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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
DOWNEY FINANCIAL CORP.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 3501 Jamboree Road 33-0633413
(State or Other Newport Beach, CA 92660 (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation or
Organization)
(Address of Principal Executive Offices Including Zip
Code)
------------------
Downey Savings and Loan Association, F.A. Employees'
Retirement and Savings Plan
(Full Title of the Plan)
------------------
Donald E. Royer
Executive Vice President and General Counsel
Downey Financial Corp.
3501 Jamboree Road
Newport Beach, CA 92660
(Name and Address of Agent For Service)
------------------
(714) 854-3100
(Telephone Number, Including Area Code, of Agent For Service)
------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities Offering Aggregate
to be Amount to be Price Offering Amount of
Registered Registered(3) Per Share(1) Price(1) Registration Fee
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 400,000 $23.06 $9,224,000 $2,795.15
par value
$.01 per share
- --------------------------------------------------------------------------------
Interests in (2) (2) (2) (2)
the Downey
Savings and Loan
Association, F.A.
Employees'
Retirement and
Savings Plan
- --------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purposes of determining the registration fee
pursuant to Rules 457(h) and 457(c) and based on the average of the high
and low prices of the Common Stock of Downey Financial Corp. as reported on
June 26, 1997 on the New York Stock Exchange.
(2) 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 Plan. In accordance with Rule 457(h)(2), no separate fee
calculation is made for Plan interests.
(3) There is also being registered hereunder such additional shares as may be
issued pursuant to the antidilution provisions of the Plan.
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<PAGE>
INTRODUCTION
This Registration Statement on Form S-8 is filed by Downey Financial Corp.,
a Delaware corporation (the "Registrant"), relating to 400,000 shares of the
Registrant's common stock, $.01 par value ("the Common Stock"), issuable
pursuant to the Downey Savings and Loan Association, F.A. Employees' Retirement
and Savings Plan ("the Plan.")
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.(1)
* Information required by Part I of Form S-8 to be contained in the
Section 10(a) prospectus is omitted from this Registration Statement in
accordance with Rule 428 under the Securities Act of 1933, as amended (the
"Securities Act"), and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Registrant and the Plan with the
Securities and Exchange Commission (the "Commission") are hereby incorporated by
reference into this Registration Statement:
1. The Registrant's Annual Report on Form 10-K for the year ended December 31,
1996;
2. The Registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
3. The Plan's Annual Report on Form 11-K for the year ended December 31, 1995;
and
4. The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-B (Registration No. 1-13578),
including any amendment or report filed for the purpose of updating such
description.
All reports and other documents that the Registrant subsequently files with
the Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange
Act, prior to the
2
<PAGE>
filing of a post-effective amendment indicating that the Registrant has sold all
of the securities offered under this Registration Statement or that deregisters
the distribution of all such securities then remaining unsold, shall be deemed
to be incorporated by reference into this Registration Statement from the date
that the Registrant files such report or document.
Any statement contained in this Registration Statement or any report or
document incorporated into this Registration Statement by reference, however,
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained in a subsequently dated
report or document that is also considered part of this Registration Statement,
or in any amendment to this Registration Statement, is inconsistent with such
prior statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Registrant is a Delaware corporation. Section 145 of the Delaware
General Corporation Law ("GCL") permits indemnification of officers and
directors of the Registrant under certain conditions and subject to certain
limitations. Section 145 of the GCL also provides that a corporation has the
power to purchase and maintain insurance on behalf of its officers and directors
against any liability asserted against such person and incurred by him or her in
such capacity, or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify him or her against such liability
under the provisions of Section 145 of the GCL. Article 6 of the Registrant's
By-laws provides for indemnification of the Registrant's officers and directors
to the fullest extent provided by the GCL and other applicable laws as currently
in effect and as they may be amended in the future.
Article Seventeenth of the Registrant's Certificate of Incorporation
exonerates the Registrant's directors from personal liability to the Registrant
or its shareholders for monetary damages for breach of the fiduciary duty of
care as a director, provided that Article Seventeenth does not eliminate or
limit liability for any breach of the directors' duty of loyalty for acts or
omissions not in good faith or which involve intentional misconduct or knowing
violations of law, for any improper declaration of dividends or for any
transaction from which the director derived an improper personal benefit.
Article Seventeenth does not eliminate a shareholder's right to seek
non-monetary, equitable remedies, such as an injunction or rescission, to
redress an action taken by the directors. However, as a practical matter,
equitable remedies may not be available in all situations, and there may be
instances in which no effective remedy is available.
3
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Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit No. Description
4.1 Certificate of Incorporation of the Registrant(1)
4.2 Bylaws of the Registrant(2)
4.3 Downey Savings and Loan Association, F.A. Employees' Retirement
and Savings Plan
4.4 Directed Employee Benefit Trust Agreement dated November 16, 1994
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Scott Bankhead & Co.
24 Powers of Attorney (contained on signature page hereto)
(1) Filed as part of the Registrant's Form S-8 filed on February 3, 1995 and
incorporated herein by reference.
(2) Filed as part of the Registrant's Form 8-B/A filed on January 17, 1995 and
incorporated herein by reference.
The Registrant hereby undertakes to submit the Plan and any amendments
thereto to the Internal Revenue Service ("IRS") in a timely manner and
undertakes to make all changes required by the IRS in order to qualify the Plan.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement; and
4
<PAGE>
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(2)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or 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; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) 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 Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Newport Beach, State of California, on 1 day of July,
1997.
DOWNEY FINANCIAL CORP.
By: /s/ JAMES W. LOKEY
------------------------------------------------
James W. Lokey
President and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated. Each of the directors and/or officers of
the Registrant whose signature appears below hereby appoints James W. Lokey and
Thomas E. Prince, and each of them severally as his or her attorney-in-fact to
sign his or her name and on his or her behalf, in any and all capacities stated
below, and to file with the Securities and Exchange Commission any and all
amendments, including post-effective amendments to this Registration Statement
as appropriate, and generally to do all such things in their behalf in their
capacities as officers and directors to enable Registrant to comply with the
provisions of the Securities Act of 1933, and all requirements of the Securities
and Exchange Commission.
Name and Signature Title Date
/s/ JAMES W. LOKEY President and Chief Executive July 1, 1997
- -------------------------- Officer (Principal Executive Officer)
James W. Lokey
/s/ THOMAS E. PRINCE Executive Vice President and Chief July 1, 1997
- -------------------------- Financial Officer (Principal
Thomas E. Prince Financial and Accounting Officer)
6
<PAGE>
/s/ MAURICE L. McALISTER Chairman of the Board July 1, 1997
- --------------------------
Maurice L. McAlister
/s/ CHERYL E. JONES Vice Chairman of the Board July 1, 1997
- --------------------------
Cheryl E. Jones
/s/ DR. DENNIS J. AIGNER Director July 1, 1997
- --------------------------
Dr. Dennis J. Aigner
/s/ DR. PAUL KOURI Director July 1, 1997
- --------------------------
Dr. Paul Kouri
/s/ SAM YELLEN Director July 1, 1997
- --------------------------
Sam Yellen
Director July 1, 1997
- --------------------------
Brent McQuarrie
/s/ LESTER C. SMULL Director July 1, 1997
- --------------------------
Lester C. Smull
Pursuant to the requirements of the Securities Act of 1933, the trustees
(or other persons who administer the Plan) have duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Newport Beach, State of California, on July 1, 1997.
DOWNEY SAVINGS AND LOAN
ASSOCIATION, F.A. EMPLOYEES'
RETIREMENT AND SAVINGS PLAN
By: /s/ THOMAS E. PRINCE
------------------------------------------
Name: Thomas E. Prince
Title: Member, Administrative Committee
7
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4.1 Certificate of Incorporation of the Registrant(1)
4.2 Bylaws of the Registrant(2)
4.3 Downey Savings and Loan Association, F.A. Employees' Retirement and
Savings Plan
4.4 Directed Employee Benefit Trust Agreement dated November 16, 1994
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Scott Bankhead & Co.
24 Powers of Attorney (contained on signature page hereto)
(1) Filed as part of the Registrant's Form S-8 filed on February 3, 1995 and
incorporated herein by reference.
(2) Filed as part of the Registrant's Form 8-B/A filed on January 17, 1995 and
incorporated herein by reference.
8
<PAGE>
EXHIBIT 4.3
DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A. EMPLOYEES'
RETIREMENT AND SAVINGS PLAN
<PAGE>
DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.
EMPLOYEES' RETIREMENT AND SAVINGS PLAN
JANUARY 1, 1997 RESTATEMENT
TO INCORPORATE
FIRST AMENDMENT TO AUGUST 1, 1993 AMENDMENT AND RESTATEMENT
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.....................................................................1
GENERAL 1
1.1 Plan Name and Purpose.......................................1
ARTICLE II....................................................................2
DEFINITIONS...................................................................2
2.1 Accounts....................................................2
2.2 Administration Committee....................................2
2.3 Affiliated Company..........................................2
2.4 Beneficiary.................................................3
2.5 Board of Directors..........................................3
2.6 Break in Service............................................3
2.7 Code........................................................4
2.8 Company.....................................................4
2.9 Company Stock...............................................4
2.10 Compensation................................................4
2.11 Computation Period..........................................6
2.12 Disability..................................................6
2.13 Distributable Benefit.......................................6
2.14 Effective Date..............................................6
2.15 Eligible Employee...........................................7
2.16 Employee....................................................7
2.17 Employer....................................................7
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2.18 Employer Annual Contributions................................8
2.19 Employment Commencement Date.................................8
2.20 Entry Date...................................................8
2.21 ERISA........................................................8
2.22 Forfeiture Account...........................................8
2.23 Hardship.....................................................9
2.24 Highly Compensated Employee..................................9
2.25 Hour of Service.............................................10
2.26 Investment Fund.............................................11
2.27 Investment Manager..........................................11
2.28 Leave of Absence............................................12
2.29 Matching Contributions......................................12
2.30 Maternity or Paternity Absence..............................12
2.31 Normal Retirement Age.......................................12
2.32 Participant and Active Participant..........................12
2.33 Plan........................................................13
2.34 Plan Administrator..........................................13
2.35 Plan Year...................................................13
2.36 Pre-Tax Contributions.......................................13
2.37 Severance...................................................13
2.38 Severance Date..............................................13
2.39 Spouse......................................................14
2.40 Trust and Trust Fund........................................14
2.41 Trust Agreement.............................................14
2.42 Trustee.....................................................14
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2.43 Valuation Date..............................................14
2.44 Vested Interest.............................................14
2.45 Year of Eligibility Service.................................14
2.46 Year of Vesting Service.....................................15
ARTICLE III...................................................................18
ELIGIBILITY AND PARTICIPATION.................................................18
3.1 Eligibility to Participate..................................18
3.2 Commencement of Active Participation........................18
3.3 Change in Status............................................18
3.4 Employee Responsibility.....................................19
3.5 USERRA......................................................19
ARTICLE IV....................................................................20
PARTICIPANT CONTRIBUTIONS.....................................................20
4.1 Election to Contribute......................................20
4.2 Participant Contribution Amounts............................20
4.3 Modification, Revocation or Termination of Contribution
Election....................................................21
4.4 Limitation on Pre-Tax Contributions by Highly Compensated
Employees...................................................21
4.5 Provisions for Disposition of Excess Pre-Tax Contributions
by Highly Compensated Employees.............................23
4.6 Provisions for Return of Annual Pre-Tax Contributions in
Excess of the Deferral Limitation...........................25
4.7 Character of Amounts Contributed as Pre-Tax Contributions...26
4.8 Direct Rollover Contributions...............................26
4.9 Plan-to-Plan Transfers......................................26
ARTICLE V.....................................................................27
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EMPLOYER CONTRIBUTIONS........................................................27
5.1 Determination of Employer Contributions.....................27
5.2 Pre-Tax Contributions.......................................27
5.3 Matching Contribution.......................................27
5.4 Employer Annual Contributions...............................27
5.5 Qualified Nonelective Employer Annual Contributions.........28
5.6 Timing of Employer Contributions............................30
5.7 Application of Forfeitures..................................30
5.8 Requirement for Profits.....................................30
5.9 Special Limitations on Matching Contributions...............31
5.10 Provisions for Reduction of Excess Matching Contributions
by or on Behalf of Highly Compensated Employees.............33
5.11 Forfeiture of Matching Contributions Attributable to
Excess Deferrals or Contributions...........................34
5.12 Irrevocability..............................................34
ARTICLE VI....................................................................35
FUNDING 35
6.1 In General..................................................35
ARTICLE VII...................................................................36
INVESTMENTS...................................................................36
7.1 Investments of Contributions................................36
7.2 Investment in Securities Issued by the Company or an
Affiliated Company..........................................36
7.3 Participant Investment Designations.........................36
ARTICLE VIII..................................................................38
SPECIAL PROVISIONS CONCERNING COMPANY SECURITIES..............................38
iv
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8.1 Securities Transactions.....................................38
8.2 Valuation of Company Securities.............................38
8.3 Allocation of Stock Dividends and Splits....................38
8.4 Reinvestment of Dividends...................................39
8.5 Voting of Company Stock.....................................39
8.6 Certain Offers for Company Stock............................40
8.7 Confidentiality Procedures..................................43
8.8 Securities Law Limitation...................................43
8.9 Certain Securities Laws Rules...............................43
ARTICLE IX....................................................................45
VESTING.......................................................................45
9.1 Vested Interest in Pre-Tax Contributions Account............45
9.2 Determination of Vested Interest in Matching Contributions
Account and Employer Contribution Account.................45
9.3 Amendment of Vesting Schedule...............................46
ARTICLE X.....................................................................47
PAYMENT OF PLAN BENEFITS......................................................47
10.1 Distribution Upon Retirement................................47
10.2 Distribution Upon Death Prior to Payment of Benefits........47
10.3 Distribution upon Disability................................48
10.4 Severance Prior to Normal Retirement Age....................48
10.5 Form and Manner of Payment of Distributable Benefit.........49
10.6 Election for Direct Rollover to Eligible Retirement Plan....51
10.7 Forfeitures; Restoration....................................52
10.8 Loans.......................................................53
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10.9 Designation of Beneficiary..................................54
10.10 Facility of Payment.........................................56
10.11 Payee Consent...............................................56
10.12 Additional Requirements for Distribution....................56
ARTICLE XI....................................................................57
VALUATION OF ACCOUNTS.........................................................57
11.1 Value of Participant Accounts...............................57
ARTICLE XII...................................................................58
OPERATION AND ADMINISTRATION OF THE PLAN......................................58
12.1 Plan Administration.........................................58
12.2 Administration Committee Powers.............................58
12.3 Investment Manager..........................................59
12.4 Administration Committee Procedure..........................59
12.5 Compensation of Administration Committee....................60
12.6 Resignation and Removal of Members..........................60
12.7 Appointment of Successors...................................60
12.8 Records.....................................................60
12.9 Reliance Upon Documents and Opinions........................61
12.10 Requirement of Proof........................................61
12.11 Reliance on Administration Committee Memorandum.............61
12.12 Multiple Fiduciary Capacity.................................62
12.13 Limitation on Liability.....................................62
12.14 Indemnification.............................................62
12.15 Bonding.....................................................62
12.16 Prohibition Against Certain Actions.........................62
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12.17 Plan Expenses...............................................63
ARTICLE XIII..................................................................64
MERGER OF COMPANY; MERGER OF PLAN.............................................64
13.1 Effect of Reorganization or Transfer of Assets..............64
13.2 Merger Restriction..........................................64
ARTICLE XIV...................................................................65
PLAN TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS..........................65
14.1 Plan Termination............................................65
14.2 Discontinuance of Contributions.............................65
14.3 Rights of Participants......................................66
14.4 Trustee's Duties on Termination.............................66
14.5 Partial Termination.........................................66
14.6 Failure to Contribute.......................................67
ARTICLE XV....................................................................68
APPLICATION FOR BENEFITS......................................................68
15.1 Application for Benefits....................................68
15.2 Action on Application.......................................68
15.3 Appeals.....................................................68
ARTICLE XVI...................................................................70
LIMITATIONS ON CONTRIBUTIONS..................................................70
16.1 General Rule................................................70
16.2 Annual Additions............................................70
16.3 Other Defined Contribution Plans............................70
16.4 Combined Plan Limitation (Defined Benefit Plan).............70
16.5 Adjustments for Excess Annual Additions.....................71
vii
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16.6 Disposition of Excess Employer Contribution Amounts.........72
16.7 Affiliated Company..........................................72
ARTICLE XVII..................................................................73
RESTRICTION ON ALIENATION.....................................................73
17.1 General Restrictions Against Alienation.....................73
17.2 Nonconforming Distributions Under Court Order...............73
ARTICLE XVIII.................................................................75
PLAN AMENDMENTS...............................................................75
18.1 Amendments..................................................75
ARTICLE XIX...................................................................76
MISCELLANEOUS.................................................................76
19.1 No Enlargement of Employee Rights...........................76
19.2 Mailing of Payments; Lapsed Benefits........................76
19.3 Addresses...................................................77
19.4 Notices and Communications..................................77
19.5 Reporting and Disclosure....................................77
19.6 Interpretation..............................................78
19.7 Withholding for Taxes.......................................78
19.8 Limitation on Company and Employer; Administration
Committee and Trustee Liability.............................78
19.9 Successors and Assigns......................................78
19.10 Counterparts................................................78
ARTICLE XX....................................................................79
TOP-HEAVY PLAN RULES..........................................................79
20.1 Applicability...............................................79
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20.2 Definitions.................................................79
20.3 Top-Heavy Status............................................80
20.4 Minimum Contributions.......................................81
20.5 Maximum Annual Addition.....................................82
20.6 Vesting Rules...............................................83
20.7 Non-Eligible Employees......................................83
ix
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ARTICLE I
GENERAL
1.1 PLAN NAME AND PURPOSE.
The name of this Plan is the Downey Savings and Loan Association, F.A.
Employees' Retirement and Savings Plan (the "Plan"). The purpose of this
instrument is to restate the terms and conditions of the Plan to incorporate the
First Amendment to the August 1, 1993 amendment and restatement of the Plan.
This Plan is intended to qualify under Code Section 401(a) as a profit
sharing plan and, with respect to the portion hereof intended to qualify as a
qualified cash or deferred arrangement, to satisfy the requirements of Code
Section 401(k).
1.2 EFFECTIVE DATE.
The original effective date of this Plan is January 1, 1978. This
January 1, 1997 Restatement of the Plan sets forth the provisions of the Plan as
it has been amended from time to time. The effective dates of said amendments
are as set forth in the various documents amending the Plan, up to and including
the First Amendment to the August 1, 1993 Amendment and Restatement of the Plan.
The provisions relating to the portion of the Plan intended to qualify as a
cash or deferred arrangement under Code Section 401(k) shall apply to
Compensation (as defined in Section 2.10) otherwise payable to an Active
Participant on or after August 1, 1993.
Except as expressly stated to the contrary herein, the provisions of this
instrument are not intended to enlarge the rights of any Employee whose
employment for an Employer and all Affiliated Companies terminated prior to
January 1, 1997.
<PAGE>
ARTICLE II
DEFINITIONS
When capitalized, the following terms shall have the meanings set forth in
this Article II:
2.1 ACCOUNTS.
"Accounts" or "Participant's Accounts" shall mean the following Plan
accounts maintained by the Administration Committee for each Participant:
(a) "Pre-Tax Contributions Account" shall mean the account established
and maintained for each Participant to reflect amounts held in the Trust
Fund on behalf of such Participant which are attributable to Pre-Tax
Contributions by an Employer on behalf of the Participant in accordance
with Section 5.2.
(b) "Matching Contributions Account" shall mean the account
established and maintained for each Participant to reflect amounts held in
the Trust Fund on behalf of such Participant which are attributable to
Matching Contributions by an Employer under Section 5.3.
(c) "Employer Annual Contributions Account" shall mean the account
established and maintained for each Participant to reflect amounts held in
the Trust Fund on behalf of such Participant which are attributable to any
Employer Annual Contributions in accordance with Section 5.4 or 5.5.
(d) "Rollover Account" shall mean the account established and
maintained for a Participant to reflect amounts held in the Trust Fund on
behalf of such Participant which are attributable to the Participant's
eligible direct rollover contributions in accordance with Section 4.8.
2.2 ADMINISTRATION COMMITTEE.
"Administration Committee" shall mean the Administration Committee
described in Article XII hereof.
2.3 AFFILIATED COMPANY.
"Affiliated Company" shall mean:
(a) with respect to an Employer, any corporation that is included in a
controlled group of corporations, within the meaning of Section 414(b) of
the Code, that includes such Employer,
(b) with respect to an Employer, any trade or business that is under
common control with such Employer within the meaning of Section 414(c) of
the Code,
(c) with respect to an Employer, any member of an affiliated service
group, within the meaning of Section 414(m) of the Code, that includes such
Employer, and
(d) with respect to an Employer, any other entity required to be
aggregated with such Employer pursuant to regulations under Section 414(o)
of the Code.
2
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2.4 BENEFICIARY.
"Beneficiary" or "Beneficiaries" means the person or persons last
designated by a Participant as set forth in Section 10.9 or, if there is no
designated Beneficiary or surviving Beneficiary, the person or persons
designated in Section 10.9 to receive the Distributable Benefit of a deceased
Participant in such event.
2.5 BOARD OF DIRECTORS.
"Board of Directors" shall mean the Board of Directors of Downey Savings
and Loan Association, F.A. as it may from time to time be constituted, or a
committee thereof, if duly authorized to act for and in place of the Board of
Directors.
2.6 BREAK IN SERVICE.
"Break in Service," for purposes of determining an Employee's Years of
Vesting Service credit or Year of Eligibility Service credit, shall mean a
Computation Period during which an individual completes not more than five
hundred (500) Hours of Service required for such Year of Vesting Service or
Eligibility Service. A Break in Service shall be sustained, or be deemed to
occur, on the last day of the applicable Computation Period.
(a) Solely for purposes of determining whether an Employee sustains a
Break in Service because he is not credited with the number of Hours of
Service required for a Year of Vesting Service or a Year of Eligibility
Service, the provisions of Subsections (b) and (c) below shall apply to an
Employee's period of Maternity or Paternity Absence.
(b) The number of Hours of Service which shall be credited to an
Employee for a period of Maternity or Paternity Absence shall be
(i) the number which otherwise would normally have been credited
to the Employee but for the absence, or
(ii) if the Administrative Committee determines that the number
described in (i) above can not be determined, eight (8) Hours of
Service per day of such absence, provided, however, that the total
number of hours treated as Hours of Service under this Subsection (b)
shall not exceed five hundred one (501), and that these Hours of
Service shall be taken into account solely for purposes of determining
whether or not the Employee has incurred a Break in Service.
(c) The Hours described in Subsection (b) above shall be credited to
the Computation Period
(i) in which the absence from work begins, if the Employee would
be prevented from incurring a Break in Service in that Computation
Period solely because of such crediting, or
(ii) in any other case, in the immediately following Computation
Period.
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2.7 CODE.
"Code" shall mean the Internal Revenue Code of 1986, as in effect on the
date of execution of this Plan document and as thereafter amended from time to
time.
2.8 COMPANY.
"Company" shall mean Downey Savings and Loan Association, F.A.
2.9 COMPANY STOCK.
"Company Stock" shall mean any class of stock of the Downey Financial Corp.
which both constitutes "qualifying employer securities" as defined in Section
407(d) of ERISA and "employer securities" as defined in Section 409(l) of the
Code.
2.10 COMPENSATION.
"Compensation" for purposes of this Plan shall be determined in accordance
with the provisions of this Section, unless expressly provided to the contrary
elsewhere in this Plan.
(a) The term "Compensation" for purposes of determining a
Participant's Pre-Tax Contributions under Article IV and Employer
Contributions under Article V shall mean all compensation payable in cash
or kind by the Employer subject to the limitations of Subsections (b) and
(d) below.
(b) The term "Compensation" for purposes of determining Participant
Pre-Tax Contributions under Article IV and Employer Contributions under
Article V shall not include any of the following amounts:
(i) Amounts paid or payable by reason of services performed
during any period in which an Employee is not an Active Participant;
(ii) Fringe benefits, contributions by an Employer to any
employee benefit plan, or benefits under any employee benefit plan;
provided, however that except for "possibilities dollars" or
equivalent such amounts made available to employees under the
Employer's flexible benefits program, which shall be excluded from
Compensation whether or not such amounts are deferred under this Plan,
this paragraph (ii) shall not cause to be excluded from the definition
of "Compensation" amounts that otherwise would qualify for inclusion
as "Compensation" but are either (A) deferred by the Participant in
accordance with the provisions of Section 4.1 and which qualify for
treatment under Code Section 401(k), or (B) deducted from a
Participant's remuneration under a plan which satisfies the
requirements of Section 125 or 129 of the Code.
(iii) Amounts not included in an Employee's gross income for his
current taxable year pursuant to deferred compensation plans (other
than amounts qualifying for treatment under Code Section 401(k) as
described in (a) above);
(iv) Amounts included in any Employee's gross income with respect
to life insurance as provided by Code Section 79;
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(v) Amounts in excess of Seventy-Five Thousand Dollars ($75,000)
in the case of any non-management commissioned Employee; and
(vi) Amounts paid in property (whether or not included in an
Employee's gross income) as a result of a prize or award.
(vii) Amounts included in an Employee's gross income for his
current taxable year pursuant to short-term payouts, withdrawals,
payout/suspensions for unforseeable financial emergencies and
withdrawal elections made pursuant to deferred compensation plans.
(c) For purposes of Article XVI (relating to certain limitations on
annual additions to or benefits from qualified plans) and Article XX of
this Plan, the term "Compensation" shall mean wages as defined in Section
3401(a) for purposes of income tax withholding at the source but determined
without regard to any rules that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Section 3401(a)(2)). For
purposes of applying the limitations of Article XVI, Compensation as
defined in this Subsection (c) for a Limitation Year (as defined in
Article XVI) shall be subject to the limitations of Paragraphs (i) and (ii)
below.
(i) For Limitation Years that begin after December 31, 1991 and
before January 1, 1998, Compensation shall include only amounts
actually paid or includible in gross income during such Limitation
Year.
(ii) For Limitation Years beginning on and after January 1, 1998,
in addition to amounts taken into account under Paragraph (i) above,
Compensation shall also include amounts not actually paid or
includible in income that are either (A) deferred by the Participant
in accordance with the provisions of Section 4.1 and which qualify for
treatment under Code Section 401(k), or (B) deducted from a
Participant's remuneration under a plan which satisfies the
requirements of Section 125 or 129 of the Code.
For purposes of applying the requirements of Article XX, Compensation for a
Plan Year determined in accordance with this Subsection (c) shall be
limited as provided in Subsection (d) below.
(d) "Compensation" of any Employee taken into account under Article IV
or V for any Plan Year that begins on or after January 1, 1989 shall not
exceed the annual compensation limit in effect under Section 401(a)(17) of
the Code on the January 1 coinciding with or immediately preceding the
first day of such Plan Year, as provided in this Subsection.
(i) "Compensation" of any Employee taken into account under
Article IV or V for any Plan Year that begins on or after January 1,
1994 shall not exceed $150,000, as that amount is adjusted in
accordance with Section 401(a)(17)(B) of the Code. For Plan Years
commencing on and after January 1, 1997, the annual compensation limit
in effect under Section 401(a)(17) of the Code is increased to
$160,000.
(ii) "Compensation" of any Employee taken into account under
Article IV or V for any Plan Year that begins on or after January 1,
1989 and before January 1, 1994, shall not exceed $200,000, as that
amount is adjusted at the same time and in the same manner as under
Section 415(d) of the Code.
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(iii) If Compensation for a period of less than twelve (12)
months is taken into account for any Plan Year, then, to the extent
required by regulations under Section 401(a)(17) of the Code, the
otherwise applicable annual Compensation limit provided under this
Subsection is reduced in the same proportion as the reduction in the
twelve-month period.
2.11 COMPUTATION PERIOD.
"Computation Period" shall mean the consecutive twelve-month period used
for purposes of determining whether an Employee is to be credited with a Year of
Vesting or Eligibility Service, or a Break in such Service.
(a) For purposes of determining whether an Employee is to be credited
with a Year of Eligibility Service or a Break in such Service, the initial
Computation Period shall be the twelve-month period commencing on the
Employee's Employment Commencement Date. Succeeding Computation Periods
shall be the Plan Year, commencing with the Plan Year that includes the
first anniversary of the Employee's Employment Commencement Date.
(b) For purposes of determining whether an Employee is to be credited
with a Year of Vesting Service or a Break in such Service, the Computation
Period shall be the Plan Year.
2.12 DISABILITY.
"Disability" shall mean the inability of a Participant to perform his job
by reason of a medically determinable physical or mental impairment which can be
expected to be permanent. The Administration Committee shall determine whether
an Employee has incurred a Disability based on the certification of a medical
examiner satisfactory to the Administration Committee.
2.13 DISTRIBUTABLE BENEFIT.
"Distributable Benefit" shall mean the Vested Interest of a Participant in
this Plan which is determined and distributable to the Participant in accordance
with the provisions of Articles IX, X and XI.
2.14 EFFECTIVE DATE.
The original "Effective Date" of this Plan is January 1, 1978. This
January 1, 1997 Restatement of the Plan sets forth the provisions of the Plan as
it has been amended from time to time. The effective dates of said amendments
are as set forth in the various documents amending the Plan, up to and including
the First Amendment to the August 1, 1993 Amendment and Restatement of the Plan.
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2.15 ELIGIBLE EMPLOYEE.
(a) "Eligible Employee" shall mean any individual who is employed by
an Employer, except as provided in Subsection (b) below.
(b) The term "Eligible Employee" shall not include:
(i) Any Employee who is covered by a collective bargaining
agreement to which an Employer is a party, unless the collective
bargaining agreement provides for coverage under this Plan.
Notwithstanding the provisions of the preceding sentence, solely for
purposes of applying percentage coverage tests under Code Section 410,
to the extent required by Section 410, employees covered by a
collective bargaining agreement shall be deemed ineligible only if
there is evidence that retirement benefits were the subject of good
faith bargaining between the Employer and the collective bargaining
representative, and if less than two percent of the employees of the
employer who are covered pursuant to that agreement are professionals
as defined in Treasury Regulations Section 1.410(b)-9(g).
(ii) Any non-resident alien who receives no earned income (within
the meaning of Code Section 911(d)(2)) from the Employer that
constitutes income from sources within the United States (within the
meaning of Code Section 861(a)(3).
(iii) Any Employee who is a "leased employee" within the meaning
of Code Section 414(n).
(iv) Any Employee who is an Employee within the meaning of Code
Section 401(c)(3).
(v) Any Employee who is employed in a division, unit, facility or
class of Employee that the Employer has determined in writing not to
be covered by the terms of the Plan.
2.16 EMPLOYEE.
(a) "Employee" shall mean each person currently employed in any
capacity by an Employer or Affiliated Company, any portion of whose
compensation paid by an Employer or an Affiliated Company is subject to
withholding of income tax and/or for whom Social Security contributions are
made by an Employer or an Affiliated Company.
(b) In addition, "Employee" shall mean a person deemed to be employed
by an Employer or an Affiliated Company, pursuant to Code Section 414(n).
(c) Although Eligible Employees are the only class of Employees
eligible to participate in this Plan, the term "Employee" is used to refer
to persons employed in a non-Eligible Employee capacity as well as Eligible
Employee category. Thus, those provisions of this Plan that are not limited
to Eligible Employees, such as those relating to certain service
computation rules, apply to both Eligible and non-Eligible Employees.
2.17 EMPLOYER.
"Employer" shall mean Downey Savings and Loan Association, F.A. and any
employer that is an Affiliated Company with respect to Downey Savings and Loan
Association, F.A. and
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which may be included within the coverage of the Plan with the written consent
of the Board of Directors (but only for such period of time that such Employer's
participation in this Plan and Trust continues to be approved by the Board of
Directors).
2.18 EMPLOYER ANNUAL CONTRIBUTIONS.
"Employer Annual Contributions" shall mean Employer Contributions described
in Section 5.4 or Section 5.5.
2.19 EMPLOYMENT COMMENCEMENT DATE.
"Employment Commencement Date" shall mean each of the following:
(a) The date on which an Employee first performs an Hour of Service in
any capacity for an Employer or an Affiliated Company with respect to which
the Employee is compensated or is entitled to compensation by the Employer
or the Affiliated Company.
(b) In the case of an Employee who incurs a Severance and who is
reemployed by an Employer or an Affiliated Company, the term "Employment
Commencement Date" shall mean either the Employee's "Employment
Commencement Date" as defined in (a) above or, if the Participant incurs a
Break in Service, the first day following the Severance on which the
Employee performs an Hour of Service for the Employer or an Affiliated
Company with respect to which he is compensated or entitled to compensation
by the Employer or Affiliated Company.
2.20 ENTRY DATE.
"Entry Date" shall mean the first day of any payroll period coinciding with
or immediate following the first day of any Plan quarter, except that for the
Plan Year commencing January 1, 1993 only, "Entry Date" shall also mean August
1.
2.21 ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
2.22 FORFEITURE ACCOUNT.
"Forfeiture Account" shall mean an account established and maintained
pursuant to Section 5.7 for purposes of holding any non-vested portion of a
Participant's Account that is forfeited by the Participant in accordance with
Section 5.11 or Section 10.7.
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2.23 HARDSHIP.
"Hardship" shall mean a need created by an immediate and heavy financial
need of the Participant which need cannot be met by other sources reasonably
available to the Participant and shall include, but shall not be limited to, a
need arising from such causes as sickness of a Participant or his family,
layoff, divorce or dissolution of marriage, a need to purchase or provide
primary housing or a need to provide for education of dependents.
2.24 HIGHLY COMPENSATED EMPLOYEE.
(a) "Highly Compensated Employee" shall mean, to the extent required
by regulations issued by the Secretary of the Treasury, any Employee who
(i) was a Five Percent (5%) Owner at any time during the Plan
Year or the preceding Plan Year, or
(ii) for the preceding Plan Year,
(A) received Compensation (as defined in Subsection (b)
below) from an Employer in excess of $80,000, as adjusted by the
Secretary of the Treasury at the same time and in the same manner
as under Code Section 415(d), except that the base period for
such adjustment shall be the calendar quarter ending
September 30, 1996, and
(B) if the Employer elects the application of this
Subparagraph (B) for such preceding Plan Year, was in the
top-paid group of employees for such preceding year.
(b) Determination of a Highly Compensated Employee shall be in
accordance with the following special rules:
(i) An Employee shall be treated as a Five Percent (5%) Owner for
any Plan Year if at any time during such Plan Year such Employee was a
Five Percent (5%) Owner (as defined in Section 20.2).
(ii) An Employee is in the top-paid group of Employees for any
Plan Year if such Employee is in the group consisting of the top
twenty percent (20%) of the Employees when ranked on the basis of
Compensation (as defined below in this Subsection (b)) paid during
such Plan Year. For purposes of determining the number of Employees in
the top-paid group, the following Employees shall be excluded:
(A) Employees who have not completed six (6) months of
Service,
(B) Employees who normally work less than 17-1/2 hours per
week,
(C) Employees who normally work not more than six (6) months
during any Plan Year,
(D) Employees who have not attained age 21,
(E) Except to the extent provided in Treasury Regulations,
Employees who are included in a unit of employees covered by an
agreement which the Secretary of Labor finds to be a collective
bargaining agreement between Employee representatives and
Employer, and
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(F) Employees who are nonresident aliens and who receive no
earned income (within the meaning of Section 911(d)(2) from the
Employer which constitutes income from sources within the United
States (within the meaning of Section 861(a)(3)).
An Employer may elect to apply Subparagraphs (A) through (D) above by
substituting a shorter period of Service, smaller number of hours or
months, or lower age for the period of service, number of hours or
months, or (as the case may be) than as specified in such
Subparagraphs.
(iii) For purposes of this Section, the term "Compensation" means
Compensation as set forth in Section 2.10(c), without regard to the
limitations of Section 2.10(d); provided, however, the determination
under this Paragraph (vi) shall be made without regard to Section 125,
salary reduction contributions qualifying for tax-deferred treatment
under Section 401(k), 408(k)(6), or Section 403(b).
(iv) A former Employee shall be treated as a Highly Compensated
Employee if:
(A) such Employee was a Highly Compensated Employee when
such Employee incurred a Severance, or
(B) such Employee was a Highly Compensated Employee at
any time after attaining age fifty-five (55).
(ix) Code Sections 414(b), (c), (m), (n), and (o) shall be
applied before the application of this Section 2.24.
(c) To the extent permissible under Code Section 414(q), the
Administration Committee may determine which Employees shall be categorized
as Highly Compensated Employees by applying a simplified method prescribed
by the Internal Revenue Service.
2.25 HOUR OF SERVICE.
(a) "Hour of Service" of an Employee shall mean the following:
(i) Each hour for which the Employee is paid by an Employer
or an Affiliated Company or entitled to payment for the
performance of services as an Employee. For purposes of this
Section, overtime work shall be credited as straight time.
(ii) Each hour in or attributable to a period of time during
which the Employee performs no duties (irrespective of whether he
has terminated his employment) due to a vacation, holiday,
illness, incapacity (including pregnancy or disability), layoff,
jury duty, military duty or leave of absence for which he is so
paid or so entitled to payment, whether direct or indirect.
However, no such hours shall be credited to an Employee if such
Employee is directly or indirectly paid or entitled to payment
for such hours and if such payment or entitlement is made or due
under a plan maintained solely for the purpose of complying with
applicable worker's compensation, unemployment compensation or
disability insurance laws or is a payment which solely reimburses
the Employee for medical or medically related expenses incurred
by him.
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(iii) Each hour in or attributable to a period of time
during which the Employee performs no duties due to service in
the Armed Forces of the United States (other than by voluntary
enlistment or commission), provided that such Employee's duties
for the Employer or an Affiliated Company are resumed within
ninety (90) days after release from the Armed Forces. With
respect to any such unpaid absence as set forth in this
Paragraph (iii), an Employee shall be deemed to complete Hours of
Service at his customary work schedule prior to the commencement
of such absence.
(iv) Each hour for which the Employee is entitled to back
pay, irrespective of mitigation of damages, whether awarded or
agreed to by the Employer or an Affiliated Company, provided that
such Employee has not previously been credited with an Hour of
Service with respect to such hour under Paragraphs (i) or (ii)
above.
Notwithstanding the foregoing, no more than 501 Hours of Service shall
be credited to an Employee under Subparagraphs (ii) or (iv) above on
account of any single continuous period of time during which no duties are
performed, and in no event shall the provisions of such paragraphs be
construed to require an Employer to approve a leave or other absence nor
shall the provisions of either such paragraph be construed to confer any
benefit except as expressly stated therein.
(b) Hours of Service under Paragraphs (ii) and (iv) above shall be
calculated in accordance with Department of Labor Regulation 29 C.F.R.
2530.200b-2(b). Hours of Service shall be credited to the appropriate
computation period according to Department of Labor Regulation
2530.200b-2(c). However, an Employee will not be considered as being
entitled to payment until the date when the Employer or the Affiliated
Company would normally make payment to the Employee for such Hour of
Service.
(c) Unless expressly provided to the contrary by this Plan or by the
Board of Directors, an Employee shall not be credited with Hours of Service
for periods of employment with an Affiliated Company prior to the date on
which an entity becomes an Affiliated Company, or part of an Affiliated
Company.
2.26 INVESTMENT FUND.
"Investment Fund" shall mean any of the separate Investment Funds
established by the Administration Committee which may be made available by the
Administration Committee from time to time for selection by Participants for
purposes of the investment of amounts contributed to this Plan, as provided in
Article VII.
2.27 INVESTMENT MANAGER.
"Investment Manager" means the one or more Investment Managers, if any,
that are appointed pursuant to Section 12.3.
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2.28 LEAVE OF ABSENCE.
"Leave of Absence" shall mean any absence without pay authorized by the
Employer under the Employer's standard personnel practices. The treatment of
Leaves of Absence under this Plan shall not result in discrimination in favor of
Highly Compensated Employees in violation of Code Section 401(a)(4).
2.29 MATCHING CONTRIBUTIONS.
"Matching Contributions" shall mean Employer contributions that are made on
account of Participant contributions, as provided in Section 5.3.
2.30 MATERNITY OR PATERNITY ABSENCE.
"Maternity or Paternity Absence" shall mean an absence from work for any
period
(a) By reason of the pregnancy of the Employee,
(b) By reason of the birth of a child of the Employee,
(c) By reason of the placement of a child with the Employee in
connection with the adoption of the child by the Employee, or
(d) For purposes of caring for the child for a period beginning
immediately following the birth or placement referred to in Subsection (b)
or (c) above.
Notwithstanding the foregoing, a period of absence shall be treated as a
Maternity or Paternity Absence only if the Employee claims that such absence
qualifies as a Maternity or Paternity Absence and furnishes such proof and
information regarding such absence as the Administration Committee reasonably
requires. A Maternity or Paternity Absence shall be recognized solely for
purposes of determining whether or not an Employee has incurred a Break in
Service. Accordingly, such a Maternity or Paternity Absence shall not result in
an accrual of Service for purposes of the benefit accrual or vesting provisions
of this Plan. Further, nothing in this Plan shall be construed or interpreted to
give an Employee the right to any paid or unpaid maternity or paternity leave.
An Employee's rights, if any, with respect to such leave shall be governed by
the Employer's standard personnel practices and policies.
2.31 NORMAL RETIREMENT AGE.
"Normal Retirement Age" shall mean the Participant's age on his sixty-fifth
(65th) birthday.
2.32 PARTICIPANT AND ACTIVE PARTICIPANT.
(a) "Participant" shall mean any person for whom an Account is
maintained under the Plan and whose Account, representing such person's
interest in the Trust Fund, has not been distributed or otherwise disposed
of in accordance with applicable law.
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(b) "Active Participant" as of any applicable date shall mean an
Eligible Employee who has satisfied the eligibility and participation
requirements of Article III.
2.33 PLAN.
"Plan" shall mean the Downey Savings and Loan Association, F.A. Employees'
Retirement and Savings Plan as set forth herein, and as it may be amended from
time to time.
2.34 PLAN ADMINISTRATOR.
"Plan Administrator" shall mean the administrator of the Plan, within the
meaning of Section 3(16)(A) of ERISA. The Plan Administrator shall be Downey
Savings and Loan Association, F.A.
2.35 PLAN YEAR.
"Plan Year" shall mean the twelve (12) month period ending on each December
31.
2.36 PRE-TAX CONTRIBUTIONS.
"Pre-Tax Contributions" shall include those amounts contributed to the Plan
as a result of a salary or wage reduction election made by the Participant in
accordance with applicable provisions of the Plan, to the extent such
contributions qualify for treatment as contributions made under a "qualified
cash or deferred arrangement" within the meaning of Section 401(k) of the Code.
2.37 SEVERANCE.
"Severance" shall mean the termination of an Employee's employment, in any
capacity, with the Employer and Affiliated Companies, by reason of such
Employee's death, resignation, dismissal or otherwise, as determined in
accordance with the provisions of this Section 2.37. For the purposes of this
Plan, an Employee shall be deemed to have incurred a Severance on the date on
which he dies, resigns, is discharged, or his employment with the Employer and
its Affiliated Companies otherwise terminates, including a failure to return to
work at the end of an approved Leave of Absence, which failure shall be deemed
to constitute a termination of employment as of the date he is scheduled to
return.
2.38 SEVERANCE DATE.
"Severance Date" shall, in the case of any Employee who incurs a Severance,
mean the day on which such Employee is deemed to have incurred said Severance,
determined in accordance with the provisions of Section 2.37.
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2.39 SPOUSE.
"Spouse" shall mean the person to whom a Participant is legally married as
of the date of the payment of all or a portion of the Participant's Vested
Interest in his Accounts, or in the case of a payment after the Participant's
death, the person to whom the Participant is legally married as of the date of
the Participant's death. To the extent required under a qualified domestic
relations order, a former spouse shall be treated as a Spouse.
2.40 TRUST AND TRUST FUND.
"Trust" or "Trust Fund" shall mean the assets of the Plan held in a trust,
insurance contract or custodial account established under a Trust Agreement
pursuant to Article VI.
2.41 TRUST AGREEMENT.
"Trust Agreement" shall mean the one or more trust agreements entered into
by the Company in accordance with the provisions of Article VI for the purpose
of holding contributions and earnings under this Plan, and shall include any
funding agreement with an insurance company or custodian treated as a Trustee
under Section 401(f) of the Code.
2.42 TRUSTEE.
"Trustee" shall mean any successor or other corporation or person or
persons selected by the Board of Directors to act as a trustee of the Trust Fund
under a Trust Agreement, and shall include any insurance company, bank or person
treated as the holder of a qualified trust under Section 401(f) of the Code.
2.43 VALUATION DATE.
"Valuation Date" shall mean the date as of which the Trustee shall
determine the fair market value of the assets in the Trust Fund for purposes of
determining the value of each Account therein. Such Valuation Date shall be each
day that the New York Stock Exchange is open for business.
2.44 VESTED INTEREST.
"Vested Interest" or "Vested Right" shall mean the interest of a
Participant in his Accounts which is at all times fully vested and
nonforfeitable.
2.45 YEAR OF ELIGIBILITY SERVICE.
An Employee's Year of Eligibility Service credit shall be determined in
accordance with the following provisions of this Section 2.45.
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(a) "Year of Eligibility Service" shall mean, for purposes of
Article III of this Plan, a Computation Period during which the Employee
completes at least one thousand (1,000) Hours of Service for an Employer or
an Affiliated Company.
(b) In the case of any Employee who incurs a Break in Service, upon
such Employee's completion of one (1) Hour of Service following a Break in
Service, his Years of Eligibility Service prior to said Break shall be
taken into account under this Plan if he either had a Vested Right to
benefits under this Plan immediately preceding such Break, or the number of
his one-year Breaks in Service does not equal or exceed his Parity Period,
as defined in Subsection (d) below.
(c) In the case of any Employee who incurs a Break in Service and who,
immediately preceding such Break, did not have any Vested Right to benefits
under this Plan, if the number of his one-year Breaks in Service equals or
exceeds his Parity Period, as defined in Subsection (d) below, then his
Years of Eligibility Service prior to said Break in Service shall not be
taken into account under this Plan. Any Years of Eligibility Service credit
accrued before a Break shall be deemed not to include any Years of
Eligibility Service not required to be taken into account under this
Subsection (c) by reason of any prior Break in Service.
(d) For purposes of this Section 2.45, the term Parity Period shall
mean:
(i) For Plan Years commencing on or before December 31, 1984, the
Participant's Years of Eligibility Service credit accrued prior to a
Severance giving rise to said Break.
(ii) For Plan Years commencing after December 31, 1984, the
greater of (A) five Years of Eligibility Service, or (B) the number of
Years of Eligibility Service credited under this Section prior to the
Severance giving rise to such Break.
(e) An Employee shall be credited with Years of Eligibility Service
with respect to periods of employment with an Affiliated Company, but only
to the extent that such periods of employment would be so credited under
the foregoing rules set forth in this Section had such Employee been
employed during such period by the Employer. Notwithstanding the foregoing,
unless provided by the Board of Directors, or unless otherwise expressly
stated in this Plan, such an Employee shall not receive such Service credit
for any period of employment with an Affiliated Company prior to such
entity becoming or becoming a part of, an Affiliated Company.
(f) Notwithstanding the foregoing, no Employees shall be credited with
a Year of Eligibility Service with respect to any period of employment
prior to January 1, 1977.
2.46 YEAR OF VESTING SERVICE.
An Employee Years of Vesting Service credit shall be determined in
accordance with the following provisions of this Section 2.46.
(a) "Year of Vesting Service" shall mean a Computation Period during
which the Employee completes at least one thousand (1,000) Hours of Service
for an Employer or an Affiliated Company. In no instance will an Employee
be credited with
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more than one (1) Year of Vesting Service with respect to service performed
in a single Computation Period.
(b) In the case of any Employee who incurs a Break in Service, upon
such Employee's completion of one (1) Hour of Service following a Break in
Service, his Years of Vesting Service prior to said Break shall be taken
into account under this Plan if he either had a Vested Right to benefits
under this Plan immediately preceding such Break, or the number of his
one-year Breaks in Service does not equal or exceed his Parity Period, as
defined in Subsection (d) below.
(c) In the case of any Employee who incurs a Break in Service and who,
immediately preceding such Break, did not have any Vested Right to benefits
under this Plan, if the number of his one-year Breaks in Service equals or
exceeds his Parity Period, as defined in Subsection (d) below, then his
Years of Vesting Service prior to said Break in Service shall not be taken
into account under this Plan. Any Years of Vesting Service credit accrued
before a Break shall be deemed not to include any Years of Vesting Service
not required to be taken into account under this Subsection (c) by reason
of any prior Break in Service.
(d) For purposes of this Section 2.46, the term Parity Period shall
mean:
(i) For Plan Years commencing on or before December 31, 1984, the
Participant's Years of Vesting Service credit accrued prior to a
Severance giving rise to said Break.
(ii) For Plan Years commencing after December 31, 1984, the
greater of (A) five Years of Vesting Service, or (B) the number of
Years of Vesting Service credited under this Section prior to the
Severance giving rise to such Break.
(e) An Employee shall be credited with Years of Vesting Service with
respect to periods of employment with an Affiliated Company, but only to
the extent that such periods of employment would be so credited under the
foregoing rules set forth in this Section had such Employee been employed
during such period by the Employer. Notwithstanding the foregoing, unless
provided by the Board of Directors, or unless otherwise expressly stated in
this Plan, such an Employee shall not receive such Years of Vesting Service
credit for any period of employment with an Affiliated Company prior to
such entity becoming or becoming a part of, an Affiliated Company.
(f) In the event of a change in the Plan Year, an Employee who is
credited with a Year of Vesting Service in both the twelve (12) month
period that begins on the first day of the short Plan Year and the Plan
Year that immediately follows such short Plan Year, shall be credited with
two (2) Years of Vesting Service.
(g) Notwithstanding the foregoing, Years of Vesting Service prior to
January 1, 1977 shall be credited only for those persons who were Employees
on January 1, 1978 and such Years of Vesting Service shall be credited on
an elapsed time basis since the Employee's last Employment Commencement
Date prior to January 1, 1977. A Year of Service on the elapsed time basis
shall mean a period of service commencing with the Employee's Employment
Commencement Date and ending on the date a period of severance begins. If a
period of service includes a period of separation from service of less than
twelve (12) consecutive months, the period of separation shall be credited
as a period of service. A period of severance begins with the earlier of
(i) the date an
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<PAGE>
Employee separates from service by reasons of quitting, retirement, death
or discharge, or (ii) the date twelve (12) consecutive months after the
date and Employee separates from service for any other reasons and ends
with the date such Employee resumes employment with the Employer.
17
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ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY TO PARTICIPATE.
(a) Any Eligible Employee who has attained at least age twenty-one
(21) and completed at least one (1) Year of Eligibility Service shall
become an Active Participant as of the Entry Date coinciding with or
immediately following the date he has satisfied such requirements.
(b) If an Employee who is not an Eligible Employee becomes an Eligible
Employee, such Eligible Employee shall become an Active Participant in the
Plan on an Entry Date which is the later of (i) the date he becomes an
Eligible Employee, if he has satisfied the requirements under Subsection
(a) above as of the date he becomes an Eligible Employee, or (ii) the date
he satisfies the requirements of Subsection (a) above, provided he is an
Eligible Employee on such date.
(c) If an Eligible Employee ceases to be an Eligible Employee, he
shall become an Active Participant in the Plan on an Entry Date which is
the later of (i) the date he again becomes an Eligible Employee, if he
previously satisfied the requirements of Subsection (a) above and any Year
of Eligibility Service has not been disregarded under Section 1.45(b) as of
such date, or (ii) the date he satisfies the requirements of Subsection
(a) above, provided he is an Eligible Employee on such date.
3.2 COMMENCEMENT OF ACTIVE PARTICIPATION.
(a) An Eligible Employee shall become an Active Participant as of the
Entry Date determined in accordance with Section 3.1. Effective as of such
Entry Date, or any subsequent Entry Date, an Active Participant may elect
to contribute to the Plan in accordance with the provisions of Article IV
by filing a contribution election prior to the applicable Entry Date in
accordance with rules prescribed or approved by the Administration
Committee.
(b) Each Active Participant shall complete an enrollment form and such
other forms as may be prescribed by the Administration Committee and may
designate a Beneficiary. An Active Participant shall also designate one or
more of the Investment Funds described in Article VII for the investment of
contributions allocated to his Accounts, to the extent provided in
Article VII. The Administration Committee may prescribe such rules as it
deems appropriate in connection with a Participant's investment
designations.
3.3 Change in Status.
If an Active Participant is transferred from one Employer to another
Employer, he shall automatically become an Active Participant under the Plan
with such other Employer if he continues to be an Eligible Employee; further, he
shall continue to be a Participant with respect to his Accounts at the date of
transfer during the period that he is a Participant under the Plan with such
Employer. If an Active Participant becomes an ineligible Employee and therefore
becomes ineligible to continue to be an Active Participant because he is no
longer an Eligible
18
<PAGE>
Employee, he shall continue to be a Participant with respect to his Accounts at
the date of his change of status during the period of his subsequent employment
as an ineligible Employee.
3.4 EMPLOYEE RESPONSIBILITY.
It shall be the responsibility of each Participant who elects to contribute
to this Plan to verify that amounts of his contributions are in accordance with
his election, and investment of such contributions is in accordance with his
investment designation. It shall also be the responsibility of each Participant
to periodically review his Beneficiary designation and any other elections under
this Plan. In the case of an Eligible Employee who ceases to be an Eligible
Employee and then again becomes an Eligible Employee, it shall be such Eligible
Employee's responsibility to determine when he will become an Active
Participant, as provided in Section 3.1, and to file any required contribution
election form in accordance with Section 3.2 (any and other applicable forms)
prior to any Entry Date coinciding with or following the date he becomes an
Active Participant, if he wishes to contribute to the Plan.
3.5 USERRA.
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Section 414(u) of the Code.
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<PAGE>
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.1 ELECTION TO CONTRIBUTE.
(a) Each Active Participant who desires to contribute to this Plan
shall file a contribution election pursuant to Section 3.2 in which he
elects to have an amount equal to a percentage of his Compensation (as
defined in Section 2.10) contributed to the Plan for each payroll period
that the contribution election is in effect, as provided in Section 4.2.
Subject to the provisions of Section 2.10(d), each such Active Participant
also may be given the right to defer all or a portion of amounts made
available to such Employee under the Employer's flexible benefits program,
without regard to whether such amounts are included in the definition of
Compensation under Sections 2.10(a) and (b). All contributions by Active
Participants shall be made as Pre-Tax Contributions.
(b) An Active Participant's contribution election shall be effective
as of the date determined in accordance with Section 3.2. Such contribution
election shall remain in effect until it is modified, revoked or
terminated, pursuant to Section 4.3, or until the Active Participant ceases
to be an Eligible Employee. A contribution election shall be made in such
form and manner as the Administration Committee shall prescribe or approve.
(c) An Active Participant's Pre-Tax Contributions shall be made by
payroll deduction and an amount equal to such Pre-Tax Contributions shall
be paid by the Employer to the Trustee in accordance with Section 5.2.
4.2 PARTICIPANT CONTRIBUTION AMOUNTS.
Participant contribution amounts shall be subject to the limitations of
this Section 4.2, in addition to such other limitations as may be provided
elsewhere in this Plan.
(a) PRE-TAX CONTRIBUTIONS. The amount of an Active Participant's
Pre-Tax Contributions for each payroll period for which his election to
make Pre-Tax Contributions is in effect shall be in whole percentage
amounts of from one percent (1%) of the Active Participant's Compensation
(as defined in Section 2.10) for each such payroll period, up to fifteen
percent (15%). Except as otherwise determined by the Administration
Committee, such percentage limitations shall not take into account Pre-Tax
Contributions to the extent that such contributions include unused
"possibilities dollars," as such terms are used in the Employer's flexible
benefits program.
(b) AFTER-TAX CONTRIBUTIONS. A Participant shall not be permitted to
make "after-tax" contributions.
(c) In general, no Active Participant shall be permitted to make
Pre-Tax Contributions in excess of the dollar limitation on the exclusion
of elective deferrals from the Participant's gross income under
Section 402(g) of the Code, as in effect with respect to the taxable year
of the Participant (hereinafter referred to as the "Deferral Limitation").
In the event an Active Participant's Pre-Tax Contributions under this Plan,
or the total amount of his elective deferrals, within the meaning of Code
Section 402(g)(3), under all plans of the Employer and any Affiliated
Company, exceed
20
<PAGE>
the Deferral Limitation for any reason, such excess elective deferrals, and
any income allocable thereto, shall be returned to the Participant in
accordance with Section 4.6.
(d) The Administration Committee may prescribe such rules as it deems
necessary or appropriate regarding an Active Participant's contributions
under this Plan, including rules regarding the maximum amount that any
Active Participant may contribute and the timing of a contribution
election. These rules shall apply to all Eligible Employees, except to the
extent that the Administration Committee prescribes special or more
stringent rules applicable only to Highly Compensated Employees.
4.3 MODIFICATION, REVOCATION OR TERMINATION OF CONTRIBUTION ELECTION.
(a) Subject to the limitations of Section 4.2, an Active Participant
may modify his contribution election effective as of any Entry Date by
filing his notice of such modification prior to such Entry Date in
accordance with rules prescribed or approved by the Administration
Committee.
(b) An Active Participant may revoke his contribution election
effective as of the first day of any payroll period by filing his notice of
such revocation before the start of such pay period in accordance with
rules prescribed or approved by the Administration Committee. The minimum
period of revocation shall be the remainder of the of the quarter in which
such revocation becomes effective. A revocation shall remain in effect
throughout that Plan Year and all subsequent Plan Years until the
Participant makes a new contribution election pursuant to Section 3.2.
(c) An Active Participant's contribution election shall automatically
terminate if he ceases to be an Eligible Employee. If he again becomes an
Active Participant and desires to again contribute a portion of his
Compensation (as defined in Section 2.10), it shall be his responsibility
to make a new contribution election pursuant to Section 3.2 in order to
resume contributions; provided, however, if such individual resumes Active
Participant status within an automatic restatement period as may be
provided under the Company's re-employment policy, the individual's
contribution election in effect before the cessation of Eligible Employee
status shall be reinstated automatically and it shall be the responsibility
of such individual to modify or revoke such prior contribution election if
he does not wish to have such election remain in effect.
(d) The Administration Committee may prescribe such rules as it deems
necessary or appropriate regarding the modification, revocation or
termination of an Active Participant's contribution election.
4.4 LIMITATION ON PRE-TAX CONTRIBUTIONS BY HIGHLY COMPENSATED EMPLOYEES.
With respect to each Plan Year, Participant Pre-Tax Contributions under the
Plan for the Plan Year shall not exceed the limitations on contributions on
behalf of Highly Compensated Employees under Section 401(k) of the Code, as
provided in this Section. In the event that Pre-Tax Contributions under this
Plan on behalf of Highly Compensated Employees for any Plan Year exceed the
limitations of this Section for any reason, such excess contributions and any
income allocable thereto shall be returned to the Participant as provided in
Section 4.5.
(a) The Pre-Tax Contributions by a Participant for a Plan Year shall
satisfy the Average Deferral Percentage test set forth in (i)(A) below, or
the alternative
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<PAGE>
Average Deferral Percentage test set forth in (i)(B) below, and to the
extent required by regulations under Code Section 401(m), also shall
satisfy the test identified in (ii) below:
(i) (A) The "Actual Deferral Percentage" for the current Plan
Year for Eligible Employees who are Highly Compensated Employees shall
not be more than the "Actual Deferral Percentage" for the preceding
Plan Year of all other Eligible Employees for such preceding year,
multiplied by 1.25, or
(i) (B) The excess of the "Actual Deferral Percentage" for the
current Plan Year for Eligible Employees who are Highly Compensated
Employees over the "Actual Deferral Percentage" for the preceding Plan
Year of all other Eligible Employees for such preceding year shall not
be more than two percentage points, and the "Actual Deferral
Percentage" for the current Plan Year for Highly Compensated Employees
shall not be more than the "Actual Deferral Percentage" for the
preceding Plan Year of all other Eligible Employees for such preceding
year, multiplied by 2.00.
(i) (C) The Employer may elect to apply Paragraphs (A) and (B)
above using the Actual Deferral Percentage for the current Plan Year
rather than for the preceding Plan Year for Eligible Employees who are
not Highly Compensated Employees, but if such election is made it may
not be changed except as provided by the Secretary of the Treasury.
(ii) Average Contribution Percentage for Highly Compensated
Employees eligible to participate in this Plan and a plan of the
Company or an Affiliated Company that is subject to the limitations of
Section 401(m) of the Code including, if applicable, this Plan, shall
be reduced in accordance with Section 5.10, to the extent necessary to
satisfy the requirements of Treasury Regulations Section 1.401(m)-2.
(b) For the purposes of the limitations of this Section, the following
definitions shall apply:
(i) "Actual Deferral Percentage" means, with respect to Eligible
Employees who are Highly Compensated Employees and all other Eligible
Employees for a Plan Year, the average of the Deferral Percentages,
calculated separately for each Eligible Employee in such group.
(ii) "Deferral Percentage" means for any Eligible Employee the
ratio of the amount of Pre-Tax Contributions under the Plan allocated
to the Eligible Employee for such Plan Year to such Employee's
"Compensation" (as defined below in this Subsection (b)) for such Plan
Year. An Eligible Employee's Pre-Tax Contributions may be taken into
account for purposes of determining his Deferral Percentage for a
particular Plan Year only if such Pre-Tax Contributions are allocated
to the Eligible Employee as of a date within that Plan Year. For
purposes of this rule, an Eligible Employee's Pre-Tax Contributions
shall be considered allocated as of a date within a Plan Year only if
(A) the allocation is not contingent upon the Eligible Employee's
participation in the Plan or performance of services on any date
subsequent to that date, and (B) the Pre-Tax Contribution is actually
paid to the Trust no later than the end of the twelve month period
immediately following the Plan Year to which the contribution relates.
In accordance with regulations issued by the Secretary of the
Treasury, Employer contributions on behalf of an Active Participant
that satisfy the requirements of
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<PAGE>
401(k)(3)(D) shall also be taken into account for the purpose of
determining the Deferral Percentage of such Active Participant.
(iii) "Eligible Employee" includes any Employee directly or
indirectly eligible to make Pre-Tax Contributions at any time during
the Plan Year, including any otherwise Eligible Employee during a
period of suspension due to a hardship withdrawal, if applicable, as
prescribed by the Secretary of the Treasury in regulations under Code
Section 401(k).
(iv) "Compensation" means Compensation determined by the
Administration Committee in accordance with the requirements of
Section 414(s) of the Code, including, to the extent elected by the
Administration Committee, amounts deducted from an Employee's wages or
salary that are excludable from income under Sections 125 and 401(k)
of the Code.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 401(a)(4) or 410(b) of the Code only
if aggregated with one or more other plans which include arrangements under
Code Section 401(k), then this Section shall be applied by determining the
Actual Deferral Percentages of Eligible Employees as if all such plans were
a single plan, in accordance with regulations prescribed by the Secretary
of the Treasury under Section 401(k) of the Code.
(d) For the purposes of this Section, the Deferral Percentage for any
Highly Compensated Employee who is a participant under two or more Code
Section 401(k) arrangements of the Company or an Affiliated Company shall
be determined by taking into account the Highly Compensated Employee's
Compensation (as defined in Subsection (b) above) under each such
arrangement and contributions under each such arrangement which qualify for
treatment under Code Section 401(k), in accordance with regulations
prescribed by the Secretary of the Treasury under Section 401(k) of the
Code.
(e) For purposes of this Section, the amount of Pre-Tax Contributions
by a Participant who is not a Highly Compensated Employee for a Plan Year
shall be reduced by any Pre-Tax Contributions in excess of the Deferral
Limitation which have been distributed to the Participant under
Section 4.6, in accordance with regulations prescribed by the Secretary of
the Treasury under Section 401(k) of the Code.
(f) The determination of the Deferral Percentage of any Participant
shall be made after applying the provisions of Section 16.5 relating to
certain limits on Annual Additions under Section 415 of the Code.
(g) The determination and treatment of Pre-Tax Contributions and the
Actual Deferral Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(h) The Administration Committee shall keep or cause to have kept such
records as are necessary to demonstrate that the Plan satisfies the
requirements of Code Section 401(k) and the regulations thereunder, in
accordance with regulations prescribed by the Secretary of the Treasury.
4.5 PROVISIONS FOR DISPOSITION OF EXCESS PRE-TAX CONTRIBUTIONS BY HIGHLY
COMPENSATED EMPLOYEES.
(a) The Administration Committee shall determine, as soon as is
reasonably possible following the close of each Plan Year, if the Actual
Deferral
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<PAGE>
Percentage test is satisfied for the Plan Year. If, pursuant to the
determination by the Administration Committee, any or all of a Highly
Compensated Employee's Pre-Tax Contributions must be reduced to enable the
Plan to satisfy the Actual Deferral Percentage test, then any excess
Pre-Tax Contributions by a Highly Compensated Employee, and any income
allocable thereto shall, if administratively feasible, be distributed to
the Participant not later than two and one-half (2-1/2) months following
the close of the Plan Year in which such excess Pre-Tax Contributions were
made, but in any event no later than the close of the first Plan Year
following the Plan Year in which such excess Pre-Tax Contributions were
made (after withholding any applicable income taxes due on such amounts).
Recharacterization of excess Pre-Tax Contributions as Participant after-tax
contributions shall not be permitted; provided, however, any portion of a
Participant's excess Pre-Tax Contributions which have been pledged as
security for a loan from the Plan shall be applied to reduce the
outstanding amount of the loan not later than two and one-half (2-1/2)
months following the close of the Plan Year in which such excess Pre-Tax
Contributions were made. Any excess Pre-Tax Contributions applied to reduce
a Participant's loan shall be treated as a taxable distribution of such
excess in accordance with this Section 4.5.
(b) The Administration Committee shall determine the amount of any
excess Pre-Tax Contributions by Highly Compensated Employees for a Plan
Year by application of the leveling method set forth in Code Section
401(k)(8)(C) under which the Pre-Tax Contributions of the Highly
Compensated Employee who has the highest dollar amount of such Pre-Tax
Contributions for such Plan Year is reduced by the lesser of the amount
required (i) to enable the Plan to satisfy the Actual Deferral Percentage
test, or (ii) to cause Pre-Tax Contributions by such Highly Compensated
Employee to equal the Pre-Tax Contributions of the Highly Compensated
Employee with the next highest dollar amount of Pre-Tax Contributions. This
process shall be repeated until the Plan satisfies the Actual Deferral
Percentage test.
(c) For purposes of satisfying the Actual Deferral Percentage test,
income allocable to a Participant's excess Pre-Tax Contributions, as
determined under (b) above, shall be determined in accordance with any
reasonable method used by the Plan for allocating income to Participant
Accounts, provided such method does not discriminate in favor of Highly
Compensated Employees and is consistently applied to all Participants for
all corrective distributions under the Plan for a Plan Year. Under no
circumstances shall the income pertaining to any Participant's excess
Pre-Tax Contributions distributed to a Participant as provided above, be
required to include income attributable to periods after the end of the
Plan Year in which or for which the excess Pre-Tax Contributions were made.
(d) The Administration Committee shall not be liable to any
Participant (or his Beneficiary, if applicable) for any losses caused by
misestimating the amount of any Pre-Tax Contributions in excess of the
limitations of this Article IV and any income allocable to such excess.
(e) To the extent required by regulations under Section 401(k) or 415
of the Code, any excess Pre-Tax Contributions with respect to a Highly
Compensated Employee shall be treated as Annual Additions under Article XVI
for the Plan Year for which the excess Pre-Tax Contributions were made,
notwithstanding the distribution of such excess in accordance with the
provisions of this Section.
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<PAGE>
4.6 PROVISIONS FOR RETURN OF ANNUAL PRE-TAX CONTRIBUTIONS IN EXCESS OF THE
DEFERRAL LIMITATION.
In the event Participant's elective deferrals, within the meaning of Code
Section 402(g)(3), for any calendar year exceed the Deferral Limitation, such
excess elective deferrals shall be returned to the Participant as provided in
this Section 4.6.
(a) In the event that due to error or otherwise, a Participant's
Pre-Tax Contributions under this Plan for any calendar year exceed the
Deferral Limitation for such calendar year (without regard to elective
deferrals under any other plan), the Administration Committee shall notify
the Plan of the amount of the excess Pre-Tax Contributions, and such excess
Pre-Tax Contributions, together with income allocable thereto, shall be
distributed to the Participant on or before the first April 15 following
the close of the calendar year in which such excess Pre-Tax Contributions
were made.
(b) If in any calendar year, a Participant makes Pre-Tax Contributions
under this Plan and additional elective deferrals, within the meaning of
Code Section 402(g)(3), under any other plan maintained by the Employer or
an Affiliated Company, and the total amount of the Participant's elective
deferrals under this Plan and all such other plans exceed the Deferral
Limitation, the Employer and each Affiliated Company maintaining a plan
under which the Participant made any elective deferrals shall notify the
affected plans, and corrective distributions of the excess elective
deferrals, and any income allocable thereto, shall be made from one or more
such plans, to the extent determined by the Employer and each Affiliated
Company. All corrective distributions of excess elective deferrals shall be
made on or before the first April 15 following the close of the calendar
year in which the excess elective deferrals were made.
(c) Income on Pre-Tax Contributions in excess of the Deferral
Limitation shall be calculated in accordance with 4.5(d), except that if
the Plan Year is not the calendar year, calculations of allocable income
shall be made with reference to income allocable for the calendar year
rather than the Plan Year, and based upon the Participant's account balance
as of the last day of the calendar year.
(d) The Administration Committee shall not be liable to any
Participant (or his Beneficiary, if applicable) for any losses caused by
misestimating the amount of any Pre-Tax Contributions in excess of the
limitations of this Article IV and any income allocable to such excess.
(e) In the event a Participant's Pre-Tax Contributions for any
calendar year exceed the Deferral Limitation solely by reason of the
Participant's elective deferrals under a plan maintained by an unrelated
employer, such excess Pre-Tax Contributions shall not be returned to the
Participant, but shall be held in the Participant's Pre-Tax Contributions
Account until distribution can be made in accordance with the provisions of
this Plan.
(f) To the extent required by regulations under Section 402(g) or 415
of the Code, Pre-Tax Contributions with respect to a Participant in excess
of the Deferral Limitation shall be treated as Annual Additions under
Article XVI for the Plan Year for which the excess Contributions were made,
unless such excess is distributed to the Participant in accordance with the
provisions of this Section.
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<PAGE>
4.7 CHARACTER OF AMOUNTS CONTRIBUTED AS PRE-TAX CONTRIBUTIONS.
Unless otherwise specifically provided to the contrary elsewhere in this
Plan, Pre-Tax Contributions pursuant to a Participant's contribution election
described above in Section 4.1 (and which qualify for treatment under Code
Section 401(k) and are contributed to the Trust Fund pursuant to Article VI)
shall be treated, for federal and state income tax purposes, as Employer
contributions.
4.8 DIRECT ROLLOVER CONTRIBUTIONS.
(a) To the extent permissible under Code Section 402(c), and in
accordance with rules established by the Administration Committee, an
Eligible Employee may elect to have an eligible rollover distribution from
a plan that satisfies the requirements of Code Section 401(a) transferred
directly from the trustee of that plan to the trustee of this Plan in the
form of a direct rollover contribution.
(b) A direct rollover contribution by an Eligible Employee shall be
credited to a Rollover Account established for such Eligible Employee in
accordance with rules which the Administration Committee shall prescribe
from time to time. Any direct rollover contributions in accordance with
this Section shall be in cash in an amount not less than one thousand
dollars ($1,000).
(c) An Eligible Employee who makes a direct rollover contribution to
the Plan shall be treated as a Participant for purposes of the Plan
provisions relating to loans from Accounts and provisions relating to the
maintenance, valuation, investment and distribution of Accounts; provided,
however, such Employee shall not be an Active Participant and eligible to
contribute to the Plan prior to satisfaction of the requirements of Article
III and shall not receive an allocation of Company Matching Contributions
under the Plan with respect to any direct rollover contribution.
4.9 PLAN-TO-PLAN TRANSFERS.
Except for a direct rollover contribution by an Eligible Employee in
accordance with Section 4.8, no amounts held under another plan that is
qualified under Code Section 401(a) may be transferred directly from the trustee
of that plan to the Trustee of this Plan, except in the case of a merger with or
transfer of assets from another plan qualified under Code Section 401(a) which
has been approved by the Administration Committee. Any merger or transfer shall
satisfy the requirements of Code Sections 401(k), 411(d)(6) and 414(l). The
Administration Committee shall determine, in its sole discretion, whether a
plan-to-Plan transfer pursuant to a merger or a transfer of assets would
adversely affect the qualified status of the Plan.
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<PAGE>
ARTICLE V
EMPLOYER CONTRIBUTIONS
5.1 DETERMINATION OF EMPLOYER CONTRIBUTIONS.
Subject to the requirements and restrictions of this Article V and
Articles IV and XVI, and subject also to the amendment or termination of the
Plan or the suspension or discontinuance of contributions as provided herein,
Employer contributions to the Plan shall be determined in accordance with this
Article V.
5.2 PRE-TAX CONTRIBUTIONS.
The Employer shall make a Pre-Tax Contribution on behalf of each Active
Participant who is an Eligible Employee of such Employer in an amount equal to
the amount of the Pre-Tax Contribution elected by the Active Participant in
accordance with Article IV, provided such Pre-Tax Contribution qualifies for tax
treatment under Code Section 401(k). A Pre-Tax Contribution on behalf of an
Active Participant for a payroll period shall be paid to the Trustee and
allocated to the Active Participant's Pre-Tax Contribution Account as soon as
administratively practicable following the last day of such payroll period, but
in no event later than the fifteenth business day of the month following the
month in which the contributions were withheld or received by the Employer,
unless a greater period is permitted by law.
5.3 MATCHING CONTRIBUTION.
(a) As of the last day of each Plan quarter, the Employer shall make a
Matching Contribution on behalf of each "Eligible Participant," as defined
in Subsection (c) below, who is an Eligible Employee of such Employer. A
Matching Contribution on behalf of an Eligible Participant under this
Section 5.3 shall be in an amount equal to twenty-five percent (25%) of the
Eligible Participant's Pre-Tax Contributions for the Plan quarter which do
not exceed four percent (4%) of the Eligible Participant's Compensation (as
defined in Section 2.10) for that quarter.
(b) Any Matching Contributions for a Plan Quarter period shall be paid
to the Trustee and allocated to the Eligible Participant's Matching
Contributions Account as soon as administratively practicable following the
last day of the Plan Quarter.
(c) For purposes of this Section 5.3, "Eligible Participant" means for
the period ending on the last day of a Plan Quarter, each Eligible Employee
of the Employer who is an Active Participant on the last day of such Plan
Quarter.
5.4 EMPLOYER ANNUAL CONTRIBUTIONS.
(a) As of the last day of a Plan Year, each Employer shall make an
Employer Annual Contribution for such Plan Year on behalf of each "Eligible
Participant," as defined in Subsection (d) below, which shall be a
percentage of the Eligible Participant's Compensation (as defined in
Section 2.10) based on such Eligible
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Participants attained age of the first day of such Plan year in accordance
with the schedule below:
PERCENT OF COMPENSATION (AS DEFINED IN SECTION 2.10) CONTRIBUTED
EACH YEAR DETERMINED BY AGE AT BEGINNING OF PLAN YEAR
-----------------------------------------------------
PERCENT OF COMPENSATION (AS
ATTAINED AGE DEFINED IN SECTION 2.10)
21 through 33 2.00
34 2.10
35 2.26
36 2.45
37 2.64
38 2.85
39 3.08
40 3.33
41 3.59
42 3.88
43 4.19
44 4.53
45 4.89
46 5.28
47 5.70
48 6.16
49 6.65
50 7.18
51 7.76
52 8.38
53 9.05
54 9.77
55 10.56
56 11.40
57 12.31
58 13.30
59 14.36
60 or more 15.00
(b) Any Employer Annual Contributions in accordance with this Section
5.4 shall be allocated to an Eligible Participant's Employer Annual
Contributions Account.
(c) For purposes of this Section 5.4, "Eligible Participant" means for
the period ending on the last day of a Plan Year, each Eligible Employee of
the Employer who is an Active Participant as of the last day of the Plan
Year and who is credited with at least one thousand (1,000) Hours of
Service during such Plan Year.
5.5 QUALIFIED NONELECTIVE EMPLOYER ANNUAL CONTRIBUTIONS.
(a) (i) As of the last day of a Plan Year, the Company in its
sole discretion may determine that each Employer shall make an
Employer Annual Contribution for such Plan Year in an amount to be
determined and allocated in
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accordance with this Section 5.5(a). Any Employer Annual Contributions
under this Section 5.5(a) shall be designated as "qualified
non-elective contributions," within the meaning of regulations under
Section 401(k) of the Code. Unless the Company determines that
Employer Annual Contributions shall be made for a Plan Year in
accordance with this Section 5.5(a) or Subsection 5.5(b) below, no
Employer Annual Contributions shall be made for such Plan Year under
this Section 5.5.
(ii) Any Employer Annual Contributions for a Plan Year in
accordance with this Section 5.5(a) shall be allocated as of the last
day of such Plan Year to Employer Annual Contributions Accounts of
Eligible Participants, in accordance with the following rules:
(A) Employer Annual Contributions shall first be allocated
to the Employer Annual Contributions Account of the Eligible
Participant with the lowest Compensation (as defined in Section
2.10) for the Plan Year in an amount sufficient to cause the
Deferral Percentage (as defined in Section 4.4) of the
Participant to equal the maximum percentage of Compensation (as
defined in Section 2.10) an Active Participant is permitted to
contribute to the Plan for the Plan Year as a Pre-Tax
Contribution, as determined under rules established by the
Administration Committee in accordance with Section 4.2.
(B) Such Employer Annual Contributions shall then be
allocated in the amount described above to the Eligible
Participant with the next lowest Compensation (as defined in
Section 2.10), and such allocations shall continue in the same
manner until a sufficient amount has been allocated to the
Pre-Tax Contributions Accounts of Eligible Participants to
satisfy the Average Contribution Percentage test with the
smallest aggregate Employer Annual Contribution.
(iii) If, by the deadline for making "qualified nonelective
contributions" to the Plan under Treasury Regulations Section
1.401(k)-1(b)(4)(i)(A)(2), the Company does not have sufficient data
or is unable to determine exactly the smallest Employer Annual
Contribution amount necessary to satisfy the Actual Deferral
Percentage test in accordance with the provisions of Subparagraph (B)
above, the Company may estimate such amount for each Employer and add
a cushion sufficient to ensure that the test will be met. Under these
circumstances, the Employer Annual Contributions designated as"
qualified nonelective contributions" shall be allocated as provided in
Subparagraphs (A) and (B) above, except that allocations under
Subparagraph (B) shall continue until the aggregate estimated amount
of such Employer Annual Contributions is completely allocated.
(b) (i) As of the last day of a Plan Year, the Company in its
sole discretion may determine that each Employer shall make an
Employer Annual Contribution for such Plan Year in an amount to be
determined and allocated in accordance with this Section 5.5(b). Any
Employer Annual Contributions under this Section 5.5(b) shall be
designated as "qualified non-elective contributions," within the
meaning of regulations under Section 401(k) of the Code. Unless the
Company determines that Employer Annual Contributions shall be made
for a
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Plan Year in accordance with this Section 5.5(b) or Subsection 5.5(a)
above, no Employer Annual Contributions shall be made for such Plan
Year under this Section 5.5.
(ii) Any Employer Annual Contributions for a Plan Year in
accordance with this Section 5.5(a) shall be allocated as of the last
day of such Plan Year to Employer Annual Contributions Accounts of
each Eligible Participant, in the ratio that such Eligible
Participant's Matching Contribution percentage bears to the Matching
Contribution percentage of all Eligible Participants.
(iii) If, by the deadline for making "qualified nonelective
contributions" to the Plan under Treasury Regulations
1.401(k)-1(b)(4)(i)(A)(2), the Company does not have sufficient data
or is unable to determine the proper amount to be allocated to each
Eligible Participant, the Company may estimate such amount and add a
cushion sufficient to ensure that the test will be met.
(d) For purposes of this Section 5.5, "Eligible Participant" means any
Participant who has Compensation (as defined in Section 2.10) for the Plan
Year, who is not a Highly Compensated Employee, and who is eligible to
receive an allocation of the Employer Annual Contribution pursuant to the
provisions of Subsection (a) or (b) above, whichever is applicable.
5.6 TIMING OF EMPLOYER CONTRIBUTIONS.
In no event shall any Employer contributions under this Article V for any
Plan Year be made later than the time prescribed by law for the deduction of
such contributions for purposes of the Employer's Federal income tax, as
determined by the applicable provisions of the Code.
5.7 APPLICATION OF FORFEITURES.
The non-vested portion of a Participant's Accounts that is forfeited under
any provision in this Plan shall be credited to a Forfeiture Account, which
shall be invested within a reasonable period of time in an interest bearing
account. Amounts credited to a Forfeiture Account shall first be applied to
restore amounts previously forfeited, as provided in Section 10.7(c), shall next
be applied to reduce administrative expenses, to the extent determined by the
Company, and shall then be applied to reduce future Employer contributions by
the Employer by whom the Participant was employed as of his Severance Date, and
shall not otherwise be repaid to or recovered by an Employer.
5.8 REQUIREMENT FOR PROFITS.
Any contributions by an Employer under this Plan may be made without regard
to current or accumulated profits for the Employer's tax year; provided,
however, the Plan is designed to qualify as a profit sharing plan for purposes
of Section 401(a), et seq. of the Code.
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5.9 SPECIAL LIMITATIONS ON MATCHING CONTRIBUTIONS.
With respect to each Plan Year, any employer matching contributions, as
defined in Section 401(m) of the Code, under the Plan for the Plan Year shall
not exceed the limitations on such contributions by or on behalf of Highly
Compensated Employees under Section 401(m) of the Code, as provided in this
Section. In the event that Matching Contributions under this Plan by or on
behalf of Highly Compensated Employees for any Plan Year exceed the limitations
of this Section for any reason, such excess Matching Contributions and any
income allocable thereto shall be disposed of in accordance with Section 5.10.
(a) Matching Contributions by and on behalf of Participants for a Plan
Year shall satisfy the Average Contribution Percentage test set forth in
(i)(A) below or the alternative Average Contribution Percentage test set
forth in (i)(B) below, or to the extent required by regulations under Code
Section 401(m), shall satisfy the test identified in (ii) below.
(i) (A) The "Average Contribution Percentage" for the current
Plan Year for Eligible Employees who are Highly Compensated Employees
shall not be more than the "Average Contribution Percentage" for the
preceding Plan Year of all other Eligible Employees for such preceding
year, multiplied by 1.25, or
(i) (B) The excess of the "Average Contribution Percentage" for
the current Plan Year for Eligible Employees who are Highly
Compensated Employees over the "Average Contribution Percentage" for
the preceding Plan Year of all other Eligible Employees for such
preceding year shall not be more than two percentage points, and the
"Average Contribution Percentage" for the current Plan Year for Highly
Compensated Employees shall not be more than the "Average Contribution
Percentage" for the preceding Plan Year of all other Eligible
Employees for such preceding year, multiplied by 2.00.
(i) (C) The Employer may elect to apply Paragraphs (A) and (B)
above using the Average Contribution Percentage for the current Plan
Year rather than for the preceding Plan Year for those Eligible
Employees who are not Highly Compensated Employees, but if such
election is made it may not be changed except as provided by the
Secretary of the Treasury.
(ii) The Average Contribution Percentage for Highly Compensated
Employees eligible to participate in this Plan and a plan of the
Employer or an Affiliated Company that satisfies the requirements of
Section 401(k) of the Code, including, if applicable, this Plan, shall
be reduced to the extent necessary to satisfy the requirements of
Treasury Regulations Section 1.401(m)-2 or similar such rule relating
to the multiple use of the alternative test described in (i)(B) above.
(b) For purposes of this Article V, the following definitions shall
apply:
(i) "Average Contribution Percentage" means, with respect to a
group of Eligible Employees for a Plan Year, the average of the
Contribution Percentage, calculated separately for each Eligible
Employee in such group.
(ii) The "Contribution Percentage" means for any Eligible
Employee the percentage determined by dividing the sum of Matching
Contributions under the Plan on behalf of each Eligible Employee for
such Plan
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Year, by such Eligible Employee's Compensation (as defined in
Subsection (b) below) for such Plan Year in accordance with
regulations prescribed by the Secretary of the Treasury under Code
Section 401(m). A matching contribution shall be taken into account
for a Plan Year only if it is (A) made on account of a Participant's
Pre-Tax Contributions for the Plan Year; (B) allocated to the
Participant's matching contributions account during that Plan Year;
and (C) actually paid to the Trust no later than the end of the twelve
(12) month period immediately following the Plan Year to which the
contribution relates. To the extent determined by the Administration
Committee and in accordance with regulations issued by the Secretary
of the Treasury under Code Section 401(m)(3), Pre-Tax Contributions on
behalf of an Eligible Employee and any qualified nonelective
contributions, within the meaning of Code Section 401(m)(4)(C), on
behalf of an Eligible Employee may also be taken into account for
purposes of calculating the Contribution Percentage of such Eligible
Employee, but shall not otherwise be taken into account. However, if
matching contributions are taken into account for purposes of
determining the Actual Deferral Percentage of an Eligible Employee for
a Plan Year under Section 4.4 then such matching contributions shall
not be taken into account under this Section.
(iii) "Eligible Employee" means any Eligible Employee directly or
indirectly eligible to contribute to the Plan and receive a matching
contribution, including any otherwise Eligible Employee during a
period of suspension due to a Hardship withdrawal, if applicable, in
accordance with regulations prescribed by the Secretary of the
Treasury under Code Section 401(k).
(iv) "Compensation" means compensation determined by the
Administration Committee in accordance with Section 414(s) of the
Code, including to the extent determined by the Administration
Committee, amounts deducted from an Employee's wages or salary that
are not currently includible in the Employee's gross income by reason
of the application of Code Section 401(k) or 125.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of Section 410(b) of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the Contribution
Percentages of Eligible Employees as if all such plans were a single plan,
in accordance with regulations prescribed by the Secretary of the Treasury
under Section 401(m) of the Code.
(d) For the purposes of this Section, the Contribution Percentage for
any Eligible Employee who is a Highly Compensated Employee under two or
more Code Section 401(a) plans of an Employer or an Affiliated Company to
the extent required by Code Section 401(m), shall be determined in a manner
taking into account the participant contributions and matching
contributions for such Eligible Employee under each of such plans.
(e) The determination of the Contribution Percentage of any
Participant shall be made after first applying the provisions of Section
16.5 relating to certain limits on Annual Additions under Section 415 of
the Code, then applying the provisions of Section 4.6 relating to the
return of Pre-Tax Contributions in excess of the
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Deferral Limitation, then applying the provisions of Section 4.5 relating
to certain limits under Section 401(k) of the Code imposed on Pre-Tax
Contributions of Highly Compensated Employees and last, applying the
provisions of Section 5.11 relating to the forfeiture of matching
contributions attributable to excess deferrals or contributions.
(f) The determination and treatment of the Contribution Percentage of
any Participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
(g) The Administration Committee shall keep or cause to have kept such
records as are necessary to demonstrate that the Plan satisfies the
requirements of Code Section 401(m) and the regulations thereunder, in
accordance with regulations prescribed by the Secretary of the Treasury.
5.10 PROVISIONS FOR REDUCTION OF EXCESS MATCHING CONTRIBUTIONS BY OR ON BEHALF
OF HIGHLY COMPENSATED EMPLOYEES.
(a) The Administration Committee shall determine, as soon as is
reasonably possible following the close of the Plan Year, if Matching
Contributions by or on behalf of Highly Compensated Employees satisfy the
Average Contribution Percentage test for such Plan Year. If, pursuant to
the determination by the Administration Committee, Matching Contributions
by or on behalf of a Highly Compensated Employee must be reduced to enable
the Plan to satisfy the Average Contribution Percentage test, then the
Administration Committee shall cause matching contributions on behalf of
the Highly Compensated Employee, and any income allocable thereto, to be
forfeited, to the extent forfeitable under the Plan, or to be distributed
to the Highly Compensated Employee, to the extent non-forfeitable under the
Plan (after withholding any applicable income taxes on such amounts),
within two and one-half (2-1/2) months following the close of the Plan Year
for which the excess Contributions were made, but in any event no later
than the end of the first Plan Year following the Plan Year for which the
excess Contributions were made, notwithstanding any other provision in this
Plan.
Any amounts of excess matching contributions forfeited by Highly
Compensated Employees under this Section, including any income allocable
thereto, shall be credited to the Forfeiture Account and applied in
accordance with Section 5.7.
(b) The Administration Committee shall determine the amount of any
excess Matching Contributions by Highly Compensated Employees for a Plan
Year by application of the leveling method set forth in Code Section
401(k)(8)(C) under which the Matching Contributions of the Highly
Compensated Employee who has the highest dollar amount of such Matching
Contributions for such Plan Year is reduced by the lesser of the amount
required (i) to enable the Plan to satisfy the Average Contribution
Percentage test, or (ii) to cause Matching Contributions by such Highly
Compensated Employee to equal the Matching Contributions of the Highly
Compensated Employee with the next highest dollar amount of Matching
Contributions. This process shall be repeated until the Plan satisfies the
Average Contribution Percentage test.
(c) For purposes of satisfying the Average Contribution Percentage
test, income allocable to a Participant's excess Matching Contributions, as
determined under (b) above, shall be determined in accordance with any
reasonable method used by the Plan for allocating income to Participant
Accounts, provided such method does not
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discriminate in favor of Highly Compensated Employees and is consistently
applied to all Participants for all corrective distributions under the Plan
for a Plan Year. Under no circumstances shall the income pertaining to any
Participant's excess Matching Contributions distributed to a Participant as
provided above, be required to include income attributable to periods after
the end of the Plan Year in which or for which the excess Matching
Contributions were made.
(d) To the extent required by regulations under Section 401(m) or 415
of the Code, any Matching Contributions in excess of the limitations of
Section 5.9 forfeited by or distributed to a Highly Compensated Employee in
accordance with this Section shall be treated as an Annual Addition under
Article XVI for the Plan Year for which the excess contribution was made,
notwithstanding such forfeiture or distribution.
5.11 FORFEITURE OF MATCHING CONTRIBUTIONS ATTRIBUTABLE TO EXCESS DEFERRALS OR
CONTRIBUTIONS.
To the extent any Matching Contributions allocated to a Participant's
Matching Contributions Account are attributable to excess Pre-Tax Contributions
required to be distributed to the Participant in accordance with Section 4.5 or
4.6, such Matching Contributions, including any income allocable thereto, shall
be forfeited, notwithstanding that such Matching Contributions may otherwise be
non-forfeitable under the terms of the Plan.
5.12 IRREVOCABILITY.
An Employer shall have no right or title to, nor interest in, the
contributions made to the Trust Fund, and no part of the Trust Fund shall revert
to an Employer except that on and after the Effective Date funds may be returned
to the Employer as follows:
(a) In the case of an Employer contribution which is made by a mistake
of fact, that contribution (and any income allocable to such contribution)
may be returned to the Employer within one (1) year after it is made.
(b) All Employer contributions are hereby conditioned upon the Plan
initially satisfying all of the requirements of Code Section 401(a) and
Section 401(k). If the Plan does not initially qualify, at the Company's
written election the Plan or any portion thereof may be revoked and any or
all such contributions with respect to the portion revoked may be returned
to the Employer within one year after the date of IRS denial of the initial
qualification of the Plan. Upon such a revocation the affairs of the Plan
and Trust shall be terminated and wound up as the Company shall direct.
(c) All contributions to the Trust Fund are conditioned on
deductibility under Code Section 404. In the event a deduction is
disallowed for any such contribution such contribution shall be returned to
the Employer within one (1) year of the disallowance of the deduction.
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ARTICLE VI
FUNDING
6.1 IN GENERAL.
The Company has entered into a Trust Agreement with a Trustee creating the
Trust Fund. Such Trust Agreement provides for the administration of the Trust
Fund by the Trustee. The Trust Fund shall be invested in accordance with
provisions of Article VII and the Trust Agreement and shall be held in trust for
the exclusive benefit of Participants or their Beneficiaries. The Company by
action of the Board of Directors shall select such Trustee and may, without
further reference to or action by any Participant, from time to time
(a) enter into such further agreements with the Trustee or other
parties and make such amendments to the Trust Agreement or said further
agreements as it may deem necessary or desirable to carry out the Plan,
(b) designate a successor Trustee or successor Trustees, and
(c) take such other steps and execute such other instruments as it may
deem necessary or desirable to put the Plan into effect or to carry out the
provisions thereof.
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ARTICLE VII
INVESTMENTS
7.1 INVESTMENTS OF CONTRIBUTIONS.
Contributions by and on behalf of a Participant shall be invested in
accordance with the Participant's investment designations in one or more
Investment Funds established by the Administration Committee from time to time
for this purpose.
7.2 INVESTMENT IN SECURITIES ISSUED BY THE COMPANY OR AN AFFILIATED COMPANY.
The Administration Committee may establish an Investment Fund consisting
solely of Company Stock.
7.3 PARTICIPANT INVESTMENT DESIGNATIONS.
In accordance with rules of uniform application which the Administration
Committee may from time to time adopt and subject to any limitations set forth
below in this Article VII, each Participant shall have the right to designate
one or more of the Investment Funds for the investment of his Accounts under the
Plan, in accordance with the following rules:
(a) Investment of contributions by and on behalf of a Participant in
any Investment Fund and transfer of a Participant's Account balances
between Investment Funds shall be in increments of one percent (1%).
(b) A Participant may make a new investment designation which shall
apply to (i) the amount standing to his credit in his Accounts, effective
as of any Valuation Date; and (ii) future contributions to his Accounts, to
be effective as of any Valuation Date, by filing such new investment
designation in accordance with rules prescribed by the Administration
Committee.
(c) If a Participant ceases to be a Participant but becomes an Active
Participant within an automatic restatement period as may be provided under
the Company's re-employment policy, upon resumption of Active Participant
status, the individual's investment election in effect before the cessation
of Participant status shall be reinstated automatically and it shall be the
responsibility of such individual to modify or revoke such prior investment
election if he does not wish to have such election remain in effect.
(d) Investment Funds may, from time to time, hold cash or cash
equivalent investments (including interests in any fund maintained by the
Trustee as provided in the Trust Agreement) resulting from investment
transactions relating to the property of said Fund; provided, however, that
neither the Administration Committee, the Company, the Employer, the
Trustee or any other person shall have any duty or responsibility to cause
such Funds to be held in cash or cash equivalent investments for investment
purposes. In the case of any Investment Fund under the management and
control of an Investment Manager appointed by the Administration Committee
in accordance with Section 12.3, neither the Administration Committee, the
Company, the
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Employer, the Trustee, nor any other person shall have any responsibility
or liability for investment decisions made by such Investment Manager.
(e) In the event a Participant fails to make an investment designation
in accordance with this Article VII, contributions by and on behalf of the
Participant shall be invested in a money market fund.
(f) Notwithstanding the foregoing provisions of this Section 7.3, from
time to time the Administration Committee may designate that a portion of
the assets of the Trust Fund be held as a pooled investment, not subject to
Participant investment directions as provided in paragraphs (a) through (d)
of this Section 7.3. In such case the Administration Committee shall
establish rules for the valuation of such pooled investment fund and for
the allocation, not less frequently than annually, of earnings and gains or
losses thereon among Participants.
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ARTICLE VIII
SPECIAL PROVISIONS CONCERNING COMPANY SECURITIES
8.1 SECURITIES TRANSACTIONS.
The Trustee may acquire Company Stock in the open market or from the
Company or any other person, including a party in interest. No commission will
be paid in connection with the Trustee's acquisition of Company Stock from a
party in interest. Neither the Company, nor the Administration Committee, nor
any Trustee have any responsibility or duty to time any transaction involving
Company Stock in order to anticipate market conditions or changes in Company
Stock value. Neither the Company, nor the Administration Committee nor any
Trustee have any responsibility or duty to sell Company Stock held in the Trust
Fund in order to maximize return or minimize loss.
8.2 VALUATION OF COMPANY SECURITIES.
When it is necessary to value Company Stock held by the Plan, the value
will be the then current fair market value of the Company Stock, determined in
accordance with applicable legal requirements.
If the Company Stock cannot be valued on the basis of its then closing
price in the then recent public trading, fair market value will be determined by
the Company in good faith based on all relevant factors for determining the fair
market value of securities. Relevant factors include an independent appraisal by
a person who customarily makes such appraisals, if an appraisal of the fair
market value of the Company Stock as of the relevant date was obtained.
In the case of a transaction between the Plan and an Employer or another
party in interest, the fair market value of the Company Stock must be determined
as of the date of the transaction rather than as of some other Valuation Date
occurring before or after the transaction. In other cases, the fair market value
of the Company Stock will be determined as of the then most recent Valuation
Date.
8.3 ALLOCATION OF STOCK DIVIDENDS AND SPLITS.
Company Stock received by the Trust as a result of a Company Stock split or
Company Stock dividend on Company Stock held in Participants' Accounts will be
allocated as of the Valuation Date coincident with or following the date of such
split or dividend, to each Participant who has such an Account. The amount
allocated will bear substantially the same proportion to the total number of
shares received as the number of shares in the Participant's Account bears to
the total number of shares allocated to such Accounts of all Participants
immediately before the allocation. The shares will be allocated to the nearest
thousandth of a share.
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8.4 REINVESTMENT OF DIVIDENDS.
Upon direction of the Administration Committee, cash dividends may be
reinvested as soon as practicable by the Trustee in shares of Company Stock for
Participants' Accounts, to the extent not inconsistent with any other provisions
of this Plan. Cash dividends may be reinvested in Company Stock purchased as
provided in Section 8.1 or purchased from the Accounts of Participants who
receive cash distributions of a fractional share or a fractional interest
therein.
8.5 VOTING OF COMPANY STOCK.
Except as provided in (b) below, the Trustee shall have no discretion or
authority to vote Company Stock held in the Trust on any matter presented for a
vote by the stockholders of the Company except in accordance with timely
directions received by the Trustee from Participants. To the extent determined
by the Administration Committee, and with the approval of the Trustee,
Participants' voting instructions in accordance with this Section 8.5 may be
transmitted to the transfer agent, as agent for the Trustee.
(a) Each Participant shall be entitled to direct the Trustee to the
voting of all Company Stock allocated and credited to his Account.
(b) All Participants entitled to direct such voting shall be notified
by the Company, pursuant to its normal communications with shareholders, of
each occasion for the exercise of such voting rights within a reasonable
time before such rights are to be exercised. Such notification shall
include all information distributed to shareholders either by the Company
or any other party regarding the exercise of such rights. Such participants
shall be so entitled to direct the voting of fractional shares (or
fractional interests in shares), provided, however, that the Trustee may,
to the extent possible, vote the combined fractional shares (or fractional
interests in shares) so as to reflect the aggregate direction of all
Participants giving directions with respect to fractional shares (or
fractional interests in shares). If a Participant shall fail to direct the
Trustee as to the exercise of voting rights arising under any Company Stock
credited to his Accounts, such Company Stock shall be voted by the Trustee
in the same ratio that the stock is voted by the Participants who exercised
their voting rights, unless otherwise required by applicable law. The
Trustee shall maintain confidentiality with respect to the voting
directions of all Participants.
(c) Each Participant shall be a Named Fiduciary (as that term is
defined in ERISA Section 402(a)(2)) with respect to Company Stock for which
he has the right to direct the voting under the Plan but solely for the
purpose of exercising voting rights pursuant to this Section 8.5 or
certain offers pursuant to Section 8.6.
(d) In the event a court of competent jurisdiction shall issue an
opinion or order to the Plan, the Employer or the Trustee, which shall, in
the opinion of counsel to the Employer or the Trustee, invalidate under
ERISA, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the manner in which
Company Stock held in the trust shall be voted or cause any such provision
or provisions to conflict with ERISA, then, upon notice thereof to the
Employer or the Trustee, as the case may be, such invalid or conflicting
provisions of this Section shall be given no further force or effect. In
such circumstances the Trustee shall nevertheless have no discretion to
vote Company Stock held in the Trust unless required under such
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order or opinion but shall follow instructions received from Participants,
to the extent such instructions have not been invalidated. To the extent
required to exercise any residual fiduciary responsibility with respect to
voting, the Trustee shall take into account in exercising its fiduciary
judgment, unless it is clearly imprudent to do so, directions timely
received from Participants, as such directions are most indicative of what
is in the best interests of Participants.
8.6 CERTAIN OFFERS FOR COMPANY STOCK.
Notwithstanding any other provision of this Plan to the contrary, in the
event an offer shall be received by the Trustee (including, but not limited to,
a tender offer or exchange offer within the meaning of the Securities Exchange
Act of 1934, as from time to time amended and in effect), to acquire any or all
shares of Company Stock held by the Trust (an "Offer"), whether or not such
stock is allocated to Participants' Accounts, the discretion or authority to
sell, exchange or transfer any of such shares shall be determined in accordance
with this Section 8.6. To the extent determined by the Administration Committee,
and with the approval of the Trustee, Participants' directions to sell, exchange
or transfer shares of Company Stock in accordance with this Section 8.6 may be
transmitted to the transfer agent, as agent for the Trustee.
(a) The Trustee shall have no discretion or authority to sell,
exchange or transfer any of such stock pursuant to such Offer except to the
extent, and only to the extent that the Trustee is timely directed to do so
in writing (i) with respect to any Company Stock held by the Trustee
subject to such Offer and allocated to the Account of any Participant, by
each Participant to whose account any of such shares are allocated, and
(ii) with respect to any Company Stock held by the Trustee subject to such
Offer and held in the Forfeiture Account, by each Participant, with respect
to a number of shares (including fractional shares) of such Forfeiture
Account Company Stock equal to the total number of shares of such
Forfeiture Account Company Stock, multiplied by a fraction the numerator of
which is the value of the account balance of such Participant as of the
most recent allocation date preceding the date on which such Offer is made
and the denominator of which is the total value of the Account balances of
all Participants as of the most recent allocation date preceding the date
on which the Offer is made. Upon timely receipt of such instructions, the
Trustee shall, subject to the provisions of Paragraphs (c) and (k) of this
Section, sell, exchange or transfer pursuant to such Offer, only such
shares as to which such instructions were given. The Trustee shall use its
best efforts to communicate or cause to be communicated to each Participant
the consequences of any failure to provide timely instructions to the
Trustee. In the event, under the terms of an Offer or otherwise, any shares
of Company Stock tendered for sale, exchange or transfer pursuant to such
Offer may be withdrawn from such Offer, the Trustee shall follow such
instructions respecting the withdrawal of such securities from such Offer
in the same manner as shall be timely received by the Trustee from the
Participants entitled under this Paragraph to give instructions as to the
sale, exchange or transfer of securities pursuant to such Offer.
(b) In the event that an Offer for fewer than all of the shares of
Company Stock held by the Trustee in the Trust shall be received by the
Trustee, each Participant shall be entitled to direct the Trustee as to the
acceptance or rejection of such Offer (as provided by Paragraph (a) of this
Section) with respect to the largest portion of
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such Company stock as may be possible given the total number of amount of
shares of Company Stock the Plan may sell, exchange or transfer pursuant to
the Offer based upon the instructions received by the Trustee from all
other Participants who shall timely instruct the Trustee pursuant to this
Paragraph to sell, exchange or transfer such shares pursuant to such Offer,
each on a pro rata basis in accordance with the maximum number of shares
each such Participant would have been permitted to direct under
Paragraph (a) had the Offer been for all shares of Company Stock held in
the trust.
(c) In the event an Offer shall be received by the Trustee and
instructions shall be solicited from Participants in the Plan pursuant to
Paragraph (a) of this Section regarding such Offer, and prior to
termination of such Offer, another Offer is received by the Trustee for the
securities subject to the first Offer, the Trustee shall use its best
efforts under the circumstances to solicit instructions from the
Participants to the Trustee (i) with respect to securities tendered for
sale, exchange or transfer pursuant to the first Offer, whether to withdraw
such tender, if possible, and, if withdrawn, whether to tender any
securities so withdrawn for sale, exchange or transfer pursuant to the
second Offer, and (ii) with respect to securities not tendered for sale,
exchange or transfer pursuant to the first Offer, whether to tender or not
to tender such securities for sale, exchange or transfer pursuant to the
second Offer. The Trustee shall follow all such instructions received in a
timely manner from Participants in the same manner and in the same
proportion as provided in Paragraph (a) of this Section. With respect to
any further Offer for any Company Stock received by the Trustee and subject
to any earlier Offer (including successive Offers from one or more existing
offerors), the Trustee shall act in the same manner as described above.
(d) With respect to any Offer received by the Trustee, the Trustee
shall distribute, at the Company's expense, copies of all relevant
material, including, but not limited to, material filed with the Securities
and Exchange Commission with such Offer or regarding such Offer, and shall
seek confidential written instructions from each Participant who is
entitled to respond to such Offer pursuant to Paragraphs (a) or (b). The
identities of Participants, the amount of Company Stock allocated to their
Accounts, and the Account balance of each Participant shall be determined
from the list of Participants delivered to the Trustee by the Recordkeeper
(as defined below). The Recordkeeper shall take all reasonable steps
necessary to provide the Trustee with the latest possible information. For
purposes of this Section, the "Recordkeeper" shall mean such person or
entity appointed by the Committee to receive Participant designations and
instructions pursuant to the provisions of this Plan and to carry out such
other administrative duties and responsibilities under the Plan as shall be
agreed to by the Committee and the Recordkeeper.
(e) The Trustee shall distribute and/or make available to each
Participant who is entitled to respond to an Offer pursuant to Paragraph
(a) or (b) an instruction form to be used by each such Participant who
wishes to instruct the Trustee. The instruction form shall state that
(i) if the Participant fails to return an instruction form to the Trustee
by the indicated deadline, the Company Stock for which he is entitled to
give instructions will not be sold, exchanged or transferred pursuant to
such Offer, (ii) the Participant will be a Named Fiduciary (as described in
Paragraph (j) below) with respect to all shares for which he is entitled to
give instructions, and (iii) the Company
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acknowledges and agrees to honor the confidentiality of the Participant's
instructions to the Trustee.
(f) Each Participant may choose to instruct the Trustee in one of the
following two ways: (i) not to sell, exchange or transfer any shares of
Company Stock for which he is entitled to give instructions, or (ii) to
sell, exchange or transfer all Company Stock for which he is entitled to
give instructions. The Trustee shall follow up with additional mailings and
postings of bulletins, as reasonable under the time constraints then
prevailing, to obtain instructions from Participants not otherwise
responding to such requests for instructions. The Trustee shall then sell,
exchange or transfer shares according to instructions from Participants,
except that shares for which no instructions are received shall not be
sold, exchanged or transferred.
(g) The Company shall furnish former Participants who have received
distributions of Common Stock so recently as to not be shareholders of
record with the information given to Participants pursuant to
Paragraphs (d), (e) and (f) of this Section 8.6. The Trustee is hereby
authorized to sell, exchange or transfer pursuant to an Offer any Company
Stock it may receive from such former Participants in accordance with
appropriate instructions from them.
(h) Neither the Committee nor the Trustee shall express any opinion or
give any advice or recommendation to any Participant concerning the Offer,
nor shall they have any authority or responsibility to do so. The Trustee
has no duty to monitor or police the party making the Offer; provided,
however, that if the Trustee becomes aware of activity which on its face
reasonably appears to the Trustee to be materially false, misleading, or
coercive, the Trustee shall demand promptly that the offending party take
appropriate corrective action. If the offending party fails or refuses to
take appropriate corrective action, the Trustee shall communicate with
affected Participants in such manner as it deems advisable.
(i) The Trustee shall not reveal or release a Participant's
instructions to the Employer, its officers, directors, employees, or
representatives. If some, but not all, Company Stock held by the Trust is
sold, exchanged, or transferred pursuant to an Offer, the Employer, with
the Trustee's cooperation, shall take such action as is necessary to
maintain the confidentiality of Participant's records, including, without
limitation, establishment of a security system and procedures which
restrict access to Participant records and retention of an independent
agent to maintain such records. If an independent record keeping agent is
retained, such agent must agree, as a condition of its retention by the
Company, not to disclose the composition of any Participant Accounts to the
Employer, its officers, directors, employees, or representatives. The
Employer acknowledges and agrees to honor the confidentiality of
Participants' instructions to the Trustee.
(j) Each Participant shall be a Named Fiduciary (as that term is
defined in ERISA Section 402(a)(2)) with respect to Company Stock allocated
to his Account under the Plan and with respect to his pro rata portion of
the Forfeiture Account Company Stock for which he is entitled to issue
instructions in accordance with Paragraph (a) of this Section solely for
purposes of exercising the rights of a shareholder with respect to an Offer
pursuant to this Section 8.6 and voting rights pursuant to Section 8.5.
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(k) In the event a court of competent jurisdiction shall issue to the
Plan, the Employer or the Trustee an opinion or order, which shall, in the
opinion of counsel to the Employer or the Trustee, invalidate, in all
circumstances or in any particular circumstances, any provision or
provisions of this Section regarding the determination to be made as to
whether or not Company Stock held by the Trustee shall be sold, exchanged
or transferred pursuant to an Offer or cause any such provision or
provisions to conflict with securities laws, then, upon notice thereof to
the Employer or the Trustee, as the case may be, such invalid or
conflicting provisions of this Section shall be given no further force or
effect. In such circumstances the Trustee shall have no discretion as to
whether or not the Company stock held in the Trust shall be sold,
exchanged, or transferred unless required under such order or opinion, but
shall follow instructions received from Participants, to the extent such
instructions have not been invalidated by such order or opinion. To the
extent required to exercise any residual fiduciary responsibility with
respect to such sale, exchange or transfer, the Trustee shall take into
account in exercising its fiduciary judgment, unless it is clearly
imprudent to do so, directions timely received from Participants, as such
directions are most indicative of what action is in the best interests of
Participants.
8.7 CONFIDENTIALITY PROCEDURES.
In its sole discretion, the Administration Committee may establish
procedures intended to ensure the confidentiality of information relating to
Participant transactions involving Company Stock, including the exercise of
voting, tender and similar rights. In the event the Administration Committee
establishes such confidentiality procedures, the Administration Committee shall
also be responsible for ensuring the adequacy of the confidentiality procedures
and monitoring compliance with such procedures. The Administration Committee
may, in its sole discretion, appoint an independent fiduciary to carry out any
activities that it determines involve a potential for undue Company influence on
Participants with respect to the exercise of their rights as shareholders.
8.8 SECURITIES LAW LIMITATION.
Neither the Administration Committee nor the Trustee shall be required to
engage in any transaction, including, without limitation, directing the purchase
or sale of Company Stock, which either determines in its sole discretion might
tend to subject itself, its members, the Plan, the Company, or any Participant
or Beneficiary to a liability under federal or state securities laws.
8.9 CERTAIN SECURITIES LAWS RULES.
Any election or direction made under this Plan by an individual who is or
may become subject to liability under Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), may be conditioned upon such
restrictions as are necessary or appropriate to qualify for an applicable
exemption under Section 16(b) of the Exchange Act, or any rule
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promulgated thereunder. To the extent required by Section 401(a)(4) of the Code,
the rules under this Section 8.9 shall be administered in a non-discriminatory
manner.
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ARTICLE IX
VESTING
9.1 VESTED INTEREST IN PRE-TAX CONTRIBUTIONS ACCOUNT.
Each Participant shall at all times have one hundred percent (100%) Vested
Interest in the value of his Pre-Tax Contributions Account and Rollover Account
under the Plan.
9.2 DETERMINATION OF VESTED INTEREST IN MATCHING CONTRIBUTIONS ACCOUNT AND
EMPLOYER CONTRIBUTION ACCOUNT.
A Participant who is credited with an Hour of Service on or after the
August 1, 1993 shall acquire a Vested Interest in the value of his Matching
Contributions Account and his Employer Annual Contributions Account in
accordance with the provisions of this Section 9.2. A Participant who is not
credited with an Hour of Service on or after August 1, 1993 shall acquire a
Vested Interest in his Employer Annual Contributions Account in accordance with
the vesting schedule in effect under the Plan prior to August 1, 1993.
(a) The Vested Interest of each Participant in the value of his
Matching Contributions Account and his Employer Annual Contributions
Account shall be determined as provided in the following table:
<TABLE>
<CAPTION>
Number of Full Years
of Vesting Service Vested Interest
<S> <C>
Under 1 0%
At least 1, less than 2 20%
At least 2, less than 3 40%
At least 3, less than 4 60%
At least 4, less than 5 80%
5 or more 100%
</TABLE>
Fractional Years of Service shall not be taken into account.
(b) In addition, a Participant shall be one hundred percent (100%)
vested in the value of his Matching Contributions Account and his Employer
Annual Contributions Account
(i) when the sum of his attained age and Years of Vesting Service
equals sixty (60);
(ii) upon his attainment of Normal Retirement Age while employed
by the Employer or an Affiliated Company; or
(iii) upon his earlier Severance due to death or Disability.
(c) Notwithstanding the provisions of Subsection (a) above, any Years
of Vesting Service completed by a Participant after he incurs at least
five (5) consecutive Breaks in Service shall not be taken into account for
purposes of determining his Vested Interest in the value of his Matching
Contributions Account and Employer Annual Contributions Account prior to
his incurring such five (5) consecutive Breaks in Service.
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9.3 AMENDMENT OF VESTING SCHEDULE.
If the vesting schedule under the Plan is amended or if the Plan is amended
in any way that directly or indirectly affects the computation of a
Participant's Vested Interest, each Participant who has completed at least
three (3) Years of Vesting Service may elect, within a reasonable time after the
adoption of the amendment, to continue to have his Vested Interest computed
under the Plan without regard to such amendment. The period during which the
election may be made shall commence with the date the amendment is adopted and
shall end on the latest of: (i) 60 days after the amendment is adopted; (ii) 60
days after the amendment is effective; or (iii) 60 days after the Participant is
issued written notice of the amendment.
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ARTICLE X
PAYMENT OF PLAN BENEFITS
10.1 DISTRIBUTION UPON RETIREMENT.
(a) Upon a Participant's Severance on or after he attains Normal
Retirement Age such Participant shall be entitled to a distribution of his
Distributable Benefit as provided in Section 10.5 as soon as
administratively practicable following the Valuation Date determined in
accordance with Section 11.1. In no event shall distribution be made or
commence later than the sixtieth (60th) day after the later of the close of
the Plan Year in which occurs the Severance, or the close of the Plan Year
in which the Participant attains Normal Retirement Age.
(b) If the Participant continues in the service of the Employer after
he attains Normal Retirement Age, he shall continue to participate in the
Plan in the same manner as Participants who have not attained Normal
Retirement Age.
(c) Notwithstanding the foregoing, distribution of a Participant's
Distributable Benefit shall be made or commence not later than his
"Required Beginning Date" as determined in accordance with this Subsection:
(i) Except as provided in (ii) below, a Participants "Required
Beginning Date" shall mean the April 1 following the later of the
calendar year in which the Participant attains age 70-1/2, or the
calendar year in which the Participant incurs a Severance.
(ii) In the case of a Participant who is a "5-percent owner"
within the meaning of Section 401(a)(9) of the Code, or a Participant
who attained age 70-1/2 prior to January 1, 1996," Required Beginning
Date" shall mean the April 1 following the calendar year in which the
Participant attains age 70-1/2, whether or not such Participant has
incurred a Severance or whether or not the Participant consents to the
distribution.
(iii) The Participant's Distributable Benefit determined as of
the December 31 of the calendar year in which his Required Beginning
Date occurs and the December 31 of each subsequent calendar year shall
be distributed not later than the December 31 of the next following
calendar year.
10.2 DISTRIBUTION UPON DEATH PRIOR TO PAYMENT OF BENEFITS.
(a) Upon the death of a Participant prior to the payment of his
Distributable Benefit, the Administration Committee shall direct the
Trustee to make a distribution of such Distributable Benefit as
provided in Section 10.5, to the Beneficiary designated by the
deceased Participant, or otherwise entitled to such Distributable
Benefit, as provided in Section 10.9.
(b) Distribution of a Participant's Distributable Benefit shall
be made or commence as soon as administratively practicable after the
later of (i) the Valuation Date determined in accordance with Section
11.1 or (ii) the date all facts required by the Administration
Committee to be established as a condition of payment shall have been
established to the satisfaction of the Administration Committee, but
in any event within five (5) years of the Participant's death.
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<PAGE>
10.3 DISTRIBUTION UPON DISABILITY.
(a) If a Participant incurs a Severance due to Disability,
distribution of his Distributable Benefit shall be made or commence as
provided in Section 10.5 as soon as administratively practicable after the
later of the Valuation Date determined in accordance with Section 11.1 or
(ii) the date the Participant's Disability has been determined by the
Administration Committee.
(b) If a Participant incurs a Severance due to Disability prior to his
attainment of Normal Retirement Age, the requirements of Section 10.4
relating to written consent to a distribution in excess of $3500 shall be
applicable.
10.4 SEVERANCE PRIOR TO NORMAL RETIREMENT AGE.
(a) If a Participant incurs a Severance prior to attainment of Normal
Retirement Age for any reason other than death, distribution of his
Distributable Benefit before Normal Retirement Age shall be made or
commence as provided in Section 10.5 after receipt by the Administration
Committee of all required documentation, as follows:
(i) In the case of a Participant whose Distributable Benefit does
not exceed, or at the time of any prior distribution never exceeded,
$3,500, distribution shall be made in a single sum as soon as
administratively practicable following the Valuation Date determined
in accordance with Section 11.1, whether or not the Participant
consents to such distribution.
(ii) In the case of a Participant whose Distributable Benefit
exceeds, or at the time of any prior distribution ever exceeded,
$3,500, distribution shall be made as soon as administratively
practicable following the Valuation Date coinciding with or next
following the later of (A) the Valuation Date determined in accordance
with Section 11.1, or (B) the receipt by the Administration Committee
of the written consent of the Participant to the distribution in
accordance with (iv) below.
(iii) If a Participant described in (ii) above fails to consent
to distribution of the Participant's Distributable Benefit prior to
the first Valuation Date that occurs at least ninety (90) days
following the Participant's Severance Date, such a Participant shall
be deemed to have made an election to defer distribution to Normal
Retirement Age, unless prior to Normal Retirement Age and in
accordance with (ii) above, the Participant submits a request for an
earlier distribution.
(iv) Any written consent by a Participant to receive distribution
of the Participant's Distributable Benefit prior to Normal Retirement
Age shall not be valid unless such consent is made both (A) after the
Participant receives a written notice advising him of his right to
defer distribution to Normal Retirement Age and (B) within the ninety
(90) day period ending on the Participant's "Benefit Starting Date."
The notice to the Participant advising him of his right to defer
distribution shall be given no less than thirty (30) nor more than
ninety (90) days prior to the Participant's Benefit Starting Date;
provided, however, a Participant may waive the thirty (30) day notice
requirement by making an affirmative election to receive or commence
payment of his Distributable Benefit. For purposes of this
Paragraph (iv), "Benefit Starting Date" shall mean the first day of
the first period for which the Participant's Distributable Benefit is
paid.
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<PAGE>
(b) Unless the provisions of (a) above apply, if a Participant incurs
a Severance prior to Normal Retirement Age for any reason other than death,
his Distributable Benefit shall be paid as provided in Section 10.5 as soon
as administratively feasible following the Participant's Normal Retirement
Age; provided, however, such distribution shall be made or commence not
later than sixty (60) days after the close of the Plan Year in which the
Participant attains Normal Retirement Age.
(c) If a Participant who incurs a Severance does not have a 100%
Vested Interest in any Account as of such Severance, the portion of such
Participant's Account which is not vested as of such Severance shall be
held in such Account, subject to forfeiture in accordance with Section
10.7.
(d) To the extent permissible under Section 401(k)(10) of the Code, if
a Participant ceases to be an Employee by reason of the sale or other
disposition by the Employer or an Affiliated Company of either (i)
substantially all of the assets used by the Employer, or an Affiliated
Company, as the case may be, in a trade or business to an unrelated
corporation, or (ii) the interest of the Employer or an Affiliated Company,
as the case may be, in a subsidiary to an unrelated entity or individual,
such Participant shall be entitled to distribution of his Distributable
Benefit as if, for purposes of this Plan only, such event constitutes a
Severance.
10.5 FORM AND MANNER OF PAYMENT OF DISTRIBUTABLE BENEFIT.
In accordance with procedures adopted by the Administration Committee,
payment of the Participant's Distributable Benefit by reason of a Severance for
any reason, including death, shall be in the form and manner elected by the
Participant or his Beneficiary, if applicable.
(a) The following forms of payment of a Participant's Distributable
Benefit shall be available:
(i) a single sum payment in cash, or in Company Stock as provided
in (c) below; or
(ii) a series of substantially equal annual or more frequent
installment payments in cash or in Company Stock as provided in (c)
below, over a period not to exceed five (5) years.
(b) No optional method of payment shall be permitted which would
require payments to extend beyond the life expectancy of the Participant
(or a period not extending beyond the life expectancy of the Participant);
or the life expectancy of the Participant and a designated Beneficiary (or
a period not extending beyond the life expectancies of the Participant and
the designated Beneficiary).
(i) If a Participant's Distributable Benefit is to be paid in a
series of installments over a specified number of years, the minimum
amount to be paid each year shall be at least equal to the quotient
obtained by dividing the Participant's Distributable Benefit under the
Plan by the specified number of years. For purposes of this
Subsection, life expectancies may be computed by reference to the
return multiples contained in Treasury Regulation Section 1.72-9. For
purposes of that computation, the life expectancy of the Participant
and/or his Spouse or non-Spouse beneficiary may not be recalculated.
The expected payments to the Participant under any settlement option
made must be more than fifty percent (50%) of the total payments to be
made to both the Participant and
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<PAGE>
the designated Beneficiary unless the designated Beneficiary is the
Participant's Spouse.
(ii) If the Participant dies after payment of his Distributable
Benefit has commenced, and before his entire Distributable Benefit is
paid, the method of distributing the remaining portion of such benefit
shall be at least as rapid as that in effect as of the date of his
death.
(iii) If a Participant dies before payment of his Distributable
Benefit has commenced, his entire Distributable Benefit shall be
distributed within five (5) years of his death unless the deceased
Participant's Distributable Benefit is payable to a designated
Beneficiary over the life of the designated Beneficiary (or a period
not extending beyond the Beneficiary's life expectancy) and the
payments begin not later than one (1) year after the Participant's
death.
(iv) Notwithstanding any provision to the contrary in this Plan,
all distributions under this Plan shall be made in accordance with
Section 401(a)(9) of the Code and the regulations issued thereunder,
which provisions shall override any distribution options under this
Plan which may be inconsistent with Code Section 401(a)(9). The
Administration Committee shall, in its sole and absolute discretion,
determine whether an optional method of payment of a Participant's
Distributable Benefit, as elected by the Participant, meets the
requirements of Section 401(a)(9) of the Code, and applicable Internal
Revenue Service regulations. This discretion shall be exercised in a
uniform and nondiscriminatory manner.
(c) Any portion of a Participant's Distributable Benefit attributable
to Company Stock allocated to his Accounts shall be paid in cash, unless
the Participant or Beneficiary, as applicable, elects in writing in
accordance with procedures established by the Administration Committee,
that such payment shall be made in Company Stock in lieu of cash (which
election may apply to the payment of a direct rollover in accordance with
Section 10.6 ).
(i) Within a reasonable period of time (at least thirty (30)
days) prior to the date such Participant's Distributable Benefit is to
be paid, the Administration Committee shall notify the Participant or
Beneficiary of his right to elect to have payment of the portion of
such Distributable Benefit attributable to Company Stock made in the
form of a Company Stock distribution in lieu of a cash distribution.
(ii) Upon being so notified, the Participant or Beneficiary shall
have a reasonable time (at least thirty (30) days) in which to file a
written election to have such payment made in a Company Stock
distribution. Any such election shall be irrevocable. In the event
payment is to be made in cash, to the extent required to make the cash
distribution, the Trustee shall sell Company Stock as soon as
administratively practicable at the then prevailing purchase price.
Neither the Company, the Administration Committee, nor the Trustee
shall be required to time the distribution or sale of Company Stock to
anticipate fluctuations in the purchase price.
(iii) If, within thirty (30) days after receiving notification of
his right to elect the form of payment of the portion of his
Distributable Benefit
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<PAGE>
attributable to Company Stock, the Participant or Beneficiary fails to
file a written election as to the form of such payment, payment shall
be made in cash.
10.6 ELECTION FOR DIRECT ROLLOVER TO ELIGIBLE RETIREMENT PLAN.
(a) To the extent required by Section 401(a)(31) of the Code, a
Participant whose Distributable Benefit becomes payable in an "eligible
rollover distribution," as defined in (b)(i) below, shall be entitled to
make a written election for a direct rollover of all or a portion of the
taxable portion of such Distributable Benefit to an "eligible retirement
plan," as defined in (b)(ii) below. Any non-taxable portion of a
Participant's Distributable Benefit shall be payable to the Participant, as
provided in 10.5 above. For purposes of this Article X, a Participant who
makes a direct rollover election in accordance with this Section 10.6 shall
be deemed to have received payment of his Distributable Benefit as of the
date payment is made from the Plan.
(b) For purposes of this Section,
(i) an "eligible rollover distribution" shall mean any
distribution of all or any portion of a Participant's Distributable
Benefit, except that an eligible rollover distribution shall not
include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Participant or the joint lives
(or joint life expectancies) of the Participant and the Participant's
designated Beneficiary, or for a specified period of ten (10) years or
more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities), and
(ii) an "eligible retirement plan" shall mean any plan described
in Code Section 402(c)(8)(B), the terms of which permit the acceptance
of a direct rollover from a qualified plan.
(c) A Participant's direct rollover election under this Section shall
be made in accordance with rules and procedures established by the
Administration Committee and shall specify the dollar or percentage amount
of the direct rollover, the name and address of the eligible retirement
plan selected by the Participant and such additional information as the
Administration Committee deems necessary or appropriate in order to
implement the Participant's election. It shall be the Participant's
responsibility to confirm that the eligible retirement plan designated in
the direct rollover election will accept the eligible rollover
distribution. The Administration Committee shall be entitled to effect the
direct rollover based on its reasonable reliance on information provided by
the Participant, and shall not be required to independently verify such
information, unless it is clearly unreasonable not to do so.
(d) At least thirty (30) days, but nor more than ninety (90) days,
prior to the date a Participant's Distributable Benefit becomes payable,
the Participant shall be given written notice of any right he may have to
elect a direct rollover of his eligible rollover distribution; provided,
however, a Participant may waive the thirty (30) day notice requirement by
making an affirmative election to make or not to make a direct rollover of
all or a portion of his Distributable Benefit.
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<PAGE>
(e) If a Participant who attained his Normal Retirement Age or whose
Distributable Benefit does not exceed $3500 fails to file a properly
completed direct rollover election with the Administration Committee within
ninety (90) days after such notice is given, or if the Administration
Committee is unable to effect the rollover within a reasonable time after
the election is filed with the Administration Committee due to the failure
of the Participant to take such actions as may be required by the eligible
retirement plan before it will accept the rollover, the Participant's
Distributable Benefit shall be paid to him in a lump sum, after withholding
applicable income taxes.
(f) If the eligible retirement plan specified by the Participant will
not accept a direct rollover of any Company Stock includible in the taxable
portion of the Participant's Distributable Benefit pursuant to the
Participant's election under Section 10.5(c), such Company Stock will be
distributed to the Participant.
(g) To the extent required by Section 401(a)(31) of the Code, if all
or a portion of a Participant's Distributable Benefit is payable to his
surviving Spouse in an eligible rollover distribution, or to a former
Spouse in accordance with a "qualified domestic relations order," such
surviving Spouse or former Spouse shall be entitled to elect a direct
rollover of all or a portion of such distribution to an individual
retirement account or an individual retirement annuity in accordance with
the provisions of this Section.
10.7 FORFEITURES; RESTORATION.
(a) Subject to the provisions of (c) below, any non-vested portion of
a Participant's Accounts shall be forfeited as of the earlier of the date
the Participant's Distributable Benefit is paid to him as provided in
Section 10.4, or the date the Participant incurs five (5) consecutive
Breaks in Service. For purposes of this Section, if the value of a
Participant's Distributable Benefit is zero, the Participant shall be
deemed to have received payment of his Distributable Benefit.
(b) Any non-vested portion of a Participant's Accounts which is
forfeited in accordance with (a) above shall be applied as provided in
Section 5.7.
(c) In accordance with such rules as the Administration Committee may
prescribe, there shall be restored to the Participant's Account the dollar
value of any non-vested portion of such a Participant's Account which was
forfeited upon payment of the Participant's Distributable Benefit in
accordance with Section 10.7(a) prior to the date on which he incurs five
(5) consecutive Breaks in Service; provided, however, that such restoration
shall be made only in the case of the Participant's reemployment as an
Eligible Employee prior to incurring five (5) consecutive Breaks in
Service, and only if the Participant repays to the Plan in cash no later
than the fifth anniversary of the date on which the Participant resumes
employment as an Eligible Employee an amount equal to the Distributable
Benefit attributable to Employer contributions paid to him following his
Severance. The determination of the dollar value of the forfeited portion
of the Participant's Account required to be restored to the Participant
shall be made as of the Valuation Date the Participant's Account was valued
for purposes of determining his Distributable Benefit, as provided in
Article XI. No adjustment in the dollar value of the forfeited amounts
shall be made for any gains or losses of the Trust Fund, between the
applicable Valuation Date and the restoration of the dollar value of the
forfeited portion of the Participant's Account. Restored amounts shall be
paid from the Forfeiture Account,
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or if forfeitures are not available, the Employer shall make an additional
contribution for this purpose.
10.8 LOANS.
(a) The Administration Committee shall adopt procedures whereby a
Participant who is employed by an Employer or an Affiliated Company may
borrow from his Vested Interest in his Accounts for Hardship. The amount
borrowed shall be paid to the Participant in a single sum in cash. In
addition to such other requirements as may be imposed by applicable law,
any loan by a Participant shall bear a reasonable rate of interest, shall
be adequately secured by proper collateral, and shall be repaid within a
specified period of time according to a written repayment schedule, as
provided in this Section.
(b) The Administration Committee shall be solely responsible for
determining the interest rate for the loan. The interest rate shall be that
which shall be reasonably equivalent to interest rates applicable to loans
with similar terms and collateral available on a commercial basis within
the region of the Employer's principal place of business. The
Administration Committee may consult such sources and/or conduct such
surveys as is thought necessary to make the determination at the time the
loan is made. The interest rate shall be unchanged for the term of the
loan.
(c) A loan by a Participant shall be secured by the Participant's
Vested Interest in his Accounts.
(d) Any loan shall by its terms require repayment in substantially
level payments made not less frequently than quarterly over a repayment
period which may in the discretion of the Administration Committee be up to
a maximum of five (5) years; provided, however, a Participant may at any
time repay the total amount of an outstanding loan, or a portion thereof,
directly to the Plan.As of the date of a Participant's Severance for any
reason, with or without cause (including retirement or death), the amount
of any outstanding loan shall be due and payable, and the Participant's
Distributable Benefit shall be reduced by the amount of any outstanding
loan that is secured by the Participant's Vested Interest in his Accounts.
(e) In no event shall the principal amount of a loan hereunder, at the
time the loan is made, together with the outstanding balance of all other
loans to the Participant under this Plan, exceed the lesser of:
(i) fifty percent (50%) of the value of the Participant's Vested
Interest in his Account determined as of the Valuation Date
immediately preceding the date on which the Participant's loan is
approved plus any contributions allocated to the Participant's
Accounts since such Valuation Date, or
(ii) fifty thousand dollars ($50,000) reduced by the excess of
the Participant's highest loan balance during the preceding 12-month
period, over the Participant's outstanding loan balance as of the date
of the new loan.
The minimum amount of any loan shall be one thousand dollars ($1000.00).
(f) Each Participant desiring to enter into a loan agreement pursuant
to this Section shall apply for a loan by filing a properly completed
application with the Administration Committee. The Administration Committee
shall notify the Participant within a reasonable time whether the
application is approved or denied. Upon approval of the application by the
Administration Committee, the Participant shall enter into a loan
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agreement with the Trustee. Such a Participant shall execute such further
written agreements as may be necessary or appropriate to establish a bona
fide debtor-creditor relationship between such Participant and the Trustee
and to protect against the impairment of any security for said loan.
(g) In the event a Participant fails to repay a loan in accordance
with the terms of a loan agreement, and such failure continues for ninety
(90) days, such loan shall be treated as in default. The date of the
enforcement of the security interest due to a loan in default shall be
determined by the Administration Committee, provided no loss of principal
or income shall result due to any delay in the enforcement of the security
interest. As of the Participant's Severance Date, the Participant's Account
shall be reduced by the outstanding amount of a loan which is then in
default, including any accrued interest thereon, that is secured by the
Participant's vested interest in such Account. Any reasonable costs related
to collection of a loan made hereunder shall be borne by the Participant.
(h) To the extent required to comply with the requirements of Code
Section 401(a)(4), loans hereunder shall be made in a uniform and
nondiscriminatory manner.
(i) Subject to the foregoing provisions of this Section, to the extent
required by Section 408(b)(i) of ERISA, loans hereunder shall be available
on a reasonably equivalent basis to all Participants who are parties in
interest, as defined in Section 3(14) of ERISA, and shall not be available
to Participants who are Highly Compensated Employees in a greater amount
than the amount available to other Participants.
10.9 DESIGNATION OF BENEFICIARY.
(a) Subject to the provisions of (b) below, each Participant shall
have the right to designate a Beneficiary or Beneficiaries to receive his
interest in the Trust Fund in the event of his death before receipt of his
entire interest in the Trust Fund. This designation is to be made on the
form prescribed by and delivered to the Administration Committee. Subject
to the provisions of (b) below, a Participant shall have the right to
change or revoke any such designation by filing a new designation or notice
of revocation with the Administration Committee, and no notice to any
Beneficiary nor consent by any Beneficiary shall be required to effect any
such change or revocation.
(b) If a Participant designates a Beneficiary and on the date of his
death has a Spouse who is not such Beneficiary, no effect shall be given to
such designation unless such Spouse has consented or thereafter consents in
writing to such designation, the consent acknowledges the effect of the
designation and the consent is witnessed by a notary public. A Spouse's
consent to a Beneficiary designation is not required under the following
circumstances:
(i) if it is established to the satisfaction of the
Administration Committee that there is no Spouse; or
(ii) if the Participant's Spouse cannot be located; or
(iii) because of other circumstances under which a Spouse's
consent is not required in accordance with applicable Treasury or
Department of Labor Regulations.
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The Administration Committee shall have absolute discretion as to
whether the consent of a Spouse shall be required. The provisions of this
Section shall not be construed to place upon the Company or the
Administration Committee any duty or obligation to require the consent of a
Spouse for the purpose of protecting the rights or interests of present or
former Spouses of Participants, except to the extent required to comply
with Code Section 401(a)(11) or Section 205 of ERISA.
(c) If a deceased Participant shall have failed to designate a
Beneficiary, or if the Administration Committee shall be unable to locate a
designated Beneficiary after reasonable efforts have been made, or if for
any reason (including but not limited to application of the rules in (b)
above) the designation shall be legally ineffective, or if the Beneficiary
shall have predeceased the Participant without effectively designating a
successor Beneficiary, any distribution required to be made under the
provisions of this Plan shall commence within one (1) year after the
Participant's death to the person or persons included in the highest
priority category among the following, in order of priority:
(i) The Participant's surviving Spouse;
(ii) The Participant's surviving children, including adopted
children and children of deceased children, per stirpes;
(iii) The Participant's surviving parents in equal shares;
(iv) The Participant's brothers and sisters, and nephews and
nieces who are children of deceased brothers and sisters, per stirpes;
or
(v) The Participant's estate.
The determination by the Administration Committee as to which persons,
if any, qualify within the foregoing categories shall be final and
conclusive upon all persons. Notwithstanding the preceding provisions of
this Section, distribution made pursuant to this Section shall be made to
the Participant's estate if the Administration Committee so determines in
its discretion.
(d) In the event that the deceased Participant was not a resident of
California at the date of his death, the Administration Committee, in its
discretion, may require the establishment of ancillary administration in
California. In the event that a Participant shall predecease his
Beneficiary and on the subsequent death of the Beneficiary a remaining
distribution is payable under the applicable provisions of this Plan, the
distribution shall be payable in the same order of priority categories as
set forth above but determined with respect to the Beneficiary, subject to
the same provisions concerning non-California residency, the unavailability
of an estate representative and/or the absence of administration of the
Beneficiary's estate as are applicable on the death of the Participant.
(e) The Administration Committee shall not be required to authorize
any payment to be made to any person following a Participant's death,
whether or not such person has been designated by the Participant as a
Beneficiary, if the Administration Committee determines that the Plan may
be subject to conflicting claims in respect of said payment for any reason,
including, without limitation, the designation or continuation of a
designation of a Beneficiary other than the Participant's Spouse without
the consent of such Spouse to the extent such consent is required by
Section 401(a)(11) of the Code. In the event the Administration Committee
determines in accordance with this
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Section not to make payment to a designated Beneficiary, the Administration
Committee shall take such steps as it determines appropriate to resolve
such potential conflict.
10.10 FACILITY OF PAYMENT.
If any payee under the Plan is a minor or if the Administration Committee
reasonably believes that any payee is legally incapable of giving a valid
receipt and discharge for any payment due him, the Administration Committee may
have the payment, or any part thereof, made to the person (or persons or
institution) whom it reasonably believes is caring for or supporting the payee,
unless it has received due notice of claim therefor from a duly appointed
guardian or committee of the payee. Any payment shall be a payment from the
Accounts of the payee and shall, to the extent thereof, be a complete discharge
of any liability under the Plan to the payee.
10.11 PAYEE CONSENT.
To the extent required to comply with Code Section 411(a)(11), the
Administration Committee shall require each Participant or other payee to
consent to any payment of a Participant's Accounts.
10.12 ADDITIONAL REQUIREMENTS FOR DISTRIBUTION.
(a) The Administration Committee or Trustee, or both, may require the
execution and delivery of such documents, papers and receipts as the
Administration Committee or Trustee may determine necessary or appropriate
in order to establish the fact of death of the deceased Participant and of
the right and identity of any Beneficiary or other person or persons
claiming any benefits under this Article X.
(b) The Administration Committee or the Trustee, or both, may, as a
condition precedent to the payment of death benefits hereunder, require an
inheritance tax release and/or such security as the Administration
Committee or Trustee, or both, may deem appropriate as protection against
possible liability for state or federal death taxes attributable to any
death benefits.
(c) Notwithstanding any other provision in this Article X regarding
the time within which a Participant's Distributable Benefit will be paid,
if, in the opinion of the Administration Committee there are or reasonably
may be conflicting claims or other legal impediments to the payment of such
Distributable Benefit to a payee, such payment may be delayed for so long
as is necessary to resolve such conflict, potential conflict, or other
legal impediment, but not beyond the date permitted by applicable law.
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ARTICLE XI
VALUATION OF ACCOUNTS
11.1 VALUE OF PARTICIPANT ACCOUNTS.
For purposes of payment of a Participant's Distributable Benefit
following a Severance for any reason, the value of a Participant's Accounts
shall be determined by the Plan's recordkeeper as of the date payment of
the Distributable Benefit is processed; provided, however, in no event
shall payment be processed prior to both
(a) the occurrence of an event entitling the Participant to a
distribution, and
(b) the receipt by the Administration Committee of the properly
completed timely application of the Participant (or his Beneficiary)
for payment of the Participant's Distributable Benefit with respect to
such event, and such other forms or documents as the Administration
Committee may require in order to process the application. In the case
of a Participant whose Distributable Benefit does not exceed, or at
the time of any prior distribution never exceeded, $3,500,
distribution of such Participant's Distributable Benefit shall be
made, to the extent determined by the Committee in its discretion,
without regard to whether the Participant consents to such
distribution.
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ARTICLE XII
OPERATION AND ADMINISTRATION OF THE PLAN
12.1 PLAN ADMINISTRATION.
(a) Authority to control and manage the operation and administration
of the Plan shall be vested in the Administration Committee as provided in
this Article XII.
(b) The Administration Committee shall have at least three members,
all of whom shall be appointed by the Board of Directors and shall hold
office until resignation, death or removal by the Board of Directors.
Subsequent to the initial appointment of the Administration Committee by
the Board of Directors, new and successor members shall be nominated by the
members of the Administration Committee then serving as such, subject to
final approval of the Board of Directors.
(c) For purposes of ERISA Section 402(a), the members of the
Administration Committee shall be the Named Fiduciaries of this Plan.
(d) Notwithstanding the foregoing, a Trustee with whom Plan assets
have been placed in trust or an Investment Manager appointed pursuant to
Section 12.3 may be granted exclusive authority and discretion to manage
and control all or any portion of the assets of the Plan in accordance with
the terms of a Trust Agreement or investment management agreement, as
applicable.
12.2 ADMINISTRATION COMMITTEE POWERS.
The Administration Committee shall have all discretionary powers necessary
to supervise the administration of the Plan and control its operations. In
addition to any powers and authority conferred on the Administration Committee
elsewhere in the Plan or by law, the Administration Committee shall have, by way
of illustration but not by way of limitation, the following powers and
authority:
(a) To allocate fiduciary responsibilities (other than trustee
responsibilities) among the Named Fiduciaries and to designate one or more
other persons to carry out fiduciary responsibilities (other than trustee
responsibilities). However, no allocation or delegation under this Section
12.2 shall be effective until the person or persons to whom the
responsibilities have been allocated or delegated agree to assume the
responsibilities. The term "trustee responsibilities" as used herein shall
have the meaning set forth in Section 405(c) of ERISA. The preceding
provisions of this Section shall not limit the authority of the
Administration Committee to appoint one or more Investment Managers in
accordance with Section 12.3.
(b) To designate agents to carry out responsibilities relating to the
Plan, other than fiduciary responsibilities.
(c) To employ such legal, actuarial, medical, accounting, clerical and
other assistance as it may deem appropriate in carrying out the provisions
of this Plan, including one or more persons to render advice with regard to
any responsibility any Named Fiduciary or any other fiduciary may have
under the Plan.
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(d) To establish rules and regulations from time to time for the
conduct of the Administration Committee's business and the administration
and effectuation of this Plan.
(e) To administer, interpret, construe and apply this Plan and to
decide all questions which may arise or which may be raised under this Plan
by any Employee, Participant, former Participant, Beneficiary or other
person whatsoever, including but not limited to all questions relating to
eligibility to participate in the Plan, the amount of service of any
Participant, and the amount of benefits to which any Participant or his
Beneficiary may be entitled.
(f) To determine the manner in which the assets of this Plan, or any
part thereof, shall be disbursed.
(g) To the extent provided in Section 7.1, to direct the investment of
any portion of the Trust Fund that is not under the management and control
of the Trustee or an Investment Manager.
(h) To perform or cause to be performed such further acts as it may
deem to be necessary, appropriate or convenient in the efficient
administration of the Plan.
Any action taken in good faith by the Administration Committee in the
exercise of authority conferred upon it by this Plan shall be conclusive and
binding upon the Participants and their Beneficiaries. All discretionary powers
conferred upon the Administration Committee shall be absolute.
12.3 INVESTMENT MANAGER.
(a) The Administration Committee, by action reflected in the minutes
thereof, may appoint one or more Investment Managers, as defined in
Section 3(38) of ERISA, to manage all or a portion of the assets of the
Plan.
(b) An Investment Manager shall discharge its duties in accordance
with applicable law and in particular in accordance with Section 404(a)(l)
of ERISA.
(c) An Investment Manager, when appointed, shall have full power to
manage the assets of the Plan for which it has responsibility, and neither
the Company, an Employer nor the Administration Committee shall thereafter
have any responsibility for the management of those assets.
12.4 Administration Committee Procedure.
(a) A majority of the members of the Administration Committee as
constituted at any time shall constitute a quorum, and any action by a
majority of the members present at any meeting, or authorized by a majority
of the members in writing without a meeting, shall constitute the action of
the Administration Committee.
(b) The Administration Committee may designate certain of its members
as authorized to execute any document or documents on behalf of the
Administration Committee, in which event the Administration Committee shall
notify the Trustee of this action and the name or names of the designated
members. The Trustee, Company, an Employer, Participants, Beneficiaries,
and any other party dealing with the Administration Committee may accept
and rely upon any document executed by the
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designated members as representing action by the Administration Committee
until the Administration Committee shall file with the Trustee a written
revocation of the authorization of the designated members.
12.5 COMPENSATION OF ADMINISTRATION COMMITTEE.
(a) Members of the Administration Committee shall serve without
compensation unless the Board of Directors shall otherwise determine.
However, in no event shall any member of the Administration Committee who
is an Employee receive compensation from the Plan for his services as a
member of the Administration Committee.
(b) All members shall be reimbursed by the Company for any necessary
or appropriate expenditures incurred in the discharge of duties as members
of the Administration Committee.
(c) The compensation or fees, as the case may be, of all officers,
agents, counsel, the Trustee, or other persons retained or employed by the
Administration Committee shall be fixed by the Administration Committee.
12.6 RESIGNATION AND REMOVAL OF MEMBERS.
Any member of the Administration Committee may resign at any time by giving
written notice to the other members and to the Company effective as therein
stated. Any member of the Administration Committee may, at any time, be removed
by the Board of Directors. If a member of the Administration Committee who is an
Employee incurs a Severance, such person shall no longer be a member of the
Administration Committee.
12.7 APPOINTMENT OF SUCCESSORS.
(a) Upon the death, resignation, or removal of any Administration
Committee member, or other termination of a member's status as a member of
the Administration Committee, members of the Administration Committee then
serving as such shall nominate a successor, subject to final approval by
the Board of Directors.
(b) Notice of appointment of a successor member shall be given by the
Board of Directors in writing to the Trustee and to the members of the
Administration Committee.
(c) Upon termination, for any reason, of an Administration Committee
member's status as a member of the Administration Committee, the member's
status as a Named Fiduciary shall concurrently be terminated, and upon the
appointment of a successor Administration Committee member the successor
shall assume the status of a Named Fiduciary as provided in Section 12.1.
12.8 RECORDS.
(a) The Administration Committee shall keep a record of all its
proceedings and shall keep, or cause to be kept, all such books, accounts,
records or other data as may be necessary or advisable in its judgment for
the administration of the Plan and to properly reflect the affairs thereof.
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(b) However, nothing in this Section 12.8 shall require the
Administration Committee or any member thereof to perform any act which,
pursuant to law or the provisions of this Plan, is the responsibility of
the Plan Administrator, nor shall this Section 12.8 relieve the Plan
Administrator from such responsibility.
12.9 RELIANCE UPON DOCUMENTS AND OPINIONS.
(a) The members of the Administration Committee, the Board of
Directors, the Company, the Employer and any person delegated under the
provisions hereof to carry out any fiduciary responsibilities under the
Plan ("delegated fiduciary"), shall be entitled to rely upon any tables,
valuations, computations, estimates, certificates and reports furnished by
any consultant, or firm or corporation which employs one or more
consultants, upon any opinions furnished by legal counsel, and upon any
reports furnished by the Trustee. The members of the Administration
Committee, the Board of Directors, the Company, the Employer and any
delegated fiduciary shall be fully protected and shall not be liable in any
manner whatsoever for anything done or action taken or suffered in reliance
upon any such consultant or firm or corporation which employs one or more
consultants, Trustee, or counsel.
(b) Any and all such things done or actions taken or suffered by the
Administration Committee, the Board of Directors, the Company, the Employer
and any delegated fiduciary shall be conclusive and binding on all
Employees, Participants, Beneficiaries, and any other persons whomsoever,
except as otherwise provided by law.
(c) The Administration Committee and any delegated fiduciary may, but
are not required to, rely upon all records of the Company with respect to
any matter or thing whatsoever, and may likewise treat those records as
conclusive with respect to all Employees, Participants, Beneficiaries, and
any other persons whomsoever, except as otherwise provided by law.
12.10 REQUIREMENT OF PROOF.
The Administration Committee or the Company may require satisfactory proof
of any matter under this Plan from or with respect to any Employee, Participant,
or Beneficiary, and no person shall acquire any rights or be entitled to receive
any benefits under this Plan until the required proof shall be furnished.
12.11 RELIANCE ON ADMINISTRATION COMMITTEE MEMORANDUM.
Any person dealing with the Administration Committee may rely on and shall
be fully protected in relying on a certificate or memorandum in writing signed
by any Administration Committee member or other person so authorized, or by the
majority of the members of the Administration Committee, as constituted as of
the date of the certificate or memorandum, as evidence of any action taken or
resolution adopted by the Administration Committee.
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12.12 MULTIPLE FIDUCIARY CAPACITY.
Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.
12.13 Limitation on Liability.
(a) Except as provided in Part 4 of Title I of ERISA, no person shall
be subject to any liability with respect to his duties under the Plan
unless he acts fraudulently or in bad faith.
(b) No person shall be liable for any breach of fiduciary
responsibility resulting from the act or omission of any other fiduciary or
any person to whom fiduciary responsibilities have been allocated or
delegated, except as provided in Part 4 of Title I of ERISA.
(c) No action or responsibility shall be deemed to be a fiduciary
action or responsibility except to the extent required by ERISA.
12.14 INDEMNIFICATION.
(a) To the extent permitted by law, the Company shall indemnify each
member of the Board of Directors and the Administration Committee, and any
other Employee of the Company with duties under the Plan, against expenses
(including any amount paid in settlement) reasonably incurred by him in
connection with any claims against him by reason of his conduct in the
performance of his duties under the Plan, except in relation to matters as
to which he acted fraudulently or in bad faith in the performance of such
duties. The preceding right of indemnification shall pass to the estate of
such a person.
(b) The preceding right of indemnification shall be in addition to any
other right to which the Board member or Administration Committee member or
other person may be entitled as a matter of law or otherwise.
12.15 BONDING.
(a) Except as is prescribed by the Board of Directors, as provided in
Section 412 of ERISA, or as may be required under any other applicable law,
no bond or other security shall be required by any member of the
Administration Committee, or any other fiduciary under this Plan.
(b) Notwithstanding the foregoing, for purposes of satisfying its
indemnity obligations under Section 12.14, the Company may (but need not)
purchase and pay premiums for one or more policies of insurance. However,
this insurance shall not release the Company of its liability under the
indemnification provisions.
12.16 PROHIBITION AGAINST CERTAIN ACTIONS.
(a) To the extent prohibited by law, in administering this Plan the
Administration Committee shall not discriminate in favor of any class of
Employees and particularly it shall not discriminate in favor of Highly
Compensated Employees.
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(b) The Administration Committee shall not cause the Plan to engage in
any transaction that constitutes a nonexempt prohibited transaction under
Section 4975(c) of the Code or Section 406(a) of ERISA.
(c) All individuals who are fiduciaries with respect to the Plan (as
defined in Section 3(21) of ERISA) shall discharge their fiduciary duties
in accordance with applicable law, and in particular, in accordance with
the standards of conduct contained in Section 404 of ERISA.
12.17 PLAN EXPENSES.
All expenses incurred in the establishment, administration and operation of
the Plan, including but not limited to the expenses incurred by the members of
the Administration Committee in exercising their duties, shall be paid by the
Company if not paid by the Trust Fund, or by allocation to Participants.
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ARTICLE XIII
MERGER OF COMPANY; MERGER OF PLAN
13.1 EFFECT OF REORGANIZATION OR TRANSFER OF ASSETS.
In the event of a consolidation, merger, sale, liquidation, or other
transfer of the operating assets of the Company to any other company, the
ultimate successor or successors to the business of the Company shall
automatically be deemed to have elected to continue this Plan in full force and
effect, in the same manner as if the Plan had been adopted by resolution of its
board of directors, unless the successor(s), by resolution of its board of
directors, shall elect not to so continue this Plan in effect, in which case the
Plan shall automatically be deemed terminated as of the applicable effective
date set forth in the board resolution.
13.2 MERGER RESTRICTION.
Notwithstanding any other provision in this Article, this Plan shall not in
whole or in part merge or consolidate with, or transfer its assets or
liabilities to any other plan unless each affected Participant in this Plan
would receive a benefit immediately after the merger, consolidation, or transfer
(if the Plan then terminated) which is equal to or greater than the benefit he
would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).
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ARTICLE XIV
PLAN TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS
14.1 PLAN TERMINATION.
(a) (i)Subject to the following provisions of this Section 14.1, the
Board of Directors may terminate the Plan and the Trust Agreements at any
time by an instrument in writing executed in the name of the Company, and
delivered to the Trustee.
(ii) The Plan and Trust Agreements may terminate if the Company
merges into any other corporation, if as the result of the merger the
entity of the Company ceases, and the Plan is terminated pursuant to
the rules of Section 13.1.
(b) Upon and after the effective date of the termination, an Employer
shall not make any further contributions under the Plan and no
contributions need be made by the Employer applicable to the Plan Year in
which the termination occurs, except as may otherwise be required by
applicable law.
(c) The rights of all affected Participants to benefits accrued to the
date of termination of the Plan, to the extent funded as of the date of
termination, shall automatically become fully vested as of that date, to
the extent required to comply with the requirements of Code Section 411.
14.2 DISCONTINUANCE OF CONTRIBUTIONS.
(a) In the event an Employer decides it is impossible or inadvisable
for business reasons to continue to make Employer contributions under the
Plan, the Employer may discontinue contributions to the Plan. Upon and
after the effective date of this discontinuance, neither the Employer nor
any Employees of such Employer shall make any further contributions under
the Plan, and no Employer contributions need be made by the Employer with
respect to the Plan Year in which the discontinuance occurs, except as may
otherwise be required by applicable law.
(b) The discontinuance of Employer contributions on the part of an
Employer shall not terminate the Plan as to the funds and assets then held
by the Trustee, or operate to accelerate any payments of distributions to
or for the benefit of Participants or Beneficiaries, and the Trustee shall
continue to administer the Trust Fund in accordance with the provisions of
the Plan until all of the obligations under the Plan shall have been
discharged and satisfied.
(c) However, if this discontinuance of Employer contributions shall
cause the Plan to lose its status as a qualified plan under Code
Section 401(a), the Plan shall be terminated in accordance with the
provisions of this Article XIV.
(d) On and after the effective date of a complete discontinuance of an
Employer's contributions, the rights of all affected Participants to
benefits accrued to that date, to the extent funded as of that date, shall
automatically become fully vested as of that date, to the extent required
by Code Section 411.
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14.3 RIGHTS OF PARTICIPANTS.
In the event of the termination of the Plan, for any cause whatsoever, all
assets of the Plan, after payment of expenses, shall be used for the exclusive
benefit of Participants and their Beneficiaries and no part thereof shall be
returned to the Company, except as provided in Section 5.12 of this Plan.
14.4 TRUSTEE'S DUTIES ON TERMINATION.
(a) Upon the termination of the Plan, the Trustee shall proceed as
soon as administratively practicable, but in any event within six (6)
months from the effective date, to reduce all of the assets of the Trust
Fund to cash and/or common stock and other securities in such proportions
as the Administration Committee shall determine (after approval by the
Internal Revenue Service, if necessary or desirable, with respect to any
portion of the assets of the Trust Fund held in common stock or securities
of the Company).
(b) After first deducting the estimated expenses for liquidation and
distribution chargeable to the Trust Fund, and after setting aside a
reasonable reserve for expenses and liabilities (absolute or contingent) of
the Trust, the Administration Committee shall make required allocations of
items of income and expense to the Accounts.
(c) Following these allocations, the Trustee shall promptly, after
receipt of appropriate instructions from the Administration Committee,
distribute in accordance with Section 10.5 to each former Participant a
benefit equal to the amount credited to his Accounts as of the date of
completion of the liquidation.
(d) The Trustee and the Administration Committee shall continue to
function as such for such period of time as may be necessary for the
winding up of this Plan and for the making of distributions in accordance
with the provisions of this Plan.
(e) Notwithstanding the foregoing, distributions to Participants upon
Plan termination in accordance with this Section 14.4 shall not be made if
the Employer establishes or maintains a "successor plan" as defined in
regulations issued under Section 401(k)(10) of the Code. In the event
benefits are not distributable upon the termination of the Plan, the
Administration Committee shall direct the Trustee to hold the assets until
benefits become distributable under the Plan, or to transfer such benefits
to the successor plan in accordance with regulations prescribed by the
Secretary of the Treasury.
14.5 PARTIAL TERMINATION.
(a) In the event of a partial termination of the Plan within the
meaning of Code Section 411(d)(3), the interests of affected Participants
in the Trust Fund, as of the date of the partial termination, shall become
nonforfeitable as of that date.
(b) That portion of the assets of the Plan affected by the partial
termination shall be used exclusively for the benefit of the affected
Participants and their Beneficiaries, and no part thereof shall otherwise
be applied.
(c) With respect to Plan assets and Participants affected by a partial
termination, the Administration Committee and the Trustee shall follow the
same procedures and take the same actions prescribed in this Article XIV in
the case of a total termination of the Plan.
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14.6 FAILURE TO CONTRIBUTE.
The failure of an Employer to contribute to the Trust in any year, if
contributions are not required under the Plan for that year, shall not
constitute a complete discontinuance of contributions to the Plan.
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ARTICLE XV
APPLICATION FOR BENEFITS
15.1 APPLICATION FOR BENEFITS.
The Administration Committee may require any person claiming benefits under
the Plan to submit an application therefor, together with such documents and
information as the Administration Committee may require. In the case of any
person suffering from a disability which prevents the claimant from making
personal application for benefits, the Administration Committee may, in its
discretion, permit another person acting on his behalf to submit the
application.
15.2 ACTION ON APPLICATION.
(a) Within ninety (90) business days following receipt of an
application and all necessary documents and information, the Administration
Committee's authorized delegate reviewing the claim shall furnish the
claimant with written notice of the decision rendered with respect to the
application.
(b) In the case of a denial of the claimant's application, the written
notice shall set forth:
(i) The specific reasons for the denial, with reference to the
Plan provisions upon which the denial is based;
(ii) A description of any additional information or material
necessary for perfection of the application (together with an
explanation why the material or information is necessary); and
(iii) An explanation of the Plan's claim review procedure.
(c) A claimant who wishes to contest the denial of his application for
benefits or to contest the amount of benefits payable to him shall follow
the procedures for an appeal of benefits as set forth in Section 15.3
below, and shall exhaust such administrative procedures prior to seeking
any other form of relief.
15.3 APPEALS.
(a) (i) A claimant who does not agree with the decision rendered
with respect to his application may appeal the decision to the
Administration Committee.
(ii) The appeal shall be made, in writing, within sixty-five (65)
business days after the date of notice of the decision with respect to
the application.
(iii) If the application has neither been approved nor denied
within the ninety (90)-day period provided in Section 15.2 above, then
the appeal shall be made within sixty-five (65) business days after
the expiration of the ninety (90)-day period.
(b) The claimant may request that his application be given full and
fair review by the Administration Committee. The claimant may review all
pertinent documents and submit issues and comments in writing in connection
with the appeal.
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(c) The decision of the Administration Committee shall be made
promptly, and not later than sixty (60) business days after the
Administration Committee's receipt of a request for review, unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but not later than one
hundred twenty (120) business days after receipt of a request for review.
(d) The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant with specific reference to the pertinent Plan
provisions upon which the decision is based.
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ARTICLE XVI
LIMITATIONS ON CONTRIBUTIONS
16.1 GENERAL RULE.
(a) Notwithstanding anything to the contrary contained in this Plan
the total Annual Additions under this Plan to a Participant's Plan Accounts
for any Limitation Year (as defined in Subsection (b) below) shall not
exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000), as that amount may be
adjusted for cost of living increases in accordance with Code Section
415(d); or
(ii) Twenty-five percent (25%) of the Participant's total
Compensation (as defined in Subsection (c) below) from the Employer
and any Affiliated Companies for the year, excluding amounts otherwise
treated as Annual Additions under Section 16.2(a)(iii).
(b) For purposes of this Article XVI, the Employer has elected a
"Limitation Year" corresponding to the Plan Year.
(c) For purposes of this Article XVI, "Compensation" shall have the
meaning set forth in Section 2.10(c).
16.2 ANNUAL ADDITIONS.
(a) For purposes of Section 16.1, the term "Annual Additions" shall
mean, for any Plan Year, the sum of (i) the amount credited to the
Participant's Accounts from Employer contributions for such Plan Year;
(ii) any Employee contributions for the Plan Year; and (iii) any amounts
described in Sections 415(l)(1) or 419(A)(d)(2) of the Code. The term
"Employee Contributions," for purposes of the preceding sentence, shall
mean amounts considered contributed by the Employee and which do not
qualify for tax deferral treatment under Section 401(k) of the Code.
(b) Notwithstanding anything to the contrary in this Section, the
Annual Addition for any Limitation Year beginning before January 1, 1987
shall not be recomputed to treat all Employee contributions as Annual
Additions.
16.3 OTHER DEFINED CONTRIBUTION PLANS.
If the Employer or an Affiliated Company is contributing to any other
defined contribution plan (as defined in Section 415(i) of the Code) for its
Employees, some or all of whom may be Participants in this Plan, then
contributions to the other plan shall be aggregated with contributions under
this Plan for the purposes of applying the limitations of Section 16.1.
16.4 COMBINED PLAN LIMITATION (DEFINED BENEFIT PLAN).
In the event a Participant hereunder also is a participant in any qualified
defined benefit plan (within the meaning of Section 415(k) of the Code) of the
Employer or an Affiliated Company, then the benefit payable under such defined
benefit plan, or any of them, shall be reduced for so long and to the extent
necessary to provide that the sum of the "defined benefit
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fraction" and the "defined contribution fraction" for any Plan Year, as defined
below, shall not exceed 1.
(a) "Defined Benefit Fraction" shall be a fraction, the numerator of
which is the projected benefit of a Participant under all qualified defined
benefit plans adopted by the Employer or an Affiliated Company expressed as
either an annual straight life annuity or a qualified joint and survivor
annuity providing the maximum permissible survivor benefit (determined as
of the close of the Plan Year), and the denominator of which is the lesser
of (i) the maximum dollar amount otherwise allowable for such Plan Year
under applicable law times 1.25 or (ii) the percentage of compensation
limit for such Plan Year times 1.4.
(b) "Defined Contribution Fraction" shall be a fraction, the numerator
of which is the sum of the annual addition of the Participant's account
under this Plan and any other defined contribution plans adopted by the
Employer or an Affiliated Company for each Plan Year, and the denominator
of which is the lesser for each such Plan Year of (i) maximum Annual
Addition which could have been made under this Plan and any other defined
contribution plans adopted by the Employer or an Affiliated Company for
such Plan Year and for each prior Plan Year of service with the Employer or
an Affiliated Company times 1.25 or (ii) the amount determined under the
percentage of compensation limit for such Plan Year times 1.4.
16.5 ADJUSTMENTS FOR EXCESS ANNUAL ADDITIONS.
In general, Annual Additions for any Plan Year under this Plan and any
other defined contribution plan (as defined in Code Section 414(i)) or defined
benefit plan (as defined in Code Section 414(j)) maintained by the Employer or
an Affiliated Company will be determined so as to avoid Annual Additions in
excess of the limitations set forth in Sections 16.1 through 16.4. However, if
as a result of a reasonable error in estimating the amount of the Annual
Additions to a Participant's Accounts under this Plan, such Annual Additions
(after giving effect to the maximum permissible adjustments under the other
plans) exceed the applicable limitations described in Sections 16.1 through
16.4, such excess Annual Additions shall be corrected as follows:
(a) If the Participant made any Pre-Tax Contributions to this or any
other defined contribution plan that is maintained by the Employer or an
Affiliated Company, which Pre-Tax Contributions were not matched by
matching contributions, within the meaning of Code Section 401(m), such
Pre-Tax Contributions and any earnings thereon shall be returned to the
Participant to the extent of any excess Annual Additions.
(b) If excess Annual Additions remain after the application of the
above rule, if the Participant made any Pre-Tax Contributions to this or
any other defined contribution plan that is maintained by the Employer or
an Affiliated Company, which Pre-Tax Contributions were matched by matching
contributions, within the meaning of Code Section 401(m), any such Pre-Tax
Contributions and any earnings thereon shall be returned to the Participant
and any matching contributions attributable thereto and any earnings
thereon shall be reduced to the extent necessary to eliminate any remaining
excess Annual Additions.
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(c) If excess Annual Additions remain after the application of the
above rule, any other Employer contributions and any earnings thereon shall
be reduced to the extent necessary to eliminate any remaining excess Annual
Additions.
16.6 DISPOSITION OF EXCESS EMPLOYER CONTRIBUTION AMOUNTS.
Any excess Annual Additions attributable to Employer contributions on
behalf of a Participant for any Plan Year and any earnings thereon, other than
Pre-Tax Contributions and any earnings thereon returned to the Participant in
accordance with Section 16.5, shall be held unallocated in a suspense account
for the Plan Year and applied to reduce the Employer contributions for the
succeeding Plan Year, or Years, if necessary. No investment gains or losses
shall be allocated to a suspense account established for this purpose.
16.7 AFFILIATED COMPANY.
For purposes of this Article XVI, the status of an entity as an Affiliated
Company shall be determined by reference to the percentage tests set forth in
Code Section 415(h).
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ARTICLE XVII
RESTRICTION ON ALIENATION
17.1 GENERAL RESTRICTIONS AGAINST ALIENATION.
(a) The interest of any Participant or Beneficiary in the income,
benefits, payments, claims or rights hereunder, or in the Trust Fund shall
not in any event be subject to sale, assignment, hypothecation, or
transfer. Each Participant and Beneficiary is prohibited from anticipating,
encumbering, assigning, or in any manner alienating his or her interest
under the Trust Fund, and is without power to do so, except as may
otherwise be provided for in the Trust Agreement. The interest of any
Participant or Beneficiary shall not be liable or subject to his debts,
liabilities, or obligations, now contracted, or which may be subsequently
contracted. The interest of any Participant or Beneficiary shall be free
from all claims, liabilities, bankruptcy proceedings, or other legal
process now or hereafter incurred or arising; and the interest or any part
thereof, shall not be subject to any judgment rendered against the
Participant or Beneficiary.
(b) In the event any person attempts to take any action contrary to
this Article XVII, that action shall be void and the Company, the Employer,
the Administration Committee, the Trustees and all Participants and their
Beneficiaries, may disregard that action and are not in any manner bound
thereby, and they, and each of them separately, shall suffer no liability
for any disregard of that action, and shall be reimbursed on demand out of
the Trust Fund for the amount of any loss, cost or expense incurred as a
result of disregarding or of acting in disregard of that action.
(c) The preceding provisions of this Section 17.1 shall be interpreted
and applied by the Administration Committee in accordance with the
requirements of Code Section 401(a)(13) as construed and interpreted by
authoritative judicial and administrative rulings and regulations.
17.2 NONCONFORMING DISTRIBUTIONS UNDER COURT ORDER.
(a) In the event that a court with jurisdiction over the Plan and the
Trust Fund shall issue an order or render a judgment requiring that all or
part of a Participant's interest under the Plan and in the Trust Fund be
paid to a spouse, former spouse and/or children of the Participant by
reason of or in connection with the marital dissolution and/or marital
separation of the Participant and the spouse, and/or some other similar
proceeding involving marital rights and property interests, then
notwithstanding the provisions of Section 17.1 the Administration Committee
may, in its absolute discretion, direct the applicable Trustee to comply
with that court order or judgment and distribute assets of the Trust Fund
in accordance therewith.
(b) The Administration Committee's decision with respect to compliance
with any such court order or judgment shall be made in its absolute
discretion and shall be binding upon the Trustee and all Participants and
their Beneficiaries, provided, however, that the Administration Committee
in the exercise of its discretion shall not make payments in accordance
with the terms of an order which is not a qualified domestic relations
order or which the Administration Committee determines would jeopardize the
continued qualification of the Plan and Trust under Section 401 of the
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Code. Notwithstanding the foregoing, if a domestic relations order
requires payment to an alternate payee prior to the date the Participant
attains age fifty (50), but otherwise satisfies the requirements for a
qualified domestic relations order under Code Section 414(p), the
Administration Committee may make a distribution to the alternate payee
prior to the date the Participant attains age fifty (50) as if such
distribution is required by a qualified domestic relations order.
(c) Neither the Plan, the Company, an Employer, the Administration
Committee nor the Trustee shall be liable in any manner to any person,
including any Participant or Beneficiary, for complying with any such court
order or judgment.
(d) Nothing in this Section 17.2 shall be interpreted as placing upon
the Company, an Employer, the Administration Committee or any Trustee any
duty or obligation to comply with any such court order or judgment. The
Administration Committee may, if in its absolute discretion it deems it to
be in the best interests of the Plan and the Participants, determine that
any such court order or judgment shall be resisted by means of judicial
appeal or other available judicial remedy, and in that event the Trustee
shall act in accordance with the Administration Committee's directions.
(e) The Administration Committee shall adopt procedures and provide
notifications to a Participant and alternate payees in connection with a
qualified domestic relations order, to the extent required under Code
Section 414(p).
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ARTICLE XVIII
PLAN AMENDMENTS
18.1 AMENDMENTS.
The Company, acting through its Board of Directors may at any time, and
from time to time, amend the Plan by an instrument in writing executed in the
name of the Company and delivered to the applicable Trustee. However, the then
highest ranking officer of the Company shall have the right by written
instrument to amend this Plan without approval of the Board of Directors,
provided that such amendment does not substantially alter the basic design of
the Plan or the cost of providing benefits thereunder. Notwithstanding the
foregoing, to the extent required by law, no amendment shall be made at any
time, the effect of which would be:
(a) To cause any assets of the Trust Fund to be used for or diverted
to purposes other than providing benefits to the Participants and their
Beneficiaries, and defraying reasonable expenses of administering the Plan,
except as provided in Section 5.12;
(b) To have any retroactive effect so as to deprive any Participant or
Beneficiary of any accrued benefit to which he would be entitled under this
Plan if his employment were terminated immediately before the amendment, to
the extent so doing would contravene Code Section 411(d)(6);
(c) To eliminate or reduce a subsidy or early retirement benefit or an
optional form of benefit to the extent so doing would contravene Code
Section 411(d)(6); or
(d) To increase the responsibilities or liabilities of a Trustee or an
Investment Manager without his written consent.
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ARTICLE XIX
MISCELLANEOUS
19.1 NO ENLARGEMENT OF EMPLOYEE RIGHTS.
(a) This Plan is strictly a voluntary undertaking on the part of the
Company and shall not be deemed to constitute a contract between the
Company or any Employer and any Employee, or to be consideration for, or an
inducement to, or a condition of, the employment of any Employee.
(b) Nothing contained in this Plan or the Trust shall be deemed to
give any Employee the right to be retained in the employ of the Company or
an Employer or to interfere with the right of the Company or an Employer to
discharge or retire any Employee at any time.
(c) No Employee, nor any other person, shall have any right to or
interest in any portion of the Trust Fund other than as specifically
provided in this Plan.
19.2 MAILING OF PAYMENTS; LAPSED BENEFITS.
(a) All payments under the Plan shall be delivered in person or mailed
to the last address of the Participant (or, in the case of the death of the
Participant, to the last address of any other person entitled to such
payments under the terms of the Plan) furnished pursuant to Section 19.3
below.
(b) In the event that a benefit is payable under this Plan to a
Participant or any other person and after reasonable efforts such person
cannot be located for the purpose of paying the benefit for a period of
three (3) consecutive years, the benefit shall be forfeited and as soon
thereafter as practicable shall be applied to reduce contributions by the
Employer who was the Employer of the Participant as of the Participant's
Severance Date. In the event any person entitled to payment of a benefit
that has been forfeited in accordance with this Section 19.2 submits a
claim for such benefit, payment shall be made to such person out of current
forfeitures, or if necessary, such Employer shall make an additional
contribution for purposes of paying such benefit.
(c) For purposes of this Section 19.2, the term "Beneficiary" shall
include any person entitled under Section 10.9 to receive the interest of a
deceased Participant or deceased designated Beneficiary. It is the
intention of this provision that the benefit will be distributed to an
eligible Beneficiary in a lower priority category under Section 10.9 if no
eligible Beneficiary in a higher priority category can be located by the
Administration Committee after reasonable efforts have been made.
(d) The Accounts of a Participant shall continue to be maintained
until the amounts in the Accounts are paid to the Participant or his
Beneficiary. Notwithstanding the foregoing, in the event that the Plan is
terminated, the following rules shall apply:
(i) All Participants (including Participants who have not
previously claimed their benefits under the Plan) shall be notified of
their right to receive a distribution of their interests in the Plan;
(ii) All Participants shall be given a reasonable length of time,
which shall be specified in the notice, in which to claim their
benefits;
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(iii) All Participants (and their Beneficiaries) who do not claim
their benefits within the designated time period shall be presumed to
be dead. The Accounts of such Participants shall be forfeited at such
time. These forfeitures shall be disposed of according to rules
prescribed by the Administration Committee, which rules shall be
consistent with applicable law.
(iv) The Administration Committee shall prescribe such rules as
it may deem necessary or appropriate with respect to the notice and
forfeiture rules stated above.
(e) Should it be determined that the preceding rules relating to
forfeiture of benefits upon Plan termination are inconsistent with any of
the provisions of the Code and/or ERISA, these provisions shall become
inoperative without the need for a Plan amendment and the Administration
Committee shall prescribe rules that are consistent with the applicable
provisions of the Code and/or ERISA.
19.3 ADDRESSES.
Each Participant shall be responsible for furnishing the Administration
Committee with his correct current address and the correct current name and
address of his Beneficiary or Beneficiaries.
19.4 NOTICES AND COMMUNICATIONS.
(a) All applications, notices, designations, elections, and other
communications from Participants shall be in writing, on forms prescribed
by the Administration Committee and shall be mailed or delivered to the
office designated by the Administration Committee, and shall be deemed to
have been given when received by that office.
(b) Each notice, report, remittance, statement and other communication
directed to a Participant or Beneficiary shall be in writing and may be
delivered in person or by mail. An item shall be deemed to have been
delivered and received by the Participant when it is deposited in the
United States Mail with postage prepaid, addressed to the Participant or
Beneficiary at his last address of record with the Administration
Committee, or when it is deposited in interoffice mail.
(c) Notwithstanding the foregoing, to the extent permitted by
applicable law, and not inconsistent with the terms of the Plan, the
Administration Committee may make telephonic or other electronic
communication or filing methods available for certain elections,
designations, investment directions or applications for benefits by
Participants and for certain notices, statements or other communications to
Participants.
19.5 REPORTING AND DISCLOSURE.
The Plan Administrator shall be responsible for the reporting and
disclosure of information required to be reported or disclosed by the Plan
Administrator pursuant to ERISA or any other applicable law.
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19.6 INTERPRETATION.
(a) Article and Section headings are for convenient reference only and
shall not be deemed to be part of the substance of this instrument or in
any way to enlarge or limit the contents of any Article or Section. Unless
the context clearly indicates otherwise, masculine gender shall include the
feminine, and the singular shall include the plural and the plural the
singular.
(b) The provisions of this Plan shall in all cases be interpreted in a
manner that is consistent with this Plan satisfying the requirements (of
Code Sections 401(a) and 401(k) and related statutes) for qualification as
a qualified cash or deferred arrangement.
19.7 WITHHOLDING FOR TAXES.
Any payments out of the Trust Fund may be subject to withholding for taxes
as may be required by any applicable federal or state law.
19.8 LIMITATION ON COMPANY AND EMPLOYER; ADMINISTRATION COMMITTEE AND TRUSTEE
LIABILITY.
Any benefits payable under this Plan shall be paid or provided for solely
from the Trust Fund and neither the Company, the Employer, the Administration
Committee nor the Trustee assume any responsibility for the sufficiency of the
assets of the Trust to provide the benefits payable hereunder.
19.9 SUCCESSORS AND ASSIGNS.
This Plan and the Trust established hereunder shall inure to the benefit
of, and be binding upon, the parties hereto and their successors and assigns.
19.10 COUNTERPARTS.
This Plan document may be executed in any number of identical counterparts,
each of which shall be deemed a complete original in itself and may be
introduced in evidence or used for any other purpose without the production of
any other counterparts.
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ARTICLE XX
TOP-HEAVY PLAN RULES
20.1 APPLICABILITY.
(a) Notwithstanding any provision in this Plan to the contrary, the
provisions of this Article XX shall apply in the case of any Plan Year in
which the Plan is determined to be a Top-Heavy Plan under the rules of
Section 20.3.
(b) Except as is expressly provided to the contrary, the rules of this
Article XX shall be applied after the application of the Affiliated Company
rules of Code Section 414.
20.2 DEFINITIONS.
(a) For purposes of this Article XX, the term "Key Employee" shall
mean any Employee or former Employee who, at any time during the Plan Year
or any of the four (4) preceding Plan Years, is or was --
(i) An officer of the Employer having an annual compensation
greater than fifty percent (50%) of the amount in effect under Code
Section 415(b)(1)(A) for this Plan Year. However, no more than fifty
(50) Employees (or, if lesser, the greater of three (3) or ten percent
(10%) of the Employees) shall be treated as officers;
(ii) One (1) of the ten (10) employees having annual compensation
from the Employer of more than the limitation in effect under Code
Section 415(c)(1)(A) and owning (or considered as owning within the
meaning of Code Section 318) the largest interests in the Employer.
For this purpose, if two (2) Employees have the same interest in the
Employer, the employee having greater annual compensation from the
Employer shall be treated as having a larger interest;
(iii) A Five Percent (5%) Owner of the Employer; or
(iv) A One Percent (1%) Owner of the Employer having an annual
compensation from the Employer of more than one hundred fifty thousand
dollars ($150,000).
(b) For purposes of this Section 20.2, the term "Five Percent (5%)
Owner" means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the outstanding
stock of the Employer or stock possessing more than five percent (5%) of
the total combined voting power of all stock of the Employer. The rules of
Subsections (b), (c), and (m) of Code Section 414 shall not apply for
purposes of applying these ownership rules. Thus, this ownership test shall
be applied separately with respect to every Affiliated Company.
(c) For purposes of this Section 20.2, the term "One Percent (1%)
Owner" means any person who would be described in Subsection (b) if "one
percent (1%)" were substituted for "five percent (5%)" each place where it
appears therein.
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(d) For purposes of this Section 20.2, the rules of Code
Section 318(a)(2)(C) shall be applied by substituting "five percent (5%)"
for "fifty percent (50%)."
(e) For purposes of this Article XX, the term "Non-Key Employee" shall
mean any Employee who is not a Key Employee.
(f) For purposes of this Article XX, the terms "Key Employee" and
"Non-Key Employee" include their Beneficiaries.
20.3 TOP-HEAVY STATUS.
(a) The term "Top-Heavy Plan" means, with respect to any Plan Year --
(i) Any defined benefit plan if, as of the Determination Date,
the present value of the cumulative accrued benefits under the Plan
for Key Employees exceeds sixty percent (60%) of the present value of
the cumulative accrued benefits under the plan for all Employees, and
(ii) Any defined contribution plan if, as of the Determination
Date, the aggregate of the account balances of Key Employees under the
Plan exceeds sixty percent (60%) of the present value of the aggregate
of the account balances of all Employees under the plan.
For purposes of this Subsection (a), the term "Determination Date"
means, with respect to any Plan Year, the last day of the preceding Plan
Year. In the case of the first Plan Year of any plan, the term
"Determination Date" shall mean the last day of that Plan Year.
The present value of account balances under a defined contribution
plan shall be determined as of the most recent valuation date. The present
value of accrued benefits under a defined benefit plan shall be determined
as of the same valuation date as used for computing plan costs for minimum
funding. The present value of the cumulative accrued benefits of a Non-Key
Employee shall be determined under either:
(i) the method, if any, that uniformly applies for accrual
purposes under all plans maintained by affiliated companies, within
the meaning of Code Sections 414(b), (c), (m) or (o); or
(ii) if there is no such method, as if such benefit accrued not
more rapidly than the lowest accrual rate permitted under the
fractional accrual rate of Section 411(b)(1)(C) of the Code.
(b) Each plan maintained by the Employer required to be included in an
Aggregation Group shall be treated as a Top-Heavy Plan if the Aggregation
Group is a Top-Heavy Group. If the Aggregation Group is not a Top-Heavy
Group no plan in such group shall be a Top-Heavy Plan.
(i) The term "Aggregation Group" means --
(A) Each Plan of the Employer in which a Key Employee is a
Participant, and
(B) Each other plan of the Employer which enables any plan
described in Subparagraph (A) to meet the requirements of Code
Sections 401(a)(4) or 410.
Also, any plan not required to be included in an Aggregation Group
under the preceding rules may be treated as being part of such group
if the group would
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continue to meet the requirements of Code Sections 401(a)(4) and 410
with the plan being taken into account.
(ii) The term "Top-Heavy Group" means any Aggregation Group if
the sum (as of the Determination Date) of --
(A) The present value of the cumulative accrued benefits for
Key Employees under all defined benefit plans included in the
group, and
(B) The aggregate of the account balances of Key Employees
under all defined contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for all
Employees.
(iii) For purposes of determining --
(A) The present value of the cumulative accrued benefit of
any Employee, or
(B) The amount of the account balance of any Employee, such
present value or amount shall be increased by the aggregate
distributions made with respect to the Employee under the plan
during the five (5) year period ending on the Determination Date.
The preceding rule shall also apply to distributions under a
terminated plan which, if it had not been terminated, would have
been required to be included in an Aggregation Group. Also, any
rollover contribution or similar transfer initiated by the
Employee and made after December 31, 1983 to a plan shall not be
taken into account with respect to the transferee plan for
purposes of determining whether such plan is a Top-Heavy Plan (or
whether any Aggregation Group which includes such plan is a
Top-Heavy Group).
(c) If any individual is a Non-Key Employee with respect to any plan
for any Plan Year, but the individual was a Key Employee with respect to
the plan for any prior Plan Year, any accrued benefit for the individual
(and the account balance of the individual) shall not be taken into account
for purposes of this Section 20.3.
(d) If any individual has not performed any services for the Employer
at any time during the five (5) year period ending on the Determination
Date, any accrued benefit for such individual (and the account balance of
the individual) shall not be taken into account for purposes of this
Section 20.3.
20.4 MINIMUM CONTRIBUTIONS.
For each Plan Year in which the Plan is Top-Heavy, the minimum
contributions for that year shall be determined in accordance with the rules of
this Section 20.4.
(a) Except as provided below, the minimum contribution (excluding
amounts deferred under a cash or deferred arrangement under Section 401(k)
of the Code and any employer contributions taken into account under
Section 401(k)(3) or 401(m)(3) of the Code) for each Non-Key Employee who
has not separated from service as of the last day of the Plan Year shall be
not less than three percent (3%) of his Compensation (as defined in
Subsection (e) below), regardless of whether the Non-Key Employee has less
than 1,000 Hours of Service during such Plan Year or elected to make
Pre-Tax Contributions to the Plan for such year.
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(b) Subject to the following rules of this Subsection (b), the
percentage set forth in Subsection (a) above shall not be required to
exceed the percentage at which contributions (including amounts deferred
under a cash or deferred arrangement under Section 401(k) of the Code and
any employer contributions taken into account under Section 401(k)(3) or
401(m)(3) of the Code) are made (or are required to be made) under the Plan
for the year for the Key Employee for whom the percentage is the highest
for the year. This determination shall be made by dividing the
contributions for each Key Employee by so much of his total compensation
for the year as does not exceed one hundred fifty thousand dollars
($150,000), as adjusted in accordance with Code Section 401(a)(17). For
purposes of this Subsection (b), all defined contribution plans required to
be included in an Aggregation Group shall be treated as one plan. However,
the rules of this Subsection (b) shall not apply to any plan required to be
included in an Aggregation Group if the plan enables a defined benefit plan
to meet the requirements of Code Sections 401(a)(4) or 410.
(c) The requirements of this Section 20.4 must be satisfied without
taking into account contributions under Chapter 2 or 21 of the Code,
Title II of the Social Security Act, or any other Federal or State law.
(d) In the event a Participant is covered by both a defined
contribution and a defined benefit plan maintained by the Employer, both of
which are determined to be Top Heavy Plans, the defined benefit minimum,
offset by the benefits provided under the defined contribution plan, shall
be provided under the defined benefit plan.
(e) In no instance may the Plan take into account an Employee's
compensation in excess of one hundred fifty thousand dollars ($150,000),
(or such greater amount as may be permitted pursuant to Section 401(a)(17)
of the Code). For purposes of this Section 20.4, an Employee's Compensation
shall be as defined in Section 2.10 for purposes of this Article XX.
20.5 MAXIMUM ANNUAL ADDITION.
(a) Except as set forth below, in the case of any Top-Heavy Plan the
rules of Code Section 415(e)(2)(B) and (3)(B) shall be applied by
substituting "1.0" for "1.25."
(b) The rule set forth in Subsection (a) above shall not apply if the
requirements of both Paragraphs (i) and (ii), below, are satisfied.
(i) The requirements of this Paragraph (i) are satisfied if the
rules of Section 20.4(a) above would be satisfied after substituting
"four percent (4%)" for "three percent (3%)" where it appears therein
with respect to participants covered only under a defined contribution
plan.
(ii) The requirements of this Paragraph (ii) are satisfied if the
Plan would not be a Top-Heavy Plan if "ninety percent (90%)" were
substituted for "sixty percent (60%)" each place it appears in
Section 20.3(a).
(c) The rules of Subsection (a) shall not apply with respect to any
Employee as long as there are no --
(i) Employer Contributions, forfeitures, or voluntary
nondeductible contributions allocated to the Employee under a defined
contribution plan maintained by the Employer, or
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(ii) Accruals by the Employee under a defined benefit plan
maintained by the Employer.
20.6 VESTING RULES.
In the event that the Plan is determined to be Top-Heavy in accordance with
the rules of this Article XX, then the vested status of each Non-Key Employee as
of such date shall not be less than as determined under the vesting schedule set
forth below:
Years of Service Vested Interest
2 20%
3 40%
4 60%
5 80%
6 or more 100%
If the Plan ceases to be a Top-Heavy Plan for any Plan Year, the provisions
of Section 9.3 shall apply.
20.7 NON-ELIGIBLE EMPLOYEES.
The rules of this Article XX shall not apply to any Employee included in a
unit of employees covered by an agreement which the Secretary of Labor finds to
be a collective bargaining agreement between employee representatives and one or
more employers if there is evidence that retirement benefits were the subject of
good faith bargaining between such employee representatives and the employer or
employers.
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IN WITNESS WHEREOF, in order to record the adoption of this January 1, 1997
Restatement of the Plan, DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A. has caused
this instrument to be executed by its duly authorized officers this 23 day of
April, 1997, effective, however, as of January 1, 1997, except as otherwise
expressly provided herein or in the First Amendment to the August 1, 1993
Amendment and Restatement of the Plan.
DOWNEY SAVINGS AND LOAN ASSOCIATION, F.A.
By: /s/ James W. Lokey
--------------------------------------
Title: President and
Chief Executive Officer
By: /s/ JoLene Bryant
--------------------------------------
Title: Senior Vice President
Director of Human Resources
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EXHIBIT 4.4
DIRECTED EMPLOYEE
BENEFIT TRUST AGREEMENT
<PAGE>
DIRECTED EMPLOYEE BENEFIT TRUST AGREEMENT
This TRUST AGREEMENT ("Trust Agreement" or "Agreement"), entered into this
16th day of November, 1994, by and between DOWNEY SAVINGS AND LOAN ASSOCIATION,
a California corporation, partnership or sole proprietorship (the "Company"),
and THE CHARLES SCHWAB TRUST COMPANY (the "Trustee").
PURPOSE
The Company has adopted a plan called Downey Savings and Loan Association
Employees' Retirement and Savings Plan (the "Plan") for the exclusive purpose of
providing benefits to certain of its employees and their beneficiaries and
defraying reasonable expenses of administering the Plan. The Plan provides that,
from time to time, cash and other assets may be paid to the Trustee by the
Company to be held and administered as a trust (the "Trust Fund" or "Trust") for
the uses and purposes of the Plan. The Company intends that the Plan shall
qualify under section 401 of the Internal Revenue Code of 1986, as amended (the
"Code"), and that the Trust shall constitute a part of the Plan, as a tax exempt
entity within the meaning of Code section 501(a).
Subject to specific conditions set forth in this Agreement, the Trustee
agrees that it will hold in the Trust and invest cash and other acceptable
property received pursuant to this Agreement and received as contributions from
the Company or transfers from another plan qualified under section 401(a) of the
Code upon the terms and conditions stated below.
ARTICLE I-TRUST FUND
1.1 The Company's President or other duly authorized official shall certify
in writing to the Trustee the names and specimen signatures of all those persons
who are authorized to act as or on behalf of the Plan's named fiduciary, which
term shall include the administrator of the Plan (the "Administrator") and these
names and specimen signatures shall be updated as necessary by the President or
other duly authorized official.
1.2 All contributions or transfers shall be received by the Trustee in cash
or in any other property acceptable to the Trustee as determined by the Trustee
under its Investment Guidelines, which are incorporated herein and made part of
the Agreement as amended from time to time. The Trust Fund shall consist of the
contributions and transfers received by the Trustee, together with the income
and earnings from them and any increments to them. The Trustee shall manage and
administer the Trust Fund without distinction between principal and income. The
Trustee shall have no duty to (i) compute any amount required to be transferred
or paid to it by the Company, (ii) collect any contributions or transfers to the
Trust Fund, or (iii) determine whether any contribution or transfer complies
with the terms of the Plan.
If the Company creates or maintains one or more employee benefit plans
qualified under Code section 401(a) in addition to the Plan, the Company may
request the Trustee to hold the assets of the additional plan or plans in the
Trust Fund. The Administrator shall keep records showing the interest of the
Plan and each additional plan in the Trust Fund unless the Trustee enters into
an agreement with the Company to keep separate accounts for each such plan. The
Company and the Administrator shall not permit or cause the assets of one plan
to be used to pay benefits or the administrative expenses of any other plan with
the assets in the Trust Fund.
1.3 The Trustee shall accept a contribution of cash or other property
otherwise acceptable to the Trustee that has been distributed to a participant
(or an eligible employee who is about to become a participant) from another
employee benefit plan qualified under Code section 401(a), or from an individual
retirement account or annuity described in Code section 408, at the direction of
the
<PAGE>
Administrator. The Administrator shall be solely responsible for determining
that such assets represent an eligible rollover contribution within the meaning
of Code section 402(a)(5) or 408(d)(3). The Trustee shall accept a transfer of
cash or other property acceptable to the Trustee on behalf of a participant (or
an employee who is about to become a participant) directly from the trustee of
an employee benefit plan qualified under Code section 401(a) at the direction of
the Administrator.
ARTICLE II-INVESTMENTS AND DISTRIBUTIONS
2.1 (a) Except as provided below, the Administrator shall have all power
over and responsibility for the management, disposition, and investment of the
Trust assets, and the Trustee shall comply with proper written directions of the
Administrator concerning those assets. The Administrator shall not issue
directions in violation of the terms of the Plan and Trust or prohibited by the
fiduciary responsibility rules of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Except to the extent required by ERISA or otherwise
provided in this Agreement, the Trustee shall have no duty or responsibility to
review, initiate action, or make recommendations regarding Trust assets and
shall retain assets until directed in writing by the Administrator to dispose of
them.
The Administrator may delegate to any other person or persons any of the
Administrator's rights, powers or responsibilities with respect to the operation
and administration of the Trust Fund. Any such delegation shall be made in
writing and communicated to the Trustee. The Administrator shall not be liable
for any breach of fiduciary responsibility of a delegee that is not proximately
caused by the Administrator's failure to properly select or supervise such
delegee and in which the Administrator does not participate.
(b) If permissible under the Plan, each participant and/or beneficiary may
have investment power over the account maintained for him or her, and may direct
the investment and reinvestment of assets of the account among the options
authorized by the Administrator. Such direction shall be furnished to the
Trustee in writing or otherwise as agreed by the Trustee and the Administrator.
Such direction shall be furnished to the Trustee in writing or otherwise as
agreed by the Trustee and the Administrator. To the extent provided under ERISA
section 404(c), the Trustee shall not be liable for any loss, or by reason of
any breach, which results from such participant's or beneficiary's exercise of
control. If a participant who has investment authority under the terms of the
Plan fails to provide such directions, the Administrator shall direct the
investment of the participant's account. The Administrator shall maintain
records showing the interest of each participant and/or beneficiary in the Trust
Fund unless the Trustee enters into an agreement with the Company to keep
separate accounts for each such participant and/or beneficiary. The Trustee
shall have no duty or responsibility to review or make recommendations regarding
investments made at the direction of the Administrator or participant and shall
be required to act only upon receipt of proper written directions. A participant
or beneficiary shall not have authority to direct the investment of assets in
his or her account in a loan to any participant, including himself or herself,
or "collectibles" within the meaning of Code section 408(m)(2).
(c) The Administrator may appoint an investment manager or managers within
the meaning of section 3(38) of ERISA to direct, control or manage the
investment of all or a portion of the Trust assets, as provided in sections
3(38) and 403(a)(2) of ERISA. The Administrator shall notify the Trustee in
writing of the appointment of each investment manager, and the assets over which
each manager shall exercise control and cause the investment manager to
acknowledge to the Trustee in writing that the investment manager is a fiduciary
with respect to the Plan. If the foregoing conditions are met, the investment
manager shall have the power to manage, acquire, or dispose of any Trust assets
identified as under such manager's control, and the Trustee shall not be liable
for acts or omissions of the investment manager, or be under an obligation to
invest or otherwise manage any asset of the Trust that is subject to the
management of such investment manager. The Trustee shall act only upon receipt
of proper written directions from a duly appointed investment manager, and shall
have no liability to review or question any such directions.
(d) If the Plan authorizes loans to Plan participants, the duties of the
Trustee and Administrator may be covered by a separate agreement to be
incorporated as part of this Agreement.
2.2 (a) Subject to the Investment Guidelines of the Trustee, any general or
specific investment guidelines formulated by the Company or the Administrator
and the provisions of Section 2.1 above, the person with investment
responsibility ("Authorized Person") may cause the Trust Fund to be invested and
reinvested in every kind of investment including, without limitation, publicly
traded equity and debt interests of all kinds issued by domestic or foreign
governments, business organizations, limited partnerships, investment companies
and trusts or other entities, convertible securities of all kinds,
interest-bearing deposits in any depository institution (including the Trustee
or any affiliate of the Trustee), money market securities of all kinds,
collective investments as described in subsection
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(b) below and insurance contracts as described in subsection (c) below.
Notwithstanding anything in the Trust Agreement to the contrary, the Trustee may
hold uninvested and without liability for interest such part of the Trust Fund
as may be reasonably necessary for the orderly administration of the Trust Fund.
(b) Subject to the following provisions, the assets of the Trust Fund may
be invested and reinvested, in whole or in part, in any common or collective
investment fund (referred to as the "fund") maintained by the Trustee or an
investment manager in which the Trust Fund is eligible to participate.
Notwithstanding any other provision of this Agreement, to the extent Trust Fund
assets are invested in any such fund, the terms of the fund's governing
instrument shall govern the investment responsibilities and powers of the entity
responsible for management of the fund (referred to as "fund manager"), and the
terms of such governing instrument shall be incorporated into the Trust
Agreement. The value of any interest in a fund held by the Trust Fund shall be
the fair market value of the interest as determined by the fund manager in
accordance with the fund's governing instrument. For purposes of valuation of
the Trust Fund assets, the Trustee shall be entitled to rely conclusively on the
value reported by the fund manager.
The Trust Fund may be invested in a pooled investment vehicle funded by
contracts issued by an insurance company qualified to do business in a state
(within the meaning of ERISA section 3(10)) including, without limitation, group
annuity and guaranteed investment contracts. Any such contract may provide for
the allocation of amounts received by the insurance company to its general
account, one or more of its separate accounts (including pooled separate
accounts), or both. To the extent Trust Fund assets are allocated to a separate
account of an insurance company, the Administrator shall appoint the insurance
company as an investment manager as provided above. Notwithstanding any other
provision of the Trust Agreement, the terms of the contract(s) governing the
separate account(s) in which the Trust Fund is invested shall govern the
investment responsibilities and powers of the insurance company and, to the
extent required by law, the terms of such contract(s) shall be incorporated into
the Trust Agreement.
(c) To the extent permitted by the Plan, the Authorized Person may direct
the Trustee to apply for and purchase life insurance or annuity contracts
(referred to as "contracts") from an insurance company, subject to the following
provisions:
(i) The Authorized Person shall be responsible for ensuring that the
purchases conform with the requirements of the Plan and any rules and policies
established by the Administrator regarding the form, value, optional settlement
methods and other provisions of the contracts. The Trustee shall not be
responsible for the validity or proper execution of any contract delivered to
it, or any act of any person which renders the contract void or voidable. The
Trustee shall not be responsible if the contract held in the Trust Fund fails to
meet the requirements of the Plan, and shall have no duty to inform participants
of the terms and conditions of any such contract.
(ii) The Administrator shall instruct the insurance company to notify the
Administrator of all premiums becoming due under the contracts. The
Administrator shall deliver all premium notices to the Trustee, together with a
direction to the Trustee to pay the premiums out of the Trust Fund. The Trustee
shall have no responsibility for paying the premium unless sufficient assets of
the Trust Fund are available for that purpose.
(iii) The Administrator shall cause the Trustee to be designated as the
sole owner of any such contract, with sole power to exercise all rights,
privileges, options and other incidents of ownership at the Administrator's
direction. The Administrator from time to time shall direct the Trustee
regarding the designation of a beneficiary of the death benefit payable under
any such contract in accordance with the applicable provisions of the Plan.
(d) To the extent permitted by the Plan and ERISA and subject to the
applicable federal and state securities laws, the Authorized Person may direct
the Trustee to invest in qualifying employer securities within the meaning of
ERISA section 407(d)(5) ("Employer Securities"). The Administrator shall have
full responsibility for determining that any such investment, and the voting
rights attributable to such investment, complies with applicable law.
Notwithstanding any other provision of the Plan or Trust Agreement, the
Administrator shall have responsibility for voting any shares or directing that
such shares shall be sold, exchanged or otherwise disposed of except to the
extent that such duties are made the responsibility of another person or persons
under the terms of the Plan or other governing documents, and such person
performs according to such terms.
2.3 In its administration of the Trust Fund, the Trustee shall have and
exercise whatever powers are necessary to discharge its obligations and exercise
its rights under the Trust Agreement. Subject to the direction of the
Administrator, participants, or an investment manager as provided in
Section 2.1, the Trustee shall have full power
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and authority with respect to property held in the Trust Fund to do all such
acts, take all proceedings, and exercise all such rights and privileges, whether
specifically referred to or not in this documents, as could be done, taken, or
exercised by the absolute owner, including, without limitation, the following:
(a) To collect income generated by the Trust Fund investments and proceeds
realized on the sale or disposition of assets and to hold the same pending
reinvestment or distribution in accordance with this Agreement;
(b) To register Trust Fund property in the Trustee's own name, in the name
of a nominee or in bearer form, provided the Trustee's records and accounts show
that such property is an asset of the Trust Fund;
(c) To deposit securities in a security depository and permit the
securities so deposited to be held in the name of the depository's nominee, and
to deposit securities issued or guaranteed by the U.S. government or any agency
or instrumentality thereof, including securities evidenced by book entry rather
than by certificate, with the U.S. Department of the Treasury, a Federal Reserve
Bank or other appropriate custodial entity, in the same account as the Trustee'
own property, provided the Trustee's records and accounts show that such
securities are assets of the Trust Fund;
(d) To hold securities issued by a foreign government or business entity at
a foreign office of the Trustee or any of its affiliates, or to deposit such
securities with a foreign securities depository or bank regulated by a
government agency or regulatory authority in the foreign jurisdiction, and to
permit the securities so deposited to be held in the nominee name of the
depository or bank, provided that the Trustee's records and accounts show that
such securities belong to the Trust Fund;
(e) To retain the property in the Trust;
(f) To sell Trust assets, at either public or private sale, at such time or
times and on such terms and conditions as it may deem appropriate;
(g) To consent to or participate in any plan for the reorganization,
consolidation, or merger of any business unit, any security of which is held in
the Trust Fund, to pay calls and assessments imposed upon the owners of such
securities as condition of their participating therein, and to consent to any
contract, lease, mortgage, purchase or sale of property, by or between such
business unit and any other party;
(h) To exercise or dispose of any right it may have as the holder of any
security, to convert the same into another security, to acquire any additional
security or securities, to make any payments, to exchange any security, or to do
any other act with reference thereto;
(i) To renew or extend the time of payment of any obligation due or
becoming due;
(j) To grant options to purchase property held in the Trust;
(k) To compromise, arbitrate, or otherwise adjust or settle claims in favor
of or against the Trust and to deliver or accept consideration in either total
or partial satisfaction of any indebtedness or other obligation, and to continue
to hold property so received for the period of time that the Trustee deems
appropriate;
(l) To exchange any property for other property upon such terms and
conditions as the Trustee may deem proper, and to give or receive money to
effect equality in price;
(m) To foreclose any obligation by judicial proceeding or otherwise;
(n) To sue or defend in connection with any and all securities or property
at any time received or held in the Trust Fund and to charge against the Trust
Fund all reasonable expenses and attorney's fees in connection therewith;
(o) To manage any real property in the same manner as if the Trustee were
the absolute owner thereof, including the power to lease the same for such term
or terms, and upon such conditions including, but without limitation, agreements
for the purchase or disposal of buildings on the property or options to the
tenant to renew such lease from time to time or to purchase such property as the
Trustee deems proper; to make ordinary and extraordinary repairs and alterations
to any property that the Trustee deems proper; to make ordinary and
extraordinary repairs and alterations to any building, to raze old buildings, to
erect new buildings, to insure against loss by fire or other casualties, and to
employ agents and confer upon them authority with respect to the management of
such real property as the Trustee deems appropriate;
4
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(p) To borrow money from any person other than a party in interest of the
Plan with or without giving security;
(q) To deposit any security with any protective or reorganization
committee, and to delegate to that committee such power and authority as the
Trustee may deem proper, and to agree to pay out of the Trust Fund that portion
of the expenses and compensation of that committee as the Trustee may deem
proper;
(r) To deliver to the Administrator, or the person or persons identified by
the Administrator, proxies and powers of attorney and related informational
material, for any shares or other property held in the Trust. The Administrator
shall have responsibility for voting such shares, by proxy or in person, except
to the extent such responsibility is delegated to another person, under the
terms of the Plan or Trust Agreement or under an agreement between the named
fiduciary of the Plan and an investment manager, in which case such persons
shall have such responsibilities. The Trustee may use agents to effect such
delivery to the Administrator or the person or persons identified by the
Administrator. In no event shall the Trustee be responsible for the voting of
shares of securities held in the Trust or for ascertaining or monitoring
whether, or how, proxies are voted or whether the proper number of proxies is
received;
(s) To appoint agents as necessary or desirable, including legal counsel
who may be counsel for the Company;
(t) To hold that portion of the Trust Fund as the Trustee may deem
necessary for ordinary administration and for the disbursement of funds in cash,
without liability for interest, by depositing the same in any bank (including
deposits which bear a reasonable rate of interest in a bank or similar financial
institution supervised by the United States or a State, even where a bank or
financial institution is the Trustee, or otherwise is a fiduciary of the Plan,
including The Charles Swab Trust Company), subject to the rules and regulations
governing such deposits, and without regard to the amount of any such deposit;
(u) To retain group or individual insurance contracts of all kinds
authorized under the Plan;
(v) If directed by the Administrator, participant, or investment manager,
to acquire, hold, and administer limited partnership interests, or interests in
other specialized investment vehicles, provided that such Authorized Person
signs any agreement or other necessary documents requested by the Trustee prior
to entering into the transaction;
(w) To write covered call options on securities where appropriate for the
Trust; provided that any such transaction is in conformity with the Plan and all
applicable rules, regulations, and laws governing the Trustee, the Plan, and
this Trust;
(x) To the extent permitted under applicable laws, to invest in deposits,
long and short term debt instruments, stocks, and other securities, including
those of the Trustee, The Charles Schwab Corporation (the "Public Company"),
Charles Schwab & Co., Inc. (the "Broker/Dealer"), their affiliates and
subsidiaries;
(y) To lend securities from the Trust on a secured basis in accordance with
a separate written agreement between the Administrator and the Trustee.
2.4 The Trustee is authorized to contract or make other arrangements with
The Charles Schwab Corporation (the "Public Company"), Charles Schwab & Co.,
Inc. (the "Broker/ Dealer"), their affiliates and subsidiaries, successors and
assigns and any other organizations affiliated with or subsidiaries of the
Trustee or related entities, for the provision of services to the Trust or Plan,
except where such arrangements are prohibited by law or regulation.
2.5 The Trustee is authorized to place securities orders, settle securities
trades, hold securities in custody, and other related activities on behalf of
the Trust through or by the Broker/Dealer whenever possible, unless the
Authorized Person specifically instructs the use of another broker/dealer.
Trades (and related activities) conducted through the Broker/Dealer shall be
subject to fees and commissions established by the Broker/Dealer, which may be
paid from the Trust or netted from the proceeds of trades.
Trades shall not be executed through the Broker/Dealer unless the
Administrator and the Authorized Person have received disclosure concerning the
relationship of the Broker/Dealer to the Trustee, and fees and commissions which
may be paid to the Public Company, Broker/Dealer, the Trustee and/or their
affiliates or subsidiaries as a result of using the Broker/Dealer's execution or
other services.
The Trustee is authorized to disclose such information as is necessary to
the operation and administration of the Trust to the Public Company or any of
its affiliates, and to such other persons or organizations that the Trustee
determines have a legitimate business purpose for obtaining such information.
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2.6 At the direction of the Authorized Person, the Trustee may purchase
shares of regulated investment companies (or other investment vehicles) advised
by the Holding Company, Broker/Dealer or the Trustee or any affiliate of any of
them ("SchwabFunds") except to the extent that such investment is prohibited by
law or regulation.
(a) Uninvested cash of the Trust will be invested in SchwabFunds designated
by the Authorized Person for that purpose, unless the Authorized Person
specifically instructs the use of another fund or account, except to the extent
prohibited by law or regulation.
SchwabFunds shares may not be purchased or held by the Trust unless the
Authorized Person has received disclosure concerning the Public Company's,
Broker/Dealer's, the Trustee's and/or their affiliate's or subsidiary's
relationship to the Funds, and any fees which may be paid to the Public Company,
Broker/Dealer, Trustee and/or their affiliates or subsidiaries.
2.7 The Administrator shall have responsibility for establishing and
carrying out a funding policy and method, as specified in section 402(b)(1) of
ERISA, consistent with the objectives of the Plan and the requirements of ERISA,
taking into consideration the Plan's short-term and long-term financial needs.
The Trustee shall not be responsible for proper diversification of the
assets of the Trust Fund. The Administrator or the person to whom such
responsibility has been properly delegated under the requirements of ERISA shall
be responsible for the funding policy, for diversification of assets held in
trust for the Plan, and for compliance of the Trust Fund with statutory
limitations on the amount of investment in securities or other property of the
Company or its affiliated companies.
2.8 No assets of the Trust Fund shall be invested in the securities of the
Company or its affiliates unless the Administrator determines that the
securities are exempt from registration under the federal Securities Act of
1933, as amended, and are exempt from registration or qualification under the
applicable state law, and of any other applicable blue sky law, or in the
alternative, that the securities have been so registered and/or qualified. The
Administrator shall also specify what restrictive legend on transfer, if any, is
required to be set forth on the certificates for the securities and the
procedure to be followed by the Trustee to effectuate a resale of such
securities. The Administrator shall not direct the investment in "employer
securities" or "employer real property", within the meaning of section 407 of
ERISA, if such investment would be prohibited by ERISA. The Administrator shall
only direct the investment of Trust funds into securities of the Company or an
affiliate (i) if those securities are traded on an exchange permitting a readily
ascertainable fair market value, or (ii) if the Administrator shall have
obtained a current valuation by a qualified independent appraiser.
2.9 The Trustee shall make distributions or transfers from the Trust as
specified in written directions from the Administrator. The Trustee is
authorized, to the extent required under applicable law, to withhold from
distributions to any payee an amount that the Trustee determines in necessary to
cover federal and state taxes, and the Trustee is required to withhold such
amounts if so directed by the Administrator. The Trustee shall have no liability
for making any distribution or transfer pursuant to the direction of the
Administrator (including amounts withheld pursuant to the previous sentence) and
shall be under no duty to make inquiry whether any distribution or transfer
directed by the Administrator is made pursuant to the provisions of the Plan.
The Administrator shall furnish to the Trustee all information necessary to
carry out such withhold, or, if such information is not provided to the Trustee,
the Administrator shall hold the Trustee harmless from and indemnify it for any
liability and related expenses that arise in connection with improper
withholding.
The Trustee shall not be liable for the proper application of any part of
the Plan or Trust if distributions or transfers are made in accordance with the
written directions of the Administrator including any distribution made pursuant
to a domestic relations order which the Administrator has determined to be
qualified within the meaning of section 414(p) of the Code, nor shall the
Trustee be responsible for the adequacy of the Trust Fund to discharge any and
all payments and liabilities under the Plan.
2.10 The Trustee may make any payment required for it under this Agreement
by mailing its check for the amount specified to the recipient at such address
last furnished to the Trustee by the Administrator, or if the Trustee has never
received an address, to the recipient in care of the Administrator.
2.11 All persons dealing with the Trustee are released from inquiring into
the decision or authority of the Trustee and from seeing to the proper
application of any monies paid or securities or other property delivered to the
Trustee.
2.12 The Trustee shall bear no liability for acting upon any instructions
or document believed by it to be genuine and to be presented or signed by a
party duly authorized to
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do so, and the Trustee shall be under no duty to make any investigation or
inquiry about the correctness of such instruction or document.
2.13 The Trustee may consult with legal counsel of its choice, including
counsel for the Company, upon any question or matter arising hereunder and the
opinion of such counsel when relied upon by the Trustee shall be evidenced the
Trustee was acting in good faith.
2.14 If, as provided in the Plan, other trustees of separate trusts under
the Plan may be appointed, the Trustee under this Agreement shall have no duties
or responsibilities for Plan assets not held in the Trust by the Trustee, except
as required by applicable law.
ARTICLE III - SETTLEMENT OF ACCOUNTS
3.1 (a) The Trustee shall maintain accurate records and detailed accounts
of all investments, receipts, disbursements, and other transactions related to
the Trust, and those records shall be available at all reasonable times to the
Administrator, the Company, or their authorized representatives.
(b) The Trustee, at the direction of the Administrator, shall submit to the
Administrator and any other person that the Administrator designates those
valuations, reports, or other information as the Administrator may reasonably
require. In any case, the Trust Fund shall be valued by the Trustee at the
frequency agreed to by the Trustee and the Company, but in any event not less
than annually at the fair market value as of the close of business at the end of
the last business day of the fiscal year of the Plan. Except as specified below,
in the absence of fraud or bad faith, the Trustee's valuation of the Trust Fund
shall be conclusive.
3.2 (a) Within sixty days following the close of each fiscal year of the
Plan or the close of any other period as may be agreed upon by the Trustee and
the Administrator, the Trustee shall file with the Administrator a written
account setting forth a description of all securities and other property
purchased and sold, all receipts, disbursements, and other transactions effected
by it during that fiscal year or other designated period, and listing the
securities and other property held by the Trustee at the end of such fiscal year
or other designated period, together with their then fair market values.
(b) The Administrator may approve an account by written notice of approval
delivered to the Trustee or by failure to deliver to the Trustee express
objections to the account in writing within sixty days from the date upon which
the account was mailed or otherwise delivered to the Administrator.
(c) The account shall be deemed approved upon receipt by the Trustee of the
Administrator's written approval of the account or upon the passage of the sixty
day period of time, except for any matters covered by written objections that
have been delivered to the Trustee by the Administrator and for which the
Trustee has not given an explanation or made an adjustment satisfactory to the
Administrator.
(d) If the account is not settled as provided above, the Trustee, the
Company or the Administrator shall have the right to apply to a court of
competent jurisdiction at the expense of the Trust Fund for a judicial
settlement of the accounting. Any judgment or decree entered in such proceedings
shall be conclusive on all persons interested in the Trust Fund.
3.3 Notwithstanding any other provision of this Article 3, if the Trustee
shall determine that the Trust Fund consists in while or in part of property not
traded freely on a recognized market, or that information necessary to ascertain
the fair market value is not readily available, the Trustee may request
instructions from the Administrator on the value of such property for all
purposes under the Plan and this Trust Agreement, and the Administrator shall
comply with that request. The Trustee shall be entitled to rely upon the value
placed upon such property by the Administrator. At the Trustee's option, it may
request that the Administrator hire an independent appraiser that meets the
requirements of Code section 401(a)(28)(C) to value the property. Alternatively,
if the Trustee chooses, or if the Administrator shall fail or refuse to instruct
the Trustee on the value of such property within a reasonable time after receipt
of the Trustee's request, the Trustee at its sole discretion may engage an
independent appraiser to determine the fair market value of such property. Any
expenses with respect to such appraisal shall be paid by the Trustee out of the
Trust Fund or, at the option of the Company, by the Company.
ARTICLE IV - INDEMNIFICATION
4.1 To the extent permitted under ERISA, the Company shall indemnify and
hold harmless the Trustee, its officers, employees, and agents from and against
all liabilities, losses, expenses, and claims (including reasonable attorneys'
fees and costs of defense) arising out of (1) the acts or omissions to act with
respect to the Plan or Trust by persons unrelated to the Trustee ("unrelated
persons"),
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(2) the Trustee's action or inaction with respect to the Plan or Trust
resulting from reliance on the action or inaction of unrelated persons,
including directions to invest or otherwise deal with Plan assets, or (3) any
violation by any unrelated person of the provisions of ERISA or the regulations
thereunder, unless Trustee commits a breach of its duties by reason of its
negligence or willful misconduct. Expenses incurred by the Trustee which it
believes to be subject to indemnification under this Agreement shall be paid by
the Company upon the Trustee's request, provided that the Company may delay
payment of any amount in dispute until such dispute is resolved according to the
provisions of Sec. 8.5 of the Agreement. Such resolution may include the award
of interest on unpaid amounts determined to be payable to the Trustee under this
Section.
ARTICLE V - TAXES, EXPENSES AND COMPENSATION OF TRUSTEE
5.1 The Trustee shall notify the Plan Administrator of any tax levied upon
or assessed against the Trust Fund of which the Trustee has knowledge. If the
Trustee receives no instructions from the Administrator, the Trustee may pay the
tax from the Trust Fund. If the Plan Administrator wishes to contest the tax
assessment, it shall give appropriate written instructions to the Trustee. The
Trustee shall not be required to bring any legal actions or proceedings to
contest the validity of any tax assessments unless the Trustee has been
indemnified to its satisfaction against loss or expense related to such actions
or proceedings, including reasonable attorneys' fees.
5.2 The Company shall quarterly pay the Trustee its expenses in
administering the Trust Fund and reasonable compensation for its services as
Trustee at a rate set forth in the Fee Schedule, which may be amended from time
to time. The Trustee reserves the right to alter this rate of compensation at
any time by providing the Company with notice of such change at least sixty days
prior to its effective date. Reasonable compensation shall include compensation
for any extraordinary services or compensations required, such as determination
of the value of assets when current market values are not published, and the
covering of overdrafts. The Trustee shall have a lien on the Trust Fund for
compensation and for any reasonable expenses including counsel, appraisal, or
accounting fees, and such amounts may be withdrawn from the Trust Fund unless
paid by the Company within thirty days after mailing of the written billing by
the Trustee.
ARTICLE VI - RESIGNATION OR REMOVAL OF TRUSTEE
6.1 The Trustee may resign as Trustee hereunder or may be removed by the
Company. This resignation or removal may be accomplished at any time upon the
giving of sixty days written notice to the Trustee or Company, as applicable (or
less if the other party agrees to waive notice). Upon resignation or removal,
the Company shall appoint a successor Trustee who shall then succeed to all the
powers and duties given to the Trustee by this Agreement. The terminating
Trustee shall transfer all property of the Trust Fund then held by its to such
successor Trustee. The terminating Trustee may require as a condition of making
such transfer that the successor Trustee present evidence that any bonding
requirement under ERISA section 412 has been met and/or may require that the
Company provide a writing indemnifying the Trustee against any losses arising
from the replacement of the Trustee. If either party has given notice of
termination as provided under this Agreement, and upon the expiration of the
advance notice period no other successor Trustee has been appointed and has
accepted such appointment, this provision shall serve as (i) notice of
appointment of the chief executive officer of the Company as Trustee and (ii) as
acceptance by that person of that appointment. The Trustee is authorized to
reserve such sum of money as it may deem advisable for payment of its fees and
expenses in connection with the settlement of its accounts or other proper Trust
expenses, and any balance of such reserve remaining after the payment of such
fees and expenses shall be paid to the successor Trustee.
6.2 Within sixty days of the transfer of the successor Trustee, the
terminating Trustee shall provide the Company with an account in the form and
manner prescribed for the annual account by Article 3. Unless the Company files
with the Trustee written objections within sixty days after such account has bee
mailed or otherwise delivered, the account shall be deemed to have been
approved.
ARTICLE VII - AMENDMENT AND TERMINATION OF TRUST
7.1 It is the intention of the Company that this Trust and the Plan of
which it is a part shall be permanently administered for the benefit of the
Plan's participants and their beneficiaries, and defraying reasonable expenses
of administering the Plan. This Trust is, accordingly, irrevocable except with
respect to Section 8.4; however, if changing conditions require, this Trust may
be terminated at any time by the Company, and upon such termination, the Trust
Fund shall be distributed by the Trustee as and when directed by the
Administrator in accordance with the provisions of Section 2.9 and the Plan
document. From the date of termination of the Plan and until the final
distribution of the Trust assets, the Trustee shall continue to have all the
powers provided under this Agreement that are necessary or
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desirable for the orderly liquidation and distribution of the Trust Fund. In no
instance upon any termination, or discontinuance, and subsequent distribution
shall the Trust Fund or any part of it be used for, or diverted to, purposes
other than providing benefits to participating employees and their
beneficiaries, and defraying the administrative expenses of the Plan until all
Plan liabilities have been satisfied, except in the instance of the failure of
the Trust initially to qualify for tax-exempt status as set forth in
Section 8.4.
7.2 This Trust Agreement, other than Section 7.1 may be amended at any time
by written agreement of the Company and the Trustee, provided that such
amendment shall not operate:
(i) to cause any part of the Trust Fund to revert to be recoverable by the
Company or to be used for or diverted to purposes other than the exclusive
benefit of participants and their beneficiaries, except to the extent permitted
by law and the Plan; or
(ii) to reduce the then accrued benefits or the amounts then held for the
benefit of any participant or beneficiary of the Plan.
7.3 The Trustee may condition the transfer or distribution of any assets of
the Trust Fund upon termination of the Trust on receipt of a favorable
determination letter from the Internal Revenue Service confirming that the
termination of the Plan does not adversely affect the tax-exempt status of the
Trust Fund. Alternatively, the Trustee, in its sole discretion, may accept the
indemnification of the Trustee against any liability arising from such transfer
or distribution that is provided by the Company or may require the Company to
post a bond sufficient to protect the Trustee against such liability until such
time as a favorable determination letter is received.
ARTICLE VIII - MISCELLANEOUS
8.1 The Trust will be administered in the State of California, and its
validity, construction, and all rights hereunder shall be governed by ERISA and,
to the extent not preempted, by the laws of California. If any provisions of
this Agreement shall be invalid or unenforceable, the remaining provisions shall
continue to be fully effective.
8.2 The headings in this instrument have been inserted for convenience of
reference only, and are to be ignored in any construction of the provision of
this Agreement.
8.3 No person entitled to any benefit under this Trust and the Plan shall
have any right to assign, alienate, hypothecate, or encumber his interest in any
benefits under this Agreement (except as to any loans under the Plan) and those
benefits shall not in any way be subject to claim of his creditors or liable to
attachment, execution, or other process of law except to the extent required
under a qualified domestic relations under within the meaning of section 414(p)
of the Code.
8.4 It is intended that this Trust shall be tax exempt under section 501 of
the Code and that the Plan referred to herein shall qualify under section 401(a)
of the Code. However, notwithstanding any other provisions of the Trust, if the
Internal Revenue Service is requested to issue to the Company a favorable
written determination or ruling with respect to the initial qualification of the
Plan and exemption of the Trust from tax and such request is denied, the Trustee
shall, after receiving a written direction from the Administrator, pay to each
participant that portion of the Trust Fund applicable to said participant's
voluntary contributions, if any, and provided the Plan so states, pay to the
Company an part of the Trust Fund attributable to Company contributions then
remaining in the Trustee's possession. As a condition of such repayment, the
Company must execute, acknowledge, and deliver to the Trustee its written
undertaking in form satisfactory to the Trustee, to indemnify, defend, and hold
the Trustee harmless from all claims, actions, demands, or liabilities arising
on connection with such repayment, and provided further that such repayment will
occur within one year after the date the request for qualification is denied.
8.5 Any dispute under this Agreement shall be resolved by submission of the
issue to a member of the American Arbitration Association who is chosen by the
Company and the Trustee. If the Company and the Trustee cannot agree on such a
choice, each shall nominate a member of the American Arbitration Association,
and the two nominees will then select an arbitrator. Expenses of the arbitration
shall be paid as decided by the arbitrator.
8.6 This Trust Agreement is incorporated into and is a part of the Plan.
Anything in any other part of the Plan that is inconsistent with this Trust
Agreement is overridden, and in the case of such conflict, the terms of this
Trust Agreement shall govern.
8.7 The duties and responsibilities of the Trustee shall be solely those
set forth in this document. The trustee shall not be a named fiduciary under the
Plan and shall not have the authority to interpret the Plan.
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8.8 To the extent permitted by statutory or administrative exemption, the
Trustee may engage in actions that otherwise would violate section 406 of ERISA.
8.9 Each fiduciary shall be solely responsible for the fiduciary's own acts
or omissions under the Plan or the Trust. Except to the extent otherwise
provided by ERISA, the parties specifically intend that no fiduciary shall be
liable for any breach of fiduciary responsibility of another fiduciary.
8.10 The Trustee is authorized to tape record conversations between the
Trustee and persons acting on behalf of the Plan or a participant of the Plan to
verify data on transactions.
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IN WITNESS WHEREOF, DOWNEY SAVINGS AND LOAN ASSOCIATION and THE CHARLES SCHWAB
TRUST COMPANY, have caused this Agreement to be executed by their respective
officers thereunto duly authorized as of the day and year first above written.
COMPANY NAME: DOWNEY SAVINGS AND LOAN ASSOCIATION
By: /S/ JOLENE BRYANT
------------------------------------
Printed Name: Jolene Bryant
--------------------------
Title: SVP, Director of Human Resources
---------------------------------
THE CHARLES SCHWAB TRUST COMPANY
Trustee
By: /S/ CAROL STROHMEIR
------------------------------------
Printed Name: Carol Strohmeier
--------------------------
Title: Senior Account Administrator
---------------------------------
<PAGE>
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Downey Financial Corp.
We consent to incorporation by reference in the registration statement on Form
S-8 of Downey Financial Corp. of our report dated January 16, 1997, relating to
the consolidated balance sheets of Downey Financial Corp. and subsidiaries as of
December 31, 1996 and 1995 and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1996, which report appears in the December 31, 1996
annual report on Form 10-K of Downey Financial Corp.
/s/ KPMG Peat Marwick LLP
Los Angeles, California
June 27, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF SCOTT BANKHEAD & CO.
<PAGE>
June 27, 1997
Board of Directors
Downey Financial Corp.
3501 Jamboree Road
Newport Beach, CA 92660
We consent to the incorporation by reference in the Registration Statement on
Form S-8 of Downey Financial Corp. pertaining to the Downey Savings and Loan
Association, F.A. Employees' Retirement and Savings Plan of our report dated
September 20, 1996 with respect to the financial statements of the Downey
Savings and Loan Association, F.A. Employees' Retirement and Savings Plan for
years ended December 31, 1995 and 1994 which report appears in the 1995 Annual
Report on Form 11-K of Downey Savings and Loan Association, F.A. Employees'
Retirement and Savings Plan.
Very truly yours,
/s/ Scott, Bankhead & Co.
