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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 18, 1999
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CENTURY BUSINESS SERVICES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 22-2769024
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
6480 ROCKSIDE WOODS BOULEVARD SOUTH
SUITE 330
CLEVELAND, OHIO 44131
(Address of principal executive offices)
(Zip Code)
BEALL, GARNER, SCREEN & GEARE, INC.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
(Full title of the plan)
MICHAEL G. DEGROOTE
CHIEF EXECUTIVE OFFICER, PRESIDENT AND CHAIRMAN OF THE BOARD
6480 Rockside Woods Boulevard South, Suite 330
Cleveland, Ohio 44131
(216) 447-9000
(Name and address, including zip code, and
telephone number of agent for service)
Copies to:
ALAN M. UTAY, ESQ.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P
1700 PACIFIC AVENUE
SUITE 4100
DALLAS, TEXAS 75201-4675
(214) 969-2800
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CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED (1) SHARE (2) PRICE (1) FEE
Common Stock, $0.01 par value per share 500,000 $9.9065 $4,953,250 $1,378
(1) The number of shares of Common Stock set forth is the maximum aggregate
number of shares that it is anticipated will be purchased under the Plan.
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described herein.
(2) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) and (h). The calculation of the proposed maximum offering
price is based upon the average of the high and low sales prices of the
Common Stock of Century Business Services, Inc. on March 17, 1999, as
reported by the Nasdaq National Market.
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PART I
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INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
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ITEM 1. PLAN INFORMATION*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the registration statement in accordance with
Rule 428 under the Securities Act of 1933 and the Note to Part I of
Form S-8.
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PART II
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INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
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ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed by Century Business Services,
Inc. (the "Registrant") with the Securities and Exchange Commission and are
incorporated herein by reference:
(a) The description of the Registrant's Common Stock, $.01 par
value per share (the "Common Stock") contained in the
Registrant's registration statement on Form S-3
(No. 333-40331) filed with the Commission on November 14,
1997, as amended by Amendment #1 thereto filed with the
Commission on December 9, 1997.
(b) The Annual Report on Form 10-K filed by the Registrant with
the Securities and Exchange Commission for the Registrant's
fiscal year ended December 31, 1998.
(c) All other reports filed by the Registrant pursuant to
Section 13 or 15(b) of the Exchange Act since
December 31, 1998.
(d) All documents filed by the Registrant pursuant to Section
13(a), 13(c), 14, or 15(d) of the Exchange Act after the date
hereof and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or
which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be a
part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
to the extent that a statement contained in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such prior statement. The documents required to be so
modified or superseded shall not be deemed to constitute a part of this
Registration Statement, except as so modified or superseded.
ITEM 4. DESCRIPTION OF SECURITIES
A description of the Registrant's Common Stock has been incorporated by
reference into this Registration Statement. See Item 3(a), above.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the Shares offered hereby will be passed upon for the
Company by Akin, Gump, Strauss, Hauer & Feld, L.L.P. Rick L. Burdick, a partner
of Akin, Gump, Strauss, Hauer & Feld, L.L.P., is a director of the Company and
is the beneficial owner of 59,034 shares of Common Stock (including options and
warrants to purchase Common Stock).
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") empowers a Delaware corporation to indemnify any
person who was or is a party, or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of such corporation) by reason of the fact that such person is or
was an officer or director of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise.
The indemnity may include expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by
such person in connection with such action, suit or proceeding, provided
that such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and with
respect to any criminal action or proceeding, had no reasonable cause to
believe such person's conduct was unlawful. A Delaware corporation may
indemnify past or present officers and directors of such corporation or
of another corporation or other enterprise at the former corporation's
request, in an action by or in the right of the corporation to procure a
judgment in its favor under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in defense of any action
referred to above, or in defense of any claim, issue or matter therein, the
corporation must indemnify such person against the expenses (including
attorneys' fees) which such person actually and reasonably
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incurred in connection therewith. Section 145 further provides that any
indemnification shall be made by the corporation only as authorized in each
specific case upon a determination that indemnification of such person is
proper because he has met the applicable standard of conduct by:
- the stockholders;
- board of directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or
proceeding;
- committee of directors who are not parties to such action,
suit or proceeding designated by majority vote by such
disinterested directors even if less than a quorum; or
- independent legal counsel, if there are no such disinterested
directors, or if such disinterested directors so direct.
Section 145 further provides that indemnification pursuant to its
provisions is not exclusive of other rights of indemnification to which a
person may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise.
The Amended and Restated Certificate of Incorporation, as amended, of
the Registrant entitles the Board of Directors to provide for indemnification of
directors and officers to the fullest extent provided by law, except for
liability for:
- any breach of director's duty of loyalty to the Registrant or
its stockholders;
- acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
- unlawful payments of dividends;
- unlawful stock purchases or redemptions; or
- any transaction from which the director derived an improper
personal benefit.
Article VII of the Amended and Restated Bylaws of the Registrant
(the "Bylaws") provides that to the fullest extent and in the manner
permitted by the laws of the State of Delaware and specifically as is
permitted under Section 145 of the DGCL, the Registrant shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, other than an action by or in
the right of the Registrant, by reason of the fact that such person is or
was a director, officer, employee or agent of the Registrant, or is or was
serving at the request of the Registrant as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit, or proceeding if such person acted in
good faith and in a manner he reasonably believed to be in and not opposed
to the best interests of the Registrant and with respect to any criminal
action or proceeding, such person had no reasonable cause to believe his
conduct was unlawful. Determination of an action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere
or its equivalent shall not, of itself, create a presumption that a person
did not act in good faith and in a manner such person reasonably believed
to be in and not opposed to the best interests of the Registrant, and with
respect to any criminal action or proceeding, had reasonable cause to
believe his conduct was lawful.
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The Bylaws provide that any decision as to indemnification shall be
made:
- by the Board of Directors of the Registrant by a majority vote
of a quorum consisting of directors who were not parties to
such action, suit or proceeding; or
- if such a quorum is not obtainable, or even if obtainable, if
a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion; or
- by the stockholders.
The Board of Directors of the Registrant may authorize
indemnification of expenses incurred by an officer or director in defending
a civil or criminal action, suit or proceeding in advance of the final
disposition of such action, suit or proceeding. Indemnification pursuant to
these provisions is not exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise and shall continue as
to a person who has ceased to be a director or officer. The Registrant may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Company.
Further, the Bylaws provide that the indemnity provided will be
extended to the directors, officers, employees and agents of any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger that, if its separate existence has continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of the Bylaws with respect
to the resulting or surviving corporation as such person would have with respect
to such constituent corporation if its separate existence had continued.
The Registrant currently maintains a separate insurance policy
relating to its directors and officers, under which policy such directors
and officers are insured, within the limits and subject to the limitations
of the policy, against certain expenses in connection with the defense of
certain claims, actions, suits or proceedings, and certain liabilities
which might be imposed as a result of such claims, actions, suits or
proceedings, which may be brought against them by reason of being or having
been such directors or officers.
The Commission has issued a policy statement that the indemnification
of officers and directors for liabilities under the Securities Act of 1933 is
against public policy as expressed in the Act, and is, therefore, unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
See Index to Exhibits, attached hereto and incorporated herein by
reference. The undersigned Registrant hereby undertakes to submit the Plan and
any amendments thereto to the Internal Revenue Service in a timely manner and
to make all changes required by the Internal Revenue Service in order to
qualify the Plan under Section 401(a) and Section 401(k) of the Internal
Revenue Code.
ITEM 9. UNDERTAKINGS
A. RULE 415 OFFERING. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
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PROVIDED, HOWEVER, that paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE. The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Hamilton, Bermuda on March 18, 1999.
CENTURY BUSINESS SERVICES, INC.
By: /s/ Michael G. DeGroote
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Michael G. DeGroote
Chief Executive Officer, President and
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Michael G. DeGroote and Charles D.
Hamm, Jr., and each of them, with full power to act without the other, his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in all capacities
(until revoked in writing), to sign any and all amendments (including, without
limitation, post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting to each
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the date indicated above.
SIGNATURE TITLE
/s/ Michael G. DeGroote
__________________________________ President, Chief Executive Officer, Chairman of the
Michael G. DeGroote Board and Director (Principal Executive Officer)
/s/ Charles D. Hamm, Jr.
__________________________________ Senior Vice President and Chief Financial Officer
Charles D. Hamm, Jr. (Principal Accounting and Financial Officer)
/s/ Rick L. Burdick
__________________________________ Director
Rick L. Burdick
/s/ Joseph S. DiMartino
__________________________________ Director
Joseph S. DiMartino
/s/ Harve A. Ferrill
__________________________________ Director
Harve A. Ferrill
/s/ Hugh P. Lowenstein
__________________________________ Director
Hugh P. Lowenstein
/s/ Richard C. Rochon
__________________________________ Director
Richard C. Rochon
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Pursuant to the requirements of the Securities Act of 1933, as
amended, the trustees (or other persons who administer the employee benefit
plan) have duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Cumberland,
State of Maryland, on March 18, 1999.
BEALL, GARNER, SCREEN & GEARE, INC.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP
PLAN
By: /s/ Robert H. Garner
______________________________________
Robert H. Garner
Trustee
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INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS
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4.1 Amended and Restated Certificate of Incorporation of the Company (filed as
Exhibit 3.1 to Registration Statement on Form 10, Commission File No.
0-25890, and incorporated herein by reference)
4.2 Certificate of Amendment to the Certificate of Incorporation of the Company
dated October 18, 1996 (filed as Exhibit 3.2 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1996, and incorporated herein
by reference)
4.3 Certificate of Amendment to the Certificate of Incorporation of the Company
effective December 23, 1997 (filed as Exhibit 3.3 to Annual Report on Form
10-K for the year ended December 31, 1997, and incorporated herein by
reference)
4.4 Certificate of Amendment to the Certificate of Incorporation of the Company
effective September 10, 1998 (filed as Exhibit 3.4 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, and incorporated
herein by reference)
4.5 Amended and Restated Bylaws of the Company (filed as Exhibit 3.2 to
Registration Statement on Form 10, Commission File No. 0-25890 and
incorporated herein by reference)
4.6 Form of Stock Certificate of Common Stock of the Company (filed as Exhibit
4.1 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, and incorporated herein by reference)
4.7* Beall, Garner, Screen & Geare, Inc. Employee Savings and Stock Ownership
Plan, effective as amended and restated as of January 1, 1997
5.1* Opinion of Counsel Regarding the Legality of the Shares of Common Stock
23.1* Consent of KPMG LLP
23.2* Consent of Akin, Gump, Strauss, Haver & Feld, L.L.P. (included
in Exhibit 5.1)
25.1* Power of Attorney (included on the signature page of this Registration
Statement)
* Filed herewith
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BEALL, GARNER, SCREEN & GEARE, INC.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
Amendment and Restatement
Effective as of January 1, 1997
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BEALL, GARNER, SCREEN & GEARE, INC.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
Amendment and Restatement
Effective as of January 1, 1997
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
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1.1 ACQUISITION LOAN 1
1.2 ACQUISITION LOAN SUSPENSE ACCOUNT 1
1.3 ADMINISTRATOR 2
1.4 AFFILIATED COMPANY(IES) 2
1.5 ANNIVERSARY DATE 2
1.6 BENEFICIARY 2
1.7 BREAK IN SERVICE 2
1.8 CODE 2
1.9 COMPENSATION 2
1.10 EARLY RETIREMENT DATE 3
1.11 EFFECTIVE DATE 3
1.12 EMPLOYEE 3
1.13 EMPLOYER 3
1.14 EMPLOYER MATCHING CONTRIBUTION ACCOUNT 3
1.15 EMPLOYER STOCK 3
1.16 EMPLOYER STOCK ACCOUNT 4
1.17 ESOP CONTRIBUTION ACCOUNT 4
1.18 ERISA 4
1.19 FINANCED SHARES 4
1.20 HIGHLY COMPENSATED EMPLOYEE 4
1.21 HOUR OF SERVICE 5
1.22 NON-HIGHLY COMPENSATED EMPLOYEE 6
1.23 NORMAL RETIREMENT AGE 6
1.24 NORMAL RETIREMENT DATE 6
1.25 PARTICIPANT 6
1.26 PLAN 6
1.27 PLAN ACCOUNT 6
1.28 PLAN YEAR 6
1.29 QUALIFIED ELECTION PERIOD 6
1.30 QUALIFIED MATCHING CONTRIBUTION ACCOUNT 6
1.31 QUALIFIED NONELECTIVE CONTRIBUTION ACCOUNT 6
1.32 QUALIFIED PARTICIPANT 6
1.33 QUALIFIED PARTICIPANT SELF-DIRECTED ACCOUNT 7
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1.34 QUALIFIED PARTICIPANT SELF-DIRECTED INVESTMENTS 7
1.35 ROLLOVER CONTRIBUTION ACCOUNT 7
1.36 SALARY REDUCTION CONTRIBUTION ACCOUNT 7
1.37 TRUST 7
1.38 TRUST FUND 7
1.39 TRUSTEES 7
1.40 VALUATION DATE 7
1.41 YEARS OF SERVICE 7
ARTICLE 2
ELIGIBILITY FOR PARTICIPATION
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2.1 INITIAL ELIGIBILITY 8
2.2 SUBSEQUENT ELIGIBILITY 8
2.3 REHIRED PARTICIPANTS 9
ARTICLE 3
CONTRIBUTIONS AND ALLOCATIONS
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3.1 SALARY REDUCTION CONTRIBUTIONS BY PARTICIPANTS 9
3.2 EMPLOYER MATCHING CONTRIBUTIONS 11
3.3 ESOP CONTRIBUTIONS 12
3.4 DEDUCTIBILITY OF CONTRIBUTIONS 13
3.5 LIMITS ON ANNUAL ADDITIONS 13
3.6 DISPOSITION OF EXCESS ANNUAL ADDITIONS 15
3.7 CONTRIBUTIONS TO ROLLOVER CONTRIBUTION ACCOUNT 16
3.8 DEFINITION OF "ROLLOVER CONTRIBUTION" 16
3.9 DISTRIBUTION OF EXCESS DEFERRALS 17
3.10 DISTRIBUTION OF EXCESS CONTRIBUTIONS 18
3.11 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS 18
3.12 MILITARY SERVICE BENEFITS 19
3.13 EMPLOYER STOCK 19
3.14 ADMINISTRATOR'S DIRECTION 20
3.15 INCURRENCE OF ACQUISITION LOANS 20
3.16 DIVERSIFICATION ELECTIONS 21
(a) Qualified Participants' Rights 21
(b) Qualified Participant Self-Directed Accounts 21
3.17 VOTING OF EMPLOYER STOCK 21
(a) Publicly Traded Stock 21
(b) Non-Publicly Traded Stock 21
3.18 PARTICIPANTS' INVESTMENT ELECTIONS 22
3.19 ALLOCATION OF CONTRIBUTIONS, FORFEITURES AND EARNINGS 22
3.20 PROHIBITED ALLOCATIONS 25
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(a) General Rule 25
(b) Exception For Certain Lineal Descendants 26
(c) Nonallocation Period 26
3.21 VALUATION OF EMPLOYER STOCK 26
ARTICLE 4
DISTRIBUTIONS
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4.1 RETIREMENT 26
4.2 DEATH OF PARTICIPANT 27
4.3 DISABILITY 27
4.4 TERMINATION PRIOR TO RETIREMENT 28
4.5 REHIRED PARTICIPANT 30
4.6 COMMENCEMENT OF BENEFITS 30
4.7 NOTICE REQUIREMENTS 31
4.8 CASH-OUT DISTRIBUTIONS 31
4.9 DIRECT ROLLOVERS 31
4.10 REQUIRED DISTRIBUTIONS 32
4.11 FORMS OF BENEFITS 32
4.12 EMPLOYER STOCK DISTRIBUTIONS; BEGINNING DATE 33
4.13 CHARTER/BYLAW RESTRICTIONS 33
4.14 STOCK DISTRIBUTIONS; PUT OPTION 34
4.15 PUT OPTION RIGHT; LEVERAGED SHARES 34
4.16 RIGHT OF FIRST REFUSAL ON EMPLOYER STOCK 35
4.17 LEGENDS 35
4.18 HARDSHIP WITHDRAWALS 35
ARTICLE 5
ADMINISTRATION
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ARTICLE 6
THE ADMINISTRATOR
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6.1 MEMBERS 37
6.2 PROCEDURE 37
6.3 POWERS AND RESPONSIBILITIES 37
6.4 CERTIFICATIONS AND INVESTIGATIONS 38
6.5 CLAIMS PROCEDURE 38
6.6 ADVICE 40
6.7 DELEGATION 40
6.8 LIABILITY; INDEMNIFICATION 40
6.9 INSURANCE 40
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6.10 BONDING 41
6.11 COMPENSATION 41
ARTICLE 7
TRUST AND TRUSTEES
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7.1 TRUST FUND 41
7.2 TRUSTEES' CONTROL 41
7.3 INVESTMENT OPTIONS 42
7.4 TRUSTEES APPOINTMENT AND RESIGNATION; REMOVAL AND
SUCCESSION OF TRUSTEES 42
7.5 PRUDENT PERSON RULE 43
7.6 LIABILITY; EXPENSES; COMPENSATION 43
7.7 MANAGEMENT OF ASSETS 43
7.8 RELIANCE BY TRUSTEES 46
7.9 CHANGES IN ADMINISTRATOR 46
7.10 LEGAL COUNSEL 46
7.11 ACCOUNTING OF FUNDS AND TRANSACTIONS 46
7.12 RELIANCE ON TRUSTEES 47
7.13 LEGAL ACTION 47
7.14 DISTRIBUTIONS 47
7.15 SIGNATURES 47
7.16 FEES AND EXPENSES 48
7.17 AMENDMENT AND TERMINATION 48
7.18 NON-REVERSION 48
7.19 RESIGNATION OR REMOVAL OF TRUSTEE 48
7.20 ACCEPTANCE 48
7.21 DIRECTION OF TRUSTEE; INDEMNIFICATION 49
ARTICLE 8
MEETINGS AND DECISIONS OF TRUSTEES
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8.1 MEETING OF TRUSTEES 49
8.2 ACTION BY TRUSTEES WITHOUT MEETING 49
8.3 MINUTES OF MEETING 49
ARTICLE 9
AMENDMENT
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9.1 AMENDMENT 49
9.2 PROCEDURE 50
ARTICLE 10
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TERMINATION
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10.1 RIGHT TO TERMINATE 50
10.2 EFFECT OF TERMINATION 50
10.3 PROCEDURE 51
10.4 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS OF THE
EMPLOYER 51
10.5 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS OF THE PLAN 51
ARTICLE 11
PROVISIONS TO PREVENT DISCRIMINATION
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11.1 NO Section 401(a) DISCRIMINATION 51
11.2 UNIFORM TREATMENT 51
ARTICLE 12
TOP HEAVY PROVISIONS
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12.1 TOP HEAVY REQUIREMENTS 52
12.2 TOP HEAVY PLAN DEFINITIONS 53
ARTICLE 13
LOANS TO PARTICIPANTS
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13.1 LOAN ADMINISTRATION 55
13.2 AMOUNT, AVAILABILITY 55
13.3 NON-DISCRIMINATION 55
13.4 LOAN APPROVAL 56
13.5 INTEREST RATE 56
13.6 COLLATERAL 56
13.7 REPAYMENT 57
13.8 PARTICIPANT CONSENT TO LOAN SET-OFFS 57
13.9 DISTRIBUTIONS PROHIBITED 57
13.10 NO ALIENATION 58
13.11 DISCLOSURE 58
ARTICLE 14
MISCELLANEOUS
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14.1 NO RIGHT TO EMPLOYMENT 58
14.2 HEADINGS 58
14.3 COUNTERPARTS 58
14.4 GOVERNING LAW 58
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14.5 RULES AND REGULATIONS 58
14.6 NO ASSIGNMENT OF BENEFITS 58
14.7 EXCLUSIVE BENEFIT 59
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BEALL, GARNER, SCREEN & GEARE, INC.
EMPLOYEE SAVINGS AND STOCK OWNERSHIP PLAN
Amendment and Restatement
Effective as of January 1, 1997
This amended and restated Plan, the Beall, Garner, Screen & Geare, Inc.
Employee Savings And Stock Ownership Plan (the "Plan"), is adopted, effective as
of January 1, 1997, by Beall, Garner, Screen & Geare, Inc. (the "Employer").
The primary purpose of this Plan is to enable eligible employees to
share in the growth and prosperity of the Employer, and to provide such eligible
employees with an opportunity to accumulate capital for their future economic
security by acquiring stock ownership interests in the Employer. Therefore, a
portion of the Trust Fund established pursuant to the Plan is designed to invest
primarily in Employer Stock. In this regard, the Plan is intended to be an
employee stock ownership plan within the meaning of Section 4975(e)(7) of the
Code and Section 407(d)(6) of ERISA.
This amended and restated Plan also is designed to afford eligible
employees an opportunity to increase their security at retirement through their
own savings and through Employer contributions during their periods of active
employment while this Plan remains in effect.
Accordingly, the Employer wishes to adopt this amended and restated
Plan, effective as of January 1, 1997, subject, however, to such amendments as
may be required by the Internal Revenue Service in order that the Plan may
qualify as a tax-qualified "profit-sharing" plan and conditioned on such
qualification.
Effective February 15, 1999, the Plan shall not receive contributions
of, or be designed to invest primarily in, Employer Stock, but rather the Plan's
assets shall be invested at the discretion of the Plan's participants and
beneficiaries among a diversified portfolio of investments made available under
the Plan, including, but not limited to, Employer Stock.
ARTICLE 1
DEFINITIONS
-----------
The following terms, when used in this Plan, have the meanings set forth
below, unless different meanings are clearly required by the context:
1.1 ACQUISITION LOAN means a loan (or other extension of credit) used by the
Trustees to finance the acquisition of Employer Stock, which loan may constitute
an extension of credit to the Trustees from a party in interest (as defined in
Section 3(14) of ERISA).
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1.2 ACQUISITION LOAN SUSPENSE ACCOUNT means the bookkeeping account maintained
to record the Plan's interest in Financed Shares which have not been released
from encumbrance pursuant to Section 3.15.
1.3 ADMINISTRATOR means the Plan Administrator provided for in Article of this
Plan.
1.4 AFFILIATED COMPANY(IES) means any corporation, trade or business during any
period in which it is, along with the Plan Sponsor, a member of a controlled
group of corporations, a group of trades or businesses under common control or
an affiliated service group, as described in Code Sections 414(b), 414(c),
414(m) and 414(o).
1.5 ANNIVERSARY DATE means the last day of the Plan Year.
1.6 BENEFICIARY means, except as provided in Section 4.2, the person or persons
designated by the Participant on his or her designation form as being entitled
to receive the Participant's Plan Account upon the Participant's death, or, in
some cases, after the death of the Participant's designated Beneficiary. If
there is no designated Beneficiary, a Participant's Beneficiary shall be his or
her surviving spouse, or if he or she has no surviving spouse, his or her
estate.
1.7 BREAK IN SERVICE shall occur at the end of any Plan Year during which an
Employee is not credited with more than five hundred (500) Hours of Service.
1.8 CODE means the Internal Revenue Code of 1986 and the regulations
promulgated thereunder, as amended from time to time.
1.9 COMPENSATION means the amount of earnings reflected as federal taxable
wages on the Participant's W-2 Income Statement, or, for any self-employed
person (as defined in Code Section 401(c)(1) and the regulations thereunder),
earned income (as defined below), paid by the Employer to a Participant during
each Plan Year (or portion thereof) during which such person is a Participant,
plus amounts which are paid out of an Employee's remuneration from the Employer
and which are "elective contributions" which are not includible in gross income
under Code Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b), deferrals under an
eligible deferred compensation plan within the meaning of Code Section 457(b) or
employer "pick-up" contributions (under governmental plans) within the meaning
of Code Section 414(h)(2). Notwithstanding any other provision of this Plan, the
Compensation of any Participant taken into account under the Plan for any year
may not exceed the dollar limit under Code Section 401(a)(17). This dollar
limitation shall be adjusted automatically at the same time and in the same
manner as any cost-of-living adjustment made by the Secretary of the Treasury
under Code Section 415(d) (as modified by Code Section 401(a)(17)). The Code
Section 401(a)(17) dollar limit is one hundred sixty thousand dollars
($160,000.00) for 1998. Earned income means 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 individual are a material
income-producing factor. Net earnings will
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be determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by contributions by
the Employer to a qualified retirement plan to the extent deductible under Code
Section 404. Net earnings shall be determined with regard to the deduction
allowed to the taxpayer by Section 164(f) of the Code.
1.10 EARLY RETIREMENT DATE means the first day of any month that precedes the
Participant's Normal Retirement Date and that coincides with or follows the
Participant's (a) attainment of age sixty (60), and (b) completion of
twenty-five (25) Years of Service for vesting purposes. Effective January 1,
1998, Early Retirement Date shall mean the first day of any month that precedes
the Participant's Normal Retirement Date and that coincides with or follows the
earlier of the Participant's (a) attainment of age sixty (60), or (b) completion
of twenty-five (25) Years of Service for vesting purposes.
A Participant shall become fully vested upon satisfying this requirement if
still employed at his or her Early Retirement Age.
A former Participant who terminates employment and who thereafter reaches
the age requirement contained herein shall be entitled to receive his or her
benefits under this Plan.
1.11 EFFECTIVE DATE means January 1, 1997, the effective date of this amendment
and restatement of the Plan. The initial effective date of the Plan was January
1, 1966.
1.12 EMPLOYEE means any person employed by the Employer, except that the term
Employee shall not include: (a) any employee of the Employer who is classified
by the Employer as an "hourly employee" of the Employer (as determined by the
Employer in its sole and absolute discretion), or (b) effective until May 1,
1997, an employee of the Employer's Real Estate Division (as determined by the
Employer in its sole and absolute discretion), or (c) any employee of the
Employer who is a member of a collective bargaining unit covered under a
collective bargaining agreement unless the collective bargaining agreement
provides for the employee's participation in the Plan (as determined by the
Employer in its sole and absolute discretion), or (d) any leased employee (as
defined in Code Section 414(n)) of the Employer (as determined by the Employer
in its sole and absolute discretion), or (e) any person who is not classified by
the Employer as a common law employee of the Employer for the period during
which the person is not so classified by the Employer notwithstanding the later
reclassification by a court or any regulatory agency of the person as a common
law employee of the Employer (as determined by the Employer in its sole and
absolute discretion), or (f) any person classified by the Employer as a
temporary employee of the Employer (as determined by the Employer in its sole
and absolute discretion).
1.13 EMPLOYER means Beall, Garner, Screen & Geare, Inc., and such Affiliated
Companies as are designated by Beall, Garner, Screen & Geare, Inc. to be
participating employers under this Plan, and any successor or successors
thereto.
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1.14 EMPLOYER MATCHING CONTRIBUTION ACCOUNT means that portion of a
Participant's Plan Account which is attributable to contributions made under
Section.
1.15 EMPLOYER STOCK means shares of the Employer (or, effective October 1, 1998,
of Century Business Services, Inc., the Employer's parent corporation) having a
combination of voting power and dividend rights equal to or in excess of (a)
that class of common stock of the Employer (or, effective October 1, 1998, of
Century Business Services, Inc.) having the greatest voting power, and (b) that
class of common stock of the Employer (or, effective October 1, 1998, of Century
Business Services, Inc.) having the greatest dividend rights.
1.16 EMPLOYER STOCK ACCOUNT means the account of a Participant which reflects
his or her interest in Employer Stock held by the Trustees in respect of shares
of Employer Stock released from the Acquisition Loan Suspense Account as a
result of Acquisition Loan repayments made from assets in the Participant's
Employer Matching Contribution Account, if any, and assets in the Participant's
ESOP Contribution Account, as a result of the allocation of forfeitures and as a
result of Acquisition Loan repayments made from earnings on Employer Stock in
the Acquisition Loan Suspense Account.
1.17 ESOP CONTRIBUTION ACCOUNT means that portion of a Participant's Plan
Account which is attributable to contributions made under Section 3.3.
1.18 ERISA means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
1.19 FINANCED SHARES means shares of Employer Stock acquired by the Trustees
with the proceeds of an Acquisition Loan.
1.20 HIGHLY COMPENSATED EMPLOYEE . The term Highly Compensated Employee includes
active Highly Compensated Employees and former Highly Compensated Employees, as
described in Code Section 414(q), which currently provides as follows:
An active Highly Compensated Employee includes any Employee who performs
service for the Employer during the "determination year" and who (i) was a five
percent (5%) owner as defined in Code Section 416(i)(1) at any time during the
"look-back year" or determination year or (ii) (A) during the look-back year,
received compensation (as defined below) from the Employer in excess of eighty
thousand dollars ($80,000) (as adjusted pursuant to Section 415(d) of the Code,
and (B) was, for the look-back year, in the group consisting of the top twenty
percent (20%) of non-excludible employees ranked by compensation (as defined
below) for such year.
For this purpose, except as otherwise provided in this paragraph, the
determination year shall be the Plan Year. The look-back year shall be the
twelve (12) month period immediately preceding the determination year.
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A former Highly Compensated Employee includes any Employee who separated
from service (or was deemed to have separated from service) prior to the
determination year, performs no service for the Employer during the
determination year, and was an active Highly Compensated Employee for either the
separation year or any determination year ending on or after the Employee's
fifty-fifth (55th) birthday.
The determination of who is a Highly Compensated Employee will be made in
accordance with Section 414(q) of the Code and the regulations thereunder.
In determining whether an individual is a Highly Compensated Employee, the
term "compensation" means compensation as defined in Section 3.5, or any other
definition selected by the Administrator which is permitted under Code Section
415(c)(3), which is received by the individual from the Employer during the
determination year or from the Employer during the look-back year, as applicable
including, (i) for Plan Years beginning prior to January 1, 1998, elective or
salary reduction contributions to a cafeteria plan under Section 125 of the
Code, a cash or deferred arrangement under Section 401(k) of the Code, or a
simplified employee pension under Section 402(h) of the Code and (ii) for Plan
Years beginning after December 31, 1997, elective salary reduction contributions
to a cafeteria plan under Section 125 of the Code, a cash or deferred
arrangement under Section 401(k) of the Code, a simplified employee pension
under Section 408(k) of the Code, a simple plan under Section 408(q) of the
Code, or a plan under Section 457 of the Code.
Notwithstanding the preceding, in determining whether an individual is a
Highly Compensated Employee, the Employer may elect to apply the "alternative
definition" to determine whether an Employee who separated from service before
January 1, 1987 is a former Highly Compensated Employee. The election, once
made, cannot be changed without the consent of the Commissioner of the Internal
Revenue Service. Under the alternative definition, a former Highly Compensated
Employee includes any former Employee who separated from service with the
Employer prior to January 1, 1987, and was described in any one or more of the
following groups during either the Employee's separation year (as defined in
Treasury Regulations under Section 414(q) of the Code) (or the year preceding
such separation year) or any year ending on or after such Employee's fifty-fifth
(55th) birthday (or the last year ending before such Employee's fifty-fifth
(55th) birthday): (i) the Employee was a five percent (5%) owner of the Employer
at any time during the year; (ii) the Employee received compensation from the
Employer in excess of fifty thousand dollars ($50,000) during the year. The
determinations provided for in this alternative definition may be made on the
basis of the calendar year, the Plan Year, or any other twelve (12) month period
selected by the Employer and applied on a reasonable and consistent basis.
1.21 HOUR OF SERVICE means each hour for which an Employee is directly or
indirectly compensated by the Employer for the performance of duties for the
Employer, or for reasons other than the performance of such duties (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, and each hour for which back pay is either awarded or granted
to such Employee by the Employer, regardless of mitigation of damages. In
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computing and crediting Hours of Service for periods during which the Employee
does not perform duties for the Employer, no more than five hundred one (501)
Hours of Service shall be credited for any single continuous period of
nonperformance of duties for the Employer, and the rules set forth in Sections
2530.200b-2(b) and (c) of Department of Labor Regulations shall apply, and those
rules are incorporated herein by reference. Solely for purposes of determining
whether a Break in Service has occurred, an Employee who is absent for maternity
or paternity reasons will receive credit for up to five hundred one (501) Hours
of Service for the Hours of Service which would otherwise have been credited to
the Employee had the Employee not been absent, or if those Hours of Service
cannot be determined, eight (8) Hours of Service for each day of absence. The
Hours of Service credited for a maternity or a paternity absence shall be
credited in the year the absence begins if necessary to prevent a Break in
Service for that year or in any other case, in the immediately following year.
An absence for maternity or paternity reasons means an absence (1) because of
the individual's pregnancy, (2) because of the birth of the individual's child,
(3) because of the individual's adoption of a child or (4) for purposes of
caring for the individual's child beginning immediately following the child's
birth or placement with the individual.
1.22 NON-HIGHLY COMPENSATED EMPLOYEE means an Employee who is not a Highly
Compensated Employee.
1.23 NORMAL RETIREMENT AGE means the Participant's sixty-fifth (65th) birthday.
1.24 NORMAL RETIREMENT DATE means the first day of the month coinciding with or
next following a Participant's Normal Retirement Age.
1.25 PARTICIPANT means any Employee who participates in the Plan as provided in
Article or who makes a contribution to a Rollover Contribution Account. Subject
to Sections 3.2(d) and 3.3(d), a Participant shall continue to be a Participant
as long as he or she has a Plan Account, but a non-Employee who formerly was a
Participant shall be referred to hereunder as a "former Participant" from time
to time.
1.26 PLAN means the Beall, Garner, Screen & Geare, Inc. Employee Savings And
Stock Ownership Plan as set forth in this document and as amended from time to
time.
1.27 PLAN ACCOUNT means the amount held under this Plan for the account of a
Participant, and shall equal the sum as to each Participant of the Participant's
Salary Reduction Contribution Account, ESOP Contribution Account, Employer
Matching Contribution Account, Employer Stock Account, Qualified Nonelective
Contribution Account, Qualified Matching Contribution Account, Qualified
Participant Self-Directed Account and Rollover Contribution Account.
1.28 PLAN YEAR means the twelve (12) month period beginning each January 1 and
ending each December 31 during which this Plan is in effect.
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1.29 QUALIFIED ELECTION PERIOD means the six-Plan Year period beginning with the
Plan Year in which the Participant first became a Qualified Participant.
1.30 QUALIFIED MATCHING CONTRIBUTION ACCOUNT means that portion of a
Participant's Plan Account which is attributable to "qualified matching
contributions" (as defined in Code Sections 401(k) and (m)).
1.31 QUALIFIED NONELECTIVE CONTRIBUTION ACCOUNT means that portion of a
Participant's Plan Account which is attributable to "qualified nonelective
contributions" (as defined in Code Sections 401(k) and (m)).
1.32 QUALIFIED PARTICIPANT means a Participant who has completed at least 10
years of participation in the Plan and has attained age 55.
1.33 QUALIFIED PARTICIPANT SELF-DIRECTED ACCOUNT means the Account of a
Qualified Participant which reflects his or her interests in the Plan
attributable to his or her Qualified Participant Self-Directed Investments.
1.34 QUALIFIED PARTICIPANT SELF-DIRECTED INVESTMENTS means investments made and
held by the Trustees at the direction of a Qualified Participant pursuant to
Section 4.4 and allocated to the Qualified Participant's Self-Directed Account.
1.35 ROLLOVER CONTRIBUTION ACCOUNT means that portion of a Participant's Plan
Account which is attributable to contributions made under Section .
1.36 SALARY REDUCTION CONTRIBUTION ACCOUNT means that portion of a Participant's
Plan Account which is attributable to contributions made under Section 3.1. A
Participant's Salary Reduction Contribution Account shall include, in addition
to amounts attributable to contributions made under Section 3.1, amounts held
under the Plan in respect of contributions made to the Participant's "profit
sharing account" prior to 1987 and contributions made to the Participant's
Employer Matching Contribution Account prior to 1992.
1.37 TRUST means the trust established under this Plan or under a separate trust
agreement which forms a part of this Plan.
1.38 TRUST FUND means the assets of the Trust.
1.39 TRUSTEES means the trustees of the Trust serving as such from time to time.
1.40 VALUATION DATE means the last day of a Plan Year, and any other date or
dates chosen by the Administrator as of which the Trust is valued pursuant to
Article 7.
1.41 YEARS OF SERVICE , for eligibility purposes, means the twelve (12) month
period beginning on an Employee's date of hire (i.e., the first day on which the
Employee completes
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an Hour of Service) by the Employer if the Employee completes at least one
thousand (1,000) Hours of Service during that period. If an Employee does not
complete at least one thousand (1,000) Hours of Service during the twelve (12)
month period beginning on his or her date of hire by the Employer, he or she
will receive credit, for eligibility purposes, for a Year of Service at the
close of any Plan Year commencing after his or her date of hire by the Employer
(either before or after the Effective Date) during which he or she completes at
least one thousand (1,000) Hours of Service.
For purposes of vesting, Year of Service means a calendar year during which
an Employee is credited with one thousand (1,000) Hours of Service.
If an Employee incurs a Break in Service, the Employee's Years of Service
before the Break in Service will be taken into account only if the Employee
subsequently becomes an Employee and completes one (1) Year of Service.
In the case of any Participant who incurs five (5) consecutive Breaks in
Service, Years of Service completed after such five (5) year period shall not be
taken into account for purposes of determining the Participant's vested interest
in benefits derived from Employer contributions which accrued before such five
(5) year period.
If a Participant has a Break in Service before the Participant acquires a
vested interest in the Participant's Plan Account, service before the Break in
Service shall not be taken into account if the number of consecutive Breaks in
Service equals or exceeds the greater of five (5) or the aggregate number of
such Years of Service prior to such Break in Service.
If the Employer is a member of a controlled group of employers within the
meaning of Code Sections 414(b), (c), (m) or (o), Years of Service shall be
determined as if all members of the controlled group were a single employer,
excluding, however, employment during periods when the Employer was not a member
of the controlled group.
In the case of an Employee who is absent from service with the Employer or
an Affiliated Company solely by reason of military service under circumstances
by which such Employee is afforded reemployment rights under any applicable
Federal or State statute or regulation, such Employee shall be deemed not to
have terminated employment or have been absent from service with the Employer or
an Affiliated Company if such Employee returns to service with the Employer or
an Affiliated Company before the expiration of such reemployment rights;
provided, however, if such Employee fails to return to service with the Employer
or an Affiliated Company before the expiration of such reemployment rights, such
Employee shall be deemed to have terminated employment on the first day on which
such Employee was first absent from service with the Employer or an Affiliated
Company by reason of such military service.
ARTICLE 2
ELIGIBILITY FOR PARTICIPATION
-----------------------------
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1
2.1 INITIAL ELIGIBILITY. Each person who is an Employee on the Effective Date
and who, on the Effective Date, is at least twenty-one (21) years of age and is
credited with at least one (1) Year of Service for eligibility purposes will
become, or continue as, a Participant in the Plan on the Effective Date.
2.2 SUBSEQUENT ELIGIBILITY. Each Employee who first attains age twenty-one (21)
and first is credited with at least one (1) Year of Service for eligibility
purposes after the Effective Date will become a Participant on the January 1 or
July 1 coincident with or next following the date on which the Employee first
attains age twenty-one (21) and is credited with at least one (1) Year of
Service for eligibility purposes. Notwithstanding the preceding, (i) effective
May 1, 1997, an Employee shall become eligible to make Salary Reduction
Contributions in accordance with Section 3.1 on the date the Employee becomes an
Employee and (ii) effective January 1, 1998, any individual who satisfies the
eligibility requirements of the Plan for making Salary Reduction Contributions
under Section 3.1 and who later ceases to satisfy those eligibility requirements
because he or she transfers from Employee status to "hourly employee" status
shall be eligible to make Salary Reduction Contributions in accordance with
Section 3.1 on and after the individual's "hourly employee" status commences,
but he or she shall not be entitled to participate in any contribution feature
of the Plan other than Sections 3.1 and 3.7.
2.3 REHIRED PARTICIPANTS. A Participant who ceases to be an Employee for any
reason and who subsequently becomes an Employee will be eligible to participate
in this Plan on the first day he or she again becomes an Employee; provided,
however, that if the Employee's Years of Service are disregarded pursuant to
Section , the Employee shall participate in this Plan only as provided in
Section .
ARTICLE 3
CONTRIBUTIONS AND ALLOCATIONS
-----------------------------
3.1 SALARY REDUCTION CONTRIBUTIONS BY PARTICIPANTS .
(a) Each Participant may make a salary reduction election to reduce his or
her Compensation per payroll period in an amount equal to any whole percentage
of his or her Compensation which is not less than one percent (1%) nor more than
fifteen percent (15%), subject, however, to the Employer's right to amend or
revoke the Participant's election as provided in Sections 3.1(d) and 3.1(e)
below; provided, however, that, effective until December 31, 1998, during an
Employee's eligibility to participate in the Plan's Employer Matching
Contribution feature under Section 3.2 and the Plan's ESOP Contribution feature
under Section 3.3, the Employee's maximum permissible salary reduction election
percentage shall be reduced for so long as he or she is so eligible (or until
December 31, 1998 if later) to five percent (5%) of Compensation. In addition, a
Participant's Salary Reduction Contributions to the Plan, and to all other
plans, contracts or arrangements subject to Code Section 402(g), during any
calendar year may not exceed the dollar limitation applicable to the Plan
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under Section 402(g) of the Code (ten thousand dollars ($10,000) for 1998). This
dollar limit shall be adjusted automatically by the cost-of-living adjustment
factor prescribed by the Secretary of the Treasury at the same time and in the
same manner as the cost-of-living adjustment applied under Code Section 415(d)
(as modified by Code Section 402(g)).
(b) Contributions will be made by the Employer to the Salary Reduction
Contribution Account of each Participant in an amount equal to the amount of the
Participant's reduction in Compensation. All Salary Reduction Contribution
Accounts shall be one hundred percent (100%) vested at all times.
(c) Salary reduction elections shall be made in writing on such forms, and shall
be subject to such uniform administrative rules, as the Administrator shall
establish. A Participant may amend or revoke his or her salary reduction
election at such times and with such frequency as the Administrator's uniform
rules shall permit.
(d) The Employer shall have the right to amend or revoke a Participant's salary
reduction election (i) if such election causes the Participant's contributions
to exceed the limits on annual additions imposed by this Section or Section 3.5,
or (ii) to insure that this Plan meets the deferral percentage tests of Code
Section 401(k)(3).
(e) The Plan at all times shall be administered so as to comply with the
provisions of Code Section 401(k)(3), Treasury Regulation Section 1.401(k)-1(b)
and any subsequent Internal Revenue Service guidance issued under the applicable
Code provisions. For purposes of testing compliance with Code Section 401(k)(3),
the definition of "compensation" will be the definition designated by the
Administrator from year to year, and may be limited to compensation during that
portion of the Plan Year that the Employee was a Participant, as permitted under
applicable law. For purposes of the Average Deferral Percentage test, the
Employer shall use the prior Plan Year's average deferral percentage of
Non-Highly Compensated Employees to determine the permitted average deferral
percentage of Highly Compensated Employees for the Plan Year. An election to
change the method used to determine the average deferral percentage of
Non-Highly Compensated Employees shall be limited by, and made in the manner
prescribed under, guidance issued by the Secretary of the Treasury.
(f) The Employer also may uniformly amend or revoke all Participants' salary
reduction elections if the full amount of Salary Reduction Contributions to the
Plan cannot be made for any Plan Year because the full amount of Salary
Reduction Contributions for a Plan Year will exceed the amount deductible by the
Employer under Code Section 404 (including carryovers) for the applicable fiscal
year of the Employer.
(g) Any amendment or revocation of a Participant's salary reduction election by
the Employer must be made in writing to the Participant stating the amount of
the Salary Reduction Contribution which the Employer will accept. If the
Employer amends or revokes a Participant's salary reduction election for a Plan
Year, any excess of Salary Reduction Contributions already made with respect to
the Participant for such Plan Year over the amount of such contributions allowed
with respect to the Participant for such Plan Year shall be
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returned to the Participant as provided below.
(h) If, at the end of any Plan Year, it appears to the Employer that the above
deferral percentage test of Code Section 401(k)(3) will not be met, the
Employer, in lieu of amending or revoking salary reduction elections as
permitted above, may elect to make an additional contribution for the benefit of
Participants who are Non-Highly Compensated Employees. The additional
contribution shall be allocated in the same manner as Employer Matching
Contributions or in any other manner determined by the Employer. If the
additional contribution is not allocated as an Employer Matching Contribution,
it shall be added to the Qualified Nonelective Contribution Accounts of
Participants on whose behalf it is made and shall be immediately one hundred
percent (100%) vested and, except as otherwise provided herein, shall be subject
to the distribution provisions and limitations which are applicable to Salary
Reduction Contributions to the Plan. If the additional contribution is allocated
as an Employer Matching Contribution, it shall be added to the Qualified
Matching Contribution Accounts of Participants on whose behalf it is made and
shall be immediately one hundred percent (100%) vested and, except as otherwise
provided herein, shall be subject to the distribution provisions and limitations
which are applicable to Salary Reduction Contributions to the Plan. The amount
of the additional contribution shall be such that the deferral percentage test
of Section 401(k)(3) of the Code will be met. The additional contribution shall
be deposited to Participants' Accounts not later than the earlier of (i) the
date which is prescribed by law for filing the Employer's income tax return
(including any extension thereof) for the taxable year to which the contribution
relates, or (ii) the last day of the twelve (12) month period immediately
following the Plan Year to which the contribution relates. A Participant may not
elect to receive any portion of the additional contribution as current
Compensation.
3.2 EMPLOYER MATCHING CONTRIBUTIONS .
(a) A matching contribution shall be made by the Employer to the Employer
Matching Contribution Account of each Participant who has satisfied the
eligibility requirements set forth in Article 2 and who makes a contribution to
his or her Salary Reduction Contribution Account for the Plan Year. The matching
contribution for each Participant shall be made at such time as determined by
the Employer, but no later than the date provided by applicable law for making
Employer Matching Contributions for the Plan Year. The matching contribution for
each Participant shall equal one hundred percent (100%) of the Participant's
Salary Reduction Contributions. Effective January 1, 1999, the matching
contribution for each Participant shall equal fifty percent (50%) of the portion
of the Participant's Salary Reduction Contributions for the Plan Year that does
not exceed six percent (6%) of the Participant's Compensation for the Plan Year,
excluding Compensation for any period during which the Participant is not
eligible to receive an Employer Matching Contribution.
(b) The Plan at all times shall be administered so as to comply with the
provisions of Code Section 401(m), Treasury Regulation Sections 1.401(m)-1 and
1.401(m)-2 and any subsequent Internal Revenue Service guidance issued under the
applicable Code provisions. For purposes of testing compliance with Code Section
401(m)(2), the definition of "compensation" will be the
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definition designated by the Administrator from year to year, and may be limited
to compensation during that portion of the Plan Year that the Employee was a
Participant, as permitted under applicable law. When required by Treasury
Regulation Section 1.401(m)-2(c), multiple use of the alternative limitation
shall be corrected by reducing the actual contribution percentage of all Highly
Compensated Employees under the Plan. For purposes of the Average Contribution
Percentage test, the Employer shall use the prior Plan Year's average
contribution percentage on Non-Highly Compensated Employees to determine the
permitted average contribution percentage of Highly Compensated Employees for
the Plan Year. An election to change the method used to determine the average
contribution percentage of Non-Highly Compensated Employees shall be limited by,
and made in the manner prescribed under, guidance issued by the Secretary of the
Treasury.
(c) If, at the end of any Plan Year, it appears to the Employer that the above
contribution percentage test of Code Section 401(m)(2) will not be met, the
Employer, in lieu of limiting or prohibiting Employee contribution elections as
permitted above or distributing Excess Aggregate Contributions as permitted in
Section , may elect to make an additional contribution for Participants who are
Non-Highly Compensated Employees. The additional contribution shall be allocated
in the same manner as Employer Matching Contributions or in any other manner
determined by the Employer. If the additional contribution is not allocated as
an Employer Matching Contribution, it shall be added to the Qualified
Nonelective Contribution Accounts of Participants on whose behalf it is made and
shall be immediately one hundred percent (100%) vested and, except as otherwise
provided herein, shall be subject to the distribution provisions and limitations
which are applicable to Salary Reduction Contributions to the Plan. If the
additional contribution is allocated as an Employer Matching Contribution, it
shall be added to the Employer Matching Contribution Accounts of Participants on
whose behalf it is made and shall for all purposes herein be treated as if it
were an Employer Matching Contribution. The amount of the additional
contribution shall be such that the contribution percentage test of Section
401(m) of the Code will be met. The additional contribution shall be deposited
to Participants' Accounts not later than the earlier of (i) the date which is
prescribed by law for filing the Employer's income tax return (including any
extension thereof) for the taxable year to which the contribution relates, or
(ii) the last day of the twelve (12) month period immediately following the Plan
Year to which the contribution relates. A Participant may not elect to receive
any portion of the additional contribution as current Compensation.
(d) Notwithstanding the preceding, (i) an individual who is an Employee, who
satisfies the requirements of eligibility for a contribution under this Section
and who then ceases to be an Employee because of a change in job classification
to that of being an "hourly employee" and (ii) an Employee who is employed in
the Employer's Real Estate Division, shall not be eligible to participate in the
Employer Matching Contributions described in this Section.
3.3 ESOP CONTRIBUTIONS.
12
20
(a) An ESOP Contribution equal to a uniform percentage of each
Participant's Compensation may be made by the Employer for each Participant
eligible for the contribution. The amount of any contribution will be
established each year at the discretion of the Board of Directors of the
Employer, and the contribution for each Participant shall be made annually or
more frequently as the Employer may determine. A Participant shall be eligible
for an allocation of any contribution under this Section for a Plan Year if the
Participant has been credited with at least one thousand (1,000) Hours of
Service during the Plan Year and is employed on the last day of the Plan Year.
(b) For each Plan Year, the Employer shall contribute cash or shares of
Employer Stock, or both, to Participants' ESOP Contribution Accounts in such
amounts as may be determined by the Board of Directors in its discretion with
respect to that Employer, which amounts shall be delivered to the Trustee;
provided, however, that ESOP Contributions shall be paid in cash in such amounts
and at such times as may be needed (when considering amounts currently existing
in Participants' Employer Matching Contribution Accounts and ESOP Contribution
Accounts) to provide the Trustees with cash sufficient to pay any currently
maturing obligations under an Acquisition Loan. The Employer shall not be
required to make an ESOP Contribution under this Section for any period for
which an Acquisition Loan is not due and payable.
(c) For each Plan Year, ESOP Contributions, if any, shall not be considered
as accruing prior to the Anniversary Date thereof.
13
21
(d) Notwithstanding the preceding, (i) an individual who is an
Employee, who satisfies the requirements of eligibility for a contribution under
this Section and who then ceases to be an Employee because of a change in job
classification to that of being an "hourly employee" and (ii) an Employee who is
employed in the Employer's Real Estate Division, shall not be eligible to
participate in the ESOP Contributions described in this Section.
3.4 DEDUCTIBILITY OF CONTRIBUTIONS. Employer contributions for a Plan
Year shall not exceed an amount which, when combined with all other
contributions under the Plan for the Plan Year, equals the maximum contribution
which would be deductible by the Employer under Code Section 404 (including
carryovers) for the applicable fiscal year of the Employer.
3.5 LIMITS ON ANNUAL ADDITIONS.
(a) Basic Limitations. Notwithstanding any other provision of this
Plan, a Participant's total annual additions under this Plan for any Plan Year
shall not exceed the lesser of (a) thirty thousand dollars ($30,000) or, if
greater, one-fourth (1/4) of the defined benefit dollar limitation set forth in
Code Section 415(b)(1) as in effect for the Plan Year, as adjusted in Treasury
Regulation Section 1.415-2(b)(4)(iii), or (b) twenty-five percent (25%) of the
Participant's Compensation for such Plan Year. "Annual additions" for this
purpose means the sum of (i) contributions under Section 3.1 of this Plan
allocable to the Participant's Plan Account, and (ii) any forfeitures allocable
to the Participant's Plan Account; provided, however, that, any Employer
contributions which are applied by the Trustees to pay interest on an
Acquisition Loan, and any Financed Shares which are allocated as forfeitures,
shall not be included as annual additions if not more than one-third of the
Employer contributions applied to pay principal and interest on an Acquisition
Loan are allocated to Participants who are Highly Compensated Employees.
For purposes of this Section, "Compensation" refers to the
Participant's earned income, wages, salaries, and fees for professional services
actually rendered in the course of employment with the Employer (including, but
not limited to, commissions paid to salespersons, compensation for services on
the basis of a percentage of profits, commissions on insurance premiums, tips
and bonuses) and excluding the following:
(i) 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
to the extent such contributions are deductible by the Participant, or any
distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the Participant either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
(iii) Amounts realized from the sale, exchange or other disposition of
stock
22
acquired under a qualified stock option; and
(iv) Other amounts which received special tax benefits, or contributions made
by a Participant (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 excludible from the gross income of the Participant).
23
For purposes of applying the limitations of this Section, Compensation
for a limitation year is the Compensation actually paid or includible in gross
income during such year.
Notwithstanding the preceding sentence, Compensation for a Participant
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 had been 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
Participant are nonforfeitable when made.
Notwithstanding the preceding, effective for Plan Years beginning on or
after January 1, 1998, "compensation" shall include any elective deferral (as
defined in Code Section 402(g)(3)) and any amount which is contributed or
deferred by the Employer at the election of the Participant and which is not
includible in the gross income of the Participant by reason of Code Section 125
or 457.
(b) Combined Limitations . After any reduction in any benefit under a
defined benefit plan pursuant to the following paragraph, if a Participant
participates in any other defined contribution plan sponsored by the Employer
which is qualified under Code Section 401(a), his or her annual additions under
such plan shall be aggregated with his or her annual additions under this Plan,
and his or her annual additions under this Plan shall be reduced, if necessary,
so that the aggregate of such annual additions does not exceed the limitations
set forth in (a) above.
For limitation years commencing before January 1, 2000, if a
Participant participates or has participated in any defined benefit pension plan
sponsored by the Employer which is qualified under Code Section 401(a), his or
her benefit under the defined benefit pension plan shall be reduced, if
necessary, so that the sum of (i) and (ii), below, does not exceed 1.0 for any
Plan Year:
(i)(A) the projected annual normal retirement benefit (assuming
continued employment until such Participant's normal retirement date and
constancy of all relevant factors) of the Participant under the defined benefit
pension plans, determined as of the close of the Plan Year, divided by
(B) the lesser of (A) 1.25 times the dollar limitation in effect under Code
Section 415(b)(1)(A) as of the close of such Plan Year or (B) 1.4 times the
Participant's average Compensation for his or her "high three years" (where
"high three years" refers to the period of three (3) consecutive calendar years
yielding the highest such average and during which the Participant was a
participant in the defined benefit pension plan), plus
24
(ii)(A) the sum of the annual additions credited to the Participant
under this Plan (and all other defined contribution plans required to be
aggregated with this Plan) for the current Plan Year and all prior Plan Years,
determined as of the close of the Plan Year, less any amounts permitted to be
subtracted from such sum under Section 235(g)(3) of the Tax Equity and Fiscal
Responsibility Act of 1982, divided by
(B) the lesser of (A) 1.25 times the dollar limitation in effect under
Code Section 415(c)(1)(A) (determined without regard to Code Section 415(c)(6))
for the current Plan Year and for all prior years of the Participant's
employment with the Employer (regardless of whether a defined contribution plan
was in effect for those years), or (B) thirty-five percent (35%) of the
Participant's Compensation for the current Plan Year and for prior years of the
Participant's employment with the Employer (regardless of whether a defined
contribution plan was in effect for those years).
If the fraction produced under (ii), above, would exceed 1.0, even
after the reduction in the Participant's benefits under the defined benefit
plan(s), which shall be done first, then the contributions for the Participant
under this Plan shall be reduced to the extent necessary in accordance with this
Section 3.5.
(c) TRANSITION RULE. At the election of the Administrator, with respect
to any year ending after December 31, 1982, the amount taken into account under
subsection (b)(ii)(B) above with respect to each Participant for all years
ending before January 1, 1983 shall be an amount equal to the amount determined
under (b)(ii)(B) above for the year ending in 1982 times the transition
fraction. For purposes of this paragraph, the term "transition fraction" means a
fraction, the numerator of which is the lesser of fifty-one thousand eight
hundred seventy-five dollars ($51,875) or thirty-five percent (35%) of the
Participant's Compensation (as defined above) for the year ending in 1981 and
the denominator of which is the lesser of forty-one thousand five hundred
dollars ($41,500) or twenty-five percent (25%) of the Participant's Compensation
for the year ending in 1981.
(d) AGGREGATION OF EMPLOYERS. The foregoing maximum contributions which
may be made under this Plan shall be further limited by reason of the existence
of other qualified retirement plans maintained by any other members of a
controlled group of corporations, of one of a group of trades or businesses
under common control (as described in Code Sections 414(b) or (c), as modified
by Code Section 415(h)), or of an affiliated service group (as described in Code
Sections 414(m) or (o)) to the extent such limitation is required by Code
Section 415. The Administrator shall advise affected Participants of any
additional limitation required by the preceding sentence.
3.6 DISPOSITION OF EXCESS ANNUAL ADDITIONS. If the limitations
described in Section are exceeded with respect to any Participant in any Plan
Year, then the contributions allocable to the Participant under this Plan for
such Plan Year shall be reduced to the minimum extent required by such
limitations by first reducing contributions to the Participant's Salary
Reduction Contribution Account and then, if necessary, reducing contributions to
the
25
Participant's Employer Matching Contribution Account and, then, if necessary
reducing contributions to the Participant's ESOP Contribution Account. The
Administrator, in its sole discretion, shall determine if any reduction in the
annual additions to a Participant's Accounts is required by reason of the
limitations set forth in this Article or Code Section 415. No Participant shall
be entitled to any annual additions (or earnings thereon) made or allocated to
the Participant in excess of such limitations. If it is determined at any time
that the Administrator has erred in accepting and crediting salary reduction
contributions by a Participant or in allocating Employer contributions to any
Participant's Plan Account for any Plan Year in violation of such limitations,
then (i) the amount of any required reduction in the Participant's contributions
(including earnings thereon) shall be returned to the Participant and any
Employer Matching Contributions attributable to such Participant contributions
shall be forfeited, and (ii) the amount of any required reduction in the
Employer's contributions to the Participant's ESOP Contribution Account
(including earnings to the extent permitted by applicable law) allocable or
allocated to the Participant under this Plan shall be returned to the Employer
if such reduction in the Employer's contributions is attributable to a mistake
of fact by the Employer or the Administrator at the time the contribution was
made. If the reduction in the Employer's contributions is not attributable to
such a mistake of fact, the amount of the reduction (including earnings) shall
be held in suspense and applied against the Employer's contributions to the
Participant's ESOP Contribution Account under Section 3.3 which are next due and
owing to the Plan.
3.7 CONTRIBUTIONS TO ROLLOVER CONTRIBUTION ACCOUNT. Any Employee (whether or not
currently eligible to participate in the Plan) may transfer to the Trust any
Rollover Contributions as defined in Section. An Employee's Rollover
Contribution shall be credited to and held in the Participant's Rollover
Contribution Account. A Participant's Rollover Contribution Account shall be one
hundred percent (100%) vested in the Participant at all times. A Rollover
Contribution shall not be taken into account in determining the annual additions
to an Employee's Plan Account under Section 3.5.
3.8 DEFINITION OF "ROLLOVER CONTRIBUTION". The term "Rollover Contribution"
means an amount contributed to the Plan on or before the sixtieth (60th) day
after the day the contributing Employee received it, if the amount received by
the Employee is a distribution which is eligible for rollover to the Plan under
Code Section 402.
The term "Rollover Contribution" also means assets representing a Participant's
nonforfeitable interest in another retirement plan qualified under Section
401(a) or 403(a) of the Code, or in a conduit individual retirement account or
annuity, which assets have been transferred directly from the trustee (or other
fiduciary) of such other plan, account or annuity to the Trustees of this Plan;
provided, however, that such direct transfer shall not be accepted by the
Trustee unless (A) the transfer constitutes an "elective transfer" under Section
1.411(d)-4 Q&A-3(b) of regulations promulgated by the Secretary of the Treasury,
(B) the plan from which the transfer is made provides no protected benefits
under Section 411(d)(6) of the Code which are not already provided under the
Plan or (C) the transfer constitutes a direct rollover after December 31, 1992
under Section 402 of the Code.
26
The Administrator may reject any Rollover Contribution which is not
qualified to be a Rollover Contribution to the Plan under the foregoing or under
the Code. The Administrator may make all investigations necessary to determine
whether any amount submitted as a Rollover Contribution may be received.
3.9 DISTRIBUTION OF EXCESS DEFERRALS.
(a) IN GENERAL. Notwithstanding any other provision of the Plan, Excess
Deferrals, plus income and minus any loss allocable thereto, shall be
distributed no later than April 15 to any Participant to whose account Excess
Deferrals were assigned for the preceding taxable year and who claims such
Excess Deferrals for such taxable year. A Participant is deemed to have claimed
the Excess Deferrals for a taxable year to the extent that the Participant's
Excess Deferrals are calculated by taking into account only Elective Deferrals
to this Plan. If Excess Deferrals are distributed as provided above, any
Employer Matching Contribution attributable to the Excess Deferrals shall be
forfeited (if forfeitable) or distributed as provided in Section .
(b) DEFINITIONS.
(i) "Elective Deferrals" means any Employer contributions made to the
Plan at the election of the Participant, in lieu of cash compensation, and shall
include contributions made pursuant to a salary reduction agreement or other
deferral mechanism. With respect to any taxable year, a Participant's Elective
Deferrals equal the sum of all Employer contributions made on behalf of such
Participant pursuant to the Participant's election to defer under the Plan or
under any other plan or arrangement described in Sections 401(k), 408(k) or
403(b) of the Code.
(ii) "Excess Deferrals" means the amount of Elective Deferrals for the
Participant's taxable year that is includible in the Participant's gross income
under Section 402(g) of the Code to the extent such Participant's Elective
Deferrals exceed the seven thousand dollar ($7,000) (as indexed) limit under
Section 402(g) of the Code. Excess Deferrals shall be treated as annual
additions under the Plan for purposes of the limitations under Section 415 of
the Code.
(c) CLAIMS. The Participant's claim shall be in writing, shall be
submitted to the Administrator no later than March 1; shall specify the
Participant's Excess Deferrals for the preceding taxable year; and shall be
accompanied by the Participant's written statement that if such amounts are not
distributed, such Excess Deferrals, when added to amounts deferred under other
plans or arrangements described in Sections 401(k), 408(k) or 403(b) of the
Code, exceed the dollar limitation under Section 402(g) of the Code for the year
in which the deferral occurred.
(d) DETERMINATION OF INCOME. The Excess Deferrals distributed to a
Participant with respect to a taxable year shall be adjusted for income or loss
during the taxable year and, if elected by the Plan Administrator, during the
period from the end of the taxable year to the date of distribution. The income
or loss allocable to Excess Deferrals for the taxable year (and, if elected,
from the end of the Plan Year to the date of distribution) shall be determined
27
by the Plan Administrator using any reasonable method permitted under Section
402(g) of the Code.
3.10 DISTRIBUTION OF EXCESS CONTRIBUTIONS.
(a) IN GENERAL. Notwithstanding any other provision of the Plan, Excess
Contributions, plus any income and minus any loss allocable thereto, shall be
distributed to the appropriate Highly Compensated Employees after the last day
of the Plan Year in which the Excess Contributions arose and, if possible,
within two and one-half (2 1/2) months after the last day of such Plan Year. If
Excess Contributions are distributed more than two and one-half (2 1/2) months
after the last day of the Plan Year in which such Excess Contributions arose, a
ten percent (10%) excise tax will be imposed on the Employer with respect to
such amounts. Excess Contributions, plus any income and minus any loss allocable
thereto, shall be distributed no later than the last day of the twelfth (12th)
month after the last day of the Plan Year in which the Excess Contributions
arose. Excess Contributions shall be treated as annual additions under the Plan
for purposes of the limitations under Section 415 of the Code. If Excess
Contributions are distributed as provided above, any Employer Matching
Contributions attributable to the Excess Contributions shall be forfeited (if
forfeitable) or distributed as provided in Section 3.11.
(b) EXCESS CONTRIBUTIONS. "Excess Contributions" means, with respect to
any Plan Year, the excess of (i) the aggregate amount of Employer contributions
actually taken into account in computing the Actual Deferral Percentage of
Highly Compensated Employees for such Plan Year, over (ii) the maximum amount of
such contributions permitted by the Average Deferral Percentage test. The
maximum amount of contributions permitted for each Highly Compensated Employee
shall be determined by a leveling method under which the actual deferral
percentage of the Highly Compensated Employee with the highest dollar amount of
Salary Reduction Contributions is reduced to the extent required to (i) enable
the Plan to satisfy the Average Deferral Percentage Test under Section 3.1 or
(ii) cause such Highly Compensated Employee's actual deferral percentage to
equal the actual deferral percentage of the Highly Compensated Employee with the
next highest dollar amount of Salary Reduction Contributions. This process is
continued until the Plan satisfies the Average Deferral Percentage Test under
Section 3.1 and the maximum amount of contributions permitted for each Highly
Compensated Employee is determined.
(c) DETERMINATION OF INCOME. Excess Contributions shall be adjusted for income
or loss during the Plan Year and, if elected by the Plan Administrator, during
the period from the end of the Plan Year to the date of distribution. The income
or loss allocable to Excess Contributions for the Plan Year (and, if elected,
from the end of the Plan Year to the date of distribution) shall be determined
by the Plan Administrator using any reasonable method permitted under Section
401(k) of the Code.
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3.11 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS.
(a) IN GENERAL. Notwithstanding any other provision of the Plan, Excess
Aggregate Contributions, plus income and minus any loss allocable thereto, shall
be forfeited, if forfeitable, or if not forfeitable, distributed to the
appropriate Highly Compensated Employees after the last day of the Plan Year in
which the Excess Aggregate Contributions arose and, if possible, within two and
one-half (2 1/2) months after the last day of such Plan Year. If Excess
Aggregate Contributions are distributed more than two and one-half (2 1/2)
months after the last day of the Plan Year in which such Excess Aggregate
Contributions arose, a ten percent (10%) excise tax will be imposed on the
Employer with respect to such amounts. Excess Aggregate Contributions, plus
income and minus any loss allocable thereto, shall be forfeited, if forfeitable,
or if not forfeitable, distributed no later than the last day of the twelfth
(12th) month after the last day of the Plan Year in which the Excess Aggregate
Contributions arose. Excess Aggregate Contributions shall be treated as annual
additions under the Plan for purposes of the limitations under Section 415 of
the Code.
(b) EXCESS AGGREGATE CONTRIBUTIONS. "Excess Aggregate
Contributions" means, with respect to any Plan Year, the excess of (i) the
aggregate Contribution Percentage Amounts taken into account in computing
the numerators of the Contribution Percentages of Highly Compensated
Employees for such Plan Year, over (ii) the maximum Contribution Percentage
Amounts permitted by the Average Contribution Percentage test. The maximum
amount of contributions permitted for each Highly Compensated Employee
shall be determined by a leveling method under which the contribution
percentage of the Highly Compensated Employee with the highest amount of
contributions taken into account in computing the contribution percentages
is reduced to the extent required to (i) enable the Plan to satisfy the
Average Contribution Percentage Test under Section 3.2 or (ii) cause such
Highly Compensated Employee's contribution percentage to equal the
contribution percentage of the Highly Compensated Employee with the next
highest amount of such contributions. This process is continued until the
Plan satisfies the Average Contribution Percentage Test under Section 3.2
and the maximum amount of contributions permitted for each Highly
Compensated Employee is determined. A determination of Excess Aggregate
Contributions shall be made after first determining Excess Deferrals and
then determining Excess Contributions.
(c) DETERMINATION OF INCOME. Excess Aggregate Contributions shall
be adjusted for any income or loss during the Plan year and, if elected by
the Plan Administrator, during the period from the end of the Plan Year to
the date of distribution. The income or loss allocable to Excess Aggregate
Contributions for the Plan Year (and, if elected, from the end of the Plan
Year to the date of distribution) shall be determined by the Plan
Administrator using any reasonable method permitted under Section 401(m) of
the Code.
3.12 MILITARY SERVICE BENEFITS. Notwithstanding any provision of this
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Section 414(u) of
the Code.
29
3.13 EMPLOYER STOCK. Effective until February 15, 1999, plan assets will be
invested primarily in Employer Stock, as provided in the Trust Agreement that
forms a part hereof. Plan assets may be used to purchase shares of Employer
Stock from the Employer or its other shareholders. The Trustees may also invest
Plan assets in any other investments permitted by the Trust Agreement that forms
a part of this Plan.
30
3.14 ADMINISTRATOR'S DIRECTION. All purchases and sales of Employer Stock by the
Trustees shall be made at the direction of the Administrator. The Trustees may
hold up to one hundred percent (100%) of the Plan's assets in Employer Stock.
3.15 INCURRENCE OF ACQUISITION LOANS. Effective until February 15, 1999, at the
direction of the Administrator, the Trustees may incur Acquisition Loans from
time to time to finance the acquisition of Employer Stock or to repay a prior
Acquisition Loan. An installment obligation incurred in connection with the
purchase of Employer Stock shall constitute an Acquisition Loan. An Acquisition
Loan shall be for a specific term, shall bear a reasonable rate of interest and
shall not be payable on demand except in the event of default. An Acquisition
Loan may be secured by a collateral pledge of the Financed Shares so acquired,
which shares shall be allocated to an Acquisition Loan Suspense Account. No
other Plan assets may be pledged as collateral for an Acquisition Loan, and no
lender shall have recourse against Plan assets other than any Financed Shares
remaining subject to a pledge. Repayment of principal and interest on any
Acquisition Loan shall be made by the Trustees only from Employer contributions
under Sections 3.2 and 3.3 to enable the Trustees to repay such loan, from
earnings attributable to such Employer contributions and from any cash dividends
or other earnings received by the Trust on Financed Shares. Any pledge of
Financed Shares must provide for the release of shares so pledged in the
following manner:
(a) NORMAL RELEASE METHOD. For each Plan Year during the duration of the
Acquisition Loan, the number of Financed Shares released must equal the number
of Financed Shares held in the Acquisition Loan Suspense Account immediately
before release for the current Plan Year multiplied by a fraction, the numerator
of which is the amount of principal and interest paid for the Plan Year and the
denominator of which is the sum of the numerator plus the principal and interest
to be paid for all future years. The number of future years under the
Acquisition Loan must be definitely ascertainable and must be determined without
taking into account any possible extensions or renewal periods. If the interest
rate under the Acquisition Loan is variable, the interest to be paid in future
years must be computed by using the interest rate applicable as of the end of
the Plan Year.
(b) ALTERNATIVE RELEASE METHOD. Alternatively, the number of Financed
Shares to be released from the Acquisition Loan Suspense Account may be
determined in the same manner as described in (a), above, except that such
number shall be based solely on the amount of principal paid for the Plan Year
in relation to the sum of such amount plus the principal to be paid for all
future years; and provided that:
(i) The Acquisition Loan must provide for annual payments of principal
and interest at a cumulative rate that is not less rapid at any time than level
annual payments of such amounts for ten (10) years;
(ii) Interest in any payment is disregarded only to the extent that it
would be determined to be interest under standard loan amortization tables; and
31
(iii) The alternative described in this subsection (b) is not
applicable from the time that, by reason of renewal, extension or refinancing,
the sum of the expired duration of the Acquisition Loan, the renewal period, the
extension period, and the duration of a new Acquisition Loan exceeds ten (10)
years.
3.16 DIVERSIFICATION ELECTIONS.
(a) QUALIFIED PARTICIPANTS' RIGHTS. Each Qualified Participant in the Plan
may elect, within ninety (90) days after the close of each Plan Year in the
Qualified Election Period with respect to such Qualified Participant, to direct
the Administrator as to the investment of at least twenty-five percent (25%) of
the Qualified Participant's Employer Stock Account (to the extent such portion
exceeds the amount to which a prior election under this Section applies). In the
case of the last Plan Year with respect to which a Qualified Participant can
make an election under this Section, he or she shall be permitted to direct the
Administrator as to the investment of at least fifty percent (50%) of his or her
Employer Stock Account (to the extent such portion exceeds the amount to which a
prior election under this Section applies).
(b) QUALIFIED PARTICIPANT SELF-DIRECTED ACCOUNTS. The Administrator shall
establish a Qualified Participant Self-Directed Account for each Qualified
Participant who makes an election under (a), above. The Administrator shall make
available at least three investment options (not inconsistent with regulations
prescribed by the Secretary of the Treasury) for each Qualified Participant who
makes such an election, and the Plan Administrator shall direct the Trustees to
invest the portion of such Qualified Participant's Accounts covered by such
election in the option or options elected by the Qualified Participant, and
allocated in the manner selected by the Qualified Participant within ninety (90)
days after the 90-day election period described in (a), above. The Administrator
shall establish and communicate reasonable procedures for implementing this
Section, which procedures shall not be inconsistent with regulations prescribed
by the Secretary of the Treasury.
3.17 VOTING OF EMPLOYER STOCK.
(a) PUBLICLY TRADED STOCK. If the Employer (or, effective October 1, 1998,
the Employer's parent corporation) issues a class of securities required to be
registered under Section 12 of the Securities Exchange Act of 1934, or a class
that would be required to be so registered except for the exemption from
registration provided in subsection (g)(2)(H) of such Section 12, then each
Participant and Beneficiary shall be entitled to direct the Trustees as to the
manner in which shares allocated to his or her Employer Stock Account are to be
voted.
(b) NON-PUBLICLY TRADED STOCK. If the Employer or, effective October 1, 1998,
the Employer's parent corporation does not issue a class of securities described
in subsection (a), above, each Participant and Beneficiary shall be entitled to
direct the Trustees as to the manner in which shares allocated to his or her
Employer Stock Account are to be voted; provided, however, that:
32
(i) Such entitlement shall apply only with respect to a corporate matter
which involves the approval or disapproval of any corporate merger or
consolidation, recapitalization, reclassification, liquidation, dissolution,
sale of substantially all assets of a trade or business, or such similar
transactions as the Secretary of the Treasury may prescribe in regulations; and
(ii) The Trustees may vote the shares so directed such that each Participant
and Beneficiary is deemed to be entitled to only one vote, regardless of the
number of shares allocated to his or her Employer Stock Account, and the actual
number of shares shall be voted in the proportion thus determined.
(iii) The Trustees shall determine the manner of voting all shares with respect
to which Plan Participants and Beneficiaries do not have or exercise voting
power under this Section.
3.18 PARTICIPANTS' INVESTMENT ELECTIONS. The Administrator shall establish and
implement procedures pursuant to which each Participant and each former
Participant with a Salary Reduction Contribution Account shall be permitted to
direct the investment of all or a portion of his or her Salary Reduction
Contribution Account into one or more investment options described in Article 7.
If any such Participant or former Participant fails to make an investment
election, such Participant's or former Participant's Plan Salary Reduction
Contribution Account shall be invested in an investment option, or a combination
of investment options, selected by the Administrator, which offer(s) reasonable
opportunities for capital appreciation, preservation of capital, and/or
liquidity. The timing of permissible changes to investment elections and the
portion of a Participant's Salary Reduction Contribution Account (or any
particular asset thereof) that may be reinvested at any one time shall be
subject to rules established by the Administrator and any rules or restrictions
of any insurance company or other entity serving as the manager or funding
vehicle of any of the investment funds. Investment elections shall be subject to
such uniform rules and procedures as the Administrator shall establish. Any
earnings or losses attributable to a Participant's directed investments shall be
allocated to that Participant's Salary Reduction Contribution Account. The
procedures established pursuant to this Section shall apply to amounts subject
to Qualified Participant direction under Section 3.16. Effective January 1, 1999
(or as soon thereafter as is practicable), this Section shall apply to all
amounts held by a Participant under the Plan and Employer Stock shall be a
permissible investment option for Participant directed investment.
3.19 ALLOCATION OF CONTRIBUTIONS, FORFEITURES AND EARNINGS.
(a) The Administrator shall establish and maintain a Plan Account in the
name of each Participant to which the Administrator shall credit as of each
Anniversary Date all amounts allocated to each such Participant as set forth
herein.
(b) The Employer shall provide the Administrator with all information
required by the Administrator to make a proper allocation of all contributions
under the Plan for each Plan Year. Within a reasonable period of time after the
date of receipt by the Administrator of such
33
information, the Administrator shall allocate such contributions as follows:
34
(i) With respect to the Salary Reduction Contributions made pursuant to
Section 3.1, to each Participant's Salary Reduction Contribution Account in an
amount equal to each such Participant's Salary Reduction Contributions for the
applicable period. Earnings shall be allocated to Salary Reduction Contribution
Accounts and to Qualified Self-Directed Accounts as provided in Section 3.18. A
Participant's Salary Reduction Contribution Account shall be debited for any
insurance or annuity premiums paid, if any, and credited with any dividends
received on any insurance contract held as an asset of the Account.
(ii) With respect to the Employer's Matching Contribution made pursuant to
Section 3.2, to each Participant's Employer Matching Contribution Account in
accordance with Section 3.2.
(iii) With respect to the Employer's ESOP Contribution made pursuant to
Section 3.3, to each Participant's ESOP Contribution Account in the same
proportion that each such Participant's Compensation for the year bears to the
total Compensation of all such Participants for such year.
(c) The Employer Stock Account of each Participant shall be credited as of
each Anniversary Date with Forfeitures of Employer Stock and the Participant's
allocable share of Employer Stock (including fractional shares) purchased and
paid for by the Plan or contributed in kind by the Employer. Dividends on
Employer Stock held in the Participant's Employer Stock Account paid in Employer
Stock shall be credited to the Participant's Employer Stock Account when paid.
Cash dividends on Employer Stock held in the Participant's Employer Stock
Account shall, in the sole discretion of the Administrator, either be credited
to the Participant's Employer Matching Contribution Account or ESOP Contribution
Account when paid or be used to repay an Acquisition Loan; provided, however,
that when cash dividends are used to repay an Acquisition Loan, Employer Stock
shall be released from the Acquisition Loan Suspense Account and allocated to
the Participant's Employer Stock Account pursuant to Section 4.4(e) and,
provided further, that any Employer Stock dividends allocated to the
Participant's Employer Stock Account shall have a fair market value not less
than the amount of cash dividends which would have been allocated to such
Participant's Employer Matching Contribution Account or ESOP Contribution
Account, as the case may be, for the year.
(d) As of each Anniversary Date or other valuation date, before allocation
of Employer contributions for the entire Plan Year and forfeitures, for all
Employer Matching Contribution Accounts and ESOP Contribution Accounts, any
earnings or losses (net appreciation or net depreciation) of the Trust Fund
attributable to such Accounts shall be allocated in the same proportion that
each Participant's and former Participant's Employer Matching Contribution
Account or ESOP Contribution Account, bear to the total of all Participants' and
former Participants' Employer Matching Contribution Accounts or ESOP
Contribution Accounts, as of such date.
Earnings or losses under this sub-Section do not include the interest paid
under any installment contract for the purchase of Employer Stock by the Trust
Fund or on any
35
Acquisition Loan used by the Trust Fund to purchase Employer Stock, nor does it
include income received by the Trust Fund with respect to Employer Stock
acquired with the proceeds of an Acquisition Loan; all income received by the
Trust Fund from Employer Stock acquired with the proceeds of an Acquisition Loan
may, at the discretion of the Administrator, be used to repay such loan.
(e) All Employer Stock acquired by the Plan with the proceeds of an
Acquisition Loan must be added to and maintained in the Acquisition Loan
Suspense Account. Such Employer Stock shall be released and withdrawn from the
Acquisition Loan Suspense Account in the manner prescribed in Section 3.15. As
of each Anniversary Date, the Plan must consistently allocate to each
Participant's Employer Stock Account, in the same manner as Employer
contributions under Sections 3.2 and 3.3 are allocated, non-monetary units
(shares and fractional shares of Employer Stock) representing each Participant's
interest in Employer Stock withdrawn from the Acquisition Loan Suspense Account
in respect of payments made to reduce amounts owing under an Acquisition Loan
from amounts held in the Participant's Employer Matching Contribution Account
and ESOP Contribution Account. Participants who have terminated employment with
the Employer for any reason during the Plan Year shall have their portion of the
Plan's Employer Matching Contribution Accounts and ESOP Contribution Accounts
segregated so that the portion is not available for the purchase of any
additional Employer Stock. Income earned with respect to Employer Stock in the
Acquisition Loan Suspense Account shall be used, at the discretion of the
Administrator, to repay the Acquisition Loan used to purchase such Employer
Stock. Financed Shares released from the Acquisition Loan Suspense Account with
such income, and any income which is not so used, shall be allocated as of each
Anniversary Date or other valuation date in the same proportion that each
Participant's and former Participant's Employer Matching Contribution Account
and ESOP Contribution Account after the allocation of any earnings or losses
pursuant to Section 3.19(d) bear to the total of all Participants' and former
Participants' Employer Matching Contribution Accounts and ESOP Contribution
Accounts after the allocation of any earnings or losses pursuant to Section
3.19(d).
(f) Forfeitures attributable to Employer Matching Contributions made
pursuant to Section 3.2 shall be allocated among Employer Matching Contribution
Accounts of Participants entitled to an Employer Matching Contribution in the
same proportion that each such Participant's Compensation for the Plan Year
bears to the total Compensation for the Plan Year of all Participants eligible
to share in an allocation of Employer Matching Contributions for the Plan Year.
(g) Forfeitures attributable to ESOP Contributions made pursuant to Section
3.3 shall be allocated among the ESOP Contribution Accounts of Participants
otherwise eligible to share in the allocation of ESOP Contributions for the Plan
Year in the same proportion that each such Participant's Compensation for the
Plan Year bears to the total Compensation of all such Participants for the year.
(h) Effective December 31, 1998, following the merger on October 1, 1998 of
36
BGS&G Acquisition Corp., Inc., a subsidiary of Century Business Services, Inc.,
with and into the Employer and the exchange by the Trustees, along with all
other equity shareholders of the Employer, of Employer Stock for the common
stock of Century Business Services, Inc., such that the Employer Stock shall
thereafter be shares of common stock of Century Business Services, Inc.: (i)
assets held in Participants' and former Participants' Employer Matching
Contribution Accounts and ESOP Contribution Accounts shall be used to pay, in
part, so much of the existing Acquisition Loan as then may have accrued, up to
the total of such Accounts, with Financed Shares released from the Acquisition
Loan Suspense Account in respect of such loan repayments being allocated to each
such Participant's Employer Stock Account in the same proportion that each such
Participant's and former Participant's Employer Matching Contribution Account
and ESOP Contribution Account value bears to the total of all Participants' and
former Participants' Employer Matching Contribution Accounts and ESOP
Contribution Accounts, after the allocation of any earnings or losses to such
Accounts pursuant to Section 3.19(d); (ii) after the partial Acquisition Loan
repayment, release and allocation described in (i), neither Employer Matching
Contribution Accounts nor ESOP Contribution Accounts shall be available for
future payments of the Acquisition Loan, but such Accounts shall instead be
invested by the Trustees in such investments as the Trustees deem appropriate in
accordance with Article 7 and Section 3.18; and (iii) Financed Shares released
as a result of payments made on the remaining Acquisition Loan balance to the
Employer with proceeds on the sale of Financed Shares shall be allocated to the
Accounts of Participants who would be entitled to share in allocations of ESOP
Contributions under Section 3.3 in the Plan Year for which such Acquisition Loan
repayment is made in the proportion that each such Participant would share in
ESOP Contributions made for the Plan Year for which the Acquisition Loan
repayment is made.
3.20 PROHIBITED ALLOCATIONS.
(a) GENERAL RULE. No portion of the assets of the Plan attributable to (or
allocable in lieu of) Employer Stock acquired by the Plan in a sale to which
Section 1042 of the Code applies shall accrue (or be allocated directly or
indirectly under any other tax-qualified plan maintained by the Employer):
(i) during the nonallocation period, for the benefit of any person who made
an election under Section 1042(a) of the Code with respect to Employer Stock, or
any individual who is related to such person (within the meaning of Section
267(b) of the Code), other than individuals described in subsection (b), below,
or
(ii) for the benefit of any other person who owns (after application of Section
318(a) of the Code, without regard to paragraph (2)(B)(i) thereof) more than 25
percent of:
(A) any class of outstanding stock of the Employer or of any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 409(l) of the Code) as the Employer, or
37
(B) the total value of any class of outstanding stock of the Employer or such
other corporation.
38
(b) EXCEPTION FOR CERTAIN LINEAL DESCENDANTS. Subsection (a)(i), above,
shall not apply to an individual if:
(i) such individual is a lineal descendant of the person who made an
election under Code Section 1042(a), and
(ii) the aggregate amount allocated to the benefit of all such lineal
descendants during the nonallocation period does not exceed more than five
percent (5%) of the Employer Stock (or amounts allocated in lieu thereof) held
by the Plan which is attributable to a sale to the Plan by any person related to
such descendants (within the meaning of Section 267(c)(4) of the Code) in
transactions to which Section 1042 of the Code applied.
A person shall be treated as failing to meet the ownership limitation of
subsection (a)(ii), above, if such person fails such limitation at any time
during the one-year period ending on the date of sale of Employer Stock to the
Plan or on the date as of which shares of Employer Stock are allocated to
Participants.
(c) NONALLOCATION PERIOD. For purposes of this Section 3.20, "nonallocation
period" means the period beginning on the date of a sale described in subsection
(a), above, and ending on:
(i) the date which is ten (10) years after the date of sale, or
(ii) the date of the allocation attributable to the final payment of any
Acquisition Loan received in connection with such sale.
3.21 VALUATION OF EMPLOYER STOCK. Effective until October 1, 1998, shares of
Employer Stock shall be valued as of each Anniversary Date by an appraiser
meeting requirements similar to the requirements of the regulations prescribed
under Section 170(a)(1) of the Code as and to the extent required by Section
401(a)(28)(C) of the Code.
ARTICLE 4
DISTRIBUTIONS
-------------
4.1 RETIREMENT.
(a) Each Participant who is an Employee on his or her attainment of Normal
Retirement Age or Early Retirement Date, to the extent not then vested, shall
become fully vested and, following termination of employment, the Participant
shall be entitled to receive the full amount of the Plan Account in any form of
benefit permitted under Section 4.11 of the Plan.
(b) Distribution to a Participant shall be made, or shall commence, as soon as
is practicable after the Participant's retirement, and after arrangements for
payment have been
39
made by the Administrator and the Trustee; provided, however, that, unless the
Participant elects otherwise, that distribution shall be made, or shall
commence, not later than sixty (60) days after the end of the Plan Year in which
the later of the Participant's Normal Retirement Date or termination of
employment occurs.
4.2 DEATH OF PARTICIPANT. If a Participant's employment is terminated because of
the death of the Participant, the Participant's entire Plan Account, to the
extent not then vested, shall become fully vested in the Participant. Upon the
death of a Participant, the Participant's vested Plan Account shall be paid to
the Participant's Beneficiary, who, for a married Participant, shall be the
Participant's spouse, except as provided below.
Notwithstanding the foregoing, a married Participant may, by a "qualified
election", designate a different Beneficiary for all or part of his or her Plan
Account. A "qualified election" is a written designation by the Participant of a
Beneficiary other than the Participant's spouse which contains the written
consent of the spouse to the payment of the Plan Account to the Beneficiary
designated in the election (which may not be changed without spousal consent) or
which contains the written consent of the spouse which expressly permits
Beneficiary designations by the Participant without any requirement of further
consent by the spouse. The spouse must acknowledge the effect of the waiver and
consent and the spouse's signature must be notarized or witnessed by a Plan
representative. If the consent of the spouse permits Beneficiary designations
without further consent by the spouse, the consent must acknowledge and
expressly relinquish the right to limit the consent to the designation of a
specific Beneficiary. A spouse may not revoke his or her qualified election. A
qualified election is not required if it is established to the satisfaction of
the Administrator that there is no spouse or that the spouse cannot be located.
If the spouse is legally incompetent to give consent, the spouse's legal
guardian, even if the guardian is the Participant, may give consent. Also, if
the Participant is legally separated or the Participant has been abandoned
(within the meaning of local law), and the Participant has a court order to such
effect, a qualified election is not required unless a qualified domestic
relations order (as defined in Code Section 414(p)) provides otherwise.
The vested Plan Account of a Participant who is not married when he or she
dies will be paid to the Beneficiary of the Participant.
Payment of the Participant's vested Plan Account on death shall be made as
provided in Section 4.11 of the Plan.
Payment of the Participant's vested Plan Account on death shall be made as
soon as is practicable following the Participant's death and after arrangements
for payment have been made by the Administrator and the Trustees.
40
4.3 DISABILITY.
(a) If a Participant's employment with the Employer terminates because of
disability, the Participant's entire Plan Account, to the extent not then
vested, shall become fully vested in the Participant and shall be paid to the
Participant in any form of benefit permitted under Section 4.11 of the Plan as
soon as is practicable following the Administrator's approval of the
Participant's disability and after arrangements for payment have been made by
the Administrator and the Trustee; provided, however, that no payment shall be
made, or shall commence, to a Participant without the Participant's written
consent given in a manner required by applicable law until the Participant's
Normal Retirement Date unless, as determined under Section , the Participant's
Account balance at the date of payment or commencement is five thousand dollars
($5,000) or less (three thousand five hundred dollars ($3,500) or less for Plan
Years beginning before August 5, 1997).
(b) A Participant shall be considered disabled if he or she establishes to the
satisfaction of the Administrator that he or she is mentally or physically
disabled due to accident or illness and has been unable to perform the majority
of duties of his or her regular occupation with the Employer for a period of at
least one hundred eighty (180) days, and that such disability is permanent.
Evidence of disability shall include the certificate of a competent licensed
physician selected by the Participant and approved by the Administrator which
confirms that the Participant is disabled as defined herein.
4.4 TERMINATION PRIOR TO RETIREMENT.
1.3
(a) Amount of Distribution: Forfeitures. If a Participant's employment with
the Employer terminates for any reason other than retirement, disability or
death, his or her Plan Account shall be vested in the Participant as follows:
(i) Contributions to the Participant's Employer Matching Contribution
Account, ESOP Contribution Account and Employer Stock Account shall become
vested according to the following schedule:
=========================================================== ========================================================
YEARS OF SERVICE FOR VESTING PURPOSES VESTED PERCENTAGE
=========================================================== ========================================================
Less than 2 0%
- ----------------------------------------------------------- --------------------------------------------------------
2 20%
- ----------------------------------------------------------- --------------------------------------------------------
3 40%
- ----------------------------------------------------------- --------------------------------------------------------
4 60%
- ----------------------------------------------------------- --------------------------------------------------------
5 80%
- ----------------------------------------------------------- --------------------------------------------------------
6 or more 100%
- ----------------------------------------------------------- --------------------------------------------------------
(ii) The Participant's Salary Reduction Contribution Account, Qualified
41
Nonelective Contribution Account, Qualified Matching Contribution Account
and Rollover Contribution Account shall be one hundred percent (100%) vested at
all times.
42
The vested portion of the terminated Participant's Plan Account shall
be payable as provided in this Section. The unvested portion of such Plan
Account shall be forfeited and allocated in the manner described below. The
unvested portion of the terminated Participant's Plan Account shall be forfeited
on the earlier of (1) the date of a cash-out distribution to the Participant as
described in Treasury Regulation Section 1.411(a)-7(d), or (2) the last day of
the Plan Year in which the Participant incurs a Break in Service. Any
Participant who, upon termination of employment, has only an Employer Stock
Account and ESOP Contribution Account and is zero percent (0%) vested in those
Accounts shall be deemed to have received a cash-out distribution upon
termination of employment. Forfeitures shall be restored, if at all, pursuant to
Section 4.5.
(iii) If a portion of a Participant's Plan Account is to be forfeited, Employer
Stock allocated to the Participant's Employer Stock Account must be forfeited
only after the Participant's other non-vested Plan Accounts have been depleted.
In the event that the amount of the vested portion of the terminated
Participant's Plan Account equals or exceeds the fair market value of any
insurance contracts held by the Plan Account, the Trustees, when so directed by
the Administrator and agreed to by the terminated Participant, shall assign,
transfer, and set over to such terminated Participant all contracts on the
Participant's life in such form or with such endorsements so that the settlement
options and forms of payment are consistent with the provisions of Sections 4.10
and 4.11. In the event that the terminated Participant's vested portion does not
at least equal the fair market value of all such insurance contracts, if any, on
the Participant's life and held by the Participant's Plan Account, the
terminated Participant may pay over to the Trustees the sum needed to make the
distribution equal to the value of the insurance contracts being assigned or
transferred, or the Trustees, pursuant to the Participant's election, may borrow
the cash value of the insurance contracts from the insurer so that the value of
the insurance contracts is equal to the vested portion of the terminated
Participant's Plan Account and then assign the contracts to the terminated
Participant.
(b) Form and Timing of Distribution. On or before the Anniversary Date
coinciding with or subsequent to the termination of a Participant's employment
for any reason other than retirement, disability or death, the Administrator may
direct the Trustee to segregate the amount of the vested portion of such
terminated Participant's Plan Account and invest the aggregate amount thereof in
a separate, federally insured savings account, certificate of deposit, common or
collective trust fund of a bank or a deferred annuity. In the event the vested
portion of a Participant's Plan Account is not segregated, the amount shall
remain in a separate account for the terminated Participant and share in
allocations as and to the extent provided in Section 3.19 until such time as a
distribution is made to the terminated Participant.
Distribution of the funds due to a terminated Participant shall be made on
the occurrence of an event which would result in the distribution had the
terminated Participant remained in the employ of the Employer (upon the
Participant's death, disability, or Early or Normal Retirement). However, at the
election of the Participant, the Administrator shall
43
direct the Trustees to cause the entire vested portion of the terminated
Participant's Plan Account to be payable to such terminated Participant after a
Break in Service. Effective December 1, 1997, at the election of the
Participant, the Administrator shall direct the Trustees to cause the entire
amount of the Participant's Salary Reduction Contribution Account to be payable
to such terminated Participant as soon as practicable after such Participant has
terminated. The balance of such terminated Participant's Plan Account shall be
payable to such terminated Participants after a Break in Service.
44
Notwithstanding the preceding paragraph, distribution to a Participant
under this Section shall not include amounts held under the Plan in respect of
any Employer Stock acquired with the proceeds of an Acquisition Loan until the
close of the Plan Year for which such loan is repaid in full. With respect to
amounts distributable to a Participant in respect of Employer Stock acquired
with the proceeds of an Acquisition Loan after the close of the Plan Year for
which such loan is repaid in full, such distributions shall be made as if the
Participant had terminated employment in the manner he or she actually
terminated employment on the last day of the Plan Year of the repayment in full,
with distributions occurring as soon as practicable after such Plan Year (or
after a Break in Service, if applicable) and accomplished in the manner
distributions otherwise would be payable under this Article if the Participant
had terminated employment on such last day of the Plan Year in the manner he or
she in fact had terminated employment.
4.5 REHIRED PARTICIPANT. A Participant who is not one hundred percent (100%)
vested in his or her Plan Account upon termination of employment and who
forfeits the unvested portion of his or her Plan Account as provided in Section
shall be entitled to a restoration of the forfeited amount only as provided in
this Section. If the vested portion of the Plan Account of a terminated
Participant is paid to the Participant before the Participant incurs five (5)
consecutive Breaks in Service and if the Participant is rehired before he or she
incurs five (5) consecutive Breaks in Service and repays the amount distributed
before the date which is five (5) years after the date the Participant is
rehired, any unvested portion of the Participant's Plan Account which previously
was forfeited shall be restored to the Participant's Plan Account. If the vested
portion of the Plan Account of a terminated Participant is not paid to the
Participant before the Participant incurs five (5) consecutive Breaks in Service
and if the Participant is rehired before he or she incurs five (5) consecutive
Breaks in Service, any unvested portion of the Participant's Plan Account which
previously was forfeited shall be restored to the Participant's Plan Account.
Any Participant who is deemed to have received a cash-out distribution because
he or she was zero percent (0%) vested upon termination of employment and who is
rehired before incurring five (5) consecutive Breaks in Service shall be deemed
to have repaid the deemed distribution upon his or her date of rehire.
4.6 COMMENCEMENT OF BENEFITS. A Participant's distribution must be made or must
commence by the first day of April of the calendar year following the later of
the calendar year in which the Participant terminates employment with the
Employer or the calendar year in which the Participant attains age seventy and
one-half (70 1/2). Notwithstanding the preceding, (i) if the Participant is a
five percent (5%) owner of the Employer (as defined in Code Section 416(i)) with
respect to the Plan Year in which the Participant attains age seventy and
one-half (70 1/2), the required distribution commencement date is the first day
of April of the calendar year following the calendar year in which the
Participant attains age seventy and one-half (70 1/2) (even if the Participant's
employment with the Employer has not yet terminated) and (ii) a Participant
other than a five percent (5%) owner (as defined in Code Section 416(i)) who
attains age seventy and one-half (70 1/2), but whose employment with the
Employer has not yet terminated, shall be permitted, but shall not be required,
to elect to commence the receipt of distributions by the first day of April of
the
45
calendar year following the calendar year in which the Participant attains age
seventy and one-half (70 1/2).
4.7 NOTICE REQUIREMENTS. No less than thirty (30) days and no more than ninety
(90) days before the date of any distribution to a Participant prior to the
Participant's Normal Retirement Date, the Participant must receive (i) a general
description of the material features, and an explanation of the relative values,
of optional forms of benefit available under the Plan, and (ii) notice of the
Participant's right to defer the distribution until the Participant's Normal
Retirement Date. The preceding notice requirement under (ii) is not applicable
for any distribution after the Participant's Normal Retirement Date, and none of
the preceding notice requirements are applicable if the Participant's Plan
Account can be cashed out as provided under Section .
Notwithstanding the preceding, such distribution may commence less than
thirty (30) days after the notice required under Section 1.411(a)-11(c) of the
Income Tax Regulations is given, provided that:
(a) the Administrator clearly informs the Participant that the
Participant has a right to a period of at least thirty (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
(b) the Participant, after receiving the notice, affirmatively elects
an immediate distribution.
4.8 CASH-OUT DISTRIBUTIONS. Notwithstanding any other provision of the Plan to
the contrary, if the present value of a Participant's vested Plan Account to be
distributed does not exceed five thousand dollars ($5,000) (or does not exceed
three thousand five hundred dollars ($3,500) for Plan Years beginning before
August 5, 1997), such Participant's vested Plan Account will be distributed in a
lump sum as soon as practicable after the date on which the Participant (or
Beneficiary) becomes entitled to the distribution. For purposes of this
determination, if at the time of any distribution the present value of the
vested Plan Account of the Participant exceeds five thousand dollars ($5,000)
(or exceeds three thousand five hundred dollars ($3,500) for Plan Years
beginning before August 5, 1997), then the present value of the vested Plan
Account of the Participant at any subsequent time shall be deemed to exceed five
thousand dollars ($5,000) (or to exceed three thousand five hundred dollars
($3,500) for Plan Years beginning before August 5, 1997).
4.9 DIRECT ROLLOVERS. Notwithstanding any other provision of the Plan to the
contrary, any Distributee who is to receive an Eligible Rollover Distribution
may elect the direct trustee-to-trustee rollover of the distribution to an
Eligible Retirement Plan. A direct rollover election must be made pursuant to
the procedures established by the Plan Administrator and must specify the
Eligible Retirement Plan to which the direct rollover is to be made. If the
Distributee elects a direct rollover as permitted hereunder, the Plan
Administrator shall make the rollover as elected. For purposes of this Section,
the term
46
"Eligible Rollover Distribution" has the meaning given such term in Code Section
401(a)(31)(C) and currently means any distribution on or after January 1, 1993
of all or any portion of the balance to the credit of the Distributee, except
(i) any distribution that is one of a series of substantially equal periodic
payments (not less frequent than annual) made for the life (or life expectancy)
of the Distributee or the joint lives (or joint life expectancies) of the
Distributee and the Distributee's designated Beneficiary, or for a specified
period of ten (10) years or more, (ii) any distribution to the extent such
distribution is required under Code Section 401(a)(9), and (iii) 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). For purposes of this Section, the term Eligible Retirement Plan has
the meaning given such term in Code Section 401(a)(31)(D) and currently means
(i) an individual retirement account described in Code Section 408(a), (ii) an
individual retirement annuity described in Code Section 408(b) (other than an
endowment contract), (iii) an annuity plan described in Code Section 403(a), and
(iv) a qualified trust that is a defined contribution plan described in Code
Section 401(a), the terms of which permit the acceptance of direct rollovers.
However, in the case of an Eligible Rollover Distribution to a Participant's
surviving spouse, an Eligible Retirement Plan is limited to the plans described
in (i) and (ii) in the preceding sentence. For purposes of this Section, the
term Distributee includes the Participant and the Participant's surviving
spouse. In addition, Distributee includes the Participant's spouse or former
spouse who is the alternate payee under a Qualified Domestic Relations Order, as
defined in Code Section 414(p), with respect to the payee's interest under the
Plan.
4.10 REQUIRED DISTRIBUTIONS. This Section is included in the Plan to comply with
Code Section 401(a)(9) and the Regulations thereunder. To the extent that there
is any conflict between the provisions of Code Section 401(a)(9) and the
Regulations thereunder and any other provision in the Plan, the provisions of
Code Section 401(a)(9) and the Regulations thereunder will control. If the
Participant's spouse is not the Beneficiary with respect to any distribution of
benefits, the method of distribution elected must satisfy the incidental death
benefit requirements specified in Section 401(a)(9)(G) of the Code and Treasury
Regulation Section 1.401(a)(9)-2. For purposes of these rules, the life
expectancy of the Participant and the Participant's spouse may be recalculated
but only if so elected by the Participant or by the Participant's spouse, but
the life expectancy of any non-spouse Beneficiary may not be recalculated.
Participants whose distributions from the Plan were required to commence prior
to January 1, 1997 because of attainment of age seventy and one-half (70 1/2/),
but who are not required to receive minimum required distributions under
applicable law in effect for tax years beginning after December 31, 1996, may
elect to cease receiving distributions until otherwise required under the Plan.
4.11 FORMS OF BENEFITS.
(a) NORMAL FORM OF BENEFIT. A Participant's normal form of benefit
shall be a cash lump sum.
(b) EQUIVALENT OPTIONS. In lieu of receiving the normal form of benefit provided
in Section above, a Participant may elect to receive his or her Plan Account
payable in
47
substantially equal monthly, quarterly, semi-annual, or annual installments over
a fixed period not to exceed the life expectancy of the Participant or the joint
life expectancies of the Participant and the Participant's designated
Beneficiary.
48
(c) ELECTION OF OPTIONS. An election of an optional benefit form under
Section above must be in writing (on a form provided by the Administrator) filed
with the Administrator prior to the commencement of retirement benefit payments.
If no election is made, then the normal form of benefit in Section will be
deemed to have been elected by the Participant. Once an election of an optional
benefit form has been made and filed with the Administrator or has been deemed
to have been made, and unless it is rescinded or changed before the commencement
of benefit payments or before the purchase of an annuity that will pay the
Participant's benefits, it cannot be rescinded or changed by the Participant.
4.12 EMPLOYER STOCK DISTRIBUTIONS; BEGINNING DATE.
(a) MEDIUM OF DISTRIBUTIONS. All distributions under the Plan shall be made
in cash; provided, however, that, subsequent to February 15, 1999, a Participant
may elect to have distributions from the Participant's Employer Stock Account
made in cash or in shares of Employer Stock and cash representing fractional
shares.
(b) EMPLOYER STOCK REQUIRED BEGINNING DATE; DURATION OF INSTALLMENTS. Unless the
Participant otherwise elects, subject to the last paragraph of subSection
4.4(b), distribution of the portion of the Participant's Accounts attributable
to shares of Employer Stock shall commence no later than one year after the
close of the Plan Year:
(i) in which the Participant separates for service by reason of the
attainment of Normal Retirement Age, disability, or death; or
(ii) which is the fifth Plan Year following the Plan Year in which the
Participant otherwise separates from service, except that this paragraph (ii)
shall not apply if the Participant is reemployed by the Employer before
distribution is required to begin under this paragraph (ii).
Unless the Participant elects in writing a longer distribution period,
effective until December 31, 1998, distributions to a Participant or Beneficiary
attributable to Employer Stock shall be in substantially equal monthly,
quarterly, semiannual, or annual installments over a period not longer than five
(5) years. In the case of a Participant with an account balance attributable to
Employer Stock in excess of five hundred thousand dollars ($500,000), the five
(5) year period shall be extended one (1) additional year (but not more than
five (5) additional years) for each one hundred thousand dollars ($100,000) or
fraction thereof by which such balance exceeds five hundred thousand dollars
($500,000). The dollar limits shall be adjusted at the same time and in the same
manner as provided in Code section 415(d).
4.13 CHARTER/BYLAW RESTRICTIONS. If the Employer's charter or bylaws restricts
the ownership of substantially all outstanding securities of the Employer to
employees or to a trust described in Section 401(a) of the Code, all
distributions under this Plan shall thereafter be made in cash, until the
Employer's charter or bylaws is amended otherwise. This Section shall cease to
be effective if and so long as the Employer Stock is actively traded on an
established
49
market.
4.14 STOCK DISTRIBUTIONS; PUT OPTION.
(a) STOCK DISTRIBUTIONS. A Participant or Beneficiary who is entitled to a
distribution from the Plan in the form of shares of Employer Stock shall have
the right to require the Employer to repurchase shares so distributed under a
fair valuation formula. The right to require the Employer to repurchase shares
of Employer Stock may be exercised by the Participant or Beneficiary to whom the
shares were distributed. The Employer may allow the Administrator to direct the
Trustees (with the consent of the Trustees) to purchase Employer Stock tendered
to the Employer under a put option. The provisions of this Section shall apply
only to Employer Stock which is not publically traded or which is subject to a
trading limitation when distributed. A "trading limitation" for these purposes
on Employer Stock is a restriction under any federal or state securities law or
any regulation thereunder, or any agreement affecting the Employer Stock, which
would make the Employer Stock not as freely tradeable as Employer Stock not
subject to such restriction.
(b) PUT OPTION PERIOD. The right to require the Employer to repurchase shares of
Employer Stock may be exercised at any time within the 60-day period following
the date of distribution of such shares, and if such right is not exercised
within such 60-day period, within the 60-day period commencing as soon as
practicable in the following Plan Year after the Plan Administrator has valued
the Employer Stock for the previous Plan Year.
(c) EXERCISE PRICE. The amount to be paid by the Employer pursuant to the
exercise of a right described in this Section with respect to shares of Employer
Stock may be paid in a lump sum or in substantially equal periodic payments (not
less frequently than annually) over a period beginning not later than thirty
(30) days after the exercise of such right and not exceeding five (5) years,
provided that, if payment is to be made in periodic payments, adequate security
shall be provided and reasonable interest shall be paid on the unpaid amounts.
(d) EFFECTIVENESS. This Section shall cease to be effective if and so long as
the Employer Stock is actively traded on an established market.
4.15 PUT OPTION RIGHT; LEVERAGED SHARES. The following special rules apply to
the exercise of a right described in Section 4.14, above, with respect to any
shares of Employer Stock acquired with the proceeds of an Acquisition Loan:
(a) EXERCISE OF RIGHT BY DONEES OR HEIRS. Such right may also be exercised
by the Participant's or Beneficiary's donees, or by the persons (including an
estate or its distributee) to whom the shares pass by reason of the
Participant's or Beneficiary's death; and
(b) EXERCISE PERIOD. Such right may be exercised at any time during the 15-month
period beginning on the date of distribution by the holder notifying the
Employer in writing that such right is being exercised.
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The provisions of Section 4.14 and this Section are nonterminable and shall
continue to apply even if the Plan ceases to be an employee stock ownership plan
within the meaning of Section 4975(e)(7) of the Code. This Section shall cease
to be effective if and so long as the Employer Stock is actively traded on an
established market.
4.16 RIGHT OF FIRST REFUSAL ON EMPLOYER STOCK. Effective until October 1, 1998,
any shares of Employer Stock distributed by the Trust shall be subject to a
"right of first refusal". The right of first refusal shall provide that, prior
to any subsequent transfer, such Employer Stock must first be offered in writing
to the Employer, and then if refused by the Employer, to the Trust, at the then
fair market value thereof. The selling price and other terms under the right of
first refusal must not be less favorable to the seller than the greater of the
value of the Employer Stock determined under Treas. Reg. Section
54.4975-11(d)(5) by an independent appraiser meeting requirements similar to
those contained in Treasury regulations under Section 170(a)(1) of the Code or
the purchase price and other terms that would be contained in a good faith offer
to purchase such shares from an independent prospective buyer. The Employer and
the Administrator (on behalf of the Trust) shall have a total of fourteen (14)
days (from the date the Employer receives the offer) to exercise the right of
first refusal on the same terms offered by a prospective buyer. A Participant
(or Beneficiary) entitled to a distribution of Employer Stock may be required to
execute an appropriate stock transfer agreement (evidencing the right of first
refusal) prior to receiving a certificate for Employer Stock. This Section shall
cease to be effective if and so long as the Employer Stock is actively traded on
an established market.
4.17 LEGENDS. Shares of Employer Stock held or distributed by the Trustees may
include such legend restrictions on transferability as the Employer may
reasonably require in order to assure compliance with applicable federal and
state securities laws. Except as otherwise provided in Section 4.14 and Section
4.16, no shares of Employer Stock held or distributed by the Trustees may be
subject to a put, call or other option, or buy-sell or similar arrangement.
4.18 HARDSHIP WITHDRAWALS. No amounts may be withdrawn from a Participant's Plan
Account prior to the Participant's retirement, death, disability, or termination
of service with the Employer, except in the case of financial hardship. A
Participant may withdraw all or part of his or her Salary Reduction Contribution
Account (exclusive of earnings after December 31, 1988 attributable thereto)
while the Participant is an Employee, if the Participant is suffering an
immediate and heavy financial need. A hardship withdrawal may not exceed the
amount which is necessary to alleviate the Participant's financial hardship. The
determination of the existence of an immediate and heavy financial need and of
the amount necessary to alleviate the financial need shall be made based upon
all the relevant facts and circumstances and in accordance with the "safe
harbor" standards set forth below, applied by the Plan Administrator on a
nondiscriminatory basis.
(a) DEEMED IMMEDIATE AND HEAVY FINANCIAL NEED. A distribution will be
deemed to be made on account of an immediate and heavy financial need of the
Participant if the
51
distribution is on account of (1) medical expenses described in Code Section
213(d) previously incurred by the Participant, the Participant's spouse, or any
dependents of the Participant (as defined in Code Section 152) or necessary for
these persons to obtain medical care described in Code Section 213(d); (2) costs
directly related to the purchase of a principal residence for the Participant
(excluding mortgage payments); (3) the payment of tuition and related
educational fees for the next twelve (12) months of post-secondary education for
the Participant, or for the Participant's spouse, children, or dependents (as
defined in Code Section 152); (4) payments necessary to prevent the eviction of
the Participant from his or her principal residence or foreclosure on the
mortgage of the Participant's principal residence; (5) any other event which is
deemed an immediate and heavy financial need by the Secretary of Treasury; or
(6) any federal, state or local income taxes or penalties reasonably anticipated
to result from the hardship distribution.
(b) DEEMED NECESSARY TO SATISFY FINANCIAL NEED. A distribution will be deemed to
be necessary to alleviate the Participant's immediate and heavy financial need
if the following requirements are satisfied: (1) the distribution is not in
excess of the amount of the immediate and heavy financial need of the
Participant; and (2) the Participant has obtained all distributions, other than
hardship distributions, and all non-taxable (at the time of the loan) loans
currently available under the Plan, and all other plans maintained by the
Employer.
A Participant who receives a hardship distribution may not make Salary
Reduction Contributions to the Plan (or to any other qualified or non-qualified
plans of deferred compensation (including stock option, stock purchase and
similar plans, and any cash or deferred arrangement that is part of a cafeteria
plan under Code Section 125) maintained by the Employer, other than the
mandatory employee contribution to a defined benefit plan and other than health
or welfare plans) for the twelve (12) month period beginning on the date of
receipt of the hardship distribution, and the aggregate of Salary Reduction
Contributions made by the Participant for the calendar year of the hardship
distribution and the calendar year immediately following the year of
distribution cannot exceed the dollar limitation in Code Section 402(g).
Notwithstanding any other provision of the Plan, if a Participant is suspended
from making Salary Reduction Contributions for a period of twelve (12) months
because of a hardship withdrawal, such Participant may resume making Salary
Reduction Contributions immediately following such twelve (12) month period.
ARTICLE 5
ADMINISTRATION
--------------
5.1 ADMINISTRATION. The Administration of this Plan shall be the responsibility
of the following named fiduciaries, who are designated as such for purposes of
the ERISA:
(a) The Trustees with respect to the management, control and investment of
the Trust (except to the extent the Trustees are subject to the direction of the
Administrator, Participants or an investment manager appointed by the Employer
as provided herein) and the payment of benefits to Participants and their
beneficiaries;
52
(b) The Administrator or other person or persons designated by the Administrator
for purposes of determining appeals with respect to denied claims for benefits;
and
(c) The Administrator with respect to controlling and managing the
administration and operation of the Plan as hereinafter set forth. The
Administrator may, through a written instrument, designate other persons to
carry out some or all of its fiduciary responsibility.
The authority of each named fiduciary in its designated area of
responsibility as aforesaid shall be exclusive, and no named fiduciary shall
have either authority or responsibility to exercise any discretion or control
other than as specifically delegated to the named fiduciary hereunder. Any
person or group of persons or entity may serve in more than one fiduciary
capacity with respect to the Plan.
ARTICLE 6
THE ADMINISTRATOR
-----------------
6.1 MEMBERS. The Administrator shall be designated by the Employer and may be
the Employer or a committee of one or more individuals. The Administrator shall
serve until death, resignation or removal by the Employer. The Administrator
may, but need not, be a Participant in the Plan.
6.2 PROCEDURE.
(a) The Administrator may elect from among its membership, by a majority
vote for each, a secretary and such other officers as the Administrator may deem
expedient. The Administrator shall meet as often as its Chairperson deems
necessary to carry out its functions. Any other two (2) members of the
Administrator may call a meeting at any time by giving due notice thereof to the
Chairperson and the other Administrator members.
(b) Action by the Administrator on any matter of substance or on any matter that
requires the exercise of discretion by the Administrator shall be taken at a
meeting of the Administrator by a majority vote or by unanimous written consent
without a meeting. Action on purely administrative matters may be taken by any
member designated by a majority of the entire Administrator to act upon such
administrative matter. However, no member of the Administrator who is a
Participant shall vote or act on any question concerning only his or her rights
or his or her beneficiaries' rights under the Plan.
6.3 POWERS AND RESPONSIBILITIES. The Administrator shall have the following
powers and responsibilities:
(a) Under advice of counsel, who may be counsel to the Employer or counsel
of its own selection, construing the Plan, and remedying any ambiguities,
inconsistencies or omissions.
53
(b) Determining all questions relative to the eligibility of employees to be
Participants and the benefits of Participants or beneficiaries.
(c) Establishing reasonable rules for the administration of the Plan.
(d) Maintaining appropriate records relating to Participants and their
beneficiaries.
54
(e) Designating to the Trustees the investment vehicles to be established under
Section 3.18 and the portion of each Participant's Plan Account to be invested
in each such vehicle.
(f) Preparing and filing such reports and returns with respect to the Plan as
are required by law.
(g) Allocating income, gains and losses among Plan Accounts as provided in
Article 5 above.
(h) Performing other duties necessary for the administration of this Plan which
appear to the Administrator to be necessary or appropriate in order properly to
administer and operate the Plan.
The Administrator shall discharge its duties for the exclusive purpose of
providing benefits hereunder and defraying the reasonable expenses of operating
the Plan and with the skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character and
with like aims.
In carrying out its duties herein, the Administrator shall have
discretionary authority to exercise all powers and to make all determinations,
consistent with the terms of the Plan, in all matters entrusted to it, and its
determinations shall be given deference and shall be final and binding on all
interested parties.
6.4 CERTIFICATIONS AND INVESTIGATIONS.
(a) Whenever in the administration of the Plan a certification by the
Employer is required to be given to the Administrator, or if the Administrator
shall deem it necessary that a matter be proved by certification of the Employer
prior to taking or omitting any action hereunder, such certification shall be
duly made, and the matter shall be deemed proved, by an instrument delivered to
the Administrator, signed in the name of the Employer by its duly authorized
representative. The Administrator shall be empowered to act, and shall be
protected in acting, upon such instrument. Further, the Administrator shall be
empowered to act, and shall be protected in acting, upon any notice, resolution,
order, offer, telegram, letter or other document believed by the Administrator
to be genuine and to have been signed by the proper party or parties.
(b) The Administrator shall not be required to make any investigation to
determine the identity or mailing address of any person entitled to benefits
under this Plan and shall be entitled to withhold the payment of benefits until
the identity and mailing addresses of persons entitled to benefits are certified
to it by the Employer or by such person.
6.5 CLAIMS PROCEDURE. Any person claiming a benefit under the Plan (a
55
"Claimant") shall present the claim, in writing, to the Administrator, and the
Administrator shall respond in writing. If the claim is denied, the written
notice of denial shall state, in a manner calculated to be understood by the
Claimant:
(a) The specific reason or reasons for denial, with specific references to the
Plan provisions on which the denial is based;
(b) A description of any additional material or information necessary for the
Claimant to perfect his or her claim and an explanation of why such material or
information is necessary; and
(c) An explanation of the Plan's claims review procedure.
The written notice denying or granting the Claimant's claim shall be
provided to the Claimant within ninety (90) days after the Administrator's
receipt of the claim, unless special circumstances require an extension of time
for processing the claim. If such an extension is required, written notice of
the extension shall be furnished by the Administrator to the Claimant within the
initial ninety (90) day period and in no event shall such an extension exceed a
period of ninety (90) days from the end of the initial ninety (90) day period.
Any extension notice shall indicate the special circumstances requiring the
extension and the date on which the Administrator expects to render a decision
on the claim. Any claim not granted or denied within the period noted above
shall be deemed to have been denied.
Any Claimant whose claim is denied, or deemed to be denied under the
preceding sentence, (or such Claimant's authorized representative) may, within
sixty (60) days after the Claimant's receipt of notice of the denial, or after
the date of the deemed denial, request a review of the denial by notice given,
in writing, to the Administrator. Upon such a request for review, the claim
shall be reviewed by the Administrator (or its designated representative) which
may, but shall not be required to, grant the Claimant a hearing. In connection
with the review, the Claimant may have representation, may examine pertinent
documents, and may submit issues and comments in writing.
The decision on review normally shall be made within sixty (60) days of the
Administrator's receipt of the request for review. If an extension of time is
required due to special circumstances, the Claimant shall be notified, in
writing, by the Administrator, and the time limit for the decision on review
shall be extended to one hundred twenty (120) days. The decision on review shall
be in writing and shall state, in a manner calculated to be understood by the
Claimant, the specific reasons for the decision and shall include references to
the relevant Plan provisions on which the decision is based. The written
decision on review shall be given to the Claimant within the sixty (60) day (or,
if applicable, the one hundred twenty (120) day) time limit discussed above. If
the decision on review is not communicated to the Claimant within the sixty (60)
day (or, if applicable, the one hundred twenty (120) day) period discussed
above, the claim shall be deemed to have been denied upon review. All decisions
on review shall be final and binding with respect to all concerned parties.
56
6.6 ADVICE. The Administrator may secure specialized advice or assistance as it
deems necessary or desirable in connection with the administration and operation
of the Plan and shall be entitled to rely conclusively upon, and shall be fully
protected in any action or omission taken by it in good faith reliance upon, any
advice or opinion so obtained.
6.7 DELEGATION. The Administrator shall have the power and authority to
delegate from time to time by written instrument all or any part of its duties,
powers or responsibilities under the Plan, both ministerial and discretionary,
as it deems appropriate, to any person, and in the same manner to revoke any
such delegation of duties, powers or responsibilities. Any action of such person
in the exercise of duties, powers or responsibilities delegated to such person
shall have the same force and effect for all purposes hereunder as if such
action had been taken by the Administrator. Further, the Administrator may
authorize one or more persons to execute any certificate or document on behalf
of the Administrator, in which event any person notified by the Administrator of
such authorization shall be entitled to accept and conclusively rely upon any
such certificate or document executed by such person as representing action by
the Administrator until such third person shall have been notified of the
revocation of such authority. Except to the extent required by ERISA, the
Administrator shall not be liable for any act or omission of any person to whom
the Administrator's duties, powers or responsibilities have been delegated, nor
shall any person to whom any duties, powers or responsibilities have been
delegated have any liabilities with respect to any duties, powers or
responsibilities not delegated to such person, except to the extent required by
ERISA.
6.8 LIABILITY; INDEMNIFICATION. Except to the extent required by ERISA, no
member of the Administrator shall incur any liability: (i) by virtue of any
contract, agreement, bond or other instrument made or executed by the member or
on the member's behalf as a member of the Administrator, (ii) for any act or
failure to act, or any mistake or judgment made by the member, with respect to
the business of the Plan, unless resulting from the member's gross negligence or
willful misconduct, or (iii) for the neglect, omission or wrongdoing of any
other member of the Administrator or of any person employed or retained by the
Administrator. The Employer shall indemnify and hold harmless each member of the
Administrator from the effects and consequences of the member's acts, omissions
and conduct with respect to the Plan, except to the extent that such effects and
consequences shall result from the member's own willful misconduct or gross
negligence. The foregoing right to indemnification shall be in addition to such
other rights as the Administrator may enjoy as a matter of law or by reason of
insurance coverage of any kind. Rights granted hereunder shall be in addition to
and not in lieu of any rights to indemnification to which the Administrator may
be entitled pursuant to the by-laws of the Employer, and, if the Administrator
is an Employee, service as the Administrator shall be deemed in partial
fulfillment of the member's employment function. In all computations, the
Administrator shall be entitled to rely fully upon data furnished by the
Employer and upon information furnished it by or on behalf of an Employee or
Employees.
57
6.9 INSURANCE. The Plan may purchase, as an expense of the Plan, liability
insurance for the Plan and/or for its fiduciaries to cover liability or losses
occurring by reason of an act or omission by a fiduciary. In addition, any
fiduciary may purchase, from and for the fiduciary's own account, insurance to
protect the fiduciary in the event of a breach of fiduciary duty, and the
Employer may also purchase insurance to cover the potential liability of one or
more persons who serve in a fiduciary capacity with regard to the Plan.
6.10 BONDING. The Administrator shall arrange for such bonding as is required by
law. Bonding in excess of the amount required by law shall not be considered
required, but shall be permitted, by this Plan. The costs for such bonding shall
be paid by the Employer or, if the Employer elects, from the Trust.
6.11 COMPENSATION. The Administrator shall serve without compensation, but all
expenses of the Administrator incurred in the performance of duties hereunder
shall be proper charges to the Trust and shall be paid therefrom unless the
Employer, in its discretion, chooses to pay such expenses.
ARTICLE 5
TRUST AND TRUSTEES
7.1 TRUST FUND. The Trust Fund shall consist of all contributions made by the
Employer under Article 3 or transferred to the Trust Fund as provided herein,
and the investments and reinvestments thereof and the income thereon which shall
be accumulated and added to principal.
7.2 TRUSTEES' CONTROL.
(a) Except as specifically required herein, the Trustees shall invest and
reinvest the Trust assets primarily (or exclusively) in shares of Employer
Stock, in accordance with the terms of the Plan and this Trust Agreement,
including, but not limited to, the requirement that all purchases and sales of
shares of Employer Stock shall be made at the direction of the Plan
Administrator.
(b) The Trustees shall have the exclusive responsibility for the control and
management of the Trust assets, except to the extent that Plan Participants have
the right to direct the Trustees to invest amounts allocated to their Salary
Reduction Contribution Accounts and Qualified Participant Self-Directed Accounts
pursuant to the Plan. The Administrator shall advise the Trustees of its
procedures for implementing this feature of the Plan and any changes to such
procedures. The Trustees shall discharge their duties solely in the interest of
the Participants and Beneficiaries and for the exclusive purposes of providing
benefits for Participants and Beneficiaries and defraying reasonable expenses of
administering the Plan.
(c) In the event that the Trustees dispose of any shares of Employer Stock held
as Trust assets, under circumstances which require registration or qualification
of the securities
58
under applicable Federal or state securities laws, then the Trustees, at the
Employer's or, at the direction of the Employer, the Trust's expense, will take,
or cause to be taken, any and all such actions as may be necessary or
appropriate to effect such registration or qualification.
59
(d) The Trustees shall be free from all liabilities for their acts and
conduct in the administration of the Trust and for any losses incurred in the
administration of the Plan or upon the investment of the Trust Assets, except to
the extent that ERISA does not permit the Trustees to be relieved from the
liability for such acts and conduct. A Trustee shall not be liable for the acts
or omissions of another Plan fiduciary unless (a) the Trustee knowingly
participates in, or knowingly attempts to conceal the act or omission of,
another fiduciary and the Trustees knows that act or omission is a breach of
fiduciary responsibility by the other fiduciary; (b) the Trustee has knowledge
of a breach by the other fiduciary and shall not make reasonable efforts to
remedy the breach; or (c) the Trustee's breach of his or her own fiduciary
responsibility permits the other fiduciary to commit a breach.
(e) Upon request of the Administrator, the Trustees will provide the Plan
Administrator with information particularly known to the Trustees which the Plan
Administrator is required to give to Participants and Beneficiaries or any
governmental agency under applicable Federal or state law. Such information need
only be provided once during each Plan Year unless Federal or state law requires
the Plan Administrator to provide information to Participants on a more frequent
basis.
7.3 INVESTMENT OPTIONS. The Trustees shall establish such investment options as
the Administrator shall direct for purposes of implementing Section 3.18 and
shall divide the trust among investment options in accordance with the
investment directions of Participants which are made as provided in this Plan.
Investment options shall be established either by direct investment or through
the medium of a bank, a trust fund, an insurance contract or regulated
investment company mutual fund, as the Administrator shall direct. Each
investment option (a) shall be held and administered as part of the Trust, but
(b) shall be separately invested and accounted for.
The assets of the Trust invested in each of the options shall be separately
valued at fair market value as of the appropriate Valuation Date.
7.4 TRUSTEES APPOINTMENT AND RESIGNATION; REMOVAL AND SUCCESSION OF TRUSTEES.
(a) Appointment of Trustee. The Trustees shall be appointed by the
Employer. It is anticipated that the Trust normally will have during its
existence three (3) or more Trustees.
(b) RESIGNATION OR REMOVAL OF TRUSTEES. Any Trustee may resign at any time by
filing the Trustee's resignation, in writing, with the Employer. The Employer
shall have the power to remove the Trustee(s) at any time, with or without
cause, and to appoint successor Trustees. Upon resignation or removal, the
Trustee(s) shall render an accounting of its administration since the last
annual accounting and shall transfer and deliver the assets in hand under this
Plan to any remaining or successor Trustee. Any successor Trustee(s) shall have
all the same titles, rights, powers, authorities, discretions and immunities as
the original Trustee(s) hereunder.
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7.5 PRUDENT PERSON RULE. The Trustees shall discharge their duties under this
Plan solely in the interest of Participants and their beneficiaries and: (i) for
the exclusive purpose of providing benefits to such Participants and
beneficiaries and paying reasonable expenses of administering the Plan; (ii)
with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of like character and
with like aims; and (iii) in accordance with the provisions of this Plan insofar
as they are consistent with the provisions of ERISA.
7.6 LIABILITY; EXPENSES; COMPENSATION. The Trustees shall not be liable for any
losses which may be incurred upon the investments of the Trust Fund except to
the extent that any losses to the Trust Fund shall have been caused by his, her
or their bad faith, gross negligence or willful misconduct or by a breach of
his, her or their fiduciary duties under ERISA.
The Employer may pay all expenses properly and actually incurred by the
Trustees in the administration or termination of the Trust Fund, including
compensation for the Trustee's services as Trustees and legal expenses, provided
that, if a Trustee already receives full time pay from the Employer, the Trustee
may not receive such compensation. Should the Employer for any reason fail to
pay such expenses, the same shall be paid out of the Trust Fund.
7.7 MANAGEMENT OF ASSETS.
(a) POWERS OF THE TRUSTEES OR INVESTMENT MANAGER. The Trustees who are
managing and administering the Trust Fund or, if applicable, the Investment
Manager (as defined in Section 3(38) of ERISA) which has been appointed by the
Employer to manage the Plan's assets, shall be and hereby are empowered and
authorized, in the sole discretion and subject to current rules and regulations
at the time the investment is made and subject to the provisions of the Plan
with respect to direction by the Administrator or Participant direction (and
voting) of investments:
(i) To invest and reinvest contributions and any accretions thereto,
whether capital gains or income or both, and the proceeds of any sale, pledge,
lease or other disposition of any assets of the Trust Fund in bonds, notes,
mortgages, commercial paper, coins, stamps, foreign bonds, antiques, broodmares,
gold, art, silver, diamonds, second trusts, option securities, in any other type
of personal property and in real property; provided, however, that no
individually-directed account may be invested in collectibles as described in
Code Section 408(m). Notwithstanding any other provision of this Plan, any
person having investment authority with regard to the Trust Fund is hereby
authorized to direct the investment of any part or all of the assets of the
trust in any common, collective, or group trust ("Common Trust"), including but
not limited to any Common Trust which has been qualified under Code Section
401(a) and is exempt from taxation under Code Section 501(a) now or hereafter
maintained by a bank or trust company which is a fiduciary with respect to the
Plan or trust, as any such Common Trust may have
61
heretofore been or may hereafter be amended, to be held subject to all the
provisions thereof and to be commingled with the assets of other trusts
participating therein; provided, however, that any investment and retention of
an interest therein shall be such as will not adversely affect in any manner
the qualified or exempt status of the Plan and trust under Code Section 401(a)
and Section 501(a). To the extent of the equitable share of the trust in a
Common Trust which is qualified under Code Section 401(a), the Common Trust
shall be a part of the Plan and of the trust, and all of the terms and
conditions of the instrument creating the Common Trust shall be deemed to be
incorporated by reference herein. The power herein conferred is intended to and
shall override any provision of this Plan to the contrary (including, but not
limited to, any investment limitations contained in or imposed by this Plan).
(ii) To vote any stocks (including Employer Stock as provided in this Plan),
bonds or other securities held in the Trust, or otherwise consent to or request
any action on the part of the issuer in person or by proxy; provided, however,
that the Trustees shall vote stocks, bonds, or other securities allocated to a
Participant's Salary Reduction Contribution Account and Qualified Participant
Self-Directed Account, or otherwise consent to or request any action on the part
of the issuer in person or by proxy with respect thereto, only in accordance
with the specific written directions of such Participant;
(iii) To invest, reinvest and change investments; to sell, mortgage, pledge,
lease, assign, transfer and convey any and all of the Trust Fund property for
cash or on credit, at public or private sale; to exchange any Trust Fund
property for other property; to grant options to purchase or acquire any Trust
Fund property; to determine the prices and terms of sales, exchanges or options;
and to execute, acknowledge and deliver any and all deeds or other trust
instruments of conveyance which may be required to carry the foregoing powers
into effect, without obligation on the part of the purchaser, lessee, lender,
assignee or transferee, or anyone to whom the property may in any way be
conveyed to see to the application of the purchase money loans or property
exchanged, transferred, assigned or conveyed.
(iv) To allow cash in the Trustees' hands to remain on deposit in the
commercial or savings department of any bank or trust company supervised by the
United States or a State or agency of either, even if it is a fiduciary or
party-in-interest, at any time and from time to time in a reasonable amount;
and, as to such amount on deposit, the Trustees shall have liability for such
interest as may be paid on such deposit.
(v) To exercise with respect to all investments all of the rights, powers and
privileges of an owner including, without limiting the foregoing, the power to
give proxies and to pay calls, assessments and other sums deemed necessary for
the protection of the Trust Fund; to participate in voting trusts, pooling
agreements, foreclosures, reorganizations, consolidations, mergers and
liquidations, and in connection therewith to deposit securities with and
transfer title to any protective or other committee under such terms as the
Trustees may deem advisable; to exercise or sell stock subscriptions or
conversion rights and to accept and retain as an investment hereunder any
securities received through the exercise of any of the
62
foregoing powers. If the Trustees shall pay more than the par value of any
security purchased, the Trustees shall not be obligated to establish a sinking
fund out of the income of such investments for repaying to the principal the
same amount paid above par.
(vi) To take any action with respect to conserving or realizing upon the value
of any Trust Fund property and with respect to foreclosures, reorganizations, or
other changes affecting the Trust Fund property; to collect, pay, contest,
compromise, or abandon demands of or against the Trust Fund estate, wherever
situated; and to execute contracts, notes, conveyances and other instruments,
including instruments containing covenants and warranties binding upon and
creating a charge against the Trust Fund estate, and containing provisions
excluding personal liability.
(vii) To employ agents, including investment counsel, for advice and to manage
the investment of the Trust Fund property, to employ attorneys, auditors,
depositories and proxies, with or without discretionary powers and all such
parties shall have the right to rely upon and execute the written instructions
of the Trustees, and shall not be obligated to inquire into the propriety of the
acts of directions of the Trustees, other than is required under ERISA.
(viii) To compromise any claims existing in favor of or made against the Trust
Fund.
(ix) To engage in any litigation, either for the collection of monies or for
other properties due the Trust Fund, provided in defense of any claim against
the Trust Fund; provided, however, that the Trustees shall not be required to
engage in or participate in any litigation unless the Trustees shall have been
indemnified to their satisfaction against all expenses and liabilities to which
the Trustees may become subject.
(x) To invest and reinvest up to one hundred percent (100%) of the Trust Fund
in qualifying Employer securities, as defined in Section 407(d)(1) of ERISA.
Such investment must be for the exclusive benefit of employees and must meet the
requirements of Code Section 401(a) and all aspects thereof as to the common law
prudence standard (except as to the diversification requirement).
(xi) Effective until February 15, 1999, to borrow from any lender (including
the Employer or one or more Trustees) to finance the acquisition of Employer
Stock, giving their note as Trustees with such reasonable interest and security
for the loan as may be appropriate or necessary;
(xii) To contract or otherwise enter into transactions between themselves as
Trustees and the Employer, or any Employer shareholder, for the purpose of
acquiring or selling Employer Stock;
(xiii) To exercise any of the powers of an owner, with respect to such
63
Employer Stock and other Trust assets; and
(xiv) To perform all acts which the Trustees shall deem necessary or appropriate
and exercise any and all powers and authority of the Trustees under this
Agreement. The Administrator may authorize the Trustees to act on any matter or
class of matters with respect to which directions or instructions from the Plan
Administrator are called for hereunder or pursuant to the Plan without specific
directions or other instructions from the Administrator.
(b) INVESTMENT MANAGER. Notwithstanding the foregoing, the Employer
reserves the right to appoint an investment adviser registered as such under the
Investment Advisers Act of 1940, a bank (as defined in that Act) or an insurance
company qualified to perform investment management services under the laws of
more than one state to manage the investments of all or any part of the Trust
Fund. Upon such appointment, and acknowledgment by the appointee that it is a
fiduciary as defined in ERISA, the appointee shall have all rights to manage the
investments of that portion of the Trust Fund over which authority has been
granted. The Trustees shall be relieved of all further responsibility in respect
thereof and shall abide by the instructions of such appointee.
7.8 RELIANCE BY TRUSTEES. The Trustees may rely on any direction or decision of
the Administrator purporting to be made pursuant to the terms of this Plan and
on any list or notice furnished by the Employer or the Administrator as to any
facts, the occurrence of any events or the existence of any situation, and shall
not be bound to inquire as to the basis of any such decision, list or notice,
and shall incur no obligation or liability for any action taken or suffered to
be taken by them in reliance thereon. The Trustees may rely without liability
upon such valuation of Employer Stock as may be determined in good faith by the
Administrator in accordance with the provisions of the Plan.
7.9 CHANGES IN ADMINISTRATOR. The Trustees shall not be bound to inquire as to
changes in the Administrator and shall be entitled to rely on such information
as it may receive from time to time from the Employer with respect to such
membership.
7.10 LEGAL COUNSEL. The Trustees may consult with legal counsel (who may or may
not be counsel for the Employer) concerning any question which may arise with
reference to its duties under this Plan, and the Trustees may rely in good faith
upon the opinion of such counsel.
7.11 ACCOUNTING OF FUNDS AND TRANSACTIONS.
(a) The Trustees shall keep true and accurate records of all transactions
of the Trust Fund which records shall be available for inspection on order by
authorized representatives of the Employer or by Participants at reasonable
times.
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Although a separate Account for each Participant under the Plan shall be
maintained as herein provided, it shall not be necessary for the Trustees to
make or maintain an actual physical division of the assets of the Trust Fund
until the time shall arrive for the payment to a Participant or a beneficiary or
beneficiaries of a Participant, and, at such time or times, the Trustees need
only make an actual division of so much of any Account as may be necessary to
satisfy the particular payments to be made.
(b) On the last day of the Plan Year, or more often as directed by the Employer,
the Trustees shall prepare and deliver to the Employer an accounting of the
funds and transactions since the last previous such accounting of the Trust
Fund. In the absence of the filing in writing with the Trustees by the Employer
of exceptions or objections to such accounting within one hundred twenty (120)
days after the delivery of such accounting to the Employer, the Employer shall
be deemed to have approved such accounting, and in such a case or upon the
written approval by the Employer of such an accounting, the Trustees shall be
released, relieved and discharged with respect to all matters and things
disclosed in such accounting as though such accounting had been settled by
decree of a court of competent jurisdiction.
7.12 RELIANCE ON TRUSTEES. No person contracting or in any way dealing with the
Trustees shall be under any obligation to ascertain or inquire: (i) into any
powers of the Trustee, (ii) whether such powers have been properly exercised, or
(iii) about the sources or applications of any funds received from or paid to
the Trustee. Any person contracting or in any way dealing with the Trustees may
rely on the exercise of any power or authority as the conclusive evidence that
the Trustees possesses such power or authority.
7.13 LEGAL ACTION. In the case of any suit or proceeding regarding this Plan to
which the Trustees are a party, the Trustees shall be reasonably reimbursed for
any and all costs, including attorney's fees, and for all necessary expenses
which they have incurred or become liable on account thereof or on account of
any other phase of their administration of the Trust Fund, and they shall be
entitled to reimburse themselves for said expenses out of the Trust Fund. In
order to protect the Trust Fund against depletion as the result of ill-advised
litigation, it is agreed that in the event any Participant, beneficiary or
Employee brings any legal action against the Trustees, the result of which shall
be adverse to the party bringing such suit, the court costs and attorney's fees
to the Trustees in defending such suit shall be charged to such extent as is
allowed by a court of competent jurisdiction, and as is possible, directly to
the account of said Participant, beneficiary or Employee, and only the excess,
if any, of such costs and fees over and above the Participant's separate share
of the fund shall be included in the expense in determining the earnings or loss
to the Trust Fund.
7.14 DISTRIBUTIONS. The Trustees shall make distributions from the Trust, at
such times and in cash or in shares of Employer Stock, to the person entitled
thereto under the Plan, as the Plan Administrator directs in writing. Any
undistributed portion of a Participant's Account under the Plan shall be
retained in the Trust until the Plan Administrator directs its distribution.
65
7.15 SIGNATURES. All communications required hereunder from the Employer or the
Plan Administrator to the Trustees shall be in writing signed by an officer of
the Employer or a member of the Plan Administrator authorized to sign on the
Plan Administrator's behalf, respectively. The Plan Administrator shall
authorize one or more individuals to sign on its behalf all communications
required hereunder between the Plan Administrator and the Trustees. The Employer
shall at all times keep the Trustees advised of the names and specimen
signatures of all members of the Plan Administrator and the individuals
authorized to sign on behalf of the Plan Administrator. The Trustees shall be
fully protected in relying on any such communication and shall not be required
to verify the accuracy or validity thereof unless they have reasonable grounds
to doubt the authenticity of any signature. If after request the Trustees do not
receive instructions from the Plan Administrator on any matter in which
instructions are required hereunder, the Trustees shall act or refrain from
acting as they may determine.
7.16 FEES AND EXPENSES. Each Trustee shall receive such compensation as he or
she and the Employer may agree upon in writing. The reasonable expenses incurred
by the Trustees in the performance of their duties, and all other proper
administrative costs of the Plan and Trust (including Trustees' fees), shall be
charged to and paid out of the Trust assets in a manner directed by the Plan
Administrator. However, the Employer may elect to pay all or any portion of such
expenses; and further provided that the compensation (if any) of a Trustee who
already receives full-time pay from an Employer shall not be charged to or
payable from the Trust.
7.17 AMENDMENT AND TERMINATION. The Employer (through its Board of Directors)
shall have the right at any time, by an instrument in writing, duly executed and
delivered to the Trustees, to modify, alter or amend this Agreement, in whole or
in part, and to terminate the Plan and Trust, in accordance with the express
provisions of the Plan. In no event, however, shall the duties, powers or
liabilities of the Trustees hereunder be changed without their prior written
consent.
7.18 NON-REVERSION. Subject to any provision of the Plan expressly stating to
the contrary, this Trust is declared to be irrevocable, and at no time shall any
part of the Trust assets revert to the Employer or be used for, or be diverted
to, purposes other than for the exclusive benefit of Participants (and their
Beneficiaries). However, the Employer may, by notice in writing to the Trustees,
direct that all or part of the Trust assets be transferred to a successor
trustee under a trust which is for the exclusive benefit of such Participants
(and their Beneficiaries) and which satisfies the requirements of Section 401(a)
of the Code; and thereupon the Trust assets, or any part thereof, shall be paid
over, transferred or assigned to said successor trustee, free from the Trust
created hereunder.
7.19 RESIGNATION OR REMOVAL OF TRUSTEE.
(a) A Trustee may resign at any time upon 30 days' written notice to the
Employer. Upon receipt of instructions or directions from the Employer or the
Administrator with which
66
a Trustee is unable or unwilling to comply, a Trustee may resign, upon notice in
writing to the Employer given within a reasonable time under the circumstances
then prevailing after the receipt of such instructions or directions and
notwithstanding any other provisions hereof, and in that event the Trustee shall
have no liability to the Employer, or to any person having an interest herein,
for failure to comply with such instructions or directions, except as otherwise
provided in ERISA.
(b) Upon resignation or removal of a Trustee, the Employer may appoint a
successor trustee. The successor trustee shall have the same powers and duties
as are conferred upon the Trustees hereunder, and the resigning or removed
Trustee shall assign, transfer and deliver to such successor trustee and the
remaining Trustees all the Trust assets in his or her possession, together with
such records or copies thereof as may be necessary.
7.20 ACCEPTANCE. The Trustees hereby accept this Trust and agree to hold the
Trust assets, and all additions and accretions thereto, subject to all the terms
and conditions of the Plan and this Agreement. Each Trustee hereby acknowledges
receipt of a copy of the Plan. In the event that any provision of this Plan and
Trust shall be held illegal or invalid for any reason, the illegality or
invalidity thereof shall not affect the remaining provisions of this Agreement,
but shall by fully severable, and the Plan and Trust shall be construed and
enforced as if the illegal or invalid provision had never been inserted herein.
7.21 DIRECTION OF TRUSTEE; INDEMNIFICATION. Whenever the Administrator or the
Employer shall direct the Trustees as to the taking of any action permitted to
be taken by the Trustees in their discretion, and the Trustees take such action,
the Trustees shall be indemnified and held harmless by the Employer with respect
to any action so taken. In addition, the Trustees shall be indemnified and held
harmless by the Employer to the maximum extent permitted under applicable law
for all actions taken by them, whether or not at the direction of the Employer
or the Administrator.
ARTICLE 8
MEETINGS AND DECISIONS OF TRUSTEES
----------------------------------
1
8.1 MEETING OF TRUSTEES. Meetings of the Trustees shall be held at such place or
places as may be agreed upon by a majority of the Trustees and may be called by
any Trustee upon written notice to the other Trustees and may be held at any
time without such notice if all the Trustees consent.
8.2 ACTION BY TRUSTEES WITHOUT MEETING. Action by the Trustees may also be taken
by them in writing without a meeting, provided, however, that in such cases
there shall be unanimous written consent therein by all of the Trustees.
Whenever action is taken by the Trustees pursuant to the terms hereof, such
action shall be taken by affirmative vote of a majority of the Trustees then
designated and entitled to exercise authority with respect to such action or, if
two or fewer Trustees are entitled to exercise authority with respect to such
action, shall be taken by affirmative vote of both Trustees or the only Trustee,
as applicable.
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8.3 MINUTES OF MEETING. The Trustees shall keep minutes of all meetings, but
such minutes need not be verbatim. Copies of the minutes shall be sent to all
Trustees.
ARTICLE 9
AMENDMENT
---------
1
9.1 AMENDMENT. Except as herein limited, the Employer shall have the right to
amend this Plan at any time to any extent that it may deem advisable. Any
amendment of the Plan shall be set forth in an instrument in writing approved by
the Board of Directors. All Participants, all Employers, the Administrator and
the Trustees shall be bound by any amendment to this Plan except that:
(a) No amendment shall increase the duties or liabilities of the
Administrator or the Trustees without the consent of such party;
(b) No amendment shall have the effect of vesting in the Employer any interest
in or control over any of the assets held by the Trustees pursuant to this Plan;
and
(c) No amendment shall have the effect of the elimination of a benefit protected
under Code Section 411(d)(6) with respect to the Plan, unless such elimination
is permitted under Treasury regulation Sections 1.401(a)-4 and 1.411(d)-4.
(d) No amendment to the Plan's vesting schedule shall deprive any Participant of
any vested interest in his or her Accrued Benefit. If the Plan's vesting
schedule is amended, any Participant having not less than three (3) Years of
Service shall be permitted to elect, in writing, to the Administrator, to have
his or her Vested Percentage computed under the Plan without regard to such
amendment, provided such Participant's Vested Percentage at some point under the
amended schedule may be less than such Participant's Vested Percentage at some
point under the prior vesting schedule.
The period during which the vesting schedule election must be made by the
Participant shall begin no later than the date the Plan amendment is adopted and
end no later than the latest of the following dates:
(i) The date which is sixty (60) days after the day the amendment is
adopted;
(ii) The date which is sixty (60) days after the day the amendment
becomes effective;
(iii) The date which is sixty (60) days after the day the Participant
is issued written notice of the amendment by the Employer or Administrator.
68
9.2 PROCEDURE. An amendment under this Article shall be valid only if it is
approved by the Employer's Board of Directors at a duly called meeting at which
a quorum thereof is present or by written consent of the members of the
Employer's Board of Directors executed in accordance with applicable state law.
ARTICLE 10
TERMINATION
-----------
1
10.1 RIGHT TO TERMINATE. It is expected that this Plan and the payment of
contributions hereunder will continue indefinitely, but the continuance of this
Plan is not assumed as a contractual obligation of any Employer. The Employer
shall have the right at any time, and without the consent of any party, to
terminate this Plan in its entirety.
10.2 EFFECT OF TERMINATION. Upon a termination of this Plan, upon a partial
termination of the Plan as determined under applicable rules and regulations of
the Internal Revenue Service or upon a complete discontinuance of contributions
to the Plan, the Plan Account of each Employee with respect to whom the Plan is
being terminated (including any Participant who has not received a complete
distribution of his or her vested Plan Account and has not incurred, as of the
date of the termination, at least five (5) Breaks in Service) or with respect to
whom contributions are being discontinued shall become fully vested. Upon such
termination or partial termination, the Administrator shall instruct the
Trustees to transfer to each Participant or retired Participant (or his or her
beneficiaries) with respect to whom the Plan is being terminated, by suitable
instrument of transfer and delivery thereof, all assets held by the Trustees for
such Participant or retired Participant (or his or her beneficiaries). If,
however, the Employer or any entity within a controlled group (determined under
the Code) with the Employer maintains another defined contribution plan other
than an employee stock ownership plan (as defined by Code Section 4975(e)(7)),
the Plan Accounts of all Participants will be determined and transferred to such
other defined contribution plan, unless the Participant consents to an immediate
distribution from the Plan.
10.3 PROCEDURE. Discontinuance or termination under this Article shall be valid
only if it is approved by the Employer's Board of Directors at a duly called
meeting at which a quorum thereof is present or by written consent of the
members of the Employer's Board of Directors executed in accordance with
applicable state law.
10.4 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS OF THE EMPLOYER. To the extent
permitted by applicable law, in the event of merger or consolidation of the
Employer, or transfer of all or substantially all of its assets to any
corporation or other business, provisions may be made by any successor
organization for the continuance of this Plan, and said successor shall in such
event be substituted in place of the Employer by an appropriate instrument
confirming such substitution and adopting this Plan. Notice of such substitution
delivered to the Trustees shall be authority to the Trustees to recognize such
successor in place of the Employer. The continuation of this Plan shall be by a
separate plan
69
and trust, to which the Trustees shall transfer the Plan Accounts of Employees
of that Employer.
10.5 MERGER, CONSOLIDATION OR TRANSFER OF ASSETS OF THE PLAN. In the event of
the merger, consolidation or transfer of the assets of the Plan with any other
pension or profit sharing plan, such action shall be on terms providing that
each Participant in this Plan would (if the transferee plan then terminated)
receive a benefit immediately after the merger, consolidation or transfer which
is not less than the benefit the Participant would have been entitled to receive
immediately before such action (if the Plan had then terminated).
ARTICLE 11
PROVISIONS TO PREVENT DISCRIMINATION
------------------------------------
1
11.1 NO Section 401(a) DISCRIMINATION. No contributions made to the Trust Fund
by the Employer, nor benefits received from the Trust Fund by the Participants
or their beneficiaries, shall be discriminatory within the meaning of Code
Section 401.
11.2 UNIFORM TREATMENT. This Plan shall be administered and construed in a
uniform and non-discriminatory manner, treating similarly situated Participants
alike.
ARTICLE 12
TOP HEAVY PROVISIONS
--------------------
1
12.1 TOP HEAVY REQUIREMENTS. Notwithstanding anything contained herein to the
contrary, if the Plan is a Top Heavy Plan for any Plan Year, then the Plan shall
meet the following requirements for such Plan Year:
(a) MINIMUM VESTING REQUIREMENTS. Vesting shall be determined in accordance
with one of the following schedules as designated by the Administrator by
written resolution, except that if the vesting schedule then in effect is more
favorable in all respects to Participants than either of the following
schedules, the vesting schedule then in effect shall continue to apply:
(i) A Participant will have a fully vested interest in his or her Plan
Account upon completion of not more than three (3) Years of Service for vesting
purposes; or
(ii) A Participant's vested interest in his or her Plan Account will be
determined under a schedule which is not less favorable to the Participant than
the following:
=========================================================== ========================================================
Years of Vesting Service Vested Interest
=========================================================== ========================================================
Less than 2 0%
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- ----------------------------------------------------------- --------------------------------------------------------
2 but less than 3 20%
- ----------------------------------------------------------- --------------------------------------------------------
3 but less than 4 40%
- ----------------------------------------------------------- --------------------------------------------------------
4 but less than 5 60%
- ----------------------------------------------------------- --------------------------------------------------------
5 but less than 6 80%
- ----------------------------------------------------------- --------------------------------------------------------
6 or more 100%
=========================================================== ========================================================
If the Administrator fails to designate one of the preceding schedules,
Schedule (i) shall be deemed to have been designated.
If this Plan is found to be a Top Heavy Plan and subsequently ceases to
be a Top Heavy Plan, then the vested interest of a Participant with fewer than
three (3) Years of Service on the date on which the Plan ceases to be a Top
Heavy Plan in benefits accrued with respect to Plan Years after the Plan ceases
to be a Top Heavy Plan shall be determined without regard to the preceding
schedules; the vested interest of a Participant with more than three (3) Years
of Vesting Service on that date shall in that event, upon the Participant's
election, continue to be determined by the preceding schedules.
Notwithstanding the preceding, if the Plan's normal vesting schedule is
more favorable than the Top Heavy schedule above, the Plan's normal vesting
schedule shall continue to apply when the Plan is a Top Heavy Plan. In addition,
a Participant's vested percentage will not be reduced as the result of the
Plan's change from Top Heavy to Non-Top Heavy status or from Non-Top Heavy too
Top Heavy status.
(b) MINIMUM CONTRIBUTION REQUIREMENT. This Plan will provide a minimum
contribution allocation for such Plan Year for each Participant who is eligible
to participate in the Plan for the Plan Year (regardless of whether he or she
has earned a Year of Service during the Plan Year), who is employed by the
Employer on the last day of the Plan Year and who is a Non-Key Employee in an
amount equal to at least three percent (3%) of such Participant's Compensation
(as defined in Section 3.5(a)) for such Plan Year. The three percent (3%)
minimum contribution allocation requirement shall be increased to four percent
(4%) for any year in which the Employer also maintains a defined benefit pension
plan if such increase is necessary to avoid the application of Code Section
416(h)(1), relating to special adjustments to Code Section 415 limits for Top
Heavy Plans, and if the adjusted limitations of Code Section 416(h)(1) would
otherwise be exceeded if such minimum contribution allocation were not so
increased.
The minimum contribution allocation requirements set forth hereinabove
shall be reduced in the following circumstances:
(i) The percentage minimum contribution allocation required hereunder shall in
no event exceed the percentage contribution allocation made for the Key Employee
for whom such percentage is the highest for the Plan Year, after taking into
account contribution allocations and benefits under other qualified plans in
this Plan's aggregation group as
71
provided in Code Section 416(c)(2)(B)(ii); and
(ii) No minimum contribution will be required (or the minimum contribution will
be reduced, as the case may be) for a Participant under this Plan for any Plan
Year if the Participant's Employer maintains another qualified plan under which
a minimum benefit or contribution is being funded or made for such year for the
Participant in accordance with Code Section 416(c).
ADDITIONAL SUPER TOP HEAVY REQUIREMENT. If the Plan is a Super Top Heavy Plan
for any Plan Year, the limitations on annual additions contained in Article 4
shall be adjusted pursuant to Code Section 416(h).
12.2 TOP HEAVY PLAN DEFINITIONS. For purposes of this Article, the following
terms shall have the meanings provided below:
(a) A plan is a "TOP HEAVY PLAN" if, as of the Determination Date, the
aggregate of the accounts of Key Employees under a defined contribution plan
exceeds sixty percent (60%) of the aggregate of the accounts of all employees
under such plan or, in the case of a defined benefit plan, the present value of
the cumulative accrued benefits under the plan for Key Employees exceeds sixty
percent (60%) of the present value of the cumulative accrued benefits under the
plan for all employees, all as adjusted by and determined in accordance with the
provisions of Code Section 416(g). The determination of whether a plan is Top
Heavy shall be made after aggregating each Plan of the sponsoring Employer in
which at least one Key Employee participates and each other plan of the
sponsoring Employer which enables any plan in which at least one Key Employee
participates to meet the requirements of Code Sections 401(a)(4) or 410, and
after aggregating any plan not required to be aggregated by the foregoing if
such aggregated group of plans, taking such plan into account, continues to meet
the requirements of Code Sections 401(a)(4) and 410. A plan is a "SUPER TOP
HEAVY PLAN" if, as of the Determination Date, the plan would meet the test
specified above for being a Top Heavy Plan if ninety percent (90%) were
substituted for sixty percent (60%) in each place it appears in this subsection
(a).
(b) The "Determination Date" for purposes of determining whether a
plan is Top Heavy for a particular plan year is the last day of the
preceding plan year (or, in the case of the first plan year of a plan, the
last day of the first plan year).
(c) A "Key Employee" is any employee or former employee (including a
beneficiary of such employee or former employee) who at any time during the
plan year or any of the four (4) preceding plan years is:
(i) An officer of the plan sponsor or any corporation required to be
aggregated with the plan sponsor under Code Sections 414(b), (c), (m) or
(o) who has annual compensation (as defined below) from the plan sponsor or
any corporation required to be aggregated with the plan sponsor under Code
Sections 414(b), (c), (m) or (o) of more than fifty
72
percent (50%) of the amount in effect under Code Section 415(b)(1)(A) for the
plan year (but in no event shall the number of officers taken into account as
Key Employees exceed the lesser of (i) fifty (50) or, (ii) the greater of three
(3) or ten percent (10%) of all employees).
(ii) One (1) of the ten (10) Employees owning (or considered as owning within
the meaning of Code Section 318) both more than a one-half percent (1/2%)
ownership interest and the largest percentage ownership interests in the
Employer, and (ii) as annual compensation (as defined below) of more than the
amount in effect under Code Section 415(c)(1)(A). For purposes of this Section,
if two (2) Employees have the same interests in the Employer, the Employee
having greater annual compensation (as defined below) from the Employer shall be
treated as having a larger interest;
(iii) A person owning (or considered as owning within the meaning of Code
Section 318) more than five percent (5%) of the outstanding stock of the plan
sponsor or stock possessing more than five percent (5%) of the total combined
voting power of all stock of the plan sponsor; or
(iv) A person who has an annual compensation (as defined below) from the plan
sponsor (or any corporation required to be aggregated with the plan sponsor
under Code Sections 414(b),(c), (m) or (o)) of more than one hundred fifty
thousand dollars ($150,000) and who would be described in subparagraph (iii)
hereof if one percent (1%) were substituted for five percent (5%).
For purposes of applying Code Section 318 to the provisions of this
subsection (c), subparagraph (C) of Code Section 318(a)(2) shall be applied by
substituting five percent (5%) for fifty percent (50%). In addition, the rules
of subsections (b), (c) and (m) of Code Section 414 shall not apply for purposes
of determining ownership of the plan sponsor under this subsection (c).
For purposes of determining whether an Employee is a Key Employee, annual
compensation means compensation as defined in Code Section 415(c)(3), but
including amounts contributed by the Employer pursuant to a salary reduction
agreement which are excludible from the Employee's gross income under Code
Sections 125, 402(a)(8), 402(h) or 403(b).
(d) A "NON-KEY EMPLOYEE" is any participant in a plan (including a beneficiary
of such participant) who is not a Key Employee.
ARTICLE 13
LOANS TO PARTICIPANTS
---------------------
13.1 LOAN ADMINISTRATION. The Trustees (the "Loan Administrator" for purposes of
this Article) is authorized to establish and administer a loan program as
provided herein.
Parties in interest (as defined in ERISA Section 3(14)) who are
Participants, or who are beneficiaries who have become entitled to receive a
benefit under the Plan, may make
73
written application to the Loan Administrator for a loan. The Loan Administrator
shall review the loan application and approve or deny the application in
writing, in accordance with the uniform and non-discriminatory loan policy set
forth in this Article. Any such loan shall be made from the assets of the
borrower's Salary Reduction Contribution Account only.
13.2 AMOUNT, AVAILABILITY. The minimum amount which a borrower may borrow at any
one time from the Plan, exclusive of interest, is one thousand dollars ($1,000).
The maximum amount which a borrower may borrow from the Plan, when added to the
outstanding balance of all other loans from the Plan and from any other
qualified plans maintained by the Employer and any entity required to be
aggregated with the Employer pursuant to Code Section 72(p), exclusive of
interest, shall not exceed the lesser of: (i) fifty thousand dollars ($50,000),
reduced by the excess (if any) of the highest outstanding balance of loans from
the Plan to the borrower during the one (1) year period ending on the day before
the date on which such loan was made, over the outstanding balance of loans from
the Plan to the borrower on the date on which such loan was made; or (ii) fifty
percent (50%) of the borrower's vested Plan Account, determined as of the
origination date of the loan in the same manner as provided in Section . A
borrower's vested interest in the Plan shall be determined in accordance with
Code Section 72(p)(2)(A). In addition, the Loan Administrator shall approve a
loan made pursuant to this Article only if the Loan Administrator determines, in
his or her sole and absolute discretion, that the amount of such loan is
reasonable based on factors that are legally considered by commercial entities
in the business of making similar loans. In no event shall a loan be made which
would be taxed under Code Section 72(p) as a distribution from the Plan.
Effective January 1, 1999, a borrower may have no more than one loan outstanding
under the Plan at any time.
13.3 NON-DISCRIMINATION. Loans shall be available to all parties in interest (as
defined above) who are Participants on a reasonably equivalent basis, without
regard to an individual's race, color, religion, age, sex or national origin. In
approving such loans, the Loan Administrator shall not discriminate in favor of
highly compensated employees (within the meaning of Code Section 414(q)) as to
the general availability of loans, as to the terms of repayment, or as to the
amount of such loans in proportion to the vested portion of the Borrower's Plan
Account. Notwithstanding anything in this Plan to the contrary, all loans shall
comply with the requirements of Section 408(b)(1) of ERISA.
13.4 LOAN APPROVAL. The Loan Administrator shall not take the purpose of the
loan into account in approving or disapproving a loan application.
The Loan Administrator shall approve or deny the loan application based on
the same factors which commercial lenders in the business of making similar
types of loans legally recognize for purposes of loan availability. The Loan
Administrator may examine such factors as creditworthiness, financial need,
adequacy of security and risk of loss to the Plan in the event of default. Based
on these factors, Participants and beneficiaries other than active employees may
be offered loans on different terms and conditions due to valid economic
differences.
74
13.5 INTEREST RATE. Each loan shall bear a reasonable rate of interest, to be
established by the Loan Administrator. A reasonable rate of interest means an
interest rate which is at least the rate of interest currently being charged by
commercial lenders in the area for the use of money which they lend under
similar circumstances (including creditworthiness of the borrower and the
security given for the loan). The Loan Administrator shall not discriminate
among borrowers in the matter of interest, but loans may bear different interest
rates if, in the Loan Administrator's opinion, the difference is justified by
different terms for repayment, the security of the collateral, or changes in
economic conditions. No loans will be granted during any period in which the
reasonable commercial interest rate for money loaned under similar circumstances
exceeds the maximum legal rate that may be charged to individuals for loans of
this nature under applicable usury laws.
The Loan Administrator may from time to time set appropriate processing and
loan administration fees.
13.6 COLLATERAL. Each loan, to the extent of the amount of the indebtedness,
including interest, shall be secured by the assignment of up to fifty percent
(50%) of the borrower's vested Plan Account, determined as of the origination
date of the loan, supported by the borrower's collateral promissory note for the
payment of the indebtedness, including interest, payable to the order of the
Trustee. No more than fifty percent (50%) of the borrower's vested Plan Account,
determined as of the origination date of the loan, may be used as collateral for
loans hereunder. Subject to applicable provisions of law, each loan shall be
further supported by the Participant's execution of an agreement, in a form
specified by the Loan Administrator, to repay the loan by payroll deduction over
a term and in a manner specified by the Loan Administrator. In addition to the
assignment of any part of the borrower's Plan Account, the Loan Administrator
may require such additional collateral as he or she may deem necessary to
adequately secure such loan. The Loan Administrator shall choose collateral that
the Plan can sell or foreclose on in the event of default, that will not leave
the Plan with a loss of principal or interest, and that would be sufficient in
the same context in a commercial setting. The assignment of any part of the
borrower's Plan Account provided for above shall be void for any period of time
during which the loan fails to comply with Code Section 4975(d)(1) and Section
408(b)(1) of ERISA.
13.7 REPAYMENT. Except as provided in regulations or other formal guidance
issued by the Secretary of the Treasury or by the Department of Labor, and
subject to any limitations which may apply in the case of a borrower who is not
an active Employee, loans shall be repaid by payroll deductions. Any loan to a
borrower shall be repaid in such manner and over such period as will constitute
level amortization of such loan over the term of the loan (with payments not
less frequently than quarterly), and the term of the loan shall not exceed such
period (not to exceed five years, or such longer period as may be allowed
without causing the loan to be taxed under Code Section 72(p) as a distribution
from the Plan) as the Loan Administrator shall determine. All payments by a
borrower on any such loan, including interest, shall be credited to such
borrower's Plan Account.
75
The events of default shall be listed specifically in the borrower's Loan
Agreement. The Loan Agreement provisions are deemed part of the Plan with
respect to that borrower for purposes of complying with Department of Labor
regulation Section 2550.408b-1(d)(2). Generally, a borrower is in default if one
or more of the following events occurs: (a) any false or misleading
representation, warranty, or statement is made by the borrower in connection
with the borrower's Loan Agreement; (b) failure by the borrower to pay any loan
obligation when due; (c) failure by the borrower to observe or perform any
warranty, covenant, condition or agreement under the Loan Agreement; (d) the
borrower's death or retirement; (e) the borrower's request for a distribution of
the borrower's Plan Account (other than a hardship distribution of that portion
of the Participant's vested account which is not used as collateral for any loan
hereunder); or (f) the borrower's termination of employment. If a borrower
defaults in the repayment of the loan, the borrower's Plan Account used as
collateral shall be charged with the full unpaid balance of the loan, including
any accrued but unpaid interest, as of the earliest date on which the borrower
may elect to receive a distribution of a portion or all of his or her Plan
Account. If the borrower's Plan Account used as collateral is insufficient to
repay the remaining balance of the loan, including interest, such borrower shall
be liable for and continue to make payments on any balance still due. Any costs
incurred by the Trustee or Loan Administrator in collecting amounts due,
including attorney's fees, shall be added to the principal balance of the loan
and treated accordingly.
13.8 PARTICIPANT CONSENT TO LOAN SET-OFFS. No loan shall be made to a
Participant unless the Participant consents to the loan and to the fact that, if
the loan defaults, the Participant's account may be reduced as provided in this
Article, before the Participant attains the age of sixty-five (65). The consent
of the Participant must be made within the ninety (90) day period before the
making of the loan. For purposes of this Section, any renegotiation, extension,
renewal or other revision of a loan shall be treated as a new loan made on the
day of the renegotiation, extension, renewal or other revision.
13.9 DISTRIBUTIONS PROHIBITED. No distribution (other than a hardship
distribution of that portion of the Participant's vested Plan Account which is
not used as collateral for any loan hereunder) under the Plan shall be made to
any Participant or former Participant or to a Beneficiary of any such
Participant unless all unpaid loans, including accrued interest, have been
repaid or otherwise discharged.
13.10 NO ALIENATION. A loan made to a borrower shall not be treated as an
assignment or alienation of any portion of the borrower's Plan Account due to
the fact that the loan will be secured by the borrower's Plan Account and all
loans made to Participants and beneficiaries shall be made in a manner to be
exempt from the tax imposed on prohibited transactions under Code Section
4975(d)(1).
13.11 DISCLOSURE. Every borrower must receive from the Loan Administrator a
statement which describes the procedure for loan application, the events
constituting default and the steps which will be taken by the Plan in the event
of default, and a clear statement of
76
the charges involved in each loan transaction. The statement of charges shall
include the dollar amount of the loan and the annual interest rate.
ARTICLE 14
MISCELLANEOUS
-------------
14.1 NO RIGHT TO EMPLOYMENT. Participation in this Plan shall not give any
person the right to be retained in the employ of the Employer, or any right or
interest in this Plan other than as herein provided.
14.2 HEADINGS. The headings and sub-headings in this instrument are inserted for
convenience of reference only and are not to be considered in construing the
provisions hereof.
14.3 COUNTERPARTS. This instrument may be executed in any number of
counterparts, each of which shall be deemed an original, and said counterparts
shall constitute but one and the same instrument, which may be sufficiently
evidenced by any one counterpart.
14.4 GOVERNING LAW. This Plan shall be construed, administered and governed in
all respects under and by the laws of the State of Maryland, except to the
extent Maryland law shall have been pre-empted by ERISA.
14.5 RULES AND REGULATIONS. By becoming a Participant, every Participant shall
thereby be deemed to have agreed to abide by the rules and regulations of the
Administrator made in accordance with this Plan, and to sign all papers
necessary for the compliance therewith.
14.6 NO ASSIGNMENT OF BENEFITS. Except as expressly provided herein, no benefits
under the Plan may be assigned or alienated, and the Trustees shall pay all
amounts payable hereunder, and shall distribute all assets distributable
hereunder, to any person, into the hands of such person and not unto any other
person or corporation whatsoever, whether claiming by his or her authority or
otherwise; nor may said payments be anticipated. Except as expressly provided
herein, the interest of any Participant hereunder may not be assigned or
encumbered, nor shall it be subject to attachment or other judicial process.
However, deposit to the credit of the account of any person in a bank or trust
company designated by such person in writing shall be deemed to be the
equivalent of payment into the hands of such person. Notwithstanding the
foregoing, amounts held for the benefit of a Participant may be paid in
accordance with a "qualified domestic relations order" as defined in Code
Section 414(p) (or a domestic relations order entered before January 1, 1985
which, in the judgment of the Administrator, is entitled to be treated as a
qualified domestic relations order), so long as the payment complies with Code
Section 414(p).
14.7 EXCLUSIVE BENEFIT. The Trust Fund shall be held by the Trustees for the
exclusive purpose of providing benefits to Participants and their beneficiaries
and defraying reasonable expenses of administering the Plan. No part of the
Trust shall ever inure to the
77
benefit of the Employer, except that:
(a) Any contribution made to the Trust Fund by the Employer which is
attributable to a mistake of fact may be returned to the Employer within one
year after such contribution was made;
(b) All contributions shall be conditioned on the initial qualification of the
Plan under Code Section 401, and if the Plan does not qualify, then such
contributions may be returned to the Employer within one year after the date of
denial of qualification of the Plan.
(c) All contributions shall be conditioned on their deductibility under Code
Section 404, and any nondeductible contribution will be returned to the Employer
within one year after the date of disallowance of such deduction.
(d) If a return of contributions pursuant to the foregoing is due to a good
faith mistake of fact or a good faith mistake in determining the deductibility
of the contribution:
(i) The amount which may be returned to the Employer is the excess of the
amount contributed over the amount that would have been contributed had there
not occurred a mistake of fact or a mistake in determining the deduction; and
(ii) Gains attributable to such excess contribution may not be withdrawn, but
losses attributable thereto must reduce the amount to be returned; and
(iii) In no event may a return of contributions be due which would cause the
Account of any Participant to be reduced to an amount less than the amount which
would have been credited to the Participant's Account if the mistaken amount not
been contributed.
(e) If the return of contributions is due to the non-deductibility for federal
tax purposes under Code Section 404 or any statute of similar impact, such
amount shall be deemed forfeited within one year after the date of disallowance
of the deduction and shall be applied to reduce future Employer contributions
due hereunder.
78
IN WITNESS WHEREOF, as evidence of its adoption of this Plan, the
Employer has caused this Plan to be executed, and the Trustees have joined
herein to evidence their respective acceptance of the provisions of the Plan and
Trust, generally effective as of January 1, 1997.
ATTEST/WITNESS: BEALL, GARNER, SCREEN & GEARE, INC.
By:
- ------------------------------- -----------------------------------------
Print Name: Print Name:
-------------------- ---------------------------------
Title:
--------------------------------------
Date:
---------------------------------------
ROBERT H. GARNER, TRUSTEE
- -------------------------------
Print Name: Date:
--------------------
RANDOLPH B. SCREEN, TRUSTEE
- -------------------------------
Print Name: Date:
--------------------
COLEMAN P. BROWN, II, TRUSTEE
- -------------------------------
Print Name: Date:
--------------------
JON S. KETZNER, TRUSTEE
- -------------------------------
79
Print Name: Date:
--------------------
H. GLENN TWIGG, JR., TRUSTEE
- -------------------------------
Print Name: Date:
--------------------
MARC E. ZANGER, TRUSTEE
- -------------------------------
Print Name: Date:
--------------------
1
Exhibit 5.1
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
ATTORNEYS AT LAW
A REGISTERED LIMITED LIABILITY PARTNERSHIP
INCLUDING PROFESSIONAL CORPORATIONS
1700 PACIFIC AVENUE
AUSTIN SUITE 4100
BRUSSELS DALLAS, TEXAS 75201
DALLAS (214) 969-2800
HOUSTON FAX (214) 969-4343
LONDON www.akingump.com
LOS ANGELES
MOSCOW
NEW YORK WRITER'S DIRECT DIAL NUMBER 214/969-4256
PHILADELPHIA WRITER'S E-MAIL ADDRESS autay@akingump.com
SAN ANTONIO
WASHINGTON, D.C.
March 18, 1999
Century Business Services, Inc.
6480 Rockside Woods Boulevard South
Suite 330
Cleveland, Ohio 44131
Re: Century Business Services, Inc.
Registration Statement on Form S-8
Dated March 18, 1999 (the "Registration Statement")
Ladies and Gentlemen:
We have acted as counsel to Century Business Services, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company with the Securities and Exchange Commission of the Registration
Statement under the Securities Act of 1933, as amended. The Registration
Statement relates to an aggregate of up to 500,000 shares (the "Shares") of the
Company's common stock, par value $0.01 per share ("Common Stock"), which may be
issued by the Company from time to time in the future under the Beall, Garner,
Screen & Geare, Inc. Employee Savings and Stock Ownership Plan (the "Plan").
We have examined such corporate records, documents, instruments and
certificates of the Company and have received such representations from the
officers and directors of the Company and have reviewed such questions of law as
we have deemed necessary, relevant or appropriate to enable us to render the
opinion expressed herein. In such examination, we have assumed the genuineness
of all signatures and authenticity of all documents, instruments, records and
certificates submitted to us as originals.
Based upon such examination and review and upon the representations
made to us by the officers and directors of the Company, we are of the opinion
that when the Registration Statement becomes effective under the Securities Act
of 1933, as amended, the Shares, when issued and delivered in accordance with
the Plan, and for consideration of at least the par value
2
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
Century Business Services, Inc.
March 18, 1999
Page 2
of the Shares, will constitute legally issued, fully paid and non-assessable
securities of the Company.
The opinions expressed herein are limited to the corporate laws of the
State of Delaware and we express no opinion as to the effect on the matters
covered by any other jurisdiction.
This firm consents to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
---------------------------------------------
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
1
EXHIBIT 23.1
- ------------
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Century Business Services, Inc.:
We consent to incorporation by reference in the registration
statement on Form S-8 of Century Business Services, Inc. for the Beall,
Garner, Screen & Geare, Inc. Employee Savings and Stock Ownership Plan,
effective as amended and restated as of January 1, 1997 of the consolidated
and combined balance sheets of Century Business Services, Inc. and
subsidiaries as of December 31, 1998 and 1997, and the related consolidated
and combined statements of income, shareholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1998, and all
related schedules, which appear in the December 31, 1998 annual report on
Form 10-K of Century Business Services, Inc.
/s/ KPMG LLP
KPMG LLP
Cleveland, Ohio
March 18, 1999
