<PAGE> 1
As filed with the Securities and Exchange Commission on January 21, 1997
Registration No. 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMWAY ASIA PACIFIC LTD.
(Exact name of registrant as specified in its charter)
BERMUDA 1-12548
(State or other jurisdiction of (Commission File No.)
incorporation or organization)
28/F Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong
(Address of Principal Executive Offices)
AMWAY CORPORATION
PROFIT-SHARING AND 401(K) PLAN
(Exact name of registrant as specified in its charter)
c/o Amway Corporation
Human Resources
7575 Fulton Street, East
Ada, Michigan 49355
(Address of Principal Executive Offices)
AMWAY CORPORATION
PROFIT-SHARING AND 401(K) PLAN
(Full title of the plan)
Craig N. Meurlin, Esq.
Senior Vice President and General Counsel
Amway Corporation
7575 Fulton Street, East
Ada, Michigan 49355
(Name and address of agent for service)
(616) 787-6000
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE(1)
================================================================================================================================
Proposed
Proposed maximum
Title of securities Amount to be maximum offering aggregate offering Amount of
to be registered registered price per share (2) price (2) registration fee
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value U.S. $0.01 per 216,000 shares $43.00 $9,288,000 $2,815
share
================================================================================================================================
<FN>
(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(s) described herein.
(2) Estimated solely for calculating the amount of the registration fee,
pursuant to paragraphs (c) and (h) of Rule 457 of the General Rules and
Regulations under the Securities Act, on the basis of the average of
the high and low sale prices of such securities on the New York Stock
Exchange on January 14, 1997, which date is within five business days
prior to filing.
</TABLE>
Exhibit Index Appears on Page 7
Page 1 of 7 Pages
<PAGE> 2
PART II
This Registration Statement relates to 216,000 shares of Common Stock,
par value U.S. $0.01 per share (the "Common Stock"), of Amway Asia Pacific Ltd.,
a Bermuda corporation (the "Registrant"), being registered for use under Amway
Corporation's Profit-Sharing and 401(k) Plan, as amended and restated as of
January 1, 1997 (the "Plan").
Item 3. Incorporation of Documents by Reference
---------------------------------------
The following documents previously filed by the Registrant with the
Securities and Exchange Commission (the "Commission") are incorporated herein by
reference: (i) the Registrant's Annual Report of Form 20-F for the fiscal year
ended August 31, 1996 (File No. 1-12548); (ii) the Registrant's Interim Report
on Form 6-K for the quarter ended November 30, 1996 (File No. 1-12548); and
(iii) the description of the Common Stock contained in the Registration
Statement on Form 8-A of the Registrant filed on December 14, 1993
(File No. 1-12548) and reports filed for the purpose of updating that
description.
To the extent designated therein certain Reports on Form 6-K
and all other documents subsequently filed by the Registrant or the Plan
pursuant to Sections 13(a), 13(c) and 15(d) of the Securities Exchange Act of
1934, prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated herein by reference and to
be part hereof from the date of filing of such documents.
Item 4. Description of Securities
-------------------------
Not applicable. (Class of securities to be offered is registered under
Section 12 of the Securities Exchange Act of 1934.)
Item 5. Interests of Named Experts and Counsel
--------------------------------------
None.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
Bye-law 166(1) of the Registrant's Bye-laws, attached as Exhibit
3.1(ii) to the Registrant's Registration Statement on Form F-1 as amended and
filed with the Commission on December 13, 1993, provides indemnification by the
Registrant to its officers and directors against any and all liability incurred
in connection with the execution of their duties on behalf of the Registrant,
except for willful negligence, willful default, fraud or dishonesty on the part
of such persons. Such Bye-law expressly authorizes the Registrant to enter into
agreements with such persons which provide greater or different indemnity than
that discussed above.
Item 7. Exemption from Registration Claims
----------------------------------
Not Applicable.
Page 2 of 7 Pages
<PAGE> 3
Item 8. Exhibits
4.1 Amway Corporation Profit-Sharing and 401(k) Plan, as amended
and restated as of January 1, 1997
23(a) Consent of KPMG Peat Marwick LLP
24 Power of Attorney
The undersigned Registrant hereby undertakes to submit the Plan to the Internal
Revenue Service (the "IRS") in a timely manner in order to obtain a
determination letter that the Plan is qualified under Section 401 of the
Internal Revenue Code and to make any changes in the Plan required by the IRS in
order to issue such a determination letter.
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. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b)) if, in
the aggregate, the changes in volume and
price represent no more than a 20% change in
the maximum aggregate offering price set
forth in the "Calculation of Registration
Fee" table in the effective Registration
Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the Registration Statement is on Form S-3 or Form
S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new
Page 3 of 7 Pages
<PAGE> 4
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be in the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Page 4 of 7 Pages
<PAGE> 5
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Township of Ada, State of Michigan, on January 15, 1997.
AMWAY ASIA PACIFIC LTD.
By: /s/ Craig N. Meurlin
----------------------------------
Craig N. Meurlin
Vice President, General Counsel
and Assistant Secretary
The Plan. Pursuant to the requirements of the Securities Act of 1933,
the trustees (or other persons who administer the Plan) have duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Township of Ada, State of Michigan, on January 15, 1997.
AMWAY CORPORATION PROFIT-SHARING
AND 401(K) PLAN
By: Amway Corporation, as Plan
Administrator
By: /s/ Dwight Sawyer
----------------------------------
Dwight Sawyer
Vice President-Human Resources
Page 5 of 7 Pages
<PAGE> 6
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman; Director (Chief Executive January 15, 1997
- ------------------------------------------ Officer)
Stephen A. Van Andel
* Chief Financial Officer, Vice January 15, 1997
- ------------------------------------------ President and Treasurer (Chief
Lawrence M. Call Financial and Accounting Officer)
* Director
- ------------------------------------------ January 15, 1997
Richard M. DeVos, Jr.
* Director January 15, 1997
- ------------------------------------------
Eva Cheng
* Director January 15, 1997
- ------------------------------------------
L.H. Choong
* Director January 15, 1997
- ------------------------------------------
Eoghan M. McMillan
* Director January 15, 1997
- ------------------------------------------
Jack C.K. So
* Director January 15, 1997
- ------------------------------------------
John C.C. Chan
* Director January 15, 1997
- ------------------------------------------
James B. Payne
/s/ Craig N. Meurlin Authorized U.S. Representative January 15, 1997
- ------------------------------------------
Craig N. Meurlin
<FN>
* Craig N. Meurlin, the undersigned attorney-in-fact, by signing his
name hereto, does sign and execute this Registration Statement on behalf of the
above-named officers and directors pursuant to a power of attorney filed with
the Securities and Exchange Commission as Exhibit 24 to this Registration
Statement.
</TABLE>
January 15, 1997 By: /s/ Craig N. Meurlin
-----------------------------------------------
Craig N. Meurlin
Attorney-in-Fact
Page 6 of 7 Pages
<PAGE> 7
EXHIBIT INDEX
Pagination by
sequential
Exhibit Exhibit numbering
Number Description system
------ ----------- ------
4.1 Amway Corporation Profit-Sharing and 401(k) Plan,
as amended and restated as of January 1, 1997
23(a) Consent of KPMG Peat Marwick LLP
24 Power of Attorney
Page 7 of 7 Pages
<PAGE> 1
Exhibit 4.1
AMWAY CORPORATION
PROFIT-SHARING AND 401(K) PLAN
(RESTATED EFFECTIVE AS OF JANUARY 1, 1997)
Prepared by:
Miller, Johnson, Snell & Cummiskey, P.L.C.
800 Calder Plaza Building
250 Monroe Avenue, N.W.
Grand Rapids, MI 49503-2250
(616) 831-1700
<PAGE> 2
<TABLE>
<CAPTION>
I N D E X
PAGE
----
<S> <C> <C>
ARTICLE I ESTABLISHMENT OF THE PLAN............................................................ 1
1.1 HISTORY OF THE PLAN......................................................... 1
1.2 MERGER OF PLANS............................................................. 1
1.3 THIS DOCUMENT............................................................... 1
ARTICLE II DEFINITIONS................................................................. 1
ARTICLE III PARTICIPATION............................................................... 15
3.1 ELIGIBLE EMPLOYEES.......................................................... 15
3.2 DATE OF PARTICIPATION....................................................... 16
3.3 TRANSFER TO INELIGIBLE JOB CLASSIFICATION................................... 16
ARTICLE IV EMPLOYER CONTRIBUTIONS...................................................... 16
4.1 EMPLOYER CONTRIBUTIONS GENERALLY............................................ 16
4.2 EMPLOYER DISCRETIONARY CONTRIBUTIONS........................................ 17
4.3 EMPLOYER PAY DEFERRAL CONTRIBUTIONS......................................... 20
4.4 EMPLOYER MATCHING CONTRIBUTIONS............................................. 21
4.5 TIME FOR PAYMENT OF CONTRIBUTIONS........................................... 22
4.6 NONREVERSION OF EMPLOYER CONTRIBUTIONS...................................... 22
ARTICLE V NONDISCRIMINATION RULES AND OTHER
LIMITS ON EMPLOYER CONTRIBUTIONS..................................................... 22
5.1 LIMITS ON EMPLOYER CONTRIBUTIONS GENERALLY.................................. 22
5.2 DEDUCTIBLE CONTRIBUTION LIMIT............................................... 22
5.3 DOLLAR LIMIT ON PAY DEFERRALS............................................... 23
5.4 NONDISCRIMINATION TESTS REGARDING PAY DEFERRALS............................. 24
5.5 NONDISCRIMINATION TESTS REGARDING MATCHING
CONTRIBUTIONS............................................................... 28
5.6 PROCEDURE FOR REDUCING PAY DEFERRAL OR MATCHING
CONTRIBUTIONS TO SATISFY THE NONDISCRIMINATION
TESTS -- OLD RULES.......................................................... 32
5.7 PROCEDURE FOR REDUCING PAY DEFERRAL OR MATCHING
CONTRIBUTIONS TO SATISFY THE NONDISCRIMINATION
TESTS -- NEW RULES.......................................................... 32
5.8 RESTRICTION ON MULTIPLE USE OF ALTERNATIVE
NONDISCRIMINATION TEST...................................................... 33
5.9 LIMITS ON ANNUAL ADDITIONS.................................................. 34
</TABLE>
-i-
<PAGE> 3
<TABLE>
PAGE
----
<S> <C> <C>
ARTICLE VI PARTICIPANTS' ACCOUNTS................................................................38
6.1 ESTABLISHMENT OF ACCOUNTS....................................................38
6.2 VESTED PORTION OF ACCOUNTS...................................................38
6.3 ROLLOVERS AND TRANSFERS FROM OTHER QUALIFIED PLANS...........................38
6.4 INVESTMENT OF ACCOUNTS.......................................................39
ARTICLE VII ADJUSTMENTS TO ACCOUNTS......................................................40
7.1 METHOD OF ADJUSTMENT.........................................................40
7.2 CHARGES AGAINST ACCOUNTS.....................................................40
7.3 ADDITIONS TO ACCOUNTS........................................................40
7.4 ALLOCATION OF LOAN INTEREST..................................................40
7.5 ALLOCATION OF FORFEITURES....................................................40
7.6 RESTORATION OF FORFEITURES UPON REEMPLOYMENT.................................41
7.7 ADJUSTMENT FOR ERRORS........................................................41
ARTICLE VIII DISTRIBUTION OF BENEFITS.....................................................42
8.1 TIME OF DISTRIBUTION.........................................................42
8.2 AMOUNT OF DISTRIBUTION.......................................................44
8.3 FORM OF DISTRIBUTION.........................................................44
8.4 METHOD OF DISTRIBUTION IN THE EVENT OF TERMINATION
OTHER THAN DEATH.............................................................44
8.5 METHOD OF DISTRIBUTION IN THE EVENT OF DEATH.................................47
8.6 CASH-OUT OF SMALL BENEFITS...................................................49
8.7 DISTRIBUTIONS PURSUANT TO A QUALIFIED DOMESTIC
RELATIONS ORDER..............................................................49
8.8 ELIGIBLE ROLLOVER DISTRIBUTIONS..............................................50
8.9 ELECTION OF BENEFITS.........................................................51
ARTICLE IX VESTING...............................................................................51
9.1 VESTED PERCENTAGE............................................................51
9.2 YEARS OF VESTED SERVICE......................................................53
9.3 VESTED SERVICE AFTER REEMPLOYMENT............................................53
9.4 ACCOUNTING AFTER REEMPLOYMENT................................................54
9.5 AMENDMENTS TO VESTING SCHEDULE...............................................54
ARTICLE X WITHDRAWALS DURING EMPLOYMENT.........................................................55
10.1 WITHDRAWALS GENERALLY........................................................55
10.2 WITHDRAWALS AFTER AGE 59 1/2.................................................55
</TABLE>
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<PAGE> 4
<TABLE>
PAGE
----
<S> <C> <C>
10.3 HARDSHIP WITHDRAWALS.........................................................55
10.4 WITHDRAWALS FROM EMPLOYEE CONTRIBUTION ACCOUNT...............................57
ARTICLE XI LOANS TO PARTICIPANTS.................................................................57
11.1 LOANS GENERALLY..............................................................57
11.2 NUMBER OF LOANS..............................................................58
11.3 AMOUNT OF LOAN...............................................................58
11.4 INTEREST ON LOAN.............................................................58
11.5 TERM OF LOAN.................................................................58
11.6 SECURITY FOR LOAN............................................................59
11.7 REPAYMENT OF LOAN............................................................59
11.8 ACCOUNTING FOR LOANS.........................................................60
11.9 CONVERSION OF LOAN INTO WITHDRAWAL...........................................60
ARTICLE XII TOP-HEAVY PROVISIONS..................................................................60
12.1 APPLICABILITY OF THIS ARTICLE................................................60
12.2 DEFINITIONS..................................................................60
12.3 MINIMUM VESTING..............................................................63
12.4 MINIMUM CONTRIBUTIONS........................................................63
12.5 ADJUSTED SECTION 415 LIMITS..................................................64
ARTICLE XIII TRUST FUND AND TRUSTEE................................................................64
13.1 TRUST FUND...................................................................64
13.2 INVESTMENT MANAGER...........................................................65
13.3 USE OF TRUST FUND............................................................65
ARTICLE XIV ADMINISTRATION........................................................................65
14.1 POWERS OF PLAN ADMINISTRATOR.................................................65
14.2 STANDARD OF CARE.............................................................66
14.3 APPEAL PROCEDURE.............................................................66
ARTICLE XV RIGHTS OF PARTICIPANTS................................................................67
15.1 EMPLOYMENT RIGHTS............................................................67
15.2 NO PARTICIPANT INTEREST IN TRUST FUND........................................67
15.3 SPENDTHRIFT PROVISION........................................................67
15.4 OTHER BENEFITS NOT CONTINGENT ON PAY DEFERRAL
CONTRIBUTIONS................................................................67
15.5 MILITARY SERVICE.............................................................68
</TABLE>
-iii-
<PAGE> 5
<TABLE>
PAGE
----
<S> <C> <C>
ARTICLE XVI SUCCESSOR EMPLOYER AND CORPORATE DISPOSITIONS.........................................68
16.1 ADOPTING EMPLOYERS...........................................................68
16.2 SUCCESSOR EMPLOYER...........................................................68
16.3 DISPOSITION OF PART OF EMPLOYER..............................................68
ARTICLE XVII PLAN AMENDMENT, MERGER AND TERMINATION................................................69
17.1 PLAN AMENDMENT...............................................................69
17.2 MERGER OR CONSOLIDATION......................................................69
17.3 TERMINATION OF PLAN..........................................................70
ARTICLE XVIII INSURANCE CONTRACTS...................................................................70
18.1 INSURANCE CONTRACTS..........................................................70
18.2 PREMIUMS.....................................................................71
18.3 DEATH OF THE PARTICIPANT BEFORE RETIREMENT...................................71
18.4 RETIREMENT OR TOTAL DISABILITY...............................................71
18.5 OTHER TERMINATION OF EMPLOYMENT..............................................72
18.6 RETIREMENT OF A PARTICIPANT..................................................72
18.7 PROVISIONS RELATING TO INSURER...............................................73
ARTICLE XIX MISCELLANEOUS PROVISIONS..............................................................73
19.1 AGE..........................................................................73
19.2 UNIFORMITY OF TREATMENT......................................................73
19.3 CONSTRUCTION.................................................................73
19.4 ERISA........................................................................73
19.5 GOVERNING LAW................................................................73
SIGNATURE PAGE ........................................................................................74
APPENDIX A ............................................................................................75
</TABLE>
-iv-
<PAGE> 6
AMWAY CORPORATION
PROFIT-SHARING AND 401(K) PLAN
------------------------------
ARTICLE I
ESTABLISHMENT OF THE PLAN
-------------------------
1.1 HISTORY OF THE PLAN.
Amway Corporation, a Michigan corporation, adopted the Amway
Corporation Salaried Employees' Profit-Sharing Plan for the purpose of providing
retirement benefits to Employees eligible under the terms and conditions of the
Plan. The Plan was adopted effective as of August 31, 1965, and has been
periodically amended. The Plan was most recently amended and restated as of
September 1, 1989.
1.2 MERGER OF PLANS.
Employer is merging the Amway Corporation 401(k) Retirement and
Savings Plan and the Nutrilite Division Profit Sharing Plan (formerly the
"Employees' Profit-Sharing Retirement Plan of Nutrilite Products, Inc.") into
the Plan, effective as of January 1, 1997.
1.3 THIS DOCUMENT.
By this document, Employer is amending and restating the Plan as of
January 1, 1997. The amended and restated Plan is called the Amway Corporation
Profit-Sharing and 401(k) Plan. The amended and restated Plan is intended to
meet the requirements of Sections 401(a) and 501(a) of the Code.
ARTICLE II
DEFINITIONS
-----------
The following terms shall have the meanings described in this Article.
All references in the Plan to specific Articles or Sections shall refer to
Articles or Sections of the Plan unless otherwise stated.
2.1 ACCOUNTS.
"Accounts" means all accounts maintained to record the interest of the
Participant in the Plan.
-1-
<PAGE> 7
2.2 ANNUITY STARTING DATE.
"Annuity Starting Date" means the first day of the first period for
which an amount is to be paid as an annuity or other form under Section 8.4.
2.3 AUTHORIZED LEAVE OF ABSENCE.
"Authorized Leave of Absence" means any absence from employment
authorized by Employer pursuant to its standard personnel practices.
2.4 BENEFICIARY.
"Beneficiary" means the person or persons, trust or entity designated
under Section 8.5 to receive a benefit after the death of a Participant.
2.5 CODE.
"Code" means the Internal Revenue Code of 1986, as amended.
2.6 COLLECTIVE BARGAINING AGREEMENT.
"Collective Bargaining Agreement" means a collective bargaining
agreement between Employer and a certified representative of an appropriate unit
of Employees, provided retirement benefits were the subject of good faith
bargaining. For this purpose, the term "certified representative of an
appropriate unit of Employees" does not include any organization more than half
of whose members are Employees who are owners, officers or executives of
Employer.
2.7 COLLECTIVE BARGAINING UNIT.
"Collective Bargaining Unit" means a unit of Employees recognized by
Employer for purposes of negotiating a Collective Bargaining Agreement between
Employer and a certified representative of an appropriate unit of Employees. For
purposes of the Plan, a Collective Bargaining Unit shall not exist until the
effective date of the first Collective Bargaining Agreement reached through good
faith bargaining.
2.8 COMPENSATION.
"Compensation" means a Participant's compensation during a Plan Year.
(a) ITEMS INCLUDED.
(i) A Participant's base wages and salary.
(ii) Overtime pay for Nonexempt Employees.
-2-
<PAGE> 8
(iii) Sick pay and short-term disability benefits that are
paid by Employer through its payroll system.
(iv) Pay Deferral Contributions and pay reduction
contributions under Sections 125, 402(h)(1)(B) or 403(b) of the
Code.
(v) PIP bonuses paid to Nonexempt Employees in Employer's
Nutrilite Division.
(vi) Amounts deferred under nonqualified deferred
compensation plans.
(b) ITEMS EXCLUDED.
(i) Bonuses, except as described in subsection (a)(v).
(ii) Incentive pay, shift premiums and severance pay.
(iii) Extraordinary or nonrecurring compensation (e.g.,
moving expenses).
(iv) Irregular or discretionary compensation or
benefits paid under the Plan.
(v) The taxable portion of any noncash fringe benefit.
(vi) Long-term disability benefits.
(vii) Additional compensation paid to United States
citizens living in foreign countries (e.g., living expense
allowances).
(viii) Compensation earned while working in an
ineligible job classification (i.e., a job classification
that is not Covered Employment).
(c) DOLLAR LIMIT. Compensation of each Participant in a
Plan Year shall be limited to the maximum amount permitted by Section
401(a)(17) of the Code (the "Dollar Limit"). The Dollar Limit is currently
$150,000, but will be increased to $160,000 for the Plan Year beginning
September 1, 1997. The Dollar Limit shall be further increased at the same
time and in the same manner as adjustments under Section 415(d) of the
Code, except that any increases shall be rounded to the next lowest
multiple of $10,000.
Further, for Plan Years beginning before January 1, 1997, if
the Participant is a Five-Percent Owner or one of the ten Highly
Compensated Employees with the highest Compensation during the Plan Year,
the Compensation during that
-3-
<PAGE> 9
Plan Year of the Participant, the Participant's Spouse, and lineal
descendants under age 19 shall be aggregated for purposes of the Dollar
Limit. If the Dollar Limit is exceeded, then the Dollar Limit shall be
prorated among the affected individuals as determined by the Plan
Administrator.
2.9 COVERED EMPLOYMENT.
"Covered Employment" means employment with Employer in a job
classification that is eligible for participation in the Plan under the terms of
Section 3.1.
2.10 DIRECT ROLLOVER.
"Direct Rollover" means the payment of an Eligible Rollover
Distribution by the Plan to an Eligible Retirement Plan specified by the
Distributee. However, for purposes of Section 6.3, a "Direct Rollover" means the
payment of an Eligible Rollover Distribution by another Qualified Plan to the
Plan.
2.11 DISCRETIONARY CONTRIBUTION ACCOUNT.
"Discretionary Contribution Account" means the account maintained for
a Participant recording the total Employer contributions on his behalf under
Section 4.2, adjusted as provided in Article VII.
2.12 DISTRIBUTEE.
"Distributee" means a Participant, the Participant's Spouse, or an
alternate payee under a Qualified Domestic Relations Order.
2.13 ELIGIBLE RETIREMENT PLAN.
"Eligible Retirement Plan" means an eligible retirement plan, as
defined in Section 401(a)(31) of the Code, that accepts the Distributee's
Eligible Rollover Distribution. An Eligible Retirement Plan includes an
individual retirement account, an individual retirement annuity, an annuity plan
described in Section 403(a) of the Code, and a Qualified Plan. However, if an
Eligible Rollover Distribution is made to a Spouse, an Eligible Retirement Plan
is an individual retirement account or an individual retirement annuity.
2.14 ELIGIBLE ROLLOVER DISTRIBUTION.
"Eligible Rollover Distribution" means an eligible rollover
distribution under Section 402(c)(4) of the Code. This includes any distribution
from a Participant's Accounts, except the following:
(a) A distribution that is required under Section 401(a)(9) of the
Code;
-4-
<PAGE> 10
(b) A distribution for a specified period of ten or more years;
(c) A distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and his Beneficiary; or
(d) Any portion of the distribution that is not included in the
Distributee's gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities).
2.15 EMPLOYEE.
"Employee" means any person who is both working as a regular full-time
or part-time employee in an authorized billet for Employer or any Related
Employer and is treated as a common-law employee for tax purposes. A Leased
Employee shall also be treated as an Employee, except as provided in this
Section.
Employee includes any U.S. citizen or resident who is entitled
under Section 406 of the Code to be treated as an employee of Amway Corporation.
This shall include a U.S. citizen or resident who is employed abroad by a
Foreign Affiliate, provided contributions under a funded plan of deferred
compensation are not provided by any other person with regard to the
Compensation paid to the U.S. citizen or resident by the Foreign Affiliate.
Employee does NOT include any other employee of a Foreign Affiliate.
Employee also includes a person who is transferred to a
Related Employer for employment outside the United States, provided the person
was a Participant before the transfer or was eligible to participate in the Plan
before the transfer.
Solely for purposes of the Plan, a person who is treated as an
Employee under the previous two paragraphs shall have his employment with the
Foreign Affiliate or Related Employer treated as employment with Amway
Corporation. For example, his Compensation with the Foreign Affiliate or Related
Employer shall be treated as Compensation.
A person whom the Employer treats as an independent contractor
for tax purposes is not an Employee. Further, a Leased Employee shall not be
considered an Employee of Employer if:
(a) The Leased Employee is covered by a money
purchase pension plan providing:
(i) A nonintegrated Employer contribution
equal to at least 10% of the Leased Employee's compensation.
For this purpose, "compensation" shall be the amount
determined under Section 5.9, plus any pay reduction
contributions under Sections 125, 402(e)(3), 402(h)(1)(B) or
403(b) of the Code;
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(ii) Immediate participation; and
(iii) Full and immediate vesting; and
(b) Leased Employees do not constitute more than 20%
of the Employer's "nonhighly compensated work force," as defined in
Section 414(n)(5)(C)(ii) of the Code.
2.16 EMPLOYEE CONTRIBUTION ACCOUNT.
"Employee Contribution Account" means the account maintained for a
Participant recording his total Employee Contributions, adjusted as provided in
Article VII.
2.17 EMPLOYEE CONTRIBUTIONS.
"Employee Contributions" means voluntary after-tax contributions made
by a Participant to Trustee before September 1, 1987.
2.18 EMPLOYER.
"Employer" means Amway Corporation, any Related Employer whose
Employees are eligible to participate in the Plan, and any successor employer
that adopts the Plan in accordance with Section 16.2. However, for purposes of
performing the duties of the Plan Administrator, "Employer" means Amway
Corporation.
2.19 EMPLOYER DISCRETIONARY CONTRIBUTION.
"Employer Discretionary Contribution" or "Discretionary Contribution"
means a contribution under Section 4.2 by Employer on behalf of a Participant.
2.20 EMPLOYER MATCHING CONTRIBUTION.
"Employer Matching Contribution" or "Matching Contribution" means a
contribution under Section 4.4 by Employer on behalf of a Participant who defers
a portion of his Compensation under Section 4.3.
2.21 ERISA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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2.22 EXEMPT EMPLOYEE.
"Exempt Employee" means any Employee who is employed in a job
classification that is exempt from the overtime requirements of the Fair Labor
Standards Act of 1938, as amended.
2.23 FIVE-PERCENT OWNER.
"Five-Percent Owner" means any person who owns (or is considered as
owning under Section 318 of the Code) more than 5% of the outstanding stock of
Employer or stock possessing more than 5% of the combined voting power of all
stock of Employer.
2.24 FOREIGN AFFILIATE.
"Foreign Affiliate" means a foreign corporation which satisfies the
following requirements:
(a) At least 10% of its voting stock is owned by Amway
Corporation or one of its domestic subsidiaries; and
(b) Amway Corporation has entered into an agreement under Section
3121(l) of the Code to make Social Security contributions for U.S.
citizens or residents employed by that foreign corporation.
2.25 FORFEITURE.
"Forfeiture" means the nonvested portion of the Accounts of a
Participant who terminates employment with Employer before his Total Disability,
death or attainment of Normal Retirement Age.
2.26 HIGHLY COMPENSATED EMPLOYEE -- OLD DEFINITION.
"Highly Compensated Employee" means a highly compensated employee as
defined in Section 414(q) of the Code.
(a) DEFINITION. For Plan Years beginning before
January 1, 1997, an Employee is a Highly Compensated Employee for a
Plan Year if, at any time during the Plan Year or the preceding Plan
Year, the Employee satisfied one or more of the following criteria:
(i) Was a Five-Percent Owner;
(ii) Received more than $75,000 in
Compensation from Employer;
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(iii) Received more than $50,000 in Compensation from
Employer and was within the top 20% of Employees by pay during
the same year;
(iv) Was an Officer of Employer and received more
than $45,000 in Compensation from Employer. If no Officer
received more than $45,000, the highest paid Officer shall be
a Highly Compensated Employee;
(v) Was a member of the Family of a Five-Percent
Owner; or
(vi) Was a member of the Family of a Highly
Compensated Employee who was one of the ten highest
compensated Employees of Employer during the year.
(b) OPERATIONAL RULES. For purposes of determining
whether an Employee satisfies the criteria in subsection (a), the
following rules apply:
(i) HIGHEST PAID 100 EMPLOYEES. An Employee who
satisfies subsections (a)(ii), (iii) or (iv) in a Plan Year,
but not in the preceding Plan Year, shall be a Highly
Compensated Employee only if the Employee is among the highest
paid 100 Employees in that Plan Year.
(ii) FORMER EMPLOYEE. A former Employee shall always
be a Highly Compensated Employee if the Employee was a Highly
Compensated Employee when the Employee separated from service
with Employer, or any time after attaining age 55.
(iii) EMPLOYER. For purposes of this Section, the
term "Employer" means Employer or any Related Employer.
(iv) FAMILY. For purposes of this Section, the term
"family" means, with respect to an Employee, the Employee's
Spouse, lineal ascendants and descendants, and spouses of
lineal ascendants and descendants.
(v) OFFICERS. For purposes of this Section, the term
"officer" means an Employee who holds the title of an officer
or who, regardless of title, performs the functions of an
officer. However, the maximum number of Employees who are
treated as Officers depends on the total number of Employees,
as follows:
(A) If less than 30 Employees, not more than
three Employees are treated as Officers.
(B) If at least 30 but less than 500
Employees, not more than 10% of the Employees are
treated as Officers.
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(C) If 500 or more Employees, not more than 50 Employees are
treated as Officers.
(vi) COMPENSATION. For purposes of this Section, "Compensation"
means Compensation as defined in Section 5.9(e)(ii), plus any Pay
Deferral Contributions made by Employer on behalf of a Participant.
Compensation shall also include pay reduction contributions made on
behalf of a Participant in a plan under Section 125 or Section 403(b)
of the Code.
(vii) COST-OF-LIVING ADJUSTMENT. The $75,000 and $50,000 limits
shall be increased for any cost-of-living adjustment provided under
Section 415(d) of the Code. The $45,000 limit shall be increased for
one-half of any cost-of-living adjustment provided under Section
415(d)(1)(A) of the Code.
(viii) TOP 20%. The number of Employees who are in the top 20% by
pay for purposes of subsection (a)(iii) is determined in accordance
with the regulations issued under Section 414(q) of the Code.
Alternatively, Employer may periodically elect to determine its
Highly Compensated Employees under the calendar year calculation
election provided in Treas. Reg. ss.1.414(q)-1T (Q&A-14) or the
simplified method (with or without snapshot testing rules) of Rev.
Proc. 93-42.
2.27 HIGHLY COMPENSATED EMPLOYEE -- NEW DEFINITION.
"Highly Compensated Employee" means a highly compensated employee as
defined in Section 414(q) of the Code.
(a) DEFINITION. For Plan Years beginning after
December 31, 1996, an Employee is a Highly Compensated Employee for a
Plan Year if the Employee satisfied one or more of the following
criteria:
(i) The Employee was a Five-Percent Owner
at any time during the Plan Year or the preceding Plan Year;
or
(ii) The Employee was highly-paid during the
prior Plan Year. Employer may elect on an annual basis which
of the following two criteria shall be used in determining
whether an Employee was highly-paid:
(A) The Employee received more than
$80,000 in Compensation from Employer during the
preceding Plan Year; or
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(B) The Employee received more than
$80,000 in Compensation from Employer during the
preceding Plan Year and was within the top 20% of
Employees by pay during the preceding Plan Year.
(b) OPERATIONAL RULES. For purposes of determining
whether an Employee satisfies the criteria in subsection (a), the
following rules apply:
(i) FORMER EMPLOYEE. A former Employee shall
always be a Highly Compensated Employee if the Employee was a
Highly Compensated Employee when the Employee separated from
service with Employer, or any time after attaining age 55.
(ii) EMPLOYER. For purposes of this Section,
the term "Employer" means Employer or any Related Employer.
(iii) COMPENSATION. For purposes of this
Section, "Compensation" means Compensation as defined in
Section 5.9(e)(ii) plus, to the extent not otherwise counted
in Section 5.9(e)(ii), Pay Deferral Contributions made by
Employer on behalf of a Participant and pay reduction
contributions made on behalf of a Participant in a plan under
Section 125 or Section 403(b) of the Code.
(iv) COST-OF-LIVING ADJUSTMENT. The $80,000
limit shall be increased for any cost-of-living adjustment
provided under Section 415(d) of the Code, as it applies to
Highly Compensated Employees under Section 414(q) of the Code.
(v) TOP 20%. The number of Employees who are
in the top 20% by pay for purposes of subsection (a)(ii)(B) is
determined in accordance with the regulations issued under
Section 414(q) of the Code.
(vi) FIRST PLAN YEAR. For purposes of
determining whether an Employee is a Highly Compensated
Employee for the first Plan Year beginning after December 31,
1996, this definition is considered to be in effect for the
preceding Plan Year.
2.28 HOUR OF SERVICE.
"Hour of Service" means each hour for which an Employee is
paid, or entitled to be paid, by Employer or a Related Employer for the
performance of duties for Employer or a Related Employer.
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2.29 INVESTMENT MANAGER.
"Investment Manager" means any bank, trust company, firm or
institution appointed by Employer as an Investment Manager pursuant to Article
XIII.
2.30 LEASED EMPLOYEE.
"Leased Employee" means any person who is hired by a leasing
organization and performs services for Employer under the following
circumstances:
(a) The services are pursuant to an agreement
between the leasing organization and Employer;
(b) The person performs the services for Employer
(or Related Employers) on a substantially full-time basis for at
least one year; and either
(c) For Plan Years beginning before January 1, 1997,
the services are of a type historically performed in Employer's
business by common-law employees; or
(d) For Plan Years beginning after December 31, 1996,
the services are performed under the primary direction or control of
Employer.
2.31 MATCHING CONTRIBUTION ACCOUNT.
"Matching Contribution Account" means the account maintained
for a Participant recording the total Employer contributions on his behalf under
Section 4.4, adjusted as provided in Article VII.
2.32 MERGED PLANS.
"Merged Plans" means the Amway Corporation 401(k) Retirement
and Savings Plan and the Nutrilite Division Profit Sharing Plan.
2.33 NONELECTIVE EMPLOYER CONTRIBUTION.
"Nonelective Employer Contribution" means an Employer
contribution which is made to satisfy the nondiscrimination rules in Sections
5.4 and/or 5.5.
2.34 NONELECTIVE EMPLOYER CONTRIBUTION ACCOUNT.
"Nonelective Employer Contribution Account" means the account
maintained for a Participant recording the total Nonelective Employer
Contributions on his behalf under Sections 5.4(f)(iii) and 5.5(f)(iii), adjusted
as provided in Article VII.
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2.35 NONEXEMPT EMPLOYEE.
"Nonexempt Employee" means each Employee who is subject to the
overtime requirements of the Fair Labor Standards Act of 1938, as amended.
2.36 NONHIGHLY COMPENSATED EMPLOYEE.
"Nonhighly Compensated Employee" means an Employee who is not
a Highly Compensated Employee.
2.37 NORMAL RETIREMENT AGE.
"Normal Retirement Age" means age 65.
2.38 NUTRILITE PLAN.
"Nutrilite Plan" means the Nutrilite Division Profit-Sharing
Plan.
2.39 PARTICIPANT.
"Participant" means an Employee who has met the requirements
for participation under Article III and whose Accounts have not been
distributed.
2.40 PAY DEFERRAL ACCOUNT.
"Pay Deferral Account" means the account maintained for a
Participant recording the total Pay Deferral Contributions made by Employer on
his behalf under Section 4.3, adjusted as provided in Article VII.
2.41 PAY DEFERRAL AGREEMENT.
"Pay Deferral Agreement" means an agreement between Employer
and a Participant pursuant to which the Participant elects to defer a portion of
his Compensation and have Employer contribute the deferred amount to the Plan on
his behalf. The Pay Deferral Agreement shall be in the form periodically
prescribed by Employer.
2.42 PAY DEFERRAL CONTRIBUTIONS.
"Pay Deferral Contributions" means contributions under Section
4.3 by Employer on behalf of a Participant pursuant to a Pay Deferral Agreement.
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2.43 PERIOD OF SEVERANCE.
"Period of Severance" means a period of time beginning on the
date of a Participant's Severance from Service and ending on the date the
Participant again has an Hour of Service.
If an Employee is absent from work for maternity or paternity
reasons, the 12-consecutive-month period beginning on the first anniversary of
the Participant's Severance from Service shall not constitute a Period of
Severance but shall not count as a Year of Vested Service. An absence from work
for maternity or paternity reasons means an absence caused by (a) pregnancy of
the Employee; (b) birth of a child of the Employee; (c) placement of a child
with the Employee in connection with the adoption of the child by the Employee;
or (d) caring for the child for a period beginning immediately after the birth
or placement.
2.44 PLAN.
"Plan" means the Amway Corporation Profit-Sharing and 401(k)
Plan.
2.45 PLAN ADMINISTRATOR.
"Plan Administrator" means the named fiduciary responsible for
the operation and administration of the Plan. Amway Corporation shall be the
Plan Administrator. Amway Corporation may periodically delegate some or all of
its duties as Plan Administrator to a committee appointed by its Board of
Directors or Policy Board.
2.46 PLAN YEAR.
"Plan Year" means the 12-consecutive-month period beginning
on September 1 and ending on the following August 31.
If another plan with a different plan year is transferred to,
or merged with the Plan, the initial Plan Year under the Plan for any affected
Employee or Participant shall be the 12-consecutive-month period beginning on
the September 1 that coincides with or immediately precedes the date of transfer
or merger. This initial Plan Year shall be recognized for purposes of
participation and vesting, even though the first day of that Plan Year occurs
during the final plan year of the other plan.
2.47 QUALIFIED DOMESTIC RELATIONS ORDER.
"Qualified Domestic Relations Order" means a qualified
domestic relations order under Section 414(p) of the Code. The Plan
Administrator shall determine whether a judicial order which requires payment of
Plan benefits to an alternate payee is a Qualified Domestic Relations Order.
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2.48 QUALIFIED PLAN.
"Qualified Plan" means a retirement plan meeting the
requirements of Sections 401(a) and 501(a) of the Code.
2.49 RELATED EMPLOYER.
"Related Employer" means (a) any member of a controlled group
of corporations in which Employer is a member, as defined in Section 414(b) of
the Code; (b) any other trade or business under common control of or with
Employer, as defined in Section 414(c) of the Code; (c) any member of an
affiliated service group with Employer, as defined in Section 414(m) of the
Code; and (d) any other entity required to be aggregated with Employer pursuant
to regulations under Section 414(o) of the Code.
2.50 RETIREMENT.
"Retirement" means termination of employment after the date
the Participant attains Normal Retirement Age, or after the date he attains age
60 with at least five Years of Vested Service.
2.51 ROLLOVER ACCOUNT.
"Rollover Account" means the account maintained for a
Participant to record rollovers under Section 6.3, adjusted as provided in
Article VII.
2.52 SEVERANCE FROM SERVICE.
"Severance from Service" means the date as of which the
Participant quits, retires, is discharged or dies, whichever occurs first.
2.53 SPOUSE.
"Spouse" means the person of the opposite sex to whom a
Participant is legally married on his Annuity Starting Date or, if earlier, his
death. A former spouse shall be treated as a Spouse for purposes of the Plan to
the extent provided under a Qualified Domestic Relations Order.
2.54 TOTAL DISABILITY.
"Total Disability" means a total and permanent inability of
the Participant, by reason of a physical or mental condition, to perform the
duties of his employment or the duties of any position Employer makes available
to him for which he is qualified by reason of his training, education or
experience. The existence of a Total Disability shall be established by the
certification of a physician or physicians selected by the Plan Administrator,
unless the Plan Administrator determines that an examination is unnecessary.
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2.55 TRUST AGREEMENT.
"Trust Agreement" means the Amway Corporation Master Trust
Agreement established under Article XIII.
2.56 TRUST FUND.
"Trust Fund" means the assets held under the Trust Agreement.
2.57 TRUSTEE.
"Trustee" means the person and/or trust company, designated as
trustee by Employer pursuant to Article XIII.
2.58 YEAR OF VESTED SERVICE.
"Year of Vested Service" means a year of vested service under
the terms of Section 9.2.
ARTICLE III
PARTICIPATION
-------------
3.1 ELIGIBLE EMPLOYEES.
Each Employee of Amway Corporation or the Related Employers
listed in Appendix A shall be eligible to participate in the Plan, except as
follows:
(a) Any Employee who is a member of a Collective
Bargaining Unit shall be ineligible to participate in the Plan unless
the Collective Bargaining Agreement specifically provides for
participation in the Plan;
(b) Any Leased Employee shall be ineligible to
participate in the Plan;
(c) Except as otherwise provided in Section 2.15,
any Employee of any other Related Employer shall be ineligible to
participate in the Plan;
(d) Any Employee who is a nonresident alien and who
receives no earned income from sources within the United States is
ineligible to participate in the Plan; and
(e) Any Temporary Employee who is eligible to
participate in the Amway Corporation Hourly Employees' Pension
Plan ("Hourly Pension Plan") upon satisfying the participation
requirements of the Hourly Pension Plan. For this purpose,
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the term "Temporary Employee" shall have the same meaning as in the
Hourly Pension Plan.
An eligible Employee shall become a Participant on the date
provided in Section 3.2.
3.2 DATE OF PARTICIPATION.
Each Employee who was a Participant in the Plan or a
participant in one of the Merged Plans as of December 31, 1996 shall be a
Participant in the Plan as of January 1, 1997. Each other Employee who is
eligible under Section 3.1 shall become a Participant on the first date the
Employee satisfies the following requirements:
(a) The Employee is employed in Covered
Employment; and
(b) The Employee is at least age 18.
However, a Participant's eligibility for various types of
contributions shall be determined under the Sections that apply to those
contributions. Further, an Employee who is a resident of or works in Puerto Rico
shall only be eligible for participation under Section 4.2.
3.3 TRANSFER TO INELIGIBLE JOB CLASSIFICATION.
A Participant who is transferred to a job classification which
makes him ineligible to participate in the Plan shall be ineligible to have
additional contributions made on his behalf, except that the Participant shall
share in the allocation of any contribution made for the Plan Year in which the
transfer occurs if the Participant otherwise is eligible under Section 4.2(b).
The Employee shall continue as a Participant until his Accounts are distributed
under the terms of the Plan.
ARTICLE IV
EMPLOYER CONTRIBUTIONS
----------------------
4.1 EMPLOYER CONTRIBUTIONS GENERALLY.
Employer shall contribute to the Trust Fund on behalf of each
Participant in accordance with this Article, subject to the limitations of
Article V. Employer contributions may be made without regard to whether Employer
has current or accumulated profits. However, the Plan shall be considered a
profit-sharing plan for purposes of Sections 401(a), 402, 412 and 417 of the
Code.
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4.2 EMPLOYER DISCRETIONARY CONTRIBUTIONS.
(a) AMOUNT OF CONTRIBUTION. For each Plan Year,
Employer may make a Discretionary Contribution to the Trust Fund.
Employer shall determine the amount of any Discretionary Contribution.
No Discretionary Contribution is required.
If an Employer contribution is made, Employer shall
designate the amount that shall be allocated among the eligible Exempt
Employees and the amount that shall be allocated among the eligible
Nonexempt Employees. A separate allocation, however, shall be made only
if the requirements of Section 401(a)(4) of the Code are satisfied.
(b) ELIGIBILITY TO SHARE IN ALLOCATION. A Participant
shall be eligible to share in the allocation of Employer's
Discretionary Contribution for the Plan Year if, as of the last day of
the Plan Year, the Participant has completed six months of employment
with Employer, or a Related Employer, and the Participant:
(i) Is employed in Covered Employment on
the last day of the Plan Year;
(ii) Is on an Authorized Leave of Absence on
the last day of the Plan Year, but was employed in Covered
Employment during the Plan Year;
(iii) Is employed in Covered Employment at
some time during the Plan Year and is employed by Employer or
a Related Employer at the end of the Plan Year (provided the
transfer from Covered Employment occurs after the Employee has
completed six months of employment in Covered Employment); or
(iv) Was employed in Covered Employment
during the Plan Year, but terminated employment during the
Plan Year as a result of the Participant's Retirement, Total
Disability or death.
If an Employee terminates employment with Employer and is subsequently
rehired, the Employee's prior service shall count towards satisfying
the service requirement in this subsection if the Employee previously
had vested benefits under the Plan or the Employee is reemployed before
having a Period of Severance of at least five years. In all other
situations, the Employee shall be required to satisfy the service
requirement of this subsection.
(c) ALLOCATION PROCEDURES. If Employer makes separate
Discretionary Contributions for Exempt Employees and Nonexempt
Employees, those contributions shall be allocated separately among
eligible Participants in the two respective groups. The remaining
portion of this subsection describes the procedures to be used to make
the allocation within each separate group.
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(i) ALLOCATION TO EXEMPT EMPLOYEES. Subject
to the limitations of Section 5.9, the separate Discretionary
Contribution for Exempt Employees shall be allocated to
eligible Participants who are Exempt Employees using the
following steps. Each successive step shall be used only after
allocating the maximum amount under the previous step. Any
reference to the term "Participant" in this subsection shall
mean a Participant who is an eligible Exempt Employee.
(A) STEP ONE. If the Plan is
Top-Heavy (as defined in Section 12.2) for a Plan
Year, the contribution shall be allocated to each
eligible Participant in the ratio that the
Participant's Compensation bears to all eligible
Participants' Compensation, but not in excess of 3%
of each Participant's Compensation. If the Plan is
not Top-Heavy for a Plan Year, Step One shall not
apply.
(B) STEP TWO. If the Plan is
Top-Heavy (as defined in Section 12.2) for a Plan
Year, any contribution remaining after the allocation
in Step One shall be allocated to each eligible
Participant in the ratio that the Participant's
Excess Compensation for the Plan Year bears to the
Excess Compensation of all eligible Participants. The
maximum amount which may be allocated to a
Participant under Step Two is 3% of the Participant's
Excess Compensation. If the Plan is not Top-Heavy for
a Plan Year, Step Two shall not apply.
(C) STEP THREE. Any contribution
remaining after the allocation in Step Two shall be
allocated to each eligible Participant in the ratio
that the sum of the Participant's total Compensation
and Excess Compensation bears to the sum of all
eligible Participants' total Compensation and Excess
Compensation. The maximum amount which may be
allocated to a Participant under Step Three is the
sum of a Participant's total Compensation and Excess
Compensation, multiplied by the Maximum Disparity
Rate.
(D) STEP FOUR. Any contribution
remaining after the allocation in Step Three shall be
allocated to each eligible Participant in the ratio
that the Participant's Compensation for the Plan Year
bears to all eligible Participants' Compensation for
the Plan Year.
(E) DEFINITIONS. For purposes of
this Section, the following terms shall have the
meanings described in this subsection:
(1) "COMPENSATION" means
Compensation as defined in Section 2.8.
However, Compensation for an Exempt
Employee who is employed by Employer's
Nutrilite Division during the Plan Year
ending August 31, 1997 shall include his
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<PAGE> 24
Compensation from September 1, 1996 through
August 31, 1997.
(2) "EXCESS COMPENSATION"
means a Participant's Compensation during a
Plan Year in excess of the Integration
Level.
(3) "INTEGRATION LEVEL"
means the maximum amount of earnings which
may be considered as wages under Section
3121(a)(1) of the Code (i.e., the taxable
wage base) as of the beginning of the Plan
Year.
(4) "MAXIMUM DISPARITY
RATE" means 5.7% if the Plan is not
Top-Heavy or 2.7% if the Plan is Top-Heavy.
Trustee shall allocate the Employer
Discretionary Contribution for each Plan Year as soon as
administratively feasible after receiving the contribution.
The Plan Administrator shall deliver to Trustee the
information necessary to perform the allocation.
(ii) ALLOCATION TO NONEXEMPT EMPLOYEES.
Subject to the limitations of Section 5.9, the amount of the
separate Discretionary Contribution for Nonexempt Employees
allocated to an eligible Participant who is a Nonexempt
Employee shall be based on the ratio that the Participant's
Compensation for the Plan Year bears to the total Compensation
of all eligible Participants who are Nonexempt Employees. For
the Plan Year ending August 31, 1997, the following special
rules shall apply in determining a Participant's Compensation:
(A) A Nonexempt Employee who is
employed by Employer's Nutrilite Division shall have
his Compensation for the period of September 1, 1996
through August 31, 1997 counted.
(B) A Nonexempt Employee who is NOT
employed by Employer's Nutrilite Division shall have
his Compensation for the period of January 1, 1997
through August 31, 1997 counted.
Trustee shall allocate the Employer
Discretionary Contribution for each Plan Year as soon as
administratively feasible after receiving the contribution.
The Plan Administrator shall deliver to Trustee the
information necessary to perform the allocation.
(iii) TRANSFERRED EMPLOYEES. If an eligible
Participant is both an Exempt Employee and a Nonexempt
Employee during a Plan Year and Employer makes separate
Discretionary Contributions for Exempt Employees
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and Nonexempt Employees, the Participant shall share in the
allocation of the contribution for Participant's job
classification at the end of the Plan Year. For example, if
the Participant was a Nonexempt Employee but becomes an Exempt
Employee during the Plan Year, the Participant shall share in
the allocation of the contribution made for Exempt Employees.
(iv) SINGLE CONTRIBUTION. If Employer makes
a single Discretionary Contribution for both Exempt Employees
and Nonexempt Employees, the Discretionary Contribution shall
be allocated under the steps contained in subsection (i), with
those steps applying to both Exempt Employees and Nonexempt
Employees.
(d) ACCOUNTING FOR CONTRIBUTIONS. Employer
contributions under this Section shall be credited to Participants'
Discretionary Contribution Accounts.
4.3 EMPLOYER PAY DEFERRAL CONTRIBUTIONS.
Employer shall make Pay Deferral Contributions on behalf of a
Participant in accordance with the Pay Deferral Agreement in effect at the time
Compensation is paid, subject to the following:
(a) The amount which may be contributed shall be a
specified percentage (in increments of 1%) of the Participant's
Compensation, up to a maximum of:
(i) If the Participant is an Exempt
Employee, a maximum of 10% of the Participant's Compensation.
(ii) If the Participant is a Nonexempt
Employee, a maximum of 12% of the Participant's Compensation.
The total pay deferrals by a Participant under all
Section 401(k) plans in which he participates may not exceed the dollar
limit described in Section 5.3.
(b) For purposes of determining the type of
Compensation from which Pay Deferral Contributions may be made, a
Participant's Compensation shall be determined in the same manner as
set forth in Section 2.8.
(c) Pay Deferral Contributions shall be made by
reducing the amount otherwise payable to the Participant in his
paychecks. No other form of contribution by the Participant shall be
treated as a Pay Deferral Contribution.
(d) If the amount of Compensation payable to a
Participant in any paycheck is insufficient (after all authorized or
legally required payroll deductions) to permit making the full Pay
Deferral Contribution for the pay period, Pay Deferral
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Contributions shall be suspended until the next pay period for which
sufficient Compensation is available to make the full Pay Deferral
Contribution. Pay Deferral Contributions that are suspended shall not
be made up in subsequent pay periods.
(e) The specified percentage of Compensation
designated as his pay deferral rate shall continue in effect, despite
any change in Compensation, until the Participant elects to change the
specified percentage. A Participant may change his pay deferral rate to
any other permitted rate at any time by using procedures periodically
established by Employer. The change shall be effective as soon as
administratively feasible.
(f) A Participant may discontinue or resume pay
deferrals at any time by using procedures periodically established by
Employer. The change shall be effective as soon as administratively
feasible after the notice is given.
(g) Pay Deferral Contributions on behalf of a
Participant shall be reduced to the extent necessary to comply with the
limitations of Article V.
(h) Employer contributions under this Section shall
be credited to Participants' Pay Deferral Accounts.
4.4 EMPLOYER MATCHING CONTRIBUTIONS.
(a) ELIGIBILITY TO RECEIVE CONTRIBUTION. Employer
shall make a Matching Contribution on behalf of each Nonexempt
Employee for whom Pay Deferral Contributions are made.
(b) AMOUNT OF CONTRIBUTION. The amount of the
Employer Matching Contribution on behalf of an eligible Participant
shall be an amount equal to 25% of the Participant's Pay Deferral
Contributions made during each pay period in which the Participant was
a Nonexempt Employee.
Employer Matching Contributions made on behalf of
Highly Compensated Employees may be reduced to the extent necessary to
satisfy the nondiscrimination tests under Section 5.5. No Matching
Contributions shall be made on Pay Deferral Contributions which exceed
the limitations in Section 5.3, regarding excess pay deferrals, or the
limitations in Section 5.4, regarding excess contributions. If Matching
Contributions are mistakenly made in violation of this provision, the
erroneous Matching Contributions shall be forfeited and used to offset
Employer's next Matching Contribution.
(c) ACCOUNTING FOR CONTRIBUTION. Employer
contributions under this Section shall be credited to Participants'
Matching Contribution Accounts.
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4.5 TIME FOR PAYMENT OF CONTRIBUTIONS.
Employer shall pay its Pay Deferral Contributions as soon as
administratively feasible after the amount otherwise would have been payable to
the Participant, but not later than the 15th business day of the following
month. Employer shall pay its Matching Contributions as soon as administratively
feasible following the end of each month and no later than within the time
prescribed for filing Employer's federal income tax return for the Plan Year,
including extensions. Employer shall pay its other contributions to Trustee
within the time prescribed for filing Employer's federal income tax return for
the Plan Year, including extensions.
4.6 NONREVERSION OF EMPLOYER CONTRIBUTIONS.
Employer shall have no direct or indirect interest in the
Trust Fund, except as follows:
(a) The Trust Fund may be used to defray the
reasonable expenses of administering the Plan and Trust Fund.
(b) Each contribution to the Plan is conditioned on
its deductibility under Section 404 of the Code. If all or part of any
contribution is not deductible, the portion which is not deductible
shall be returned to Employer within one year after it is determined
not to be deductible.
(c) If a contribution is made by Employer under a
mistake of fact, the portion of the contribution resulting from the
mistake of fact may be returned to Employer within one year after the
date of payment.
ARTICLE V
NONDISCRIMINATION RULES AND OTHER
---------------------------------
LIMITS ON EMPLOYER CONTRIBUTIONS
--------------------------------
5.1 LIMITS ON EMPLOYER CONTRIBUTIONS GENERALLY.
Employer contributions described in Article IV shall be
subject to the rules and limitations described in this Article.
5.2 DEDUCTIBLE CONTRIBUTION LIMIT.
The Employer contribution for any Plan Year shall not exceed
the maximum deductible contribution to the Plan under Section 404 of the Code.
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5.3 DOLLAR LIMIT ON PAY DEFERRALS.
The total pay deferrals by a Participant under all Section
401(k) plans, simplified employee pension plans and plans under Section 403(b)
of the Code in which he participates may not exceed the dollar limit under
Section 402(g) of the Code. The dollar limit for 1997 is $9,500. The dollar
limit shall be increased for any cost-of-living adjustment provided under
Section 415(d) of the Code. Any Pay Deferral Contributions which are returned to
the Participant under Section 5.9(d) shall not be counted toward the dollar
limit.
The excess pay deferrals shall be distributed at the request
of the Participant as provided in this Section. The request for distribution
shall be in writing and shall certify that the amount to be distributed is an
excess pay deferral. However, the Participant shall be deemed to have provided
the written notice to the extent the Participant has excess deferrals counting
only the amount of his Pay Deferral Contributions to the Plan.
The excess pay deferrals may be distributed during the same
calendar year in which contributed if the following conditions are satisfied:
(a) Both the Participant and the Plan Administrator
designate the distribution as a distribution of excess pay deferrals.
However, the Participant shall be deemed to have provided the
designation to the extent the Participant has excess elective deferrals
counting only the amount of his Pay Deferral Contributions to the Plan.
(b) The correcting distribution is made after the
date the Plan received the excess pay deferral.
Alternatively, the excess pay deferrals may be distributed
during the following calendar year. The Participant must notify the Plan
Administrator of the excess pay deferrals by the March 1 following the year in
which the excess pay deferrals were made. If the Plan Administrator is notified
in a timely manner, the Plan Administrator shall distribute the excess pay
deferrals by the following April 15.
Regardless of the time of the distribution, the amount of
excess pay deferrals withdrawn shall be increased by any investment income and
decreased by any investment loss attributable to the excess pay deferrals,
whether the income or loss is realized or unrealized. The amount of investment
income or loss shall be determined up to the end of the calendar year in which
the excess pay deferrals were made (or the date of distribution, if earlier).
However, the amount of excess pay deferrals to be distributed to a Highly
Compensated Employee with regard to a taxable year shall be reduced by any
excess Pay Deferral Contributions distributed to him under Section 5.4(f)(ii)
for the Plan Year ending with or within the taxable year.
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<PAGE> 29
5.4 NONDISCRIMINATION TESTS REGARDING PAY DEFERRALS.
(a) NONDISCRIMINATION TESTS. For each Plan Year, at
least one of the following nondiscrimination tests shall be satisfied:
(i) The Actual Deferral Percentage of
eligible Highly Compensated Employees shall not be more than
125% of the Actual Deferral Percentage of eligible Nonhighly
Compensated Employees; or
(ii) The Actual Deferral Percentage of
eligible Highly Compensated Employees shall not be more than
two percentage points higher than, nor more than 200% of, the
Actual Deferral Percentage of eligible Nonhighly Compensated
Employees.
For purposes of the nondiscrimination tests, a Highly Compensated
Employee or Nonhighly Compensated Employee is "eligible" if he is
eligible for Pay Deferral Contributions for all or part of the Plan
Year for which the Actual Deferral Percentage is being calculated.
An Employee who receives a hardship withdrawal under Section 10.3
shall be considered "eligible" during the time period his right to
make Pay Deferral Contributions is suspended.
For purposes of this Section, Employer may
periodically elect to treat as a separate plan any Participants who are
excludable employees under Treas. Reg. Section 1.410(b)-6. Further,
effective for Plan Years beginning after December 31, 1998, Employer
may elect to treat such Participants as "ineligible" Employees for
purposes of the nondiscrimination tests.
(b) DEFINITION OF ACTUAL DEFERRAL PERCENTAGE.
(i) GENERAL RULE. For each group being
tested, "Actual Deferral Percentage" means the average of the
following percentages (calculated separately for each group
member): Pay Deferral Contributions and other contributions
counted as Pay Deferral Contributions under subsection (d) on
behalf of a group member (collectively, "ADP Contributions"),
divided by the Compensation of that group member.
(A) For Plan Years beginning before
January 1, 1997, the Participant's ADP Contributions
and Compensation for the Plan Year being tested are
used.
(B) For Plan Years beginning after
December 31, 1996, the following is used:
(1) For an eligible Highly
Compensated Employee, the Employee's ADP
Contributions and Compensation for the Plan
Year being tested.
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<PAGE> 30
(2) For an eligible
Nonhighly Compensated Employee, the
Employee's ADP Contributions and
Compensation in the preceding Plan Year are
used.
The Actual Deferral Percentage for
Nonhighly Compensated Employees in the preceding Plan Year is
determined using the group of Employees who were Nonhighly
Compensated Employees during the preceding Plan Year (based
upon the definition of Highly Compensated Employee in effect
for that Plan Year). The Employee is included in the
calculation even if the Employee is no longer employed by
Employer or has become a Highly Compensated Employee in the
Plan Year being tested.
The Actual Deferral Percentage for each
Employee and group shall be calculated to the nearest
one-hundredth of one percent. Unless a contribution is counted
under subsection (d), the Actual Deferral Percentage of an
eligible Employee who does not have any Pay Deferral
Contributions is zero. If the Participant is a Highly
Compensated Employee, his pay deferral contributions under any
other Section 401(k) plan of Employer shall be included in
determining his Actual Deferral Percentage for the Plan.
(ii) COMPENSATION. For purposes of
determining a Participant's Actual Deferral Percentage, his
Compensation shall be determined in the same manner as
described in Section 5.9(e)(ii), subject to the following
adjustments:
(A) Pay Deferral Contributions and
pay reduction contributions under Section 125 of the
Code are "added back" and counted as Compensation to
the extent not otherwise counted under Section
5.9(e)(ii).
(B) Compensation shall be subject to
the dollar limit described in Section 2.8(c).
If an Employee becomes eligible to
participate in the Plan during the Plan Year, Employer shall
elect on a nondiscriminatory basis to count his Compensation
during the entire Plan Year or only count his Compensation
after the Employee became eligible to participate in the Plan.
(iii) FAMILY AGGREGATION. For Plan Years
beginning before January 1, 1997, certain family members shall
be aggregated for purposes of determining the Actual Deferral
Percentage for each group member. If any Employee is a Highly
Compensated Employee because he is a member of the family of a
Five-Percent Owner or of one of the ten Highly Compensated
Employees with the highest Compensation during the Plan Year
(as described in Section 2.26(a)(v) or (vi)), all members of
the family group shall be treated as one Highly Compensated
Employee and a combined Actual Deferral Percentage shall be
calculated for the group.
The combined Actual Deferral Percentage
shall be determined by combining the Pay Deferral
Contributions (including amounts treated as Pay Deferral
Contributions under subsection (d)) and Compensation of all
eligible family members. The Pay Deferral Contributions
(including amounts treated as Pay Deferral Contributions under
subsection (d)) and Compensation of all family
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<PAGE> 31
members shall be disregarded for purposes of determining the
Actual Deferral Percentage for the group of Highly Compensated
Employees and the group of Nonhighly Compensated Employees,
except as provided in this paragraph.
(iv) EXCESS PAY DEFERRALS. Pay Deferral
Contributions that exceed the dollar limit of Section 5.3
shall be counted in determining the Participant's Actual
Deferral Percentage. However, Pay Deferral Contributions by a
Nonhighly Compensated Employee that exceed the dollar limit of
Section 5.3 shall not be counted to the extent the Pay
Deferral Contributions are made under plans sponsored by
Employer.
(c) PAY DEFERRALS WHICH MUST BE COUNTED. All Pay
Deferral Contributions which satisfy both of the following requirements
for a Plan Year must be counted for purposes of calculating a
Participant's Actual Deferral Percentage for that Plan Year:
(i) The Pay Deferral Contributions are
allocated to a Participant's Account as of a date within the
Plan Year; and
(ii) The Pay Deferral Contributions (A)
relate to Compensation which would have been received by the
Participant in the Plan Year if the Participant had not
elected to have the Pay Deferral Contributions made on his
behalf; or (B) are attributable to services rendered during
the Plan Year and for which the Participant would have been
paid within 2 1/2 months after the end of the Plan Year.
However, to the extent Pay Deferral Contributions are counted as
Matching Contributions for purposes of satisfying the nondiscrimination
tests described in Section 5.5, the Pay Deferral Contributions shall
not be counted under this subsection for purposes of the
nondiscrimination tests described in subsection (a). Also, any Pay
Deferral Contributions which are returned to the Participant under
Section 5.9(e) shall not be counted.
(d) OTHER TYPES OF CONTRIBUTIONS WHICH MAY BE
COUNTED. Employer Discretionary and/or Matching Contributions may be
counted as Pay Deferral Contributions for a Plan Year if the following
requirements are satisfied:
(i) The contributions that are counted must
be treated as 100% vested, and subject to the distribution
requirements described in Articles VIII and X; and
(ii) Section 401(a)(4) of the Code must be
satisfied with regard to all Employer Discretionary and/or
Matching Contributions for the Plan Year. In addition, Section
401(a)(4) of the Code must be satisfied with regard to the
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<PAGE> 32
Employer Discretionary and/or Matching Contributions which are
not counted as Pay Deferral Contributions.
(e) AGGREGATION. Two or more Qualified Plans which
are treated as a single plan for purposes of Section 401(a)(4) or
Section 410(b) of the Code shall be treated as a single plan for
purposes of this Section. In addition, any other Qualified Plans (other
than an employee stock ownership plan) which are maintained by Employer
or a Related Employer may be treated as a single plan for purposes of
this Section. Any plans aggregated under this Section must have the
same Plan Year.
(f) CORRECTIVE ACTIONS. Employer may take one or
more of the following actions if necessary to satisfy the
nondiscrimination tests described in subsection (a).
(i) Employer may reduce the rate of Pay
Deferral Contributions on behalf of Highly Compensated
Employees at any time to the extent it deems necessary to
satisfy the nondiscrimination tests. The reduction shall be
made using the procedure described in Section 5.6 or Section
5.7, whichever is applicable.
(ii) Employer may distribute the excess
contributions to Highly Compensated Employees. The
distribution shall be made during the 12-month period after
the Plan Year during which the excess contributions were made.
The amount of the excess contributions to be distributed shall
be increased for any investment income or decreased for any
investment loss attributable to the excess contributions,
regardless of whether the income or loss is realized. The
amount of investment income or loss shall be determined up to
the end of the Plan Year in which the excess contributions
were made (or the date of distribution, if earlier). However,
the amount of excess Pay Deferral Contributions to be
distributed to a Highly Compensated Employee shall be reduced
by any excess pay deferrals previously distributed to him
under Section 5.3 for his taxable year ending with or within
the Plan Year.
In the case of family members who are
treated as one Highly Compensated Employee under subsection
(b)(iii), the excess contributions for the family group shall
be allocated among the family members in proportion to the Pay
Deferral Contributions of each family member that are combined
to determine the Actual Deferral Percentage.
(iii) Employer may make Nonelective Employer
Contributions to the Plan to the extent necessary to satisfy
the nondiscrimination tests. The additional contribution shall
be allocated among all Participants who have been employed for
at least one day during the Plan Year and who are Nonhighly
Compensated Employees. The amount of the additional
contribution allocated to an eligible Participant shall be
based on the ratio of the Compensation of the
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<PAGE> 33
Participant to the total Compensation of all Participants
sharing in the additional contribution for the Plan Year.
If the corrective action described in paragraphs (ii)
or (iii) of this subsection is taken within 2 1/2 months after the end
of the Plan Year in which the excess contributions are made, no penalty
shall be assessed. If the corrective action is not taken within the 2
1/2-month period, an excise tax equal to 10% of the excess
contributions may be imposed on Employer. If corrective action is not
taken by the end of the Plan Year following the Plan Year in which the
excess contributions are made, the Plan may violate Section 401(a)(4)
of the Code.
(g) RECORDS. Employer shall maintain records
demonstrating compliance with the nondiscrimination tests set forth in
this Section.
5.5 NONDISCRIMINATION TESTS REGARDING MATCHING
CONTRIBUTIONS.
(a) NONDISCRIMINATION TESTS. For each Plan Year,
at least one of the following nondiscrimination tests shall be
satisfied:
(i) The Matching Contribution Percentage of
eligible Highly Compensated Employees shall not be more than
125% of the Matching Contribution Percentage of eligible
Nonhighly Compensated Employees; or
(ii) The Matching Contribution Percentage of
eligible Highly Compensated Employees shall not be more than
two percentage points higher than, nor more than 200% of, the
Matching Contribution Percentage of eligible Nonhighly
Compensated Employees.
For purposes of the nondiscrimination tests, a Highly Compensated
Employee or Nonhighly Compensated Employee is "eligible" if he is
eligible to receive Employer's Matching Contributions under Section
4.4(a) for the Plan Year for which the Matching Contribution
Percentage is being calculated.
For purposes of this Section, Employer may
periodically elect to treat as a separate plan any Participants who are
excludable employees under Treas. Reg. ss.1.410(b)-6. Further,
effective for Plan Years beginning after December 31, 1998, Employer
may elect to treat such Participants as "ineligible" Employees for
purposes of the nondiscrimination tests.
(b) DEFINITION OF MATCHING CONTRIBUTION PERCENTAGE.
(i) GENERAL RULE. For each group being
tested, "Matching Contribution Percentage" means the average
of the following percentages (calculated separately for each
group member): Matching Contributions and other
contributions counted as Matching Contributions under
subsection (d) on
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<PAGE> 34
behalf of a group member (collectively, "ACP Contributions"),
divided by the Compensation of that group member.
(A) For Plan Years beginning before
January 1, 1997, the Participant's ACP Contributions
and Compensation for the Plan Year being tested are
used.
(B) For Plan Years beginning after
December 31, 1996, the following is used:
(1) For an eligible Highly
Compensated Employee, the Employee's ACP
Contributions and Compensation for the Plan
Year being tested.
(2) For an eligible
Nonhighly Compensated Employee, the
Employee's ACP Contributions and
Compensation in the preceding Plan Year are
used.
The Matching Contribution Percentage for
Nonhighly Compensated Employees in the preceding Plan Year is
determined using the group of Employees who were Nonhighly
Compensated Employees during the preceding Plan Year (based
upon the definition of Highly Compensated Employee in effect
for that Plan Year). The Employee is included in the
calculation even if the Employee is no longer employed by
Employer or has become a Highly Compensated Employee in the
Plan Year being tested.
The Matching Contribution Percentage for
each Employee and group shall be calculated to the nearest
one-hundredth of one percent. If a Participant is a Highly
Compensated Employee, any matching contributions made on his
behalf in any other Qualified Plan maintained by Employer
shall be included in determining his Matching Contribution
Percentage for the Plan.
(ii) COMPENSATION. For purposes of
determining a Participant's Matching Contribution Percentage,
his Compensation shall be deter mined in the same manner as
described in Section 5.4(b)(ii).
(iii) FAMILY AGGREGATION. For Plan Years
beginning before January 1, 1997, certain family members shall
be aggregated for purposes of determining the Matching
Contribution Percentage for each group member. If any Employee
is a Highly Compensated Employee because he is a member of the
family of a Five-Percent Owner or of one of the ten Highly
Compensated Employees with the highest Compensation during the
Plan Year (as described in Section 2.26(a)(v) or (vi)), all
members of the family group shall be treated as one Highly
Compensated Employee and a combined Matching Contribution
Percentage shall be calculated for the group.
The combined Matching Contribution
Percentage shall be determined by combining the Employer
Matching Contributions (including amounts treated as Employer
Matching Contributions under subsection (d)) and Compensation
of all eligible family members. The Employer Matching
Contributions (including amounts treated as Employer Matching
Contributions under subsection (d)) and Compensation of all
family members shall be disregarded for purposes of
determining the Matching Contribution Percentage for the group
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<PAGE> 35
of Highly Compensated Employees and the group of Nonhighly
Compensated Employees, except as provided in this paragraph.
(c) MATCHING CONTRIBUTIONS WHICH MUST BE COUNTED.
Matching Contributions that satisfy the following conditions are
counted for purposes of calculating a Participant's Matching
Contribution Percentage for a Plan Year:
(i) The Matching Contributions are
allocated to a Participant's Account as of a date within the
Plan Year;
(ii) The Matching Contributions are made on
account of Pay Deferral Contributions for the Plan Year;
(iii) The Matching Contributions are NOT
counted as Pay Deferral Contributions for purposes of
satisfying the nondiscrimination tests described in Section
5.4(a); and
(iv) The Matching Contributions are NOT used
to satisfy the minimum contribution requirement of Section
12.4.
(d) OTHER TYPES OF CONTRIBUTIONS WHICH MAY BE
COUNTED. Pay Deferral Contributions and Employer Discretionary
Contributions may be counted as Matching Contributions for purposes of
a Plan Year if the following requirements are satisfied:
(i) The Employer Discretionary
Contributions are fully vested and subject to the
distribution requirements of Articles VIII and X;
(ii) Section 401(a)(4) of the Code must be
satisfied with regard to all Employer Discretionary
Contributions for the Plan Year. In addition, Section
401(a)(4) of the Code must be satisfied with regard to
Employer Discretionary Contributions which are not counted as
Matching Contributions;
(iii) The Employer Discretionary
Contributions are allocated to a Participant's Account as of
a date within the Plan Year;
(iv) The nondiscrimination tests described
in Section 5.4(a) must be satisfied with regard to all Pay
Deferral Contributions for the Plan Year. In addition, the
nondiscrimination tests described in Section 5.4(a) must be
satisfied with regard to Pay Deferral Contributions which are
not counted as Matching Contributions; and
(v) The Pay Deferral Contributions satisfy
the requirements of Section 5.4(c).
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<PAGE> 36
(e) AGGREGATION. Two or more Qualified Plans which
are treated as a single plan for purposes of Section 401(a)(4) or
Section 410(b) of the Code shall be treated as a single plan for
purposes of this Section. In addition, any other Qualified Plans (other
than an employee stock ownership plan) which are maintained by Employer
or a Related Employer may be treated as a single plan for purposes of
this Section. Any plans aggregated under this Section must have the
same Plan Year.
(f) CORRECTIVE ACTIONS. Employer may take one or
more of the following actions if necessary to satisfy the
nondiscrimination tests described in subsection (a).
(i) Employer may reduce the Matching
Contributions that otherwise would be made on behalf of Highly
Compensated Employees to the extent it deems necessary to
satisfy the nondiscrimination tests. The reduction shall be
made using the procedure described in Section 5.6 or Section
5.7, whichever is applicable.
(ii) If the excess Matching Contributions
have been made, Employer shall distribute the vested portion
of the excess Matching Contributions to Highly Compensated
Employees. The amount of the excess contributions to be
distributed shall be increased for any investment income or
decreased for any investment loss attributable to the excess
contributions, regardless of whether the income or loss is
realized. The amount of investment income or loss shall be
determined up to the end of the Plan Year in which the excess
contributions were made (or the date of distribution, if
earlier).
The nonvested portion of the excess Matching
Contributions shall be forfeited. The forfeited amounts shall
be allocated equally to the Accounts of Participants other
than Highly Compensated Employees who made Pay Deferral
Contributions during the Plan Year in which the excess
Matching Contributions were made.
In the case of family members who are
treated as one Highly Compensated Employee under subsection
(b)(iii), the excess Matching Contributions for the family
group shall be allocated among the family members in
proportion to the Matching Contributions of each family member
that are combined to determine the Matching Contribution
Percentage.
(iii) Employer may make Nonelective
Employer Contributions to the Plan to the extent necessary to
satisfy the nondiscrimination tests.
If the corrective action described in paragraphs (ii)
or (iii) of this subsection is taken within 2 1/2 months after the end
of the Plan Year in which the excess contributions are made, no penalty
shall be assessed. If the corrective action is not taken within the 2
1/2-month period, an excise tax equal to 10% of the excess
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<PAGE> 37
Matching Contributions may be imposed on Employer. If corrective action
is not taken by the end of the Plan Year following the Plan Year in
which the excess contributions are made, the Plan may violate Section
401(a)(4) of the Code.
(g) RECORDS. Employer shall maintain records
demonstrating compliance with the nondiscrimination tests set forth in
this Section.
5.6 PROCEDURE FOR REDUCING PAY DEFERRAL OR MATCHING
CONTRIBUTIONS TO SATISFY THE NONDISCRIMINATION
TESTS -- OLD RULES.
For Plan Years beginning before January 1, 1997, any reduction
of Pay Deferral Contributions or Matching Contributions on behalf of a Highly
Compensated Employee to satisfy the nondiscrimination tests of this Article
shall be made using the procedure described in this Section.
Any reduction of Pay Deferral Contributions shall be made by
reducing the Actual Deferral Percentage of the Highly Compensated Employee or
Employees with the highest Actual Deferral Percentage until the first of the
following occurs:
(a) One of the nondiscrimination tests described in
Section 5.4 is satisfied; or
(b) The Highly Compensated Employee's Actual
Deferral Percentage is equal to the Actual Deferral Percentage of the
Highly Compensated Employee with the next highest Actual Deferral
Percentage.
This process is repeated until one of the nondiscrimination tests described in
Section 5.4 is satisfied.
All members of a family group who are treated as one Highly
Compensated Employee under Section 5.4(b)(iii) and Section 5.5(b)(iii) shall be
treated as one Highly Compensated Employee for purposes of this Section.
Any reduction of Matching Contributions shall be made using
the same procedure except that the term "Matching Contribution Percentage" is
substituted for "Actual Deferral Percentage" and the nondiscrimination tests of
Section 5.5(a) must be satisfied.
5.7 PROCEDURE FOR REDUCING PAY DEFERRAL OR MATCHING
CONTRIBUTIONS TO SATISFY THE NONDISCRIMINATION
TESTS -- NEW RULES.
For Plan Years beginning after December 31, 1996, any
reduction of Pay Deferral Contributions or Matching Contributions on behalf of a
Highly Compensated Employee to satisfy the nondiscrimination tests of this
Article shall be made using the procedure described in this Section.
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<PAGE> 38
Any reduction of Pay Deferral Contributions shall be made by
reducing the Pay Deferral Contributions of the Highly Compensated Employee or
Employees with the largest amount of Pay Deferral Contributions until the first
of the following occurs:
(a) One of the nondiscrimination tests described in
Section 5.4(a) is satisfied; or
(b) The Highly Compensated Employee's Pay Deferral
Contributions equal the Pay Deferral Contributions of the Highly
Compensated Employee with the next largest amount of Pay Deferral
Contributions.
This process is repeated until one of the nondiscrimination tests described in
Section 5.4(a) is satisfied.
Any reduction of Matching Contributions shall be made using
the same procedure except that the term "Matching Contributions" is substituted
for "Pay Deferral Contributions" and the nondiscrimination tests of Section
5.5(a) must be satisfied.
5.8 RESTRICTION ON MULTIPLE USE OF ALTERNATIVE
NONDISCRIMINATION TEST.
(a) PURPOSE OF SECTION. This Section contains rules
limiting the multiple use of the alternative test for complying with
the nondiscrimination rules applying to Pay Deferral Contributions and
Matching Contributions. The alternative test is described in Section
5.4(a)(ii) and Section 5.5(a)(ii).
(b) APPLICATION OF SECTION. The limit contained in
this Section applies if all of the following conditions are satisfied
with regard to a Plan Year:
(i) One or more Highly Compensated
Employees of the Employer or a Related Employer are eligible
for both Pay Deferral Contributions and Matching
Contributions;
(ii) The nondiscrimination test described
in Section 5.4(a)(i) is not satisfied;
(iii) The nondiscrimination test described
in Section 5.5(a)(i) is not satisfied; and
(iv) The sum of the Actual Deferral
Percentage and the Matching Contribution Percentage for
eligible Highly Compensated Employees exceeds the "aggregate
limit" described in subsection (c).
All plans which are aggregated for purposes of Sections 5.4 or 5.5
shall be treated as a single plan for purposes of this Section.
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<PAGE> 39
(c) AGGREGATE LIMIT. The "aggregate limit"
shall be calculated as follows:
(i) Calculate the Actual Deferral Percentage
described in Section 5.4(b) for Nonhighly Compensated
Employees who were eligible to participate in the Plan during
the Plan Year.
(ii) Calculate the Matching Contribution
Percentage described in Section 5.5(b) for Nonhighly
Compensated Employees who were eligible to participate in the
Plan during the Plan Year.
(iii) Determine the sum of the following
amounts:
(A) Multiply the larger of the
percentages in subsection (c)(i) or subsection
(c)(ii) by 125%.
(B) Add 2% to the smaller of the
percentages in subsection (c)(i) or subsection
(c)(ii). However, if the smaller percentage is less
than 2%, multiply it by two rather than adding 2%.
(iv) Determine the sum of the following
amounts:
(A) Multiply the smaller of the
percentages in subsection (c)(i) or subsection
(c)(ii) by 125%.
(B) Add 2% to the larger of the
percentages in subsection (c)(i) or subsection
(c)(ii). However, if the smaller percentage is less
than 2%, multiply it by two rather than adding 2%.
(v) The "aggregate limit" is the larger of
the amounts calculated in subsections (c)(iii) and (c)(iv).
(d) CORRECTIVE ACTION. If the limit in this Section
would not otherwise be satisfied, Employer shall reduce the Actual
Deferral Percentage and/or Matching Contribution Percentage of the
Highly Compensated Employees until the limit is satisfied. The
reduction shall be made using the procedure described in Section 5.6 or
Section 5.7, whichever is applicable.
5.9 LIMITS ON ANNUAL ADDITIONS.
(a) GENERAL RULE. The amount of Annual Additions
which may be allocated to a Participant's Accounts for a Limitation
Year shall not exceed the lesser of:
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(i) $30,000, as adjusted under Section
415(d) of the Code for cost-of-living increases; or
(ii) 25% of the Participant's Compensation
during the Limitation Year.
This limit on Annual Additions is called the "Section 415" limit.
(b) MULTIPLE DEFINED CONTRIBUTION PLANS. A
Participant's Annual Additions under all defined contribution plans
maintained by Employer or a Related Employer shall be counted in
determining if a Participant's Annual Additions exceed the Section 415
limit. If a Participant participates in more than one defined
contribution plan, his Annual Additions in the Plan shall be reduced as
necessary to satisfy the Section 415 limit.
(c) DEFINED BENEFIT PLAN. For Limitation Years
beginning before January 1, 2000, a special combined Section 415 limit
applies if a Participant also participates in a defined benefit plan
maintained by Employer or a Related Employer. If the special combined
Section 415 limit would be exceeded, a Participant's benefit accruals
in the defined benefit plan shall be restricted as necessary to satisfy
the limit.
(d) SUSPENSE ACCOUNT. If there is an Excess Amount
with regard to a Participant for a Limitation Year as a result of the
allocation of Forfeitures, a reasonable error in estimating a
Participant's Compensation, a reasonable error in determining the
amount of Pay Deferral Contributions that may be made with respect to
any Participant under the limits of Section 415 of the Code, or other
facts and circumstances found by the Internal Revenue Service to
justify the application of these rules, the Excess Amount shall be held
by Trustee in a suspense account. The amount in the suspense account
shall be offset against and allocated as part of the Employer
contribution for the next Plan Year.
Alternatively, the Excess Amount may be corrected by
returning to the Participant all or part of the Pay Deferral
Contributions made on behalf of the Participant for the Plan Year, plus
any investment earnings attributable to the Excess Amount being
returned.
If there is a suspense account 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 contributions may be made to the Plan for that Limitation
Year. Excess Amounts may not be distributed to Participants or former
Participants except as provided in this subsection.
(e) DEFINITIONS. For purposes of this Section, the
following terms shall have the meanings described in this subsection:
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(i) "ANNUAL ADDITIONS" means the sum of
the following amounts credited to a Participant's Accounts:
(A) Employer contributions;
(B) Employee contributions;
(C) Forfeitures;
(D) Amounts allocated to an
individual medical account under Section 415(l)(2) of
the Code, which is part of a pension or annuity plan;
and
(E) Amounts attributable to
post-retirement medical benefits allocated to the
separate account of a key employee, as defined in
Section 419A(d)(3) of the Code, under a welfare
benefit fund described in Section 419(e) of the Code.
Pay Deferral Contributions that exceed the dollar limit of
Section 5.3 shall be counted for purposes of determining a
Participant's Annual Additions for a Limitation Year even if
the Excess Amounts are subsequently distributed to the
Participant, unless the Pay Deferral Contributions are
distributed to the Participant by the April 15 following the
year in which the Pay Deferral Contributions were made. Pay
Deferral Contributions which fail to satisfy the
nondiscrimination tests of Section 5.4 and Matching
Contributions which fail to satisfy the nondiscrimination
tests of Section 5.5 shall be counted for purposes of
determining a Participant's Annual Additions for a Limitation
Year even if the Excess Amounts are subsequently distributed
to the Participant.
(ii) "COMPENSATION" means a Participant's
wages during a Limitation Year. A Participant's wages shall be
determined in the same manner as described in Section 3401(a)
of the Code, for purposes of income tax withholding at the
source. However, this amount shall be determined without
regard to any rules that limit the remuneration included in
wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural
labor in Section 3401(a)(2) of the Code). For Limitation Years
beginning after December 31, 1997, Compensation shall also
include Pay Deferral Contributions and pay reduction
contributions under Sections 125, 402(h)(1)(B), 403(b) and 457
of the Code.
If an Employee works for both Employer and a
Related Employer during a Limitation Year, his Compensation
shall include Compensation received from both Employer and the
Related Employer.
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(iii) "EMPLOYER" means Employer and all
Related Employers (as modified by Section 415(h) of the Code).
(iv) "EXCESS AMOUNT" means the excess of the
Participant's Annual Additions for the Limitation Year over
the amount permitted under this Section.
For purposes of determining the source of a
Participant's Excess Amount, the following procedure shall be
used:
(A) If the Participant is a Highly
Compensated Employee, the Excess Amount shall come
from the following sources in the following order:
(1) If the
nondiscrimination tests regarding pay
deferrals set forth in Section 5.4 would
fail before any reduction for compliance
with the Section 415 limit, then the pay
deferrals shall be considered the Excess
Amount.
(2) If the
nondiscrimination tests regarding Matching
Contributions set forth in Section 5.5 would
fail before any reduction for compliance
with the Section 415 limit, then the
Matching Contributions shall be considered
the Excess Amount.
(3) If an Excess Amount
still remains, the Excess Amount shall come
from the contributions made on behalf of the
Participant in the following order: Pay
Deferral Contributions, Matching
Contributions, then Discretionary
Contributions.
(B) If the Participant is a
Nonhighly Compensated Employee, the Excess Amount
shall come from the following sources in the
following order:
(1) If the
nondiscrimination tests regarding pay
deferrals would pass before any reduction
for compliance with the Section 415 limit,
then the Participant's pay deferrals shall
be considered the Excess Amount if this
would not cause the nondiscrimination tests
regarding pay deferrals set forth in Section
5.4 to fail.
(2) If any Excess Amount
still remains, the Excess Amount shall come
from the contributions made on behalf of
the Participant in the following order:
Discretionary Contributions, Pay Deferral
Contributions, then Matching Contributions.
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(v) "LIMITATION YEAR" for this Plan means
the 12-consecutive-month period beginning on September 1 and
ending on the following August 31.
(f) INCORPORATION BY REFERENCE. To the extent not
otherwise described in this Section, the provisions of Section 415 of
the Code and any regulations issued with regard to Section 415 of the
Code are incorporated in the Plan by reference.
ARTICLE VI
PARTICIPANTS' ACCOUNTS
----------------------
6.1 ESTABLISHMENT OF ACCOUNTS.
Trustee shall establish and maintain, as necessary, the
following Accounts for each Participant:
(a) Discretionary Contribution Account.
(b) Pay Deferral Account.
(c) Matching Contribution Account.
(d) Rollover Account.
(e) Nonelective Employer Contribution Account.
(f) Employee Contribution Account.
The separate Accounts are only for bookkeeping purposes. The
Accounts shall be commingled for investment purposes to the extent described in
Section 6.4.
6.2 VESTED PORTION OF ACCOUNTS.
The vested portion of each Participant's Accounts shall be
determined under Article IX.
6.3 ROLLOVERS AND TRANSFERS FROM OTHER QUALIFIED PLANS.
(a) ROLLOVERS. A Participant may elect to roll over
to Trustee a distribution from a Qualified Plan. An amount may be
rolled over under this Section only if the Trustee receives the amount:
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(i) As a Direct Rollover from another
Qualified Plan;
(ii) Within 60 days after the Participant
received the amount as a lump sum distribution (as defined in
Section 402(e)(4) of the Code) from a Qualified Plan; or
(iii) Within 60 days after the Participant
received the amount from an individual retirement account
which contains no assets other than those representing
employer contributions to a Qualified Plan and earnings on
those assets.
The amount rolled over shall be placed in a fully
vested Rollover Account on behalf of the Participant. The Rollover
Account shall be adjusted along with the Participant's other Accounts
under Article VII.
(b) TRANSFERS. A direct trustee-to-trustee transfer,
other than a Direct Rollover, shall not be permitted under this
Section.
6.4 INVESTMENT OF ACCOUNTS.
A Participant may direct that his Accounts be invested in any
combination of the investment funds designated by the Plan Administrator. If a
Participant fails to make an investment election, his Accounts shall be invested
in an investment fund or funds designated by the Plan Administrator.
Any investment direction made by a Participant shall continue
in effect until changed by the Participant. A Participant may change his
investment direction, within the limits of this Section, by following procedures
which are periodically established by the Plan Administrator.
The Plan Administrator may periodically change the investment
funds made available to Participants. If an investment fund is eliminated and
replaced by a different fund with similar investment characteristics, the Plan
Administrator may direct the transfer of funds from the eliminated fund to its
replacement.
The terms and conditions of making and changing investment
elections shall also be subject to any requirements imposed by the financial
institution or other entity which establishes the investment funds.
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ARTICLE VII
ADJUSTMENTS TO ACCOUNTS
-----------------------
7.1 METHOD OF ADJUSTMENT.
The investment funds under Section 6.4 shall be valued on each
business day. The total value of a Participant's Accounts shall be the sum of
the Participant's interest in each of the investment funds, plus the cash value
of any insurance contracts on the Participant's life.
7.2 CHARGES AGAINST ACCOUNTS.
Any distributions or withdrawals made from the investment
funds shall be charged to the proper Accounts.
7.3 ADDITIONS TO ACCOUNTS.
Amounts contributed to or on behalf of a Participant shall be
credited to the appropriate Accounts of a Participant as soon as
administratively feasible.
7.4 ALLOCATION OF LOAN INTEREST.
A Participant who has an outstanding loan from his Accounts in
the Plan, as provided in Article XI, shall have the interest income from the
loan (less any loan expenses) allocated to his Accounts.
7.5 ALLOCATION OF FORFEITURES.
After a Participant terminates employment with Employer, the
Plan Administrator shall determine the Participant's vested benefits in his
Accounts under Section 9.1. The nonvested portion of his Accounts shall be
forfeited as of the following date:
(a) If the Participant receives a distribution of
his entire vested benefits during a Plan Year, as of the last day of
that Plan Year; or
(b) If the Participant incurs a Period of Severance
of at least five years before receiving a distribution of his entire
vested benefits, as of the last day of the Plan Year during which the
Period of Severance is at least five years.
If a Participant does not have vested benefits in any portion of his Accounts,
he shall be deemed to have received a distribution of his vested benefits during
the Plan Year in which he terminates employment.
Subject to Section 7.6, Forfeitures from a Participant's
Discretionary Contribution Account shall be allocated to the Discretionary
Contribution Accounts of those remaining
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Participants who are eligible to share in the Employer Discretionary
Contribution under Section 4.2 for the Plan Year in which the Forfeitures occur.
Forfeitures shall be allocated as part of the Employer Discretionary
Contributions under Section 4.2. If separate Discretionary Contributions are
made for different groups of Participants, the Forfeiture from the respective
groups shall be allocated as part of the Discretionary Contribution for that
group.
Subject to Section 7.6, Forfeitures from a Participant's
Matching Contribution Account shall be used to reduce the Matching Contribution
otherwise required to be made for that Plan Year under Section 4.4.
7.6 RESTORATION OF FORFEITURES UPON REEMPLOYMENT.
(a) CONDITIONS FOR RESTORATION. If a Participant
terminates employment with Employer, forfeits the nonvested amount in
his Accounts and is reemployed by Employer before incurring a Period of
Severance of at least five years, the amount forfeited shall be
restored to the Participant's Accounts in the Plan Year in which the
Participant repays the amount distributed from his Discretionary and
Matching Contribution Accounts. The amount distributed may be repaid in
installments. However, to qualify for a restoration of a Forfeiture
under this Section, the full amount must be repaid before the earlier
of the following dates:
(i) The fifth anniversary of the
Participant's date of reemployment; or
(ii) The last day of the Plan Year in which
the Participant incurs a Period of Severance of at least five
years.
(b) SOURCE OF RESTORATION. The restoration shall be
provided out of the following sources, to the extent necessary and in
the following order:
(i) From Forfeitures occurring during
the Plan Year, before allocation under Section 7.5;
(ii) From the Employer Discretionary
Contribution for the Plan Year, before allocation under
Section 4.2; and
(iii) From an Employer contribution made
solely for the reemployed Participant.
7.7 ADJUSTMENT FOR ERRORS.
The Plan Administrator may direct Trustee to correct any error
by making adjustments to Participants' Accounts. Employer may make an additional
or alternative contribution where appropriate to correct an error. Any
contribution made under this Section shall be allocated and shall vest in a
manner which corrects the error.
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ARTICLE VIII
DISTRIBUTION OF BENEFITS
------------------------
8.1 TIME OF DISTRIBUTION.
(a) GENERAL RULE. A Participant may request payment
of benefits at any time after his Total Disability or termination of
employment with Employer and all Related Employers. The Participant's
Beneficiary may request payment of benefits at any time after the
Participant's death. Payment shall be made as soon as administratively
feasible after the distribution is requested.
Notwithstanding any other provision, if a Participant
is reemployed by Employer or a Related Employer before a distribution
of benefits is made, no distribution of benefits shall be made under
this Section until the Participant again terminates employment with
Employer and all Related Employers.
(b) SIXTY-DAY RULE. Unless the Participant elects
otherwise, payment of benefits must begin within 60 days after the
close of the Plan Year in which the latest of the following occurs:
(i) The Participant attains age 65;
(ii) The Participant terminates his
service with Employer; or
(iii) The tenth anniversary of the date the
Participant began participation in the Plan.
No distribution is required under this subsection if
a Participant who is eligible for a distribution fails to request a
distribution. The Participant shall be considered to have elected a
deferred distribution.
(c) AGE 70 1/2 DISTRIBUTION RULE. As a general rule,
the distribution of benefits to a Participant shall begin by the April
1 following the later of the calendar year in which the Participant
attains age 70 1/2 or the calendar year in which the Participant
terminates employment with Employer. However, the following exceptions
apply:
(i) If a Participant is a Five-Percent
Owner, the distribution shall begin no later than the April 1
following the calendar year in which the Participant attains
age 70 1/2.
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(ii) This subsection shall not apply to a
Participant who made a valid election under Section 242(b)(2)
of the Tax Equity and Fiscal Responsibility Act of 1982 which
is inconsistent with the general rule.
A Participant who is receiving required minimum
distributions under Section 401(a)(9) of the Code as of January 1, 1997
but who would not be required to receive such distributions under the
provisions of this subsection may suspend required minimum
distributions until such distributions are required under the terms of
this subsection or may elect to continue such distributions.
A distribution under this provision shall satisfy the
requirements of Section 8.4(c).
(d) EXCISE TAX ON EARLY DISTRIBUTIONS. If a
distribution from the Plan occurs before the Participant attains age
59 1/2, an excise tax equal to 10% of the amount of the distribution
may be imposed on the recipient unless one of the following exceptions
applies:
(i) The distribution is rolled over to an
individual retirement account or other Qualified Plan within
60 days after receipt;
(ii) The distribution is made as a result of
the Participant's termination of employment with Employer
after the Participant attains age 55;
(iii) The distribution is made as a result
of the Participant's death;
(iv) The distribution is made as a result of
the Participant's disability within the meaning of Section
72(m)(7) of the Code;
(v) The distribution consists of excess pay
deferrals under Section 5.3;
(vi) The distribution is used to pay
deductible medical expenses (medical expenses exceeding 7 1/2%
of adjusted gross income);
(vii) The distribution is made under a
Qualified Domestic Relations Order;
(viii) The distribution is part of
substantially equal payments over the Participant's life
expectancy or the joint life expectancy of the Participant
and his Spouse; or
(ix) The distribution consists of Employee
Contributions.
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8.2 AMOUNT OF DISTRIBUTION.
The amount distributed to a Participant shall be determined by
multiplying:
(a) His vested percentage in his Accounts (determined
separately for each Account under Section 9.1) as of the date he
terminated employment with Employer; by
(b) The amount realized by the Plan as a result of
the sale of the Participant's interest in the investment funds.
However, if a Participant elects under Section 8.3 to receive a
distribution "in kind," the value of the stock to be distributed in
kind (determined as of the date the Participant's interest in the
other investment funds are sold) shall be taken into account in
determining the amount distributed to the Participant.
The amount of distribution shall also include any vested
contributions made by or on behalf of the Participant subsequent to the sale of
the Participant's interest in the investment funds.
The nonvested portion of a Participant's Accounts shall be
forfeited as described in Section 7.5.
8.3 FORM OF DISTRIBUTION.
The distribution of benefits to a Participant shall be made by
check or in other immediately available funds, subject to the following:
(a) If the Participant receives an Eligible Rollover
Distribution, the Participant may elect a Direct Rollover to an
Eligible Retirement Plan under Section 8.8.
(b) If any portion of the Participant's Pay Deferral
Account has been invested in common stock (or American Depositary
Shares) of Amway Asia Pacific, Ltd. or Amway Japan Limited, the
Participant may elect to receive a distribution in kind of such stock.
8.4 METHOD OF DISTRIBUTION IN THE EVENT OF TERMINATION
OTHER THAN DEATH.
This Section shall apply if a Participant terminates
employment for a reason other than death.
(a) OPTIONAL METHODS OF PAYMENT. A Participant may
elect one of the optional forms of payment:
(i) A single lump sum payment;
(ii) Installments over a period not
exceeding either:
(A) 15 years; or
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(B) The Participant's life
expectancy or the joint life expectancy of the
Participant and his Beneficiary;
(iii) Single life annuity immediately
payable over the life of the Participant;
(iv) Joint and survivor annuity
immediately payable over the lives of the Participant and his
Spouse or other Beneficiary; or
(v) A combination of paragraphs (i),
(ii), (iii) or (iv).
If a Participant elects either a single life annuity or a joint and survivor
annuity, the Participant shall select the insurance company from which the
annuity is purchased.
(b) JOINT AND SURVIVOR ANNUITY. This subsection shall
apply to a Participant, including a Participant who terminated
employment prior to August 23, 1984, who has a Spouse on the Annuity
Starting Date and elects to receive all or part of his benefits in the
form of an annuity. It does NOT apply if the Participant does not have
a Spouse on his Annuity Starting Date. It also does not apply if the
Participant elects a lump sum distribution or a distribution in
installments. If this subsection applies, the vested amount in the
Participant's Accounts shall be used to purchase a joint and survivor
annuity as described below unless a joint and survivor annuity is
waived as described in paragraph (iii).
(i) DEFINITION OF JOINT AND SURVIVOR
ANNUITY. A joint and survivor annuity is an immediate annuity
for the life of the Participant, with a survivor annuity for
the life of the Spouse which is not less than 50% nor more
than 100% of the amount of the annuity payable during the
joint lives of the Participant and the Spouse.
(ii) NOTICE REQUIREMENTS. No less than 30
days and no more than 90 days before the Annuity Starting
Date, the Plan Administrator shall provide each married
Participant with a written explanation of:
(A) The terms and conditions of
a joint and survivor annuity;
(B) The Participant's right to
make, and the effect of, an election to waive the
joint and survivor annuity form of benefit;
(C) The rights of a Participant's
Spouse; and
(D) The right to make, and the
effect of, a revocation of a previous election to
waive the joint and survivor annuity.
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However, the Participant (with his Spouse's written consent)
may elect to begin receiving benefits at any time more than
seven days (but less than 30 days) after being provided the
written notice.
(iii) WAIVER OF JOINT AND SURVIVOR ANNUITY.
Within the 90-day period ending on the Annuity Starting Date,
the Participant may waive the receipt of benefits in the form
of a joint and survivor annuity and elect one of the optional
forms of payment described in subsection (a). The waiver must
be in writing and must be consented to in writing by the
Spouse of the Participant. The Spouse's consent must also
acknowledge the effect of the waiver and must be witnessed by
a Plan representative or by a notary public. However, if the
Participant establishes to the satisfaction of the Plan
Administrator that written consent cannot be obtained because
there is no Spouse or the Spouse cannot be located, the
consent of the Spouse shall not be required to waive the joint
and survivor annuity. Any consent required by this provision
shall be valid only with respect to the Spouse who signs the
consent.
Any spousal consent under this subsection
may be specific as to the alternative form of benefit payment
that may be elected by the Participant or may authorize the
Participant to designate an alternative form of benefit
without any further spousal consent. The spousal consent may
also be specific as to the nonspouse Beneficiary (including
any class of Beneficiaries or secondary Beneficiaries) who
shall receive a benefit after the Participant's death or may
authorize the Participant to designate a nonspouse Beneficiary
(including any class of Beneficiaries or secondary
Beneficiaries) without any further spousal consent. If the
spousal consent is specific as to the alternative form of
benefit payment or Beneficiary, any change in the form of
benefit payment or Beneficiary shall require a new spousal
consent.
(iv) REVOCATION OF WAIVER. A Participant may
revoke a waiver of the joint and survivor annuity without the
consent of the Spouse at any time before the commencement of
benefits. The number of waivers and revocations of waivers
shall not be limited.
(c) MINIMUM DISTRIBUTION REQUIREMENT.
Notwithstanding any other provisions, the distribution under this
Section shall satisfy the minimum distribution requirements of Section
401(a)(9) of the Code, including the incidental death benefit
requirement of Section 401(a)(9)(G). The distribution shall comply with
the requirements under Treas. Reg. Section 1.401(a)(9)-2.
A Participant who is required to receive a
distribution under Section 8.1(c) shall have the following choices:
(i) Receive an annual distribution in an
amount equal to the amount credited to the Participant's
Accounts as of the prior December 31; or
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(ii) Receive the minimum annual distribution
permitted under Section 401(a)(9) of the Code (notwithstanding
the 15-year limit in Section 8.4(a)(ii)(A)). The Participant
may elect whether to recalculate the life expectancies of the
Participant and/or the Participant's Spouse under Section
401(a)(9)(D) of the Code. Any such election shall be made
before the first distribution required under Section 401(a)(9)
of the Code and shall be irrevocable. If no election is made,
the Participant's life expectancy (but not the Spouse's life
expectancy) shall be recalculated each year for purposes of
determining the minimum annual distribution.
The Participant shall make his choice before he
receives the first distribution required under Section 401(a)(9) of the
Code. The Participant shall not be permitted to change his election
after the first required distribution is made.
8.5 METHOD OF DISTRIBUTION IN THE EVENT OF DEATH.
This Section shall apply if a Participant dies before the
vested amount in his Accounts is completely distributed.
(a) DEATH AFTER COMMENCEMENT OF BENEFITS. If the
Participant begins receiving a distribution of benefits from the Plan
prior to his death and the Participant dies after the required
beginning date described in Section 8.1(c), the remaining amount in his
Accounts shall be distributed to his Beneficiary under the method of
distribution elected by the Participant unless the Beneficiary elects a
more rapid form of distribution from the optional methods of payment
set forth in Section 8.4.
If the Participant begins receiving a distribution of
benefits from the Plan before his death and the Participant dies before
the required beginning date described in Section 8.1(c), the remaining
amount in his Accounts shall be distributed to his Beneficiary under
the five-year rule described in subsection (b).
(b) DEATH BEFORE COMMENCEMENT OF BENEFITS. If the
Participant dies before receiving any distribution of benefits from the
Plan, the amount in his Accounts shall be distributed to his
Beneficiary. The distribution shall be in the form elected by the
Participant in writing before his death. If no written election was
made, the form of distribution shall be elected by the Beneficiary in
writing from the optional methods of payment described in Section 8.4.
The distribution shall be completed within five years after the death
of the Participant unless one of the following two exceptions to the
five-year rule applies:
(i) The distributions are made in
substantially equal installments over a period not exceeding
the life expectancy of the Beneficiary, and distributions
begin within one year after the Participant's death.
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(ii) If the Beneficiary is the Participant's
Spouse, the distributions begin no later than the date on
which the Participant would have attained age 70 1/2 and are
made over a period not exceeding the life expectancy of the
Spouse. If the Spouse dies before the distribution begins,
distributions shall be made as if the Spouse were the
Participant.
If the Beneficiary elects to receive a distribution under one of the
two exceptions to the five-year rule, the Beneficiary must make the
election no later than the earlier of: December 31 of the calendar year
in which distributions would be required to begin under the two
exceptions to the five-year rule, or December 31 of the calendar year
which contains the fifth anniversary of the date of the death of the
Participant.
(c) DESIGNATION OF BENEFICIARY. If the Participant is
married at the time of his death, the Beneficiary of any death benefits
shall be the Participant's Spouse, despite any designation to the
contrary, unless the Spouse has consented to a different or additional
Beneficiary. The Spouse's consent shall be in writing and shall be
witnessed by a Plan representative or by a notary public.
If the Participant is not married, the Participant
may in writing designate any person or persons as Beneficiary on a form
provided by the Plan Administrator. If the Participant is married but
the Participant's Spouse has consented to a different or additional
Beneficiary, the Participant may in writing designate that person as a
Beneficiary. Subject to these rules, the Participant may change the
Beneficiary desig nation at any time by completing a new form and
filing it with the Plan Administrator.
The Plan Administrator shall determine the rights of
any trustee designated as a Beneficiary without responsibility for
determining the validity, existence or provisions of that trust, and
shall not have responsibility for the application of sums paid to that
trustee or for the discharge of the trust.
If the Participant designates more than one
Beneficiary and a Beneficiary dies before benefit payments are
completed, the heirs or estate of the deceased Beneficiary shall not
receive any benefits from the Plan. Instead, the share payable to the
deceased Beneficiary shall be paid to the Beneficiaries who are still
living. Payment shall be made in proportion to the shares otherwise
payable to the living Beneficiaries.
If the Participant fails to designate a Beneficiary
or if no Beneficiary survives the Participant, distribution shall be
made in equal shares to the members of the first of the classes listed
below having a living member on the date the distribution is payable.
The classes, in order of priority, are as follows:
(i) The Participant's Spouse;
(ii) The Participant's children or their
then-living issue, by right of representation; and
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(iii) The legal heirs of the Participant
under the laws of the Participant's state of residence on the
date of the Participant's death.
The facts as shown by the records of the Plan
Administrator at the time of death shall be conclusive as to the
identity of the proper payee, and the records of Trustee shall be
conclusive as to the amount properly payable. The distribution made in
accordance with such state of facts shall constitute a complete
discharge of all obligations under the provisions of the Plan.
8.6 CASH-OUT OF SMALL BENEFITS.
Notwithstanding any other provision of the Plan, if a
Participant or his Beneficiary is eligible to request a distribution under
Section 8.1 and the vested amount in the Participant's Accounts does not exceed
$3,500 (and did not exceed $3,500 as of the time of any prior distribution), the
Plan Administrator shall distribute the vested amount to the Participant or his
Beneficiary in a single lump sum payment.
The distribution shall be made as soon as administratively
feasible after the Participant's termination of employment or death.
8.7 DISTRIBUTIONS PURSUANT TO A QUALIFIED DOMESTIC
RELATIONS ORDER.
Benefits payable to an alternate payee under a Qualified
Domestic Relations Order shall be paid in accordance with the terms of the
order. However, the order may not require a distribution which is impermissible
under the terms of the Plan and applicable law.
The order must be entered by the court and recognized by the
Plan Administrator as a Qualified Domestic Relations Order before the Plan
Administrator may implement the order. As soon as administratively feasible
after the order is entered by the court and recognized by the Plan Administrator
as a Qualified Domestic Relations Order, the Plan Administrator shall take
action with respect to the terms of the order.
If the Qualified Domestic Relations Order provides for a lump
sum distribution of the alternate payee's benefits as soon as administratively
feasible, the Plan Administrator shall distribute benefits in accordance with
the terms of the order. Alternatively, if the alternate payee's benefits are not
immediately distributed in a lump sum, the Plan Administrator shall establish
an Account for the alternate payee and allocate a portion of the Participant's
Accounts to the alternate payee's Account pursuant to the terms of the Qualified
Domestic Relations Order. The alternate payee's Account shall be invested, and
the alternate payee shall have the same investment rights as the Participant in
accordance with Article VI.
The alternate payee's benefits shall be distributed only from
the Participant's vested benefits in his Accounts. The amount distributed to the
alternate payee shall not exceed the Participant's vested benefits in his
Accounts.
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<PAGE> 55
If a lump sum distribution is made to an alternate payee under
this Section at a time when the Participant is not fully vested and his vested
percentage may increase, the following accounting rule shall apply: A separate
account or accounting record shall be established and maintained for each of the
Participant's Accounts that is not fully vested as of the time of the
distribution to the alternate payee. The Participant's vested benefits in each
separate account or accounting record shall be the amount designated as "V" in,
and determined by, the formula: V = P(AB + D) - D, where P is the Participant's
vested percentage; AB is the account balance after allocations and revaluation,
as of the most recent Valuation Date; and D is the amount of the distribution
made to the alternate payee under this Section.
8.8 ELIGIBLE ROLLOVER DISTRIBUTIONS.
If a Distributee receives an Eligible Rollover Distribution
from the Plan, the following rules supersede any other provisions in this
Article.
(a) NOTICE REQUIREMENT. No less than 30 days and no
more than 90 days before a distribution, the Plan Administrator shall
provide the Distributee with a written explanation of:
(i) The rules under which the
distribution may be paid in a Direct Rollover to an Eligible
Retirement Plan;
(ii) The rules that require income tax
withholding if the distribution is not paid in a Direct
Rollover;
(iii) The rules under which the
Distributee may roll over the distribution within 60 days of
receipt; and
(iv) Any other applicable tax rules.
However, the Distributee may elect to begin receiving benefits within
30 days after being provided the written notice, provided the
Distributee is given at least 30 days after receipt of the written
notice to consider whether or not to receive a Direct Rollover and the
Distributee is clearly informed of this right.
(b) DIRECT ROLLOVER. The Distributee may elect
a Direct Rollover of the distribution to an Eligible Retirement Plan.
However, the Distributee's right to elect a Direct Rollover is subject
to the following:
(i) A Direct Rollover shall not be
permitted if the amount of the distribution is less than $200;
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(ii) A Distributee may elect a Direct
Rollover of a portion of the distribution and elect to receive
the remaining amount, provided the amount of the Direct
Rollover is at least $500;
(iii) A Distributee's election to make or
not make a Direct Rollover with respect to one payment in a
series of payments applies to all subsequent payments.
However, the Distributee may change his election at any time;
(iv) A Distributee may not elect a Direct
Rollover to more than one Eligible Retirement Plan; and
(v) The Distributee shall supply the Plan
Administrator with any information the Plan Administrator
reasonably requests in connection with the Direct Rollover.
(C) INCOME TAX WITHHOLDING. Mandatory income tax
withholding shall apply to the portion of the Eligible Rollover
Distribution for which the Distributee does not elect a Direct
Rollover.
8.9 ELECTION OF BENEFITS.
Except as otherwise provided in the Plan, the election of the
method of distribution of benefits shall be made in writing by the Participant,
if living, or by his Beneficiary if the Participant is deceased. The election
may be revoked or changed, but may not be changed without the consent of the
Plan Administrator after the first distribution payment is made.
ARTICLE IX
VESTING
9.1 VESTED PERCENTAGE.
All amounts in a Participant's Accounts other than the
Discretionary and Matching Contribution Accounts are fully vested and
nonforfeitable. Amounts in the Participant's Discretionary and Matching
Contribution Accounts shall be fully vested and nonforfeitable if the
Participant is employed by Employer as of the date of his Total Disability,
death or attainment of Normal Retirement Age.
If a Participant terminates employment before Normal
Retirement Age for a reason other than Total Disability or death, the vested
percentage of a Participant in his Discretionary and Matching Contribution
Accounts shall be based upon his Years of Vested Service and the following
vesting schedule:
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<PAGE> 57
<TABLE>
<CAPTION>
YEARS OF VESTED SERVICE VESTED PERCENTAGE
----------------------- -----------------
<S> <C> <C>
Less than 3 0%
3 20%
4 60%
5 or more 100%
</TABLE>
Notwithstanding any other provision of this Section, the
following special rules apply:
(a) If a Participant terminated employment with
Employer before January 1, 1997, his vested percentage shall be
determined under the provisions of the Plan or the Merged Plan in which
he was a participant that were in effect at the time he terminated
employment.
(b) If any Matching Contributions are used to satisfy
the nondiscrimination tests described in Section 5.4, those amounts
shall be placed in a separate, fully vested Matching Contribution
Account.
(c) If the Participant formerly participated in the
Nutrilite Plan, the Participant's discretionary contribution account
and matching contribution account under the Nutrilite Plan as of
December 31, 1996 shall be maintained as separate accounts under the
Plan until the Participant is fully vested in his Discretionary
Contribution Account and Matching Contribution Account under this
Section, at which time the respective separate accounts shall be merged
into the Participant's Matching Contribution Account and Discretionary
Contribution Account. Before this merger of accounts occurs, the
Participant's vested percentage in these separate accounts shall be
determined as follows:
(i) The Participant shall be 100% vested in
his Nutrilite Plan matching contribution account, including
any subsequent investment earnings relating to that account.
(ii) The Participant's vested percentage
in his Nutrilite discretionary contribution account,
including any subsequent investment earnings relating to
that account, shall be determined under the terms of the
Nutrilite Plan in effect as of December 31, 1996.
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<PAGE> 58
The Participant shall have a separate Matching
Contribution Account and Discretionary Contribution Account for
contributions made after December 31, 1996. These new accounts shall
vest according to the vesting schedule in this Section.
9.2 YEARS OF VESTED SERVICE.
A Year of Vested Service is a 12-month period of employment
with Employer. A Participant shall be credited with Years of Vested Service
based on the time between the date of the Participant's first Hour of Service
for Employer or a Related Employer and the Participant's Severance from Service,
subject to the following:
(a) If a Participant has a Severance from Service and
is rehired before incurring a Period of Severance of at least 12
months, the period in which the Participant is not employed shall be
included in his Years of Vested Service.
(b) Service with Employer in a job classification
which is not eligible for participation in the Plan and service with a
Related Employer (while related) shall be included in determining a
Participant's period of employment under this Section.
(c) All periods of less than a 12-month period shall
be aggregated at the rate of 1/12 of a year for each full period of 30
days.
Notwithstanding any other provision, the Years of Vested
Service of a former participant in the Nutrilite Plan shall not be less than his
years of vested service under the terms of the Nutrilite Plan as of December 31,
1996.
9.3 VESTED SERVICE AFTER REEMPLOYMENT.
If a Participant terminates employment and is subsequently
reemployed, his prior Years of Vested Service shall be counted after his
reemployment only in the following situations:
(a) If the Participant was vested in any
portion of his Discretionary and Matching Contribution Accounts before
the Period of Severance; or
(b) If the Participant's Period of Severance is
less than five years.
These prior Years of Vested Service shall be taken into account after the
Participant has completed one Year of Vested Service after being reemployed.
However, if an amount is forfeited under Section 7.5 and not restored under
Section 7.6, the amount of the Forfeiture shall not change even if the
Participant subsequently earns additional Years of Vested Service.
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<PAGE> 59
9.4 ACCOUNTING AFTER REEMPLOYMENT.
A reemployed Participant shall have two subaccounts for his
Discretionary and Matching Contribution Accounts if the Participant:
(a) Left the vested portion of his Discretionary and
Matching Contribution Accounts in the Plan after terminating
employment; and
(b) Incurred a Period of Severance of at least five
years before becoming reemployed by Employer.
One subaccount shall be the Participant's pre-termination Account balance, which
shall be 100% vested. The other subaccount shall include post-reemployment
additions to the Participant's Discretionary and Matching Contribution Accounts.
Years of Vested Service earned by the Participant after
reemployment, plus any Years of Vested Service earned before reemployment and
retained under Section 9.3, shall be used to determine the vested portion of the
Participant's post-reemployment subaccount. When the Participant's
post-reemployment subaccount becomes 100% vested, the two subaccounts shall be
merged.
Each other reemployed Participant shall have one Discretionary
Contribution Account and one Matching Contribution Account. Each Account shall
contain any repayment and restoration of pre-termination amounts, as required by
Section 7.6, plus all post-reemployment additions. Years of Vested Service
earned by the Participant after reemployment, plus any Years of Vested Service
earned before reemployment and retained under Section 9.3, shall be used to
determine the vested portion of the Participant's Account.
9.5 AMENDMENTS TO VESTING SCHEDULE.
No amendment to the Plan shall have the effect of decreasing a
Participant's vested benefits determined as of the later of the date the
amendment is adopted or the date it becomes effective.
If the Plan's vesting schedule is amended or the Plan is
amended in any way that directly or indirectly affects the computation of the
Participant's nonforfeitable percentage, each Participant with at least three
Years of Vested Service may elect, within a reasonable period after the adoption
of the amendment or change, to have the nonforfeitable percentage computed under
the Plan without regard to the amendment or change.
The period during which the election may be made shall
commence with the date the amendment is adopted or deemed to be made and shall
end on the latest of:
(a) 60 days after the amendment is adopted;
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<PAGE> 60
(b) 60 days after the amendment becomes effective; or
(c) 60 days after the Participant receives written
notice of the amendment.
ARTICLE X
WITHDRAWALS DURING EMPLOYMENT
-----------------------------
10.1 WITHDRAWALS GENERALLY.
Except as provided in this Article, no withdrawals shall be
permitted from the Plan while the Participant is actively employed by Employer.
10.2 WITHDRAWALS AFTER AGE 59 1/2.
A Participant who is at least age 59 1/2 may make a withdrawal
one time per Plan Year from his Pay Deferral Account. The minimum withdrawal
under this Section is $1,000 or the total amount in his Pay Deferral Account,
whichever is less. The amount withdrawn may be subject to the rules regarding
Eligible Rollover Distributions described in Section 8.8.
10.3 HARDSHIP WITHDRAWALS.
(a) GENERAL RULE. A Participant may make a
withdrawal from his Pay Deferral Account if he has a financial
hardship. For purposes of this Section, a Participant has a "financial
hardship" if both of the following requirements are satisfied:
(i) The Participant has an immediate
and heavy financial need; and
(ii) The distribution is necessary to
satisfy the financial need.
A Participant who requests a hardship withdrawal must
provide the Plan Administrator with sufficient information for the Plan
Administrator to determine whether the request meets the hardship
withdrawal requirements of Section 401(k) of the Code. The Plan
Administrator shall make its determination in a uniform manner with
regard to similarly situated Participants. The Plan Administrator's
determination shall be based upon subsections (b), (c) and (d) and
applicable law.
(b) DEEMED IMMEDIATE AND HEAVY FINANCIAL NEED. A
Participant shall be considered to have an immediate and heavy
financial need if the financial need is for one or more of the
following reasons:
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(i) Uninsured medical expenses previously
incurred by the Participant, the Participant's Spouse or
dependents or expenses necessary for these persons to obtain
medical care;
(ii) Costs directly related to the purchase
of the Participant's principal residence (excluding mortgage
payments);
(iii) Payment of tuition, related
educational fees, and room-and-board expenses for the next 12
months of post-secondary education for the Participant or the
Participant's Spouse, children or dependents;
(iv) Payments necessary to prevent the
eviction of the Participant from his principal residence or
foreclosure on the mortgage of the Participant's principal
residence; or
(v) Any other reason that is deemed to be an
immediate and heavy financial need of the Participant under
regulations and rulings of the Internal Revenue Service (i.e.,
"safe harbor" events).
(c) NECESSARY TO SATISFY THE FINANCIAL NEED. A
distribution shall be necessary to satisfy the financial need only if
all the following requirements are satisfied:
(i) The distribution is not in excess of the
amount of the Participant's immediate and heavy financial
need. The amount of an immediate and heavy financial need may
include any amounts necessary to pay federal, state or local
income taxes or penalties reasonably anticipated to result
from the distribution;
(ii) The Participant has obtained all
distributions (other than hardship withdrawals) and all
nontaxable loans currently available from the Plan or any
other Qualified Plan maintained by Employer;
(iii) Pay Deferral Contributions on behalf
of the Participant under all qualified and nonqualified plans
of deferred compensation maintained by Employer are suspended
for at least 12 months after the receipt of the hardship
withdrawal. Pay Deferral Contributions may resume at any time
after the 12-month suspension; and
(iv) The Participant's dollar limit on Pay
Deferral Contributions under Section 5.3 for the calendar year
after the calendar year of the hardship withdrawal is reduced
by the amount of the Participant's Pay Deferral Contributions
during the calendar year of the hardship withdrawal.
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<PAGE> 62
(d) AMOUNT OF WITHDRAWAL. In addition to the limit on
the amount which may be withdrawn described in subsection (c)(i) above,
the limits in this subsection shall apply.
First, the amount to be withdrawn may not exceed
the amount of the Pay Deferral Contributions in the Participant's Pay
Deferral Account. Earnings relating to Pay Deferral Contributions may
not be withdrawn. In addition, Employer Discretionary and Matching
Contributions which are treated as Pay Deferral Contributions for
purposes of Section 5.4 may not be withdrawn.
Second, effective as of February 1, 1997, the minimum
withdrawal under this Section is the lesser of $500 or the amount of
Pay Deferral Contributions credited to the Participant's Pay Deferral
Account.
Any amount withdrawn under this Section may be subject to the
excise tax on early distributions described in Section 8.1 and the rules
applying to Eligible Rollover Distributions described in Section 8.8.
10.4 WITHDRAWALS FROM EMPLOYEE CONTRIBUTION ACCOUNT.
A Participant may make a withdrawal from his Employee
Contribution Account by making a written request to the Plan Administrator at
least 30 days before the proposed withdrawal date. Any withdrawal of Employee
Contributions which were made before January 1, 1987, shall constitute a
withdrawal of contributions first and a withdrawal of earnings and gains on
contributions only after all contributions have been withdrawn. Any withdrawal
of Employee Contributions which were made after December 31, 1986, shall
constitute pro rata portions of contributions and earnings and gains on
contributions.
The portion of any withdrawal which constitutes earnings and
gains on contributions may be subject to the excise tax on early distributions
described in Section 8.1 and the rules applying to Eligible Rollover
Distributions described in Section 8.8.
ARTICLE XI
LOANS TO PARTICIPANTS
---------------------
11.1 LOANS GENERALLY.
A Participant may borrow from his Pay Deferral Account as
provided in this Article. However, a Participant may borrow from his Pay
Deferral Account only if:
(a) The Participant is actively employed by Employer
as of the date of the loan; or
(b) The Participant is a party in interest (as
defined in Section 3(14) of ERISA) with respect to the Plan as of the
date of the loan.
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<PAGE> 63
Loans shall be made available to all Participants on a
reasonably equivalent basis. However, the Plan Administrator shall have
discretion to determine whether a loan should be made to a Participant and the
amount of the loan. The standards used by the Plan Administrator shall be
applied uniformly without discrimination to all Participants requesting loans,
but the Plan Administrator may take into account a Participant's credit rating,
financial need and ability to repay the loan.
11.2 NUMBER OF LOANS.
The Participant may only have one loan outstanding at any
time. However, a Participant may have two loans outstanding if the second loan
is made at the time the Participant has an immediate and heavy financial need
for one of the reasons described in Section 10.3(b).
A new loan may not be made until 30 days after a prior loan is
repaid.
11.3 AMOUNT OF LOAN.
The minimum loan shall be $1,000. The maximum shall be the
smaller of the following amounts:
(a) 50% of the vested amount in the Participant's Pay
Deferral Account; or
(b) $50,000 reduced by the largest loan balance
outstanding in the preceding 12 months.
Further, the amount that may be borrowed from the Plan shall be reduced by the
outstanding balance of any loan from the Plan or from another Qualified Plan
maintained by Employer or a Related Employer.
11.4 INTEREST ON LOAN.
The loan must bear a reasonable interest rate, as periodically
determined by the Plan Administrator. The interest rate shall not change during
the term of the loan.
Interest shall not be deductible if the loan is to a Key
Employee (as defined in Section 12.2(b)) or if the loan is secured by the
balance of the Participant's Pay Deferral Account.
11.5 TERM OF LOAN.
Each loan shall be for a term of at least one year. The loan,
by its terms, must be repaid within five years
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<PAGE> 64
11.6 SECURITY FOR LOAN.
Each loan shall be adequately secured. The security shall
consist of the balance of the Participant's Accounts. Employer shall also
require repayment by payroll deduction as security for the loan.
Each loan payment by a Participant shall be made when it is
due. However, the Plan Administrator shall provide a "grace period" for a
delinquent loan payment by a Participant. The grace period shall end on the last
day of the calendar quarter following the calendar quarter in which the
delinquent loan payment should have been made. For example, if the loan payment
should have been made on August 25, 1997, the grace period would end on December
31, 1997.
If the delinquent payment is not made before the end of the
grace period or the Participant breaches any of the other terms and conditions
of the loan, the Plan Administrator shall treat the entire outstanding balance
of the loan as a "deemed distribution" from the Plan and IRS Form 1099-R (or any
other form required by the IRS) shall be issued to the Participant.
A "deemed distribution" is treated as a distribution to the
Participant only for certain tax purposes and is not an actual distribution from
the Participant's Accounts. The loan continues to be outstanding. The
Participant's Accounts shall not be offset for the deemed distribution until an
event occurs when the Participant could otherwise receive a distribution of
benefits from the Plan.
If a loan is unpaid at the time of distribution of benefits,
Trustee shall apply from the Participant's Accounts the amount required to make
full payment of the loan. The remaining balance of the Participant's Accounts
shall be distributed to the Participant or his Beneficiary as provided in
Article VIII.
11.7 REPAYMENT OF LOAN.
Each loan shall be amortized in level payments, not less
frequently than quarterly. Each loan shall be repaid by payroll deduction. The
Participant shall sign all appropriate documents to authorize the payroll
deduction. Prepayment of the entire balance by check or money order is
permitted.
If a Participant with a loan takes a leave of absence, the
Participant may make loan payments by check or money order, repay the
outstanding balance in full, or apply to convert the loan into a withdrawal
under Section 11.9. Alternatively, if the Participant is on an unpaid leave of
absence, the Participant may suspend repayment for up to one year or the term of
the leave of absence, whichever is less. The term of the loan may be extended by
the length of time that payments are suspended, provided that the extended term
of a loan does not exceed five years.
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<PAGE> 65
If a Participant terminates employment for any reason, the
outstanding loan principal and interest shall be paid by the Participant within
60 days after the Participant's termination of employment.
If a loan is not paid in full at the time of distribution of
benefits, Trustee shall first apply from the assets of the Participant's
Accounts which would otherwise be distributed to the Participant or his
Beneficiary the amount required to make full payment of the loan.
11.8 ACCOUNTING FOR LOANS.
A Participant's Accounts are considered segregated for
investment purposes to the extent of the outstanding principal amount of a loan.
Interest paid by the Participant is added only to the Participant's Accounts.
The Participant may designate the investment fund or funds
from which the loan shall be made. Loan payments are invested in accordance with
Section 6.4, based upon the Participant's election in effect when the payment is
made.
11.9 CONVERSION OF LOAN INTO WITHDRAWAL.
If a Participant who has not terminated employment
demonstrates he has immediate and heavy financial needs, the loan may be
converted to a withdrawal to the extent permitted under Sections 10.2, 10.3 and
10.4. Any amount which is converted to a withdrawal under this Section may be
subject to the excise tax on early distributions described in Section 8.1.
ARTICLE XII
TOP-HEAVY PROVISIONS
--------------------
12.1 APPLICABILITY OF THIS ARTICLE.
The provisions of this Article shall apply in any Plan Year in
which the Plan is Top-Heavy and shall supersede any conflicting provisions of
the Plan. The Plan Administrator shall be responsible for determining whether
the Plan is Top-Heavy.
12.2 DEFINITIONS.
For purposes of this Article, the following terms shall have
the meanings described in this Section:
(a) "TOP-HEAVY PLAN" or "TOP-HEAVY" means the Plan or
refers to the Plan if, as of the Determination Date, the present value
of accrued benefits of Key Employees under the Plan exceeds 60% of the
aggregate present value of accrued
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<PAGE> 66
benefits of all Participants in the Plan (the "60% test"), as
determined in accordance with Section 416(g) of the Code. The present
value of accrued benefits with regard to the Plan is the amount in the
Participant's Accounts as of the Determination Date.
The following rules shall apply in conducting the 60%
test:
(i) An Employee who was formerly a Key
Employee but is no longer a Key Employee shall be excluded
entirely from the 60% test.
(ii) Any amounts distributed from a
Participant's Accounts during the Plan Year containing the
Determination Date or the previous four Plan Years shall be
included in the Participant's Accounts for purposes of the 60%
test.
(iii) If a Participant has not performed any
services for Employer at any time during the five-year period
ending on the Determination Date, the Participant's Accounts
shall be excluded for purposes of the 60% test.
(iv) The 60% test shall be applied after
aggregating all other Qualified Plans of Employer and Related
Employers in the Required Aggregation Group. If the group of
aggregated plans is Top-Heavy after applying the 60% test, the
group shall be known as the "top-heavy group" and every plan
in the top-heavy group shall be treated as a Top-Heavy Plan.
(v) To the extent that further aggregation
of any other Qualified Plan of Employer would eliminate the
Top-Heavy status of the Plan, Employer shall apply the 60%
test after aggregating any other Qualified Plan of Employer in
the Permissive Aggregation Group.
(vi) Any Qualified Plan of Employer or a
Related Employer which has terminated during the five years
ending on the Determination Date shall be taken into account
for purposes of determining whether the Plan is Top-Heavy if
the terminated plan would have been part of the Required
Aggregation Group.
(vii) Rollovers initiated by an eligible
Employee or Participant under Section 6.3 which were made
after December 31, 1983, shall not be taken into account for
purposes of determining whether the Plan is Top-Heavy.
(b) "KEY EMPLOYEE" means any Employee or former
Employee (and the Beneficiaries of that Employee) who, at any time
during the Plan Year or any of the four preceding Plan Years, is:
(i) An officer of Employer having annual
Compensation exceeding 50% of the dollar limit under Section
415(b)(1)(A) of the Code for the
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<PAGE> 67
calendar year in which the Plan Year ends. The maximum number
of Employees who are treated as officers for purposes of this
Section depends on the total number of Employees, as follows:
(A) If less than 30 Employees, not
more than three Employees are treated as officers;
(B) If at least 30 but less than 500
Employees, not more than 10% of the Employees are
treated as officers; and
(C) If 500 or more Employees, not
more than 50 Employees are treated as officers;
(ii) One of the ten Employees owning (or
considered as owning under Section 318 of the Code) the
largest interest in Employer and having annual Compensation
exceeding the dollar limit under Section 415(c)(1)(A) of the
Code for the calendar year in which the Plan Year ends. If two
Employees have the same interest in Employer, the Employee
having the greater annual Compensation from Employer shall be
treated as having a larger interest;
(iii) A person having more than a 5%
ownership interest in Employer; or
(iv) A person having more than a 1%
ownership interest in Employer and whose annual Compensation
from Employer is more than $150,000.
In the case of ownership percentages, each employer that would
otherwise be aggregated under Sections 414(b), (c), (m) and (o) of the
Code is treated as a separate employer. However, for purposes of
determining whether an individual has Compensation of $150,000 or
whether an individual is a Key Employee by reason of being an officer
or a top ten owner, Compensation from each entity required to be
aggregated under Sections 414(b), (c), (m) and (o) of the Code is taken
into account.
(c) "PERMISSIVE AGGREGATION GROUP" means the Required
Aggregation Group of plans, plus any other plan or plans of the
Employer or a Related Employer which, when considered as a group with
the Required Aggregation Group, would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
(d) "REQUIRED AGGREGATION GROUP" means (i) each
Qualified Plan of the Employer and Related Employers in which at least
one Key Employee participates or participated at any time during the
determination period (regardless of whether the plan has terminated);
and (ii) any other Qualified Plan of the Employer and Related
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Employers which enables a plan described in (i) above to meet the
requirements of Section 401(a)(4) or Section 410 of the Code.
(e) "DETERMINATION DATE" means, for any Plan Year
after the first Plan Year, the last day of the preceding Plan Year.
The Determination Date for the first Plan Year of the Plan shall be
the last day of that year.
(f) "COMPENSATION" means compensation as defined in
Section 5.9 relating to the limitation on annual contributions.
However, solely for purposes of determining whether an Employee or
former Employee is a Key Employee, Compensation under this subsection
shall include pay reduction amounts under Sections 125, 402(e)(3),
402(h)(1)(B) or 403(b) of the Code to the extent those amounts would
otherwise be excluded under Section 5.9.
(g) "SUPER TOP-HEAVY PLAN" means a plan which is
Top-Heavy after substituting 90% for 60% in the definition contained in
subsection (a).
12.3 MINIMUM VESTING.
If the Plan becomes Top-Heavy, the vesting schedule in this
Section shall be substituted for the vesting schedule stated in Section 9.1 in
computing the vested percentage of a Participant who has an Hour of Service
after the Plan becomes Top-Heavy. The vesting schedule in this Section shall
apply only if it results in a greater vested percentage.
<TABLE>
<CAPTION>
YEARS OF VESTED SERVICE VESTED PERCENTAGE
----------------------- -----------------
<S> <C>
Less than 2 0%
2 20%
3 40%
4 60%
5 or more 100%
</TABLE>
If the Plan is Top-Heavy and later is no longer Top-Heavy, each Participant's
vested percentage shall again be determined under Section 9.1, provided that a
Participant's vested percentage shall not be reduced. If the determination of a
Participant's vested percentage is changed from the use of Section 9.1 to the
use of this Section, or vice-versa, each Participant with at least three Years
of Vested Service may elect under Section 9.5 to continue having his vested
percentage computed under the former vesting schedule.
12.4 MINIMUM CONTRIBUTIONS.
A minimum Employer contribution shall be made for each
Participant who is not a Key Employee for each Plan Year that the Plan is
Top-Heavy. The minimum contribution per Participant shall be 4% of the
Participant's Compensation. However, the minimum contribution shall not exceed,
in terms of a percentage of Compensation, the contribution
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made for the Key Employee for whom such percentage is the highest (including
Employer contributions under Section 4.3 and contributions made for the Key
Employee under any other defined contribution plan of Employer).
Notwithstanding the above, if a Participant is also a
participant in a defined benefit plan maintained by Employer during a Plan Year
in which the Plan is Top-Heavy and the minimum contribution is payable under the
Plan, the minimum contribution per Participant shall be 7.5% of the
Participant's Compensation.
Pay Deferral Contributions on behalf of Key Employees shall be
counted in determining the minimum required Employer contribution for Employees
other than Key Employees. However, Pay Deferral Contributions on behalf of
Employees other than Key Employees shall not be treated as Employer
contributions for purposes of satisfying the minimum required Employer
contribution.
The minimum contribution under this Section shall be allocated
to the Accounts of eligible Participants. In order to be eligible to receive the
minimum contribution, a Participant need not have at least 1,000 Hours of
Service in that Plan Year nor must Pay Deferral Contributions have been made on
behalf of the Participant, but the Participant must be employed by Employer on
the last day of the Plan Year.
12.5 ADJUSTED SECTION 415 LIMITS.
For any Plan Year beginning before January 1, 2000 in which
the Plan is a Super Top-Heavy Plan, the figure "1.0" shall be substituted for
the figure "1.25" in the definitions of defined benefit plan fraction and
defined contribution plan fraction in Section 415(e) of the Code. These
fractions have been incorporated in the Plan by reference under Section 5.9(f).
In all other situations, the figure "1.25" shall continue to be used in the
fractions.
ARTICLE XIII
TRUST FUND AND TRUSTEE
----------------------
13.1 TRUST FUND.
The Trust Fund shall be held and invested by the Trustee
appointed by Employer. The rights, powers and duties of Trustee shall be
governed by the Trust Agreement. Employer and Trustee may modify the Trust
Agreement at any time consistent with the purposes of the Plan.
Employer may remove Trustee at any time by using procedures
established by the Trust Agreement. Trustee's removal shall be effective upon
the appointment of a successor trustee.
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13.2 INVESTMENT MANAGER.
Employer may periodically appoint one or more Investment
Managers to invest part, or all, of the Trust Fund. Employer may remove an
Investment Manager at any time, subject to the terms of the written agreement
with the Investment Manager.
13.3 USE OF TRUST FUND.
The Trust Fund shall be used for the exclusive benefit of the
Participants, to pay the benefits provided by the Plan and to defray the
reasonable expenses of administering the Plan. All benefits under the Plan shall
be paid by Trustee. The Trust Agreement shall provide that the reasonable
expenses and annual fees of Trustee and any Investment Manager shall be paid
from the Trust Fund unless paid directly by Employer.
ARTICLE XIV
ADMINISTRATION
--------------
14.1 POWERS OF PLAN ADMINISTRATOR.
The Plan Administrator shall have the discretionary power and
authority to administer the Plan in accordance with its terms and applicable
laws and regulations. The Plan Administrator shall exercise its authority in a
nondiscriminatory manner. The Plan Administrator shall have the powers necessary
to administer and meet its obligations under the Plan, including, but not
limited to, the following:
(a) Maintain records and accounts pertaining to
the Plan.
(b) Interpret the terms and provisions of the Plan.
(c) Decide all questions of eligibility for
participation in the Plan.
(d) Decide all questions of eligibility for benefit
payments and determine the amount and manner of the payment of
benefits.
(e) Establish procedures by which Participants may
apply for retirement benefits under the Plan and appeal a denial of
retirement benefits.
(f) Determine the rights under the Plan of any
Participant applying for or receiving retirement benefits.
(g) Require and obtain the annual reports of Trustee.
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(h) Authorize Trustee to make benefit payments from
the Trust Fund to all Participants entitled to retirement benefits
under the Plan, and to pay the administrative expenses of the Plan.
(i) Administer the appeal procedure provided for in
this Article.
(j) Perform all acts necessary to meet the reporting
and disclosure obligations imposed by Sections 101 through 111 of
ERISA.
(k) Delegate specific responsibilities for the
operation and administration of the Plan to Employees or agents.
(l) Determine the total Years of Vested Service of a
Participant applying for or receiving retirement benefits.
14.2 STANDARD OF CARE.
The Plan Administrator shall administer the Plan in accordance
with the terms of this document and the Trust Agreement solely in the interest
of the Participants and for the exclusive purposes of providing retirement
benefits to Participants and defraying the reasonable expenses of
administration. The Plan Administrator shall administer the Plan with the care,
skill, prudence and diligence under the circumstances then prevailing that a
prudent person, acting in a like capacity and familiar with such matters, would
use in the conduct of an enterprise of a like character and with like aims.
Under no circumstances shall the Plan Administrator engage in
a transaction prohibited by Section 4975 of the Code or Section 406 of ERISA, or
otherwise not permitted by ERISA, unless the transaction qualifies for a
statutory exemption or has been granted an exemption by the United States
Department of Labor (or other agency authorized to grant exemptions). The Plan
Administrator shall not be liable for any act or omission relating to its duties
under the Plan, unless that act or omission violates the standard of care
described in this Section. The Plan Administrator shall not be liable for any
act or omission of another relating to the Plan, except as provided in Section
405(a) of ERISA.
14.3 APPEAL PROCEDURE.
Any Participant whose application for benefits under the Plan
has been denied, in whole or in part, shall be given written notice of the
denial of benefits by the Plan Administrator. The Plan Administrator shall
provide the notice of denial within 90 days after the claim is received by the
Plan, unless special circumstances require an extension of time for processing
the claim. If an extension of time is required, the Plan Administrator shall
provide the Participant written notice of the extension before the expiration of
the initial 90-day period. However, in no event shall the extension exceed a
period of 90 days from the end of the initial period.
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The notice shall be in easily understood language and shall
indicate the reasons for denial and the specific provisions of the Plan on which
the denial is based. The notice shall explain that the Participant may request a
review of the denial and the procedure for requesting review. The notice shall
describe any additional information necessary to approve the Participant's claim
and explain why the information is necessary.
A Participant may make a written request to the Plan
Administrator for a review of any denial of benefits under the Plan. The written
request must be made within 60 days after the mailing date of the notice of
denial. The request shall refer to the provisions of the Plan on which it is
based and shall set forth the facts relied upon as justifying a reversal or
modification of the determination being appealed.
A Participant who requests a review of a denial of benefits in
accordance with this appeal procedure may examine pertinent documents and submit
pertinent issues and comments in writing. A Participant may have a
representative act on his behalf in exercising his right to request a review and
the rights granted by this appeal procedure. The Plan Administrator shall
provide a review of the decision denying the claim for benefits within 60 days
after receiving the written request for review.
ARTICLE XV
RIGHTS OF PARTICIPANTS
----------------------
15.1 EMPLOYMENT RIGHTS.
The existence of the Plan shall not grant a Participant any
legal right to continue as an Employee or affect the right of Employer to
discharge a Participant.
15.2 NO PARTICIPANT INTEREST IN TRUST FUND.
No Participant, Beneficiary, or any other person shall have an
interest in, or right to, any specific assets of the Trust Fund.
15.3 SPENDTHRIFT PROVISION.
No benefit or interest under the Plan is subject to assignment
or alienation, whether voluntary or involuntary, except as provided in the Plan
or in a Qualified Domestic Relations Order.
15.4 OTHER BENEFITS NOT CONTINGENT ON PAY DEFERRAL
CONTRIBUTIONS.
No employee benefit shall be directly or indirectly
conditioned on a Participant electing to have Pay Deferral Contributions made on
his behalf under the Plan. However, this limitation shall not apply to any
Matching Contribution under Section 4.4 or to any benefit
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provided in lieu of a Pay Deferral Contribution under a cafeteria plan described
in Section 125 of the Code.
15.5 MILITARY SERVICE.
Notwithstanding any other provision of the Plan to the
contrary, contributions, benefits, and service credit with respect to qualified
military service shall be provided in accordance with Section 414(u) of the
Code. Similarly, loan repayments shall be suspended under the Plan in accordance
with Section 414(u)(4) of the Code.
ARTICLE XVI
SUCCESSOR EMPLOYER AND CORPORATE DISPOSITIONS
---------------------------------------------
16.1 ADOPTING EMPLOYERS.
A Related Employer may adopt the Plan for the benefit of its
eligible employees and their beneficiaries. The relevant documents shall specify
the effective date of the adoption and whether or not the adoption creates a
separate plan. By adopting the Plan, the Related Employer agrees to any changes
made to the Plan by Amway Corporation without any additional action required on
its part.
16.2 SUCCESSOR EMPLOYER.
If Employer transfers substantially all of its business by
sale, merger, consolidation or reorganization, the Plan may be adopted by the
successor entity upon acceptance in writing of the terms of the Plan by the
successor. The successor shall then succeed to all of the powers, rights and
duties of Employer under the Plan. If the successor does not adopt the Plan,
then the Plan shall terminate as provided in Section 17.3.
16.3 DISPOSITION OF PART OF EMPLOYER.
Except as otherwise provided in Section 16.2, a Participant
shall be eligible to request a distribution of benefits under Article VIII in
either of the following situations:
(a) Employer sells to an unrelated corporation
substantially all of the assets used by Employer in a trade or business
of Employer and the Participant continues his employment with the
acquiring corporation. A sale of at least 85% of the assets used in a
trade or business shall be deemed a sale of "substantially all" of the
assets of the trade or business.
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(b) Employer sells its interest in a subsidiary
corporation to an unrelated entity and the Participant continues
employment with the subsidiary.
Any distribution under this Section shall be in the form of a lump sum payment.
ARTICLE XVII
PLAN AMENDMENT, MERGER AND TERMINATION
--------------------------------------
17.1 PLAN AMENDMENT.
Employer reserves the right to amend the Plan at any time by
action of its Board of Directors or by the written approval of a committee or
officer to whom Employer's Board of Directors has delegated the authority to
amend the Plan. Also, an officer may sign any amendment that is necessary to
maintain the status of the Plan as a Qualified Plan. However, Employer's right
to amend the Plan is subject to the following:
(a) No amendment which affects the rights, duties or
responsibilities of Trustee may be made without Trustee's consent.
(b) No amendment shall be effective unless the Plan,
as amended, shall be for the exclusive benefit of Participants.
(c) No amendment shall reduce the amount of a
Participant's Accounts as of the effective date of the amendment.
(d) No amendment shall eliminate a form of benefit
under Section 8.3 as that form relates to benefits accrued before the
date of amendment.
Any amendment of the Plan may be made retroactively effective to the extent
permitted by the Code.
17.2 MERGER OR CONSOLIDATION.
The Plan may not be merged or consolidated with, nor may the
assets or liabilities of the Trust Fund be transferred to, any other employee
benefit pension plan unless each Participant would (if the Plan then terminated)
receive a retirement benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the retirement benefit the
Participant would have been entitled to receive immediately before the merger,
consolidation or transfer (if the Plan had then terminated).
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17.3 TERMINATION OF PLAN.
The Plan may be terminated, partially terminated or
discontinued at any time by action of Employer's Board of Directors. If the Plan
is terminated or partially terminated for any reason, or upon complete
discontinuance of contributions under the Plan, the Trust Fund shall continue to
be applied for the exclusive benefit of the Participants, and the Accounts of
each Participant shall become fully vested and nonforfeitable.
After allocation of all expenses arising out of the
termination to the Accounts of the Participants, the Trust Fund shall be
liquidated and the Accounts distributed to the Participants pursuant to Articles
VIII and X. However, if the Plan is terminated and a successor plan is not
established, a Participant may elect to receive the balance in the Participant's
Pay Deferral Account at the time of the termination or at the time provided in
Articles VIII and X.
In the event of a partial termination, only the Accounts of
the affected Participants shall become fully vested and be distributed. The
termination expenses shall be charged entirely to the Accounts of affected
Participants. The Accounts of the remaining Participants shall continue to be
subject to all of the provisions of the Plan.
Any distribution under this Section shall be in one of the
methods of payment described in Section 8.3.
ARTICLE XVIII
INSURANCE CONTRACTS
-------------------
18.1 INSURANCE CONTRACTS.
Prior to September 1, 1987, Trustee may have invested a
portion of a Participant's Accounts in life insurance contracts on the life of a
Participant. The Trust may continue to own life insurance contracts already
purchased.
A Participant may, under procedures established by the Plan
Administrator, instruct Trustee to reduce the face amount of any existing policy
or to cancel the policy and deposit the cash surrender value in the
Participant's other investment Accounts in accordance with the Participant's
current investment election. Trustee shall carry out the Participant's
instructions as soon as administratively feasible after they are received.
Any insurance contract shall be owned by Trustee. Trustee
shall have the right to exercise all the rights, options and elections under the
contract. In the event of any conflict between the terms of the Plan and the
provisions of any contract issued under this document, the terms of the Plan
shall control. Trustee shall be named as beneficiary of each insurance contract,
and the proceeds from any insurance contract shall be added to the Accounts of
the
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Participant insured by that contract and distributed to the Participant's
Beneficiary, in accordance with the terms of the Plan.
18.2 PREMIUMS.
The premium on each insurance policy shall be paid from the
cash surrender value of that policy. If the cash surrender value is insufficient
to pay the current premium, Trustee shall offer the Participant the opportunity
to purchase the policy from the Trust for its cash surrender value. If the
Participant does not elect to purchase the policy, Trustee shall cancel the
policy and credit its cash surrender value (if any) to the Participant's other
investment Accounts as soon as administratively feasible.
18.3 DEATH OF THE PARTICIPANT BEFORE RETIREMENT.
If the Participant dies before Retirement, the proceeds of the
policies shall be paid in a lump sum to the Trust and shall be distributed by
the Trustee on the date the distributions of the Participant's Accounts not
derived from life insurance first are paid.
18.4 RETIREMENT OR TOTAL DISABILITY.
If a Participant's employment terminates because of Retirement
or Total Disability, the Plan Administrator shall direct Trustee to:
(a) Elect an option or conversion under the policies
purchased for the Participant's Accounts, provided that:
(i) If a life annuity option is a
permissible option under a policy purchased for the
Participant's Accounts, then the joint and survivor annuity
provisions of this Plan shall be complied with;
(ii) No option shall be selected which
permits the insuring company to retain the proceeds at
interest only; and
(iii) No option shall be selected which
would cause the aggregate distribution at anytime to fail to
meet the minimum distribution requirements of this Plan;
(b) Surrender the policies for cash, and credit the
Participant's Accounts;
(c) Distribute the policies to the Participant; or
(d) Effect a combination of paragraphs (a), (b) or
(c) within a reasonable time after the Participant terminates
employment.
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The Trustee shall hold no insurance policies beyond the first
date of distribution.
18.5 OTHER TERMINATION OF EMPLOYMENT.
If a Participant's employment terminates for reasons other
than Retirement, death or Total Disability, Trustee shall dispose of the
insurance policies purchased for the Participant's Accounts as provided below:
(a) If the Participant's vested percentage is
100%, the Trustee shall:
(i) Distribute the policies to the
Participant;
(ii) Sell the policies to the Participant at
their cash value and credit the Participant's Accounts with
the proceeds;
(iii) Surrender the policies for cash and
credit the Participant's Accounts; or
(iv) Effect a combination of paragraphs (i),
(ii) or (iii) within a reasonable time after the Participant
terminates employment.
(b) If part, but not all, of the Participant's
Accounts is to be forfeited, the Participant shall have the option,
before forfeiture, to purchase the insurance policies held for his
Accounts at their cash value as of the date the forfeitable portion of
the Participant's Accounts shall be deemed to be forfeited. If the
Participant does not purchase the policies, then, at the Plan
Administrator's direction, the Trustee shall:
(i) Surrender the policies for cash,
crediting the Participant's Accounts with the proceeds
thereof, then forfeit the forfeitable percentage of the
total thus obtained; or
(ii) Add the cash value of the policies to
the balance of the Participant's Accounts, multiply that sum
by the Participant's vested percentage, then subtract from
that product the cash value of the policies and distribute the
resulting figure and the policies to the Participant.
18.6 RETIREMENT OF A PARTICIPANT.
Upon a Participant's Retirement, Trustee shall convert the
entire value of any insurance policy to cash to provide retirement income. No
insurance protection shall continue after Retirement. Trustee may, at the
direction of the Plan Administrator, distribute any policy to the Participant
without having converted it. Any insurance contract distributed to a Participant
shall be nontransferable. The terms of any insurance contract distributed to a
Participant or his Spouse shall comply with the terms of the Plan.
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18.7 PROVISIONS RELATING TO INSURER.
No insurer issuing insurance policies to the Plan shall be
deemed to be a party to the Plan, nor shall it be responsible for the validity
of the Plan. The insurer shall not be responsible for any action taken by
Trustee in connection with the policies. The insurer is authorized to act at the
written direction of the Trustee.
ARTICLE XIX
MISCELLANEOUS PROVISIONS
------------------------
19.1 AGE.
Any reference in the Plan to age shall mean the age of the
individual as of the individual's last birthday.
19.2 UNIFORMITY OF TREATMENT.
Any discretionary action taken under the Plan by the Plan
Administrator or Employer shall be uniform in its application to similarly
situated persons. No action shall be taken which shall discriminate in favor of
Highly Compensated Employees.
19.3 CONSTRUCTION.
Words used in the masculine shall apply to the feminine where
applicable. Wherever the context of the Plan dictates, the plural shall be read
as the singular and the singular as the plural.
19.4 ERISA.
It is intended that the Plan qualify in every aspect with the
mandatory provisions of ERISA relating to defined contribution plans. The
provisions of the Plan shall be construed accordingly.
19.5 GOVERNING LAW.
To the extent that Michigan law has not been preempted by
ERISA, the provisions in the Plan shall be governed by the laws of the state of
Michigan.
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IN WITNESS OF WHICH, Employer has adopted the Plan this _____
day of December, 1996.
AMWAY CORPORATION
By _______________________________
Its _____________________
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<PAGE> 80
APPENDIX A
TO THE
AMWAY CORPORATION
PROFIT-SHARING AND 401(K) PLAN
------------------------------
The Employees of the following Related Employers are eligible
to participate in the Plan as of the dates indicated:
<TABLE>
<CAPTION>
Date Participation Date Participation
Related Employer Began Ended
- ---------------- ------------------ ------------------
<S> <C> <C>
Merchandising Productions, Inc. September 1, 1985
Emerald Maritime Service, Inc. September 1, 1987
Amway Realty Network, Inc. June 23, 1986
Amway Management Company September 1, 1992
</TABLE>
Each Related Employer intends to establish a single plan with
Amway Corporation and any other employers that adopt the Plan. All Employer
contributions shall be allocated as if the Employees were employed by a single
employer.
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<PAGE> 1
Exhibit 23(a)
CONSENT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Amway Asia Pacific Ltd.
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of Amway Asia Pacific Ltd. of our report
dated October 4, 1996 which was included in the Annual Report on Form 20-F of
Amway Asia Pacific Ltd. for the fiscal year ended August 31, 1996.
Detroit, Michigan
January 16, 1997 /s/ KPMG Peat Marwick LLP
<PAGE> 1
Exhibit 24
Directors and Officers
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and officers of Amway Asia Pacific Ltd., a Bermuda corporation (the "Company"),
hereby constitutes and appoints Craig N. Meurlin, Robert A. Yolles, Thomas C.
Daniels and Robert J. Bush, and each of them, his true and lawful attorney or
attorneys-in-fact, with full power of substitution and resubstitution, for him
and in his name, place, and stead, to sign on his behalf as a director or
officer, or both, as the case may be, of the Company a Registration Statement on
Form S-8 pursuant to the Securities Act of 1933 with respect to the common
stock, par value $0.01 per share, of the Company to be offered in connection
with Amway Corporation's 401(k) Plan, and to sign any and all amendments or
post-effective amendments to such Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission or any state regulatory authority, granting
unto said attorney or attorneys-in-fact, and each of them, full power and
authority to do and perform each and every act and thing they deem necessary,
advisable or appropriate in connection therewith, as fully to all intents and
purposes as they might or could do in person, hereby ratifying and confirming
all that said attorney or attorneys-in-fact or any of them or their substitute
or substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the 15th day of January 1997.
/s/ Richard M. DeVos, Jr. /s/ Lawrence M. Call
- -------------------------------- ------------------------------
Richard M. DeVos, Jr. Lawrence M. Call
President, Director Chief Financial Officer, Vice
President and Treasurer
/s/ Stephen A. Van Andel /s/ Eoghan M. McMillan
- -------------------------------- ------------------------------
Stephen A. Van Andel Eoghan M. McMillan
Director Director
/s/ Jack C.K. So /s/ John C.C. Chan
- -------------------------------- ------------------------------
Jack C.K. So John C.C. Chan
Director Director
/s/ James B. Payne /s/ Eva Cheng
- -------------------------------- ------------------------------
James B. Payne Eva Cheng
Director Director
/s/ L.H. Choong
- --------------------------------
L.H. Choong
Director
