EXHIBIT 10.1
THE MEN'S WEARHOUSE, INC.
401(k) SAVINGS PLAN
Amendment and Restatement
Effective February 20, 2004
THE MEN'S WEARHOUSE, INC. 401(k) SAVINGS PLAN
THIS AGREEMENT adopted by The Men's Wearhouse, Inc., a Texas
corporation (the "Sponsor"),
W I T N E S S E T H:
WHEREAS, effective February 1, 1978, the Sponsor established The Men's
Wearhouse, Inc. 401(k) Savings Plan (the "Plan").
WHEREAS, the Sponsor desires to amend and restate the Plan;
NOW, THEREFORE, the Plan is hereby amended and restated in its entirety
as set forth below.
TABLE OF CONTENTS
SECTION
ARTICLE I - DEFINITIONS
Account............................................................................................. 1.01
Active Service...................................................................................... 1.02
Affiliated Employer................................................................................. 1.03
Annual Compensation................................................................................. 1.04
Annuity Starting Date............................................................................... 1.05
Beneficiary or Beneficiaries........................................................................ 1.06
Board............................................................................................... 1.07
Catch-up Eligible Member............................................................................ 1.08
Code................................................................................................ 1.09
Committee........................................................................................... 1.10
Considered Compensation............................................................................. 1.11
Contribution........................................................................................ 1.12
Direct Rollover..................................................................................... 1.13
Distributee......................................................................................... 1.14
Eligible Retirement Plan............................................................................ 1.15
Eligible Rollover Distribution...................................................................... 1.16
Employee............................................................................................ 1.17
Employer or Employers............................................................................... 1.18
ERISA............................................................................................... 1.19
Five Percent Owner.................................................................................. 1.20
Highly Compensated Employee......................................................................... 1.21
Hour of Service..................................................................................... 1.22
Leased Employee..................................................................................... 1.23
Matched Salary Deferral Contribution................................................................ 1.24
Member.............................................................................................. 1.25
Non-Highly Compensated Employee..................................................................... 1.26
Period of Service................................................................................... 1.27
Period of Severance................................................................................. 1.28
Plan .............................................................................................. 1.29
Plan Year........................................................................................... 1.30
Qualified Domestic Relations Order.................................................................. 1.31
Regulation.......................................................................................... 1.32
Required Beginning Date............................................................................. 1.33
Retirement Age...................................................................................... 1.34
Rollover Contribution............................................................................... 1.35
Separation From Service............................................................................. 1.36
Service............................................................................................. 1.37
Xxxxxx Service...................................................................................... 1.38
Sponsor............................................................................................. 1.39
Sponsor Stock....................................................................................... 1.40
-i-
Spouse.............................................................................................. 1.41
Trust............................................................................................... 1.42
Trustee............................................................................................. 1.43
Valuation Date...................................................................................... 1.44
ARTICLE II - ELIGIBILITY
Eligibility Requirements............................................................................ 2.01
Early Participation for Rollover Purposes........................................................... 2.02
Eligibility Upon Reemployment....................................................................... 2.03
Cessation of Participation.......................................................................... 2.04
Recommencement of Participation..................................................................... 2.05
ARTICLE III - CONTRIBUTIONS
Salary Deferral Contributions....................................................................... 3.01
Catch-up Salary Deferral Contributions.............................................................. 3.02
Matching Contributions.............................................................................. 3.03
Supplemental Contributions.......................................................................... 3.04
Rollover Contributions and Plan-to-Plan Transfers................................................... 3.05
QNECS - Extraordinary Employer Contributions........................................................ 3.06
Restorative Payments................................................................................ 3.07
Nondeductible Contributions Not Required............................................................ 3.08
Form of Payment of Contributions.................................................................... 3.09
Deadline for Payment of Employer Contributions...................................................... 3.10
Return of Contributions for Mistake, Disqualification or Disallowance of Deduction.................. 3.11
ARTICLE IV - ALLOCATION AND VALUATION OF ACCOUNTS
Information Statements from Employer................................................................ 4.01
Allocation of Salary Deferral Contribution.......................................................... 4.02
Allocation of Catch-up Salary Deferral Contribution................................................. 4.03
Allocation of Matching Contribution................................................................. 4.04
Allocation of Supplemental Contribution............................................................. 4.05
Allocation of QNEC.................................................................................. 4.06
Valuation of Accounts............................................................................... 4.07
No Rights Unless Otherwise Prescribed............................................................... 4.08
ARTICLE V - BENEFITS
Retirement Benefit.................................................................................. 5.01
Death Benefit....................................................................................... 5.02
Distribution Methods Available...................................................................... 5.03
Lump Sum Payment of Small Amounts Upon Separation From Service...................................... 5.04
Form of Payment..................................................................................... 5.05
Direct Rollover Option.............................................................................. 5.06
Time of Distributions............................................................................... 5.07
Consent to Distributions Upon Separation From Service............................................... 5.08
-ii-
Information Provided to Members..................................................................... 5.09
Designation of Beneficiary.......................................................................... 5.10
Distributions to Disabled Persons................................................................... 5.11
Distributions Pursuant to Qualified Domestic Relations Orders....................................... 5.12
Claims Procedure.................................................................................... 5.13
ARTICLE VI - IN-SERVICE DISTRIBUTIONS AND LOANS
In-Service Financial Hardship Distributions......................................................... 6.01
In-Service Age 59-1/2 Distributions................................................................. 6.02
In-Service Withdrawal of Rollover Contributions..................................................... 6.03
Loans............................................................................................... 6.04
ARTICLE VII - ACTIVE SERVICE
When Active Service Begins.......................................................................... 7.01
Aggregation of Service.............................................................................. 7.02
Period of Service of Less Than One Year............................................................. 7.03
Periods of Severance Due to Child Birth or Adoption................................................. 7.04
Transfers........................................................................................... 7.05
Employment Records Conclusive....................................................................... 7.06
Service Credit Required under Federal Law........................................................... 7.07
ARTICLE VIII - INVESTMENT ELECTIONS
Investment Funds Established........................................................................ 8.01
Election Procedures Established..................................................................... 8.02
ARTICLE IX - VOTING OF SPONSOR STOCK AND TENDER OFFERS
Voting of Sponsor Stock ............................................................................ 9.01
Tender Offers ...................................................................................... 9.02
Shares Credited..................................................................................... 9.03
Conversion ......................................................................................... 9.04
Named Fiduciary..................................................................................... 9.05
ARTICLE X - ADOPTION OF PLAN BY OTHER EMPLOYERS
Adoption Procedure................................................................................. 10.01
No Joint Venture Implied........................................................................... 10.02
All Trust Assets Available to Pay All Benefits..................................................... 10.03
Qualification a Condition Precedent to Adoption and Continued Participation........................ 10.04
ARTICLE XI - AMENDMENT AND TERMINATION
Right to Amend and Limitations Thereon............................................................. 11.01
Mandatory Amendments............................................................................... 11.02
Withdrawal of Employer............................................................................. 11.03
Termination of Plan................................................................................ 11.04
Partial or Complete Termination or Complete Discontinuance of Contributions........................ 11.05
-iii-
ARTICLE XII - MISCELLANEOUS
Plan Not an Employment Contract.................................................................... 12.01
Benefits Provided Solely From Trust................................................................ 12.02
Assignments Prohibited............................................................................. 12.03
Requirements Upon Merger or Consolidation of Plans................................................. 12.04
Forfeiture by Lost Members or Beneficiaries........................................................ 12.05
Gender of Words Used............................................................................... 12.06
Severability....................................................................................... 12.07
Reemployed Veterans................................................................................ 12.08
Limitations on Legal Actions....................................................................... 12.09
Governing Law...................................................................................... 12.10
APPENDIX A - LIMITATIONS ON CONTRIBUTIONS
APPENDIX B - TOP-HEAVY REQUIREMENTS
APPENDIX C - ADMINISTRATION OF THE PLAN
APPENDIX D - FUNDING
-iv-
ARTICLE I
DEFINITIONS
The words and phrases defined in this Article shall have the meaning
set out in the definition unless the context in which the word or phrase appears
reasonably requires a broader, narrower or different meaning.
1.01 "ACCOUNT" means all ledger accounts pertaining to a Member
which are maintained by the Committee to reflect the Member's interest in the
Trust. The Committee shall establish the following Accounts and any additional
Accounts that the Committee considers necessary to reflect the entire interest
of the Member in the Trust. Each of the Accounts listed below and any additional
Accounts established by the Committee shall reflect the Contributions or amounts
transferred to the Trust, if any, and the appreciation or depreciation of the
assets in the Trust and the income earned or loss incurred on the assets in the
Trust attributable to the Contributions and/or other amounts transferred to the
Account.
(a) Salary Deferral Contribution Account - the Member's
before-tax contributions, if any, made pursuant to Section 3.01.
(b) Catch-up Salary Deferral Contribution Account - the
Member's before-tax contributions, if any, made pursuant to Section 3.02.
(c) Matching Contribution Account - the Employer's
matching contributions, if any, made pursuant to Section 3.03.
(d) Supplemental Contribution Account - the Employer's
contributions, if any, made pursuant to Section 3.04.
(e) QNEC Account - the Employer's contributions, known as
"qualified nonelective employer contributions", made as a means of passing the
actual deferral percentage test of section 401(k) of the Code or the actual
contribution percentage test of section 401(m) of the Code.
(f) Rollover Account - funds transferred from another
qualified plan or individual retirement account for the benefit of a Member.
1.02 "ACTIVE SERVICE" means the Periods of Service which are
counted for eligibility purposes as calculated under Article VII.
1.03 "AFFILIATED EMPLOYER" means the Employer and any employer
which is a member of the same controlled group of corporations within the
meaning of section 414(b) of the Code or which is a trade or business (whether
or not incorporated) which is under common control (within the meaning of
section 414(c) of the Code), which is a member of an affiliated service group
(within the meaning of section 414(m) of the Code) with the Employer, or which
is required to be aggregated with the Employer under section 414(o) of the Code.
For purposes of the limitation on allocations contained in Appendix A, the
definition of Affiliated Employer is
I-1
modified by substituting the phrase "more than 50 percent" in place of the
phrase "at least 80 percent" each place the latter phrase appears in section
1563(a)(1) of the Code.
1.04 "ANNUAL COMPENSATION" means the Employee's wages from the
Affiliated Employers as defined in section 3401(a) of the Code for purposes of
federal income tax withholding at the source (but determined without regard to
any rules that limit the remuneration included in wages based on the nature or
location of the employment or the services performed) modified by including
elective contributions under a cafeteria plan described in section 125 of the
Code, elective contributions to any plan qualified under section 401(k), 408(k),
or 403(b) of the Code, and, effective January 1, 1998, elective contributions
under a plan described in section 132(f) of the Code. Except for purposes of
Section A.4.1 of Appendix A of the Plan, Annual Compensation in excess of
$200,000.00 (as adjusted by the Secretary of Treasury for increases in the cost
of living) shall be disregarded. If the Plan Year is ever less than twelve
months, the $200,000.00 limitation (as adjusted by the Secretary of Treasury for
increases in the cost of living) will be prorated by multiplying the limitation
by a fraction, the numerator of which is the number of months in the Plan Year,
and the denominator of which is 12.
1.05 "ANNUITY STARTING DATE" means the first day of the first
period for which an amount is payable as an annuity, or in the case of a benefit
payable in the form of a lump sum, the date on which the Trustee disburses the
lump sum.
1.06 "Applicable Distribution Period" means as follows:
(a) DISTRIBUTIONS DURING THE MEMBER'S OR FORMER MEMBER'S
LIFE. For Distribution Calendar Years commencing on or after January 1, 2003, up
to and including the Distribution Calendar Year that includes the Member's or
former Member's death, the "Applicable Distribution Period" is the Member's or
former Member's life expectancy determined using the Uniform Lifetime Table in
Regulation section 1.401(a)(9)-9 for his age as of his birthday in the relevant
Distribution Calendar Year. However, if the Member's or former Member's sole
Section 401(a)(9) Beneficiary for the entire Distribution Calendar Year is his
Spouse, for distributions during his lifetime, his "Applicable Distribution
Period" shall not be less than the joint life expectancy of him and his Spouse
using his and his Spouse's attained ages as of his and his Spouse's birthdays in
the Distribution Calendar Year.
(b) DISTRIBUTIONS AFTER THE MEMBER'S OR FORMER MEMBER'S
DEATH. Effective for Distribution Calendar Years commencing on or after January,
1, 2003, if a Member or former Member dies on or after his Required Beginning
Date, the "Applicable Distribution Period" for Distribution Calendar Years after
the Distribution Calendar Year containing the Member's or former Member's date
of death is the longer of the remaining life expectancy of his Section 401(a)(9)
Beneficiary (if any) determined in accordance with the Final Section 401(a)(9)
Regulations (calculated by using the age of the Section 401(a)(9) Beneficiary in
the year following the year of the former Member's death, reduced by one for
each subsequent year) or the remaining life expectancy of the former Member
determined in accordance with the Final Section 401(a)(9) Regulations
(calculated by using the age of the former Member in the year of death, reduced
by one for each subsequent year). However, if the former Member's surviving
Spouse is the former Member's sole Section 401(a)(9) Beneficiary, the remaining
life expectancy of the surviving Spouse is calculated for each Distribution
Calendar Year after the
I-2
year of the former Member's death using the surviving Spouse's age as the
surviving Xxxxxx's birthday in that year; and for Distribution Calendar Years
after the year of the surviving Spouse's death, the remaining life expectancy of
the surviving Spouse is calculated using the age of the surviving Spouse as of
the surviving Spouse's birthday in the calendar year of the surviving Spouse's
death, reduced by one for each subsequent calendar year.
1.07 "BENEFICIARY" OR "BENEFICIARIES" means the person or
persons, or the trust or trusts created for the benefit of a natural person or
persons or the Member's or former Member's estate, designated by the Member or
former Member to receive the benefits payable under the Plan upon his death.
1.08 "BOARD" means the board of directors of the Sponsor.
1.09 "CATCH-UP ELIGIBLE MEMBER" means a Member who is age 50 or
older or who is projected to attain the age of 50 by December 31 of the
applicable Plan Year.
1.10 "CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
1.11 "COMMITTEE" means the committee appointed by the Sponsor to
administer the Plan.
1.12 "CONSIDERED COMPENSATION" means as to each Employee, that
Employee's Annual Compensation modified by excluding the following items (even
if includable in gross income): bonuses, awards, tax gross-up payments,
reimbursements or other expense allowances (such as the payment of moving
expenses or automobile mileage reimbursements), cash and noncash fringe benefits
(such as the use of an automobile owned by the Employer and club memberships),
deferred compensation (including amounts realized upon the exercises of stock
options and amounts paid after the Employee's final regular paycheck),
compensation under a plan meeting the requirements of Section 423 of the Code,
welfare benefits (such as severance pay). Considered Compensation in excess of
$200,000.00 (as adjusted by the Secretary of Treasury for increases in the cost
of living) shall be disregarded. If the Plan Year is ever less than twelve
months, the $200,000.00 limitation (as adjusted by the Secretary of Treasury for
increases in the cost of living) will be prorated by multiplying the limitation
by a fraction, the numerator of which is the number of months in the Plan Year,
and the denominator of which is 12.
1.13 "CONTRIBUTION" means the total amount of contributions made
under the terms of the Plan. Each specific type of Contribution shall be
designated by the type of contribution made as follows:
(a) Salary Deferral Contribution - a contribution made by
the Employer pursuant to Section 3.01 and the Member's salary deferral
agreement.
(b) Catch-up Salary Deferral Contribution - a
contribution made by the Employer pursuant to Section 3.02 and the Member's
salary deferral agreement.
(c) Matching Contribution - a contribution made by the
Employer pursuant to Section 3.03.
I-3
(d) Supplemental Contribution - a contribution made by
the Employer pursuant to Section 3.04.
(e) QNEC - an extraordinary contribution, known as a
"qualified nonelective employer contribution", made by the Employer as a means
of passing the actual deferral percentage test of section 401(k) of the Code or
the actual contribution percentage test of section 401(m) of the Code.
(f) Rollover Contribution - a contribution made by a
Member pursuant to Section 3.05.
1.14 "DIRECT ROLLOVER" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
1.15 "DISTRIBUTEE" means an Employee or former Employee. In
addition, the Employee's or former Employee's surviving Spouse and the
Employee's or former Employee's Spouse or former Spouse who is the alternate
payee under a Qualified Domestic Relations Order, are Distributees with regard
to the interest of the Spouse or former Spouse.
1.16 "DISTRIBUTION CALENDAR YEAR" means a calendar year for which a
minimum distribution is required to be made to a Member or former Member under
section 401(a)(9) of the Code and Department of Treasury Regulations thereunder.
If a Member's or former Member's Required Beginning Date is April 1 of the
calendar year following the calendar year in which he attains age 70-1/2, his
first Distribution Calendar Year is the calendar year in which he attains age
70-1/2. If a Member's or former Member's Required Beginning Date is April 1 of
the calendar year following the calendar year in which he incurs a Separation
From Service, his first Distribution Calendar Year is the calendar year in which
he incurs a Separation From Service.
1.17 "ELIGIBLE RETIREMENT PLAN" means (a) an individual retirement
account described in section 408(a) of the Code, (b) an individual retirement
annuity described in section 408(b) of the Code (other than an endowment
contract), (c) an annuity plan described in section 403(a) of the Code, (d) a
qualified plan described in section 401(a) of the Code that is a defined
contribution plan that accepts the Distributee's Eligible Rollover Distribution,
(e) an eligible deferred compensation plan described in section 457(b) of the
Code that is maintained by an eligible employer described in section
457(e)(1)(A) of the Code but only if the plan agrees to separately account for
amounts rolled into such plan or (f) an annuity contract described in section
403(b) of the Code.
1.18 "ELIGIBLE ROLLOVER DISTRIBUTION" as defined in section 402 of
the Code means any distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover Distribution does
not include: (a) any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's Beneficiary, or for a specified period
of ten years or more; (b) any distribution to the extent the distribution is
required under section 401(a)(9) of the Code; (c) the portion of any
distribution that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities) unless the Eligible
I-4
Retirement Plan to which the distribution is transferred (1) agrees to
separately account for amounts so transferred, including separately accounting
for the portion of such distribution which is not includable in gross income or
(2) is an individual retirement account described in section 408(a) of the Code
or an individual retirement annuity described in section 408(b) of the Code
(other than an endowment contract); and (d) a distribution from any of the
Member's Accounts due to a financial hardship of the Member.
1.19 "EMPLOYEE" means, except as otherwise specified in this
Section, all common law employees of an Affiliated Employer and all Leased
Employees.
1.20 "EMPLOYER" OR "EMPLOYERS" means the Sponsor, K&G Men's
Company, Inc., a Delaware corporation, TMW Purchasing LLC, a Delaware limited
liability company, TMW Marketing Company, Inc., a California corporation, The
Men's Wearhouse of Texas LP, a Delaware limited partnership, TMW Merchants LLC,
a Delaware limited liability company, Twin Hill Acquisition Company, Inc., a
Delaware corporation, The Men's Wearhouse of Michigan, Inc., a Delaware
corporation, TMW Finance LP, a Delaware limited partnership, Xxxxx Xxxxxxxxx
Company, Inc., a Delaware corporation, TMW Ventures, Inc, a Delaware
corporation, and any other business organization that adopts the Plan.
1.21 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
1.22 "FINAL SECTION 401(a)(9) REGULATIONS" means the final
Department of Treasury Regulations issued under section 401(a)(9) of the Code
which were published in the Federal Register on April 17, 2002.
1.23 "FIVE PERCENT OWNER" means an Employee who is a five percent
owner as defined in section 416(i) of the Code.
1.24 "HIGHLY COMPENSATED EMPLOYEE" means, effective January 1,
1997, an Employee of an Affiliated Employer who, during the Plan Year or the
preceding Plan Year, (a) was at any time a Five Percent Owner at any time during
the Plan Year or the preceding Plan Year or (b) had Annual Compensation from the
Affiliated Employers in excess of $80,000.00 (as adjusted from time to time by
the Secretary of the Treasury) for the preceding Plan Year.
1.25 "HOUR OF SERVICE" means each hour that an Employee is paid or
entitled to payment by an Affiliated Employer for the performance of duties.
1.26 "LEASED EMPLOYEE" means, effective January 1, 1997, any person
who (a) is not a common law employee of an Affiliated Employer, (b) pursuant to
an agreement between an Affiliated Employer and any other person, has performed
services for an Affiliated Employer (or for an Affiliated Employer and related
persons determined in accordance with section 414(n)(6) of the Code) on a
substantially full-time basis for a period of at least one year and (c) performs
the services under primary direction and control of the recipient.
1.27 "MATCHED SALARY DEFERRAL CONTRIBUTION" means that portion of
the Salary Deferral Contribution that the Board determines to match from time to
time in its sole discretion.
I-5
1.28 "MEMBER" means the person or persons employed by an Employer
during the Plan Year and eligible to participate in the Plan.
1.29 "NON-HIGHLY COMPENSATED EMPLOYEE" means an Employee who is not
a Highly Compensated Employee.
1.30 "PERIOD OF SERVICE" means a period of employment with an
Affiliated Employer which commences on the day on which an Employee performs his
initial Hour of Service or performs his initial Hour of Service upon returning
to the employ of an Affiliated Employer, whichever is applicable, and ends on
the date the Employee Xxxxxx Service.
1.31 "PERIOD OF SEVERANCE" means the period of time commencing on
the date an Employee Xxxxxx Service and ending on the date the Employee again
performs an Hour of Service.
1.32 "PLAN" means The Men's Wearhouse, Inc. 401(k) Savings Plan, as
amended from time to time.
1.33 "PLAN YEAR" means the calendar year.
1.34 "QUALIFIED DOMESTIC RELATIONS ORDER" means a qualified
domestic relations order as defined in section 414(p) of the Code.
1.35 "REGULATION" means the Department of Treasury regulation
specified, as it may be changed from time to time.
1.36 "REQUIRED BEGINNING DATE" means:
(a) in the case of an individual who is not a Five
Percent Owner in the Plan Year that ends in the calendar year in which he
attains age 70-1/2, the Required Beginning Date is April 1 of the calendar year
following the later of (i) the calendar year in which the individual attains age
70-1/2, or (ii) the calendar year in which the individual incurs a Separation
From Service; and
(b) in the case of an individual who is a Five Percent
Owner in the Plan Year that ends in the calendar year in which he attains age
70-1/2, the Required Beginning Date is April 1 of the calendar year following
the year in which he attains age 70-1/2.
1.37 "RETIREMENT AGE" means age 59-1/2.
1.38 "ROLLOVER CONTRIBUTION" means the amount contributed by a
Member to the Plan which consists of any part of an Eligible Rollover
Distribution from (a) a qualified employee trust described in section 401(a) of
the Code other than an amount that is not includable in the Member's gross
income, (b) an annuity contract described in section 403(b) of the Code, (c) an
eligible deferred compensation plan described in section 457 of the Code which
is maintained by an eligible employer described in section 457(c)(1)(A) of the
Code or (d) an individual retirement account consisting solely of an eligible
rollover distribution (as defined in
I-6
section 402(c) of the Code that was not includable in the Member's gross income,
and savings thereon.
1.39 "SECTION 401(a)(9) BENEFICIARY" means an individual who is a
Member's or former Member's Beneficiary on the date of the Member's or former
Member's death and (unless the Beneficiary dies after the date of the Member's
or former Member's death and before September 30 of the following calendar year
without disclaiming benefits under the Plan) who remains a Beneficiary as of
September 30 of the calendar year following the calendar year of the Member's or
former Member's death. If the Member's or former Member's Beneficiary is a
trust, an individual beneficiary of the trust may be a Section 401(a)(9)
Beneficiary of the Member or former Member if the requirements of Regulation
Section 1.401(a)(9)-4 are satisfied.
1.40 "SEPARATION FROM SERVICE" means an individual's termination of
employment with an Affiliated Employer without commencing or continuing
employment with (a) any other Affiliated Employer.
1.41 "SERVICE" means the period or periods that a person is paid or
is entitled to payment for performance of duties with an Affiliated Employer.
1.42 "XXXXXX SERVICE" means the earlier of the following events:
(a) the Employee's quitting, retiring, dying or being discharged, (b) the
completion of a period of 365 continuous days in which the Employee remains
absent from Service (with or without pay) for any reason other than quitting,
retiring, dying or being discharged, such as vacation, holiday, sickness,
disability, leave of absence, layoff or any other absence or (c) the second
anniversary of the commencement of a continuous period of absence occasioned by
the reason of the pregnancy of the Employee, the birth of a child of the
Employee, the placement of a child with the Employee in connection with the
adoption of the child by the Employee or the caring for the child for a period
commencing immediately after the child's birth or placement.
1.43 "SPONSOR" means The Men's Wearhouse, Inc., a Texas
corporation.
1.44 "SPONSOR STOCK" means the common stock of the Sponsor.
1.45 "SPOUSE" means the person to whom the Member or former Member
is married under applicable local law. In addition, to the extent provided in a
Qualified Domestic Relations Order, a surviving former spouse of a Member or
former Member will be treated as the Spouse of the Member or former Member, and
to the same extent any current spouse of the Member or former Member will not be
treated as a Spouse of the Member or former Member. For purposes of Section
5.07, a former Spouse to whom all or a portion of a Member's or former Member's
Plan benefit is payable under a Qualified Domestic Relations Order shall, to
that extent, be treated as a Spouse or surviving Spouse regardless of whether
the Qualified Domestic Relations Order specifically provides that the former
Spouse is to be treated as the Spouse for purposes of sections 401(a)(11) and
417 of the Code.
1.46 "TRUST" means the trust estate created to fund the Plan.
I-7
1.47 "TRUSTEE" means collectively one or more persons or
corporations with trust powers which have been appointed by the initial Sponsor
and have accepted the duties of Trustee and any successor appointed by the
Sponsor.
1.48 "VALUATION DATE" means each business day of the Plan Year.
I-8
ARTICLE II
ELIGIBILITY
2.01 ELIGIBILITY REQUIREMENTS. Each Employee who is employed by an
Employer shall be eligible to participate in the Plan beginning on the date that
next follows the date on which the Employee completes 90 days of Active Service.
However, an Employee who is included in a unit of Employees covered by a
collective bargaining agreement between the Employees' representative and the
Employer shall be excluded, even if he has met the requirements for eligibility,
if there has been good faith bargaining between the Employer and the Employees'
representative pertaining to retirement benefits and the agreement does not
require the Employer to include such Employees in the Plan. In addition, a
Leased Employee shall not be eligible to participate in the Plan unless the
Plan's qualified status is dependent upon coverage of the Leased Employee. An
Employee who is a nonresident alien (within the meaning of section 7701(b) of
the Code) and receives no earned income (within the meaning of section 911(d)(2)
of the Code) from any Affiliated Employer that constitutes income from sources
within the United States (within the meaning of section 861(a)(3) of the Code)
is not eligible to participate in the Plan. During any period in which an
individual is classified by an Employer as an independent contractor with
respect to such Employer, the individual is not eligible to participate in the
Plan (even if he is subsequently reclassified by the Internal Revenue Service as
a common law employee of the Employer and the Employer acquiesces to the
reclassification). An Employee who is a nonresident alien (within the meaning of
section 7701(b) of the Code) and who does receive earned income (within the
meaning of section 911(d)(2) of the Code) from any Affiliated Employer that
constitutes income from sources within the United States (within the meaning of
section 861(a)(3) of the Code) all of which is exempt from United States income
tax under an applicable tax convention is not eligible to participate in the
Plan. An Employee who is expatriated to the United States from another country
is not eligible to participate in the Plan for so long as he continues to accrue
deferred compensation or retirement benefits under any agreement or program to
which an Affiliated Employer other than an Employer is a party. Finally, an
Employee who is employed outside the United States is not eligible to
participate in the Plan unless the Committee elects to permit him to participate
in the Plan.
2.02 EARLY PARTICIPATION FOR ROLLOVER PURPOSES. An Employee who
satisfies the eligibility requirements specified in Section 2.01 other than the
service requirement shall be eligible to make Rollover Contributions to the Plan
on the date on which he completes an Hour of Service.
2.03 ELIGIBILITY UPON REEMPLOYMENT. If an Employee incurs a
Separation From Service with the Employer prior to the date he initially begins
participating in the Plan, he shall be eligible to begin participation in the
Plan on the later of the date he would have become a Member if he did not incur
a Separation From Service or the date on which he performs an Hour of Service
after he incurs a Separation from Service. Subject to Section 2.04, once an
Employee becomes a Member, his eligibility to participate in the Plan shall
continue until he Xxxxxx Service.
II-1
2.04 CESSATION OF PARTICIPATION. An individual who has become a
Member will cease to be a Member on the earliest of the date on which he (a)
Xxxxxx Service, (b) is transferred from the employ of an Employer to the employ
of an Affiliated Employer that has not adopted the Plan, (c) becomes included in
a unit of employees covered by a collective bargaining agreement that does not
require coverage of those employees under the Plan, (d) becomes a Leased
Employee, or (e) becomes included in another classification of Employees who,
under the terms of the Plan, are not eligible to participate. Under these
circumstances, the Member's Account becomes frozen; he cannot contribute to the
Plan or share in the allocation of any Contributions for the frozen period.
However, his Accounts shall continue to share in any Plan income allocable to
his Accounts during the frozen period of time.
2.05 RECOMMENCEMENT OF PARTICIPATION. A former Member will again
become a Member on the day on which he again becomes included in a
classification of Employees that, under the terms of the Plan, is eligible to
participate.
II-2
ARTICLE III
CONTRIBUTIONS
3.01 SALARY DEFERRAL CONTRIBUTIONS. The Employer shall make a
Salary Deferral Contribution in an amount equal to the amount by which its
Members' Considered Compensation was reduced as a result of salary deferral
agreements (excluding amounts of Considered Compensation deferred pursuant to
Section 3.02 that are properly characterized as Catch-up Salary Deferral
Contributions). Any such salary deferral agreement shall be an agreement in a
form satisfactory to the Committee to prospectively receive Considered
Compensation from the Employer in a reduced amount and to have the Employer
contribute an amount equal to the amount of the reduction to the Trust on
account of the Member. A Member's right to benefits derived from Salary Deferral
Contributions made to the Plan on his behalf shall be nonforfeitable. Any such
salary deferral agreement shall be revocable in accordance with its terms,
provided that no revocation shall be retroactive or permit payment to the Member
of the amount required to be contributed to the Trust. A Member shall be
entitled to prospectively modify his salary deferral agreement at least once a
year. A Member shall be entitled to revoke, on a prospective basis, his salary
deferral agreement at any time.
The maximum amount a Member may elect to reduce his Considered
Compensation under his salary deferral agreement shall be determined by the
Committee, in its sole discretion from time to time but may not, in any event,
exceed 75 percent of his Considered Compensation. In addition, the election to
have Salary Deferral Contributions made, the ability to change the percentage of
Salary Deferral Contributions, the right to suspend Salary Deferral
Contributions, and the manner of commencing new Salary Deferral Contributions
shall be permitted under any uniform method determined by the Committee from
time to time.
3.02 CATCH-UP SALARY DEFERRAL CONTRIBUTIONS. The Employer shall
make a Catch-up Salary Deferral Contribution in an amount equal to the amounts
by which its Catch-up Eligible Members' Considered Compensation was reduced as a
result of salary deferral agreements authorizing Catch-up Salary Deferral
Contributions (to the extent that their deferrals are properly characterized as
Catch-up Salary Deferral Contributions). Any such salary deferral agreement
shall be an agreement in a form satisfactory to the Committee to prospectively
receive Considered Compensation from the Employer in a reduced amount and to
have the Employer contribute an amount equal to the amount of the reduction to
the Trust on behalf of the Catch-up Eligible Member. Further, any such salary
deferral agreement shall be revocable in accordance with its terms, provided
that no revocation shall be retroactive or permit payment to the Catch-up
Eligible Member of the amount required to be contributed to the Trust. A
Catch-up Eligible Member's right to benefits derived from Catch-up Salary
Deferral Contributions made to the Plan on his behalf shall be nonforfeitable.
Catch-up Salary Deferral Contributions on behalf of a Catch-up Eligible
Member shall be permitted to the extent that the Catch-up Salary Deferral
Contributions do not exceed the lesser of (a) the "applicable dollar catch-up
limit" under section 414(v) of the Code for the Plan Year (as adjusted from time
to time by the Secretary of Treasury), or (b) an amount equal to the Catch-up
Eligible Member's Annual Compensation for the Plan Year minus the Catch-up
Eligible Member's Salary Deferral Contributions for the Plan Year.
III-1
A final determination as to whether amounts deferred under the Plan by
a Catch-up Eligible Member are properly characterized as Salary Deferral
Contributions or Catch-up Salary Deferral Contributions for a Plan Year shall be
made as of the end of the Plan Year. To the extent that amounts deferred under
the Plan on a pre-tax basis at the election of a Catch-up Eligible Member exceed
the least of (a) the lowest statutory limit on Salary Deferral Contributions
(including limits imposed under sections 401(a)(30) and 415 of the Code), (b)
the maximum limitation on Salary Deferral Contributions, if any, imposed by the
Committee pursuant to Section 3.01, or (c) the highest amount of Salary Deferral
Contributions on behalf of the Catch-up Eligible Member that may be retained in
the Plan under the rules of section 401(k)(8)(C) of the Code, the amounts
deferred shall be characterized as Catch-up Salary Deferral Contributions. Any
amounts deferred under the Plan on a pre-tax basis at the election of a Catch-up
Eligible Member that are not properly characterized as Catch-up Salary Deferral
Contributions pursuant to the rules of the preceding sentence shall be
characterized as Salary Deferral Contributions for all purposes under the Plan.
3.03 MATCHING CONTRIBUTIONS. Each Employer shall make a Matching
Contribution in such amount, and for such period, if any, as shall be determined
by the Board. A Member's right to benefits derived from Matching Contributions
made to the Plan on his behalf shall be nonforfeitable.
3.04 SUPPLEMENTAL CONTRIBUTIONS. Each Employer may contribute for a
Plan Year a Supplemental Contribution to be allocated among Members in such
amount, if any, as shall be determined by the Employer. The rate of the
Supplemental Contribution need not be uniform among all divisions of the
Employer. A Member's right to benefits derived from Supplemental Contributions
made to the Plan on his behalf shall be nonforfeitable.
3.05 ROLLOVER CONTRIBUTIONS AND PLAN-TO-PLAN TRANSFERS. The
Committee may permit Rollover Contributions by Members and/or direct transfers
to or from another qualified plan on behalf of Members from time to time. If
Rollover Contributions and/or direct transfers to or from another qualified plan
are permitted, the opportunity to make those contributions and/or direct
transfers must be made available to Members on a nondiscriminatory basis. For
this purpose only, all Employees who are included in a classification of
Employees who are eligible to participate in the Plan shall be considered to be
Members of the Plan even though they may not have met the Active Service
requirements for eligibility. However, they shall not be entitled to elect to
have Salary Deferral Contributions made or to share in Employer Contributions or
forfeitures unless and until they have met the requirements for eligibility,
contributions and allocations. A Rollover Contribution shall not be accepted
unless it is directly rolled over to the Plan in a rollover described in section
401(a)(31) of the Code. A Member shall not be permitted to make a Rollover
Contribution if the property he intends to contribute is for any reason
unacceptable to the Trustee. A Member's right to benefits attributable to his
Rollover Contributions made to the Plan shall be nonforfeitable.
3.06 QNECS - EXTRAORDINARY EMPLOYER CONTRIBUTIONS. Any Employer may
make a QNEC in such amount, if any, as shall be determined by it. A Member's
right to benefits derived from QNECs made to the Plan on his behalf shall be
nonforfeitable. In no event will QNECs be distributed before Salary Deferral
Contributions may be distributed.
III-2
3.07 RESTORATIVE PAYMENTS. If due to an oversight or inadvertent
error an Employer fails to make a Contribution to the Plan on behalf of an
Employee, as soon as administratively practicable following the discovery of the
error, the Employer shall make a restorative payment to the Plan on behalf of
the Employee in an amount equal to the amount of required Contributions the
Employer should have made to the Plan on behalf of the Employee plus interest
thereon (both determined in a manner that is consistent with then current
guidance from the Department of Treasury concerning such restorative payments)
after the application of forfeitures available for such restoration.
3.08 NONDEDUCTIBLE CONTRIBUTIONS NOT REQUIRED. Notwithstanding any
other provision of the Plan, no Employer shall be required to make any
contribution that would be a "nondeductible contribution" within the meaning of
section 4972 of the Code.
3.09 FORM OF PAYMENT OF CONTRIBUTIONS. Contributions may be paid to
the Trustee either in cash or in qualifying employer securities (as such term is
defined in section 407(d) of ERISA) or any combination thereof, provided that
payment may not be made in any form constituting a prohibited transaction under
section 4975 of the Code or section 406 of ERISA.
3.10 DEADLINE FOR PAYMENT OF EMPLOYER CONTRIBUTIONS. Salary
Deferral Contributions and Matching Contributions shall be paid to the Trustee
in installments. The installment for each payroll period shall be paid as soon
as administratively feasible. The Matching Contributions, the Supplemental
Contributions and QNECs for a Plan Year shall be paid to the Trustee in one or
more installments, as the Employer may from time to time determine; provided,
however, that such contributions may not be paid later than the time prescribed
by law (including extensions thereof) for filing the Employer's income tax
return for its taxable year ending with or within such Plan Year.
3.11 RETURN OF CONTRIBUTIONS FOR MISTAKE, DISQUALIFICATION OR
DISALLOWANCE OF DEDUCTION. Subject to the limitations of section 415 of the
Code, the assets of the Trust shall not revert to any Employer or be used for
any purpose other than the exclusive benefit of the Members, former Members, and
their Beneficiaries and the reasonable expenses of administering the Plan
except:
(a) any Employer Contribution made because of a mistake
of fact may be repaid to the Employer within one year after the payment of the
Contribution; and
(b) all Employer Contributions are conditioned upon their
deductibility under section 404 of the Code; therefore, to the extent the
deduction is disallowed, the Contributions may be repaid to the Employer within
one year after the disallowance.
The Employer has the exclusive right to determine if a Contribution or
any part of it is to be repaid or is to remain as a part of the Trust except
that the amount to be repaid is limited, if the Contribution is made by mistake
of fact or if the deduction for the Contribution is disallowed, to the excess of
the amount contributed over the amount that would have been contributed had
there been no mistake or over the amount disallowed. Earnings which are
attributable to any excess contribution cannot be repaid. Losses attributable to
an excess contribution must reduce the amount that may be repaid. All repayments
of Contributions made due to a mistake of fact or
III-3
with respect to which a deduction is disallowed are limited so that the balance
in a Member's or former Member's Account cannot be reduced to less than the
balance that would have been in the Member's or former Member's Account had the
mistaken amount or the amount disallowed never been contributed.
III-4
ARTICLE IV
ALLOCATION AND VALUATION OF ACCOUNTS
4.01 INFORMATION STATEMENTS FROM EMPLOYER. Upon request by the
Committee, the Employer shall provide the Committee with a schedule setting
forth the amount of its Salary Deferral Contribution, Supplemental Contribution,
QNEC, and restoration contribution; the names of its Members, the number of
years of Active Service of each of its Members, the amount of Considered
Compensation and Annual Compensation paid to each Member, and the amount of
Considered Compensation and Annual Compensation paid to all its Members. Such
schedules shall be conclusive evidence of such facts.
4.02 ALLOCATION OF SALARY DEFERRAL CONTRIBUTION. The Committee
shall allocate the Salary Deferral Contribution among the Members by allocating
to each Member the amount by which his Considered Compensation was reduced
pursuant to a salary deferral agreement (as described in Section 3.01) and shall
credit each such Member's share to his Salary Deferral Contribution Account.
4.03 ALLOCATION OF CATCH-UP SALARY DEFERRAL CONTRIBUTION. The
Committee shall allocate the Catch-up Salary Deferral Contribution among the
Members by allocating to each Member the amount by which his Considered
Compensation was reduced pursuant to a salary deferral agreement under Section
3.02 and shall credit each such Member's share to his Catch-up Salary Deferral
Contribution Account
4.04 ALLOCATION OF MATCHING CONTRIBUTION. The Committee shall
separately allocate the Matching Contribution made by an Employer among the
Employer's Members in the proportion which the Matched Salary Deferral
Contributions of each such Member bears to the total Matched Salary Deferral
Contributions of all such Members. Each Member's proportionate share shall be
credited to his Matching Contribution Account.
4.05 ALLOCATION OF SUPPLEMENTAL CONTRIBUTION. For each Plan Year,
the Committee shall allocate the Supplemental Contribution made by an Employer
among the Members who are employed by the Employer during the Plan Year, based
upon each such Member's Considered Compensation paid by the Employer as compared
to the Considered Compensation for all such Members employed by the Employer and
eligible for the allocation.
4.06 ALLOCATION OF QNEC. The Committee shall separately allocate
the QNEC among the Non-Highly Compensated Employees who are Members based upon
each such Member's Considered Compensation as compared to the Considered
Compensation of all such Members.
4.07 VALUATION OF ACCOUNTS. A Member's or former Member's Accounts
shall be valued at fair market value on each Valuation Date. The earnings and
losses attributable to any asset in the Trust will be allocated solely to the
Account of the Member or former Member on whose behalf the investment in the
asset was made. In determining the fair market value of the Members' or former
Member's Accounts, the Trustee shall utilize such sources of information as it
may deem reliable including, but not limited to, stock market quotations,
statistical evaluation services, newspapers of general circulation, financial
publications, advice from investment
IV-1
counselors or brokerage firms, or any combination of sources which in the
opinion of the Trustee will provide the price such assets were last traded at on
a registered stock exchange; provided, however, that with respect to regulated
investment company shares, the Trustee shall rely exclusively on information
provided to it by the investment adviser to such funds.
4.08 NO RIGHTS UNLESS OTHERWISE PRESCRIBED. No allocations,
adjustments, credits, or transfers shall ever vest in any Member or former
Member any right, title, or interest in the Trust except at the times and upon
the terms and conditions herein set forth.
IV-2
ARTICLE V
BENEFITS
5.01 RETIREMENT BENEFIT. Upon his Separation From Service, a Member
or former Member is entitled to receive 100 percent of all of his Account
balances.
5.02 DEATH BENEFIT. If a Member or former Member dies, the death
benefit payable to his Beneficiary shall be 100 percent of the remaining amount
of his Account balances (reduced by any security interest held by the Plan by
reason of a loan outstanding to the Member).
5.03 DISTRIBUTION METHODS AVAILABLE. The only distribution method
available under the Plan is a lump sum payment.
5.04 LUMP SUM PAYMENT OF SMALL AMOUNTS UPON SEPARATION FROM
SERVICE. Notwithstanding any other provision of the Plan other than Section 5.09
and the provisions of the following paragraph of this Section, effective August
1, 2000, each Member or former Member (a) who does not die before the Annuity
Starting Date and (b) whose Account balances at the time of a distribution to
him on account of his Separation From Service are, in the aggregate, less than
or equal to $5,000.00 ($3,500 prior to January 1, 1998), shall be paid in the
form of a single sum payment. Subject to Section 5.09, effective August 1, 2000,
if a Member or former Member dies before he has received any payment from the
Plan, and the total of his Account balances at the time of the distribution is
less than or equal to $5,000.00 ($3,500 prior to January 1, 1998), his
Beneficiary shall be paid in the form of a lump sum payment. For this purpose,
for distributions prior to October 18, 2000, if the aggregate value of a
Member's or former Member's Account balances determined at the time of any prior
payment to him exceeded $5,000.00 ($3,500 prior to January 1, 1998), then the
benefit to be distributed at any subsequent time shall be deemed to exceed that
amount. If a Distributee who is subject to this Section 5.07 does not furnish
instructions in accordance with Plan procedures to directly roll over his Plan
benefit within 45 days after he has been given direct rollover forms, he will be
deemed to have elected a lump sum cash distribution of his entire Plan benefit.
Effective January 1, 2002, notwithstanding any other provision of the
Plan other than Section 5.06, if a Member's Account balance at the time of his
Separation from service is (a) less than or equal to $5,000.00 but greater than
$200, his Account balance shall be paid to him (or, in the event he has died, to
his Beneficiary) as soon as administratively practicable in the form of a single
sum payment in shares of Sponsor Stock with respect to amounts invested in
Sponsor Stock, cash and/or as a Direct Rollover or (b) less than or equal to
$200, his Account balance shall be paid to him (or, in the event he has died, to
his Beneficiary) as soon as administratively practicable in the form of a single
sum cash payment. If a Distributee who is subject to this Section 5.04 does not
furnish instructions in accordance with Plan procedures to directly roll over
his Plan benefit within 45 days after he has been given direct rollover forms,
he will be deemed to have elected a lump sum distribution of his entire Plan
benefit.
5.05 FORM OF PAYMENT. All payments from the Plan shall be made in
the form of cash; provided however that a Member, former Member or Beneficiary
may elect to receive amounts invested in Sponsor Stock in an in-kind
distribution of Sponsor Stock.
V-1
5.06 DIRECT ROLLOVER OPTION. To the extent required under
Regulations, a Distributee has the right to direct that any portion of his
Eligible Rollover Distribution will be directly paid to an Eligible Retirement
Plan specified by him that will accept the Eligible Rollover Distribution.
5.07 REQUIRED DISTRIBUTIONS. Notwithstanding any other provision of
the Plan, all benefits payable under the Plan shall be distributed, or commence
to be distributed, in compliance with the following provisions:
(a) REQUIRED DISTRIBUTIONS FOR CERTAIN PERSONS WHO ARE
70-1/2 OR OLDER. Unless a Member's or former Member's entire nonforfeitable
interest in his Plan benefit is distributed to him in a single sum no later than
his Required Beginning Date or in the form of an annuity purchased from an
insurance company, the Member's or former Member's nonforfeitable interest in
his Plan benefit must begin to be distributed, not later than his Required
Beginning Date, over the life of the Member or former Member, or the joint lives
of the Member or former Member and his Section 401(a)(9) Beneficiary, or over a
period not extending beyond the life expectancy of the Member or former Member
or the joint and last survivor expectancy of the Member or former Member and his
Section 401(a)(9) Beneficiary. The distribution required to be made on or before
the Member's or former Member's Required Beginning Date shall be the
distribution required for his first Distribution Calendar Year. The minimum
required distribution for other Distribution Calendar Years, including the
required minimum distribution for the Distribution Calendar Year in which the
Member's or former Member's Required Beginning Date occurs must be made on or
before December 31 of that Distribution Calendar Year. In the case of a benefit
payable in a form other than a single sum or an annuity purchased from an
insurance company, the amount that must be distributed for a Distribution
Calendar Year is an amount equal to the amount specified in Paragraph (b) of
this Section 5.07.
(b) REQUIRED MINIMUM DISTRIBUTIONS. If a Member's or
former Member's Required Beginning Date is before the date on which he incurs a
Separation From Service, the Member or former Member (if he is then alive) must
be paid either the entire amount credited to his Account or annual distributions
from the Plan in the amounts required under section 401(a)(9) of the Code and
Regulations thereunder commencing no later than his Required Beginning Date
until his entire interest under the Plan has been distributed. The distribution
required to be made on or before the Member's or former Member's Required
Beginning Date shall be the distribution required for his first Distribution
Calendar Year. The minimum required distribution for other Distribution Calendar
Years, including the required minimum distribution for the Distribution Calendar
Year in which the Member's or former Member's Required Beginning Date occurs
must be made on or before December 31 of that Distribution Calendar Year. The
amount that must be distributed for a Distribution Calendar Year is an amount
equal to (1) the Member's or former Member's Account balance as of the last
Valuation Date in the calendar year immediately preceding the Distribution
Calendar Year, increased by any contributions or forfeitures allocated and made
to the Account during such immediately preceding calendar year after the
Valuation Date, and decreased by distributions made during such immediately
preceding calendar year after the Valuation Date, divided by (2) the Member's or
former Member's Applicable Distribution Period.
V-2
(c) DISTRIBUTION DEADLINE FOR DEATH BENEFIT WHEN MEMBER
OR FORMER MEMBER DIES BEFORE HIS DISTRIBUTIONS BEGIN. If a Member or former
Member dies before the date distribution of his nonforfeitable interest in his
Plan benefit begins, his entire nonforfeitable interest in his Plan benefit will
be distributed, or begin to be distributed, to his Section 401(a)(9) Beneficiary
no later than as follows:
(i) Unless clause (iii) below applies, if the
Member's or former Member's surviving Spouse is the Member's or former Member's
sole Section 401(a)(9) Beneficiary, then distributions to the surviving Spouse
will begin by December 31 of the calendar year immediately following the
calendar year in which the Member or former Member died, or by December 31 of
the calendar year in which the Member or former Member would have attained age
70 1/2 , if later.
(ii) If the Member's or former Member's surviving
Spouse is not the Member's or former Member's sole Section 401(a)(9) Beneficiary
and the payment of Plan death benefits to the Section 401(a)(9) Beneficiary will
not be in the form of a single sum or a commercial annuity, then distributions
to the Section 401(a)(9) Beneficiary will begin by December 31 of the calendar
year immediately following the calendar year in which the Member or former
Member died.
(iii) If the Member's or former Member's surviving
Spouse is the Member's or former Member's sole Section 401(a)(9) Beneficiary,
and the payment of a Plan death benefit to the Section 401(a)(9) Beneficiary
will be in the form of a single sum, then the Member's or former Member's entire
nonforfeitable interest in his Plan benefit will be distributed by December 31
of the calendar year containing the fifth anniversary of the Member's or former
Member's death.
(iv) If there is no Section 401(a)(9) Beneficiary
as of September 30 of the calendar year following the calendar year of the
Member's or former Member's death, then the Member's or former Member's entire
nonforfeitable interest in his Plan benefit will be distributed by December 31
of the calendar year containing the fifth anniversary of the Member's or former
Member's death.
(v) If the Member's or former Member's surviving
Spouse is the Member's or former Member's sole Section 401(a)(9) Beneficiary and
the surviving Spouse dies after the Member or former Member but before
distributions to the surviving Spouse begin, this Section 5.07(c), other than
Section 5.07(c)(i), will apply as if the surviving Spouse were the Member or
former Member.
Unless the Member's or former Member's interest is
distributed in the form of an annuity or in a single sum on or before the
Required Beginning Date, as of the first Distribution Calendar Year
distributions will be made in accordance with Paragraph (b) of this
Section 5.07.
(d) DISTRIBUTION OF DEATH BENEFIT WHEN MEMBER OR FORMER
MEMBER DIES ON OR AFTER HIS REQUIRED BEGINNING DATE. If a Member or former
Member dies on or after his Required Beginning Date, his Plan benefit must be
distributed to his Section 401(a)(9)
V-3
Beneficiary at least as rapidly as the method of payment of minimum required
distributions being used as of the date of his death.
(e) LIMITATIONS ON DEATH BENEFITS. Benefits payable under
the Plan shall not be provided in any form that would cause a Member's or former
Member's death benefit to be more than incidental. Any distribution required to
satisfy the incidental benefit requirement shall be considered a required
distribution for purposes of section 401(a)(9) of the Code.
(f) REQUIREMENTS IN THE CASE OF A COMMERCIAL ANNUITY. If
a Member's or former Member's nonforfeitable interest in his Plan benefit is
distributed in the form of an annuity purchased from an insurance company,
distributions under the annuity contract will be made in accordance with the
requirements of section 401(a)(9) of the Code and Department of Treasury
Regulations.
(g) COMPLIANCE WITH SECTION 401(a)(9). All distributions
under the Plan will be made in accordance with the requirements of section
401(a)(9) of the Code and all Regulations promulgated thereunder, including,
effective January 1, 2003, the Final Section 401(a)(9) Regulations, including
sections 1.401(a)(9)-1 through 1.401(a)(9)-9 of the Final Section 401(a)(9)
Regulations. The provisions of the Plan reflecting section 401(a)(9) of the Code
override any distribution options in the Plan inconsistent with section
401(a)(9) of the Code.
(h) COMPLIANCE WITH SECTION 401(a)(14). Unless the Member
or former Member otherwise elects, the payment of benefits under the Plan to the
Member or former Member will begin not later than the 60th day after the close
of the Plan Year in which occurs the latest of (a) the date on which the Member
or former Member attains the later of age 62 or Retirement Age, (b) the tenth
anniversary of the year in which the Member or former Member commenced
participation in the Plan, or (c) the Member's or former Member's Separation
From Service.
5.08 CONSENT TO DISTRIBUTIONS UPON SEPARATION FROM SERVICE.
Notwithstanding any other provision of the Plan, no benefit shall be distributed
or commence to be distributed to a Member or former Member prior to his
attainment of the later of age 62 or Retirement Age without his consent, unless
the benefit is payable in a single sum under Section 5.04. Any such consent
shall be valid only if given not more than 90 days prior to the Member's or
former Member's Annuity Starting Date and after his receipt of the notice
regarding benefits described in Section (a).
5.09 INFORMATION PROVIDED TO MEMBERS. Information regarding the
form of benefits available under the Plan shall be provided to Members or former
Members in accordance with the following provisions:
(a) General Information. Except as otherwise provided in
paragraph (c), the Sponsor shall provide each Member or former Member with a
written general explanation or description of (1) the eligibility conditions and
other material features of the optional forms of benefit available under the
Plan, (2) the relative values of the optional forms of benefit available
V-4
under the Plan, and (3) the Member's or former Member's right, if any, to defer
receipt of the distribution.
(b) Time for Giving Notice. The written general
explanation or description regarding any optional forms of benefit available
under the Plan shall be provided to a Member or former Member no less than 30
days and no more than 90 days before his Annuity Starting Date unless he legally
waives this requirement.
(c) Exception for Members with Small Benefit Amounts.
Notwithstanding the preceding provisions of this Section, no information
regarding any optional forms of benefit otherwise available under the Plan shall
be provided to the Member or former Member if his benefit is payable in a single
sum under Section 5.04.
5.10 DESIGNATION OF BENEFICIARY. Each Member has the right to
designate and to revoke the designation of his Beneficiary or Beneficiaries.
Each designation or revocation must be evidenced by a written document in the
form required by the Committee, signed by the Member and filed with the
Committee. If no designation is on file at the time of a Member's death or if
the Committee determines that the designation is ineffective, the designated
Beneficiary shall be the Member's Spouse, if living, or if not, the executor,
administrator or other personal representative of the Member's estate. If a
Member is considered to be married under local law, the Member's designation of
any Beneficiary, other than the Member's Spouse, shall not be valid unless the
spouse acknowledges in writing that she understands the effect of the Member's
beneficiary designation and consents to it. The consent must be to a specific
Beneficiary. The written acknowledgement and consent must be filed with the
Committee, signed by the Spouse and at least two witnesses, one of whom must be
a member of the Committee or a notary public. However, if the Spouse cannot be
located or there exist other circumstances as described in sections 401(a)(11)
and 417(a)(2) of the Code, the requirement of the Member's Spouse's
acknowledgement and consent may be waived. If a Beneficiary other than the
Member's Spouse is named, the designation shall become invalid if the Member is
later determined to be married under local law, the Member's missing Spouse is
located or the circumstances which resulted in the waiver of the requirement of
obtaining the consent of the Member's Spouse no longer exist.
5.11 DISTRIBUTIONS TO DISABLED PERSONS. If the Committee determines
that any person to whom a payment is due is unable to care for his affairs
because of physical or mental disability, it shall have the authority to cause
the payments to be made to the Spouse, brother, sister or other person the
Committee determines to have incurred, or to be expected to incur, expenses for
that person unless a prior claim is made by a qualified guardian or other legal
representative. The Committee and the Trustee shall not be responsible to
oversee the application of those payments. Payments made pursuant to this power
shall be a complete discharge of all liability under the Plan and the Trust and
the obligations of the Employer, the Trustee, the Trust and the Committee.
5.12 DISTRIBUTIONS PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS.
The Committee will instruct the Trustee to pay benefits in accordance with the
terms of any order that has been determined, in accordance with Plan procedures,
to be a Qualified Domestic Relations Order. A Qualified Domestic Relations Order
may require the payment of an immediate cash
V-5
lump sum to an alternate payee even if the Member or former Member is not then
entitled to receive an immediate payment of Plan benefits.
5.13 CLAIMS PROCEDURE. When a benefit is due, the Member or
Beneficiary should submit a claim to the office designated by the Committee to
receive claims. Under normal circumstances, the Committee will make a final
decision as to a claim within 90 days after receipt of the claim. If the
Committee notifies the claimant in writing during the initial 90-day period, it
may extend the period up to 180 days after the initial receipt of the claim. The
written notice must contain the circumstances necessitating the extension and
the anticipated date for the final decision. If a claim is denied during the
claims period, the Committee must notify the claimant in writing. The denial
must include the specific reasons for it, the Plan provisions upon which the
denial is based, any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary, and the Plan's review procedures and time limits,
including a statement of the claimant's right to bring a civil action under
section 502(a) of ERISA.
If a Member's or Beneficiary's claim is denied and he wants a review,
he must apply to the Committee in writing. That application can include any
arguments, written comments, documents, records, and other information relating
to the claim for benefits. In addition, the claimant is entitled to receive on
request and free of charge reasonable access to and copies of all information
relevant to the claim. For this purpose, "relevant" means information that was
relied on in making the benefit determination or that was submitted, considered
or generated in the course of making the determination, without regard to
whether it was relied on, and information that demonstrates compliance with the
Plan's administrative procedures and safeguards for assuring and verifying that
Plan provisions are applied consistently in making benefit determinations. The
Committee must take into account all comments, documents, records, and other
information submitted by the claimant relating to the claim, without regard to
whether the information was submitted or considered in the initial benefit
determination. The claimant may either represent himself or appoint a
representative, either of whom has the right to inspect all documents pertaining
to the claim and its denial. The Committee can schedule any meeting with the
claimant or his representative that it finds necessary or appropriate to
complete its review. The request for review must be filed within 90 days after
the denial. If it is not, the denial becomes final. If a timely request is made,
the Committee must make its decision, under normal circumstances, within 60 days
of the receipt of the request for review. However, if the Committee notifies the
claimant prior to the expiration of the initial review period, it may extend the
period of review up to 120 days following the initial receipt of the request for
a review. All decisions of the Committee must be in writing and must include the
specific reasons for its action, the Plan provisions on which its decision is
based, and a statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records,
and other information relevant to the claimant's claim for benefits, and a
statement of the claimant's right to bring an action under section 502(a) of
ERISA If a decision is not given to the claimant within the review period, the
claim is treated as if it were denied on the last day of the review period.
V-6
ARTICLE VI
IN-SERVICE DISTRIBUTIONS AND LOANS
6.01 IN-SERVICE FINANCIAL HARDSHIP DISTRIBUTIONS.
(a) General. Prior to his Separation From Service, a
Member is entitled to receive a distribution from his Salary Deferral
Contribution Account (except for income that was not credited to his Salary
Deferred Contribution Account as of December 31, 1988), his Catch-up Salary
Deferral Contribution Account (except for income credited to his Catch-up Salary
Deferral Contribution Account), his Rollover Account, his Matching Contribution
Account and his Supplemental Contribution Account in the event of an immediate
and heavy financial need incurred by the Member and the Committee's
determination that the withdrawal is necessary to alleviate that hardship.
(b) Permitted Reasons For Financial Hardship Withdrawals.
A distribution shall be made on account of financial hardship only if the
distribution is for: (i) Expenses for medical care described in section 213(d)
of the Code previously incurred by the Member, the Member's Spouse, or any
dependents of the Member (as defined in section 152 of the Code) or necessary
for these persons to obtain medical care described in section 213(d) of the
Code, (ii) costs directly related to the purchase (excluding mortgage payments)
of a principal residence for the Member, (iii) payment of tuition and related
educational fees for the next 12 months of post-secondary education for the
Member, his Spouse, children, or dependents (as defined in section 152 of the
Code), (iv) payments necessary to prevent the eviction of the Member from his
principal residence or foreclosure on the mortgage of the Member's principal
residence, or (v) any other event added to this list by the Commissioner of
Internal Revenue.
(c) Amount. A distribution to satisfy an immediate and
heavy financial need shall not be made in excess of the amount of the immediate
and heavy financial need of the Member and the Member must have obtained all
distributions, other than hardship distributions, and all nontaxable (at the
time of the loan) loans currently available under all plans maintained by the
Employer. Notwithstanding the foregoing to the contrary, a Member need not
obtain nontaxable loans described in the preceding sentence if the aggregate
amount of all such loans would not be sufficient to fully satisfy the Member's
immediate and heavy financial need. The amount of a Member's immediate and heavy
financial need includes any amounts necessary to pay any federal, state or local
income taxes or penalties reasonably anticipated to result from the financial
hardship distribution.
(d) Suspension of Participation in Certain Benefit
Programs. The Member's hardship distribution during the 2001 Plan Year shall
terminate his right to have the Employer make any Salary Deferral Contributions
on his behalf until the next time Salary Deferral Contributions are permitted
after the lapse of 6 months following the hardship distribution or January 1,
2002, if later, and his timely filing of a written request to resume his Salary
Deferral Contributions. The Member's hardship distribution during and after the
2002 Plan Year shall terminate his right to have the Employer make any Salary
Deferral Contributions on his behalf until the next time Salary Deferral
Contributions are permitted after the lapse of 6 months following the hardship
distribution and his timely filing of a written request to resume his Salary
VI-1
Deferral Contributions. In addition, for 6 months after he receives a hardship
distribution from the Plan, the Member is prohibited from making elective
contributions and employee contributions to or under all other qualified and
nonqualified plans of deferred compensation maintained by the Employer,
including stock option plans, stock purchase plans and Code section 401(k) cash
or deferred arrangements that are part of cafeteria plans described in section
125 of the Code. However, the Member is not prohibited from making contributions
to a health or welfare benefit plan, including one that is part of a cafeteria
plan within the meaning of section 125 of the Code.
(e) Order of Withdrawals. Financial hardship
distributions will be made in the following order: First withdrawals will be
made from the Member's Supplemental Contribution Account, then from his Matching
Contribution Account, then from his Rollover Account, then form his Salary
Deferral Contribution Account and finally, from his Catch-up Salary Deferral
Contribution Account. A Member shall not be entitled to receive a financial
hardship distribution of any amount credited to his QNEC Account, or of any
income that is allocable or credited to his Salary Deferral Contribution Account
or Catch-up Salary Deferral Contribution Account.
(f) Method of Payment. Distributions pursuant to this
Section 6.01 will normally be paid in lump sums.
6.02 IN-SERVICE AGE 59-1/2 DISTRIBUTIONS. Prior to his Separation
From Service, a Member may withdraw part or all of his Account balance on or
after the date that he attains age 59-1/2. Distributions pursuant to this
Section 6.02 will normally be paid in lump sums in cash and/or shares of Sponsor
Stock to the extent his Account balance is invested in Sponsor Stock.
6.03 IN-SERVICE WITHDRAWAL OF ROLLOVER CONTRIBUTIONS. Each Member
may withdraw part or all of his Rollover Account balance at any time.
Withdrawals pursuant to this Section 6.03 will normally be paid in lump sums in
cash and/or shares of Sponsor Stock to the extent his Rollover Account is
invested in Sponsor Stock.
6.04 LOANS. The Committee may direct the Trustees to make loans to
Members (and Beneficiaries who are "parties in interest" within the meaning of
ERISA) who have a vested interest in the Plan. The Loan Committee established by
the Committee will be responsible for administering the Plan loan program. All
loans will comply with the following requirements:
(a) All loans will be made solely from the Member's or
Beneficiary's Account.
(b) Loans will be available on a nondiscriminatory basis
to all Beneficiaries who are "parties in interest" within the meaning of ERISA,
and to all Members.
(c) Loans will not be made for less than $500.00. No
Member or Beneficiary may have more than two loans outstanding at any one time.
(d) The maximum amount of a loan may not exceed the
lesser of (A) $50,000.00 reduced by the person's highest outstanding loan
balance from the Plan during the preceding one-year period, or (B) one-half of
the present value of the person's Account
VI-2
balances under the Plan determined as of the date on which the loan is approved
by the Loan Committee.
(e) Any loan from the Plan will be evidenced by a note or
notes (signed by the person applying for the loan) having such maturity, bearing
such rate of interest, and containing such other terms as the Loan Committee
will require by uniform and nondiscriminatory rules consistent with this Section
and proper lending practices.
(f) All loans will bear a reasonable rate of interest
which will be established by the Loan Committee.
(g) Each loan will be fully secured by a pledge of the
borrowing person's Account balance. No more than 50 percent of the person's
Account balance (determined immediately after the origination of the loan) will
be considered as security for any loan.
(h) Generally, the term of the loan will not be more than
five years. The Loan Committee may agree to a longer term (but not more than 15
years) only if such term is otherwise reasonable and the proceeds of the loan
are to be used to acquire a dwelling which will be used within a reasonable time
(determined at the time the loan is made) as the principal residence of the
borrowing person.
(i) The loan agreement will require level amortization
over the term of the loan. A Member's loan agreement will also require that loan
repayments be made through payroll deductions. However, the level amortization
requirement will not apply for a period, not longer than one year (or such
longer period as may apply under the Uniformed Services Employment and
Reemployment Rights Act of 1994 ("USERRA")) that an eligible borrower is on a
bona fide leave of absence, either without pay from the Employer or at a rate of
pay (after income and employment tax withholding) that is less than the amount
of the installment payments required under the terms of the loan. However, the
loan (including interest that accrues during the leave of absence) must be
repaid by the five-year loan maturity deadline specified in paragraph (h) above
(unless the loan was a home loan described in paragraph (h) above), and the
amount of the installments due after the leave ends (or, if earlier, after the
first anniversary of the leave or such longer period as may apply under USERRA)
must not be less than the amount required under the terms of the original loan.
(j) If a person fails to make a required payment by the
last day of the calendar quarter following the calendar quarter in which the
payment was due, the loan will be in default.
(k) If a Member has an outstanding loan from the Plan at
the time of his Separation From Service, the Member shall be provided an
opportunity to pay the Trustee the outstanding loan principal balance and any
accrued but unpaid interest. If the Member fails to so repay the loan, the
Trustee will foreclose on the loan and the Member will be deemed to have
received a Plan distribution of the amount foreclosed upon. The Trustee will not
foreclose upon a Member's Salary Deferral Contribution Account or QNEC Account
until the Member's Separation From Service.
VI-3
(l) If a Beneficiary defaults on his loan, the Trustee
will foreclose on the loan and the Beneficiary will be deemed to have received a
Plan distribution of the amount foreclosed upon.
(m) No amount that is pledged as collateral for a Plan
loan to a Member will be available for withdrawal before he has fully repaid his
loan.
(n) All interest payments made pursuant to the terms of
the loan agreement will be credited to the borrowing person's Account and will
not be considered as general earnings of the Trust to be allocated to other
Members.
VI-4
ARTICLE VII
ACTIVE SERVICE
7.01 WHEN ACTIVE SERVICE BEGINS. For purposes of eligibility,
Active Service begins when an Employee first performs an Hour of Service for an
Affiliated Employer. If an Employee who has begun Active Service Xxxxxx Service
he shall recommence Active Service when he again performs an Hour of Service for
an Affiliated Employer.
7.02 AGGREGATION OF SERVICE. When determining an Employee's Active
Service, all Periods of Service, whether or not completed consecutively, shall
be aggregated on a per day basis. For purposes of vesting, only full years of
Active Service shall be counted. In aggregating Active Service, 30 days shall be
counted as one month and 12 months shall be counted as one year.
7.03 PERIODS OF SERVICE OF LESS THAN ONE YEAR. If an Employee
performs an Hour of Service within 12 months after he Xxxxxx Service, the
intervening Period of Severance shall be counted as a Period of Service.
7.04 PERIODS OF SEVERANCE DUE TO CHILD BIRTH OR ADOPTION. The
period of time between (a) the first anniversary of the first day of an absence
from Service by reason of the pregnancy of the Employee, the birth of a child of
the Employee, the placement of a child with the Employee in connection with the
adoption of the child by the Employee or for purposes of caring for the child
for a period beginning immediately following the birth or placement and (b) the
second anniversary of the first day of the absence shall not be counted as a
Period of Service or a Period of Severance.
7.05 TRANSFERS. If an Employee is transferred to the employ of an
Affiliated Employer, he will continue to earn Active Service for eligibility
purposes.
7.06 EMPLOYMENT RECORDS CONCLUSIVE. The employment records of the
Employer shall be conclusive for all determinations of Active Service.
7.07 SERVICE CREDIT REQUIRED UNDER FEDERAL LAW. An Employee shall
be credited with such additional years of Active Service as are required under
any applicable law of the United States.
VII-1
ARTICLE VIII
INVESTMENT ELECTIONS
8.01 INVESTMENT FUNDS ESTABLISHED. It is contemplated that the
assets of the Plan shall be invested in such categories of assets as may be
determined from time to time by the Committee and announced and made available
on an equal basis to all Members and former Members. In accordance with
procedures established by the Committee, each Member and former Member may
designate the percentage of his Employer Matching Contribution Account, QNEC
Account, Rollover Contribution Account and Salary Deferral Contribution Account
to be invested in each investment fund available under the Plan. Up to one
hundred percent of the Trust assets may be invested in Sponsor Stock.
8.02 ELECTION PROCEDURES ESTABLISHED. The Committee shall, from
time to time, establish rules to be applied in a nondiscriminatory manner as to
all matters relating to the administration of the investment of funds including,
but not limited to, the following:
(a) the percentage of a Member's or former Member's
Account as it exists, from time to time, that may be transferred from one fund
to another and the limitations based on amounts, percentages, time, or
frequency, if any, on such transfers;
(b) the percentage of a Member's future contributions,
when allocated to his Account, that may be invested in any one or more funds and
the limitations based upon amounts, percentages, time, or frequency, if any, on
such investments in various funds;
(c) the procedures for making investment elections and
changing existing investment elections;
(d) the period of notice required for making investment
elections and changing existing investment elections;
(e) the handling of income and change of value in funds
when funds are in the process of being transferred between investment funds and
to investment funds; and
(f) all other matters necessary to permit the orderly
operation of investment funds within the Plan.
When the Committee changes any previous applicable rule, it shall state the
effective time of the change and the procedures for complying with any such
change. Any change shall remain effective until such date as stated in the
change, or if none is stated, then until revoked or changed in a like manner.
VIII-1
ARTICLE IX
VOTING OF SPONSOR STOCK AND TENDER OFFERS
9.01 VOTING OF SPONSOR STOCK. When the Sponsor files preliminary or
final proxy solicitation materials with the Securities and Exchange Commission,
the Sponsor shall cause a copy of all materials to be simultaneously sent to the
Trustee. Based on these materials, the Trustee shall prepare a voting
instruction form. At the time of mailing of notice of each annual or special
stockholders' meeting of the Sponsor, the Sponsor shall cause a copy of the
notice and all proxy solicitation materials to be sent to each Member with an
interest in Sponsor Stock held in the Trust, together with the foregoing voting
instruction form to be returned to the Trustee or its designee. The form shall
show the number of full and fractional shares of the Sponsor Stock credited to
each Member's or former Member's Account. The Sponsor shall provide the Trustee
with a copy of any materials provided to the Members and shall certify to the
Trustee that the materials have been mailed or otherwise sent to the Members and
former Members.
Each Member and former Member with an interest in Sponsor Stock held in
the Trust shall have the right to direct the Trustee as to the manner in which
the Trustee is to vote the number of shares of the Sponsor Stock reflecting such
Member's or former Member's proportional interest in the Sponsor Stock held in
the Trust. Directions from a Member or former Member to the Trustee concerning
the voting of the Sponsor Stock shall be communicated in writing, or by mailgram
or similar means. These directions shall be held in confidence by the Trustee
and shall not be divulged to the Sponsor, or any officer or employee thereof, or
any other person except to the extent that the Sponsor must have the safeguarded
information in order to comply with federal laws or state laws not preempted by
XXXXX. Upon its receipt of the directions, the Trustee shall vote the shares of
the Sponsor Stock reflecting the Member's or former Member's proportional
interest in the Sponsor Stock held in the Trust as directed by the Member or
former Member. The Trustee shall vote shares of the Sponsor Stock reflecting
such Member's or former Member's proportional interest in the Sponsor Stock held
in the Trust for which it has received no directions from the Member or former
Member in the same proportion on each issue as it votes those shares for which
it received voting directions from Members and former Members. The Trustee shall
vote shares of the Sponsor Stock not credited to Members' or former Members'
Accounts in the same proportion on each issue as it votes those shares credited
to Members' and former Members' Accounts for which it received voting directions
from Members and former Members.
9.02 TENDER OFFERS. Upon commencement of a tender offer for any
securities held in the Trust that are the Sponsor Stock, the Sponsor shall
notify each Member and former Member of the tender offer and utilize its best
efforts to timely distribute or cause to be distributed to each Member and
former Member the same information that is distributed to other stockholders of
the Sponsor in connection with the tender offer, and, after consulting with the
Trustee, shall provide and pay for a means by which the Member or former Member
may direct the Trustee whether or not to tender the Sponsor Stock credited to
the Member's or former Member's Accounts. The Sponsor shall provide the Trustee
with a copy of any material provided to the Members and former Members and shall
certify to the Trustee that the materials have been mailed or otherwise sent to
Members and former Members.
IX-1
Each Member and former Member shall have the right to direct the
Trustee to tender or not to tender some or all of the shares of the Sponsor
Stock reflecting his proportional interest in the Sponsor Stock held in the
Trust. Directions from a Member or former Member to the Trustee concerning the
tender of the Sponsor Stock shall be communicated in writing, or by mailgram or
such similar means as is agreed upon by the Trustee and the Sponsor under the
preceding paragraph. These directions shall be held in confidence by the Trustee
and shall not be divulged to the Sponsor, or any officer or employee thereof, or
any other person except to the extent that the consequences of such directions
are reflected in reports regularly communicated to any such persons in the
ordinary course of the performance of the Trustee's services hereunder. The
Trustee shall tender or not tender shares of Sponsor Stock as directed by the
Member or former Member. To the extent that Members or former Members fail to
affirmatively direct the Trustee or fail to issue valid directions to the
Trustee to tender shares of the Sponsor Stock credited to their Accounts, those
Members or former Members will be deemed to have instructed the Trustee not to
tender those shares. Accordingly, the Trustee shall not tender shares of Sponsor
Stock credited to a Member's or former Member's Accounts for which it has
received no directions or invalid directions from the Member or former Member.
The Trustee shall tender that number of shares of the Sponsor Stock not
credited to Members' or former Members' Accounts which is determined by
multiplying the total number of shares of the Sponsor Stock not credited to
Members' or former Members' Accounts by a fraction of which the numerator is the
number of shares of the Sponsor Stock credited to Members' or former Members'
accounts for which the Trustee has received valid directions from Members or
former Members to tender (which directions have not been withdrawn as of the
date of this determination) and of which the denominator is the total number of
shares of the Sponsor Stock credited to Members' or former Members' Accounts.
A Member or former Member who has directed the Trustee to tender some
or all of the shares of the Sponsor Stock credited to the Member's or former
Member's Accounts may, at any time prior to the tender offer withdrawal date,
direct the Trustee to withdraw some or all of the tendered shares, and the
Trustee shall withdraw the directed number of shares from the tender offer prior
to the tender offer withdrawal deadline. Prior to the withdrawal deadline, if
any shares of the Sponsor Stock not credited to Members' or former Members'
Accounts have been tendered, the Trustee shall redetermine the number of shares
of the Sponsor Stock that would be tendered under this Section if the date of
the foregoing withdrawal were the date of determination, and withdraw from the
tender offer the number of shares of the Sponsor Stock not credited to Members'
or former Members' Accounts necessary to reduce the amount of tendered Sponsor
Stock not credited to Members' or former Members' Accounts to the amount so
redetermined. A Member or former Member shall not be limited as to the number of
directions to tender or withdraw that the Member or former Member may give to
the Trustee.
A direction by a Member or former Member to the Trustee to tender
shares of the Sponsor Stock reflecting the Member's or former Member's
proportional interest in the Sponsor Stock held in the Trust shall not be
considered a written election under the Plan by the Member or former Member to
withdraw, or have distributed, any or all of his withdrawable shares. The
Trustee shall credit to each proportional interest of the Member or former
Member from which the tendered shares were taken the proceeds received by the
Trustee in exchange for the shares of the Sponsor Stock tendered from that
interest.
IX-2
9.03 SHARES CREDITED. For all purposes of this Article, the number
of shares of the Sponsor Stock deemed "credited" to a Member's or former
Member's Accounts as of the relevant date (the record date or the date specified
in the tender offer) shall be calculated by reference to the number of shares
reflected on the books of the transfer agent as of the relevant date. In the
case of a tender offer, the number of shares credited shall be determined as of
a date as close as administratively feasible to the relevant date.
9.04 CONVERSION. All provisions in this Article shall also apply to
any securities received as a result of a conversion of the Sponsor Stock.
9.05 NAMED FIDUCIARY. For purposes of ERISA, each Member or former
Member shall be the named fiduciary for purposes of section 403(a)(1) of ERISA
in connection with the exercise of voting and tender offer rights relating to
shares of the Sponsor Stock credited to his Accounts and any shares of the
Sponsor Stock not credited to his Accounts that may be affected by his voting or
tender decision.
IX-3
ARTICLE X
ADOPTION OF PLAN BY OTHER EMPLOYERS
10.01 ADOPTION PROCEDURE. Any business organization may, with the
approval of the Board, adopt the Plan by:
(a) a certified resolution or consent of the board of
directors of the adopting Employer or an executed adoption instrument (approved
by the board of directors of the adopting Employer) agreeing to be bound as an
Employer by all the terms, conditions and limitations of the Plan except those,
if any, specifically described in the adoption instrument; and
(b) providing all information required by the Committee
and the Trustee.
10.02 NO JOINT VENTURE IMPLIED. The document which evidences the
adoption of the Plan by an Employer shall become a part of the Plan. However,
neither the adoption of the Plan and the Trust by an Employer nor any act
performed by it in relation to the Plan and the Trust shall ever create a joint
venture or partnership relation between it and any other Employer.
10.03 ALL TRUST ASSETS AVAILABLE TO PAY ALL BENEFITS. The Accounts
of Members employed by the Employers that adopt the Plan shall be commingled for
investment purposes. All assets in the Trust shall be available to pay benefits
to all Members employed by any Employer.
10.04 QUALIFICATION A CONDITION PRECEDENT TO ADOPTION AND CONTINUED
PARTICIPATION. The adoption of the Plan and the Trust by a business organization
is contingent upon and subject to the express condition precedent that the
initial adoption meets all statutory and regulatory requirements for
qualification of the Plan and the exemption of the Trust that are applicable to
it and that the Plan and Trust continue in operation to maintain their qualified
and exempt status. In the event the adoption fails to initially qualify, the
adoption shall fail retroactively for failure to meet the condition precedent
and the portion of the Trust assets applicable to the adoption shall be
immediately returned to the adopting business organization and the adoption
shall be void ab initio. In the event the adoption as to a given business
organization later becomes disqualified and loses its exemption for any reason,
the adoption shall fail retroactively for failure to meet the condition
precedent and the portion of the Trust assets allocable to the adoption by that
business organization shall be immediately spun off, retroactively as of the
last date for which the Plan qualified, to a separate trust for its sole benefit
and an identical but separate Plan shall be created, retroactively effective as
of the last date the Plan as adopted by that business organization qualified,
for the benefit of the Members covered by that adoption.
X-1
ARTICLE XI
AMENDMENT AND TERMINATION
11.01 RIGHT TO AMEND AND LIMITATIONS THEREON. The Sponsor has the
sole right to amend the Plan. An amendment may be made by a certified resolution
or consent of the Board, or by an instrument in writing executed by the
appropriate officer of the Sponsor. The amendment must describe the nature of
the amendment and its effective date. No amendment shall:
(a) vest in an Employer any interest in the Trust;
(b) cause or permit the Trust assets to be diverted to
any purpose other than the exclusive benefit of the present or future Members
and their Beneficiaries except under the circumstances described in Section
3.09;
(c) decrease the Account of any Employee, or eliminate an
optional form of payment in violation of section 411(d)(6) of the Code;
(d) increase substantially the duties or liabilities of
the Trustee without its written consent; or
(e) change the vesting schedule to one which would result
in the nonforfeitable percentage of a Member's Account (determined as of the
later of the date of the adoption of the amendment or of the effective date of
the amendment) of any Member being less than the nonforfeitable percentage
computed under the Plan without regard to the amendment. If the Plan's vesting
schedule is amended, if the Plan is amended in any other way that affects the
computation of the Member's nonforfeitable percentage, or if the Plan is deemed
amended by an automatic change to or from a top-heavy vesting schedule, each
Member with at least three years of Active Service as of the date of the
amendment or change shall have his nonforfeitable percentage computed under the
Plan without regard to the amendment or the change if that results in a higher
nonforfeitable percentage.
Each Employer shall be deemed to have adopted any amendment made by the
Sponsor unless the Employer notifies the Committee of its rejection in writing
within 30 days after it receives a copy of the amendment. A rejection shall
constitute a withdrawal from the Plan by that Employer unless the Sponsor
acquiesces in the rejection.
11.02 MANDATORY AMENDMENTS. The Contributions of each Employer to
the Plan are intended to be:
(a) deductible under the applicable provisions of the
Code;
(b) except as otherwise prescribed by applicable law,
exempt from the Federal Social Security Act;
(c) except as otherwise prescribed by applicable law,
exempt from withholding under the Code; and
XI-1
(d) excludable from any Employee's regular rate of pay,
as that term is defined under the Fair Labor Standards Act of 1938, as amended.
The Sponsor shall make any amendment necessary to carry out this
intention, and it may be made retroactively.
11.03 WITHDRAWAL OF EMPLOYER. An Employer may withdraw from the Plan
and the Trust if the Sponsor does not acquiesce in its rejection of an amendment
or by giving written notice of its intent to withdraw to the Committee. The
Committee shall then determine the portion of the Trust assets that is
attributable to the Members employed by the withdrawing Employer and shall
notify the Trustee to segregate and transfer those assets to the successor
trustee when it receives a designation of the successor from the withdrawing
Employer.
A withdrawal shall not terminate the Plan and the Trust with respect to
the withdrawing Employer, if the Employer either appoints a successor trustee
and reaffirms the Plan and the Trust as its new and separate plan and trust
intended to qualify under section 401(a) of the Code, or establishes another
plan and trust intended to qualify under section 401(a) of the Code.
The determination of the Committee, in its sole discretion, of the
portion of the Trust assets that is attributable to the Members employed by the
withdrawing Employer shall be final and binding upon all parties; and, the
Trustee's transfer of those assets to the designated successor Trustee shall
relieve the Trustee of any further obligation, liability or duty to the
withdrawing Employer, the Members employed by that Employer and their
Beneficiaries, and the successor trustee.
11.04 TERMINATION OF PLAN. The Sponsor may terminate the Plan and
the Trust with respect to all Employers by executing and delivering to the
Committee and the Trustee, a notice of termination, specifying the date of
termination.
11.05 PARTIAL OR COMPLETE TERMINATION OR COMPLETE DISCONTINUANCE OF
CONTRIBUTIONS. Without regard to any other provision of the Plan, if there is a
partial or total termination of the Plan or there is a complete discontinuance
of the Employer's Contributions, each of the affected Members shall immediately
become 100 percent vested in his Account as of the end of the last Plan Year for
which a substantial Employer Contribution was made and in any amounts later
allocated to his Account. If the Employer then resumes making substantial
Contributions at any time, the appropriate vesting schedule shall again apply to
all amounts allocated to each affected Member's Account beginning with the Plan
Year for which they were resumed.
XI-2
ARTICLE XII
MISCELLANEOUS
12.01 PLAN NOT AN EMPLOYMENT CONTRACT. The maintenance of the Plan
and the Trust is not a contract between any Employer and its Employees which
gives any Employee the right to be retained in its employment. Likewise, it is
not intended to interfere with the rights of any Employer to discharge any
Employee at any time or to interfere with the Employee's right to terminate his
employment at any time.
12.02 BENEFITS PROVIDED SOLELY FROM TRUST. All benefits payable
under the Plan shall be paid or provided for solely from the Trust. No Employer
assumes any liability or responsibility to pay any benefit provided by the Plan.
12.03 ASSIGNMENTS PROHIBITED. No principal or income payable or to
become payable from the Trust assets shall be subject to anticipation or
assignment by a Member, former Member, or by a Beneficiary to attachment by,
interference with, or control of any creditor of a Member, former Member, or
Beneficiary; or to being taken or reached by any legal or equitable process in
satisfaction of any debt or liability of a Member, former Member, or Beneficiary
prior to its actual receipt by the Member, former Member, or Beneficiary. Any
attempted conveyance, transfer, assignment, mortgage, pledge, or encumbrance of
any Trust assets, any part of it, or any interest in it by a Member, former
Member, or Beneficiary prior to distribution shall be void, whether that
conveyance, transfer, assignment, mortgage, pledge, or encumbrance is intended
to take place or become effective before or after any distribution of Trust
assets or the termination of the Trust itself. The Trustee shall never under any
circumstances be required to recognize any conveyance, transfer, assignment,
mortgage, pledge or encumbrance by a Member, former Member, or Beneficiary of
the Trust, any part of it, or any interest in it, or to pay any money or thing
of value to any creditor or assignee of a Member, former Member, or Beneficiary
for any cause whatsoever. These prohibitions against the alienation of a
Member's Account shall not apply to a Qualified Domestic Relations Order or to a
voluntary revocable assignment of benefits not in excess of ten percent of the
amount of any payment from the Plan if such assignment complies with Regulations
issued under 401(a)(13) of the Code. Further, these prohibitions shall not apply
to any offset of a Member's benefit under the Plan against an amount that the
Member or former Member is ordered or required to pay to the Plan if (a) the
order or requirement to pay arises (1) under a judgment of conviction for a
crime involving the Plan, (2) under a civil judgment (including a consent order
or decree) entered by a court in an action in connection with an alleged
violation of part 4 of subtitle B of title I of ERISA, or (3) is pursuant to a
settlement agreement between the Secretary of Labor and the Member or former
Member in connection with an alleged violation of part 4 of subtitle B of title
I of ERISA by a fiduciary or any other person and (b) the judgment, order,
decree or settlement agreement expressly provides for the offset of all or a
part of the amount ordered or required to be paid to the Plan against the
Member's or former Member's benefits provided under the Plan.
12.04 REQUIREMENTS UPON MERGER OR CONSOLIDATION OF PLANS. The Plan
shall not merge or consolidate with or transfer any assets or liabilities to any
other plan unless each Member would receive a benefit immediately after the
merger, consolidation, or transfer which
XII-1
is equal to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan had then
terminated).
12.05 FORFEITURE BY LOST MEMBERS OR BENEFICIARIES. If a person who
is entitled to a distribution cannot be located during a reasonable search after
the Trustee has initially attempted making payment, that person's Account shall
be forfeited. Such amount shall be used to reduce the Employer's contribution
under the Plan. However, if at any time prior to the termination of the Plan and
the complete distribution of the Trust assets, the former Member or Beneficiary
files a claim with the Committee for the forfeited benefit, that benefit shall
be reinstated (without adjustment for trust income or losses during the
forfeited period) effective as of the date of the receipt of the claim. As soon
as appropriate following the Employer's Contribution of the reinstated amount,
it shall be paid to the former Member or Beneficiary in a single sum.
12.06 GENDER OF WORDS USED. If the context requires it, words of one
gender when used in the Plan shall include the other gender, and words used in
the singular or plural shall include the other.
12.07 SEVERABILITY. Each provision of this Agreement may be severed.
If any provision is determined to be invalid or unenforceable, that
determination shall not affect the validity or enforceability of any other
provision.
12.08 REEMPLOYED VETERANS. Effective December 12, 1994, the
requirements of the Uniformed Services Employment and Reemployment Rights Act of
1994 will be complied with in the operation of the Plan in the manner permitted
under section 414(u) of the Code. Notwithstanding any other provision of the
Plan, Contributions and Eligibility Service with respect to a person who has
engaged in qualified military service will be provided in accordance with
section 414(u) of the Code.
12.09 LIMITATIONS ON LEGAL ACTIONS. No person may bring an action
pertaining to the Plan or the Trust until he has exhausted his administrative
claims and appeal remedies identified in Section 5.13. Further, no person may
bring an action pertaining to a claim for benefits under the Plan or the Trust
following 120 days after the Committee's final denial of his claim for benefits.
12.10 GOVERNING LAW. The provisions of the Plan shall be construed,
administered, and governed under the laws of the United States unless the
specific matter in question is governed by state law in which event the laws of
the State of Texas shall apply.
12.11 FAMILY AGGREGATION RULES. Effective for Plan Years beginning
after December 31, 1996, the family aggregation rules required by section
414(q)(6) of the Code have been deleted from the Plan. This Section is subject
to the plan amendment rules of section 1.401(a)(4)-5(a) of the Regulations.
Effective for Plan Years beginning after December 31, 1996, the Plan is amended
to delete the provision of family aggregation as described in section
401(a)(17)(A) of the Code which requires a Member, the spouse of such Member and
any lineal descendants who have not attained age 19 before the close of the Plan
Year to be treated as a single participant for purposes of applying the
limitation on compensation for a Plan Year.
XII-2
IN WITNESS WHEREOF, The Men's Wearhouse, Inc. has caused this Agreement
to be executed this 13th day of February, 2004, in multiple counterparts, each
of which shall be deemed to be an original, to be effective the 20th day of
February, 2004, except for those provisions which have an earlier effective date
provided by law, or as otherwise provided under applicable provisions of the
Plan.
THE MEN'S WEARHOUSE, INC.
By /s/ XXXXX X. XXXXXX
-----------------------
Title Vice President, PAO
APPENDIX A
LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS
PART A.1 DEFINITIONS
DEFINITIONS. As used herein the following words and phrases have the
meaning attributed to them below:
A.1.1 "ACTUAL CONTRIBUTION RATIO" shall mean the ratio of Section
401(m) Contributions actually paid into the Trust on behalf of an Employee for a
Plan Year to the Employee's Annual Compensation for the same Plan Year. For this
purpose, Annual Compensation for any portion of the Plan Year in which the
Employee was not an eligible Employee (as defined in Section A.2.4) will not be
taken into account.
A.1.2 "ACTUAL DEFERRAL PERCENTAGE" means, for a specified group of
Employees for a Plan Year, the average of the ratios (calculated separately for
each Employee in the group) of the amount of Section 401(k) Contributions
actually paid into the Trust on behalf of the Employee for the Plan Year to the
Employee's Annual Compensation for the Plan Year.
A.1.3 "ACTUAL DEFERRAL RATIO" means the ratio of Section 401(k)
Contributions actually paid into the Trust on behalf of an Employee for a Plan
Year to the Employee's Annual Compensation for the same Plan Year. For this
purpose, Annual Compensation for any portion of the Plan Year in which the
Employee was not an eligible Employee (as defined in Section A.2.3) will not be
taken into account.
A.1.4 "ANNUAL ADDITIONS" means the sum of the following amounts
credited on behalf of a Member for the Limitation Year: (a) Employer
contributions excluding Catch-up Salary Deferral Contributions and including
Salary Deferral Contributions, (b) Employee contributions and (c) forfeitures.
For this purpose, Employee contributions are determined without regard to any
rollover contributions (as defined in sections 402(c), 403(a)(4), 403(b)(8),
408(d)(3) and 457(e)(16) of the Code without regard to employee contributions to
a simplified employee pension which are excludable from gross income under
section 408(k)(6) of the Code). Excess 401(k) Contributions for a Plan Year are
treated as Annual Additions for that Plan Year even if they are corrected
through distribution. Excess Deferrals that are timely distributed as set forth
in Section A.3.1 will not be treated as Annual Additions.
A.1.5 "CONTRIBUTION PERCENTAGE" shall mean, for a specified group of
Employees for a Plan Year, the average of the ratios (calculated separately for
each Employee in the group) of the amount of Section 401(m) Contributions
actually paid into the Trust on behalf of the Employee for the Plan Year to the
Employee's Annual Compensation for the Plan Year.
A.1.6 "CURRENT PLAN YEAR" means the Plan Year for which the applicable
discrimination test under section 401(k) or section 401(m) is being performed.
A.1.7 "EXCESS AGGREGATE 401(m) CONTRIBUTIONS" means, with respect to
any Plan Year, the excess of (a) the aggregate amount of Section 401(m)
Contributions actually paid into the
A-1
Trust on behalf of Highly Compensated Employees for the Plan Year over (b) the
maximum amount of those contributions permitted under the limitations set out in
the first sentence of Section A.2.4.
A.1.8 "EXCESS AMOUNT" shall mean the excess of the Annual Additions
credited to the Member's Account for the Limitation Year over the Maximum
Permissible Amount.
A.1.9 "EXCESS DEFERRAL" means the aggregate amount of a Member's Salary
Deferral Contributions and other elective deferral contributions described in
Section A.2.2 in excess of the limitation specified in Section A.2.2, or the
aggregate amount of the Member's Salary Deferral Contributions that the Member
timely notifies the Committee under Section A.2.2 exceeds the limitation in
section 402(g) of the Code.
A.1.10 "EXCESS 401(k) CONTRIBUTIONS" means, with respect to any Plan
Year, the excess of (a) the aggregate amount of Section 401(k) Contributions
actually paid to the Trustee on behalf of Highly Compensated Employees for the
Plan Year over (b) the maximum amount of those contributions permitted under the
limitations set out in the first sentence of Section A.2.3.
A.1.11 "LIMITATION YEAR" shall mean the Plan Year. All qualified plans
maintained by any Affiliated Employer must use the same Limitation Year. If the
Limitation Year is amended to a different 12-consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year in which the
amendment is made.
A.1.12 "MAXIMUM PERMISSIBLE AMOUNT" shall mean the lesser of (a)
$40,000 as adjusted by the Secretary of Treasury for increases in the cost of
living or (b) 100 percent of the Member's Annual Compensation for the Limitation
Year. The Annual Compensation limitation referred to in each clause (b) of the
two immediately preceding sentences shall not apply to any contribution for
medical benefits (within the meaning of section 401(h) or section 419A(f)(2) of
the Code) that is otherwise treated as an Annual Addition under section
415(l)(1) or section 419A(d)(2) of the Code. If a short Limitation Year is
created because of an amendment changing the Limitation Year to a different
12-consecutive month period, the Maximum Permissible Amount shall not exceed the
dollar limitation in effect under section 415(c)(1)(A) of the Code multiplied by
a fraction, the numerator of which is the number of months in the short
Limitation Year, and the denominator of which is 12. Effective January 1, 2000,
the combined limit described in section 415(e) of the Code is deleted.
A.1.13 "PRECEDING PLAN YEAR" means the Plan Year immediately preceding
the Current Plan Year.
A.1.14 "SECTION 401(k) CONTRIBUTIONS" means the sum of Salary Deferral
Contributions made on behalf of the Member during the Plan Year, and QNECs that
the Employer elects to have treated as section 401(k) Contributions pursuant to
section 401(k)(3)(d)(ii) of the Code.
A.1.15 "SECTION 401(m) CONTRIBUTIONS" shall mean the sum of Employer
Matching Contributions made on behalf of the Member during the Plan Year and
other amounts that the Employer elects to have treated as Section 401(m)
Contributions pursuant to section 401(m)(3)(B) of the Code.
A-2
PART A.2 LIMITATIONS ON CONTRIBUTIONS
A.2.1 LIMITATIONS BASED UPON DEDUCTIBILITY AND THE MAXIMUM ALLOCATION
PERMITTED TO A MEMBER'S ACCOUNT. Notwithstanding any other provision of the
Plan, no Employer shall make any contribution that would be a nondeductible
contribution within the meaning of section 4972 of the Code or that would cause
the limitation on allocations to each Member's Account under section 415 of the
Code and Section A.4.1 to be exceeded.
A.2.2 DOLLAR LIMITATION UPON SALARY DEFERRAL CONTRIBUTIONS. The maximum
Salary Deferral Contribution that a Member may elect to have made on his behalf
during a calendar year may not, when added to his elective deferrals under other
plans or arrangements which are both (1) described in sections 401(k), 403(b),
408(k) and 408(p)(2) of the Code and (2) either (a) maintained by an Affiliated
Employer or (b) maintained by an entity that is not an Affiliated Employer but
the Member satisfies the notification requirements of this Section A.2.2, exceed
the amount of the dollar limitation in effect under section 402(g)(1) of the
Code for the Member's taxable year beginning in such calendar year. The Employer
shall notify the Committee no later than April 1 following the calendar year in
which Excess Deferrals are made that Excess Deferrals have been made on behalf
of a Member taking into account only elective deferrals to plans maintained by
Affiliated Employers. The Member may notify the Committee, in writing, no later
than April 1 following the calendar year in which the deferrals were made, of
the amount of deferrals the Member made to the Plan in excess of the limitation
of section 402(g) of the Code, taking into account the Plan and plans that are
not maintained by Affiliated Employers. Such amount shall be treated as an
Excess Deferral. For purposes of applying the requirements of Section A.2.3,
Excess Deferrals shall not be disregarded merely because they are Excess
Deferrals or because they are distributed in accordance with Section A.3.1.
However, Excess Deferrals made to the Plan on behalf of Non-Highly Compensated
Employees in violation of this Section A.2.2 are not to be taken into account
under Section A.2.3.
A.2.3 LIMITATION BASED UPON ACTUAL DEFERRAL PERCENTAGE. The Actual
Deferral Percentage for eligible Highly Compensated Employees for the Current
Plan Year must bear a relationship to the Actual Deferral Percentage for all
other eligible Employees for the Preceding Plan Year which meets either of the
following tests:
(a) the Actual Deferral Percentage of the eligible Highly
Compensated Employees is not more than the Actual Deferral Percentage
of all other eligible Employees multiplied by 1.25; or
(b) the excess of the Actual Deferral Percentage of the
eligible Highly Compensated Employees over that of all other eligible
Employees is not more than two percentage points, and the Actual
Deferral Percentage of the eligible Highly Compensated Employees is not
more than the Actual Deferral Percentage of all other eligible
Employees multiplied by two.
For purposes of this test an eligible Employee is an Employee who is
directly or indirectly eligible to make Salary Deferral Contributions for all or
part of the Current Plan Year. A person who is suspended from making Salary
Deferral Contributions because he has made a
A-3
withdrawal is an eligible Employee. If no Salary Deferral Contributions are made
for an eligible Employee, the Actual Deferral Ratio that shall be included for
him in determining the Actual Deferral Percentage is zero. If the Plan and any
other plan or plans which include cash or deferred arrangements are considered
as one plan for purposes of section 401(a)(4) or 410(b) of the Code, the cash or
deferred arrangements included in the Plan and the other plans shall be treated
as one plan for purposes of this Section. If any Member who is a Highly
Compensated Employee is a participant in any other cash or deferred arrangements
of the Employer, when determining the deferral percentage of such Member, all
such cash or deferred arrangements are treated as one cash or deferred
arrangement.
Notwithstanding the foregoing, an individual who is not a Highly
Compensated Employee and who has not satisfied the minimum age and service
requirements of Section 410(a)(1)(A) will not be treated as an eligible Employee
for purposes of this Section A.2.3 if the Sponsor elects to apply section
410(b)(4)(B) of the Code in determining whether the Plan meets the requirements
of section 401(k)(3) of the Code.
A Salary Deferral Contribution will be taken into account under the
Actual Deferral Percentage test of section 401(k) of the Code and this Section
for a Plan Year only if it relates to Considered Compensation that either would
have been received by the Employee in the Plan Year (but for the deferral
election) or is attributable to services performed by the Employee in the Plan
Year and would have been received by the Employee within 2 1/2 months after the
close of the Plan Year (but for the deferral election). In addition, a Section
401(k) Contribution will be taken into account under the Actual Deferral
Percentage test of section 401(k) of the Code and this Section for a Plan Year
only if it is allocated to an Employee as of a date within that Plan Year. For
this purpose a Section 401(k) Contribution is considered allocated as of a date
within a Plan Year if the allocation is not contingent on participation or
performance of services after such date and the Section 401(k) Contribution is
actually paid to the Trust no later than 12 months after the Plan Year to which
the Section 401(k) Contribution relates.
Failure to correct Excess 401(k) Contributions by the close of the Plan
Year following the Plan Year for which they were made will cause the Plan's cash
or deferred arrangement to be disqualified for the Plan Year for which the
Excess 401(k) Contributions were made and for all subsequent years during which
they remain in the Trust. Also, the Employer will be liable for a ten percent
excise tax on the amount of Excess 401(k) Contributions unless they are
corrected within 2 1/2 months after the close of the Plan Year for which they
were made.
A.2.4 LIMITATION BASED UPON CONTRIBUTION PERCENTAGE. The Contribution
Percentage for eligible Highly Compensated Employees for the Current Plan Year
must bear a relationship to the Contribution Percentage for all other eligible
Employees for the Preceding Plan Year which meets either of the following tests:
(a) the Contribution Percentage of the eligible Highly
Compensated Employees is not more than the Contribution Percentage of
all other eligible Employees multiplied by 1.25; or
(b) the excess of the Contribution Percentage of the
eligible Highly Compensated Employees over that of all other eligible
Employees is not more than two
A-4
percentage points, and the Contribution Percentage of the eligible
Highly Compensated Employees is not more than the Contribution
Percentage of all other eligible Employees multiplied by two.
For purposes of this test an eligible Employee is an Employee who is
directly or indirectly eligible to receive an allocation of Matching
Contributions for all or part of the Plan Year. Except as provided below, an
Employee who would be eligible to receive an allocation of Matching
Contributions but for his election not to participate is an eligible Employee.
An Employee who would be eligible to receive an allocation of Matching
Contributions but for the limitations on his Annual Additions imposed by section
415 of the Code or because he has made a withdrawal is an eligible Employee.
Notwithstanding the foregoing, an individual who is not a Highly
Compensated Employee and who has not satisfied the minimum age and service
requirements of section 410(a)(1)(A) of the Code will not be treated as an
eligible Employee for purposes of this Section A.2.4 if the Sponsor elects to
apply section 410(b)(4)(B) of the Code in determining whether the Plan meets the
requirements of section 401(m)(2) of the Code.
If no Section 401(m) Contributions are made on behalf of an eligible
Employee, the Actual Contribution Ratio that shall be included for him in
determining the Contribution Percentage is zero.
If the Plan and any other plan or plans to which Section 401(m)
Contributions are made are considered as one plan for purposes of section
401(a)(4) or 410(b) of the Code, the Plan and those plans are to be treated as
one plan. The Actual Contribution Ratio of a Highly Compensated Employee who is
eligible to participate in more than one plan of an Affiliated Employer to which
employee or matching contributions are made is calculated by treating all the
plans in which the Employee is eligible to participate as one plan. However,
plans that are not permitted to be aggregated under Regulation section
1.410(m)-1(b)(3)(ii) are not aggregated for this purpose.
A Matching Contribution will be taken into account under this Section
for a Plan Year only if (1) it is allocated to the Employee's Account as of a
date within the Plan Year, (2) it is paid to the Trust no later than the end of
the 12-month period beginning after the close of the Plan Year, and (3) it is
made on behalf of an Employee on account of his Salary Deferral Contributions
for the Plan Year.
At the election of the Employer, a Member's Salary Deferral
Contributions and XXXXx made on behalf of the Member during the Plan Year shall
be treated as Section 401(m) Contributions that are Matching Contributions
provided that the conditions set forth in Regulation section 1.401(m)-1(b)(5)
are satisfied. Salary Deferral Contributions may not be treated as Matching
Contributions for purposes of the contribution percentage test set forth in this
Section unless such contributions, including those taken into account for
purposes of the test set forth in this Section, satisfy the actual deferral
percentage test set forth in Section A.2.3. Moreover, Salary Deferral
Contributions and QNECs may not be taken into account for purposes of the test
set forth in this Section to the extent that such contributions are taken into
account in determining whether any other contributions satisfy the actual
deferral percentage test set forth in
A-5
Section A.2.3. Finally, Salary Deferral Contributions and QNECs may be taken
into account for purposes of the test set forth in this Section only if they are
allocated to the Employee's Account as of a date within the Plan Year being
tested within the meaning of Regulation section 1.401(k)-1(b)(4).
Failure to correct Excess Aggregate 401(m) Contributions by the close
of the Plan Year following the Plan Year for which they were made will cause the
Plan to fail to be qualified for the Plan Year for which the Excess Aggregate
401(m) Contributions were made and for all subsequent years during which they
remain in the Trust. Also, the Employer will be liable for a ten percent excise
tax on the amount of Excess Aggregate 401(m) Contributions unless they are
corrected within 2 1/2 months after the close of the Plan Year for which they
were made.
PART A.3 CORRECTION PROCEDURES FOR ERRONEOUS CONTRIBUTIONS
A.3.1 EXCESS DEFERRAL FAIL SAFE PROVISION. As soon as practical after
the close of each Plan Year, the Committee shall determine if there would be any
Excess Deferrals. If there would be an Excess Deferral by a Member, the Excess
Deferral as adjusted by any earnings or losses, will be distributed from the
Plan to the Member no later than April 15 following the Member's taxable year in
which the Excess Deferral was made. The income allocable to the Excess Deferrals
for the taxable year of the Member shall be determined by multiplying the income
for the taxable year of the Member allocable to Salary Deferral Contributions by
a fraction. The numerator of the fraction is the amount of the Excess Deferrals
made on behalf of the Member for the taxable year. The denominator of the
fraction is the Member's total Salary Deferral Account balance as of the
beginning of the taxable year plus the Member's Salary Deferral Contributions
for the taxable year.
A.3.2 ACTUAL DEFERRAL PERCENTAGE FAIL SAFE PROVISION. As soon as
practicable after the close of each Plan Year, the Committee shall determine
whether the Actual Deferral Percentage for the Highly Compensated Employees
would exceed the limitation set forth in Section A.2.3. If the limitation would
be exceeded for a Plan Year, before the close of the following Plan Year (a) the
amount of Excess 401(k) Contributions for that Plan Year (and any income
allocable to those contributions as calculated in the specific manner required
by Section A.3.5) shall be distributed.
The amount of Excess 401(k) Contributions to be distributed shall be
determined in the following manner:
First, the Committee will determine the aggregate amount of the Excess
401(k) Contributions as follows. The Committee will determine how much the
Actual Deferral Ratio of the Highly Compensated Employee with the highest Actual
Deferral Ratio would have to be reduced to satisfy the Actual Deferral
Percentage Test or cause such Actual Deferred Ratio to equal the Actual Deferral
Ratio of the Highly Compensated Employee with the next highest Actual Deferred
Ratio. If a lesser reduction would enable the Plan to satisfy the Actual
Deferral Percentage Test, only the lesser reduction may be made. Second, this
process is repeated until the Actual Deferral Percentage Test is satisfied. The
amount of Excess 401(k) Contributions is equal to the sum of these hypothetical
reductions multiplied, in each case, by the Highly Compensated Employee's Annual
Compensation.
A-6
Then, the total amount of Excess 401(k) Contributions shall be
distributed on the basis of the respective amounts attributable to each Highly
Compensated Employee. The Highly Compensated Employees subject to the actual
distribution are determined using the "dollar leveling method." The Salary
Deferral Contributions of the Highly Compensated Employee with the greatest
dollar amount of Salary Deferral Contributions and other contributions treated
as Section 401(k) Contributions for the Plan Year are reduced by the amount
required to cause that Highly Compensated Employee's Salary Deferral
Contributions to equal the dollar amount of the Salary Deferral Contributions
and other contributions treated as Section 401(k) Contributions for the Plan
Year of the Highly Compensated Employee with the next highest dollar amount.
This amount is then distributed to the Highly Compensated Employee with the
highest dollar amount. However, if a lesser deduction, when added to the total
dollar amount already distributed under this Section A.3.2 would equal the total
Excess 401(k) Contributions, the lesser reduction shall be distributed. This
process shall be continued until the amount of the Excess 401(k) Contributions
have been distributed.
Any distributions of the Excess 401(k) Contributions for any Plan Year
are to be made to Highly Compensated Employees on the basis of the amount of
contributions by, or on behalf of, each Highly Compensated Employee. The amount
of Excess 401(k) Contributions to be distributed for any Plan Year must be
reduced by any excess Salary Deferral Contributions previously distributed for
the taxable year ending in the same Plan Year. Any Employer Matching
Contribution associated with an Excess 401(k) Contribution that has been
distributed to a Highly Compensated Employee under this Section shall be
forfeited. Forfeitures of Employer Matching Contributions under this Section
shall be allocated to Members who are Non-Highly Compensated Employees as if
such Contributions were additional Employer Matching Contributions for the Plan
Year.
A.3.3 CONTRIBUTION PERCENTAGE FAIL SAFE PROVISION. If the limitation
set forth in Section A.2.3 would be exceeded for any Plan Year any one or more
of the following corrective actions shall be taken before the close of the
following Plan Year as determined by the Committee in its sole discretion the
amount of the Excess Aggregate 401(m) Contributions for that Plan Year (and any
income allocable to those Contributions as calculated in the manner set forth in
Section A.3.5) shall be either distributed, or forfeited to the extent they are
not vested. Forfeitures of Excess Aggregate 401(m) Contributions shall be
allocated to Members who are Non-Highly Compensated Employees as if such
Contributions were additional Employer Matching Contributions for the Plan Year.
The amount of Excess Aggregate 401(m) Contributions to be distributed
shall be determined in the following manner:
First, the Committee will determine the aggregate amount of Excess
Aggregate 401(k) Contributions as follows. The Committee will determine how much
the Actual Contribution Ratio of the Highly Compensated Employee with the
highest Actual Contribution Ratio would have to be reduced to satisfy the Actual
Contribution Percentage Test or cause such Actual Contribution Ratio to equal
the Actual Contribution Ratio of the Highly Compensated Employee with the next
highest Actual Contribution Ratio. If a lesser reduction would enable the Plan
to satisfy the Actual Contribution Percentage Test, only this lesser reduction
may be made. Second, this process is repeated until the Actual Contribution
Percentage Test is satisfied. The
A-7
amount of Excess Aggregate 401(m) Contributions is equal to the sum of these
hypothetical reductions multiplied, in each case, by the Highly Compensated
Employee's Annual Compensation.
Then, the total amount of Excess Aggregate 401(m) Contributions shall
be distributed on the basis of the respective amounts attributable to each
Highly Compensated Employee. The Highly Compensated Employees subject to the
actual distribution are determined using the "dollar leveling method." The
Matching Contributions of the Highly Compensated Employee with the greatest
dollar amount of Matching Contributions and other contributions treated as
Section 401(m) Contributions for the Plan Year are reduced by the amount
required to cause that Highly Compensated Employee's Matching Contributions and
other contributions treated as Section 401(m) Contributions for the Plan Year to
equal the dollar amount of Matching Contributions and other contributions
treated as Section 401(m) Contributions for the Plan Year of the Highly
Compensated Employee with the next highest dollar amount. This amount is then
distributed to the Highly Compensated Employee with the highest dollar amount.
However, if a lesser reduction, when added to the total dollar amount already
distributed under this Section A.3.3., would equal the total Excess Aggregate
401(n) Contributions, the lesser reduction amount shall be distributed. This
process shall be continued until the amount of the Excess Aggregate 401(m)
Contributions has been distributed.
The corrective actions taken under this Section A.3.3 must satisfy the
requirements of section 401(a)(4) of the Code. After correction, each level of
Employer Matching Contributions must be currently and effectively available to a
group of employees that satisfies the minimum coverage requirements of section
410(b) of the Code. A method under which employee contributions are distributed
to highly compensated employees to the extent necessary to meet the requirements
of section 401(m)(2) while matching contributions attributable to such employee
contributions remain allocated to the employee's account will not meet the
requirement of section 401(a)(4). Accordingly, any amount of Employer Matching
Contributions, whether vested or not, shall be forfeited to the Plan if it has
been determined that such Contributions must be distributed under the dollar
leveling method described above and that the distribution of such Contributions
would cause the corrective actions taken under this Section A.3.3 to not meet
the requirements of section 401(a)(4). The forfeitures of Employer Matching
Contributions in accordance with the preceding sentence shall be allocated to
Members who are Non-Highly Compensated Employees as if such Contributions were
additional Employer Matching Contributions for the Plan Year.
A.3.4 ALTERNATIVE LIMITATION FAIL SAFE. As soon as practicable after
the close of each Plan Year, the Committee shall determine whether the
alternative limitation would be exceeded. If the limitation would be exceeded
for any Plan Year, before the close of the following Plan Year the Actual
Deferral Percentage or Contribution Percentage of the eligible Highly
Compensated Employees, or a combination of both, shall be reduced by
distributions made in the manner described in the Regulations. These
distributions shall be in addition to and not in lieu of distributions required
for Excess 401(k) Contributions and Excess Aggregate 401(m) Contributions.
A.3.5 INCOME ALLOCABLE TO EXCESS 401(k) CONTRIBUTIONS AND EXCESS
AGGREGATE 401(m) CONTRIBUTIONS. The income allocable to Excess 401(k)
Contributions for the Plan Year
A-8
shall be determined by multiplying the income for the Plan Year allocable to
Section 401(k) Contributions by a fraction. The numerator of the fraction shall
be the amount of Excess 401(k) Contributions made on behalf of the Member for
the Plan Year. The denominator of the fraction shall be the Member's total
Account balance attributable to Section 401(k) Contributions as of the beginning
of the Plan Year plus the Member's Section 401(k) Contributions for the Plan
Year. The income allocable to Excess Aggregate 401(m) Contributions for a Plan
Year shall be determined by multiplying the income for the Plan Year allocable
to Section 401(m) Contributions by a fraction. The numerator of the fraction
shall be the amount of Excess Aggregate 401(m) Contributions made on behalf of
the Member for the Plan Year. The denominator of the fraction shall be the
Member's total Account balance attributable to Section 401(m) Contributions as
of the beginning of the Plan Year plus the Member's Section 401(m) Contributions
for the Plan Year.
PART A.4 LIMITATION ON ALLOCATIONS
A.4.1 BASIC LIMITATION ON ALLOCATIONS. The Annual Additions which may
be credited to a Member's Account under the Plan for any Limitation Year will
not exceed the Maximum Permissible Amount reduced by the Annual Additions
credited to a Member's Account for the same Limitation Year under any other
qualified defined contribution plans maintained by any Affiliated Employer. If
the Annual Additions with respect to the Member under such other qualified
defined contribution plans are less than the Maximum Permissible Amount and the
Employer Contribution that would otherwise be contributed or allocated to the
Member's Account under the Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or allocated
under the Plan will be reduced so that the Annual Additions under all qualified
defined contribution plans maintained by any Affiliated Employer for the
Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Member under such other qualified defined
contribution plans in the aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or allocated to the Member's
Account under the Plan for the Limitation Year.
A.4.2 ESTIMATION OF MAXIMUM PERMISSIBLE AMOUNT. Prior to determining
the Member's actual Annual Compensation for the Limitation Year, the Employer
may determine the Maximum Permissible Amount on the basis of a reasonable
estimation of the Member's Annual Compensation for such Limitation Year,
uniformly determined for all Members similarly situated. As soon as is
administratively feasible after the end of the Limitation Year, the Maximum
Permissible Amount for the Limitation Year shall be determined on the basis of
the Member's actual Annual Compensation for such Limitation Year.
A.4.3 ATTRIBUTION OF EXCESS AMOUNTS. If a Member's Annual Additions
under the Plan and all other qualified defined contribution plans maintained by
an Affiliated Employer result in an Excess Amount, to the maximum extent
permissible by law, the Excess Amount shall be attributed to the Plan.
A.4.4 TREATMENT OF EXCESS AMOUNTS. If an Excess Amount attributed to
the Plan is held or contributed as a result of or because of (i) the allocation
of forfeitures, (ii) reasonable error in estimating a Member's Considered
Compensation, (iii) reasonable error in calculating the maximum Salary Deferral
Contribution that may be made with respect to a Member under
A-9
section 415 of the Code or (iv) any other facts and circumstances which the
Commissioner of Internal Revenue finds to be justified, the Excess Amount shall
be reduced as follows:
(a) First, the Excess Amount shall be reduced to the
extent necessary by distributing to the Member all Salary Deferral
Contributions together with their earnings. These distributed amounts
are disregarded for purposes of the testing and limitations contained
in this Appendix A.
(b) Second, if the Member is still employed by the
Employer at the end of the Limitation Year, then such Excess Amounts
shall not be distributed to the Member, but shall be reallocated to a
suspense account and shall be reapplied to reduce future Employer
Contributions (including any allocation of forfeitures) under the Plan
for such Member in the next Limitation Year, and for each succeeding
Limitation Year, if necessary.
(c) If, after application of paragraph (b) of this
Section, an Excess Amount still exists, and the Member is not still
employed by the Employer at the end of the Limitation Year, then such
Excess Amounts in the Member's Account shall not be distributed to the
Member, but shall be reallocated to a suspense account and shall be
reapplied to reduce future Employer Contributions (including allocation
of any forfeitures), for all remaining Members in the next Limitation
Year and each succeeding Limitation Year if necessary.
(d) If a suspense account is in existence at any time
during the Limitation Year pursuant to this Section, it will not
participate in the allocation of the Trust's investment gains and
losses. If a suspense account is in existence at any time during a
particular Limitation Year, all amounts in the suspense account must be
allocated and reallocated to Members' Accounts before any Employer
Contribution may be made to the Plan for that Limitation Year. Excess
Amounts may not be distributed to Members or former Members. If the
Plan is terminated while a suspense account described in this Section
is in existence, the amount in such suspense account shall revert to
the Employer(s) to which it is attributable.
A-10
APPENDIX B
TOP-HEAVY REQUIREMENTS
PART B.1 DEFINITIONS
DEFINITIONS. As used herein, the following words and phrases have the
meaning attributed to them below:
B.1.1 "AGGREGATE ACCOUNTS" means the total of all Account balances
derived from Employer Contributions and Rollover Contributions.
B.1.2 "AGGREGATION GROUP" means (a) each plan that is qualified under
section 401(a) of the Code and is maintained by any Affiliated Employer in which
a Key Employee is a Member and (b) each other plan of any Affiliated Employer
which enables any plan in (a) to meet the requirements of either section
401(a)(4) or 410 of the Code. Any Employer may treat a plan not required to be
included in the Aggregation Group as being a part of the group if the group
would continue to meet the requirements of section 401(a)(4) and 410 of the Code
with that plan being taken into account.
B.1.3 "DETERMINATION DATE" means for a given Plan Year the last day of
the preceding Plan Year.
B.1.4 "KEY EMPLOYEE" means an Employee or former Employee (including a
deceased Employee) who at any time during the Plan Year is (a) an officer of any
Affiliated Employer having Annual Compensation greater than $130,000.00 (as
adjusted by the Secretary of Treasury from time to time for increases in the
cost of living), (b) a Five Percent Owner of any Affiliated Employer, treated
separately, or (c) a one percent owner of any Affiliated Employer, treated
separately, having Annual Compensation greater than $150,000.00. For this
purpose no more than fifty (50) employees or, if lesser, the greater of three
(3) employees or ten percent (10%) of the employees shall be treated as
officers.
For purposes of determining the number of officers taken into account,
the following employees shall be excluded: (1) employees who have not completed
six (6) months of vesting service, (2) employees who normally work less than
seventeen and one-half (17-1/2) hours per week, (3) employees who normally work
not more than six (6) months during any year, (4) employees who have not
attained the age of twenty-one (21), and (5) except to the extent provided in
Regulations, employees who are included in a unit of employees covered by an
agreement which the Secretary of Labor finds to be a collective bargaining
agreement between employee representatives and an Affiliated Employer. Section
416(i) of the Code shall be used to determine percentage of ownership.
The determination of who is a Key Employee will be made in accordance
with section 416(i) of the Code and applicable Regulations.
B.1.5 "NON-KEY EMPLOYEE" means any Employee who is not a Key Employee.
B-1
B.1.6 "TOP-HEAVY PLAN" means any plan which has been determined to be
top-heavy under the test described in Appendix B of the Plan.
PART B.2 APPLICATION
B.2.1 APPLICATION. The requirements described in this Appendix B shall
apply to each Plan Year that the Plan is determined to be a Top-Heavy Plan.
B.2.2 TOP-HEAVY TEST. If on the Determination Date the Aggregate
Accounts of Key Employees in the Plan exceed 60 percent of the Aggregate
Accounts of all Employees in the Plan, the Plan shall be a Top-Heavy Plan for
the Plan Year being tested. In addition, if the Plan is required to be included
in an Aggregation Group and that group is a top-heavy group, the Plan shall be
treated as a Top-Heavy Plan. An Aggregation Group is a top-heavy group if on the
Determination Date the sum of (a) the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans in the Aggregation
Group which contains the Plan, plus (b) the total of all of the accounts of Key
Employees under all defined contribution plans included in the Aggregation Group
(which contains the Plan) is more than 60 percent of a similar sum determined
for all employees covered in the Aggregation Group which contains the Plan.
In applying the above tests, the following rules shall apply:
(a) in determining the present value of the accumulated
accrued benefits for any Employee or the amount in the account of any
Employee, the value or amount shall be increased by all distributions
made to or for the benefit of the Employee under the Plan after his
Separation From Service and during the one-year period ending on the
Determination Date;
(b) in determining the present value of the accumulated
accrued benefits for any Employee or the amount in the account of any
Employee, the value or amount shall be increased by all distributions
made to or for the benefit of the Employee under the Plan prior to his
Separation From Service and during the five-year period ending on the
Determination Date;
(c) all rollover contributions made by the Employee to
the Plan shall not be considered by the Plan for either test;
(d) if an Employee is a Non-Key Employee under the Plan
for the Plan Year but was a Key Employee under the Plan for a prior
Plan Year, his Account shall not be considered; and
(e) benefits shall not be taken into account in
determining the top-heavy ratio for any Employee who has not performed
services for the Employer during the last one-year period ending upon
the Determination Date.
B.2.3 VESTING RESTRICTIONS IF PLAN BECOMES TOP-HEAVY. If a Member has
at least one Hour of Service during a Plan Year when the Plan is a Top-Heavy
Plan, he shall either vest under each of the normal vesting provisions of the
Plan or under the following vesting schedule, whichever is more favorable:
B-2
Percentage of Amount Vested
In Accounts Containing
Completed Years of Active Service Employer Contributions
--------------------------------- ----------------------
Less than two years..................................................... 0
Two years but less than three years..................................... 20
Three years but less than four years.................................... 40
Four years but less than five years..................................... 60
Five years but less than six years...................................... 80
Six years or more....................................................... 100
If the Plan ceases to be a Top-Heavy Plan, this requirement shall no longer
apply. After that date, the normal vesting provisions of the Plan shall be
applicable to all subsequent Contributions by the Employer.
B.2.4 MINIMUM CONTRIBUTIONS IF PLAN BECOMES TOP-HEAVY. If the Plan is a
Top-Heavy Plan and the normal allocation of the Employer Contribution and
forfeitures is less than three percent of any Non-Key Employee Member's Annual
Compensation, the Committee, without regard to the normal allocation procedures,
shall allocate the Employer Contribution and the forfeitures among the Members
who are in the employ of the Employer at the end of the Plan Year in proportion
to each Member's Annual Compensation as compared to the total Annual
Compensation of all Members for that Plan Year until each Non-Key Employee
Member has had an amount equal to the lesser of (i) the highest rate of
Contribution applicable to any Key Employee, or (ii) three percent of his Annual
Compensation allocated to his Account. At that time, any more Employer
Contributions or forfeitures shall be allocated under the normal allocation
procedures described earlier in the Plan. Salary Deferral Contributions made on
behalf of Key Employees are included in determining the highest rate of Employer
Contributions. Salary Deferral Contributions made on behalf of Non-Key Employees
are not included for that purpose. Amounts that may be treated as Section 401(k)
Contributions made on behalf of Non-Key Employees may not be included in
determining the minimum contribution required under this Section to the extent
that they are treated as Section 401(k) Contributions for purposes of the Actual
Deferral Percentage test.
In applying this restriction, the following rules shall apply:
(a) Each Employee who is eligible for membership (without
regard to whether he has made mandatory contributions, if any are
required, or whether his compensation is less than a stated amount)
shall be entitled to receive an allocation under this Section; and
(b) All defined contribution plans required to be
included in the Aggregation Group shall be treated as one plan for
purposes of meeting the three percent maximum; this required
aggregation shall not apply if the Plan is also required to be included
in an Aggregation Group which includes a defined benefit plan and the
Plan enables that defined benefit plan to meet the requirements of
sections 401(a)(4) or 410 of the Code.
B-3
B.2.5 DISREGARD OF GOVERNMENT PROGRAMS. If the Plan is a Top-Heavy
Plan, it must meet the vesting and benefit requirements described in this
Article without taking into account contributions or benefits under Chapter 2 of
the Code (relating to the tax on self-employment income), Chapter 21 of the Code
(relating to the Federal Insurance Contributions Act), Title II of the Social
Security Act, or any other Federal or State law.
B-4
APPENDIX C
ADMINISTRATION OF THE PLAN
C.1 APPOINTMENT, TERM, RESIGNATION, AND REMOVAL. The Board shall
appoint a Committee of not less than two persons, the members of which shall
serve until their resignation, death, or removal. The Sponsor shall notify the
Trustee in writing of its composition from time to time. Any member of the
Committee may resign at any time by giving written notice of such resignation to
the Sponsor. Any member of the Committee may be removed by the Board, with or
without cause. Vacancies in the Committee arising by resignation, death,
removal, or otherwise shall be filled by such persons as may be appointed by the
Board.
C.2 POWERS. The Committee shall have exclusive responsibility for
the administration of the Plan, according to the terms and provisions of this
document, and shall have all powers necessary to accomplish such purposes,
including, but not by way of limitation, the right, power, and authority:
(a) to make rules and regulations for the administration of
the Plan which are not inconsistent with the terms and provisions
thereof, provided such rules and regulations are evidenced in writing;
(b) to construe all terms, provisions, conditions, and
limitations of the Plan; and its construction thereof made in good
faith and without discrimination in favor of or against any Member or
former Member shall be final and conclusive on all parties at interest;
(c) to correct any defect, supply any omission, or reconcile
any inconsistency which may appear in the Plan in such manner and to
such extent as it shall deem expedient to carry the Plan into effect
for the greatest benefit of all parties at interest, and its judgment
in such matters shall be final and conclusive as to all parties at
interest;
(d) to select, employ, and compensate from time to time such
consultants, actuaries, accountants, attorneys, and other agents and
employees as the Committee may deem necessary or advisable for the
proper and efficient administration of the Plan, and any agent, firm,
or employee so selected by the Committee may be a disqualified person,
but only if the requirements of section 4975(d) of the Code have been
met;
(e) to resolve all questions relating to the eligibility of
Employees to become Members, and to determine the period of Active
Service and the amount of Considered Compensation upon which the
benefits of each Member shall be calculated;
(f) to resolve all controversies relating to the
administration of the Plan, including but not limited to (1)
differences of opinion arising between the Employer and a Member or
former Member, and (2) any questions it deems advisable to determine in
order to promote the uniform and nondiscriminatory administration of
the Plan for the benefit of all parties at interest;
C-1
(g) to direct and instruct or to appoint an investment manager
or managers which would have the power to direct and instruct the
Trustee in all matters relating to the preservation, investment,
reinvestment, management, and disposition of the Trust; provided,
however, that the Committee shall have no authority that would prevent
the Trustee from being an "agent independent of the issuer," as that
term is defined in Rule 10b-18 promulgated under the Securities
Exchange Act of 1934, at any time that the Trustee's failure to
maintain such status would result in the Sponsor or any other person
engaging in a "manipulative or deceptive device or contrivance" under
the provisions of Rule 10b-6 of such Act;
(h) to direct and instruct the Trustee in all matters relating
to the payment of Plan benefits and to determine a Member's or former
Member's entitlement to a benefit should he appeal a denial of his
claim for a benefit or any portion thereof; and
(i) to delegate such of its clerical and recordation duties
under the Plan as it may deem necessary or advisable for the proper and
efficient administration of the Plan.
C.3 ORGANIZATION. The Committee shall select from among its
members a chairman, who shall preside at all of its meetings, and shall select a
secretary, without regard as to whether that person is a member of the
Committee, who shall keep all records, documents, and data pertaining to its
supervision of the administration of the Plan.
C.4 QUORUM AND MAJORITY ACTION. A majority of the members of the
Committee shall constitute a quorum for the transaction of business, and the
vote of a majority of the members present at any meeting will decide any
question brought before that meeting. In addition, the Committee may decide any
question by a vote, taken without a meeting, of a majority of its members.
C.5 SIGNATURES. The chairman, the secretary, and any one or more
of the members of the Committee to which the Committee has delegated the power,
shall each, severally, have the power to execute any document on behalf of the
Committee, and to execute any certificate or other written evidence of the
action of the Committee. The Trustee, after being notified of any such
delegation of power in writing, shall thereafter accept and may rely upon any
document executed by such member or members as representing the action of the
Committee until the Committee files with the Trustee a written revocation of
that delegation of power.
C.6 DISQUALIFICATION OF COMMITTEE MEMBERS. A member of the
Committee who is also a Member of the Plan shall not vote or act upon any matter
relating solely to himself, unless he is the sole member of the Committee.
C.7 DISCLOSURE TO MEMBERS. The Committee shall make available to
each Member, former Member, and Beneficiary for his examination such records,
documents, and other data as are required under ERISA, but only at reasonable
times during business hours. No Member, former Member, or Beneficiary shall have
the right to examine any data or records reflecting the compensation paid to any
other Member, former Member, or Beneficiary, and the Committee shall not be
required to make any data or records available other than those required by
XXXXX.
C-2
C.8 STANDARD OF PERFORMANCE. The Committee and each of its members
shall use the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such
matters would use in conducting his business as the administrator of the Plan;
shall, when exercising its power to direct investments, diversify the
investments of the Plan so as to minimize the risk of large losses, unless under
the circumstances it is clearly prudent not to do so; and shall otherwise act in
accordance with the provisions of the Plan and ERISA.
C.9 LIABILITY OF COMMITTEE AND LIABILITY INSURANCE. No member of
the Committee shall be liable for any act or omission of any other member of the
Committee, the Trustee, any investment manager, or any Member who directs the
investment of his Account or other agent appointed by the Committee except to
the extent required by the terms of ERISA, and any other applicable state or
federal law, which liability cannot be waived. No member of the Committee shall
be liable for any act or omission on his own part except to the extent required
by the terms of ERISA, and any other applicable state or federal law, which
liability cannot be waived. In this connection, each provision hereof is
severable and if any provision is found to be void as against public policy, it
shall not affect the validity of any other provision hereof.
Further, it is specifically provided that the Trustee may, at the
direction of the Committee, purchase out of the Trust assets hereof insurance
for the members of the Committee and any other fiduciaries appointed by the
Committee, and for the Trust itself to cover liability or losses occurring by
reason of the act or omission of any one or more of the members of the Committee
or any other fiduciary appointed by them under the Plan, provided such insurance
permits recourse by the insurer against the members of the Committee or the
other fiduciaries concerned in the case of a breach of a fiduciary obligation by
one or more members of the Committee or other fiduciary covered thereby.
C.10 BONDING. No member of the Committee shall be required to give
bond for the performance of his duties hereunder unless required by a law which
cannot be waived.
C.11 COMPENSATION. The Committee shall serve without compensation
for their services, but shall be reimbursed by the Employers for all expenses
properly and actually incurred in the performance of their duties under the Plan
unless the Employers elect to have such expenses paid out of the Trust assets.
C.12 PERSONS SERVING IN DUAL FIDUCIARY ROLES. Any person, group of
persons, corporations, firm, or other entity may serve in more than one
fiduciary capacity with respect to the Plan, including the ability to serve both
as a successor trustee and as a member of the Committee.
C.13 ADMINISTRATOR. For all purposes of ERISA, the administrator of
the Plan within the meaning of ERISA shall be the Sponsor. The Sponsor shall
have final responsibility for compliance with all reporting and disclosure
requirements imposed with respect to the Plan under any federal or state law, or
any regulations promulgated thereunder.
C.14 NAMED FIDUCIARY. The members of the Committee shall be the
"named fiduciary" for purposes of section 402(a)(1) of ERISA, and as such shall
have the authority to
C-3
control and manage the operation and administration of the Plan, except to the
extent such authority and control is allocated or delegated to other parties
pursuant to the terms of the Plan.
C.15 STANDARD OF JUDICIAL REVIEW OF COMMITTEE ACTIONS. The
Committee has full and absolute discretion in the exercise of each and every
aspect of its authority under the Plan, including without limitation, the
authority to determine any person's right to benefits under the Plan, the
correct amount and form of any such benefits; the authority to decide any
appeal; the authority to review and correct the actions of any prior
administrative committee; and all of the rights, powers, and authorities
specified in this Appendix and elsewhere in the Plan. Notwithstanding any
provision of law or any explicit or implicit provision of this document or any
action taken, or ruling or decision made by the Committee in the exercise of any
of its powers and authorities under the Plan, these will be final and conclusive
as to all parties other than the Sponsor or Trustee, including without
limitation all Members, former Members, and Beneficiaries, regardless of whether
the Committee or one or more members thereof may have an actual or potential
conflict of interest with respect to the subject matter of such action, ruling,
or decision. No such final action, ruling, or decision of the Committee will be
subject to de novo review in any judicial proceeding; and no such final action,
ruling, or decision of the Committee may be set aside unless it is held to have
been arbitrary and capricious by a final judgment of a court having jurisdiction
with respect to the issue.
C.16 INDEMNIFICATION OF COMMITTEE BY THE SPONSOR. The Sponsor shall
indemnify and hold harmless the Committee, the Committee members, and any
persons to whom the Committee has allocated or delegated its responsibilities in
accordance with the provisions hereof, as well as any other fiduciary who is
also an officer, director, or Employee of an Employer, and hold each of them
harmless from and against all claims, loss, damages, expense, and liability
arising from their responsibilities in connection with the administration of the
Plan which is not otherwise paid or reimbursed by insurance, unless the same
shall result from their own willful misconduct.
C-4
APPENDIX D
FUNDING
D.1 BENEFITS PROVIDED SOLELY BY TRUST. All benefits payable under
the Plan shall be paid or provided for solely from the Trust, and the Employer
assumes no liability or responsibility therefor.
D.2 FUNDING OF PLAN. The Plan shall be funded by one or more
separate Trusts. If more than one Trust is used, each Trust shall be designated
by the name of the Plan followed by a number assigned by the Committee at the
time the Trust is established.
D.3 INCORPORATION OF TRUST. Each Trust is a part of the Plan. All
rights or benefits which accrue to a person under the Plan shall be subject also
to the terms of the agreements creating the Trust or Trusts and any amendments
to them which are not in direct conflict with the Plan.
D.4 AUTHORITY OF TRUSTEE. Each Trustee shall have full title and
legal ownership of the assets in the separate Trust which, from time to time, is
in his separate possession. No other Trustee shall have joint title to or joint
legal ownership of any asset in one of the other Trusts held by another Trustee.
Each Trustee shall be governed separately by the trust agreement entered into
between the Employer and that Trustee and the terms of the Plan without regard
to any other agreement entered into between any other Trustee and the Employer
as a part of the Plan.
D.5 ALLOCATION OF RESPONSIBILITY. To the fullest extent permitted
under section 405 of ERISA, the agreements entered into between the Employer and
each of the Trustees shall be interpreted to allocate to each Trustee its
specific responsibilities, obligations and duties so as to relieve all other
Trustees from liability either through the agreement, Plan or ERISA, for any act
of any other Trustee which results in a loss to the Plan because of his act or
failure to act.
D.6 TRUSTEE'S FEES AND EXPENSES. The Trustee shall receive for its
services as Trustee hereunder the compensation which from time to time may be
agreed upon by the Sponsor and the Trustee. All of such compensation, together
with the expenses incurred by the Trustee in connection with the administration
of this Trust, including fees for legal services rendered to the Trustee, all
other charges and disbursements of the Trustee, and all other expenses of the
Plan shall be charged to and deducted from the Trust assets, unless the Sponsor
elects in writing to have any part or all of such compensation, expenses,
charges, and disbursements paid directly by the Sponsor. The Trustee shall
deduct from and charge against the Trust assets any and all taxes paid by it
which may be levied or assessed upon or in respect of the Trust hereunder or the
income thereof, and shall equitably allocate the same among the several Members
and former Members.
D-1
