<PAGE>
As filed with the Securities and Exchange Commission on March 18, 1998
File No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------
SECURITY CAPITAL GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
MARYLAND 36-3692698
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
125 Lincoln Avenue 87501
Santa Fe, New Mexico (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(505) 982-9292
SCGROUP INCORPORATED
401(K) SAVINGS PLAN
(Full title of the plan)
Jeffrey A. Klopf
Secretary
125 Lincoln Avenue
Santa Fe, New Mexico 87501
(505) 982-9292
(Agent for Service)
-----------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
======================================================================================================
Proposed Proposed
Maximum Maximum
Title of Securities to be Amount to be Offering Price Aggregate Amount of
Registered Registered Per Share(1) Offering Price(1) Registration Fee
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Common Stock, par
value $.01 per share 120,000 Shares $30.28125 $3,633,750 $1,071.96
(including related preferred
share purchase rights)
======================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee on the
basis of the average of the high and low prices for the shares of Class B
Common Stock as reported on the New York Stock Exchange on March 16, 1998.
================================================================================
<PAGE>
Part II
INFORMATION REQUIRED IN
THE REGISTRATION STATEMENT
Item 3. Incorporation of documents by reference.
The following documents, which have heretofore been filed by Security Capital
Group Incorporated ("Security Capital" or "Registrant") with the Securities and
Exchange Commission (the "SEC") are incorporated by reference herein and shall
be deemed to be a part hereof:
(a) Prospectus of Security Capital dated September 17, 1997 as filed with
the SEC on September 19, 1997 pursuant to Rule 424(b)(5) promulgated
under the Securities Act of 1933, as amended (File No. 333-26037);
(b) Quarterly Report on Form 10-Q for the quarter ended June 30, 1997
(File No. 0-22455);
(c) Quarterly Report on Form 10-Q for the quarter ended September 30, 1997
(File No. 1-13355);
(d) Current Reports on Form 8-K filed October 1, 1997 and December 12,
1997, as amended (File No. 1-13355); and
(e) The description of Security Capital's shares of Class B Common Stock
(including the related preferred share purchase rights) contained in
the Security Capital's registration statements on Form 8-A filed with
the SEC on September 11, 1997 (File No. 1-13355).
All documents subsequently filed by Security Capital pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated herein by
reference and shall be deemed a part hereof from the date of filing of such
documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The validity of the issuance of the shares of Class B Common Stock registered
hereunder is being passed upon for Security Capital by the law firm of Mayer,
Brown & Platt, Chicago, Illinois. Mayer, Brown & Platt has represented and is
currently representing Security Capital and certain of its affiliates.
Item 6. Indemnification of Directors and Officers.
Article EIGHTH of the Registrant's Charter provides as follows with respect to
the indemnification of directors and officers of the Registrant:
"The Corporation shall have the power, to the maximum extent permitted by
Maryland law in effect from time to time, to obligate itself to indemnify
and to pay or reimburse reasonable expenses in advance of final disposition
of a proceeding to (a) any individual who is a present or former director
of officer of the Corporation or (b) any individual who, while a director
or officer of the Corporation and at the request
II-1
<PAGE>
of the Corporation, serves or has served as a director, officer, partner or
trustee of another corporation, partnership, joint venture, trust, employee
benefit plan or any other enterprise from and against any claim or
liability to which such person may become subject or which such person may
incur by reason of his or her status as a present or former director or
officer of the Corporation. The Corporation shall have the power, with the
approval of the Board of Directors, to provide such indemnification and
advancement of expenses to a person who served a predecessor of the
Corporation in any of the capacities described in (a) or (b) above and to
any employee or agent of the Corporation or a predecessor of the
Corporation."
Article NINTH of the Registrant's Charter provides as follows with respect to
limitation of liability of its directors and officers:
"To the maximum extent that Maryland law in effect from time to time
permits limitation of the liability of directors and officers of a Maryland
corporation, no director or officer of the Corporation shall be liable to
the Corporation or its stockholders for money damages. Neither the
amendment nor repeal of this Article NINTH nor the adoption or amendment of
any other provision of the Charter or Bylaws of the Corporation
inconsistent with this Article NINTH, shall apply to or affect in any
respect the applicability of the preceding sentence with respect to any act
or failure to act which occurred prior to such amendment, repeal or
adoption."
Article XIII of the Registrant's Bylaws provides as follows with respect to
limitation of liability of its directors and officers and advances for expenses:
"To the maximum extent permitted by Maryland law in effect from time to
time, the Corporation shall indemnify and, without requiring a preliminary
determination of the ultimate entitlement to indemnification shall pay or
reimburse reasonable expenses in advance of final disposition of a
proceeding to (a) any individual who is a present or former director or
officer of the Corporation and who is made a party to the proceeding by
reasons of his service in that capacity or (b) any individual who, while a
director of the Corporation and at the request of the Corporation, serves
or has served another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise and who is made a party to the
proceeding by reason of his or her service in that capacity. The
Corporation may, with the approval of the Board of Directors, provide such
indemnification and advance for expenses to a person who served a
predecessor of the Corporation in any of the capacities described in (a) or
(b) above and to any employee or agent of the Corporation or a predecessor
of the Corporation.
Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Bylaws or Charter of the
Corporation inconsistent with this Article, shall apply to or affect in any
respect the applicability of the preceding paragraph with respect to any
act or failure to act which occurred prior to such amendment, repeal or
adoption."
Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. The Charter contains
such a provision which limits such liability to the maximum extent permitted by
Maryland law.
Maryland law requires a corporation (unless its charter requires otherwise,
which the Charter does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he or she is made a party by reason of his or her service in that
capacity. Maryland law permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (a) the act or omission
of the director or officer was material to the matter giving rise to the
proceeding and (i) was committed
II-2
<PAGE>
in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the
director or officer actually received an improper personal benefit in money,
property or services or (c) in the case of any criminal proceeding, the director
or officer had reasonable cause to believe that the act or omission was
unlawful. However, a Maryland corporation may not indemnify for an adverse
judgment in a suit by or in the right of the corporation or for a judgment of
liability on the basis that personal benefit was improperly received, unless in
either case a court orders indemnification and then only for expenses. In
addition, Maryland law permits a corporation to advance reasonable expenses to a
director or officer upon the corporation's receipt of (a) a written affirmation
by the director or officer of his or her good faith belief that he or she has
met the standard of conduct necessary for indemnification by the corporation and
(b) a written statement by or in his or her behalf to repay the amount paid or
reimbursed by the corporation if it shall ultimately be determined that the
standard of conduct was not met.
The Registrant has entered into indemnity agreements with each of its officers
and directors which provide for reimbursement of all expenses and liabilities of
such officer or director, arising out of any lawsuit or claim against such
officer or director due to the fact that he was or is serving as an officer or
director, except for such liabilities and expenses (a) the payment of which is
judicially determined to be unlawful, (b) relating to claims under Section 16(b)
of the Securities Exchange Act of 1934, or (c) relating to judicially determined
criminal violations.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
See Index to Exhibits.
Item 9. Undertakings.
A. Rule 415 Offering.
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 of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii)
do not apply if the 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.
II-3
<PAGE>
2. That, for the purpose of determining any liability under the
Securities Act of 1933, 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. Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Indemnification of Directors and Officers.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions of the registrant's charter or by-laws or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors and
officers of Security Capital Group Incorporated, hereby constitutes and appoints
William D. Sanders, C. Ronald Blankenship, Paul E. Szurek, Jeffrey A. Klopf and
Ariel Amir, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, with full power to act alone, to sign any and all
amendments (including post-effective amendments) to this registration statement,
and to file the same, with all exhibits thereto, and any and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or any of them, or his substitute or nominee, may lawfully do
or cause to be done by virtue hereof.
II-5
<PAGE>
SIGNATURES
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 City of Santa Fe, State of New Mexico, on March 17, 1998.
SECURITY CAPITAL GROUP INCORPORATED
By /s/ Jeffrey A. Klopf
-----------------------------------
Jeffrey A. Klopf
Senior Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William D. Sanders Chairman of the Board of Directors, March 17, 1998
- --------------------------------- President and Chief Executive Officer
William D. Sanders (principal executive officer) and
Director
/s/ Paul E. Szurek Chief Financial Officer March 17, 1998
- --------------------------------- (principal financial officer)
Paul E. Szurek
/s/ Jayson C. Cyr Vice President March 17, 1998
- --------------------------------- (principal accounting officer)
Jayson C. Cyr
/s/ Samuel W. Bodman Director March 17, 1998
- ---------------------------------
Samuel W. Bodman
/s/ Hermann Buerger Director March 17, 1998
- ---------------------------------
Hermann Buerger
Director
- ---------------------------------
John P. Frazee, Jr.
/s/ Cyrus F. Freidheim, Jr. Director March 17, 1998
- ---------------------------------
Cyrus F. Freidheim, Jr.
/s/ Director
- ---------------------------------
H. Laurance Fuller
/s/ Ray L. Hunt Director March 17, 1998
- ---------------------------------
Ray L. Hunt
/s/ John T. Kelley III Director March 17, 1998
- ---------------------------------
John T. Kelley III
/s/ Peter S. Willmott Director March 17, 1998
- ---------------------------------
Peter S. Willmott
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
Number Description of Document
- ------- -----------------------
4.1 Articles of Amendment and Restatement (incorporated by reference to
Exhibit 4.1 to Security Capital's Registration Statement on Form S-11
(File No. 333-26037)(the "Form S-11"))
4.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 4.2
to the Form S-11)
4.3 Form of Rights Agreement between Security Capital and The First
National Bank of Boston, as Rights Agent, including form of Rights
Certificate (incorporated by reference to Exhibit 4.3 to the Form
S-11)
4.4 Form of stock certificate for shares of Class B Common Stock
(incorporated by reference to Exhibit 4.5 to the Form S-11)
4.5 SCGroup Incorporated 401(K) Savings Plan, as amended and restated
effective July 1, 1996
5 Opinion of Mayer, Brown & Platt
15.1 Letter of Arthur Andersen LLP regarding unaudited interim financial
information
15.2 Letter of KPMG Peat Marwick LLP regarding unaudited interim financial
information
15.3 Letter of Arthur Andersen LLP regarding unaudited interim financial
information
23.1 Consent of Mayer, Brown & Platt (included in its opinion filed as
Exhibit 5 hereto)
23.2 Consent of Arthur Andersen LLP
23.3 Consent of KPMG Peat Marwick LLP
23.4 Consent of Price Waterhouse
23.5 Consent of Ernst & Young LLP
23.6 Consent of Ernst & Young LLP
24 Power of Attorney (included on page II-5)
II-7
<PAGE>
SCGROUP INCORPORATED
401(K) SAVINGS PLAN
as amended and restated
effective July 1, 1996
<PAGE>
PREAMBLE
The purpose of this Plan and Trust is to provide, in accordance with its
provisions, a defined contribution plan providing retirement and other related
benefits for those Employees of the Employer who are eligible to participate
hereunder. This document is a complete amendment and restatement of the SCGroup
Incorporated Employee Savings Plan, which was originally effective as of August
1, 1993, and which shall be known on and after July 1, 1996, as the SCGroup
Incorporated 401(k) Savings Plan.
It is intended that the Plan qualify for approval under Sections 401 and 410
through 417 of the Internal Revenue Code. It is intended that the Trust qualify
for approval under Section 501 of the Code. It is further intended that the Plan
comply with the provisions of the Employee Retirement Income Security Act of
1974 (ERISA). In case of any ambiguity in the Plan's language, it will be
interpreted to accomplish the Plan's intent of qualifying under the Code and
complying with ERISA.
This Plan and Trust is exclusively for the benefit of the eligible Employees and
their Beneficiaries. Neither the Employer, the Plan Administrator nor the
Trustee will apply or interpret the terms of the Plan in any manner that permits
discrimination in favor of Highly Compensated Employees. All Employees under
similar circumstances will be treated alike.
The undersigned Employer and Trustee hereby adopt this restatement of the
SCGroup Incorporated 401(k) Savings Plan to be effective as of July 1, 1996.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PAGE NO.
ARTICLE 1 - DEFINITIONS 1-1
ARTICLE 2 - PARTICIPATION 2-1
ARTICLE 3 - PARTICIPANT ACCOUNTS 3-1
ARTICLE 4 - ACCOUNTING AND VALUATION 4-1
ARTICLE 5 - RETIREMENT BENEFITS 5-1
ARTICLE 6 - DEATH BENEFIT 6-1
ARTICLE 7 - LIMITATIONS ON BENEFITS 7-1
ARTICLE 8 - MISCELLANEOUS 8-1
ARTICLE 9 - ADMINISTRATION 9-1
ARTICLE 10- AMENDMENT OR TERMINATION OF PLAN 10-1
ARTICLE 11- TRUSTEE AND TRUST FUND 11-1
ARTICLE 12- PROVISIONS RELATING TO EMPLOYER STOCK 12-1
</TABLE>
<PAGE>
ARTICLE 1
DEFINITIONS
As used in this document, unless otherwise defined or required by the context,
the following terms have the meanings set forth in this Article 1. Some of the
terms used in this document are not defined in Article 1, but for convenience
are defined as they are introduced in the text.
1.01 Account
Account means a separate account maintained for each Participant reflecting
applicable contributions, applicable forfeitures, investment income (loss)
allocated to the account and distributions.
1.02 Accounting Date, Valuation Date
The term Accounting Date means the last day of each Accounting Period and
any other days within the Accounting Period upon which, consistent with
established methods and guidelines, the Plan Administrator applies the
accounting procedures specified in Section 4.02. The term Valuation Date,
unless otherwise specified, means any business day on which the New York
Stock Exchange is open.
1.03 Accounting Period
Accounting Period means each of the 3-month periods which end on March
31st, June 30th, September 30th and December 31st.
1.04 Accrued Benefit
A Participant's Accrued Benefit means the total value of his Accounts as of
a given date. A Participant's Accrued Benefit will not be reduced solely on
account of an amendment to the Plan.
A Participant's Vested Accrued Benefit is equal to his Vested Percentage of
that portion of his Accrued Benefit which is subject to the Vesting
Schedule plus 100% of the remaining portion of his Accrued Benefit.
1.05 Beneficiary
Beneficiary means the person, persons, trust or other entity who is
designated by a Participant, subject to the provisions of Article 6, to
receive any amount payable upon the death of a Participant.
1.06 Cash-Out Distribution
Cash-Out Distribution means, as described in Article 5, a distribution to a
Participant upon termination of employment of his Vested Accrued Benefit.
1.07 Code and ERISA
Code means the Internal Revenue Code of 1986, as it may be amended from
time to time, and all regulations issued thereunder. Reference to a section
of the Code includes that section and any comparable section or sections of
any future legislation that amends, supplements or supersedes such section
and any regulations issued thereunder.
ERISA means Public Law No. 93-406, the Employee Retirement Income Security
Act of 1974, as it may be amended from time to time, and all regulations
issued thereunder. Reference to a section of ERISA includes that section
and any comparable section or sections of any future legislation that
amends, supplements or supersedes such section and any regulations issued
thereunder.
<PAGE>
1.08 Compensation
Except where otherwise specifically provided in this Plan, Compensation
means Aggregate Compensation as defined in Section 7.03(a).
For Plan Years beginning prior to January 1, 1998, Compensation also
includes any amounts contributed by the Employer or any Related Employer on
behalf of any Employee pursuant to a salary reduction agreement which are
not includable in the gross income of the Employee due to Code Section 125,
402(e)(3), 402(h), 402(k) or 403(b).
Notwithstanding the foregoing, for all purposes under this Plan,
Compensation in excess of the Statutory Compensation Limit will be
disregarded.
Statutory Compensation Limit means $150,000 ($200,000 for Plan Years
beginning before 1994), as adjusted in accordance with Code Section
401(a)(17)(B).
1.09 Effective Date
The Plan was originally established effective August 1, 1993.
Except as specified elsewhere in this document, the Effective Date of this
restatement of the Plan is July 1, 1996.
1.10 Eligible Employee Classification
An Eligible Employee Classification is a classification of Employees, the
members of which are eligible to participate in the Plan. The Plan covers
all employee classifications except Leased Employees, part time Employees
who work less than 1,000 hours during an eligibility Computation Period (as
defined in Section 2.01), and Employees covered by collective bargaining
for whom retirement benefits have been the subject of good faith
bargaining.
1.11 Eligible Participant
An Eligible Participant is a Participant who is eligible to share in the
allocation of a given Employer contribution; Eligible Participant means any
Participant who:
. completes 1,000 Hours of Service during the Plan Year and is
actively employed on the last day of the Plan Year; or
. retires, dies or becomes disabled during the Plan Year.
1.12 Employee
(a) In General
An Employee is any person who is employed by the Employer or a
Participating Employer. An individual classified by the Employer as an
Independent Contractor is not considered to be an Employee.
(b) Leased Employee
A Leased Employee means any person who, pursuant to an agreement
between the Employer or any Related Employer ("Recipient Employer")
and any other person ("leasing organization"), has performed services
for the Recipient Employer on a substantially full-time basis for a
period of at least one year and such services are performed under the
primary direction or control of the Recipient Employer.
Any Leased Employee will be treated as an Employee of the Recipient
Employer; however, contributions or benefits provided by the leasing
organization which are attributable to
<PAGE>
the services performed for the Recipient Employer will be treated as
provided by the Recipient Employer. If all Leased Employees constitute
less than 20% of the Employer's non-highly-compensated work force
within the meaning of Code Section 414(n)(1)(C)(ii), then the
preceding sentence will not apply to any Leased Employee if such
Employee is covered by a money purchase pension plan ("Safe Harbor
Plan") which provides: (1) a nonintegrated employer contribution rate
of at least 10% of compensation, (2) immediate participation, and (3)
full and immediate vesting.
Years of Service for purposes of eligibility to participate in the
Plan and Years of Service for purposes of determining a Participant's
Vested Percentage include service by an Employee as a Leased Employee.
1.13 Employer and Plan Sponsor
The Plan Sponsor is SCGroup Incorporated. A Participating Employer is any
other organization which has adopted this Plan and Trust in accordance with
Section 8.07. The Plan Sponsor and any Participating Employers shall be
referred to collectively as the Employers, and individually as the
Employer.
The term Predecessor Employer means any prior employer to which the
Employer is the successor, including any Predecessor Employer for which the
Employer maintains the obligations of a Predecessor Plan established by the
Predecessor Employer. Service with a Predecessor Employer will be included
as Service with the Employer for all purposes under this Plan.
1.14 Employment Commencement Date
The date an Employee first performs an Hour of Service for the Employer is
his Employment Commencement Date.
1.15 Entry Date
Entry Date means the January 1st, April 1st, July 1st or October 1st which
coincides with or next follows the date upon which the eligibility
requirements are met.
1.16 Fiscal Year
Fiscal Year means the taxable year of the Plan Sponsor. The Fiscal Year of
the Plan Sponsor is the 12 month period beginning January 1 and ending
December 31.
1.17 Forfeiture
The term Forfeiture refers to that portion, if any, of a Participant's
Accrued Benefit which is in excess of his Vested Accrued Benefit following
the termination of the Participant's employment.
A Forfeiture is considered to occur as of the earlier of (a) the date of
the occurrence of the fifth of 5 consecutive One Year Breaks-in-Service or
(b) the date a Cash-Out Distribution occurs in accordance with the
provisions of Article 5.
1.18 Highly Compensated Definitions
(a) Compensation
For purposes of this Section, Compensation means Aggregate
Compensation as defined in Section 7.03(a) plus (for Plan Years
beginning prior to January 1, 1998) amounts contributed by the
Employer pursuant to a salary reduction agreement which are excludable
from the gross income of the Employee under Code Section 125,
402(e)(3), 402(h), 402(k) or 403(b). Compensation in excess of the
Statutory Compensation Limit will be disregarded.
<PAGE>
(b) Determination Year
Determination Year means the Plan Year for which the determination of
who is Highly Compensated is being made.
(c) Reserved
(d) Highly Compensated Employee
Highly Compensated Employee means any individual who is a Highly
Compensated Active Employee or a Highly Compensated Former Employee
within the meaning of Code Section 414(q) and the regulations
thereunder.
(e) Highly Compensated Active Employee
Highly Compensated Active Employee means any individual who:
(1) During the Determination Year or the Lookback Year was at any
time a 5-percent Owner (within the meaning of Code Section
416(i)) of the Employer or any Related Employer; or
(2) During the Lookback Year (i) received Compensation from the
Employer and all Related Employers in excess of $80,000 (or any
greater amount determined by regulations issued by the Secretary
of the Treasury under Code Section 415(d)); and (ii), if the Plan
Sponsor elects the application of this clause for such Lookback
Year, was in the Top-paid Group for such Lookback Year.
(f) Highly Compensated Former Employee
Highly Compensated Former Employee means any Former Employee who had a
Separation Year (within the meaning of Treasury Regulation Section
1.414(q)-1T Q&A-5) and was a Highly Compensated Active Employee for
either the Separation Year or any Determination Year ending on or
after the Employee's 55th birthday.
(g) Highly Compensated Group
Highly Compensated Group means all Highly Compensated Employees.
(h) Lookback Year
Lookback Year means the 12-month period immediately preceding the
Determination Year.
(i) Non-Highly Compensated Employee
Non-Highly Compensated Employee means an Employee who is not a Highly
Compensated Employee.
(j) Non-Highly Compensated Group
Non-Highly Compensated Group means all Non-Highly Compensated
Employees.
(k) Top-Paid Group
Top-Paid Group means those individuals who are among the top 20
percent of Employees of the Employer and all Related Employers when
ranked on the basis of Compensation received during the year. In
determining the number of individuals in the Top-Paid Group (but not
the identity of those individuals), the following individuals may be
excluded:
(1) Employees who have not completed 6 months of Service by the end
of the year. For this purpose, an Employee who has completed One
Hour of Service in any calendar month will be credited with one
month of Service;
<PAGE>
(2) Employees who normally work fewer than 17 1/2 hours per week;
(3) Employees who normally work fewer than 6 months during any year.
For this purpose, an Employee who has worked on one day of a
month is treated as having worked for the whole month;
(4) Employees who have not reached age 21 by the end of the year;
(5) Nonresident aliens who received no earned income (which
constitutes income from sources within the United States) within
the year from the Employer or any Related Employer; and
(6) Employees covered by a collective bargaining agreement negotiated
in good faith between the employee representatives and the
Employer or a group of employers of which the Employer is a
member if (i) 90% or more of all employees of the Employer and
all Related Employers are covered by collective bargaining
agreements, and (ii) this Plan covers only Employees who are not
covered under a collective bargaining agreement.
1.19 Hour of Service
An Hour of Service means:
(a) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours will
be credited to the Employee for the computation period in which
the duties are performed;
(b) Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no
duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military
duty or leave of absence. No more than 501 Hours of Service will
be credited under this paragraph for any 12-month period. Hours
under this paragraph will be calculated and credited pursuant to
Section 2530.200b-2 of the Department of Labor Regulations which
are incorporated herein by this reference; and
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same
Hours of Service will not be credited both under paragraphs (a)
or (b), as the case may be, and under this paragraph (c). These
hours will be credited to the Employee for the computation period
or periods to which the award or agreement pertains rather than
the computation period in which the award, agreement or payment
is made.
Hours of Service for all Employees will be determined on the basis of
actual hours for which an Employee is paid or is entitled to payment.
Hours of Service will be credited for employment with any Related
Employer or any Predecessor Employer. Hours of Service will be
credited for any individual considered an employee under Code Section
414(n) or 414(o) and the regulations thereunder.
Solely for purposes of determining whether a One Year Break-in-Service
has occurred, a Participant who is absent from work on an authorized
Leave of Absence or by reason of the Participant's pregnancy, birth of
the Participant's child, placement of a child with the Participant in
connection with the adoption of such child, or for the purpose of
caring for such child for a period immediately following such birth or
placement, will receive credit for the Hours of Service which
otherwise would have been credited to the Participant but for such
<PAGE>
absence. The Hours of Service credited under this paragraph will be
credited in the Plan Year in which the absence begins if such
crediting is necessary to prevent a One Year Break-in-Service in such
Plan Year; otherwise, such Hours of Service will be credited in the
following Plan Year. The Hours of Service credited under this
paragraph are those which would normally have been credited but for
such absence; in any case in which the Plan Administrator is unable to
determine such hours normally credited, 8 Hours of Service per day
will be credited. No more than 501 Hours of Service will be credited
under this paragraph for any 12-month period. The Date of Severance is
the second anniversary of the date on which the absence begins. The
period between the initial date of absence and the first anniversary
of the initial date of absence is deemed to be a period of Service.
The period between the first and second anniversaries of the initial
date of absence is neither a period of service nor a period of
severance.
1.20 Investment Fund
An Investment Fund means any portion of the assets of the Trust Fund which
the Plan Administrator designates as an Investment Fund and for which the
Plan Administrator maintains a set of accounts separate from the remaining
assets of the Trust Fund.
(a) Specific Investment Fund means an Investment Fund which is designated
as a Specific Investment Fund by the Plan Administrator in a manner
and form acceptable to the Trustee.
(b) General Investment Fund means all assets of the Trust Fund excluding
the assets of any Specific Investment Funds.
1.21 Leave of Absence
An authorized Leave of Absence means a period of time of one year or less
granted to an Employee by the Employer due to illness, injury, temporary
reduction in work force, or other appropriate cause or due to military
service during which the Employee's reemployment rights are protected by
law, provided the Employee returns to the service of the Employer on or
before the expiration of such leave, or in the case of military service,
within the time his reemployment rights are so protected or within 60 days
of his discharge from military service if no federal law is applicable. All
authorized Leaves of Absence are granted or denied by the Employer in a
uniform and nondiscriminatory manner, treating Employees in similar
circumstances in a like manner.
If the Participant does not return to active service with the Employer on
or prior to the expiration of his authorized Leave of Absence he will be
considered to have had a Date of Severance as of the earlier of the date on
which his authorized Leave of Absence expired, the first anniversary of the
last date he worked at least one hour as an Active Participant, or the date
on which he resigned or was discharged.
1.22 Reserved
1.23 Normal Retirement Age
A Participant's Normal Retirement Age is age 65.
1.24 Normal Retirement Date
A Participant's Normal Retirement Date is the date on which the Participant
attains Normal Retirement Age.
1.25 One Year Break-in-Service
One Year Break-in-Service means any 365-day period following a
Participant's Date of Termination in which an Employee does not complete at
least one Hour of Service.
<PAGE>
1.26 Participant
The term Participant means an Employee or former Employee who is eligible
to participate in this Plan and who is or who may become eligible to
receive a benefit of any type from this Plan or whose Beneficiary may be
eligible to receive any such benefit.
(a) Active Participant means a Participant who is currently an Employee in
an Eligible Employee Classification.
(b) Disabled Participant means a Participant who has terminated his
employment with the Employer due to his Disability and who is
receiving or is entitled to receive benefits from the Plan.
(c) Retired Participant means a Participant who has terminated his
employment with the Employer after meeting the requirements for his
Normal Retirement Date and who is receiving or is entitled to receive
benefits from the Plan.
(d) Vested Terminated Participant means a Participant who has terminated
his employment with the Employer and who has a nonforfeitable right to
all or a portion of his or her Accrued Benefit and who has not
received a distribution of the value of his or her Vested Accrued
Benefit.
(e) Inactive Participant means a Participant who has (i) interrupted his
status as an Active Participant without becoming a Disabled, Retired
or Vested Terminated Participant and (ii) has a non-forfeitable right
to all or a portion of his Accrued Benefit and has not received a
complete distribution of his benefit.
(f) Former Participant means a Participant who has terminated his
employment with the Employer and who currently has no nonforfeitable
right to any portion of his or her Accrued Benefit.
1.27 Payroll Withholding Agreement
If a written Payroll Withholding Agreement is required pursuant to the
provisions of Article 3, then each Participant who elects to participate in
the Plan will file such agreement on or before the first day of the payroll
period for which the agreement is applicable (or at some other time as
specified by the Plan Administrator). Such agreement will be effective for
each payroll period thereafter until modified or amended.
The terms of such agreement will provide that the Participant agrees to
have the Employer withhold, each payroll period, any whole percentage of
his Compensation (or such other amount as allowed by the Plan Administrator
under rules applied on a uniform and nondiscriminatory basis), not to
exceed the limitations of Article 7. In consideration of such agreement,
the Employer periodically will make a contribution to the Participant's
proper Account(s) in an amount equal to the total amount by which the
Participant's Compensation from the Employer was reduced during applicable
payroll periods pursuant to the Payroll Withholding Agreement.
Notwithstanding the above, Payroll Withholding Agreements will be governed
by the following general guidelines:
(a) A Payroll Withholding Agreement will apply to each payroll period
during which an effective agreement is on file with the Employer. Upon
termination of employment, such agreement will become void.
(b) The Plan Administrator will establish and apply guidelines concerning
the frequency and
<PAGE>
timing of amendments or changes to Payroll Withholding Agreements.
Notwithstanding the foregoing, a Participant may revoke his Payroll
Withholding Agreement at any time and discontinue all future
withholding.
(c) The Plan Administrator may amend or revoke its Payroll Withholding
Agreement with any Participant at any time, if the Employer determines
that such revocation or amendment is necessary to insure that a
Participant's Annual Additions for any Plan Year will not exceed the
limitations of Article 7 or to insure that the requirements of
Sections 401(k) and 401(m) of the Code have been satisfied with
respect to the amount which may be withheld and contributed on behalf
of the Highly Compensated Group.
(d) Except as provided above, a Payroll Withholding Agreement may not be
revoked or amended by the Participant or the Employer.
1.28 Plan, Plan and Trust, Trust
The terms Plan, Plan and Trust and Trust mean SCGroup Incorporated 401(k)
Savings Plan. The Plan Identification Number is 001. The Plan is a profit
sharing plan.
The term Predecessor Plan means any qualified plan previously established
and maintained by the Employer and to which this Plan is the successor.
1.29 Plan Administrator
The Plan Administrator is SCGroup Incorporated. unless the Plan Sponsor
designates one or more individuals to serve as Plan Administrator pursuant
to Section 9.01.
1.30 Plan Year
The Plan Year is the 12 month period beginning January 1 and ending
December 31. The Limitation Year coincides with the Plan Year.
1.31 Reserved
1.32 Qualified Election
Qualified Election means the designation of a specific Beneficiary other
than the Participant's Surviving Spouse. Such Qualified Election must be in
writing and must be consented to by the Participant's spouse. The spouse's
written consent to a Qualified Election must be witnessed by a
representative of the Plan Administrator or a notary public. Such consent
will not be required if the Participant establishes to the satisfaction of
the Plan Administrator that such written consent may not be obtained
because there is no spouse, the spouse cannot be located or other
circumstances that may be prescribed by Treasury Regulations. Any consent
necessary under this provision will be valid only with respect to the
spouse who signs the consent (or in the event of a deemed Qualified
Election, the designated spouse). Additionally, a revocation of a prior
Qualified Election may be made by a Participant without the consent of the
spouse at any time before the commencement of benefits; however, any
Qualified Election which follows such revocation must be in writing and
must be consented to by the Participant's spouse. The number of Qualified
Elections or revocations of such Qualified Elections will not be limited.
1.32 Qualified Annuity Definitions
(a) Annuity Starting Date
Annuity Starting Date means (i) the first day of the first period for
which an amount is payable as an annuity, or (ii) in the case of a
benefit not payable in the form of an annuity, the first day on which
all events have occurred which entitled the Participant to
<PAGE>
such benefit.
(b) Qualified Election
(1) In General
Qualified Election means a written waiver of a Qualified Joint
and Survivor Annuity or a Qualified Survivor Annuity. If the
provisions of Section 5.05(b) apply, the waiver must be consented
to by the Participant's spouse with such written consent
witnessed by a representative of the Plan Administrator or a
notary public. The spouse's consent must include the designation
of a specific Beneficiary and the form of payment which cannot be
changed without the consent of the spouse. Such consent will not
be required if the Participant establishes to the satisfaction of
the Plan Administrator that such written consent may not be
obtained because there is no spouse, the spouse cannot be located
or other circumstances that may be prescribed by Treasury
Regulations. Any consent which is required under this Section
will be valid only with respect to the spouse who signs the
consent (or in the event of a deemed Qualified Election, the
designated spouse). Additionally, any revocation of a prior
waiver may be made by a Participant without the consent of the
spouse at any time before the Annuity Starting Date; however, any
waiver of a Qualified Joint and Survivor Annuity or a Qualified
Survivor Annuity which follows such revocation must be in writing
and must be consented to by the Participant's spouse. The number
of waivers or revocations of such waivers will not be limited.
(2) Qualified Joint and Survivor Annuity Notices
If the provisions of Section 5.05(b) apply, not more than 90 days
nor less than 30 days before the Participant's Annuity Starting
Date, the Plan Administrator will provide the Participant a
written explanation of:
. the terms and conditions of a Qualified Joint and
Survivor Annuity;
. the Participant's right to make and the effect of a
Qualified Election to waive the Qualified Joint and
Survivor Annuity form of benefit;
. a general description of the eligibility conditions and
other material features of the optional forms of benefit
and sufficient additional information to explain the
relative values of the optional forms of benefit
available;
. the rights of the Participant's spouse; and
. the right to make, and the effect of, a revocation of a
previous Qualified Election to waive the Qualified Joint
and Survivor Annuity.
(3) Qualified Survivor Annuity Notices If the provisions of Section
5.05(b) apply, the election period to waive the Qualified
Survivor Annuity begins on the first day of the Plan Year in
which the Participant attains age 35 and ends on the date of the
Participant's death. If a Vested Terminated Participant separates
from service before the beginning of the election period, the
election period begins on the date of separation from service.
The Plan Administrator will, within the applicable notice period,
provide each Participant a written explanation of the Qualified
Survivor Annuity containing comparable information to that
required under the provisions of Section 1.32(b)(2). For purposes
of this paragraph, the term "applicable notice period" means
whichever of
<PAGE>
the following periods ends last:
. the period beginning with the first day of the Plan Year
in which the Participant attains age 32 and ending with
the close of the Plan Year preceding the Plan Year in
which the Participant attains age 35;
. the period beginning two years before and ending 12
months after the individual becomes a Participant;
. the period beginning two years before and ending 12
months after the joint and survivor rules become
effective for the Participant; or
. the period beginning one year before and ending 12 months
after the Participant separates from service before
attaining age 35.
A Participant who will not have attained age 35 as of the end of
any current Plan Year may make a special Qualified Election to
waive the Qualified Survivor Annuity for the period beginning on
the date of the election and ending on the first day of the Plan
Year in which the Participant attains age 35. The Election will
not be valid unless the Participant receives a written
explanation of the Qualified Survivor Annuity in terms comparable
to the explanation required above. Qualified Survivor Annuity
coverage will automatically resume as of the first day of the
Plan Year in which the Participant attains age 35. Any new waiver
on or after that date will be subject to the full requirements of
this Section 1.32(b).
(c) Qualified Joint and Survivor Annuity
A Qualified Joint and Survivor Annuity means an annuity which is
purchased from an Insurer and which is payable for the life of
the Participant with a survivor annuity for the life of his
Surviving Spouse in an amount which is 50% of the amount payable
during the joint lives of the Participant and his spouse. The
amount of the Qualified Joint and Survivor Annuity will be the
amount of benefit which can be purchased from an Insurer with the
Participant's Vested Accrued Benefit.
(d) Qualified Life Annuity
A Qualified Life Annuity means an annuity which is purchased from
an Insurer and which is payable for the lifetime of the
Participant with payments terminating upon the death of the
Participant. The amount of the Qualified Life Annuity will be the
amount of benefit which can be purchased from an Insurer with the
Participant's Vested Accrued Benefit.
(e) Qualified Survivor Annuity
A Qualified Survivor Annuity which a Surviving Spouse will be
eligible to receive under the provisions of Section 6.02 means a
monthly benefit payable for the remaining lifetime of the
Surviving Spouse. The amount of the Qualified Survivor Annuity
benefit will be the amount of benefit which can be purchased from
an Insurer with the Participant's Vested Accrued Benefit.
If the Participant's Vested Accrued Benefit is $3,500 or less,
such Participant's Vested Accrued Benefit shall be payable to the
Surviving Spouse in a lump sum of the entire amount of the
Participant's Vested Accrued Benefit. If the Participant's Vested
Accrued Benefit at the time of any distribution exceeds $3,500,
the Vested Accrued Benefit at any later time will be deemed to
exceed $3,500. If the Participant's Vested Accrued Benefit
exceeds $3,500, the Surviving Spouse may elect to receive the
Qualified Survivor Annuity as a lump sum.
<PAGE>
1.33 Related Employer
The terms Related Employer and Affiliated Employer are used interchangeably
and mean any other corporation, association, company or entity on or after
the Effective Date which is, along with the Employer, a member of a
controlled group of corporations (as defined in Code Section 414(b)), a
group of trades or businesses which are under common control (as defined in
Code Section 414(c)), an affiliated service group (as defined in Code
Section 414(m)), or any organization or arrangement required to be
aggregated with the Employer by Treasury Regulations issued under Code
Section 414(o).
1.34 Required Beginning Date
The Required Beginning Date for the commencement of benefit payments from
the Plan is the April 1 immediately following the calendar year in which he
attains age 70-1/2 for a Participant who is a Five Percent Owner as defined
in Section 1.36(d)(1) with respect to the Plan Year in which the
Participant attains age 70-1/2.
The Required Beginning Date for the commencement of benefit payments from
the Plan for any other Participant is the April 1 immediately following the
later of (i) the calendar year in which the Participant attains age 70-1/2,
or (ii) if so elected by the Participant, the calendar year in which the
Participant retires.
1.35 Surviving Spouse
Surviving Spouse means a deceased Participant's spouse who was married to
the Participant on the Participant's date of death. The Plan Administrator
and the Trustee may rely conclusively on a Participant's written statement
of his marital status. Neither the Plan Administrator nor the Trustee is
required at any time to inquire into the validity of any marriage, the
effectiveness of a common-law relationship or the claim of any alleged
spouse which is inconsistent with the Participant's report of his marital
status and the identity of his spouse.
1.36 Top-Heavy Definitions
(a) Aggregate Account
Aggregate Account means, with respect to each Participant, the value
of all accounts maintained on behalf of the Participant, whether
attributable to Employer or Employee contributions, used to determine
Top-Heavy Plan status under the provisions of a defined contribution
plan. A Participant's Aggregate Account as of the Determination Date
will be the sum of:
. the balance of his Account(s) as of the most recent valuation
date occurring within a 12-month period ending on the
Determination Date (excluding any amounts attributable to
deductible voluntary employee contributions); plus
. contributions that would be allocated as of a date not later
than the Determination Date, even though those amounts are not
yet made or required to be made; plus
. any Plan Distributions made within the Plan Year that includes
the Determination Date or within the four preceding Plan Years.
(b) Aggregation Group
Aggregation Group means either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined.
<PAGE>
(1) Required Aggregation Group
Each plan of the Employer in which a Key Employee is a
Participant, and each other plan of the Employer which enables
any plan in which a Key Employee participates to meet the
requirements of Code Section 401(a)(4) or 410, will be aggregated
and the resulting group will be known as a Required Aggregation
Group.
Each plan in the Required Aggregation Group will be considered a
Top-Heavy Plan if the Required Aggregation Group is a Top-Heavy
Group. No plan in the Required Aggregation Group will be
considered a Top-Heavy Plan if the Required Aggregation Group is
not a Top-Heavy Group.
(2) Permissive Aggregation Group
The Employer may also include any other plan not required to be
included in the Required Aggregation Group, provided the
resulting group (to be known as a Permissive Aggregation Group),
taken as a whole, would continue to satisfy the provisions of
Code Sections 401(a)(4) and 410.
Only a plan that is part of the Required Aggregation Group will
be considered a Top-Heavy Plan if the Permissive Aggregation
Group is a Top-Heavy Group. No plan in the Permissive Aggregation
Group will be considered a Top-Heavy Plan if the Permissive
Aggregation Group is not a Top-Heavy Group.
Only those plans of the Employer in which the Determination Dates
fall within the same calendar year will be aggregated in order to
determine whether the plans are Top-Heavy Plans.
(c) Determination Date
Determination Date means the last day of the preceding Plan Year, or,
in the case of the first Plan Year, the last day of the first Plan
Year.
(d) Key Employee
Key Employee means any Employee or former Employee (and his
Beneficiary) who, at any time during the Plan Year or any of the
preceding four Plan Years, was:
(1) A "Five Percent Owner" of the Employer. "Five Percent Owner" means
any person who owns (or is considered as owning within the meaning
of Code Section 318) more than 5% of the value of the outstanding
stock of the Employer or stock possessing more than 5% of the
total combined voting power of all stock of the Employer. If the
Employer is not a corporation, Five Percent Owner means any person
who owns more than 5% of the capital or profits interest in the
Employer. In determining percentage ownership hereunder, Related
Employers will be treated as separate Employers; or
(2) A "One Percent Owner" of the Employer having Compensation from the
Employer of more than $150,000. "One Percent Owner" means any
person who owns (or is considered as owning within the meaning of
Code Section 318) more than 1% of the value of the outstanding
stock of the Employer or stock possessing more than 1% of the
total combined voting power of all stock of the Employer. If the
Employer is not a corporation, One Percent Owner means any person
who owns more than 1% of the capital or profits interest in the
Employer. In determining percentage ownership hereunder, Related
Employers will be treated as separate Employers. However, in
determining whether an individual has Compensation of more than
$150,000, Compensation from each Related Employer will be taken
into account.
<PAGE>
(3) One of the 10 Employees having Compensation not less than the
Defined Contribution Dollar Limit (as defined in Section 7.03(j)
for the Plan Year) who owns (or is considered as owning within the
meaning of Code Section 318) both greater than 1/2% interest and
the largest interests in all Employers required to be aggregated
under Code Sections 414(b), (c), (m) and (o);
(4) An officer (within the meaning of the regulations under Code
Section 416) of the Employer having Compensation greater than 50%
of the Defined Benefit Dollar Limit as defined in Section 7.03(f)
for the Plan Year;
For purposes of this Section, Compensation means Aggregate
Compensation as defined in Section 7.03(a) plus (for Plan Years
beginning prior to January 1, 1998) any amounts contributed by the
Employer pursuant to a salary reduction agreement which are excludable
from the gross income of the Employee under Code Section 125,
402(e)(3), 402(h), 402(k) or 403(b). Compensation in excess of the
Statutory Compensation Limit is disregarded.
(e) Non-Key Employee
Non-Key Employee means any Employee (and his Beneficiaries) who is not
a Key Employee.
(f) Plan Distributions
Plan distributions include distributions made before January 1, 1984,
and distributions under a terminated plan which, if it had not been
terminated, would have been required to be included in an aggregation
group. However, distributions made after the valuation date and before
the Determination Date are not included to the extent that they are
already included in the Participant's Single Sum Benefit as of the
valuation date.
With respect to "unrelated" rollovers and plan-to-plan transfers
(those which are both initiated by an employee and made from a plan
maintained by one employer to a plan maintained by another employer),
if such a rollover or plan-to-plan transfer is made from this Plan, it
will be considered as a distribution for purposes of this Section. If
such a rollover or plan-to-plan transfer is made to this Plan, it will
not be considered as part of the Participant's Single Sum Benefit.
However, an unrelated rollover or plan-to-plan transfer accepted
before January 1, 1984, will be considered as part of the
Participant's Single Sum Benefit.
With respect to "related" rollovers and plan-to-plan transfers (those
which are either not initiated by an employee or are made from one
plan to another plan maintained by the same employer), if such a
rollover or plan-to-plan transfer is made from this Plan, it will not
be considered as a distribution for purposes of this Section. If such
a rollover or plan-to-plan transfer is made to this Plan, it will be
considered as part of the Participant's Single Sum Benefit.
(g) Present Value of Accrued Benefit
In the case of the defined benefit plan, a Participant's Present Value
of Accrued Benefit, for Top-Heavy determination purposes, will be
determined using the following rules:
(1) The Present Value of Accrued Benefit will be determined as of the
most recent "valuation date" within a 12-month period ending on
the Determination Date.
(2) For the first Plan Year, the Present Value of Accrued Benefit will
be determined as if (A) the Participant terminated service as of
the Determination Date; or (B) the Participant terminated service
as of the valuation date, but taking into account the estimated
Present Value of Accrued Benefits as of the Determination Date.
<PAGE>
(3) For any other Plan Year, the Present Value of Accrued Benefit will
be determined as if the Participant terminated service as of the
valuation date.
(4) The valuation date must be the same date used for computing the
defined benefit plan minimum funding costs, regardless of whether
a calculation is performed that plan year.
(5) A Participant's Present Value of Accrued Benefit as of a
Determination Date will be the sum of:
. the present value of his Accrued Benefit determined using the
actuarial assumptions which are specified below; plus
. any Plan Distributions made within the Plan Year that includes
the Determination Date or within the four preceding Plan Years;
plus
. any employee contributions, whether voluntary or mandatory.
However, amounts attributable to qualified voluntary employee
contributions, as defined in Code Section 219(e)(2) will not be
considered to be a part of the Participant's Present Value of
Accrued Benefit.
For purposes of this Section, the present value of a Participant's
Accrued Benefit will be equal to the greater of the present value
determined using the actuarial assumptions which are specified for
Actuarial Equivalent purposes or the present value determined using
the "Applicable Interest Rate." The Applicable Interest Rate is the
rate or rates that would be used by the Pension Benefit Guaranty
Corporation for a trusteed single-employer plan to value a
Participant's or Beneficiary's benefit on the date of distribution
(the "PBGC Rate"). If the present value using the PBGC Rate exceeds
$25,000, the Applicable Interest Rate is 120% of the PBGC Rate.
However, the use of 120% of the PBGC Rate will never result in a
present value less than $25,000.
(6) Solely for the purpose of determining if this Plan (or any other
plan included in a Required Aggregation Group of which this Plan
is a part) is Top- Heavy, the Accrued Benefit of any Employee
other than a Key Employee will be determined under
(A) the method, if any, that uniformly applies for accrual
purposes under all plans maintained by the Employer or any
Related Employer, or
(B) if there is no such method, as if the benefit accrued no more
rapidly than the slowest accrual rate permitted under the
fractional accrual rate of Code Section 411(b)(1)(C).
(h) Single Sum Benefit
The Single Sum Benefit for any Participant in a defined benefit
pension plan will be equal to his Present Value of Accrued Benefit.
The Single Sum Benefit for any Participant in a defined contribution
plan will be equal to his Aggregate Account.
(i) Top-Heavy Group
Top-Heavy Group means an Aggregation Group in which, as of the
Determination Date, the Single Sum Benefits of all Key Employees under
all plans included in the group exceeds 60% of a similar sum
determined for all Participants.
<PAGE>
Super Top-Heavy Group means an Aggregation Group in which, as of the
Determination Date, the sum of (1) the Single Sum Benefits of all Key
Employees under all defined benefit plans included in the group, plus
(2) the Single Sum Benefit of all Key Employees under all defined
contribution plans included in the group exceeds 90% of a similar sum
determined for all Participants.
(j) Top-Heavy Plan
This Plan will be a Top-Heavy Plan for any Plan Year beginning after
December 31, 1983, in which, as of the Determination Date, the Single
Sum Benefits of all Key Employees exceed 60% of the Single Sum
Benefits of all Participants under this Plan.
This Plan will be a Super Top-Heavy Plan for any Plan Year beginning
after December 31, 1983, in which, as of the Determination Date, the
Single Sum Benefits of all Key Employees exceed 90% of the Single Sum
Benefits of all Participants under this Plan.
If any Participant is a Non-Key Employee for a given Plan Year, but
was a Key Employee for any prior Plan Year, the Participant's Single
Sum Benefit will not be taken into account for purposes of determining
whether this Plan is a Top-Heavy or Super Top-Heavy Plan (or whether
any Aggregation Group which includes this Plan is a Top-Heavy or Super
Top-Heavy Group).
If an individual has performed no services for the Employer at any
time during the 5-year period ending on the Determination Date, any
Single Sum Benefit of such individual will not be taken into account
for purposes of determining whether this Plan is a Top-Heavy or Super
Top-Heavy Plan (or whether any Aggregation Group which includes this
Plan is a Top-Heavy Group or Super Top-Heavy Group).
1.37 Trust Fund, Trust
These terms mean the total cash, securities, real property, insurance
contracts and any other property held by the Trustee.
1.38 Trustee
Effective July 1, 1996, the Trustee is Charles Schwab Trust Company or any
successor Trustee.
1.39 Vested Percentage
A Participant's Vested Percentage as of a given date will be that
percentage determined in accordance with the Vesting Schedule.
Notwithstanding the preceding, a Participant will be 100% vested upon
reaching the earlier of (a) his Normal Retirement Age or (b) the later of
the date upon which the Participant attains age 65 or reaches the 5th
anniversary of the date he commenced participation in the Plan.
1.40 Vesting Schedule
A Participant's Vested Percentage will be determined in accordance with the
following table:
Years of Vesting Service Vested Percentage
Less than 2 Years 0%
2 Years 20%
3 Years 40%
4 Years 60%
5 Years 80%
6 Years or more 100%
<PAGE>
1.41 Written Resolution
The terms Written Resolution and Written Consent are used interchangeably
and reflect decisions, authorizations, etc. by the Employer. A Written
Resolution will be evidenced by a resolution of the Board of Directors of
the Employer, by a committee of such Board or by a person or persons
authorized by such Board or such committee.
1.42 Year of Service
(a) Crediting Years of Service
Years of Service are determined under the Elapsed Time Method. Under
the Elapsed Time Method, Years of Service are based upon an Employee's
Elapsed Time of employment irrespective of the number of hours
actually worked during such period; a Year of Service (including a
fraction thereof) will be credited for each completed 365 days of
Elapsed Time which need not be consecutive. The following terms are
used in determining Years of Service under the Elapsed Time Method:
(1) Date of Severance (Termination) - means the earlier of (A) the
actual date an Employee resigns, is discharged, dies or retires,
or (B) the first anniversary of the date an Employee is absent
from work (with or without pay) for any other reason, e.g.,
disability, vacation, leave of absence, layoff, etc.
(2) Exception for Leaves of Absence due to maternity or paternity
reasons. Notwithstanding the above, if any Employee is absent due
to maternity or paternity reasons (pregnancy or birth of a child
of such individual or the adoption of a child by such individual
or for purposes of caring for such child immediately after birth
or adoption) the Date of Severance (Termination) shall be the
first anniversary of the date such absence began and if the
absence is for a period of more than 12 months, the 12-month
period following the first anniversary of the date such absence
began shall not be treated as a period of Service or a Period of
Severance.
(3) Elapsed Time - means the total period of service which has
elapsed between a Participant's Employment Commencement Date and
Date of Termination including Periods of Severance where a One
Year Break-in-Service does not occur.
(4) Employment Commencement Date - means the date an Employee first
performs one Hour of Service for the Employer.
(5) One Year Break-in-Service - means any 365-day period following an
Employee's Date of Termination as defined above in which the
Employee does not complete at least one Hour of Service.
(6) Period of Severance - is the time between the actual Date of
Severance as defined above and the subsequent date, if any, on
which the Employee performs an Hour of Service.
All periods of employment will be aggregated including Periods of
Severance unless there is a One Year Break-in-Service.
Years of Eligibility Service for purposes of determining eligibility
to participate in the Plan and Years of Vesting Service for purposes
of determining a Participant's Vested Percentage include service with
any organization which is a Related Employer with respect to the
Employer.
<PAGE>
(b) For Eligibility Purposes
Except as otherwise provided in Section 2.01, Years of Service for
purposes of eligibility to participate in the Plan are referred to as
Years of Eligibility Service and are determined using the Elapsed Time
Method.
All of an Employee's Years of Eligibility Service are taken into
account in determining his eligibility to participate.
(c) For Vesting Purposes
Years of Service for purposes of computing a Participant's Vested
Percentage are referred to as Years of Vesting Service and are
determined using the Elapsed Time Method.
All of a Participant's Years of Vesting Service are taken into account
in determining his Vested Percentage.
ARTICLE 2
PARTICIPATION
2.01 Participation
An Employee who is a member of an Eligible Employee Classification will
become eligible to participate in the Plan on the Entry Date which
coincides with or next follows the attainment of age 21 and the completion
of 3 months of employment.
Notwithstanding the foregoing, an Employee who is classified by the
Employer as a part time employee will enter the Plan on the Entry Date
which coincides with or next follows the attainment of age 21 and the
completion of the first eligibility Computation Period during which the
Employee completes at least 1,000 Hours of Service.
The initial Computation Period is the 12 consecutive month period beginning
with the Employee's Employment Commencement Date. Thereafter, the
Computation Period is the Plan Year beginning with the Plan Year in which
the initial Computation Period ends.
An Employee who is eligible to participate as of the Effective Date or as
of a given Entry Date will automatically become a Participant as of such
date.
2.02 Participation After Reemployment
An Employee who has satisfied all of the eligibility requirements but
terminates employment prior to his Entry Date will participate in the Plan
immediately upon returning to the employ of the Employer.
A Participant or Former Participant who has terminated employment will
participate as an Active Participant in the Plan immediately upon returning
to the employ of the Employer.
2.03 Change in Employment Classification
In the event a Participant becomes ineligible to participate because he is
no longer a member of an Eligible Employee Classification, the Participant
will participate immediately upon his return to an Eligible Employee
Classification.
<PAGE>
In the event an Employee who is not a member of an Eligible Employee
Classification becomes a member of such a classification, such Employee
will begin to participate immediately if he has satisfied the eligibility
requirements which are specified in Section 2.01.
ARTICLE 3
PARTICIPANT ACCOUNTS
3.01 Employee Pre-tax Account
Employee Pre-tax Account means the Account of a Participant reflecting
applicable contributions, investment income or loss allocated thereto and
distributions. A Participant's Employee Pre-tax Account is 100% vested at
all times.
(a) Employee Pre-tax Contributions
(1) Amount of Contribution
Each Participant may elect to make an Employee Pre-tax
Contribution each Contribution Period not to exceed 18% of the
Participant's Compensation. Such contribution will be designated
as a whole percentage of Compensation or such other amount as
allowed by the Plan Administrator.
(2) Payroll Withholding
All Employee Pre-tax Contributions will be made pursuant to a
Payroll Withholding Agreement in accordance with Section 1.27.
(3) Nondiscrimination Requirements
All Employee Pre-tax Contributions are Elective Contributions
within the meaning of Section 4.05(a) and must satisfy the
Nondiscrimination Requirements of Section 4.05.
(4) Excess Deferrals
The maximum amount of Employee Pre-tax Contribution which can be
made under the Plan on behalf of any Participant during any
calendar year will be limited to that amount which would not
constitute an Excess Deferral as defined in Section 4.05. The
Plan Administrator will distribute any Excess Deferral, together
with the income allocable to it, to the Participant no later than
April 15 of the calendar year immediately following the year of
the Excess Deferral. If a Participant notifies the Plan
Administrator before March 1 of any calendar year that Excess
Deferrals have been made on his account for the previous calendar
year by reason of participation in a Cash or Deferred Arrangement
maintained by another employer or employers, and if the
Participant requests that the Plan Administrator distribute a
specific amount to him on account of Excess Deferrals and
certifies that the requested amount is an Excess Deferral, the
Plan Administrator will designate the amount requested together
with the income allocable to it as a distribution of Excess
deferrals and distribute such amount no later than April 15 of
that calendar year. The amount of Excess Deferrals to be
distributed will be reduced by any Excess Contributions
previously distributed or recharacterized with respect to the
Plan Year beginning with or within the calendar year. The amount
of income allocable to the Excess Deferral will be determined as
<PAGE>
described in Section 4.05.
(5) Timing of Deposits
The Employer will deposit all Employee Pre-tax Contributions on
the earliest date on which such contributions can reasonably be
segregated from the Employer's general assets, but in no event
later than 15 business days following the end of the month in
which the amounts withheld would otherwise have been paid to the
Participant in cash.
The Contribution Period for Employee Pre-tax Contributions is
each month.
(b) Financial Hardship Withdrawals
A Participant may file with the Plan Administrator a written request
to withdraw, in order to avoid or alleviate a Financial Hardship, any
amount not to exceed that portion of his Employee Pre-tax Account
which represents his total Employee Pre-tax Contributions.
The Plan Administrator will allow Financial Hardship withdrawals only
if they are necessary to satisfy a Participant's immediate and heavy
financial need.
(1) Immediate and Heavy Financial Need
A withdrawal will be deemed to be made due to an immediate and
heavy financial need of the Participant if it is made because of:
. Expenses for medical care described in Code Section 213(d)
previously incurred by the Participant, his spouse or any
of his dependents (as defined in Code Section 152) or
necessary for these persons to obtain medical care
described in Code Section 213(d);
. Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
. Payment of tuition, room and board, or educational fees
for the next 12 months of post-secondary education for the
Participant, his spouse, children or dependents (as
defined in Code Section 152);
. Prevention of the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(2) Necessary To Satisfy Financial Need
No withdrawal may exceed the amount necessary to satisfy the
Participant's immediate and heavy financial need. However, the
amount of an immediate and heavy financial need may include any
amounts necessary to pay any federal, state or local income taxes
or penalties reasonably anticipated to result from the
distribution. The Plan Administrator will allow the withdrawal if
it determines, after a full review of the Participant's written
request and evidence presented by the Participant showing
immediate and heavy financial need as well as the Participant's
lack of other reasonably available resources, that the withdrawal
is necessary to satisfy the need. No withdrawal will be treated
as necessary to the extent it can be satisfied from other
resources which are reasonably available to the Participant,
including those of the Participant's spouse and minor children. A
withdrawal will be treated as necessary to the extent the
Participant demonstrates to the satisfaction of the Plan
Administrator that the need cannot be relieved by any of the
following:
. Reimbursement or compensation by insurance or otherwise;
<PAGE>
. Reasonable liquidation of assets to the extent the
liquidation would not itself cause an immediate and heavy
financial need;
. Cessation of Employee Pre-tax Contributions or Employee
After-tax Contributions (as defined in Section 4.05(a)) or
both under any plan maintained by any employer;
. Other distributions or nontaxable (at the time of the
loan) loans from plans maintained by any employer;
. Borrowing from commercial sources on reasonable commercial
terms.
Unless the Plan Administrator has evidence to the contrary, it
may rely upon the Participant's written representation that the
need cannot be relieved by any of the foregoing.
(3) Safe Harbor
The Plan Administrator will not allow any withdrawal until the
Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans currently available to
the Participant under all plans maintained by the Employer. Upon
the withdrawal of any portion of a Participant's Employee Pre-tax
Account, the Participant will become ineligible for any Elective
Contribution to this Plan or any other plan maintained by the
Employer, or to make any contribution to this Plan or any other
plan maintained by the Employer until the first day of the first
payroll period which begins not less than 12 months following the
date of withdrawal. For this purpose the phrase "any other plan
maintained by the Employer" means all qualified and nonqualified
plans of deferred compensation maintained by the Employer. The
phrase includes stock option, stock purchase, or similar plans,
or a cash or deferred arrangement that is part of a cafeteria
plan within the meaning of Code Section 125. It does not include
the mandatory employee contribution portion of a defined benefit
plan, nor does it include a health or welfare benefit plan
(including one that is part of a cafeteria plan within the
meaning of Code Section 125). Furthermore, the maximum amount of
Employee Pre-tax Contributions which can be made under the Plan
on behalf of any Participant during the calendar year which
follows the calendar year in which the withdrawal was made will
be limited to the amount which would not be treated as an Excess
Deferral for that year reduced by the amount of Employee Pre-tax
Contributions made on behalf of the Participant in the calendar
year of withdrawal.
(c) Distributions
No distribution may be made from the Participant's Employee Pre-
tax Account or any account comprised of Matching Contributions or
Nonelective Contributions which are treated as Elective
Contributions in accordance with the provisions of Section
4.05(h) except under one of the following circumstances:
. the Participant's retirement, death, disability or
separation from service within the meaning of Code Section
401(k)(2)(B);
. the Participant's attaining of age 59 1/2;
. the avoidance or alleviation of a Financial Hardship;
. the termination of this Plan without the establishment of
a successor plan within
<PAGE>
the meaning of Treasury Regulation Section 1.401(k)-
1(d)(3);
. the sale or other disposition by the Employer of at least
85 percent of the assets used by the Employer in a trade
or business to an unrelated corporation which does not
maintain the plan, but only if the Participant continues
employment with the corporation acquiring the assets and
only if the Employer continues to maintain this Plan; or
. the sale or other disposition by the Employer of its
interest in a subsidiary to an unrelated entity which does
not maintain the plan, but only if the Participant
continues employment with the subsidiary and only if the
Employer continues to maintain this Plan.
This paragraph does not apply to distributions of Excess
Deferrals, Excess Contributions, or excess Annual Additions.
3.02 Employer Discretionary Account
Employer Discretionary Account means the Account of a Participant
reflecting applicable contributions, forfeitures, investment income or loss
allocated thereto and distributions. A Participant's Employer Discretionary
Account is subject to the Vesting Schedule.
(a) Employer Discretionary Contributions
Each Plan Year, the Employer may, within the time prescribed by law
for making a deductible contribution, make an Employer Discretionary
Contribution to the Trust.
For a given Plan Year, the total Employer Discretionary Contribution,
if any, made by the Employer will be an amount determined and
authorized by the Employer for such Plan Year; however, the Employer
will not authorize Employer Discretionary Contributions at such times
or in such amounts that the Plan, in operation, discriminates in favor
of Highly Compensated Employees.
The total Employer Discretionary Contribution made by the Employer
will be allocated by the ratio which each Eligible Participant's
Compensation bears to the total Compensation of all Eligible
Participants.
With respect to Employer Discretionary Contributions, if an Employee
enters the Plan on an Entry Date other than the first day of a Plan
Year, the Employee's Compensation which would otherwise be considered
will be limited to the Compensation actually paid to the Employee
while he is a Participant in the Plan.
(b) Contribution Period
The Contribution Period for Employer Discretionary Contributions is
each calendar year.
(c) Application of Forfeitures
Forfeitures from a Participant's Employer Discretionary Account will
be added to and allocated along with Employer Discretionary
Contributions in the Plan Year in which the Forfeitures are determined
to occur.
(d) Minimum Allocation for Top-Heavy Plan
Notwithstanding anything contained herein to the contrary, for any
Plan Year in which this Plan is determined to be Top-Heavy, a
Participant (including any Employee who is excluded from the Plan
because his Compensation is less than a stated amount) will be
entitled to a
<PAGE>
minimum allocation of Employer Discretionary Contributions equal to 3%
of the Participant's Aggregate Compensation received during the Plan
Year. This minimum allocation will be provided to each Participant who
is employed by the Employer on the last day of the Plan Year whether
or not he or she is an otherwise Eligible Participant or fails to make
any mandatory Employee contribution to the Plan.
The percentage referred to in the preceding paragraph will not exceed
the percentage of Aggregate Compensation at which Employer
Discretionary Contributions are made or allocated to the Key Employee
for whom such percentage is the largest; provided, however, this
sentence will not apply if the Plan is required to be included in an
Aggregation Group to meet the requirements of Code Sections 401(a)(4)
or 410.
(e) Withdrawals
A Participant may not withdraw any portion of his Employer
Discretionary Account prior to the time when benefits otherwise become
payable in accordance with the provisions of Article 5.
3.03 Employer Matching Account
Employer Matching Account means the Account of a Participant reflecting
applicable contributions, forfeitures, investment income or loss allocated
thereto and distributions. A Participant's Employer Matching Account is
subject to the Vesting Schedule.
(a) Employer Matching Contributions
Each Plan Year, the Employer may, within the time prescribed by law
for making a deductible contribution, make an Employer Matching
Contribution to the Trust.
For a given Plan Year, the total Employer Matching Contribution, if
any, made by the Employer will be an amount determined and authorized
in its sole discretion by the Employer for such Plan Year; however,
the Employer will not authorize Employer Matching Contributions at
such times or in such amounts that the Plan, in operation,
discriminates in favor of Highly Compensated Employees.
The Employer may, at any time before or during a Plan Year, announce a
target Employer Matching Contribution to be made for each Eligible
Participant for the Plan Year. If the sum of the target Employer
Matching Contributions to be made for all Participants is less than or
greater than the total Employer Matching Contribution made by the
Employer in accordance with the provisions of this Section, then the
actual Employer Matching Contribution allocated to each Eligible
Participant's Employer Matching Account will be adjusted proratably so
that the sum of the actual Employer Matching Contributions made for
all Participants is equal to the total Employer Matching Contribution
made by the Employer.
All Employer Matching Contributions are Matching Contributions within
the meaning of Section 4.05(a) and must satisfy the Nondiscrimination
Requirements of Section 4.05.
(b) Contribution Period
The Contribution Period for Employer Matching Contributions is each
calendar year.
(c) Application of Forfeitures
Forfeitures from a Participant's Employer Matching Account will be
used to reduce Employer Matching Contributions in the Plan Year in
which the Forfeitures are determined to occur.
<PAGE>
(d) Withdrawals
A Participant may not withdraw any portion of his Employer Matching
Account prior to the time when benefits otherwise become payable in
accordance with the provisions of Article 5.
3.04 Rollover Account
Rollover Account means the Account of a Participant reflecting applicable
contributions, investment income or loss allocated thereto and
distributions. A Participant's Rollover Account is 100% vested at all
times.
(a) Rollover Contributions
Rollover Contribution means a contribution to the Plan by a
Participant where such contribution is the result of a prior
distribution from an Individual Retirement Account, an Individual
Retirement Annuity or another qualified plan. Such prior contribution
must be a rollover amount described in Section 402(c)(4) of the Code
or a contribution described in Section 408(d)(3) of the Code.
Each Employee who is a member of an Eligible Employee Classification,
regardless of whether he is a Participant in the Plan, will have the
right to make a Rollover Contribution of cash (or other property of a
form acceptable to the Plan Administrator and the Trustee) into the
Plan from another qualified plan. If the Employee is not a Participant
hereunder, his Rollover Account will constitute his entire interest in
the Plan. In no event will the existence of a Rollover Account entitle
the Employee to participate in any other benefit provided by the Plan.
If specifically provided for in a Written Resolution, Rollover
Contribution will also mean the amount of assets transferred, pursuant
to Section 10.05, to this Plan from another plan which is qualified
under Code Sections 401(a) and 501(a).
(b) Withdrawals
A Participant may withdraw all or any portion of his Rollover Account
at any time.
ARTICLE 4
ACCOUNTING AND VALUATION
4.01 General Powers of the Plan Administrator
The Plan Administrator will have the power to establish rules and
guidelines, which will be applied on a uniform and non-discriminatory
basis, as it deems necessary, desirable or appropriate with regard to
accounting procedures and to the timing and method of contributions to
and/or withdrawals from the Plan.
4.02 Valuation Procedure
As of each Valuation Date, the Plan Administrator will determine from the
Trustee the fair market value of each Specific Investment Fund and will,
subject to the provisions of this Article, determine the allocation of such
value among the Accounts of the Participants; in doing so, the Plan
Administrator will in the following order:
(a) Credit or charge, as appropriate, to the proper Accounts all
contributions, payments,
<PAGE>
transfers, forfeitures, withdrawals or other distributions made to or
from such Accounts since the last preceding Valuation Date and that
have not been previously credited or charged.
(b) Credit or charge, as applicable, each Account with its pro rata
portion of the appreciation or depreciation in the fair market value
of each Specific Investment Fund since the prior Valuation Date. Such
appreciation or depreciation will reflect investment income, realized
and unrealized gains and losses, other investment transactions and
expenses paid from each Specific Investment Fund.
4.03 Reserved
4.04 Participant Direction of Investment
(a) Application of this Section
Subject to the provisions of this Section, each Participant will have
the right to direct the investment of all of his Accounts among the
Specific Investment Funds which are made available by the Plan
Administrator.
(b) General Powers of the Plan Administrator
The Plan Administrator will have the power to establish rules and
guidelines as it deems necessary, desirable or appropriate with regard
to the directed investment of contributions in accordance with this
Section. Such rules and guidelines are intended to comply with Section
404(c) of ERISA and the regulations thereunder. Included in such
powers, but not by way of limitation, are the following powers and
rights.
(1) To direct the Trustee to temporarily invest those contributions
which are pending directed investment in a Specific Investment
Fund, in the General Investment Fund or in some other manner as
determined by the Plan Administrator.
(2) To establish rules with regard to the transfer of all or any part
of the balance of an Account or Accounts of a given Participant
from one Investment Fund to another.
(3) To direct the Trustee to maintain any part of the assets of any
Investment Fund in cash, or in demand or short-term time deposits
bearing a reasonable rate of interest, or in a short-term
investment fund that provides for the collective investment of
cash balances or in other cash equivalents having ready
marketability, including, but not limited to, U.S. Treasury
Bills, commercial paper, certificates of deposit, and similar
types of short-term securities, as may be deemed necessary by the
Trustee in its sole discretion.
Neither the Trustee nor the Plan Administrator will be liable for any
loss that results from a Participant's exercise of control over the
investment of the Participant's Accounts. If the Participant fails to
provide adequate directions, the Plan Administrator will direct the
investment of the Participant's Account. The Trustee will have no duty
to review or make recommendations regarding a Participant's investment
directions.
(c) Accounting
The Plan Administrator will maintain a set of accounts for each
Investment Fund. The accounts of the Plan Administrator for each
Investment Fund will indicate separately the dollar amounts of all
contributions made to such Investment Fund by or on behalf of each
Participant from time to time. The Plan Administrator will compute the
net income from investments; net profits or losses arising from the
sale, exchange, redemption, or other
<PAGE>
disposition of assets, and the prorata share attributable to each
Investment Fund of the expenses of the administration of the Plan and
Trust and will debit or credit, as the case may be, such income,
profits or losses, and expenses to the unsegregated balance in each
Investment Fund from time to time. To the extent that the expenses of
the administration of the Plan and Trust are not directly attributable
to a given Investment Fund, such expenses, as of a given Valuation
Date, will be prorated among each Investment Fund; such allocation of
expenses will, in general, be performed in accordance with the
guidelines which are specified in this Article.
(d) Future Contributions
Each Participant who chooses to participate in the Plan will elect the
percentage of those contributions (which are subject to Participant
direction of investment) which is to be deposited to each available
Investment Fund. Such election will be in effect until modified. If
any Participant fails to make an election by the appropriate date, he
will be deemed to have elected an Investment Fund(s) as determined by
the Plan Administrator. Elections will be limited to multiples of one
percent (or such other reasonable increments as determined by the Plan
Administrator).
(e) Change in Investment of Past Contributions
A Participant may file an election with the Plan Administrator to
shift the aggregate amount or reasonable increments (as determined by
the Plan Administrator) of the balance of his existing Account or
Accounts which are subject to Participant direction of investment
among the various Investment Funds. Elections will be limited to
multiples of one percent (or such other reasonable increments as
determined by the Plan Administrator).
(f) Changes in Investment Elections
Elections with respect to future contributions and/or with respect to
changes in the investment of past contributions will be in writing on
a form provided by the Plan Administrator, except that each
Participant may authorize the Plan Administrator in writing on an
authorization form provided by the Plan Administrator to accept such
directions as may be made by the Participant by use of a telephone
voice response system maintained for such purpose.
The Plan Administrator may establish additional rules and procedures
with respect to investment election changes including, for example,
the number of allowed changes per specified period, the amount of
reasonable fee, if any, which will be charged to the Participant for
making a change, specified dates or cutoff dates for making a change,
etc.
(g) Addition and Deletion of Specific Investment Funds
Specific Investment Funds may be made available from time to time at
the direction of the Plan Administrator. The Plan Administrator will
establish guidelines for the proper administration of affected
Accounts when a Specific Investment Fund is added or deleted.
4.05 Nondiscrimination Requirements
(a) Definitions Applicable to the Nondiscrimination Requirements
The following definitions apply to this Section:
(1) Aggregate Limit
With respect to a given Plan Year, Aggregate Limit means the
greater of the sum of [(A) + (B)] or the sum of [(C) + (D)]
where:
<PAGE>
(A) is equal to 125% of the greater of DP or CP;
(B) is equal to 2 percentage points plus the lesser of
DP or CP, not to exceed 2 times the lesser of DP or
CP;
(C) is equal to 125% of the lesser of DP or CP;
(D) is equal to 2 percentage points plus the greater of
DP or CP, not to exceed 2 times the greater of DP
or CP;
DP represents the Deferral Percentage for the Non-
highly Compensated Group eligible under the Cash or
Deferred Arrangement for the Plan Year; and
CP represents the Contribution Percentage for the
Non-highly Compensated Group eligible under the
plan providing for the Employee After-tax
Contributions or Employer Matching Contributions
for the Plan Year beginning with or within the Plan
Year of the Cash or Deferred Arrangement.
(2) Cash or Deferred Arrangement (CODA)
A Cash or Deferred Election is any election (or modification
of an earlier election) by an Employee to have the Employer
either:
. provide an amount to the Employee in the form of cash
or some other taxable benefit that is not currently
available, or
. contribute an amount to the Plan (or provide an
accrual or other benefit) thereby deferring receipt
of Compensation.
A Cash or Deferred Election will only be made with respect
to an amount that is not currently available to the Employee
on the date of election. Further, a Cash or Deferred
Election will only be made with respect to amounts that
would have (but for the Cash or Deferred Election) become
currently available after the later of the date on which the
Employer adopts the Cash or Deferred Arrangement or the date
on which the arrangement first becomes effective.
A Cash or Deferred Election does not include a one-time
irrevocable election upon the Employee's commencement of
employment or first becoming an Eligible Employee.
(3) Compensation
For purposes of this Section, Compensation means Aggregate
Compensation as defined in Section 7.03(a) plus amounts
contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the gross income of the
Employee under Code Section 125, 402(e)(3), 402(h) or
403(b). Compensation in excess of the Statutory Compensation
Limit is disregarded.
The period used to determine an Employee's Compensation for
a Plan Year may be limited to that portion of the Plan Year
in which the Employee was an Eligible Employee, provided
that this method is applied uniformly to all Eligible
Employees under the Plan for the Plan Year.
(4) Contribution Percentage
Contribution Percentage means, for any specified group, the
average of the ratios
<PAGE>
calculated (to the nearest one-hundredth of one percent)
separately for each Participant in the group, of the amount
of Employee After-tax Contributions and Matching
Contributions which are made by or on behalf of each
Participant for a Plan Year to each Participant's
Compensation for the Plan Year.
For purposes of determining the Contribution Percentage,
each Employee who is eligible under the terms of the Plan to
make or to have contributions made on his behalf is treated
as a Participant. The Contribution Percentage of an eligible
Employee who makes no Employee After-tax Contribution and
receives no Matching Contribution is zero.
For purposes of determining the Contribution Percentage of a
Participant who is a Highly Compensated Employee, the
Compensation of and all Employee Contributions and Matching
Contributions for the Participant include, in accordance
with the provisions of Section 4.05(d), the Compensation of
and all Employee After-tax Contributions and Matching
Contributions for any Family Member of the Participant.
The Contribution Percentage of a Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible
to make Employee After-tax Contributions or receive an
allocation of Matching Contributions (including Elective
Contributions and Nonelective Contributions which are
treated as Employee or Matching Contributions for purposes
of the Contribution Percentage Test) allocated to his
accounts under two or more plans which are sponsored by the
Employer will be determined as if the Employee After-tax and
Matching Contributions were made under a single plan. For
purposes of this paragraph, if a Highly Compensated Employee
participates in two or more such plans which have different
Plan Years, all plans ending with or within the same
calendar year will be treated as a single plan.
(5) Contribution Percentage Test
The Contribution Percentage Test is a test applied on a Plan
Year basis to determine whether a plan meets the
requirements of Code Section 401(m). The Contribution
Percentage Test may be met by either satisfying the General
Contribution Percentage Test or the Alternative Contribution
Percentage Test.
The General Contribution Percentage Test is satisfied if the
Contribution Percentage for the Highly Compensated Group
does not exceed 125% of the Contribution Percentage for the
Non-highly Compensated Group.
The Alternative Contribution Percentage Test is satisfied if
the Contribution Percentage for the Highly Compensated Group
does not exceed the lesser of:
. the Contribution Percentage for the Non-highly
Compensated Group plus 2 percentage points, or
. the Contribution Percentage for the Non-highly
Compensated Group multiplied by 2.0.
If (i) one or more Highly Compensated Employees of the
Employer or any Related Employer are eligible to participate
in both a Cash or Deferred Arrangement and a plan which
provides for Employee After-tax Contributions or Matching
Contributions, (ii) the Deferral Percentage for the Highly
Compensated Group does not satisfy the General Deferral
Percentage Test, and (iii) the Contribution Percentage for
the Highly Compensated Group does not satisfy the General
Contribution Percentage Test, then the
<PAGE>
Contribution Percentage Test will be deemed to be satisfied
only if the sum of the Deferral Percentage and the
Contribution Percentage for the Highly Compensated Group
does not exceed the Aggregate Limit.
The Plan will not fail to satisfy the Contribution
Percentage test merely because all of the Eligible Employees
under the Plan for a Plan Year are Highly Compensated
Employees.
(6) Deferral Percentage
Deferral Percentage means, for any specified group, the
average of the ratios calculated (to the nearest one-
hundredth of one percent) separately for each Participant in
the group, of the amount of Elective Contributions which are
made on behalf of each Participant for a Plan Year to each
Participant's Compensation for the Plan Year.
For purposes of determining the Deferral Percentage, each
Employee who is eligible under the terms of the Plan to have
contributions made on his behalf is treated as a
Participant. The Deferral Percentage of an eligible Employee
who makes no Elective Contribution is zero.
For purposes of determining the Deferral Percentage of a
Participant who is a Highly Compensated Employee, the
Compensation of and Elective Contributions for the
Participant include, in accordance with the provisions of
Section 4.05(d), the Compensation and all Elective
Contributions for any Family Member of the Participant.
The Deferral Percentage of a Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible
to have Elective Contributions (including Nonelective
Contributions or Matching Contributions which are treated as
Elective Contributions for purposes of the Deferral
Percentage Test) allocated to his accounts under two or more
Cash or Deferred Arrangements which are maintained by the
Employer will be determined as if the Elective Contributions
were made under a single Arrangement. For purposes of this
paragraph, if a Highly Compensated Employee participates in
two or more Cash or Deferred Arrangements which have
different Plan Years, all Cash or Deferred Arrangements
ending with or within the same calendar year will be treated
as a single Arrangement.
(7) Deferral Percentage Test
The Deferral Percentage Test is a test applied on a Plan
Year basis to determine whether a plan meets the
requirements of Code Section 401(k). The Deferral Percentage
Test may be met by either satisfying the General Deferral
Percentage Test or the
Alternative Deferral Percentage Test.
The General Deferral Percentage Test is satisfied if the
Deferral Percentage for the Highly Compensated Group does
not exceed 125% of the Deferral Percentage for the Non-
highly Compensated Group.
The Alternative Deferral Percentage Test is satisfied if the
Deferral Percentage for the Highly Compensated Group does
not exceed the lesser of:
. the Deferral Percentage for the Non-highly
Compensated Group plus 2 percentage points, or
<PAGE>
. the Deferral Percentage for the Non-highly
Compensated Group multiplied by 2.0.
If (i) one or more Highly Compensated Employees of the
Employer or any Related Employer are eligible to participate
in both a Cash or Deferred Arrangement and a plan which
provides for Employee After-tax Contributions or Matching
Contributions, (ii) the Deferral Percentage for the Highly
Compensated Group does not satisfy the General Deferral
Percentage Test, and (iii) the Contribution Percentage for
the Highly Compensated Group does not satisfy the General
Contribution Percentage Test, then the Deferral Percentage
Test will be deemed to be satisfied only if the sum of the
Deferral Percentage and the Contribution Percentage for the
Highly Compensated Group does not exceed the Aggregate
Limit.
The Plan will not fail to satisfy the Deferral Percentage
test merely because all of the Eligible Employees under the
Plan for a Plan Year are Highly Compensated Employees.
(8) Elective Contribution
Elective Contribution means any contribution made by the
Employer to a Cash or Deferred Arrangement on behalf of and
at the election of an Employee. An Elective Contribution
will be taken into account for a given Plan Year only if:
. The Elective Contribution is allocated to the
Participant's Account as of a date within the Plan Year to
which it relates;
. The allocation is not contingent upon the Employee's
participation in the Plan or performance of services on
any date after the allocation date;
. The Elective Contribution is actually paid to the trust no
later than 12 months after the end of the Plan Year to
which the Elective Contribution relates; and
. The Elective Contribution relates to Compensation which
either (i) but for the Participant's election to defer,
would have been received by the Participant in the Plan
Year or (ii) is attributable to services performed by the
Participant in the Plan Year and, but for the
Participant's election to defer, would have been received
by the Participant within two and one-half months after
the close of the Plan Year.
Elective Contributions will be treated as Employer
Contributions for purposes of Code Sections 401(a), 401(k),
402(a), 404, 409, 411, 412, 415, 416, and 417.
(9) Elective Deferral
Elective Deferral means the sum of the following:
. Any Elective Contribution to any Cash or Deferred
Arrangement to the extent it is not includable in the
Participant's gross income for the taxable year of
contribution;
. Any employer contribution to a simplified employee
pension as defined in Code Section 408(k) to the
extent not includable in
<PAGE>
the Participant's gross income for the taxable year
of contribution;
. Any employer contribution to an annuity contract
under Code Section 403(b) under a salary reduction
agreement to the extent not includable in the
Participant's gross income for the taxable year of
contribution; plus
. Any employee contribution designated as deductible
under a trust described in Code Section 501(c)(18)
for the taxable year of contribution.
(10) Eligible Employee
Eligible Employee means an Employee who is directly or
indirectly eligible to make a Cash or Deferred Election
under the Plan for all or a portion of the Plan Year. An
Employee who is unable to make a Cash or Deferred Election
because the Employee has not contributed to another plan is
also an Eligible Employee. An Employee who would be eligible
to make Elective Contributions but for a suspension due to a
distribution, a loan, or an election not to participate in
the Plan, is treated as an Eligible Employee for purposes of
Code Section 401(k)(3) and 401(m) for a Plan Year even
though the Employee may not make a Cash or Deferred Election
due to the suspension. Also, an Employee will not fail to be
treated as an Eligible Employee merely because the employee
may receive no additional Annual Additions because of Code
Section 415(c)(1) or 415(e).
(11) Employee After-tax Contribution
Employee After-tax Contribution means any contribution made
by an Employee to any plan maintained by the Employer or any
Related Employer which is other than an Elective
Contribution and which is designated or treated at the time
of contribution as an after-tax contribution. Employee
After-tax Contributions include amounts attributable to
Excess Contributions which are recharacterized as Employee
After-tax Contributions.
(12) Excess Contribution
Excess Contribution means, for each member of the Highly
Compensated Group, the amount of Elective Contribution
(including any Qualified Nonelective Contributions and
Qualified Matching Contributions which are treated as
Elective Contributions) which exceeds the maximum
contribution which could be made if the Deferral Percentage
Test were to be satisfied.
(13) Excess Aggregate Contribution
Excess Aggregate Contribution means, for each member of the
Highly Compensated Group, the amount of Employee After-tax
and Matching Contributions (including any Qualified
Nonelective Contributions and Elective Contributions which
are treated as Matching Contributions) which exceeds the
maximum contribution which could be made if the Contribution
Percentage Test were to be satisfied.
(14) Excess Deferral
Excess Deferral means, for a given calendar year, that
amount by which each Participant's total Elective Deferrals
under all plans of all employers exceed the dollar limit in
effect under Code Section 402(g) for the calendar year.
(15) Matching Contribution
<PAGE>
Matching Contribution means any contribution made by the
Employer to any plan maintained by the Employer or any
Related Employer which is based on an Elective Contribution
or an Employee After-tax Contribution together with any
forfeiture allocated to the Participant's Account on the
basis of Elective Contributions, Employee After-tax
Contributions or Matching Contributions. A Matching
Contribution will be taken into account for a given Plan
Year only if:
. The Matching Contribution is allocated to a
Participant's Account as of a date within the Plan
Year to which it relates;
. The allocation is not contingent upon the Employee's
participation in the Plan or performance of services
on any date after the allocation date;
. The Matching Contribution is actually paid to the
Trust no later than 12 months after the end of the
Plan Year to which the Matching Contribution relates;
and
. The Matching Contribution is based on an Elective or
Employee After-tax Contribution for the Plan Year.
Any contribution or allocation, other than a Qualified
Nonelective Contribution, which is used to meet the minimum
contribution or benefit requirement of Code Section 416 is
not treated as being based on Elective Contributions or
Employee After-tax Contributions and therefore is not
treated as a Matching Contribution.
Qualified Matching Contribution means a Matching
Contribution which is 100% vested and may be withdrawn or
distributed only under the conditions described in Treasury
Regulation 1.401(k)-1(d).
(16) Nonelective Contribution
Nonelective Contribution means any Employer Contribution,
other than a Matching Contribution, which meets all of the
following requirements:
. The Nonelective Contribution is allocated to a
Participant's Account as of a date within the Plan
Year to which it relates;
. The allocation is not contingent upon the Employee's
participation in the Plan or performance of services
on any date after the allocation date;
. The Nonelective Contribution is actually paid to the
Trust no later than 12 months after the end of the
Plan Year to which the Nonelective Contribution
relates; and
. The Employee may not elect to have the Nonelective
Contribution paid in cash in lieu of being
contributed to the Plan.
Qualified Nonelective Contribution means a Nonelective
Contribution which is 100% vested and may be withdrawn or
distributed only under the conditions described in Treasury
Regulation 1.401(k)-1(d).
(b) Application of Deferral Percentage Test
<PAGE>
All Elective Contributions, including any Elective
Contributions which are treated as Employee After-tax or
Matching Contributions with respect to the Contribution
Percentage Test, must satisfy the Deferral Percentage Test.
Furthermore, any Elective Contributions which are not
treated as Employee After-tax or Matching Contributions with
respect to the Contribution Percentage Test must satisfy the
Deferral Percentage Test. The Plan Administrator will
determine as soon as administratively feasible after the end
of the Plan Year whether the Deferral Percentage Test has
been satisfied. If the Deferral Percentage Test is not
satisfied, the Employer may elect to make an additional
contribution to the Plan on account of the Non-highly
Compensated Group. The additional contribution will be
treated as a Nonelective Contribution.
If the Deferral Percentage Test is not satisfied after any
Nonelective Contributions, the Plan Administrator may, in
its sole discretion, recharacterize all or any portion of
the Excess Contribution of each Highly Compensated Employee
as an Employee After-tax Contribution if Employee After-tax
Contributions are otherwise allowed by the Plan. If so, the
Plan Administrator will notify all affected Participants and
the Internal Revenue Service of the amount recharacterized
no later than the 15th day of the third month following the
end of the Plan Year in which the Excess Contribution was
made. Excess Contributions will be includable in the
Participant's gross income on the earliest date any Elective
Contribution made on behalf of the Participant during the
Plan Year would have been received by the Participant had
the Participant elected to receive the amount in cash.
Recharacterized Excess Contributions will continue to be
treated as Employer Contributions that are Elective
Contributions for all other purposes under the Code,
including Code Sections 401(a) (other than 401(a)(4) and
401(m)), 404, 409, 411, 412, 415, 416, 417 and 401(k)(2).
With respect to the Plan Year for which the Excess
Contribution was made, the Plan Administrator will treat the
recharacterized amount as an Employee After-tax Contribution
for purposes of the Deferral Percentage Test and the
Contribution Percentage Test and for purposes of determining
whether the Plan meets the requirements of Code Section
401(a)(4), but not for any other purposes under this Plan.
Therefore, recharacterized amounts will remain subject to
the nonforfeiture requirements and distribution limitations
which apply to Elective Contributions.
If the Deferral Percentage Test is still not satisfied, then
after the close of the Plan Year in which the Excess
Contribution arose but within 12 months after the close of
that Plan Year, the Plan Administrator will distribute the
Excess Contributions, together with allocable income, to the
affected Participants of the Highly Compensated Group to the
extent necessary to satisfy the Deferral Percentage Test.
The amount of Excess Contribution to be distributed to a
Highly Compensated Employee for a Plan Year will be reduced
by any Excess Deferrals previously distributed to the
Participant for the calendar year ending with or within the
Plan Year in accordance with Code Section 402(g)(2).
Excess Contributions will be treated as Employer
Contributions for purposes of Code Sections 404 and 415 even
if distributed from the Plan.
(c) Application of Contribution Percentage Test
Employee After-tax Contributions and Matching Contributions,
disregarding any Matching Contributions which are treated as
Elective Contributions with respect to the Deferral
Percentage Test, must satisfy the Contribution Percentage
Test. The Plan Administrator will determine as soon as
administratively feasible after the end of the Plan Year
whether the Contribution Test has been satisfied. If the
Contribution Percentage Test is not satisfied, the Employer
may elect to make an additional contribution to the Plan for
the
<PAGE>
benefit of the Non-Highly Compensated Group. The additional
contribution will be treated as a Nonelective Contribution.
If the Contribution Percentage Test is still not satisfied,
then after the close of the Plan Year in which the Excess
Aggregate Contribution arose but within 12 months after the
close of that Plan Year, the Plan Administrator will
distribute (or forfeit, to the extent not vested) the Excess
Aggregate Contributions, together with allocable income, to
the affected Participants of the Highly Compensated Group to
the extent necessary to satisfy the Contribution Percentage
Test. Failure to do so will cause the Plan to not satisfy
the requirements of Code Section 401(a)(4) for the Plan Year
for which the Excess Aggregate Contribution was made and for
all subsequent Plan Years for which the Excess Aggregate
Contribution remains uncorrected.
The determination of any Excess Aggregate Contributions will
be made after the recharacterization of any Excess
Contributions as Employee After-tax Contributions.
Excess Aggregate Contributions, including forfeited Matching
Contributions, will be treated as Employer Contributions for
purposes of Code Sections 404 and 415 even if they are
distributed from the Plan.
Forfeited Matching Contributions that are reallocated to the
Accounts of other Participants are treated as Annual
Additions under Code Section 415 for the Participant whose
Accounts they are reallocated to and for the Participants
from whose Accounts they are forfeited.
(d) Family Aggregation
The Deferral Percentage or the Contribution Percentage (the
"Relevant Percentage") for any Highly Compensated Employee
who is subject to the family aggregation rules of Section
1.18(c) will be determined by combining the Elective
Contributions, Employee After-tax Contributions, Matching
Contribution, amounts treated as Elective or Matching
Contributions and Compensation of all the eligible Family
Members.
The determination and correction of Excess Contributions and
Excess Aggregate Contributions of a Highly Compensated
Employee whose Relevant Percentage is determined under the
family aggregation rules is accomplished by reducing the
Relevant Percentage as provided for in Sections 4.05(b) and
4.05(c) and Excess Contributions or Excess Aggregate
Contributions for the family group are allocated among the
Family Members whose contributions were combined to
determine the Relevant Percentage in proportion to the
Elective Contributions or Nonelective and Matching
Contributions of each Family Member.
For all purposes under this Section, the contributions and
compensation of eligible Family Members who are not Highly
Compensated Employees without regard to family aggregation
are disregarded when determining the Relevant Percentage for
the Non-highly Compensated Group.
(e) Reduction of Excess Amounts
The total Excess Contribution or total Excess Aggregate
Contribution will be reduced in a manner so that the
Deferral Percentage or the Contribution Percentage (Relevant
Percentage) of the affected Participant(s) with the highest
Relevant Percentage will first be lowered to a point not
less than the level of the affected Participant(s) with the
next highest Relevant Percentage. If further overall
reductions are required to satisfy the relevant test, each
of the above Participants' (or groups of Participants')
Relevant Percentage will be lowered to a point not less than
the level of the affected
<PAGE>
Participant(s) with the next highest Relevant Percentage,
and so on continuing until sufficient total reductions have
occurred to achieve satisfaction of the relevant test.
(f) Priority of Reductions
The Plan Administrator will determine the method and order
of correcting Excess Contributions and Excess Aggregate
Contributions. The method of correcting Excess Contributions
and Excess Aggregate Contributions must meet the
requirements of Code Section 401(a)(4). The determination of
whether a rate of Matching Contribution discriminates under
Code Section 401(a)(4) will be made after making any
corrective distributions of Excess Deferrals, Excess
Contributions and Excess Aggregate Contributions.
Excess Aggregate Contributions (and any attributable income)
will be corrected first, by distributing any excess Employee
After-tax Contributions (and any attributable income); then
by distributing vested excess Matching Contributions (and
any attributable income); and finally, by forfeiting or
distributing non-vested Matching Contributions (and any
attributable income). The Plan will not distribute Employee
After-tax Contributions while the Matching Contributions
based upon those Employee After-tax Contributions remain
allocated.
(g) Income
The income allocable to any Excess Contribution made to a
given Account for a given Plan Year will be equal to the
total income allocated to the Account for the Plan Year,
multiplied by a fraction, the numerator of which is the
amount of the Excess Contribution and the denominator of
which is equal to the sum of the balance of the Account at
the beginning of the Plan Year plus the Participant's
Elective Contributions and amounts treated as Elective
Contributions for the Plan Year.
The income allocable to any Excess Aggregate Contribution
made to a given Account for a given Plan Year will be equal
to the total income allocated to the Account for the Plan
Year, multiplied by a fraction, the numerator of which is
the amount of the Excess Aggregate Contribution and the
denominator of which is equal to the sum of the balance of
the Account at the beginning of the Plan Year plus the
Participant's Employee After-tax and Matching Contributions
and amounts treated as Employee After-tax and Matching
Contributions for the Plan Year.
Notwithstanding the foregoing, the Plan may use any
reasonable method for computing the income allocable to any
Excess Contribution or Excess Aggregate Contribution
provided the method does not violate Code Section 401(a)(4),
is used consistently for all corrective distributions under
the Plan for the Plan Year, and is used by the Plan for
allocating income to the Participants' Accounts.
Income includes all earnings and appreciation, including
interest, dividends, rents, royalties, gains from the sale
of property, and appreciation in the value of stocks, bonds,
annuity and life insurance contracts and other property,
regardless of whether the appreciation has been realized.
(h) Treatment as Elective Contributions
The Plan Administrator may, in its discretion, treat all or
any portion of Qualified Nonelective Contributions or
Qualified Matching Contributions or both, whether to this
Plan or to any other qualified plan which has the same Plan
Year and is maintained by the Employer or a Related
Employer, as Elective Contributions for purposes of
satisfying the Deferral Percentage Test if they meet all of
the following requirements:
<PAGE>
. All Nonelective Contributions, including the
Qualified Nonelective Contributions treated as
Elective Contributions for purposes of the Deferral
Percentage Test, satisfy the requirements of Code
Section 401(a)(4);
. Any Nonelective Contributions which are not treated
as Elective Contributions for purposes of the
Deferral Percentage Test or as Matching
Contributions for purposes of the Contribution
Percentage Test satisfy the requirements of Code
Section 401(a)(4);
. The Qualified Matching Contributions which are
treated as Elective Contributions for purposes of
the Deferral Percentage Test are not taken into
account in determining whether any Employee After-
tax Contributions or other Matching Contributions
satisfy the Contribution Percentage Test;
. Any Matching Contributions which are not treated as
Elective Contributions for purposes of the Deferral
Percentage Test satisfy the requirements of Code
Section 401(m); and
. The plan which includes the Cash or Deferred
Arrangement and the plan or plans to which the
Qualified Nonelective Contributions and Qualified
Matching Contributions are made could be aggregated
for purposes of Code Section 410(b).
(i) Treatment as Matching Contributions
The Plan Administrator may, in its discretion, treat all or
any portion of Qualified Nonelective Contributions or
Elective Contributions or both, whether to this Plan or to
any other qualified plan which has the same Plan Year and is
maintained by the Employer or a Related Employer, as
Matching Contributions for purposes of satisfying the
Contribution Percentage Test if they meet all of the
following requirements:
. All Nonelective Contributions, including the
Qualified Nonelective Contributions treated as
Matching Contributions for purposes of the
Contribution Percentage Test, satisfy the
requirements of Code Section 401(a)(4);
. Any Nonelective Contributions which are not treated
as Elective Contributions for purposes of the
Deferral Percentage Test or as Matching
Contributions for purposes of the Contribution
Percentage Test satisfy the requirements of Code
Section 401(a)(4);
. The Elective Contributions which are treated as
Matching Contributions for purposes of the
Contribution Percentage Test are not taken into
account in determining whether any other Elective
Contributions satisfy the Deferral Percentage Test;
. The Qualified Nonelective Contributions and Elective
Contributions which are treated as Matching
Contributions for purposes of the Contribution
Percentage Test are not taken into account in
determining whether any other contributions or
benefits satisfy Code Section 401(a); and
. All Elective Contributions, including those treated
as Matching Contributions for purposes of the
Contribution Percentage Test, satisfy the
requirements of Code Section 401(k)(3); and
. The plan that takes Qualified Nonelective
Contributions and Elective Contributions
<PAGE>
into account in determining whether Employee After-
tax and Matching Contributions satisfy the
requirements of Code Section 401(m)(2)(A) and the
plan or plans to which the Qualified Nonelective
Contributions and Elective Contributions are made
could be aggregated for purposes of Code Section
410(b).
(j) Aggregation of Plans
If the Employer or a Related Employer sponsors one or more
other plans which include a Cash or Deferred Arrangement,
the Employer may elect to treat any two or more of such
plans as an aggregated single plan for purposes of
satisfying Code Sections 401(a)(4), 401(k) and 410(b). The
Cash of Deferred Arrangements included in such aggregated
plans will be treated as a single Arrangement for purposes
of this Section. However, only those plans that have the
same plan year may be so aggregated.
If the Employer or a Related Employer sponsors one or more
other plans to which Employee After-tax Contributions or
Matching Contributions are made, the Employer may elect to
treat any two or more of such plans as an aggregated single
plan for purposes of satisfying Code Sections 401(a)(4),
401(m) and 410(b). However, only those plans that have the
same plan year may be so aggregated.
Any such aggregation must be made in accordance with
Treasury Regulation 1.401(k)-1(b)(3). For example,
contributions and allocations under the portion of a plan
described in Code Section 4975(e)(7) (an ESOP) may not be
aggregated with the portion of a plan not described in Code
Section 4975(e)(7) (a non-ESOP) for purposes of determining
whether the ESOP or non-ESOP satisfies the requirements of
Code Sections 401(a)(4), 401(k), 401(m) and 410(b).
Plans that could be aggregated under Code Section 410(b) but
that are not actually aggregated for a Plan Year for
purposes of Code Section 410(b) may not be aggregated for
purposes of Code Sections 401(k) and 401(m).
ARTICLE 5
RETIREMENT BENEFITS
5.01 Valuation of Accounts
For purposes of this Article, the value of a Participant's Accrued Benefit
will be determined as of the Valuation Date his Accounts are liquidated to
effect his distribution.
5.02 Normal Retirement
After an Active Participant reaches his Normal Retirement Date, he may
elect to retire. Upon such retirement he will become a Retired Participant
and his Accrued Benefit will become distributable to him. A Participant's
Accrued Benefit will become nonforfeitable no later than the date upon
which he attains his Normal Retirement Age. The form and timing of benefit
payment will be governed by the provisions of Section 5.05.
5.03 Disability Retirement
In the event of a Participant's termination due to Disability, he will be
entitled to begin to receive a distribution of his Accrued Benefit which
will become nonforfeitable as of his date of termination. The form and
timing of benefit payment will be governed by the provisions of Section
5.05.
<PAGE>
Disability means the determination by the Plan Administrator that a
Participant is unable by reason of any medically determinable physical or
mental impairment to perform the usual duties of his employment or of any
other employment for which he is reasonably qualified based upon his
education, training and experience.
5.04 Termination of Employment
(a) In General
If a Participant's employment terminates for any reason other than
retirement, death, or disability, his Accrued Benefit will become
distributable to him as of the last day of the month which coincides
with or next follows the last date upon which any contributions on the
Participant's behalf are made to the Trust following the Participant's
date of termination of employment (or as of such earlier date as
determined by the Plan Administrator in a uniform and
nondiscriminatory manner). The form and timing of benefit payment will
be governed by the provisions of Section 5.05.
(b) Cash-Out Distribution
If a Participant terminates employment and receives a distribution
equal to the Vested Percentage of his Accounts which are subject to
the Vesting Schedule (such Accounts are hereinafter referred to as
Employer Contribution Accounts), a Cash-Out Distribution will be
deemed to have occurred if the following conditions are met:
(1) The Participant was less than 100% vested in his Employer
Contribution Accounts; and
(2) The entire distribution is made before the last day of the second
Plan Year following the Plan Year in which the Participant
terminated employment.
(c) Restoration of Employer Contribution Accounts
If, following the date of a Cash-Out Distribution, a Participant
returns to an Eligible Employee Classification prior to incurring 5
consecutive One Year Breaks-in-Service, then the Participant will have
the right to repay to the Trustee, within 5 years after his return
date, the portion of the Cash-Out Distribution which was attributable
to his Employer Contribution Accounts which were less than 100% vested
in order to restore such Accounts to their value as of the date of the
Cash-Out Distribution.
The Plan Administrator will restore an eligible Participant's Employer
Contribution Accounts as of the Accounting Date coincident with or
immediately following the complete repayment of the Cash-Out
Distribution. To restore the Participant's Employer Contribution
Accounts, the Plan Administrator, to the extent necessary, will, under
rules and guidelines applied in a uniform and nondiscriminatory
manner, first allocate to the Participant's Employer Contribution
Accounts the amount, if any, of Forfeitures which would otherwise be
allocated under Article 3. To the extent such Forfeitures for a
particular Accounting Period are insufficient to enable the Plan
Administrator to make the required restoration, the Employer will
contribute such additional amount as is necessary to enable the Plan
Administrator to make the required restoration. The Plan Administrator
will not take into account the allocation under this Section in
applying the limitation on allocations under Article 7.
(d) Non-Vested Participant
If a Participant who is zero percent vested in his Employer
Contribution Accounts terminates employment, a Cash-Out Distribution
will be deemed to have occurred as of the Participant's date of
termination of employment.
<PAGE>
If the Participant subsequently returns to an Eligible Employee
Classification prior to incurring five consecutive One Year Breaks-in-
Service, then the Participant will immediately become entitled to a
complete restoration of his Employer Contribution Accounts as of the
Accounting Date coincident with or next following his date of re-
employment. Such restoration will be made in accordance with the
provisions of Section 5.04(c).
5.05 Time and Manner of Payment
(a) Form of Benefit Payment
Subject to the provisions of Sections 5.05(b) and 5.06 below,
distributions of a Participant's Vested Accrued Benefit may be made in
any of the following methods as the Participant selects:
(1) in a lump sum in cash or in kind;
(2) in a life annuity;
(3) in installments over a period not to exceed the life expectancy
of the Participant or joint and last survivor expectancy of the
Participant and designated Beneficiary as selected by the
Participant.
(b) Qualified Joint and Survivor Annuity
This Section 5.05(b) shall apply only to a Participant in the Plan who
has elected payment in the form of a life annuity, and with respect to
the account of a Participant that is attributable to a direct or
indirect transfer from a qualified plan which is subject to the
survivor annuity requirements of Code Sections 401(a)(11) and 417. The
Vested Accrued Benefit of a Participant which is subject to this
Section 5.05(b) shall be payable as follows:
(1) a Participant who is not married on the date benefits are to
commence will be provided a Qualified Life Annuity, unless a lump
sum or installment payment is elected, under a Qualified
Election, by the Participant within the 90-day period which ends
on his benefit commencement date.
(2) a Participant who is married on the date benefits commence will
be provided a Qualified Joint and Survivor Annuity unless a lump
sum payment, installment payment or life annuity is elected,
under a Qualified Election, by the Participant within the 90-day
period which ends on his benefit commencement date.
Within the 90-day period which ends on a married Participant's
expected benefit commencement date, the Plan Administrator will
provide each Participant with a written explanation of:
(1) the terms and conditions of a Qualified Joint and Survivor
Annuity;
(2) the Participant's right to make and the effect of a Qualified
Election to waive the Qualified Joint and Survivor Annuity form
of benefit;
(3) the rights of a Participant's spouse; and
(4) the right to make, and the effect of, a revocation of a previous
Qualified Election to
<PAGE>
waive the Qualified Joint and Survivor Annuity.
(c) Account Balance not in Excess of $3,500
Notwithstanding the above, if a terminated Participant's Vested
Accrued Benefit is $3,500 or less, such Participant's Vested Accrued
Benefit shall be payable in a lump sum of the entire amount of his
Vested Accrued Benefit. If the value of his Vested Accrued Benefit at
the time of any distribution exceeds $3,500, the value of his Vested
Accrued Benefit at any later time will be deemed to also exceed
$3,500.
(d) Installment Payment
Upon request, the Participant may receive his benefit paid in a series
of substantially equal annual or more frequent installments over a
period certain not extending beyond the earliest of (a) the end of the
period measured by the joint life and last survivor expectancy of the
Participant and his spouse, or (b) twenty (20) years. The Plan
Administrator and the Trustee will have the power to establish rules
and guidelines as deemed necessary or appropriate with regard to the
payment of benefits under the installment payment form.
5.06 Commencement of Benefit
Subject to the provisions of this Article, commencement of a benefit will,
unless the Participant elects otherwise in writing, begin not later than
the 60th day after the later of the close of the Plan Year in which the
Participant attains Normal Retirement Age or the close of the Plan Year
which contains the date the Participant terminates his service with the
Employer.
Payment of a Participant's benefits must begin no later than his Required
Beginning Date.
All distributions required under this Section will be determined and made
in accordance with the regulations issued under Code Section 401(a)(9),
including those dealing with minimum distribution requirements.
Notwithstanding the provisions of Section 5.05, an Active Participant who
is a Five Percent Owner and who has reached his Required Beginning Date
will receive an annual distribution of his Accrued Benefit equal to the
minimun required distribution determined under Code Section 401(a)(9).
For purposes of this Section, life expectancy and joint and last survivor
expectancy are to be computed by the use of the return multiples contained
in Section 1.72-9 of the Income Tax Regulations. Unless the Participant
elects otherwise by the time of the first required distribution, life
expectancy of the Participant and the surviving spouse will be recalculated
annually. Such election shall be irrevocable. The life expectancy of any
other designated Beneficiary will be calculated at the time payment first
begins without further recalculation.
If the Participant dies after distribution of his interest has begun, the
remaining portion of the interest will continue to be distributed at least
as rapidly as under the method of distribution being used before the
Participant's death.
5.07 Directed Transfer of Eligible Rollover Distributions
(a) General
This Section applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a Distributee's election under this Section, a
Distributee may elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of an Eligible Rollover
<PAGE>
Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover.
(b) Eligible Rollover Distribution
An Eligible Rollover Distribution is any distribution of all or any
portion of the balance to the credit of the Distributee, except that
an Eligible Rollover Distribution does not include: any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy)
of the Distributee or the joint lives (or joint life expectancies) of
the Distributee and the Distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(c) Eligible Retirement Plan
An Eligible Retirement Plan is an individual retirement account
described in section 408(a) of the Code, an individual retirement
annuity described in section 408(b) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the
Distributee's Eligible Rollover Distribution. However, in the case of
an Eligible Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
(d) Distributee
A Distributee includes an Employee or Former Employee. In addition,
the Employee's or Former Employee's surviving spouse and the
Employee's or Former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in section 414(p) of the Code, are Distributees with regard to the
interest of the spouse or former spouse.
(e) Direct Rollover
A Direct Rollover is a payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
(f) Waiver of 30-Day Notice
If a distribution is one to which Code Sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
. the Plan Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether
or not to elect a distribution (and, if applicable, a
particular distribution option); and
. the Participant, after receiving the notice, affirmatively
elects to receive a distribution.
ARTICLE 6
DEATH BENEFIT
<PAGE>
6.01 Valuation of Accounts
For purposes of this Article, the value of a Participant's Accrued Benefit
will be determined as of the Valuation Date his Accounts are liquidated to
effect his distribution.
6.02 Death Benefit
In the event of the death of a Participant prior to the date on which he
receives a complete distribution of his benefit under the Plan, the
Participant's Beneficiary will be entitled to receive the value of the
Participant's Accrued Benefit.
6.03 Designation of Beneficiary
Each Participant will be given the opportunity to designate a Beneficiary
or Beneficiaries, and from time to time the Participant may file with the
Plan Administrator a new or revised designation on the form provided by the
Plan Administrator. If a Participant is married, any designation of a
Beneficiary other than the Participant's spouse must be consented to by the
Participant's spouse pursuant to a Qualified Election.
If a Participant dies without designating a Beneficiary, or if the
Participant is predeceased by all designated Beneficiaries and contingent
Beneficiaries, the Plan Administrator will distribute all benefits which
are payable in the event of the Participant's death in the following manner
and to the first of the following (who are listed in order of priority) who
survive the Participant by at least 30 days:
. All to the Participant's Surviving Spouse;
. Equally among the then living children of the Participant (by
birth or adoption);
. Among the Participant's then living lineal descendants, by right
of representation; or
. The Participant's estate.
ARTICLE 7
LIMITATIONS ON BENEFITS
7.01 Limitation on Annual Additions
The amount of the Annual Addition which may be allocated under this Plan to
any Participant's Account as of any Allocation Date will not exceed the
Defined Contribution Limit (based upon his Aggregate Compensation up to
such Valuation Date) reduced by the sum of any allocations of annual
additions made to Participant's Accounts under this Plan as of any
preceding Allocation Date within the Limitation Year.
If the Annual Addition under this Plan on behalf of a Participant is to be
reduced as of any Allocation Date as a result of the next preceding
paragraph, the reduction will be, to the extent required, effected by first
reducing Participant contributions (which increase the annual addition),
then Forfeitures (if any), and then Employer contributions to be allocated
under this Plan on behalf of the Participant as of the Allocation Date.
<PAGE>
Any necessary reduction will be made as follows:
(a) The amount of the reduction consisting of nondeductible
Participant contributions will be paid to the Participant as soon
as administratively feasible.
(b) The amount of the reduction consisting of any other Participant
contributions will be paid to the Participant as soon as
administratively feasible.
(c) The amount of the reduction consisting of Forfeitures will be
allocated and reallocated to other Accounts in accordance with
the Plan formula for allocating Forfeitures to the extent that
such allocations do not cause the additions to any other
Participant's Accounts to exceed the lesser of the Defined
Contribution Limit or any other limitation provided in the Plan.
(d) Reserved.
(e) To the extent that the reductions described in paragraph (c)
cannot be allocated to other Participant's Accounts, the
reductions, and any reductions of Employer contributions which
cannot be allocated to a Participant's Accounts, will be
allocated to a suspense account and held therein until the next
succeeding Allocation Date on which they could be applied under
the provisions of the Plan. All amounts held in a suspense
account must be applied as Forfeitures before any additional
contributions, which would constitute annual additions, may be
made to the Plan. If the Plan terminates, the suspense account
will revert to the Employer to the extent it may not be allocated
to any Participant's Accounts.
(f) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, it will not participate
in the allocation of the Trust Fund's investment gains and
losses.
7.02 Where Employer Maintains Another Qualified Plan
(a) Where Employer Maintains Another Qualified Defined Contribution Plan
If the Employer maintains this Plan and one or more other qualified
defined contribution plans, one or more welfare benefit funds (as
defined in Code Section 419(e)), or one or more individual medical
accounts (as defined in Code Section 415(l)(2)), all of which are
referred to in this Article 7 as "qualified defined contribution
plans", the annual additions allocated under this Plan to any
Participant's Accounts will be limited in accordance with the
allocation provisions of this Section 7.02(a).
The amount of the Annual Additions which may be allocated under this
Plan to any Participant's Accounts as of any Allocation Date will not
exceed the Defined Contribution Limit (based upon Aggregate
Compensation up to the allocation date) reduced by the sum of any
allocations of Annual Additions made to the Participant's Accounts
under this Plan and any other qualified defined contribution plans
maintained by the Employer as of any earlier Allocation Date within
the Limitation Year.
If an Allocation Date of this Plan coincides with an Allocation Date
of any other plan described in the above paragraph, the amount of
Annual Additions to be allocated on behalf of a Participant under this
Plan as of such date will be an amount equal to the product of the
amount described in the next preceding paragraph multiplied by a
fraction (not to exceed 1.0), the numerator of which is the amount to
be allocated under this Plan without regard to this Article during the
Limitation Year and the denominator of which is the
<PAGE>
amount that would otherwise be allocated on this Allocation Date under
all plans without regard to this Article 7.
If the Annual Addition under this Plan on behalf of a Participant is
to be reduced as of any Allocation Date as a result of the next
preceding two paragraphs, the reduction will be, to the extent
required, effected by first reducing Participant contributions (which
increase the annual addition), then Forfeitures (if any), and then any
Employer contributions, to be allocated under this Plan on behalf of
the Participant as of the Allocation Date.
If as a result of the first four paragraphs of this Section 7.02 the
allocation of additions is reduced, the reduction will be treated in
the manner described in the third paragraph of Section 7.01.
(b) Where Employer Maintains a Qualified Defined Benefit Plan
(1) In General
If the Employer maintains (or has ever maintained), in addition
to this Plan, one or more qualified defined benefit plans, then
for any Limitation Year, the sum of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction will not
exceed 1.0. If, in any Limitation Year, the sum of the Defined
Benefit Plan Fraction and the Defined Contribution Plan Fraction
for a Participant would exceed 1.0 without adjustment to the
amount of the annual benefit that can be paid to the Participant
under the defined benefit plan, then the amount of annual benefit
that would otherwise be paid to the Participant under the defined
benefit plan will be reduced to the extent necessary to reduce
the sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction for the Participant to 1.0.
(2) Transition Rule under TRA '86
If a plan was in existence on May 6, 1986, the numerator of the
Defined Contribution Plan Fraction will be reduced (to not less
than zero) as prescribed by the Secretary of the Treasury by
subtracting the amount required to decrease the sum of the
Defined Contribution Plan Fraction plus the Defined Benefit Plan
Fraction to 1.0. Such amount is determined (as of the first day
of the first Limitation Year beginning on or after January 1,
1987) as the product of:
(A) The amount by which, without this adjustment, the sum of the
Defined Contribution Plan Fraction plus the Defined Benefit
Plan Fraction exceeds 1.0, multiplied by
(B) The denominator of the Defined Contribution Plan Fraction,
as computed through the last Limitation Year beginning
before January 1, 1987, disregarding any changes in the
terms and conditions of the plan after May 5, 1986.
This subparagraph applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of
Code Section 415 for all Limitation Years beginning before
January 1, 1987.
(3) Transition Rule under TEFRA
In the case of a plan which met the limitation of Section 415 of
the Code for the last Limitation Year beginning before January 1,
1983, the numerator of the Defined Contribution Plan Fraction
will be reduced (to not less than zero) as prescribed by the
Secretary of the Treasury by subtracting the amount required to
decrease the sum of the Defined Contribution Plan Fraction plus
the Defined Benefit Plan Fraction to
<PAGE>
1.0. Such amount is determined (as of the first day of the first
Limitation Year beginning on or after January 1, 1983) as
the product of:
(A) The amount by which, without this adjustment, the sum of the
Defined Contribution Plan Fraction plus the Defined Benefit
Plan Fraction exceeds 1.0, multiplied by
(B) The denominator of the Defined Contribution Plan Fraction,
as computed through the last Limitation Year beginning
before January 1, 1983.
7.03 Definitions Applicable to Article 7
(a) Aggregate Compensation
Aggregate Compensation means a Participant's earned income, wages,
salaries, and fees for professional services, and other amounts
received for personal services actually rendered in the course of
employment with the employer maintaining the plan (including, but not
limited to, commissions paid to salesmen, compensation for services on
the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
. Employer contributions to a plan of deferred compensation
which are not included in the employee's gross income for the
taxable year in which contributed or employer contributions
under a simplified employee pension plan to the extent the
contributions are deductible by the employee, or any
distributions from a plan of deferred compensation;
. Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by the
employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
. Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock option; and
. Other amounts which received special tax benefits, or
contributions made by the employer (whether or not under a
salary reduction agreement) toward the purchase of an annuity
described in Code Section 403(b) (whether or not the amounts
are actually excludable from the gross income of the
employee).
For Plan Years beginning prior to January 1, 1998, Aggregate
Compensation excludes any amounts contributed by the Employer or any
Related Employer on behalf of any Employee pursuant to a salary
reduction agreement which are not includable in the gross income of
the Employee due to Code Section 125, 402(e)(3), 402(h), 402(k) or
403(b).
Notwithstanding the above, for Plan Years beginning on or after
January 1, 1998, Aggregate Compensation includes any amounts
contributed by the Employer or any Related Employer on behalf of any
Employee pursuant to a salary reduction agreement which are not
includable in the gross income of the Employee due to Code Section
125, 402(e)(3), 402(h), 402(k) or 403(b).
Aggregate Compensation in excess of the Statutory Compensation Limit
is disregarded.
Aggregate Compensation for any Limitation Year is the Aggregate
Compensation actually paid or includable in gross income in such year.
<PAGE>
(b) Allocation Date
Allocation Date means the date with respect to which all or a portion
of employer contributions, employee contributions or forfeitures or
both are allocated to participant accounts under a defined
contribution plan.
(c) Annual Additions
For Plan Years beginning after December 31, 1986, Annual Additions are
the sum of the following amounts allocated to any defined contribution
plan maintained by the Employer (including voluntary contributions to
any defined benefit plan maintained by the Employer) on behalf of a
Participant for a Limitation Year:
. All Employee and Employer contributions;
. All reallocated forfeitures;
. Amounts allocated after March 31, 1984, to an individual
medical account, as defined in Code Section 415(l)(2) which is
part of a pension or annuity plan maintained by the Employer,
and amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after that date,
which are attributable to post-retirement medical benefits
required by Code Section 401(h)(6) to be allocated to the
separate account of a Key Employee under a welfare benefit
plan (as defined in Code Section 419(e)) maintained by the
Employer.
Contributions or forfeitures will be treated as Annual Additions
regardless of whether they constitute Excess Deferrals, Excess
Contributions or Excess Aggregate Contributions within the
meaning of the regulations under Code Section 401(k) or 401(m)
and regardless of whether they are corrected through distribution
or recharacterization. Excess deferrals distributed in accordance
with Treasury Regulation 1.402(g)-1(e)(2) or (3) are not Annual
Additions. The Annual Addition for any Limitation Year beginning
before January 1, 1987, will not be recomputed to treat all
Employee After-tax Contributions as Annual Additions.
(d) Annual Benefit
Annual Benefit means a benefit payable annually in the form of a
straight life annuity (with no ancillary benefits) under a plan to
which employees do not contribute and under which no rollover
contributions are made.
(e) Defined Benefit Compensation Limit
The Defined Benefit Compensation Limit is equal to 100% of the
Participant's average Aggregate Compensation for the three consecutive
calendar years (or other twelve consecutive month periods adopted by
the Employer pursuant to a Written Resolution and applied on a uniform
and consistent basis) of service during which the Participant had the
greatest Aggregate Compensation.
Where the annual benefit is payable to a Participant in a form other
than a straight life annuity or a Qualified Joint and Survivor
Annuity, the Defined Benefit Compensation Limit will be the Actuarial
Equivalent of a straight life annuity beginning at the same age. No
adjustment is required for the following: pre-retirement disability
benefits, pre-retirement death benefits and post-retirement medical
benefits. For purposes of this paragraph, the interest rate used in
adjusting the Defined Benefit Compensation Limit will be the greater
of (1) 5%, or (2) the post-retirement interest rate specified in the
plan for Actuarial Equivalent purposes.
<PAGE>
Where the annual benefit is payable to a Participant who has fewer
than 10 years of service with the Employer or any Related or
Predecessor Employer, the Defined Benefit Compensation Limit will be
multiplied by a fraction, the numerator of which is the Participant's
number of years of service with the Employer or Related or Predecessor
Employer, and the denominator of which is 10.
With regard to a Participant who has separated from service with a
nonforfeitable right to an Accrued Benefit, the Defined Benefit
Compensation Limit will be adjusted effective January 1 of each
Calendar year. For any Limitation Year beginning after the separation
occurs, the Defined Benefit Compensation Limit will be equal to the
Defined Benefit Compensation Limit which was applicable to the
Participant in the Limitation Year in which he separated from service
multiplied by a fraction, the numerator of which is the Defined
Benefit Dollar Limit for the Limitation Year in which the Defined
Benefit Compensation Limit is being adjusted and the denominator of
which is the Defined Benefit Dollar Limit for the Limitation Year in
which the Participant separated from service.
(f) Defined Benefit Dollar Limit
The Defined Benefit Dollar Limit is equal to $90,000 for calendar
years 1984 through 1987. As of January 1, 1988 and as of January 1 of
each subsequent calendar year, the dollar limitation (described in
Code Section 415(b)(1)(A)) as determined by the Secretary of the
Treasury for that calendar year will become effective as the Defined
Benefit Dollar Limit for the calendar year. For calendar years between
1976 and 1983, the Defined Benefit Dollar Limit is $75,000 as adjusted
by the Secretary of the Treasury under Code Section 415(d) for that
calendar year. The Defined Benefit Dollar Limit for a calendar year
applies to Limitation Years ending with or within that calendar year.
Where the annual benefit is payable to a Participant in a form other
than a straight life annuity or a Qualified Joint and Survivor
Annuity, the Defined Benefit Dollar Limit will be the Actuarial
Equivalent of a straight life annuity beginning at the same age. No
adjustment is required for the following: pre-retirement disability
benefits, pre-retirement death benefits, and post-retirement medical
benefits. For purposes of this paragraph, the interest rate used for
adjusting the Defined Benefit Dollar Limit will be the greater of (1)
5%, or (2) the post-retirement interest rate specified for Actuarial
Equivalent purposes.
Where the annual benefit is payable to a Participant who has fewer
than 10 years of participation in the Plan, the Defined Benefit Dollar
Limit will be multiplied by a fraction, the numerator of which is the
Participant's number of years (or part thereof) of participation in
the Plan, and the denominator of which is 10. To the extent provided
by the Secretary of the Treasury, this paragraph will be applied to
each change in the benefit structure of the Plan.
For a benefit commencing before a Participant's Social Security
Retirement Age but at or after age 62, the Defined Benefit Dollar
Limit will be adjusted in a manner which is consistent with the
reduction for old-age insurance benefits commencing before Social
Security Retirement Age under the Social Security Act. The reduction
will be 5/9 of 1% for each of the first 36 months and 5/12 of 1% for
each additional month (up to 24 months) by which benefits commence
before the month of the Participant's Social Security Retirement Age.
The Defined Benefit Dollar Limit for a benefit commencing before age
62 will be adjusted to the Actuarial Equivalent of the Defined Benefit
Dollar Limit for a benefit commencing at age 62 based on an interest
rate equal to the greater of (1) 5%, or (2) the interest rate
specified in the plan for determining actuarial equivalence for early
retirement.
<PAGE>
For a benefit commencing after a Participant's Social Security
Retirement Age, the Defined Benefit Dollar Limit will be adjusted to
the actuarial equivalent of the Defined Benefit Dollar Limit for a
benefit commencing at the Participant's Social Security Retirement
Age. For purposes of this paragraph, the interest rate used for
adjusting the Defined Benefit Dollar Limit will be the lesser of (1)
5%, or (2) the interest rate specified in the plan for determining
actuarial equivalence for early retirement.
(g) Defined Benefit Limit
The Defined Benefit Limit is the lesser of the Defined Benefit Dollar
Limit or the Defined Benefit Compensation Limit.
(h) Defined Benefit Plan Fraction Denominator
The Defined Benefit Plan Fraction Denominator with respect to any
Participant is the Limit multiplied by 1.25, or (2) the product of the
Defined Benefit Compensation Limit multiplied by 1.4. However, for
purposes of determining the Defined Benefit Plan Fraction Denominator,
"years of service with the Employer or any Related or Predecessor
Employer" will be substituted for "years of participation in the Plan"
wherever it appears in Section 7.03(f).
(i) Defined Benefit Plan Fraction
The Defined Benefit Plan Fraction is a fraction determined as of the
close of a Limitation Year, the numerator of which is the Projected
Annual Benefit payable to a Participant under this Plan and the
denominator of which is the Defined Benefit Fraction Denominator. If a
Participant has participated in more than one defined benefit plan
maintained by the Employer, the numerator of the Defined Benefit Plan
Fraction is the sum of the projected annual benefits payable to the
Participant under all of the defined benefit plans, whether or not
terminated.
(j) Defined Contribution Limit
The Defined Contribution Limit for a given Limitation Year is equal to
the lesser of (1) the Defined Contribution Compensation Limit, which
is 25% of Aggregate Compensation applicable to the Limitation Year, or
(2) the Defined Contribution Dollar Limit, which, for calendar years
after 1983 is the greater of $30,000 or one-fourth of the Defined
Benefit Dollar Limit for the Limitation Year, and for calendar years
between 1976 and 1983 is one-third of the Defined Benefit Dollar
Limit. If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different 12 consecutive month
period, the Defined Contribution Dollar Limit is multiplied by a
fraction, the numerator of which is equal to the number of months in
the short Limitation Year and the denominator of which is 12.
(k) Defined Contribution Plan Fraction
The Defined Contribution Plan Fraction is a fraction determined as of
the close of a Limitation Year, the numerator of which is the sum of
the Annual Additions to the Participant's Accounts under all defined
contribution plans of the Employer for the current and all prior
Limitation Years and the denominator of which is the sum of the Annual
Additions which would have been made for the Participant for the
current and all prior Limitation Years (for all prior years of service
with the Employer or any predecessor Employer) if in each Limitation
year the Annual Additions equaled the lesser of (1) the product of the
Defined Contribution Compensation Limit for the Limitation Year
multiplied by 1.4, or (2) the product of the Defined Contribution
Dollar Limit for the Limitation Year multiplied by 1.25. The aggregate
amount in the numerator of this fraction due to years beginning before
January 1, 1976 may not exceed the aggregate amount
<PAGE>
in the denominator of this fraction for all such years.
For purposes of this Section 7.03(k), the Annual Addition for any
Limitation Year beginning before January 1, 1987 will not be
recomputed to treat all Employee After-tax Contributions as Annual
Additions.
(l) Employer
The Employer is the Employer that adopts this Plan together with all
Related Employers. For this purpose, the definition of Related
Employer in Section 1.33 of this Plan is modified by Code Section
415(h).
(m) Limitation Year
The Limitation Year will be the 12 consecutive month period which is
specified in Article 1 of this Plan and which is adopted for all
qualified plans maintained by the Employer pursuant to a Written
Resolution adopted by the Employer. In the event of a change in the
Limitation Year, the additional limitations of Treasury Regulation
Section 1.415-2(b)(4)(iii) will also apply.
(n) Projected Annual Benefit
For purposes of this Section, a Participant's Projected Annual Benefit
is equal to the annual benefit to which a Participant in a defined
benefit Plan would be entitled under the terms of the plan based on
the following assumptions:
. The Participant will continue employment until reaching normal
retirement age as determined under the terms of the plan (or
current age, if that is later);
. The Participant's compensation for the Limitation Year under
consideration will remain the same for all future years;
. All other relevant factors used to determine benefits under the
plan for the Limitation Year under consideration will remain
constant for all future Limitation Years; and
. The benefits resulting from any Participant Contributions or
Rollover Contributions are disregarded.
(o) Social Security Retirement Age
Social Security Retirement Age means age 65 for a Participant born
before January 1, 1938; age 66 for a Participant born after December
31, 1937, but before January 1, 1955; and age 67 for a Participant
born after December 31, 1954.
7.04 Effect of Top-Heavy Status
(a) General
Notwithstanding the provisions of Section 7.03, "1.0" will be
substituted for "1.25" wherever it appears in Sections 7.03(h) and
7.03(k) for any Limitation Year in which the Plan is found to be Top-
Heavy for the Plan Year which coincides with or ends within such
Limitation Year.
(b) Non-application
Section 7.04(a) will not apply for any Limitation Year in which, for
the Plan Year which coincides with or ends within such Limitation
Year, (1) the Plan is not determined to be Super Top-Heavy and (2) for
any Non-Key Employee who is a Participant in both this Plan
<PAGE>
and a defined benefit plan maintained by the Employer or a Related
Employer, the annual allocation of Employer contributions plus
Forfeitures under this Plan is not less than 7.5% of the Non-Key
Employee's Aggregate Compensation.
ARTICLE 8
MISCELLANEOUS
8.01 Employment Rights of Parties Not Restricted
The adoption and maintenance of this Plan will not be deemed a contract
between the Employer and any Employee. Nothing in this Plan will give any
Employee or Participant the right to be retained in the employ of the
Employer or to interfere with the right of the Employer to discharge any
Employee or Participant at any time, nor will it give the Employer the
right to require any Employee or Participant to remain in its employ, or to
interfere with any Employee's or Participant's right to terminate his
employment at any time.
8.02 Alienation
(a) General
No person entitled to any benefit under this Plan will have any right
to sell, assign, transfer, hypothecate, encumber, commute, pledge,
anticipate or otherwise dispose of his interest in the benefit, and
any attempt to do so will be void. No benefit under this Plan will be
subject to any legal process, levy, execution, attachment or
garnishment for the payment of any claim against such person.
(b) Exceptions
Section 8.02(a) will not apply to the extent a Participant or
Beneficiary is indebted to the Plan under the provisions of the Plan.
At the time a distribution is to be made to or for a Participant's or
Beneficiary's benefit, the portion of the amount distributed which
equals the indebtedness will be withheld by the Trustee to apply
against or discharge the indebtedness. Before making a payment,
however, the Participant or Beneficiary must be given written notice
by the Plan Administrator that the indebtedness is to be so paid in
whole or part from his Participant's Accrued Benefit. If the
Participant or Beneficiary does not agree that the indebtedness is a
valid claim against his Vested Accrued Benefit, he will be entitled to
a review of the validity of the claim in accordance with procedures
established by the Plan Administrator.
Section 8.02(a) will not apply to a qualified domestic relations order
(QDRO) as defined in Code Section 414(p), and those other domestic
relations orders permitted to be so treated by the Plan Administrator
under the provisions of the Retirement Equity Act of 1984. The Plan
Administrator will establish a written procedure to determine the
qualified status of domestic relations orders and to administer
distributions under such qualified orders. Further, to the extent
provided under a QDRO, a former spouse of a Participant will be
treated as the spouse or Surviving Spouse for all purposes under the
Plan. Where, however, because of a QDRO, more than one individual is
to be treated as a Surviving Spouse, the total amount to be paid may
not exceed the amount that would be paid if there were only one
Surviving Spouse. All rights and benefits, including elections,
provided to a Participant under this Plan will be subject to the
rights afforded to any alternate payee as such term is defined in Code
Section 414(p).
<PAGE>
This Plan specifically permits distribution to an alternate payee
under a QDRO (without regard to whether the Participant has attained
his or her earliest retirement age as that term is defined under Code
Section 414(p)) in the same manner that is provided for a Vested
Terminated Participant.
8.03 Qualification of Plan
The Employer will have the sole responsibility for obtaining and retaining
qualification of the Plan under the Code with respect to the Employer's
individual circumstances.
8.04 Construction
To the extent not preempted by ERISA, this Plan will be construed according
to the laws of the state in which the Employer's principal place of
business is located. Words used in the singular will include the plural,
the masculine gender will include the feminine, and vice versa, whenever
appropriate.
8.05 Named Fiduciaries
(a) Allocation of Functions
The authority to control and manage the operation and administration
of the Plan and Trust created by this instrument will be allocated
between the Plan Sponsor, the Trustee, and the Plan Administrator, all
of whom are designated as Named Fiduciaries with respect to the Plan
and Trust as provided for by Section 402(a)(2) of ERISA. The Plan
Sponsor reserves the right to allocate the various responsibilities
for the present execution of the functions of the Plan, other than the
Trustee's responsibilities, among its Named Fiduciaries. Any person or
group of persons may serve in more than one fiduciary capacity with
regard to the Plan.
(b) Responsibilities of the Plan Sponsor
The Plan Sponsor, in its capacity as a Named Fiduciary, will have only
the following authority and responsibility:
. To appoint or remove the Plan Administrator and furnish the
Trustee with certified copies of any resolutions of the Plan
Sponsor with regard thereto;
. To appoint and remove the Trustee;
. To appoint a successor Trustee or additional Trustees;
. To communicate information to the Plan Administrator and the
Trustee as needed for the proper performance of the duties of
each;
. To appoint an investment manager (or to refrain from such
appointment), to monitor the performance of the investment
manager so appointed, and to terminate such appointment (more
than one investment manger may be appointed and in office at
any time); and
. To establish and communicate to the Trustee a funding policy
for the Plan.
(c) Limitation on Obligations of Named Fiduciaries
No Named Fiduciary will have authority or responsibility to deal with
matters other than as delegated to it under this Plan or by operation
of law. A Named Fiduciary will not in any event be liable for breach
of fiduciary responsibility or obligation by another fiduciary
(including Named Fiduciaries) if the responsibility or authority of
the act or
<PAGE>
omission deemed to be a breach was not within the scope of the Named
Fiduciary's authority or delegated responsibility.
(d) Standard of Care and Skill
The duties of each fiduciary will be performed 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 like character
and with like objectives.
8.06 Status of Insurer
The term Insurer refers to any legal reserve life insurance company
licensed to do business in the state within which the Employer maintains
its principal office. The Insurer will file such returns, keep such
records, make such reports and supply such information as required by
applicable law or regulation.
8.07 Adoption and Withdrawal by Other Organizations
(a) Procedure for Adoption
Subject to the provisions of this Section 8.07, any organization now
in existence or hereafter formed or acquired, which is not already a
Participating Employer under this Plan and which is otherwise legally
eligible may, in the future, with the consent and approval of the Plan
Sponsor, by formal Written Resolution (referred to in this Section as
an Adoption Resolution), adopt the Plan and Trust hereby created for
all or any classification of persons in its employment and thereby,
from and after the specified effective date, become a Participating
Employer under this Plan. Such consent will be effected by and
evidenced by a formal Written Resolution of the Plan Sponsor. The
Adoption Resolution may contain such specific changes and variations
in Plan terms and provisions applicable to the adopting Participating
Employer and its Employees as may be acceptable to the Plan Sponsor
and the Trustee. However, the sole, exclusive right of any other
amendment of whatever kind or extent to the Plan is reserved to the
Plan Sponsor. The Adoption Resolution will become, as to the adopting
organization and its Employees, a part of this Plan as then amended or
thereafter amended. It will not be necessary for the adopting
organization to sign or execute the original or then amended Plan and
Trust Agreement or any future amendment to the Plan and Trust
Agreement. The effective date of the Plan for the adopting
organization will be that stated in the Adoption Resolution and from
and after such effective date the adopting organization will assume
all the rights, obligations and liabilities as a Participating
Employer under this Plan. The administrative powers of and control by
the Plan Sponsor as provided in the Plan, including the sole right of
amendment or termination of the Plan, of appointment and removal of
the Plan Administrator and the Trustee, and of appointment and removal
of an investment manager will not be diminished by reason of the
participation of the adopting organization in the Plan.
(b) Withdrawal
Any Participating Employer may withdraw from the Plan at any time,
without affecting the Plan Sponsor or other Participating Employers
not withdrawing, by complying with the provisions of the Plan. A
withdrawing Participating Employer may arrange for the continuation by
itself or its successor of this Plan in separate forms for its own
employees, with such amendments, if any, as it may deem proper, and
may arrange for continuation of the Plan by merger with an existing
plan and transfer of plan assets. The Plan Sponsor may, it its
absolute discretion, terminate a Participating Employer's
participation at any time when in its judgment the Participating
Employer fails or refuses to discharge its obligations under the Plan.
<PAGE>
(c) Adoption Contingent Upon Initial and Continued Qualification
The adoption of this Plan by an organization as provided is hereby
made contingent and subject to the condition precedent that said
adopting organization meets all the statutory requirements for
qualified plans, including, but not limited to, Sections 401(a) and
501(a) of the Internal Revenue Code for its Employees. If the Plan or
the Trust, in its operation, becomes disqualified, for any reason, as
to the adopting organization and its Employees, the portion of the
Plan assets allocable to them will be segregated as soon as is
administratively feasible, pending either the prompt (1)
requalification of the Plan as to the organization and its employees
to the satisfaction of the Internal Revenue Service so as not to
affect the continued qualified status thereof as to other Employers,
(2) withdrawal of the organization from this Plan and a continuation
by itself or its successor of its plan separately from this Plan, or
by merger with another existing plan, with a transfer of its said
segregated portion of Plan assets, or (3) termination of the Plan as
to itself and its Employees.
8.08 Employer Contributions
Employer contributions made to the Plan and Trust are made and will be held
for the sole purpose of providing benefits to Participants and their
Beneficiaries.
In no event will any contribution made by the Employer to the Plan and
Trust or income therefrom revert to the Employer except as provided in
Section 7.01(e) or as provided below.
(a) Any contribution made to the Plan and Trust by the Employer because of
a mistake of fact may be returned to the Employer within one year of
such contribution.
(b) Notwithstanding any other provision of the Plan and Trust, if the
Internal Revenue Service determines initially that the Plan, as
adopted by the Employer, does not qualify under applicable sections of
the Code and applicable Treasury Department Regulations, and the
Employer does not wish to amend this Plan and Trust so that it does
qualify, the value of all assets will be distributed by the Trustee to
the Employer within one year after the date such initial qualification
is denied. Thereafter, the Employer's participation in this Plan and
Trust will be considered rescinded and of no force or effect.
(c) Any contribution made by the Employer will be conditioned on the
deductibility of such contribution and may be refunded to the
Employer, to the extent the contribution is determined not to be
deductible, within one year after such determination is made.
ARTICLE 9
ADMINISTRATION
9.01 Plan Administrator
The Plan Administrator will have the responsibility for the general
supervision and administration of the Plan and will be a fiduciary of the
Plan. The Employer may, by Written Resolution, appoint one or more
individuals to serve as Plan Administrator. If the Employer does not
appoint an individual or individuals as Plan Administrator, the Employer
will function as Plan Administrator. The Employer may at any time, with or
without cause, remove an individual as Plan Administrator or substitute
another individual therefor.
<PAGE>
9.02 Powers and Duties of the Plan Administrator
The Plan Administrator will be charged with and will have delegated to it
the power, duty, authority and discretion to interpret and construe the
provisions of this Plan, to determine its meaning and intent and to make
application thereof to the facts of any individual case; to determine in
its discretion the rights and benefits of Participants or the eligibility
of Employees; to give necessary instructions and directions to the Trustee
and the Insurer as herein provided or as may be requested by the Trustee
and the Insurer from time to time; to resolve all questions of fact
relating to any of the foregoing; and to generally direct the
administration of the Plan according to its terms. All decisions of the
Plan Administrator in matters properly coming before it according to the
terms of this Plan, and all actions taken by the Plan Administrator in the
proper exercise of its administrative powers, duties and responsibilities,
will be final and binding upon all Employees, Participants and
Beneficiaries and upon any person having or claiming any rights or interest
in this Plan. The Employer and the Plan Administrator will make and receive
any reports and information, and retain any records necessary or
appropriate to the administration of this Plan or to the performance of
duties hereunder or to satisfy any requirements imposed by law. In the
performance of its duties, the Plan Administrator will be entitled to rely
on information duly furnished by any Employee, Participant or Beneficiary
or by the Employer or Trustee.
9.03 Actions of the Plan Administrator
The Plan Administrator may adopt such rules as it deems necessary,
desirable or appropriate with respect to the conduct of its affairs and the
administration of the Plan. Whenever any action to be taken in accordance
with the terms of the Plan requires the consent or approval of the Plan
Administrator, or whenever an interpretation is to be made of the terms of
the Plan, the Plan Administrator will act in a uniform and non-
discriminatory manner, treating all Employees and Participants in similar
circumstances in a like manner. If the Plan Administrator is a group of
individuals, all of its decisions will be made by a majority vote. The Plan
Administrator will have the authority to employ one or more persons to
render advice or services with regard to the responsibilities of the Plan
Administrator, including but not limited to attorneys, actuaries, and
accountants. Any persons employed to render advice or services will have no
fiduciary responsibility for any ministerial functions performed with
respect to this Plan.
9.04 Reliance on Plan Administrator and Employer
Until the Employer gives notice to the contrary, the Trustee and any
persons employed to render advice or services will be entitled to rely on
the designation of Plan Administrator that has been furnished to them. In
addition, the Trustee and any persons employed to render advice or services
will be fully protected in acting upon the written directions and
instructions of the Plan Administrator made in accordance with the terms of
this Plan. If the Plan Administrator is a group of individuals, unless
otherwise specified, any one of such individuals will be authorized to sign
documents on behalf of the Plan Administrator and such authorized
signatures will be recognized by all person dealing with the Plan
Administrator. The Trustee and any persons employed to render advice or
services may take cognizance of any rules established by the Plan
Administrator and rely upon them until notified to the contrary. The
Trustee and any persons employed to render advice or services will be fully
protected in taking any action upon any paper or document believed to be
genuine and to have been properly signed and presented by the Plan
Administrator, Employer or any agent of the Plan Administrator acting on
behalf of the Plan Administrator.
9.05 Reports to Participants
The Plan Administrator will report in writing to a Participant his Accrued
Benefit under the Plan and the Vested Percentage of such benefit when the
Participant terminates his employment
<PAGE>
or requests such a report in writing from the Plan Administrator. To the
extent required by law or regulation, the Plan Administrator will annually
furnish to each Participant, and to each Beneficiary receiving benefits, a
report which fairly summarizes the Plan's most recent report.
9.06 Bond
The Plan Administrator and other fiduciaries of the Plan will be bonded to
the extent required by ERISA or other applicable law. No additional bond or
other security for the faithful performance of any duties under this Plan
will be required.
9.07 Compensation of Plan Administrator
The Compensation of the Plan Administrator will be left to the discretion
of the Plan Sponsor; no person who is receiving full pay from the Employer
will receive compensation for services as Plan Administrator. All
reasonable and necessary expenses incurred by the Plan Administrator in
supervising and administering the Plan will be paid from the Plan assets by
the Trustee at the direction of the Plan Administrator to the extent not
paid by the Plan Sponsor.
9.08 Claims Procedure
The Plan Administrator will make all determinations as to the rights of any
Employee, Participant, Beneficiary or other person under the terms of this
Plan. Any Employee, Participant or Beneficiary, or person claiming under
them, may make claim for benefit under this Plan by filing written notice
with the Plan Administrator setting forth the substance of the claim. If a
claim is wholly or partially denied, the claimant will have the opportunity
to appeal the denial upon filing with the Plan Administrator a written
request for review within 60 days after receipt of notice of denial. In
making an appeal the claimant may examine pertinent Plan documents and may
submit issues and comments in writing. Denial of a claim or a decision on
review will be made in writing by the Plan Administrator delivered to the
claimant within 60 days after receipt of the claim or request for review,
unless special circumstances require an extension of time for processing
the claim or review, in which event the Plan Administrator's decision must
be made as soon as possible thereafter but not beyond an additional 60
days. If no action on an initial claim is taken within 120 days, the claims
will be deemed denied for purposes of permitting the claimant to proceed to
the review stage. The denial of a claim or the decision on review will
specify the reasons for the denial or decision and will make reference to
the pertinent Plan provisions upon which the denial or decision is based.
The denial of a claim will also include a description of any additional
material or information necessary for the claimant to perfect the claim and
an explanation of the claim review procedure herein described. The Plan
Administrator will serve as an agent for service of legal process with
respect to the Plan unless the Employer, through written resolution,
appoints another agent.
If a Participant or Beneficiary is entitled to a distribution from the
Plan, the Participant or Beneficiary will be responsible for providing the
Plan Administrator with his current address. If the Plan Administrator
notifies the Participant or Beneficiary by registered mail (return receipt
requested) at his last known address that he is entitled to a distribution
and also notifies him of the provisions of this paragraph, and the
Participant or Beneficiary fails to claim his benefits under the Plan or
provide his current address to the Plan Administrator within one year after
such notification, the distributable amount will be forfeited and used to
reduce the cost of the Plan. If the Participant or Beneficiary is
subsequently located, such benefit will be restored.
9.09 Liability of Fiduciaries
Except for a breach of fiduciary responsibility due to gross negligence or
willful misconduct,
<PAGE>
the Plan Administrator will not incur any individual liability for any
decision, act, or failure to act hereunder. The Plan Administrator may
engage agents to assist it and may engage legal counsel who may be counsel
for the Employer. The Plan Administrator will not be responsible for any
action taken or omitted to be taken on the advice of counsel.
If there is more than one person serving as a fiduciary in any capacity
(for example, co-Trustees), each will use reasonable care to prevent the
other or others from committing a breach of this Plan. Nothing contained in
this Section will preclude any agreement allocating specific
responsibilities or obligations among the co-fiduciaries provided that the
agreement does not violate any of the terms and provisions of this Plan. In
those instances where any duties have been allocated between co-
fiduciaries, a fiduciary will not be liable for any loss resulting to the
Plan arising from any act or omission on the part of another co-fiduciary
to whom responsibilities or obligations have been allocated except under
the following circumstances:
. If he participates knowingly in, or knowingly undertakes to conceal,
an act or omission of a co-fiduciary knowing the act or omission is
a breach; or
. If by his failure to comply with his specific responsibilities which
give rise to his status as a fiduciary, he has enabled the other
fiduciary to commit a breach; or
. If he has knowledge of a breach by a co-fiduciary, unless he makes
reasonable efforts under the circumstances to remedy the breach.
9.10 Expenses of Administration
The Employer does not and will not guarantee the Plan assets against loss.
The Employer may, in its sole discretion (but will not be obligated to),
pay the costs and expenses of administering the Plan, the taxes imposed
upon the Plan, if any, and the fees, charges or commissions with respect to
the purchase and sale of Plan assets. Unless paid by the Employer, such
costs and expenses, taxes (if any), and fees, charges and commissions will
be a charge upon Plan assets and deducted by the Trustee to the extent
permitted by applicable law.
9.11 Distribution Authority
If any person entitled to receive payment under this Plan is a minor,
declared incompetent or is under other legal disability, the Plan
Administrator may, in its sole discretion, direct the Trustee to:
. Distribute directly to the person entitled to the payment;
. Distribute to the legal guardian or, if none, to a parent of the
person entitled to payment or to a responsible adult with whom the
person entitled to payment maintains his residence;
. Distribute to a custodian for the person entitled to payment under
the Uniform Gifts to Minors Act if permitted by the laws of the
state in which the person entitled to payment resides; or
. Withhold distribution of the amount payable until a court of
competent jurisdiction determines the rights of the parties thereto
or appoints a guardian of the estate of the person entitled to
payment.
If there is any dispute, controversy or disagreement between any
Beneficiary or person and any
<PAGE>
other person as to who is entitled to receive the benefits payable under
this Plan, or if the Plan Administrator is uncertain as to who is entitled
to receive benefits, or if the Plan Administrator is unable to locate the
person who is entitled to benefits, the Plan Administrator may with
acquittance interplead the funds into a court of competent jurisdiction in
the judicial district in which the Employer maintains its principal place
of business and, upon depositing the funds with the clerk of the court, be
released from any further responsibility for the payment of the benefits.
If it is necessary for the Plan Administrator to retain legal counsel or
incur any expense in determining who is entitled to receive the benefits,
whether or not it is necessary to institute court action, the Plan
Administrator will be entitled to reimbursement from the benefits for the
amount of its reasonable costs, expenses and attorneys' fees incurred, to
the extent permitted by applicable law.
ARTICLE 10
AMENDMENT OR TERMINATION OF PLAN
10.01 Right of Plan Sponsor to Amend or Terminate
The Plan Sponsor reserves the right to alter, amend, revoke or terminate
this Plan. No amendment will deprive any Participant or Beneficiary of any
vested right nor will it reduce any Accrued Benefit to which he is then
entitled with respect to Employer contributions previously made, except as
may be required to maintain the Plan as a qualified plan under the Code. No
amendment will change the duties or responsibilities of the Trustee without
its express written consent thereto.
A plan amendment which has the effect of (a) eliminating or reducing an
early retirement benefit or a retirement-type subsidy, or (b) eliminating
an optional benefit form, will, with respect to benefits attributable to
service before the amendment be treated as reducing Accrued Benefits.
10.02 Allocation of Assets Upon Termination of Plan
If this Plan is revoked or terminated (in whole or in part) or if
contributions are completely discontinued the Accounts of all affected
Participants will become non-forfeitable. The Employer will then arrange
for allocation of all assets among Participants so affected by the total or
partial termination in accordance with the requirements of all applicable
law and the regulations and requirements of the Internal Revenue Service.
All allocated amounts will be retained in the Plan to the credit of the
individual Participants until distribution as directed by the Employer.
Distribution to Participants may be in the form of cash or other Plan
assets or partly in each.
10.03 Exclusive Benefit
At no time will any part of the principal or income of the Plan assets be
used or diverted for purposes other than the exclusive benefit of
Participants in the Plan and their Beneficiaries, nor may any portion of
the Plan assets revert to the Employer except as provided in Sections
7.01(e) and 8.08.
10.04 Failure to Qualify
Notwithstanding any of the foregoing provisions, if this Plan, upon
adoption by the Employer, is submitted to the Internal Revenue Service
which then determines that the Plan as initially
<PAGE>
adopted by the Employer is not a qualified plan under the Code, the
Employer may elect to terminate this Plan by giving written notice thereof.
Such termination will have the same effect as if the Plan were never
adopted, all policies and contracts will be cancelled, and all
contributions, to the extent recoverable from the Trustee, will be returned
to their source. If any amendment to this Plan is submitted to the Internal
Revenue Service within the period allowed under Code Section 401(b) which
then determines that the Plan as amended is not a qualified plan under the
Code, the Employer may cancel or modify any or all provisions of the
amendment retroactive to the effective date of the amendment in order to
maintain the qualified status of the Plan, whereupon written notice thereof
will be furnished to all affected Employees, Participants and
Beneficiaries.
10.05 Mergers, Consolidations or Transfers of Plan Assets
In the event this Plan is merged or consolidated with another plan which is
qualified under Code Sections 401(a) (and 501(a) if applicable), or in the
event of a transfer of the assets or liabilities of this Plan to another
plan which is qualified under Code Sections 401(a) (and 501(a) if
applicable), the benefit which each Participant would be entitled to
receive under the successor plan or other plan if it were terminated
immediately after the merger, consolidation or transfer will be equal to or
greater than the benefit which the Participant would have received
immediately before the merger, consolidation or transfer if this Plan had
then terminated.
Any transfer of assets and/or liabilities to (or from) this Plan from (or
to) another plan qualified under Code Sections 401(a) (and 501(a) if
applicable) will be evidenced by a Written Resolution by the Plan Sponsor
of each affected plan which specifically authorizes such transfer of assets
and/or liabilities.
Any transfer of assets to this Plan will be allowed under the provisions of
this Section if such transferred assets are not required to be paid in the
form of a qualified joint & survivor annuity or a qualified survivor
annuity in accordance with Code Section 401(a)(11).
10.06 Effect of Plan Amendment on Vesting Schedule
No amendment to the Vesting Schedule will deprive a Participant of his
nonforfeitable right to his Vested Accrued Benefit as of the date of the
amendment. Further, if the Vesting Schedule of the Plan is amended, or if
the Plan is amended in any way that directly or indirectly affects the
computation of a Participant's non-forfeitable percentage, each Participant
with at least 3 Years of Vesting Service as of the last day of the election
period described below may elect, within a reasonable period after the
adoption of the amendment, to have his Vested Percentage computed under the
Plan without regard to such amendment. The period during which such
election may be made will commence with the date the amendment is adopted
and will end 60 days after the latest of:
(a) the date the amendment is adopted;
(b) the date the amendment becomes effective; or
(c) the date the Participant is issued written notice of the amendment by
the Employer.
ARTICLE 11
<PAGE>
TRUSTEE AND TRUST FUND
11.01 Acceptance of Trust
The Trustee, by signing this Agreement, accepts this Trust and agrees to
perform the duties of the Trustee in accordance with the terms and
conditions set forth herein.
11.02 Trust Fund
(a) Purpose and Nature
The Trustee will establish and maintain a Trust Fund for purposes of
providing a means of accumulating the assets necessary to provide the
benefits which become payable under the Plan. The Trustee will
receive, hold and invest all contributions made by the Employer, any
Participating Employers, and the Participants, including the
investment earnings thereon. The Trust Fund arising from such
contributions and earnings will consist of all assets held by the
Trustee under the Plan and Trust. All benefits payable under the Plan
will be paid by the Trustee from the Trust Fund.
Any person having any claim under the Plan will look solely to the
assets of the Trust Fund for satisfaction. In no event will the Plan
Administrator, the Employer, any Employees, any officer of the
Employer or any agents of the Employer or the Plan Administrator be
liable in their individual capacities to any person whomsoever, under
the provisions of this Plan and Trust, except as provided by law.
The Trust Fund will be used and applied only in accordance with the
provisions of the Plan and Trust, to provide the benefits thereof, and
no part of the corpus or income of the Trust Fund will be used for, or
diverted to, purposes other than for the exclusive benefit of the
Participants or their Beneficiaries entitled to benefits under the
Plan, except to the extent specifically provided elsewhere herein.
(b) Operation of the Trust Fund
The Trust Fund will be maintained in accordance with the accounting
requirements of the Plan. No Participant will have any right to any
specific asset or any specific portion of the Trust Fund prior to
distribution of benefits. Withdrawals from the Trust Fund will be made
to provide benefits to Participants and Beneficiaries in the amounts
specified by the Plan, and to pay expenses agreed to in writing by the
Plan Administrator.
(c) Investments
The Trustee will invest the Trust Fund in accordance with the proper
directions of the Plan Administrator or Investment Manager. Except to
the extent required by ERISA or otherwise provided in this Plan, the
Trustee shall have no duty or responsibility to review, initiate
action, or make recommendations regarding Trust assets and shall
retain assets until directed by the Plan Administrator to dispose of
them.
(d) Combined Trust Fund for Collective Investment Purposes
If the Plan Sponsor creates or maintains one or more employee benefit
plans qualified under Code Section 401(a) in addition to this Plan,
the Plan Sponsor may request the Trustee to hold the assets of the
additional plan or plans in the Trust Fund. The Plan Administrator
shall keep records showing the interest of the Plan and each
additional plan in the Trust Fund unless the Trustee enters into an
agreement with the Plan Sponsor to keep separate accounts for each
such plan. The Plan Sponsor and the Plan Administrator shall not
permit or cause the assets of one plan to be used to pay benefits
<PAGE>
or the administrative expenses of any other plan with assets in the
Trust Fund.
11.03 Receipt of Contributions
The Trustee will be accountable to the Employer for the funds contributed
to it, but will have no duty to see that the contributions received comply
with the provisions of the Plan. The Trustee will not be obligated to
collect any contributions from the Employer or the Participants.
11.04 Powers of the Trustee
Subject to the provisions and limitations contained elsewhere in this Plan,
the Trustee will have full discretion and authority with regard to the
investment of the Trust Fund. The Trustee is authorized and empowered, but
not by way of limitation, with the following powers, rights and duties:
(a) To invest any part or all of the Trust Fund in any common or preferred
stocks, open-end or closed-end mutual funds, United States retirement
plan bonds, corporate bonds, debentures, convertible debentures,
commercial paper, U.S. Treasury bills, book entry deposits with the
United States Federal Reserve Bank or System, Master Notes or similar
arrangements sponsored by the Trustee or any other financial
institution as permitted by law, improved or unimproved real estate
situated in the United States, mortgages, notes or other property of
any kind, real or personal, as a prudent man would so invest under
like circumstances with due regard for the purposes of this Plan;
(b) To maintain any part of the assets of the Trust Fund in cash, or in
demand or short-term time deposits bearing a reasonable rate of
interest (including demand or short-term time deposits of or with the
Trustee), or in a short-term investment fund or in other cash
equivalents having ready marketability, including, but not limited to,
U.S. Treasury Bills, commercial paper, certificates of deposit
(including such certificates of deposit of or with the Trustee), and
similar types of short-term securities, as may be deemed necessary by
the Trustee in its sole discretion;
(c) To manage, sell, contract to sell, grant options to purchase, convey,
exchange, transfer, abandon, improve, repair, insure, lease for any
term even though commencing in the future or extending beyond the term
of the Trust, and otherwise deal with all property, real or personal,
in such manner, for such considerations and on such terms and
conditions as the Trustee will decide;
(d) To credit and distribute the Trust as directed by the Plan
Administrator or any agent of the Plan Administrator. The Trustee will
not be obliged to inquire as to whether any payee or distributee is
entitled to any payment or whether the distribution is proper or
within the terms of the Plan, or as to the manner of making any
payment or distribution. The Trustee will be accountable only to the
Plan Administrator for any payment or distribution made by it in good
faith on the order or direction of the Plan Administrator or any agent
of the Plan Administrator;
(e) To borrow money, assume indebtedness, extend mortgages and encumber by
mortgage or pledge;
(f) To compromise, contest, arbitrate, or abandon claims and demands, in
its discretion;
(g) To have with respect to the Trust all of the rights of an individual
owner, including the power to give proxies, to participate in any
voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights;
<PAGE>
(h) To hold any securities or other property in the name of the Trustee or
its nominee, or in another form as it may deem best, with or without
disclosing the trust relationship;
(i) To perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management, investment and
distribution of the Trust;
(j) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment
or delivery of the funds or property until final adjudication is made
by a court of competent jurisdiction;
(k) To file all tax forms or returns required of the Trustee;
(l) To begin, maintain or defend any litigation necessary in connection
with the administration of the Plan, except that the Trustee will not
be obligated to or required to do so unless indemnified to its
satisfaction; and
(m) To keep any or all of the Trust property at any place or places within
the United States or abroad, or with a depository or custodian at such
place or places; provided, however, that the Trustee may not maintain
the indicia of ownership of any assets of the Plan outside the
jurisdiction of the District Courts of the United States, except as
may be expressly authorized in U.S. Treasury or U.S. Department of
Labor regulations.
11.05 Investment in Common or Collective Trust Funds
Notwithstanding the provisions of Section 11.04, the Plan Sponsor
specifically authorizes the Trustee to invest all or any portion of the
assets comprising the Trust Fund in any common or collective trust fund
which at the time of the investment provides for the pooling of the assets
of plans qualified under Code Section 401(a). The authorization applies
only if such common or collective trust fund: (a) is exempt from taxation
under Code Section 584 or 501(a); (b) if exempt under Code Section 501(a),
expressly limits participation to pension and profit sharing trusts which
are exempt under Code Section 501(a) by reason of qualifying under Code
Section 401(a); (c) prohibits that part of its corpus or income which
equitably belongs to any participating trust from being used for or
diverted to any purposes other than for the exclusive benefit of the
Employees or their Beneficiaries who are entitled to benefits under such
participating trust; (d) prohibits assignment by participating trust of any
part of its equity or interest in the group trust; and (e) the sponsor of
the group trust created or organized the group trust in the United States
and maintains the group trust at all times as a domestic trust in the
United States. The provisions of the common or collective trust fund
agreement, as amended by the Trustee from time to time, are by this
reference incorporated within this Plan and Trust. The provisions of the
common or collective trust fund will govern any investment of Plan assets
in that fund. This provision constitutes the express permission required by
Section 408(b)(8) of ERISA.
11.06 Investment in Insurance Company Contracts
The Trustee may invest any portion of the Trust Fund in a deposit
administration, guaranteed investment or similar type of investment
contract (hereinafter referred to as Contract); provided, however, that no
such Contract may provide for an optional form of benefit which would not
be provided for under the provisions hereof. The Trustee will be the
complete and absolute owner of Contracts held in the Trust Fund.
The Trustee may convert from one form to another any Contract held in the
Trust Fund; designate any mode of settlement; sell or assign any Contract
held in the Trust Fund; surrender for cash any Contract held in the Trust
Fund; agree with the insurance company issuing any Contract to any release,
reduction, modification or amendment thereof; and,
<PAGE>
without limitation of any of the foregoing, exercise any and all of the
rights, options and privileges that belong to the absolute owner of any
Contract held in the Trust Fund that are granted by the terms of any such
Contract or by the terms of this Agreement.
The Trustee will hold in the Trust Fund the proceeds of any sale,
assignment or surrender of any Contract held in the Trust Fund and any and
all dividends and other payments of any kind received in respect to any
Contract held in the Trust Fund.
No insurance company which may issue any Contract based upon the
application of the Trustee will be responsible for the validity of this
Plan, be required to look into the terms of this Plan, be required to
question any act of the Plan Administrator or the Trustee hereunder or be
required to verify that any action of the Trustee is authorized by this
Plan. If a conflict should arise between the terms of the Plan and any such
Contract, the terms of the Plan will govern.
11.07 Fees and Expenses from Fund
The Trustee will be entitled to receive reasonable annual compensation as
may be mutually agreed upon from time to time between the Plan Sponsor and
the Trustee. The Trustee will pay all expenses reasonably incurred by it in
its administration and investment of the Trust Fund from the Trust Fund
unless the Plan Sponsor pays the expenses. No person who is receiving full
pay from the Plan Sponsor will receive compensation for services as
Trustee.
11.08 Records and Accounting
The Trustee will keep full and complete records of the administration of
the Trust Fund which the Employer and the Plan Administrator may examine at
any reasonable time. As soon as practical after the end of each Plan Year
and at such other reasonable times as the Employer may direct, the Trustee
will prepare and deliver to the Employer and the Plan Administrator an
accounting of the administration of the Trust, including a report on the
fair market value of all assets of the Trust Fund.
11.09 Distribution Directions
If no one claims a payment or distribution made from the Trust, the Trustee
will notify the Plan Administrator and will dispose of the payment in
accordance with the subsequent direction of the Plan Administrator.
11.10 Third Party
No person dealing with the Trustee will be obliged to see to the proper
application of any money paid or property delivered to the Trustee, or to
inquire whether the Trustee has acted pursuant to any of the terms of the
Plan. Each person dealing with the Trustee may act upon any notice, request
or representation in writing by the Trustee, or by the Trustee's duly
authorized agent, and will not be liable to any person whomsoever in so
doing. The certification of the Trustee that it is acting in accordance
with the Plan will be conclusive in favor of any person relying on the
certification.
11.11 Professional Agents, Affiliates and Arbitration
(a) Professional Agents
The Trustee may employ and pay from the Trust Fund reasonable
compensation to agents, attorneys, accountants and other persons to
advise the Trustee as in its opinion may be necessary. The Trustee may
delegate to any agent, attorney, accountant or other person selected
by it any non-Trustee power or duty vested in it by the Plan; the
Trustee may act or refrain from acting on the advice or opinion of any
agent, attorney, accountant or other person so selected.
<PAGE>
(b) Use of Affiliates
(1) Charles Schwab Trust Company (CSTC) is authorized to contract or
make other arrangements with The Charles Schwab Corporation,
Charles Schwab & Co., Inc., their affiliates and subsidiaries,
successors and assigns (collectively referred to as Schwab), and
any other organizations affiliated with or subsidiaries of CSTC
or related entities, for the provision of services to the Trust
Fund or Plan, except where such arrangements are prohibited by
law or regulation. As used below, authorized person means any
person whose authorization is required pursuant to the provision
of any prohibited transaction exemption otherwise applicable.
(2) CSTC is authorized to place securities orders, settle securities
trades, hold securities in custody and other related activities
on behalf of the Trust Fund through or by Schwab whenever
possible unless the authorized person specifically instructs the
use of another Broker. Trades and related activities conducted
through the Broker will be subject to fees and commissions
established by the Broker, which may be paid from the Trust Fund
or netted from the proceeds of trades.
(3) Trades will not be executed through Schwab unless the Plan
Administrator and the authorized person have received disclosure
concerning the relationship of Schwab to CSTC, and the fees and
commissions which may be paid to Schwab, CSTC and any affiliate
or subsidiary of any of them as a result of using Schwab to
execute trades or for other services.
(4) CSTC is authorized to disclose such information as is necessary
to the operation and administration of the Trust Fund to Schwab
and to such other persons or organizations that CSTC determines
have a legitimate business purpose for obtaining such
information.
(5) At the direction of the authorized person, CSTC may purchase
shares of regulated investment companies (or other investment
vehicles) advised by Schwab or CSTC ("Schwab Funds"), except to
the extent that such investment is prohibited by law or
regulation. Schwab Fund shares may not be purchased for or held
by the Trust Fund unless the Plan Administrator has received
disclosure concerning the relationship of Schwab or CSTC to the
Schwab Funds, and any fees which may be paid to such entities.
(6) To the extent permitted under applicable laws, CSTC may invest in
deposits, long and short term debt instruments, stocks and other
securities, including those of CSTC or Schwab.
(7) CSTC and Schwab are authorized to tape record conversations
between CSTC or Schwab and persons acting on behalf of the Plan
or a Participant in order to verify data on transactions.
(c) Arbitration
Any dispute between the Employer and the Trustee under this agreement
will be resolved by submission of the issue to a member of the
American Arbitration Association who is chosen by the Employer and the
Trustee. If the Employer and the Trustee cannot agree on such a
choice, each will nominate a member of the American Arbitration
Association, and the two nominees will then select an arbitrator.
Expenses of the arbitration will be paid as decided by the arbitrator.
<PAGE>
11.12 Valuation of Trust
The Trustee will value the Trust Fund as of the last day of each Plan Year
to determine the fair market value of the Trust, and the Trustee will value
the Trust Fund on such other date(s) as may be necessary to carry out the
provisions of the Plan.
11.13 Liability of Trustee
The Trustee will be liable only for the safeguarding and administration of
the assets of this Trust Fund in accordance with the provisions hereof and
any amendments hereto and no other duties or responsibilities will be
implied. The Trustee will not be required to pay any interest on funds paid
to or deposited with it or to its credit under the provisions of this
Trust, unless pursuant to a written agreement between the Employer and the
Trustee. The Trustee will not be responsible for the adequacy of the Trust
Fund to meet and discharge any liabilities under the Plan and will not be
required to make any payment of any nature except from funds actually
received as Trustee. The Trustee may consult with legal counsel (who may be
legal counsel for the Employer) selected by the Trustee and will be fully
protected for any action taken, suffered or omitted in good faith in
accordance with the opinion of said legal counsel. It will not be the duty
of the Trustee to determine the identity or mailing address of any
Participant or any other person entitled to benefits hereunder, such
identity and mailing addresses to be furnished by the Employer, the Plan
Administrator or an agent of the Plan Administrator. The Trustee will be
under no liability in making payments in accordance with the terms of this
Plan and the certification of the Plan Administrator or an agent of the
Plan Administrator who has been granted such powers by the Plan
Administrator.
Except to the extent required by any applicable law, no bond or other
security for the faithful performance of duty hereunder will be required of
the Trustee.
11.14 Removal or Resignation and Successor Trustee
A Trustee may resign at any time upon giving 30 days prior written notice
to the Plan Sponsor or, with the consent of the Plan Sponsor, a Trustee may
resign with less than 30 days prior written notice.
The Plan Sponsor may remove a Trustee by giving at least 30 days prior
written notice to the Trustee.
Upon the removal or resignation of a Trustee, the Plan Sponsor will appoint
and designate a successor Trustee which will be one or more individual
successor Trustees or a corporate Trustee organized under the laws of the
United Sates or of any state thereof with authority to accept and execute
trusts. Any successor Trustee must accept and acknowledge in writing its
appointment as a successor Trustee before it can act in such capacity.
Title to all property and records or true copies of such records necessary
to the current operation of the Trust Fund held by the Trustee hereunder
will vest in any successor Trustee acting pursuant to the provisions
hereof, without the execution or filing of any further instrument. Any
resigning or removed Trustee will execute all instruments and do all acts
necessary to vest such title in any successor Trustee of record. Each
successor Trustee will have, exercise and enjoy all the powers, both
discretionary and ministerial, herein conferred upon his predecessor. No
successor Trustee will be obligated to examine the accounts, records and
acts of any previous Trustee or Trustees, and each successor Trustee in no
way or manner will be responsible for any action or omission to act on the
part of any previous Trustee.
Any corporation which results from any merger, consolidation or purchase to
which the Trustee may be a party, or which succeeds to the trust business
of the Trustee, or to which
<PAGE>
substantially all the trust assets of the Trustee may be transferred, will
be the successor to the Trustee hereunder without any further act or
formality with like effect as if the successor Trustee had originally been
named Trustee herein; and in any such event it will not be necessary for
the Trustee or any successor Trustee to give notice thereof to any person,
and any requirement, statutory or otherwise, that notice will be given is
hereby waived.
11.15 Appointment of Investment Manager
One or more Investment Managers may be appointed by the Plan Sponsor (or
the Plan Administrator) to exercise full investment management authority
with respect to all or a portion of the Trust assets. Authorized payment of
the fees and expenses of the Investment Manager(s) may be made from the
Trust assets. For purposes of this agreement, any Investment Manager so
appointed will, during the period of his appointment, possess fully and
absolutely those powers, rights and duties of the Trustee (to the extent
delegated by the Plan Sponsor or the Plan Administrator) with respect to
the investment or reinvestment of that portion of the Trust assets over
which the Investment Manager has investment management authority. The
Investment Manager must be one of the following:
(a) Registered as an investment advisor under the Investment Advisors Act
of 1940;
(b) A bank, as defined in the Investment Advisors Act of 1940;
or
(c) An insurance company qualified to manage, acquire, or dispose of such
Plan assets under the laws of more than one state.
Any Investment Manager will acknowledge in writing to the Plan Sponsor or
the Plan Administrator and to the Trustee that he or it is a fiduciary with
respect to the Plan. During any period of time when the Investment Manager
is so appointed and serving, and with respect to those assets in the Plan
over which the Investment Manager exercises investment management
authority, the Trustee's responsibility will be limited to holding such
assets as a custodian, providing accounting services, disbursing benefits
as authorized, and executing such investment instructions only as directed
by the Investment Manager. The Trustee will not be responsible for any acts
or omissions of the Investment Manager. Any certificates or other
instruments duly signed by the Investment Manager (or the authorized
representative of the Investment Manager), purporting to evidence any
instruction, direction or order of the Investment Manager with respect to
the investment of those assets of the Plan over which the Investment
Manager has investment management authority, will be accepted by the
Trustee as conclusive proof thereof. The Trustee will also be fully
protected in acting in good faith upon any notice, instruction, direction,
order, certificate, opinion, letter, telegram or other document believed by
the Trustee to be genuine and from the Investment Manager (or the
authorized representative of the Investment Manager). The Trustee will not
be liable for any action taken or omitted by the Investment Manager or for
any mistakes of judgment or other action made, taken or omitted by the
Trustee in good faith upon direction of the Investment Manager.
11.16 Loans to Participants
The Plan Administrator may authorize the Trustee to lend on a
nondiscriminatory basis to a Participant an amount from the Plan as
specified herein; provided, a reasonable rate of interest will be charged
on the loan, the loan will be secured by 50% of the Participant's Vested
Accrued Benefit in the Plan, and provision for repayment will be made. All
loans will be subject to the approval of the Plan Administrator which will
investigate each application for a loan. The Plan Administrator will
prescribe such rules as may be necessary to provide guidelines as to under
which circumstances and for what purpose loans will be permitted.
<PAGE>
The Plan Administrator will prescribe guidelines as to which Account or
Accounts loans may be made from. Each loan made to a Participant will be
made from the Participant's allowable Account or Accounts. All interest and
principal repayments will be credited to the Participant's Account from
which the loan was made.
In addition to any additional rules and regulations as the Plan
Administrator may adopt all loans will comply with the following terms and
conditions:
(a) Only Active and Inactive Participants will be eligible to apply for a
loan. Each application for a loan will be made in writing to the Plan
Administrator, whose action thereon will be final.
(b) Each loan will be made against collateral being the assignment of 50%
of the borrower's entire right, title and interest in and to the Trust
Fund, supported by the borrower's promissory note for the amount of
the loan, including interest payable to the order to the Trustee, and
any additional security deemed necessary to adequately secure the
Loan. If a person fails to make a required payment within 90 days of
the due date set forth in the loan agreement, the loan will be in
default. There will be no foreclosure against a Participant's Accrued
Benefit prior to his becoming entitled to a distribution of benefits
in accordance with the terms of this Plan. All loans will become due
and payable in full upon the termination of a Participant's
employment. If a Participant with an outstanding loan terminates
employment and becomes entitled to a distribution of benefits from the
Plan, then the outstanding balance of the unpaid loan plus any accrued
interest thereon will be deducted from the amount of otherwise
distributable benefits and the Participant's promissory note will be
distributed to the Participant.
(c) The principal repayment will be amortized over the fixed life of a
loan with installments of principal and interest to be paid not less
often than quarterly. The period of repayment for each loan will be
arrived at by mutual agreement between the Plan Administrator and the
borrower, but in no event will such period exceed a reasonable period
of time. The period of repayment will in no event exceed 5 years
unless the loan is to be used to acquire, construct, reconstruct or
substantially rehabilitate any dwelling unit which, within a
reasonable period of time, is to be used as a principal residence of
the Participant or a member of the family (spouse, brother, sister,
ancestor, or lineal descendants) of the Participant.
(d) The minimum amount of any loan is equal to $1,000.
(e) The maximum amount of any loan is such that when the amount of the
loan is added to the outstanding balance of all other loans made to
the Participant from the Plan (and any other plans maintained by the
Employer or any Related Employer) the total does not exceed the lesser
of:
(1) 50% of the Participant's Vested Accrued Benefit; or
(2) $50,000, reduced by the amount, if any, of the highest balance of
all outstanding loans to the Participant during the one-year
period ending on the day prior to the day on which the loan in
question is made.
(f) Each loan will bear interest at a rate equal to the prime rate which
is published in the Wall Street Journal as being representative of the
base rate on corporate loans at large U.S. money center commercial
banks on the first day of the month in which the loan is made, plus 1
percentage point.
<PAGE>
(g) A Participant may have no more than three loans outstanding at any
time.
(h) Each loan will require the Participant to consent to the loan and the
possible reduction in the Participant's Accrued Benefit. Such consent
must be made in writing within the 90-day period before the making of
the loan.
(i) No loan will be permitted to a Participant in a year in which he is
either an Owner-Employee or Shareholder-Employee as defined in Code
Section 4975(d).
ARTICLE 12
PROVISIONS RELATING TO EMPLOYER STOCK
12.01 Type of Employer Stock
The Trustee will, to the extent directed by the Plan Administrator, invest
Employer Matching Contributions in Common Stock of SCGroup Incorporated
(Employer Stock).
If authorized by the Plan Administrator, the Trustee will, to the extent
practical based on the Participant's election, invest that portion of the
Trust fund subject to Participant direction in Employer Stock.
Employer Stock includes treasury stock which has been purchased by the
Employer.
12.02 Voting Rights
(a) In General
Voting rights with respect to shares of Employer Stock held in the
Trust Fund shall be voted by the Trustee in such manner as may be
determined by the respective Participants, with respect to all matters
requiring shareholder approval.
With respect to shares of Employer Stock in the Trust Fund which are
allocated to Participants who fail to give directions to the Trustee
or which are held in a loan suspense account or forfeiture suspense
account, such shares shall be voted by the Trustee based on the voting
directions of those Participants who issued directions with respect to
Employer Stock allocated to their Accounts. Persons for whom no
directions were received shall be disregarded for this purpose. The
number of non-voted shares to be voted in a particular manner shall be
determined by multiplying the total number of such shares by a
fraction, the numerator of which is the number of allocated shares
directed to be voted in such manner, and the denominator of which is
the total number of allocated shares directed to be voted in any
manner with respect to the matter at issue. For shares of Employer
Stock held in a loan suspense account or a forfeiture suspense
account, the Plan Administrator shall, in its absolute and sole
discretion then and then alone, either (i) select an independent
fiduciary to vote all such shares of Employer Stock in its sole
discretion or (ii) vote all of such shares of Employer Stock. For
purposes of this Section, Participants who direct the vote of Employer
Stock allocated to their Accounts shall be considered named
fiduciaries of the Plan within the meaning of
<PAGE>
ERISA Section 403(a)(1).
The Plan Administrator may establish such rules and guidelines as it
deems necessary to properly effect the provisions of this section.
(b) Tender Offers
The Employer has the right to direct the Trustee with respect to the
manner in which to respond to a tender or exchange offer with respect
to shares of Employer Stock held in the Plan.
If the Employer elects not to direct the Trustee, each Participant,
or, in the event of his death, his Beneficiary, shall have the right,
to the extent of the number of full shares of Employer Stock in his
account, to direct the Trustee in writing as to the manner in which to
respond to a tender or exchange offer with respect to shares of such
Employer Stock.
The Employer shall utilize its best efforts to timely distribute or
cause to be distributed to each Participant (or Beneficiary) such
information as will be distributed to shareholders of the Employer in
connection with any such tender or exchange offer.
The Trustee shall, with respect to Employer Stock held in the Trust
Fund, accept or reject the terms of any tender offer and, accordingly,
tender Employer Stock held by the Trustee in the Trust Fund in
accordance with the terms and provisions of any tender offer, or not
tender such Employer Stock, as directed by the Employer or by
respective Participants (or Beneficiaries). If Participants fail or
refuse to direct the Plan as to the manner in which to vote such
shares, or if shares are held in a forfeiture suspense account, the
Plan Administrator shall, in its sole and absolute discretion then and
then alone, either (i) select an independent fiduciary to vote or
tender all such shares of Employer Stock in its sole discretion or
(ii) vote or tender all such shares of Employer Stock. For purposes of
this Section, Participants who direct the vote or tender of Employer
Stock allocated to their Accounts shall be considered named
fiduciaries of the Plan within the meaning of ERISA Section 401(a)(1).
The Plan Administrator may establish such rules and guidelines as it
deems appropriate to properly effect the provisions of this Section.
IN WITNESS WHEREOF, this instrument has been executed by the duly
authorized and empowered officers of the Employer, this ________ day of
_____________________, 19_____.
SCGroup Incorporated
By:
----------------------------
The Trustee agrees to continue to serve as Trustee under the terms of this
instrument.
Charles Schwab Trust Company
By:
----------------------------
<PAGE>
Exhibit 5
March 17, 1998
Security Capital Group Incorporated
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Re: Registration Statement on Form S-8
SCGroup Incorporated 401(K) Savings Plan
Ladies and Gentlemen:
We have acted as counsel to Security Capital Group Incorporated, a
Maryland corporation ("Security Capital" or the "Company"), in connection with
the proceedings (the "Company Proceedings") taken and to be taken relating to
the registration by Security Capital of an aggregate of 120,000 of its shares of
Class B Common Stock, par value $.01 per share (the "Class B Shares"), with the
Securities and Exchange Commission (the "SEC") in connection with the Company's
SCGroup Incorporated 401(K) Savings Plan (the "Plan"). We have also participated
in the preparation and filing with the SEC under the Securities Act of 1933, as
amended, of a registration statement on Form S-8 (the "Registration Statement")
relating to the Class B Shares.
As counsel to Security Capital, we have examined originals or copies
certified to our satisfaction of the Company's Articles of Amendment and
Restatement and Amended and Restated Bylaws, resolutions of the Board of
Directors and such other Company records, instruments, certificates and
documents and such questions of law as we considered necessary or appropriate to
enable us to express this opinion. As to certain facts material to our opinion,
we have relied, to the extent we deem such reliance proper, upon certificates of
public officials and officers of Security Capital. In rendering this opinion, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to authentic original
documents of photostatic copies.
Based upon and subject to the foregoing and to the assumptions,
limitations and conditions set forth herein, we are of the opinion that, upon
completion of the Company Proceedings, the Class B Shares will have been validly
issued and delivered in accordance with the Company Proceedings and the Plan,
the Class B Shares will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
MAYER, BROWN & PLATT
<PAGE>
Exhibit 15.1
March 16, 1998
Board of Directors and Shareholders of
Security Capital Group Incorporated
We are aware that Security Capital Group Incorporated has incorporated by
reference in its Registration Statement on Form S-8, relating to the SCGroup
Incorporated 401(K) Savings Plan, its Form 10-Q for the quarter ended June 30,
1997, which includes our report dated August 11, 1997 covering the unaudited
interim financial information contained therein, and its Form 10-Q for the
quarter ended September 30, 1997, which includes our report dated November 12,
1997 covering the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933 (the "Act"), that report
is not considered a part of such registration statement or a report prepared or
certified by our firm within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
<PAGE>
Exhibit 15.2
The Board of Directors of
Security Capital Group Incorporated
With respect to the registration statement on Form S-8 of Security Capital Group
Incorporated relating to the SCGroup Incorporated 401(K) Savings Plan, we
acknowledge our awareness of the incorporation by reference therein of our
report dated August 13, 1997 related to our review of interim financial
information of Security Capital Pacific Trust as of June 30, 1997 and for the
three- and six-month periods ended June 30, 1997 and 1996 and our report dated
October 21, 1997 related to our review of interim financial information of
Security Capital Pacific Trust as of September 30, 1997 and for the three- and
nine-month periods ended September 30, 1997 and 1996. Pursuant to Rule 436(c)
under the Securities Act of 1933 (the "Act"), such reports are not considered a
part of a registration statement prepared or certified by an accountant, or a
report prepared or certified by an accountant within the meaning of Sections 7
and 11 of the Act.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 16, 1998
<PAGE>
Exhibit 15.3
March 16, 1998
Board of Trustees and Shareholders of
Security Capital Group Incorporated:
We are aware that Security Capital Group Incorporated has incorporated by
reference in its Registration Statement on Form S-8, relating to the SCGroup
Incorporated 401(K) Savings Plan, Security Capital Industrial Trust's Form 10-Q
for the quarter ended June 30, 1997, which includes our report dated August 11,
1997 covering the unaudited interim financial information contained therein.
Pursuant to Regulation C of the Securities Act of 1933 (the "Act"), that report
is not considered a part of such registration statement or a report prepared or
certified by our firm within the meaning of Sections 7 and 11 of the Act.
Very truly yours,
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our Security Capital Group
Incorporated report dated February 28, 1997 (except with respect to the matters
discussed in Note 11 as to which the date is April 18, 1997), our Security
Capital Group Incorporated report dated February 17, 1995, and our Security
Capital Industrial Trust reports dated February 10, 1997 and to all references
to our Firm included in or made a part of this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 16, 1998
<PAGE>
Exhibit 23.3
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of
Security Capital Group Incorporated:
We consent to the incorporation by reference in this registration statement
on Form S-8 of Security Capital Group Incorporated related to the SCGroup
Incorporated 401(K) Savings Plan of our report dated January 29, 1997, except as
to Note 13, which is as of March 10, 1997, relating to the balance sheets of
Security Capital Pacific Trust as of December 31, 1996 and 1995, the related
statements of earnings, shareholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1996, and the related schedule
as of December 31, 1996, which are incorporated by reference in this
registration statement.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 16, 1998
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Registration Statement on Form S-8
filed by Security Capital Group Incorporated, in connection with the SCGroup
Incorporated 401(K) Savings Plan, of our reports dated March 4, 1996 and
February 28, 1997, relating to the consolidated financial statements of Security
Capital US Realty SICAV, which reports are incorporated by reference in such
registration statement.
PRICE WATERHOUSE SA
24-26 Avenue de Liberte
Luxembourg, L-1014
March 16, 1998
<PAGE>
Exhibit 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the SCGroup Incorporated 401(K) Savings Plan of our
report dated February 3, 1997, with respect to the financial statements at
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996 of Security Capital Atlantic Incorporated which is included in
the Registration Statement on Form S-11 (No. 333-26037) and the related
Prospectus of Security Capital Group Incorporated.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Dallas, Texas
March 16, 1998
<PAGE>
Exhibit 23.6
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the SCGroup Incorporated 401(K) Savings Plan of our
report dated February 24, 1997, with respect to the financial statements at
December 31, 1996 and for the year ended December 31, 1996 of Homestead Village
Incorporated which is included in the Registration Statement on Form S-11 (No.
333-26037) and the related Prospectus of Security Capital Group Incorporated.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Dallas, Texas
March 16, 1998
