representations made by the
Participant in his application for the hardship withdrawal and will
not be held accountable for any misrepresentation of which it did not
have actual knowledge.
24
<PAGE>
ARTICLE VI
Post-Employment Payments
------------------------
6.1 Payment Events. The Participant who has a payment event described in this
--------------
Section may elect to receive or begin receiving payment of his Account
balances under Section 6.2 as of any Valuation Date on or after his
Termination Date, but not later than the Valuation Date on or next
following the date he reaches age 65. Rules governing payment to the
beneficiary of the deceased Participant are set forth in Subsection (d).
Rules governing the amount, form and timing of payments are set forth in
Section 6.2.
(a) Retirement. The Participant's Normal Retirement Age is his 65th
----------
birthday, regardless of the number of his Years of Service. He will
become fully vested in his Matching Account and Profit Sharing
Account balances on that date, if not earlier under Subsection 3.2
(d). He may receive his vested Account balances as of any Valuation
Date on or after the later of his Termination Date or 65th birthday.
The Participant who continues Employment after Normal Retirement Age
will continue to be eligible to participate in the Plan on the same
basis until he retires; provided that he must begin to make minimum
annual inservice withdrawals under Section 5.5 on his Required
Beginning Date.
(b) Termination of Employment Before Age 65. The Participant who
---------------------------------------
terminates Employment before age 65, and has aggregate Account
balances greater than $3,500, may receive his vested Account balances
as of any Valuation Date on or after his Termination Date, but not
later than age 65.
(c) Disability. The Participant who incurs a Disability will become
----------
fully vested in his Matching Account and Profit Sharing Account
regardless of his age and Years of Service. He may receive his
vested Account balances as of any Valuation Date on or after his
Termination Date, but not later than age 65.
(d) Death. In the event of the Participant's death while he has a
-----
balance in his Accounts, his Account balances will become fully
vested and will be immediately payable to his surviving Spouse, or if
there is no surviving Spouse or if the Participant had properly
designated a non-Spouse beneficiary with the Spouse's written consent
under Section 6.3, then to his beneficiary.
6.2 Amount, Form and Timing of Payment. Each payment of a Participant's
----------------------------------
aggregate Account balances will be subject to the following rules and any
other rules adopted by the Plan Administrator from time to time and
uniformly applied:
(a) Application for and Timing of Payment. The Participant or
-------------------------------------
beneficiary must apply for payment by completing a form provided by
the Plan Administrator (which will include an election regarding
income tax withholding and an election regarding direct rollovers),
and by filing the properly completed form with the Plan Administrator
no later than the deadline established by the Plan Administrator and
uniformly applied.
25
<PAGE>
The Plan Administrator will direct the Trustee or other payor to
issue the payment as of the Valuation Date following the date when it
receives the properly completed form; provided that if the Plan
Administrator does not receive the properly completed form by the
quarterly deadline, it will direct payment to be made as of the
Valuation Date for the following calendar quarter.
(b) Right to Defer Payment. Regardless of the reason for his
----------------------
termination, the Participant whose aggregate Account balances exceed
$3,500 and who terminates Employment before age 65 may leave his
aggregate Account balances in the Plan until he reaches that age. As
of any Valuation Date after his Termination Date, he may elect to
receive payment. No Beneficiary may defer payment.
(c) Amount of Payment. The Participant or beneficiary will receive the
-----------------
amount of the Account balances determined as of the Valuation Date
last preceding the payment date, plus any Before-Tax Contributions
made since that date, and minus any inservice withdrawals made under
Article V since that date.
(d) Form of Payment. Each Participant or beneficiary will receive
---------------
payment of the aggregate Account balances in a lump-sum payment;
provided, however, that all optional forms of distribution which were
available with respect to funds from Transferor Plan shall continue
to be available with respect to those funds.
(e) Medium of Payment. The Participant or beneficiary may elect to
-----------------
receive the Account balances either entirely in cash, or cash for any
Account balances invested in the funds other than Company Stock, and
shares of Company Stock for any Account balances invested in Company
Stock, provided that any fractional shares will be paid in cash.
(f) Withdrawal Fee. The recordkeeper will deduct from the amount of each
--------------
lump sum payment a processing fee in an amount determined from time
to time by the recordkeeper and the Plan Administrator and timely
communicated to Participants. The recordkeeper will reflect the
deduction on the statement that it issues with the payment.
(g) Direct Rollover. The retired or terminated vested Participant who
---------------
receives a payment before his Required Beginning Date may instruct
the Plan Administrator to roll over all or part of his payment to
another qualified retirement plan or to an individual retirement
account (IRA). The Participant must timely provide in writing all
information required to effect the rollover. A surviving Spouse who
receives a payment before the Spouse's Required Beginning Date may
instruct the Plan Administrator to roll over all or part of the
payment to an IRA, and must timely provide in writing all information
required to effect the rollover. The Plan Administrator will provide
timely notice of the right to make a direct rollover. The non-Spouse
beneficiary may not make a direct rollover.
(h) Constructive Cash-Out. Regardless of the amount of his Account
---------------------
balance(s), each nonvested Participant will be considered to have
received a constructive cash-out of his Matching Account and Profit
Sharing Account balances as of his Termination Date. In the event
such Participant resumes Employment before he incurs a Five-Year
Break,
26
<PAGE>
he will be considered to have repaid his constructive cash-out as of
the date he resumes Employment.
(i) Latest Payment Date. Unless the Participant or beneficiary elects
-------------------
later payment under Subsection 6.2(b), the Plan will pay each
Participant's aggregate Account balances no later than the 60th day
after the end of the Plan Year in which occurs the latest of the date
when: (1) he reaches Normal Retirement Age, (2) the tenth
anniversary of the date he began participating in the Plan, or (3)
his Termination Date; provided that the Trustee will make payment no
later than the Required Beginning Date.
(j) Compliance with Code Section 401(a)(9). The intent of this Section
--------------------------------------
is that the payment date for each Participant and beneficiary will be
within the limitations permitted under Code Section 401(a)(9). If
there is any discrepancy between this Section and Code Section
401(a)(9), that Code Section will prevail.
6.3 Designation of Beneficiaries
----------------------------
(a) Procedure. Each Participant, with the written consent of his Spouse
---------
(if any), may designate one or more beneficiary(s) to receive any
balance in his Accounts which may be payable in the event of his
death. The Participant may change his designation from time to time
by filing the proper form with the Plan Administrator, and each
change will revoke all his prior designations. To be effective, each
designation or revocation must be made in writing on a form provided
by the Plan Administrator and must be signed and filed with the Plan
Administrator before the Participant's death. The Participant may
name one or more primary beneficiaries and one or more contingent
beneficiaries. If upon the Participant's death his Spouse has not
consented to his beneficiary designation or if no designated
beneficiary survives him, the Plan Administrator will direct the
payment of his benefits to his surviving Spouse if any, or if none
then to his surviving lineal descendants per stirpes, or if none then
to the Participant's surviving parent(s), or if none then to the
Participant's surviving siblings per stirpes, or if none then to the
Participant's estate.
(b) Waiver of Spouse's Rights. Each married Participant may elect to
-------------------------
have all or any part of his Account balances that would otherwise be
payable to his surviving Spouse in the event of his death, payable
instead to one or more beneficiary(s) designated under Subsection
(a). Each election must be in writing and (1) must be signed by the
Participant and his Spouse; (2) the Spouse's consent must acknowledge
the effect of the election; (3) the Spouse's consent must either
specifically approve each named beneficiary and the elected form of
payment, or must permit the Participant to name any beneficiary and
elect any form of payment without further Spousal consent; and (4)
the Spouse's consent must be witnessed by a notary public. Spousal
consent will not be required if the Participant provides the Plan
Administrator with a decree of abandonment or legal separation, or
with satisfactory evidence that he cannot obtain consent because he
has been unable to locate his Spouse after reasonable effort. If the
Spouse is legally incompetent, the Spouse's court-appointed guardian
may give consent, even if the guardian is the Participant.
27
<PAGE>
(c) Judicial Determination. In the event the Plan Administrator does not
----------------------
direct a payment as specified in Subsection (a) or (b), it may have a
court of applicable jurisdiction determine to whom payment should be
made, in which event all expenses incurred in obtaining the
determination may be charged against the payee.
6.4 Payment to the Participant's Representative. If the Participant is
-------------------------------------------
incompetent to handle his affairs at the time when his Account balances
become payable, or has disappeared, the Plan Administrator will make
payment to his court-appointed personal representative, or if none is
appointed the Plan Administrator may in its discretion make payment to his
next-of-kin; provided that the Plan Administrator may request a court of
competent jurisdiction to determine the payee, in which event all expenses
incurred in obtaining the determination may be charged against the payee.
6.5 Unclaimed Benefits. In the event the Plan Administrator cannot locate,
------------------
with reasonable effort and after a period of five years, any person
entitled to receive the Participant's Account balances, his balances will
be forfeited but will be reinstated, to the extent required by applicable
law, in the event he subsequently makes a claim for benefits.
28
<PAGE>
ARTICLE VII
Limitations on Allocations
--------------------------
7.1 Excess Dollar Deferrals. The Plan will limit each Participant's Before-
-----------------------
Tax Contributions for each calendar year to $7,000, as indexed under Code
Section 402(g) beginning in 1988. Any amount which the Participant
contributes in excess of the dollar limit in effect for each year will be
an Excess Dollar Deferral. In the event any Participant makes Excess
Dollar Deferrals for any calendar year, the excess amount will be
distributed under the following rules.
(a) Time of Refund. If the Participant made his Excess Dollar Deferral
--------------
solely to this Plan, the Plan Administrator will refund the excess
amount and attributable earnings as soon as practicable after it
discovers the excess. If the Participant made his Excess Dollar
Deferral in whole or part to another qualified plan or individual
retirement account but wishes to withdraw his Before-Tax
Contributions from this Plan, he must submit to the Plan
Administrator no later than March 1 a written statement that he made
Excess Dollar Deferrals for the previous calendar year and a request
that a specified amount of the excess be refunded from this Plan. In
no event will the Plan Administrator refund Excess Dollar Deferrals
or attributable income later than April 15 following the calendar
year in which the excess was contributed. In the event any Excess
Dollar Deferral is not refunded by April 15 of the calendar year
following the calendar year in which it was contributed, it will
remain in the Participant's Before-Tax Account until a withdrawal or
payment event occurs under Article V or Article VI. The Plan
Administrator will not refund any Excess Dollar Deferral until the
Participant has actually contributed the excess amount to the Plan.
(b) Reporting Form. When the Plan Administrator refunds the Excess
--------------
Dollar Deferral, it will designate the refund as an Excess Dollar
Deferral on the appropriate form published by the Internal Revenue
Service so that the Participant can designate the refund as an Excess
Dollar Deferral on his income tax return.
(c) Order of Refunds. The Plan will refund Excess Dollar Deferrals
----------------
before it refunds any Before-Tax Contributions under Section 7.2 to
avoid failing the ADP Test.
(d) Inclusion in ADP Test. Excess Dollar Deferrals made by HCEs will be
---------------------
included in the ADP Test under Section 7.2 for the Plan Year in which
they were made, whether or not they are refunded in the same or next
following Plan Year; provided that Excess Dollar Deferrals which are
also Excess Annual Additions and which are refunded under Subsection
7.3(b) as such, will not be included in the ADP Test. Excess Dollar
Deferrals timely refunded to NCEs will not be included in the ADP
Test.
(e) Inclusion in Annual Addition. Excess Dollar Deferrals made by HCEs
----------------------------
and by NCEs which are refunded in the same Plan Year or by April 15
of the next following Plan Year will not be included in their Annual
Additions under Section 7.3. Excess Dollar Deferrals which are also
Excess Annual Additions and which are refunded under Subsection
7.3(b) as such, will not be included in the Participant's Annual
Addition.
29
<PAGE>
(f) Determination of Earnings. The Plan Administrator will use the
-------------------------
Plan's normal method of calculating earnings to determine the amount
of earnings attributable to each Participant's Excess Dollar
Deferrals.
7.2 Nondiscrimination Tests. Notwithstanding any other provision of the Plan,
-----------------------
the Plan Administrator will limit or refund Before-Tax Contributions for
HCEs in any Plan Year to the extent necessary to meet the ADP Test, and
will limit Matching Contributions for HCEs in any Plan Year to the extent
necessary to meet the ACP Test. Alternatively, the Plan Administrator may
direct the Employers to make the Safe Harbor Contributions described in
Subsection 3.2(c).
(a) ADP Test. The Plan Administrator will conduct the ADP Test for each
--------
Plan Year to determine whether the Average Deferral Percentage (ADP)
for the HCE Group and the ADP for the NCE Group for each Plan Year
are within the maximum disparity permitted under Subsection (a)(3).
The Plan Administrator will use the following steps to conduct the
ADP Test:
(1) Actual Deferral Ratio (ADR). The Plan Administrator will
---------------------------
determine the ratio of the sum of each Participant's Before-Tax
Contributions and any Safe Harbor Contributions, to his
Compensation.
(2) Average Deferral Percentage (ADP). The ADP for the HCE Group
---------------------------------
will be the average of their individual ADRs, calculated
separately for each Employee in the HCE Group. The ADP for the
NCE Group is the average of their individual ADRs, calculated
separately for each Employee in the NCE Group.
(3) Maximum Disparity. In no Plan Year will the ADP of the HCE
-----------------
Group exceed the greater of:
(A) the ADP of the NCE Group multiplied by 1.25; or
(B) the lesser of the ADP of the NCE Group plus 2 percentage
points, or the ADP of the NCE Group multiplied by 2.
(b) ACP Test. The Plan Administrator will conduct the ACP Test to
--------
determine whether the Actual Contribution Percentage (ACP) for the
HCE Group and the ACP for the NCE Group for each Plan Year are within
the maximum disparity permitted under Subsection (b)(3). The Plan
Administrator will use the following steps to conduct the ACP Test:
(1) Actual Contribution Ratio (ACR). The Plan Administrator will
-------------------------------
determine the ratio of the sum of each Participant's total
allocation of Matching Contributions and any Safe Harbor
Contributions, to his Compensation.
(2) Average Contribution Percentage (ACP). The ACP for the HCE
-------------------------------------
Group will be the average of their individual ACRs, calculated
separately for each Employee in the HCE Group. The ACP for the
NCE Group will be the average of their individual ACRs,
calculated separately for each Employee in the NCE Group.
30
<PAGE>
(3) Maximum Disparity. In no Plan Year will the ACP of the HCE
-----------------
Group in either the Savings Plan or the ESOP exceed the greater
of:
(A) the ACP of the NCE Group multiplied by 1.25; or
(B) the lesser of the ACP of the NCE Group plus 2 percentage
points, or the ACP of the NCE Group multiplied by 2.
(c) Multiple Use. The Plan Administrator will determine for each Plan
------------
Year whether to use the 2-point-spread-2-times multiplier in the ADP
Test or in the ACP Test, and will use the 1.25-multiplier in the
remaining test for that Plan Year; provided that in any Plan Year the
Plan Administrator either may reclassify ADP amounts as ACP amounts
for testing purposes only, or may use the multiple-use test described
in Subsection (d).
(d) Multiple-Use Test. The combined limit for the HCE Group may not
-----------------
exceed an amount equal to the sum of (1) the larger of the ADP or ACP
of the NCE Group multiplied by the 2-point-spread-2-times multiplier,
plus (2) the smaller of the ADP or ACP of the NCE Group multiplied by
the 1.25 multiplier.
(e) Correction of Excess ADP Contributions and Excess ACP Contributions.
-------------------------------------------------------------------
The Plan Administrator will correct any Excess ADP Contribution and
Excess ACP Contribution, under the following rules.
(1) Correction before Excess Contributions are Made. In the event
-----------------------------------------------
the Plan Administrator determines, before Excess ADP
Contributions and/or Excess ACP Contributions are made, that the
Plan will fail to meet either the ADP Test or the ACP Test or
both tests for that Plan Year, then it will either make the Safe
Harbor Contribution described in Subsection 3.2(c) or limit the
Before-Tax Contributions and/or Matching Contributions for the
HCE Group by such amount and beginning as of such pay period as
it considers necessary to prevent failing the ADP Test and/or
ACP Test.
(2) Correction after Excess Contributions are Made. In the event
----------------------------------------------
the Plan Administrator determines, after the Plan has already
received Excess ADP Contributions and/or Excess ACP
Contributions, that the Plan will fail to meet either the ADP
Test or the ACP Test or both Tests for that Plan Year, then it
either will make the Safe Harbor Contribution described in
Subsection 3.2(c) or will refund the excess amounts and
attributable earnings as necessary to meet the ADP Test and/or
ACP Test. The amount actually refunded will be reduced to the
extent that the amount of the excess has already been reduced by
the refund of any Before-Tax Contributions in excess of $7,000
(indexed) under Section 7.1. The Plan Administrator will refund
excess amounts and attributable earnings to the affected HCEs no
later than the end of the Plan Year following the Plan Year for
which the excess amount was contributed, and if practicable by
March 15 of that Plan Year.
(A) Excess ADP Contributions. The Plan Administrator will
------------------------
refund Excess ADP Contributions to HCEs in the order of
their Actual Deferral
31
<PAGE>
Ratios (ADRs), beginning with the highest ADR and
continuing the refund, if necessary, until all HCEs have
the same ADR, and then reducing those ADRs equally (the
leveling method).
(B) Excess ACP Contributions. The Plan Administrator will
------------------------
forfeit nonvested Excess ACP Contributions of HCEs. The
Plan Administrator will refund Excess ACP Contributions to
HCEs in the order of their Actual Contribution Ratios
(ACRs), beginning with the highest ACR and continuing the
refunds, if necessary, until all HCEs have the same ACR,
and then reducing those ACRs equally.
(3) Determination of Earnings Attributable to the Excess. The Plan
---------------------------------------------- ------
Administrator will use the Plan's normal method of calculating
earnings to determine the amount of earnings attributable to
each Participant's allocation of Excess ADP Contributions and/or
Excess ACP Contributions.
(f) Family Aggregation Rules.
------------------------
(1) Contributions Used in the ADP Test.
----------------------------------
(A) ADP Test. For purposes of the ADP Test, the Plan
--------
Administrator will aggregate the Compensation and
Contributions used in the ADP Test of all Employees in any
Family Unit as if the Family Unit were a single HCE
Participant and the aggregate Actual Deferral Ratio (ADR)
of all members of the Family Unit were the ADR of a single
HCE Participant.
(B) Correcting Excess ADP Contributions for the Family Unit.
-------------------------------------------------------
The Plan Administrator will correct any Excess ADP
Contributions by the following method.
(i) Leveling Method. The Plan Administrator will reduce
---------------
the Family Unit ADR by treating it as the ADR of an
HCE Participant and by reducing the ADR of all HCE
Participants, beginning with the highest ADR and
continuing the reduction, if necessary, until all HCEs
have the same ADR, and then reducing those ADRs
equally. The Plan Administrator will then determine
the dollar amount of the Excess ADP Contribution.
(ii) Allocation of Excess. The Plan Administrator will
--------------------
allocate the Excess ADP Contribution for the Family
Unit among the members in proportion to their
Contributions used in the ADP Test for the Plan Year,
i.e., by multiplying the amount of the excess by the
ratio of each individual member's Contribution
used in the ADP Test to the total Contributions of all
members used in the ADP Test.
32
<PAGE>
(2) Contributions Used in the ACP Test.
----------------------------------
(A) ACP Test. For purposes of the ACP Test, the Plan
--------
Administrator will aggregate the Compensation and
Contributions used in the ACP Test of all Employees in any
Family Unit as if the Family Unit were a single HCE
Participant and the aggregate Actual Contribution Ratio
(ACR) of all members of the Family Unit were the ACR of a
single HCE Participant.
(B) Correcting Excess ACP Contributions. The Plan
-----------------------------------
Administrator will correct any Excess ACP Contributions of
a Family Unit in the same manner as it corrects Excess ADP
Contributions, described above in Subsection (f)(1)(B),
except that the term Actual Contribution Ratio (ACR) will
be substituted for the term Actual Deferral Ratio (ADR)
each place it appears.
(g) Excess Annual Addition. Any Before-Tax Contribution or Employer
----------------------
Contribution which is an Excess Annual Addition and which is
distributed under Subsection 7.3(b)(1) will not be included in the
ADP Test or ACP Test, as applicable.
7.3 Code Section 415 Limitation. In no event will the Maximum Annual Addition
---------------------------
for any Participant exceed the Code Section 415 Limit described in this
Section for any Plan Year after 1986.
(a) Applicable Definitions. For purposes of this Section, the following
----------------------
terms will have the meanings set forth below.
(1) Annual Addition. Each Participant's Annual Addition will
---------------
include the sum of Before-Tax Contributions and Employer
Contributions allocable to him for the Limitation Year,
including (A) Excess Dollar Deferrals that are not timely
refunded under Section 7.1, and (B) Excess ADP Contributions and
Excess ACP Contributions, whether or not timely distributed
under Section 7.2; provided that any Contributions which are
distributed as Excess Annual Additions under Subsection
7.3(b)(1) will not be included in the Participant's Annual
Addition.
(2) Compensation.
------------
(i) Notwithstanding anything herein to the contrary, "Section
415 Compensation" shall include wages, salaries, fees for
-------
professional services, amounts received (without regard to
whether or not an amount is paid in cash) for personal services
actually rendered in the course of employment with the Employer
to the extent that the amounts are includible in gross income
(including, but not limited to, commissions paid salesmen,
compensation for service on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses,
fringe benefits, and reimbursements or other expense allowances
under a non-accountable plan (as described in Section 1.62-2(c)
of the Treasury regulations), amounts described in Code Sections
104(a)(3), 105(a)
33
<PAGE>
and 105(h) to the extent such amounts are included in the gross
income of the Employee, IRC Section 911 earned income, if any,
moving expenses paid or reimbursed by the Employer to the extent
not deductible by the Employee under Section 217 of the Code,
the value of non-qualified stock options to the extent
includible in gross income for the taxable year in which
granted, and the value of property transferred, in accordance
with Code Section 83(b), in connection with the performance of
services which an Employee elects to include in gross income.
(ii) "Section 415 Compensation" shall exclude amounts
-------
contributed to a deferred compensation plan which are not
includible in the Employee's gross income for the taxable year
in which contributed, contributions to a simplified employee
pension plan to the extent deductible, any distribution from a
deferred compensation plan, amounts realized from the exercise
of a non-qualified stock option or when restricted stock or
property held by the Employee becomes freely transferable,
amounts realized from disposition of stock acquired under a
qualified stock option, premiums for group term life insurance,
or contributions toward the purchase of a qualified annuity
contract. For Limitation Years beginning after December 31,
1988, "Section 415 Compensation" shall be limited to $200,000,
as adjusted in the same manner permitted under Code Section
415(d).
(3) Controlled Group. For purposes of this Section, all controlled
----------------
group members which have at least 50 percent common ownership,
within the meaning of Code Sections 414(b) and 415(h), will be
considered to be a single employer.
(4) Excess Annual Addition. Any Before-Tax Contribution and/or
----------------------
Employer Contribution which exceeds the Participant's Maximum
Annual Addition for the Limitation Year.
(5) Limitation Year. The Plan Year.
---------------
(6) Maximum Annual Addition. For each Participant during each
-----------------------
Limitation Year, an amount which does not exceed the lesser of
(A) $30,000 (or 1/4 of the defined benefit plan dollar
limitation in effect for the Limitation Year under Code Section
415(b)(1)(A) if greater or such other amount specified under
that Code Section), or (B) 25 percent of his Compensation.
(b) Treatment of Excess Annual Additions. In the event the Plan
------------------------------------
Administrator determines that, as the result of a reasonable error in
estimating a Participant's annual Compensation or in determining the
amount of Before-Tax Contributions that he can make for the Plan Year
under the $7,000 (indexed) limit described in Section 7.1, or under
other circumstances that the Internal Revenue Service approves, the
Annual Addition to any Participant's Accounts for any Plan Year would
exceed his Maximum Annual Addition, the Plan Administrator will
reduce his allocations to the extent necessary to equal his Maximum
Annual Addition. The Plan Administrator will disregard the removed
Excess Annual Additions for purposes of the $7,000 (indexed)
limitation described in Section 7.1 and for purposes of the ADP Test
and the ACP Test.
34
<PAGE>
The Plan Administrator will remove Excess Annual Additions from the
Accounts by using the following procedures:
(1) Any Before-Tax Contributions to the extent they would reduce the
excess amount, will be returned to the Participant. Such
amounts shall be disregarded for purposes of Code Section
402(g), the actual deferral percentage test of Code Section
401(k)(3), and the actual contribution percentage test of Code
Section 401(m).
(2) If an excess amount remains, and the Participant is covered by
the Plan at the end of the Limitation Year, the excess amount in
the Participant's account shall be used to reduce Employer
Contributions (including any allocation of forfeitures) for such
Participant in the next Limitation Year, and each succeeding
Limitation Year if necessary. If the Participant is not covered
by the Plan at the end of a Limitation Year, the excess amount
shall be held unallocated in a suspense account. The suspense
account shall be applied to reduce future Employer Contributions
for all remaining Participants in the next Limitation Year, and
each succeeding Limitation Year if necessary.
(3) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, it will not
participate in the allocation of the Trust's investment gains
and losses. If a suspense account is in existence at any time
during a particular Limitation Year, all amounts in the suspense
account must be allocated and reallocated to Participants'
accounts before any Employer or any Employee Contributions may
be made to the Plan for that Limitation Year. Excess amounts
may not be distributed to Participants or former Participants.
(4) In the event the Plan is terminated, the Annual Addition
Suspense Account shall be returned to the Employer to the extent
it may not then be allocated to any Participant's Account.
(c) Combined Plan Limitation. If an Employee is a Participant at any
------------------------
time in both this Plan and any qualified defined benefit plan
maintained by an Employer, and the sum of his Defined Benefit
Fraction and his Defined Contribution Fraction exceeds 1.0, his
benefit under the defined benefit plan will be reduced so that the
sum of the fractions does not exceed 1.0.
(1) Defined Benefit Fraction. The Participant's Defined Benefit
------------------------
Fraction for any Plan Year is a fraction, the numerator of which
is his projected annual benefit under the defined benefit plan
determined as of the close of the Plan Year and the denominator
of which is the lesser of:
(A) 1.25 multiplied by $90,000 (as adjusted) and the product
multiplied by the ratio of the Participant's years of
Employment (not greater than 10) over 10; or
(B) 1.4 multiplied by his average Compensation for the three
consecutive calendar years when his Compensation was
highest.
35
<PAGE>
(2) Defined Contribution Fraction. The Participant's Defined
-----------------------------
Contribution Fraction for any Plan Year is a fraction, the
numerator of which is the sum of the Annual Additions to his
Accounts for the Plan Year and all prior Plan Years during his
Employment, and the denominator of which is the sum of the
lesser of the following amounts for the Plan Year and all prior
Plan Years during his Employment:
(A) 1.25 multiplied by $30,000 (as adjusted);
or
(B) 1.4 multiplied by 25 percent of his Compensation for the
Plan Year.
Alternatively, the Plan Administrator may authorize the use of
any method permitted by Treasury Regulations from time to time
to compute the Defined Contribution Fraction.
(d) Combining of Plans. For purposes of applying the limitations
------------------
described in this Section, all defined benefit plans maintained by an
Employer (whether or not terminated) will be treated as one defined
benefit plan, and all defined contribution plans maintained by an
Employer (whether or not terminated) will be treated as one defined
contribution plan.
(e) Controlled Group. For purposes of this Section, all controlled group
----------------
members under 50 percent common control by or with the Employer,
within the meaning of Code Sections 414(b) and 415(h), will be
considered to be a single Employer.
(f) Compliance With Code Section 415. The intent of this Section is that
--------------------------------
the maximum benefit payable to each Participant will be exactly equal
to the maximum amount permitted under Code Section 415. If there is
any discrepancy between this Section and Code Section 415, then Code
Section 415 will prevail.
7.4 Top-Heavy Rules.
---------------
(a) Definitions. As used in this Section, the following words and
-----------
phrases and any derivatives thereof will have the following meanings:
(1) Aggregation Group.
------------------
(A) Required Aggregation Group. Each of the following
--------------------------
qualified plans of the Controlled Group is required to be
aggregated for purposes of determining top-heavy status:
(i) each plan in which a Key Employee is a participant, and
(ii) each other plan which enables any plan with Key
Employee participants to meet the requirements of Code
Section 401(a)(4) or 410.
(B) Permissive Aggregation Group. Qualified plans of the
----------------------------
Controlled Group which are required to be aggregated, plus
such plans which are not part of the Required Aggregation
Group but which satisfy the
36
<PAGE>
requirements of Code Sections 401(a)(4) and 410 when
considered together with the Required Aggregation Group.
(2) Cumulative Account Balances. For purposes of this Section, the
---------------------------
Cumulative Account Balance of each Participant as of any
Determination Date will include his:
(A) Employer Contribution Account balance as of the most recent
Valuation Date, adjusted by allocations of his
proportionate share of Employer Contributions actually made
and allocations of investment gains or losses made or due
to be made under Section 4.1 as of the Determination Date.
(B) Before-Tax Account balances as of the most recent Valuation
Date, adjusted by allocations of investment gains or losses
made or due to be made under Section 4.1 as of the
Determination Date.
(C) Distributions made to the Participant or to his Spouse or
beneficiary within the Plan Year that includes the
Determination Date and the four preceding Plan Years,
excluding distributions rolled over to Related Plans.
Account balance(s) of any former Employee who has not performed
any service for any Employer during the five-year period ending
on the Determination Date will not be considered.
(3) Determination Date. For each Plan Year, the last day of the
------------------
preceding Plan Year.
(4) Key Employee. Any Employee or former Employee who is, or at any
------------
time during the Plan Year in which occurs the Determination Date
or any of the four preceding Plan Years has been either:
(A) One of the 10 highest-paid owners of any Employer or
Controlled Group member, who both (i) owns more than a 1/2
percent interest in value of the Employer or Controlled
Group Member, and (ii) earns more than $30,000 Compensation
as indexed under Code Section 415(d).
(B) A 5-percent owner of an Employer or Controlled Group
member.
(C) A 1-percent owner of an Employer or Controlled Group member
having Compensation of more than $150,000.
(D) An officer (a high-level policy-making executive) who
receives more than $45,000 Compensation as indexed under
Code Section 415(d), provided that the maximum number of
officers will be the lesser of (i)
37
<PAGE>
50, or (ii) the greater of 3, or 10 percent of the total
number of Controlled Group employees.
(5) Non-Key Employee. Any Employee or former Employee who is not a
----------------
Key Employee.
(6) Related Plans. Qualified plans maintained by the Employer or a
-------------
Controlled Group employer.
(b) Determination of Top-Heavy Status. The Plan will be top-heavy for
---------------------------------
any Plan Year if, as of the Determination Date:
(1) 60 Percent Rule. The sum of the Cumulative Account Balances of
---------------
Participants who are Key Employees, exceeds 60 percent of the
sum of the Cumulative Account Balances of all Participants; or
(2) Top-Heavy Group Rule. The Plan is part of a Required
--------------------
Aggregation Group in which more than 60 percent of the sum of
(A) aggregated Cumulative Account Balances, and (B) present
values of accrued benefits under defined benefit plans, have
been accumulated in favor of Key Employees; provided that the
Plan will not be considered a top-heavy plan with respect to any
Plan Year in which the Plan is part of a Required or Permissive
Aggregation Group that is not top-heavy.
(c) Plan Operation During Top-Heavy Status. Notwithstanding any other
--------------------------------------
provision of the Plan, the following provisions will apply to
Participants for any Plan Year in which the Plan is top-heavy.
(1) Minimum Benefit or Allocation. Each Participant who is a Non-
-----------------------------
Key Employee in a top-heavy Plan Year and who also participates
in a defined benefit plan maintained by a Controlled Group
employer, will receive the minimum benefit under the defined
benefit plan required under Code Section 416(c)(1). Each Non-
Key Employee Participant who does not participate in a defined
benefit plan, and who has not terminated Employment as of the
last day of the Plan Year, will receive an allocation of
Employer Contributions in an amount not less than the lesser of
(A) 3 percent of his Compensation, whether or not he has made
any Employee Contributions for the Plan Year, and regardless of
his level of Compensation for the Plan Year, or (B) the
percentage contributed for the HCE who receives the greatest
percentage for the Plan Year.
(3) Effect on Aggregate Defined Benefit and Defined Contribution
------------------------------------------------------------
Limits. For the purpose of calculating the denominators of the
------
Defined Benefit Fraction and Defined Contribution Fraction under
Section 7.3, 1.0 will be substituted for l.25 each place it
appears; provided that such substitution will not be required
if:
(A) the Cumulative Account Balances for Key Employees does not
exceed 90 percent of the Cumulative Account Balances for
all Employees, and
38
<PAGE>
(B) the minimum top-heavy benefit is provided to the
Participant under a defined benefit plan maintained by a
Controlled Group employer;
and provided further that such substitution will be suspended
for any Employee or former Employee so long as he receives no
allocations under this Plan or any other qualified plan
maintained by a Controlled Group employer.
39
<PAGE>
ARTICLE VIII
Amendment, Termination and Merger
---------------------------------
8.1 Amendment.
---------
(a) Procedure. The Employer will have the right to amend the Plan from
---------
time to time. The Plan Administrator will determine that an
amendment is appropriate, and will determine whether the amendment
may significantly alter the Plan's contribution requirements or
expense provisions. The Plan Administrator or its agent will draft
the amendment. Each amendment must be approved by a majority of the
Plan Administrator members then in office. The Employer's President,
or officer designated by the President, will adopt each amendment by
placing his signature thereon. If the amendment may significantly
alter the Plan's contribution requirements or expense provisions, the
Board of Directors must approve it by resolution. Within 30 days
after the date when the amendment is adopted, the Plan Administrator
will provide a copy to each Employer.
(b) Prohibited Amendments. No amendment will be permitted which would
---------------------
have the effect of any of the following:
(1) Exclusive Benefit. No amendment will permit any part of the
-----------------
Trust Fund to be used for purposes other than the exclusive
benefit of Participants.
(2) Nonreversion. No amendment will cause any portion of the Trust
------------
Fund to revert to any Employer, except such amount as may remain
after termination of the Plan and satisfaction of all
liabilities.
(3) No Cutback. No amendment will eliminate any optional form of
----------
benefit with respect to Account balances accrued before the
amendment.
(c) Election of Pre-Amendment Vesting Schedule. In the event the Plan is
------------------------------------------
amended to change or modify the vesting schedule, a Participant with
at least three (3) Years of Credited Service as of the expiration of
the election period described below, may elect to be subject to the
pre-amendment vesting schedule. If a Participant fails to make such
an election, then such Participant shall be subject to the new
vesting schedule. The election of the pre-amendment vesting schedule
shall be made by giving written notice to the Plan Administrator
during the election period. The election period shall begin on the
date such amendment is adopted and shall end no earlier than the
latest of the following dates:
(1) The date which is sixty (60) days after the date the amendment is
adopted;
(2) The date which is sixty (60) days after the date the Plan
amendment becomes effective; or
40
<PAGE>
(3) The date which is sixty (60) days after the date the Participant
is issued written notice of the amendment by the Employer or
Administrator.
Such election shall be made only by an individual who is a Participant at
the time such election is made and such election shall be irrevocable.
Such amendment shall not reduce the Vested percentage of a Participant's
Accrued Benefit as of the later of the date on which such amendment is
adopted or the effective date of such amendment.
8.2 Termination of the Plan.
-----------------------
(a) Right to Terminate. The Employer expects this Plan to be continued
------------------
indefinitely but necessarily reserves the right to terminate the Plan
and all contributions at any time, subject to approval by the Board.
Each Employer reserves the right to terminate its participation in
the Plan at any time by appropriate action of its board of directors.
(b) Full Vesting. In the event of termination or partial termination,
------------
the Account balances of each affected Participant, to the extent
funded, will become fully vested as of the termination date. For
purposes of accelerated vesting, affected Participants will include
only those who are in active Employment as of the Plan termination
date. All nonvested Participants who terminated Employment before
the Plan termination date will be considered to have received
constructive cash-outs of their entire Account balances under
Subsection 6.2(g).
(c) Provision for Benefits Upon Plan Termination. In the event of
--------------------------------------------
termination, the Plan Administrator may in its discretion act as
follows:
(1) Maintain the Trust. The Plan Administrator may continue the
------------------
Trust for so long as it considers advisable and so long as
permitted by law, either through the existing trust
agreement(s), or through successor funding media.
(2) Terminate the Trust. The Plan Administrator may terminate the
-------------------
Trust, pay all expenses, and direct the payment of the benefits,
either in the form of lump-sum distributions, installment
payments, transfer to another qualified plan, or any other form
selected by the Plan Administrator, to the extent not prohibited
by law.
(d) Surplus Reversion. Any assets that remain after all benefits under the
-----------------
Plan have been allocated will be returned to the affected Employer(s), to
the extent permitted by applicable law.
8.3 Plan Merger. In the event of any merger or consolidation of the Plan with
-----------
any other plan, or the transfer of assets or liabilities by the Plan to
another plan, each Participant will be entitled to receive a benefit
immediately after the merger, consolidation or transfer, if the Plan then
terminated, which is equal to or greater than the benefit he would have
been entitled to receive immediately before the merger, consolidation, or
transfer if the Plan had then terminated.
41
<PAGE>
ARTICLE IX
----------
ADOPTION OF PLAN BY PARTICIPATING EMPLOYERS
-------------------------------------------
9.1 Right of Participating Employers to Participate.
-----------------------------------------------
(a) A corporation, partnership or proprietorship (hereinafter referred to
as a "Participating Employer"), may adopt and participate in the Plan
if the Plan Administrator approves such adoption and participation.
(b) Adoption of the Plan by a Participating Employer shall be evidenced
by written action of the Participating Employer either in the form of
a written resolution of such Board or a separate agreement executed
by a duly authorized officer of such Participating Employer (or in
the case of a partnership or proprietorship written authorization of
a general partner or the proprietor) wherein it is agreed that the
Participating Employer adopts the Plan and agrees to be bound by all
the terms and provisions of the Plan. In addition, such
Participating Employer shall give written notice of such adoption to
the Administrator of the Plan.
(c) Approval of the adoption of the Plan by a Participating Employer
shall be evidenced by written action of the Administrator and Named
Fiduciary wherein they approve adoption of the Plan by the
Participating Employer.
9.2 Participant Accounts. A Participant who is employed or has been employed
--------------------
by Employer and/or Participating Employer shall have a separate Employer
Contribution Account for Employer and each Participating Employer to which
shall be allocated contributions and forfeitures from Employer and each
Participating Employer together with earnings and losses thereon.
9.3 Administrative Powers of Plan Administrator. The administrative powers
-------------------------------------------
and control of the Administrator shall not be diminished under the Plan by
reason of the participation of any Participating Employer in the Plan and
such administrative powers and controls specifically granted herein to the
Administrator shall apply only to the Administrator. The right to amend
the Plan shall apply only to the Named Fiduciary.
9.4 Creation of Trust. A Participating Employer shall be required to appoint
-----------------
the Trustee which has been appointed by the Named Fiduciary to serve as
Trustee of any funds contributed for its Employees and shall authorize the
Named Fiduciary to appoint such successor or co-Trustees as it deems
necessary and advisable. A Participating Employer shall also be required
to make contributions on behalf of its Employees to such Trustee to hold,
invest and maintain pursuant to the terms and provisions of the Trust
Agreement entered into between the Trustee and Employer.
42
<PAGE>
9.5 Transfer of Employment.
----------------------
(a) For purposes of determining a Year of Credited Service, a Break in
Service and an Hour of Service, the transfer of a Participant between
Employer and any Participating Employer shall not be deemed a
termination of employment.
(b) For purposes of determining participation in the Plan, all service
with Employer and with each Participating Employer shall be taken
into account.
(c) For purposes of determining an Employee's Years of Credited Service
under the Plan, all Years of Credited Service with Employer and each
Participating Employer shall be taken into account.
9.6 Withdrawal of Participating Employers.
-------------------------------------
(a) A Participating Employer may withdraw from the Plan by giving written
notice of such withdrawal to the Administrator. Such notice shall
contain: (1) the effective date of withdrawal; (2) a statement
whether the withdrawal constitutes a termination of the Plan as to
its Employees; and (3) the disposition to be made of assets held by
the Trustee for the Employees of such Participating Employer.
(b) Employer may require a Participating Employer to withdraw from the
Plan by giving sixty (60) days written notice thereof to the
Administrator and to the President of such Participating Employer (or
in the case of a partnership or proprietorship to a general partner
or the proprietor). Such notice shall contain: (1) the effective
date of withdrawal, and (2) the date the Trustee will release assets
held by it for the Employees of such Participating Employer. Upon
receipt of such notice, the Participating Employer shall, within
thirty (30) days thereafter, notify the Administrator, in writing,
(1) whether it intends to create its own plan, intends to terminate
the Plan for its Employees, or intends to adopt the plan of another
company; and (2) the name and address of the trustee or other party
who is to receive the assets held by the Trustee for the Employees of
the Participating Employer.
(c) Upon withdrawal of a Participating Employer from the Plan, either
under subsection (a) or (b) hereinabove, the Administrator shall give
written notification to the Trustee of such withdrawal and shall
direct the Trustee to transfer and pay over the assets held by the
Trustee for the Employees of the Participating Employer to a
successor Trustee or another party or to the Employees. For purposes
of this Section, if the Employees of the withdrawing Participating
Employer cease participation in the Plan as a result of the
withdrawal, the employment of such Employees shall be terminated.
Distribution of the vested account balance of each such Employee
shall be made in the same manner and at the same time as provided in
Section 6.1(b). The non-vested account balance of each such Employee
shall be forfeited in accordance with the provisions of Section
3.2(e).
(d) If the Participating Employer, which is required to withdraw under
subsection (b) hereinabove, does not cooperate or fully comply with
the terms of subsection (b), then the Administrator may direct the
Trustee to distribute to each Employee of the
43
<PAGE>
Participating Employer his Accrued Benefit in the same manner and at
the same time as provided in Section 6.1(b). Upon such distribution,
the duties, obligations and responsibilities of the Administrator and
Trustee to the Employees of the Participating Employer shall
terminate.
(e) Upon withdrawal by such Participating Employer, all administration
and control which the Employer and the Administrator had heretofore
exercised with respect to such Participating Employer shall cease and
all administration and controls shall be the responsibility of such
withdrawing Participating Employer or the Administrator appointed by
it. The Named Fiduciary and the Administrator shall be relieved of
any further liability therefor.
9.7 Internal Revenue Service Approval of Plan for a Participating Employer.
----------------------------------------------------------------------
Promptly upon becoming a Participating Employer, such Participating
Employer may make initial application to the Internal Revenue Service for
approval of the Plan as it pertains to such Participating Employer. In
the event the Internal Revenue Service issues an adverse letter with
respect to such application and determines that the Plan as it pertains to
such Participating Employer fails to qualify under Section 401 of the
Code, then the adoption of the Plan by the Participating Employer shall
become null and void, ab initio. Upon a failure to obtain initial
-- ------
qualification of the Plan, any contributions made by the Participating
Employer to the Trustee shall be returned to the Participating Employer,
to the extent allowed under Section 11.3. If application is not made to
the Internal Revenue Service, then, at a minimum the Participating
Employer shall notify the Internal Revenue Service that its Employees are
participating in the Plan.
9.8 Joint Venture Restriction. Neither the adoption of this Plan by a
-------------------------
Participating Employer nor the act performed by it in relation to this
Plan shall ever create a joint venture or partnership between Employer and
any Participating Employer.
9.9 Commingled Assets. Notwithstanding anything to the contrary, it is the
-----------------
intention of the Employer and the Participating Employer that the Trust
Fund shall be available to pay benefits to all of the employees who are
participating in the Plan and their beneficiaries.
44
<PAGE>
ARTICLE X
Administration
--------------
10.1 Allocation of Fiduciary Responsibilities. The Plan fiduciaries will have
----------------------------------------
the powers and duties described below, and may delegate their duties to
the extent permitted under ERISA Section 402.
(a) Employer and Employers. The Employer, through its Board, will be
----------------------
responsible for amending the Plan, terminating the Plan, appointing
Plan Administrator members, and appointing and removing the Trustee.
The Employer and each Employer will be responsible for making
contributions to the Plan in the amounts determined by the Plan
Administrator based on the Before-Tax Contributions made by
Participants, net profit margins, and ADP Test and ACP Test results.
Each Employer will promptly provide complete information regarding
the Compensation, Before-Tax Contributions and Employment of each
Participant and such other relevant information as the Plan
Administrator may require.
(b) The Plan Administrator.
----------------------
(1) Appointment and Termination of Office. The Plan Administrator
-------------------------------------
will consist of not less than 1 nor more than 5 individuals who
will be appointed by and serve at the pleasure of the Board.
The Board will have the right to remove any member of the Plan
Administrator at any time. A member may resign at any time by
written resignation to the Plan Administrator and the Board. If
a vacancy in the Plan Administrator should occur, the Board will
appoint a successor.
(2) Organization of Plan Administrator. The Board will appoint a
----------------------------------
Chairman from among the Plan Administrator members, and will
appoint a Secretary who may or may not be a Plan Administrator
member. The Plan Administrator may appoint agents who may or
may not be Plan Administrator members, as it considers necessary
for the effective performance of its duties, and may delegate to
the agents ministerial powers and duties as it considers
expedient or appropriate. The Plan Administrator will fix the
compensation of the agents within the limits set by the Board.
Employee Plan Administrator members will serve as such without
additional compensation.
(3) Plan Administrator Meetings. The Plan Administrator will hold
---------------------------
meetings at least annually. A majority of the members then in
office will constitute a quorum. Each action of the Plan
Administrator will be taken by a majority vote of all members
then in office, provided that the Plan Administrator may
establish procedures for taking written votes without a meeting.
(4) Powers of the Plan Administrator. The Plan Administrator will
--------------------------------
have primary responsibility for administering the Plan, and all
powers necessary to enable it
45
<PAGE>
to properly perform its duties, including but not limited to the
following powers and duties:
(A) Rules. The Plan Administrator may adopt rules and
-----
regulations necessary for the performance of its duties
under the Plan.
(B) Construction. The Plan Administrator will have the power
------------
to construe the Plan and to decide all questions arising
under the Plan.
(C) Right to Benefits. The Plan Administrator will have
-----------------
discretionary authority to determine the eligibility of
Participants or their beneficiaries to receive benefits and
the amount of benefits to which any Participant or
beneficiary may be entitled under the Plan, and will
enforce the claims procedure described in Section 10.4.
(D) Employee Data. The Plan Administrator will request from
-------------
the Employer complete information regarding the
Compensation, Before-Tax Contributions, and Employment of
each Eligible Employee and other facts as it considers
necessary from time to time, and will treat Employer
records as conclusive with respect to such information.
(E) Payments. The Plan Administrator will direct the payment
--------
of benefits from the Trust, or may appoint a disbursing
agent, and will specify the payee, the amount and the
conditions of each payment.
(F) Disclosure. The Plan Administrator will prepare and
----------
distribute to the Employees plan summaries, notices and
other information about the Plan in such manner as it deems
proper and in compliance with applicable law.
(G) Application Forms. The Plan Administrator will provide
-----------------
forms for use by Participants in designating beneficiaries
and applying for benefits.
(H) Agents. The Plan Administrator will retain legal counsel,
------
accountants and such other agents as it deems necessary to
properly administer the Plan.
(I) Financial Statements. The Plan Administrator will
--------------------
periodically prepare reports of the Plan's operation,
showing its assets and liabilities in reasonable detail,
and will submit a copy of each report to the Board and
cause a copy to be maintained in the office of the
secretary of the Plan Administrator.
(J) Reporting. The Plan Administrator will cause to be filed
---------
all reports required under ERISA and the Code.
(K) Investment Manager. With approval of the Board, the
------------------
Employer may appoint an investment manager.
46
<PAGE>
(L) Accounts. The Plan Administrator will maintain or cause
--------
to be maintained individual Accounts for Participants, and to
allocate or cause to be allocated Before-Tax Contributions,
Employer Contributions, and Rollover Contributions to the proper
Accounts.
(M) General. The Plan Administrator will perform all acts
-------
reasonably necessary to administer the Plan.
(c) The Trustee. The Board will appoint a Trustee who will have the
-----------
duties and responsibilities described in the trust agreement executed
by the Employer and the Trustee. The trust agreement will be an
integral part of this Plan.
10.2 Expenses. The Plan Administrator will determine, in its sole discretion,
--------
whether the expenses incurred in administering the Plan and Trust will be
paid by the Employer(s) or by the Trustee from the Trust Fund, or will be
charged to Accounts (such as recordkeeping fees for processing elections,
allocations, withdrawals and distributions). Plan expenses include but
are not limited to fees and charges of actuaries, attorneys, accountants,
consultants, investment managers, recordkeepers, and the Trustee. The
Trustee will pay from the Trust Fund all expenses directly incurred in
connection with the investment of Plan assets. No Employee will receive
any additional Compensation for services performed in connection with the
Plan.
10.3 Indemnification. The Employers will indemnify and hold harmless the Plan
---------------
Administrator and each member and each person to whom the Plan
Administrator or either Plan Administrator has delegated responsibility
under this Article, from all joint or several liability for their acts and
omissions and for the acts and omissions of their duly appointed agents in
the administration of the Plan, except for their own breach of fiduciary
duty and willful misconduct.
10.4 Claims Procedure.
----------------
(a) Application for Benefits. The Plan Administrator will furnish to
------------------------
each Participant, upon his retirement, information about the benefits
to which he is entitled under the Plan. The Plan Administrator may
require any person claiming benefits under the Plan to submit a
written application, together with such documents, evidence, and
information as it considers necessary to process the claim.
(b) Action on Application. Within 90 days after receipt of an
---------------------
application and all necessary documents and information, the Plan
Administrator will furnish the claimant a written notice of its
decision. If the Plan Administrator denies the claim in whole or in
part, the notice will set forth (1) specific reasons for the denial,
with specific reference to Plan provisions upon which the denial is
based; (2) a description of any additional information or material
necessary to process the application with an explanation why such
material or information is necessary; and (3) an explanation of the
Plan's claim review procedure.
If special circumstances require an extension of time for processing
the claim, the Plan Administrator will furnish the claimant written
notice of the extension before the end of the initial 90-day period.
In no event will the extension exceed a period of 90 days from the
end of the initial period. The notice will explain the circumstances
requiring
47
<PAGE>
an extension of time and the date by which the Plan Administrator
expects to render a decision.
(c) Claim Review. The claimant who does not agree with the decision
------------
rendered on his application may request that the Plan Administrator
review the decision. The request must be made within 60 days after
the claimant receives the decision, or if the application has neither
been approved nor denied within the 90-day period specified in
subsection (b), then the request must be made within 60 days after
expiration of the 90-day period.
Each request for review must be in writing and addressed to the Plan
Administrator. Concurrently with filing the request for review, or
within the 60-days request period, the claimant may submit in writing
to the Plan Administrator a statement of the issues raised by his
appeal and supporting arguments and comments.
During the pendency of his appeal the claimant may inspect all
documents which are reasonably pertinent to his case, upon reasonable
notice to the Plan Administrator. However, under no circumstance
will any Employer be required to disclose to any claimant information
concerning any person other than the Participant whose benefit is
being claimed, to the extent such information is normally treated as
confidential.
Where the Plan Administrator believes that the issues raised by the
claimant's appeal may be more efficiently or fairly processed by
taking testimony of the claimant or others, it will set the matter
for oral hearing and give the claimant reasonable notice of the time
and place. Whether or not an oral hearing is scheduled, the Plan
Administrator will proceed promptly to resolve all issues raised by
the claimant's appeal and will render a written decision on the
merits, with a statement of the reasons and references to the
pertinent supporting provisions of the Plan, within 60 days following
receipt of the claimant's request for review.
If special circumstances require an extension of time, the Plan
Administrator will render a decision as soon as possible, but not
later than 120 days after receipt of the request for review. If an
extension is required, the Plan Administrator will furnish to the
claimant written notice of the extension, including an explanation of
the circumstances requiring the extension, before commencement of the
extension period.
48
<PAGE>
ARTICLE XI
Miscellaneous
-------------
11.1 Headings. The headings and subheadings in this Plan have been inserted
--------
for convenient reference, and in the event a heading or subheading
conflicts with the text, the text will govern.
11.2 Construction. The Plan will be construed in accordance with the laws of
------------
the State of Alabama, except to the extent such laws are preempted by
ERISA and the Code.
11.3 Employer Reversion Upon Initial Disqualification. Notwithstanding any
------------------------------------------------
contrary provisions contained in any portion of this Plan, in the event
the Commissioner of Internal Revenue determines that the Plan is not
initially qualified under the Code, any contribution made incident to that
initial qualification by the Employer must be returned to the Employer
within one year after the date the initial qualification is denied, but
only if the application for the qualification is made by the time
prescribed by law for filing the Employer's return for the taxable year in
which the Plan is adopted, or such later date as the Secretary of the
Treasury may prescribe.
11.4 Nonalienation. No benefits payable under the Plan will be subject to the
-------------
claim or legal process of any creditor of any Participant or beneficiary,
and no Participant or beneficiary will alienate, transfer, anticipate or
assign any benefits under the Plan, except that payments will be made
pursuant to (a) qualified domestic relations orders issued in accordance
with Code Section 414(p), (b) judgments resulting from federal tax
assessments, and (c) as otherwise required by law.
11.5 No Employment Rights. Participation in the Plan will not give any
--------------------
Employee the right to be retained in the employ of any Employer, or upon
termination any right or interest in the Plan except as provided in the
Plan.
11.6 No Enlargement of Rights. No person will have any right to or interest in
------------------------
any portion of the Plan except as specifically provided in the Plan.
11.7 Withholding for Taxes. Payments under the Plan will be subject to
---------------------
withholding for payroll taxes as required by law. Beginning in 1993, each
Employer will withhold 20 percent federal income tax from each lump sum
payment which is not rolled over directly into another qualified
retirement plan or individual retirement account under Subsection 6.2(f).
49
<PAGE>
IN WITNESS WHEREOF, Colonial Properties Trust has caused this Plan to be
executed by its duly authorized officer this 15th day of February, 1995,
to be effective as of January 1, 1995.
COLONIAL PROPERTIES TRUST
By: /s/ Thomas H. Lowder
------------------------------
Title: President
---------------------------
ATTEST:
/s/ Kenneth E. Howell
- ----------------------------------------
Secretary
Corporate Seal
50
<PAGE>
THE COLONIAL PROPERTIES TRUST
401(k)/PROFIT SHARING PLAN
Table of Contents
-----------------
Page
ARTICLE I - DEFINITIONS
1.1 ACP Test 1
1.2 ADP Test 1
1.3 Accounts 1
1.4 Actual Contribution Ratio (ACR) 2
1.5 Actual Deferral Ratio (ADR) 2
1.6 Adoption Agreement 2
1.7 Affiliated Company 2
1.8 After-Tax Account 2
1.9 Average Contribution Percentage (ACP) 2
1.10 Average Deferral Percentage (ADP) 2
1.11 Before-Tax Account 2
1.12 Before-Tax Contribution 2
1.13 Board 2
1.14 Break in Service 2
1.15 Code 2
1.16 Company Stock 2
1.17 Compensation 3
1.18 Contributions 3
1.19 Controlled Group 4
1.20 Disability 4
1.21 Effective Date 4
1.22 Eligible Employee (or Employee) 4
1.23 Employer 4
1.24 Employer Contribution Accounts 4
1.25 Employer Contributions 4
1.26 Employment 5
1.27 Employment Date 5
1.28 Enrollment Date 5
1.29 ERISA 5
1.30 Excess ACP Contributions 5
1.31 Excess ADP Deferrals 5
1.32 Excess Dollar Deferrals 5
1.33 Family Unit 5
1.34 Five-Year Break 5
1.35 HCE Group 5
1.36 Highly Compensated Employee (HCE) 5
1.37 Hours of Service 7
1.38 Matching Account 8
1.39 Matching Contribution 8
1.40 NCE Group 8
51
<PAGE>
1.41 Nonhighly Compensated Employee (NCE) 8
1.42 Normal Retirement Age 8
1.43 One-Year Break 8
1.44 Participant 9
1.45 Plan 9
1.46 Plan Administrator 9
1.47 Plan Year 9
1.48 Pre-1987 Vested Account 9
1.49 Profit Sharing Account 9
1.50 Profit Sharing Contribution 9
1.51 Required Beginning Date 9
1.52 Rollover Account 9
1.53 Rollover Contribution 9
1.54 Safe Harbor Account 9
1.55 Safe Harbor Contribution 9
1.56 Spouse 9
1.57 Termination Date 9
1.58 Transferor Plan 9
1.59 Trust (or Trust Fund) 10
1.60 Trustee 10
1.61 Valuation Date 10
1.62 Vested Percentage 10
1.63 Vesting Service 10
1.64 Years of Service 10
ARTICLE II - ELIGIBILITY
2.1 Eligibility 11
2.2 Participation Upon Reemployment 11
2.3 Leased Employees 12
ARTICLE III - CONTRIBUTIONS
3.1 Employee Contributions 13
(a) Before-Tax Only 13
(b) Vesting 13
(c) Election to Participate 13
3.2 Employer Contributions 14
(a) Matching Contribution 14
(b) Profit Sharing Contribution 14
(c) Safe-Harbor Contribution 15
(d) Vesting 16
(e) Forfeiture 16
(f) Exclusive Benefit of Participants 16
(g) Deductibility 16
(h) Payment to the Trustee 17
52
<PAGE>
(i) Return of Employer Contributions 17
3.3 Rollover Contributions 17
(a) Eligible Rollover Distribution 17
(b) Rollover or Direct Plan Transfer 17
(c) Timing 17
(d) Required Information 17
(e) Prohibited Rollovers and Transfers 18
(f) Refund of Prohibited Rollovers 18
(g) Reliance on Participant's Representations 18
ARTICLE IV - INDIVIDUAL ACCOUNTS
4.1 Adjustments to Account Balances 19
(a) Regular Valuation Dates 19
(b) Special Valuation Dates 19
(c) Valuations Binding 19
(d) Allocation Date 19
(e) Statement of Account Balances 19
(f) Correction of Mistakes 19
4.2 Investment Election 20
(a) Available Funds 20
(b) Liquidity 20
(c) Participant Elections 20
(d) Failure to Elect 21
(e) Allocation of Earnings 21
(f) Special Election Date 21
(g) Voting of Company Stock 21
ARTICLE V - INSERVICE WITHDRAWALS
5.1 Limitation on Frequency of Inservice
Withdrawals 22
5.2 Withdrawal Fee 22
5.3 Inservice Withdrawal from After-Tax
and Pre-1987 Vested Accounts 22
5.4 Inservice Withdrawal After Age 59 1/2 22
5.5 Inservice Withdrawal After Age 70 1/2 22
5.6 Hardship Withdrawals 23
(a) Application 23
(b) Available Amount 23
(c) Immediate and Heavy Financial Need 23
(d) No Other Available Resources 23
(e) Nondiscrimination 24
(f) Reliance on Participant's Representations 24
53
<PAGE>
ARTICLE VI - POST-EMPLOYMENT DISTRIBUTIONS
6.1 Payment Events 25
(a) Retirement 25
(b) Termination of Employment Before Age 65 25
(c) Disability 25
(d) Death 25
6.2 Amount, Form and Timing of Payment 25
(a) Application for and Timing of Payment 25
(b) Right to Defer Payment 26
(c) Amount of Payment 26
(d) Form of Payment 26
(e) Medium of Payment 26
(f) Withdrawal Fee 26
(g) Direct Rollover 26
(h) Constructive Cash-Out 26
(i) Latest Payment Date 27
(j) Compliance with Code Section 401(a)(9) 27
6.3 Designation of Beneficiaries 27
(a) Procedure 27
(b) Waiver of Spouse's Rights 27
(c) Judicial Determination 28
6.4 Payment to the Participant's Representative 28
6.5 Unclaimed Benefits 28
ARTICLE VII - LIMITATIONS ON ALLOCATIONS
7.1 Excess Dollar Deferrals 29
(a) Time of Refund 29
(b) Reporting Form 29
(c) Order of Refunds 29
(d) Inclusion of ADP Test 29
(e) Inclusion in Annual Addition 29
(f) Determination of Earnings 30
7.2 Nondiscrimination Tests 30
(a) ADP Test 30
(b) ACP Test 30
(c) Multiple Use 31
(d) Multiple Use Test 31
(e) Correction of Excess ADP Contributions
and Excess ACP Contributions 31
(f) Family Aggregation Rules 32
(g) Excess Annual Addition 33
7.3 Code Section 415 Limitation 33
(a) Applicable Definitions 33
(b) Treatment of Excess Annual Additions 34
(c) Combined Plan Limitation 35
54
<PAGE>
(d) Combining of Plans 36
(e) Controlled Group 36
(f) Compliance With Code Section 415 36
7.4 Top-Heavy Rules 36
(a) Definitions 36
(b) Determination of Top-Heavy Status 38
(c) Plan Operation During Top-Heavy Status 38
ARTICLE VIII - AMENDMENT, TERMINATION AND MERGER
8.1 Amendment 40
8.2 Termination of the Plan 41
8.3 Plan Merger 99
ARTICLE IX - PARTICIPATING EMPLOYERS
9.1 Rights of Participating Employers to Participate 42
9.2 Participant Accounts 42
9.3 Administrative Powers of Plan Administrator 42
9.4 Creation of Trust 42
9.5 Transfer of Employment 43
9.6 Withdrawal of Participating Employers 43
9.7 Internal Revenue Service Approval of Plan for a
Participating Employer 44
9.8 Joint Venture Restriction 44
9.9 Commingled Assets 44
ARTICLE X - ADMINISTRATION
10.1 Allocation of Fiduciary Responsibilities 45
(a) Employer and Employers 45
(b) The Plan Administrator 45
(c) The Trustee 47
10.2 Expenses 47
10.3 Indemnification 47
10.4 Claims Procedure 47
ARTICLE XI - MISCELLANEOUS
11.1 Headings 49
11.2 Construction 49
11.3 Qualification for Continued Tax-Exempt Status 49
11.4 Nonalienation 49
11.5 No Employment Rights 49
55
<PAGE>
11.6 No Enlargement of Rights 49
11.7 Withholding for Taxes 49
56
<PAGE>
STATE OF ALABAMA
JEFFERSON COUNTY
FIRST AMENDMENT
COLONIAL PROPERTIES TRUST
401(k)/PROFIT SHARING PLAN
COLONIAL PROPERTIES TRUST, an Alabama Real Estate Investment Trust
(hereinafter called the "Employer"), hereby adopts and publishes on this the
27th day of December, 1995 this Amendment to the Colonial Properties Trust
401(k)/Profit Sharing Plan, as follows:
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Employer, effective on January 1, 1995, established a
401(k)/Profit Sharing Plan and Trust; and
WHEREAS, said Plan provides that Employer reserves the right at any
time and from time to time, by action of its Board to amend in whole or in part,
any and all provisions of the Plan; and
WHEREAS, Employer desires to amend said Plan in the following
respects; and
WHEREAS, by written unanimous consent of the Board of Directors of the
Corporation, said Board did specifically approve and adopt by resolution the
amendment hereinafter set forth;
NOW, THEREFORE, in consideration of the premises hereinabove set
forth, Employer hereby amends said Plan, as follows:
FIRST: Subparagraph 3.1(a)(2) of said Plan shall be deleted in its
entirety and there shall be substituted in lieu thereof the following:
(2) Amount Matched. The first six percent (6%) of
--------------
Compensation that a Participant elects to contribute will
receive a Matching Contribution.
SECOND: Subparagraph Section 3.2(a) of said Plan shall be deleted in
its entirety and there shall be substituted in lieu thereof the following:
3.2 Employer Contributions.
----------------------
(a) Matching Contribution. Each Employer will make a Matching
---------------------
Contribution in an amount equal to fifty percent (50%) of the
first six percent (6%) of Compensation contributed by each of its
Participants for each Plan Year, provided that the Participant
remains in Employment until the last day of the Plan Year. The
<PAGE>
Participant will not receive a Matching Contribution to the
extent he withdraws his Before-Tax Contributions under Article V
in the same Plan Year when he makes them. For this purpose, the
Participant's withdrawals will come first from the earliest
Contributions and earnings allocated to his Before-Tax Account.
THIRD: This Amendment shall be effective commencing October 1, 1995, and
for each year thereafter until further amended.
FOURTH: In all other respects, said Plan is hereby ratified, confirmed and
approved.
The Employer has caused this Amendment to be executed by its duly
authorized officer and duly attested, and its corporate seal to be hereunto
affixed on the day and year first above written.
COLONIAL PROPERTIES TRUST
By /s/ Thomas H. Lowder
-------------------------------
Thomas H. Lowder
President
ATTEST: (EMPLOYER)
/s/ Kenneth E. Howell
- ----------------------------
Kenneth E. Howell,
Secretary
(CORPORATE SEAL)
-2-
<PAGE>
Exhibit 4.2
-----------
COLONIAL PROPERTIES TRUST
DECLARATION OF TRUST
Dated August 21, 1995
SECTION 8.4 Indemnification. The Trust shall indemnify (i) its
---------------
Trustees and officers, whether serving the Trust or at its request any other
entity, to the full extent required or permitted by the laws of the State of
Alabama applicable to business corporations now or hereafter in force, including
the advance of expenses under the procedures and to the full extent permitted by
such laws, and (ii) the Shareholders and other employees and agents of the Trust
to such extent as shall be authorized by the Trustees or the Bylaws and as
permitted by law. Nothing contained herein shall be construed to protect any
Person against any liability to the extent such protection would violate Alabama
statutory or decisional law applicable to real estate investment trusts
organized under the Act or any successor provision. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Trustees may take such action as
is necessary to carry out these indemnification provisions and are expressly
empowered to adopt, approve and amend from time to time such bylaws, resolutions
or contracts implementing such provisions or such further indemnification
arrangements as may be permitted by law. No amendment of this Declaration of
Trust or repeal of any of its provisions shall limit or eliminate the right of
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal.
<PAGE>
Exhibit 4.3
-----------
COLONIAL PROPERTIES TRUST
BYLAWS
ARTICLE XII
INDEMNIFICATION
To the maximum extent permitted by Alabama law in effect from time to
time, the Trust, after a preliminary determination of the ultimate entitlement
to indemnification has been made in accordance with Section 8.55 of Chapter 2B,
Title 10, of the Code of Alabama, 1975, as amended, shall indemnify (a) any
Trustee, officer or shareholder or any former Trustee, officer or shareholder
(including among the foregoing, for all purposes of this Article XII and without
limitation, any individual who, while a Trustee and at the request of the Trust,
serves or has served another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer, partner or
trustee of such corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise), who has been successful, on the merits or otherwise,
in the defense of a proceeding to which he was made a party by reason of such
status, against reasonable expenses incurred by him in connection with the
proceeding, (b) any Trustee or officer or any former Trustee or officer made a
party to a proceeding by reason of such status against reasonable expenses
incurred by him in connection with the proceeding, if: (i) he conducted himself
in good faith, and (ii) he reasonably believed (A) in the case of conduct in his
official capacity with the Trust, that the conduct was in the Trust's best
interests and (B) in all other cases, that the conduct was at least not opposed
to its best interests, and (iii) in the case of any criminal proceeding, he had
no reasonable cause to believe his conduct was unlawful, provided, however, that
------------------
the indemnification provided for in this clause (b) shall not be available if it
is established that (1) in connection with a proceeding by or in the right of
the Trust, he was adjudged liable to the Trust, or (2) in connection with any
other proceeding charging improper personal benefit to him, whether or not
involving action in his official capacity, he was adjudged liable on the basis
that personal benefit was improperly received by him, and (c) each shareholder
or former shareholder against any claim or liability to which he may become
subject by reason of his status as a shareholder or former shareholder. In
addition, the Trust shall pay or reimburse, in advance of final disposition of a
proceeding, reasonable expenses incurred by a Trustee, officer or shareholder or
former Trustee, officer or shareholder made a party to a proceeding by reason of
his status as a Trustee, officer or shareholder; provided, that in the case of a
--------
Trustee or officer, (i) the Trust shall have received a written affirmation by
the Trustee or officer of his good faith belief that he has met the applicable
standard of conduct necessary for indemnification by the Trust as authorized by
these Bylaws, (ii) the Trust shall have received a written undertaking by or on
his behalf to repay the amount paid or reimbursed by the Trust if it shall
ultimately be determined that the applicable standard of conduct was not met and
(iii) a determination shall have been made, in accordance with Section 8.55 of
Chapter 2B, Title 10, of the Code of Alabama, 1975, as amended, that the facts
then known to those making the determination would not preclude indemnification
under the provisions hereof. The Trust may, with the approval of its Trustees,
provide such indemnification and payment or reimbursement of expenses to any
Trustee, officer or shareholder or any former Trustee, officer or shareholder
who served a predecessor of the Trust and to any employee or agent of the Trust
or a predecessor of the Trust. Neither the amendment nor repeal of this Article
XII, nor the adoption or amendment of any other provision of the Declaration of
Trust or these Bylaws inconsistent with this Article XII, shall apply to or
affect in any respect the applicability of this paragraph with respect to any
act or failure to act which occurred prior to such amendment, repeal or
adoption. Any
<PAGE>
indemnification or payment or reimbursement of the expenses permitted by these
Bylaws shall be furnished in accordance with the procedures provided for
indemnification and payment or reimbursement of expenses under Article 8 of
Chapter 2B, Title 10, of the Code of Alabama, 1975. The Trust may provide to
Trustees, officers and shareholders such other and further indemnification or
payment or reimbursement of expenses as may be permitted by Alabama law, as in
effect from time to time, for directors of Alabama corporations.
<PAGE>
Exhibit 5.1
-----------
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
P.O. BOX 1055
ATLANTA, GA 30370
Employer Identification Number:
Date: June 25, 1996 59-7007599
File Folder Number:
COLONIAL PROPERTIES TRUST 590048631
C/O JOSEPH S. BLUESTEIN, ESQ. Person to Contact:
SIROTE & PERMUTT, P.C. EP/EO CUSTOMER SERVICE UNIT
P.O. BOX 55727 Contact Telephone Number:
BIRMINGHAM, AL 35255-5727 (410) 962-6058
Plan Name:
COLONIAL PROPERTIES TRUST 401K
PROFIT SHARING PLAN
Plan Number: 001
Dear Applicant:
We have made a favorable determination on your plan, identified
above, based on the information supplied. Please keep this letter in your
permanent records.
Continued qualification of the plan under its present form will
depend on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this
favorable determination letter, points out some features that may affect the
qualified status of your employee retirement plan, and provides information on
the reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the
Internal Revenue Code. It is not a determination regarding the effect of other
federal or local statutes.
This determination letter is applicable for the amendment(s)
adopted on 12/27/95.
This determination letter is applicable for the plan adopted on
2/15/95.
This plan has been mandatorily disaggregated, permissively
aggregated, or restructured to satisfy the nondiscrimination requirements.
This plan satisfies the nondiscrimination in amount requirement
of section 1.401(a)(4)-1(b)(2) of the regulations on the basis of a design-based
safe harbor described in the regulations.
This letter is issued under Rev. Proc. 93-39 and considers the
amendments required by the Tax Reform Act of 1986 except as otherwise specified
in this letter.
This plan satisfies the nondiscriminatory current availability
requirements of section 1.401(a)(4)-4(b) of the regulations with respect to
those benefits, rights, and features that are currently available to all
employees
<PAGE>
in the plan's coverage group. For this purpose, the plan's coverage group
consists of those employees treated as currently benefiting for purposes of
demonstrating that the plan satisfies the minimum coverage requirements of
section 410(b) of the Code.
This letter may not be relied upon with respect to whether the
plan satisfies the qualification requirements as amended by the Uruguay Round
Agreements Act, Pub. L. 103-465.
The information on the enclosed addendum is an integral part of
this determination. Please be sure to read and keep it with this letter.
We have sent a copy of this letter to your representative as
indicated in the power of attorney.
If you have questions concerning this matter, please contact the
person whose name and telephone number are shown above.
Sincerely yours,
/s/ Paul M. Harrington
District Director
Enclosures:
Publication 794
Addendum
<PAGE>
-3-
COLONIAL PROPERTIES TRUST
THIS LETTER ALSO APPLIES TO THE FOLLOWING PARTICIPATING EMPLOYERS:
COLONIAL PROPERTIES SERVICES LIMITED PARTNERSHIP
COLONIAL PROPERTIES SERVICES, INC.
THE COLONIAL COMPANY
LOWDER NEW HOMES, INC.
LOWDER CONSTRUCTION COMPANY, INC.
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
We consent to the incorporation by reference in this registration statement of
Colonial Properties Trust on Form S-8 of our report, dated January 25, 1996, on
our audits of the consolidated and combined financial statements and financial
statement schedules of Colonial Properties Trust as of December 31, 1995 and
1994, and for the years ended December 31, 1995, 1994 and 1993 which report is
included in the 1995 Annual Report incorporated by reference on Form 10-K, as
amended.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
October 11, 1996
<PAGE>
Exhibit 23.2
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Colonial Properties Trust
Registration on Form S-8
We are aware that our reports dated April 20, 1996 and July 23, 1996 on our
reviews of interim financial information of Colonial Properties Trust for the
periods ended March 31, 1996 and June 30, 1996, respectively, and included in
the Company's quarterly reports on Form 10-Q for the quarters then ended, are
incorporated by reference in this registration statement on Form S-8. Pursuant
to Rule 436(c) under the Securities Act of 1933, these reports should not be
considered a part of the registration statement prepared or certified by us
within the meaning of Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
October 11, 1996
<PAGE>
Exhibit 99.1
------------
DIVISION E. INDEMNIFICATION
10-2B-8.50 DEFINITIONS.--In Division E of this Article 8:
(1) "Corporation" includes any domestic or foreign predecessor
entity of a corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is or was
serving at the corporation's request as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise. A director is
considered to be serving an employment benefit plan at the corporation's request
if his or her duties to the corporation also impose duties on, or otherwise
involve services by, the director to the plan or to participants in or
beneficiaries of the plan. "Director" includes, unless the context requires
otherwise, the estate or personal representative of a director.
(3) "Expenses" include counsel fees.
(4) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses incurred with respect to a proceeding.
(5) "Official capacity" means (i) when used with respect to a
director, the office of director in a corporation; and (ii) when used with
respect to an individual other than a director, as contemplated in Section 8.56,
the office in a corporation held by an officer or the employment or agency
relationship undertaken by the employee or agent on behalf of the corporation.
"Official capacity" does not include service for any foreign or domestic
corporation or any partnership, joint venture, trust, employee benefit plan, or
other enterprise.
(6) "Party" includes an individual who was, is or is threatened to
be made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
and whether formal or informal.
10-2B-8.51 AUTHORITY TO INDEMNIFY.--(a) Except as provided in
subsection (d), a corporation may indemnify an individual made a party to a
proceeding because he or she is or was a director against liability incurred in
the proceeding if:
(1) The individual conducted himself or herself in good faith; and
(2) The individual reasonably believed:
(i) In the case of conduct in his or her official capacity with the
corporation, that the conduct was in its best interests; and
(ii) In all other cases, that the conduct was at least not opposed to
its best interests; and
(3) In the case of any criminal proceeding, the individual had no
reasonable cause to believe his or her conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan
for a purpose he or she reasonably believed to be in the interests of the
participants in,
<PAGE>
and beneficiaries of the plan is conduct that satisfies the requirement of
subsection (a)(2)(ii).
(c) The termination of a proceeding by judgement, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
(d) A corporation may not indemnify a director under this section:
(1) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation; or
(2) In connection with any other proceeding charging improper
personal benefit to the director, whether or not involving action in his or her
official capacity, in which the director was adjudged liable on the basis that
personal benefit was improperly received by him or her.
(e) Indemnification permitted under this section in connection with
a proceeding by or in the right of the corporation is limited to reasonable
expenses incurred in connection with the proceeding.
10-2B-8.52 MANDATORY INDEMNIFICATION.--A corporation shall indemnify
a director who was successful, on the merits or otherwise, in the defense of any
proceeding, or of any claim, issue or matter in such proceeding, where he or she
was a party because he or she is or was a director of the corporation, against
reasonable expenses incurred in connection therewith, notwithstanding that he or
she was not successful on any other claim, issue or matter in any such
proceeding.
10-2B-8.53 ADVANCE FOR EXPENSES.--(a) A corporation may pay for or
reimburse the reasonable expenses incurred by a director who is a party to a
proceeding in advance of final disposition of the proceeding if:
(1) The director furnishes the corporation a written affirmation of
good faith belief that he or she has met the standard of conduct described in
Section 8.51;
(2) The director furnishes the corporation a written undertaking,
executed personally or on the director's behalf, to repay the advance if it is
ultimately determined that the director did not meet the standard of conduct, or
is not otherwise entitled to indemnification under Section 8.51(d), unless
indemnification is approved by the court under Section 8.54;
(3) A determination is made that the facts then known to those
making the determination would not preclude indemnification under Division E of
this article.
(b) The undertaking required by subsection (a)(2) must be an
unlimited general obligation of the director but need not be secured and may be
accepted without reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this section
shall be made in the manner specified in Section 8.55.
10-2B-8.54 COURT-ORDERED INDEMNIFICATION.--A director of the
corporation who is a party to a proceeding may apply for indemnification to
-2-
<PAGE>
the court conducting the proceeding, or may file an action therefor in another
court of competent jurisdiction if such court has jurisdiction over the
corporation and the corporation is a party to the proceeding. On receipt of such
an application or the filing of such an action, the court after giving any
notice it considers necessary may order indemnification if it determines:
(1) The director is entitled to mandatory indemnification under
Section 8.52, in which case the court shall also order the corporation to pay
the director's reasonable expenses incurred to obtain court-ordered
indemnification; or
(2) The director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not he or
she met the standard of conduct set forth in Section 8.51 or was adjudged liable
as described in Section 8.51(d), but if he or she was adjudged so liable the
indemnification is limited to reasonable expenses incurred.
10-2B-8.55 DETERMINATION AND AUTHORIZATION OF INDEMNIFICATION.--(a) A
corporation may not indemnify a director under Section 8.51 unless authorized in
the specific case after a determination has been made that indemnification of
the director is permissible in the circumstances because the director has met
the standard of conduct set forth in Section 8.51.
(b) The determination shall be made:
(1) By the board of directors by majority vote of a quorum
consisting of directors not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under subdivision (1), by
majority vote of a committee duly designated by the board of directors (in which
designation directors who are parties may participate) consisting solely of two
or more directors not at the time parties to the proceeding;
(3) By special legal counsel;
(i) Selected by the board of directors or its committee in the
manner prescribed in subdivision (1) or (2); or
(ii) If a quorum of the board of directors cannot be obtained under
subdivision (1) and a committee cannot be designated under subdivision (2),
selected by majority vote of the full board of directors (in which selection
directors who are parties may participate); or
(4) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination. A majority of the shares that are entitled to vote
on the transaction by virtue of not being owned by or under the control of such
directors constitutes a quorum for the purpose of taking action under this
section.
(c) Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the determination
that indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection
(b)(3) to select counsel.
10-2B-8.56 INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS.--(a)
An officer of a corporation who is not a director is entitled to
-3-
<PAGE>
mandatory indemnification under Section 8.52, and is entitled to apply for
court-ordered indemnification under Section 8.54, in each case to the same
extent as a director.
(b) A corporation may indemnify and may advance expenses under
Division E of this article to an officer, employee, or agent of the corporation
who is not a director to the same extent as to a director.
10-2B-8.57 INSURANCE.--A corporation may purchase and maintain
insurance, or furnish similar protection (including but not limited to trust
funds, self-insurance reserves, or the like), on behalf of an individual who is
or was a director, officer, employee, or agent of the corporation, or who, while
a director, officer, employee, or agent of the corporation, is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise, against
liability asserted against or incurred by him or her in that capacity or arising
from his or her status as a director, officer, employee, or agent, whether or
not the corporation would have power to indemnify him or her against the same
liability under Section 8.51 or 8.52.
10-2B-8.58 APPLICATION OF INDEMNIFICATION PROVISIONS.--(a) Any
indemnification, or advance for expenses, authorized under Division E of this
article shall not be deemed exclusive of and shall be in addition to that which
may be contained in a corporation's articles of incorporation, bylaws, a
resolution of its shareholders or board of directors, or in a contract or
otherwise.
(b) Division E of this article does not limit a corporation's power
to pay or reimburse expenses incurred by a director in connection with the
director's appearance as a witness in a proceeding at a time when he or she has
not been made a named defendant or respondent to the proceeding.
-4-
