Index to Exhibits
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
4.1** Our Restated Certificate of Incorporation filed as
Exhibit 3.1 to our Form 10-Q for the quarterly period
ended June 30, 2000.
4.2** Our Restated By-Laws filed as Exhibit 3.2 to our Form
10-Q for the quarterly period ended June 30, 2000.
4.3* Community Health Systems, Inc. 401(k) Plan.
4.4* Community Health Systems, Inc. 2000 Stock Option and
Award Plan.
5* Opinion of Fried, Frank, Harris, Shriver & Jacobson as
to the legality of securities offered under the
Community Health Systems, Inc. 401(k) Plan and the
Community Health Systems, Inc. 2000 Stock Option and
Award Plan.
23.1* Consent of Deloitte & Touche LLP.
23.2 Consent of Fried, Frank, Harris, Shriver & Jacobson
(included in Exhibit 5).
24 Power of Attorney (included in the signature pages of
this Registration Statement).
- --------------------------
* Filed herewith.
** Incorporated by reference.
EXHIBIT 4.3
[PART 1: KEMSTAR PROTOTYPE PLAN BASIC PLAN DOCUMENT 04,
CONFORMED TO REFLECT THE CHANGES MADE IN THE FIRST AMENDMENT OF THE PLAN]
Community Health Systems Prototype 401(k) Plan Document
-------------------------------------------------------
ARTICLE I. INTRODUCTION
------------
The Employer has established this Plan (the "Plan"), consisting of the
Adoption Agreement and the following provisions (the "Prototype 401(k)
Plan") for the exclusive benefit of Participants and their Beneficiaries.
ARTICLE II. DEFINITIONS
-----------
Where the following words and phrases appear in this Plan, they shall
have the respective meanings set forth below, unless their context clearly
indicates a contrary meaning. The singular herein shall include the plural,
and vice versa, and the masculine gender shall include the feminine gender,
and vice versa, where the context requires.
2.01 "Account" shall mean the Trust assets held by the Trustee for the
benefit of a Participant, which shall be the sum of the Participant's
Salary Reduction Contribution Account, Deferred Cash Contribution Account,
Employer Profit Sharing Contribution Account, Employer Matching
Contribution Account, Nondeductible Voluntary Contribution Account,
Deductible Voluntary Contribution Account, Rollover Account and Qualified
Nonelective Contribution Account and any transfer account established
pursuant to Section 4.07 hereof with respect to funds transferred to the
Trust on the Participant's behalf.
2.02 "Act" shall mean the Employee Retirement Income Security Act of
1974, as amended.
2.03 "Administrator" shall mean the person or persons specified in
Section 14.01 hereof.
2.04 "Adoption Agreement" shall mean the agreement by which the
Employer has most recently adopted or amended the Plan.
2.05 "Annuity Starting Date" shall mean the first day of the first
period for which an amount is paid to a Participant (other than loan(s) or
in-service withdrawal(s)) from the Trust (whether or not such distributions
are received in the form of an annuity).
2.06 "Applicable Life Expectancy" shall mean the life expectancy of
the Participant or the joint life and last survivor expectancy of the
Participant and Beneficiary calculated using the return multiples specified
in Section 1.72-9 of the Treasury Regulations. Unless the Participant
elects otherwise, life expectancies determined as of the First Required
Distribution Year shall be calculated using the attained age of the
Participant and, if applicable, the Beneficiary as of his or her birth date
in the First Required Distribution Year. Life expectancies for subsequent
calendar years shall be determined by reducing the life expectancy
determined as of the First Required Distribution Year by one for each
calendar year that has elapsed; provided, however, that the Participant may
elect prior to April 1 of the year immediately following his or her First
Required Distribution Year to have his or her life expectancy and, if the
Participant's Beneficiary is his or her Spouse, the life expectancy of such
Beneficiary, recalculated annually. If a Participant elects recalculation,
life expectancies for each subsequent calendar year shall be determined
using the attained ages of the Participant and, if applicable, his or her
Beneficiary, as of their respective birth dates in such calendar year.
With respect to a Beneficiary who is entitled to receive a
distribution after the death of a Participant, "Applicable Life Expectancy"
shall mean the life expectancy of the Beneficiary calculated using the
return multiples specified in Section 1.72-9 of the Treasury Regulations as
of the Beneficiary's birth date in the calendar year in which distributions
are required to commence, and reduced by one for each subsequent calendar
year. If the Beneficiary is the Participant's Spouse, he or she may elect,
prior to the time distributions are required to commence, to have his or
her life expectancy recalculated annually. If a Spouse so elects, his or
her life expectancy for each subsequent calendar year shall be determined
as of his or her birth date in such calendar year.
2.07 "Beneficiary" shall mean any person or legal representative
effectively designated by the Participant as a person entitled to receive
benefits on or after the death of a Participant. Such term shall also
include any person or legal representative designated by a Beneficiary as a
person entitled to receive benefits on or after the death of such
Beneficiary.
2.08 "Code" shall mean the Internal Revenue Code of 1986, as amended.
Reference to a section of the Code shall include any comparable section or
sections of future legislation that amends, supplements or supersedes such
section.
2.08A "Company Stock Fund" shall mean the separate investment option
available under the Plan, which is not a Designated Investment, consisting
primarily of the publicly-traded common stock of Community Health Systems,
Inc. ("CHS"), par value $.01 per share (the "Common Stock"), held by the
Trustee pursuant to the terms of Section 13.03(l) and, in addition, the
Unitized Company Stock Services Agreement between the Trustee, the
Employer, the Administrator and CHS, a copy of which is attached hereto as
Exhibit "A."
2.09 "Compensation" shall mean:
(a) except as provided in subsection (b), (c), and (d) and
subject to the limitation of subsection (e), one of the following as
elected by the Employer in the Adoption Agreement:
(i) W-2 Compensation. Information required to be reported
under Sections 6041, 6051 and 6052 of the Code (Wages, tips and other
compensation as reported on Form W-2). Compensation is defined as wages
within the meaning of Section 3401(a) and all other payments of
compensation to an Employee by the Employer (in the course of the
Employer's trade or business) for which the Employer is required to furnish
the Employee a written statement under Sections 6041(d), 6051(a)(3) and
6052. Compensation must be determined without regard to any rules under
Section 3401(a) that limit the remuneration included in wages based on the
nature or location of the employment or the services performed (such as the
exception for agricultural labor in Section 3401(a)(2)).
(ii) 415 Safe Harbor Compensation. "Compensation" as defined
in Section 5.05(b)(ii) of this Plan.
(iii) Safe Harbor Alternative Definition. Compensation as
defined in Section 2.09(a)(ii) above, reduced by all of the following items
(even if includible in gross income): reimbursements or other expense
allowances, fringe benefits (cash and non-cash), moving expenses, deferred
compensation, and welfare benefits.
(iv) In the case of a Self-Employed Individual, the
determination of Compensation shall be made on the basis of the
Self-Employed Individual's Earned Income.
(b) If so specified in the Adoption Agreement, the Employer may
elect to include in the definition of Compensation the Participant's Salary
Reduction Contributions, Deferred Cash Contributions and any other amount
which is contributed by the Employer pursuant to a salary reduction
agreement and which is not includible in the gross income of the employee
under sections 125, 402(e)(3), 402(h) or 403(b) of the Code.
(c) If so specified in the Adoption Agreement, an Employer may
elect to exclude from the definition any one or more of the following types
of compensation:
(i) additional compensation for Participants working outside
their regularly scheduled tour of duty such as overtime pay, premiums for
shift differential and call-in premiums;
(ii) bonuses;
(iii) commissions;
(iv) such other items as specified in the Adoption
Agreement; provided, however, that if the Employer elects an alternative
definition of Compensation pursuant to this Section 2.09(c) for purposes of
allocating Employer Profit Sharing Contributions and forfeitures thereof,
then such alternative definition must be tested by the Administrator to
show that it meets the nondiscrimination requirements of Section 414(s)(3)
of the Code. Such alternative definition of Compensation may not be used
for purposes of Articles V, VI and XXIII.
(d) If this Plan is adopted, (i) as an amendment to an existing
plan, (ii) to remove a disqualifying provision which results from a change
in the qualification requirements of the Code made by the Tax Reform Act of
1986 and such other legislation as set forth in Section
1.401(b)-I(b)(2)(ii) of the regulations under Code Section 401(b), and
(iii) within the remedial amendment period applicable to such disqualifying
provision, then for Plan Years beginning before the date such amendment is
adopted, "Compensation" shall, subject to the limitation of subsection (e),
mean compensation as defined under the terms of the plan prior to its
amendment.
(e) In addition to other applicable limitations set forth in the
Plan, and notwithstanding any other provision of the Plan to the contrary,
for Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Participant taken into account under the Plan for any
determination period shall not exceed the OBRA '93 annual compensation
limit. The OBRA '93 annual compensation limit is $150,000, as adjusted by
the Commissioner for increases in the cost of living in accordance with
Section 401(a)(17) of the Code. The cost-of-living adjustment in effect for
a calendar year applies to any period, not to exceed 12 months, beginning
in such calendar year over which Compensation is determined ("determination
period"). If a determination period is a short Plan Year (i.e., shorter
than 12 months), the OBRA '93 annual compensation limit will be multiplied
by a fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply, except
in applying such rules, the term "family" shall include only the Spouse of
the Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the year. If, as a result of the
application of such rules the OBRA '93 annual compensation limit is
exceeded, then (except for purposes of determining the portion of
Compensation up to the integration level if this Plan provides for
permitted disparity), the limitation shall be prorated among the affected
individuals in proportion to each such individual's Compensation as
determined under this Section prior to the application of this limitation.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall mean
the OBRA '93 annual compensation limit.
(f) Compensation shall be based on the amount actually paid to
the Participant during the Plan Year. To the extent elected by the Employer
in the Adoption Agreement, for purposes of allocating Employer Profit
Sharing Contributions and/or Employer Matching Contributions and/or
applying the Section 401(m) nondiscrimination test, Compensation shall be
based on the amounts paid during that portion of the Plan Year during which
the Employee is eligible to participate with respect to the allocation of
such contributions. To the extent elected by the Employer in the Adoption
Agreement, for purposes of applying the Section 401(k) nondiscrimination
test, Compensation shall be based on the amount paid during that portion of
the Plan Year during which the Employee is eligible to make a salary
reduction election and/or to receive allocations of Deferred Cash
Contributions. Notwithstanding the preceding sentence, compensation for the
purposes of Article V (Code Section 415 Limitations on Allocations) shall
be based on the amount actually paid or made available to the Participant
during the Limitation Year. Compensation for the initial Plan Year for a
new plan shall be based upon eligible Participants' Compensation, subject
to the Adoption Agreement, from the Effective Date through the end of the
first Plan Year.
2.10 "Deductible Voluntary Contribution Account" shall mean the
separate account maintained pursuant to Section 7.03(g) for any deductible
voluntary contributions under Code Section 219 that the Participant made
for 1986 and earlier calendar years and the income, expenses, gains and
losses attributable thereto.
2.11 "Deferred Cash Allocation" shall mean the contribution payable by
the Employer to the Trust on behalf of a Participant subject to the
Participant's right to elect to receive all or a portion of such
contribution in cash in lieu of having it contributed to the Trust on his
or her behalf.
2.12 "Deferred Cash Contribution Account" shall mean the separate
account maintained pursuant to Section 7.03(b) hereof for Deferred Cash
Contributions allocated to the Participant and the income, expenses, gains
and losses attributable thereto.
2.13 "Deferred Cash Contributions" shall mean contributions to the
Trust by the Employer in accordance with Section 4.02 hereof.
2.14 "Designated Investment" shall mean either a collective investment
trust for the collective investment of assets of employee pension or profit
sharing trusts pursuant to Revenue Ruling 81-100, a commingled investment
vehicle for the collective investment of assets of institutional investors,
or a regulated investment company, for which Scudder Kemper Investments,
Inc., its successor or any of its affiliates, acts as investment adviser
and any of which are designated by Scudder Investor Services, Inc. or its
successors as eligible for investment under the Plan.
2.15 "Designation of Beneficiary" or "Designation" shall mean the
document executed by a Participant under Article XVII.
2.16 "Disabled" or "Disability" shall mean the inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or
last for a continuous period of 12 months or more, as certified by a
licensed physician selected by the Participant and approved by the
Employer.
2.17 "Distributor" shall mean Scudder Investor Services, Inc. or its
successor.
2.18 "Earned Income" shall mean the net earnings from self-employment
in the trade or business with respect to which the Plan is established, for
which personal services of the Owner-Employee or Self-Employed Individual
are a material income-producing factor. Net earnings will be determined
without regard to items not included in gross income and the deductions
allocable to such items, except that, for taxable years beginning after
December 31, 1989, net earnings shall be determined with regard to the
deduction allowed by Code Section 164(f). Net earnings are reduced by
contributions by the Employer to a qualified plan, including this Plan, to
the extent deductible under Code Section 404.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Earned Income of
each Participant taken into account under the Plan for any determination
period shall not exceed the OBRA '93 annual compensation limit. The OBRA
'93 annual compensation limit is $150,000, as adjusted by the Commissioner
for increases in the cost of living in accordance with Section 401(a)(17)
of the Code. The cost-of-living adjustment in effect for a calendar year
applies to any period, not to exceed 12 months, beginning in such calendar
year over which Earned Income is determined ("determination period"). If a
determination period is a short Plan Year (i.e., shorter than 12 months),
the OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period,
and the denominator of which is 12.
In determining the Earned Income of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply, except
in applying such rules, the term "family" shall include only the Spouse of
the Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the year. If, as a result of the
application of such rules the OBRA '93 annual compensation limit is
exceeded, then (except for purposes of determining the portion of Earned
Income up to the integration level if this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals
in proportion to each such individual's Earned Income as determined under
this Section prior to the application of this limitation.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall mean
the OBRA '93 annual compensation limit.
2.19 "Effective Date" shall mean the date specified by the Employer in
the Adoption Agreement.
2.20 "Employee" shall mean any individual who performs services in any
capacity in the business of the Employer (including any individual deemed
to be an employee of the Employer under Code Section 414(n) or (o)).
2.21 "Employer" shall mean the organization or other entity named as
such in the Adoption Agreement and any successor organization or entity
which adopts the Plan. If the organization or other entity named as
Employer in the Adoption Agreement is a sole proprietorship or a
professional corporation and the sole proprietor of such proprietorship or
the sole shareholder of the professional corporation dies, then the legal
representative of the estate of such sole proprietor or shareholder shall
be deemed to be the Employer until such time as, through the disposition of
such sole proprietor's or sole shareholder's estate or otherwise, any
organization or other entity succeeds to the interests of the sole
proprietor in the proprietorship or the sole shareholder in the
professional corporation.
Unless the adopting organization or entity elects otherwise in the
Adoption Agreement, any two or more organizations or entities which are
members of (a) a controlled group of corporations (as defined under Code
Section 414(b)) which includes the adopter, (b) a group of trades or
businesses (whether or not incorporated) which are under common control (as
defined under Code Section 414(c)) which includes the adopter, or (c) an
affiliated service group (as defined under Code Section 414(m)) which
includes the adopter, will be considered to be the Employer for the
purposes of the Plan. Similarly, any other organization or entity which is
required to be aggregated with the adopter pursuant to Code Section 414(o)
and the regulations thereunder will be considered to be the Employer for
the purposes of the Plan.
2.22 "Employer Contributions" shall mean Employer Profit Sharing
Contributions, Employer Matching Contributions, Salary Reduction
Contributions, Deferred Cash Contributions, Qualified Matching
Contributions and Qualified Nonelective Contributions.
2.23 "Employer Profit Sharing Contribution Account" shall mean the
separate account maintained pursuant to Section 7.03(c) hereof for Employer
Profit Sharing Contributions allocated to the Participant and the income,
expenses, gains and losses attributable thereto.
2.24 "Employer Profit Sharing Contributions" shall mean contributions
to the Trust by the Employer in accordance with Section 4.03 hereof.
Employer Profit Sharing Contributions may be fixed or discretionary as
provided in the Adoption Agreement.
2.25 "Employer Matching Contribution Account" shall mean the separate
account maintained pursuant to Section 7.03(d) hereof for Employer Matching
Contributions allocated to the Participant and the income, expenses, gains
and losses attributable thereto.
2.26 "Employer Matching Contributions" shall mean the contributions
made to the Trust by the Employer in accordance with Section 4.04 hereof as
matching contributions. All Employer Matching Contributions shall initially
be invested in the Company Stock Fund on behalf of each Participant for
whom such contributions are made. At the discretion of the Employer, all
Employer Matching Contributions shall be made either in the form of cash or
shares of Common Stock, or some combination thereof.
2.27 "Family Member" shall mean, with respect to a particular
Employee, any individual who is a Spouse, lineal ascendant, lineal
descendent, or a Spouse of a lineal ascendant or descendent of the
Employee. "Family Member" as used in this Plan refers to an individual who
is, or was during the Plan Year in question, an Employee.
2.28 "First Required Distribution Year" shall mean:
(a) in the case of a Participant whose date of birth is July 1,
1917 or a later date, the calendar year during which the Participant
attains age 70 1/2;
(b) in the case of a Participant (i) whose date of birth is June
30, 1917 or an earlier date and (ii) who is not, and has not been at any
time since the calendar year during which he or she attained age 65 1/2, a
"5% owner" (as defined in Code Section 416(i)(1)(B)(i)) of the Employer
(hereinafter a "5% owner"), the calendar year during which occurs the later
of the Participant's separation from Service or the Participant's
attainment of age 70 1/2, provided that if the Participant continues in
Service after he or she attains age 70 1/2 and later becomes a 5% owner,
such Participant's First Required Distribution Year shall be the calendar
year during which the Participant attains the status of a 5% owner;
(c) in the case of a Participant (i) whose date of birth is June
30, 1917 or an earlier date and (ii) who is, or has been at sometime since
the calendar year during which he or she attained age 65 1/2, a 5% owner,
the calendar year during which the Participant attains age 70 1/2.
2.29 "Highly Compensated Employee" shall mean:
(a) any Employee who was, at any time in the look-back year or
determination year, a 5% owner;
(b) any Employee who, in the look-back year:
(i) earned more than $75,000 (as adjusted by the Secretary
of the Treasury to reflect rises in the cost of living in accordance with
Code Section 415(d)) in annual compensation,
(ii) was an officer and earned more than 50% of the dollar
limitation in effect for such year under Code Section 415(b)(1)(A); or
(iii) earned more than $50,000 (as adjusted by the Secretary
of the Treasury to reflect rises in the cost of living in accordance with
Code Section 415(d)) in annual compensation and was among the top 20% of
Employees when ranked on the basis of compensation paid during such year.
For purposes of calculating the top 20% of Employees when ranked on
the basis of compensation paid during the look-back year, there shall be
excluded from the total number of Employees: (A) Employees with less than
six months of Service, (B) Employees who normally work less than 17 1/2
hours per week, (C) Employees who normally work less than six months per
year, (D) except as provided in Treasury Regulations, Employees covered by
a collective bargaining agreement, (E) Employees who have not attained 21
years of age, and (F) Employees who are nonresident aliens and who receive
no earned income from the Employer that constitutes income from sources
within the United States;
(c) any Employee not described in paragraph (b) above but who is
described in clause (i), (ii) or (iii) of paragraph (b) if the term
"determination year" is substituted for the term "look-back year," and the
Employee is among the 100 Employees who received the most compensation from
the Employer during the determination year; and
(d) any former Employee who has separated from Service but who
was a Highly Compensated Employee as described in paragraph (a), (b) or (c)
above when he separated from Service or at any time after he attained age
55.
For purposes of this Section, "compensation" shall mean the amount
paid during the look-back year or determination year, whichever is
applicable, by the Employer to the Employee for services rendered
(regardless of whether the individual was a Participant at the time) as
reportable to the Federal Government for the purpose of withholding federal
income taxes and increased by any amount to which Code Sections 125,
402(e)(3), 402(h)(1)(B) or 403(b) apply. Also for purposes of this Section,
no more than 50 Employees or, if lesser, the greater of three Employees or
10% of Employees shall be treated as officers; however, if no officer has
compensation in excess of the applicable stated dollar amount above in any
year, the officer with the highest compensation shall be treated as
described in paragraph (b) or (c), as applicable.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the 12-month period immediately preceding the
determination year. The Employer may elect to make the look-back year
calculation for a determination on the basis of the calendar year ending
with or within the applicable determination year, as prescribed by Section
414(q) of the Code and the regulations issued thereunder.
If an Employee is, during a determination year or look-back year, a
Family Member of either a 5% owner who is an active or former Employee or a
Highly Compensated Employee who is one of the ten most Highly Compensated
Employees ranked on the basis of compensation paid by the Employer during
such year, then the Family Member and the 5% owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the Family Member
and the 5% owner or top-ten Highly Compensated Employee shall be treated as
a single Employee receiving compensation and Plan contributions or benefits
equal to the sum of such compensation and contributions or benefits of the
Family Member and 5% owner or top-ten Highly Compensated Employee. Finally,
all interpretative questions concerning whether an individual constitutes a
Highly Compensated Employee shall be resolved in a manner consistent with
Department of Treasury and Internal Revenue Service interpretations of Code
Section 414(q).
2.30 "Highly Compensated Participation" shall mean a Highly
Compensated Employee who was, at any time during the Plan Year in question,
eligible to participate in the Plan.
2.31 "Hour of Service" shall mean each hour credited to an Employee in
the applicable computation period (a 12-consecutive month period) pursuant
to subsection (a) or (b) below, as the case may be.
(a) If the Employer has so selected in the Adoption Agreement,
Hours of Service shall be credited on the basis of weeks of employment and
the rules in paragraphs (i) through (iii) below shall apply as modified by
paragraphs (iv) and (v) below.
(i) Each Employee shall be credited with 45 Hours of Service
for each week in which the Employee would be credited with at least one
hour of service under Section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by reference. In the case of a
week which extends into two computation periods, the Hours of Service for
such week shall be allocated between the two computation periods on a pro
rata basis.
(ii) In the case of a payment made or due to an Employee
which is not calculated on the basis of units of time, the number of Hours
of Service to be credited shall be equal to the amount of the payment
divided by the Employee's most recent hourly rate of compensation as
determined under Section 2530.200b-2 of the Department of Labor
Regulations.
(iii) No more than 501 Hours of Service shall be credited
under this Section for any single continuous period (whether or not such
period occurs in a single computation period) during which no duties or
services are performed for the Employer (or any other corporation during a
time when such corporation was related to the Employer within the meaning
of Code Section 414), but for which the individual is paid.
(iv) The following hours shall be considered to be hours of
service for which an Employee would be credited under Section 2530.200b-2
of the Department of Labor Regulations for the purposes of subsection
(a)(i) of this Section:
(A) An hour for which an Employee is paid, or entitled
to payment, for the performance of duties or services for the Employer.
(B) An hour for which an Employee is paid, or entitled
to payment, by the Employer (or any other corporation during a time when
such corporation was related to the Employer within the meaning of Code
Section 414) on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
Disability), layoff, jury duty, military duty or leave of absence (unless
such payment is made or due solely to comply with applicable workman's
compensation, unemployment compensation or disability insurance laws or
solely as reimbursement for the Employee's medical expenses).
(C) An hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer (or
any other corporation during a time when such corporation was related to
the Employer within the meaning of Code Section 414). The same hours shall
not be considered both under paragraph (iv)(A) or paragraph (iv)(B), as the
case may be, and under this paragraph (iv)(C). Such hours shall be treated
under paragraphs (i) through (iii) as occurring in the computation period
or periods to which the award or agreement pertains rather than the
computation period in which the award, agreement or payment, is made.
(v) Solely for the purpose of determining whether a One-Year
Break in Service has occurred, an Employee shall be credited with any Hours
of Service which would otherwise have been credited to such Employee but
for such absence from work during a Plan Year which commences after
December 31, 1984 because of: such Employee's pregnancy, birth of a child
of the Employee, placement of an adopted child with the Employee, or caring
for a natural or an adopted child for a period beginning immediately
following birth or placement.
Hours of Service shall be credited to an Employee pursuant to this
paragraph in the manner indicated in paragraphs (i) through (iii) above for
the computation period during which such absence begins, if the Employee
would otherwise have suffered a One-Year Break in Service and, in all other
cases, in the next following computation period. No more than 501 Hours of
Service shall be credited under this paragraph by reason of any one
placement or pregnancy. Notwithstanding any implication of this paragraph
(v) to the contrary, no credit shall be given pursuant to this paragraph
(v) unless the Employee makes a timely, written filing with the
Administrator which establishes valid reasons for the absence and
enumerates the days for which there was such an absence.
(b) If the Employer has not selected in the Adoption Agreement to
have Hours of Service credited on the basis of weeks of employment, Hours
of Service shall mean:
(i) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours shall
be credited to the Employee for the computation period in which the duties
are performed;
(ii) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no
duties are performed (irrespective of whether the employment relationship
has terminated) due to vacation, holiday, illness, incapacity (including
Disability), layoff, jury duty, military duty or leave of absence. No more
than 501 Hours of Service shall be credited under this paragraph for any
single continuous period (whether or not such period occurs in a single
computation period). Hours under this subsection shall be calculated and
credited pursuant to section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by this reference;
(iii) Solely for the purpose of determining whether a
One-Year Break in Service has occurred, each hour which normally would have
been credited to an Employee (or in any case in which such hours cannot be
determined, eight hours per day of such absence) but for an absence from
work during a Plan Year which commences after December 31, 1984 because of
such individual's pregnancy, birth of a child of the Employee, placement of
an adopted child with the Employee, or caring for an adopted or a natural
child following placement or birth. Hours of Service shall be credited to
an Employee pursuant to this paragraph for the computation period during
which such absence begins if the individual would otherwise have suffered a
One-Year Break in Service, and in all other cases, in the immediately
following computation period. No more than 501 Hours of Service shall be
credited under this paragraph by reason of any one placement or pregnancy.
Notwithstanding any implication of this paragraph (iii) to the contrary, no
credit shall be given under this paragraph (iii) unless the Employee makes
a timely, written filing with the Administrator which establishes valid
reasons for the absence and enumerates the days for which there was such an
absence;
(iv) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer. The
same Hours of Service shall not be credited both under paragraph (i), (ii)
or (iii), as the case may be, and under this paragraph (iv). These hours
shall be credited to the Employee for the computation period or periods to
which the award or agreement pertains rather than the computation period in
which the award, agreement or payment is made.
(c) (i) Where the Employer maintains the plan of a predecessor
employer, service for such predecessor employer shall be treated as Service
of the Employer. Where the Employer does not maintain the plan of a
predecessor employer, employment by a predecessor employer, upon the
written election of the Employer made in a uniform and non-discriminatory
manner, shall be treated as Service for the Employer.
(ii) If the Employer is a member of (A) a controlled group
of corporations (as defined under Code Section 414(b)), (B) a group of
trades or businesses (whether or not incorporated) which are under common
control (as defined under Code Section 414(c)), or (C) an affiliated
service group (as defined under Code Section 414(m)), all service of an
Employee for any member of such a group, or for any other entity required
to be aggregated with the Employer pursuant to Code Section 414(o) and the
regulations thereunder, shall be treated as if it were Service for the
Employer for purposes of this Section.
(iii) Except as provided below, service of any Employee who
is considered a leased employee of the Employer under Code Section
414(n)(2) shall be treated as if it were Service for the Employer for
purposes of this Section. However, qualified plan contributions or benefits
provided by the leasing organization which are attributable to services
performed for the Employer shall be treated as provided by the Employer.
The provisions of this paragraph shall not apply to any leased employee if
such individual:
(A) is covered by a money purchase pension plan
maintained by the leasing organization providing:
(1) a non-integrated employer contribution rate of
at least 10% of compensation (as defined in Code Section 415(c)(3), but
including amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's gross income
under Code Section 125, 402(e)(3), 402(h), or 403(b),
(2) immediate participation for leasing
organization employees who earn more than $1,000 in a year (other than
employees who perform substantially all their services for the
organization), and
(3) full and immediate vesting, and
(B) is a member of a group of leased employees which in
the aggregate does not constitute more than 20% of the Employer's
non-highly compensated work force (within the meaning of Code Section
414(n)(5)(C)(ii)).
(C) For purposes of this Section, the term "leased
employee" means any person who is not an Employee and who, pursuant to an
agreement between the recipient and any other person, has performed
services for the Employer (or for the Employer and related persons
determined in accordance with Code Section 414(n)(6)) on a substantially
full-time basis for a period of at least one year and such services are of
a type historically performed by employees in the business field of the
Employer.
2.32 "Integration Level" for a Plan Year shall mean the lesser of the
Social Security Wage Base (as in effect on the first day of the Plan Year)
or the dollar amount specified in the Adoption Agreement.
2.33 "Integration Rate" for the Plan Year shall mean the lesser of the
Maximum Disparity Rate (as in effect on the first day of the Plan Year) or
the rate specified in the Adoption Agreement.
2.34 "Loan Trustee" shall mean the person named in the Adoption
Agreement to act as trustee solely for the purpose of administering the
provisions of Article XII and holding the Trust assets to the extent that
they are invested in loans pursuant to such Article. Loan assets shall be
held in a separate trust if the person named as Loan Trustee is not the
same person as the person named as Trustee. Scudder Trust Company will not
act as Loan Trustee unless it specifically agrees in writing to act as
such.
2.35 "Maximum Disparity Rate" shall mean the rate determined in
accordance with paragraphs (a), (b) or (c) and (d) below.
(a) If the Integration Level selected by the Employer in the
Adoption Agreement is equal to the Social Security Wage Base or does not
exceed the greater of $10,000 or 20 percent of the Social Security Wage
Base, then, except as provided in (d) below, the Maximum Disparity Rate is
equal to the greater of (i) 5.7 percent or (ii) the OASDI Rate.
(b) If the Integration Level selected by the Employer in the
Adoption Agreement exceeds the greater of $10,000 or 20 percent of the
Social Security Wage Base but is less than or equal to 80 percent of the
Social Security Wage Base, then, except as provided in (d) below, the
Maximum Disparity Rate is equal to the greater of (i) 4.3 percent or (ii)
the OASDI Rate multiplied by a fraction the numerator of which is 4.3 and
the denominator of which is 5.7.
(c) If the Integration Level selected by the Employer in the
Adoption Agreement exceeds 80 percent of the Social Security Wage Base but
is less than the Social Security Wage Base, then, except as provided in (d)
below, the Maximum Disparity Rate is equal to the greater of (i) 5.4
percent or (ii) the OASDI Rate multiplied by a fraction the numerator of
which is 5.4 and the denominator of which is 5.7.
(d) If allocations for a Plan Year are made on an integrated
basis pursuant to Section 4.03(b)(ii) and the provisions of Section 23.03
are applicable for such Plan Year, then for purposes of determining the
Integration Rate as applied to limit allocations under Section 4.03(b)(ii),
the Maximum Disparity Rate determined in accordance with paragraph (a), (b)
or (c) above shall be reduced by 3 percent. If the Employer has elected in
the Adoption Agreement to make a 4 percent minimum allocation pursuant to
Section 23.07(b), then 4 percent shall be substituted for 3 percent in the
preceding sentence.
2.36 "Nondeductible Voluntary Contribution Account" shall mean the
separate account maintained pursuant to the Section 7.03(e) hereof for
Nondeductible Voluntary Contributions made by the Participant and the
income, expenses, gains and losses attributable thereto.
2.37 "Nondeductible Voluntary Contributions" shall mean all
contributions by Participants which are not deductible voluntary
contributions under Code Section 219, Rollover Contributions, or
contributions of accumulated deductible employee contributions (as defined
in Code Section 72(o)(5)).
2.38 "Non-Highly Compensated Employee" shall mean an Employee who is
neither a Highly Compensated Employee nor a Family Member of a Highly
Compensated Employee.
2.39 "Non-Highly Compensated Participant" shall mean a Non-Highly
Compensated Employee who was, at any time during the Plan Year in question,
eligible to participate in the Plan.
2.40 "Normal Retirement Date" or "Normal Retirement Age" shall mean
the date selected by the Employer in the Adoption Agreement.
2.41 "OASDI Rate" for a Plan Year shall mean that portion of the tax
rate under Code Section 3111(a) in effect on the first day of the Plan Year
which is attributable to old-age insurance.
2.42 "One-Year Break in Service" shall mean a 12-consecutive-month
period in which an Employee does not complete more than 500 Hours of
Service unless the number of Hours of Service specified in the Adoption
Agreement for purposes of determining a Year of Service is less than 501,
in which case a 12-consecutive-month period in which an Employee has fewer
than that number of Hours of Service shall be a One-Year Break in Service.
The computation period over which One-Year Breaks in Service shall be
measured shall be the same computation period over which Years of Service
are measured.
2.43 "Owner-Employee" shall mean an Employee who is a sole proprietor
adopting this Plan as the Employer, or who is a partner owning more than
10% of either the capital or profits interest of a partnership adopting
this Plan as the Employer. Solely for the purposes of Article XII hereof,
an Owner-Employee shall also mean an Employee who owns (or is considered as
owning within the meaning of Code Section 318(a)(1)) on any day during the
Year, more than 5% of the Employer if the Employer is an electing small
business corporation.
2.44 "Participant" shall mean an Employee who is eligible to
participate in the Plan under Article III (other than, if this Plan is
adopted as a nonstandardized plan, a Self-Employed Individual who elects
not to be a Participant in the Plan) and any other person (including former
Employees) with respect to whom any Account exists under the Plan.
2.45 "Plan" shall mean this 401(k) Plan and Adoption Agreement.
2.46 "Plan Year" shall mean the fiscal year of the Employer or a
different 12-consecutive-month period as specified in the Adoption
Agreement. A Plan Year may consist of less than a 12-consecutive-month
period in the case of the initial Plan Year or a short Plan Year resulting
from a change in Plan Year.
2.47 "Prototype 401(k) Plan" shall mean these Articles I to XXV.
2.48 "Qualified Matching Contributions" shall mean contributions made
to the Trust by the Employer in accordance with Section 6.03(c) hereof on
behalf of Non-Highly Compensated Participants to enable the Plan to satisfy
one or more of the non-discrimination tests set forth in Article VI.
Qualified Matching Contributions are subject to full and immediate vesting
and are distributable only in accordance with the distribution provisions,
other than hardship distributions, that are applicable to Deferred Cash
Contributions and Salary Reduction Contributions. The term "Qualified
Matching Contributions" could, at the election of the Administrator, also
apply to Employer Matching Contributions if such contributions are subject
to full and immediate vesting and are distributable only in accordance with
the distribution provisions, other than hardship distributions, that are
applicable to Deferred Cash Contributions and Salary Reduction
Contributions.
2.49 "Qualified Nonelective Contributions" shall mean contributions
made to the Trust by the Employer in accordance with Section 6.02(c) hereof
on behalf of Non-Highly Compensated Participants to enable the Plan to
satisfy one or more of the nondiscrimination tests set forth in Article VI.
Qualified Nonelective Contributions are subject to full and immediate
vesting and are distributable only in accordance with the distribution
provisions, other than hardship distributions, that are applicable to
Deferred Cash Contributions and Salary Reduction Contributions. The term
"Qualified Nonelective Contributions" could, at the election of the
Administrator, also apply to Employer Profit Sharing Contributions if such
contributions are subject to full and immediate vesting and are
distributable only in accordance with the distribution provisions, other
than hardship distributions, that are applicable to Deferred Cash
Contributions and Salary Reduction Contributions.
2.50 "Qualified Nonelective Contribution Account" shall mean the
separate account maintained pursuant to Section 7.03(f) hereof for
Qualified Matching Contributions and Qualified Nonelective Contributions
allocated to the Participant and the income, expenses, gains and losses
attributable thereto.
2.51 "Rollover Account" shall mean the separate account maintained
pursuant to Section 7.03(h) hereof for any Rollover Contributions made by
the Participant and the income, expenses, gains and losses attributable
thereto.
2.52 "Rollover Contributions" shall mean contributions made to the
Trust by Participants in accordance with Section 4.06 hereof.
2.53 "Salary Reduction Contribution Account" shall mean the separate
account maintained pursuant to Section 7.03(a) hereof for Salary Reduction
Contributions made on behalf of the Participant and the income, expenses,
gains and losses attributable thereto.
2.54 "Salary Reduction Contributions" shall mean contributions made to
the Trust by the Employer in accordance with Section 4.01 hereof as a
result of the election by Participants to contribute part of their
Compensation.
2.55 "Self-Employed Individual" shall mean an Employee who has Earned
Income for the taxable year from the trade or business for which the Plan
is established or would have had earned income but for the fact that the
trade or business had no net profits for such year.
2.56 "Service" shall mean employment by the Employer and, if the
Employer is maintaining the plan of a predecessor employer, or if the
Employer is not maintaining the plan of a predecessor employer but has so
elected in the manner described in Section 2.31 above, employment by such
predecessor employer.
2.57 "Social Security Wage Base" for a Plan Year shall mean the
maximum amount of annual earnings which may be considered wages under Code
Section 3121(a)(1) as in effect on the first day of such Plan Year for
purposes of the old-age, survivors, and disability insurance under Code
Section 3111(a).
2.58 "Sponsor" shall mean any of the organizations (a) which have
requested a favorable opinion letter from the National Office of the
Internal Revenue Service for this Plan or (b) to which a favorable opinion
letter for this Plan has been issued by the National Office of the Internal
Revenue Service.
2.59 "Spouse" shall mean the Spouse or surviving Spouse of the
Participant, provided that a former Spouse will be treated as the Spouse
and a current Spouse will not be treated as the Spouse to the extent
provided under a qualified domestic relations order (as defined in Code
Section 414(p)).
2.60 "Trust" shall mean any trust established under Article XIII of
this Plan for investment of the assets of the Plan. If more than one Trust
is established under Article XIII, references herein to the Trust shall, as
the context requires, refer to each such Trust, separately or all such
Trusts, collectively.
2.61 "Trust Fund" shall mean with respect to a Trust the contributions
to such Trust and any assets into which such contributions shall be
invested or reinvested in accordance with Sections 13.01 and 13.03 of this
Plan. If more than one Trust is established under Article XIII, references
herein to the Trust Fund shall refer to the Trust Fund of each such Trust,
separately, or all such Trusts, collectively, as the context requires.
2.62 "Trustee" shall mean, with respect to each Trust, the person or
persons, including any successor or successors thereto, named in the
Adoption Agreement to act as trustee of the such Trust and hold the assets
of such Trust in accordance with Article XIII hereof. If more than one
Trust is established under Article XIII, references herein to the Trustee
shall, as the context requires, refer to the Trustee or Trustees of each
such Trust.
2.63 "Valuation Date" shall mean the last day of each Plan Year and
such other date(s) as may be designated by the Administrator from time to
time.
2.64 "Vesting Years" shall be measured on the 12-consecutive-month
computation period specified in the Adoption Agreement.
(a) A Participant will have a Vesting Year during any such
computation period if the Participant completes the number of Hours of
Service selected in the Adoption Agreement for purposes of computing a Year
of Service.
(b) When determining Vesting Years, unless the Employer has
otherwise specified in the Adoption Agreement, there shall be excluded: (i)
if this Plan is a continuation of an earlier plan which would have
disregarded such service, Service before the first Plan Year to which the
Act is applicable; (ii) Service before the first Plan Year in which the
Participant attained age 18 and (iii) Service before the Employer
maintained this Plan or a predecessor plan.
2.65 "Year" shall mean the fiscal year of the Employer.
2.66 "Year of Service" shall be measured on the 12-consecutive-month
period computation period specified in the Adoption Agreement during which
the Employee completes the number of Hours of Service specified in the
Adoption Agreement. The initial date of employment or reemployment is the
first day on which the Employee performs an Hour of Service. If the
Employer specifies in the Adoption Agreement that the computation period
after the initial computation period shall be the Plan Year which begins
after the Employee's initial date of employment or reemployment, an
Employee who is credited with the requisite number of Hours of Service in
both the initial computation period and in the Plan Year which begins after
the Employee's date of employment or reemployment shall be credited with
two Years of Service.
ARTICLE III. ELIGIBILITY
-----------
3.01 Entry. Each Employee of the Employer, who on the Effective Date
of this Plan meets the conditions specified in the Adoption Agreement,
shall become eligible to participate in the Plan commencing with the
Effective Date. Each other Employee of the Employer, including future
Employees, shall become eligible to participate in the Plan when the
eligibility requirements specified in the Adoption Agreement are met. For
the purposes of this Plan's eligibility requirements, the exclusion
concerning Employees who are covered by collective bargaining agreements
applies to individuals who are covered by a collective bargaining contract
between the Employer and Employee Representatives if contract negotiations
considered retirement benefits in good faith, unless such contract
specifically provides for participation in the Plan. For the purposes of
this Section, "Employee Representatives" shall mean the representatives of
an employee organization which engages in collective bargaining
negotiations with the Employer provided that, owners, officers, and
executives of the Employer do not comprise more than 50% of the employee
organization's membership.
3.02 Interrupted Service. All Years of Service with the Employer are
counted towards eligibility except that if the Employer has specified in
the Adoption Agreement that more than one Year of Service is required
before becoming a Participant eligible to receive allocations of Employer
Matching Contributions and/or Employer Profit Sharing Contributions, and if
the individual has a One-Year Break in Service before satisfying the
relevant eligibility requirement, Service before such break will not be
taken into account for purposes of determining when the individual is
eligible to receive allocations of Employer Matching Contributions and/or
Employer Profit Sharing Contributions once the individual returns to the
employ of the Employer. A former Employee who has met the entry
requirements and who terminates Service with the Employer prior to becoming
a Participant, or a former Participant, shall become a Participant
immediately upon return to the employ of the Employer as a member of an
eligible class of Employees.
3.03 Transfer to Eligible Class. In the event an Employee who is not a
member of an eligible class of Employees becomes a member of an eligible
class, such Employee shall participate immediately if such Employee has
satisfied the minimum age and Service requirements and would have
previously become a Participant had he or she been a member of an eligible
class throughout the period of employment with the Employer.
3.04 Determination by Administrator. The Administrator shall have the
discretionary authority to determine an Employee's eligibility to
participate in the Plan and shall notify each Employee upon his or her
admission as a Participant in the Plan.
ARTICLE IV. CONTRIBUTIONS
-------------
4.01 Salary Reduction Contributions. If selected by the Employer in
the Adoption Agreement, the Employer will make a Salary Reduction
Contribution (for allocation to the eligible Participant's Salary Reduction
Account) on behalf of each Participant who both has elected to have a
portion of the Compensation which would otherwise have been paid to him or
her for the Plan Year contributed to the Trust and has received
Compensation during the Plan Year. With respect to such elective
contributions, the following provisions shall apply:
(a) an Employee shall be given an opportunity to elect, prior to
the date as of which he or she becomes eligible in accordance with
procedures set by the Administrator, to have Salary Reduction Contributions
made on his or her behalf or, in the case of an Employee who becomes
eligible immediately upon becoming an Employee, as soon as is
administratively possible following his or her initial date of eligibility;
(b) Participants shall be given opportunities to elect to
commence having Salary Reduction Contributions made on their respective
behalves at such other time or times as the Administrator designates;
(c) such elections may only be made on a prospective basis and
pursuant to written, salary reduction agreements between the Employee and
the Employer;
(d) each such written, salary reduction agreement shall be in
such form and subject to such rules as the Administrator may prescribe, and
the agreement shall specify the percentage or amount of Compensation that
the Participant desires to contribute (but in no event may such
contribution exceed the percentage of Compensation specified in the
Adoption Agreement);
(e) a salary reduction agreement may be amended or terminated
prospectively during the Plan Year at such times and in such manner as
permitted by rules prescribed by the Administrator;
(f) Salary Reduction Contributions made on behalf of a
Participant shall be in an amount equal to the percentage or amount of
Compensation specified in the eligible Participant's salary reduction
agreement; provided, however, that at any time during a Plan Year the
Administrator may reduce the rate of Salary Reduction Contributions to be
made on behalf of any Participant for the remainder of the Plan Year to the
extent the Administrator determines necessary to comply with the
limitations of Section 4.08, and Articles V and VI hereof. Any amount which
cannot be contributed to the Trust because of those limitations shall be
paid to the Participant in cash and such payment shall be subject to
federal income and other tax withholding by the Employer.
4.02 Deferred Cash Contributions. If selected by the Employer in the
Adoption Agreement, the Employer will make a Deferred Cash Contribution on
behalf of each eligible Participant (as determined in accordance with the
Adoption Agreement), in an amount equal to the Deferred Cash Allocation
specified in the Adoption Agreement, as expressed as a percentage of such
Participant's Compensation.
With respect to Participants' elections not to have amounts
contributed, the following provisions shall apply:
(a) each Participant shall be afforded a reasonable opportunity
to elect not to have Deferred Cash Allocations contributed to the Trust on
his or her behalf at least once during each Plan Year and at such other
time or times as the Administrator elects;
(b) such elections may only be made pursuant to written
agreements between the Participant and the Employer;
(c) each such written agreement shall be in such form and subject
to such rules as the Administrator may prescribe, and the election shall
specify the amount of the Deferred Cash Allocation that the Participant
desires to receive in cash; and
(d) the amount which a Participant has elected to receive in cash
pursuant to such an election shall be paid to the Participant by the
Employer no later than the last day on which the Deferred Cash
Contributions for the Plan Year in question must be paid to the Trust under
Section 7.02 hereof.
Notwithstanding the above, the Deferred Cash Contribution otherwise to
be made for a Participant may be reduced to the extent necessary to comply
with the limitations of Section 4.08 hereof and shall be reduced to the
extent necessary to comply with the limitations of Articles V and VI
hereof. Any amount which cannot be contributed to the Trust because of
those limitations shall be paid to the Participant in cash and such payment
shall be subject to federal income and other tax withholding by the
Employer.
4.03 Employer Profit Sharing Contributions. If selected by the
Employer in the Adoption Agreement, for each Plan Year, the Employer will
contribute, as Employer Profit Sharing Contributions, either a fixed amount
or the amount determined by it in its discretion. Employer Profit Sharing
Contributions, plus any forfeitures under Section 8.02 hereof, for a Plan
Year shall be allocated as of the last day of such Plan Year among the
Employer Profit Sharing Contribution Accounts of eligible Participants (as
determined in accordance with the Adoption Agreement), as follows:
(a) If a non-integrated formula is elected in the Adoption
Agreement, such contribution and forfeitures shall be allocated to the
Employer Profit Sharing Contribution Account of each eligible Participant
in the ratio that each such Participant's Compensation for the Plan Year
bears to the total Compensation paid to all eligible Participants for the
Plan Year; and
(b) If an integrated formula is elected in the Adoption
Agreement, such contributions and forfeitures shall be allocated in the
following steps:
(i) First, Employer Profit Sharing Contributions and
forfeitures will be allocated to the Employer Profit Sharing Contribution
Account of each eligible Participant in the ratio that the sum of each such
Participant's Compensation and Compensation in excess of the Integration
Level for the Plan Year bears to the sum of Compensation and Compensation
in excess of the Integration Level for all such eligible Participants for
the Plan Year, provided that the amount so credited to any such
Participant's Employer Profit Sharing Contribution Account for the Plan
Year shall not exceed the product of the Integration Rate times the sum of
the Participant's Compensation and Compensation in excess of the
Integration Level for the Plan Year. For purposes of this step, in the case
of any Participant who has exceeded the cumulative permitted disparity
limit described below, two times such Participant's Compensation for the
Plan Year will be taken into account.
(ii) Next, any remaining Employer Profit Sharing
Contributions and forfeitures will be allocated to the Employer Profit
Sharing Contribution Account of each eligible Participant in the ratio that
each such Participant's Compensation for the Plan Year bears to the total
Compensation paid to all eligible Participants for the Plan Year.
(c) Overall permitted disparity limits.
----------------------------------
(i) Annual overall permitted disparity limit:
Notwithstanding the preceding paragraphs, for any Plan Year this Plan
benefits any Participant who benefits under another qualified plan or
simplified employee pension, as defined in Section 408(k) of the Code,
maintained by the Employer that provides for permitted disparity (or
imputes disparity), Employer contributions and forfeitures will be
allocated pursuant to the provisions of Section 4.03 (a) rather than 4.03
(b).
(ii) Cumulative permitted disparity limit: Effective for
Plan Years beginning on or after January 1, 1995, the cumulative permitted
disparity limit for a Participant is 35 total cumulative permitted
disparity years. Total cumulative permitted years means the number of years
credited to the Participant for allocation or accrual purposes under this
Plan, any other qualified plan or simplified employee pension plan (whether
or not terminated) ever maintained by the Employer. For purposes of
determining the Participant's cumulative permitted disparity limit, all
years ending in the same calendar year are treated as the same year. If the
Participant has not benefited under a defined benefit or target benefit
plan for any year beginning on or after January 1, 1994, the Participant
has no cumulative disparity limit.
4.04 Employer Matching Contributions
------------------------------
(a) If selected by the Employer in the Adoption Agreement, the
Employer will make an Employer Matching Contribution (for allocation
together with forfeitures under Section 8.02 below) to the Participant's
Employer Matching Contribution Account on behalf of each eligible
Participant (as determined in accordance with the Adoption Agreement) for
each Plan Year that a contribution within one or more of the contribution
categories selected by the Employer in the Adoption Agreement (i.e., Salary
Reduction Contributions, Deferred Cash Contributions, or Nondeductible
Voluntary Contributions) is allocated to such Participant's Account. The
Employer Matching Contribution made for an eligible Participant shall be in
an amount determined in accordance with the Adoption Agreement and shall be
allocated in the manner specified in the Adoption Agreement.
(b) Notwithstanding any implication of the preceding subsection
(a) to the contrary, the Employer Matching Contribution otherwise to be
made for a Participant may be reduced to the extent necessary to comply
with the limitations of Section 4.08 hereof and shall be reduced to the
extent necessary to comply with the limitations of Articles V. Any amount
which cannot be contributed to the Trust because of these limitations will
be retained by the Employer, and the Employer shall have no obligation to
contribute such amount to the Trust.
4.05 Nondeductible Voluntary Contributions. If, in the Adoption
Agreement, the Employer has specified that Participants may make
Nondeductible Voluntary Contributions, a Participant may make such
contributions to his or her Account; provided, however, that a
Participant's right to make such contributions shall be subject to the
conditions and limitations specified below:
(a) The aggregate amount of a Participant's Nondeductible
Voluntary Contributions shall not cause the Annual Addition (as defined in
Section 5.05(a) hereof) to his or her Account to exceed the limitations set
forth in Article V.
(b) A Participant's Nondeductible Voluntary Contributions shall
be allocated to his or her Nondeductible Voluntary Contribution Account
under Section 7.03(e) hereof.
(c) At any time during a Plan Year, the Administrator may cause a
Participant to reduce the rate of his or her Nondeductible Voluntary
Contributions for the remainder of the Plan Year to the extent the
Administrator determines necessary to comply with the limitations of
Article V and VI hereof.
4.06 Rollover Contributions. The Administrator may, in its discretion,
direct the Trustee to accept a Rollover Contribution upon the express
request of an Employee wishing to make such Rollover Contribution, subject
to the consent of the Trustee if the contribution includes property other
than cash. A Rollover Contribution shall mean a contribution which is an
"eligible rollover distribution" within the meaning of Code Section
402(c)(4) or a "rollover contribution" within the meaning of Code Section
408(d)(3)(A)(ii) and which satisfies all applicable provisions of the Code.
Each Rollover Contribution made by an Employee shall be allocated to his or
her Rollover Account pursuant to Section 7.03(h) hereof. Such Rollover
Account shall be invested by the Trustee as part of the Trust Fund,
pursuant to Article XIII hereafter. An Employee may make a contribution
under this Section 4.06 whether or not he or she has satisfied the age and
service participation requirements set forth in the Adoption Agreement. An
Employee who makes a contribution under this Section 4.06 and does not
otherwise qualify as a Participant is, nevertheless, deemed to be a
Participant for the limited purpose of administering that contribution.
The Administrator may, in its discretion, accept accumulated
deductible employee contributions (as defined in Code Section 72(o)(5))
that were distributed from a qualified retirement plan and rolled over
pursuant to Code Sections 402(c), 403(a)(4), or 408(d)(3). The rolled over
amount will be added to the Participant's Deductible Voluntary Contribution
Account.
4.07 Transfers from Other Qualified Plans. The Administrator may, in
its discretion, direct the Trustee to accept the transfer of any assets
held for a Participant's benefit under a qualified retirement plan of a
former employer of such Participant. Such a transfer shall be made directly
between the trustee or custodian of the former employer's plan and the
Trustee in the form of cash or its equivalent, and shall be accompanied by
written instruction showing separately the portion of the transfer
attributable to types of contributions made by the former employer and
pre-tax and after-tax contributions made by the Participant, respectively.
Separate written instructions delivered by the Administrator shall identify
the portion of the transferred funds, if any, attributable to any period
during which the Participant participated in a defined benefit plan, money
purchase pension plan (including a target benefit plan), stock bonus plan
or profit sharing plan which would otherwise have provided a life annuity
form of payment to the Participant. The Trustee and recordkeeper shall be
entitled to rely on such written instructions with respect to the character
of the transferred funds. Except as otherwise provided in Article XXIV, the
amounts transferred shall be allocated to separate accounts as provided in
Section 7.03 that match the character of the transferred funds.
4.08 Limitations on Contributions. During a Plan Year, Employer Profit
Sharing Contributions and Employer Matching Contributions may not, in the
aggregate, exceed (a) 15% (or such larger percentage as may be permitted by
the Code as a current deduction to the Employer with respect to any Plan
Year) of the total Compensation (disregarding any exclusion from
Compensation specified by the Employer in the Adoption Agreement) paid to,
or accrued by the Employer for, Participants for the Year ending in the
Plan Year, less (b) any amounts contributed as Salary Reduction
Contributions and Deferred Cash Contributions, plus (c) any unused pre-'87
credit carryovers. For this purpose, a "pre-'87 credit carryover" is the
amount by which Employer Contributions for a previous Year which commenced
before January 1, 1987 were less than 15% of the total Compensation
(disregarding any exclusion from Compensation specified by the Employer in
the Adoption Agreement) paid or accrued by the Employer to Participants for
such Year, but such unused pre-'87 credit carryover shall in no event
permit the Employer Contributions for a Year to exceed 25% (or such larger
percentage as may be permitted by the Code as a deduction to the Employer)
of the total Compensation (disregarding any exclusion from Compensation
specified by the Employer in the Adoption Agreement) paid or accrued by the
Employer to Participants for the Year ending in the Plan Year in question.
4.09 Deductible Voluntary Contributions. This Plan will not accept
deductible voluntary contributions for taxable years beginning after
December 31, 1986. Deductible voluntary contributions made in prior taxable
years shall be maintained in the Participant's Deductible Voluntary
Contribution Account and shall share in the gains and losses of the Trust
Fund in accordance with Section 8.02(e). No part of a Participant's
Deductible Voluntary Contribution Account may be used to purchase life
insurance. A Participant may withdraw all or a portion of his or her
Deductible Voluntary Contribution Account in accordance with Section 11.01.
ARTICLE V. CODE SECTION 415 LIMITATIONS ON ALLOCATIONS
-------------------------------------------
5.01 Employers Maintaining No Other Plan.
-----------------------------------
(a) If a Participant does not participate in, and has never
participated in another qualified plan, a welfare benefit fund (as defined
in Code Section 419(e)), an individual medical account (as defined in Code
Section 415(l)(2)), or a simplified employee pension (as defined in Code
Section 408(k)) maintained by the Employer, the amount of the Annual
Addition which may be credited to the Participant's Account for any
Limitation Year shall not exceed the lesser of the Maximum Permissible
Amount or any other limitation contained in the Plan.
(b) If the Employer Contribution (including any forfeitures) that
would otherwise be allocated to a Participant's Account would cause the
Annual Addition for the Limitation Year to exceed the Maximum Permissible
Amount, the amount allocated will be reduced so that any Excess Amount
shall be eliminated and, consequently, the Annual Addition for the
Limitation Year will equal the Maximum Permissible Amount.
(i) Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant on the basis of a reasonable
estimation of the Participant's Compensation for the Limitation Year,
uniformly determined for all Participants similarly situated.
(ii) As soon as is administratively feasible after the end
of each Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of Participants' actual Compensation
for the Limitation Year.
(c) If the allocation of forfeitures or the use by the Employer
of the estimation described in Section 5.01(b)(i) above results in an
Excess Amount, such Excess Amount shall be eliminated pursuant to the
following procedure:
(i) The portion of the Excess Amount consisting of
Nondeductible Voluntary Contributions which are a part of the Annual
Addition shall be returned to the Participant (with any income or gains
attributable thereto) as soon as administratively feasible;
(ii) At the election of the Administrator, if after the
application of Subparagraph (i) an Excess Amount still exists, the portion
of the Excess Amount consisting of Salary Reduction Contributions and
Deferred Cash Contributions (with any income or gains attributable thereto)
shall be returned to the Participant;
(iii) If after the application of subparagraph (ii) an
Excess Amount still exists and the Participant is covered by the Plan at
the end of a Limitation Year, the Excess Amount in the Participant's
Account will be used to reduce Employer Contributions (including any
allocation of forfeitures) for such Participant in the next Limitation
Year, and each succeeding Limitation Year if necessary;
(iv) If after the application of subparagraph (iii) an
Excess Amount still exists and the Participant is not covered by the Plan
at the end of a Limitation Year, the Excess Amount will be held unallocated
in a suspense account. The suspense account will be applied to reduce
proportionately future Employer Contributions (including any allocation of
forfeitures) for all remaining Participants in the next Limitation Year,
and each succeeding Limitation Year, if necessary. If a suspense account is
in existence at any time during a Limitation Year pursuant to this
subparagraph, it will not participate in the allocation of the Trust's
investment gains and losses. In the event of termination of the Plan, the
suspense account shall revert to the Employer to the extent it may not then
be allocated to any Participant's Account.
(v) If a suspense account is in existence at any time during
a particular Limitation Year, all amounts in the suspense account must be
allocated and reallocated to Participants' Accounts before any Employer
Contributions or Nondeductible Voluntary Contribution may be made to the
Plan for that Limitation Year.
(d) Notwithstanding any other provision in subsections (a)
through (c), the Employer shall not contribute any amount that would cause
an allocation to the suspense account as of the date the contribution is
allocated.
5.02 Employers Maintaining Other Master or Prototype Defined
Contribution Plans.
-------------------------------------------------------
(a) This Section applies if, in addition to this Plan, a
Participant is covered under another qualified Master or Prototype defined
contribution plan, a welfare benefit fund (as defined in Code Section
419(e)), an individual medical account (as defined in Code Section
415(l)(2)), or a simplified employee pension (as defined in Code Section
408(k)) maintained by the Employer during any Limitation Year. The Annual
Addition which may be allocated to any Participant's Account for any such
Limitation Year shall not exceed the Maximum Permissible Amount, reduced by
the sum of any portion of the Annual Addition credited to the Participant's
account under such other plans, welfare benefit funds, and individual
medical accounts for the same Limitation Year.
(b) If the Annual Addition with respect to a Participant under
other defined contribution plans, welfare benefit funds, individual medical
accounts and simplified employee pensions maintained by the Employer of
what would be portions of the Annual Addition (if the allocations were made
under the Plan) are less than the Maximum Permissible Amount and the
Employer Contribution that would otherwise be contributed or allocated to
the Participant's Account under this Plan would cause the Annual Addition
for the Limitation Year to exceed this limitation, the amount contributed
or allocated will be reduced so that the Annual Addition under all such
plans and funds for the Limitation Year will equal the Maximum Permissible
Amount.
(c) If the Annual Addition with respect to the Participant under
such other defined contribution plans, welfare benefit funds, individual
medical accounts and simplified employee pensions in the aggregate are
equal to or greater than the Maximum Permissible Amount, no amount will be
contributed or allocated to the Participant's Account under this Plan for
the Limitation Year.
(d) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant in the manner described in Section 5.01(b)(i)
provided the Employer complies with the provisions of Section 5.01(b)(ii).
(e) If, pursuant to Section 5.02(d) or as a result of the
allocation of forfeitures, a Participant's Annual Addition under this Plan
and such Participant's annual additions under such other defined
contributions plans, welfare benefit funds, individual medical accounts and
simplified employee pensions would result in an Excess Amount for a
Limitation Year, the Excess Amount will be deemed to consist of the annual
additions last allocated, except that annual additions attributable to a
simplified employee pension will be deemed to have been allocated first,
followed by annual additions to a welfare benefit fund or individual
medical account, regardless of the actual allocation date.
(f) If an Excess Amount was allocated to a Participant under this
Plan on a date which coincides with the date an allocation was made under
another plan, the Excess Amount attributed to this Plan will be the product
of:
(i) the total Excess Amount allocated as of such date,
multiplied by
(ii) the quotient obtained by dividing
(A) the portion of the Annual Addition allocated to the
Participant for the Limitation Year as of such date by
(B) the total Annual Addition allocated to the
Participant for the Limitation Year as of such date under this and all the
other qualified Master or Prototype defined contribution plans maintained
by the Employer.
(g) Any Excess Amount attributed to the Plan will be disposed in
the manner described in Section 5.01.
5.03 Employers Maintaining Other Defined Contribution Plans. If a
Participant is covered under another qualified defined contribution plan
which is not a Master or Prototype plan, the Annual Addition credited to
the Participant's Account under this Plan for any Limitation Year will be
limited in accordance with the provisions of Section 5.02 above as though
the plan were a Master or Prototype Plan, unless the Employer provides
other limitations pursuant to the Adoption Agreement.
5.04 Employers Maintaining Defined Contribution Plans. If the Employer
maintains, or at any time maintained, a qualified defined benefit plan
covering any Participant in this Plan, the sum of the Participant's Defined
Benefit Plan Fraction and Defined Contribution. Plan Fraction will not
exceed 1.0 in any Limitation Year. The Annual Addition which may be
credited to the Participant's Account under this Plan for any Limitation
Year will be limited in accordance with the provisions of Section 5.02
above, unless the Employer provides other limitations pursuant to the
Adoption Agreement.
5.05 Definitions. For purposes of this Article, the following terms
shall be defined as follows:
(a) Annual Addition. With respect to any Participant, the "Annual
Addition" shall be the sum of the following amounts credited to a
Participant's Account for the Limitation Year:
(i) Employer Contributions;
(ii) forfeitures; and
(iii) Nondeductible Voluntary Contributions.
For the purposes of calculating the amount of Employer Contributions
credited to a Participant's Account, Excess Elective Deferrals distributed
on or before the April 15 deadline described in Section 6.01(b) below shall
not be considered to be amounts credited to the Participant's Account but
Excess Contributions distributed to the Participant pursuant to Section
6.02 below, and Excess Aggregate Contributions distributed to, or forfeited
by, the Participant pursuant to Section 6.03, 6.04 or 6.05 below shall be
considered to be amounts credited to a Participant's Account.
Any Excess Amount applied under Section 5.01(c)(iii) or (iv) or
Section 5.02(e) hereof in a Limitation Year to reduce Employer
Contributions will be considered part of the Annual Addition for such
Limitation Year. Amounts allocated, after March 31, 1984, to an individual
medical account (as defined in Code Section 415(l)(2)) which is part of a
pension or an annuity plan maintained by the Employer, or to a simplified
employee pension (as defined in Code Section 408(k)) maintained by the
Employer, are treated as part of the Annual Addition. Also, amounts derived
from contributions paid or accrued after December 31, 1985, in taxable
years ending after such date, which are attributable to post-retirement
medical benefits allocated to the separate account of a Key Employee (as
defined in Section 23.02(a) hereof) under a welfare benefit fund (as
defined in Code Section 419(e)) maintained by the Employer, are treated as
part of the Annual Addition but only for the purpose of determining whether
the dollar limitation portion of the definition of Maximum Permissible
Amount has been exceeded.
(b) Compensation. For the purposes of this Article V, the term
"Compensation" shall mean one of the following as selected by the Employer
in the Adoption Agreement:
(i) W-2 Compensation. Information required to be reported
under Sections 6041, 6051 and 6052 of the Code (Wages, tips and other
compensation as reported on Form W-2). Compensation is defined as wages
within the meaning of Section 3401(a) and all other payments of
compensation to an Employee by the Employer (in the course of the
Employer's trade or business) for which the Employer is required to furnish
the Employee a written statement under Sections 6041(d), 6051(a)(3) and
6052. Compensation must be determined without regard to any rules under
Section 3401(a) that limit the remuneration included in wages based on the
nature or location of the employment or the services performed (such as the
exception for agricultural labor in Section 3401(a)(2)).
(ii) 415 Safe Harbor Compensation. Wages, salaries, and fees
for professional services and other amounts received for personal services
actually rendered in the course of employment with the Employer maintaining
the Plan (including, but not limited to commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses), and excluding the
following:
(A) Employer contributions to a plan of deferred
compensation which are not includible in the Participant's gross income for
the taxable year in which contributed, or Employer contributions under a
simplified employee pension plan, or any distributions from a plan of
deferred compensation;
(B) Amounts realized from the exercise of a
non-qualified stock option, or when property transferred to the Participant
in connection with the performance of services either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture;
(C) Amounts realized from the sale, exchange or other
disposition of stock acquired under an incentive stock option; and
(D) Other amounts which received special tax benefits,
or contributions made by the Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity described in Code
Section 403(b) (whether or not the amounts are actually excludable from the
gross income of the Participant).
(iii) Safe Harbor Alternative Definition. Compensation as
defined in (ii) above, reduced by all of the following items (even if
includible in gross income): reimbursements or other expenses allowances,
fringe benefits (cash and non-cash) moving expenses, deferred compensation
and welfare benefits.
For any Self-Employed Individual, Compensation shall mean Earned
Income.
For purposes of applying the limitations of this Article V,
Compensation for a Limitation Year is the Compensation actually paid or
made available in gross income during such year.
Notwithstanding the preceding sentence, Compensation for a Participant
in a defined contribution plan who is permanently and totally disabled (as
defined in Code Section 22(e)(3)) is the Compensation such Participant
would have received for the Limitation Year if the Participant was paid at
the rate of Compensation paid immediately before becoming permanently and
totally disabled; such imputed compensation for the disabled Participant
may be taken into account only if the Participant is not a Highly
Compensated Employee, and contributions made on behalf of such a
Participant are nonforfeitable when made.
(c) Defined Benefit Fraction. The "Defined Benefit Fraction"
shall be a fraction, the numerator of which is the sum of the Participant's
Projected Annual Benefits under all the defined benefit plans (whether or
not terminated) maintained by the Employer, and the denominator of which is
the lesser of 125% of the dollar limitation in effect for the Limitation
Year under Code Section 415(b)(1)(A) or 140% of the Participant's Highest
Average Compensation (including any adjustments required by Code Section
415(b)).
Notwithstanding the above, if the Participant was a participant as of
the first day of the first Limitation Year beginning after December 31,
1986 in one or more defined benefit plans maintained by the Employer which
were in existence on May 6, 1986, the denominator of this fraction will not
be less than 125% of the sum of the annual benefits under such plans which
the Participant had accrued as of the end of the last Limitation Year
beginning before January 1, 1987 (disregarding any changes in the terms and
conditions of the Plan after May 5, 1986). The preceding sentence applies
only if the defined benefit plans individually and in the aggregate
satisfied the requirements of Code Section 415 for all Limitation Years
beginning before January 1, 1987.
(d) Defined Contribution Dollar Limitation. The "Defined
Contribution Dollar Limitation" shall be the greater of (i) $30,000; or
(ii) one-fourth (1/4) of the defined benefit dollar limitation set forth in
Code Section 415(b)(i) as in effect for the Limitation Year.
(e) Defined Contribution Fraction. The "Defined Contribution
Fraction" shall be a fraction, the numerator of which is the sum of the
Annual Additions to the Participant's account under all the defined
contribution plans (whether or not terminated) maintained by the Employer
for the current and all prior Limitation Years (including the Annual
Additions attributable to the Participant's nondeductible employee
contributions to all defined benefit plans, whether or not terminated,
maintained by the Employer, and the Annual Additions attributable to all
welfare benefit funds (as defined in Code Section 419(e)), individual
medical accounts (as defined in Code Section 415(l)(2)) and simplified
employee pensions (as defined in Code Section 408(k)), and the denominator
of which is the sum of the Maximum Aggregate Amounts for the current and
all prior Limitation Years of service with the Employer (regardless of
whether a defined contribution plan was maintained by the Employer). The
Maximum Aggregate Amount in any Limitation Year is the lesser of 125% of
the dollar limitation in effect under Code Section 415(c)(1)(A) or 35% of
the Participant's Compensation for such year.
If the Participant was a participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986 in one or more
defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted
if the sum of this Defined Contribution Fraction and the Defined Benefit
Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of:
(i) the excess of the sum of the fractions over 1.0,
multiplied by
(ii) the denominator of this Defined Contribution Fraction,
will be permanently subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they would be computed as
of the end of the last Limitation Year beginning before January 1, 1987
(disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986 but using the Code Section 415 limitation applicable to
the first Limitation Year beginning on or after January 1, 1987). This
adjustment also will be made if at the end of the last Limitation Year
beginning before January 1, 1984, the sum of the fractions exceeds 1.0
because of accruals or additions that were made before the limitations of
this Section 5 became effective to any plans of the Employer in existence
on July 1, 1982. For purposes of this paragraph, a Master or Prototype plan
with an opinion letter issued before January 1, 1983, which was adopted by
the Employer on or before September 30, 1983, is treated as a plan in
existence on July 1, 1982.
(f) Employer. "Employer" means the Employer that adopts this Plan
and all members of (i) a controlled group of corporations (as defined in
Code Section 414(b) as modified by Code Section 415(h)), (ii) commonly
controlled trades or businesses (whether or not incorporated) (as defined
in Code Section 414(c) as modified by Code Section 415(h)), or (iii)
affiliated service groups (as defined in Code Section 414(m)) of which the
Employer is a part and (iv) any other entity required to be aggregated with
the employer pursuant to Code Section 414(o) and the regulations
thereunder.
(g) Excess Amount. The "Excess Amount" is the excess of what
would otherwise be a Participant's Annual Addition for the Limitation Year
over the Maximum Permissible Amount. If at the end of a Limitation Year
when the Maximum Permissible Amount is determined on the basis of the
Participant's actual Compensation for the year, an Excess Amount results,
the Excess Amount will be deemed to consist of the portion of the Annual
Addition last allocated, except that the portion of the Annual Addition
attributable to a welfare benefit fund will be deemed to have been
allocated first regardless of the actual allocation date.
(h) Highest Average Compensation. A Participant's "Highest
Average Compensation" is his or her average Compensation for the three
consecutive Years of Service with the Employer that produces the highest
average.
(i) Limitation Year. A "Limitation Year" is the Plan Year or any
other 12-consecutive-month period specified by the Employer in the Adoption
Agreement. All qualified plans maintained by the Employer must use the same
Limitation Year. If the Limitation Year is amended to a different
12-consecutive-month period, the new Limitation Year must begin on a date
within the Limitation Year in which the amendment is made.
(j) Master or Prototype Plan. A "Master or Prototype" plan is a
plan the form of which is the subject of a favorable opinion letter from
the Internal Revenue Service.
(k) Maximum Permissible Amount. For a Limitation Year, the
"Maximum Permissible Amount" with respect to any Participant shall be the
lesser of
(i) the Defined Contribution Dollar Limitation or
(ii) 25% of the Participant's Compensation for the
Limitation Year.
The compensation limitation referred to in (ii) above shall not apply
to contribution for medical benefits (within the meaning of Code Section
401(h) or Section 419A(f)(2)) which is otherwise treated as an Annual
Addition under Code Section 415(l)(1) or 419A(d)(2).
(1) Projected Annual Benefit. The "Projected Annual Benefit" is
the annual retirement benefit (adjusted to an actuarial equivalent straight
life annuity if such benefit is expressed in a form other than a straight
life annuity or qualified joint and survivor annuity) to which the
Participant would be entitled under the terms of the plan assuming:
(i) the Participant will continue employment until normal
retirement date under the plan (or current age, if later), and
(ii) the Participant's compensation for the current
Limitation Year and all other relevant factors used to determine benefits
under the plan will remain constant for all future Limitation Years.
ARTICLE VI. LIMITATIONS ON DEFERRALS,
-------------------------
MATCHING ALLOCATIONS AND VOLUNTARY CONTRIBUTIONS.
------------------------------------------------
6.01 Maximum Amount of Elective Deferrals. For each calendar year, the
sum of (i) the Salary Reduction Contributions, (ii) Deferred Cash
Contributions (together "Elective Deferrals") made on behalf of any
Participant under this Plan, and (iii) similar contributions made under all
other plans of the Employer with a cash or deferred feature shall not
exceed the dollar limitation contained in Code Section 402(g) in effect at
the beginning of such calendar year. Elective Deferrals shall not include
amounts properly distributed to a Participant as an Excess Amount pursuant
to Section 6.01(b). If, during any calendar year, more than the maximum
permissible amount under Code Section 402(g) is allocated pursuant to one
or more cash or deferred arrangements to a Participant's accounts under the
Plan and any other plan described in Code Sections 401(k), 408(k), 403(b),
457, or 501(c)(18), the following provisions shall apply:
(a) The Participant may, but is not required to, assign to this
Plan all or part of such contributions in excess of the maximum permissible
amount (hereinafter "Excess Elective Deferrals") by notifying the
Administrator by March 1 of the calendar year next succeeding the calendar
year in which such contributions are made. To be effective, such notice
must be in writing, state that Excess Elective Deferrals have been made on
behalf of such Participant for the preceding calendar year, and be
submitted to the Administrator. A Participant is deemed to notify the
Administrator of any Excess Elective Deferrals that arise by taking into
account only those Excess Elective Deferrals made to this Plan and any
other plans of this Employer.
(b) To the extent a Participant timely assigns, or is deemed to
assign, Excess Elective Deferrals to the Plan pursuant to (a) above, the
Administrator shall direct the Trustee to distribute such Excess Elective
Deferrals, adjusted for income or loss allocable thereto pursuant to
Section 6.01(c) below, to the Participant no later than the April 15 of the
calendar year next succeeding the calendar year in which such Excess
Elective Deferrals were made.
(c) Excess Elective Deferrals shall be adjusted for any income or
loss up to the last day of the calendar year in which such Excess Elective
Deferrals were made. The income or loss allocable to Excess Elective
Deferrals is (i) the income or loss allocable to the Participant's Salary
Reduction Contribution Account and/or Deferred Cash Contribution Account,
as the case may be, for the taxable calendar year multiplied by a fraction,
the numerator of which is such Participant's Excess Elective Deferrals for
the year and the denominator is the balance of such account or accounts, as
the case may be, determined as the beginning of the calendar year plus any
Salary Reduction Contributions or Deferred Cash Contributions made during
the calendar year without regard to any income or loss occurring during
such calendar year or (ii) such other amount determined under any
reasonable method, provided that such method is used consistently for all
Participants in calculating the distributions required under this Article
VI for the Plan Year, and is used by the Plan to allocate income or loss to
Participants' Accounts. Income or loss allocable to the period between the
end of the calendar year and the date of distribution shall be disregarded
in determining income or loss. Excess Elective Deferrals shall be treated
as an Annual Addition under the Plan, unless such amounts are distributed
no later than the first April 15 following the close of the calendar year.
6.02 Limitation on Elective Deferrals.
--------------------------------
(a) For each Plan Year, the Average Deferral Percentage of the
group of Highly Compensated Participants for the Plan Year may not exceed
the greater of (i) 1.25 times the Average Deferral Percentage of the group
of Non-Highly Compensated Participants for the same Plan Year; or (ii) the
lesser of 2 times the Average Deferral Percentage of all such Non-Highly
Compensated Participants, or such Average Deferral Percentage plus 2
percentage points.
For purposes of this Section 6.02, the "Average Deferral Percentage"
of a specified group of Participants for a Plan Year shall be the average
of the ratios (calculated separately for each Participant in such group) of
(A) the amount of the Contributions actually paid over to the Trust on
behalf of each Participant for each Plan Year to (B) the Participant's
Compensation for the Plan Year. For purposes of this Section 6.02,
"Compensation" shall have the same meaning as in Section 2.09(a); provided,
however, that to the extent elected by the Employer in the Adoption
Agreement "Compensation" shall exclude amounts paid for the period when the
Participant was not eligible to make Elective Deferrals and/or shall
include the amounts set forth in Section 2.09(b). For purposes of this
Section 6.02, "Contributions" shall include both Elective Deferrals
(including Excess Elective Deferrals of Highly Compensated Participants)
and Qualified Nonelective Contributions, if any. Such Contributions shall
not include (1) Excess Elective Deferrals of Non-Highly Compensated
Participants that arise solely from Elective Deferrals made under this Plan
or other plans of the Employer, and (2) Elective Deferrals that are taken
into account in the Contribution Percentage Test (provided the Average
Deferral Percentage test is satisfied both with and without exclusion of
these Elective Deferrals). For purposes of computing Average Deferral
Percentages, each Employee who would be a Participant but for the failure
to make Elective Deferrals shall be treated as a Participant on whose
behalf no Elective Deferrals are made.
(b) Special Rules:
-------------
(i) The deferral percentage of a Highly Compensated
Participant for the Plan Year who is eligible to have Elective Deferrals
allocated to his or her accounts under two or more arrangements described
in Code Section 401(k), that are maintained by the Employer, shall be
determined as if such Elective Deferrals were made under a single
arrangement. If a Highly Compensated Participant participates in two or
more cash or deferred arrangements that have different Plan Years, all cash
or deferred arrangements ending with or within the same calendar year shall
be treated as a single arrangement. Notwithstanding the foregoing, certain
plans shall be treated as separate if mandatorily disaggregated under
regulations promulgated under Code Section 401(k).
(ii) In the event that this Plan satisfies the requirements
of Code Section 401(k), 401(a)(4), or 410(b) only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements of
such Code sections only if aggregated with this Plan, then this Section
6.02 shall be applied by determining the Average Deferral Percentages of
Employees as if all such plans were a single plan. For Plan Years beginning
after December 31, 1989, plans may be aggregated in order to satisfy Code
Section 401(k) only if they have the same Plan Year.
(iii) For purposes of determining the deferral percentage of
a Participant who is a 5% owner or one of the top ten Highly Compensated
Employees, the Elective Deferrals (and, if applicable, Qualified
Nonelective Contributions) and Compensation of such Participant shall
include the Elective Deferrals (and, if applicable, Qualified Nonelective
Contributions) and Compensation for the Plan Year of his Family Members.
Such Family Members shall be disregarded as separate Participants in
determining the Average Deferral Percentage both for Non-Highly Compensated
Participants and for Highly Compensated Participants.
(iv) For purposes of applying the Average Deferral
Percentage test, Elective Deferrals and Qualified Nonelective Contributions
must be made before the last day of the 12-month period immediately
following the Plan Year to which contributions relate.
(v) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Average Deferral Percentage test and the
amount of Qualified Nonelective Contributions, if any, used in such test.
(vi) The determination and treatment of the deferral
percentage of any Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
(vii) If, in any Plan Year, the Plan benefits Employees
otherwise excludable from the Plan if the Plan had imposed the greatest
minimum age and service conditions permissible under Section 410(a) of the
Code, and the Employer applies Section 410(b) of the Code separately to the
portion of the Plan that benefits only Employees who satisfy age and
service conditions under the Plan that are lower than the greatest minimum
age and service conditions permissible under Section 410(a) and to the
portion of the Plan that benefits Employees who have satisfied the greatest
minimum age and service conditions permissible under Section 410(a), the
Plan shall be treated as comprising two separate Plans and the Average
Deferral Percentage test set forth in subsection (a) shall be applied
separately for each group of Employees in each Plan.
(c) If, for any Plan Year, the Plan is unable to satisfy the
Average Deferral Percentage test set forth in subsection (a) above, the
Employer may make a Qualified Nonelective Contribution to the Trust in an
amount determined at the discretion of the Employer on behalf of the group
of Non-Highly Compensated Participants who were actively employed on the
last day of the Plan Year and who were eligible to participate in the Plan
for the entire Plan Year. The Qualified Nonelective Contribution will be
allocated as follows:
(i) The lowest paid Participant in the group will be
allocated an amount equal to the lowest of (1) 25% of the Participant's
Compensation for the Plan Year; (2) the Maximum Permissible Amount
applicable to the Participant; or (3) the full amount of the Qualified
Nonelective Contribution.
(ii) The next lowest paid Participant will be allocated an
amount equal to the lowest of (1) 25% of the Participant's Compensation for
the Plan Year; (2) the Maximum Permissible Amount applicable to the
Participant; or (3) the balance of the Qualified Nonelective Contribution
after the above allocation.
(iii) The allocation in step (ii) will be applied
individually to each remaining Participant in the group, in ascending order
of Compensation, until the Qualified Nonelective Contribution is fully
allocated. Once the Qualified Nonelective Contribution is fully allocated,
no further allocation will be made to the remaining Participants in the
group.
(d) If, for any Plan Year, after taking into account the
Qualified Nonelective Contributions made by the Employer pursuant to
Subsection (c) above, if any, the Administrator shall determine the
aggregate amount of Elective Deferrals of Highly Compensated Participants
for such Plan Year exceeds the maximum amount of such contributions
permitted by the Average Deferral Percentage test set forth in subsection
(a) above, the Administrator shall reduce such excess contributions made on
behalf of Highly Compensated Participants in order of their deferral
percentages, beginning with the highest of such percentages (hereinafter
"Excess Contributions"). For each Highly Compensated Participant who is so
affected, the Administrator shall reduce amounts credited to his or her
Salary Reduction Contribution Account and Deferred Cash Contribution
Account in proportion to the Participant's Salary Reduction Contributions
and Deferred Cash Contributions for the Plan Year. Excess Contributions of
each Participant who is subjected to the Family Member aggregation rules
shall be allocated among the Family Members of such Participant in
proportion to the Elective Deferrals (and amounts treated as Elective
Deferrals) of each Family Member that is combined to determine the combined
deferral percentage. Such Excess Contributions, plus any income and minus
any loss allocable thereto, shall be distributed to each affected Highly
Compensated Participant no later than the last day of the Plan Year
following the Plan Year in which such Excess Contributions were made. If
Excess Contributions are not distributed before the date which is 2-1/2
months after the last day of the Plan Year in which such Excess
Contributions arose, a 10% excise tax shall be imposed on the Employer
maintaining the Plan with respect to such amounts. Excess Contributions
shall be treated as an Annual Addition under the Plan.
(e) Excess Contributions shall be adjusted for any income or loss
up to and including the last day of the Plan Year for which such Excess
Contributions were made. The income or loss allocable to Excess
Contributions is (i) the income or loss allocable to the Participant's
Salary Reduction Contribution Account and/or Deferred Cash Contribution
Account, as the case may be, for the Plan Year multiplied by a fraction,
the numerator of which is such Participant's Excess Contributions for the
year and the denominator is the balance of such Account or Accounts, as the
case may be, determined as of the beginning of the Plan Year plus any
Salary Reduction Contributions and/or Deferred Cash Contributions made
during the Plan Year without regard to any income or loss occurring during
such Plan Year, or (ii) such other amount determined under any reasonable
method, provided that such method is used consistently for all Participants
in calculating any distributions required under this Article VI for the
Plan Year and is used by the Plan in allocating income or loss to
Participants' Accounts. Income or loss allocable to the period between the
end of the Plan Year and the date of distribution shall be disregarded.
6.03 Limitation on Voluntary Nondeductible Contributions and Employer
Matching Contributions.
----------------------------------------------------------------
(a) For each Plan Year, the Average Contribution Percentage of
the group of Highly Compensated Participants for the Plan Year may not
exceed the greater of (i) 1.25 times the Average Contribution Percentage of
the group of Non-Highly Compensated Participants for the same Plan Year, or
(ii) the lesser of 2 times the Average Contribution Percentage of all such
Non-Highly Compensated Participants, or such Average Contribution
Percentage plus 2 percentage points.
For purposes of this Section 6.03, the "Average Contribution
Percentage" of a specified group of Participants for a Plan year shall be
the average of the ratios (expressed as a percentage and calculated
separately for each Participant in such group) of (A) the Contribution
Percentage Amounts actually paid over to the Trust on behalf of each
Participant to (B) the Participant's Compensation for the Plan Year. For
purposes of this Section 6.03, "Compensation" shall have the same meaning
as in Section 2.09; provided, however, that to the extent elected by the
Employer in the Adoption Agreement, "Compensation" shall exclude amounts
paid for the period when the Participant was not eligible to participate in
the Plan with respect to the allocation of Employer Matching Contributions
or with respect to the making of Voluntary Nondeductible Contributions
and/or shall include the amounts set forth in Section 2.09(b). For purposes
of this Section 6.03, "Contribution Percentage Amounts" shall be the sum of
Voluntary Nondeductible Contributions and Employer Matching Contributions.
Such Contribution Percentage Amounts shall not include Employer Matching
Contributions that are forfeited either to correct Excess Aggregate
Contributions or because the contributions to which they related are Excess
Deferrals, Excess Contributions, or Excess Aggregate Contributions. In
determining the Contribution Percentage Amounts, the Administrator may
include Qualified Nonelective Contributions that are not used in satisfying
the Average Deferral Percentage test of Section 6.02 and Qualified Matching
Contributions. The Administrator also may elect to use Elective Deferrals
in the Contribution Percentage Amounts so long as the Average Deferral
Percentage test is met before the Elective Deferrals are used in the
Average Contribution Percentage test and continues to be met following the
exclusion of those Elective Deferrals that are used to meet the Average
Contribution Percentage test. For purposes of computing Average
Contribution Percentages, each Employee who is eligible to make Voluntary
Nondeductible Contributions or Elective Deferrals or to receive an Employer
Matching Contribution shall be taken into account as a Participant, whether
or not he is actually making, or entitled to receive, such contributions to
the Trust.
(b) Special Rules:
-------------
(i) For purposes of this Section 6.03, the contribution
percentage of a Highly Compensated Participant for the Plan Year who is
eligible to have Contribution Percentage Amounts allocated to his or her
accounts under two or more plans described in Code Section 401(a), or
arrangements described in Code Section 401(m) that are maintained by the
Employer, shall be determined as if the total of such Contribution
Percentage Amounts was made under each plan. Notwithstanding the foregoing,
certain plans shall be treated as separate if mandatorily disaggregated
under regulations under Code Section 401(m).
(ii) In the event that this Plan satisfies the requirements
of Code Section 401(m), 401(a)(4) or 410(b) only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements of
such sections of the Code only if aggregated with this Plan, then this
Section 6.03 shall be applied by determining the Contribution Percentage of
Participants as if all such plans were a single plan. For Plan Years
beginning after December 31, 1989, plans may be aggregated in order to
satisfy Code Section 401(m) only if they have the same Plan Year.
(iii) For purposes of determining the Contribution
Percentage of a Participant who is a 5% owner or one of the top-ten Highly
Compensated Employees, the Contribution Percentage Amounts and Compensation
of such Participant shall include the Contribution Percentage Amounts and
Compensation for the Plan Year of his Family Members. Such Family Members
shall be disregarded as separate Employees in determining the Average
Contribution Percentage both for Non-Highly Compensated Participants and
for Highly Compensated Participants.
(iv) For purposes of applying the Average Contribution
Percentage test, Voluntary Nondeductible Contributions are considered to
have been made in the Plan Year in which contributed to the Trust. Employer
Matching Contributions, Elective Deferrals, Qualified Matching
Contributions and Qualified Nonelective Contributions will be considered
made for a Plan Year if made no later than the end of the 12-month period
immediately following the Plan Year to which such Contributions relate.
(v) The Employer shall maintain records sufficient to
demonstrate satisfaction of the Average Contribution Percentage test and
the amount of Qualified Matching Contributions and Qualified Nonelective
Contributions, if any, used in such test.
(vi) The determination and treatment of the contribution
percentage of any Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
(vii) If, in any Plan Year, the Plan benefits Employees
otherwise excludable from the Plan if the Plan had imposed the greatest
minimum age and service conditions permissible under Section 410(a) of the
Code, and the Employer applies Section 410(b) of the Code separately to the
portion of the Plan that benefits only Employees who satisfy age and
service conditions under the Plan that are lower than the greatest minimum
age and service conditions permissible under Section 410(a) and to the
portion of the Plan that benefits Employees who have satisfied the greatest
minimum age and service conditions permissible under Section 410(a), the
Plan shall be treated as comprising two separate Plans and the Average
Contribution Percentage test set forth in subsection (a) shall be applied
separately for each group of Employees in each Plan.
(c) If, for any Plan Year, the Plan is unable to satisfy the
Average Contribution Percentage test set forth in subsection (a) above, in
lieu of distributing excess Contribution Percentage Amounts to Highly
Compensated Participants as provided in subsection (d) below, the Employer
may make a Qualified Matching Contribution to the Trust on behalf of
Non-Highly Compensated Participants in an amount sufficient to enable the
Plan to meet the Average Contribution Percentage test set forth in
subsection (a) above. Such Qualified Matching Contribution shall be
allocated to the Qualified Nonelective Contribution Account of each
Non-Highly Compensated Participant who is eligible to participate in the
Plan at any time during the Plan Year in the same manner as the allocation
of Employer Matching Contributions.
(d) If, for any Plan Year, the Administrator shall determine that
the aggregate Contribution Percentage Amounts of Highly Compensated
Participants for such Plan Year exceeds the maximum amount permitted by the
Average Contribution Percentage test in subsection (a) above, the
Administrator shall reduce such excess Contribution Percentage Amounts made
on behalf of Highly Compensated Participants in order of their contribution
percentages, beginning with the highest of such percentages (hereinafter
"Excess Aggregate Contributions"). The foregoing determination shall be
made after first determining Excess Elective Deferrals pursuant to Section
6.01, and then determining Excess Contributions pursuant to Section 6.02.
For each Highly Compensated Participant who is affected, the Administrator
shall reduce, on a pro rata basis, amounts credited to his or her Voluntary
Nondeductible Contribution Account and his or her Employer Matching
Contribution Account. Excess Aggregate Contributions of each Highly
Compensated Participant who is subject to the Family Member aggregation
rules shall be allocated among the Family Members in proportion to the
Voluntary Nondeductible Contributions and Employer Matching Contributions
(and amounts treated as Contribution Percentage Amounts) of each Family
Member that is combined to determine the combined contribution percentage.
Subject to the provisions of Section 6.05, Excess Aggregate Contributions
which are attributable to the sum of Voluntary Nondeductible Contributions
and fully vested Employer Matching Contributions plus any income and minus
any loss allocable thereto, shall be distributed to each affected Highly
Compensated Participant no later than the last day of the Plan Year
following the Plan Year in which such Excess Aggregate Contributions were
made. If such Excess Aggregate Contributions are not distributed within
2-1/2 months after the last day of the Plan Year in which such Excess
Aggregate Contributions arose, a 10% excise tax shall be imposed on the
Employer maintaining the Plan with respect to those amounts. Excess
Aggregate Contributions which are attributable to Employer Matching
Contributions which are not fully vested, plus any income and minus any
loss allocable thereto, shall be forfeited and shall be applied to reduce
future Employer Matching Contributions. Excess Aggregate Contributions
shall be treated as an Annual Addition under the Plan.
(e) Excess Aggregate Contributions shall be adjusted for any
income or loss up to and including the last day of the Plan Year for which
such Excess Aggregate Contributions were made. The income or loss allocable
to Excess Aggregate Contributions is (i) the income or loss allocable to
the Participant's Voluntary Nondeductible Contribution Account and/or
Employer Matching Contribution Account, as the case may be, for the Plan
Year multiplied by a fraction, the numerator of which is such Participant's
Excess Aggregate Contributions for the year and the denominator is the
balance of such Account or Accounts, as the case may be, determined as of
the beginning of the Plan Year plus any Voluntary Nondeductible
Contributions and/or Employer Matching Contributions made during the Plan
without regard to any income or loss occurring during such Plan Year, or
(ii) such other amount determined under any reasonable method, provided
that such method is used consistently for all Participants in calculating
any distributions required under this Article VI for the Plan Year and is
used by the Plan in allocating income or loss to Participants' Accounts.
Income or loss allocable to the period between the end of the Plan Year and
the date of distribution shall be disregarded.
6.04 Multiple Use Test. If one or more Highly Compensated Participants
participate in both a cash or deferred arrangement and a plan subject to
the Average Contribution Percentage test maintained by the Employer and the
sum of the Average Deferral Percentage and Average Contribution Percentage
of those Highly Compensated Participants subject to either or both tests
exceeds the Aggregate Limit, then unless the Employer elects to make a
Qualified Nonelective Contribution or a Qualified Matching Contribution to
the Trust to the extent necessary to enable the Plan to satisfy the
Aggregate Limit, the Contribution Percentage Amounts of those Highly
Compensated Participants who also participate in a cash or deferred
arrangement will be reduced (beginning with such Highly Compensated
Participant whose contribution percentage is the highest) so that the
Aggregate Limit is not exceeded. The amount by which each Highly
Compensated Participant's Contribution Percentage Amount is reduced shall
be treated as an Excess Aggregate Contribution. The Average Deferral
Percentage and Average Contribution Percentage of the Highly Compensated
Participants are determined after any corrections required to meet the
Average Deferral Percentage and Average Contribution Percentage tests in
Sections 6.02 and 6.03. Multiple use does not occur if both the Average
Deferral Percentage and Average Contribution Percentage of the Highly
Compensated Employees do not exceed 1.25 multiplied by the Average Deferral
Percentage and Average Contribution Percentage of the Non-Highly
Compensated Employees.
For purposes of this Section 6.04, the "Aggregate Limit" shall mean
the sum of (i) 125 percent of the greater of the Average Deferral
Percentage of the Non-Highly Compensated Participants for the Plan Year or
the Average Contribution Percentage of the Non-Highly Compensated
Participants under the Plan subject to Code Section 401(m) for the Plan
Year beginning with or within the Plan Year of the cash or deferred
arrangement and (ii) the lesser of 200% of, or two percentage points plus
the lesser of such Average Deferral Percentage or Average Contribution
Percentage. "Lesser" shall be substituted for "greater" in (i) and
"greater" shall be substituted for "lesser" after "two percentage points
plus the" in (ii) if such substitution would result in a larger Aggregate
Limit.
6.05 Further Limitations on Employer Matching Contributions.
Notwithstanding anything to the contrary in the foregoing, any Employer
Matching Contributions related to a Participant's Excess Deferrals, Excess
Contributions and/or Excess Aggregate Contributions shall be forfeited by
such Participant and such amounts shall be applied to reduce future
Employer Matching Contributions.
6.06 Special Rules. Any amount distributed to a Highly Compensated
Participant pursuant to this Article VI shall not be subject to any of the
consent rules for Participants and sponsors contained in Articles IX, X and
XXIV, below. Amounts distributed pursuant to this Article VI shall be
allocated on a pro rata basis among the Designated Investments in which a
Participant's Account is invested; provided, however, that the
Administrator or the Participant may specify an alternative manner in which
distributions shall be allocated.
ARTICLE VII. TIME AND MANNER OF MAKING CONTRIBUTIONS.
---------------------------------------
7.01 Manner. Other than on those occasions when the Employer chooses
to contribute any required Employer Matching Contributions to the Trust in
the form of shares of Common Stock, unless otherwise agreed to by the
Trustee, all contributions to said Trust shall be made only in cash. All
contributions may be made in one or more installments.
7.02 Time. Employer Contributions (other than Salary Reduction
Contributions and Deferred Cash Contributions) with respect to a Plan Year
shall be made before the time limit, including extensions thereof, for
filing the Employer's federal income tax return for the Year with or within
which the particular Plan Year ends (or such later time as is permitted by
regulations authorized by the Secretary of the Treasury or delegate or such
earlier time as the Secretary of the Treasury or delegate prescribes with
respect to contributions used to satisfy the nondiscrimination tests set
forth in Article VI above). Unless the Secretary of the Treasury prescribes
a later date in regulations, Salary Reduction and Deferred Cash
Contributions shall be made within 30 days after the date on which, in the
absence of the Participant's election to make such contributions, such
amounts would have been payable to the Participant as cash compensation.
Nondeductible Voluntary Contributions for a given Limitation Year (as
defined in Section 5.05(i) above) must be made during such Limitation Year
or within 30 days of the end of the Limitation Year. Rollover Contributions
may be made at any time acceptable to the Administrator in accordance with
Section 4.06 hereof.
All contributions shall be paid to the Administrator for transfer to
the Trustee, as soon as possible, or, if acceptable to the Administrator
and the Trustee, such contributions may be paid directly to the Trustee.
The Administrator shall transfer such contributions to the Trustee as soon
as possible. The Administrator may establish a payroll deduction system or
other procedure to assist the making of Nondeductible Voluntary
Contributions to the Trust, and the Administrator may from time to time
adopt rules or policies governing the manner in which such contributions
may be made so that the Plan may be conveniently administered.
7.03 Separate Accounts. For each Participant, a separate account shall
be maintained for each of the following types of contributions and the
income, expenses, gains and losses attributable thereto:
(a) Salary Reduction Contributions, if selected in the Adoption
Agreement;
(b) Deferred Cash Contributions, if selected in the Adoption
Agreement;
(c) Employer Profit Sharing Contributions, if selected in the
Adoption Agreement;
(d) Employer Matching Contributions, if selected in the Adoption
Agreement;
(e) Nondeductible Voluntary Contributions, if selected in the
Adoption Agreement, with separate accounts maintained for pre-1987
Nondeductible Voluntary Contributions and post-1986 Nondeductible Voluntary
Contributions;
(f) Qualified Nonelective Contributions and Qualified Matching
Contributions, if selected in the Adoption Agreement;
(g) Deductible Voluntary Contributions, if Participants made such
contributions in past years; and
(h) Rollover Contributions, if, pursuant to Section 4.06 hereof,
the Administrator directs the Trustee to accept such contributions.
In addition, pursuant to Section 8.03 hereof, separate accounts will
be maintained for the pre-break and post-break Employer Contributions made
on behalf of a Participant who has Service excluded from the calculations
of Vesting Years. Notwithstanding the above, if a Participant's rights to
one or more types of Employer Contributions are immediately and fully
nonforfeitable and are subject to the same distribution rules, such types
of contributions may be maintained in a single account.
ARTICLE VIII. VESTING
-------
8.01 When Vested. A Participant shall always have a fully vested and
nonforfeitable interest in his or her Nondeductible Voluntary Contribution
Account, Deductible Voluntary Contribution Account, Salary Reduction
Contribution Account, Deferred Cash Contribution Account, Qualified
Nonelective Contribution Account and Rollover Account. A Participant's
interest in his or her Employer Profit Sharing Contribution Account and
Employer Matching Contribution Account shall be vested and nonforfeitable
at Normal Retirement Date, death while in Service, Disability, upon
termination (including a complete discontinuance of Employer Contributions)
or partial termination of the Plan and otherwise only to the extent
specified in the Adoption Agreement.
8.02 Employer Profit Sharing Contribution and Employer Matching
Contribution Forfeitures. If a Participant's employment with the Employer
is terminated before his or her Employer Profit Sharing Contribution
Account and/or Employer Matching Contribution Account is (are) fully vested
in accordance with Section 8.01, this Section 8.02 shall apply.
(a) The portion of the Participant's Employer Profit Sharing
Contribution Account and/or Employer Matching Contribution Account which is
to be forfeited pursuant to subsection (b) below shall be treated as
follows:
(i) if the Employer has not specified otherwise in the
Adoption Agreement, the forfeiture shall be allocated as if it were an
Employer Profit Sharing Contribution or Employer Matching Contribution, as
the case may be, for the Plan Year following the Plan Year in which such
forfeiture occurs, or
(ii) if the Employer so specifies in the Adoption Agreement,
the forfeiture(s) shall be applied to reduce the Employer's obligation to
make Employer Matching Contributions for the Plan Year following the Plan
Year in which the forfeiture occurs, provided that if the amount of the
forfeiture to be reallocated exceeds the Employer's then unsatisfied
obligation to make Employer Matching Contributions for the Plan Year, the
forfeiture shall be applied to reduce the Employer's obligation to make
fixed Employer Profit Sharing Contributions for the Plan Year following the
Plan Year in which the forfeiture occurs. If the Plan does not provide for
fixed Employer Profit Sharing Contributions, or the amount of forfeiture to
be reallocated exceeds the Employer's then unsatisfied obligation to make
fixed Employer Profit Sharing Contributions, the forfeiture shall be
reallocated as if it were an additional discretionary Employer Profit
Sharing Contribution made for the Plan Year following the Plan Year in
which the forfeiture occurs.
(b) If the Participant elects to receive a distribution of the
value of his vested account balances in his or her Employer Profit Sharing
Contribution and Employer Matching Contribution Accounts in a lump sum
pursuant to the provisions of Section 10.02(a)(ii) or receives a
nonconsensual distribution pursuant to Section 10.04, the nonvested portion
of his or her Employer Profit Sharing Contribution and Employer Matching
Contribution Accounts shall be treated as a forfeiture and reallocated
pursuant to the provisions of Section 8.02(a). For this purpose, if the
value of a Participant's vested account balance in his or her Employer
Profit Sharing Contribution and Employer Matching Contribution Accounts is
zero, the Participant shall be deemed to have received a distribution of
such vested account balance. A Participant's vested account balance shall
not include accumulated deductible employee contributions within the
meaning of Code Section 72(o)(5)(B) for Plan Years beginning prior to
January 1, 1989.
In all other cases, the nonvested portion of a Participant's Employer
Profit Sharing Contribution and Employer Matching Contribution Accounts
shall be treated as a forfeiture and reallocated pursuant to the provisions
of Section 8.02(a) when such Participant incurs five consecutive One-Year
Breaks in Service.
(c) No forfeitures shall occur solely as a result of withdrawal
of Deductible Voluntary Contributions, Nondeductible Voluntary
Contributions, or Rollover Contributions.
8.03 Reemployment
------------
(a) If a former Participant who was not fully vested in his or
her Employer Profit Sharing Contribution and/or Employer Matching
Contribution Accounts at termination of employment is reemployed after
incurring five consecutive One-Year Breaks in Service, he or she shall have
no right to any forfeited account balance. Any undistributed vested portion
of his or her Employer Profit Sharing Contribution Account shall be held in
a separate vested Employer Profit Sharing Contribution Account, and future
Employer Profit Sharing Contributions on his or her behalf shall be
credited to a new Employer Profit Sharing Contribution Account until such
Participant becomes fully vested in such Account whereupon such
Participant's old and new Employer Profit Sharing Contribution Accounts
shall be merged. Any undistributed vested portion of his or her Employer
Matching Contribution Account shall be held in a separate vested Employer
Matching Contribution Account, and future Employer Matching Contributions
on his or her behalf shall be credited to a new Employer Matching
Contribution Account until such Participant becomes fully vested in such
Account whereupon such Participant's old and new Employer Matching
Contribution Accounts shall be merged.
(b) The following provisions shall apply with respect to a former
Participant who was not fully vested in his or her Employer Profit Sharing
Contribution and/or Employer Matching Contribution Accounts at termination
of employment, and who is reemployed before he or she incurs five
consecutive One-Year Breaks in Service:
(i) If no amounts have been forfeited from his or her
Employer Profit Sharing Contribution Account and/or Employer Matching
Contribution Account, the amounts remaining in his or her Employer Profit
Sharing Contribution Account and/or Employer Matching Contribution Account
shall be restored to his or her credit.
(ii) If the nonvested portion of the Participant's Employer
Profit Sharing Contribution Account and/or Employer Matching Contribution
Account has been forfeited, and the Participant has previously received the
vested portions of his or her Employer Profit Sharing Contribution Account
and/or Employer Matching Contribution Account, he or she shall have the
right to repay to the Plan the full amount of such prior distribution. Such
repayment must be made on or before the earlier of five years after the
first date on which the Participant is subsequently reemployed by the
Employer, or the close of the first period of five consecutive One-Year
Breaks in Service following the date of distribution. Upon such repayment,
the amount of any such repayment plus the value of the forfeited portion of
such Accounts as of the date of forfeiture shall be credited to such
Accounts.
(iii) If the Participant is deemed to have received a
distribution from his Employer Profit Sharing Contribution Account and/or
Employer Matching Contribution Account pursuant to Section 8.02(b), and his
entire Employer Profit Sharing Contribution Account and/or Employer
Matching Contribution Account has been forfeited, upon the reemployment of
such Participant, the value of his Employer Profit Sharing Contribution
Account and/or Employer Matching Contribution Account as of the date of the
forfeiture shall be restored to his credit within a reasonable time after
his or her reemployment.
(iv) Restoration of the previously forfeited amount shall be
funded by current unallocated forfeitures, additional Employer
contributions, or any combination thereof at the Employer's discretion.
Such restoration shall not be treated as an Annual Addition under Article
V.
(v) Any Employer Profit Sharing Contributions to which such
Participant becomes entitled after reemployment shall be credited to his or
her Employer Profit Sharing Contribution Account. Any Employer Matching
Contributions to which such Participant becomes entitled after reemployment
shall be credited to his or her Employer Matching Contribution Account. The
portion of such Accounts to which he or she will be entitled upon
subsequent termination of employment will be based upon his or her
aggregate Vesting Years before and after the break.
ARTICLE IX. DISTRIBUTIONS UPON DEATH
------------------------
9.01 Distributions at Death. If a Participant dies at a time when he
or she has a vested Account balance, this Section shall apply with respect
to such vested Account balance.
(a) The Trustee shall, at the direction of the Administrator,
distribute a Participant's vested Account balance in accordance with the
provisions of this Article IX. The Administrator's direction shall include
notification of the Participant's death, the existence or non-existence of
a surviving spouse; the amounts, or method of calculating the amounts, to
be distributed on given dates; and such other information required by the
Trustee.
(b) If the Participant has validly named a Beneficiary or
Beneficiaries in compliance with Article XVII, his or her vested Account
balance shall be distributed to the Beneficiary or Beneficiaries so named.
To the extent that any portion of a vested Account balance of a deceased
Participant is not governed by an effective Designation of Beneficiary,
that portion of the vested Account balance shall be distributed to the
deceased Participant's Spouse or if that is not possible, to the estate of
the deceased Participant.
(c) If the Participant has validly elected a form of distribution
permitted under Section 10.02 which complies with the applicable provisions
of subsection (d) below (a "permissible form of distribution") with respect
to his or her vested Account balance, such vested Account balance shall be
distributed in accordance with such election whether or not distributions
have commenced prior to the Participant's death. With respect to any
portion of a deceased Participant's vested Account balance for which the
Participant had not validly elected a permissible form of distribution
prior to his or her death, distribution shall be made in such permissible
form as the Participant's Beneficiary (or Beneficiaries) may elect in
writing with the Trustee. In the absence of such a valid election by the
Beneficiary, the Participant's vested Account balance shall be distributed
as follows:
(i) if distributions have commenced prior to the
Participant's death, in the form selected by the Participant,
(ii) if distributions have not commenced prior to the
Participant's death, and if the Beneficiary is the Spouse, in substantially
equal installment payments over the Spouse's Applicable Life Expectancy,
or, if the Beneficiary is not the Spouse, in a lump sum.
(d) Distribution to the Participant's Beneficiary shall be made
according to the following provisions:
(i) If the Participant dies before distributions have
commenced on account of the Participant's attainment of his or her First
Required Distribution Year and if the Beneficiary is not the Spouse, the
Participant's entire vested Account balance must be distributed to the
Participant's Beneficiary either (A) on or before December 31 of the
calendar year during which occurs the fifth anniversary of the
Participant's death, or (B) in substantially equal annual or more frequent
installments over a period not exceeding the Applicable Life Expectancy of
the oldest Beneficiary (as determined as of the date of the Participant's
death) provided that such distributions commence before the second January
1 which follows the Participant's death.
(ii) If the Participant dies before distributions have
commenced on account of the Participant's attainment of his or her First
Required Distribution Year and if the Beneficiary is the Spouse, the
Participant's entire vested Account balance must be distributed to the
Participant's Spouse either (A) in a lump sum payable, or in installments
which will be completely paid, on or before December 31 of the calendar
year during which occurs the fifth anniversary of the date of the
Participant's death, or (B) in annual installments over the Spouse's life
or a period not longer than the Spouse's Applicable Life Expectancy
provided that such distribution is commenced before the later of (1) the
first January 1 following the calendar year during which the Participant
would have attained age 70 1/2 had the Participant not died or (2) the
second January 1 which follows the Participant's death.
(iii) If a Participant dies after distributions have
commenced on account of the Participant's attainment of his or her First
Required Distribution Year, distributions to the Participant's Spouse,
Beneficiary or estate shall continue over a period at least as rapid as the
period selected by the Participant.
(e) If a Beneficiary dies after the Participant (or in the case
of a Beneficiary designated by another Beneficiary, after such other
Beneficiary) and before such deceased Beneficiary receives full payment of
the portion of the vested Account balance to which he or she is entitled,
the Trustee shall, upon direction of the Administrator, distribute the
funds to which the deceased Beneficiary is entitled to the Beneficiary or
Beneficiaries validly named on the most recent Designation of Beneficiary
filed by the deceased Beneficiary. To the extent that any portion of the
funds to which the deceased Beneficiary was entitled are not governed by an
effective Designation of Beneficiary, the funds shall be distributed to the
deceased Beneficiary's surviving Spouse, or if that is not possible, to the
estate of the deceased Beneficiary. The Administrator's direction shall
include notification of the Beneficiary's death and the existence or
non-existence of a surviving Spouse and such other information required by
the Trustee. Such funds shall be distributed as follows:
(i) If distributions had commenced before the Participant's
death, distribution to the beneficiary of a deceased Beneficiary shall
continue over a period at least as rapid as that selected by the
Participant.
(ii) If the deceased Beneficiary was the surviving Spouse of
the Participant and had not begun to receive distributions from the
Participant's Account at the time of his or her death, the Participant's
vested Account balance shall be distributed to the deceased Beneficiary's
Beneficiary according to the provisions of Sections 9.01(c) - (d) applied
as if the deceased Beneficiary were the Participant. In addition, the
surviving Spouse's Beneficiaries shall be treated as Beneficiaries during
any future application of this Section.
(iii) If neither subparagraph (i) nor (ii) above apply, the
Participant's vested Account balance shall be distributed to the deceased
Beneficiary's Beneficiary either (A) on or before December 31 of the
calendar year during which occurs the fifth anniversary of the
Participant's death or (B) in substantially equal annual or more frequent
installments over the remainder of the Applicable Life Expectancy of the
oldest Beneficiary of the Participant as determined at the Participant's
death provided that distributions commence before the second January 1
which follows the Participant's death.
9.02 Children as Beneficiaries. For the purposes of Section 9.01, to
the extent provided by Treasury regulations, any distribution paid to a
Participant's child shall be treated as paid to the Participant's surviving
Spouse if the remaining portion of the Participant's vested Account balance
with respect to which such child is a Beneficiary becomes payable to the
surviving Spouse when the child reaches the age of majority (or such other
designated event permitted under the Treasury regulations).
9.03 Nonconsensual Distributions to Beneficiaries. Notwithstanding any
provision of this Article, Article X or Article XXIV to the contrary, the
Administrator may direct the entire vested Account balance of a deceased
Participant (exclusive of his or her Rollover Account and Deductible
Voluntary Contribution Account) be distributed if the amount distributed
will be equal to $3,500 or less. The Administrator may make such direction
without obtaining the consent of any Beneficiary.
9.04 Eligible Rollover Distributions. If the Participant's Beneficiary
is a surviving Spouse, the provisions of Section 10.07 shall apply to
distributions made pursuant to Article IX.
ARTICLE X. DISTRIBUTIONS AFTER SEPARATION FROM SERVICE
-------------------------------------------
10.01 Commencement of Distributions. The Trustee shall, at the
direction of the Administrator, distribute a Participant's vested Account
balance in accordance with the provisions of this Article X. The
Administrator's direction shall include the amounts, or method of
calculating the amounts, to be distributed on given dates and such other
information required by the Trustee. In the event distribution is to be
made in the form of an annuity contract, the Administrator shall also
direct the Trustee with regard to the purchase of such a contract,
including the selection of an appropriate insurance carrier. Except as
otherwise provided in this Article X, distributions of a Participant's
vested Account balance shall commence within 60 days after the close of the
Plan Year during which occurs the later of (a) the Participant's Normal
Retirement Date or (b) the earlier of (i) the Participant's separation from
Service or (ii) the end of his or her First Required Distribution Year.
Payment of benefits may, at the discretion of the Trustee, be paid directly
to the Participant or to the Administrator, as payee agent. If the
Participant's vested Account balance (exclusive of his or her Rollover
Account and Deductible Voluntary Contribution Account) is greater than
$3,500, written consent of the Participant is required for any earlier
distribution. A Participant may file an election with the Administrator to
request that distributions commence in accordance with one of the following
options provided that the distribution shall otherwise comply with the
requirements of the Plan (including, but not limited to, Section 10.03):
(A) Distributions commencing before the Participant's
Normal Retirement Date if the Participant is Disabled or experiences a
separation from Service.
(B) Distributions commencing after the normal time of
distribution described above; provided, however, that any such deferred
distribution must commence no later than 60 days after the end of the
Participant's First Required Distribution Year.
10.02 Forms of Distribution.
---------------------
(a) Upon a Participant's separation from Service (for reasons
other than death), he or she may file an election with the Administrator to
request to receive a distribution of his or her vested Account balance in
one or more of the following optional forms, provided that the distribution
shall otherwise comply with the requirements of this Plan and provided that
the optional forms have been designated by the Employer in the Adoption
Agreement:
(i) Distribution of the Participant's entire vested Account
balance in monthly installments over a period equal to the shorter of 120
months or the Applicable Life Expectancy. The monthly amount shall normally
be the balance of the Participant's vested Account balance divided by the
remaining number of months in such period, all rounded to the nearest cent.
However, the amount of each monthly installment may be recomputed and
adjusted from time to time no more frequently than monthly as the Trustee
may reasonably determine.
(ii) Distribution of the Participant's entire vested Account
balance in a lump sum.
(iii) Distribution of the Participant's entire vested
Account balance in installment payments of a fixed amount, such payments to
be made until exhaustion of the Participant's vested Account balance.
(iv) Distribution in kind.
(v) Any reasonable combination of the foregoing or any
reasonable time or manner of distribution within the above-stated
limitations.
(vii) Any distribution option that is a "protected benefit"
under Code Section 411(d)(6).
(b) To the extent permitted by applicable law and consistent with
the provisions of this Article X, amounts distributed pursuant to this
Article X shall be allocated on a pro rata basis among the Participant's
Accounts and among the Designated Investments in which each Account is
invested; provided, however, that the Participant may specify to the
Administrator an alternative manner in which distributions shall be so
allocated.
10.03 Required Minimum Distributions. In the case of each Participant,
the annual distribution from his or her Account shall be determined by the
Administrator in accordance with the regulations under Code Section
401(a)(9), including the minimum distribution incidental benefit
requirement of Section 1.401(c)(9)-2 of such regulations and must equal or
exceed the amount equal to the quotient obtained by dividing the
Participant's Account balance at the beginning of the calendar year by the
lesser of (a) the Applicable Life Expectancy, or (b) if the Participant's
Spouse is not the Beneficiary, the applicable divisor determined from the
table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the regulations under
Code Section 401(a)(9).
10.04 Nonconsensual Distributions. Notwithstanding any provision of
Article IX, this Article or Article XXIV to the contrary, the Administrator
may direct that the entire vested Account balance of a Participant
(exclusive of his or her Rollover Account and Deductible Voluntary
Contribution Account) be distributed if the amount distributed will be
equal to $3,500 or less. The Administrator may make such direction (a) only
if the Participant has not previously attained his or her Annuity Starting
Date and (b) regardless of whether the Participant requests or otherwise
consents to such distribution.
10.05 Special One-Time Distribution Election. Notwithstanding any Plan
provision to the contrary, distribution on behalf of any Participant,
including a 5% owner, may be made in accordance with the following
requirements (regardless of when such distribution commences):
(a) The distribution is one which would not have disqualified the
Plan under Code Section 401(a)(9) as it was in effect prior to its
amendment by the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of
distribution designated by the Participant whose interest in the Plan is
being distributed or, if the Participant has died, by a beneficiary of such
Participant.
(c) Such designation was in writing, was signed by the
Participant or the beneficiary, and was made before January 1, 1984.
(d) The Participant had accrued a benefit under the Plan as of
December 31, 1983.
(e) The method of distribution designated by the Participant or
the beneficiary specifies the time at which distribution will commence, the
period over which distributions will be made, and in the case of any
distribution upon the Participant's death, the Beneficiaries of the
Participant are listed in order of priority.
(f) If the distribution is one to which the provisions of Article
XXIV hereof would otherwise have applied and the Participant is married,
the Participant's Spouse consents to the election in a writing filed with
the Administrator.
A distribution upon death will not be covered by this Section unless
the information in the designation contains the required information
described above with respect to the distributions to be made upon the death
of the Participant.
For any distribution which commenced before January 1, 1984, but
continues after December 31, 1983, the Participant, or the Beneficiary, to
whom such distribution is being made, will be presumed to have designated
the method of distribution under which the distribution is being made if
the method of distribution was specified in writing and the distribution
satisfies the requirement in subsections (a) and (e) above.
If a designation is revoked, any subsequent distribution must satisfy
the requirements of Code Section 401(a)(9) as amended. Any changes in the
designation will be considered to be a revocation of the designation.
However, the mere substitution or addition of another Beneficiary (one not
named in the designation) under the designation will not be considered to
be a revocation of the designation, so long as such substitution or
addition does not alter the period over which distributions are to be made
under the designation, directly or indirectly (for example, by altering the
relevant measuring life).
10.06 Distribution on Account of Plan Termination. Subject to the
provisions of Section 11.04, if the Employer terminates the Plan or
completely discontinues making Employer Contributions to the Trust, the
Administrator has discretion pursuant to Section 20.03 below to distribute,
or retain in the Trust, Participants' Account balances.
10.07 Eligible Rollover Distribution.
------------------------------
(a) This Section applies to distributions made by the Trustee on
or after January 1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's election under this
Section, a Distributee may elect, at the time and in the manner prescribed
by the Administrator, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover.
(b) An Eligible Rollover Distribution is any distribution of all
or any portion of the balance to the credit of the Distributee, except that
an Eligible Rollover Distribution does not include any distribution that is
one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or life expectancies) of the Distributee
and the Distributee's designated beneficiary, or for a specified period of
ten years or more; any distribution to the extent such distribution is
required under Code Section 401(a)(9); and the portion of any distribution
that is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities).
(c) An Eligible Retirement Plan is 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
the Distributee's Eligible Rollover Distribution. However, in the case of
an Eligible Rollover Distribution to the surviving Spouse, an Eligible
Retirement Plan is an individual retirement account or individual
retirement annuity.
(d) A Distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving Spouse and the
Employee's or former Employee's Spouse or former Spouse who is the
alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are Distributees with regard to the interest of
the Spouse or former Spouse.
(e) A Direct Rollover is a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
If a distribution is one to which Code Sections 401(a)(11) and 417 do
not apply, such distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the Income Tax Regulations
is given, provided that:
(i) the Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days after receiving
the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option), and
(ii) the Participant, after receiving the notice,
affirmatively elects a distribution.
ARTICLE XI. IN-SERVICE WITHDRAWALS
----------------------
11.01 In-service Withdrawal from Participant's Accounts. This Section
11.01 shall apply only to Participants who remain in the employ of the
Employer.
(a) Nondeductible Voluntary Contribution Account. A Participant
may withdraw all or a portion of his or her Nondeductible Voluntary
Contribution Account upon notice to the Administrator; provided, however,
that a Participant who withdraws any amount from his or her Nondeductible
Voluntary Contribution Account which previously generated an Employer
Matching Contribution shall be prohibited from making a nondeductible
voluntary contribution for six calendar months, beginning with the calendar
month immediately following the date of withdrawal.
(b) Rollover Account. A Participant may withdraw all or a portion
of his or her Rollover Account upon notice to the Administrator.
(c) Deductible Voluntary Contribution Account. A Participant may
withdraw all or a portion of his or her Deductible Voluntary Contribution
Account upon notice to the Administrator.
(d) Employer Profit Sharing Contribution Account. Upon attainment
of his or her Normal Retirement Date, a Participant may withdraw all or a
portion of his or her Employer Profit Sharing Contribution Account upon
notice to the Administrator. If elected by the Employer in the Adoption
Agreement, a Participant who has not attained his or her Normal Retirement
Date but who is fully vested in his or her Employer Profit Sharing
Contribution may submit a request to the Administrator for a withdrawal of
all or a portion of his or her Employer Profit Sharing Contribution
Account. The Administrator may permit such a withdrawal only if the
Participant can demonstrate to the satisfaction of the Administrator that
he or she is suffering from "hardship" as defined in Section 11.02 below.
(e) Employer Matching Contribution Account. Upon attainment of
his or her Normal Retirement Date, a Participant may withdraw all or a
portion of his or her Employer Matching Contribution Account upon notice to
the Administrator. If elected by the Employer in the Adoption Agreement, a
Participant who has not attained his or her Normal Retirement Date but who
is fully vested in his or her Employer Matching Contribution Account may
submit a request to the Administrator for a withdrawal of all or a portion
of his or her Employer Matching Contribution Account. The Administrator may
permit such a withdrawal only if the Participant can demonstrate to the
satisfaction of the Administrator that he or she is suffering from
"hardship" as defined in Section 11.02 below.
(f) Salary Reduction Contribution Account, Deferred Cash
Contribution Account and Qualified Nonelective Contribution Account. Upon
attainment of his or her Normal Retirement Date, a Participant may withdraw
all or a portion of his or her Salary Reduction Contribution Account,
Deferred Cash Contribution Account and/or Qualified Nonelective
Contribution Account upon notice to the Administrator. If elected by the
Employer in the Adoption Agreement, a Participant who has not attained his
or her Normal Retirement Date may submit a request to the Administrator for
a withdrawal of all or a portion of his or her Salary Reduction
Contribution Account or Deferred Cash Contribution Account (but not
earnings on such accounts after December 31, 1988). The Administrator may
permit such a withdrawal only if the Participant can demonstrate that he or
she is suffering from "hardship" as defined in Section 11.02 below.
11.02 Rules Governing Hardship Withdrawals. A Participant shall be
considered to be suffering from "hardship" only if the distribution is both
made on account of an immediate and heavy financial need of the Participant
and is necessary to satisfy such financial need, determined in accordance
with objective, nondiscretionary standards as set forth in this Section.
(a) An "immediate and heavy financial need" shall be deemed to
include, and shall be limited to, the following:
(i) Expenses incurred or necessary for medical care
described in Code Section 213(d) of the Participant, his or her Spouse, or
any dependents of the Participant (as defined in Code Section 152);
(ii) Purchase (excluding mortgage payments) of a principal
residence for the Participant;
(iii) Payment of tuition, related educational fees and room
and board for the next 12 months of post-secondary education for the
Participant, his or her Spouse, children, or dependents; or
(iv) The need to prevent the eviction of the Participant
from his or her principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) A distribution will be treated as "necessary" to satisfy an
immediate and heavy financial need of the Participant only if:
(i) The Participant has obtained all distributions, other
than hardship distributions, and all nontaxable loans under all plans
maintained by the Employer;
(ii) All plans maintained by the Employer provide that the
Participant's Salary Reduction Contributions and/or Deferred Cash
Contributions (and Nondeductible Voluntary Contributions) will be suspended
for 12 months after the receipt of the hardship distribution;
(iii) The distribution is not in excess of the amount of an
immediate and heavy financial need (including amounts necessary to pay any
federal, state or local income taxes or penalties reasonably anticipated to
result from the distribution); and
(iv) All plans maintained by the Employer provide that the
Participant may not make Salary Reduction Contribution and/or Deferred Cash
Contributions for the Participant's taxable year immediately following the
taxable year of the hardship distribution in excess of the applicable limit
under Code Section 402(g) for such taxable year less the amount of such
Participant's Salary Reduction Contributions and/or Deferred Cash
Contributions for the taxable year of the hardship distribution.
11.03 Manner of Distribution. A distribution under this Article shall
be made in a lump-sum payment to the Participant. In each case in which a
partial distribution is made from a Participant's Account, the amount
distributed from such Account pursuant to this Article XI shall be
allocated on a pro rata basis among the Designated Investments in which
such Account is invested; provided, however, that the Administrator or the
Participant may specify an alternative manner in which such distribution
shall be so allocated.
11.04 Limitation on Distributions. Notwithstanding anything to the
contrary elsewhere herein, the amounts credited to a Participant's Salary
Reduction Contribution Account and Deferred Cash Contribution Account, and
Qualified Nonelective Contribution Account shall not be distributable to a
Participant or his or her Beneficiary until the Participant separates from
Service on account of retirement, disability, death or termination of
employment or upon the occurrence of one of the following events:
(a) Termination of the Plan without the establishment of another
defined contribution plan, other than an employee stock ownership plan (as
defined in Code Section 4975(e) or Section 409) or a simplified pension
plan as defined in Code Section 408(k).
(b) The disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of Code Section
409(d)(2)) used in a trade or business of such corporation if such
corporation continues to maintain this Plan after the disposition, but only
with respect to Participants who continue employment with the corporation
acquiring such assets.
(c) The disposition by a corporation to an unrelated entity of
such corporation interest in a subsidiary (within the meaning of Code
Section 409(d)(3)) if such corporation continues to maintain this Plan, but
only with respect to Participants who continue employment with such
subsidiary.
(d) The attainment of age 59-1/2 by the Participant.
(e) In the case of the Participant's Salary Reduction
Contribution Account and Deferred Cash Contribution Account, the hardship
of the Participant as described in Section 11.02.
All distributions that may be made pursuant to one or more of the
foregoing distributable events are subject to the spousal and Participant
consent requirements (if applicable) contained in Code Sections 411(a)(11)
and 417. In addition, distributions made after March 31, 1988, that are
triggered by an event enumerated in Sections 11.04(a)-(c) must be made in a
lump sum.
ARTICLE XII. LOANS
-----
12.01 Availability of Loans. If, in the Adoption Agreement, the
Employer has specified that loans to Participants are permitted, the Loan
Trustee shall, upon the direction of the Administrator, make one or more
loans, including any renewal thereof, to a Participant who is an Employee
or, in the discretion of the Administrator, a former Employee (other than a
Participant who is an Owner-Employee). Any such loan shall be subject to
such terms and conditions as the Administrator shall determine pursuant to
a written uniform policy adopted by the Administrator for this purpose,
which policy shall be incorporated herein as part of the Plan, at least as
restrictive as required by this Article, and, contain specific provisions
setting forth: (a) the identity of the person or positions authorized to
administer the loan program; (b) a procedure for applying for loans; (c)
the basis upon which loans will be approved or denied; (d) limitations, in
addition to those described in this Article XII, on the types and amount of
loans offered; (e) the procedure under the program for determining a
reasonable rate of interest; (f) the types of collateral which may secure a
loan; and (g) the events constituting default and the steps that will be
taken to preserve plan assets in the event of such default.
12.02 Spousal Consent Required. If this Plan is adopted as a plan
which is subject to the special annuity rules discussed in Article XXIV
below, to obtain a loan, a Participant must obtain the consent of his or
her Spouse, if any, within the 90-day period before the time his or her
Account balance is used as security for the loan. Furthermore, a new
consent is required if an increase in the amount of the security is
necessary and any of the remaining balance of the Account is used. A
spousal consent to a loan must be in writing, witnessed by a Plan
representative or notary public, and acknowledge that as a result of a
default in repayment of the loan the Spouse may be entitled to a lesser
death benefit than he or she would otherwise receive under the Plan. A
Spouse shall be deemed to consent to any loan which is outstanding at the
time of his or her marriage to the Participant.
12.03 Equivalent Basis. No such loan may be made to a disqualified
person within the meaning of Code Section 4975(e), unless such loans are
available to all active Participants on a reasonably equivalent basis and
are not made available to Highly Compensated Employees in an amount which,
when stated as a percentage of any such Participant's Account, is greater
than is available to any other Participants.
12.04 Limitation on Amount. The amount of any such loan, when added to
the outstanding balance of all other loans from the Trust (and any other
qualified retirement plans of the Employer) to the Participant, shall not
exceed the lesser of:
(a) $50,000 reduced by the amount by which (i) the highest
outstanding balance of all such loans to the Participant during the
one-year period ending on the day before the date on which the loan is made
exceeds (ii) the outstanding balance of such loans to the Participant on
the date on which such loan is made; or
(b) the amount determined pursuant to the following chart:
Vested Maximum
Account Balance Amount of Loan
- -------------------------------------------------------------------------
$0 - $100,000 50% of vested Account balance
over $100,000 $50,000.
The value of the Participant's Account balance shall be as determined
by the Administrator; provided, however, that such determination shall in
no event take into account the portion of the Participant's Account
attributable to the Participant's Deductible Voluntary Contribution
Account.
12.05 Maximum Term. The term of any such loan shall not exceed five
years; provided, however, that such limitation shall not apply to any loan
used for the purchase of a dwelling unit which within a reasonable time is
to be used (determined at the time the loan is made) as a principal
residence of the Participant.
12.06 Promissory Note. Any such loan shall be evidenced by a
promissory note executed by the Participant and payable to the Loan
Trustee, on the earliest of (i) a fixed maturity date meeting the
requirements of Section 12.05 above, (ii) the Participant's death (iii) the
Participant's separation from service if the loan policy does not permit
loans to former Employees. Such promissory note shall evidence such terms
as are required by this Article.
12.07 Adequate Security. Each loan and related promissory note shall
be secured by an assignment of no more than 50 percent of the Participant's
Account to the Loan Trustee. A Participant may also provide such other or
additional security for the loan as the Loan Trustee may require or permit.
12.08 Repayment By Payroll Reduction. In addition to executing a
promissory note, the Participant who desires to take out a loan shall enter
into a payroll reduction agreement with the Employer or such other form of
repayment agreement with the Employer as the Administrator permits from
time to time. The Participant shall enter into such agreement on or before
the date when the loan is made. Such agreement shall provide that, if the
Participant defaults on the loan while he or she is still an Employee, the
Employer shall be entitled to reduce the Participant's pay in sufficient
increments to ensure that, over a reasonable period of time, the amount
with respect to which the Participant has defaulted plus any interest owed
and any costs of collection incurred by the Loan Trustee will be repaid to
the Trust. The Employer shall promptly pay to the Loan Trustee all amounts
that the Employer withholds from a Participant's pay pursuant to such a
payroll reduction agreement or other repayment agreement. The Administrator
and/or Loan Trustee shall credit all amounts withheld from a Participant's
pay or collected pursuant to a repayment agreement to the relevant
Participant's Account as payments of amounts owed on the note.
12.09 Interest. Any such loan shall be subject to a reasonable rate of
interest.
12.10 Level Amortization. A Participant shall repay the principal of
any loan according to a schedule which shall provide for level amortization
over a period of the loan, with payments to be made no less frequently than
quarterly.
12.11 Additional Repayment Rules. If a Participant fails to make a
payment in accordance with the schedule developed in accordance with the
requirements of Section 12.10 above, the Administrator shall notify the
Participant in writing that if the relevant loan principal and accumulated
and unpaid interest thereon is not paid within 30 days, action will be
taken to collect such amounts plus any cost of collection. When collecting
such amounts, the Loan Trustee may utilize any of the remedies available to
it including those provided by the promissory note, a payroll reduction
agreement entered into pursuant to Section 12.08 and applicable law. If a
note is not paid when the Participant's benefits hereunder are to be
distributed, then any unpaid portion of such loan, and unpaid interest
thereon, and any costs of collection incurred by the Loan Trustee shall be
deducted by the Loan Trustee from the Participant's Account before benefits
are paid from or purchased out of the Account. Such deduction shall, to the
extent thereof, cancel the indebtedness of the Participant. Notwithstanding
any implication of the preceding sentence to the contrary, no attachment of
the Participant's Account which is subject to Section 11.04 shall occur
until a distributable event occurs as specified in Section 11.04.
12.12 Accounting. Loans shall be made on a pro rata basis among the
Participant's Accounts and among the Designated Investments in which each
Account is invested and shall be treated as an investment of each such
Account, provided, however, that the Administrator or the Participant may
specify an alternative manner in which such loan shall be so allocated.
Notwithstanding the foregoing, no loans shall be made from the
Participant's Deductible Voluntary Contribution Account, and without the
consent of the Distributor, no loans shall be made from the Participant's
Accounts invested in qualifying employer securities.
12.13 Administration of Loans. Except as expressly provided otherwise
in this Article XII, the Administrator shall have the sole responsibility
for all administrative tasks relating to loans made pursuant hereto
including, but not limited to, the issuance of any appropriate notices or
information returns required under the Code or other applicable law.
12.14 Precedence. This Article overrides Section 18.01 below.
ARTICLE XIII. TRUST PROVISIONS
----------------
13.01 Manner of Investment. Except as expressly provided otherwise
herein, all contributions made pursuant to the Plan and any assets in which
such contributions shall be invested or reinvested shall be held in trust
by one or more Trustee pursuant to the provisions of this Agreement of
Trust. Certain assets of the Plan (including, but not limited to, insurance
contracts and shares of securities of an Employer that are not publicly
traded) may be held by the Administrator or such other entity as the
Trustee may appoint as subcustodian on behalf of the Trustee. Except to the
extent that a Participant's Account is invested in a loan pursuant to
Article XII hereof, the Account of a Participant may only be invested and
reinvested in Designated Investments or the Company Stock Fund, unless the
Distributor consents to such other investments. If the Administrator or the
Participant, as the case may be, has elected to have a portion of an
Account invested in investments other than Designated Investments or the
Company Stock Fund, and the Distributor has given its consent, the Trustee
shall invest such amount in such investments, directed by the Administrator
or other person with investment discretion and in accordance with Section
13.03 hereof. Both the Designated Investments and investments other than
Designated Investments available for investment may be limited by the
Administrator who may impose separate rules for separate accounts or for
terminated Participants. Investment in more than one Designated Investment
is not permitted unless the value of the Participant's Account and the
value of the investment in each additional Designated Investment exceed
amounts from time to time determined by the Distributor. If the Trustee
invests in one or more collective investment funds (whether or not the
Trustee acts as trustee thereof) for the collective investment of assets of
employee pension or profit-sharing trusts pursuant to Revenue Ruling
81-100, and such collective investment fund constitutes a qualified trust
under the applicable provisions of the Code, such collective investment
funds shall constitute part of the Plan, and the instrument creating such
funds shall constitute part of this Agreement of Trust while any portion of
the Trust is so invested.
13.02 Investment Decision.
-------------------
(a) The decision as to the investment of an Account shall be made
by the person designated in the Adoption Agreement or as provided in this
Section 13.02, and the Trustee shall have no responsibility for determining
how an Account is to be invested or to see that investment directions
communicated to it comply with the terms of the Plan. Each such person,
including the Administrator, a Participant or a Beneficiary, is hereby
designated a "named fiduciary" within the meaning of Sections 402(a)(2) and
403(a)(1) of the Act, with respect to the Accounts over which he or she may
exercise investment control. If the decision is made by the Participant,
then (subject to Section 13.02(d) below) the Participant shall convey
investment instructions to the Administrator and the Administrator shall
promptly transmit those instructions to the Trustee. Further, if the
decision is to be made by the Participant, the right to make such a
decision shall remain with the Participant upon retirement and shall pass
to his or her Beneficiary upon death; provided, however, that upon
termination of Service by a Participant, the Administrator shall have the
right to make investment decisions with respect to the portion of such
Participant's Account which is not vested pursuant to Article VIII and any
expense account maintained under the Plan. In the event that all or a
portion of a Participant's Account is assigned to an "alternate payee"
pursuant to a "qualified domestic relations order," such alternate payee
shall have the right to make investment decisions with respect to such
portion and any earnings thereon to the same extent as the Participant.
(b) The person designated to make the decision as to the
investment of an Account may direct that the investment medium of an
Account be changed, provided that no such change may be made from or to an
investment medium other than a Designated Investment or the Company Stock
Fund except to the extent permitted under Section 13.01 above and by the
terms of that other investment vehicle. Notwithstanding the foregoing, the
Administrator may from time to time establish uniform, nondiscretionary
rules with respect to the frequency or times at which changes in the
investment medium of the Account may be made. If the Distributor determines
in its own judgment that there has been trading of Designated Investments
in the Accounts of the Participants, any Designated Investment may refuse
to sell to such Accounts. When an investment is being made or changed, the
person designated to do so shall specify the type of Account to which the
change refers.
(c) Except as provided in subsection (a) above, if any decision
as to investments is to be made by the Administrator, it shall be made on a
uniform basis with respect to all Participants.
(d) The Administrator and the Trustee may adopt procedures
permitting Participants to convey their investment instructions directly to
the Trustee or to the transfer agent for the Designated Investment or for
any other investment permitted by the Distributor.
(e) Whenever a Participant is the person designated to make the
decision as to the investment of an Account, the Administrator shall
ascertain that the Participant has received a copy of the current
prospectus relating to any Designated Investment, or the Company Stock
Fund, in which such Account is to be invested where required by state or
federal law. With respect to contributions designated for investment by a
Participant, by remitting such a contribution to the Trustee, the
Administrator shall be deemed to warrant to the Trustee for the benefit of
the appropriate Designated Investment and its principal underwriter (if
applicable) that the Participant has received all such prospectuses. By
remitting any other contribution to the Trustee, the Administrator shall be
deemed to warrant to the Trustee for the benefit of the appropriate
Designated Investment and its principal underwriter (if applicable) that
the Administrator has received a current prospectus of any Designated
Investment in which the contribution is to be invested where required by
any state or federal law.
13.03 Directed Powers of the Trustee. To the extent that a portion of
the Trust assets are invested other than in Designated Investments pursuant
to Section 13.01 above, except as otherwise provided in Section 13.19, the
Trustee shall have the following powers and authority in the administration
of the Trust to be exercised at the direction of the Administrator or other
person with investment discretion:
(a) To purchase, receive or subscribe for any securities or other
property and to retain in trust such securities or other property.
(b) To sell for cash or credit, to convert, redeem, or exchange
securities for other securities or other property, to tender securities
pursuant to tender offers, or otherwise to dispose of any securities or
other property at any time held by the Trustee.
(c) To settle, compromise, or submit to arbitration any claims,
debts or damages, due or owing to or from the Trust Fund, to commence or
defend suits or legal proceedings and to represent the Trust Fund in all
suits or legal proceedings; provided, however, that the Trustee shall have
the right, in its sole discretion, to bring, join in or oppose any such
suits or legal proceedings where it may be adversely affected by the
outcome, individually or as Trustee, or where it is advised by counsel that
such action is required on its part by the Act or other applicable law.
(d) To exercise any conversion privilege and/or subscription
right available in connection with any securities or other property at any
time held by it; to oppose or to consent to the reorganization,
consolidation, merger or readjustment of the finances of any corporation,
company or association, or to the sale, mortgage, pledge or lease of the
property of any corporation, company or association, the securities of
which may at any time be held by it and to do any act with reference
thereto, including the exercise of options, the making of agreements or
subscriptions and the payment of expenses, assessments or subscriptions
which may be deemed necessary or advisable in connection therewith, and to
hold and retain any securities or other property which it may so acquire,
and to deposit any property with any protective, reorganization or similar
committee or with depositories designated thereby, to delegate power
thereto, and to pay or agree to pay part of the expenses and compensation
of any such committee and any assessments levied with respect to property
so deposited; provided, however, that the Trustee shall not be responsible
for taking any action or exercising any right described in this subsection
(d) with respect to securities or other property of the Trust Fund unless,
at least three business days prior to the date on which such power is to be
exercised, it or its agents (i) are in actual possession or control of such
securities or property (if such possession or control is necessary to
exercise any such power) and (ii) have received instructions from the
Administrator to exercise any such power.
(e) To exercise, personally, by proxy or by general or limited
power of attorney, any right appurtenant to any securities or other
property held by it at any time.
(f) To invest and reinvest all or any part of the assets of the
Trust Fund, and to hold part of the Trust Fund uninvested.
(g) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation as expenses of the Trust.
(h) To purchase, enter into, sell, hold and generally deal in any
manner in and with contracts for the immediate delivery of financial
instruments of any issuer or of any other property, to grant, purchase,
sell, exercise, permit to exercise, permit to be held in escrow and
otherwise to acquire, dispose of, hold and generally deal in any manner
with or in all forms of options in any combination; and, in connection with
its exercise of the powers hereinabove granted, to deposit any securities
or other property as collateral with any broker-dealer or other person, and
to take all other appropriate action in connection with such contracts.
(i) To deposit or pledge any securities or other property as
collateral with any broker-dealer or other person (including the Trustee),
and to permit securities or other property to be held by or in the name of
others or in transferable form.
(j) To borrow money, with or without security, from any legally
permissible source, to encumber property of the Trust Fund to secure
repayment of such indebtedness, to assume liens on properties acquired by
the Trust, and to acquire properties subject to liens.
(k) To form corporations and to create trusts to hold title to
any securities or other property of the Trust Fund.
(l) To acquire and hold securities which constitute qualifying
employer securities with respect to a Plan (as such term is defined in
Section 407 of the Act); provided that the Trustee shall have no
responsibility for determining whether such acquisition or holding complies
with the Act; and provided further that the Administrator shall be
responsible for filing all reports required under federal or state
securities laws with respect to the Trust Fund's ownership of qualifying
employer securities (including without limitation any reports required
under Section 13 or 16 of the Securities Exchange Act of 1934, as amended)
and shall immediately notify the Trustee in writing of any requirement to
stop purchases or sales of employer securities pending the filing of any
report, and the Trustee shall provide to the Administrator such information
on the Trust Fund's ownership of qualifying employer securities as the
Administrator may reasonably request in order to comply with federal or
state securities laws and the Act;
(m) To convert any monies into any currency through foreign
exchange transactions (which may be effected with the Trustee or an
affiliate of the Trustee to the extent permitted under the Act); and
(n) Generally, to do all acts, whether or not expressly
authorized, which may be considered necessary or desirable for the
protection or enhancement of the Trust Fund or to carry out any of the
foregoing powers and the purposes of the Trust Fund.
13.04 Discretionary Powers of the Trustee. The Trustee shall have the
following powers and authority in the administration of the Trust to be
exercised in its sole discretion:
(a) To register any securities held by it hereunder in its own
name or in the name of a nominee with or without the addition of words
indicating that such securities are held in a fiduciary capacity and to
hold any securities in bearer form and to deposit any securities or other
property in a depository, clearing corporation, or similar corporation,
either domestic or foreign.
(b) To make, execute and deliver, as Trustee hereunder, any and
all instruments in writing necessary or proper for the accomplishment of
any of the powers referred to in Section 13.03 or in this Section 13.04.
(c) To employ suitable agents, custodians, subcustodians, and
counsel including but not limited to entities which are affiliates of the
Trustee and, subject to applicable law, to pay their reasonable
compensation and expenses as expenses of the Trust.
(d) With the consent of the Administrator, to loan securities
held in the Trust to brokers or dealers or other borrowers under such terms
and conditions as the Trustee, in its absolute discretion, deems advisable,
to secure the same in any manner permitted by law and the provisions of
this Agreement, and during the term of any such loan, to permit the loaned
securities to be transferred into the name of and voted by the borrowers or
others, and, in connection with the exercise of the powers hereinabove
granted, to hold any property deposited as collateral by the borrower
pursuant to any master loan agreement in bulk, together with the
unallocated interests of other lenders, and to retain any such property
upon the default of the borrower, whether or not investment in such
property is authorized under this Agreement, and to receive compensation
therefor out of any amounts paid by or charged to the account of the
borrower.
13.05 Limitations in Investments. Notwithstanding the above, the
following restrictions on the investment of a Participant's Account shall
apply:
(a) No part of a Participant's Deductible Voluntary Contribution
Account may be used to purchase life insurance.
(b) At most, less than one-half of the aggregate Employer
Contributions allocated to a Participant's Employer Contribution Account
may be used to pay premiums attributable to the purchase of ordinary life
insurance contracts (life insurance contracts with both nondecreasing death
benefits and non-increasing premiums).
(c) No more than one-quarter of aggregate Employer Contributions
allocated to a Participant's Account may be used to pay premiums on term
life insurance contracts, universal life insurance contracts, and all other
life insurance contracts which are not ordinary life insurance contracts.
(d) One-half of the amount used to pay premiums on ordinary life
insurance contracts plus the amount used to pay premiums on all other life
insurance contracts may not exceed an amount equal to one-quarter of the
aggregate Employer Contributions allocated to a Participant's Account.
(e) No part of a Participant's Account shall be applied towards
the purchase of any insurance contract unless (i) the Trustee applies for
and is the owner of such contract, (ii) the contract provides that all
contract proceeds shall be paid to the Trustee, and (iii) the contract
provides for distributions to the Participant's Spouse, as necessary to
ensure compliance with the applicable requirements of Articles IX, X, and
XXIV.
(f) Amounts used to pay premiums on, or purchase, any insurance
contract(s) on the life of a Participant shall be paid first from that
portion of the Participant's Nondeductible Voluntary Contribution Account
which represents Nondeductible Voluntary Contributions made by the
Participant prior to January 1, 1987, provided that the Plan, as of May 5,
1986, permitted withdrawal of Nondeductible Voluntary Contributions before
separation from Service. Amounts used to pay premiums on, or purchase, any
insurance contract(s) on the life of a Participant which exceed that
portion of the Participant's Nondeductible Voluntary Contribution Account
described in the preceding sentence shall be paid first from the portion of
the Participant's Nondeductible Voluntary Contribution Account which
represents the remaining Nondeductible Voluntary Contributions made by the
Participant and then, except as provided in paragraph (a) above, from such
other of the Participant's Accounts as the Administrator directs pursuant
to the Participant's election.
(g) Except as provided in Section 22.01, any insurance
contract(s) on the life of a Participant will be converted to cash or
distributed to the Participant as of the Participant's Annuity Starting
Date.
(h) Any dividends or credits earned on insurance contract(s) will
be allocated to the Account of the Participant for whose benefit the
contract is held, provided, however, that if an insurance contract was
purchased with a Participant's Nondeductible Voluntary Contributions, such
dividends or credits which are attributable to the Participant's
Nondeductible Voluntary Contributions shall, to the extent treated as a
return of premium, be credited to the Participant's Nondeductible Voluntary
Contribution Account.
If a Participant's Account is invested in one or more insurance contracts,
the Trustee is required to pay over all proceeds of the contract(s) to the
Participant's Beneficiary or Beneficiaries in accordance with the terms of
this Plan and under no circumstances shall the Trust retain any contract
proceeds.
13.06 Appointment of Investment Manager. Subject to Sections 13.01 and
13.03 above, the Administrator may designate, and the Employer may contract
with, Scudder Kemper Investments Inc., or its successor or any affiliate,
or any other qualified entity to act as investment manager (within the
meaning of the Act), and may at any time revoke such designation. If an
investment manager is so designated, the Trustee shall follow all
investment directions given by the investment manager with respect to the
retention, investment and reinvestment of the Plan assets to the extent
they are under the control of such investment manager. If permitted by the
Trustee, the investment manager may issue orders for the purchase and sale
of securities, including orders through any affiliate of such investment
manager. Such an investment manager is specifically allowed to direct or
make investments in any Designated Investment and any other investments to
which the Distributor has given its consent. The Trustee shall not be
liable for following any direction given by, or any actions of, an
investment manager so appointed.
13.07 Trustee: Number, Qualifications and Majority Action.
---------------------------------------------------
(a) The Employer shall designate one or more Trustees for each
Trust. Any natural person and any corporation having power under applicable
law to act as a trustee of a pension or profit sharing plan may be a
Trustee. No person shall be disqualified from being a Trustee by being
employed by the Employer, by being the Administrator, by being a trustee
under any other qualified retirement plan of the Employer or by being a
Participant in this Plan or such other qualified plan.
(b) A Trustee holding office as sole Trustee with respect to a
Trust hereunder shall have all the powers and duties herein given to the
Trustees hereunder. When the number of Trustees with respect to a Trust is
three, any two of them may act, but the third Trustee shall be promptly
informed of the action. When there are two or more Trustees with respect to
a Trust, they may, by written instrument communicated to the Employer and
the Administrator, allocate among themselves the powers and duties herein
given to the Trustee hereunder. If such an allocation is made, to the
extent permitted by applicable law, no Trustee shall be liable either
individually or as a trustee for loss to the Plan from the acts or
omissions of another Trustee with respect to duties allocated to such other
Trustee.
13.08 Change of Trustee.
-----------------
(a) Any Trustee may resign as Trustee upon notice in writing to
the Employer, and the Employer may remove any Trustee upon notice in
writing to each Trustee. The removal of a Trustee shall be effective
immediately, except that a corporation serving as a Trustee shall be
entitled to 60 days' notice which it may waive, and the resignation of a
Trustee shall be effective immediately, provided that, if the Trustee is
the sole Trustee, neither a removal nor a resignation of a Trustee shall be
effective until a successor Trustee has been appointed and has accepted the
appointment. If within 60 days of the delivery of the written resignation
or removal of a sole Trustee, another Trustee shall not have been appointed
and have accepted, the resigning or removed Trustee may petition any court
of competent jurisdiction for the appointment of a successor Trustee or may
terminate the Plan pursuant to Section XVIII of the Prototype Plan. The
Trustee shall not be liable for the acts and omissions of any successor
Trustee.
(b) At any time when the number of Trustees is one or two the
Employer may but need not appoint, respectively two or one additional
Trustees. Such an appointment and the acceptance thereof shall be in
writing, and shall take effect upon the delivery of written notice thereof
to all the Trustees and the Administrator and such acceptance by the
appointed Trustee, provided that if a corporation is a Trustee then in the
absence of its consent, such an appointment of an additional or successor
Trustee shall not become effective until 60 days after its receipt of
notice.
(c) Although any Employer adopting the Plan may choose any
Trustee who is willing to accept the Trust, the Distributor or its
successor may make or may have made tentative standard arrangements with
any bank or trust company with the expectation it will be used as the
Trustee by a substantial group of Employers. It is also contemplated that
more favorable results can be obtained with a substantial volume of
business, and that it may become advisable to remove such bank or trust
company as Trustee and substitute another Trustee. Therefore, anything in
the prior two subsections notwithstanding, each Employer adopting this Plan
hereby agrees that the Distributor may, upon a date specified in a notice
of at least 30 days to the affected Employer and in the absence of written
objection by the Employer received by the Distributor before such date, (i)
remove any Trustee and in that case, or if such a Trustee has resigned as
to a group of Employers, (ii) appoint a successor Trustee, provided such
action is taken with respect to all Employers similarly circumstanced of
which the Distributor has knowledge, and provided such notice is given in
writing and mailed postage prepaid to the Employer at the latest address
furnished to the Distributor directly or supplied to it by such Trustee
which is to be succeeded. If within 60 days after a Trustee's resignation
or removal pursuant to this subsection (i), the Distributor has not
appointed a successor which has accepted such appointment the resigning or
removed Trustee may petition an appropriate court for the appointment of
its successor. The resigning or removed Trustee shall not be liable for the
acts and omissions of such successor.
(d) Successor Trustees qualifying under this Section shall have
all rights and powers and all the duties and obligations of original
Trustees.
13.09 Valuation. Annually, on the Valuation Date, or more frequently
in the discretion of the Trustee, the assets of each Trust shall be valued
at fair market value and the accounts of the Trust shall be proportionately
adjusted to reflect income, gains, losses or expenses, if the system of
accounting does not directly accomplish all such adjustments. Each account
shall share in income gains, losses, or expenses connected with an asset in
which it is invested according to the proportion which the account's
investment in the asset bears to the total amount of the Trust Fund
invested in the asset. Any dividends or credits earned on insurance
contracts shall be allocated to the specific account of the Participant
from which the funds originated for investment in the contract.
The Trust Fund shall be administered separately from, and shall not
include any assets being administered under, any other plan of an Employer.
Interim valuations, if any, shall be applied uniformly and in a
non-discriminatory manner for all Employees.
13.10 Registration. Any assets in the Trust Fund may be registered in
the name of the Trustee or any nominee designated by the Trustee.
13.11 Certifications and Instructions.
-------------------------------
(a) Any pertinent vote or resolution of the Board of Directors of
the Employer (if it is a corporation) shall be certified to the Trustee
over the signature of the Secretary or an Assistant Secretary of the
Employer and under its corporate seal. The Employer shall promptly furnish
to the Trustee appropriate certification evidencing the appointment and
termination of the individual or individuals serving as Administrator under
Section 14.01 of the Plan.
(b) The Administrator shall furnish to the Trustee appropriate
certification of the individual or individuals authorized to give notice on
behalf of the Administrator and providing specimens of their signatures.
All requests, directions, requisitions for money and instructions by the
Administrator to the Trustee shall be in writing and signed. There may be
standing requests, directions, requisitions or instructions to the extent
acceptable to the Trustee.
13.12 Accounts and Approval.
---------------------
(a) The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder,
and all books and records relating thereto shall be open at all reasonable
times to inspection and audit by any person or persons designated by the
Administrator or by the Employer.
(b) Within 90 days following the close of each Plan Year the
Trustee may, and upon the request of the Employer or the Administrator
shall, file with the Administrator and the Employer a written report
setting forth all securities or other investments (including insurance
contracts) purchased and sold, all receipts, disbursements and other
transactions effected by it during the period since the date covered by the
next prior report, and showing the securities and other property held at
the end of such period, and such other information about the Trust Fund as
the Administrator shall request. Unless the Employer or Administrator,
within 90 days from the date of mailing of such report, objects to the
contents of such report, the report shall be deemed approved. Any such
objections shall set forth the specific grounds on which they are based.
13.13 Taxes. The Trustee may assume that any taxes assessed on or in
respect of the Trust Fund are lawfully assessed unless the Administrator
shall in writing advise the Trustee that in the opinion of counsel for the
Employer such taxes are not lawfully assessed. In the event that the
Administrator shall so advise the Trustee, the Trustee, if so requested by
the Administrator and suitable provision for their indemnity having been
made, shall contest the validity of such taxes in any manner deemed
appropriate by the Administrator or counsel for the Employer. The word
"taxes" in this Article shall be deemed to include any interest or
penalties that may be levied or imposed in respect to any taxes assessed.
Any taxes, including transfer taxes incurred in connection with the
investment or reinvestment of the assets of the Trust Fund that may be
levied or assessed in respect to such assets shall, if allocable to the
Accounts of specific Participants, be charged to such Accounts, and if not
so allocable, they shall be equitably apportioned among all such
Participants' Accounts.
13.14 Employment of Counsel. The Trustee may employ legal counsel (who
may be counsel for the Employer) and shall be fully protected in acting or
refraining from acting, upon such counsel's advice in respect to any legal
questions.
13.15 Compensation of Trustee. An individual Trustee who is an
Employee of the Employer shall not be compensated for services as Trustee.
A corporation, or an individual who is not an Employee of the Employer,
serving as a Trustee shall be entitled to reasonable compensation for
services; such compensation shall be paid in accordance with Article XV.
13.16 Limitation of Trustee's Liability.
---------------------------------
(a) The Trustee shall have no duty to take any action other than
as herein specified, unless the Administrator shall furnish it with
instructions in proper form and such instructions shall have been
specifically agreed to by it, or to defend or engage in any suit unless it
shall have first agreed in writing to do so and shall have been fully
indemnified to its satisfaction.
(b) The Trustee may conclusively rely upon and shall be protected
in acting in good faith upon any written representation or order from the
Administrator or any other notice, request, consent, certificate or other
instrument or paper believed by the Trustee to be genuine and properly
executed, or any instrument or paper if the Trustee believes the signature
thereon to be genuine.
(c) The Trustee shall not be liable for interest on any
reasonable cash balances maintained in the Trust.
(d) The Trustee shall not be obligated to, but may, in its
discretion, receive a contribution directly from a Participant.
(e) The Employer shall indemnify and save harmless the Trustee
from and against any and all liability to which the Trustee may be
subjected by reason of any act, conduct or failure to act (except willful
misconduct or gross negligence) in its capacity as Trustee, including all
expenses reasonably incurred in its defense.
13.17 Successor Trustee. Any corporation into which a corporation
acting as a Trustee hereunder may be merged or with which it may be
consolidated, or any corporation resulting from any merger, reorganization
or consolidation to which such Trustee may be a party, shall be the
successor of the Trustee hereunder, without the necessity of any
appointment or other action, provided the Trustee does not resign and is
not removed.
13.18 Enforcement of Provisions. To the extent permitted by applicable
law, the Employer and the Administrator shall have the exclusive right to
enforce any and all provisions of this Agreement on behalf of all Employees
or former Employees of the Employer or their Beneficiaries or other persons
having or claiming to have an interest in the Trust Fund or under the Plan.
In any action or proceeding affecting the Trust Fund or any property
constituting a part or all thereof, or the administration thereof or for
instructions to the Trustee, the Employer, the Administrator and the
Trustee shall be the only necessary parties and shall be solely entitled to
any notice of process in connection therewith; any judgment that may be
entered in such action or proceeding shall be binding and conclusive on all
persons having or claiming to have any interest in the Trust Fund or under
the Plan.
13.19 Voting and Other Powers.
(a) Except as otherwise provided in subsection (b), the Trustee
shall deliver, or cause to be executed and delivered, to the Administrator,
or to such individuals designated by the Administrator, all notices,
prospectuses, financial statements, proxies and proxy soliciting materials
received by the Trustee relating to securities held by the Trust. The
Administrator shall deliver these to the individuals entitled to make
investment decisions pursuant to Section 13.02 hereof (if the Adoption
Agreement so provides this may be the Participant or a Beneficiary) to the
extent that the Administrator has decided to pass-through voting to such
individuals. Each individual, including the Administrator, with voting
rights, is hereby designated a "named fiduciary," within the meaning of
Section 402(a)(2) and 403(a)(1) of the Act, with respect to the Accounts
over which he or she may exercise voting rights. With respect to proxies,
proxy solicitation materials, and other voting matters, the Trustee shall
vote securities held by the Trust in accordance with the written
instructions (as expressed in a properly completed and executed proxy) of
the Administrator or of the individuals entitled to make investment
decisions pursuant to Section 13.02 as expressed in a properly completed
and executed proxy. Such instructions shall be delivered to the Trustee by
the Administrator, or such person designated by the Administrator. With
respect to securities issued by the Employer, voting instructions shall be
delivered directly to the Trustee by the individuals entitled to make
investment decisions with respect to such securities and the Trustee shall
maintain the confidentiality, and shall not disclose the contents, of any
such vote except as otherwise required by law or a court of competent
jurisdiction. The Trustee and the Administrator may establish a procedure
whereby any votes relating to securities issued by the Employer are
delivered by the Administrator to the Trustee provided that the contents of
such votes are not made known to the Administrator. If, however, the
Trustee has not received instructions with respect to how to vote given
securities at least five full business days (or such shorter period as the
Trustee, in its discretion, may determine) prior to the meeting at which
such securities are to be voted, the Trustee shall not vote such securities
unless otherwise required by law.
(b) Voting and Tender Rights of Participants with respect to
Common Stock in the Company Stock Fund.
--------------------------------------------------------
(i) Each Participant shall be entitled to instruct the
Trustee as to the manner in which his or her proportionate interest in
shares of Common Stock held in the Company Stock Fund shall be voted on
each matter brought before an annual or special stockholders' meeting of
CHS. Before each such meeting of stockholders, CHS or the Employer shall
cause to be furnished to each Participant a copy of any proxy solicitation
material, together with a form requesting confidential instructions on how
such Participant's proportionate interest in such shares shall be voted on
each such matter. Upon timely receipt of such instructions, the Trustee
shall on each such matter vote as instructed a number of such shares
(including fractional shares) representing such Participant's proportionate
interest in the Company Stock Fund. The instructions received by the
Trustee from Participants shall be held by the Trustee in confidence and
shall not be divulged or released to any person, including officers or
Employees of CHS, the Employer or any of their affiliates. Shares of Common
Stock held by the Trustee as to which no instructions are received shall be
voted by the Trustee in the same proportion as the shares of Common Stock
as to which instructions have been received.
(ii) Each Participant shall be entitled to direct the
Trustee to exercise any rights in his or her proportionate interest in
shares of Common Stock held in the Company Stock Fund as to the manner in
which to respond to a tender or exchange offer for shares of such Common
Stock. Each of CHS and the Employer shall (i) use its best efforts to
timely distribute or cause to be distributed to each Participant such
information as will be distributed to stockholders of CHS in connection
with any such tender or exchange offer and (ii) advise Participants that
the failure to provide instructions as to the tendering or exchange of any
shares of Common Stock shall cause such shares not to be tendered or
exchanged. Upon timely receipt of such written direction, the Trustee shall
respond as directed with respect to a number of such shares (including
fractional shares) representing all of such Participant's proportionate
interest in the Company Stock Fund. The directions received by the Trustee
from Participants shall be held by the Trustee in confidence and shall not
be divulged or released to any person, including officers or Employees of
CHS, the Employer or any of their affiliates. Shares of Common Stock held
by the Trustee as to which no instructions are received shall not be
tendered or exchanged by the Trustee. For purposes of this Section 13.19, a
Participant shall include a former Participant.
(iii) For purposes of this Section 13.19, each Participant
who is entitled to give such instructions shall be deemed a "named
fiduciary" (within the meaning of the Employee Retirement Income Security
Act of 1974) with respect to such instructions.
13.20 Applicability to Loan Trustee. Where appropriate, the foregoing
provisions of this Article shall apply to the Loan Trustee on the same
basis as if the Loan Trustee were the Trustee.
13.21 Applicability to Other Trust. The provisions of this Article
XIII shall apply with respect to a separate trust which is created hereby
but shall not apply to a separate trust created pursuant to a separate
trust agreement.
ARTICLE XIV. ADMINISTRATION
--------------
14.01 Appointment of Administrator. From time to time, the Employer
may, by identifying such person(s) in writing to both the Trustee and the
Participants, appoint one or more persons as Administrator (hereinafter
referred to in the singular). Such Administrator shall have all power and
authority necessary to carry out the terms of the Plan. A person appointed
as Administrator may also serve in any other fiduciary capacity, including
that of Trustee, with respect to the Plan. The Administrator may resign
upon 15 days' advance written notice to the Employer, and the Employer may
at any time revoke the appointment of the Administrator with or without
cause. The Employer shall exercise the power and fulfill the duties of the
Administrator if at any time an Administrator has not been properly
appointed in accordance with this Section or the position is otherwise
vacant.
14.02 Named Fiduciaries. The "Named Fiduciaries" within the meaning of
the Act shall be the Administrator, each Trustee and each Participant and
Beneficiary with voting rights and/or investment rights.
14.03 Allocation of Responsibilities. Responsibilities under the Plan
shall be allocated among the Trustee, the Administrator and the Employer as
follows:
(a) Trustee: The Trustee shall have exclusive responsibility to
hold, manage and invest, pursuant to instructions communicated to it in
accordance with Section 13.02 above, the funds received by it subject to
the powers granted to it under Article XIII hereof. Notwithstanding the
preceding sentence, to the extent that loans are made to Participants in
accordance with Article XII hereof, the Trustee shall not be responsible
for management of the portion of Trust assets subject to such loans and the
Loan Trustee shall be responsible for administering such Trust assets in
accordance with provisions of Article XII.
(b) The Administrator: The Administrator shall have the
responsibility and authority to control the operation and administration of
the Plan in accordance with its terms including, without limiting the
generality of the foregoing, (i) any investment decisions assigned to it
under the Adoption Agreement or the Plan or transmission to the Trustee of
any Participant investment decision under Section 13.02; (ii)
interpretation of the Plan, conclusive determination of all questions of
eligibility, status, benefits and rights under the Plan and certification
to the Trustee of all benefit payments under the Plan; (iii) hiring of
persons to provide necessary services to the Plan not provided by
Employees; (iv) preparation and filing of all statements, returns and
reports required to be filed by the Plan with any agency of government; (v)
compliance with all disclosure requirements of all state or federal law;
(vi) maintenance and retention of all Plan records as required by law,
except those required to be maintained by the Trustee; and (vii) all
functions otherwise assigned to it under the terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of
the Plan, as adopted or amended, the designation of the Administrator and
each Trustee (and, if appropriate, the Loan Trustee) as provided in the
Plan, the delivery to the Administrator and the Trustee of employee
information necessary for operation of the Plan (including, without
limitation, dates of birth, hire, and death; compensation amounts; and
dates of death of beneficiaries), the timely making of the Employer
Contributions pursuant to Articles IV and VII, and the exercise of all
functions provided in or necessary to the Plan except those assigned in the
Plan to other persons.
(d) This Section is intended to allocate individual
responsibility for the prudent execution of the functions assigned to each
of the Trustees, the Loan Trustee, the Administrator and the Employer and
none of such responsibilities or any other responsibility shall be shared
among them unless specifically provided in the Plan. Whenever one such
person is required by the Plan to follow the directions of another, the two
shall not be deemed to share responsibility, but the person who gives the
direction shall be responsible for giving it and the responsibility of the
person receiving the direction shall be to follow it insofar as it is on
its face proper under applicable law.
14.04 More Than One Administrator. If more than one individual is
appointed as Administrator, such individuals shall either exercise the
duties of the Administrator in concert, acting by a majority vote or
allocate such duties among themselves by written agreement delivered to the
Employer and the Trustee. In such a case, the Trustee may rely upon the
instruction of any one of the individuals appointed as Administrator
regardless of the allocation of duties among them.
14.05 No Compensation. The Administrator shall not be entitled to
receive any compensation from the funds held under the Plan for its
services in that capacity unless so determined by the Employer or required
by law.
14.06 Record of Acts. The Administrator shall keep a record of all its
proceedings, acts and decisions, and all such records and all instruments
pertaining to Plan administration shall be subject to inspection by the
Employer at any time. The Employer shall supply, and the Administrator may
rely on the accuracy of, all Employee data and other information needed to
administer the Plan.
14.07 Bond. The Administrator shall be required to give bond for the
faithful performance of its duties to the extent, if any, required by the
Act, the expense to be borne by the Employer.
14.08 Agent for Service of Legal Process. The Administrator shall be
agent for service of legal process on the Plan.
14.09 Rules. The Administrator may adopt or amend and shall publish to
the Employees such rules and forms for the administration of the Plan, and
may employ or retain such attorneys, accountants, physicians, investment
advisors, consultants and other persons to assist in the administration of
the Plan as it deems necessary or advisable.
14.10 Delegation. To the extent permitted by applicable law, the
Administrator may delegate all or part of its responsibilities hereunder
and at any time revoke such delegation, by written statement communicated
to the delegate and the Employer. The Trustee may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review
the performance of all such delegates.
14.11 Claims Procedure. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established
by the Administrator and published to the Participants and Beneficiaries.
(a) Manner of Making Claim. A claim for benefits by a Participant
or Beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or
by course of conduct waives such requirements.
(b) Notice of Reason for Denial. If an effective claim is wholly
or partially denied, the Administrator shall furnish such Participant or
Beneficiary with written notice of the denial within 60 days after the
original claim was filed. This notice of denial shall set forth in a manner
calculated to be understood by the claimant (i) the reason or reasons for
denial, (ii) specific reference to pertinent plan provisions on which the
denial is based, (iii) a description of any additional information needed
to perfect the claim and an explanation of why such information is
necessary, and (iv) an explanation of the Plan's claims procedure.
(c) The Participant or Beneficiary shall have 60 days from
receipt of the denial notice in which to make written application for
review by the Administrator. The Participant or Beneficiary may request
that the review be in the nature of a hearing. The Participant or
Beneficiary shall have the rights (i) to have representation, (ii) to
review pertinent documents, and (iii) to submit comments in writing.
(d) The Administrator shall issue a decision on such review
within 60 days after receipt of an application for review, except that such
period may be extended for a period of time not to exceed an additional 60
days if the Administrator determines that special circumstances (such as
the need to hold a hearing) requires such extension. The decision on review
shall be in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant, and
specific references to the pertinent Plan provisions on which the decision
is based.
(e) The Employer shall indemnify and hold harmless the
Administrator, if the Administrator is not the Employer, and any employees
of the Employer who performs the function of the Administrator for the
Employer, if the Administrator is the Employer, (collectively, an
"Indemnitee"), from any and all claims, loss, damages, expenses (including
reasonable counsel fees approved by the Employer) and liability (including
any reasonable amounts paid in settlement with the Employer's approval),
arising from any act or omission of such Indemnitee, except when the same
is judicially determined to be due to the willful misconduct or gross
negligence of such Indemnitee.
ARTICLE XV. FEES AND EXPENSES
-----------------
All reasonable fees and expenses of the Administrator or Trustee
incurred in the performance of their duties hereunder or under the Trust
may be paid by the Employer; and to the extent not so paid by the Employer,
said fees and expenses shall be deemed to be an expense of the Trust and
shall be charged against the assets of the Trust, including any forfeitures
that have not been reallocated or applied to reduce Employer Contributions.
In addition, if the Plan permits Participant-directed investment of
Accounts, expenses that are allocable to the Accounts of specific
Participants shall be charged against the respective Participants' Accounts
in accordance with procedures adopted by the Administrator from time to time.
ARTICLE XVI. BENEFIT RECIPIENT INCOMPETENT
OR DIFFICULT TO ASCERTAIN OR LOCATE
------------------------------------------
16.01 Incompetency. If any portion of the Trust Fund becomes
distributable to a minor or to a Participant or Beneficiary who, as
determined in the sole discretion of the Administrator, is physically or
mentally incapable of handling his or her financial affairs, the
Administrator may direct the Trustee to make such distribution either to
the legal representative or custodian of the incompetent or to apply such
distribution directly for the incompetent's support and maintenance.
Payments which are made in good faith shall completely discharge the
Employer, Administrator and Trustee from liability therefor.
16.02 Difficulty to Ascertain or Locate. If it is impossible or
difficult to ascertain or locate the person who is entitled to receive any
benefit under the Plan, the Administrator in its discretion may direct that
such benefit (a) be retained in the Trust, (b) be paid to a court pending
judicial determination of the right thereto, or (c) be forfeited and
reallocated pursuant to the provisions of Section 8.02(a)(i) or (ii) above,
as the case may be, provided that as a result the Employer shall incur an
obligation to restore the individual's Account balance or otherwise pay the
individual his or her benefit if the individual is subsequently ascertained
or located.
ARTICLE XVII. DESIGNATION OF BENEFICIARY
--------------------------
Each Participant and Beneficiary may submit a properly executed
Designation of Beneficiary to the person designated under this Article XVII
to keep such records. In order to be effective, such designation must have
been properly executed and submitted to the appropriate person before the
death of the Participant or Beneficiary, as the case may be; and, for a
Participant who is survived by his or her Spouse, unless the Participant
leaves 100% of his or her benefit to such Spouse, must be accompanied, or
preceded, by the consent of such Spouse. Such consent of the Spouse must
(a) be in writing; (b) acknowledge that the effect of such consent is that
the Spouse may receive no benefits under the Plan; (y) be witnessed by a
Plan representative or a notary public; and (c) be either (i) a limited
consent to the payment of death benefits to a specific person or persons or
(ii) expressly permit the Participant to designate another person or other
persons without obtaining further consent of the Spouse. The last effective
Designation accepted by the appropriate person shall be controlling, and
whether or not fully dispositive of the Participant's Account, thereupon
shall revoke all Designations previously submitted by the Participant or
Beneficiary, as the case may be. If a Participant's Beneficiary(ies)
predeceases the Participant, the remaining living Beneficiary(ies) shall
receive their proportionate share of the Participant's Account as if such
deceased Beneficiary(ies) had never been designated. Similar rules shall
apply with respect to contingent Beneficiaries. Each such executed
Designation is hereby specifically incorporated herein by reference and
shall be construed and enforced in accordance with the laws of the state in
which the Trustee has its principal place of business. The Administrator
shall be the person responsible for accepting and safekeeping Designation
of Beneficiary Forms unless the Trustee agrees in writing to accept and
safekeep such forms.
ARTICLE XVIII. SPENDTHRIFT PROVISION AND DISTRIBUTIONS
PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS
------------------------------------------------------
18.01 General Spendthrift Rule. No interest of any Participant or
Beneficiary shall be assigned, anticipated or alienated in any manner nor
shall it be subject to attachment, to bankruptcy proceedings or to any
other legal process or to the interference or control of creditors or
others, except (a) to the extent that Participants may secure loans from
the Trust with their Accounts pursuant to Article XII hereof and (b)
pursuant to Section 18.02 hereof.
18.02 Account Division and Distribution Pursuant to Qualified Domestic
Relations Orders. A Participant's vested Account may be assigned pursuant
to a qualified domestic relations order as defined in Code Section 414(p).
If, and to the extent that, any portion of a Participant's vested Account
is payable to an alternate payee pursuant to a qualified domestic relations
order within the meaning of Sections 401(a)(13)(B) and 414(p) of the Code,
the provisions of said order shall govern the payment thereof. An order
shall not fail to constitute a qualified domestic relations order within
the meaning of Sections 401(a)(13)(B) and 414(p) of the Code if the order
provides for a payment to be made to an alternate payee prior to the time
the Participant would be entitled to receive a benefit payment hereunder.
The Administrator shall be responsible for determining whether an order
constitutes a qualified domestic relations order.
ARTICLE XIX. NECESSITY OF QUALIFICATION
--------------------------
This Plan is established with the intent that it shall qualify under
Code Section 401(a) as that Section exists at the time the Plan is
established. If the Plan as adopted by the Employer fails to attain such
qualification, the Plan will no longer participate in the relevant
sponsor's prototype 401(k) plan and will be considered an individually
designed plan. If the Plan as adopted by the Employer fails to attain or
retain such qualification, the Employer shall promptly either amend the
Plan under Code Section 401(b) so that it does qualify, or direct the
Trustee to terminate the Trust, and distribute all the assets of the Trust
equitably among the contributors thereto in proportion to their
contributions, and the Plan and Trust shall be considered to be rescinded
and of no force and effect.
ARTICLE XX. AMENDMENT AND TERMINATION
-------------------------
20.01 Amendment or Termination by the Employer. The Employer by action
of the Board of Directors, other governing board, general partner or sole
proprietor, as the case may be, may at any time, and from time to time
amend this Prototype Plan and the Adoption Agreement (including a change in
any election it has made in the Adoption Agreement), or suspend or
terminate this Plan by giving written notice to the Trustee, but the Trust
may not thereby be diverted from the exclusive benefit of the Participants,
their Beneficiaries, survivors or estates, or the administrative expenses
of the Plan, nor revert to the Employer, nor may an allocation or
contribution theretofore made be changed thereby, nor may any amendment
directly or indirectly deprive a Participant of such Participant's
nonforfeitable rights to benefits accrued to the date of the amendment.
No amendment to the Plan shall be effective to the extent that it
would have the effect of decreasing a Participant's Account balance or
eliminating an optional form of distribution. Notwithstanding the preceding
sentence, a Participant's Account balance may be reduced to the extent
permitted under Code Section 412(c)(8). Furthermore, if the vesting
schedule of the Plan is amended, in the case of an Employee who is a
Participant as of the later of the date such amendment is adopted or the
date it becomes effective, the nonforfeitable percentage (determined as of
such date) of such Employee's right to his Employer-derived Account balance
will not be less than his percentage computed under the Plan without regard
to such amendment.
The Employer may (a) change the choice of options in the Adoption
Agreement, (b) add overriding language in the Adoption Agreement when such
language is necessary to satisfy the requirements of Code Section 415 or to
avoid duplication of minimum benefits or accruals under Code Section 416
because of the required aggregation of multiple plans, or (c) adopt a model
amendment published by the Internal Revenue Service which specifically
provides that the adoption of such a model amendment will not cause the
Plan to be treated as an individually designed plan. Any other amendment by
the Employer will constitute a substitution by the Employer of an
individually designed plan for the sponsor's prototype plan. After such an
amendment, the Plan shall no longer participate in the sponsor's prototype
plan and the general amendment procedure of the Internal Revenue Service
governing individually designed plans will be applicable.
If an amendment changing the vesting schedule is executed (including
execution of this Adoption Agreement as an amendment to an existing plan),
Participants with three or more Vesting Years (five or more Vesting Years
for Participants who have not been credited with an Hour of Service in a
Plan Year beginning after December 31, 1988) before the expiration of the
election period described in the next sentence shall have the right to
elect the vesting schedule in effect on the day before the election period.
The election period shall commence on the date the amendment is adopted and
end on the latest of (x) 60 days after the amendment is adopted, (y) 60
days after the Effective Date, or (z) 60 days after the Participant is
issued written notice of the amendment by the Administrator. Failure to so
elect shall be treated as a rejection and such election or rejection shall
be final.
Nothing contained herein shall constitute an agreement or
representation by any Sponsor or the Distributor that it will continue to
maintain its sponsorship of the Plan indefinitely.
20.02 Delegation. The Employer hereby delegates to the Sponsor the
authority to amend so much of the Adoption Agreement and this Prototype
401(k) Plan as is in prototype form and, to the extent to which the
Employer could effect such amendment, the Employer shall be deemed to have
consented to any amendment so made. When an election within the prototype
form has been made by the Employer, it shall be deemed to continue after
amendment of the prototype form unless and until the Employer expressly
further amends the election, notwithstanding that the provision for the
election in the amended prototype form is in a different form or place;
provided, however, that if the amended form inadvertently fails to provide
means to duplicate exactly the earlier election, such earlier election
shall continue until such further amendment. The immediately preceding
sentence is subject to the qualification that each Employer hereby
delegates to the Sponsor, in the event of such an amendment of the
prototype form, authority to determine conclusively that such a
continuation of an earlier election by the Employer is not advisable and to
make the election for the Employer in the amended prototype form which in
the judgment of the Sponsor most nearly corresponds with the election made
by the Employer before the amendment of the prototype form, provided the
following procedure is followed: the election for the Employer may be made
with respect to any specified Employers as to whom it may be made
applicable singly, or such election may be made with respect to all
Employers as to whom it may be made applicable as a group; and the election
shall be made as of an effective date which has been specified in a notice
mailed or delivered, at the last address(es) of the Employer(s) on the
records of the Distributor, to the Employer(s) at least 20 days before the
end of the remedial amendment period. Such notice may be mailed to
Employers to whom it cannot be applicable by reason of a previous election
made by the Employer or otherwise, but it shall be effective only as to
those Employers who have received the notice and have not themselves made a
new election with respect to that item since the amendment of the prototype
form and previous to the effective date of such election by the Sponsor. In
the case of a mass submitter plan, the Sponsor delegates its authority to
make elections, or to make amendments, to the mass submitter who shall make
such elections or amendments on behalf of the Sponsor and the Sponsor shall
be deemed to have consented to any such election or amendment so made. The
foregoing delegations of authority to make elections, or to make
amendments, shall not impose any duty on the Sponsor or, if applicable, the
mass submitter to make a given election or amendment and shall not affect
the interpretation of the Plan if any so delegated authority is not used.
20.03 Distribution of Accounts Upon Termination. Upon termination or
partial termination of the Plan or complete discontinuance of Employer
Contributions under it, the rights of all Participants (or, in the case of
a partial termination, the Participants affected thereby) to amounts
theretofore credited to their Accounts under the Plan shall be fully vested
and nonforfeitable. Upon any such termination or discontinuance, the
Administrator shall determine whether to pay the interests of Participants,
and Beneficiaries immediately, to retain such interest in the Trust and pay
them in the future according to Articles IX and X (or Article XXIV, if
applicable) or to use what other methods the Administrator deems advisable
in order to furnish whatever benefits the Trust will provide; provided any
such distributions pursuant to this Section shall comply with the
requirements of Articles IX or X (or Article XXIV, if applicable) hereof.
ARTICLE XXI. TRANSFERS
---------
Nothing contained herein shall prevent the merger or consolidation of
the Plan with, or transfer of assets or liabilities of the Plan to, another
plan meeting the requirements of Code Section 401(a) or the transfer to the
Plan of assets or liabilities of another such plan so qualified under the
Code. Any such merger, consolidation or transfer shall be accompanied by
the transfer of such existing records and information as may be necessary
to properly allocate such assets among Participants, including any tax or
other information necessary for the Participants or persons administering
the plan which is receiving the assets. The terms of such merger,
consolidation or transfer must be such that if this Plan is then
terminated, the requirements of Section 20.01 hereof would be satisfied and
each Participant would receive a benefit immediately after the merger,
consolidation or transfer equal to or greater than the benefit he or she
would have received if the Plan had terminated immediately before the
merger, consolidation or transfer. If this Plan is a transferee plan with
respect to all or a portion of a Participant's Account, the optional forms
of distribution described in Article X shall include any optional form of
distribution which the Participant could have elected under the transferor
plan and which would otherwise comply with the provisions of this Plan.
ARTICLE XXII. OWNER-EMPLOYEE PROVISIONS
-------------------------
22.01 Purpose of Section. This Section is intended to insure that the
Plan complies with Code Section 401(d). Any ambiguity herein will be
construed to that end, and this Article will override any other provision
of the Plan with which it may be inconsistent.
22.02 Control. For purposes of this Article, "Control" means the
ownership directly or indirectly of the entire interest in an
unincorporated trade or business or more than 50% of either the capital
interest or the profits interest in a partnership. For the purposes of
applying the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are considered to
Control.
22.03 Limitations. No benefits shall be provided to an Owner-Employee
under this Plan unless:
---------------------------------------------------------------
(a) if an Owner-Employee or group of Owner-Employees Controls the
trade or business covered by this Plan and also Control as an
Owner-Employee or Owner-Employees one or more other trades or businesses,
this Plan and the plans established for such other trades or businesses,
when taken together, form a single plan which satisfies the requirements of
Code Sections 401(a) and (d) with respect to the employees of all the
controlled trades or businesses;
(b) if an Owner-Employee or group of Owner-Employees Controls
another trade or business but does not Control the trade or business
covered by this Plan, the employees of such other trades or businesses are
included in a plan which satisfies the requirements of Sections 401(a) and
(d) of the Code and which provides contributions and benefits for such
employees which are not less favorable than those provided for
Owner-Employees under this Plan; and
(c) if an Owner-Employee is covered under the qualified
retirement plans of two or more trades or businesses which he or she does
not Control and the Owner-Employee Controls a trade or business,
contributions or benefits for the employees under the plan of the trade or
business which the Owner-Employee Controls are not less favorable than
those provided for the Owner-Employee in the most favorable qualified
retirement plan of the trade(s) or business(es) which the Owner-Employee
does not Control.
ARTICLE XXIII. TOP-HEAVY PROVISIONS
--------------------
23.01 Purpose of Section. This Article is intended to insure that the
Plan complies with Code Section 416. If the Plan is or becomes Top-Heavy in
any Plan Year, the provisions of this Section will supersede any
conflicting provision in the Plan.
23.02 Definitions. The terms used in this Section shall have the
following meanings:
----------------------------------------------------------
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination
period was (i) an officer of the Employer having an annual compensation
greater than 50% of the amount in effect under Code Section 415(b)(1)(A)
for the Plan Year (subject to the limitation that no more than the lesser
of (A) 50 Employees or (B) the greater of 3 Employees or 10% of the
Employees shall be deemed to be officers), (ii) an owner (or considered an
owner under Code Section 318) of 1 of the 10 largest interests in the
Employer if both such individual was an owner of more than a .5% interest
in the Employer (aggregated with the Employer for this purpose are all
members of (A) a controlled group of corporations (as defined in Code
Section 414(b) as modified by Code Section 415(h)), (B) commonly controlled
trades or businesses (whether or not incorporated) (as defined in Code
Section 414(c) as modified by Code Section 415(h)), or (C) affiliated
service groups (as defined in Code Section 414(m)) of which the Employer is
a part) and such individual's compensation exceeds the dollar limitation
under Code Section 415(c)(1)(A), (iii) a 5% owner of the Employer, or (iv)
a 1-percent owner of the Employer who has an annual compensation of more
than $150,000. The determination period is the Plan Year containing the
Determination Date and the 4 preceding Plan Years. The determination of who
is a Key Employee will be made in accordance with Code Section 416(i)(1)
and the regulations thereunder.
(b) Top-Heavy Plan. This Plan is Top-Heavy if any of the
following conditions exist:
(i) If the Top-Heavy Ratio for this Plan exceeds 60% and
this Plan is not part of any Required Aggregation Group or Permissive
Aggregation Group of plans.
(ii) If this Plan is a part of a Required Aggregation Group
of plans but not part of a Permissive Aggregation Group and the Top-Heavy
Ratio for the Required Aggregation Group of plans exceeds 60%.
(iii) If this Plan is a part of a Required Aggregation Group
and part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio
for the Permissive Aggregation Group exceeds 60%.
(c) Top-Heavy Ratio.
---------------
(i) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee Pension Plan within
the meaning of Code Section 408(k)) and the Employer has not maintained any
defined benefit plan which during the five-year period ending on the
Determination Date(s) has or has had accrued benefits, Top-Heavy Ratio for
this Plan alone or for the Required Aggregation Group or Permissive
Aggregation Group, as appropriate, is a fraction, the numerator of which is
the sum of the account balances under all of the plans as of the
Determination Date(s) (including any part of any account balance
distributed in the five-year period ending on the Determination Date(s)) of
all Key Employees who have received compensation from the Employer (other
than benefits under a qualified retirement plan) at any time during the
five-year period ending on the Determination Date(s), and the denominator
of which is the sum of all account balances as of the Determination Date(s)
(including any part of any account balance distributed in the five-year
period ending on the Determination Date(s)), of all Participants who have
received compensation from the Employer (other than benefits under a
qualified retirement plan) at any time during the five-year period ending
on the Determination Date(s). Both the numerator and denominator of the
fraction shall be computed in accordance with Code Section 416 and the
Treasury Regulations promulgated thereunder. In addition, both the
numerator and denominator of the Top-Heavy Ratio shall be increased to
reflect any contribution which is not actually made as of the Determination
Date(s), but which is required to be taken into account on that date under
Code Section 416 and the Treasury Regulations promulgated thereunder.
(ii) If the Employer maintains one or more defined
contribution plans (including any Simplified Employee Pension Plan within
the meaning of Code Section 408(k)) and the Employer maintains or has
maintained one or more defined benefit plans which during the five-year
period ending on the Determination Date(s) has or has had accrued benefits,
the Top-Heavy Ratio for any Required Aggregation Group or Permissive
Aggregation Group, as appropriate, is a fraction, the numerator of which is
the sum of (A) account balances under the defined contribution plans as of
the Determination Date(s) (including any part of any account balance
distributed in the five-year period ending on the Determination Date(s)) of
all Key Employees who have received compensation from the Employer (other
than benefits under a qualified retirement plan) at any time during the
five-year period ending on the Determination Date(s) and (B) the present
value of accrued benefits under the defined benefit plans for all Key
Employees, who have received compensation from the Employer (other than
benefits under a qualified retirement plan) at any time during the
five-year period ending on the Determination Date(s) and the denominator of
which is the sum of (A) the account balances under the defined contribution
plans as of the Determination Date(s) (including any part of any account
balance distributed in the five-year period ending on the Determination
Date(s)) of all participants who have received compensation from the
Employer (other than benefits under this Plan) at any time during the
five-year period ending on the Determination Date(s) and (B) the present
value of accrued benefits under the defined benefit plans for all
participants who have received compensation from the Employer (other than
benefits under this Plan) at any time during the five-year period ending on
the Determination Date(s). Both the numerator and denominator of the
fraction shall be computed in accordance with Code Section 416 and Treasury
Regulations promulgated thereunder. In addition, both the numerator and
denominator of the Top-Heavy Ratio shall be increased for aggregate
distribution(s) of an account balance or an accrued benefit made during the
five-year period ending on the Determination Date(s) and any contribution
to a defined contribution plan not actually made as of the Determination
Date(s), but which is required to be taken into account on that date under
Code Section 416 and the Treasury Regulations promulgated thereunder.
(iii) For purposes of (i) and (ii) above, the value of
account balances and the present value of accrued benefits will be
determined as of the most recent Valuation Date that falls within, or ends
with, the 12-month period ending on the Determination Date, except as
provided in Code Section 416 and the Treasury Regulations promulgated
thereunder for the first and second plan years of a defined benefit plan.
The account balances and accrued benefits of a Participant who has not been
credited with at least one Hour of Service at any time during the five-year
period ending on the Determination Date, will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to which distributions,
rollovers, and transfers are taken into account will be made in accordance
with Code Section 416 and the Treasury Regulations promulgated thereunder.
Deductible employee contributions under any qualified plan maintained by
the Employer will not be taken into account for purposes of computing the
Top-Heavy Ratio. When aggregating plans the value of account balances and
accrued benefits will be calculated with reference to the Determination
Dates that fall within the same calendar year.
For Plan Years commencing after December 31, 1986 for the purpose of
determining the Top-Heavy Ratio, if any target benefit or defined benefit
plan is included in the Required Aggregation Group, the accrued benefit of
an Employee other than a Key Employee shall be determined under the method
that uniformly applies for accrual purposes under all qualified retirement
plans maintained by the Employer, or if there is no such method, as if such
benefit accrued not more rapidly than the slowest accrual rate permitted
under the fractional accrual rate of Code Section 411(b)(1)(C).
(d) Permissive Aggregation Group. The Required Aggregation Group
of plans plus any other plan or plans of the Employer which, when
considered as a group with the Required Aggregation Group, would continue
to satisfy the requirements of Code Sections 401(a)(4) and 410.
(e) Required Aggregation Group. (i) Each qualified plan of the
Employer in which at least one Key Employee participates or participated at
any time during the determination period (regardless of whether the plan
has terminated), and (ii) any other qualified plan of the Employer which
enables a plan described in (i) to meet the requirements of Code Sections
401(a)(4) or 410.
(f) Determination Date. For any Plan Year subsequent to the first
Plan Year, the Determination Date shall be the last day of the preceding
Plan Year. For the first Plan Year of the Plan, the Determination Date
shall be the last day of that year.
(g) Valuation Date. Shall be the last day of the Plan Year.
(h) Present Value. Present Value shall be based only on the
interest rate and the mortality table specified by the Employer in the
Adoption Agreement.
23.03 Minimum Allocation.
------------------
(a) In any Plan Year in which this Plan is Top-Heavy, except as
otherwise provided in subsections (c) and (d) below, the Employer
Contributions and forfeitures allocated, or during a Plan Year which begins
after December 31, 1988, Employer Profit Sharing Contributions and
forfeitures allocated to the Participant's Employer Profit Sharing
Contribution Account, on behalf of any Participant who is not a Key
Employee shall not be less than the lesser of 3% of such Participant's
Compensation or, in the case where the Employer has no defined benefit plan
which designates this Plan to satisfy Code Section 401, the largest
percentage of Employer Contributions and forfeitures stated as a percentage
of a Key Employee's Compensation, allocated on behalf of any Key Employee
for that Plan Year. The minimum allocation is determined without regard to
any Social Security contribution by the Employer. Salary Reduction
Contributions, Employer Matching Contributions and Qualified Matching
Contributions may not be taken into account to satisfy this minimum
allocation. This minimum allocation shall be made even though, under other
provisions of this Plan, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser allocation for the
year because (i) the Participant failed to complete the number of Hours of
Service specified in the Adoption Agreement for receiving an allocation,
(ii) the Participant's Compensation was less than a stated amount, or (iii)
the Participant made insufficient mandatory contributions to receive an
Employer Matching Contribution.
(b) For purposes of computing the minimum allocation,
"Compensation" shall have the same meaning as in Section 5.05(b) hereof.
(c) The provision in subsection (a) above shall not apply to any
Participant who was not employed by the Employer on the last day of the
Plan Year.
(d) The provision in subsection (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan
or plans of the Employer, and the Employer has provided in the Adoption
Agreement that the minimum allocation or benefit requirement applicable to
Top-Heavy Plans will be met in such other plan or plans.
23.04 Nonforfeitability of Minimum Allocation. The minimum allocation
required (to the extent required to be nonforfeitable under Code Section
416(b)) may not be forfeited under Code Section 411(a)(3)(B) or
411(a)(3)(D).
23.05 Limitation on Compensation. For Plan Years beginning after
January 1, 1994, only the first $150,000 (or such other amount as may be
prescribed by the Secretary of the Treasury or his or her delegate) of a
Participant's Compensation for the Plan Year shall be taken into account
for purposes of allocating Employer Contributions under this Article XXIII.
23.06 Minimum Vesting Schedule. Unless the Employer has specified a
more rapid vesting schedule in the Adoption Agreement, for any Plan Year in
which this Plan is Top-Heavy, the following minimum vesting schedule shall
apply:
Vesting Years Nonforfeitable Percentage of
Employer Profit Sharing and
Matching Contribution Accounts
-------------------------------------------------------------------
1 0%
2 20
3 40
4 60
5 80
6 or more 100
The minimum vesting schedule applies to all benefits within the
meaning of Code Section 411(a)(7) attributable to Employer Contributions
and forfeitures, including benefits accrued before the effective date of
Code Section 416 and benefits accrued before the Plan became Top-Heavy.
Further, no reduction in a Participant's nonforfeitable percentage may
occur in the event the Plan's status as Top-Heavy changes for any Plan
Year. If conversion of the Plan into a Top-Heavy Plan has resulted in a
change of the Plan's vesting schedule to the minimum vesting schedule
discussed above, the change shall be treated as an amendment to the Plan
and the election referred to in Section 20.01 hereof shall apply. This
Section does not apply to the Employer Profit Sharing Contribution Account
and Employer Matching Contribution Account balances of any Participant who
does not have an Hour of Service after the Plan has initially become
Top-Heavy and such Participant's vested Employer Profit Sharing
Contribution Account and Employer Matching Contribution Account balance
will be determined without regard to this Section.
23.07 Effect on Code Section 415 Limitations. Notwithstanding anything
to the contrary in Article V above, the following provisions apply if the
Plan is Top-Heavy:
(a) In any Plan Year in which the Top-Heavy Ratio exceeds 90%
(and the Plan therefore becomes super Top-Heavy) the denominators of the
Defined Benefit Fraction (as defined in Section 5.05(c) above) and the
Defined Contribution Fraction (as defined in Section 5.05(d) above) shall
be computed using 100% of the dollar limitation stated therein instead of
125%.
(b) In any Plan Year in which the Top-Heavy Ratio exceeds 60%,
but is less than 90%, the denominators of the Defined Benefit Fraction (as
defined in Section 5.05(c) above) and the Defined Contribution Fraction (as
defined in Section 5.05(e) above) shall be computed using 100% of the
dollar limitation described therein instead of 125%, unless the Employer
has specified in the Adoption Agreement that the minimum allocation
provisions of Section 23.03 above shall be computed using 4% of a
Participant's Compensation, in which case the dollar limitations of the
Defined Benefit Fraction (as defined in Section 5.05(c) above) and the
Defined Contribution Fraction (as defined in Section 5.05(e) above) shall
continue to be computed using 125% of the dollar limitations.
23.08 Termination of Top-Heavy Status. If the Plan ceases to be
Top-Heavy for any Plan Year and if the Employer has not specified otherwise
in the Adoption Agreement, the minimum vesting schedule described in
Section 23.06 shall continue to apply. If the Employer has specified in the
Adoption Agreement that, upon conversion of the Plan to non-Top-Heavy
status, Participants' vested benefits are to be determined according to a
schedule other than the minimum vesting schedule described in Section 23.06
hereof, such change in vesting schedules shall be treated as an amendment,
and the election referred to in Section 20.01 hereof shall apply.
ARTICLE XXIV. SPECIAL DISTRIBUTION RULES
--------------------------
24.01 Special Distribution Rules for Certain Participants. If (a) it
is determined that this Plan is a direct or indirect transferee (where such
transfer occurred after December 31, 1984) of a defined benefit plan, money
purchase pension plan (including a target benefit plan), stock bonus or
profit sharing plan which would otherwise provide a life annuity form of
payment with respect to a Participant (including a plan which was amended
into this Plan), (b) the Plan is amended so as to allow a participant to
elect to receive his or her benefits in the form of a life annuity and a
Participant elects to receive his or her benefits in such form, (c) the
Plan is amended to provide that absent a Qualified Election of a
Participant's surviving Spouse, someone other than the Participant's
surviving Spouse becomes entitled to the Participant's vested Account
balance, or (d) if someone other than the Participant's surviving Spouse is
the beneficiary of any insurance purchased with funds from the
Participant's Account, then the provisions of Sections 24.03 to 24.05 below
shall apply in lieu of Article IX above and Sections 10.01 and 10.02 above.
The Administrator shall specify in writing to the Trustee the Participants'
Accounts (or frozen amounts in such Accounts) to which the provisions of
Section 24.03 to 24.05 shall apply. For the purposes of determining whether
the provisions of this Article apply, the Trustee shall be entitled to rely
conclusively on written instructions, if any, received by the Trustee from
the Administrator concurrent with the transfer. Furthermore, where the
transfer is, or was, not accompanied by written instructions specifying
conditions under which specific provisions of this Article would apply, the
Trustee shall be entitled to conclusively presume that this Article does
not apply.
24.02 Definitions. For the purpose of this Section, the following
terms shall have the specified meanings:
(a) "Election Period" shall mean the period which begins on the
first day of the Plan Year in which the Participant attains age 35 and
which ends on the date of the Participant's death. If a Participant
separates from Service prior to the first day of the Plan Year in which he
or she attains age 35, the Election Period with respect to his or her
Vested Account Balance (as of his or her date of separation) shall begin on
his or her date of separation.
(b) "Qualified Election" shall mean a valid waiver of a Qualified
Joint and Survivor Annuity or Qualified Preretirement Survivor Annuity, as
the case may be. To be valid, the waiver must be in writing and
Participant's Spouse must consent to it in writing. The Spouse's consent to
the waiver (i) must be witnessed by a Plan representative or notary public
and (ii) must be (A) a general consent to the provision of a form (or
forms) of distribution to any alternative person (or alternative persons);
(B) a limited consent to the provision of a specific form (or specific
forms) of distribution to a specific alternate person (or specific
alternate persons); or (iii) a limited consent which is specific with
respect to form or alternative payee. Notwithstanding the foregoing consent
requirement, if the Participant establishes to the satisfaction of a Plan
representative that such written consent may not be obtained because there
is no Spouse or the Spouse cannot be located, a waiver will nonetheless be
deemed a Qualified Election. Any consent necessary for a Qualified Election
will be valid only with respect to the Spouse who signs the consent, or in
the event of a deemed Qualified Election, the Spouse whose consent could
not be obtained or who could not be located. Additionally, a revocation of
a prior waiver may be made by a Participant without the consent of the
Spouse at any time before the commencement of distributions or benefits.
The number of revocations shall be unlimited. Each such revocation shall
once again make the Qualified Joint and Survivor Annuity or Qualified
Preretirement Survivor Annuity applicable, as the case may be. No consent
obtained pursuant to this Section shall be valid unless the Participant has
received the relevant notice as provided in Sections 24.09 and 24.10.
(c) "Qualified Joint and Survivor Annuity" shall mean, in the
case of a married Participant, an annuity which can be purchased with the
Participant's Vested Account Balance for the life of the Participant with a
survivor annuity for the life of the Spouse equal to 50% of the amount of
the annuity which is payable during the joint lives of the Participant and
the Spouse. In the case of an unmarried Participant, Qualified Joint and
Survivor Annuity shall mean an annuity which can be purchased with a
Participant's Vested Account Balance for the life of the Participant.
(d) "Special Qualified Election" shall mean a valid waiver of a
Qualified Preretirement Survivor Annuity for the period beginning on the
date of such election and ending on the first day of the Plan Year in which
the Participant attains age 35. To be valid, the waiver must be (i) in
writing, (ii) made prior to the first day of the Plan Year in which the
Participant attains age 35, and (iii) preceded by a written explanation to
the Participant of the Qualified Preretirement Survivor Annuity in such
terms as are comparable to the explanation required by Section 24.09 and
24.10. Any election made pursuant to this Section shall be void as of the
first day of the Plan Year in which the Participant attains age 35 and
Qualified Preretirement Survivor Annuity coverage shall be automatically
reinstated as of such date. Any future election to waive the Qualified
Preretirement Survivor Annuity must be a Qualified Election.
(e) "Vested Account Balance" shall mean the Participant's vested
portion of his or her Account consisting of the sum of the balances of
Participant's Nondeductible Voluntary Contributions Account, Deductible
Voluntary Contribution Account, Rollover Account, Salary Reduction
Contributions Account, Deferred Cash Contribution Account and Nonelective
Contribution Account and the vested portions of a Participant's Employer
Profit Sharing Account and Employer Matching Account, reduced by any loans
outstanding on the Annuity Starting Date which are secured by the
Participant's Account balance.
24.03 Distributions upon Death.
------------------------
(a) Qualified Preretirement Survivor Annuity.
----------------------------------------
(i) Unless either paragraph (ii) below applies or the
Participant has selected an optional form of distribution within the
Election Period pursuant to a Qualified Election or a Special Qualified
Election, if the Participant dies before the earlier of (A) his or her
Annuity Starting Date or (B) his or her First Required Distribution Date,
then the Trustee shall, upon the direction of the Administrator, apply 50%
of the Participant's Vested Account Balance toward the purchase of an
annuity contract for the life of the Spouse.
(ii) Notwithstanding the provisions of paragraph (i) above,
prior to the earlier of (A) Spouse's Annuity Starting Date or (B) the
Spouse's First Required Distribution Year, the Spouse of a Participant may
deliver a written election to the Administrator whereby the Spouse elects
not to have 50% of the Participant's Vested Account Balance applied toward
the purchase of an annuity contract for the Spouse's life. Similarly, after
the earlier of (A) the Spouse's Annuity Starting Date or (B) the Spouse's
First Required Distribution Year, the Spouse may deliver a written election
to the Administrator whereby the Spouse elects to terminate distributions
pursuant to the Qualified Preretirement Survivor Annuity and to receive the
liquidated value of the remainder of the Qualified Preretirement Survivor
Annuity in an alternative form. In the case where a Spouse makes either of
such elections, the portion of the deceased Participant's Vested Account
Balance which would otherwise have been distributed pursuant to this
subsection shall be distributed pursuant to the provisions of subsection
(b) below.
(iii) In the case of a Spouse of a deceased Participant who
is scheduled to receive a Qualified Preretirement Survivor Annuity and who
does not otherwise elect, at the instruction of the Administrator, the
Trustee shall apply 50% of the deceased Participant's Vested Account
Balance toward an annuity under which payments begin as of the later of the
Participant's separation from Service or (what would have been) the
Participant's Normal Retirement Date. A Spouse of a deceased Participant
may elect a commencement date which is earlier than the date discussed in
the previous sentence by filing a written election to that effect with the
Administrator; the Trustee shall begin to make payments on such earlier
date upon instruction from the Administrator.
(b) Other Distributions at Death. If the Participant dies after
he or she has begun to receive distributions pursuant to Section 24.04
below, this subsection shall apply with respect to the Participant's entire
Vested Account Balance. With respect to any Vested Account Balance, or
portion thereof, to which subsection (a) did not apply, the provisions of
Article IX shall govern the distribution thereof.
24.04 Timing of Annuity Payments and Normal Distributions. Payment of
benefits under the Qualified Joint and Survivor Annuity or distributions
pursuant to, the normal form of distribution discussed in Section 24.05(b)
below shall commence within 60 days after the close of the Plan Year during
which occurs the later of (a) the Participant's Normal Retirement Date or
(b) the earlier of (i) the Participant's separation from Service or (ii)
the end of his or her First Required Distribution Year. Payment of benefits
may, at the discretion of the Trustee, be paid directly to the Participant
or to the Administrator, as payee agent. If the Participant's vested
Account balance (exclusive of his or her Rollover Account and Deductible
Voluntary Contribution Account) is greater than $3,500, written consent of
the Participant is required for any earlier distribution. A Participant may
file an election with the Administrator to request that distributions
commence in accordance with one of the following options provided that the
distribution shall otherwise comply with the requirements of the Plan
(including, but not limited to, Section 10.03):
(A) Distributions commencing before the Participant's
Normal Retirement Date if the Participant is Disabled or experiences a
separation from Service.
(B) Distributions commencing after the normal time of
distribution described above; provided, however, that any such deferred
distribution must commence no later than 60 days after the end of the
Participant's First Required Distribution Year.
24.05 Form of Distribution and Optional Times for Commencement of
Distribution. The Vested Account Balance of a Participant to which Section
24.03 above does not apply, shall be distributed in a form determined
according to this Section.
(a) Unless the Participant elects an optional form of
distribution pursuant to a Qualified Election or a Special Qualified
Election within 90 days before his or her Annuity Starting Date, the
Participant's Vested Account Balance shall be paid in the form of a
Qualified Joint and Survivor Annuity.
(b) If the Participant was eligible to receive a Qualified Joint
and Survivor Annuity and he or she elects an optional form of distribution
set forth in Article X pursuant to a Qualified Election or a Special
Qualified Election within 90 days before his or her Annuity Starting Date,
then the Participant's Vested Account Balance will be distributed in the
form selected by the Participant and the provisions of Article X shall
apply.
(c) All annuity contracts purchased and distributed by the Plan
to a Participant or a Beneficiary shall be nontransferable when distributed
and the terms of such contracts shall comply with the requirements of the
Plan.
24.06 Elections for Former Participants. An opportunity to make the
applicable distribution elections discussed in this Section must be given
to any living former Participant who had not begun receiving benefits from
this Plan on August 23, 1984 and who would not otherwise receive the
benefit forms prescribed by Section 24.05 above.
(a) In the case of a former Participant who:
(i) would have been entitled to receive his or her benefits
in the form of a life annuity had he or she completed an Hour of Service
during a Plan Year commencing after December 31, 1984,
(ii) was credited with Service under this Plan or a
predecessor plan in a plan year beginning after December 31, 1975, and
(iii) had at least ten years of Vesting Service when he or
she separated from Service, the former Participant must be given an
opportunity to elect to receive his or her benefits in accordance with the
provisions of Section 24.05 above.
(b) In the case of a former Participant:
(i) who was credited with service under this Plan or a
predecessor plan after September 1, 1974;
(ii) who was not credited with service under this plan or a
predecessor plan in a plan year beginning after December 31, 1975; and
(iii) whose benefits would have been payable in the form of
a life annuity, the Participant must be given an opportunity to elect to
receive his or her benefits in accordance with the provisions of Section
24.08 below.
(c) In the case of a former Participant who:
(i) satisfies the requirements of subsection (a) but does
not exercise the election made available to him or her in subsection (a),
or
(ii) satisfies the requirements of subsection (a) other than
the requirement of paragraph (iii), the former Participant shall have his
or her benefits distributed in accordance with the provisions of Section
24.08 below.
24.07 Election Period for Certain Elections by Separated Participants.
The period during which a former Participant entitled to make an election
pursuant to Section 24.06 above shall commence on August 23, 1984 and end
on the earlier of the former Participant's death or the date benefits would
otherwise commence to said former Participant.
24.08 Benefit Form for Certain Former Participants. The benefits of a
former Participant who is entitled to elect, and has elected to have his or
her benefits distributed pursuant to this Section or a former Participant
whose benefits are required to be distributed in accordance with the
provisions of this Section shall be distributed in accordance with the
following provisions:
(a) If benefits in the form of a life annuity become payable to a
married former Participant who:
(i) begins to receive payments under the Plan on or after
Normal Retirement Age; or
(ii) dies on or after Normal Retirement Age while still
working for the Employer; or
(iii) begins to receive payments prior to Normal Retirement
Age; or
(iv) separates from Service on or after attaining Normal
Retirement Age (or the qualified early retirement age) after satisfying the
eligibility requirement for the payment of benefits under the Plan and
thereafter dies before beginning to receive such benefits; then such
benefits will be received under this plan in the form of a Qualified Joint
and Survivor Annuity, unless the former Participant has elected otherwise
during the election period. For this purpose, the election period must
begin at least six months before the Participant attains qualified early
retirement age and end not more than 90 days before the commencement of
benefit distributions. Any election hereunder must be in writing and
delivered to the Administrator; such election may be changed by the former
Participant at any time by delivery of written notification of such change
and/or a separate written election to the Administrator.
(b) A former Participant who is employed at the start of the
election period defined below will be given the opportunity to elect,
during such election period, to have a survivor annuity payable on death.
If the former Participant elects the survivor annuity, payments under such
annuity must not be less than the payments which would have been made to
the Spouse under the Qualified Joint and Survivor Annuity if the former
Participant had retired on the day before his or her death. Any election
under this provision must be in writing and delivered to the Administrator;
such election may be changed by the former Participant at any time by
delivery of written notification of such change and/or a separate written
election to the Administrator. The election period begins on the later of
(i) the 90th day before the former Participant attains the qualified early
retirement age or (ii) the date on which participation begins, and ends on
the date the former Participant terminates employment with the Employer.
(c) The qualified early retirement age referred to in this
Section shall mean the latest of:
(i) the earliest date, under the Plan, on which the former
Participant may elect to receive retirement benefits:
(ii) the first day of the 120th month beginning before the
former Participant reaches Normal Retirement Age: or
(iii) the date the former Participant began participation.
24.09 Notice of Waivability of Qualified Preretirement Survivor
Annuity.
---------------------------------------------------------
(a) In the case of a Participant who is scheduled to receive
Qualified Preretirement Survivor Annuity coverage pursuant to Section 24.03
hereof, the Administrator shall provide to the Participant within the
applicable period as determined pursuant to subsection (b) below, a written
explanation of: (i) the terms and conditions of a Qualified Preretirement
Survivor Annuity; (ii) the Participant's right to make, and the effect of,
an election to waive Qualified Preretirement Survivor Annuity coverage;
(iii) the rights of a Participant's Spouse; and (iv) the Participant's
right to make, and the effect of, a revocation of a previous election to
waive Qualified Preretirement Survivor Annuity coverage.
(b) The applicable period during which the Administrator shall
provide the written explanation described in subsection (a) above shall
mean, with respect to a given Participant, whichever of the following
periods ends last:
(i) The period beginning when the individual becomes a
Participant and ending a reasonable period of time thereafter;
(ii) The period beginning on the first day of the Plan Year
during which the Participant attains age 32 and ending on the last day of
the Plan Year during which the Participant attains age 34;
(iii) The period that begins with a Participant's separation
from Service when the Participant separates from Service before attaining
age 35 and ends a reasonable period of time after such separation from
Service;
(iv) The period of time that begins on the effective date of
a Plan amendment which causes the Plan to no longer fully subsidize the
cost of the Qualified Preretirement Survivor Annuity and ends a reasonable
period of time after the effective date of such an amendment; or
(v) The period of time which begins when Section 24.03(a)
above first applies in the case of the Participant and ends a reasonable
period of time thereafter.
For purposes of applying the preceding paragraph, a reasonable period
ending after the enumerated events described in (i), (iv) and (v) is the
end of the two-year period beginning one year prior to the date the
applicable event occurs and ending one year after that date. In the case of
a Participant who separates from service before the Plan Year in which age
35 is attained, notice shall be provided within the two-year period
beginning one year prior to separation and ending one year after
separation. If such a Participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be redetermined.
24.10 Notice of Waivability of Qualified Joint and Survivor Annuity.
In the case of a Participant who is scheduled to receive a Qualified Joint
and Survivor Annuity pursuant to the provisions of Section 24.05 hereof,
the Administrator shall provide to the Participant, no less than 30 days
and no more than 90 days prior to the annuity starting date, a written
explanation of: (a) the terms and conditions of a Qualified Joint and
Survivor Annuity; (b) the Participant's right to make, and the effect of,
an election to waive distribution in the form of a Qualified Joint and
Survivor Annuity; (c) the rights of the Participant's Spouse; and (d) the
Participant's right to make, and the effect of, a revocation of a previous
election to waive distribution in the form of the Qualified Joint and
Survivor Annuity. Distribution to a Participant may commence seven days
after the foregoing explanation is given, provided that:
(i) the Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days after receiving
the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option), and
(ii) the Participant, after receiving the explanation,
affirmatively elects a distribution.
ARTICLE XXV. MISCELLANEOUS
-------------
25.01 Misrepresentation. Notwithstanding any other provision herein,
if an Employee misrepresents his or her age or any other fact, any benefit
payable hereunder shall be the smaller of: (a) the amount that would be
payable if no facts had been misrepresented, or (b) the amount that would
be payable if the facts were as misrepresented.
25.02 No Enlargement of Plan Rights. It is a condition of the Plan,
and each Participant by participating herein expressly agrees, that he or
she shall look solely to the assets of the Trust for the payment of any
benefit under the Plan.
25.03 No Enlargement of Employment Rights. Nothing appearing in or
done pursuant to the Plan shall be construed (a) to give any person a legal
or equitable right or interest in the assets of the Trust or distribution
therefrom, nor against the Employer, except as expressly provided herein or
(b) to create or modify any contract of employment between the Employer and
any Employee or obligate the Employer to continue the services of any
Employee.
25.04 Written Orders. In taking or omitting to take any action under
this Plan, the Trustee may conclusively rely upon and shall be protected in
acting upon any written orders from or determinations by the Employer or
the Administrator as appropriate, or upon any other notices, requests,
consents, certificates or other instruments or papers believed by it to be
genuine and to have been properly executed, and so long as it acts in good
faith, in taking or omitting to take any other action.
25.05 No Release from Liability
-------------------------
Nothing in the Plan shall relieve any person from liability for any
responsibility under Part 4 of Title I of the Act. Subject thereto, neither
Trustee, Loan Trustee, Administrator or Distributor nor any other person
shall have any liability under the Plan, except as a result of negligence
or wilful misconduct, and in any event the Employer shall fully indemnify
and save harmless all persons from any liability except that resulting from
their negligence or wilful misconduct.
25.06 Discretionary Actions. The Administrator shall have
discretionary authority to determine eligibility for benefits and construe
the terms of the Plan. Any discretionary action, including the granting of
a loan pursuant to Article XII hereof, to be taken by the Employer or the
Administrator under this Plan shall be non-discriminatory in nature and all
Employees similarly situated shall be treated in a uniform manner.
25.07 Headings. Headings herein are primarily for convenience of
reference, and if they conflict with the text, the text shall control.
25.08 Applicable Law. This Plan and Trust shall, to the extent state
law is applicable, be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the state in which
(a) if the Trustee is a corporation, the Trustee has its principal place of
business; (b) if the Trustee is an individual, the Trustee resides; or (c)
if the Trustee is individuals, where a majority of the individuals serving
as Trustee reside. The Employer's execution of the Adoption Agreement may
be acknowledged where required by applicable law.
25.09 No Reversion. Notwithstanding any other contrary provision of
the Plan, but subject nevertheless to Articles V and XVIII, no part of the
assets in the Trust shall revert to the Employer, and no part of such
assets, other than that amount required to pay taxes or administrative
expenses, shall be used for any purpose other than exclusive benefit of
Employees or their Beneficiaries. However, the Employer may request a
return, and this Section shall not prohibit return, of an amount to the
Employer under any of the following circumstances:
(a) if the amount was all or part of an Employer Contribution
which was made as a result of a mistake of fact and the amount contributed
or, if less, the then current value is returned to the Employer within one
year after the date on which the mistaken payment of the contribution was
made, or
(b) if the amount was all or part of an Employer Contribution
which was conditioned on deductibility under Code Section 404, such
deduction was disallowed with respect to such amount and this condition is
not satisfied and the amount is returned to the Employer within one year
after the date on which the deduction is disallowed, or
(c) if the amount was all or part of an Employer Contribution
which was conditioned on the initial qualification of the Plan under Code
Section 401 (a), the Plan receives an adverse determination with respect to
this qualification and the amount is returned to the Employer within one
year after the date on which such adverse determination is made, but only
if the application for the determination is made by the time prescribed by
law for filing the Employer's return for the taxable year in which the Plan
was adopted, or such later date as the Secretary of Treasury may prescribe.
For the purposes of this Section, all Employer Contributions are
conditioned on initial qualification of the Plan under Code Section 401(a),
qualification of the Plan as amended under Code Section 401(a), and
deductibility under Code Section 404.
25.10 Notices. The Employer will provide the notice to other
interested parties contemplated under Code Section 7476 before requesting a
determination by the Secretary of the Treasury or his or her delegate with
respect to the qualification of the Plan.
25.11 Conflict. In the event of any conflict between the provisions of
this Plan and the terms of any contract or agreement issued thereunder or
with respect thereto, the provisions of the Plan shall control. In
particular, the proceeds of any life insurance contract purchased by the
Trustee and not governed by an effective Designation of Beneficiary form
shall be paid to the Participant's Spouse regardless of who is named as
the beneficiary or beneficiaries in the contract.
25.12 Prior Benefits. If the optional form of benefits under the Plan
prior to adoption of the Prototype 401(k) Plan (the "Prior Benefits") were
different than the optional form of benefits as provided in the Prototype
401(k) Plan, then the portion of a Participants' Account which are
attributable to participation in the Plan prior to adoption of the
Prototype 401(k) Plan shall be subject to such Prior Benefits and, in the
discretion of the Administrator the remaining portion of the Participants'
Account shall also be subject to such Prior Benefits. The Administrator
shall notify the Trustee as to what portion, if any, of the Participants'
Account is subject to such Prior Benefits and give a full description of
such Prior Benefits; and, separate accounts shall be maintained for each
type of contribution (as provided in Section 7.03) for such portion.
EXHIBIT "A"
UNITIZED COMPANY STOCK SERVICES AGREEMENT
NAME OF PLAN: COMMUNITY HEALTH SYSTEMS, INC. 401(K) PLAN (THE "PLAN")
EMPLOYER: CHS/COMMUNITY HEALTH SYSTEMS, INC. (THE "EMPLOYER")
PLAN ADMINISTRATOR: CHS/COMMUNITY HEALTH SYSTEMS, INC. (THE "PLAN
ADMINISTRATOR")
1. GENERAL
Under this Unitized Company Stock Services Agreement ("Agreement"),
Scudder Trust Company ("Scudder") agrees to administer as a unitized
account ("Stock Account") an investment option offered under the Plan that
consists of common stock issued by Community Health Systems, Inc. ("CHS"),
par value $.01 per share ("Employer Stock"), cash or cash equivalents to
the extent required for liquidity purposes ("Cash"), and any receivables or
payables thereon. Unitization of the Stock Account is solely a
recordkeeping and accounting function that facilitates daily valuation and
Participant transactions under the Plan.
As described by the Unitized Company Stock Application (Attachment A)
(the "Application"), the Employer has engaged Scudder as Trustee of the
Plan under a trust agreement (the "Trust Agreement") and Scudder provides
recordkeeping services to the Plan under a separate recordkeeping agreement
(the "Recordkeeping Agreement"). In performing its duties under this
Agreement, Scudder shall have all of the powers, rights, authority, and
indemnification provided to Scudder under the Trust Agreement and the
Recordkeeping Agreement, both of which are hereby incorporated by
reference.
2. ELIGIBILITY FOR UNITIZED FUND ADMINISTRATION
The Stock Account is eligible to be administered on a unitized basis
only as long as the Employer Stock is suitable for unitization services
under the unitization standards set forth in Attachment B ("Unitization
Standards") and the Stock Account continues to satisfy the account size and
other requirements under the Unitization Standards.
3. ESTABLISHMENT OF UNITIZED FUND
Scudder shall administer the Stock Account as a unitized account
solely in accordance with this Agreement, including the Unitized Account
Instructions at Attachment C (the "Instructions"). Scudder shall not
provide, and shall have no responsibility for providing, any investment
advice (as described by ERISA section 3(21) and regulations thereunder)
with respect to management or investment of the assets of the Stock Account
and shall have no discretionary authority, responsibility or control
respecting the investment or management of the assets of the Stock Account.
The Employer and Plan Administrator acknowledge that Scudder, in performing
its duties and responsibilities under this Agreement, is performing
ministerial non-fiduciary functions subject to the Plan Administrator's
direction and supervision, and Scudder does not accept any responsibility,
authority or control as a fiduciary in its administration of the Stock
Account as a unitized account.
4. ACCOUNT ADMINISTRATION
4.1 Stock Account Value. Scudder shall determine the value of the
Stock Account (the "Stock Account Value") each business day that the New
York Stock Exchange is open for business unless Scudder is not required to
process investment transactions on behalf of the Plan's Participants under
the Recordkeeping Agreement on any such day ("Business Day"). On any
Business Day, the Stock Account Value shall be:
(a) the aggregate value of the Employer Stock, determined at a price
established for such Business Day according to the Instructions,
taking into account any purchases or sales of Employer Stock
pending for the Stock Account;
(b) plus the market value of the Cash as of the market close on the
Business Day;
(c) plus unpaid accrued interest and dividends receivable through the
previous Business Day;
(d) less the fees and expenses chargeable to the Stock Account under
Section 5, accrued daily.
4.2 Units; Unit Value
-----------------
(a) Each Participant's beneficial interest in the Stock Account shall
be represented by units ("Units"), each one of which shall be equal in
value to every other. Each Unit shall represent an undivided proportionate
interest in all assets and liabilities of the Stock Account, and all
income, profits, and losses of the Stock Account shall be allocated to all
Units equally. No certificates of such Units shall be issued, but Scudder
shall keep books in which shall be recorded the number of Units standing to
the credit of each Participant's Account under the Plan.
(b) On the "Unitization Date" specified in the Instructions, Scudder
shall determine the number of Units outstanding from the Stock Account by
crediting each Participant's Account under the Plan with a number of Units
equal to the dollar value of the Participant's pro rata interest in the
Stock Account, divided by 10 and rounded to 0.001 Units. The value of each
Participant's pro rata interest in the Stock Account on the Unitization
Date shall be determined based on the Stock Account Value on the
Unitization Date.
(c) On each Business Day, Scudder shall determine a value for each
Unit ("Unit Value") by dividing the Stock Account Value by the total number
of Units credited to the Accounts under the Plan of Participants with an
interest in the Stock Account. Scudder shall credit to each Participant
that makes a deposit to the Stock Account (or has deposits made to the
Stock Account on his or her behalf) the number of Units that the deposit
will purchase at the Unit Value as determined as of the business day
specified under Section 4.3, and upon the redemption of Units by a
Participant, Scudder shall distribute from the Stock Account in accordance
with the terms of the Plan a sum arrived at by multiplying the number of
Units redeemed by the Unit Value as of the Business Day determined under
Section 4.3.
(d) Scudder may from time to time divide the Units of the Stock
Account into a greater number of Units of lesser value or decrease the
number of Units of the Stock Account into a lesser number of Units of
greater value, provided that the proportionate interest of each
Participant's interest in the Stock Account shall not thereby be changed.
4.3 Processing of Unit Trades. Except as provided under Section 4.5
and Attachment D, which address the processing of Participant redemptions
in the event of insufficient liquidity, Scudder shall (a) process all
Participant transactions involving the Stock Account, other than
contributions of Employer Stock to the Stock Account by the Employer, as
purchases and redemptions of Units at the Unit Value on the Business Day
that the Participant transactions are processed by Scudder pursuant to the
Recordkeeping Agreement, and Scudder shall settle all Participant purchases
and redemptions of Units on the next Business Day; and (b) process
Participant transactions involving the Stock Account which are
contributions of Employer Stock to the Stock Fund by the Employer as a
purchase of Units at the Unit Value on the Business day prior to Scudder's
receipt of such Employer Stock from the Employer (as determined by the
Employer and communicated in writing to Scudder by the Employer), and
Scudder shall process such transactions as soon as practicable thereafter.
If processing and settlement of Participant redemptions is delayed pursuant
to Section 4.5 and Attachment D, Scudder shall process the delayed Unit
redemptions at the Unit Value on the Business Day determined in accordance
with Section 4.5 and Attachment D.
4.4 Liquidity. The Plan Administrator shall specify a Liquidity
Target, a Minimum Liquidity Percentage and a Maximum Liquidity Percentage
in the instructions. Subject to Section 4.5, Scudder shall administer the
Stock Account so that the Cash portion of the Stock Account (the "Actual
Cash Percentage") shall be within the range provided by the Minimum
Liquidity Percentage and Maximum Liquidity Percentage, as follows:
(a) Each Business Day, Scudder shall calculate the Actual Cash
Percentage based on the Stock Account Value on the previous Business Day,
taking into account pending Participant Unit purchases and redemptions,
pending purchases and sales of Employer Stock for the Stock Account, and
any pending dividends or other receivables or payables of the Stock
Account.
(b) On any Business Day, if the Actual Cash Percentage is less
than the Minimum Liquidity Percentage, Scudder shall sell as soon as
practicable at the current market price the number of whole shares of
Employer Stock required to restore the Actual Cash Percentage to the
Liquidity Target.
(c) On any Business Day, if the Actual Cash Percentage is greater
than the Maximum Liquidity Percentage, Scudder shall purchase as soon as
practicable at the current market price the number of whole shares of
Employer Stock required to restore the Actual Cash Percentage to the
Liquidity Target.
4.5 Insufficient Liquidity. If, on any Business Day, the Cash portion
of the Stock Account is not sufficient to satisfy all pending Unit
redemptions requested by Participants, Scudder shall follow the procedures
for processing the pending Unit redemptions and restoring liquidity
approved by the Plan Administrator under Attachment D. The Plan
Administrator agrees that in the case of insufficient liquidity and in
accordance with the instructions in Attachment D, Scudder may (a) reverse
certain transactions posted to Participant Accounts under the Plan and
corresponding purchases of other investments for the Plan that must be
reversed if Participant Unit redemption transactions are reversed, and/or
(b) refuse to accept additional Unit redemption requests. Scudder shall
continue to process Participant Unit purchase requests, even if Unit
redemptions are delayed or refused on a Business Day.
4.6 Management of the Liquidity Target. The Plan Administrator shall
be responsible for determining whether the Liquidity Target, and the
Minimum and Maximum Liquidity Percentages, are appropriate for the Stock
Account and for amending the Instructions from time to time to ensure the
efficient administration of the Stock Account. If the Plan Administrator
anticipates a large volume of Unit redemptions or if an anticipated event
(such as, without limitation, a lay-off, merger, spin-off; early retirement
window, partial plan termination, or other business action, or a redemption
or withdrawal by a Participant whose interest in the Stock Account exceed
5% of the Stock Account) could result in an increased volume of Unit
redemptions, the Plan Administrator shall use best efforts to notify
Scudder and may direct Scudder to increase the Target Liquidity and Minimum
and Maximum Liquidity Percentages to accommodate a larger volume of
redemptions. The Plan Administrator shall be responsible for providing any
notice to Participants that may be required under applicable laws with
respect to the possibility of the failure to settle Unit trades due to
insufficient liquidity in the Stock Account.
4.7 Investment of Cash Portion. The Cash portion of the Stock Account
shall be invested in the money market fund or other investment specified in
the Instructions.
4.8 Dividends. All dividends shall be reinvested in Employer Stock.
4.9 Authority to Place and Settle Securities Transactions. Scudder is
authorized to place and settle orders for purchases and sales of the
Employer Stock at the current market price when and in such amounts as is
required to maintain the Target Liquidity as required under Sections 4.4
and 4.5. Scudder shall execute the trades through the Designated Broker
named in the Instructions, provided that, if the Plan Administrator does
not designate a broker, Scudder may execute the trades through any broker
not affiliated with Scudder.
4.10 Distributions. Subject to Section 4.5, if a Participant requests
a distribution of benefits or another withdrawal in accordance with the
terms of the Plan and Units will be redeemed to satisfy such request, the
Participant shall receive a sum determined in accordance with Section 4.2.
Distributions shall be processed in accordance with the terms of the
Recordkeeping Agreement and Trust Agreement, provided that, subject to
Section 4.11, the distribution may be in cash or in-kind. A Participant
receiving a distribution from the Plan shall not be entitled to any
interest or other income earned on amounts pending distribution.
4.11 Distributions In-Kind. If elected by the Plan Administrator in
the Instructions, Participants may request an in-kind distribution of the
Employer Stock. Scudder shall not process an in-kind distribution until
Scudder receives all of the information required under its procedures to
determine the person to whom a certificate should be issued or a brokerage
account to which the ownership or distributed Employer Stock should be
transferred.
Subject to Section 4.5, on the Business Day that Scudder receives all
required information before the close of the New York Stock Exchange,
Scudder shall use its best efforts to determine the number of whole shares
and cash in lieu of fractional shares equal in value to the value of the
Participant's Units as of that Business Day. Scudder shall segregate that
number of whole shares of Employer Stock from the Stock Account and shall,
as soon as practicable, process the in-kind distribution of the shares in
accordance with information provided by the Participant.
5. FEES
The Fee Schedule (Attachment E) sets forth the fees for providing the
services under this Agreement. All fees payable under the Fee Schedule
shall be accrued daily and deducted quarterly from the Stock Account,
unless the Employer elects to pay the fees in the Instructions and the
Employer pays all such fees within a reasonable time as specified by
Scudder. All of Scudder's expenses relating to the acquisition,
administration and disposition of the assets of the Stock Account,
including any taxes of any kind whatsoever and fees for legal services
(whether or not incurred in connection with a judicial or administrative
preceding), shall be accrued daily and deducted quarterly from the Stock
Account. To the extent that any such fees or expenses cannot legally be
paid from the Stock Account, or the assets of the Stock Account are not
sufficient to pay the fees and expenses, the Employer shall promptly pay
Scudder such amounts.
6. AMENDMENT
This Agreement may be amended at any time by the written agreement of
the parties. The Plan Administrator may amend the Instructions at any time
by written notice to Scudder and such amendment shall be effective upon
receipt unless Scudder objects within thirty days after receipt of notice
of an amendment to the Instructions. Scudder may amend any provision of
this Agreement, except for the Application and the Instructions, at any
time upon sixty days' written notice to the Employer and the Plan
Administrator, and Scudder may assume that the Employer and Plan
Administrator have agreed to the amendment unless the Employer or Plan
Administrator objects in writing before the end of such sixty day period.
7. TERMINATION
Any of the parties may terminate this Agreement for any reason upon 60
days' written notice to the other parties, or such lesser time as mutually
agreed. Scudder may immediately terminate this Agreement if there is any
material change in any of the information provided by the Plan
Administrator on the Application, or the Stock Account is not eligible for
unitized accounting under the Unitization Standards. In addition, this
Agreement automatically terminates upon the termination of the Trust
Agreement or the Recordkeeping Agreement.
8. MISCELLANEOUS
8.1 Compliance With Securities Laws. CHS and the Plan Administrator
represent and warrant that the offer of Plan interests and the offer of
Employer Stock under the Plan are registered with the Securities and
Exchange Commission ("SEC") as required under the Securities Act of 1933,
or are exempt from registration. CHS shall be responsible, and Scudder
shall have no responsibility, for (a) maintaining such registration, or
ensuring the continuing availability of such exemption, (b) providing to
Participants any disclosures or communications required to be provided
under federal securities laws, and (c) filing all reports required to be
filed with the SEC in connection with the Plan and the Plan's ownership of
Employer Stock, including without limitation, reports required under the
Securities Exchange Act of 1934.
8.2 Severability. If any provisions of this Agreement are held to be
contrary to any provision or applicable law, or held invalid for any other
reason, then such provision shall be enforced only to the extent permitted,
and shall be severed from the remaining provisions of this Agreement.
However, the invalidity of one provision shall not affect the validity or
enforceability of the other provisions of this Agreement.
8.3 Effective Date. This Agreement is effective as of the date set
forth below.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and effective as of September 1, 2000.
SCUDDER TRUST COMPANY CHS/COMMUNITY HEALTH SYSTEMS, INC.
EMPLOYER
BY: BY:
-------------------------- -----------------------------------------
TITLE: TITLE:
----------------------- --------------------------------------
DATE: DATE:
------------------------ --------------------------------------
CHS/COMMUNITY HEALTH SYSTEMS, INC.
PLAN ADMINISTRATOR
BY:
-----------------------------------------
TITLE:
--------------------------------------
DATE:
--------------------------------------
COMMUNITY HEALTH SYSTEMS, INC.
BY:
-----------------------------------------
TITLE:
--------------------------------------
DATE:
--------------------------------------
ATTACHMENT A--UNITIZED COMPANY STOCK APPLICATION
1. PLAN NAME: Community Health Systems, Inc. 401(k) Plan
2. EMPLOYER NAME: CHS/Community Health Systems, Inc.
ADDRESS: 155 Franklin Road
Brentwood, TN 37027
3. PLAN ADMINISTRATOR: CHS/Community Health Systems, Inc.
ADDRESS: 155 Franklin Road
Brentwood, TN 37027
Mr. Barry Stewart
TELEPHONE NUMBER: (615) 373-9600 Fax Number: (615) 661-6267
5. DATE OF TRUST AGREEMENT WITH SCUDDER: Effective October 1, 1999
6. DATE OF COMPASS RECORDKEEPING SERVICE AGREEMENT: Effective October 1,
1999
7. EMPLOYER STOCK as of 6/14/00
Name: Community Health Systems Stock Fund
Ticker Symbol: CYH CUSIP: 203668108 Exchange: NYSE
Total Shares Outstanding: 74,370,807 Current Price Per Share: $14.00
Average Shares Bought/Sold Daily on the Exchange: 2,663,000
Total Shares Held by Plan/Market Value: 0
Number or Participants Holding Employer Stock ("Shareholder
Participants"): 0
Average Percentage of Company Stock Fund held Per Shareholder
Participant: 0
Percentage of Employer Stock Owned by 3 Largest Shareholder
Participants: 0
Dividend Schedule: no dividends
ATTACHMENT B--UNITIZATION STANDARDS
The Stock Account is suitable for unitization services only if--
1. The Employer Stock is "actively traded," which requires
that the average daily trading volume of the Employer
Stock must be at least $1 million on a major or U.S.
securities exchange and the issuer must have a public
float value of at least $15 million.
2. The number of shares held by the Stock Account does not
exceed 200% of the average daily trading volume.
3. Stock Account size is at least $1 million, with at least
100 Participants.
ATTACHMENT C--UNITIZED ACCOUNT INSTRUCTIONS
1. LIQUIDITY MANAGEMENT
Unitization Date: September 1, 2000
Target Liquidity: 5%
Minimum Liquidity Percentage: 3%
Maximum Liquidity Percentage: 7%
2. VALUATION
On each Business Day, the Employer Stock shall be valued
based on the closing price on the New York Stock Exchange.
3. INVESTMENT OF CASH PORTION
All cash held in the Stock Account shall be invested in the SSgA
Money Market Fund (the "Fund"). The Plan Administrator acknowledges receipt
of a prospectus for the Fund, including the information on fees paid from
the assets of the Fund as described therein.
4. DESIGNATED BROKER
All transactions shall be effected through State Street Bank.
5. FEES
[ ] All recordkeeping fees are paid by the Employer.
[X] Fees are accrued daily and deducted quarterly from
the Stock Account.
6. DISTRIBUTIONS
[ ] Participants may take in-kind distributions.
[X] In-kind distributions are not permitted.
ATTACHMENT D--INSUFFICIENT LIQUIDITY PROCEDURES
1. If, on any Business Day, the Cash available in the Stock Account is
not sufficient to satisfy the Unit redemptions requested by Participants on
that Business Day, Scudder shall as soon as practicable notify the Plan
Administrator of the insufficient liquidity. Scudder's notice to the Plan
Administrator shall indicate whether Scudder will extend credit on a
temporary basis to settle Unit redemptions as directed by Section 2 or
Scudder will be required to stop processing Unit redemptions until the Plan
Administrator provides instructions as directed under Section 3.
2. Liquidity Shortfall means the amount required to settle all Unit
redemptions requested by Participants on a Business Day less Cash available
in the Stock Account. If the Liquidity Shortfall on any Business Day is
less than or equal to twice the Liquidity Target, Scudder shall cause the
Plan to borrow an amount sufficient to facilitate the processing of the
Unit redemptions and shall sell as soon as practicable whole shares or
Employer Stock to the extent necessary to repay the loan and restore the
Actual Cash Percentage to the Liquidity Target. The loan shall be an
interest-free unsecured loan from Scudder to the Plan and the term of the
loan shall not exceed three Business Days. All amounts received to the
Stock Account, including without limitations, contributions, amounts
transferred to the Stock Account in connection with the purchase of Units,
cash dividends and proceeds of liquidated shares, shall be automatically
and immediately upon receipt by the Stock Account applied to repay the loan
until the loan is repaid in full. If the Plan borrows any amount to
facilitate the settlement of Unit redemptions, Scudder shall refuse to
accept additional Unit redemption requests from Participants until the
Business Day following the Business Day on which the loan is repaid.
3. If the Liquidity Shortfall on any Business Day is more than twice
the Liquidity Target, Scudder shall not, until the Plan Administrator
provides additional instructions, sell any shares of Employer Stock,
attempt to process and settle any Unit redemptions submitted by
Participants, or accept additional Unit redemption requests from
Participants.
If, before posting the Unit redemptions to Participant Accounts under
the Plan, Scudder identifies a Liquidity Shortfall that is more than twice
the Liquidity Target, Scudder shall not post to Participant accounts under
the Plan any Unit redemption requests that cannot be processed and settled
under this Section 3 ("delayed Unit redemptions") or any corresponding
purchase requests to the extent that Participants direct transfers from the
Stock Account to another Plan investment option ("corresponding delayed
purchases"). If Scudder identifies the insufficient liquidity after Scudder
has posted delayed Unit redemptions and corresponding delayed purchases to
Participant Accounts under the Plan for a Business Day, Scudder shall
reverse delayed Unit redemption transactions and corresponding delayed
purchases (if any) on the Participants Accounts under the Plan.
ATTACHMENT E--FEE SCHEDULE
The Recordkeeping Fee is 10 basis points of the total assets in the Stock
Account; with a minimum of $7,500.
[PART II: KEMSTAR 401(K) PLAN ADOPTION AGREEMENT,
NONSTANDARDIZED PROTOTYPE PLAN 04-002,
CONFORMED TO REFLECT THE CHANGES MADE IN
THE FIRST AMENDMENT OF THE PLAN]
Plan number 002
(nonstandardized)
KEMSTAR 401(k) PLAN
Adoption Agreement
The undersigned (the "Employer") establishes or amends the COMMUNITY HEALTH
SYSTEMS, INC. 401(K) PLAN by completing this Adoption Agreement, adopting
or amending the Plan in the form of the Prototype 401(k) Plan attached.
I. ELIGIBILITY
A. To become a Participant who is eligible to make a salary
reduction election and/or to receive allocations of Deferred Cash
Contributions, an Employee need not complete any period of
Service
[ X ] or, if this box is checked, an Employee must complete:
[ ] (1) _____ Year of Service (insert no more
than "1").
[ X ] (2) 6 consecutive months of service (insert no
more than "12"; no minimum number of hours can
be required).
B. An Employee who meets the above requirements for eligibility to
make a salary reduction election and/or to receive allocations of
Deferred Cash Contributions shall become such an eligible
Participant on the first day the requirements are met
[ ] or, if this box is checked, on the first day of the next
month
[ ] or, if this box is checked, on the first day of the next
pay period
[ X ] or, if this box is checked, on the first day of the
next quarter of the Plan Year.
[ ] or, if this box is checked, on the first day
of the next Plan Year, or the first day of the
seventh month of the Plan Year, whichever is
earlier.
C. To become a Participant who is eligible to receive allocations of
Employer Matching Contributions and/or Employer Profit Sharing
Contributions and to make Nondeductible Voluntary Contributions
(if permitted by Section XIII), an Employee must complete 1 Year
of Service
[ X ] or, if this box is checked, an Employee must
complete 6 Month(s) of Service, (insert "2" or
less; select more than 1 only if the Employer
selects full and immediate vesting in Section
VI.A. and B. below; insert "0" for no waiting
period).
D. An Employee who meets the above requirements for eligibility to
receive allocations of Employer Matching Contributions and/or
Employer Profit Sharing Contributions and to make Nondeductible
Voluntary Contributions (if permitted by Section XIII) shall
become such an eligible Participant on the first day the
requirements are met
[ ] or, if this box is checked, on the first day of the
next month
[ ] or, if this box is checked, on the first day of the
next pay period
[ X ] or, if this box is checked, on the first day of the
next quarter of the Plan Year
[ ] or, if this box is checked, on the first day
of the next Plan Year, or the first day of the
seventh month of the Plan Year, whichever is
earlier.
E. The number of Hours of Service required to have a Year of Service
is 1000
[ ] or, if this box is checked, _____ (insert less than
"1000").
F. A Year of Service (for the purpose of eligibility) shall be
measured on the 12-consecutive-month period beginning on the
Employee's initial date of employment and reemployment or an
anniversary of that date
[ X ] or, if this box is checked, on the
12-consecutive-month period beginning on the
Employee's initial date of employment or
reemployment and each Plan Year commencing
thereafter.
G. For purposes of calculating periods of Service, the Employer
shall calculate periods of Service based on an actual count of
the Hours of Service an Employee performs
[ ] or, if this box is checked, an Employee shall
be credited with 45 Hours of Service for each
week during which the Employee performs an
actual Hour of Service.
H. Before an Employee may become a Participant, the Employee need
not attain any minimum age
[ X ] or, if this box is checked, an Employee must be at least
21 (insert "21" or less) years of age.
I. All Employees are entitled to be Participants except (one or more
may be selected):
[ ] Non-resident aliens who receive no earned
income from the Employer which constitutes
income from sources within the United States;
[ X ] Individuals covered by a collective bargaining contract
which meets the requirements specified in the Plan;
[ ] Salaried Employees;
[ ] Hourly-paid Employees;
[ ] Leased Employees;
[ ] Piece-rate Employees;
[ ] Employees paid by commission;
[ ] Employees covered by another retirement plan to which
the Employer is required to contribute;
[ ] Employees of the following subsidiaries or affiliates:
--------------------------------------
[ ] Employees in the following non-discriminatory
classification:
--------------------------------------
--------------------------------------
Note: If Employees are excluded from the Plan
under one or more of the classifications above
(not including the first two classifications)
the Plan must satisfy, on a continuing basis,
the coverage, nondiscrimination, and
participation requirements of Code Sections
410(b), 401(a)(4), and 401(a)(26).
II. SALARY REDUCTIONS AND DEFERRED CASH CONTRIBUTIONS
For each Plan Year, the Employer will make the following contribution
to the Trust on behalf of each eligible Participant:
A. [ X ] A Salary Reduction Contribution equal to
the portion of the Compensation otherwise
payable to the Participant that the Participant
has elected to contribute to the Trust. The
Participant's election shall specify the portion
of the Compensation to be contributed, which
amount shall be not less than 1% (insert "0" or
more, but not more than the next chosen number)
and not more than 15% (insert "20" or less, but
not less than the previously chosen number) of
the Participant's Compensation for the Plan
Year.
B. [ ] A Deferred Cash Contribution equal to that
portion of the Deferred Cash Allocation which
the eligible Participant has not elected to
receive in cash. The Deferred Cash Allocation
for this purpose shall be an amount equal to the
percentage of the eligible Participant's
Compensation as is determined by the Employer
for each Plan Year (which percentage shall be
the same for each Participant)
[ ] or, if this box is checked, __% of the eligible
Participant's Compensation
C. A Participant shall be entitled to a Deferred Cash
Allocation and a Deferred Cash Contribution for a
Plan Year if the Participant receives Compensation
from the Employer during the Plan Year
[ ] and, if this box is checked, the Participant is
employed on the last day of the Plan Year and is credited
with at least ___ (insert "1000" or less) Hours of
Service during the Plan Year, or the Participant retires,
dies or becomes disabled during the Plan Year.
III. PROFIT SHARING CONTRIBUTIONS
For each Plan Year, the Employer will not make an Employer Profit
Sharing Contribution
[ ] or, if this box is checked, the Employer will make an
Employer Profit Sharing Contribution.
A. [ ] Fixed Formula
For each Plan Year, the Employer will make an
Employer Profit Sharing Contribution to the
Trust in an amount equal to __% (not to exceed
15%) of each such eligible Participant's
Compensation.
A Participant shall be entitled to an allocation
of the fixed Employer Profit Sharing
Contribution for a Plan Year if the Participant
receives Compensation from the Employer during a
Plan Year
[ ] and, if this box is checked, the
Participant is employed on the last day
of the Plan Year, or the Participant
retires, dies or becomes disabled
during the Plan Year.
[ ] and, if this box is checked, the
Participant is credited with at least
___ (insert "1000" or less) Hours of
Service during the Plan Year, or the
Participant retires, dies or becomes
disabled during the Plan Year.
B. [ ] Discretionary Formula
For each Plan Year, the Employer will make an
Employer Profit Sharing Contribution to the
Trust equal to the amount, if any, determined by
the Employer for such Plan Year.
A Participant shall be entitled to an allocation
of the discretionary Employer Profit Sharing
Contribution for a Plan Year if the Participant
receives Compensation from the Employer during
the Plan Year
[ ] and, if this box is checked, the
Participant is employed on the last day
of the Plan Year, or the Participant
retires, dies or becomes disabled
during the Plan Year.
[ ] and, if this box is checked, the
Participant is credited with at least
__ (insert "1000" or less) Hours of
Service during the Plan Year, or the
Participant retires, dies or becomes
disabled during the Plan Year.
C. Employer Profit Sharing Contributions will be allocated to
eligible Participants in the ratio that each eligible
Participant's Compensation for the Plan Year bears to the total
Compensation paid to all eligible Participants for the Plan Year,
or
[ ] if this box is checked, on an integrated basis
in accordance with the provisions of Section
4.03(b)(ii) of the Plan.
The Integration Level for a Plan Year will be the Social Security
Wage Base for such Plan Year
[ ] or, if this box is checked, $__________ (not in excess of
the Social Security Wage Base).
[ ] or, if this box is checked, ____% of the Social Security
Wage Base (not in excess of 100%).
The Integration Rate for a Plan Year will be the Maximum
Disparity Rate for such Plan Year.
[ ] or if this box is checked, __% (not in excess of the
Maximum Disparity Rate).
Note: An Employer may elect to integrate the Plan with
Social Security only if the Employer does not
maintain another qualified retirement plan
integrated with Social Security.
IV. MATCHING CONTRIBUTIONS
A. For each Plan Year, the Employer will not make an Employer
Matching Contribution
[ X ] or, if this box is checked, the Employer
will make an Employer Matching Contribution on
behalf of each eligible Participant who,
pursuant to Section VI below, is eligible to
receive an allocation; such contribution shall
be equal to the percentage indicated in (B)
below of aggregate:
[ X ] (1) Salary Reduction Contributions
[ ] (2) Deferred Cash Contributions
[ ] (3) Nondeductible Voluntary Contributions
A Participant shall be entitled to an allocation of the Employer
Matching Contribution for a Plan Year if the Participant makes
contributions indicated above for the Plan Year
[ X ] and, if this box is checked, the
Participant is employed by the Employer
on the last day of the Plan Year, or
the Participant retires, dies or
becomes disabled during the Plan Year.
[ ] and, if this box is checked, the
Participant is credited with at least
_____ Hours of Service (insert "1000"
or less) during the Plan Year, or the
Participant retires, dies or becomes
disabled during the Plan Year.
B. The Employer Matching Contribution made on behalf of each
eligible Participant shall be equal to a percentage of the
Participant's contributions selected in (A) above; which
percentage shall be equal to:
[ ] (1) ___%
[ ] (2) the sum of ____% of the first ___% of the
Participant's Compensation, plus ___% of the
next ___% of the Participant's Compensation.
[ ] (3) the sum of ___% of such contributions up to
___ dollars, plus ___% of such contributions which
are in excess of ___ dollars.
[ X ] (4) the percentage voted or declared by the Employer
for the Plan Year.
NOTE: If (2) or (3) above are completed with the
second matching percentage (following the word
"plus") greater than the first matching
percentage (following the words "the sum of"),
the IRS may deem the plan to be discriminatory
under Code Section 401(a)(4).
C. The Employer Matching Contribution shall be limited as follows:
[ X ] (1) A Participant's aggregate
contributions indicated in (A) above
for a Plan Year in excess of 6% of the
Participant's Compensation shall not be
matched.
[ ] (2) A Participant's aggregate
contributions indicated in (A) above
for a Plan Year in excess of ____
dollars shall not be matched.
[ ] (3) The Employer Matching
Contribution for a Participant for a
Plan Year shall not exceed __% of the
Participant's Compensation or _____
dollars.
V. QUALIFIED NONELECTIVE CONTRIBUTIONS AND QUALIFIED MATCHING
CONTRIBUTIONS
For each Plan Year, the Employer will not make a Qualified Nonelective
Contribution or a Qualified Matching Contribution
[ X ] or, if this box is checked, in any Plan Year
in which the Plan cannot satisfy one or more of
the non-discrimination tests set forth in
Article VI, the Employer may make a Qualified
Nonelective Contribution and/or Qualified
Matching Contribution to the Trust in an amount
sufficient to enable the Plan to satisfy such
tests.
VI. VESTING OF EMPLOYER CONTRIBUTIONS
NOTE: Make selections in Section VI. only if Employer
Profit Sharing Contributions and/or Employer Matching
Contributions have been selected.
A. Employer Profit Sharing Contributions shall be immediately vested
and nonforfeitable
[ ] (1) or, if this box is checked, vested at the rate
specified in Column 1 below.
[ ] (2) or, if this box is checked, vested at the rate
specified in Column 2 below.
[ ] (3) or, if this box is checked, vested at the rate
specified in Column 3 below.
[ ] (4) or, if this box is checked, vested at the rate
specified in Column 4 below which rate shall, if
a graded rate is specified, be at least as rapid
as the rate specified in Column 2 below or, if a
cliff rate is specified, be at least as rapid as
the rate specified in Column 3 below.
Column 1 Column 2 Column 3 Column 4
Top-Heavy 7-Year 5-Year Percentage
Vesting Years Vesting Rate Graded Rate Cliff Rate Elected
------------- ------------- ------------ ---------- -----------
1 0% 0% 0% _________
2 20% 0% 0% _________
3 40% 20% 0% _________
4 60% 40% 0% _________
5 80% 60% 100% _________
6 100% 80% 100% _________
7 100% 100% 100% _________
NOTE: Employer Profit Sharing Contributions must be
immediately vested and nonforfeitable if the Employer
makes the election in Section I.C. above and requires
Employees to complete more than one Year of Service.
B. Employer Matching Contributions shall be immediately vested and
nonforfeitable
[ ] (1) or, if this box is checked, vested at the rate
specified in Column I below.
[ ] (2) or, if this box is checked, vested at the rate
specified in Column 2 below
[ ] (3) or, if this box is checked, vested at the rate
specified in Column 3 below
[ X ] (4) or, if this box is checked,
vested at the rate specified in Column
4 below which rate shall, if a graded
rate is specified, be at least as rapid
as the rate specified in Column 2
below, or, if a cliff rate is
specified, be at least as rapid as the
rate specified in Column 3 below.
Column 1 Column 2 Column 3 Column 4
Top-Heavy 7-Year 5-Year Percentage
Vesting Years Vesting Rate Graded Rate Cliff Rate Elected
-------------- ------------ ------------ ----------- -----------
1 0% 0% 0% 20%
---
2 20% 0% 0% 40%
---
3 40% 20% 0% 60%
---
4 60% 40% 0% 80%
---
5 80% 60% 100% 100%
----
6 100% 80% 100% ---------
7 100% 100% 100% ---------
NOTE: Employer Matching Contributions must be
immediately vested and nonforfeitable if the Employer
makes the election in Section I.C. above and requires
Employees to complete more than one Year of Service.
C. The following Service will not be included in determining Vesting
Years unless checked below:
[ ] (1) Service before the Employer maintained this Plan or
a predecessor plan.
[ ] (2) Service before the first Plan Year during which
a Participant attained age 18.
[ ] (3) Service before the first Plan
Year to which ERISA is applicable, if
this Plan is a continuation of an
earlier plan which would have
disregarded such service.
D. Vesting Years and One-Year Breaks in Service for the purpose of
vesting shall be measured on the 12-consecutive-month period
beginning on the Participant's initial date of employment or an
anniversary of that date
[ ] or, if this box is checked, on the Plan Year.
E. The Participant will have a Vesting Year only if the Participant
is credited with at least 1000 Hours of Service
[ ] or, if this box is checked, _________ (insert less
than "1000").
F. If the Plan becomes a Top-Heavy Plan but thereafter ceases to be
a Top-Heavy Plan, the vesting schedule in effect while the Plan
was a Top-Heavy Plan will continue to be in effect for all
existing and future Participants
[ ] or, if this box is checked, the vesting schedule selected
in Sections VI.A. or B. above, as the case may be, will
apply for all Plan Years during which the Plan is not
a Top-Heavy Plan.
VII. SPECIAL RULES FOR ALLOCATIONS OF EMPLOYER CONTRIBUTIONS
A. An otherwise eligible Participant who is a Highly Compensated
Employee for a given Plan Year shall receive an allocation of any
Employer Profit Sharing Contributions made pursuant to Section
III. above and any reallocated forfeitures
[ ] or, if this box is checked, shall not receive an allocation
of any Employer Profit Sharing Contributions made pursuant
to Section III. above and any reallocated forfeitures.
B. An otherwise eligible Participant who is a Highly Compensated
Employee for a given Plan Year shall receive an allocation of any
Employer Matching Contributions made pursuant to Section III.B.
above and any reallocated forfeitures
[ ] or, if this box is checked, shall not receive an allocation
of any Employer Matching Contributions made pursuant to
Section IV. above and any reallocated forfeitures.
C. Any minimum Top-Heavy allocations will be made first from this
Plan
[ ] or, if this box is checked, first from the
_________ Plan (insert name of another qualified
retirement plan maintained by the Employer).
D. For any Plan Year for which the Plan is a Top-Heavy Plan, minimum
allocations shall be made in accordance with the provisions of
Section 23.03
[ ] or, if this box is checked, because the
Employer maintains at least one other qualified
retirement plan, minimum allocations shall be
made at the following rate of Compensation: __%
(insert "3" or more).
Note: Only consider checking the box in Section VII.D. if the
Employer sponsors two or more tax-qualified retirement plans and
either (1) one of those plans is a defined benefit plan or (2)
the plans do not have identical eligibility requirements.
VIII. REALLOCATION OF FORFEITURES
Any forfeiture which results from a Participant's termination of
Service shall be reallocated as if it were a contribution of the
same type (i.e., Employer Profit Sharing Contribution or Employer
Matching Contribution) for the Plan Year following the Plan Year
in which such forfeiture occurs
[ X ] or, if this box is checked, such forfeiture shall be
applied to reduce the Employer's obligation to make
Employer Matching Contributions and fixed Profit Sharing
Contributions for the Plan Year during which the
forfeiture occurs.
IX. COMPENSATION
A. Compensation shall be defined as follows for the purposes
designated below:
[ ] (1) W-2 Compensation. Compensation as reported on
Form W-2 and as more fully defined in Section 2.09(a)(i)
of the Plan.
The above definition of Compensation shall apply for
the purposes of allocating or determining:
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
[ ] Employer Matching Contributions
[ ] Non-discrimination tests contained
in Article VI of the Plan.
[ ] Section 415 Limitations on Allocations
[ ] (2) 415 Safe Harbor Compensation. "Compensation" as
defined in Section 5.05(b)(ii) of this Plan.
The above definition of Compensation shall apply for
the purposes of allocating or determining:
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
[ ] Employer Matching Contributions
[ ] Non-discrimination tests contained in
Article VI of the Plan.
[ ] Section 415 Limitations on Allocations
[ X ] (3) Safe Harbor Alternative Definition. 415 Safe Harbor
Compensation, reduced by all of the following items
(even if includible in gross income): reimbursement
or other expense allowances, fringe benefits (cash and
non-cash), moving expenses, deferred compensation,
and welfare benefits.
The above definition of Compensation shall apply for
the purposes of allocating or determining:
[ X ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions
[X] Employer Matching Contributions
[X] Non-discrimination tests contained in Article VI of the Plan.
[X] Section 415 Limitations on Allocations
[ ] (4)a. Non Safe Harbor Alternative Definition. Compensation as
indicated above but excluding:
[ ] overtime pay, premiums for shift differential and
call-in premiums;
[ ] bonuses;
[ ] commissions;
[ ] such other items as follows:
--------
------------------------------------
The above definition of Compensation shall apply for the
purposes of allocating or determining
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions (non-integrated
formula only)
[ ] Employer Matching Contributions.
b. Non Safe Harbor Alternative Definition. Compensation as
indicated above but excluding:
[ ] overtime pay, premiums for shift differential and
call-in premiums;
[ ] bonuses;
[ ] commissions;
[ ] such other items as follows:
---------
-------------------------------------
The above definition of Compensation shall apply for the
purposes of allocating or determining
[ ] Salary Reduction Contributions
[ ] Deferred Cash Contributions
[ ] Employer Profit Sharing Contributions (non-integrated
formula only)
[ ] Employer Matching Contributions.
NOTE: If the Employer elects an alternative definition
of Compensation by making a reduction pursuant
to this IX.A.4 for purposes of allocating Employer
Profit Sharing Contributions, then such alternative
definition must be tested by the Administrator to
show that it meets the nondiscrimination
requirements of Section 414(s)(3) of the Code.
B. Compensation
[ X ] shall include [ ] shall not include
A Participant's Salary Reduction Contributions, Deferred
Cash Contributions (which the Participant did not elect
to take in cash) and other amounts which are excluded
from an Employee's gross income pursuant to Code Sections
125, 402(g)(3), 402(h)(1)(B), and 403(b).
The above rule shall apply for the purposes of allocating or
determining
[ ] Employer Profit Sharing Contributions
[ X ] Employer Matching Contributions
[ X ] Non-discrimination tests contained in Article VI of
the Plan.
C. Compensation
[ X ] shall include [ ] shall not include
amounts paid during that portion of the Plan Year during
which the Employee is not eligible to participate in the
Plan with respect to the allocation of Employer Profit
Sharing Contributions and/or Employer Matching
Contributions.
The above rule shall apply for the purposes of allocating or applying
[ ] Employer Profit Sharing Contributions
[ X ] Employer Matching Contributions
[ X ] Section 401(m) non-discrimination test contained in
Article VI of the Plan.
D. Compensation for purposes of applying the Section 401(k)
non-discrimination test contained in Article VI of the Plan.
[ X ] shall include [ ] shall not include
amounts paid during that portion of the Plan Year during
which the Employee is not eligible to make a salary
reduction election and/or to receive allocations of
Deferred Cash Contributions.
NOTE: Participant's Salary Reduction
Contributions, Deferred Cash
Contributions (which the Participants
do not elect to take in cash) and other
amounts which are excluded from an
Employee's gross income pursuant to
Code Sections 125, 402(a)(8),
402(h)(1)(B), and 403(b) are not
considered compensation for purposes of
determining the Employer's permissible
deduction under Code Section 404 or for
purposes of applying the limitations on
allocations to Participants' Accounts
under Article V of the Plan and Code
Section 415.
X. NORMAL RETIREMENT DATE
A Participant's Normal Retirement Date shall be age 591/2
[ X ] or, if this box is checked, age 65 (insert more than
591/2 but not more than 65).
X1. IN-SERVICE HARDSHIP WITHDRAWALS
NOTE: SALARY REDUCTION CONTRIBUTIONS ARE AVAILABLE FOR IN-SERVICE
WITHDRAWALS UPON ATTAINING AGE 59 1/2 AND MAY BE MADE IN A LUMP SUM PAYMENT
OR IN A PERIOD CERTAIN PAYMENT IN QUARTERLY INSTALLMENTS.
A. In-service withdrawals by a Participant from his or her Employer
Profit Sharing Contribution Account shall not be permitted unless
the Participant has attained his or her Normal Retirement Date
[ ] or, if this box is checked, a Participant who
has not attained his or her Normal Retirement
Date and who is fully vested in his or her
Employer Profit Sharing Contribution Account may
request an in-service withdrawal from such
account in case of hardship.
B. In-service withdrawals by a Participant from his or her Employer
Matching Contribution Account shall not be permitted unless the
Participant has attained his or her Normal Retirement Date
[ X ] or, if this box is checked, a Participant
who has not attained his or her Normal
Retirement Date and who is fully vested in his
or her Employer Matching Contribution Account
may request an in-service withdrawal from such
account in case of hardship.
C. In-service withdrawals by a Participant from his or her Salary
Reduction Contribution Account, Deferred Cash Contribution
Account and Qualified Nonelective Contribution Account shall not
be permitted unless the Participant has attained his or her
Normal Retirement Date
[ X ] or, if this box is checked, a Participant
who has not attained his or her Normal
Retirement Date may request an in-service
withdrawal from his or her Salary Reduction
Contribution Account and Deferred Cash
Contribution Account in case of hardship.
XII. DISTRIBUTION OPTIONS
NOTE: PERIOD CERTAIN PAYMENTS IN QUARTERLY INSTALLMENTS ARE "GRANDFATHERED"
FROM THE PREVIOUS PLAN AND WILL BE AVAILABLE AS A DISTRIBUTION OPTION.
A Participant (or Beneficiary to the extent permitted under the
Plan) may elect to receive a distribution of his or her vested
Account balance in one or more of the following optional forms:
[ ] (1) Distribution of the Participant's
entire vested Account balance in
monthly installments over a period
equal to the shorter of 120 months or
the Applicable Life Expectancy.
[ X ] (2) Distribution of the Participant's entire vested
Account balance in a lump sum.
[ ] (3) Distribution of the Participant's
entire vested Account balance in
installment payments of a fixed amount,
such payments to be made until
exhaustion of the Participant's vested
Account balance.
[ ] (4) Distribution in kind.
[ ] (5) Any reasonable combination of the
foregoing or any reasonable time or
manner of distribution within the
above-stated limitations as elected by
the Participant (or Beneficiary to the
extent permitted under the Plan).
XIII. NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS
Nondeductible Voluntary Contributions by a Participant are not
permitted
[ ] or, if this box is checked, are permitted.
XIV. INVESTMENT
Except for the initial investment of any Employer Matching
Contributions made on behalf of a Participant to the Company
Stock Fund, investment decisions with respect to all contribution
sources shall be made by the Participant
[ ] or, if this box is checked, by the Administrator with
respect to all contribution sources.
[ ] or, if this box is checked, by the Administrator with
respect to Employer Matching Contributions, Employer
Profit Sharing Contributions, Qualified Nonelective
Contributions and Qualified Matching Contributions.
XV. LOANS
Loans to a Participant are not permitted
[ X ] or, if this box is checked, are permitted.
Note: If you elect to permit loans to Participants, you must
designate a Loan Trustee in Section XX. Scudder Trust
Company will not act as Loan Trustee unless it expressly
agrees to act as such.
XVI. EFFECTIVE DATE
The Effective Date of this Plan or Amendment shall be the first
day of the Employer's fiscal year during which the Plan is adopted
or amended
[ ] or, if this box is checked, ____________________.
(insert date)
XVII. PLAN AND LIMITATION YEARS
A. The Plan Year shall be the same as the fiscal year of the
Employer
[ ] or, if this box is checked, shall end on the last
day of the month of __________.
B. The Limitation Year shall be the Plan Year
[ ] or, if this box is checked, shall be the
12-consecutive month period ending on the
last day of the month of __________.
XVIII. AMENDMENT
Execution of this Adoption Agreement is not an amendment
to an existing plan
[ X ] or, if this box is checked, is an amendment to an
existing plan
XIX. CALCULATION OF TOP HEAVY RATIO
If the Employer has maintained, now or subsequently maintains one
or more defined benefit plans, then, for purposes of calculating
the Top-Heavy Ratio, Present Value shall be based upon the
interest rate and mortality table employed as of the date in
question for such purpose as specified in the most recently
adopted or amended defined benefit plan maintained by the Employer
[ ] or, if this box is checked, the interest rate and mortality
table specified below.
Interest Rate: _________________%
Mortality Table: _________________
XX. APPOINTMENT OF TRUSTEES
The Employer hereby designates the following Trustees:
A. Scudder Trust Company shall act as Trustee under this Trust with
respect to all assets of Plan except as provided below.
B. __________ shall act as Trustee with respect to __________.
C. __________ shall act as Trustee with respect to __________.
D. Scudder shall act as Loan Trustee.
XXI. LIMITATIONS ON ALLOCATIONS
This section applies only for an Employer who maintains or has
ever maintained: another qualified retirement plan (other than a
plan which the Employer amended into the Prototype 401(k) Plan) in
which any Participant in this Plan is or was a participant or
could possibly become a participant, a welfare benefit fund (as
defined in Code Section 419(e)), or an individual medical account
(as defined in Code Section 415(l)(2)) under which amounts are
treated as annual additions with respect to any Participant in
this Plan.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master
or prototype plan, the provisions of Article V of the Plan will
apply as if the other plan were a master or prototype plan
[ ] or, if this box is checked, the attached rider
describes the method by which the plans will
limit total Annual Additions to the Maximum
Permissible Amount described in Section 5.05 of
the Plan and reduce any excess amount in a
manner that precludes Employer discretion.
B. If the Participant is, or has ever been, a participant in a
defined benefit plan maintained by the Employer, the provisions
of Article V of the Plan will apply
[ ] or, if this box is checked, the attached rider
describes the method by which the plans involved
will satisfy the 1.0 limitation described in
Section 5.04 of the Plan and reduce any excess
amount in a manner that precludes Employer
discretion.
XXII. SIGNATURES
The Employer (1) covenants and agrees that whenever a Participant
makes a contribution the Employer shall ascertain that the Participant has
received a copy of the current prospectus relating to any Designated
Investment or other investment in which such contribution is to be invested
where required by any state or federal law, and (2) by remitting any
contribution to the Trustee the Employer shall be deemed to represent that
the Employer has received a current prospectus of any investment in which
it is to be invested where required by any state or federal law.
An Employer adopting this Plan may not rely on the opinion letter
issued by the National Office of the Internal Revenue Service as evidence
that this Plan is qualified under Code Section 401. An Employer who wishes
to obtain such reliance should apply for a determination letter from the
appropriate Key District Director of the Internal Revenue Service to obtain
reliance that the plan is qualified.
This Adoption Agreement may be used in conjunction with basic
plan document #04. Failure to properly complete this Adoption Agreement may
result in the disqualification of the Plan.
All inquiries regarding this Plan should be made to Kemper
Distributors, Inc. c/o Scudder Investor Services, Inc. by calling
1-877-536-7827, or by writing to Kemper Distributors, Inc. c/o Scudder
Investor Services, Inc., Group Retirement Plans Department, Two
International Place, Boston, MA, 02110. Scudder Investor Services, Inc.
will notify each adopting Employer of any amendments made to, or of the
discontinuance or abandonment of, this Plan.
Trustee(s) Signature(s):
SCUDDER TRUST COMPANY
By:
- ---------------------------------- ----------------------------------
Signature of Employer
CHS/Community Health Systems, Inc.
- ---------------------------------- ----------------------------------
Print Name of Employer Trustee
155 Franklin Road
- ---------------------------------- ----------------------------------
Street Address Trustee
Brentwood, TN 37027
- ---------------------------------- ----------------------------------
City State Zip Loan Trustee
76-0137985
- ----------------------------------
Employer Tax Identification Number
1/1 - 12/31
- ----------------------------------
Employer's Fiscal Year
(615) 377-4574
- ----------------------------------
Employer's Telephone Number
- ---------------------------------- ----------------------------------
Date Accepted by Scudder Investor
Services, Inc.
- ----------------------------------
Expected Number of Participants
Exhibit 4.4
COMMUNITY HEALTH SYSTEMS, INC.
2000 STOCK OPTION AND AWARD PLAN
(As Adopted April 25, 2000)
1. Purpose.
-------
The purpose of this Plan is to strengthen Community Health
Systems, Inc., a Delaware corporation (the "Company") and its Subsidiaries,
by providing an incentive to its employees, officers, consultants and
directors and thereby encouraging them to devote their abilities and
industry to the success of the Company's business enterprise. It is
intended that this purpose be achieved by extending to employees (including
future employees who have received a formal written offer of employment),
officers, consultants and directors of the Company and its Subsidiaries an
added long-term incentive for high levels of performance and unusual
efforts through the grant of Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Performance Units and Performance
Shares, Share Awards, Phantom Stock and Restricted Stock (as each term is
herein defined).
2. Definitions.
-----------
For purposes of the Plan:
2.1 "Affiliate" means any entity, directly or indirectly,
controlled by, controlling or under common control with the Company or any
corporation or other entity acquiring, directly or indirectly, all or
substantially all the assets and business of the Company, whether by
operation of law or otherwise.
2.2 "Agreement" means the written agreement between the Company
and an Optionee or Grantee evidencing the grant of an Option or Award and
setting forth the terms and conditions thereof.
2.3 "Award" means a grant of Restricted Stock, Phantom Stock, a
Stock Appreciation Right, a Performance Award, a Share Award or any or all
of them.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means:
(a) in the case of an Optionee or Grantee whose employment
with the Company or a Subsidiary is subject to the terms of an employment
agreement between such Optionee or Grantee and the Company or Subsidiary,
which employment agreement includes a definition of "Cause", the term
"Cause" as used in this Plan or any Agreement shall have the meaning set
forth in such employment agreement during the period that such employment
agreement remains in effect; and
(b) in all other cases, (i) intentional failure to perform
reasonably assigned duties, (ii) dishonesty or willful misconduct in the
performance of duties, (iii) involvement in a transaction in connection
with the performance of duties to the Company or any of its Subsidiaries
which transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit or (iv) willful
violation of any law, rule or regulation in connection with the performance
of duties (other than traffic violations or similar offenses); provided,
however, that following a Change in Control clause (i) of this Section
2.5(b) shall not constitute "Cause."
2.6 "Change in Capitalization" means any increase or reduction in
the number of Shares, or any change (including, but not limited to, in the
case of a spin-off, dividend or other distribution in respect of Shares, a
change in value) in the Shares or exchange of Shares for a different number
or kind of shares or other securities of the Company or another
corporation, by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance of warrants or
rights or debentures, stock dividend, stock split or reverse stock split,
cash dividend, property dividend, combination or exchange of shares,
repurchase of shares, change in corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence of any of the
following:
(a) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by any
"Person" (as the term person is used for purposes of Section 13(d) or 14(d)
of the Exchange Act), other than Forstmann Little & Co. Equity Partnership
- - V, L.P. and Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership - VI, L.P. or any of their Affiliates,
immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of more than
fifty percent (50%) of the then outstanding Shares or the combined voting
power of the Company's then outstanding Voting Securities; provided,
however, in determining whether a Change in Control has occurred pursuant
to this Section 2.7(a), Shares or Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan (or
a trust forming a part thereof) maintained by (A) the Company or (B) any
corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or
indirectly, by the Company (for purposes of this definition, a "Related
Entity"), (ii) the Company or any Related Entity, or (iii) any Person in
connection with a "Non-Control Transaction" (as hereinafter defined);
(b) The individuals who, as of April 25, 2000 are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at
least a majority of the members of the Board or, following a Merger which
results in a Parent Corporation, the board of directors of the ultimate
Parent Corporation; provided, however, that if the election, or nomination
for election by the Company's common stockholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be considered as a member of the
Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened "Election
Contest" (as described in Rule 14a-11 promulgated under the Exchange Act)
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election Contest or
Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with or
into the Company or in which securities of the Company are issued (a
"Merger"), unless such Merger, is a "Non-Control Transaction." A
"Non-Control Transaction" shall mean a Merger where:
(A) the stockholders of the Company, immediately
before such Merger own directly or indirectly immediately following such
Merger, at least fifty percent (50%) of the combined voting power of the
outstanding voting securities of (x) the corporation resulting from such
Merger (the "Surviving Corporation"), if fifty percent (50%) or more of the
combined voting power of the then outstanding voting securities of the
Surviving Corporation is not Beneficially Owned, directly or indirectly by
another Person (a "Parent Corporation"), or (y) if there are one or more
Parent Corporations, the ultimate Parent Corporation; and
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement
providing for such Merger, constitute at least a majority of the members of
the board of directors of (x) the Surviving Corporation, if there is no
Parent Corporation, or (y) if there are one or more Parent Corporations,
the ultimate Parent Corporation.
(ii) A complete liquidation or dissolution of the
Company; or
(iii) The sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Related Entity or under conditions that would constitute a
Non-Control Transaction with the disposition of assets being regarded as a
Merger for this purpose or the distribution to the Company's stockholders
of the stock of a Related Entity or any other assets).
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the then
outstanding Shares or Voting Securities as a result of the acquisition of
Shares or Voting Securities by the Company which, by reducing the number of
Shares or Voting Securities then outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Persons, provided that
if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of Shares or Voting Securities by the
Company, and after such share acquisition by the Company, the Subject
Person becomes the Beneficial Owner of any additional Shares or Voting
Securities which increases the percentage of the then outstanding Shares or
Voting Securities Beneficially Owned by the Subject Person, then a Change
in Control shall occur.
If an Eligible Individual's employment is terminated by the
Company without Cause prior to the date of a Change in Control but the
Eligible Individual reasonably demonstrates that the termination (A) was at
the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a change in control or (B) otherwise arose
in connection with, or in anticipation of, a Change in Control which has
been threatened or proposed, such termination shall be deemed to have
occurred after a Change in Control for purposes of this Plan provided a
Change in Control shall actually have occurred.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
2.9 "Committee" means a committee, as described in Section 3.1,
appointed by the Board from time to time to administer the Plan and to
perform the functions set forth herein.
2.10 "Company" means Community Health Systems, Inc.
2.11 "Director" means a director of the Company.
2.12 "Disability" means:
(a) in the case of an Optionee or Grantee whose employment
with the Company or a Subsidiary is subject to the terms of an employment
agreement between such Optionee or Grantee and the Company or Subsidiary,
which employment agreement includes a definition of "Disability", the term
"Disability" as used in this Plan or any Agreement shall have the meaning
set forth in such employment agreement during the period that such
employment agreement remains in effect; or
(b) the term "Disability" as used in the Company's long-term
disability plan, if any; or
(c) in all other cases, the term "Disability" as used in
this Plan or any Agreement shall mean a physical or mental infirmity which
impairs the Optionee's or Grantee's ability to perform substantially his or
her duties for a period of one hundred eighty (180) consecutive days.
2.13 "Division" means any of the operating units or divisions of
the Company designated as a Division by the Committee.
2.14 "Dividend Equivalent Right" means a right to receive all or
some portion of the cash dividends that are or would be payable with
respect to Shares.
2.15 "Eligible Individual" means any of the following individuals
who is designated by the Committee as eligible to receive Options or Awards
subject to the conditions set forth herein: (a) any director, officer or
employee of the Company or a Subsidiary, (b) any individual to whom the
Company or a Subsidiary has extended a formal, written offer of employment,
or (c) any consultant or advisor of the Company or a Subsidiary.
2.16 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.17 "Fair Market Value" on any date means the closing sales
prices of the Shares on such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or, if
such Shares are not so listed or admitted to trading, the average of the
per Share closing bid price and per Share closing asked price on such date
as quoted on the National Association of Securities Dealers Automated
Quotation System or such other market in which such prices are regularly
quoted, or, if there have been no published bid or asked quotations with
respect to Shares on such date, the Fair Market Value shall be the value
established by the Board in good faith and, in the case of an Incentive
Stock Option, in accordance with Section 422 of the Code.
2.18 "Grantee" means a person to whom an Award has been granted
under the Plan.
2.19 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as
an Incentive Stock Option.
2.20 "Initial Public Offering" means the consummation of the
first public offering of Shares pursuant to a registration statement (other
than a Form S-8 or successor forms) filed with, and declared effective by,
the Securities and Exchange Commission.
2.21 "Nonemployee Director" means a director of the Company who
is a "nonemployee director" within the meaning of Rule 16b-3 promulgated
under the Exchange Act.
2.22 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.23 "Option" means a Nonqualified Stock Option, an Incentive
Stock Option, or any or all of them.
2.24 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.25 "Outside Director" means a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.26 "Parent" means any corporation which is a parent corporation
within the meaning of Section 424(e) of the Code with respect to the
Company.
2.27 "Performance Awards" means Performance Units, Performance
Shares or either or both of them.
2.28 "Performance-Based Compensation" means any Option or Award
that is intended to constitute "performance based compensation" within the
meaning of Section 162(m)(4)(C) of the Code and the regulations promulgated
thereunder.
2.29 "Performance Cycle" means the time period specified by the
Committee at the time Performance Awards are granted during which the
performance of the Company, a Subsidiary or a Division will be measured.
2.30 "Performance Objectives" has the meaning set forth in
Section 8.
2.31 "Performance Shares" means Shares issued or transferred to
an Eligible Individual under Section 8.
2.32 "Performance Units" means Performance Units granted to an
Eligible Individual under Section 8.
2.33 "Phantom Stock" means a right granted to an Eligible
Individual under Section 9 representing a number of hypothetical Shares.
2.34 "Plan" means Community Health Systems, Inc. 1999 Stock
Option and Award Plan, as amended and restated from time to time.
2.35 "Pooling Transaction" means an acquisition of the Company in
a transaction which is intended to be treated as a "pooling of interests"
under generally accepted accounting principles.
2.36 "Restricted Stock" means Shares issued or transferred to an
Eligible Individual pursuant to Section 7.
2.37 "Share Award" means an Award of Shares granted pursuant to
Section 9.
2.38 "Shares" means the Class A Common Stock of the Company, par
value $.01 per share, and any other securities into which such shares are
changed or for which such shares are exchanged.
2.39 "Stock Appreciation Right" means a right to receive all or
some portion of the increase in the value of the Shares as provided in
Section 6 hereof.
2.40 "Subsidiary" means (i) except as provided in subsection (ii)
below, any corporation which is a subsidiary corporation within the meaning
of Section 424(f) of the Code with respect to the Company, and (ii) in
relation to the eligibility to receive Options or Awards other than
Incentive Stock Options and continued employment for purposes of Options
and Awards (unless the Committee determines otherwise), any entity, whether
or not incorporated, in which the Company directly or indirectly owns 50%
or more of the outstanding equity or other ownership interests.
2.41 "Successor Corporation" means a corporation, or a Parent or
Subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a)
of the Code applies.
2.42 "Ten-Percent Stockholder" means an Eligible Individual, who,
at the time an Incentive Stock Option is to be granted to him or her, owns
(within the meaning of Section 422(b)(6) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company, or of a Parent or a Subsidiary.
2.43 "Transition Period" means the period beginning with an
Initial Public Offering and ending as of the earlier of (i) the date of the
first annual meeting of shareholders of the Company at which directors are
to be elected that occurs after the close of the third calendar year
following the calendar year in which the Initial Public Offering occurs, or
(ii) the expiration of the "reliance period" under Treasury Regulation ss.
1.162-27(f)(2).
3. Administration.
--------------
3.1 The Plan shall be administered by the Committee, which shall
hold meetings at such times as may be necessary for the proper
administration of the Plan. The Committee shall keep minutes of its
meetings. If the Committee consists of more than one (1) member, a quorum
shall consist of not fewer than two (2) members of the Committee and a
majority of a quorum may authorize any action. Any decision or
determination reduced to writing and signed by a majority of all of the
members of the Committee shall be as fully effective as if made by a
majority vote at a meeting duly called and held. The Committee shall
consist of at least one (1) Director and may consist of the entire Board;
provided, however, that from and after the date of an Initial Public
Offering, (A) if the Committee consists of less than the entire Board, then
with respect to any Option or Award to an Eligible Individual who is
subject to Section 16 of the Exchange Act, the Committee shall consist of
at least two (2) Directors each of whom shall be a Nonemployee Director and
(B) to the extent necessary for any Option or Award intended to qualify as
Performance-Based Compensation to so qualify, the Committee shall consist
of at least two (2) Directors, each of whom shall be an Outside Director.
For purposes of the preceding sentence, if one or more members of the
Committee is not a Nonemployee Director and an Outside Director but recuses
himself or herself or abstains from voting with respect to a particular
action taken by the Committee, then the Committee, with respect to that
action, shall be deemed to consist only of the members of the Committee who
have not recused themselves or abstained from voting. Subject to applicable
law, the Committee may delegate its authority under the Plan to any other
person or persons.
3.2 No member of the Committee shall be liable for any action,
failure to act, determination or interpretation made in good faith with
respect to this Plan or any transaction hereunder. The Company hereby
agrees to indemnify each member of the Committee for all costs and expenses
and, to the extent permitted by applicable law, any liability incurred in
connection with defending against, responding to, negotiating for the
settlement of or otherwise dealing with any claim, cause of action or
dispute of any kind arising in connection with any actions in administering
this Plan or in authorizing or denying authorization to any transaction
hereunder.
3.3 Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time to:
(a) determine those Eligible Individuals to whom Options
shall be granted under the Plan and the number of such Options to be
granted and to prescribe the terms and conditions (which need not be
identical) of each such Option, including the exercise price per Share, the
vesting schedule and the duration of each Option, and make any amendment or
modification to any Option Agreement consistent with the terms of the Plan;
(b) select those Eligible Individuals to whom Awards shall
be granted under the Plan and to determine the number of Shares in respect
of which each Award is granted, the terms and conditions (which need not be
identical) of each such Award, and make any amendment or modification to
any Award Agreement consistent with the terms of the Plan;
(c) to construe and interpret the Plan and the Options and
Awards granted hereunder and to establish, amend and revoke rules and
regulations for the administration of the Plan, including, but not limited
to, correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to the
extent it shall deem necessary or advisable, including so that the Plan and
the operation of the Plan complies with Rule 16b-3 under the Exchange Act,
the Code to the extent applicable and other applicable law, and otherwise
to make the Plan fully effective. All decisions and determinations by the
Committee in the exercise of this power shall be final, binding and
conclusive upon the Company, its Subsidiaries, the Optionees and Grantees,
and all other persons having any interest therein;
(d) to determine the duration and purposes for leaves of
absence which may be granted to an Optionee or Grantee on an individual
basis without constituting a termination of employment or service for
purposes of the Plan;
(e) to exercise its discretion with respect to the powers
and rights granted to it as set forth in the Plan; and
(f) generally, to exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best interests of
the Company with respect to the Plan.
4. Stock Subject to the Plan; Grant Limitations.
--------------------------------------------
4.1 The maximum number of Shares that may be made the subject of
Options and Awards granted under the Plan is __________.(FN*) The Company
shall reserve for the purposes of the Plan, out of its authorized but
unissued Shares or out of Shares held in the Company's treasury, or partly
out of each, such number of Shares as shall be determined by the Board.
- -------------------
* 6% of the sum of the number of shares of Class A common stock (i)
outstanding on a fully diluted basis as of the date the Plan is
adopted by the Board and (ii) issued after the date hereof as a result
of the Company's recapitalization and registered public offering (each
as described in Amendment No. 1 of the Form S-1 filed by the Company
with the Securities and Exchange Commission on April 19, 2000); it
being understood that in connection with the Company's
recapitalization, the shares of Class A common stock are being
redesignated as "Common Stock" (whereupon the shares of capital stock
issuable upon options granted under this Plan or otherwise shall be
the Common Stock).
4.2 Upon the granting of an Option or an Award, the number of
Shares available under Section 4.1 for the granting of further Options and
Awards shall be reduced as follows:
(a) In connection with the granting of an Option or an Award
(other than the granting of a Performance Unit denominated in dollars), the
number of Shares shall be reduced by the number of Shares in respect of
which the Option or Award is granted or denominated; provided, however,
that if any Option is exercised by tendering Shares, either actually or by
attestation, to the Company as full or partial payment of the exercise
price, the maximum number of Shares available under Section 4.1 shall be
increased by the number of Shares so tendered.
(b) In connection with the granting of a Performance Unit
denominated in dollars, the number of Shares shall be reduced by an amount
equal to the quotient of (i) the dollar amount in which the Performance
Unit is denominated, divided by (ii) the Fair Market Value of a Share on
the date the Performance Unit is granted.
4.3 Whenever any outstanding Option or Award or portion thereof,
expires, is canceled, is settled in cash (including the settlement of tax
withholding obligations using Shares) or is otherwise terminated for any
reason without having been exercised or payment having been made in respect
of the entire Option or Award, the Shares allocable to the expired,
canceled, settled or otherwise terminated portion of the Option or Award
may again be the subject of Options or Awards granted hereunder.
4.4 In no event may more than 30,000 Shares be issued upon the
exercise of Incentive Stock Options granted under the Plan.
5. Option Grants for Eligible Individuals.
--------------------------------------
5.1 Authority of Committee. Subject to the provisions of the
Plan, the Committee shall have full and final authority to select those
Eligible Individuals who will receive Options, and the terms and conditions
of the grant to such Eligible Individuals shall be set forth in an
Agreement. Incentive Stock Options may be granted only to Eligible
Individuals who are employees of the Company or any Subsidiary.
5.2 Exercise Price. The purchase price or the manner in which the
exercise price is to be determined for Shares under each Option shall be
determined by the Committee and set forth in the Agreement; provided,
however, that the exercise price per Share under each Incentive Stock
Option shall not be less than 100% of the Fair Market Value of a Share on
the date the Option is granted (110% in the case of an Incentive Stock
Option granted to a Ten-Percent Stockholder).
5.3 Maximum Duration. Options granted hereunder shall be for such
term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of ten (10) years from
the date it is granted (five (5) years in the case of an Incentive Stock
Option granted to a Ten-Percent Stockholder) and a Nonqualified Stock
Option shall not be exercisable after the expiration of ten (10) years from
the date it is granted; provided, however, that unless the Committee
provides otherwise, an Option (other than an Incentive Stock Option) may,
upon the death of the Optionee prior to the expiration of the Option, be
exercised for up to one (1) year following the date of the Optionee's death
even if such period extends beyond ten (10) years from the date the Option
is granted. The Committee may, subsequent to the granting of any Option,
extend the term thereof, but in no event shall the term as so extended
exceed the maximum term provided for in the preceding sentence.
5.4 Vesting. Subject to Section 5.10, each Option shall become
exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement.
To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable,
but not later than the date the Option expires. The Committee may
accelerate the exercisability of any Option or portion thereof at any time.
5.5 Deferred Delivery of Option Shares. The Committee may, in its
discretion permit Optionees to elect to defer the issuance of Shares upon
the exercise of one or more Nonqualified Stock Options granted pursuant to
the Plan. The terms and conditions of such deferral shall be determined at
the time of the grant of the Option or thereafter and shall be set forth in
the Agreement evidencing the Option.
5.6 Limitations on Incentive Stock Options. To the extent that
the aggregate Fair Market Value (determined as of the date of the grant) of
Shares with respect to which Incentive Stock Options granted under the Plan
and "incentive stock options" (within the meaning of Section 422 of the
Code) granted under all other plans of the Company or its Subsidiaries (in
either case determined without regard to this Section 5.6) are exercisable
by an Optionee for the first time during any calendar year exceeds
$100,000, such Incentive Stock Options shall be treated as Nonqualified
Stock Options. In applying the limitation in the preceding sentence in the
case of multiple Option grants, Options which were intended to be Incentive
Stock Options shall be treated as Nonqualified Stock Options according to
the order in which they were granted such that the most recently granted
Options are first treated as Nonqualified Stock Options.
5.7 Non-Transferability. No Option shall be transferable by the
Optionee otherwise than by will or by the laws of descent and distribution
or, in the case of an Option other than an Incentive Stock Option, pursuant
to a domestic relations order (within the meaning of Rule 16a-12
promulgated under the Exchange Act), and an Option shall be exercisable
during the lifetime of such Optionee only by the Optionee or his or her
guardian or legal representative. Notwithstanding the foregoing, the
Committee may set forth in the Agreement evidencing an Option (other than
an Incentive Stock Option) at the time of grant or thereafter, that the
Option may be transferred to members of the Optionee's immediate family, to
trusts solely for the benefit of such immediate family members and to
partnerships in which such family members and/or trusts are the only
partners, and for purposes of this Plan, a transferee of an Option shall be
deemed to be the Optionee. For this purpose, immediate family means the
Optionee's spouse, parents, children, stepchildren and grandchildren and
the spouses of such parents, children, stepchildren and grandchildren. The
terms of an Option shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the
Optionee.
5.8 Method of Exercise. The exercise of an Option shall be made
only by a written notice delivered in person or by mail to the Secretary of
the Company at the Company's principal executive office, specifying the
number of Shares to be exercised and, to the extent applicable, accompanied
by payment therefor and otherwise in accordance with the Agreement pursuant
to which the Option was granted; provided, however, that Options may not be
exercised by an Optionee for twelve months following a hardship
distribution to the Optionee, to the extent such exercise is prohibited
under Treasury Regulation ss. 1.401(k)-1(d)(2)(iv)(B)(4). The exercise
price for any Shares purchased pursuant to the exercise of an Option shall
be paid in either of the following forms (or any combination thereof): (a)
cash or (b) the transfer, either actually or by attestation, to the Company
of Shares that have been held by the Optionee for at least six (6) months
(or such lesser period as may be permitted by the Committee) prior to the
exercise of the Option, such transfer to be upon such terms and conditions
as determined by the Committee or (c) a combination of cash and the
transfer of Shares; provided, however, that the Committee may determine
that the exercise price shall be paid only in cash. In addition, Options
may be exercised through a registered broker-dealer pursuant to such
cashless exercise procedures which are, from time to time, deemed
acceptable by the Committee. Any Shares transferred to the Company as
payment of the exercise price under an Option shall be valued at their Fair
Market Value on the day of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the Option
to the Secretary of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Optionee. No fractional
Shares (or cash in lieu thereof) shall be issued upon exercise of an Option
and the number of Shares that may be purchased upon exercise shall be
rounded to the nearest number of whole Shares.
5.9 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and
until (a) the Option shall have been exercised pursuant to the terms
thereof, (b) the Company shall have issued and delivered Shares to the
Optionee, and (c) the Optionee's name shall have been entered as a
stockholder of record on the books of the Company. Thereupon, the Optionee
shall have full voting, dividend and other ownership rights with respect to
such Shares, subject to such terms and conditions as may be set forth in
the applicable Agreement.
5.10 Effect of Change in Control. In the event an Optionee's
employment with the Company and its Subsidiaries is terminated by the
Company without Cause following a Change in Control, or in the case of a
Director who is not an employee of the Company or any Subsidiary, his
services as a Director of the Company ceases following a Change in Control,
each Option held by the Optionee as of the date of termination of the
Optionee's employment or service shall become immediately and fully
exercisable and shall, notwithstanding any shorter period set forth in the
Agreement evidencing the Option, remain exercisable for a period ending not
before the earlier of (x) the six (6) month anniversary of the termination
of the Optionee's employment or service or (y) the expiration of the stated
term of the Option. In addition, the Agreement evidencing the grant of an
Option may provide for any other treatment of the Option in the event of a
Change in Control.
6. Stock Appreciation Rights.
-------------------------
The Committee may in its discretion, either alone or in
connection with the grant of an Option, grant Stock Appreciation Rights in
accordance with the Plan, the terms and conditions of which shall be set
forth in an Agreement. If granted in connection with an Option, a Stock
Appreciation Right shall cover the same Shares covered by the Option (or
such lesser number of Shares as the Committee may determine) and shall,
except as provided in this Section 6, be subject to the same terms and
conditions as the related Option.
6.1 Time of Grant. A Stock Appreciation Right may be granted (a)
at any time if unrelated to an Option, or (b) if related to an Option,
either at the time of grant or at any time thereafter during the term of
the Option.
6.2 Stock Appreciation Right Related to an Option.
---------------------------------------------
(a) Exercise. A Stock Appreciation Right granted in
connection with an Option shall be exercisable at such time or times and
only to the extent that the related Options are exercisable, and will not
be transferable except to the extent the related Option may be
transferable. A Stock Appreciation Right granted in connection with an
Incentive Stock Option shall be exercisable only if the Fair Market Value
of a Share on the date of exercise exceeds the exercise price specified in
the related Incentive Stock Option Agreement.
(b) Amount Payable. Upon the exercise of a Stock
Appreciation Right related to an Option, the Grantee shall be entitled to
receive an amount determined by multiplying (i) the excess of the Fair
Market Value of a Share on the date of exercise of such Stock Appreciation
Right over the per Share exercise price under the related Option, by (ii)
the number of Shares as to which such Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit in any
manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock Appreciation
Right at the time it is granted.
(c) Treatment of Related Options and Stock Appreciation
Rights Upon Exercise. Upon the exercise of a Stock Appreciation Right
granted in connection with an Option, the Option shall be canceled to the
extent of the number of Shares as to which the Stock Appreciation Right is
exercised, and upon the exercise of an Option granted in connection with a
Stock Appreciation Right, the Stock Appreciation Right shall be canceled to
the extent of the number of Shares as to which the Option is exercised or
surrendered.
6.3 Stock Appreciation Right Unrelated to an Option. The
Committee may grant to Eligible Individuals Stock Appreciation Rights
unrelated to Options. Stock Appreciation Rights unrelated to Options shall
contain such terms and conditions as to exercisability (subject to Section
6.7), vesting and duration as the Committee shall determine, but in no
event shall they have a term of greater than ten (10) years; provided,
however, that the Committee may provide that Stock Appreciation right may,
upon the death of the Grantee, be exercised for up to one (1) year
following the date of the Grantee's death even if such period extends
beyond ten (10) years from the date the Stock Appreciation Right is
granted. Upon exercise of a Stock Appreciation Right unrelated to an
Option, the Grantee shall be entitled to receive an amount determined by
multiplying (a) the excess of the Fair Market Value of a Share on the date
of exercise of such Stock Appreciation Right over the Fair Market Value of
a Share on the date the Stock Appreciation Right was granted, by (b) the
number of Shares as to which the Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit in any
manner the amount payable with respect to any Stock Appreciation Right by
including such a limit in the Agreement evidencing the Stock Appreciation
Right at the time it is granted.
6.4 Non-Transferability. No Stock Appreciation Right shall be
transferable by the Grantee otherwise than by will or by the laws of
descent and distribution or pursuant to a domestic relations order (within
the meaning of Rule 16a-12 promulgated under the Exchange Act), and such
Stock Appreciation Right shall be exercisable during the lifetime of such
Grantee only by the Grantee or his or her guardian or legal representative.
The terms of such Stock Appreciation Right shall be final, binding and
conclusive upon the beneficiaries, executors, administrators, heirs and
successors of the Grantee.
6.5 Method of Exercise. Stock Appreciation Rights shall be
exercised by a Grantee only by a written notice delivered in person or by
mail to the Secretary of the Company at the Company's principal executive
office, specifying the number of Shares with respect to which the Stock
Appreciation Right is being exercised. If requested by the Committee, the
Grantee shall deliver the Agreement evidencing the Stock Appreciation Right
being exercised and the Agreement evidencing any related Option to the
Secretary of the Company who shall endorse thereon a notation of such
exercise and return such Agreement to the Grantee.
6.6 Form of Payment. Payment of the amount determined under
Sections 6.2(b) or 6.3 may be made in the discretion of the Committee
solely in whole Shares in a number determined at their Fair Market Value on
the date of exercise of the Stock Appreciation Right, or solely in cash, or
in a combination of cash and Shares. If the Committee decides to make full
payment in Shares and the amount payable results in a fractional Share,
payment for the fractional Share will be made in cash.
6.7 Effect of Change in Control. In the event a Grantee's
employment with the Company is terminated by the Company without Cause
following a Change in Control, each Stock Appreciation Right held by the
Grantee shall become immediately and fully exercisable and shall,
notwithstanding any shorter period set forth in the Agreement evidencing
the Stock Appreciation Right, remain exercisable for a period ending not
before the earlier of the six (6) month anniversary of (x) the termination
of the Grantee's employment or (y) the expiration of the stated term of the
Stock Appreciation Right. In addition, the Agreement evidencing the grant
of a Stock Appreciation Right unrelated to an Option may provide for any
other treatment of the Stock Appreciation Rights in the event of a Change
in Control.
7. Restricted Stock.
----------------
7.1 Grant. The Committee may grant Awards to Eligible Individuals
of Restricted Stock, which shall be evidenced by an Agreement between the
Company and the Grantee. Each Agreement shall contain such restrictions,
terms and conditions as the Committee may, in its discretion, determine and
(without limiting the generality of the foregoing) such Agreements may
require that an appropriate legend be placed on Share certificates. Awards
of Restricted Stock shall be subject to the terms and provisions set forth
below in this Section 7.
7.2 Rights of Grantee. Shares of Restricted Stock granted
pursuant to an Award hereunder shall be issued in the name of the Grantee
as soon as reasonably practicable after the Award is granted provided that
the Grantee has executed an Agreement evidencing the Award, the appropriate
blank stock powers and, in the discretion of the Committee, an escrow
agreement and any other documents which the Committee may require as a
condition to the issuance of such Shares. If a Grantee shall fail to
execute the Agreement evidencing a Restricted Stock Award, or any documents
which the Committee may require within the time period prescribed by the
Committee at the time the Award is granted, the Award shall be null and
void. At the discretion of the Committee, Shares issued in connection with
a Restricted Stock Award shall be deposited together with the stock powers
with an escrow agent (which may be the Company) designated by the
Committee. Unless the Committee determines otherwise and as set forth in
the Agreement, upon delivery of the Shares to the escrow agent, the Grantee
shall have all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or
other distributions paid or made with respect to the Shares.
7.3 Non-transferability. Until all restrictions upon the Shares
of Restricted Stock awarded to a Grantee shall have lapsed in the manner
set forth in Section 7.4, such Shares shall not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated.
7.4 Lapse of Restrictions.
---------------------
(a) Generally. Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such terms and
conditions as the Committee may determine. The Agreement evidencing the
Award shall set forth any such restrictions.
(b) Effect of Change in Control. The Committee may determine
at the time of the grant of an Award of Restricted Stock the extent to
which the restrictions upon Shares of Restricted Stock shall lapse upon a
Change in Control. The Agreement evidencing the Award shall set forth any
such provisions.
7.5 Treatment of Dividends. At the time an Award of Shares of
Restricted Stock is granted, the Committee may, in its discretion,
determine that the payment to the Grantee of dividends, or a specified
portion thereof, declared or paid on such Shares by the Company shall be
(a) deferred until the lapsing of the restrictions imposed upon such Shares
and (b) held by the Company for the account of the Grantee until such time.
In the event that dividends are to be deferred, the Committee shall
determine whether such dividends are to be reinvested in Shares (which
shall be held as additional Shares of Restricted Stock) or held in cash. If
deferred dividends are to be held in cash, there may be credited at the end
of each year (or portion thereof) interest on the amount of the account at
the beginning of the year at a rate per annum as the Committee, in its
discretion, may determine. Payment of deferred dividends in respect of
Shares of Restricted Stock (whether held in cash or as additional Shares of
Restricted Stock), together with interest accrued thereon, if any, shall be
made upon the lapsing of restrictions imposed on the Shares in respect of
which the deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any Shares of
Restricted Stock shall be forfeited upon the forfeiture of such Shares.
7.6 Delivery of Shares. Upon the lapse of the restrictions on
Shares of Restricted Stock, the Committee shall cause a stock certificate
to be delivered to the Grantee with respect to such Shares, free of all
restrictions hereunder.
8. Performance Awards.
------------------
8.1 Performance Units. The Committee, in its discretion, may
grant Awards of Performance Units to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company
and the Grantee. Performance Units may be denominated in Shares or a
specified dollar amount and, contingent upon the attainment of specified
Performance Objectives within the Performance Cycle, represent the right to
receive payment as provided in Section 8.3(c) of (i) in the case of
Share-denominated Performance Units, the Fair Market Value of a Share on
the date the Performance Unit was granted, the date the Performance Unit
became vested or any other date specified by the Committee, (ii) in the
case of dollar-denominated Performance Units, the specified dollar amount
or (iii) a percentage (which may be more than 100%) of the amount described
in clause (i) or (ii) depending on the level of Performance Objective
attainment; provided, however, that, the Committee may at the time a
Performance Unit is granted specify a maximum amount payable in respect of
a vested Performance Unit. Each Agreement shall specify the number of
Performance Units to which it relates, the Performance Objectives which
must be satisfied in order for the Performance Units to vest and the
Performance Cycle within which such Performance Objectives must be
satisfied.
(a) Vesting and Forfeiture. Subject to Sections 8.3(c) and
8.4, a Grantee shall become vested with respect to the Performance Units to
the extent that the Performance Objectives set forth in the Agreement are
satisfied for the Performance Cycle.
(b) Payment of Awards. Subject to Section 8.3(c), payment to
Grantees in respect of vested Performance Units shall be made as soon as
practicable after the last day of the Performance Cycle to which such Award
relates unless the Agreement evidencing the Award provides for the deferral
of payment, in which event the terms and conditions of the deferral shall
be set forth in the Agreement. Subject to Section 8.4, such payments may be
made entirely in Shares valued at their Fair Market Value, entirely in
cash, or in such combination of Shares and cash as the Committee in its
discretion shall determine at any time prior to such payment; provided,
however, that if the Committee in its discretion determines to make such
payment entirely or partially in Shares of Restricted Stock, the Committee
must determine the extent to which such payment will be in Shares of
Restricted Stock and the terms of such Restricted Stock at the time the
Award is granted.
8.2 Performance Shares. The Committee, in its discretion, may
grant Awards of Performance Shares to Eligible Individuals, the terms and
conditions of which shall be set forth in an Agreement between the Company
and the Grantee. Each Agreement may require that an appropriate legend be
placed on Share certificates. Awards of Performance Shares shall be subject
to the following terms and provisions:
(a) Rights of Grantee. The Committee shall provide at the
time an Award of Performance Shares is made the time or times at which the
actual Shares represented by such Award shall be issued in the name of the
Grantee; provided, however, that no Performance Shares shall be issued
until the Grantee has executed an Agreement evidencing the Award, the
appropriate blank stock powers and, in the discretion of the Committee, an
escrow agreement and any other documents which the Committee may require as
a condition to the issuance of such Performance Shares. If a Grantee shall
fail to execute the Agreement evidencing an Award of Performance Shares,
the appropriate blank stock powers and, in the discretion of the Committee,
an escrow agreement and any other documents which the Committee may require
within the time period prescribed by the Committee at the time the Award is
granted, the Award shall be null and void. At the discretion of the
Committee, Shares issued in connection with an Award of Performance Shares
shall be deposited together with the stock powers with an escrow agent
(which may be the Company) designated by the Committee. Except as
restricted by the terms of the Agreement, upon delivery of the Shares to
the escrow agent, the Grantee shall have, in the discretion of the
Committee, all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or
other distributions paid or made with respect to the Shares.
(b) Non-transferability. Until any restrictions upon the
Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Sections 8.2(c) or 8.4, such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may
also impose such other restrictions and conditions on the Performance
Shares, if any, as it deems appropriate.
(c) Lapse of Restrictions. Subject to Sections 8.3(c) and
8.4, restrictions upon Performance Shares awarded hereunder shall lapse and
such Performance Shares shall become vested at such time or times and on
such terms, conditions and satisfaction of Performance Objectives as the
Committee may, in its discretion, determine at the time an Award is
granted.
(d) Treatment of Dividends. At the time the Award of
Performance Shares is granted, the Committee may, in its discretion,
determine that the payment to the Grantee of dividends, or a specified
portion thereof, declared or paid on Shares represented by such Award which
have been issued by the Company to the Grantee shall be (i) deferred until
the lapsing of the restrictions imposed upon such Performance Shares and
(ii) held by the Company for the account of the Grantee until such time. In
the event that dividends are to be deferred, the Committee shall determine
whether such dividends are to be reinvested in shares of Stock (which shall
be held as additional Performance Shares) or held in cash. If deferred
dividends are to be held in cash, there may be credited at the end of each
year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its
discretion, may determine. Payment of deferred dividends in respect of
Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon
the lapsing of restrictions imposed on the Performance Shares in respect of
which the deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any Performance
Shares shall be forfeited upon the forfeiture of such Performance Shares.
(e) Delivery of Shares. Upon the lapse of the restrictions
on Performance Shares awarded hereunder, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares,
free of all restrictions hereunder.
8.3 Performance Objectives
----------------------
(a) Establishment. Performance Objectives for Performance
Awards may be expressed in terms of (i) earnings per Share, (ii) Share
price, (iii) pre-tax profits, (iv) net earnings, (v) return on equity or
assets, (vi) sales, (vii) any combination of the foregoing or (viii) prior
to the end of the Transition Period, such other criteria as the Committee
may determine. Performance Objectives may be in respect of the performance
of the Company, any of its Subsidiaries, any of its Divisions or any
combination thereof. Performance Objectives may be absolute or relative (to
prior performance of the Company or to the performance of one or more other
entities or external indices) and may be expressed in terms of a
progression within a specified range. The Performance Objectives with
respect to a Performance Cycle shall be established in writing by the
Committee by the earlier of (x) the date on which a quarter of the
Performance Cycle has elapsed or (y) the date which is ninety (90) days
after the commencement of the Performance Cycle, and in any event while the
performance relating to the Performance Objectives remain substantially
uncertain.
(b) Effect of Certain Events. At the time of the granting of
a Performance Award, or at any time thereafter, in either case to the
extent permitted under Section 162(m) of the Code and the regulations
thereunder without adversely affecting the treatment of the Performance
Award as Performance-Based Compensation, the Committee may provide for the
manner in which performance will be measured against the Performance
Objectives (or may adjust the Performance Objectives) to reflect the impact
of specified corporate transactions, accounting or tax law changes and
other extraordinary or nonrecurring events.
(c) Determination of Performance. Prior to the vesting,
payment, settlement or lapsing of any restrictions with respect to any
Performance Award that is intended to constitute Performance-Based
Compensation made to a Grantee who is subject to Section 162(m) of the
Code, the Committee shall certify in writing that the applicable
Performance Objectives have been satisfied to the extent necessary for such
Award to qualify as Performance Based Compensation.
8.4 Effect of Change in Control. The Agreements evidencing
Performance Shares and Performance Units may provide for the treatment of
such Awards (or portions thereof) in the event of a Change in Control,
including, but not limited to, provisions for the adjustment of applicable
Performance Objectives.
8.5 Non-transferability. Until the vesting of Performance Units
or the lapsing of any restrictions on Performance Shares, as the case may
be, such Performance Units or Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated.
9. Other Share Based Awards.
------------------------
9.1 Share Awards. The Committee may grant a Share Award to any
Eligible Individual on such terms and conditions as the Committee may
determine in its sole discretion. Share Awards may be made as additional
compensation for services rendered by the Eligible Individual or may be in
lieu of cash or other compensation to which the Eligible Individual is
entitled from the Company.
9.2 Phantom Stock Awards.
--------------------
(a) Grant. The Committee may, in its discretion, grant
shares of Phantom Stock to any Eligible Individuals. Such Phantom Stock
shall be subject to the terms and conditions established by the Committee
and set forth in the applicable Agreement.
(b) Payment of Awards. Upon the vesting of a Phantom Stock
Award, the Grantee shall be entitled to receive a cash payment in respect
of each share of Phantom Stock which shall be equal to the Fair Market
Value of a Share as of the date the Phantom Stock Award was granted, or
such other date as determined by the Committee at the time the Phantom
Stock Award was granted. The Committee may, at the time a Phantom Stock
Award is granted, provide a limitation on the amount payable in respect of
each share of Phantom Stock. In lieu of a cash payment, the Committee may
settle Phantom Stock Awards with Shares having a Fair Market Value equal to
the cash payment to which the Grantee has become entitled.
10. Effect of a Termination of Employment.
-------------------------------------
The Agreement evidencing the grant of each Option and
each Award shall set forth the terms and conditions applicable to such
Option or Award upon a termination or change in the status of the
employment of the Optionee or Grantee by the Company, a Subsidiary or a
Division (including a termination or change by reason of the sale of a
Subsidiary or a Division), which shall be as the Committee may, in its
discretion, determine at the time the Option or Award is granted or
thereafter.
11. Adjustment Upon Changes in Capitalization.
-----------------------------------------
(a) In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate adjustments, if any,
to (i) the maximum number and class of Shares or other stock or securities
with respect to which Options or Awards may be granted under the Plan, (ii)
the number and class of Shares or other stock or securities which are
subject to outstanding Options or Awards granted under the Plan and the
exercise price therefor, if applicable, and (iii) the Performance
Objectives.
(b) Any such adjustment in the Shares or other stock or
securities (i) subject to outstanding Incentive Stock Options (including
any adjustments in the exercise price) shall be made in such manner as not
to constitute a modification as defined by Section 424(h)(3) of the Code
and only to the extent otherwise permitted by Sections 422 and 424 of the
Code, or (ii) subject to outstanding Options or Awards that are intended to
qualify as Performance-Based Compensation shall be made in such a manner as
not to adversely affect the treatment of the Option or Award as
Performance-Based Compensation.
(c) If, by reason of a Change in Capitalization, a Grantee
of an Award shall be entitled to, or an Optionee shall be entitled to
exercise an Option with respect to, new, additional or different shares of
stock or securities of the Company or any other corporation, such new,
additional or different shares shall thereupon be subject to all of the
conditions, restrictions and performance criteria which were applicable to
the Shares subject to the Award or Option, as the case may be, prior to
such Change in Capitalization.
12. Effect of Certain Transactions.
------------------------------
Subject to Sections 5.10, 6.7, 7.4(b) and 8.4 or as
otherwise provided in an Agreement, in the event of (a) the liquidation or
dissolution of the Company or (b) a merger or consolidation of the Company
(a "Transaction"), the Plan and the Options and Awards issued hereunder
shall continue in effect in accordance with their respective terms, except
that following a Transaction either (i) each outstanding Option or Award
shall be treated as provided for in the agreement entered into in
connection with the Transaction or (ii) if not so provided in such
agreement, each Optionee and Grantee shall be entitled to receive in
respect of each Share subject to any outstanding Options or Awards, as the
case may be, upon exercise of any Option or payment or transfer in respect
of any Award, the same number and kind of stock, securities, cash, property
or other consideration that each holder of a Share was entitled to receive
in the Transaction in respect of a Share; provided, however, that such
stock, securities, cash, property, or other consideration shall remain
subject to all of the conditions, restrictions and performance criteria
which were applicable to the Options and Awards prior to such Transaction.
The treatment of any Option or Award as provided in this Section 12 shall
be conclusively presumed to be appropriate for purposes of Section 11.
13. Interpretation.
--------------
Following the required registration of any equity
security of the Company pursuant to Section 12 of the Exchange Act:
(a) The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall interpret and
administer the provisions of the Plan or any Agreement in a manner
consistent therewith. Any provisions inconsistent with such Rule shall be
inoperative and shall not affect the validity of the Plan.
(b) Unless otherwise expressly stated in the relevant
Agreement, each Option, Stock Appreciation Right and Performance Award
granted under the Plan is intended to be Performance-Based Compensation.
The Committee shall not be entitled to exercise any discretion otherwise
authorized hereunder with respect to such Options or Awards if the ability
to exercise such discretion or the exercise of such discretion itself would
cause the compensation attributable to such Options or Awards to fail to
qualify as Performance-Based Compensation.
(c) To the extent that any legal requirement of Section 16
of the Exchange Act or Section 162(m) of the Code as set forth in the Plan
ceases to be required under Section 16 of the Exchange Act or Section
162(m) of the Code, that Plan provision shall cease to apply.
14. Pooling Transactions.
--------------------
Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event of a Change in Control which is
also intended to constitute a Pooling Transaction, the Committee shall take
such actions, if any, as are specifically recommended by an independent
accounting firm retained by the Company to the extent reasonably necessary
in order to assure that the Pooling Transaction will qualify as such,
including but not limited to (a) deferring the vesting, exercise, payment,
settlement or lapsing of restrictions with respect to any Option or Award,
(b) providing that the payment or settlement in respect of any Option or
Award be made in the form of cash, Shares or securities of a successor or
acquirer of the Company, or a combination of the foregoing, and (c)
providing for the extension of the term of any Option or Award to the
extent necessary to accommodate the foregoing, but not beyond the maximum
term permitted for any Option or Award.
15. Termination and Amendment of the Plan or Modification of Options
and Awards.
----------------------------------------------------------------
15.1 Plan Amendment or Termination. The Plan shall terminate on
the day preceding the tenth anniversary of the date of its adoption by the
Board and no Option or Award may be granted thereafter. The Board may
sooner terminate the Plan and the Board may at any time and from time to
time amend, modify or suspend the Plan; provided, however, that:
(a) no such amendment, modification, suspension or
termination shall impair or adversely alter any Options or Awards
theretofore granted under the Plan, except with the consent of the Optionee
or Grantee, nor shall any amendment, modification, suspension or
termination deprive any Optionee or Grantee of any Shares which he or she
may have acquired through or as a result of the Plan; and
(b) to the extent necessary under any applicable law,
regulation or exchange requirement no amendment shall be effective unless
approved by the stockholders of the Company in accordance with applicable
law, regulation or exchange requirement.
15.2 Modification of Options and Awards. No modification of an
Option or Award shall adversely alter or impair any rights or obligations
under the Option or Award without the consent of the Optionee or Grantee,
as the case may be.
16. Non-Exclusivity of the Plan.
---------------------------
The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or
only in specific cases.
17. Limitation of Liability.
-----------------------
As illustrative of the limitations of liability of the Company,
but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:
(a) give any person any right to be granted an Option or
Award other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Plan;
(c) limit in any way the right of the Company or any
Subsidiary to terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding, expressed
or implied, that the Company will employ any person at any particular rate
of compensation or for any particular period of time.
18. Regulations and Other Approvals; Governing Law.
----------------------------------------------
18.1 Except as to matters of federal law, the Plan and the rights
of all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware without giving effect to
conflicts of laws principles thereof.
18.2 The obligation of the Company to sell or deliver Shares with
respect to Options and Awards granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such approvals
by governmental agencies as may be deemed necessary or appropriate by the
Committee.
18.3 The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Individuals granted Incentive Stock
Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.
18.4 Each Option and Award is subject to the requirement that, if
at any time the Committee determines, in its discretion, that the listing,
registration or qualification of Shares issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Option
or Award or the issuance of Shares, no Options or Awards shall be granted
or payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or
obtained free of any conditions as acceptable to the Committee.
18.5 Notwithstanding anything contained in the Plan or any
Agreement to the contrary, in the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act of 1933, as amended (the "Securities
Act"), and is not otherwise exempt from such registration, such Shares
shall be restricted against transfer to the extent required by the
Securities Act and Rule 144 or other regulations thereunder. The Committee
may require any individual receiving Shares pursuant to an Option or Award
granted under the Plan, as a condition precedent to receipt of such Shares,
to represent and warrant to the Company in writing that the Shares acquired
by such individual are acquired without a view to any distribution thereof
and will not be sold or transferred other than pursuant to an effective
registration thereof under said Act or pursuant to an exemption applicable
under the Securities Act or the rules and regulations promulgated
thereunder. The certificates evidencing any of such Shares shall be
appropriately amended or have an appropriate legend placed thereon to
reflect their status as restricted securities as aforesaid.
19. Miscellaneous.
-------------
19.1 Multiple Agreements. The terms of each Option or Award may
differ from other Options or Awards granted under the Plan at the same
time, or at some other time. The Committee may also grant more than one
Option or Award to a given Eligible Individual during the term of the Plan,
either in addition to, or in substitution for, one or more Options or
Awards previously granted to that Eligible Individual.
19.2 Withholding of Taxes.
--------------------
(a) At such times as an Optionee or Grantee recognizes
taxable income in connection with the receipt of Shares or cash hereunder
(a "Taxable Event"), the Optionee or Grantee shall pay to the Company an
amount equal to the federal, state and local income taxes and other amounts
as may be required by law to be withheld by the Company in connection with
the Taxable Event (the "Withholding Taxes") prior to the issuance, or
release from escrow, of such Shares or the payment of such cash. The
Company shall have the right to deduct from any payment of cash to an
Optionee or Grantee an amount equal to the Withholding Taxes in
satisfaction of the obligation to pay Withholding Taxes. The Committee may
provide in an Agreement evidencing an Option or Award at the time of grant
or thereafter, that the Optionee or Grantee, in satisfaction of the
obligation to pay Withholding Taxes to the Company, may elect to have
withheld a portion of the Shares issuable to him or her pursuant to the
Option or Award having an aggregate Fair Market Value equal to the
Withholding Taxes.
(b) If an Optionee makes a disposition, within the meaning
of Section 424(c) of the Code and regulations promulgated thereunder, of
any Share or Shares issued to such Optionee pursuant to the exercise of an
Incentive Stock Option within the two-year period commencing on the day
after the date of the grant or within the one-year period commencing on the
day after the date of transfer of such Share or Shares to the Optionee
pursuant to such exercise, the Optionee shall, within ten (10) days of such
disposition, notify the Company thereof, by delivery of written notice to
the Company at its principal executive office.
19.3 Effective Date. The effective date of this Plan shall be as
determined by the Board, subject only to the approval by the holders of a
majority of the securities of the Company entitled to vote thereon, in
accordance with the applicable laws within twelve (12) months of the
adoption of the Plan by the Board.
19.4 Post-Transition Period. Following the Transition Period, any
Option, Stock Appreciation Right or Performance Award granted under the
Plan which is intended to be Performance-Based Compensation, shall be
subject to the approval of the material terms of the Plan by a majority of
the shareholders of the Company in accordance with Section 162(m) of the
Code and the regulations promulgated thereunder.
EXHIBIT 5
[Letterhead of Fried, Frank, Harris, Shriver & Jacobson
(a partnership including professional corporations)]
August 30, 2000
Community Health Systems, Inc.
155 Franklin Road, Suite 400
Brentwood, Tennessee 37027
RE: Registration Statement on Form S-8
Ladies and Gentlemen:
Community Health Systems, Inc. (the "Company") is filing
with the Securities and Exchange Commission a Registration Statement on
Form S-8 (the "Registration Statement") with respect to an aggregate of
5,562,791 shares (the "Shares") of common stock, par value $.01 per share,
of the Company, issuable pursuant to the Community Health Systems, Inc.
401(k) Plan and the Community Health Systems, Inc. 2000 Stock Option and
Award Plan (the "Plans").
With your permission, all assumptions and statements of
reliance herein have been made without any independent investigation or
verification on our part except to the extent otherwise expressly stated,
and we express no opinion with respect to the subject matter or accuracy of
such assumptions or items relied upon.
In connection with this opinion, we have (i) investigated
such questions of law, (ii) examined originals or certified, conformed or
reproduction copies of such agreements, instruments, documents and records
of the Company, such certificates of public officials and such other
documents, and (iii) received such information from officers and
representatives of the Company as we have deemed necessary or appropriate
for the purposes of this opinion. In all examinations, we have assumed the
legal capacity of all natural persons executing documents, the genuineness
of all signatures, the authenticity of original and certified documents and
the conformity to original or certified copies of all copies submitted to
us as conformed or reproduction copies. As to various questions of fact
relevant to the opinions expressed herein, we have relied upon, and assume
the accuracy of, representations and warranties contained in documents and
certificates and oral or written statements and other information of or
from representatives of the Company and others and assume compliance on the
part of all parties to the documents with their covenants and agreements
contained therein. We also have assumed that any future changes to the
terms and conditions of the Plans will be duly authorized by the Company
and will comply with all applicable laws.
Based upon the foregoing and subject to the limitations and
assumptions set forth herein, we are of the opinion that the Shares to be
registered pursuant to the Registration Statement (when issued, delivered
and paid for in accordance with the terms of the Plans and the applicable
option agreements under the 2000 Stock Option and Award Plan) will be duly
authorized, validly issued, fully paid and non-assessable.
The opinion expressed herein is limited to the General
Corporation Law of the State of Delaware (the "GCLD") and the applicable
provisions of the Delaware Constitution, in each case as currently in
effect, and reported judicial decisions interpreting the GCLD the Delaware
Constitution.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to this Firm
under the caption "Interests of Named Experts and Counsel" in the
Registration Statement. In giving such consent, we do not hereby admit that
we are in the category of such persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ Jeffrey Bagner
---------------------------------------
Jeffrey Bagner
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Community Health Systems, Inc. on Form S-8 of our reports dated February
25, 2000 (June 8, 2000 as to Notes 9, 10 and 14) accompanying the
consolidated financial statements and schedule, appearing in Registration
Statement No. 333-31790 on Form S-1 of Community Health Systems, Inc.
DELOITTE & TOUCHE LLP
Nashville, Tennessee
August 30, 2000
