Exhibit 10.4
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L.A. GEAR, INC.
EMPLOYEE STOCK SAVINGS PLAN
PLAN AND TRUST AGREEMENT
SECOND COMPLETE
AMENDMENT AND RESTATEMENT
GENERALLY EFFECTIVE AUGUST 1, 1993
L.A. Gear, Inc. Employee Stock Savings Plan and Trust
Second Complete Amendment and Restatement Generally Effective August 1, 1993
L.A. Gear, Inc. established the Retirement Plan for Employees of L.A. Gear,
effective December 1, 1985, intended to constitute a qualified profit sharing
plan, as described in Code section 401(a), for the benefit of eligible employees
of the Company and its participating affiliates. The Retirement Plan for
Employees of L.A. Gear was renamed the L.A. Gear, Inc. Employee Stock Savings
Plan effective December 1, 1986, and concurrently amended and restated to add a
qualified cash or deferred arrangement, as described in Code section 401(k) and
provisions to provide for a qualified stock bonus plan, as described in Code
section 401(a), designated as an employee stock ownership plan, as described in
Code section 4975(e)(7).
The provisions related to the employee stock ownership plan are discontinued,
which provisions were never effected. The Plan, as amended and restated
generally effective August 1, 1993, is intended to constitute a qualified profit
sharing plan, as described in Code section 401(a), which includes a qualified
cash or deferred arrangement, as described in Code section 401(k).
The provisions of this Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between L.A. Gear, Inc. and ▇▇▇▇▇
Fargo Bank, National Association. The Trust is intended to be tax exempt as
described under Code section 501(a).
The L.A. Gear, Inc. Employee Stock Savings Plan and Trust, as set forth in this
document, is hereby amended and restated generally effective as of August 1,
1993. This constitutes the second complete amendment and restatement generally
effective August 1, 1993.
Date: November 9, 1995 L.A. Gear, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Title: 401(k) committee members
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The trust agreement set forth in those provisions of this Plan and Trust which
relate to the Trustee is hereby executed.
Date: November 9, 1995 ▇▇▇▇▇ Fargo Bank, National Association
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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Title:
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Date: November 9, 1995 ▇▇▇▇▇ Fargo Bank, National Association
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Title:
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TABLE OF CONTENTS
1 DEFINITIONS....................................................... 1
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2 ELIGIBILITY....................................................... 10
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2.1 Eligibility................................................. 10
2.2 Ineligible Employees........................................ 10
2.3 Ineligible or Former Participants........................... 11
3 PARTICIPANT CONTRIBUTIONS......................................... 12
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3.1 Employee 401(k) Contribution Election....................... 12
3.2 After-Tax Contribution Election............................. 12
3.3 Changing a Contribution Election............................ 12
3.4 Revoking and Resuming a Contribution Election............... 12
3.5 Contribution Percentage Limits.............................. 13
3.6 Refunds When Contribution Dollar Limit Exceeded............. 13
3.7 Timing, Posting and Tax Considerations...................... 14
4 ROLLOVERS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS......... 15
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4.1 Rollovers................................................... 15
4.2 Transfers From and To Other Qualified Plans................. 15
5 EMPLOYER CONTRIBUTIONS............................................ 16
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5.1 Employer Matching Contributions............................. 16
5.2 Matching Stock Contributions................................ 17
5.3 Matching Cash Contributions................................. 17
5.4 Qualifying Contributions.................................... 18
6 ACCOUNTING........................................................ 19
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6.1 Individual Participant Accounting........................... 19
6.2 Sweep Account is Transaction Account........................ 19
6.3 Trade Date Accounting and Investment Cycle.................. 19
6.4 Accounting for Investment Funds............................. 19
6.5 Payment of Fees and Expenses................................ 19
6.6 Accounting for Participant Loans............................ 20
6.7 Error Correction............................................ 20
6.8 Participant Statements...................................... 21
6.9 Special Accounting During Conversion Period................. 21
6.10 Accounts for QDRO Beneficiaries............................. 21
7 INVESTMENT FUNDS AND ELECTIONS.................................... 22
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7.1 Investment Funds............................................ 22
7.2 Investment Fund Elections................................... 22
7.3 Responsibility for Investment Choice........................ 23
7.4 Default if No Election...................................... 23
7.5 Timing...................................................... 23
7.6 Investment Fund Election Change Fees........................ 23
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8 VESTING & FORFEITURES............................................ 24
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8.1 Fully Vested Contribution Accounts......................... 24
8.2 Full Vesting upon Certain Events........................... 24
8.3 Vesting Schedule........................................... 24
8.4 Forfeitures................................................ 25
8.5 Rehired Employees.......................................... 25
9 PARTICIPANT LOANS................................................ 26
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9.1 Participant Loans Permitted................................ 26
9.2 Loan Application, Note and Security........................ 26
9.3 Spousal Consent............................................ 26
9.4 Loan Approval.............................................. 26
9.5 Loan Funding Limits, Account Sources and Funding Order..... 26
9.6 Maximum Number of Loans.................................... 27
9.7 Source and Timing of Loan Funding.......................... 27
9.8 Interest Rate.............................................. 27
9.9 Loan Payment............................................... 27
9.10 Loan Payment Hierarchy..................................... 28
9.11 Repayment Suspension....................................... 28
9.12 Loan Default............................................... 28
9.13 Call Feature............................................... 28
10 IN-SERVICE WITHDRAWALS............................................ 29
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10.1 In-Service Withdrawals Permitted........................... 29
10.2 In-Service Withdrawal Application and Notice............... 29
10.3 Spousal Consent............................................ 29
10.4 In-Service Withdrawal Approval............................. 29
10.5 Minimum Amount, Payment Form and Medium.................... 29
10.6 Source and Timing of In-Service Withdrawal Funding......... 30
10.7 Hardship Withdrawals....................................... 30
10.8 After-Tax Account Withdrawals.............................. 32
10.9 Over Age 59 1/2 Withdrawals................................ 32
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW.......... 34
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11.1 Benefit Information, Notices and Election.................. 34
11.2 Spousal Consent............................................ 34
11.3 Payment Form and Medium.................................... 34
11.4 Distribution of Small Amounts.............................. 35
11.5 Source and Timing of Distribution Funding.................. 35
11.6 Deemed Distribution........................................ 35
11.7 Latest Commencement Permitted.............................. 36
11.8 Payment Within Life Expectancy............................. 36
11.9 Incidental Benefit Rule.................................... 36
11.10 Payment to Beneficiary..................................... 37
11.11 Beneficiary Designation.................................... 37
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12 ADP AND ACP TESTS.................................................. 38
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12.1 Contribution Limitation Definitions......................... 38
12.2 ADP and ACP Tests........................................... 41
12.3 Correction of ADP and ACP Tests............................. 41
12.4 Multiple Use Test........................................... 43
12.5 Correction of Multiple Use Test............................. 43
12.6 Adjustment for Investment Gain or Loss...................... 43
12.7 Testing Responsibilities and Required Records............... 44
12.8 Separate Testing............................................ 44
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS....................... 45
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13.1 "Annual Addition" Defined................................... 45
13.2 Maximum Annual Addition..................................... 45
13.3 Avoiding an Excess Annual Addition.......................... 45
13.4 Correcting an Excess Annual Addition........................ 45
13.5 Correcting a Multiple Plan Excess........................... 46
13.6 "Defined Benefit Fraction" Defined.......................... 46
13.7 "Defined Contribution Fraction" Defined..................... 46
13.8 Combined Plan Limits and Correction......................... 46
14 TOP HEAVY RULES.................................................... 47
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14.1 Top Heavy Definitions....................................... 47
14.2 Special Contributions....................................... 48
14.3 Adjustment to Combined Limits for Different Plans........... 49
15 PLAN ADMINISTRATION................................................ 50
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15.1 Plan Delineates Authority and Responsibility................ 50
15.2 Fiduciary Standards......................................... 50
15.3 Company is ERISA Plan Administrator......................... 50
15.4 Administrator Duties........................................ 51
15.5 Advisors May be Retained.................................... 51
15.6 Delegation of Administrator Duties.......................... 52
15.7 Committee Operating Rules................................... 52
16 MANAGEMENT OF INVESTMENTS.......................................... 53
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16.1 Trust Agreement............................................. 53
16.2 Investment Funds............................................ 53
16.3 Authority to Hold Cash...................................... 54
16.4 Trustee to Act Upon Instructions............................ 54
16.5 Administrator Has Right to Vote Registered Investment
Company Shares.............................................. 54
16.6 Custom Fund Investment Management........................... 54
16.7 Authority to Segregate Assets............................... 55
16.8 Maximum Permitted Investment in Company Stock............... 55
16.9 Participants Have Right to Vote and Tender Company Stock.... 55
16.10 Registration and Disclosure for Company Stock............... 56
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17 TRUST ADMINISTRATION....................................... 57
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17.1 Trustee to Construe Trust........................... 57
17.2 Trustee To Act As Owner of Trust Assets............. 57
17.3 United States Indicia of Ownership.................. 57
17.4 Tax Withholding and Payment......................... 58
17.5 Trust Accounting.................................... 58
17.6 Valuation of Certain Assets......................... 58
17.7 Legal Counsel....................................... 59
17.8 Fees and Expenses................................... 59
17.9 Trustee Duties and Limitations...................... 59
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION.......... 60
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18.1 Plan Does Not Affect Employment Rights.............. 60
18.2 Limited Return of Contributions..................... 60
18.3 Assignment and Alienation........................... 60
18.4 Facility of Payment................................. 61
18.5 Reallocation of Lost Participant's Accounts......... 61
18.6 Claims Procedure.................................... 61
18.7 Construction........................................ 62
18.8 Jurisdiction and Severability....................... 62
18.9 Indemnification by Employer......................... 62
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION............ 63
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19.1 Amendment........................................... 63
19.2 Merger.............................................. 63
19.3 Divestitures........................................ 63
19.4 Plan Termination.................................... 64
19.5 Amendment and Termination Procedures................ 64
19.6 Termination of Employer's Participation............. 64
19.7 Replacement of the Trustee.......................... 65
19.8 Final Settlement and Accounting of Trustee.......... 65
APPENDIX A - INVESTMENT FUNDS................................... ▇▇
▇▇▇▇▇▇▇▇ ▇ - PAYMENT OF PLAN FEES AND EXPENSES.................. 67
APPENDIX C - LOAN INTEREST RATE................................. 68
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1 DEFINITIONS
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When capitalized, the words and phrases below have the following meanings
unless different meanings are clearly required by the context:
1.1 "Account". The records maintained for purposes of accounting for a
Participant's interest in the Plan. "Account" may refer to one or all
of the following accounts which have been created on behalf of a
Participant to hold specific types of Contributions under the Plan:
(a) "Employee 401(k) Account". An account created to hold Employee
401(k) Contributions.
(b) "After-Tax Account". An account created to hold After-Tax
Contributions.
(c) "Rollover Account". An account created to hold Rollover
Contributions.
(d) "Employer Matching Account". An account created to hold
Employer Matching Contributions.
(e) "Matching Stock Account". An account created to hold Matching
Stock Contributions and, effective December 1, 1995, amounts
designated as Employer Matching Contributions, which amounts
prior to December 1, 1995, were held in a Participant's Employer
Matching Account.
(f) "Matching Cash Account". An account created to hold Matching
Cash Contributions.
(g) "Qualifying Account". An account created to hold Qualifying
Contributions.
1.2 "ACP" or "Average Contribution Percentage". The percentage calculated
in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all or a portion of
the duties of the Administrator under the Plan to a Committee in
accordance with Section 15.6.
1.4 "ADP" or "Average Deferral Percentage". The percentage calculated in
accordance with Section 12.1.
1.5 "Beneficiary". The person or persons who is to receive benefits after
the death of the Participant pursuant to the "Beneficiary Designation"
paragraph in Section 11, or as a result of a QDRO.
1
1.6 "Break in Service". The end of five consecutive Plan Years (or six
consecutive Plan Years if absence from employment was due to a
Parental Leave) for which a Participant is credited with no Hours of
Service.
1.7 "Code". The Internal Revenue Code of 1986, as amended. Reference to
any specific Code section shall include such section, any valid
regulation promulgated thereunder, and any comparable provision of any
future legislation amending, supplementing or superseding such
section.
1.8 "Committee". If applicable, the committee which has been appointed by
the Company to administer the Plan in accordance with Section 15.6.
1.9 "Company". L.A. Gear, Inc. or any successor by merger, purchase or
otherwise.
1.10 "Company Stock". Shares of common stock of the Company, or its
successors or assigns, or any corporation with or into which said
corporation may be merged, consolidated or reorganized, or to which a
majority of its assets may be sold.
1.11 "Compensation". The sum of a Participant's Taxable Income and salary
reductions, if any, pursuant to Code sections 125, 402(e)(3), 402(h),
403(b), 414(h)(2) or 457, excluding reimbursements or other expense
allowances, cash and non-cash fringe benefits, moving expenses,
deferred compensation and welfare benefits. Effective December 1,
1995, the preceding reference to "excluding reimbursements or other
expense allowances, cash and non-cash fringe benefits, moving
expenses, deferred compensation and welfare benefits" shall no longer
apply.
For purposes of determining benefits under this Plan, Compensation is
limited to $200,000, (as adjusted for the cost of living pursuant to
Code sections 401(a)(17) and 415(d)) per Plan Year. For purposes of
determining benefits under this Plan for Plan Years beginning after
December 31, 1993, Compensation is limited to $150,000, (as adjusted
for the cost of living pursuant to Code sections 401(a)(17) and
415(d)) per Plan Year.
For purposes of the preceding paragraph, in the case of an HCE who is
a 5% Owner or one of the 10 most highly compensated Employees, (i)
such HCE and such HCE's family group (as defined below) shall be
treated as a single employee and the Compensation of each family group
member shall be aggregated with the Compensation of such HCE, and (ii)
the limitation on Compensation shall be allocated among such HCE and
his or her family group members in proportion to each individual's
Compensation before the application of this sentence. For purposes of
this Section, the term "family group" shall mean an Employee's spouse
and lineal descendants who have not attained age 19 before the close
of the year in question.
2
For purposes of determining HCEs and key employees, Compensation for
the entire Plan Year shall be used. For purposes of determining ADP
and ACP, Compensation shall be limited to amounts paid to an Eligible
Employee while a Participant.
1.12 "Contribution". An amount contributed to the Plan by the Employer or
an Eligible Employee, and allocated by contribution type to
Participants' Accounts, as described in Section 1.1. Specific types
of contribution include:
(a) "Employee 401(k) Contribution". An amount contributed by an
eligible Participant in conjunction with his or her Code section
401(k) salary deferral election which shall be treated as made
by the Employer on an eligible Participant's behalf.
(b) "After-Tax Contribution". An amount contributed by an eligible
Participant on an after-tax basis.
(c) "Rollover Contribution". An amount contributed by an Eligible
Employee which originated from another employer's or an
Employer's qualified plan.
(d) "Employer Matching Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant for periods prior
to December 1, 1995.
(e) "Matching Stock Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant as set forth in
Section 5.2.
(f) "Matching Cash Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant as set forth in
Section 5.3.
(g) "Qualifying Contribution". An amount contributed by the
Employer on an eligible Participant's behalf and allocated on a
pay based formula.
1.13 "Contribution Dollar Limit". The annual limit placed on each
Participant's Employee 401(k) Contributions, which shall be $7,000 per
calendar year (as adjusted for the cost of living pursuant to Code
sections 402(g)(5) and 415(d)). For purposes of this Section, a
Participant's Employee 401(k) Contributions shall include (i) any
employer contribution made under any qualified cash or deferred
arrangement as defined in Code section 401(k) to the extent not
includible in gross income for the taxable year under Code section
402(e)(3) or 402(h)(1)(B) (determined without regard to Code section
402(g)), and (ii) any employer contribution to purchase an annuity
contract under Code section 403(b) under a salary reduction agreement
(within the meaning of Code section 3121(a)(5)(D)).
3
1.14 "Conversion Period". The period of converting the prior accounting
system of the Plan and Trust, if such Plan and Trust were in existence
prior to the Effective Date, or the prior accounting system of any
plan and trust which is merged into this Plan and Trust subsequent to
the Effective Date, to the accounting system described in Section 6.
1.15 "Direct Rollover". An Eligible Rollover Distribution that is paid
directly to an Eligible Retirement Plan for the benefit of a
Distributee.
1.16 "Disability". A Participant's total and permanent, mental or physical
disability as evidenced by presentation of medical evidence
satisfactory to the Administrator preventing a Participant from
engaging in his or her normal job, provided that the Participant
receives, or is anticipated to receive, disability benefits under the
Social Security Act.
1.17 "Distributee". An Employee or former Employee, the surviving spouse
of an Employee or former Employee and a spouse or former spouse of an
Employee or former Employee determined to be an alternate payee under
a QDRO.
1.18 "Effective Date". The date upon which the provisions of this document
become effective. This date is August 1, 1993, unless stated
otherwise and specifically except that the provisions related to
Qualifying Contributions and related Accounts are effective November
1, 1994, provisions related to Employer Matching Contributions and
related Accounts are discontinued effective November 30, 1995 and
provisions related to Matching Stock and Matching Cash Contributions
and related Accounts are effective December 1, 1995. In general, the
provisions of this document only apply to Participants who are
Employees on or after the Effective Date. However, investment and
distribution provisions apply to all Participants with Account
balances to be invested or distributed after the Effective Date.
1.19 "Eligible Employee". An Employee of an Employer, except any Employee:
(a) whose compensation and conditions of employment are covered by a
collective bargaining agreement to which an Employer is a party
unless the agreement calls for the Employee's participation in
the Plan;
(b) who is treated as an Employee because he or she is a Leased
Employee
(c) who is a nonresident alien who (i) either receives no earned
income (within the meaning of Code section 911(d)(2)), from
sources within the United States under Code section 861(a)(3);
or (ii) receives such earned income from such sources within the
United States but such income is exempt from United States
income tax under an applicable income tax convention; or
(d) who is a Temporary Employee.
4
Effective December 1, 1995, an Eligible Employee shall include a
Temporary Employee other than a Temporary Employee, if any, described
in (a), (b) or (c) above.
1.20 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan described in Code
section 403(a), or a qualified trust described in Code section 401(a),
that accepts a Distributee's Eligible Rollover Distribution, except
that with regard to an Eligible Rollover Distribution to a surviving
spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
1.21 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee, excluding a
distribution that is one of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or
life expectancy) of a Distributee or the joint lives (or joint life
expectancies) of a Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more; a
distribution to the extent such distribution is required under Code
section 401(a)(9); and the portion of a distribution that is not
includible in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to Employer securities).
1.22 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom any income
for such employment is subject to withholding of income or
social security taxes, or
(b) a Leased Employee.
1.23 "Employer". The Company and any Subsidiary or other Related Company
of either the Company or a Subsidiary which adopts this Plan with the
approval of the Company.
1.24 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific section shall include such
section, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation amending, supplementing
or superseding such section.
1.25 "Expatriate Employee". The employment status of an Eligible Employee
during the period he or she is on an international assignment and
residing in a location other this his or her home country.
1.26 "Forfeiture Account". An account holding amounts forfeited by
Participants who have terminated employment with all Related
Companies, invested in interest bearing deposits of the Trustee,
pending disposition as provided in this Plan and Trust and as directed
by the Administrator.
5
1.27 "HCE" or "Highly Compensated Employee". An Employee described as a
Highly Compensated Employee in Section 12.
1.28 "Hour of Service". Each hour for which an Employee is entitled to:
(a) payment for the performance of duties for any Related Company;
(b) payment from any Related Company for any period during which no
duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, sickness,
incapacity (including disability), layoff, leave of absence,
jury duty or military service;
(c) back pay, irrespective of mitigation of damages, by award or
agreement with any Related Company (and these hours shall be
credited to the period to which the agreement pertains); or
(d) no payment, but is on a Leave of Absence (and these hours shall
be based upon his or her normally scheduled hours per week or a
40 hour week if there is no regular schedule).
The crediting of hours for which no duties are performed shall be in
accordance with Department of Labor regulation sections 2530.200b-2(b)
and (c). Actual hours shall be used whenever an accurate record of
hours are maintained for an Employee. Otherwise, an equivalent number
of hours shall be credited for each payroll period in which the
Employee would be credited with at least 1 hour. The payroll period
equivalencies are 45 hours weekly, 90 hours biweekly, 95 hours
semimonthly and 190 hours monthly.
Hours credited prior to a Break in Service are included.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Hours of Service
for eligibility and/or vesting purposes if (1) the Company directs
that credit for such service be granted, or (2) a qualified plan of
the predecessor or acquired company is subsequently maintained by any
Employer or Related Company.
1.29 "Ineligible". The Plan status of an individual during the period in
which he or she is (1) an Employee of a Related Company which is not
then an Employer, (2) an Employee, but not an Eligible Employee, or
(3) not an Employee.
1.30 "Investment Fund" or "Fund". An investment fund as described in
Section 16.2. The Investment Funds authorized by the Administrator to
be offered under the Plan as of the Effective Date, or such date as
otherwise specified, are set forth in Appendix A.
6
1.31 "Leased Employee". An individual who is deemed to be an employee of
any Related Company as provided in Code section 414(n) or (o).
1.32 "Leave of Absence". A period during which an individual is deemed to
be an Employee, but is absent from active employment, provided that
the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed forces
and the individual returns to active employment within the
period during which he or she retains employment rights under
federal law.
1.33 "Loan Account". The record maintained for purposes of accounting for
a Participant's loan and payments of principal and interest thereon.
1.34 "NHCE" or "Non-Highly Compensated Employee". An Employee described as
a Non-Highly Compensated Employee in Section 12.
1.35 "Normal Retirement Date". The date of a Participant's 65th birthday.
1.36 "Owner". A person with an ownership interest in the capital, profits,
outstanding stock or voting power of a Related Company within the
meaning of Code section 318 or 416 (which exclude indirect ownership
through a qualified plan).
1.37 "Parental Leave". The period of absence from work by reason of
pregnancy, the birth of an Employee's child, the placement of a child
with the Employee in connection with the child's adoption, or caring
for such child immediately after birth or placement as described in
Code section 410(a)(5)(E).
1.38 "Participant". An Eligible Employee who begins to participate in the
Plan after completing the eligibility requirements as described in
Section 2.1. An Eligible Employee who makes a Rollover Contribution
prior to completing the eligibility requirements as described in
Section 2.1 shall also be considered a Participant, except that he or
she shall not be considered a Participant for purposes of provisions
related to Contributions, other than a Rollover Contribution, until he
or she completes the eligibility requirements as described in Section
2.1. A Participant's participation continues until his or her
employment with all Related Companies ends and his or her Account is
distributed or forfeited.
1.39 "Pay". All cash compensation paid to an Eligible Employee by an
Employer while a Participant during the current period, except that
"base pay" shall be substituted for the preceding reference to "All
cash compensation" with regard to an Eligible Employee during any
period he or she is an Expatriate Employee. Pay excludes
reimbursements or other expense allowances, cash and non-cash fringe
benefits, moving expenses, deferred compensation and welfare benefits.
7
Pay is neither increased by any salary credit or decreased by any
salary reduction pursuant to Code sections 125 or 402(e)(3). Pay is
limited to $200,000 (as indexed for the cost of living pursuant to
Code sections 401(a)(17) and 415(d)) per Plan Year. Pay is limited to
$150,000 (as adjusted for the cost of living pursuant to Code sections
401(a)(17) and 415(d)) per Plan Year for Plan Years beginning after
December 31, 1993.
1.40 "Plan". The L.A. Gear, Inc. Employee Stock Savings Plan set forth in
this document, as from time to time amended.
1.41 "Plan Year". The annual accounting period of the Plan and Trust which
ends on each November 30.
1.42 "QDRO". A domestic relations order which the Administrator has
determined to be a qualified domestic relations order within the
meaning of Code section 414(p).
1.43 "Related Company". With respect to any Employer, that Employer and
any corporation, trade or business which is, together with that
Employer, a member of the same controlled group of corporations, a
trade or business under common control, or an affiliated service group
within the meaning of Code sections 414(b), (c), (m) or (o), except
that for purposes of Section 13 "within the meaning of Code sections
414(b), (c), (m) or (o), as modified by Code section 415(h)" shall be
substituted for the preceding reference to "within the meaning of Code
section 414(b), (c), (m) or (o)".
1.44 "Regular Employee". An Employee of an Employer other than an Employee
classified as a Temporary Employee.
1.45 "Settlement Date". For each Trade Date, the Trustee's next business
day.
1.46 "Spousal Consent". The written consent given by a spouse to a
Participant's Beneficiary designation. The spouse's consent must
acknowledge the effect on the spouse of the Participant's designation,
and be duly witnessed by a Plan representative or notary public.
Spousal Consent shall be valid only with respect to the spouse who
signs the Spousal Consent and only for the particular choice made by
the Participant which requires Spousal Consent. A Participant may
revoke (without Spousal Consent) a prior designation that required
Spousal Consent at any time before payments begin. Spousal Consent
also means a determination by the Administrator that there is no
spouse, the spouse cannot be located, or such other circumstances as
may be established by applicable law.
1.47 "Subsidiary". A company which is 50% or more owned, directly or
indirectly, by the Company.
8
1.48 "Sweep Account". The subsidiary Account for each Participant through
which all transactions are processed, which is invested in interest
bearing deposits of the Trustee.
1.49 "Sweep Date". The cut off date and time for receiving instructions
for transactions to be processed on the next Trade Date.
1.50 "Taxable Income". Compensation in the amount reported by the Employer
or a Related Company as "Wages, tips, other compensation" on Form W-2,
or any successor method of reporting under Code section 6041(d).
1.51 "Temporary Employee". An Employee of an Employer whose work
assignment is not intended to exceed 120 days and therefore whose
employment commencement date and termination date is not intended to
be more than 120 days apart.
1.52 "Trade Date". Each day the Investment Funds are valued, which is
normally every day the assets of such Funds are traded.
1.53 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the Plan
and holds the Plan assets which are comprised of the aggregate of
Participants' Accounts, any unallocated funds invested in deposit or
money market type assets pending allocation to Participants' Accounts
or disbursement to pay Plan fees and expenses and the Forfeiture
Account.
1.54 "Trustee". ▇▇▇▇▇ Fargo Bank, National Association.
1.55 "Year of Vesting Service". A 12 consecutive month period ending on
the last day of a Plan Year in which an Employee is credited with at
least 1,000 Hours of Service. An Employee shall be credited with a
Year of Vesting Service at such time as he or she is credited with
1,000 Hours of Service during such 12 consecutive month period.
Years of Vesting Service shall include service credited prior to
December 1, 1985.
9
2 ELIGIBILITY
-----------
2.1 Eligibility
All Participants as of August 1, 1993 shall continue their eligibility
to participate. Each other Eligible Employee shall become a
Participant on the later of August 1, 1993 or thereafter, on the first
day of the next month after the date he or she attains age 21, and
completes a three month eligibility period in which he or she is
credited with at least 250 Hours of Service. The initial eligibility
period begins on the date an Employee first performs an Hour of
Service. Subsequent eligibility periods begin with the start of each
quarter of the Plan Year beginning after the first Hour of Service is
performed.
Effective February 1, 1995, all Participants as of February 1, 1995
shall continue their eligibility to participate. Each other Eligible
Employee shall become a Participant on the later of February 1, 1995
or thereafter, on the first day of the next payroll period after the
date he or she attains age 21, and completes a 30 day eligibility
period in which he or she is credited with at least 83 Hours of
Service. The initial eligibility period begins on the date an
Employee first performs an Hour of Service. Subsequent eligibility
periods begin with the start of each month beginning after the first
Hour of Service is performed.
Effective December 1, 1995, all Participants as of December 1, 1995
shall continue their eligibility to participate. Each other Eligible
Employee, other than a Temporary Employee or a Regular Employee
classified as part-time, shall become a Participant on the first day
of the next payroll period after the date he or she attains age 21,
and completes a 30 day eligibility period in which he or she is
credited with at least 83 Hours of Service. The initial eligibility
period begins on the date an Employee first performs an Hour of
Service. Subsequent eligibility periods begin with the start of each
month beginning after the first Hour of Service is performed.
Each Eligible Employee who is a Temporary Employee or a Regular
Employee classified as part-time, shall become a Participant on the
later of December 1, 1995 or thereafter, on the first day of the next
payroll period after the date he or she attains age 21, and completes
a twelve month eligibility period in which he or she is credited with
at least 1,000 Hours of Service. The initial eligibility period
begins on the date an Employee first performs an Hour of Service.
Subsequent eligibility periods begin with the start of each Plan Year
after the first Hour of Service is performed.
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements, but is
Ineligible at the time participation would otherwise begin (if he or
she were not Ineligible), he or she shall become a Participant on the
first subsequent date on which he or she is an Eligible Employee.
10
2.3 Ineligible or Former Participants
A Participant may not make or share in Plan Contributions, nor
generally be eligible for a new Plan loan, during the period he or she
is Ineligible, but he or she shall continue to participate for all
other purposes. An Ineligible Participant or former Participant shall
automatically become an active Participant on the date he or she again
becomes an Eligible Employee.
11
3 PARTICIPANT CONTRIBUTIONS
-------------------------
3.1 Employee 401(k) Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to reduce
his or her Pay by an amount which does not exceed the Contribution
Dollar Limit, within the limits described in the Contribution
Percentage Limits paragraph of this Section 3, and have such amount
contributed to the Plan by the Employer as a Employee 401(k)
Contribution. The election shall be made as a whole percentage of Pay
in such manner and with such advance notice as prescribed by the
Administrator. In no event shall an Employee's Employee 401(k)
Contributions under the Plan and comparable contributions to all other
plans, contracts or arrangements of all Related Companies exceed the
Contribution Dollar Limit for the Employee's taxable year beginning in
the Plan Year.
3.2 After-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to make
After-Tax Contributions to the Plan in an amount which does not exceed
the limits described in the Contribution Percentage Limits paragraph
of this Section 3. The election shall be made as a whole percentage
of Pay in such manner and with such advance notice as prescribed by
the Administrator.
3.3 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her
Employee 401(k) and/or After-Tax Contribution election at any time,
but no more frequently than once in any 3-month period, in such manner
and with such advance notice as prescribed by the Administrator, and
such election shall be effective with the first payroll paid after
such date. Participants' Contribution election percentages shall
automatically apply to Pay increases or decreases.
3.4 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Employee 401(k) and/or After-Tax
Contribution election at any time in such manner and with such advance
notice as prescribed by the Administrator, and such revocation shall
be effective with the first payroll paid after such date.
A Participant who has revoked his or her Employee 401(k) and/or After-
Tax Contribution election shall be required to wait at least three
months before he or she may resume Employee 401(k) and/or After-Tax
Contributions to the Plan. Thereafter, a Participant who is an
Eligible Employee may resume Employee 401(k) and/or After-Tax
Contributions by making a new Contribution election at any time in
such manner and with such advance notice as prescribed by the
Administrator, and such election shall be effective with the first
payroll paid after such date.
12
3.5 Contribution Percentage Limits
The Administrator may establish and change from time to time, in
writing, without the necessity of amending this Plan and Trust, the
minimum, if applicable, and maximum Employee 401(k) and After-Tax
Contribution percentages, and/or a maximum combined Employee 401(k)
and After-Tax Contribution percentage, prospectively or
retrospectively (for the current Plan Year), for all Participants. In
addition, the Administrator may establish any lower percentage limits
for Highly Compensated Employees as it deems necessary to satisfy the
tests described in Section 12. As of the Effective Date, the minimum
Employee 401(k) and After-Tax Contribution Percentages are 1%, and the
maximum Contribution percentages are:
HIGHLY
CONTRIBUTION COMPENSATED ALL OTHER
TYPE EMPLOYEES PARTICIPANTS
------------------ ------------ -------------
Employee 401(k) 17% 17%
After-Tax 10% 10%
Sum of Both 17% 17%
Irrespective of the limits that may be established by the
Administrator in accordance with this paragraph, in no event shall the
contributions made by or on behalf of a Participant for a Plan Year
exceed the maximum allowable under Code section 415.
3.6 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Employee 401(k) Contributions for a calendar
year to this Plan and comparable contributions to any other qualified
defined contribution plan in excess of the Contribution Dollar Limit
may notify the Administrator in writing by the following March 1 (or
as late as April 14 if allowed by the Administrator) that an excess
has occurred. In this event, the amount of the excess specified by
the Participant, adjusted for investment gain or loss, shall be
refunded to him or her by April 15 and shall not be included as an
Annual Addition under Code section 415 for the year contributed.
Refunds shall not include investment gain or loss for the period
between the end of the applicable calendar year and the date of
distribution.
Excess amounts shall first be taken from unmatched Employee 401(k)
Contributions and then from matched Employee 401(k) Contributions.
Any Employer Matching Contributions attributable to refunded excess
Employee 401(k) Contributions as described in this Section shall be
forfeited and used as described in Section 8.4. For the calendar year
commencing January 1, 1995, "Any Employer Matching, Matching Stock and
Matching Cash Contributions" shall be substituted for the reference to
"Any Employer Matching Contributions" in the preceding sentence and
for calendar years commencing
13
on or after January 1, 1996, "Any Matching Stock and Matching Cash
Contributions" shall be substituted for the reference to "Any Employer
Matching Contributions" in the preceding sentence.
3.7 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover Contributions, may
only be made through payroll deduction. Such amounts shall be paid to
the Trustee in cash and posted to each Participant's Account(s) as
soon as such amounts can reasonably be separated from the Employer's
general assets and balanced against the specific amount made on behalf
of each Participant. In no event, however, shall such amounts be paid
to the Trustee more than 90 days after the date amounts are deducted
from a Participant's Pay. Employee 401(k) Contributions shall be
treated as Contributions made by an Employer in determining tax
deductions under Code section 404(a).
14
4 ROLLOVERS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS
---------------------------------------------------------
4.1 Rollovers
The Administrator may authorize the Trustee to accept a rollover
contribution, within the meaning of Code section 402(c) or
408(d)(3)(A)(ii), in cash, directly from an Eligible Employee or as a
Direct Rollover from another qualified plan on behalf of the Eligible
Employee, even if he or she is not yet a Participant. The Employee
shall be responsible for furnishing satisfactory evidence, in such
manner as prescribed by the Administrator, that the amount is eligible
for rollover treatment. A rollover contribution received directly
from an Eligible Employee must be paid to the Trustee in cash within
60 days after the date received by the Eligible Employee from a
qualified plan or conduit individual retirement account.
Contributions described in this paragraph shall be posted to the
applicable Employee's Rollover Account as of the date received by the
Trustee.
If it is later determined that an amount contributed pursuant to the
above paragraph did not in fact qualify as a rollover contribution
under Code section 402(c) or 408(d)(3)(A)(ii), the balance credited to
the Employee's Rollover Account shall immediately be (1) segregated
from all other Plan assets, (2) treated as a nonqualified trust
established by and for the benefit of the Employee, and (3)
distributed to the Employee. Any such nonqualifying rollover shall be
deemed never to have been a part of the Plan.
4.2 Transfers From and To Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in cash
or in kind directly from another qualified plan or transfer assets in
cash or in kind directly to another qualified plan; provided that a
transfer should not be directed if:
(a) any amounts are not exempted by Code section 401(a)(11)(B) from
the annuity requirements of Code section 417 unless, in the
event of a receipt of assets, the Plan complies with such
requirements or, in the event of a transfer of assets, the
receiving Plan complies with such requirements; or
(b) any amounts include benefits protected by Code section 411(d)(6)
which would not be preserved under applicable Plan provisions,
in the event of a receipt of assets or, under the applicable
provisions of the receiving plan, in the event of a transfer of
assets.
The Trustee may refuse the receipt of any transfer if:
(a) the Trustee finds the in-kind assets unacceptable; or
(b) instructions for posting amounts to Participants' Accounts are
incomplete.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee.
15
5 EMPLOYER CONTRIBUTIONS
----------------------
The provisions of Section 5.1 are discontinued effective November 30, 1995.
The provisions of Sections 5.2 and 5.3 are effective December 1, 1995. The
provisions of Section 5.4 are effective November 1, 1994.
5.1 Employer Matching Contributions
(a) Frequency and Eligibility. For each Plan Year, the Employer
shall make Employer Matching Contributions, as described in the
following Allocation Method paragraph, on behalf of each
Participant who contributed during the period and was an
Eligible Employee on the last day of the period.
Such Contributions shall also be made on behalf of each
Participant who contributed during the period but who ceased
being an Employee during the period after having attained age
65, or by reason of his or her Disability or death.
(b) Allocation Method. The Employer Matching Contributions
(including any Forfeiture Account amounts applied as Employer
Matching Contributions in accordance with Section 8.4) for each
period shall total 50% of each eligible Participant's Employee
401(k) Contributions for the period, provided that no Employer
Matching Contributions (and Forfeiture Account amounts) shall be
made based upon a Participant's Contributions in excess of 6% of
his or her Pay. The Employer may change the 50% matching rate
or the 6% of considered Pay to any other percentages, including
0%, generally by notifying eligible Participants in sufficient
time to adjust their Contribution elections prior to the start
of the period for which the new percentages apply, or in the
case of an increased percentage matching rate or increased
percentage of considered Pay, no later than the due date,
including extensions, for filing the Employer's federal income
tax return for the applicable year.
(c) Timing, Medium and Posting. The Employer shall make each
period's Employer Matching Contribution in cash as soon as
administratively feasible, and for purposes of deducting such
Contribution, not later than the Employer's federal tax filing
date, including extensions. The Trustee shall post such amount
to each Participant's Employer Matching Account once the total
Contribution received has been balanced against the specific
amount to be credited to each Participant's Employer Matching
Account.
16
5.2 Matching Stock Contributions
(a) Frequency and Eligibility. For each Participant for which
Participants' Contributions are made, the Employer shall make
Matching Stock Contributions, as described in the following
Allocation Method paragraph, on behalf of each Participant who
contributed during the period.
(b) Allocation Method. The Matching Stock Contributions (including
any Forfeiture Account amounts applied as Matching Stock
Contributions in accordance with Section 8.4) for each period
shall total 25% of each eligible Participant's Employee 401(k)
Contributions for the period, provided that no Matching Stock
Contributions (and Forfeiture Account amounts) shall be made
based upon a Participant's Contributions in excess of 6% of his
or her Pay. The Employer may change the 25% matching rate or
the 6% of considered Pay to any other percentages, including 0%,
generally by notifying eligible Participants in sufficient time
to adjust their Contribution elections prior to the start of the
Plan Year for which the new percentages apply.
(c) Timing, Medium and Posting. The Employer shall make each
period's Matching Stock Contribution in cash as soon as
administratively feasible, and for purposes of deducting such
Contribution, not later than the Employer's federal tax filing
date, including extensions. The Trustee shall post such amount
to each Participant's Matching Stock Account once the total
Contribution received has been balanced against the specific
amount to be credited to each Participant's Matching Stock
Account.
5.3 Matching Cash Contributions
(a) Frequency and Eligibility. For each period for which
Participants Contributions are made, the Employer shall make
Matching Cash Contributions, as described in the following
Allocation Method paragraph, on behalf of each Participant who
contributed during the period.
(b) Allocation Method. The Matching Cash Contributions (including
any Forfeiture Account amounts applied as Matching Cash
Contributions in accordance with Section 8.4) for each period
shall total 25% of each eligible Participant's Employee 401(k)
Contributions for the period, provided that no Matching Cash
Contributions (and Forfeiture Account amounts) shall be made
based upon a Participant's Contributions in excess of 6% of his
or her Pay. The Employer may change the 25% matching rate or the
6% of considered Pay to any other percentages, including 0%,
generally by notifying eligible Participants in sufficient time
to adjust their Contribution elections prior to the start of the
Plan Year for which the new percentages apply.
17
(c) Timing, Medium and Posting. The Employer shall make each
period's Matching Cash Contribution in cash as soon as
administratively feasible, and for purposes of deducting such
Contribution, not later than the Employer's federal tax filing
date, including extensions. The Trustee shall post such amount
to each Participant's Matching Cash Account once the total
Contribution received has been balanced against the specific
amount to be credited to each Participant's Matching Cash
Account.
5.4 Qualifying Contributions
(a) Frequency and Eligibility. For each Plan Year, the Employer may
make a Qualifying Contribution on behalf of a Non-Highly
Compensated Employee Participant who was an Eligible Employee at
any time during the period.
(b) Allocation Method. The Qualifying Contribution for each period
shall be in an amount determined by the Employer, not in excess
of the amount determined necessary to satisfy the tests
described in Section 12, and allocated among eligible
Participants in order of each Participant's Taxable Income for
the Plan Year beginning with the Participant with the lowest
Taxable Income, in an amount representing the lesser of the
amount determined necessary to satisfy the tests described in
Section 12 or that results in the Annual Addition, as defined in
Section 13.1, to the Participant's Account equaling, but not
exceeding, the Maximum Annual Addition, as defined in Section
13.2. This process shall be repeated with the Participant with
the next lowest Taxable Income and so forth as necessary until
the tests described in Section 12 are satisfied.
(c) Timing, Medium and Posting. The Employer shall make each
period's Qualifying Contribution in cash as soon as
administratively feasible, and for purposes of deducting such
Contribution, not later than the Employer's federal tax filing
date, including extensions. Notwithstanding, for purposes of
satisfying the tests described in Section 12, Qualifying
Contributions shall be made before the end of the Plan Year
following the Plan Year being tested. The Trustee shall post
such amount to each Participant's Qualifying Account once the
total Contribution received has been balanced against the
specific amount to be credited to each Participant's Qualifying
Account.
18
6 ACCOUNTING
----------
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts for
each Participant in order to reflect transactions both by type of
Contribution and investment medium. Financial transactions shall be
accounted for at the individual Account level by posting each
transaction to the appropriate Account of each affected Participant.
Participant Account values shall be maintained in shares for the
Investment Funds and in dollars for the Sweep and Loan Accounts. At
any point in time, the Account value shall be determined using the
most recent Trade Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep Account
shall be credited with interest up until the date on which it is
removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade Date.
For any transaction to be processed as of a Trade Date, the Trustee
must receive instructions for the transaction by the Sweep Date. Such
instructions shall apply to amounts held in the Account on that Sweep
Date. Financial transactions of the Investment Funds shall be posted
to Participants' Accounts as of the Trade Date, based upon the Trade
Date values provided by the Trustee, and settled on the Settlement
Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in shares.
The Trustee is responsible for determining the share values of each
Investment Fund as of each Trade Date. To the extent an Investment
Fund is comprised of collective investment funds of the Trustee, or
any other fiduciary to the Plan, the share values shall be determined
in accordance with the rules governing such collective investment
funds, which are incorporated herein by reference. All other share
values shall be determined by the Trustee. The share value of each
Investment Fund shall be based on the fair market value of its
underlying assets.
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund management and
maintenance, as set forth below, are paid by the Employer directly, or
indirectly, through the Forfeiture
19
Account as directed by the Administrator, such fees and expenses shall
be paid as set forth below. The Employer may pay a lower portion of
the fees and expenses allocable to the Accounts of Participants who
are no longer Employees or who are not Beneficiaries, unless doing so
would result in discrimination.
(a) Account Maintenance: Account maintenance fees and expenses, may
include but are not limited to, administrative, Trustee,
government annual report preparation, audit, legal,
nondiscrimination testing and fees for any other special
services. Account maintenance fees shall be charged to
Participants on a per Participant basis provided that no fee
shall reduce a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include but are
not limited to, periodic installment payment Investment Fund
election change and loan fees. Transaction fees shall be
charged to the Participant's Account involved in the transaction
provided that no fee shall reduce a Participant's Account
balance below zero.
(c) Investment Fund Management and Maintenance: Management and
maintenance fees and expenses related to the Investment Funds
shall be charged at the Investment Fund level and reflected in
the net gain or loss of each Fund.
As of the Effective Date, a breakdown of which Plan fees and expenses
shall generally be borne by the Trust (and charged to individual
Participants' Accounts or charged at the Investment Fund level and
reflected in the net gain or loss of each Fund) and those that shall
be paid by the Employer is set forth in Appendix B and may be changed
from time to time by the Administrator, in writing, without the
necessity of amending this Plan and Trust.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from the
Trust.
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Loan Account of the
Participant and accounted for in dollars as an earmarked asset of the
borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account
balance with the amount that would be credited to the Account had no
error or omission been made. Funds necessary for any such restoration
shall be provided through payment made by the Employer, or by the
Trustee to the extent the error or omission is
20
attributable to actions or inactions of the Trustee, or if the
restoration involves an Account holding amounts contributed by an
Employer, the Administrator may direct the Trustee to use amounts from
the Forfeiture Account.
6.8 Participant Statements
The Administrator shall provide Participants with statements of their
Accounts as soon after the end of each quarter of the Plan Year as
administratively feasible.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting
methods in performing their respective duties during any Conversion
Period. This includes, but is not limited to, the method for
allocating net investment gains or losses and the extent, if any, to
which contributions received by and distributions paid from the Trust
during this period share in such allocation.
6.10 Accounts for QDRO Beneficiaries
A separate Account shall be established for an alternate payee
entitled to any portion of a Participant's Account under a QDRO as of
the date and in accordance with the directions specified in the QDRO.
In addition, a separate Account may be established during the period
of time the Administrator, a court of competent jurisdiction or other
appropriate person is determining whether a domestic relations order
qualifies as a QDRO. Such a separate Account shall be valued and
accounted for in the same manner as any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an alternate payee
may be distributed, in a form as permissible under Section 11,
to the alternate payee at the time specified in the QDRO,
regardless of whether the Participant is entitled to a
distribution from the Plan at such time.
(b) Participant Loans. Except to the extent required by law, an
alternate payee, on whose behalf a separate Account has been
established, shall not be entitled to borrow from such Account.
If a QDRO specifies that the alternate payee is entitled to any
portion of the Account of a Participant who has an outstanding
loan balance, all outstanding loans shall generally continue to
be held in the Participant's Account and shall not be divided
between the Participant's and alternate payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an alternate payee and has not yet been
distributed, the alternate payee may direct the investment of
such Account in the same manner as if he or she were a
Participant.
21
7 INVESTMENT FUNDS AND ELECTIONS
------------------------------
7.1 Investment Funds
Except for Participants' Sweep and Loan Accounts, the Trust shall be
maintained in various Investment Funds. The Administrator shall
select the Investment Funds offered to Participants and may change the
number or composition of the Investment Funds, subject to the terms
and conditions agreed to with the Trustee. As of the Effective Date
or such date as otherwise specified, a list of the Investment Funds
offered under the Plan is set forth in Appendix A, and may be changed
from time to time by the Administrator, in writing, and as agreed to
by the Trustee, without the necessity of amending this Plan and Trust.
7.2 Investment Fund Elections
Each Participant shall direct the investment of all of his or her
Contribution Accounts except for these Accounts:
Employer Matching Account
which shall be entirely invested in the Investment Fund specified by
the Administrator, which Investment Fund as of the Effective Date is
set forth in Appendix A. However, a Participant who has attained age
55 may direct the investment of the balances in his or her Employer
Matching Account. Future amounts allocated to his or her Employer
Matching Account shall continue to be entirely invested in the
Investment Fund specified by the Administrator, until otherwise
directed by the Participant.
Effective December 1, 1995, "Matching Stock Account" (which effective
December 1, 1995 includes amounts previously held in a Participant's
Employer Matching Account) shall be substituted for each reference to
"Employer Matching Account" in the preceding paragraph.
A Participant shall make his or her investment election in any
combination of one or any number of the Investment Funds offered in
accordance with the procedures established by the Administrator and
Trustee. However, during any Conversion Period, Trust assets may be
held in any investment vehicle permitted by the Plan, as directed by
the Administrator, irrespective of Participant investment elections.
The Administrator may set a maximum percentage of the total election
that a Participant may direct into any specific Investment Fund, which
maximum, if any, as of the Effective Date is set forth in Appendix A,
and may be changed from time to time by the Administrator, in writing,
without the necessity of amending this Plan and Trust.
22
7.3 Responsibility for Investment Choice
Each Participant shall be solely responsible for the selection of his
or her Investment Fund choices. No fiduciary with respect to the Plan
is empowered to advise a Participant as to the manner in which his or
her Accounts are to be invested, and the fact that an Investment Fund
is offered shall not be construed to be a recommendation for
investment.
7.4 Default if No Election
The Administrator shall specify an Investment Fund for the investment
of that portion of a Participant's Account which is not yet held in an
Investment Fund and for which no valid investment election is on file.
The Investment Fund specified as of the Effective Date is set forth in
Appendix A, and may be changed from time to time by the Administrator,
in writing, without the necessity of amending this Plan and Trust.
7.5 Timing
A Participant shall make his or her initial investment election upon
becoming a Participant and may change his or her investment election
at any time in accordance with the procedures established by the
Administrator and Trustee. Investment elections received by the
Trustee by the Sweep Date shall be effective on the following Trade
Date.
7.6 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a Participant's
Account for Investment Fund election changes in excess of a specified
number per year as determined by the Administrator.
23
8 VESTING & FORFEITURES
---------------------
8.1 Fully Vested Contribution Accounts
A Participant shall be fully vested in these Accounts at all times:
Employee 401(k) Account
After-Tax Account
Rollover Account
Qualifying Account
8.2 Full Vesting upon Certain Events
A Participant's entire Account shall become fully vested once he or
she has attained his or her Normal Retirement Date as an Employee or
upon his or her terminating employment with all Related Companies due
to his or her Disability or death.
8.3 Vesting Schedule
In addition to the vesting provided above, a Participant's Employer
Matching Account shall become vested in accordance with the following
schedule:
YEARS OF VESTING VESTED
SERVICE PERCENTAGE
-------------------- -----------
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
Effective December 1, 1995, "Matching Stock and Matching Cash
Accounts" (which, with regard to "Matching Stock Account" effective
December 1, 1995, includes amounts previously held in a Participant's
Employer Matching Account) shall be substituted for the preceding
reference to "Employer Matching Account".
If this vesting schedule is changed, the vested percentage for each
Participant shall not be less than his or her vested percentage
determined as of the last day prior to this change, and for any
Participant with at least three Years of Vesting Service when the
schedule is changed, vesting shall be determined using the more
favorable vesting schedule.
24
8.4 Forfeitures
A Participant's non-vested Account balance shall be forfeited as of
the Settlement Date following the Sweep Date on which the
Administrator has reported to the Trustee that the Participant's
employment has terminated with all Related Companies. Forfeitures
from all Employer Contribution Accounts shall be transferred to and
maintained in a single Forfeiture Account, which shall be invested in
interest bearing deposits of the Trustee. Forfeiture Account amounts
shall be utilized to restore Accounts, to pay Plan fees and expenses
and to reduce Employer Matching Contributions as directed by the
Administrator.
Effective December 1, 1995, "Matching Stock and Matching Cash
Contributions" shall be substituted for the reference to "Employer
Matching Contributions" in the preceding paragraph.
8.5 Rehired Employees
(a) Service. If a former Employee is rehired, all Years of Vesting
Service credited when his or her employment last terminated
shall be counted in determining his or her vested interest.
(b) Account Restoration. If a former Employee is rehired before he
or she has a Break in Service, the amount forfeited when his or
her employment last terminated shall be restored to his or her
Account. The restoration shall include the interest which would
have been credited had such forfeiture been invested in the
Sweep Account from the date forfeited until the date the
restoration amount is restored. The amount shall come from the
Forfeiture Account to the extent possible, and any additional
amount needed shall be contributed by the Employer. The vested
interest in his or her restored Account shall then be equal to:
V% times (AB + D) - D
where:
V% = current vested percentage
AB = current account balance
D = amount previously distributed
25
9 PARTICIPANT LOANS
-----------------
9.1 Participant Loans Permitted
Loans to Participants are permitted pursuant to the terms and
conditions set forth in this Section.
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with such
advance notice as prescribed by the Administrator. All loans shall be
evidenced by a promissory note, secured only by the portion of the
Participant's Account from which the loan is made, and the Plan shall
have a lien on this portion of his or her Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
take out a loan under the Plan.
9.4 Loan Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that a loan request conforms to the requirements described
in this Section and granting such request.
9.5 Loan Funding Limits, Account Sources and Funding Order
The loan amount must meet all of the following limits as determined as
of the Sweep Date the loan is processed and shall be funded from the
Participant's Accounts as follows:
(a) Plan Minimum Limit. The minimum amount for any loan is $500.
(b) Plan Maximum Limit, Account Sources and Funding Order. Subject
to the legal limit described in (c) below, the maximum a
Participant may borrow, including the outstanding balance of
existing Plan loans, is 100% of the following of the
Participant's Accounts which are fully vested in the priority
order as follows:
Employee 401(k) Account
Qualifying Account
Rollover Account
After-Tax Account
26
(c) Legal Maximum Limit. The maximum a Participant may borrow,
including the outstanding balance of existing Plan loans, is 50%
of his or her vested Account balance, not to exceed $50,000.
However, the $50,000 maximum is reduced by the Participant's
highest outstanding loan balance during the 12 month period
ending on the day before the Sweep Date as of which the loan is
made. For purposes of this paragraph, the qualified plans of
all Related Companies shall be treated as though they are part
of this Plan to the extent it would decrease the maximum loan
amount.
9.6 Maximum Number of Loans
A Participant may have a maximum of two loans outstanding at any given
time.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets of his or
her own Account. The available assets shall be determined first by
Account type and then within each Account used for funding a loan,
amounts shall first be taken from the Sweep Account and then taken by
Investment Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund as of the Trade Date on
which the loan is processed.
The loan shall be funded on the Settlement Date following the Trade
Date as of which the loan is processed. The Trustee shall make
payment to the Participant as soon thereafter as administratively
feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a fixed
reasonable rate of interest, determined from time to time by the
Administrator, which provides the Plan with a return commensurate with
the prevailing interest rate charged by persons in the business of
lending money for loans which would be made under similar
circumstances. As of the Effective Date, the interest rate is
determined as set forth in Appendix C, and may be changed from time to
time by the Administrator, in writing, without the necessity of
amending this Plan and Trust.
9.9 Loan Payment
Substantially level amortization shall be required of each loan with
payments made at least monthly, generally through payroll deduction.
Loans may be prepaid in full or in part at any time. The Participant
may choose the loan repayment period, not to exceed 5 years, except
that the repayment period may be for any period not to exceed 10 years
if the purpose of the loan is to acquire the Participant's principal
residence.
27
9.10 Loan Payment Hierarchy
Loan principal payments shall be credited to the Participant's
Accounts in the inverse of the order used to fund the loan. Loan
interest shall be credited to the Participant's Accounts in direct
proportion to the principal payment. Loan payments are credited to
the Investment Funds based upon the Participant's current investment
election for new Contributions.
9.11 Repayment Suspension
The Administrator may agree to a suspension of loan payments for up to
12 months for a Participant who is on a Leave of Absence without pay.
During the suspension period interest shall continue to accrue on the
outstanding loan balance. At the expiration of the suspension period
all outstanding loan payments and accrued interest thereon shall be
due unless otherwise agreed upon by the Administrator.
9.12 Loan Default
A loan is treated as a default if scheduled loan payments are more
than 90 days late. A Participant shall then have 30 days from the
time he or she receives written notice of the default and a demand for
past due amounts to cure the default before it becomes final.
In the event of default, the Administrator may direct the Trustee to
report the outstanding principal balance of the loan and accrued
interest thereon as a taxable distribution. As soon as a Plan
withdrawal or distribution to such Participant would otherwise be
permitted, the Administrator may instruct the Trustee to execute upon
its security interest in the Participant's Account by distributing the
note to the Participant.
9.13 Call Feature
The Administrator shall have the right to call any Participant loan
once a Participant's employment with all Related Companies has
terminated or if the Plan is terminated.
28
10 IN-SERVICE WITHDRAWALS
----------------------
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in this
Section and as required by law as set forth in Section 11.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such manner
and with such advance notice as prescribed by the Administrator. The
Participant shall be provided the notice prescribed by Code section
402(f).
If an in-service withdrawal is one to which Code sections 401(a)(11)
and 417 do not apply, such in-service withdrawal may commence less
than 30 days after the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or she has the right
to a period of at least 30 days after receipt of such notice to
consider his or her option to elect or not elect a Direct
Rollover for all or a portion, if any, of his or her in-service
withdrawal which shall constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notice, affirmatively
elects a Direct Rollover for all or a portion, if any, of his or
her in-service withdrawal which shall constitute an Eligible
Rollover Distribution or alternatively elects to have all or a
portion made payable directly to him or her, thereby not
electing a Direct Rollover for all or a portion thereof.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
make an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that an in-service withdrawal request conforms to the
requirements described in this Section and granting such request.
10.5 Minimum Amount, Payment Form and Medium
There is no minimum amount for any type of withdrawal.
The form of payment for an in-service withdrawal shall be a single
lump sum and payment shall be made in cash.
29
With regard to the portion of a withdrawal representing an Eligible
Rollover Distribution, a Participant may elect a Direct Rollover for
all or a portion of such amount.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made solely from
the assets of his or her own Account and shall be based on the Account
values as of the Trade Date the in-service withdrawal is processed.
The available assets shall be determined first by Account type and
then within each Account used for funding an in-service withdrawal,
amounts shall first be taken from the Sweep Account and then taken by
Investment Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund (which excludes his or
her Loan Account balance) as of the Trade Date on which the in-service
withdrawal is processed.
The in-service withdrawal shall be funded on the Settlement Date
following the Trade Date as of which the in-service withdrawal is
processed. The Trustee shall make payment as soon thereafter as
administratively feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may request the
withdrawal of up to the amount necessary to satisfy a financial
need including amounts necessary to pay any federal, state or
local income taxes or penalties reasonably anticipated to result
from the withdrawal. Only requests for withdrawals (1) on
account of a Participant's "Deemed Financial Need" or
"Demonstrated Financial Need", and (2) which are "Demonstrated
as Necessary" to satisfy the financial need shall be approved.
(b) "Deemed Financial Need". An immediate and heavy financial need
relating to:
(1) the payment of unreimbursable medical expenses described
under Code section 213(d) incurred (or to be incurred) by
the Employee, his or her spouse or dependents;
(2) the purchase (excluding mortgage payments) of the
Employee's principal residence;
(3) the payment of unreimbursable tuition and related
educational fees (which, effective January 1, 1995 ,include
room and board) for up to the next 12 months of post-
secondary education for the Employee, his or her spouse or
dependents;
30
(4) the payment of amounts necessary for the Employee to
prevent losing his or her principal residence through
eviction or foreclosure on the mortgage; or
(5) any other circumstance specifically permitted under Code
section 401(k)(2)(B)(i)(IV).
(c) "Demonstrated Financial Need". A determination by the
Administrator that an immediate and heavy financial need exists
relating to:
(1) a sudden and unexpected illness or accident to the Employee
or his or her spouse or dependents;
(2) the loss, due to casualty, of the Employee's property other
than nonessential property (such as a boat or a
television); or
(3) some other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the
control of the Employee.
(d) "Demonstrated as Necessary". A withdrawal is "demonstrated as
necessary" to satisfy the financial need only if the withdrawal
amount does not exceed the financial need, the Employee
represents that he or she is unable to relieve the financial
need (without causing further hardship) by doing any or all of
the following and the Administrator does not have actual
knowledge to the contrary:
(1) receiving any reimbursement or compensation from insurance
or otherwise;
(2) reasonably liquidating his or her assets and the assets of
his or her spouse or minor children that are reasonably
available to the Employee;
(3) ceasing his or her contributions to this Plan;
(4) obtaining other withdrawals and nontaxable loans available
from this Plan, plans maintained by Related Companies and
plans maintained by any other employer; and
(5) obtaining loans from commercial sources on reasonable
commercial terms.
(e) Account Sources and Funding Order. All available amounts must
first be withdrawn from a Participant's After-Tax Account. The
remaining withdrawal amount shall come from the following of the
Participant's fully vested Accounts, in the priority order as
follows:
31
Rollover Account
Employee 401(k) Account
The amount that may be withdrawn from a Participant's Employee
401(k) Account shall not include any earnings credited to his or
her Employee 401(k) Account.
(f) Permitted Frequency. There is no restriction on the number of
Hardship withdrawals permitted to a Participant.
(g) Suspension from Further Contributions. A Hardship withdrawal
shall not affect a Participant's ability to make or be eligible
to receive further Contributions.
10.8 After-Tax Account Withdrawals
(a) Requirements. A Participant who is an Employee may withdraw
from the Accounts listed in paragraph (b) below.
(b) Account Sources and Funding Order. The withdrawal amount shall
come from a Participant's After-Tax Account.
(c) Permitted Frequency. The maximum number of After-Tax Account
withdrawals permitted to a Participant in any 12-month period is
one.
(d) Suspension from Further Contributions. An After-Tax Account
withdrawal shall not affect a Participant's ability to make or
be eligible to receive further Contributions.
10.9 Over Age 59 1/2 Withdrawals
(a) Requirements. A Participant who is an Employee and over age 59
1/2 may withdraw from the Accounts listed in paragraph (b)
below.
(b) Account Sources and Funding Order. The withdrawal amount shall
come from the following of the Participant's fully vested
Accounts, in the priority order as follows, except that the
Participant may instead choose to have amounts taken from his or
her After-Tax Account first:
Rollover Account
Employee 401(k) Account
Qualifying Account
Employer Matching Account
Matching Cash Account
After-Tax Account
32
Effective December 1, 1995, "Matching Stock Account" (which
effective December 1, 1995 includes amounts previously held in a
Participant's Employer Matching Account) shall be substituted
for the preceding reference to "Employer Matching Account".
(c) Permitted Frequency. The maximum number of Over Age 59 1/2
withdrawals permitted to a Participant in any 12-month period is
one.
(d) Suspension from Further Contributions. An Over Age 59 1/2
withdrawal shall not affect a Participant's ability to make or
be eligible to receive further Contributions.
33
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR AS REQUIRED BY LAW
---------------------------------------------------------
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or her
death, shall be provided with information regarding all optional times
and forms of distribution available, to include the notices prescribed
by Code section 402(f) and Code section 411(a)(11). Subject to the
other requirements of this Section, a Participant, or his or her
Beneficiary in the case of his or her death, may elect, in such manner
and with such advance notice as prescribed by the Administrator, to
have his or her vested Account balance paid to him or her beginning
upon any Settlement Date following the Participant's termination of
employment with all Related Companies or, if earlier, at the time
required by law as set forth in Section 11.7.
If a distribution is one to which Code sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the
aforementioned notices are provided, if:
(a) the Participant is clearly informed that he or she has the right
to a period of at least 30 days after receipt of such notices to
consider the decision as to whether to elect a distribution and
if so to elect a particular form of distribution and to elect or
not elect a Direct Rollover for all or a portion, if any, of his
or her distribution which shall constitute an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notices, affirmatively
elects a distribution and a Direct Rollover for all or a
portion, if any, of his or her distribution which shall
constitute an Eligible Rollover Distribution or alternatively
elects to have all or a portion made payable directly to him or
her, thereby not electing a Direct Rollover for all or a portion
thereof.
11.2 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
receive a distribution under the Plan.
11.3 Payment Form and Medium
Except to the extent otherwise provided by Section 11.4, a Participant
may elect to be paid in any of these forms:
(a) a single lump sum;
(b) a portion paid in a lump sum, and the remainder paid later; or
(c) periodic installments over a period not to exceed the life
expectancy of the Participant and his or her Beneficiary.
34
Distributions shall be made in cash, except to the extent a
distribution consists of a loan call as described in Section 9.
Alternatively, a Participant may elect that a lump sum payment be made
in the form of whole shares of Company Stock and cash in lieu of
fractional shares to the extent invested in the Company Stock Fund.
With regard to the portion of a distribution representing an Eligible
Rollover Distribution, a Distributee may elect a Direct Rollover for
all or a portion of such amount.
11.4 Distribution of Small Amounts
If after a Participant's employment with all Related Companies ends,
the Participant's vested Account balance is $3,500 or less, the
Participant's benefit shall be paid as a single lump sum as soon as
administratively feasible in accordance with procedures prescribed by
the Administrator. Effective December 1, 1995, "If after a
Participant's employment with all Related Companies ends, the
Participant's vested Account balance is $3,500 or less, and if at the
time of any prior in-service withdrawal or distribution the
Participant's vested Account balance did not exceed $3,500," shall be
substituted for the preceding reference to "If after a Participant's
employment with all Related Companies ends, the Participant's vested
Account balance is $3,500 or less,".
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the assets
of his or her own Accounts and shall be based on the Account values as
of the Trade Date the distribution is processed. The available assets
shall be determined first by Account type and then within each Account
used for funding a distribution, amounts shall first be taken from the
Sweep Account and then taken by Investment Fund in direct proportion
to the market value of the Participant's interest in each Investment
Fund as of the Trade Date on which the distribution is processed.
The distribution shall be funded on the Settlement Date following the
Trade Date as of which the distribution is processed. The Trustee
shall make payment as soon thereafter as administratively feasible.
11.6 Deemed Distribution
For purposes of Section 8.4, if at the time a Participant's employment
with all Related Companies has terminated, the Participant's vested
Account balance attributable to Accounts subject to vesting as
described in Section 8, is zero, his or her vested Account balance
shall be deemed distributed as of the Settlement Date following the
Sweep Date on which the Administrator has reported to the Trustee that
the Participant's employment with all Related Companies has
terminated.
35
11.7 Latest Commencement Permitted
In addition to any other Plan requirements and unless a Participant
elects otherwise, his or her benefit payments shall begin not later
than 60 days after the end of the Plan Year in which he or she attains
his or her Normal Retirement Date or retires, whichever is later.
However, if the amount of the payment or the location of the
Participant (after a reasonable search) cannot be ascertained by that
deadline, payment shall be made no later than 60 days after the
earliest date on which such amount or location is ascertained but in
no event later than as described below. A Participant's failure to
elect in such manner as prescribed by the Administrator to have his or
her vested Account balance paid to him or her, shall be deemed an
election by the Participant to defer his or her distribution.
Benefit payments shall begin by the April 1 immediately following the
end of the calendar year in which the Participant attains age 70 1/2,
whether or not he or she is an Employee, except that distribution for
an Employee who was born before July 1, 1917 does not need to begin
until his or her employment with all Related Companies ends.
If benefit payments cannot begin at the time required because the
location of the Participant cannot be ascertained (after a reasonable
search), the Administrator may, at any time thereafter, treat such
person's Account as forfeited subject to the provisions of Section
18.5.
11.8 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to be
completed within a period not to exceed the lives or the joint and
last survivor life expectancy of the Participant and his or her
Beneficiary. The life expectancies of a Participant and his or her
Beneficiary may not be recomputed annually.
11.9 Incidental Benefit Rule
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or her sole
primary Beneficiary, the minimum annual distribution for each calendar
year, beginning with the year in which he or she attains age 70 1/2
(or such later date as provided otherwise in Section 11), shall not be
less than the quotient obtained by dividing (a) the Participant's
vested Account balance as of the last Trade Date of the preceding year
by (b) the applicable divisor as determined under the incidental
benefit requirements of Code section 401(a)(9).
36
11.10 Payment to Beneficiary
Payment to a Beneficiary must either: (1) be completed by the end of
the calendar year that contains the fifth anniversary of the
Participant's death or (2) begin by the end of the calendar year that
contains the first anniversary of the Participant's death and be
completed within the period of the Beneficiary's life or life
expectancy, except that:
(a) If the Participant dies after the April 1 immediately following
the end of the calendar year in which he or she attains age
70 1/2, payment to his or her Beneficiary must be made at least
as rapidly as provided in the Participant's distribution
election;
(b) If the surviving spouse is the Beneficiary, payments need not
begin until the end of the calendar year in which the
Participant would have attained age 70 1/2 and must be completed
within the spouse's life or life expectancy; and
(c) If the Participant and the surviving spouse who is the
Beneficiary die (1) before the April 1 immediately following the
end of the calendar year in which the Participant would have
attained age 70 1/2 and (2) before payments have begun to the
spouse, the spouse shall be treated as the Participant in
applying these rules.
11.11 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's
remaining Plan interest at the time of his or her death. The
designation may be changed at any time. However, a Participant's
spouse shall be the sole primary Beneficiary unless the designation
includes Spousal Consent for another Beneficiary. If no proper
designation is in effect at the time of a Participant's death or if
the Beneficiary does not survive the Participant, the Beneficiary
shall be, in the order listed, the:
(a) Participant's surviving spouse,
(b) Participant's children, in equal shares, (or if a child does not
survive the Participant, and that child leaves issue, the issue
shall be entitled to that child's share, by right of
representation) or
(c) Participant's estate.
37
12 ADP AND ACP TESTS
-----------------
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12 (where a
definition is contained in both Sections 1 and 12, for purposes of
Section 12 the Section 12 definition shall be controlling):
(a) "ACP" or "Average Contribution Percentage". The Average
Percentage calculated using Contributions allocated to
Participants as of a date within the Plan Year.
(b) "ACP Test". The determination of whether the ACP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(c) "ADP" or "Average Deferral Percentage". The Average Percentage
calculated using Deferrals allocated to Participants as of a
date within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(e) "Average Percentage". The average of the calculated percentages
for Participants within the specified group. The calculated
percentage refers to either the "Deferrals" or "Contributions"
(as defined in this Section) made on each Participant's behalf
for the Plan Year, divided by his or her Compensation for the
portion of the Plan Year in which he or she was an Eligible
Employee while a Participant. (Employee 401(k) Contributions to
this Plan or comparable contributions to plans of Related
Companies which shall be refunded solely because they exceed the
Contribution Dollar Limit are included in the percentage for the
HCE Group but not for the NHCE Group.)
(f) "Contributions" shall include Employer Matching and After-Tax
Contributions. For Plan Years commencing on or after December
1, 1995, "Matching Stock, Matching Cash and After-Tax
Contributions" shall be substituted for the reference to
"Employer Matching and After-tax Contributions" in the preceding
sentence.
In addition, Contributions may include Employee 401(k) and,
effective for Plan Years commencing on or after December 1,
1993, Qualifying Contributions, but only to the extent that (1)
the Employer elects to use them, (2) they are not used or
counted in the ADP Test, (3) Qualifying Contributions are fully
vested when made, not withdrawable by an Employee before he or
she attains age 59 1/2 and (4) they otherwise
38
satisfy the requirements as prescribed under Code section 401(m)
permitting treatment as Contributions for purposes of the ACP
Test, including with regard to Qualifying Contributions
satisfaction of the requirements of Code section 401(a) in the
manner prescribed under Code section 401(m).
(g) "Deferrals" shall include Employee 401(k) Contributions.
In addition, effective for Plan Years commencing on or after
December 1, 1993, Deferrals may include Qualifying
Contributions, but only to the extent that (1) the Employer
elects to use them, (2) they are not used or counted in the ACP
Test, (3) they are fully vested when made, not withdrawable by
an Employee before he or she attains age 59 1/2 and (4) they
otherwise satisfy the requirements as prescribed under Code
section 401(k) permitting treatment as Deferrals for purposes of
the ADP Test, including satisfaction of the requirements of Code
section 401(a) in the manner prescribed under Code section
401(k).
(h) "Family Member". An Employee who is, at any time during the
Plan Year or Lookback Year, a spouse, lineal ascendant or
descendant, or spouse of a lineal ascendant or descendant of (1)
an active or former Employee who at any time during the Plan
Year or Lookback Year is a more than 5% Owner (within the
meaning of Code section 414(q)(3)), or (2) an HCE who is among
the 10 Employees with the highest Compensation for such Year.
(i) "HCE" or "Highly Compensated Employee". With respect to each
Employer and its Related Companies, an Employee during the Plan
Year or Lookback Year who (in accordance with Code section
414(q)):
(1) Was a more than 5% Owner at any time during the Lookback
Year or Plan Year;
(2) Received Compensation during the Lookback Year (or in the
Plan Year if among the 100 Employees with the highest
Compensation for such Year) in excess of (i) $75,000 (as
adjusted for such Year pursuant to Code sections 414(q)(1)
and 415(d)), or (ii) $50,000 (as adjusted for such Year
pursuant to Code sections 414(q)(1) and 415(d)) in the case
of a member of the "top-paid group" (within the meaning of
Code section 414(q)(4)) for such Year), provided, however,
that if the conditions of Code section 414(q)(12)(B)(ii)
are met, the Company may elect for any Plan Year to apply
clause (i) by substituting $50,000 for $75,000 and not to
apply clause (ii);
(3) Was an officer of a Related Company and received
Compensation during the Lookback Year (or in the Plan Year
if
39
among the 100 Employees with the highest Compensation for
such Year) that is greater than 50% of the dollar
limitation in effect under Code section 415(b)(1)(A) and
(d) for such Year (or if no officer has Compensation in
excess of the threshold, the officer with the highest
Compensation), provided that the number of officers shall
be limited to 50 Employees (or, if less, the greater of
three Employees or 10% of the Employees); or
(4) Was a Family Member at any time during the Lookback Year or
Plan Year, in which case the Deferrals, Contributions and
Compensation of the HCE and his or her Family Members shall
be aggregated and they shall be treated as a single HCE.
A former Employee shall be treated as an HCE if (1) such former
Employee was an HCE when he separated from service, or (2) such
former Employee was an HCE in service at any time after
attaining age 55.
The determination of who is an HCE, including the determinations
of the number and identity of Employees in the top-paid group,
the top 100 Employees and the number of Employees treated as
officers shall be made in accordance with Code section 414(q).
(j) "HCE Group" and "NHCE Group". With respect to each Employer and
its Related Companies, the respective group of HCEs and NHCEs
who are eligible to have amounts contributed on their behalf for
the Plan Year, including Employees who would be eligible but for
their election not to participate or to contribute, or because
their Pay is greater than zero but does not exceed a stated
minimum.
(1) If the Related Companies maintain two or more plans which
are subject to the ADP or ACP Test and are considered as
one plan for purposes of Code sections 401(a)(4) or 410(b),
all such plans shall be aggregated and treated as one plan
for purposes of meeting the ADP and ACP Tests, provided
that the plans may only be aggregated if they have the same
Plan Year.
(2) If an HCE, who is one of the top 10 paid Employees or a
more than 5% Owner, has any Family Members, the Deferrals,
Contributions and Compensation of such HCE and his or her
Family Members shall be combined and treated as a single
HCE. Such amounts for all other Family Members shall be
removed from the NHCE Group percentage calculation and be
combined with the HCE's.
(3) If an HCE is covered by more than one cash or deferred
arrangement, or more than one arrangement permitting
40
employee or matching contributions, maintained by the
Related Companies, all such plans shall be aggregated and
treated as one plan (other than those plans that may not be
permissively aggregated) for purposes of calculating the
separate percentage for the HCE which is used in the
determination of the Average Percentage.
(k) "Lookback Year". Pursuant to Code section 414(q), the Company
elects as the Lookback Year the 12 months ending immediately
prior to the start of the Plan Year.
(l) "Multiple Use Test". The test described in Section 12.4 which a
Plan must meet where the Alternative Limitation (described in
Section 12.2(b)) is used to meet both the ADP and ACP Tests.
(m) "NHCE" or "Non-Highly Compensated Employee". An Employee who is
not an HCE.
12.2 ADP and ACP Tests
For each Plan Year, the ADP and ACP for the HCE Group must meet either
the Basic or Alternative Limitation when compared to the respective
ADP and ACP for the NHCE Group, defined as follows:
(a) Basic Limitation. The HCE Group Average Percentage may not
exceed 1.25 times the NHCE Group Average Percentage.
(b) Alternative Limitation. The HCE Group Average Percentage is
limited by reference to the NHCE Group Average Percentage as
follows:
IF THE NHCE GROUP THEN THE MAXIMUM HCE
AVERAGE PERCENTAGE IS: GROUP AVERAGE PERCENTAGE IS:
------------------------- -----------------------------
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a maximum
percentage to be used in place of the calculated percentage for all
HCEs that would reduce the ADP and/or ACP for the HCE group by a
sufficient amount to meet the ADP and ACP Tests. ADP and/or ACP
corrections shall be made in accordance with the leveling method as
described below.
41
(a) ADP Correction. The HCE with the highest Deferral percentage
shall have his or her Deferral percentage reduced to the lesser
of the extent required to meet the ADP Test or to cause his or
her Deferral percentage to equal that of the HCE with the next
highest Deferral percentage. The process shall be repeated
until the ADP Test is met.
To the extent an HCE's Deferrals were determined to be reduced
as described in the paragraph above, Employee 401(k)
Contributions shall, by the end of the next Plan Year, be
refunded to the HCE in an amount equal to the actual Deferrals
minus the product of the maximum percentage and the HCE's
Compensation, except that such amount to be refunded shall be
reduced by Employee 401(k) Contributions previously refunded
because they exceeded the Contribution Dollar Limit.
The excess amounts shall first be taken from unmatched Employee
401(k) Contributions and then from matched Employee 401(k)
Contributions. Any Employer Matching Contributions attributable
to refunded excess Employee 401(k) Contributions as described in
this Section shall be forfeited and used as described in Section
8.4. For Plan Years commencing on or after December 1, 1995,
"Any Matching Stock and Matching Cash Contributions" shall be
substituted for the reference to "Any Employer Matching
Contributions" in the preceding sentence.
(b) ACP Correction. The HCE with the highest Contribution
percentage shall have his or her Contribution percentage reduced
to the lesser of the extent required to meet the ACP Test or to
cause his or her Contribution percentage to equal that of the
HCE with the next highest Contribution percentage. The process
shall be repeated until the ACP Test is met.
To the extent an HCE's Contributions were determined to be
reduced as described in the paragraph above, Contributions
shall, by the end of the next Plan Year, be refunded to the HCE
to the extent vested, and forfeited to the extent such amounts
were not vested, as of the end of the Plan Year being tested, in
an amount equal to the actual Contributions minus the product of
the maximum percentage and the HCE's Compensation.
The excess amounts shall first be taken from After-Tax
Contributions and then from Employer Matching Contributions. For
Plan Years commencing on or after December 1, 1995, "and then as
a proportional combination of Matching Stock and Matching Cash
Contributions" shall be substituted for the reference to "and
then from Employer Matching Contributions" in the preceding
sentence.
42
(c) Investment Fund Sources. Once the amount of excess Deferrals
and/or Contributions is determined and with regard to excess
Contributions, allocated by type of Contribution, amounts shall
first be taken from the Sweep Account and then taken by
Investment Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund (which excludes
his or her Loan Account balance) as of the Trade Date on which
the correction is processed.
(d) Family Member Correction. To the extent any reduction is
necessary with respect to an HCE and his or her Family Members
that have been combined and treated for testing purposes as a
single Employee, the excess Deferrals and Contributions from the
ADP and/or ACP Test shall be prorated among each such
Participant in direct proportion to his or her Deferrals or
Contributions included in each Test.
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is used to
meet both the ADP and ACP Tests, the ADP and ACP for the HCE Group
must also comply with the requirements of Code section 401(m)(9). Such
Code section requires that the sum of the ADP and ACP for the HCE
Group (as determined after any corrections needed to meet the ADP and
ACP Tests have been made) not exceed the sum (which produces the most
favorable result) of:
(a) the Basic Limitation (defined in Section 12.2) applied to either
the ADP or ACP for the NHCE Group, and
(b) the Alternative Limitation applied to the other NHCE Group
percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the calculated
percentage for all HCEs that would reduce either or both the ADP or
ACP for the HCE Group by a sufficient amount to meet the multiple use
limit. Any excess shall be handled in the same manner that the
distribution of excess Deferrals or Contributions are handled.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a Participant
or forfeited in accordance with Section 12.3 or 12.5 shall be adjusted
for investment gain or loss. Refunds or forfeitures shall include
investment gain or loss for the period between the end of the
applicable Plan Year and the date of distribution. For Plan Years
commencing on or after December 1, 1993, "shall not include" shall be
substituted for the reference to "shall include" in the preceding
sentence.
43
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the Plan
meets the ADP Test, the ACP Test and the Multiple Use Test, and that
the Contribution Dollar Limit is not exceeded. In carrying out its
responsibilities, the Administrator shall have sole discretion to
limit or reduce Deferrals or Contributions at any time. The
Administrator shall maintain records which are sufficient to
demonstrate that the ADP Test, the ACP Test and the Multiple Use Test,
have been met for each Plan Year for at least as long as the
Employer's corresponding tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs, and the
performance of the ADP Test, the ACP Test and Multiple Use Test,
and any corrective action resulting therefrom, shall be made
separately with regard to the Employees of each Employer (and
its Related Companies) that is not a Related Company with the
other Employer(s).
(b) Collective Bargaining Units: The performance of the ADP Test,
and if applicable, the ACP Test and Multiple Use Test, and any
corrective action resulting therefrom, shall be applied
separately to Employees who are eligible to participate in the
Plan as a result of a collective bargaining agreement.
In addition, separate testing may be applied, at the discretion of the
Administrator and to the extent permitted under Treasury regulations,
to any group of Employees for whom separate testing is permissible.
44
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
--------------------------------------------
13.1 "Annual Addition" Defined
The sum of all amounts allocated to the Participant's Account for a
Plan Year. Amounts include contributions (except for rollovers or
transfers from another qualified plan), forfeitures and, if the
Participant is a Key Employee (pursuant to Section 14) for the
applicable or any prior Plan Year, medical benefits provided pursuant
to Code section 419A(d)(1). For purposes of this Section 13.1,
"Account" also includes a Participant's account in all other defined
contribution plans currently or previously maintained by any Related
Company. The Plan Year refers to the year to which the allocation
pertains, regardless of when it was allocated. The Plan Year shall be
the Code section 415 limitation year.
13.2 Maximum Annual Addition
The Annual Addition to a Participant's accounts under this Plan and
any other defined contribution plan maintained by any Related Company
for any Plan Year shall not exceed the lesser of (1) 25% of his or her
Taxable Income or (2) the greater of $30,000 or one-quarter of the
dollar limitation in effect under Code section 415(b)(1)(A), except
that for Plan Years beginning after December 31, 1994, "(2) $30,000
(as adjusted for the cost of living pursuant to Code section 415(d))"
shall be substituted for the preceding reference to "(2) the greater
of $30,000 or one-quarter of the dollar limitation in effect under
Code section 415(b)(1)(A)".
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any additional
Contributions would produce an excess Annual Addition for such year,
Contributions to be made for the remainder of the Plan Year shall be
limited to the amount needed for each affected Participant to receive
the maximum Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a Participant's
Account (resulting from forfeitures, allocations, reasonable error in
determining Participant compensation or the amount of elective
contributions, or other facts and circumstances acceptable to the
Internal Revenue Service) the excess amount (adjusted to reflect
investment gains) shall first be returned to the Participant to the
extent of his or her After-Tax Contributions, and then to the extent
of his or her Employee 401(k) Contributions (however to the extent
Employee 401(k) Contributions were matched, the applicable Employer
Matching Contributions shall be forfeited in proportion to the
returned matched Employee 401(k) Contributions) and the remaining
excess, if any, shall be forfeited by the Participant and used as
described in Section 8.4. For Plan Years commencing on or after
December 1, 1995, "the applicable Matching Stock and Matching Cash
Contributions" shall be substituted for the reference to "the
applicable Employer Matching Contributions" in the preceding sentence.
45
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined contribution
plan, the excess shall be corrected by reducing the Annual Addition to
this Plan only after all possible reductions have been made to the
other defined contribution plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the "projected
annual benefit" and the denominator is the greater of 125% of the
"protected current accrued benefit" or the normal limit which is the
lesser of (1) 125% of the maximum dollar limitation provided under
Code section 415(b)(1)(A) for the Plan Year or (2) 140% of the amount
which may be taken into account under Code section 415(b)(1)(B) for
the Plan Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit provided by the
Plan determined pursuant to Code section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined benefit plan in
existence (1) on July 1, 1982, shall be the accrued annual
benefit provided for under Public Law 97-248, section 235(g)(4),
as amended, or (2) on May 6, 1986, shall be the accrued annual
benefit provided for under Public Law 99-514, section
1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the Participant's
Annual Addition for each Plan Year to date and the denominator is the
sum of the "annual amounts" for each year in which the Participant has
performed service with a Related Company. The "annual amount" for any
Plan Year is the lesser of (1) 125% of the Code section 415(c)(1)(A)
dollar limitation (determined without regard to subsection (c)(6)) in
effect for the Plan Year and (2) 140% of the Code section 415(c)(1)(B)
amount in effect for the Plan Year, where:
(a) each Annual Addition is determined pursuant to the Code section
415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-248, section
235(g)(3), as amended, or Public Law 99-514, section 1106(i)(4).
13.8 Combined Plan Limits and Correction
If a Participant has also participated in a defined benefit plan
maintained by a Related Company, the sum of the Defined Benefit
Fraction and the Defined Contribution Fraction for any Plan Year may
not exceed 1.0. If the combined fraction exceeds 1.0 for any Plan
Year, the Participant's benefit under any defined benefit plan (to the
extent it has not been distributed or used to purchase an annuity
contract) shall be limited so that the combined fraction does not
exceed 1.0 before any defined contribution limits shall be enforced.
46
14 TOP HEAVY RULES
---------------
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the following
meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each qualified
plan of an Employer (and its Related Companies) (1) in which a
Key Employee is a participant or was a participant during the
determination period (regardless of whether such plan has
terminated), or (2) which enables another plan in the group to
meet the requirements of Code sections 401(a)(4) or 410(b). The
Employer may also treat any other qualified plan as part of the
group if the group would continue to meet the requirements of
Code sections 401(a)(4) and 410(b) with such plan being taken
into account.
(b) "Determination Date". The last Trade Date of the preceding Plan
Year or, in the case of the Plan's first year, the last Trade
Date of the first Plan Year.
(c) "Key Employee". A current or former Employee (or his or her
Beneficiary) who at any time during the five year period ending
on the Determination Date was:
(1) an officer of a Related Company whose Compensation (i)
exceeds 50% of the amount in effect under Code section
415(b)(1)(A) and (ii) places him within the following
highest paid group of officers:
NUMBER OF EMPLOYEES NUMBER OF
NOT EXCLUDED UNDER CODE HIGHEST PAID
SECTION 414(Q)(8) OFFICERS INCLUDED
-------------------------- ----------------------
Less than 30 3
30 to 500 10% of the number of
Employees not excluded
under Code section
414(q)(8)
More than 500 50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose
Compensation exceeds $150,000, or
47
(4) a more than 0.5% Owner who is among the 10 Employees owning
the largest interest in a Related Company and whose
Compensation exceeds the amount in effect under Code
section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date of (1) an
Employee's Account, (2) the present value of his or her other
accrued benefits provided by all qualified plans within the
Aggregation Group, and (3) the aggregate distributions made
within the five year period ending on such date. Plan Benefits
shall exclude Rollover Contributions and plan to plan transfers
made after December 31, 1983 which are both employee initiated
and from a plan maintained by a non-related employer.
(e) "Top Heavy". The Plan's status when the Plan Benefits of Key
Employees account for more than 60% of the Plan Benefits of all
Employees who have performed services at any time during the
five year period ending on the Determination Date. The Plan
Benefits of Employees who were, but are no longer, Key Employees
(because they have not been an officer or Owner during the five
year period), are excluded in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year in which
the Plan is Top Heavy, the Employer shall not allow any
contributions (other than a Rollover Contribution from a plan
maintained by a non-related employer) to be made by or on behalf
of any Key Employee unless the Employer makes a contribution
(other than contributions made by an Employer in accordance with
a Participant's salary deferral election or contributions made
by an Employer based upon the amount contributed by a
Participant) on behalf of all Participants who were Eligible
Employees as of the last day of the Plan Year in an amount equal
to at least 3% of each such Participant's Taxable Income. The
Administrator shall remove any such contributions (including
applicable investment gain or loss) credited to a Key Employee's
Account in violation of the foregoing rule and return them to
the Employer or Employee to the extent permitted by the Limited
Return of Contributions paragraph of Section 18.
(b) Overriding Minimum Benefit. Notwithstanding, contributions
shall be permitted on behalf of Key Employees if the Employer
also maintains a defined benefit plan which automatically
provides a benefit which satisfies the Code section 416(c)(1)
minimum benefit requirements, including the adjustment provided
in Code section 416(h)(2)(A), if applicable. If this Plan is
part of an aggregation group in which a Key Employee is
receiving a benefit and no minimum is provided in any other
plan, a minimum contribution of at least 3% of Taxable Income
shall be
48
provided to the Participants specified in the preceding
paragraph. In addition, the Employer may offset a defined
benefit minimum by contributions (other than contributions made
by an Employer in accordance with a Participant's salary
deferral election or contributions made by an Employer based
upon the amount contributed by a Participant) made to this Plan.
14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall be
substituted for 125% in determining the Defined Benefit Fraction and
the Defined Contribution Fraction.
49
15 PLAN ADMINISTRATION
-------------------
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator, the Committee
and/or the Trustee, as applicable, whose specific duties are
delineated in this Plan and Trust. In addition, Plan fiduciaries also
include any other person to whom fiduciary duties or responsibility is
delegated with respect to the Plan. Any person or group may serve in
more than one fiduciary capacity with respect to the Plan. To the
extent permitted under ERISA section 405, no fiduciary shall be liable
for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with this Plan and
Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that a
prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying reasonable
expenses of administering the Plan;
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so as
to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(e) treat similarly situated Participants and Beneficiaries in a
uniform and nondiscriminatory manner.
15.3 Company is ERISA Plan Administrator
The Company is the plan administrator, within the meaning of ERISA
section 3(16), which is responsible for compliance with all reporting
and disclosure requirements, except those that are explicitly the
responsibility of the Trustee under applicable law. The Administrator
and/or Committee shall have any necessary authority to carry out such
functions through the actions of the Administrator, duly appointed
officers of the Company, and/or the Committee.
50
15.4 Administrator Duties
The Administrator shall have the discretionary authority to construe
this Plan and Trust, other than the provisions which relate to the
Trustee, and to do all things necessary or convenient to effect the
intent and purposes thereof, whether or not such powers are
specifically set forth in this Plan and Trust. Actions taken in good
faith by the Administrator shall be conclusive and binding on all
interested parties, and shall be given the maximum possible deference
allowed by law. In addition to the duties listed elsewhere in this
Plan and Trust, the Administrator's authority shall include, but not
be limited to, the discretionary authority to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of
Contributions, and the eligibility for loans, withdrawals and
distributions;
(b) provide each Participant with a summary plan description no
later than 90 days after he or she has become a Participant (or
such other period permitted under ERISA section 104(b)(1)), as
well as informing each Participant of any material modification
to the Plan in a timely manner;
(c) make a copy of the following documents available to Participants
during normal work hours: this Plan and Trust (including
subsequent amendments), all annual and interim reports of the
Trustee related to the entire Plan, the latest annual report and
the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's
interest based upon such proof and evidence as it deems
necessary;
(e) establish and review at least annually a funding policy bearing
in mind both the short-run and long-run needs and goals of the
Plan. To the extent Participants may direct their own
investments, the funding policy shall focus on which Investment
Funds are available for Participants to use; and
(f) adjudicate claims pursuant to the claims procedure described in
Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers,
investment counsel and administrative assistants) as it considers
necessary to assist it in the performance of its duties. The
Administrator shall also comply with the bonding requirements of ERISA
section 412.
51
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, has appointed a Committee
to administer the Plan on its behalf. The Company shall provide the
Trustee with the names and specimen signatures of any persons
authorized to serve as Committee members and act as or on its behalf.
Any Committee member appointed by the Company shall serve at the
pleasure of the Company, but may resign by written notice to the
Company. Committee members shall serve without compensation from the
Plan for such services. Except to the extent that the Company
otherwise provides, any delegation of duties to a Committee shall
carry with it the full discretionary authority of the Administrator to
complete such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the Company to the
Committee may be done by a majority of its members. The
majority may be expressed by a vote at a meeting or in writing
without a meeting, and a majority action shall be equivalent to
an action of all Committee members.
(b) Meetings. The Committee shall hold meetings upon such notice,
place and times as it determines necessary to conduct its
functions properly.
(c) Reliance by Trustee. The Committee may authorize one or more of
its members to execute documents on its behalf and may authorize
one or more of its members or other individuals who are not
members to give written direction to the Trustee in the
performance of its duties. The Committee shall provide such
authorization in writing to the Trustee with the name and
specimen signatures of any person authorized to act on its
behalf. The Trustee shall accept such direction and rely upon
it until notified in writing that the Committee has revoked the
authorization to give such direction. The Trustee shall not be
deemed to be on notice of any change in the membership of the
Committee, parties authorized to direct the Trustee in the
performance of its duties, or the duties delegated to and by the
Committee until notified in writing.
52
16 MANAGEMENT OF INVESTMENTS
-------------------------
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in accordance
with those provisions of this Plan and Trust which relate to the
Trustee, for use in providing Plan benefits and paying Plan fees and
expenses not paid directly by the Employer. Plan benefits shall be
drawn solely from the Trust and paid by the Trustee as directed by the
Administrator. Notwithstanding, the Administrator may appoint, with
the approval of the Trustee, another trustee to hold and administer
Plan assets which do not meet the requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the Trustee to
invest Trust assets in one or more Investment Funds. The number and
composition of Investment Funds may be changed from time to time,
without the necessity of amending this Plan and Trust. The Trustee
may establish reasonable limits on the number of Investment Funds as
well as the acceptable assets for any such Investment Fund. Each of
the Investment Funds may be comprised of any of the following:
(a) shares of a registered investment company, whether or not the
Trustee or any of its affiliates is an advisor to, or other
service provider to, such company;
(b) collective investment funds maintained by the Trustee, or any
other fiduciary to the Plan, which are available for investment
by trusts which are qualified under Code sections 401(a) and
501(a);
(c) individual equity and fixed income securities which are readily
tradeable on the open market;
(d) guaranteed investment contracts issued by a bank or insurance
company;
(e) interest bearing deposits of the Trustee; and
(f) Company Stock.
Any Investment Fund assets invested in a collective investment fund,
shall be subject to all the provisions of the instruments establishing
and governing such fund. These instruments, including any subsequent
amendments, are incorporated herein by reference.
53
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment manager
of each Investment Fund to maintain sufficient deposit or money market
type assets in each Investment Fund to handle the Fund's liquidity and
disbursement needs. Each Participant's and Beneficiary's Sweep
Account, which is used to hold assets pending investment or
disbursement, shall consist of interest bearing deposits of the
Trustee.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions are
received from the Administrator, Participants, or Beneficiaries. Such
instructions shall remain in effect until changed by the
Administrator, Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company Shares
The Administrator shall be entitled to vote proxies or exercise any
shareholder rights relating to shares held on behalf of the Plan in a
registered investment company. Notwithstanding, the authority to vote
proxies and exercise shareholder rights related to such shares held in
a Custom Fund is vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee, an
investment manager for any Investment Fund established by the Trustee
solely for Participants of this Plan (a "Custom Fund"). The
investment manager may be the Administrator, Trustee or an investment
manager pursuant to ERISA section 3(38). The Administrator shall
advise the Trustee in writing of the appointment of an investment
manager and shall cause the investment manager to acknowledge to the
Trustee in writing that the investment manager is a fiduciary to the
Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee,
shall be established for a Custom Fund. If a Custom Fund
consists solely of collective investment funds or shares of a
registered investment company (and sufficient deposit or money
market type assets to handle the Fund's liquidity and
disbursement needs), its underlying instruments shall constitute
the guidelines.
(b) Authority of Investment Manager. The investment manager of a
Custom Fund shall have the authority to vote or execute proxies,
exercise shareholder rights, manage, acquire, and dispose of
Trust
54
assets. Notwithstanding, the authority to vote proxies and
exercise shareholder rights related to shares of Company Stock
held in a Custom Fund is vested as provided otherwise in Section
16.
(c) Custody and Trade Settlement. Unless otherwise agreed to by the
Trustee, the Trustee shall maintain custody of all Custom Fund
assets and be responsible for the settlement of all Custom Fund
trades. For purposes of this section, shares of a collective
investment fund, shares of a registered investment company and
guaranteed investment contracts issued by a bank or insurance
company, shall be regarded as the Custom Fund assets instead of
the underlying assets of such instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the Administrator
nor the Trustee shall be obligated to invest or otherwise manage
any Custom Fund assets for which the Trustee or Administrator is
not the investment manager nor shall the Administrator or
Trustee be liable for acts or omissions with regard to the
investment of such assets except to the extent required by
ERISA.
16.7 Authority to Segregate Assets
The Company may direct the Trustee to split an Investment Fund into
two or more funds in the event any assets in the Fund are illiquid or
the value is not readily determinable. In the event of such
segregation, the Company shall give instructions to the Trustee on
what value to use for the split-off assets, and the Trustee shall not
be responsible for confirming such value.
16.8 Maximum Permitted Investment in Company Stock
If the Company provides for a Company Stock Fund the Fund shall be
comprised of Company Stock and sufficient deposit or money market type
assets to handle the Fund's liquidity and disbursement needs. The Fund
may be as large as necessary to comply with Participants' and
Beneficiaries' investment elections (if the Company Stock Fund is
designated as an Investment Fund offered to Participants and
Beneficiaries) as well the total investment of Participants' and
Beneficiaries' Employer Matching Accounts. Effective December 1,
1995, "Matching Stock Account" (which effective December 1, 1995
includes amounts previously held in a Participant's Employer Matching
Account) shall be substituted for the reference to "Employer Matching
Account" in the preceding sentence.
16.9 Participants Have Right to Vote and Tender Company Stock
Each Participant or Beneficiary shall be entitled to instruct the
Trustee as to the voting or tendering of any full or partial shares of
Company Stock held on his or her behalf in the Company Stock Fund.
Prior to such voting or tendering of
55
Company Stock, each Participant or Beneficiary shall receive a copy of
the proxy solicitation or other material relating to such vote or
tender decision and a form for the Participant or Beneficiary to
complete which confidentially instructs the Trustee to vote or tender
such shares in the manner indicated by the Participant or Beneficiary.
Upon receipt of such instructions, the Trustee shall act with respect
to such shares as instructed. The Administrator shall instruct the
Trustee with respect to how to vote or tender any shares for which
instructions are not received from Participants or Beneficiaries.
16.10 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining the
applicability (and, if applicable, complying with) the requirements of
the Securities Act of 1933, as amended, the California Corporate
Securities Law of 1968, as amended, and any other applicable blue sky
law. The Administrator shall also specify what restrictive legend or
transfer restriction, 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.
56
17 TRUST ADMINISTRATION
--------------------
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe those
provisions of this Plan and Trust which relate to the Trustee and to
do all things necessary or convenient to the administration of the
Trust, whether or not such powers are specifically set forth in this
Plan and Trust. Actions taken in good faith by the Trustee shall be
conclusive and binding on all interested parties, and shall be given
the maximum possible deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in this
Plan and Trust, the Trustee shall have all the power, authority,
rights and privileges of an absolute owner of the Trust assets and,
not in limitation but in amplification of the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge, mortgage,
lease, grant options respecting, repair, alter, insure, or
distribute any and all property in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription or
conversion privileges, exercise options and register any
securities in the Trust in the name of the nominee, in federal
book entry form or in any other form as shall permit title
thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or
otherwise, or defend against the same, any obligations or claims
in favor of or against the Trust; and
(d) lend, through a collective investment fund, any securities held
in such collective investment fund to brokers, dealers or other
borrowers and to permit such securities to be transferred into
the name and custody and be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any Trust
assets outside the jurisdiction of the United States, except as
authorized by ERISA section 404(b).
57
17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes with regard to any
Eligible Rollover Distribution that is not paid as a Direct
Rollover in accordance with the Participant's withholding
election or as required by law if no election is made or the
election is less than the amount required by law. With regard
to any taxable distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes in accordance with the
Participant's withholding election or as required by law if no
election is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay from the
Investment Fund any taxes or assessments imposed by any taxing
or governmental authority on such Fund or its income, including
related interest and penalties.
17.5 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable period)
following the close of the Plan Year, the Trustee shall provide
the Administrator with an annual accounting of Trust assets and
information to assist the Administrator in meeting ERISA's
annual reporting and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records and
provide sufficient reporting to allow the Administrator to
properly monitor the Trust's assets and activity.
(c) Administrator Approval. Approval of any Trustee accounting
shall automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection with the Trustee within such time period.
Such approval shall be final as to all matters and transactions
stated or shown therein and binding upon the Administrator.
17.6 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is not
readily tradeable and listed on a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, the
Trustee may engage a qualified independent appraiser to determine the
fair market value of such property, and the appraisal fees shall be
paid from the Investment Fund containing the asset.
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17.7 Legal Counsel
The Trustee may consult with legal counsel of its choice, including
counsel for the Employer or counsel of the Trustee, upon any question
or matter arising under this Plan and Trust. When relied upon by the
Trustee, the opinion of such counsel shall be evidence that the
Trustee has acted in good faith.
17.8 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as may be
mutually agreed upon by the Company and the Trustee. Trustee fees and
all reasonable expenses of counsel and advisors retained by the
Trustee shall be paid in accordance with Section 6.
17.9 Trustee Duties and Limitations
The Trustee's duties, unless otherwise agreed to by the Trustee, shall
be confined to construing the terms of the Plan and Trust as they
relate to the Trustee, receiving funds on behalf of and making
payments from the Trust, safeguarding and valuing Trust assets,
investing and reinvesting Trust assets in the Investment Funds as
directed by the Administrator, Participants or Beneficiaries and those
duties as described in this Section 17.
The Trustee shall have no duty or authority to ascertain whether
Contributions are in compliance with the Plan, to enforce collection
or to compute or verify the accuracy or adequacy of any amount to be
paid to it by the Employer. The Trustee shall not be liable for the
proper application of any part of the Trust with respect to any
disbursement made at the direction of the Administrator.
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18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
-------------------------------------------------
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any Employee. The
Employer expressly reserves the right to discharge an Employee at any
time, with or without cause, without regard to the effect such
discharge would have upon the Employee's interest in the Plan.
18.2 Limited Return of Contributions
Except as provided in this paragraph, (1) Plan assets shall not revert
to the Employer nor be diverted for any purpose other than the
exclusive benefit of Participants or their Beneficiaries; and (2) a
Participant's vested interest shall not be subject to divestment. As
provided in ERISA section 403(c)(2), the actual amount of a
Contribution made by the Employer (or the current value of the
Contribution if a net loss has occurred) may revert to the Employer
if:
(a) such Contribution is made by reason of a mistake of fact;
(b) initial qualification of the Plan under Code section 401(a) is
not received and a request for such qualification is made within
the time prescribed under Code section 401(b) (the existence of
and Contributions under the Plan are hereby conditioned upon
such qualification); or
(c) such Contribution is not deductible under Code section 404 (such
Contributions are hereby conditioned upon such deductibility) in
the taxable year of the Employer for which the Contribution is
made.
The reversion to the Employer must be made (if at all) within one year
of the mistaken payment of the Contribution, the date of denial of
qualification, or the date of disallowance of deduction, as the case
may be. A Participant shall have no rights under the Plan with
respect to any such reversion.
18.3 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not otherwise
required by law, no benefit provided by the Plan may be anticipated,
assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit with
respect to a Participant pursuant to a QDRO, or
(b) to use a Participant's vested Account balance as security for a
loan from the Plan which is permitted pursuant to Code section
4975.
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18.4 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the Administrator
reasonably believes that any payee is legally incapable of giving a
valid receipt and discharge for any payment due him or her, the
Administrator shall have the payment of the benefit, 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 conservator of the payee. Any payment shall to the extent
thereof, be a complete discharge of any liability under the Plan to
the payee.
18.5 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment of a
Plan benefit after a reasonable search, the Administrator may at any
time thereafter treat such person's Account as forfeited and use such
amount as described in Section 8.4. If such person subsequently
presents the Administrator with a valid claim for the benefit, such
person shall be paid the amount treated as forfeited, plus the
interest that would have been earned in the Sweep Account to the date
of determination. The Administrator shall pay the amount through an
additional amount contributed by the Employer or direct the Trustee to
pay the amount from the Forfeiture Account.
18.6 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees with the
Administrator's determination of his or her right to Plan
benefits must submit a written claim and exhaust this claim
procedure before legal recourse of any type is sought. The
claim must include the important issues the interested party
believes support the claim. The Administrator, pursuant to the
authority provided in this Plan, shall either approve or deny
the claim.
(b) Process for Denying a Claim. The Administrator's partial or
complete denial of an initial claim must include an
understandable, written response covering (1) the specific
reasons why the claim is being denied (with reference to the
pertinent Plan provisions) and (2) the steps necessary to
perfect the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested party may make
a written appeal of the Administrator's initial decision, and
the Administrator shall respond in the same manner and form as
prescribed for denying a claim initially.
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(d) Time Frame. The initial claim, its review, appeal and final
review shall be made in a timely fashion, subject to the
following time table:
Days to Respond
Action From Last Action
------ ----------------
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the maximum
response time for its initial and final review if it provides an
explanation within the normal period of why an extension is
needed and when its decision shall be forthcoming.
18.7 Construction
Headings are included for reading convenience. The text shall control
if any ambiguity or inconsistency exists between the headings and the
text. The singular and plural shall be interchanged wherever
appropriate. References to Participant shall include Beneficiary when
appropriate and even if not otherwise already expressly stated.
18.8 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and administered
under ERISA and other applicable federal laws and, where not otherwise
preempted, by the laws of the State of California. If any provision
of this Plan and Trust shall become invalid or unenforceable, that
fact shall not affect the validity or enforceability of any other
provision of this Plan and Trust. All provisions of this Plan and
Trust shall be so construed as to render them valid and enforceable in
accordance with their intent.
18.9 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries against
any and all liabilities resulting from any action or inaction,
(including a Plan termination in which the Company fails to apply for
a favorable determination from the Internal Revenue Service with
respect to the qualification of the Plan upon its termination), in
relation to the Plan or Trust (1) including (without limitation)
expenses reasonably incurred in the defense of any claim relating to
the Plan or its assets, and amounts paid in any settlement relating to
the Plan or its assets, but (2) excluding liability resulting from
actions or inactions made in bad faith, or resulting from the
negligence or willful misconduct of the Trustee. The Company shall
have the right, but not the obligation, to conduct the defense of any
action to which this Section applies. The Plan fiduciaries are not
entitled to indemnity from the Plan assets relating to any such
action.
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19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
-----------------------------------------------
19.1 Amendment
The Company reserves the right to amend this Plan and Trust at any
time, to any extent and in any manner it may deem necessary or
appropriate. The Company (and not the Trustee) shall be responsible
for adopting any amendments necessary to maintain the qualified status
of this Plan and Trust under Code sections 401(a) and 501(a). If the
Committee is acting as the Administrator in accordance with Section
15.6, it shall have the authority to adopt Plan and Trust amendments
which have no substantial adverse financial impact upon any Employer
or the Plan. All interested parties shall be bound by any amendment,
provided that no amendment shall:
(a) become effective unless it has been adopted in accordance with
the procedures set forth in Section 19.5;
(b) except to the extent permissible under ERISA and the Code, make
it possible for any portion of the Trust assets to revert to an
Employer or to be used for, or diverted to, any purpose other
than for the exclusive benefit of Participants and Beneficiaries
entitled to Plan benefits and to defray reasonable expenses of
administering the Plan;
(c) decrease the rights of any Employee to benefits accrued
(including the elimination of optional forms of benefits) to the
date on which the amendment is adopted, or if later, the date
upon which the amendment becomes effective, except to the extent
permitted under ERISA and the Code; nor
(d) permit an Employee to be paid the balance of his or her Employee
401(k) Account unless the payment would otherwise be permitted
under Code section 401(k).
19.2 Merger
This Plan and Trust may not be merged or consolidated with, nor may
its assets or liabilities be transferred to, another plan unless each
Participant and Beneficiary would, if the resulting plan were then
terminated, receive a benefit just after the merger, consolidation or
transfer which is at least equal to the benefit which would be
received if either plan had terminated just before such event.
19.3 Divestitures
In the event of a sale by an Employer which is a corporation of: (1)
substantially all of the Employer's assets used in a trade or business
to an unrelated corporation, or (2) a sale of such Employer's interest
in a subsidiary to an unrelated entity or individual, lump sum
distributions shall be permitted from the Plan, except as provided
below, to Participants with respect to Employees who continue
employment with the corporation acquiring such assets or who continue
employment with such subsidiary, as applicable.
63
Notwithstanding, distributions shall not be permitted if the purchaser
agrees, in connection with the sale, to be substituted as the Company
as the sponsor of the Plan or to accept a transfer of the assets and
liabilities representing the Participants' benefits into a plan of the
purchaser or a plan to be established by the purchaser.
19.4 Plan Termination
The Company may, at any time and for any reason, terminate the Plan in
accordance with the procedures set forth in Section 19.5, or
completely discontinue contributions. Upon either of these events, or
in the event of a partial termination of the Plan within the meaning
of Code section 411(d)(3), the Accounts of each affected Employee who
has not yet incurred a Break in Service shall be fully vested. If no
successor plan is established or maintained, lump sum distributions
shall be made in accordance with the terms of the Plan as in effect at
the time of the Plan's termination or as thereafter amended provided
that a post-termination amendment shall not be effective to the extent
that it violates Section 19.1 unless it is required in order to
maintain the qualified status of the Plan upon its termination. The
Trustee's and Employer's authority shall continue beyond the Plan's
termination date until all Trust assets have been liquidated and
distributed.
19.5 Amendment and Termination Procedures
The following procedural requirements shall govern the adoption of any
amendment or termination (a "Change") of this Plan and Trust:
(a) The Company may adopt any Change by action of its board of
directors in accordance with its normal procedures.
(b) The Committee, if acting as Administrator in accordance with
Section 15.6, may adopt any amendment within the scope of its
authority provided under Section 19.1 and in the manner
specified in Section 15.7(a).
(c) Any Change must be (1) set forth in writing, and (2) signed and
dated by the Company's board of directors or its designee.
(d) If the effective date of any Change is not specified in the
document setting forth the Change, it shall be effective as of
the date it is signed in accordance with clause (2) above,
except to the extent that another effective date is necessary to
maintain the qualified status of this Plan and Trust under Code
sections 401(a) and 501(a).
(e) No Change affecting the Trustee in its capacity as Trustee or in
any other capacity shall become effective until it is accepted
and signed by the Trustee (which acceptance shall not
unreasonably be withheld).
19.6 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate its Plan
64
participation by action of its board of directors in accordance with
its normal procedures. Written notice of such action shall be signed
and dated by an executive officer of the Employer and delivered to the
Company. If the effective date of such action is not specified, it
shall be effective on, or as soon as reasonably practicable after, the
date of delivery. Upon the Employer's request, the Company may
instruct the Trustee and Administrator to spin off all affected
Accounts and underlying assets into a separate qualified plan under
which the Employer shall assume the powers and duties of the Company.
Alternatively, the Company may treat the event as a partial
termination described above or continue to maintain the Accounts under
the Plan.
19.7 Replacement of the Trustee
The Trustee may resign as Trustee under this Plan and Trust or may be
removed by the Company at any time upon at least 90 days written
notice (or less if agreed to by both parties). In such event, the
Company shall appoint a successor trustee by the end of the notice
period. The successor trustee shall then succeed to all the powers
and duties of the Trustee under this Plan and Trust. If no successor
trustee has been named by the end of the notice period, the Company's
chief executive officer shall become the trustee, or if he or she
declines, the Trustee may petition the court for the appointment of a
successor trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as administratively feasible after
its resignation or removal as Trustee, the Trustee shall
transfer to the successor trustee all property currently held by
the Trust. However, the Trustee is authorized to reserve such
sum of money as it may deem advisable for payment of its
accounts and expenses in connection with the settlement of its
accounts or other fees or expenses payable by the Trust. Any
balance remaining after payment of such fees and expenses shall
be paid to the successor trustee.
(b) Final Accounting. The Trustee shall provide a final accounting
to the Administrator within 90 days of the date Trust assets are
transferred to the successor trustee.
(c) Administrator Approval. Approval of the final accounting shall
automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection with the Trustee within such time period.
Such approval shall be final as to all matters and transactions
stated or shown therein and binding upon the Administrator.
65
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered under the Plan as of the Effective Date to
Participants and Beneficiaries include this set of daily valued funds,
except that "as of December 1, 1995" shall be substituted for the preceding
reference to "as of the Effective Date" with regard to the LifePath and
Company Stock Funds:
CATEGORY FUNDS
-------- -----
MONEY MARKET Money Market
------------
INCOME Bond Index
------
BALANCED Asset Allocation
--------
EQUITY Company Stock
------ Growth Stock
S&P 500 Stock
COMBINATION LifePath
-----------
Prior to December 1, 1995, the Investment Funds included a Company Stock
Fund but solely for the investment of a Participant's or Beneficiary's
Employer Matching Account as directed by the Administrator.
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the Money Market
Fund.
III. Contribution Accounts For Which Investment is Restricted
A Participant or Beneficiary may direct the investment of his or her entire
Account except for the following Contribution Accounts, and except as
otherwise provided in Section 7, which shall be invested as of the
Effective Date as follows:
Employer Matching Account Company Stock Fund
Effective December 1, 1995, "Matching Stock Account" (which effective
December 1, 1995 includes amounts previously held in a Participant's
Employer Matching Account) shall be substituted for the preceding reference
to "Employer Matching Account".
IV. Maximum Percentage Restrictions Applicable to Certain Investment Funds
As of the Effective Date, there are no maximum percentage restrictions
applicable to any Investment Funds.
▇▇
▇▇▇▇▇▇▇▇ ▇ - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as follows:
1) Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants, except that the Employer shall pay the fees related to the
Company Stock Fund. These are paid by the Employer on a quarterly basis.
2) Recordkeeping Fees: These are paid by the Employer on a quarterly basis.
3) Loan Fees: A $3.50 per month fee is assessed and billed/collected
quarterly from the Account of each Participant who has an outstanding loan
balance for loans entered into on or after August 1, 1993. For loans
entered into prior to August 1, 1993, these are paid by the Employer on a
quarterly basis.
4) Investment Fund Election Changes: For each Investment Fund election change
by a Participant, in excess of 4 changes per year, a $10 fee shall be
assessed and billed/collected quarterly from the Participant's Account.
5) Periodic Installment Payment Fees: A $3.00 per check fee shall be assessed
and billed/collected quarterly from the Participant's Account.
6) Additional Fees Paid by Employer: All other Plan related fees and expenses
shall be paid by the Employer. To the extent that the Administrator later
elects that any such fees shall be borne by Participants, estimates of the
fees shall be determined and reconciled, at least annually, and the fees
shall be assessed monthly and billed/collected from Accounts quarterly.
67
APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the Trustee's prime rate, plus 2%.
68