<PAGE>
Registration No. 333-_____
Filed July 19, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
HARRINGTON FINANCIAL GROUP, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its Articles of Incorporation)
INDIANA 48-1050267
- ----------------------- ---------------------------------
(State of incorporation) (IRS Employer Identification No.)
7300 College Boulevard
Suite 430
OVERLAND PARK, KANSAS 66210
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(Address of principal executive offices, including zip code)
SMITH BREEDEN ASSOCIATES, INC.
PROFIT SHARING AND 401(K) PLAN
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(Full Title of the Plans)
Copies to:
<TABLE>
<S> <C>
Craig J. Cerny Jeffrey R. Houle, Esq.
President Elias, Matz, Tiernan & Herrick L.L.P.
Harrington Financial Group, Inc. 734 15th Street, N.W.
7300 College Boulevard, Suite 430 Washington, D.C.
Overland Park, Kansas 66210 (202) 347-0300
(913) 451-1566
- -------------------------------------
(Name, address, and telephone number
of agent for service)
</TABLE>
Page 1 of 78 pages
Index to Exhibits is located on page 6.
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Title of
Securities Amount Proposed Maximum Proposed Maximum Amount of
to be to be Offering Price Aggregate Registration
Registered Registered Per Share(2) Offering Price(2) Fee(3)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.125 350,000(1) $10.25 $3,587,500.00 $1,237.07
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents an estimate of such presently undeterminable number of shares
as may be purchased with employer and employee contributions pursuant to
the Smith Breeden Associates, Inc. Profit Sharing and 401(k) Plan.
Pursuant to Rule 416(c) under the Securities Act of 1933, this
registration statement covers an indeterminate amount of interests to be
offered or sold pursuant to the employee benefit plan described herein.
(2) Estimated solely for the purpose of calculating the registration fee,
which has been calculated pursuant to Rule 457(h). The Proposed Maximum
Offering Price Per Share is the average of the high and low prices of the
common stock, par value $.125 per share (the "Common Stock") of Harrington
Financial Group, Inc. (the "Company" or the "Registrant") on the Nasdaq
National Market on July 15, 1996.
----------------
This Registration Statement shall become effective automatically upon the
date of filing in accordance with Section 8(a) of the Securities Act of 1933,
as amended, and 17 C.F.R. Section 230.462.
2
<PAGE>
PART I
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
- ------------
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance with
Rule 428 under the Securities Act of 1933, as amended ("Securities Act"),
and the Note to Part I on Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed or to be filed with the Securities and
Exchange Commission (the "Commission") are incorporated by reference in this
Registration Statement:
(a) The Company's Prospectus, filed with the Commission as part
to Registration Statement on Form S-1 (Commission File No. 333-1556)
containing audited financial statements for the year ended June 30, 1995;
(b) All reports filed by the Company pursuant to Sections 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since the end of the fiscal year covered by the financial
statements in the Prospectus referred to in clause (a) above;
(c) The description of the Common Stock of the Company contained
in the Company's Registration Statement on Form 8-A filed with the
Commission on March 11, 1996;
(d) All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof and 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.
Any statement contained in this Registration Statement, or in a document
incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein, or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable since the Company's Common Stock is registered under
Section 12 of the Exchange Act.
ITEM. 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
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<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated under the Indiana Business Corporation Law,
of which Chapter 37 provides as follows:
23-1-37-1 "CORPORATION". As used in this chapter, "corporation" includes
any domestic or foreign predecessor entity of a corporation in a merger or other
transaction in which the predecessor's existence ceased upon consummation of the
transaction.
23-1-37-2 "DIRECTOR". As used in this chapter, "director" means an
individual who is or was a director of a corporation or an individual who, while
a director of a corporation, is or was serving at the corporation's request as a
director, officer, partner, member, manager, trustee, employee, or agent of
another foreign or domestic corporation, partnership, limited liability company,
joint venture, trust, employee benefit plan, or other enterprise, whether for
profit or not. A director is considered to be serving an employee benefit plan
at the corporation's request if the director's duties to the corporation also
impose duties on, or otherwise involve services by, the director to the plan or
to participants in or beneficiaries of the plan. "Director" includes, unless
the context requires otherwise, the estate or personal representative of a
director.
23-1-37-3 "EXPENSES". As used in this chapter, "expenses" include counsel
fees.
23-1-37-4 "LIABILITY". As used in this chapter, "liability" means the
obligation to pay a judgment, settlement, penalty, fine (including an excise tax
assessed with respect to an employee benefit plan), or reasonable expenses
incurred with respect to a proceeding.
23-1-37-5 "OFFICIAL CAPACITY". As used in this chapter, "official
capacity" means:
(1) when used with respect to a director, the office of director in a
corporation; and
(2) when used with respect to an individual other than a director, as
contemplated in section 13 of this chapter, the office in a
corporation held by the officer or the employment or agency
relationship undertaken by the employee or agent on behalf of the
corporation.
"Official capacity" does not include service for any other foreign or
domestic corporation or any partnership, limited liability company, joint
venture, trust, employee benefit plan, or other enterprise, whether for profit
or not.
23-1-37-6 "PARTY". As used in this chapter, "party" includes an
individual who was, is, or is threatened to be made a named defendant or
respondent in a proceeding.
23-1-37-7 "PROCEEDING". As used in this chapter, "proceeding" means any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative and whether formal or informal.
23-1-37-8 "PERMISSIVE INDEMNIFICATION".
(a) A corporation may indemnify an individual made a party to a proceeding
because the individual is or was a director against liability incurred in the
proceeding if:
(1) the individual's conduct was in good faith; and
(2) the individual reasonably believed:
4
<PAGE>
(A) in the case of conduct in the individual's official
capacity with the corporation, that the individual's
conduct was in its best interests; and
(B) in all other cases, that the individual's conduct was at
least not opposed to its best interests; and
(3) in the case of any criminal proceeding, the individual either:
(A) had reasonable cause to believe the individual's conduct
was lawful; or
(B) had no reasonable cause to believe the individual's conduct
was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose the director reasonably believed to be in the interests of the
participants in and beneficiaries of the plan is conduct that satisfies the
requirement of subsection (a)(2)(B).
(c) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
described in this section.
23-1-37-9 "MANDATORY INDEMNIFICATION". Unless limited by its articles of
incorporation, a corporation shall indemnify a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which the director was a party because the director is or was a director of the
corporation against reasonable expenses incurred by the director in connection
with the proceeding.
23-1-37-10 "ADVANCE INDEMNIFICATION".
(a) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of final
disposition of the proceeding if:
(1) the director furnishes the corporation a written affirmation of
the director's good faith belief that the director has met the
standard of conduct described in section 8 of this chapter;
(2) the director furnishes the corporation a written undertaking,
executed personally or on the director's behalf, to repay the
advance if it is ultimately determined that the director did not
meet the standard of conduct; and
(3) a determination is made that the facts then known to those making
the determination would not preclude indemnification under this
chapter.
(b) The undertaking required by subsection (a)(2) must be an unlimited
general obligation of the director but need not be secured and may be accepted
without reference to financial ability to make repayment.
(c) Determinations and authorizations of payments under this section shall
be made in the manner specified in section 12 of this chapter.
23-1-37-11 "APPLICATION FOR INDEMNIFICATION". Unless a corporation's
articles of incorporation provide otherwise, a director of the corporation who
is a party to a proceeding may apply for indemnification to the court conducting
the proceeding or to another court of competent jurisdiction. On receipt of an
application, the court after giving any notice the court considers necessary may
order indemnification if it determines:
5
<PAGE>
(1) the director is entitled to mandatory indemnification under section 9
of this chapter, in which case the court shall also order the corporation to pay
the director's reasonable expenses incurred to obtain court-ordered
indemnification; or
(2) the director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not the director met the
standard of conduct set forth in section 8 of this chapter.
23-1-37-12 PROCEDURE FOR DETERMINING INDEMNIFICATION.
(a) A corporation may not indemnify a director under section 8 of this
chapter unless authorized in the specific case after a determination has been
made that indemnification of the director is permissible in the circumstances
because the director has met the standard of conduct set forth in section 8 of
this chapter.
(b) The determination shall be made by any one (1) of the following
procedures:
(1) By the board of directors by majority vote of a quorum consisting
of directors not at the time parties to the proceeding.
(2) If a quorum cannot be obtained under subdivision (1), by majority
vote of a committee duly designated by the board of directors (in
which designation directors who are parties may participate),
consisting solely of two (2) or more directors not at the time
parties to the proceeding.
(3) By special legal counsel:
(A) selected by the board of directors or its committee in the
manner prescribed in subdivision (1) or (2); or
(B) if a quorum of the board of directors cannot be obtained
under subdivision (1) and a committee cannot be designated
under subdivision (2), selected by majority vote of the
full board of directors (in which selection directors who
are parties may participate).
(4) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the
proceeding may not be voted on the determination.
(c) Authorization of indemnification and evaluation as to reasonableness
of expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection
(b)(3) to select counsel.
23-1-37-13 INDEMNIFICATION OF OFFICERS, AGENTS AND EMPLOYEES. Unless a
corporation's articles of incorporation provide otherwise:
(1) an officer of the corporation, whether or not a director, is entitled
to mandatory indemnification under section 9 of this chapter, and is entitled to
apply for court-ordered indemnification under section 11 of this chapter, in
each case to the same extent as a director;
(2) the corporation may indemnify and advance expenses under this chapter
to an officer, employee, or agent of the corporation, whether or not a director,
to the same extent as to a director; and
6
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(3) a corporation may also indemnify and advance expenses to an officer,
employee, or agent, whether or not a director, to the extent, consistent with
public policy, that may be provided by its articles of incorporation, bylaws,
general or specific action of its board of directors, or contract.
23-1-37-14 INSURANCE. A corporation may purchase and maintain insurance
on behalf of an individual who is or was a director, officer, employee, or agent
of the corporation, or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a director,
officer, partner, member, manager, trustee, employee, or agent of another
foreign or domestic corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan, or other enterprise, against liability
asserted against or incurred by the individual in that capacity or arising from
the individual's status as a director, officer, member, manager, employee, or
agent, whether or not the corporation would have power to indemnify the
individual against the same liability under section 8 or 9 of this chapter.
The:
(1) corporation may purchase insurance under this section from; and
(2) insurance purchased under this section may be reinsured in whole or in
part by; an insurer that is owned by or otherwise affiliated with the
corporation whether the insurer does or does not do business with other persons.
23-1-37-15 INDEMNIFICATION UNDER CHAPTER NOT EXCLUSIVE.
(a) The indemnification and advance for expenses provided for or
authorized by this chapter does not exclude any other rights to indemnification
and advance for expenses that a person may have under:
(1) a corporation's articles of incorporation or bylaws;
(2) a resolution of the board of directors or of the shareholders; or
(3) any other authorization, whenever adopted, after notice, by a
majority vote of all the voting shares then issued and outstanding.
(b) If the articles of incorporation, bylaws, resolutions of the board of
directors or of the shareholders, or other duly adopted authorization of
indemnification or advance for expenses limit indemnification or advance for
expenses, indemnification and advance for expenses are valid only to the extent
consistent with the articles, bylaws, resolution of the board of directors or of
the shareholders, or other duly adopted authorization of indemnification or
advance for expenses.
(c) This chapter does not limit a corporation's power to pay or reimburse
expenses incurred by a director, officer, employee, or agent in connection with
the person's appearance as a witness in a proceeding at a time when the person
has not been made a named defendant or respondent to the proceeding.
Article IX of the Registrant's Amended and Restated Articles of
Incorporation provide as follows:
PERSONAL LIABILITY OF DIRECTORS. A director of the Corporation shall not
be personally liable for monetary damages for any action taken or any failure to
take any action as a director except to the extent that by law a director's
liability for monetary damages may not be limited.
INDEMNIFICATION. The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, except actions by or in the right of the
Corporation, whether civil, criminal, administrative or investigative, by reason
of the fact that such person is or was a director or officer of the Corporation,
against expenses (including attorney's fees),
7
<PAGE>
judgments, fines, excise taxes and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit
or proceeding to the full extent permissible under Indiana law.
ADVANCEMENT OF EXPENSES. Reasonable expenses incurred by an officer,
director, employee or agent of the Corporation in defending a civil or criminal
action, suit or proceeding described above in "indemnification" shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding to the full extent permitted under Indiana law.
OTHER RIGHTS. The indemnification and advancement of expenses provided by
or pursuant to this Article shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under the Corporation's Articles of Incorporation, any insurance or other
agreement, vote of shareholders or directors or otherwise, both as to actions in
their official capacity and as to actions in another capacity while holding an
office, and shall continue as to a person who has ceased to be a director or
officer and shall inure to the benefit to the heirs, executors and
administrators of such person provided that no indemnification shall be made to
or on behalf of an individual if a judgment or other final adjudication
establishes that his act or omissions (i) were in breach of his duty of loyalty
to the Corporation or its stockholders, (ii) were not in good faith or involved
a knowing violation of law or (iii) resulted in the receipt of an improper
personal benefit.
INSURANCE. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of these Articles of Incorporation.
MODIFICATION. The duties of the Corporation to indemnify and to advance
expenses to a director or officer provided in the Article shall be in the nature
of a contract between the Corporation and each such director or officer, and no
amendment or repeal of any provision of this Article shall alter, to the
determent of such director or officer, the right of such person to the advance
of expenses or indemnification related to a claim based on an act or failure to
act which took place prior to such amendment or repeal.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable since no restricted securities will be reoffered or resold
pursuant to this Registration Statement.
8
<PAGE>
ITEM 8. EXHIBITS
The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8 (numbering corresponds to Exhibit Table
in Item 601 of Regulation S-K):
<TABLE>
<CAPTION>
NO. EXHIBIT PAGE
--- ------- ----
<S> <C> <C>
4 Common Stock Certificate* --
23.2 Consent of Deloitte & Touche LLP E-1
24 Power of attorney for any subsequent
amendments is located in the signature pages --
99.1 Smith Breeden Associates, Inc. Profit Sharing
and 401(k) Plan E-2
</TABLE>
- ------------
* Incorporated by reference from the Company's Registration Statement on
Form S-1 (Commission File No. 333-1556) filed with the Commission on
February 20, 1996.
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act, (ii)
to reflect in the prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement, and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change in such
information in the Registration Statement; provided, however, that clauses (i)
and (ii) do not apply if the information required to be included in a post-
effective amendment by those clauses is contained in periodic reports filed by
the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
4. That, for the purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act 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.
9
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5. 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 foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against 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 questions whether such indemnification by it is against public
policy expressed in the Securities Act and will be governed by the final
adjudication of such issue.
10
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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 Overland Park, State of Indiana, on
this 18th day of July, 1996.
HARRINGTON FINANCIAL GROUP, INC.
By: /s/ Craig J. Cerny
-------------------------------------
Craig J. Cerny, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby makes, constitutes and appoints Craig J. Cerny his or her true
and lawful attorney, with full power to sign for such person and in such
person's name and capacity indicated below, and with full power of
substitution any and all amendments to this Registration Statement, hereby
ratifying and confirming such person's signature as it may be signed by said
attorney to any and all amendments.
/s/ Craig J. Cerny July 18, 1996
- ----------------------------------
Craig J. Cerny
President
/s/ Catherine A. Habschmidt July 18, 1996
- ----------------------------------
Catherine A. Habschmidt
Chief Financial Officer
and Treasurer
/s/ William F. Quinn, Jr. July 18, 1996
- ----------------------------------
William F. Quinn, Jr.
Executive Vice President
and Director
/s/ Douglas T. Breeden July 18, 1996
- ----------------------------------
Douglas T. Breeden
Chairman of the Board
/s/ Gerald J. Madigan July 18, 1996
- ----------------------------------
Gerald J. Madigan
Director
/s/ Michael J. Giarla July 18, 1996
- ----------------------------------
Michael J. Giarla
Director
<PAGE>
/s/ Stephen A. Eason July 18, 1996
- ----------------------------------
Stephen A. Eason
Director
/s/ Lawrence E. Golaszewski July 18, 1996
- ----------------------------------
Lawrence E. Golaszewski
Director
/s/ David F. Harper July 18, 1996
- ----------------------------------
David F. Harper
Director
/s/ Stanley J. Kon July 18, 1996
- ----------------------------------
Stanley J. Kon
Director
/s/ John J. McConnell July 18, 1996
- ----------------------------------
John J. McConnell
Director
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the trustee
who administers the employee benefit plan has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chapel Hill, State of North Carolina, on July 18,
1996.
SMITH BREEDEN ASSOCIATES, INC.
PROFIT SHARING AND 401(K) PLAN
By: /s/ Marianthe S. Mewkill
-------------------------------------
Marianthe S. Mewkill, Trustee
<PAGE>
EXHIBIT 23.2
CONSENT OF DELOITTE & TOUCHE LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Harrington Financial Group, Inc. on Form S-8 of our report dated September 8,
1995 (February 5, 1996 as to Note 19), appearing in Harrington Financial Group,
Inc.'s Prospectus, which is a part of Registration Statement No. 333-1556 on
Form S-1.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Indianapolis, Indiana
July 15, 1996
<PAGE>
EXHIBIT 99.1
SMITH BREEDEN ASSOCIATES, INC.
PROFIT SHARING AND 401(k) PLAN
<PAGE>
SMITH BREEDEN ASSOCIATES, INC.
PROFIT SHARING AND 401(k) PLAN AND TRUST
Amended and Restated
Effective January 1, 1994
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS 1
ARTICLE 2 ADMINISTRATION 5
ARTICLE 3 ELIGIBILITY TO PARTICIPATE 8
ARTICLE 4 CONTRIBUTIONS 9
ARTICLE 5 ALLOCATION OF EMPLOYER CONTRIBUTIONS 9
ARTICLE 6 RETIREMENT BENEFITS 11
ARTICLE 7 DISABILITY BENEFITS 11
ARTICLE 8 DEATH BENEFITS 11
ARTICLE 9 TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT 13
ARTICLE 10 METHOD OF PAYMENT 15
ARTICLE 11 TOP-HEAVY PROVISIONS 18
ARTICLE 12 DUTIES AND RIGHTS OF TRUSTEE 21
ARTICLE 13 INVESTMENT OF TRUST FUNDS 24
ARTICLE 14 ACCOUNTING PROCEDURE 27
ARTICLE 15 SPENDTHRIFT PROVISIONS 27
ARTICLE 16 TERMINATION 28
ARTICLE 17 AMENDMENT, SUSPENSION OF MINIMUM ACCRUAL
REQUIREMENTS AND MERGER 29
ARTICLE 18 TRUST ESTABLISHED 31
ARTICLE 19 CLAIM PROCEDURE AND MISCELLANEOUS 31
ARTICLE 20 PARTICIPANT LOANS 33
ARTICLE 21 SALARY REDUCTION CONTRIBUTIONS 34
<PAGE>
SMITH BREEDEN ASSOCIATES, INC.
PROFIT SHARING AND 401(k) PLAN AND TRUST
Smith Breeden Associates, Inc., a corporation organized under the laws of the
State of Kansas in order to reward the loyal, faithful and efficient services
of its employees, to stimulate in them a keen interest in the successful
operation of its business, and to assist them to create independent estates
from which they can better maintain their accustomed standards of living in
later life and provide for the support of their dependents upon death, has
adopted the following qualified, deferred profit sharing plan with the
intention that it shall meet the requirements for qualification under Section
401 of the Internal Revenue Code of 1986, as amended (the "Code"), that the
trust established hereunder shall be an exempt trust under Code Section 501,
and that the plan and trust shall satisfy the requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA").
Now, Employer intends to amend and restate the Plan and Trust generally
effective January 1, 1994 but subject to paragraph 1.6. The amendments are
primarily to comply with the Tax Reform Act of 1986 ("TRA 86"), subsequent
legislation, and regulations issued thereunder, and to add a 401(k) feature
to the Plan, effective January 1, 1994. The amended provisions of the Plan
and Trust shall apply only to employees whose employment terminates on or
after the applicable effective date(s) of the amended provisions and the
rights and benefits of employees hereunder shall be determined solely in
accordance with the provisions of the Plan and Trust in effect on the dates
such employees' employment was or is terminated.
ARTICLE 1
DEFINITIONS
When used herein the following words shall have the following meanings
unless the context clearly indicates otherwise:
1.1. "Administrator" shall mean the person, persons, corporation or
other entity designated or appointed pursuant to paragraph 2.1.
1.2. "Anniversary date" shall mean December 31 of each year.
-1-
<PAGE>
1.3. "Annual compensation" shall mean the total amount of compensation
earned by a Participant from Employer in any Plan Year, excluding any
contributions to, or payments or benefits under, any fringe benefit plan of
Employer but including any elective deferrals by a Participant under Article
21 hereof and subject to paragraphs 5.3 and 11.2(c) hereinafter. Effective
January 1, 1989, annual compensation recognized hereunder shall not exceed
$200,000 as defined in Code Section 414(s) ($150,000 effective January 1, 1994)
or such larger amount as may be adjusted by the Secretary of the Treasury from
time to time in the same manner as under Code Section 415(d) (or under Code
Section 401(a)(17)(B), as applicable). In determining the annual compensation
of a Participant for purposes of this limitation, the rules of Code Section
414(q)(6) shall apply, except in applying such rules, the term "family" shall
include only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year. If, as
a result of the application of such rules, the adjusted $200,000 limitation
is exceeded, then the limitation shall be prorated among the affected
individuals in proportion to each such individual's annual compensation as
determined under this paragraph prior to the application of this limitation.
1.4. "Board of Directors" or "Board" shall mean Employer's Board of
Directors.
1.5. "Disability" shall mean the apparently total and permanent
incapacity of a Participant to perform the usual duties of his employment
with Employer in a reasonably efficient manner, as determined by the
Administrator in his sole discretion. Such incapacity may be deemed to exist
when certified by a physician who is mutually acceptable to the
Administrator and to the Participant.
1.6. The original "effective date" of the Plan was December 29, 1983.
The general effective date of this amendment and restatement of the Plan
shall be January 1, 1994; provided, however, that to the extent certain
amendments included in this restatement were necessitated or permitted by
changes in the law made by TRA 86 or changes in IRS regulations and such
changes had earlier effective dates, then each effective date of such
amendment shall be such earlier date as may be applicable.
1.7. "Employee" shall mean any person employed by Employer who is or
may become eligible to participate in the Plan excluding, however, any
nonresident alien or leased employee.
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Any leased employee within the meaning of Code Section 414(n)(2) shall be
treated as an Employee of the Employer (even though not participating in the
Plan); provided, however, contributions or benefits provided by the leasing
organization which are attributable to services performed for the Employer
shall be treated as provided by the Employer. The preceding sentence shall
not apply to any leased Employee if such Employees constitute less than
twenty percent (20%) of Employer's non-highly compensated employees (within
the meaning of Code Section 414(n)(1)(C)(ii)) and are covered by a money
purchase pension plan providing: (a) a nonintegrated Employer contribution
rate of at least ten percent (10%) of compensation, (b) immediate participation
for employees whose compensation exceeds $1,000 in any of the preceding four
years, and (c) full and immediate vesting. For purposes of this paragraph,
the term "leased Employee" means any person (other than an employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or
for the Employer and related persons determined in accordance with Code
Section 414(n)(6)) on a substantially full time basis for a period of at least
one year and such services are of a type historically performed by employees
in the business field of the Employer.
All employees of all corporations or organizations which are members of
a controlled group of corporations which includes Employer (as defined in
Code Section 414(b)) or an affiliated service group which includes Employer
(as defined in Code Section 414(m)) and all employees of all trades or
businesses (whether or not incorporated) which are under common control with
Employer (as defined in Code Section 414(c)) shall be treated as employed by
Employer for purposes of determining whether the requirements of Code
Sections 401(a), 408(k), 410, 411, 415 and 416 have been met.
1.8. "Employer" shall mean Smith Breeden Associates, Inc.. In addition,
any other affiliated employer may adopt the Plan and Trust and agree to be
bound hereby, with the prior, express written consent of Employer.
1.9. "Hour of service" shall mean, and Employees shall be credited
therewith, as follows:
(a) Each hour for which an Employee is directly or indirectly paid or
entitled to payment by Employer for the performance of duties. These hours
shall be credited to the Employee for the computation period or periods in
which the duties are performed; and
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(b) Each hour for which an Employee is directly or indirectly paid or
entitled to payment by Employer for reasons (such as vacation, sickness or
disability) other than for the performance of duties, which hours shall be
credited to said computation period or periods during which the
nonperformance of duties occurred; and
(c) Each hour for which back pay, irrespective of mitigation of damage,
has been either awarded or agreed to by Employer. These hours shall 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 was made.
(d) An Employee will be credited under subparagraphs (b) and (c) above
with one hundred ninety (190) hours of service for each calendar month during
which such Employee is credited with at least one (1) hour of service during
the month.
(e) Notwithstanding the foregoing, (i) no more than 501 hours of service
shall be credited under subparagraphs (b) and (c) above for any single
continuous period during which no duties were performed; (ii) no hours of
service shall be credited under subparagraph (b) above if the indirect
compensation was paid pursuant to workmen's compensation, unemployment
compensation or disability insurance laws; (iii) no hours of service shall be
credited for any payment to an Employee which solely reimburses the Employee
for medical or medically related expenses; and (iv) hours of service shall be
determined and credited in accordance with Department of Labor Reg. Section
2530.200b-2(b) and (c) or their successors from time to time, the provisions
of which are hereby incorporated herein by this reference.
(f) Solely for purposes of determining whether a one year break in
service has occurred, in the case of an Employee absent from work by reason
of (i) such Employee's pregnancy; (ii) the birth of the Employee's child;
(iii) the placement of a child with the Employee in connection with the
Employee's adoption of the child; or (iv) caring for such child for a period
beginning immediately after such birth or placement, hours of service shall
include the hours of service which would normally have been credited to such
Employee but for such absence, but not more than 501 hours; such hours shall
be included for the Plan Year in which the absence from work begins if the
Employee does not otherwise have at least 501 hours of service for such Plan
Year, otherwise for the Plan Year immediately following.
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1.10. "One year break in service" or "break in service" shall mean a
Plan Year in which a Participant has not completed more than 500 hours of
service.
1.11. "Participant" shall mean an Employee who has qualified under and
is a Participant in the Plan.
1.12. "Plan" shall mean the Smith Breeden Associates, Inc. Profit
Sharing and 401(k) Plan and Trust set forth herein and all subsequent
amendments hereto.
1.13. "Plan Year" shall mean the twelve-month period ending on an
anniversary date.
1.14. "Retirement date" shall mean the first day of the month coinciding
with or immediately preceding a Participant's 65th birthday and "retire"
shall mean any termination of employment thereafter.
1.15. "Trust" shall mean the trust created hereby to fund the Plan.
1.16. "Trustee" shall mean the person or persons, corporation or other
entity owning and managing the assets of the Trust pursuant to the terms
hereof. The Trustee may be an individual or individuals over the age of 25
years or any corporation or other entity selected pursuant to paragraph 12.1.
1.17. "Year of service" shall mean a Plan Year in which an Employee has
completed 1,000 or more hours of service.
ARTICLE 2
ADMINISTRATION
2.1. The Administrator shall be deemed to be the Named Fiduciary for
purposes of ERISA, shall be designated by the Board of Directors and shall
carry out the duties assigned to him under this instrument. The Trustee shall
be notified in writing by Employer of the name of the Administrator and may
conclusively assume that the Administrator will continue to act in that
capacity until the Trustee has been notified to the contrary in writing by
Employer. If no Administrator shall be designated by the Board, the Employer
shall be the Administrator.
2.2. The Administrator shall interpret and construe the provisions of
this agreement; shall decide any disputes which
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may arise relative to the rights of Employees, past and present, and their
beneficiaries, hereunder; shall give instructions and directions to the
Trustee as necessary; and, in general, shall direct the administration of
the Plan as embodied in this agreement, all within his sole and exclusive
discretion. The Administrator shall determine the eligibility of Participants
according to the provisions of this Plan from the information furnished by
Employer. The Administrator shall not, through interpretation of or action
under the Plan, increase the burden imposed upon the Trustee without the
consent of the Trustee.
2.3. The Administrator shall keep records containing relevant data
pertaining to any person affected hereby and his rights under this Plan and
shall ascertain that such person receives the benefits to which he is
entitled under this Plan. Any person affected hereby may consult with the
Administrator on any matters relating to this Plan. The Administrator may
require each Employee to furnish such information as shall be necessary to
enable the Administrator properly to perform his duties hereunder.
2.4. The Administrator shall not have any right to decide any matter
relating solely to himself or to any of his rights or benefits under this
Plan; these decisions shall be made by the Board of Directors. Wherever under
the provisions of this agreement discretion is granted to the Administrator
which shall affect the benefits, rights and privileges of Participants,
normally such discretion shall be exercised uniformly so that all
Participants similarly situated shall be similarly treated.
2.5. The Administrator (or if a Committee, any member thereof) may
resign by giving written notice to Employer not less than 15 days before the
effective date thereof, unless such notice is waived in writing by Employer,
and may be removed at any time, with or without cause, by the Board of
Directors. The Board shall fill any vacancy as soon as is reasonably possible
after the vacancy occurs. Until a new appointment is made, the Board shall
have full authority to act as the Administrator.
2.6. The Administrator shall not be liable or responsible for the acts
of commission or omission of another fiduciary unless (a) the Administrator
knowingly participates or knowingly attempts to conceal the act or omission
of another fiduciary and the Administrator knows the act or omission is a
breach of fiduciary responsibility by the other fiduciary; or (b) the
Administrator has knowledge of a breach
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by another fiduciary and shall not make reasonable efforts to remedy the
breach; or (c) the Administrator's breach of his own fiduciary responsibility
permits another fiduciary to commit a breach. From the assets of the Trust,
the Trustee shall indemnify the Administrator against any and all claims,
losses, damages, expenses and liabilities arising from any act of commission
or omission so long as the act is not finally judicially determined to be a
breach of fiduciary responsibility by the Administrator. This indemnification
shall include attorneys' fees and all other costs and expenses reasonably
incurred by the Administrator in defense of any action brought against him
arising from such act of commission or omission. In addition, Employer shall
indemnify the Administrator against any and all claims, losses, damages,
expenses and liabilities arising from any act of commission or omission for
which the Administrator is not indemnified from Trust assets, provided the
act is not finally judicially determined to have been an act of willful
misconduct or gross negligence.
2.7. If the Administrator is a full-time Employee, no fee or
compensation shall be paid to the Administrator from Trust assets for his
services as the Administrator. Any expenses properly incurred by the
Administrator shall be reimbursed by Employer or paid by the Trust. The
Administrator shall have the right to employ agents and may rely upon the
written opinions or certificates of any agent, counsel, actuary, investment
manager, physician or other fiduciaries of the Plan.
2.8. The Administrator may delegate in writing all or any part of his
responsibilities hereunder to the Trustee and in the same manner revoke any
such delegation of responsibility. Any action of the Trustee in the exercise
of such delegated responsibilities shall have the same force and effect for
all purposes as if such action had been taken by the Administrator. The
Trustee shall have the right, in its sole discretion, by written instrument
delivered to the Administrator, to reject and to refuse to exercise any such
delegated authority.
2.9. The Administrator may determine and advise the Trustee, in writing,
as to how all or a part of the Trust shall be invested and reinvested. If
such instructions are not forthcoming, the Trustee shall have full power and
responsibility to invest and reinvest any funds under its control, but
subject to paragraph 13.2 and Article 21. The Trustee's rights and duties
relative to investments which are contained in Articles 12 and 13 shall inure
to the benefit of,
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and shall be binding upon, the Administrator any time the Administrator
renders investment advice.
2.10. The Administrator shall furnish Participants and beneficiaries
with a summary plan description, summary annual reports and other relevant
information and shall file all required reports, returns and other
information with the government, all as required from time to time by law.
2.11. In lieu of a single Administrator, Employer may designate two or
more persons to serve on an Administrative Committee (the "Committee") to be
jointly responsible for the performance of all of the duties of the
Administrator hereunder. Actions of the Committee shall be by majority vote
or by unanimous consent. Each member of the Committee shall be treated as a
separate fiduciary under paragraph 2.6. In the event of a vacancy on the
Committee, the remaining member or members shall have full authority to act
as the Administrator.
ARTICLE 3
ELIGIBILITY TO PARTICIPATE
3.1. An Employee is eligible and shall commence participation when he
has completed one (1) hour of service in the employment of Employer.
3.2. An Employee who becomes a Participant shall remain a Participant
until he shall terminate employment and incur a one year break in service,
provided that his hours of service shall be measured by the Plan Year, with
the first Plan Year used in the measurement to include the anniversary of the
Employee's commencement of employment. When the Employee's employment does
terminate, the applicable provisions of Article 10 shall then apply. When a
Participant incurs a one year break in service or his participation otherwise
ceases, eligibility to participate thereafter shall be determined in the
same manner as provided in paragraph 3.1. Upon completion of one hour of
service following re-employment, the Participant shall be deemed to have
recommenced participation upon his re-employment date.
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ARTICLE 4
CONTRIBUTIONS
4.1. Employer may make an annual contribution to the Trust during the
continuance of the Plan in an amount, if any, determined by timely resolution
of the Board of Directors, whether or not from current or accumulated
profits. Employer contributions may be made on any date or dates selected by
Employer within the time period permitted by law. No Employee contributions
(other than elective deferrals under Article 21) shall be required or
permitted. Forfeitures shall be used to reduce Employer's contribution (other
than under Article 21).
4.2. If in any Plan Year there shall be an overpayment of Employer's
contribution by reason of a mistake of fact, Employer shall have the right
to (a) allow all, or a portion, of the excess to remain in the Plan to the
credit of the accounts of the Participants to whom it was allocated; or (b)
recover all, or a portion, of the excess within one year after payment of the
contribution.
4.3. Employer's contributions hereto are hereby expressly conditioned on
their deductibility for income tax purposes. If any deduction is disallowed,
whether in the initial year due to Employer's failure to obtain a favorable
determination letter from the Internal Revenue Service or thereafter,
Employer has the right to recover the amount of the contribution which was
disallowed within one year after said disallowance.
ARTICLE 5
ALLOCATION OF EMPLOYER CONTRIBUTIONS
5.1. Employer's contribution and forfeitures, if any, for each Plan Year
shall be allocated as of each anniversary date among the Participants who are
employed by Employer on the last day of the Plan Year and shall be credited
to their respective accounts in proportion to the ratio which each eligible
Participant's annual compensation for such Plan Year following entry into the
Plan bears to the aggregate annual compensation in such year of all eligible
Participants.
Notwithstanding the foregoing, the requirement of employment on the
last day of the Plan Year in order to share in the allocation of
contributions and forfeitures for such year
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shall not apply to any Participant who terminates employment during a Plan
Year by reason of death, disability or retirement.
5.2. The fact that an allocation shall be made and credited to the
account of a Participant shall not vest in the Participant any right, title
or interest in or to any Plan assets except at the time or times and upon the
terms and conditions expressly set forth in this Plan.
5.3. Notwithstanding anything to the contrary herein, an allocation may
not be made to a Participant for any Plan Year that shall exceed the lesser
of $30,000 (or, if larger, one fourth of the defined benefit dollar
limitation as adjusted for increases in the cost of living under Code Section
415(b)(1)) or twenty-five percent (25%) of said Participant's annual
compensation for personal services actually rendered in the course of
employment (as defined generally in paragraph 1.3 but subject to Treas. Reg.
Section 1.415-2(d) or its successor and excluding any contributions to a plan
of deferred compensation excludable from income, any amounts realized in
connection with any stock options, and any payments which receive special tax
treatment (such as group term life insurance or 403(b) annuities)). In
computing the amount allocated to a Participant's account solely for the
purposes of applying the limitation contained in this paragraph 5.3, such
amount shall be, for any one Plan Year, the sum of (a), (b), (c) and (d)
where (a) is the amount, if any, of Employer's contribution on behalf of the
Participant in the same Plan Year to another individual account pension
benefit plan maintained by Employer together with amounts described in Code
Sections 415(1)(1) and 419A(d)(2); (b) is the portion of Plan forfeitures, if
any, allocated to the Participant's account; (c) is the portion of Employer's
contribution to the Plan (under Article 4) to be allocated to the
Participant's account(s); and (d) is the amount of the Participant's elective
deferral contribution, if any, under Article 21.
If an amount would have been allocated to a Participant's account(s) but
for this paragraph 5.3, the excess amount shall be held unallocated in a
suspense account for the limitation year. Such excess amount shall be used to
reduce Employer contributions for the next limitation year (and succeeding
limitation years as necessary) and treated as a forfeiture to be allocated on
the next succeeding date on which forfeitures could be applied hereunder. In
the event of termination of the Plan, any such amounts held in a suspense
account shall revert to Employer to the extent such amounts may not then be
allocated to any Participant's account. The Plan Year shall
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be the "limitation year" (as defined by ERISA) for purposes of applying the
foregoing limitations.
ARTICLE 6
RETIREMENT BENEFITS
6.1. A Participant may retire at any time on or after his retirement
date, as of which date his benefit is nonforfeitable. When a Participant so
retires the amount in his account(s) based on the valuation of the Trust
assets attributable to his account(s) most recently preceding distribution
shall be paid to him in a method provided for in paragraph 10.1.
ARTICLE 7
DISABILITY BENEFITS
7.1. Notwithstanding any provision hereof to the contrary, the Plan is
intended to qualify as an "accident or health plan" within the meaning of
Code Section 105 and benefits payable hereunder for the permanent loss or loss
of use of a member or function of the body are intended to qualify for the
exclusion from income described therein. In furtherance of the foregoing, if
the Administrator shall find that the employment of a Participant has been
terminated prior to his retirement date because of physical or mental
disability, as defined in paragraph 1.5, the amount in his account(s) based
on the valuation of the Trust assets attributable to his account(s) most
recently preceding distribution shall be paid to him in a method provided for
in paragraph 10.1.
7.2. If a Participant's disability shall cease and he returns to work
for Employer before all of his account(s) has been distributed, no further
payments shall be made by reason of the disability and the Participant's
account(s) shall be reduced by and to the extent of the actual distributions.
ARTICLE 8
DEATH BENEFITS
8.1. In the event of the death of a Participant, his death benefit shall
be the amount in his account(s) based on the valuation of the Trust assets
attributable to his
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account(s) most recently preceding distribution. At the direction of the
Administrator (and subject to paragraph 8.2), the Trustee shall pay said
amount in a method provided for in paragraph 10.1 to the Participant's
beneficiary or beneficiaries. The method of distribution shall satisfy the
minimum distribution requirements of Code Section 401(a)(9) and applicable
regulations thereunder, referred to in paragraph 10.1.
8.2. If a Participant dies before distribution of benefits has
commenced, the death benefit may be paid to his beneficiary or
beneficiaries in installments over a period not exceeding the beneficiary's
(or beneficiaries') life expectancy, if such installments begin not later
than (a) one year after the date of the Participant's death (or such later
date as may be permitted under regulations prescribed by the Secretary of the
Treasury), or, (b) if the designated beneficiary is the surviving spouse, by
the later of: (i) one year after the date of the Participant's death or (ii)
the date on which the Participant would have attained age 70-1/2. In all
other cases in which a Participant dies before distribution of benefits has
commenced, the death benefit must be distributed to the Participant's
beneficiary or beneficiaries within five years of his death. If distribution
of benefits to the Participant commenced before the Participant's death,
distribution of the death benefit may continue over the same period, and
shall be made at least as rapidly as, selected by the Participant.
8.3. Each Participant may file in writing with the Administrator a
designation of beneficiary(ies) to receive amounts payable under this Plan
upon his death. The designation may be changed from time to time by the
Participant by delivery of written notice of such change to the
Administrator. If no designation has been made, or if the designee or
designees have predeceased the Participant, then the Participant shall be
deemed to have designated the following as his beneficiary or beneficiaries
and his contingent beneficiary or beneficiaries with priority in the order
named:
(a) the Participant's spouse, as the case may be;
(b) the Participant's children and children of deceased children per stirpes;
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(c) the Participant's parents in equal shares;
(d) the Participant's brothers and sisters and nephews and nieces who are
children of deceased brothers and sisters, per stirpes; and
(e) the Participant's estate.
8.4. Notwithstanding any beneficiary designation to the contrary, an
amount equal to one-half of any death benefit payable with respect to a
married Participant shall be paid to the Participant's surviving spouse,
unless there is no surviving spouse or unless the surviving spouse has
irrevocably consented in writing and in the manner required by law to another
specified beneficiary and form of benefit, which election may not be changed
without spousal consent, in the manner required by law, in which case the
entire death benefit shall be paid to such designated beneficiary.
ARTICLE 9
TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT
9.1. Upon termination of employment for reasons other than death,
disability or retirement, the portion, if any, of the terminated
Participant's account(s) which has vested shall be paid to the Participant by
the Trustee at such time and in such manner as reasonably determined by the
Participant and communicated to the Administrator (subject to Article 10). As
of the last day of the Plan Year in which a Participant's termination has
occurred, the amount in his segregated account(s), if made available to the
Participant but not yet distributed, may be invested thereafter by the
Trustee (rather than at the Participant's direction) in fixed-income
securities designed to protect principal. In the event of the death of the
terminated Participant prior to distribution of his benefit, it shall then
become payable as provided in Article 8. An Employer-authorized leave of
absence (by reason of service in the Armed Forces of the United States,
temporary incapacity or other good cause), as determined by uniform rules
applied by Employer, shall not be considered a termination of employment for
purposes of this Plan. All Participants similarly situated shall be
similarly treated by Employer in granting leaves of absence.
9.2. The portion, if any, of the terminated Participant's account(s)
which does not vest in him shall be forfeited as of the last day of the Plan
Year in which the
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Participant terminates employment and receives a distribution (or deemed
distribution) of his vested account balance, subject to reinstatement as
provided in paragraph 9.5 below. If no distribution occurred upon termination
of employment, such forfeiture shall occur upon the earlier of a distribution
or deemed distribution of the Participant's vested account balance or the
occurrence of five consecutive breaks in service. A terminated Participant
who has no vested interest in his account shall be deemed to have received a
cash out distribution of his zero interest in the Plan as of the last day of
the Plan Year in which his employment terminates. As of each anniversary
date, the Administrator shall determine the total amount of forfeitures which
occurred during the Plan Year and the amount forfeited shall reduce
Employer's contribution for that Plan Year.
9.3. The purpose of graduated vesting is to encourage Participants to
remain in the employ of Employer. The amount credited to the account of a
Participant (other than his elective deferral account under Article 21) shall
vest in the Participant according to the following schedule:
YEARS OF SERVICE VESTED INTEREST
less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 years or more 100%
9.4. Vested service shall include all of a Participant's years of
service with Employer (and with any adopting employers designated in
paragraph 1.8) except service not considered because of a break in service as
described below. If a Participant has a one (or more) year break in service,
any years of service before the break in service shall not be included in
vested service until the Participant has completed a year of service after
the break in service. If a Participant has no vested interest in his
non-elective deferral account and has a break in service, years of service
before the break shall not be included in vested service if the number of
consecutive one year breaks in service is five or more. Years of service
after five consecutive breaks in service shall not increase a Participant's
vested interest attributable to service before such breaks in service.
Separate accounts shall be maintained to reflect pre-break and post-break
benefits, if any. The computation period for determining a year of vested
service shall be the Plan Year.
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9.5. If a distribution is made at a time when a Participant's vested
interest in his non-elective deferral account is less than 100% and the
Participant has not incurred five consecutive one year breaks in service or
can otherwise increase his vested interest in said account, (a) a separate
account will be established for his interest in the Plan at the time of the
distribution or such interest will be accounted for under a method which
allows computation of account balances according to the formula set forth
below, and (b) at any relevant time the Participant's vested portion of such
interest shall be equal to the amount ("X") determined under the following
formula:
X = P(AB + (R x D)) - (R x D),
where P is the vested percentage at the relevant time, AB is the account
balance at the relevant time, D is the amount of the distribution, R is the
ratio of the account balance at the relevant time to the account balance
after the distribution, and the "relevant time" is the time at which the
vested percentage cannot increase. Any required reinstatement of a
forfeited benefit may be reinstated out of income or gain to the Plan,
forfeitures, deductible Employer contributions or as otherwise permitted by
law.
9.6. Subject to paragraphs 6.1, 11.2(b), 16.1 and 21.10, any Participant
who has completed less than ten years of service and who is discharged from
his employment for (a) proven or admitted dishonesty or fraud; (b) the
commission of a misdemeanor or felony; (c) intentional destruction of or
damage to property of Employer; or (d) assault upon or intentional injury to
any employee of Employer while either or both are on duty, shall thereby
forfeit his right to any benefit hereunder attributable to Employer
contributions and earnings thereon. The provisions of this paragraph 9.6
shall apply only if said forfeiture is at the time not prohibited by law and
by the applicable Treasury or Labor Department regulations.
ARTICLE 10
METHOD OF PAYMENT
10.1. Upon the occurrence of an event requiring distribution, a
Participant's vested account balance shall be paid or distributed to him by
means of such one or more of the following methods as may be determined by
Participant:
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(a) Payment in a lump sum in cash, securities or other property, as the
Administrator shall direct;
(b) Payment in approximately equal at least annual installments over a
period of time not to exceed the life or life expectancy of the Participant
or lives or joint life expectancy of the Participant and a designated
beneficiary. If the installment payment method is selected, the Participant's
vested account(s) may thereafter be invested by the Trustee, upon the
Administrator's direction. The amount of the installments may be recomputed
annually by dividing the fair market value of the segregated account as of
the last day of the Plan Year by the number of years remaining over which the
installment payments are to continue (and then dividing that amount by the
number of payments to be made each year). If the Participant dies prior to
receiving all of the installment payments due hereunder, the entire amount
remaining at the time of his death shall be paid to the beneficiary or
beneficiaries of the Participant in the manner prescribed in Article 8. The
Participant may direct the Trustee to accelerate any installment payment to
the Participant or his beneficiary; or
(c) Payment by purchase from an insurance company of a non-transferable,
non-life annuity payable for a period certain and in a manner consistent with
the Plan.
Effective January 1, 1994, with respect to contributions and earnings
thereafter, distributions only may be made under subparagraph (a) above.
Generally, the period over which payments may be made pursuant to
subparagraphs tb) or (c) above shall not exceed the greater of the life
expectancy of the Participant or the joint life expectancy of the Participant
and his beneficiary. The amount required to be distributed annually,
beginning with the first distribution calendar year as of or after the
Participant's "required beginning date" (referred to in paragraph 10.2(b)
below), shall satisfy the "minimum distribution" requirements of Code Section
401(a)(9) and regulations thereunder and shall not be less than the amount
determined by dividing the Participant's accrued benefit as of the first day
of such calendar year by the life expectancy of the Participant or joint life
expectancy of the Participant and his beneficiary, as applicable. The life
expectancy of a Participant, or of a Participant and his beneficiary if his
beneficiary is his spouse, may be redetermined, not more frequently than
annually, upon the Participant's written request and in accordance with such
rules as may be prescribed by Treasury regulations. For Plan Years beginning
before
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January 1, 1989, the present value of the payments projected to be paid to a
Participant shall not be less than 51% of the present value of the payments
projected to be paid to the Participant and his beneficiary (if not his
spouse) (i.e., the "minimum distribution incidental benefit" requirement).
For Plan Years beginning after December 31, 1988, if the Participant's
beneficiary is not his spouse, the amount to be distributed each year,
beginning with distributions for the first distribution calendar year, shall
not be less than the quotient obtained by dividing the Participant's accrued
benefit as of the beginning of the calendar year by the lesser of (i) the
applicable life expectancy determined above or (ii) the applicable divisor
determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the
proposed regulations or any successor thereto under Code Section 401(a)(9)(G).
Distributions after the death of the Participant shall be distributed using
the applicable life expectancy determined above as the relevant divisor.
10.2. (a) Payment of benefits shall commence at the time determined by
the Participant subject to paragraph 9.1. Notwithstanding the foregoing, if
the value of a Participant's account(s) derived from Employer contributions
is less than $3,500, the Administrator may direct an immediate distribution
from the Participant's account(s) prior to the later of age 62 or his
retirement date. Moreover, unless a Participant elects otherwise in writing
in the manner permitted by law, payments must begin no later than 60 days
after the close of the later of the Plan Years in which:
(i) the Participant attains age 65; or
(ii) the Participant terminates his service with Employer.
(b) Notwithstanding the foregoing subparagraph (a), payment of benefits
shall begin no later than the Participant's required beginning date whether
or not his employment has terminated. A Participant's "required beginning
date" is the April 1 immediately after the calendar year in which the
Participant attains age 70-1/2.
If a distribution is made before a Participant attains age 59-1/2, the
distribution may be subject to a 10% penalty tax to the extent it is included
in his gross income and is attributable to Employer contributions, unless the
distribution is made on account of his death or disability.
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10.3. When a Participant becomes entitled to a distribution hereunder,
the Trustee shall transfer the Participant's vested benefit directly to the
trustee or custodian of an individual retirement account if the Participant
so requests in writing in accordance with procedures established by the
Trustee and consistent with Code Section 401(a)(31) and regulations
thereunder.
10.4. At any time when a benefit is payable to any Participant or
beneficiary, the Administrator, upon request of the Trustee or at his own
initiative, may mail by certified mail to the Participant's or beneficiary's
last known address a written demand for his then address, or for satisfactory
evidence of his continued life, and, if the Participant or beneficiary shall
fail to furnish the information to the Administrator within six months from
the mailing of the demand, then the Administrator may, in his sole
discretion, determine that the Participant or beneficiary has forfeited his
right to the benefit and may declare the benefit, or any unpaid portion
thereof, terminated; provided, however, that if required by applicable law,
such benefit shall be reinstated out of income or gain to the Plan,
forfeitures or deductible Employer contributions (or as otherwise permitted
by law) if a claim is subsequently made by the Participant or beneficiary.
ARTICLE 11
TOP-HEAVY PROVISIONS
11.1. The Plan will be considered a "top-heavy" plan for the Plan Year
if as of the "determination date" (a) the value of the accounts (including
forfeitures) of Participants who are Key Employees exceeds 60% of the value
of all Participants' accounts (including forfeitures) as determined in
accordance with Code Section 416(g) (the "60% Test") or (b) the Plan is part
of a Required Aggregation Group and the Required Aggregation Group is
top-heavy. However, and notwithstanding the results of the 60% Test, the Plan
shall not be considered a top-heavy plan for any Plan Year in which the
Plan is a part of a Required or Permissive Aggregation Group which is not
top-heavy. If any individual has not performed services for Employer at any
time during the five year period ending on the determination date, the
value of any account(s) for such individual shall not be taken into account.
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For the purpose of this Article 11:
(a) "Key Employee" shall mean any Employee or former Employee (and the
beneficiaries of such Employee) who at any time during the determination
period was (i) an officer of the Employer and had annual compensation greater
than 50% of the amount in effect under Code Section 415(b) (1)(A) for such Plan
Year, (ii) an owner (or considered an owner under Code Section 318) of one of
the ten largest interests in the Employer (in excess of 1/2 of 1%) who had
annual compensation greater than 100% of such dollar limitation, (iii) a 5%
owner of the Employer, or (iv) a 1% owner of the Employer who had annual
compensation of more than $150,000. The determination period is the Plan Year
containing the determination date and the four preceding Plan Years. The
determination of who is a Key Employee will be made in accordance with Code
Section 416(i)(1) and the regulations thereunder. Any Employee who is not a
Key Employee is a Non-Key Employee.
(b) "Permissive Aggregation Group" shall mean the required aggregation
group of plans plus any other plan or plans of the Employer which, when
considered as a group with the required aggregation group, would continue to
satisfy the requirements of Code Sections 401(a)(4) and 410.
(c) "Required Aggregation Group" shall mean (i) each qualified plan of
the Employer, including plans terminated within the prior five years, in
which at least one Key Employee participates (or participated), and (ii) any
other qualified plan of the Employer which enables a plan described in (i) to
meet the requirements of Code Sections 401(a)(4) or 410.
(d) "Determination date" and "Valuation date" shall mean for any Plan
Year subsequent to the Employer's first Plan Year, the last day of the
preceding Plan Year, and for the Employer's first Plan Year, the last day of
that year.
11.2. The following provisions shall be effective and shall supersede
any conflicting provision in the Plan in any Plan Year in which the Plan is
determined to be a top-heavy plan.
(a) Minimum Contributions. Notwithstanding the provisions of Article 5,
for any Plan Year during which the Plan is deemed a top-heavy plan, if the
Employer elects to make any necessary additional contributions to this Plan,
the Employer's contribution and forfeitures, if any, shall be allocated to
the accounts of (i) all Participants who have completed 1,000 hours of
service during such Plan Year and are
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employed by the Employer on the last day of such Plan Year and (ii) to the
extent required by law, any Participants who fail to complete 1,000 hours of
service during such Plan Year and who are employed by the Employer on the
last day of such Plan Year, in an amount equal to 3% of the total annual
compensation of all such Participants for the Plan Year or, if less, such
amount as is permitted under Code Section 416(c)(2).
The minimum allocations required under this paragraph 11.2(a) shall not
apply to any Participant to the extent such Participant is covered under any
other plan of the Employer and such plan provides the minimum allocation or
benefit required to be provided under top-heavy plans.
(b) Minimum Vesting. Notwithstanding the provisions of Article 9, as it
may be amended from time to time, if a Participant's termination of
employment occurs while the Plan is a top-heavy plan, such Participant's
vested percentage in his non-elective deferral account shall not be less than
the percentage determined in accordance with the following table:
Years of Service Vested Percentage
less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(c) Compensation Limitation. For any Plan Year in which the Plan is a
top-heavy plan, only the first $200,000 (or such larger amount as may be
prescribed under Code Section 416(d)) or, effective January 1, 1994, $150,000
(or such larger amount as may be permitted under Code Section 401(a)(17)(B))
of a Participant's annual compensation shall be taken into account for
purposes of determining Employer's contribution hereunder.
11.3. If the Plan becomes a top-heavy plan for any Plan Year and
subsequently ceases to be such, the vesting schedule in paragraph 11.2(b)
above shall continue to apply in determining the vested percentage of any
Participant who had at least five years of service as of the last day of the
last Plan Year in which the Plan was top-heavy. For other Participants, said
schedule shall apply only to their account balances while the Plan was
top-heavy.
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ARTICLE 12
DUTIES AND RIGHTS OF TRUSTEE
12.1. The Trustee shall be selected, and may be removed, by the Board of
Directors at any time upon written notice. The Trustee shall have the right
to resign at any time by giving written notice to Employer. Within 60 days
after the removal or resignation of the Trustee, the Board of Directors shall
appoint a successor Trustee, who shall qualify by delivering a written
acceptance to Employer and to the retiring Trustee. The retiring Trustee
shall forthwith file with Employer and with the Administrator a written
account of its acts from the date of its last previous annual accounting to
the date of its removal or resignation. The retiring Trustee shall assign,
transfer and pay over to the successor Trustee the assets constituting the
Trust fund. The retiring Trustee may have its account settled by a court of
competent jurisdiction.
12.2. The Trustee, subject to the Trust created herein and provisions of
the Plan including paragraphs 13.2 and 21.9, shall be the owner of the assets
held in trust under this Plan and shall be entitled to exercise each and
every incident of ownership. If not inconsistent with the provisions of this
agreement, the Trustee, at the direction of a Participant, shall have the
power to sell or assign any assets held pursuant to this Plan; to receive all
surplus derived from contracts and all income and capital gains on the
assets; to receive payments of any kind which may be made on the assets; and
to convert assets from one form to another. If requested in writing by the
Administrator, the Trustee shall grant to the Administrator the right to vote
any shares of stock held by the Trustee, including stock of the Employer. The
Trustee shall not institute any litigation to protect or collect the proceeds
of assets of the Trust without receiving the direction of the Administrator
or Employer. The cost of any litigation to which the Trustee shall be a party
in connection with the Trust and which shall have been instituted at the
direction of the Administrator or Employer shall be considered an
administrative expense. The Trustee, upon written instructions from the
Administrator or Employer, may compromise and adjust claims due the Trustee
upon the terms and conditions acceptable to the Administrator or Employer.
12.3. In the event any controversy shall arise between the Trustee and
any other person, including without limitation the Administrator, Employer or
any Participant or beneficiary under the Plan, with respect to the
interpretation of this Plan or the duties of the Trustee or any other
fiduciary, the Trust-
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ee may require that the issue be decided by a court of competent
jurisdiction, and pending such determination, the Trustee shall not be
obligated to take any other action in connection with the matter involved in
the controversy.
12.4. The Trustee shall keep full and complete records of the
administration of the Trust which shall be open at all reasonable times to
inspection by Employer, the Administrator, Participants or beneficiaries.
Within a reasonable period of time after an anniversary date, the Trustee
shall furnish Employer a complete financial statement. In addition, the
Trustee shall annually furnish each Participant or beneficiary a complete
statement of the Participant's or beneficiary's account.
12.5. All instructions or notices to be given by the Administrator or a
Participant to the Trustee shall be in writing and signed by the
Administrator or Participant.
12.6. The Administrator may direct the Trustee to distribute assets of
the Trust which a Participant is entitled to receive (a) to the Participant;
(b) to any person having custody of the Participant; (c) to the legal
custodian of the property of the Participant; (d) to any person who, or
corporation which, shall be furnishing maintenance, support or
hospitalization to the Participant; or (e) to the beneficiaries of the
Participant who are entitled to receive the benefits. The receipt of such
person or corporation to whom, or to which, the disbursements are made shall
be sufficient release for the Trustee and the recipient shall not be required
to account to Employer, to the Trustee, to any court, or to any other person
for the disposition of the distribution(s).
12.7. If the payment of any administrative expense of the Trust would
require the sale of any assets of the Trust at a loss, the Trustee shall
advise Employer, which shall have the option of paying such charges prior to
the Trustee applying such charges against the Trust.
12.8. The Trustee, if not already adequately compensated as an employee
of Employer, may be paid reasonable compensation as shall be agreed upon by
Employer and the Trustee in writing. The Trustee, in performing its duties
under this Plan, may employ counsel, accountants and other agents as shall be
deemed advisable. The Trustee may employ other fiduciaries or investment
managers only after securing the written approval of Employer. All expenses
incurred by the Trustee in the administration of the Trust, including but not
limited to the
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compensation of counsel, accountants, investment managers or other agents or
fiduciaries, shall be charged against the Trust fund, to the extent not paid
directly by Employer. Any compensation of the Trustee, if an individual
employed by Employer, shall not be paid from Trust assets. All taxes that may
be levied or assessed under existing or future laws upon, or in respect to,
the Trust, its assets, or the income therefrom, shall be a charge upon the
Trust fund, to the extent not paid directly by Employer, and the Trustee may
pay such sum or sums as may be required to satisfy any tax obligation.
Payments made by the Trustee shall be charged to Participants' accounts in
the same proportion and manner as losses of the Trust are chargeable.
12.9. The Trustee shall not be liable or responsible in any way for any
acts or omissions in the administration of the Trust prior to the date of
becoming Trustee or after the date of ceasing to be a Trustee. A successor
Trustee shall not have any duty to review the actions or accountings of any
prior Trustee.
12.10. A Trustee shall not be liable for the acts or omissions of a
joint Trustee or any other Plan fiduciary unless (a) the Trustee knowingly
participates in, or knowingly attempts to conceal, the act or omission of
another fiduciary and the Trustee knows the act or omission is a breach of a
fiduciary responsibility by the other fiduciary; or (b) the Trustee has
knowledge of a breach by the other fiduciary and shall not make reasonable
efforts to remedy the breach; or (c) the Trustee's breach of the Trustee's
own fiduciary responsibility permits the other fiduciary to commit a breach.
Except as set forth in the preceding sentence, a Trustee shall not be liable
for a breach of fiduciary responsibility if the Trustee shall follow
instructions pursuant to paragraphs 2.9, 13.2 or 21.9, or for the acts or
omissions of a properly appointed investment manager. If, but only if, the
Trustee is an individual employed by Employer, he shall be indemnified from
the assets of the Trust against any and all claims, losses, damages, expenses
and liabilities arising from any act of commission or omission so long as the
act is not finally judicially determined to be a breach of fiduciary
responsibility by the Trustee. The indemnification shall include attorneys'
fees and all other costs and expenses reasonably incurred by the Trustee in
defense of any action brought against him arising from such act of commission
or omission. In addition, Employer, from its assets, shall indemnify the
Trustee (if an individual employed by Employer) against any and all claims,
losses, damages, expenses and liabilities arising from any act of commission
or omission for
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which the Trustee is not indemnified from Trust assets, provided the act is
not finally judicially determined to have been an act of willful misconduct
or gross negligence and that such indemnification is not prohibited by law.
12.11. Employer may appoint more than one Trustee, in which event all
such Trustees shall jointly manage and control the Trust assets unless the
Board of Directors shall allocate specific responsibilities, obligations and
duties among them. The Board of Directors may also allocate certain fiduciary
responsibilities to other Plan fiduciaries. If the Board of Directors shall
make such an allocation, then the specified Trustee or fiduciary shall be
responsible for the duties allocated to him and the other Trustees or
fiduciaries shall not be liable for any breach of fiduciary responsibility
for the duties allocated except as set forth in paragraph 12.11. If the Board
of Directors shall not allocate specific responsibilities, obligations or
duties to a Trustee, then any act may be performed by any Trustee and such
act shall have the same force and effect as if the act had been performed by
all of the Trustees. Any person, corporation or other entity may deal with
any of the Trustees and may accept the signature of any one Trustee in the
same manner and with the same force and effect as if that individual were the
sole Trustee.
ARTICLE 13
INVESTMENT OF TRUST FUNDS
13.1. Subject to paragraph 2.9, the amount to the credit of each
Participant may be invested and reinvested either as a segregated account
under paragraph 13.2, in a manner designated by the Administrator under
paragraph 21.9, or as a pooled investment fund, and the Trustee in addition
to all statutory powers is and shall be authorized and empowered at the
direction of a Participant, but not by way of limitation, to:
(a) invest and reinvest the Trust's assets (pursuant to a Participant's
directions, if under paragraphs 13.2 or 21.9) in bonds, insurance policies,
mortgages, debentures, preferred or common stocks, options, mutual funds, a
common trust or fund maintained by a fiduciary which is a bank or an
insurance company, or other real or personal property, in such amounts as the
Trustee deems appropriate (or is directed by a Participant), and to deposit
the Plan's assets in accounts of banks or other financial institutions,
except that the Trustee may deposit the Plan's assets in accounts maintained
with the Trustee only if the Trustee is a financial institution
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supervised by the United States or a state and if the account bears a
reasonable rate of interest. The Trustee shall not be bound as to the
character of any investment by any state statute, rule of court or custom
governing the investment of Trust funds except as provided by ERISA;
(b) sell, exchange, convey, transfer, or dispose of, and to grant
options with respect to, any property, real or personal, at any time held in
the Trust fund. Any sale may be made by the Trustee by private contract or by
public auction, and for cash or upon credit, or partly for cash and partly
upon credit, as the Trustee may deem prudent; no person dealing with the
Trustee shall be bound to supervise the application of the proceeds of any
transaction or to inquire into the validity, expediency or propriety of the
transaction;
(c) retain, manage, operate, repair, improve, mortgage or lease for any
period any real or personal property held by the Trustee, and to purchase and
carry insurance in such amount and against such hazards as the Trustee may
deem advisable;
(d) vote in person or by general or limited proxy with respect to any
bonds, stocks or other securities held by the Trustee; exercise any options
applicable to any bonds, stocks or other securities for the conversion
thereof into other securities; exercise any rights to subscribe for
additional bonds, stocks or other securities, and to make any and all
necessary payments therefor; join in, or dissent from or oppose, the
reorganization, recapitalization, consolidation, liquidation, sale or merger
of corporations or properties upon such terms and conditions as the Trustee
may deem prudent;
(e) accept and hold any securities or other property received by the
Trustee under the provisions of this Article, whether or not the Trustee
would be authorized to invest in such securities;
(f) make, execute, acknowledge and deliver any and all appropriate
deeds, leases, assignments and other instruments;
(g) borrow or raise money from others, with the approval of the Board of
Directors, for the purposes of the Plan and to the extent and upon such terms
and conditions as the Trustee may deem desirable or proper; and for any sum
so borrowed to issue a promissory note, as Trustee, and to secure the
repayment thereof by pledging all or any part of the Trust fund, except for
segregated accounts; and no person lending money to the Trustee shall be
bound to supervise the
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application of the money borrowed, or to inquire into the validity,
expediency or propriety of any borrowing;
(h) cause any investments to be registered in, or transferred into, the
Trustee's name or the name of the Trustee's nominee or nominees, or to retain
the investment in unregistered form or in a form permitting transfer by
delivery only; however, the books and records of the Trustee shall at all
times show that all investments are part of the Trust fund;
(i) invest in all forms of insurance, including without limitation
annuity contracts or life insurance contracts on the lives of key Employees
which shall be payable to the Trustee as beneficiary, or surrender such
policies for their cash value;
(j) invest the Trust's assets with any other Employer trust which is
qualified pursuant to Code Section 401 on the condition that the income and
capital shall be divided proportionately between the trusts; and
(k) perform all acts, whether or not expressly described or referred to
above, which the Trustee may deem necessary, proper or desirable for the
protection or enhancement of the Trust fund.
13.2. In such manner as determined by the Administrator, and unless and
until determined otherwise by the Administrator, each Participant shall
exercise sole and complete control over the investment and reinvestment of
his non-elective deferral account, subject to such procedures as the
Administrator or Trustee may establish. Such assets shall be held by the
Trustee in a separate account for each Participant to which all earnings and
losses of such account shall be attributed, but subject to all provisions
hereof. Neither the Trustee, the Administrator nor any other person shall be
under any duty to question any direction from the Participant, to review any
securities or other property or to make any suggestion to the Participant
(either hereunder or under paragraph 21.9), nor shall the Trustee or
Administrator be liable for any loss or by reason of any breach resulting
from a Participant's investment hereunder or under paragraph 21.9.
Notwithstanding any provision hereof to the contrary, in no event shall an
account segregated hereunder acquire, after December 31, 1981, a
"collectible" within the meaning of Code Section 408(m) or its successor.
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ARTICLE 14
ACCOUNTING PROCEDURE
14.1. All contributions paid to the Trustee shall be held, invested and
reinvested by the Trustee in the manner provided in Articles 13 and 21.
14.2. The Trustee shall value the Trust funds whenever deemed necessary
or as directed by the Administrator, but at least annually as of the close of
business on each anniversary date. Any contributions made during the year
need not be included in the valuation as of an anniversary date. The Trustee
shall value the Trust fund at its fair market value.
14.3. All accounts shall be adjusted to reflect the effect of income
received and accrued, realized and unrealized profits and losses, expenses,
allocated forfeitures and all other transactions of the preceding period.
14.4. The amount to the credit of each account as of each anniversary
date shall be adjusted as of each succeeding anniversary date by the
following additions and subtractions in the following order:
(a) in the case of a person for or on behalf of whom payments have been
made, there shall be subtracted the total amount of the payments made from
his account during the preceding period since the last adjustment date. In
the case of a terminated Employee, there shall be subtracted the amount of
his account which is forfeited;
(b) as to each segregated or separately accounted for account, there
shall be added or subtracted the net income or net loss of such account
during the period since the last adjustment; and
(c) in the case of each eligible Participant, there shall be added that
portion of Employer's current contribution and any forfeitures occurring
during the year that is allocable to him pursuant to the allocation formula
contained in Article 5.
ARTICLE 15
SPENDTHRIFT PROVISIONS
15.1. The provisions of this Article 15 are intended to be for the
personal protection of Participants. A Participant
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shall not have any right to assign, anticipate or transfer any Trust asset
held for his benefit, including amounts credited to his account. The benefits
under this Plan shall not be subject to seizure by legal process or be in any
way subject to the claims of the Participant's creditors, including, without
limitation, any liability for contracts, debts, torts, alimony or support of
any relative. Neither the Plan's benefits nor the Trust's assets shall be
considered an asset of a Participant in the event of his divorce, insolvency
or bankruptcy.
15.2. If a Participant shall attempt to assign, anticipate or transfer
any assets held for his benefit, such assignment, anticipation or transfer
shall be void and of no effect.
15.3. Notwithstanding anything to the contrary in paragraphs 15.1 and
15.2, benefits under the Plan may be paid pursuant to and in accordance with
the applicable requirements of any qualified domestic relations order as such
term is described in Code Section 414(p) and a Participant's "earliest
retirement date" within the meaning of Code Section 414(p)(4)(B) may be
deemed to be the date that the Administrator determines that a domestic
relations order is "qualified".
ARTICLE 16
TERMINATION
16.1. Employer reserves the right to suspend or discontinue
contributions or to terminate this Plan at any time. A suspension shall be a
temporary cessation of contributions and shall not constitute or require a
termination of the Plan. A discontinuance shall not constitute a termination
of the Plan and shall not preclude later contributions. The respective
accounts of Participants under the Plan shall become 100% vested and
nonforfeitable if the Plan shall be terminated, if there shall be a complete
discontinuance of contributions, or if Employer shall be adjudicated a
bankrupt or shall make a general assignment for the benefit of creditors. In
the event of a "partial termination" of the Plan, the respective accounts of
the affected Participants shall become 100% vested and nonforfeitable. If
Employer so directs after payment of expenses properly chargeable against the
Trust, the Trustee shall distribute to Participants, in a manner provided in
Article 10, all Trust assets in the proportions determined according to
their respective accounts. This Trust shall cease after the distribution of
all assets of the Trust. Each of the Trustee's actions hereunder shall be at
the written direction
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of the Administrator. Employer's contribution to and the income of this
Trust shall not be paid to, nor shall revest in, Employer, except as provided
in paragraphs 4.2 and 4.3, and shall not be used for any purpose other than
for the exclusive benefit of Participants or their beneficiaries.
ARTICLE 17
AMENDMENT, SUSPENSION OF MINIMUM
ACCRUAL REQUIREMENTS AND MERGER
17.1. Employer may amend this Plan and Trust in any manner and at any
time without the consent of any other adopting employer or other party;
provided that to the extent prohibited by law no amendment shall reduce a
Participant's accrued benefit nor revest any interest in the Trust assets,
income or principal in Employer. An amendment shall be made by resolution of
the Board of Directors and shall be effective upon delivery of a written
instrument, executed by order of the Board of Directors, to the Trustee.
17.2. Employer may amend this Plan to qualify it under the provisions of
Code Section 401 and any amendment, by its terms, may be retroactive.
17.3. Employer may suspend the minimum benefit accrual requirements
hereunder if for any Plan Year beginning after December 31, 1989 the Plan
fails to satisfy the Participation Test or the Coverage Test. The Plan
satisfies the Participation Test if, on each day of the Plan Year, the number
of Employees who benefit under the Plan is equal to at least the lesser of
(a) 50 or (b) 40% of the total number of Includable Employees as of such day.
The Plan satisfies the Coverage Test if, on the last day of each quarter of
the Plan Year, the number of Non-Highly Compensated Employees ("NHCES") who
benefit under the Plan is equal to at least 70% of the total number of
Includable NHCES as of such day.
"Includable" Employees are all Employees other than: (a) those Employees
excluded from participating in the Plan for the entire Plan Year under
paragraph 1.7 or by reason of the participation requirements of paragraph
3.1; and (b) any Employee who terminates employment during the Plan Year and
fails to complete at least 501 hours of service for the Plan Year. A "Highly
Compensated Employee" ("HCE") shall be as determined by the Administrator
applying Code Section 414(q) and the regulations thereunder. An NHCE is an
Employee who is not an
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HCE and who is not a family member aggregated with an HCE pursuant to
paragraph 1.3.
For purposes of the Participation Text and the Coverage Test, an
Employee is benefiting under the Plan on a particular date if he is entitled
to an allocation for the Plan Year. Under the Participation Test, when
determining whether an Employee is entitled to an allocation, the
Administrator will disregard any allocation required solely by reason of the
top heavy minimum allocation (under paragraph 11.2(a)), unless the top heavy
minimum allocation is the only allocation made under the Plan for the Plan
Year.
If this paragraph 17.3 applies for a Plan Year, the Administrator will
suspend the minimum accrual requirements for the Includable Employee(s)
employed by Employer on the last day of the Plan Year, then for the
Includable Employee(s) who have the latest separation from service during the
Plan Year, and continuing to suspend in descending order the accrual
requirements for each Includable Employee who incurred an earlier separation
from service, from the latest to the earliest separation from service date,
until the Plan satisfies both the Participation Test and the Coverage Test
for the Plan Year. If two or more Includable Employees have a separation from
service on the same day, the Administrator will suspend the accrual
requirements for all such Includable Employees, irrespective of whether the
Plan can satisfy the Participation Test and the Coverage Test by accruing
benefits for fewer than all such Includable Employees. If the Plan suspends
the accrual requirements for an Includable Employee, that Employee will share
in the allocation of Employer contributions and Participant forfeitures, if
any, without regard to the number of hours of service he has earned for the
Plan Year and without regard to whether he is employed by the Employer on the
last day of the Plan Year. If in the future the Plan includes Employer
matching contributions subject to Code Section 401(m), this suspension of
accrual requirements applies separately to the Code Section 401(m) portion of
the Plan, and the Administrator will treat an Employee as benefiting under
that portion of the Plan if he is an Eligible Employee for purposes of the
Code Section 401(m) nondiscrimination test.
17.4. In the case of any merger or consolidation with, or transfer of
assets or liabilities to, any other plan, each Participant in this Plan shall
be entitled, in the event the Plan were to be terminated immediately after
the merger, consolidation or transfer, to a benefit which is equal to or
greater than the benefit he would have been entitled to receive if the Plan
had been terminated immediately before the merger,
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consolidation or transfer. However, this provision shall not be construed to
be a termination or discontinuance of the Plan or to be a guaranty of a
specified level of benefit from the Plan.
ARTICLE 18
TRUST ESTABLISHED
18.1. This agreement is executed with the express intent that it shall
be approved and qualified by the Internal Revenue Service as meeting the
requirements of the Code and regulations issued thereunder with respect to
employee plans and trusts which shall permit Employer to deduct, for income
tax purposes, the amount of its contributions to the Trust. If any provision
of this Plan shall be found to be inconsistent with or to prevent the
qualification of the Plan and Trust, in either the initial Plan Year or
thereafter, such provision shall be void and shall be treated as if it had
never been a part hereof, retroactive to the effective date of the Plan, and
the Plan shall be read and its provisions shall be applied so as to qualify
the Plan and Trust.
ARTICLE 19
CLAIM PROCEDURE AND MISCELLANEOUS
19.1. If any benefits become payable hereunder, the Administrator shall
give written notice to the Participant or, if applicable, to his beneficiary,
of the amount of such benefits within 90 days after the date the benefits
have become payable or as soon thereafter as is possible. Within 45 days
after receiving the notification, the Participant or beneficiary may file
with the Administrator a written claim in regard to such benefits. The
Administrator, within 45 days after receipt of a written claim, shall render
a written decision on the claim. If the claim is denied, either in whole or
in part, the decision shall include the reason or reasons for the denial; a
reference to the Plan provision or provisions which are the basis for the
denial; a description of any additional material or information necessary for
the claimant to perfect the claim; an explanation as to why the information
or material is necessary; and an explanation of the Plan's entire claim
procedure. The claimant may file with the Administrator, within 60 days after
receiving the written decision from the Administrator, a written notice of
request for review of the
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Administrator's decision. The review shall be made by a committee of up to
three individuals appointed by the Board of Directors. Said committee shall
be entitled to the benefit of paragraph 2.6 and shall render a written
decision on the claim containing the specific reasons for their decision,
including a reference to the Plan's provisions, within 60 days after receipt
of the request for review. If a Participant or beneficiary does not file
written notice of a claim with the Administrator at the times set forth
above, he shall have waived all benefits other than as set forth in the
original notice from the Administrator.
19.2. Neither the establishment of this Plan or Trust, the creation of
any fund or account, the payment of any benefits nor any statement in the
related Summary Plan Description (the "SPD") shall create in any employee,
Participant or other party a right to continuing employment or create any
claim against the Plan or Trust or any fiduciary for any payment except as
expressly set forth herein.
19.3. Nothing contained herein or in the SPD shall be deemed to give a
Participant any interest in any specific property of the Trust or any
interest other than a right to receive payments pursuant to the provisions of
this Plan.
19.4. If any provision hereof shall be declared invalid or
unenforceable, the remaining provisions shall be effective.
19.5. This Plan and Trust shall be construed, whenever possible, to be
in conformity with the requirements of the Code and ERISA. To the extent not
in conflict with the preceding sentence, the construction and administration
of the Plan and Trust shall be governed by, and its validity determined
under, the laws of the State of Kansas.
19.6. Each Participant, by executing a beneficiary designation and by
otherwise participating in this Plan, agrees for himself, his heirs,
beneficiaries, successors and assigns to be bound by all of the provisions of
this Plan.
19.7. Where applicable herein, words in the masculine shall include the
feminine and in the singular shall include the plural or vice versa.
Paragraph headings herein have no legal significance.
19.8. If a Participant shall be entitled to receive a benefit under this
Plan and the Participant shall be subsequently employed by an employer which
has a plan qualified pursuant to Code Section 401(a), the Trustee may transfer
the Par-
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ticipant's vested benefits under this Plan directly to the trustee of the
plan of the Participant's new employer if the following are satisfied:
(a) the trustee of the other plan shall be authorized to accept the
benefits under this Plan;
(b) the Participant's transferred assets shall be maintained in a
separate account in the other plan; and
(c) the Participant's transferred assets shall not be forfeitable or
reduce in any way the obligation of the new employer.
ARTICLE 20
PARTICIPANT LOANS
20.1. Upon the application of any Participant the Administrator, in
accordance with a uniform, nondiscriminatory policy, may direct the Trustee
to make a loan or loans to such Participant in an aggregate amount
outstanding not to exceed the lesser of (a), or (b) reduced by (c), where (a)
is one-half of the value of the Participant's vested account(s), (b) is
$50,000, and (c) is the amount, if any, of the Participant's highest
outstanding loan balance(s) during the twelve months preceding the loan
application.
20.2. Loans shall be considered an investment of the borrowing
Participant's account. Interest shall be charged thereon at a reasonable
rate, ordinarily equivalent to the prevailing rate then being charged by
lending institutions in the metropolitan area where the Employer's office at
which the Participant is employed is located in connection with comparable
loans of similar duration and similarly secured, as determined by the
Administrator.
20.3. The term of any loan and manner of repayment shall be specified by
mutual agreement between the Administrator and the Participant. However, in
no event shall the term of any loan exceed five years, except for a loan used
to acquire, construct, reconstruct or substantially rehabilitate the
principal residence of the Participant or a member of his family. All loans
made on or after January 1, 1987 shall be repaid in not less than equal
quarterly installments of principal and interest over the term of the loan.
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20.4. Each loan shall be adequately secured and evidenced by the
Participant's note for the amount of the loan plus interest payable to the
order of the Trustee. As collateral for and by accepting the loan, the
Participant automatically assigns to the Trustee as security for the loan all
of his rights, title and interest in and to the Trust fund to the extent of
and in an amount equal to the principal amount outstanding at any given time
and any accrued unpaid interest thereon. Further, the Participant consents,
within the meaning of paragraph 10.2(a) hereof, to a distribution/foreclosure
in the event of default on a balance in excess of $3,500.
20.5. If the Participant shall not repay the loan within the specified
time, or if all or a portion of the Participant's account becomes
distributable and arrangements for repayment satisfactory to the
Administrator have not been made, the Administrator may direct the Trustee to
deduct the total amount of the debt from the vested portion of the
Participant's account balance or to delay payment of any portion of the
Participant's benefit attributable to Salary Reduction Contributions under
Article 21 until the loan is repaid or, if the Plan has been terminated or
the Participant has terminated his employment or is otherwise entitled to a
distribution of benefits, to deduct the total amount of the debt from any
distribution from the Trust to which the Participant or his beneficiary may
be entitled. If the amount of such distribution or deduction is not
sufficient to repay the unpaid balance of the loan, the Participant (or
beneficiary) shall be liable for, and continue to make payments on, the
Participant's note. If the Trustee shall deduct any portion of the unpaid
loan balance from the Participant's interest in the Trust fund, the
Participant shall not be allowed to borrow from the Plan for at least one
year from the date of the deduction. This Article authorizes only the making
of bona fide loans and not distributions. Before resort is made against a
Participant's account for his failure to pay any loan, other reasonable
efforts to collect the same shall have been made by the Trustee as directed
by the Administrator.
ARTICLE 21
SALARY REDUCTION CONTRIBUTIONS
21.1 (a) Subject to subparagraph (b) below, each Participant may elect
to have Employer contribute to the Plan on such Participant's behalf a
portion of such Participant's compensation not to exceed an amount that would
cause the Plan
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to violate the provisions of paragraphs 21.6 or cause the Plan to exceed the
maximum amount deductible by Employer, at the time and in the manner
determined by the Administrator from time to time. A Participant's elective
contributions shall be made in accordance with the rules set forth in
paragraph 21.2 and such other rules as the Employer may prescribe.
(b) In no event shall a Participant's elective deferral contributions
made to this or any other qualified plan maintained by an Employer exceed in
any calendar year a total of $7,000 (or such larger amount as permitted by
cost of living adjustments prescribed by the Secretary of the Treasury under
Code Section 415(d) for years beginning after December 31, 1987). Any direction
for an Excess Elective Deferral shall be invalid and shall be returned to the
Participant. An "Excess Elective Deferral" is the amount, if any, by which
the sum of all Employer contributions on behalf of a Participant to (i)
through (v) exceeds $7,000 (or such larger permitted amount) which is
includable in the Participant's gross income under Code Section 402(g) where
(i) is any qualified CODA as described in Code Section 401(k), (ii) is any
simplified employee pension cash or deferred arrangement as described in
Code Section 402(h)(1)(B), (iii) is any eligible deferred compensation plan
under Code Section 457, (iv) is any plan described in Code Section 501(c)(18)
and (v) is an annuity contract under Code Section 403(b) under a salary
reduction agreement. If a Participant participates in another 401(k) plan in
addition to this Plan, the Participant may treat as made to this Plan any
Excess Elective Deferrals made during the calendar year to all plans by so
notifying the Administrator in writing on or before March 1 of the year
following said calendar year of the amount of the Excess Elective Deferral
to be assigned to this Plan (which may not exceed the amount of his elective
contributions hereto for such year). Such Excess Elective Deferrals, plus any
income and minus any loss allocable thereto (determined by multiplying the
income or loss attributable to the Participant's Excess Elective Deferrals
for the Plan Year by a fraction, the numerator of which is the Excess
Deferral on behalf of the Participant for the preceding Plan Year and the
denominator of which is the Participant's account balance attributable to
elective contributions on the last day of the preceding Plan Year), shall be
distributed no later than April 15 to any Participant who claims Excess
Elective Deferrals under this Plan for such year.
21.2. Participant elections described above only may be made by
completing and returning to Employer an election form obtained from Employer.
An election by a Participant shall apply to compensation earned following the
election.
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21.3. An election shall remain in effect until a new election to
increase or decrease the Participant's elective deferral percentage is filed
with Employer not later than fifteen (15) days prior to the first day of the
month for which the new election is to become effective. Any new election
shall become effective on the first day of such month and shall remain in
effect until changed pursuant to the provisions of this Article.
21.4. A Participant may discontinue elective deferrals under the Plan at
any time by filing a written notice with Employer not later than fifteen (15)
days prior to the first day of the month in which the Participant wants the
discontinuance to become effective.
21.5. Each Participant who makes an election to have Employer contribute
under the Plan shall, by making such election, authorize Employer to reduce
the Participant's compensation by an equivalent amount so long as the
election remains in effect.
21.6. Prior to the first day of each month or at such other times during
the Plan Year as Employer may determine, Employer shall test elections
hereunder to determine whether the average deferral percentage ("ADP") for
the group of eligible highly compensated Employees exceeds the average
deferral percentage of all other eligible Employees by more than the greater
of:
(a) One and one-quarter (1-1/4) times, or
(b) The lesser of (i) two (2) percentage points, or (ii) by two (2) times.
For purposes of this paragraph the term eligible "highly compensated
Employee" means any employee or leased employee of Employer, including any
affiliated employer, who during the year or the preceding year: (a) was at
any time a person owning (or considered owning within the meaning of Code
Section 318) more than five percent (5%) of the outstanding stock, or stock
possessing more than five percent (5%) of the total combined voting power, of
all stock of an Employer; (b) received compensation from an Employer in
excess of $75,000; (c) received compensation from an Employer in excess of
$50,000 and was in the group consisting of the top twenty percent (20%) of
Employees ranked on the basis of compensation during the year; or (d) was at
any time an officer and received compensation greater than 150% of the amount
in effect under Code Section 415(c)(1)(A) for such year, all as described in
Code
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Section 414(q). The $75,000 and $50,000 thresholds are indexed to reflect
cost-of-living increases.
The term "highly compensated Employee" also means any former Employee
who separated from an Employer's service (or is deemed separated) prior to
the determination year and was a highly compensated active Employee either
for such separation year or any determination year after the Employee's 55th
birthday.
If an individual is a member of the Family of a 5% owner or of an
Employee in the group consisting of the ten highly compensated Employees paid
the greatest compensation during the year, such individual shall not be
considered a separate Employee for purposes of calculating the ADP, and any
compensation paid to such individual (or contribution or benefit on his
behalf) shall be treated as if it were paid to (or on behalf of) the 5% owner
or highly compensated Employee.
The term "Family" shall mean an Employee's spouse, lineal ascendants or
descendants, and the spouses thereof.
The term "non-highly compensated Employee" shall mean an Employee who is
neither a highly compensated Employee nor a member of the Family of certain
highly compensated Employees as described above.
The term "average deferral percentage" for each group of eligible
Employees for any election period shall be the average of the percentages,
calculated separately for each Participant in such group, of compensation
each Participant elects to have contributed to the Plan for the election
period. Elective contributions shall include such contributions to any other
Employer plan containing Code Section 401(k) provisions, and such contributions
shall be deemed made for a Plan Year testing period if made by the applicable
date set forth in regulations promulgated by the Secretary of the Treasury.
Testing at year-end shall be based upon a Participant's compensation received
while a Participant during the Plan Year for which the test is conducted.
Such compensation shall include amounts otherwise excluded from a
Participant's gross income by reason of Code Sections 125, 402(a)(8),
402(h)(1)(B) or 403(b) and elective deferrals hereunder. Testing shall be made
in accordance with Code Section 401(k)(3) and the regulations promulgated
thereunder, which are hereby incorporated herein.
21.7. If the percentage of elective contributions elected by highly
compensated Employees would, if not reduced, cause the average deferral
percentage of such Participants to exceed
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the maximum average permitted above and not satisfy one of the tests set out
therein, the Administrator may reduce or suspend the future elective
contributions of such Participants for the remainder of the Plan Year
(reducing or suspending the highest individual ADPs first). Or, in the
alternative, the Administrator may, to the extent permitted by law, adjust
the average deferral percentage in accordance with one or more of the
following options:
(a) The elective deferral percentage of each highly compensated Employee
may be reduced by an amount necessary to satisfy one of the above tests, and
the amount of the excess elective deferral, plus income and minus losses
attributable thereto, shall be returned to the Participant. Income (or loss)
attributable to excess elective contributions shall include allocable income
(or loss) for the Plan Year and for the period between the end of the Plan
Year and the date of distribution. The amount of each highly compensated
Employee's excess contributions to be returned shall be determined by
leveling the highest deferral ratios until the ADP test is satisfied; or
(b) A portion of Employer's non-elective contribution may be deemed an
elective deferral contribution. Such portion shall be equal to an amount
necessary to satisfy one of the tests set forth above and shall be
reallocated to the Participant's elective deferral account. Such reallocation
of Employer's non-elective contribution shall be made on behalf of non-highly
compensated Employees; or
(c) Employer may make a contribution on behalf of the non-highly
compensated Employees in an amount sufficient to satisfy one of the tests set
forth above. Allocation of such contribution shall be to the elective
deferral account of each non-highly compensated Employee in the same
proportion that each non-highly compensated Employee's elective deferral for
the year bears to the total elective deferrals of all non-highly compensated
Employees. However, the maximum annual additions credited to a Participant's
elective deferral account shall be limited by paragraph 5.3.
The foregoing options shall apply only with respect to elective
contributions in excess of the amount permitted under the mathematical
nondiscrimination tests set forth in Code Section 401(k). Any return of
Participants' elective contributions (including income and loss) pursuant to
the Administrator's action shall be accomplished, if possible, before the end
of the Plan Year, and if not by then, then within two and one half
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months after the end of the Plan Year and, in any event, within twelve months
after the end of the Plan Year.
21.8. The amount to be contributed to the Plan in accordance with each
Participant's election hereunder shall be paid by Employer and transferred to
the Trust not later than thirty (30) days after the end of the month in which
the salary reduction is made.
21.9. The amounts contributed to the Trust hereunder on behalf of a
Participant for each payroll period shall be credited to the "elective
deferral account" of such Participant on whose behalf the contribution was
made. Such amounts shall be invested, at the direction of each Participant,
through such investment manager(s) or broker(s) as may be selected by
Employer. Such Participant directions shall be effective as to all
contributions made to the elective deferral accounts and shall be made only
in accordance with procedures approved by the Administrator and by the
manager(s) or broker(s). The Trustee shall have all powers and duties, not
allocated directly to Participants, with respect to the elective deferral
accounts and shall keep separate records (or be responsible for such records
if provided by the investment manager(s) or broker(s)) reflecting the
earnings and losses, receipts, disbursements, purchases, sales and holdings
from time to time of such assets. Neither the Trustee, the Administrator, nor
any other person shall be under any duty to question any Participant's
investment direction hereunder nor shall the Trustee, Administrator or any
other party be responsponsible or liable for any loss, or by reason of any
breach resulting from the Participant's selection of an investment fund
hereunder.
21.10. All contributions made pursuant to a Participant's election under
this Article 21 shall be at all times fully vested and nonforfeitable.
21.11. (a) No distribution shall be made from a Participant's elective
deferral account prior to his attaining age 59 1/2, except in the event of
financial hardship as described below or his disability, retirement or
termination of employment.
(b) Upon the written request of a Participant, the Administrator, in his
discretion and according to a uniform, nondiscriminatory policy, may direct
the Trustee to distribute to the Participant all or any part of his elective
deferral account in the case of an immediate and heavy financial need. A
distribution will be deemed to be on account of an immediate and heavy
financial need if the distribution is on account of
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(i) expenses for the next semester or quarter of a college education for the
Participant or his dependents, (ii) medical expenses of the Participant or a
dependent as described in Code Section 213(d), (iii) the purchase of the
Participant's principal residence, or (iv) the need to prevent the eviction
of the Participant from said residence. A distribution made pursuant to this
paragraph 21.11 shall not exceed the amount required to meet the immediate
need created by the hardship and not reasonably available from other sources.
Only the amount contributed to a Participant's elective deferral account and
neither earnings thereon nor any Employer contributions may be withdrawn
hereunder. The withdrawal will be paid in cash within thirty (30) days after
the end of the month in which the withdrawal is elected. The value of the
withdrawal must be at least $500, or for the full value of the elective
deferral account, if less.
A distribution will be treated as necessary to satisfy financial need
under the circumstances described in either (a or (b) below:
(a) if the Employer reasonably relies upon the Participant's
representation that the need cannot be relieved: (i) through reimbursement or
compensation by insurance or otherwise, (ii) by reasonable liquidation of the
Participant's assets, to the extent such liquidation would not itself cause
an immediate and heavy financial need, (iii) by cessation of elective
deferral contributions under the Plan, or (iv) by other distributions or
nontaxable loans from plans maintained by Employer or by any other employer,
or by borrowing from commercial sources on reasonable commercial terms. For
purposes of this subparagraph (a), the Participant's resources shall be
deemed to include those assets of his spouse and minor children that are
reasonably available to the Participant; or
(b) if all of the following requirements are satisfied: (i) the
distribution is not in excess of the amount of the immediate and heavy
financial need of the Participant, (ii) the Participant has obtained all
distributions, other than hardship distributions, and all nontaxable loans
currently available under all plans maintained by Employer, (iii) the Plan,
and all other plans maintained by Employer, provide that the Participant's
elective deferral contributions and employee contributions will be suspended
for at least 12 months after receipt of the hardship distribution, and (iv)
the Plan, and all other plans maintained by Employer, provide
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that the Participant may not make elective deferral contributions for the
Participant's taxable year immediately following the taxable year of the
hardship distribution in excess of the applicable limit under Code
Section 402(g) for such next taxable year less the amount of such
Participant's elective deferral contributions for the taxable year of the
hardship distribution.
21.12. Should any of the provisions of this Article not be in conformity
with Treasury Department regulations as from time to time issued, the
nonconforming provision may be amended retroactively to insure conformity.
IN WITNESS WHEREOF, Employer and the Trustee have executed this
agreement as of this 1st day of January, 1994.
EMPLOYER
SMITH BREEDEN ASSOCIATES, INC.
By:
-------------------------------------
Authorized Officer
WITNESSED:
TRUSTEE
By:
-------------------------------------
Michael J. Giarla
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AMENDMENT TO THE
SMITH BREEDEN ASSOCIATES, INC.
PROFIT SHARING AND 401(k) PLAN AND TRUST
Pursuant to Section 17.1 of the Smith Breeden Associates, Inc.
Profit Sharing and 401(k) Plan and Trust (the "Plan"), the Plan is hereby
amended in the following respects to clarify certain provisions and to allow
for the investment of the Plan's assets in "qualifying employer securities"
within the meaning of ERISA section 407(d)(5). This amendment is
effective as of the date it is signed below.
1. Section 4.1 is hereby amended by deleting the last sentence
thereof.
2. Section 9.1 is hereby amended by deleting the second
sentence thereof.
3. Section 9.2 is hereby amended by replacing the last sentence
thereof with the following:
"Any forfeitures occurring in a Plan Year shall be applied to
the reinstatement of forfeited benefits pursuant to Section
9.5. To the extent forfeitures remain after the application of
the preceding sentence, forfeitures will be applied pursuant to
Section 5.1. To the extent forfeitures are in a form other
than cash, the Trustee may take such action as is necessary to
convert such forfeitures to cash before the application
thereof."
4. Section 9.5 is hereby amended by replacing the last sentence
thereof with the following sentence:
"Any required reinstatement of a forfeited benefit shall be
made from amounts forfeited during the Plan Year, and to
the extent such funds are inadequate, from a special
contribution by the Employer."
5. The Plan is hereby amended by deleting Section 9.6 in its
entirety.
6. Section 10.1 is hereby amended by replacing paragraph (a)
thereof with the following paragraph:
"(a) Payment in a lump sum in cash, or in such securities or
other property that are allocated to the Participant's accounts
at the time of such distribution, as the Participant shall
direct;"
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7. Section 12.2 is hereby amended by deleting the third sentence
thereof and inserting in its place the following sentence:
"Subject to Sections 13.2, 13.3 and 21.9, if requested in
writing by the Administrator, the Trustee shall grant to the
Administrator the right to vote any shares of stock held by
the Trustee."
8. Paragraph (a) of Section 13.1 is hereby amended by inserting
the phrase "qualifying employer securities within the meaning
of ERISA section 407(d)(5)," after the phrase "or an
insurance company,".
9. A new Section 13.3 is added to the Plan to read in its
entirety as follows:
"13.3. Notwithstanding any other provisions of the Plan to
the contrary, each Participant (or, if applicable, beneficiary)
shall be entitled to exercise voting, tender and similar rights
with respect to the shares of 'qualifying employer securities'
as defined under ERISA section 407(d)(5) allocated to his or
her accounts. The Trustee shall not make recommendation
to Participants (or applicable beneficiaries) on whether to
vote or tender, or how to vote or tender, other than
recommendations contained in proxy and other materials that
are generally distributed to all shareholders with respect to
such vote or tender. The Trustee shall utilize its best efforts
to deliver on a timely basis or cause to be delivered to each
Participant (or beneficiary) whose accounts hold qualifying
employer securities such information as will be distributed in
connection with any vote, tender or similar right with respect
to shares of such securities allocated to such Participant's
accounts. The Trustee shall establish procedures designed to
safeguard the confidentiality of information relating to the
purchase, holding, and sale of qualifying employee securities,
and the exercise of the voting, tender and similar rights with
respect thereto (except to the extent necessary to comply with
applicable law), and shall insure that such procedures are
sufficient to safeguard confidentiality and are being followed.
The Trustee shall also be the independent fiduciary described
in Department of Labor regulation section 2550.404c-1(d)(4)(ix)
appointed to carry out activities related to any situations
which the Trustee determines involve a potential for undue
employer influence over Participants and beneficiaries with
regard to the direct or indirect exercise of shareholder rights,
unless and until another independent fiduciary is appointed
for such purpose by the Employer. The Trustee shall follow the
directions relating to voting, tender or similar rights of those
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Participants and beneficiaries who provide timely instructions
to the Trustee, and except as required by law shall not vote
or tender qualifying employer securities for which no
instructions are received."
IN WITNESS WHEREOF, Smith Breeden Associates, Inc. has
caused this Amendment to be signed by its duly authorized officer this 22
day of February 1996.
SMITH BREEDEN
ASSOCIATES, INC.
By:
-------------------------------------
