EXHIBIT 4(a)
MailCoups, Inc.
401(k)
Savings Plan & Trust
Agreement
MailCoups, Inc. 401(k) Savings Plan and Trust
Effective May 1, 1998
ADVO, Inc. (the "Company") hereby establishes the MailCoups, Inc. 401(k) Savings
Plan (the "Plan") effective May 1, 1998, for the exclusive benefit of eligible
employees covered hereunder. The Plan is intended to constitute a qualified
profit sharing plan, as described in Code section 401(a), which includes a
qualified cash or deferred arrangement, as described in Code section 401(k).
The provisions of the Plan and Trust relating to the Trustee constitute the
trust agreement which is entered into by and between ADVO, Inc. and Xxxxxxx
Xxxxx Trust Company, FSB. The Trust is intended to be tax exempt, as described
in Code section 501(a).
The Plan is intended to comply with the qualification requirements of the Small
Business Job Protection Act of 1996 (the "SBJPA") and is intended to comply in
operation therewith. To the extent that the Plan, as set forth below, is
subsequently determined to be insufficient to comply with such requirements and
any regulations issued under the SBJPA, the Plan shall later be amended to so
comply.
The MailCoups, Inc. 401(k) Savings Plan and Trust, as set forth in this
document, is hereby adopted effective as of May 1, 1998.
Date: May 1, 1998 ADVO, Inc.
By: /s/ XXXXXXXX XXXX
------------------------------
Title: Senior V.P. Human Resources
----------------------------
The trust agreement set forth in those provisions of the Plan and Trust which
relate to the Trustee is hereby executed.
Date: January 27, 1999 Xxxxxxx Xxxxx Trust Company, FSB
By: XXXX XXXXX
---------------------------------
Title: Consultant, AVP
-------------------------
TABLE OF CONTENTS
1 DEFINITIONS......................................................... 1
-----------
2 ELIGIBILITY......................................................... 11
-----------
2.1 Eligibility................................................... 11
2.2 Ineligible Employees.......................................... 11
2.3 Ineligible, Terminated or Former Participants................. 11
3 PARTICIPANT CONTRIBUTIONS........................................... 12
-------------------------
3.1 Associate Pre-Tax Contribution Election....................... 12
3.2 Changing a Contribution Election.............................. 12
3.3 Revoking and Resuming a Contribution Election................. 12
3.4 Contribution Percentage Limits................................ 13
3.5 Refunds When Contribution Dollar Limit Exceeded............... 13
3.6 Timing, Posting and Tax Considerations........................ 13
4 ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER
-------------------------------------------------------
QUALIFIED PLANS..................................................... 14
---------------
4.1 Rollover Contributions........................................ 14
4.2 Transfers From and To Other Qualified Plans................... 14
5 EMPLOYER CONTRIBUTIONS.............................................. 15
----------------------
5.1 MailCoups Matching Contributions.............................. 15
6 ACCOUNTING.......................................................... 16
----------
6.1 Individual Participant Accounting............................. 16
6.2 Sweep Account is Transaction Account.......................... 16
6.3 Trade Date Accounting and Investment Cycle.................... 16
6.4 Accounting for Investment Funds............................... 16
6.5 Payment of Fees and Expenses.................................. 17
6.6 Accounting for Participant Loans.............................. 18
6.7 Error Correction.............................................. 18
6.8 Participant Statements........................................ 18
6.9 Special Accounting During Conversion Period................... 18
6.10 Accounts for Alternate Payees................................. 18
7 INVESTMENT FUNDS AND ELECTIONS...................................... 20
------------------------------
7.1 Investment Funds.............................................. 20
7.2 Responsibility for Investment Choice.......................... 20
7.3 Investment Fund Elections..................................... 20
7.4 Default if No Valid Investment Election....................... 21
7.5 Investment Fund Election Change Fees.......................... 21
8 VESTING & FORFEITURES............................................... 22
---------------------
i
8.1 Fully Vested Accounts............................................ 22
8.2 Full Vesting Upon Certain Events................................. 22
8.3 Vesting Schedule................................................. 22
8.4 Non-Vested Account Balances of Terminated Participants........... 23
8.5 Forfeitures of Non-Vested Account Balances Upon Certain Events... 23
8.6 Use of Forfeiture Account Amounts................................ 23
8.7 Rehired Employees................................................ 24
9 PARTICIPANT LOANS...................................................... 25
-----------------
9.1 Participant Loans Permitted...................................... 25
9.2 Loan Application, Note and Security.............................. 25
9.3 Spousal Consent.................................................. 25
9.4 Loan Approval.................................................... 25
9.5 Loan Funding Limits, Account Sources and Funding Order........... 25
9.6 Maximum Number of Loans.......................................... 26
9.7 Source and Timing of Loan Funding................................ 26
9.8 Interest Rate.................................................... 26
9.9 Loan Payment..................................................... 26
9.10 Loan Payment Hierarchy........................................... 27
9.11 Repayment Suspension............................................. 27
9.12 Loan Default..................................................... 27
9.13 Call Feature..................................................... 27
10 IN-SERVICE WITHDRAWALS................................................. 28
----------------------
10.1 In-Service Withdrawals Permitted................................. 28
10.2 In-Service Withdrawal Application and Notice..................... 28
10.3 Spousal Consent.................................................. 28
10.4 In-Service Withdrawal Approval................................... 28
10.5 Payment Form and Medium.......................................... 28
10.6 Source and Timing of In-Service Withdrawal Funding............... 29
10.7 Hardship Withdrawals............................................. 29
10.8 Rollover Account Withdrawals..................................... 31
10.9 Over Age 59 1/2 Withdrawals...................................... 31
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A
----------------------------------------------------
PARTICIPANT'S REQUIRED BEGINNING DATE.................................. 32
-------------------------------------
11.1 Benefit Information, Notices and Election........................ 32
11.2 Spousal Consent.................................................. 32
11.3 Payment Form and Medium.......................................... 33
11.4 Distribution of Small Amounts.................................... 33
11.5 Source and Timing of Distribution Funding........................ 33
11.6 Latest Commencement Permitted.................................... 33
11.7 Payment Within Life Expectancy................................... 34
11.8 Incidental Benefit Rule.......................................... 34
11.9 Payment to Beneficiary........................................... 34
11.10 Beneficiary Designation.......................................... 35
ii
12 ADP AND ACP TESTS.............................................. 36
-----------------
12.1 Contribution Limitation Definitions...................... 36
12.2 ADP and ACP Tests........................................ 38
12.3 Correction of ADP and ACP Tests.......................... 39
12.4 Multiple Use Test........................................ 41
12.5 Correction of Multiple Use Test.......................... 41
12.6 Adjustment for Investment Gain or Loss................... 41
12.7 Testing Responsibilities and Required Records............ 41
12.8 Separate Testing......................................... 41
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS................... 43
--------------------------------------------
13.1 "Annual Addition" Defined................................ 43
13.2 Maximum Annual Addition.................................. 43
13.3 Avoiding an Excess Annual Addition....................... 43
13.4 Correcting an Excess Annual Addition..................... 43
13.5 Correcting a Multiple Plan Excess........................ 44
13.6 "Defined Benefit Fraction" Defined....................... 44
13.7 "Defined Contribution Fraction" Defined.................. 44
13.8 Combined Plan Limits and Correction..................... 44
14 TOP HEAVY RULES................................................ 46
---------------
14.1 Top Heavy Definitions.................................... 46
14.2 Special Contributions.................................... 47
14.3 Adjustment to Combined Limits for Different Plans........ 48
15 PLAN ADMINISTRATION............................................ 49
-------------------
15.1 Plan Delineates Authority and Responsibility............. 49
15.2 Fiduciary Standards...................................... 49
15.3 Company is ERISA Plan Administrator...................... 49
15.4 Administrator Duties..................................... 50
15.5 Advisors May be Retained................................. 50
15.6 Delegation of Administrator Duties....................... 51
15.7 Committee Operating Rules................................ 51
16 MANAGEMENT OF INVESTMENTS...................................... 52
-------------------------
16.1 Trust Agreement.......................................... 52
16.2 Investment Funds......................................... 52
16.3 Authority to Hold Cash................................... 53
16.4 Trustee to Act Upon Instructions......................... 53
16.5 Administrator Has Right to Vote Registered Investment
Company Shares........................................... 53
16.6 Custom Fund Investment Management ....................... 53
16.7 Master Custom Fund....................................... 54
16.8 Authority to Segregate Assets............................ 54
iii
16.9 Maximum Permitted Investment in Company Stock............................. 54
16.10 Participants Have Right to Vote and Tender Company Stock.................. 55
16.11 Registration and Disclosure for Company Stock............................. 55
17 TRUST ADMINISTRATION............................................................ 56
--------------------
17.1 Trustee to Construe Trust................................................. 56
17.2 Trustee To Act As Owner of Trust Assets................................... 56
17.3 United States Indicia of Ownership........................................ 56
17.4 Tax Withholding and Payment............................................... 57
17.5 Trust Accounting.......................................................... 57
17.6 Valuation of Certain Assets............................................... 58
17.7 Legal Counsel............................................................. 58
17.8 Fees and Expenses......................................................... 58
17.9 Trustee Duties and Limitations............................................ 58
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION............................... 59
-------------------------------------------------
18.1 Plan Does Not Affect Employment Rights.................................... 59
18.2 Compliance With USERRA.................................................... 59
18.3 Limited Return of Contributions........................................... 59
18.4 Assignment and Alienation................................................. 60
18.5 Facility of Payment....................................................... 60
18.6 Reallocation of Lost Participant's Accounts............................... 60
18.7 Suspension of Certain Plan Provisions During Conversion Period............ 60
18.8 Suspension of Certain Plan Provisions During Other Periods................ 60
18.9 Claims Procedure.......................................................... 61
18.10 Construction.............................................................. 62
18.11 Jurisdiction and Severability............................................. 62
18.12 Indemnification by Employer............................................... 62
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION................................. 63
-----------------------------------------------
19.1 Amendment................................................................. 63
19.2 Merger.................................................................... 63
19.3 Divestitures.............................................................. 63
19.4 Plan Termination and Complete Discontinuance of Contributions............. 64
19.5 Amendment and Termination Procedures...................................... 64
19.6 Termination of Employer's Participation................................... 65
19.7 Replacement of the Trustee................................................ 65
19.8 Final Settlement and Accounting of Trustee................................ 65
APPENDIX A - INVESTMENT FUNDS........................................................ 00
XXXXXXXX X - PAYMENT OF PLAN FEES AND EXPENSES....................................... 68
APPENDIX C - LOAN INTEREST RATE...................................................... 69
iv
1 DEFINITIONS
-----------
When capitalized, the words and phrases below have the following meanings
unless different meanings are clearly required by the context:
1.1 "Account". The records maintained by the Administrator for purposes
of accounting for a Participant's interest in the Plan. "Account" may
refer to one or all of the following accounts which have been created
on behalf of a Participant to hold amounts attributable to specific
types of Contributions under the Plan:
(a) "Associate Pre-Tax Account". An account created to hold amounts
attributable to Associate Pre-Tax Contributions.
(b) "Rollover Account". An account created to hold amounts
attributable to Rollover Contributions.
(c) "MailCoups Matching Account". An account created to hold
amounts attributable to MailCoups Matching Contributions.
1.2 "ACP" or "Average Contribution Percentage". The percentage calculated
in accordance with Section 12.1.
1.3 "Administrator". The Company, which may delegate all or a portion of
the duties of the Administrator under the Plan to a Committee in
accordance with Section 15.6.
1.4 "ADP" or "Average Deferral Percentage". The percentage calculated in
accordance with Section 12.1.
1.5 "Alternate Payee". Any spouse, former spouse, child or other
dependent (as defined in Code section 152) of a Participant who is
recognized by a domestic relations order as having a right to receive
all, or a portion, of the Participant's Account under the Plan.
1.6 "Beneficiary". The person or persons who is to receive benefits under
the Plan after the death of the Participant pursuant to the
"Beneficiary Designation" paragraph in Section 11.
1.7 "Break in Service". The fifth anniversary (or sixth anniversary if
absence from employment was due to a Parental Leave) of the date on
which a Participant's employment ends.
1.8 "Code". The Internal Revenue Code of 1986, as amended. Reference to
any specific Code section shall include such section, any valid
regulation promulgated thereunder, and any comparable provision of
any future
1
legislation amending, supplementing or superseding such section.
1.9 "Committee". If applicable, the committee which has been appointed by
the Administrator to administer the Plan in accordance with Section
15.6.
1.10 "Company". ADVO, Inc. or any successor by merger, purchase or
otherwise.
1.11 "Company Stock". Shares of common stock of the Company, its
predecessor(s), or its successors or assigns, or any corporation with
or into which said corporation may be merged, consolidated or
reorganized, or to which a majority of its assets may be sold.
1.12 "Compensation". The sum of a Participant's Taxable Income and salary
reductions, if any, pursuant to Code section 125, 402(e)(3),
402(h)(1)(B), 403(b), 408(p)(2)(A)(i) or 457.
For purposes of determining benefits under the Plan, Compensation is
limited to $150,000 per Plan Year (as adjusted for cost of living
increases pursuant to Code sections 401(a)(17) and 415(d)). If a Plan
Year consists of fewer than 12 months, the limitation on Compensation
is an amount equal to the otherwise applicable limit for such Plan
Year multiplied by a fraction, the numerator of which is the number
of months in the short Plan Year and the denominator of which is 12.
For purposes of determining HCEs and key employees and for purposes
of Section 13.2, Compensation for the entire Plan Year shall be used.
For purposes of determining ADP and ACP, Compensation shall be
limited to amounts paid to an Eligible Employee while a Participant.
1.13 "Contribution". An amount contributed to the Plan by the Employer or
an Eligible Employee, and allocated by contribution type to
Participants' Accounts, as described in Section 1.1. Specific types
of contribution include:
(a) "Associate Pre-Tax Contribution". An amount contributed by an
eligible Participant in conjunction with his or her Code
section 401(k) salary deferral election which shall be treated
as made by the Employer on the eligible Participant's behalf.
(b) "Rollover Contribution". An amount contributed by an Eligible
Employee which originated from another employer's or an
Employer's qualified plan.
(c) "MailCoups Matching Contribution". An amount contributed by the
Employer on an eligible Participant's behalf based upon the
amount contributed by the eligible Participant.
2
1.14 "Contribution Dollar Limit". The annual limit placed on each
Participant's Associate Pre-Tax Contributions, which shall be $7,000
per calendar year (as adjusted for cost of living increases pursuant
to Code sections 402(g)(5) and 415(d)). For purposes of this Section,
a Participant's Associate Pre-Tax Contributions shall include (i) any
employer contribution under a qualified cash or deferred arrangement
(as defined in Code section 401(k)) to the extent not includible in
gross income for the taxable year under Code section 402(e)(3)
(determined without regard to Code section 402(g)), (ii) any employer
contribution to the extent not includible in gross income for the
taxable year under Code section 402(h)(1)(B) (determined without
regard to Code section 402(g)), (iii) any employer contribution to
purchase an annuity contract under Code section 403(b) under a salary
reduction agreement (within the meaning of Code section
3121(a)(5)(D)) and (iv) any elective employer contribution under Code
section 408(p)(2)(A)(i).
1.15 "Conversion Period". The period of converting the prior accounting
system of any plan and trust which is merged, in whole or in part,
into the Plan and Trust, to the accounting system described in
Section 6.
1.16 "Direct Rollover". An Eligible Rollover Distribution that is paid by
the Plan directly to an Eligible Retirement Plan for the benefit of a
Distributee.
1.17 "Disability". A Participant's total and permanent, mental or physical
disability resulting in termination of employment as evidenced by
presentation of medical evidence satisfactory to the Administrator.
1.18 "Distributee". A Participant, a Beneficiary (if he or she is the
surviving spouse of a Participant) or an Alternate Payee under a QDRO
(if he or she is the spouse or former spouse of a Participant).
1.19 "Effective Date". The date upon which the provisions of this document
become effective. This date is May 1, 1998, unless stated otherwise.
In general, the provisions of this document only apply to
Participants who are Employees on or after the Effective Date.
However, investment and distribution provisions apply to all
Participants with Account balances to be invested or distributed
after the Effective Date.
1.20 "Eligible Employee". An Employee of an Employer who is compensated on
an hourly or salaried basis, except any Employee:
(a) whose compensation and conditions of employment are covered by
a collective bargaining agreement to which the Employer is a
party unless the agreement calls for the Employee's
participation in the Plan;
(b) who is treated as an Employee because he or she is a Leased
Employee; or
3
(c) who is a nonresident alien and who either (i) receives no
earned income (within the meaning of Code section 911(d)(2))
from any Related Company which constitutes income from sources
within the United States under Code section 861(a)(3); or (ii)
receives such earned income from such sources within the United
States but such income is exempt from United States income tax
under an applicable income tax convention.
An eligible employee shall not include any individual during any
period he or she is classified or treated by an Employer as an
independent contractor, a consultant or an employee of an employment
agency or any other entity other than an Employer, without regard to
whether such individual is subsequently determined to have been a
common-law employee of the Employer during such period.
1.21 "Eligible Retirement Plan". An individual retirement account
described in Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan described in Code
section 403(a), or a qualified trust described in Code section
401(a), that accepts a Distributee's Eligible Rollover Distribution,
except that, if the Distributee is the surviving spouse of a
Participant, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
1.22 "Eligible Rollover Distribution". A distribution of all or any
portion of the balance to the credit of a Distributee, excluding (i)
a distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the
life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee's
designated Beneficiary, or for a specified period of ten years or
more; (ii) a distribution to the extent such distribution is required
under Code section 401(a)(9); and (iii) the portion of a distribution
that is not includible in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect to
Employer securities).
1.23 "Employee". An individual who is:
(a) directly employed by any Related Company and for whom any
income for such employment is subject to withholding of income
or social security taxes, or
(b) a Leased Employee.
1.24 "Employer". The Company and/or any Related Company which adopts the
Plan with the approval of the Company.
4
1.25 "ERISA". The Employee Retirement Income Security Act of 1974, as
amended. Reference to any specific ERISA section shall include such
section, any valid regulation promulgated thereunder, and any
comparable provision of any future legislation amending,
supplementing or superseding such section.
1.26 "Forfeiture Account". A sub-account of the Transition Account holding
amounts forfeited by Terminated Participants, invested in interest
bearing deposits (which may include interest bearing deposits of the
Trustee) and/or money market type assets or funds, pending
disposition as provided in the Plan and Trust and as directed by the
Administrator.
1.27 "Former Participant". The Plan status of an individual after he or
she is determined to be a Terminated Participant and his or her
Account is distributed or forfeited.
1.28 "HCE" or "Highly Compensated Employee". An Employee described as a
Highly Compensated Employee in Section 12.
1.29 "Hour of Service". Each hour for which an Employee is entitled to:
(a) payment for the performance of duties for any Related Company;
(b) payment from any Related Company on account of a period of time
during which no duties are performed (irrespective of whether
the employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence;
(c) back pay, irrespective of mitigation of damages, by award or
agreement with any Related Company (and these hours shall be
credited to the period to which the award or agreement
pertains); or
(d) no payment, but is on a Leave of Absence (and these hours shall
be based upon his or her normally scheduled hours per week or a
40 hour week if there is no regular schedule).
The crediting of Hours of Service for which no duties are performed
shall be in accordance with the U.S. Department of Labor regulation
sections 2530.200b-2(b) and (c). Actual hours shall be used whenever
an accurate record of hours are maintained for an Employee.
Otherwise, an equivalent number of hours shall be credited for each
payroll period in which the Employee would be credited with at least
1 Hour of Service. The payroll period equivalencies are 45 hours
weekly, 90 hours biweekly, 95 hours semimonthly and 190 hours
monthly.
With regard to an individual who became an Employee on February 28,
1998
5
coincident to the Company's acquisition of MailHouse, Inc. and who on
February 27, 1998 was an employee of MailHouse, Inc., the Employee's
service for which he or she received service credit in accordance
with the terms of the MailHouse, Inc. 401(k) Profit Sharing Plan
shall be included in the determination of his or her Hours of Service
for eligibility and/or vesting purposes.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Hours of Service
for eligibility and/or vesting purposes if (1) the Company directs
that credit for such service be granted, or (2) a qualified plan of
the predecessor or acquired company is subsequently maintained by any
Related Company.
1.30 "Ineligible". The Plan status of an individual who is (1) an Employee
of a Related Company which is not then an Employer, (2) an Employee
of an Employer, but not an Eligible Employee, or (3) not an Employee.
1.31 "Ineligible Participant". The Plan status of a Participant who is (1)
an Employee of a Related Company which is not then an Employer, or
(2) an Employee of an Employer, but not an Eligible Employee.
1.32 "Investment Fund". An investment fund as described in Section 16.2.
The Investment Funds authorized by the Administrator to be offered
under the Plan as of the Effective Date are set forth in Appendix A.
1.33 "Leased Employee". An individual, not otherwise an Employee, who,
pursuant to an agreement between a Related Company and a leasing
organization, has performed, on a substantially full-time basis, for
a period of at least 12 months, services under the primary direction
or control of the Related Company, unless:
(a) the individual is covered by a money purchase pension plan
maintained by the leasing organization and meeting the
requirements of Code section 414(n)(5)(B), and
(b) such individuals do not constitute more than 20% of all Non-
Highly Compensated Employees of all Related Companies (within
the meaning of Code section 414(n)(5)(C)(ii)).
1.34 "Leave of Absence". A period during which an individual is deemed to
be an Employee, but is absent from active employment, provided that
the absence:
(a) was authorized by a Related Company; or
(b) was due to military service in the United States armed forces
and the individual returns to active employment within the
period during which he or she retains employment rights under
federal law.
6
1.35 "Loan Account". The record maintained for purposes of accounting for
a Participant's loan and payments of principal and interest thereon.
1.36 "NHCE" or "Non-Highly Compensated Employee". An Employee described as
a Non-Highly Compensated Employee in Section 12.
1.37 "Normal Retirement Date". The date of a Participant's 65th birthday.
1.38 "Owner". A person with an ownership interest in the capital, profits,
outstanding stock or voting power of a Related Company within the
meaning of Code section 318 or 416 (which exclude indirect ownership
through a qualified plan).
1.39 "Parental Leave". The period of absence from work by reason of the
pregnancy of an Employee, the birth of the Employee's child, the
placement of a child with the Employee in connection with the child's
adoption, or the caring for such child immediately after birth or
placement as described in Code section 410(a)(5)(E).
1.40 "Participant". The Plan status of an Eligible Employee after he or
she completes the eligibility requirements and enters the Plan as
described in Section 2.1 and any individual for whom assets have been
transferred from a predecessor plan merged, in whole or in part, with
the Plan. An Eligible Employee who makes a Rollover Contribution
prior to completing the eligibility requirements as described in
Section 2.1 shall also be considered a Participant, except that he or
she shall not be considered a Participant for purposes of Plan
provisions related to Contributions, other than a Rollover
Contribution, until he or she completes the eligibility requirements
and enters the Plan as described in Section 2.1. A Participant's
participation continues until his or her employment with all Related
Companies ends and his or her Account is distributed or forfeited.
1.41 "Pay". The base pay, overtime, shift differential, bonuses and
commissions paid to an Eligible Employee by an Employer while he or
she is a Participant during the current period.
Pay is neither increased by any salary credit or decreased by any
salary reduction pursuant to Code sections 125 or 402(e)(3). Pay is
limited to $150,000 per Plan Year (as adjusted for cost of living
increases pursuant to Code sections 401(a)(17) and 415(d)). If a Plan
Year consists of fewer than 12 months, the limitation on Pay is an
amount equal to the otherwise applicable limit for such Plan Year
multiplied by a fraction, the numerator of which is the number of
months in the short Plan Year and the denominator of which is 12.
1.42 "Period of Employment". The period beginning on the date an
Employee first
7
performs an hour of service and ending on the date his or her
employment ends. Employment ends on the date the Employee quits, is
discharged, retires or dies or (if earlier) the first anniversary of
his or her absence for any other reason. The period of absence
starting with the date an Employee's employment ends and ending on
the date he or she next performs an hour of service is (1) included
in his or her Period of Employment if the period of absence does not
exceed one year, and (2) excluded if such period exceeds one year.
Period of Employment includes the period prior to a Break in Service.
With regard to an individual who became an Employee on February 28,
1998 coincident to the Company's acquisition of MailHouse, Inc. and
who on February 27, 1998 was an employee of MailHouse, Inc., the
Employee's service for which he or she received service credit in
accordance with the terms of the MailHouse, Inc. Profit Sharing
401(k) Plan shall be included in the determination of his or her
Period of Employment for eligibility and/or vesting purposes.
An Employee's service with a predecessor or acquired company shall
only be counted in the determination of his or her Period of
Employment for eligibility and/or vesting purposes if (1) the Company
directs that credit for such service be granted, or (2) a qualified
plan of the predecessor or acquired company is subsequently
maintained by any Related Company.
1.43 "Plan". The MailCoups, Inc. 401(k) Savings Plan set forth in this
document, as from time to time amended.
1.44 "Plan Year". The annual accounting period of the Plan and Trust which
ends on each December 31. The Plan Year ending December 31, 1998
shall be a short Plan Year commencing May 1, 1998.
1.45 "QDRO". A domestic relations order which the Administrator has
determined to be a qualified domestic relations order within the
meaning of Code section 414(p).
1.46 "Related Company". Any corporation, trade or business which is,
together with the Company, a member of the same controlled group of
corporations, a trade or business under common control, or an
affiliated service group within the meaning of Code sections 414(b),
(c), (m) or (o), except that for purposes of Section 13 "within the
meaning of Code sections 414(b), (c), (m) or (o), as modified by Code
section 415(h)" shall be substituted for the preceding reference to
"within the meaning of Code sections 414(b), (c), (m) or (o)".
1.47 "Required Beginning Date". The latest date benefit payments shall
commence to a Participant. Such date shall mean:
(a) with regard to a Participant who is not a 5% Owner,
the April 1 that
8
next follows the later of (i) the calendar year in which the
Participant attained age 70 1/2, or (ii) the calendar year in
which the Participant terminates employment with all Related
Companies; and
(b) with regard to a Participant who is a 5% Owner, the April 1 that
next follows the calendar year in which the Participant attains
age 70 1/2.
A Participant shall be considered a 5% Owner for this purpose if such
Participant is a 5% Owner with respect to the Plan Year ending in the
calendar year in which the Participant attains age 70 1/2.
1.48 "Settlement Date". For each Trade Date, the Trustee's next business
day.
1.49 "Spousal Consent". The written consent given by a spouse to a
Participant's Beneficiary designation. The spouse's consent must
acknowledge the effect on the spouse of the Participant's
designation, and be duly witnessed by a Plan representative or notary
public. Spousal Consent shall be valid only with respect to the
spouse who signs the Spousal Consent and only for the particular
choice made by the Participant which requires Spousal Consent. A
Participant may revoke (without Spousal Consent) a prior designation
that required Spousal Consent at any time before payments begin.
Spousal Consent also means a determination by the Administrator that
there is no spouse, the spouse cannot be located, or such other
circumstances as may be established under Code section 417(a)(2)(B).
1.50 "Sweep Account". The subsidiary Account for each Participant through
which all transactions are processed, which is invested in interest
bearing deposits (which may include interest bearing deposits of the
Trustee) and/or money market type assets or funds.
1.51 "Sweep Date". The cut off date and time for receiving instructions
for transactions to be processed on the next Trade Date.
1.52 "Taxable Income". Compensation in the amount reported by the Employer
or a Related Company as "Wages, tips, other compensation" on Form W-
2, or any successor method of reporting under Code section 6041(d).
1.53 "Terminated Participant". The Plan status of a Participant who is not
an Employee and with respect to whom the Administrator has reported
to the Trustee that the Participant's employment has terminated with
all Related Companies.
1.54 "Trade Date". Each day the Investment Funds are valued, which is
normally every day the assets of such Investment Funds are traded.
1.55 "Transition Account". An account consisting of the sum of the sub-
accounts of individual non-vested Account balances of Terminated
Participants and the
9
Forfeiture Account.
1.56 "Trust". The legal entity created by those provisions of this
document which relate to the Trustee. The Trust is part of the Plan
and holds the Plan assets which are comprised of the aggregate of
Participants' Accounts, any unallocated funds invested in interest
bearing deposits (which may include interest bearing deposits of the
Trustee) and/or money market type assets or funds, pending allocation
to Participants' Accounts or disbursement to pay Plan fees and
expenses and the Forfeiture Account.
1.57 "Trustee". Xxxxxxx Xxxxx Trust Company, FSB, a federal savings bank,
chartered under the laws of the United States.
1.58 "USERRA". The Uniformed Services Employment and Reemployment Rights
Act of 1994, as amended.
1.59 "Year of Vesting Service". A 12 month Period of Employment.
Years of Vesting Service shall include service credited prior
to May 1, 1998.
10
2 ELIGIBILITY
-----------
2.1 Eligibility
Each Eligible Employee shall become a Participant on the later of
May 1, 1998 or the first day of the next month after the date he
or she completes a 12-month eligibility period for which he or
she is credited with at least 1,000 Hours of Service. The initial
eligibility period begins on the date an Employee first performs
an Hour of Service. Subsequent eligibility periods begin with the
start of each Plan Year beginning after the first Hour of Service
is performed.
2.2 Ineligible Employees
If an Employee completes the above eligibility requirements, but
is Ineligible at the time participation would otherwise begin (if
he or she were not Ineligible), he or she shall become a
Participant on the first subsequent date on which he or she is an
Eligible Employee.
2.3 Ineligible, Terminated or Former Participants
An Ineligible, Terminated or Former Participant may not make or
share in any Contributions, other than such Contributions due to
be made on his or her behalf after the date he or she became an
Ineligible, Terminated or Former Participant for periods prior to
such date, nor may an Ineligible or Terminated Participant be
eligible for a new Plan loan (except as described in Section
9.1), during the period he or she is an Ineligible or Terminated
Participant, but he or she shall continue to participate for all
other purposes. An Ineligible, Terminated or Former Participant
shall automatically become an active Participant on the date he
or she again becomes an Eligible Employee.
11
3 PARTICIPANT CONTRIBUTIONS
-------------------------
3.1 Associate Pre-Tax Contribution Election
Upon becoming a Participant, an Eligible Employee may elect to
reduce his or her Pay by an amount which does not exceed the
Contribution Dollar Limit or the limits described in the
Contribution Percentage Limits paragraph of this Section 3, and
have such amount contributed to the Plan by the Employer as an
Associate Pre-Tax Contribution. The election shall be made in
such manner and with such advance notice as prescribed by the
Administrator and may be limited to a whole percentage of Pay. In
no event shall an Employee's Associate Pre-Tax Contributions
under the Plan and comparable contributions to all other plans,
contracts or arrangements of all Related Companies exceed the
Contribution Dollar Limit for the Employee's taxable year
beginning in the Plan Year.
3.2 Changing a Contribution Election
A Participant who is an Eligible Employee may change his or her
Associate Pre-Tax Contribution election at any time in such
manner and with such advance notice as prescribed by the
Administrator, and such election change shall be effective with
the first payroll of the month paid after such date. A
Participant's Contribution election made as a percentage of Pay
shall automatically apply to Pay increases or decreases.
3.3 Revoking and Resuming a Contribution Election
A Participant may revoke his or her Associate Pre-Tax
Contribution election at any time in such manner and with such
advance notice as prescribed by the Administrator, and such
revocation shall be effective with the first payroll paid after
such date.
A Participant who is an Eligible Employee may resume Associate
Pre-Tax Contributions by making a new election at any time in
such manner and with such advance notice as prescribed by the
Administrator, and such election shall be effective with the
first payroll of the month paid after such date.
12
3.4 Contribution Percentage Limits
The Administrator may establish and change from time to time, in
writing, without the necessity of amending the Plan and Trust,
the minimum, if applicable, and maximum Associate Pre-Tax
Contribution percentages, prospectively or retrospectively (for
the current Plan Year), for all Participants. In addition, the
Administrator may establish any lower percentage limits for
Highly Compensated Employees as it deems necessary to satisfy the
tests described in Section 12. As of the Effective Date, the
Associate Pre-Tax Contribution minimum percentage is 1% and the
maximum percentage is 15%. Irrespective of the limits that may be
established by the Administrator in accordance with the paragraph
above , in no event shall the Contributions made by or on behalf
of a Participant for a Plan Year exceed the maximum allowable
under Code section 415.
3.5 Refunds When Contribution Dollar Limit Exceeded
A Participant who makes Associate Pre-Tax Contributions for a
calendar year to the Plan and comparable contributions to any
other qualified defined contribution plan in excess of the
Contribution Dollar Limit may notify the Administrator in writing
by the following March 1 (or as late as April 14 if allowed by
the Administrator) that an excess has occurred. In this event,
the amount of the excess specified by the Participant, adjusted
for investment gain or loss, shall be refunded to him or her by
the April 15 following the year of deferral and shall not be
included as an Annual Addition (as defined in Section 13.1) under
Code section 415 for the year contributed. The excess amounts
shall first be taken from unmatched Associate Pre-Tax
Contributions and then from matched Associate Pre-Tax
Contributions. Any MailCoups Matching Contributions attributable
to refunded excess Associate Pre-Tax Contributions as described
in this Section, adjusted for investment gain or loss, shall be
forfeited and used as described in Section 8. Refunds and
forfeitures shall not include investment gain or loss for the
period between the end of the applicable calendar year and the
date of distribution or forfeiture.
3.6 Timing, Posting and Tax Considerations
Participants' Contributions, other than Rollover Contributions,
may only be made through payroll deduction. Such amounts shall be
paid to the Trustee in cash and posted to each Participant's
Account(s) as soon as such amounts can reasonably be separated
from the Employer's general assets and balanced against the
specific amount made on behalf of each Participant. In no event,
however, shall such amounts be paid to the Trustee more than 15
business days following the end of the month that includes the
date amounts are deducted from a Participant's Pay (or as that
maximum period may be otherwise extended by ERISA). Associate
Pre-Tax Contributions shall be treated as Contributions made by
an Employer in determining tax deductions under Code section
404(a).
13
4 ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM AND TO OTHER QUALIFIED PLANS
----------------------------------------------------------------------
4.1 Rollover Contributions
The Administrator may authorize the Trustee to accept a Rollover
Contribution directly from an Eligible Employee or as a Direct
Rollover from another qualified plan on behalf of the Eligible
Employee, even if he or she is not yet a Participant. Such Rollover
Contribution shall be made in cash, except that a Rollover
Contribution made in the form of a Direct Rollover by an Eligible
Employee who was a former participant in the MailHouse, Inc. Profit
Sharing 401(k) Plan and who became a Participant in the Plan on May 1,
1998 may be made in-kind with regard to a promissory note evidencing a
loan made to the participant from his or her account under such plan.
Such loans shall continue in effect subject to the terms and
conditions in effect as of the date of the transfer or as otherwise
agreed to by the Administrator.
The Employee shall be responsible for providing satisfactory evidence,
in such manner as prescribed by the Administrator, that such Rollover
Contribution qualifies as a rollover contribution, within the meaning
of Code section 402(c) or 408(d)(3)(A)(ii). Such amounts received
directly from an Eligible Employee must be paid to the Trustee in cash
within 60 days after the date received by the Eligible Employee from a
qualified plan or conduit individual retirement account. Rollover
Contributions shall be posted to the Eligible Employee's Rollover
Account as of the date received by the Trustee.
If the Administrator later determines that an amount contributed
pursuant to the above paragraph did not in fact qualify as a rollover
contribution, within the meaning of Code section 402(c) or
408(d)(3)(A)(ii), the balance credited to the Participant's Rollover
Account shall immediately be (1) segregated from all other Plan
assets, (2) treated as a nonqualified trust established by and for the
benefit of the Participant, and (3) distributed to the Participant.
Any such amount shall be deemed never to have been a part of the Plan.
4.2 Transfers From and To Other Qualified Plans
The Administrator may instruct the Trustee to receive assets in cash
or in kind directly from another qualified plan or to transfer assets
in cash or in kind directly to another qualified plan; provided that
receipt of a transfer shall not be directed if:
(a) any amounts are not exempted by Code section 401(a)(11)(B) from
the annuity requirements of Code section 417 unless the Plan
complies with such requirements; or
(b) any amounts include benefits protected by Code section 411(d)(6)
which would not be preserved under applicable Plan provisions.
14
The Trustee may refuse to receive any such transfer if:
(a) the Trustee finds the in kind assets unacceptable; or
(b) instructions for posting amounts to Participants' Accounts are
incomplete.
Such amounts shall be posted to the appropriate Accounts of
Participants as of the date received by the Trustee. To the extent a
receipt of a transfer includes Participant loans, such loans shall
continue in effect subject to the terms and conditions in effect as of
the date of the transfer or as otherwise agreed to by the
Administrator.
5 EMPLOYER CONTRIBUTIONS
----------------------
5.1 MailCoups Matching Contributions
(a) Frequency and Eligibility. For each period for which
Participants' Contributions are made, the Employer shall make
MailCoups Matching Contributions, as described in the following
Allocation Method paragraph, on behalf of each Participant who
contributed during the period, except any Participant who is not
eligible for MailCoups Matching Contributions for the period
because his or her Plan Year to date MailCoups Matching
Contribution dollar amount equals the maximum MailCoups Matching
Contribution dollar amount that may be made on his or her behalf
for the Plan Year as described in the following Allocation Method
paragraph.
(b) Allocation Method. The MailCoups Matching Contributions
(including any Forfeiture Account amounts applied as MailCoups
Matching Contributions in accordance with Section 8) for each
period shall total 10% of each eligible Participant's Associate
Pre-Tax Contributions for the period, provided that the maximum
dollar match made on behalf of a Participant shall not exceed
$1,000 for the Plan Year.
(c) Timing, Medium and Posting. The Employer shall make each period's
MailCoups Matching Contribution in cash as soon as
administratively feasible, and for purposes of deducting such
Contribution, not later than the Employer's federal tax filing
date, including extensions. Such amounts shall be paid to the
Trustee and posted to each Participant's MailCoups Matching
Account once the total MailCoups Matching Contribution received
has been balanced against the specific amount to be credited to
each Participant's MailCoups Matching Account.
15
6 ACCOUNTING
----------
6.1 Individual Participant Accounting
The Administrator shall maintain an individual set of Accounts for
each Participant in order to reflect transactions both by type of
Account and investment medium. Financial transactions shall be
accounted for at the individual Account level by posting each
transaction to the appropriate Account of each affected Participant.
Participant Account values shall be maintained in shares for the
Investment Funds and in dollars for the Sweep and Loan Accounts. At
any point in time, the Account value shall be determined using the
most recent Trade Date values provided by the Trustee.
6.2 Sweep Account is Transaction Account
All transactions related to amounts being contributed to or
distributed from the Trust shall be posted to each affected
Participant's Sweep Account. Any amount held in the Sweep Account
shall be credited with interest up until the date on which it is
removed from the Sweep Account.
6.3 Trade Date Accounting and Investment Cycle
Participant Account values shall be determined as of each Trade Date.
For any transaction to be processed as of a Trade Date, the Trustee
must receive instructions for the transaction by the Sweep Date. Such
instructions shall apply to amounts held in the Account on that Sweep
Date. Financial transactions of the Investment Funds shall be posted
to Participants' Accounts as of the Trade Date, based upon the Trade
Date values provided by the Trustee, and settled on the Settlement
Date.
6.4 Accounting for Investment Funds
Investments in each Investment Fund shall be maintained in shares. The
Trustee is responsible for determining the share values of each
Investment Fund as of each Trade Date. To the extent an Investment
Fund is comprised of collective investment funds offered by the
Trustee or any other entity authorized to offer collective investment
funds, the share values shall be determined in accordance with the
rules governing such collective investment funds, which are
incorporated herein by reference. All other share values shall be
determined by the Trustee. The share value of each Investment Fund
shall be based on the fair market value of its underlying assets.
16
6.5 Payment of Fees and Expenses
Except to the extent Plan fees and expenses related to Account
maintenance, transaction and Investment Fund management and
maintenance, set forth below, are paid by the Employer directly, or
indirectly, through the Forfeiture Account as directed by the
Administrator, such fees and expenses shall be paid as set forth
below.
(a) Account Maintenance: Account maintenance fees and expenses, may
include but are not limited to, administrative, Trustee,
government annual report preparation, audit, legal,
nondiscrimination testing and fees for any other special
services. Account maintenance fees shall be charged to
Participants on a per Participant basis provided that no fee
shall reduce a Participant's Account balance below zero.
(b) Transaction: Transaction fees and expenses, may include but are
not limited to, periodic installment payment, Investment Fund
election change and loan fees. Transaction fees shall be charged
to the Participant's Account involved in the transaction provided
that no fee shall reduce a Participant's Account balance below
zero.
(c) Investment Fund Management and Maintenance: Management and
maintenance fees and expenses related to the Investment Funds
shall be charged at the Investment Fund level and reflected in
the net gain or loss of each Investment Fund.
The Company may determine that the Employers pay a lower portion of
the fees and expenses allocable to the Accounts of Participants who
are no longer Employees or who are not Beneficiaries, unless doing so
would result in discrimination prohibited under Code section 401(a)(4)
or a significant detriment prohibited by Code section 411(a)(11). As
of the Effective Date, a breakdown of which Plan fees and expenses
shall generally be borne by the Trust (and charged to individual
Participants' Accounts or charged at the Investment Fund level and
reflected in the net gain or loss of each Investment Fund) and those
that shall be paid by the Employer is set forth in Appendix B, which
may be changed from time to time by the Company, in writing, without
the necessity of amending the Plan and Trust.
The Trustee shall have the authority to pay any such fees and
expenses, which remain unpaid by the Employer for 60 days, from the
Trust.
17
6.6 Accounting for Participant Loans
Participant loans shall be held in a separate Loan Account of the
Participant and accounted for in dollars as an earmarked asset of the
borrowing Participant's Account.
6.7 Error Correction
The Administrator may correct any errors or omissions in the
administration of the Plan by restoring any Participant's Account
balance with the amount that would be credited to the Account had no
error or omission been made. Funds necessary for any such restoration
shall be provided through payment made by the Employer, or by the
Trustee to the extent the error or omission is attributable to actions
or inactions of the Trustee, or if the restoration involves an Account
holding amounts contributed by an Employer, the Administrator may
direct the Trustee to use amounts from the Forfeiture Account.
6.8 Participant Statements
The Administrator shall provide Participants with statements of their
Accounts as soon after the end of each quarter of the Plan Year as
administratively feasible. With regard to a Terminated Participant,
such statements shall not include the portion, if any, of his or her
non-vested Account balance maintained in the Transition Account.
6.9 Special Accounting During Conversion Period
The Administrator and Trustee may use any reasonable accounting
methods in performing their respective duties during any Conversion
Period. This includes, but is not limited to, the method for
allocating net investment gains or losses and the extent, if any, to
which contributions received by and distributions paid from the Trust
during this period share in such allocation.
6.10 Accounts for Alternate Payees
A separate Account shall be established for an Alternate Payee
entitled to any portion of a Participant's Account under a QDRO as of
the date and in accordance with the directions specified in the QDRO.
In addition, a separate Account may be established during the period
of time the Administrator, a court of competent jurisdiction or other
appropriate person is determining whether a domestic relations order
qualifies as a QDRO. Such a separate Account shall be valued and
accounted for in the same manner as any other Account.
(a) Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an Alternate Payee
may be
18
distributed, in a form permissible under Section 11, to
the Alternate Payee at any time beginning as soon as practicable
after the QDRO determination is made, regardless of whether the
Participant is entitled to a distribution from the Plan at such
time. The Alternate Payee shall be provided the notice prescribed
by Code section 402(f).
(b) Participant Loans. Except to the extent required by law, an
Alternate Payee, on whose behalf a separate Account has been
established, shall not be entitled to borrow from such Account.
If a QDRO specifies that the Alternate Payee is entitled to any
portion of the Account of a Participant who has an outstanding
loan balance, all outstanding loans shall generally continue to
be held in the Participant's Account and shall not be divided
between the Participant's and Alternate Payee's Accounts.
(c) Investment Direction. Where a separate Account has been
established on behalf of an Alternate Payee and has not yet been
distributed, the Alternate Payee may direct the investment of
such Account in the same manner as if he or she were a
Participant.
19
7 INVESTMENT FUNDS AND ELECTIONS
------------------------------
7.1 Investment Funds
Except for Participants' Sweep and Loan Accounts and any unallocated
funds invested in interest bearing deposits (which may include
interest bearing deposits of the Trustee) and/or money market type
assets or funds, pending allocation to Participants' Accounts or
disbursement to pay Plan fees and expenses and the Transition Account,
the Trust shall be maintained in various Investment Funds. The
Administrator shall select the Investment Funds offered to
Participants and may change the number or composition of the
Investment Funds, subject to the terms and conditions agreed to with
the Trustee. As of the Effective Date, a list of the Investment Funds
offered under the Plan is set forth in Appendix A, which may be
changed from time to time by the Administrator, in writing, and as
agreed to by the Trustee, without the necessity of amending the Plan
and Trust.
The Administrator may set a maximum percentage of the total election
that a Participant may direct into any specific Investment Fund, which
maximum, if any, as of the Effective Date is set forth in Appendix A,
which may be changed from time to time by the Administrator, in
writing, without the necessity of amending the Plan and Trust.
7.2 Responsibility for Investment Choice
Each Participant shall direct the investment of all of his or her
Accounts. Each Participant shall be solely responsible for the
selection of his or her Investment Fund choices. No fiduciary with
respect to the Plan is empowered to advise a Participant as to the
manner in which his or her Accounts are to be invested, and the fact
that an Investment Fund is offered shall not be construed to be a
recommendation for investment.
Notwithstanding, a Terminated Participant shall not direct the
investment of his or her non-vested Account balance. A Terminated
Participant's non-vested Account balance shall be held in the
Transition Account and invested in interest bearing deposits (which
may include interest bearing deposits of the Trustee) and/or money
market type assets or funds.
During any Conversion Period, Trust assets may be held in any
investment vehicle permitted by the Plan, as directed by the
Administrator, irrespective of prior Participant investment elections.
7.3 Investment Fund Elections
A Participant shall provide his or her initial investment election
upon becoming a Participant and may change his or her investment
election at any time in accordance with procedures established by the
Administrator and the Trustee. A Participant shall make his or her
investment election in any combination of
20
one or any number of the Investment Funds offered in accordance with
the procedures established by the Administrator and Trustee.
Investment elections received by the Trustee by the Sweep Date shall
be effective on the following Trade Date.
7.4 Default if No Valid Investment Election
The Administrator shall specify an Investment Fund for the investment
of that portion of a Participant's Account which is not yet held in an
Investment Fund and for which no valid investment election is on file.
The Investment Fund specified as of the Effective Date is set forth in
Appendix A, which may be changed from time to time by the
Administrator, in writing, without the necessity of amending the Plan
and Trust.
7.5 Investment Fund Election Change Fees
A reasonable processing fee may be charged directly to a Participant's
Account for Investment Fund election changes in excess of a specified
number per year as determined by the Administrator.
21
8 VESTING & FORFEITURES
---------------------
8.1 Fully Vested Accounts
A Participant shall be fully vested in these Accounts at all
times:
Associate Pre-Tax Account
Rollover Account
8.2 Full Vesting Upon Certain Events
A Participant's entire Account shall become fully vested once he or
she has attained his or her Normal Retirement Date while an Employee
or upon his or her terminating employment with all Related Companies
due to his or her Disability or death.
8.3 Vesting Schedule
In addition to the vesting provided above, a Participant's MailCoups
Matching Account shall become vested in accordance with the following
schedule:
Years of Vesting Vested
Service Percentage
------- ----------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
If this vesting schedule is changed, the vested percentage for each
Participant shall not be less than his or her vested percentage
determined as of the last day prior to this change, and for any
Participant with at least three Years of Vesting Service when the
schedule is changed, his or her vested percentage shall be determined
using the more favorable vesting schedule.
22
8.4 Non-Vested Account Balances of Terminated Participants
The non-vested balance of a Terminated Participant's Account shall be
deposited to the Transition Account as of the Settlement Date
following the Sweep Date on which the Administrator has reported to
the Trustee that the Participant's employment has terminated with all
Related Companies and shall be maintained as a sub-account in the
Transition Account. The Trustee shall maintain records necessary to
identify each Terminated Participant's non-vested Account balance at
least annually and as of the earlier of the date the Administrator
reports to the Trustee that the Terminated Participant is again an
Employee or the date the Terminated Participant incurs a forfeitable
event described in this Section.
If a Terminated Participant again becomes an Employee before incurring
a forfeitable event described in this Section, his or her non-vested
Account balance shall no longer be maintained as a sub-account in the
Transition Account and shall be recombined with his or her remaining
Account balance. The non-vested Account balance shall be credited to
the Investment Funds based upon the Participant's current investment
election for new Contributions.
8.5 Forfeitures of Non-Vested Account Balances Upon Certain Events
A Terminated Participant shall forfeit his or her non-vested Account
balance as soon as administratively feasible after the earliest of the
date he or she:
(a) is determined to be a Terminated Participant, if his or her
vested Account balance is zero;
(b) receives a complete distribution of his or her vested Account
balance; or
(c) incurs a Break in Service.
Forfeitures from all Accounts subject to vesting shall be transferred
to and maintained in the Forfeiture Account. At any time, the balance
of the Forfeiture Account shall equal the total of the Transition
Account less any non-vested amounts maintained as sub-accounts in the
Transition Account on behalf of Terminated Participants which have not
yet been forfeited.
8.6 Use of Forfeiture Account Amounts
Forfeiture Account amounts shall be used to restore Accounts, to pay
Plan fees and expenses and to reduce future MailCoups Matching
Contributions to be made, as directed by the Administrator.
23
8.7 Rehired Employees
(a) Service Restoration. If a former Employee again becomes an
Employee, all Periods of Employment credited when his or her
employment last terminated shall be counted in determining his or
her vested interest.
(b) Account Restoration. If a former Employee again becomes an
Employee before he or she incurs a Break in Service, but after he
or she incurs a forfeitable event as described in this Section,
the amount forfeited after his or her employment last terminated
shall be restored to his or her Account as if such Employee had
repaid any vested portion of his or her Account from which such
amount was forfeited. The restoration shall include the interest
earned on such amount from the date deposited to the Transition
Account until the date the restoration amount is restored. The
restoration amount shall come from the Forfeiture Account to the
extent possible, and any additional amount needed shall be
contributed by the Employer. His or her vested interest in the
restored Account shall then be equal to:
V% times (AB + D) - D
where:
V% = current vested percentage
AB = current Account balance
D = amount previously distributed from Account
24
9 PARTICIPANT LOANS
-----------------
9.1 Participant Loans Permitted
Loans to Participants and Beneficiaries are permitted pursuant to the
terms and conditions set forth in this Section, except that a loan
shall not be permitted to a Participant who is no longer an Employee
or to a Beneficiary, unless such Participant or Beneficiary is
otherwise a party in interest (as defined in ERISA section 3(14)).
9.2 Loan Application, Note and Security
A Participant shall apply for any loan in such manner and with such
advance notice as prescribed by the Administrator. Each loan shall be
evidenced by a promissory note, secured only by the portion of the
Participant's Account from which the loan is made, and the Plan shall
have a lien on this portion of his or her Account.
9.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
borrow from his or her Account under the Plan.
9.4 Loan Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining that a loan request conforms to the requirements described
in this Section and granting such request.
9.5 Loan Funding Limits, Account Sources and Funding Order
The loan amount must meet all of the following limits as determined as
of the Sweep Date the loan is processed and shall be funded from the
Participant's Accounts as follows:
(a) Plan Minimum Limit. The minimum amount for any loan is $1,000.
(b) Plan Maximum Limit, Account Sources and Funding Order. Subject to
the legal limit described in (c) below, the maximum a Participant
may borrow, including the aggregate outstanding balances of
existing Plan loans, is 100% of the following of the
Participant's Accounts which are fully vested in the priority
order as follows:
Associate Pre-Tax Account
MailCoups Matching Account
25
Rollover Account
(c) Legal Maximum Limit. The maximum a Participant may borrow,
including the aggregate outstanding balances of existing
Plan loans, is 50% of his or her vested Account balance, not
to exceed $50,000. However, the $50,000 maximum is reduced
by the Participant's highest aggregate outstanding Plan loan
balance during the 12-month period ending on the day before
the Sweep Date as of which the loan is made. For purposes of
this paragraph, the qualified plans of all Related Companies
shall be treated as though they are part of the Plan to the
extent it would decrease the maximum loan amount.
9.6 Maximum Number of Loans
A Participant may have only one loan outstanding at any given time.
9.7 Source and Timing of Loan Funding
A loan to a Participant shall be made solely from the assets of his or
her own Account. The available assets shall be determined first by
Account and then within each Account used for funding a loan, amounts
shall first be taken from the Sweep Account and then taken by
Investment Fund in direct proportion to the market value of the
Participant's interest in each Investment Fund as of the Trade Date on
which the loan is processed.
The loan shall be funded on the Settlement Date following the Trade
Date as of which the loan is processed. The Trustee shall make payment
to the Participant as soon thereafter as administratively feasible.
9.8 Interest Rate
The interest rate charged on Participant loans shall be a fixed
reasonable rate of interest, determined from time to time by the
Administrator, which provides the Plan with a return commensurate with
the prevailing interest rate charged by persons in the business of
lending money for loans which would be made under similar
circumstances. As of the Effective Date, the interest rate is
determined as set forth in Appendix C, which may be changed from time
to time by the Administrator, in writing, without the necessity of
amending the Plan and Trust.
9.9 Loan Payment
Substantially level amortization shall be required of each loan with
payments made at least monthly, generally through payroll deduction.
Loans may be prepaid in full or in part at any time. The Participant
may choose the loan repayment period, not to exceed 5 years, except
that the repayment period
26
may be for any period not to exceed 15 years if the purpose of the
loan is to acquire the Participant's principal residence.
9.10 Loan Payment Hierarchy
Loan principal payments shall be credited to the Participant's
Accounts in the inverse of the order used to fund the loan. Loan
interest shall be credited to the Participant's Accounts in direct
proportion to the principal payment. Loan payments are credited to
the Investment Funds based upon the Participant's current investment
election for new Contributions.
9.11 Repayment Suspension
The Administrator may agree to a suspension of loan payments for up
to six months for a Participant who is on a Leave of Absence without
pay. During the suspension period, interest shall continue to accrue
on the outstanding loan balance. At the expiration of the suspension
period all outstanding loan payments and accrued interest thereon
shall be due unless otherwise agreed upon by the Administrator.
9.12 Loan Default
A loan is treated as in default if a scheduled loan payment is not
made at the time required. A Participant shall then have a grace
period to cure the default before it becomes final. Such grace period
shall be for a period that does not extend beyond the last day of the
calendar quarter following the calendar quarter in which the
scheduled loan payment was due or such lesser or greater maximum
period as may later be authorized by Code section 72(p).
In the event a default is not cured within the grace period, the
Administrator may direct the Trustee to report the outstanding
principal balance of the loan and accrued interest thereon as a
taxable distribution to the Participant. As soon as a Plan withdrawal
or distribution to such Participant would otherwise be permitted, the
Administrator may instruct the Trustee to execute upon its security
interest in the Participant's Account by distributing the note to the
Participant.
9.13 Call Feature
The Administrator shall have the right to call any Participant loan
once a Participant's employment with all Related Companies has
terminated, unless he or she is otherwise a party in interest (as
defined in ERISA section 3(14)), or if the Plan is terminated.
27
10 IN-SERVICE WITHDRAWALS
----------------------
10.1 In-Service Withdrawals Permitted
In-service withdrawals to a Participant who is an Employee are
permitted pursuant to the terms and conditions set forth in this
Section and pursuant to the terms and conditions set forth in Section
11 with regard to an in-service withdrawal made in accordance with a
Participant's Required Beginning Date.
10.2 In-Service Withdrawal Application and Notice
A Participant shall apply for any in-service withdrawal in such
manner and with such advance notice as prescribed by the
Administrator. The Participant shall be provided the notice
prescribed by Code section 402(f).
Code sections 401(a)(11) and 417 do not apply to in-service
withdrawals under the Plan. An in-service withdrawal may commence
less than 30 days after the aforementioned notice is provided, if:
(a) the Participant is clearly informed that he or she has the right
to a period of at least 30 days after receipt of such notice to
consider his or her option to elect or not elect a Direct
Rollover for all or a portion, if any, of his or her in-service
withdrawal which constitutes an Eligible Rollover Distribution;
and
(b) the Participant after receiving such notice, affirmatively
elects a Direct Rollover for all or a portion, if any, of his or
her in-service withdrawal which constitutes an Eligible Rollover
Distribution or alternatively elects to have all or a portion
made payable directly to him or her, thereby not electing a
Direct Rollover for all or a portion thereof.
10.3 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
receive an in-service withdrawal under the Plan.
10.4 In-Service Withdrawal Approval
The Administrator, or the Trustee, if otherwise authorized by the
Administrator and agreed to by the Trustee, is responsible for
determining whether an in-service withdrawal request conforms to the
requirements described in this Section and granting such request.
10.5 Payment Form and Medium
The form of payment for an in-service withdrawal shall be a
single lump sum
28
and payment shall be made in cash. With regard to the portion of an
in-service withdrawal representing an Eligible Rollover Distribution,
a Participant may elect a Direct Rollover for all or a portion of
such amount.
10.6 Source and Timing of In-Service Withdrawal Funding
An in-service withdrawal to a Participant shall be made solely from
the assets of his or her own Account and shall be based on the
Account values as of the Trade Date the in-service withdrawal is
processed. The available assets shall be determined first by Account
and then within each Account used for funding an in-service
withdrawal, amounts shall first be taken from the Sweep Account and
then taken by Investment Fund in direct proportion to the market
value of the Participant's interest in each Investment Fund (which
excludes his or her Loan Account balance) as of the Trade Date on
which the in-service withdrawal is processed.
The in-service withdrawal shall be funded on the Settlement Date
following the Trade Date as of which the in-service withdrawal is
processed. The Trustee shall make payment to the Participant or on
behalf of the Participant as soon thereafter as administratively
feasible.
10.7 Hardship Withdrawals
(a) Requirements. A Participant who is an Employee may request the
withdrawal of up to the amount necessary to satisfy a financial
need including amounts necessary to pay any federal, state or
local income taxes or penalties reasonably anticipated to result
from the withdrawal. Only requests for withdrawals (1) on
account of a Participant's "Deemed Financial Need" and (2) which
are "Deemed Necessary" to satisfy the financial need shall be
approved.
(b) "Deemed Financial Need". An immediate and heavy financial
need relating to:
(1) the payment of unreimbursed medical care expenses
(described under Code section 213(d)) incurred (or to be
incurred) by the Employee, his or her spouse or dependents
(as defined in Code section 152);
(2) the purchase (excluding mortgage payments) of the
Employee's principal residence;
(3) the payment of unreimbursed tuition, related educational
fees and room and board for up to the next 12 months of
post-secondary education for the Employee, his or her
spouse or dependents (as defined in Code section 152);
(4) the payment of funeral expenses of an Employee's family
29
member;
(5) the payment of amounts necessary for the Employee to
prevent losing his or her principal residence through
eviction or foreclosure on the mortgage; or
(6) any other circumstance specifically permitted under Code
section 401(k)(2)(B)(i)(IV).
(c) "Deemed Necessary". A withdrawal is "Deemed Necessary" to
satisfy the financial need only if the withdrawal amount does
not exceed the financial need and all of these conditions are
met:
(1) the Employee has obtained all possible withdrawals (other
than hardship withdrawals) and nontaxable loans available
from the Plan and all other plans maintained by Related
Companies;
(2) the Administrator shall suspend the Employee from making
any contributions to the Plan and all other qualified and
nonqualified plans of deferred compensation and all stock
option or stock purchase plans maintained by Related
Companies for 12 months from the date the withdrawal
payment is made; and
(3) the Administrator shall reduce the Contribution Dollar
Limit for the Employee with regard to the Plan and all
other plans maintained by Related Companies, for the
calendar year next following the calendar year of the
withdrawal by the amount of the Employee's Associate Pre-
Tax Contributions for the calendar year of the withdrawal.
(d) Account Sources and Funding Order. The withdrawal shall come
from the following of the Participant's fully vested Accounts,
in the priority order as follows:
Rollover Account
Associate Pre-Tax Account
The amount that may be withdrawn from a Participant's Associate
Pre-Tax Account shall not include any amounts attributable to
earnings.
(e) Minimum Amount. The minimum amount for a hardship withdrawal is
$500.
(f) Permitted Frequency. There is no restriction on the number of
hardship withdrawals permitted to a Participant.
(g) Suspension from Further Contributions. Upon making a hardship
withdrawal, a Participant may not make additional Associate Pre-
Tax
30
Contributions (or additional contributions to all other
qualified and nonqualified plans of deferred compensation and
all stock option or stock purchase plans maintained by Related
Companies) for a period of 12 months from the date the
withdrawal payment is made.
10.8 Rollover Account Withdrawals
(a) Requirements. A Participant who is an Employee may make a
Rollover Account withdrawal.
(b) Account Sources and Funding Order. The withdrawal shall come
from a Participant's Rollover Account.
(c) Minimum Amount. The minimum amount for a Rollover Account
withdrawal is $500.
(d) Permitted Frequency. There is no restriction on the number of
Rollover Account withdrawals permitted to a Participant.
(e) Suspension from Further Contributions. A Rollover Account
withdrawal shall not affect a Participant's ability to make or
be eligible to receive further Contributions.
10.9 Over Age 59 1/2 Withdrawals
(a) Requirements. A Participant who is an Employee and over age
59 1/2 may make an Over Age 59 1/2 withdrawal.
(b) Account Sources and Funding Order. The withdrawal shall come
from the following of the Participant's fully vested Accounts,
in the priority order as follows:
Rollover Account
Associate Pre-Tax Account
MailCoups Matching Account
(c) Minimum Amount. The minimum amount for an Over Age 59 1/2
withdrawal is $500.
(d) Permitted Frequency. There is no restriction on the number of
Over Age 59 1/2 withdrawals permitted to a Participant.
(e) Suspension from Further Contributions. An Over Age 59 1/2
withdrawal shall not affect a Participant's ability to make or
be eligible to receive further Contributions.
31
11 DISTRIBUTIONS ONCE EMPLOYMENT ENDS OR BY REASON OF A PARTICIPANT'S REQUIRED
---------------------------------------------------------------------------
BEGINNING DATE
--------------
11.1 Benefit Information, Notices and Election
A Participant, or his or her Beneficiary in the case of his or her
death, shall be provided with information regarding all optional
times and forms of distribution available under the Plan, including
the notices prescribed by Code sections 402(f) and 411(a)(11).
Subject to the other requirements of this Section, a Participant, or
his or her Beneficiary in the case of his or her death, may elect, in
such manner and with such advance notice as prescribed by the
Administrator, to have his or her vested Account balance distributed
beginning upon any Settlement Date following the Participant's
termination of employment with all Related Companies and a reasonable
period of time during which the Administrator shall process, and
inform the Trustee of, the Participant's termination or, if earlier,
at the time of the Participant's Required Beginning Date.
Notwithstanding, if a Participant's termination of employment with
all Related Companies does not constitute a separation from service
for purposes of Code section 401(k)(2)(B)(i)(I) or otherwise
constitute an event set forth under Code section 401(k)(10)(A)(ii) or
(iii) as described in Section 19.3, the portion of a Participant's
Account subject to the distribution rules of Code section 401(k) may
not be distributed until such time as he or she separates from
service for purposes of Code section 401(k)(2)(B)(i)(I) or, if
earlier, upon such other event as described in Code section
401(k)(2)(B) and as provided for in the Plan.
Code sections 401(a)(11) and 417 do not apply to distributions under
the Plan. A distribution may commence less than 30 days after the
aforementioned notices are provided, if:
(a) the Participant is clearly informed that he or she has the right
to a period of at least 30 days after receipt of such notices to
consider the decision as to whether to elect a distribution and
if so to elect a particular form of distribution and to elect or
not elect a Direct Rollover for all or a portion, if any, of his
or her distribution which constitutes an Eligible Rollover
Distribution; and
(b) the Participant after receiving such notices, affirmatively
elects a distribution and a Direct Rollover for all or a
portion, if any, of his or her distribution which constitutes an
Eligible Rollover Distribution or alternatively elects to have
all or a portion made payable directly to him or her, thereby
not electing a Direct Rollover for all or a portion thereof.
11.2 Spousal Consent
A Participant is not required to obtain Spousal Consent in order to
receive a
32
distribution under the Plan.
11.3 Payment Form and Medium
Except to the extent otherwise provided by Section 11.4, a
Participant may elect to be paid in any of these forms:
(a) a single lump sum;
(b) a portion paid in a lump sum, and the remainder paid later
(partial payment); or
(c) periodic installments over a period not to exceed the life
expectancy of the Participant and his or her Beneficiary.
Distributions shall be made in cash, except to the extent a
distribution consists of a loan call as described in Section 9. With
regard to the portion of a distribution representing an Eligible
Rollover Distribution, a Distributee may elect a Direct Rollover for
all or a portion of such amount.
11.4 Distribution of Small Amounts
If after a Participant's employment with all Related Companies ends,
the Participant's vested Account balance is $5,000 or less, and if at
the time of any prior in-service withdrawal or distribution the
Participant's vested Account balance did not exceed $5,000, the
Participant's benefit shall be paid as a single lump sum as soon as
administratively feasible in accordance with procedures prescribed by
the Administrator.
11.5 Source and Timing of Distribution Funding
A distribution to a Participant shall be made solely from the assets
of his or her own Account and shall be based on the Account values as
of the Trade Date the distribution is processed. The available assets
shall be determined first by Account and then within each Account
used for funding a distribution, amounts shall first be taken from
the Sweep Account and then taken by Investment Fund in direct
proportion to the market value of the Participant's interest in each
Investment Fund as of the Trade Date on which the distribution is
processed.
The distribution shall be funded on the Settlement Date following the
Trade Date as of which the distribution is processed. The Trustee
shall make payment to the Participant or on behalf of the Participant
as soon thereafter as administratively feasible.
11.6 Latest Commencement Permitted
In addition to any other Plan requirements and unless a Participant
elects
33
otherwise, his or her benefit payments shall begin not later than 60
days after the end of the Plan Year in which he or she attains his or
her Normal Retirement Date or retires, whichever is later. However,
if the amount of the payment or the location of the Participant
(after a reasonable search) cannot be ascertained by that deadline,
payment shall be made no later than 60 days after the earliest date
on which such amount or location is ascertained but in no event later
than the Participant's Required Beginning Date. A Participant's
failure to elect in such manner as prescribed by the Administrator to
have his or her vested Account balance distributed, shall be deemed
an election by the Participant to defer his or her distribution but
in no event shall his or her benefit payments commence later than his
or her Required Beginning Date.
If benefit payments cannot begin at the time required because the
location of the Participant cannot be ascertained (after a reasonable
search), the Administrator may, at any time thereafter, treat such
person's Account as forfeited subject to the provisions of Section
18.6.
11.7 Payment Within Life Expectancy
The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to be
completed within a period not to exceed the lives or the joint and
last survivor life expectancy of the Participant and his or her
Beneficiary. The life expectancies of a Participant and his or her
Beneficiary may not be recomputed annually.
11.8 Incidental Benefit Rule
The Participant's payment election must be consistent with the
requirement that, if the Participant's spouse is not his or her sole
primary Beneficiary, the minimum annual distribution for each
calendar year, beginning with the calendar year preceding the
calendar year that includes the Participant's Required Beginning
Date, shall not be less than the quotient obtained by dividing (a)
the Participant's vested Account balance as of the last Trade Date of
the preceding year by (b) the applicable divisor as determined under
the incidental benefit requirements of Code section 401(a)(9).
11.9 Payment to Beneficiary
Payment to a Beneficiary must either (i) be completed by the end of
the calendar year that contains the fifth anniversary of the
Participant's death or (ii) begin by the end of the calendar year
that contains the first anniversary of the Participant's death and be
completed within the period of the Beneficiary's life or life
expectancy, except that:
(a) If the Participant dies after his or her Required Beginning
Date, payment to his or her Beneficiary must be made at least as
rapidly as provided in the Participant's distribution election;
34
(b) If the surviving spouse is the Beneficiary, payments need not
begin until the later of (i) the end of the calendar year that
includes the first anniversary of the Participant's death, or
(ii) the end of the calendar year in which the Participant would
have attained age 70 1/2 and must be completed within the
spouse's life or life expectancy; and
(c) If the Participant and the surviving spouse who is the
Beneficiary die (i) before the Participant's Required Beginning
Date and (ii) before payments have begun to the spouse, the
spouse shall be treated as the Participant in applying these
rules.
11.10 Beneficiary Designation
Each Participant may complete a beneficiary designation form
indicating the Beneficiary who is to receive the Participant's
remaining Plan interest at the time of his or her death and such
designation may be changed at any time. However, a Participant's
spouse shall be the sole primary Beneficiary unless the designation
includes Spousal Consent for another Beneficiary. If no proper
designation is in effect at the time of a Participant's death or if
the Beneficiary does not survive the Participant, the Beneficiary
shall be, in the order listed, the:
(a) Participant's surviving spouse,
(b) Participant's children, in equal shares, (or if a child does not
survive the Participant, and that child leaves issue, the issue
shall be entitled to that child's share, by right of
representation) or
(c) Participant's estate.
35
12 ADP AND ACP TESTS
-----------------
12.1 Contribution Limitation Definitions
The following definitions are applicable to this Section 12 (where a
definition is contained in both Sections 1 and 12, for purposes of
Section 12 the Section 12 definition shall be controlling):
(a) "ACP" or "Average Contribution Percentage". The Average
Percentage calculated using Contributions allocated to
Participants as of a date within the Plan Year.
(b) "ACP Test". The determination of whether the ACP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(c) "ADP" or "Average Deferral Percentage". The Average Percentage
calculated using Deferrals allocated to Participants as of a
date within the Plan Year.
(d) "ADP Test". The determination of whether the ADP is in
compliance with the Basic or Alternative Limitation for a Plan
Year (as defined in Section 12.2).
(e) "Average Percentage". The average of the calculated percentages
for Participants within the specified group. The calculated
percentage refers to either the "Deferrals" or "Contributions"
(as defined in this Section) made on each Participant's behalf
for the Plan Year, divided by his or her Compensation.
(Associate Pre-Tax Contributions to the Plan or comparable
contributions to plans of Related Companies which must be
refunded solely because they exceed the Contribution Dollar
Limit are included in the percentage for the HCE Group but not
for the NHCE Group.)
(f) "Contributions" (i) shall include MailCoups Matching
Contributions and (ii) may include Associate Pre-Tax
Contributions, but with regard to (ii), only to the extent that
(1) the Administrator elects to use them, (2) they are not used
or counted in the ADP Test and (3) they otherwise satisfy the
requirements as prescribed under Code section 401(m) permitting
treatment as Contributions for purposes of the ACP Test.
(g) "Current Year Testing Method". The use of the Plan Year's ADP
for the Plan Year's NHCE Group for purposes of performing the
Plan Year's ADP Test and/or the use of the Plan Year's ACP for
the Plan Year's NHCE Group for purposes of performing the Plan
Year's ACP Test.
(h) "Deferrals" shall include Associate Pre-Tax Contributions.
36
(i) "HCE" or "Highly Compensated Employee". With respect to all
Related Companies, an Employee who (in accordance with Code
section 414(q)):
(1) Was a more than 5% Owner (within the meaning of Code
section 414(q)(2)) at any time during the Plan Year or the
12 months preceding such Plan Year; or
(2) Received Compensation during the 12 months preceding such
Plan Year in excess of $80,000 (as adjusted for such period
pursuant to Code sections 414(q)(1) and 415(d)) or, if the
Company elects, "in excess of $80,000 (as adjusted for such
period pursuant to Code sections 414(q)(1) and 415(d)) and
was a member of the "top-paid group" (within the meaning of
Code section 414(q)(3)) for the 12 months preceding such
Plan Year" shall be substituted for the preceding reference
to "in excess of $80,000 (as adjusted for such period
pursuant to Code sections 414(q)(1) and 415(d))".
A former Employee shall be treated as an HCE if (1) such former
Employee was an HCE when he or she separated from service, or
(2) such former Employee was an HCE in service at any time after
attaining age 55.
The determination of who is an HCE and the determination of the
number and identity of Employees in the top-paid group shall be
made in accordance with Code section 414(q).
(j) "HCE Group" and "NHCE Group". With respect to all Related
Companies, the respective group of HCEs and NHCEs who are
eligible to have amounts contributed on their behalf for the
respective Plan Year, including Employees who would be eligible
but for their election not to participate or to contribute, or
because their Pay is greater than zero but does not exceed a
stated minimum. For Plan Years commencing after December 31,
1998, with respect to all Related Companies, if the Plan permits
participation prior to an Eligible Employee's satisfaction of
the minimum age and service requirements of Code section
410(a)(1)(A), Eligible Employees who have not met the minimum
age and service requirements of Code section 410(a)(1)(A) may be
excluded in the determination of the NHCE Group, but not in the
determination of the HCE Group, for purposes of (i) the ADP
Test, if Code section 410(b)(4)(B) is applied in determining
whether the 401(k) portion of the Plan meets the requirements of
Code section 410(b), or (ii) the ACP Test, if Code section
410(b)(4)(B) is applied in determining whether the 401(m)
portion of the Plan meets the requirements of Code section
410(b).
37
(1) If the Related Companies maintain two or more plans which
are subject to the ADP or ACP Test and are considered as
one plan for purposes of Code sections 401(a)(4) or 410(b),
all such plans shall be aggregated and treated as one plan
for purposes of meeting the ADP and ACP Tests, provided
that the plans may only be aggregated if they have the same
plan year.
(2) If an HCE is covered by more than one cash or deferred
arrangement, or more than one arrangement permitting
employee or matching contributions, maintained by the
Related Companies, all such plans shall be aggregated and
treated as one plan (other than those plans that may not be
permissively aggregated) for purposes of calculating the
separate percentage for the HCE which is used in the
determination of the Average Percentage. For purposes of
the preceding sentence, if such plans have different plan
years, the plans are aggregated with respect to the plan
years ending with or within the same calendar year.
(k) "Multiple Use Test". The test described in Section 12.4 which a
Plan must meet where the Alternative Limitation (described in
Section 12.2) is used to meet both the ADP and ACP Tests.
(l) "NHCE" or "Non-Highly Compensated Employee". An Employee
who is not an HCE.
(m) "Prior Year Testing Method". The use of the preceding Plan
Year's ADP for the preceding Plan Year's NHCE Group for purposes
of performing the Plan Year's ADP Test and/or the use of the
preceding Plan Year's ACP for the preceding Plan Year's NHCE
Group for purposes of performing the Plan Year's ACP Test.
12.2 ADP and ACP Tests
For each Plan Year, the Prior Year Testing Method shall be used and
the ADP and ACP for the HCE Group must meet either the Basic or
Alternative Limitation when compared to the respective preceding Plan
Year's ADP and ACP for the preceding Plan Year's NHCE Group, defined
as follows:
(a) Basic Limitation. The HCE Group Average Percentage may not
exceed 1.25 times the NHCE Group Average Percentage.
(b) Alternative Limitation. The HCE Group Average Percentage is
limited by reference to the NHCE Group Average Percentage as
follows:
If the NHCE Group Then the Maximum HCE
Average Percentage is: Group Average Percentage is:
--------------------- ---------------------------
38
Less than 2% 2 times NHCE Group Average %
2% to 8% NHCE Group Average % plus 2%
More than 8% NA - Basic Limitation applies
Alternatively, the Company may elect to use the Current Year Testing
Method and the ADP and/or ACP for the HCE Group must meet either the
Basic or Alternative Limitation as defined above when compared to the
respective Plan Year's ADP and/or ACP for the Plan Year's NHCE Group.
If a Current Year Testing Method election is made, such election may
not be changed except as provided by the Code.
In the case of the first Plan Year in which the Plan is subject to
the requirements of Code section 401(k), the amount taken into
account as the "preceding Plan Year's ADP for the preceding Plan
Year's NHCE Group", shall be (i) 3%, or (ii) if the Company elects,
the Plan Year's ADP. The preceding sentence shall not apply with
regard to a Plan that is a successor plan or, if for such first Plan
Year, the Plan is aggregated with another plan that was subject to
the requirements of Code section 401(k) in the preceding year and
treated as one plan for purposes of meeting the ADP Test.
In the case of the first Plan Year in which the Plan is subject to
the requirements of Code section 401(m), the amount taken into
account as the "preceding Plan Year's ACP for the preceding Plan
Year's NHCE Group", shall be (i) 3%, or (ii) if the Company elects,
the Plan Year's ACP. The preceding sentence shall not apply with
regard to a Plan that is a successor plan or, if for such first Plan
Year, the Plan is aggregated with another plan that was subject to
the requirements of Code section 401(m) in the preceding year and
treated as one plan for purposes of meeting the ACP Test.
12.3 Correction of ADP and ACP Tests
If the ADP or ACP Tests are not met, the Administrator shall
determine, no later than the end of the next Plan Year, a maximum
percentage to be used in place of the calculated percentage for all
HCEs that would reduce the ADP and/or ACP for the HCE Group by a
sufficient amount to meet the ADP and ACP Tests.
With regard to each HCE whose Deferral percentage and/or Contribution
percentage is in excess of the maximum percentage, a dollar amount of
excess Deferrals and/or excess Contributions shall then be determined
by (i) subtracting the product of such maximum percentage for the ADP
and the HCE's Compensation from the HCE's actual Deferrals and (ii)
subtracting the product of such maximum percentage for the ACP and
the HCE's Compensation from the HCE's actual Contributions. Such
amounts shall then be aggregated to determine the total dollar amount
of excess Deferrals and/or excess Contributions. ADP and/or ACP
corrections shall be made in accordance with the leveling method as
described below.
39
(a) ADP Correction. The HCE with the highest Deferral dollar amount shall
have his or her Deferral dollar amount reduced in an amount equal to
the lesser of the dollar amount of excess Deferrals for all HCEs or
the dollar amount that would cause his or her Deferral dollar amount
to equal that of the HCE with the next highest Deferral dollar
amount. The process shall be repeated until the total of the Deferral
dollar amount reductions equals the dollar amount of excess Deferrals
for all HCEs.
To the extent an HCE's Deferrals were determined to be reduced as
described in the paragraph above, Associate Pre-Tax Contributions
shall, by the end of the next Plan Year, be refunded to the HCE,
except that such amount to be refunded shall be reduced by Associate
Pre-Tax Contributions previously refunded because they exceeded the
Contribution Dollar Limit. The excess amounts shall first be taken
from unmatched Associate Pre-Tax Contributions and then from matched
Associate Pre-Tax Contributions. Any MailCoups Matching Contributions
attributable to refunded excess Associate Pre-Tax Contributions as
described in this Section, adjusted for investment gain or loss for
the Plan Year to which the excess Associate Pre-Tax Contributions
relate, shall be forfeited and used as described in Section 8.
(b) ACP Correction. The HCE with the highest Contribution dollar amount
shall have his or her Contribution dollar amount reduced in an amount
equal to the lesser of the dollar amount of excess Contributions for
all HCEs or the dollar amount that would cause his or her
Contribution dollar amount to equal that of the HCE with the next
highest Contribution dollar amount. The process shall be repeated
until the total of the Contribution dollar amount reductions equals
the dollar amount of excess Contributions for all HCEs.
To the extent an HCE's Contributions were determined to be reduced as
described in the paragraph above, MailCoups Matching Contributions
shall, by the end of the next Plan Year, be refunded to the HCE to
the extent vested, and forfeited and used as described in Section 8
to the extent such amounts were not vested, as of the end of the Plan
Year being tested.
(c) Investment Fund Sources. Once the amount of excess Deferrals and/or
Contributions is determined, within each Account from which amounts
are refunded or forfeited, amounts shall first be taken from the
Sweep Account and then taken by Investment Fund in direct proportion
to the market value of the Participant's interest in each Investment
Fund (which excludes his or her Loan Account balance) as of the Trade
Date on which the correction is processed.
40
12.4 Multiple Use Test
If the Alternative Limitation (defined in Section 12.2) is used to
meet both the ADP and ACP Tests, the ADP and ACP for the HCE Group
must also comply with the requirements of Code section 401(m)(9).
Such Code section requires that the sum of the ADP and ACP for the
HCE Group (as determined after any corrections needed to meet the ADP
and ACP Tests have been made) not exceed the sum (which produces the
most favorable result) of:
(a) the Basic Limitation (defined in Section 12.2) applied to either
the ADP or ACP for the NHCE Group, and
(b) the Alternative Limitation applied to the other NHCE Group
percentage.
12.5 Correction of Multiple Use Test
If the multiple use limit is exceeded, the Administrator shall
determine a maximum percentage to be used in place of the calculated
percentage for all HCEs that would reduce either or both the ADP or
ACP for the HCE Group by a sufficient amount to meet the multiple use
limit. Any excess shall be corrected in the same manner that excess
Deferrals or Contributions are corrected.
12.6 Adjustment for Investment Gain or Loss
Any excess Deferrals or Contributions to be refunded to a Participant
or forfeited in accordance with this Section 12 shall be adjusted for
investment gain or loss. Refunds or forfeitures shall not include
investment gain or loss for the period between the end of the
applicable Plan Year and the date of distribution or forfeiture.
12.7 Testing Responsibilities and Required Records
The Administrator shall be responsible for ensuring that the Plan
meets the ADP Test, the ACP Test and the Multiple Use Test, and that
the Contribution Dollar Limit is not exceeded. The Administrator
shall maintain records which are sufficient to demonstrate that the
ADP Test, the ACP Test and the Multiple Use Test, have been met for
each Plan Year for at least as long as the Employer's corresponding
tax year is open to audit.
12.8 Separate Testing
(a) Multiple Employers: The determination of HCEs, NHCEs, and the
performance of the ADP Test, the ACP Test and the Multiple Use
Test, and any corrective action resulting therefrom, shall be
conducted separately with regard to the Employees of each
Employer (and its Related Companies) that is not a Related
Company with respect to the other Employer(s).
41
(b) Collective Bargaining Units: The performance of the ADP Test, and
if applicable, the ACP Test and the Multiple Use Test, and any
corrective action resulting therefrom, shall be conducted
separately with regard to Employees who are eligible to
participate in the Plan as a result of a collective bargaining
agreement.
In addition, testing may be conducted separately, at the discretion of
the Administrator and to the extent permitted under Treasury
regulations, with regard to any group of Employees for whom separate
testing is permissible under such regulations.
42
13 MAXIMUM CONTRIBUTION AND BENEFIT LIMITATIONS
--------------------------------------------
13.1 "Annual Addition" Defined
The sum for a Plan Year of all (i) contributions (excluding rollover
contributions) and forfeitures allocated to the Participant's Account
and his or her account in all other defined contribution plans
maintained by any Related Company, (ii) amounts allocated to the
Participant's individual medical account (within the meaning of Code
section 415(l)(2)) which is part of a defined benefit plan maintained
by any Related Company, and (iii) if the Participant is a key
employee (within the meaning of Code section 419A(d)(3)) for the
applicable or any prior Plan Year, amounts attributable to post-
retirement medical benefits allocated to his or her separate account
under a welfare benefit fund (within the meaning of Code section
419(e)) maintained by any Related Company. The Plan Year refers to
the year to which the allocation pertains, regardless of when it was
allocated. The Plan Year shall be the Code section 415 limitation
year.
13.2 Maximum Annual Addition
A Participant's Annual Addition for any Plan Year shall not exceed
the lesser of (i) 25% of his or her Compensation or (ii) $30,000 (as
adjusted for cost of living increases pursuant to Code section
415(d)); provided, however, that clause (i) shall not apply to Annual
Additions described in clauses (ii) and (iii) of Section 13.1.
13.3 Avoiding an Excess Annual Addition
If, at any time during a Plan Year, the allocation of any additional
Contributions would produce an excess Annual Addition for such year,
Contributions to be made for the remainder of the Plan Year shall be
limited to the amount needed for each affected Participant to receive
the maximum Annual Addition.
13.4 Correcting an Excess Annual Addition
Upon the discovery of an excess Annual Addition to a Participant's
Account (resulting from a reasonable error in determining a
Participant's compensation or the maximum permissible amount of his
or her elective deferrals (within the meaning of Code section
402(g)(3)), or other facts and circumstances acceptable to the
Internal Revenue Service), the excess amount (adjusted to reflect
investment gains) shall first be returned to the Participant to the
extent of his or her Associate Pre-Tax Contributions (however to the
extent Associate Pre-Tax Contributions were matched, the applicable
MailCoups Matching Contributions shall be forfeited in proportion to
the returned matched Associate Pre-Tax Contributions) and the
remaining excess, if any,
43
shall be forfeited by the Participant and together used as described
in Section 8.
13.5 Correcting a Multiple Plan Excess
If a Participant, whose Account is credited with an excess Annual
Addition, received allocations to more than one defined contribution
plan, the excess shall be corrected by reducing the Annual Addition
to the Plan only after all possible reductions have been made to the
other defined contribution plans.
13.6 "Defined Benefit Fraction" Defined
The fraction, for any Plan Year, where the numerator is the
"projected annual benefit" and the denominator is the greater of 125%
of the "protected current accrued benefit" or the normal limit which
is the lesser of (i) 125% of the dollar limitation in effect under
Code section 415(b)(1)(A) for the Plan Year or (ii) 140% of the
amount which may be taken into account under Code section
415(b)(1)(B) for the Plan Year, where a Participant's:
(a) "projected annual benefit" is the annual benefit provided by the
plan determined pursuant to Code section 415(e)(2)(A), and
(b) "protected current accrued benefit" in a defined benefit plan in
existence (1) on July 1, 1982, shall be the accrued annual
benefit provided for under Public Law 97-248, section 235(g)(4),
as amended, or (2) on May 6, 1986, shall be the accrued annual
benefit provided for under Public Law 99-514, section
1106(i)(3).
13.7 "Defined Contribution Fraction" Defined
The fraction where the numerator is the sum of the Participant's
Annual Addition for each Plan Year to date and the denominator is the
sum of the "annual amounts" for each year in which the Participant
has performed service with a Related Company. The "annual amount" for
any Plan Year is the lesser of (i) 125% of the dollar limitation in
effect under Code section 415(c)(1)(A) (determined without regard to
subsection (c)(6)) for the Plan Year or (ii) 140% of the amount which
may be taken into account under Code section 415(c)(1)(B) for the
Plan Year, where:
(a) each Annual Addition is determined pursuant to the Code section
415(c) rules in effect for such Plan Year, and
(b) the numerator is adjusted pursuant to Public Law 97-248, section
235(g)(3), as amended, or Public Law 99-514, section 1106(i)(4).
13.8 Combined Plan Limits and Correction
44
The sum of a Participant's Defined Benefit Fraction and Defined
Contribution Fraction for any Plan Year may not exceed 1.0. If the
combined fraction exceeds 1.0 for any Plan Year, the Participant's
benefit under any defined benefit plan (to the extent it has not been
distributed or used to purchase an annuity contract) shall be limited
so that the combined fraction does not exceed 1.0 before any defined
contribution limits shall be enforced.
For Plan Years commencing after December 31, 1999, the provisions of
the preceding paragraph shall no longer be effective.
45
14 TOP HEAVY RULES
---------------
14.1 Top Heavy Definitions
When capitalized, the following words and phrases have the following
meanings when used in this Section:
(a) "Aggregation Group". The group consisting of each qualified plan
of the Related Companies (1) in which a Key Employee is a
participant or was a participant during the determination period
(regardless of whether such plan has terminated), or (2) which
enables another plan in the group to meet the requirements of
Code sections 401(a)(4) or 410(b). The Administrator may also
treat any other qualified plan of the Related Companies as part
of the group if the resulting group would continue to meet the
requirements of Code sections 401(a)(4) and 410(b) with such
plan being taken into account.
(b) "Determination Date". For any Plan Year, the last Trade Date of
the preceding Plan Year or, in the case of the Plan's first Plan
Year, the last Trade Date of that Plan Year.
(c) "Key Employee". A current or former Employee (or his or her
Beneficiary) who at any time during the five year period ending
on the Determination Date was:
(1) an officer of a Related Company whose Compensation (i)
exceeds 50% of the amount in effect under Code section
415(b)(1)(A) and (ii) places him or her within the
following highest paid group of officers:
Number of Employees Number of
not Excluded Under Code Highest Paid
Section 414(q)(5) Officers Included
---------------- -----------------
Less than 30 3
30 to 500 10% of the number of
Employees not excluded
under Code section 414(q)(5)
More than 500 50
(2) a more than 5% Owner,
(3) a more than 1% Owner whose Compensation exceeds $150,000,
or
(4) a more than 0.5% Owner who is among the 10 Employees owning
the largest interest in a Related Company and whose
Compensation exceeds the amount in effect under Code
46
section 415(c)(1)(A).
(d) "Plan Benefit". The sum as of the Determination Date of (1) an
Employee's Account, (2) the present value of his or her other
accrued benefits provided by all qualified plans within the
Aggregation Group, and (3) the aggregate distributions made
within the five year period ending on such Date. For this
purpose, the present value of the Employee's accrued benefit in
a defined benefit plan shall be determined by the method that is
used for benefit accrual purposes under all such plans
maintained by the Related Companies or, if there is no such
single method used under all such plans, as if the benefit
accrues no more rapidly than the slowest rate permitted by the
fractional accrual rule in Code section 411(b)(1)(C). Plan
Benefits shall exclude rollover contributions and similar
transfers made after December 31, 1983 as provided in Code
section 416(g)(4)(A).
(e) "Top Heavy". The Plan's status when the Plan Benefits of Key
Employees account for more than 60% of the Plan Benefits of all
Employees who have performed services at any time during the
five year period ending on the Determination Date. The Plan
Benefits of Employees who were, but are no longer, Key Employees
(because they have not been an officer or Owner during the five
year period), are excluded in the determination.
14.2 Special Contributions
(a) Minimum Contribution Requirement. For each Plan Year in which
the Plan is Top Heavy, the Employer shall not allow any
contributions (other than a Rollover Contribution from a plan
maintained by a non Related Company) to be made by or on behalf
of any Key Employee unless the Employer makes a contribution
(other than contributions made by an Employer in accordance with
a Participant's salary deferral election or contributions made
by an Employer based upon the amount contributed by a
Participant) on behalf of all Participants who were Eligible
Employees as of the last day of the Plan Year in an amount equal
to at least 3% of each such Participant's Taxable Income.
(b) Overriding Minimum Benefit. Notwithstanding, contributions shall
be permitted on behalf of Key Employees if the Employer also
maintains a defined benefit plan which automatically provides a
benefit which satisfies the Code section 416(c)(1) minimum
benefit requirements, including the adjustment provided in Code
section 416(h)(2)(A), if applicable. If the Plan is part of an
Aggregation Group under which a Key Employee is receiving a
benefit and no minimum contribution is provided under any other
plan, a minimum contribution of at least 3% of Taxable Income
shall be provided to the Participants specified in the
47
preceding paragraph. In addition, the Employer may offset a
defined benefit minimum by contributions (other than
contributions made by an Employer in accordance with a
Participant's salary deferral election or contributions made by
an Employer based upon the amount contributed by a Participant)
made to the Plan.
14.3 Adjustment to Combined Limits for Different Plans
For each Plan Year in which the Plan is Top Heavy, 100% shall be
substituted for 125% in determining the Defined Benefit Fraction and
the Defined Contribution Fraction. For Plan Years commencing after
December 31, 1999, the provisions of the preceding sentence shall no
longer be effective.
48
15 PLAN ADMINISTRATION
-------------------
15.1 Plan Delineates Authority and Responsibility
Plan fiduciaries include the Company, the Administrator, the
Committee and/or the Trustee, as applicable, whose specific duties
are delineated in the Plan and Trust. In addition, Plan fiduciaries
also include any other person to whom fiduciary duties or
responsibilities are delegated with respect to the Plan. Any person
or group may serve in more than one fiduciary capacity with respect
to the Plan. To the extent permitted under ERISA section 405, no
fiduciary shall be liable for a breach by another fiduciary.
15.2 Fiduciary Standards
Each fiduciary shall:
(a) discharge his or her duties in accordance with the Plan and
Trust to the extent they are consistent with ERISA;
(b) use that degree of care, skill, prudence and diligence that a
prudent person acting in a like capacity and familiar with such
matters would use in the conduct of an enterprise of a like
character and with like aims;
(c) act with the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying reasonable
expenses of administering the Plan;
(d) diversify Plan investments, to the extent such fiduciary is
responsible for directing the investment of Plan assets, so as
to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(e) treat similarly situated Participants and Beneficiaries in a
uniform and nondiscriminatory manner.
15.3 Company is ERISA Plan Administrator
The Company is the administrator of the Plan (within the meaning of
ERISA section 3(16)) and is responsible for compliance with all
reporting and disclosure requirements, except those that are
explicitly the responsibility of the Trustee under applicable law.
The Administrator and/or Committee shall have any necessary authority
to carry out such functions through the actions of the Administrator,
duly appointed officers of the Company and/or the Committee.
49
15.4 Administrator Duties
The Administrator shall have the discretionary authority to construe
the Plan and Trust, other than the provisions which relate to the
Trustee, and to do all things necessary or convenient to effect the
intent and purposes thereof, whether or not such powers are
specifically set forth in the Plan and Trust. Actions taken in good
faith by the Administrator shall be conclusive and binding on all
interested parties, and shall be given the maximum possible deference
allowed by law. In addition to the duties listed elsewhere in the
Plan and Trust, the Administrator's authority shall include, but not
be limited to, the discretionary authority to:
(a) determine who is eligible to participate, if a contribution
qualifies as a rollover contribution, the allocation of
Contributions, and the eligibility for loans, in-service
withdrawals and distributions;
(b) provide each Participant with a summary plan description no
later than 90 days after he or she has become a Participant (or
such other period permitted under ERISA section 104(b)(1)), as
well as informing each Participant of any material modification
to the Plan in a timely manner;
(c) make a copy of the following documents available to Participants
during normal work hours: the Plan and Trust (including
subsequent amendments), all annual and interim reports of the
Trustee related to the entire Plan, the latest annual report and
the summary plan description;
(d) determine the fact of a Participant's death and of any
Beneficiary's right to receive the deceased Participant's
interest based upon such proof and evidence as it deems
necessary;
(e) establish and review at least annually a funding policy bearing
in mind both the short-run and long-run needs and goals of the
Plan and to the extent Participants may direct their own
investments, the funding policy shall focus on which Investment
Funds are available for Participants to use; and
(f) adjudicate claims pursuant to the claims procedure described in
Section 18.
15.5 Advisors May be Retained
The Administrator may retain such agents and advisors (including
attorneys, accountants, actuaries, consultants, record keepers,
investment counsel and administrative assistants) as it considers
necessary to assist it in the performance of its duties. The
Administrator shall also comply with the bonding requirements of
ERISA section 412.
50
15.6 Delegation of Administrator Duties
The Company, as Administrator of the Plan, may appoint a Committee to
administer the Plan on its behalf. The Company shall provide the
Trustee with the names and specimen signatures of any persons
authorized to serve as Committee members and act as or on its behalf.
Any Committee member appointed by the Company shall serve at the
pleasure of the Company, but may resign by written notice to the
Company. Committee members shall serve without compensation from the
Plan for such services. Except to the extent that the Company
otherwise provides, any delegation of duties to the Committee shall
carry with it the full discretionary authority of the Administrator
to complete such duties.
15.7 Committee Operating Rules
(a) Actions of Majority. Any act delegated by the Company to the
Committee may be done by a majority of its members. The majority
may be expressed by a vote at a meeting or in writing without a
meeting, and a majority action shall be equivalent to an action
of all Committee members.
(b) Meetings. The Committee shall hold meetings upon such notice,
place and times as it determines necessary to conduct its
functions properly.
(c) Reliance by Trustee. The Committee may authorize one or more of
its members to execute documents on its behalf and may authorize
one or more of its members or other individuals who are not
members to give written direction to the Trustee in the
performance of its duties. The Committee shall provide such
authorization in writing to the Trustee with the name and
specimen signatures of any person authorized to act on its
behalf. The Trustee shall accept such direction and rely upon it
until notified in writing that the Committee has revoked the
authorization to give such direction. The Trustee shall not be
deemed to be on notice of any change in the membership of the
Committee, parties authorized to direct the Trustee in the
performance of its duties, or the duties delegated to and by the
Committee until notified in writing.
51
16 MANAGEMENT OF INVESTMENTS
-------------------------
16.1 Trust Agreement
All Plan assets shall be held by the Trustee in trust, in accordance
with those provisions of the Plan and Trust which relate to the
Trustee, for use in providing Plan benefits and paying Plan fees and
expenses not paid directly by the Employer. Plan benefits shall be
drawn solely from the Trust and paid by the Trustee as directed by
the Administrator. Notwithstanding, the Company may appoint, with the
approval of the Trustee, another trustee to hold and administer Plan
assets which do not meet the requirements of Section 16.2.
16.2 Investment Funds
The Administrator is hereby granted authority to direct the Trustee
to invest Trust assets in one or more Investment Funds. The number
and composition of Investment Funds may be changed from time to time,
without the necessity of amending the Plan and Trust. The Trustee may
establish reasonable limits on the number of Investment Funds as well
as the acceptable assets for any such Investment Fund. Each of the
Investment Funds may be comprised of any of the following:
(a) shares of a registered investment company, whether or not the
Trustee or any of its affiliates is an advisor to, or other
service provider to, such company;
(b) collective investment funds maintained by the Trustee, or any
other fiduciary to the Plan, which are available for investment
by trusts which are qualified under Code sections 401(a) and
501(a);
(c) individual equity and fixed income securities which are readily
tradable on the open market;
(d) synthetic guaranteed investment contracts and guaranteed
investment contracts issued by an insurance company and/or
synthetic guaranteed investment contracts and bank investment
contracts issued by a bank;
(e) interest bearing deposits (which may include interest bearing
deposits of the Trustee); and
(f) Company Stock.
Any Investment Fund assets invested in a collective investment fund,
shall be subject to all the provisions of the instruments
establishing and governing such fund. These instruments, including
any subsequent amendments, are incorporated herein by reference.
52
16.3 Authority to Hold Cash
The Trustee shall have the authority to cause the investment manager
of each Investment Fund to maintain sufficient deposit or money
market type assets in each Investment Fund to handle the Investment
Fund's liquidity and disbursement needs. Each Participant's and
Beneficiary's Sweep Account, which is used to hold assets pending
investment or disbursement, shall consist of interest bearing
deposits (which may include interest bearing deposits of the Trustee)
and/or money market type assets or funds.
16.4 Trustee to Act Upon Instructions
The Trustee shall carry out instructions to invest assets in the
Investment Funds as soon as practicable after such instructions are
received from the Administrator, Participants or Beneficiaries. Such
instructions shall remain in effect until changed by the
Administrator, Participants or Beneficiaries.
16.5 Administrator Has Right to Vote Registered Investment Company Shares
The Administrator shall be entitled to vote proxies or exercise any
shareholder rights relating to shares held on behalf of the Plan in a
registered investment company. Notwithstanding, the authority to vote
proxies and exercise shareholder rights related to such shares held
in a Custom Fund is vested as provided otherwise in Section 16.
16.6 Custom Fund Investment Management
The Administrator may designate, with the consent of the Trustee, an
investment manager for any Investment Fund established by the Trustee
solely for Participants of the Plan and, subject to Section 16.7, any
other qualified plan of the Company or a Related Company (a "Custom
Fund"). The investment manager may be the Administrator, Trustee or
an investment manager pursuant to ERISA section 3(38). The
Administrator shall advise the Trustee in writing of the appointment
of an investment manager and shall cause the investment manager to
acknowledge to the Trustee in writing that the investment manager is
a fiduciary to the Plan.
A Custom Fund shall be subject to the following:
(a) Guidelines. Written guidelines, acceptable to the Trustee, shall
be established for a Custom Fund. If a Custom Fund consists
solely of collective investment funds or shares of a registered
investment company (and sufficient deposit or money market type
assets to handle the Custom Fund's liquidity and disbursement
needs), its underlying instruments shall constitute the
guidelines.
(b) Authority of Investment Manager. The investment manager of a
53
Custom Fund shall have the authority to vote or execute proxies,
exercise shareholder rights, manage, acquire, and dispose of
Trust assets. Notwithstanding, if the Company provides for a
Company Stock Fund, the authority to vote proxies and exercise
shareholder rights related to shares of Company Stock held in
the Company Stock Fund is vested as provided otherwise in
Section 16.
(c) Custody and Trade Settlement. Unless otherwise agreed to by the
Trustee, the Trustee shall maintain custody of all Custom Fund
assets and be responsible for the settlement of all Custom Fund
trades. For purposes of this Section, shares of a collective
investment fund, shares of a registered investment company and
synthetic guaranteed investment contracts and guaranteed
investment contracts issued by an insurance company and/or
synthetic guaranteed investment contracts and bank investment
contracts issued by a bank, shall be regarded as the Custom Fund
assets instead of the underlying assets of such instruments.
(d) Limited Liability of Co-Fiduciaries. Neither the Administrator
nor the Trustee shall be obligated to invest or otherwise manage
any Custom Fund assets for which the Trustee or Administrator is
not the investment manager nor shall the Administrator or
Trustee be liable for acts or omissions with regard to the
investment of such assets except to the extent required by
ERISA.
16.7 Master Custom Fund
The Trustee may establish, at the direction of the Administrator, a
single Custom Fund (the "Master Custom Fund"), for the benefit of the
Plan and any other qualified plan of the Company or a Related Company
for which the Trustee acts as trustee pursuant to a plan and trust
document that contains a provision substantially identical to this
provision. The assets of the Plan, to the extent invested in the
Master Custom Fund, shall consist only of that percentage of the
assets of the Master Custom Fund represented by the shares held by
the Plan.
16.8 Authority to Segregate Assets
The Administrator may direct the Trustee to split an Investment Fund
into two or more funds in the event any assets in the Investment Fund
are illiquid or the value is not readily determinable. In the event
of such segregation, the Administrator shall give instructions to the
Trustee on what value to use for the split-off assets, and the
Trustee shall not be responsible for confirming such value.
16.9 Maximum Permitted Investment in Company Stock
If the Company provides for a Company Stock Fund, directly or through
a
54
Master Custom Fund, the Company Stock Fund shall be comprised of
Company Stock and sufficient deposit or money market type assets to
handle the Company Stock Fund's liquidity and disbursement needs. The
Company Stock Fund may be as large as necessary to comply with
Participants' and Beneficiaries' investment elections.
16.10 Participants Have Right to Vote and Tender Company Stock
Each Participant or Beneficiary shall be entitled to instruct the
Trustee as to the voting or tendering of any full or partial shares
of Company Stock held on his or her behalf in the Company Stock Fund.
Prior to such voting or tendering of Company Stock, each Participant
or Beneficiary shall receive a copy of the proxy solicitation or
other material relating to such vote or tender decision and a form
for the Participant or Beneficiary to complete which confidentially
instructs the Trustee to vote or tender such shares in the manner
indicated by the Participant or Beneficiary. Upon receipt of such
instructions, the Trustee shall act with respect to such shares as
instructed.
With regard to shares for which the Trustee receives no voting or
tendering instructions from Participants or Beneficiaries, the
Administrator shall instruct the Trustee with respect to how to vote
or tender such shares and the Trustee shall act with respect to such
shares as instructed.
16.11 Registration and Disclosure for Company Stock
The Administrator shall be responsible for determining the
applicability (and, if applicable, complying with) the requirements
of the Securities Act of 1933, as amended, the California Corporate
Securities Law of 1968, as amended, and any other applicable blue sky
law. The Administrator shall also specify what restrictive legend or
transfer restriction, if any, is required to be set forth on the
certificates for the securities and the procedure to be followed by
the Trustee to effectuate a resale of such securities.
55
17 TRUST ADMINISTRATION
--------------------
17.1 Trustee to Construe Trust
The Trustee shall have the discretionary authority to construe those
provisions of the Plan and Trust which relate to the Trustee and to
do all things necessary or convenient to the administration of the
Trust, whether or not such powers are specifically set forth in the
Plan and Trust. Actions taken in good faith by the Trustee shall be
conclusive and binding on all interested parties, and shall be given
the maximum possible deference allowed by law.
17.2 Trustee To Act As Owner of Trust Assets
Subject to the specific conditions and limitations set forth in the
Plan and Trust, the Trustee shall have all the power, authority,
rights and privileges of an absolute owner of the Trust assets and,
not in limitation but in amplification of the foregoing, may:
(a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge, mortgage,
lease, grant options respecting, repair, alter, insure, or
distribute any and all property in the Trust;
(b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription or
conversion privileges, exercise options and register any
securities in the Trust in the name of the nominee, in federal
book entry form or in any other form as shall permit title
thereto to pass by delivery;
(c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or
otherwise, or defend against the same, any obligations or claims
in favor of or against the Trust; and
(d) lend, through a collective investment fund, any securities held
in such collective investment fund to brokers, dealers or other
borrowers and to permit such securities to be transferred into
the name and custody and be voted by the borrower or others.
17.3 United States Indicia of Ownership
The Trustee shall not maintain the indicia of ownership of any Trust
assets outside the jurisdiction of the United States, except as
authorized under ERISA section 404(b).
56
17.4 Tax Withholding and Payment
(a) Withholding. The Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes with regard to any
Eligible Rollover Distribution that is not paid as a Direct
Rollover in accordance with the Participant's withholding
election or as required by law if no election is made or the
election is less than the amount required by law. With regard to
any taxable distribution that is not an Eligible Rollover
Distribution, the Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes in accordance with the
Participant's withholding election or as required by law if no
election is made.
(b) Taxes Due From Investment Funds. The Trustee shall pay from the
Investment Fund any taxes or assessments imposed by any taxing
or governmental authority on such Investment Fund or its income,
including related interest and penalties.
17.5 Trust Accounting
(a) Annual Report. Within 60 days (or other reasonable period)
following the close of the Plan Year, the Trustee shall provide
the Administrator with an annual accounting of Trust assets and
information to assist the Administrator in meeting ERISA's
annual reporting and audit requirements.
(b) Periodic Reports. The Trustee shall maintain records and provide
sufficient reporting to allow the Administrator to properly
monitor the Trust's assets and activity.
(c) Administrator Approval. Approval of any Trustee accounting shall
automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection with the Trustee within such time period. Such
approval shall be final as to all matters and transactions
stated or shown therein and binding upon the Administrator.
57
17.6 Valuation of Certain Assets
If the Trustee determines the Trust holds any asset which is not
readily tradable and listed on a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, the
Trustee may engage a qualified independent appraiser to determine the
fair market value of such property, and the appraisal fees shall be
paid from the Investment Fund containing the asset.
17.7 Legal Counsel
The Trustee may consult with legal counsel of its choice, including
counsel for the Employer or counsel of the Trustee, upon any question
or matter arising under the Plan and Trust. When relied upon by the
Trustee, the opinion of such counsel shall be evidence that the
Trustee has acted in good faith.
17.8 Fees and Expenses
The Trustee's fees for its services as Trustee shall be such as may
be mutually agreed upon by the Company and the Trustee. Trustee fees
and all reasonable expenses of counsel and advisors retained by the
Trustee shall be paid in accordance with Section 6.
17.9 Trustee Duties and Limitations
The Trustee's duties, unless otherwise agreed to by the Trustee,
shall be confined to construing the terms of the Plan and Trust as
they relate to the Trustee, receiving funds on behalf of and making
payments from the Trust, safeguarding and valuing Trust assets,
investing and reinvesting Trust assets in the Investment Funds as
directed by the Administrator, Participants or Beneficiaries, and
those duties as described in this Section 17.
The Trustee shall have no duty or authority to ascertain whether
Contributions are in compliance with the Plan, to enforce collection
or to compute or verify the accuracy or adequacy of any amount to be
paid to it by the Employer. The Trustee shall not be liable for the
proper application of any part of the Trust with respect to any
disbursement made at the direction of the Administrator.
58
18 RIGHTS, PROTECTION, CONSTRUCTION AND JURISDICTION
-------------------------------------------------
18.1 Plan Does Not Affect Employment Rights
The Plan does not provide any employment rights to any Employee. The
Employer expressly reserves the right to discharge an Employee at any
time, with or without cause, without regard to the effect such
discharge would have upon the Employee's interest in the Plan.
18.2 Compliance With USERRA
Notwithstanding any provision of the Plan to the contrary, with
regard to an Employee who after serving in the uniformed services is
reemployed on or after December 12, 1994, within the time required by
USERRA, contributions shall be made and benefits and service credit
shall be provided under the Plan with respect to his or her qualified
military service (as defined in Code section 414(u)(5)) in accordance
with Code section 414(u). Furthermore, notwithstanding any provision
of the Plan to the contrary, Participant loan payments may be
suspended during a period of qualified military service.
18.3 Limited Return of Contributions
Except as provided in this Section 18.3, (i) Plan assets shall not
revert to the Employer nor be diverted for any purpose other than the
exclusive benefit of Participants and Beneficiaries and defraying
reasonable expenses of administering the Plan; and (ii) a
Participant's vested interest shall not be subject to divestment. As
provided in ERISA section 403(c)(2), the actual amount of a
Contribution or portion thereof made by the Employer (or the current
value of such if a net loss has occurred) may revert to the Employer
if:
(a) such Contribution or portion thereof is made by reason of a
mistake of fact;
(b) a determination with respect to the initial qualification of the
Plan under Code section 401(a) is not received and a request for
such determination is made within the time prescribed under Code
section 401(b) (the existence of and Contributions under the
Plan are hereby conditioned upon such initial qualification); or
(c) such Contribution or portion thereof is not deductible under
Code section 404 (such Contributions are hereby conditioned upon
such deductibility) in the taxable year of the Employer for
which the Contribution is made.
The reversion to the Employer must be made (if at all) within one
year of the mistaken payment, the date of denial of qualification, or
the date of disallowance of deduction, as the case may be. A
Participant shall have no rights under the Plan with respect to any
such reversion.
59
18.4 Assignment and Alienation
As provided by Code section 401(a)(13) and to the extent not
otherwise required by law, no benefit provided by the Plan may be
anticipated, assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit with
respect to a Participant pursuant to a QDRO; or
(b) to use a Participant's vested Account balance as security for a
loan from the Plan which is permitted pursuant to Code section
4975.
18.5 Facility of Payment
If a Plan benefit is due to be paid to a minor or if the
Administrator reasonably believes that any payee is legally incapable
of giving a valid receipt and discharge for any payment due him or
her, the Administrator shall have the payment of the benefit, or any
part thereof, made to the person (or persons or institution) whom it
reasonably believes is caring for or supporting the payee, unless it
has received due notice of claim therefor from a duly appointed
guardian or conservator of the payee. Any payment shall to the extent
thereof, be a complete discharge of any liability under the Plan to
the payee.
18.6 Reallocation of Lost Participant's Accounts
If the Administrator cannot locate a person entitled to payment of a
Plan benefit after a reasonable search, the Administrator may at any
time thereafter treat such person's Account as forfeited and use such
amount as described in Section 8. If such person subsequently
presents the Administrator with a valid claim for the benefit, such
person shall be paid the amount treated as forfeited, plus the
interest that would have been earned in the Sweep Account to the date
of determination. The Administrator shall pay the amount through an
additional amount contributed by the Employer or direct the Trustee
to pay the amount from the Forfeiture Account.
18.7 Suspension of Certain Plan Provisions During Conversion Period
Notwithstanding any provision of the Plan to the contrary, during any
Conversion Period, in accordance with procedures established by the
Administrator and the Trustee, the Administrator may temporarily
suspend, in whole or in part, certain provisions under the Plan,
which may include, but are not limited to, a Participant's right to
change his or her Contribution election, a Participant's right to
change his or her investment election and a Participant's right to
borrow or withdraw from his or her Account or obtain a distribution
from his or her Account.
18.8 Suspension of Certain Plan Provisions During Other Periods
60
Notwithstanding any provision of the Plan to the contrary, in
accordance with procedures established by the Administrator and the
Trustee, the Administrator may temporarily suspend a Participant's
right to borrow or withdraw from his or her Account or obtain a
distribution from his or her Account, if (i) the Administrator
receives a domestic relations order and the Participant's Account is
a source of the payment for such domestic relations order, or (ii) if
the Administrator receives notice that a domestic relations order is
being sought by the Participant, his or her spouse, former spouse,
child or other dependent (as defined in Code section 152) and the
Participant's Account is a source of the payment for such domestic
relations order. Such suspension may continue for a reasonable period
of time (as determined by the Administrator) which may include the
period of time the Administrator, a court of competent jurisdiction
or other appropriate person is determining whether the domestic
relations order qualifies as a QDRO.
18.9 Claims Procedure
(a) Right to Make Claim. An interested party who disagrees with the
Administrator's determination of his or her right to Plan
benefits must submit a written claim and exhaust this claim
procedure before legal recourse of any type is sought. The claim
must include the important issues the interested party believes
support the claim. The Administrator, pursuant to the authority
provided in the Plan, shall either approve or deny the claim.
(b) Process for Denying a Claim. The Administrator's partial or
complete denial of an initial claim must include an
understandable, written response covering (1) the specific
reasons why the claim is being denied (with reference to the
pertinent Plan provisions) and (2) the steps necessary to
perfect the claim and obtain a final review.
(c) Appeal of Denial and Final Review. The interested party may make
a written appeal of the Administrator's initial decision, and
the Administrator shall respond in the same manner and form as
prescribed for denying a claim initially.
(d) Time Frame. The initial claim, its review, appeal and final
review shall be made in a timely fashion, subject to the
following time table:
Days to Respond
Action From Last Action
------ ----------------
Administrator determines benefit NA
Interested party files initial request 60 days
Administrator's initial decision 90 days
Interested party requests final review 60 days
Administrator's final decision 60 days
However, the Administrator may take up to twice the maximum
61
response time for its initial and final review if it provides an
explanation within the normal period of why an extension is
needed and when its decision shall be forthcoming.
18.10 Construction
Headings are included for reading convenience. The text shall control
if any ambiguity or inconsistency exists between the headings and the
text. The singular and plural shall be interchanged wherever
appropriate. References to Participant shall include Alternate Payee
and/or Beneficiary when appropriate and even if not otherwise already
expressly stated.
18.11 Jurisdiction and Severability
The Plan and Trust shall be construed, regulated and administered
under ERISA and other applicable federal laws and, where not
otherwise preempted, by the laws of the State of New Jersey. If any
provision of the Plan and Trust is or becomes invalid or otherwise
unenforceable, that fact shall not affect the validity or
enforceability of any other provision of the Plan and Trust. All
provisions of the Plan and Trust shall be so construed as to render
them valid and enforceable in accordance with their intent.
18.12 Indemnification by Employer
The Employers hereby agree to indemnify all Plan fiduciaries against
any and all liabilities resulting from any action or inaction,
(including a Plan termination in which the Company fails to apply for
a favorable determination from the Internal Revenue Service with
respect to the qualification of the Plan upon its termination), in
relation to the Plan or Trust (i) including (without limitation)
expenses reasonably incurred in the defense of any claim relating to
the Plan or its assets, and amounts paid in any settlement relating
to the Plan or its assets, but (ii) excluding liability resulting
from actions or inactions made in bad faith, or resulting from the
negligence or willful misconduct of the Trustee. The Company shall
have the right, but not the obligation, to conduct the defense of any
action to which this Section applies. The Plan fiduciaries are not
entitled to indemnity from the Plan assets relating to any such
action.
62
19 AMENDMENT, MERGER, DIVESTITURES AND TERMINATION
-----------------------------------------------
19.1 Amendment
The Company reserves the right to amend the Plan and Trust at any
time, to any extent and in any manner it may deem necessary or
appropriate. The Company (and not the Trustee) shall be responsible
for adopting any amendments necessary to maintain the qualified
status of the Plan and Trust under Code sections 401(a) and 501(a).
If the Committee is acting as the Administrator in accordance with
Section 15.6, it shall have the authority to adopt Plan and Trust
amendments which have no substantial adverse financial impact upon
any Employer or the Plan. All interested parties shall be bound by
any amendment, provided that no amendment shall:
(a) become effective unless it has been adopted in accordance with
the procedures set forth in Section 19.5;
(b) except to the extent permissible under ERISA and the Code, make
it possible for any portion of the Trust assets to revert to an
Employer or to be used for, or diverted to, any purpose other
than for the exclusive benefit of Participants and Beneficiaries
entitled to Plan benefits and to defray reasonable expenses of
administering the Plan;
(c) decrease the rights of any Participant to benefits accrued
(including the elimination of optional forms of benefits) to the
date on which the amendment is adopted, or if later, the date
upon which the amendment becomes effective, except to the extent
permitted under ERISA and the Code; nor
(d) permit a Participant to be paid any portion of his or her
Account subject to the distribution rules of Code section 401(k)
unless the payment would otherwise be permitted under Code
section 401(k).
19.2 Merger
The Plan and Trust may not be merged or consolidated with, nor may
its assets or liabilities be transferred to, another plan unless each
Participant and Beneficiary would, if the resulting plan were then
terminated, receive a benefit just after the merger, consolidation or
transfer which is at least equal to the benefit which would be
received if either plan had terminated just before such event.
19.3 Divestitures
In the event of a sale of: (i) substantially all of the assets used
in a trade or business of an Employer to an unrelated corporation, or
(ii) a sale of a subsidiary which is an Employer or an Employer's
interest in a subsidiary to an unrelated entity or individual, lump
sum distributions shall be permitted from
63
the Plan, except as provided below, to Participants with respect to
Employees who continue employment with the corporation acquiring such
assets or who continue employment with such subsidiary, as
applicable.
Notwithstanding, distributions shall not be permitted if the
purchaser agrees, in connection with the sale, to be substituted as
the Company as the sponsor of the Plan or to accept a transfer in a
transaction subject to Code section 414(I)(1) of the assets and
liabilities representing the Participants' benefits into a plan of
the purchaser or a plan to be established by the purchaser.
19.4 Plan Termination and Complete Discontinuance of Contributions
The Company may, at any time and for any reason, terminate the Plan
in accordance with the procedures set forth in Section 19.5, or
completely discontinue contributions. Upon either of these events, or
in the event of a partial termination of the Plan within the meaning
of Code section 411(d)(3), the Accounts of each affected Participant
who has not yet incurred a forfeitable event as described in Section
8 shall be fully vested.
In the event of the Plan's termination, if no successor plan is
established or maintained, lump sum distributions shall be made in
accordance with the terms of the Plan as in effect at the time of the
Plan's termination or as thereafter amended, provided that a post-
termination amendment shall not be effective to the extent that it
violates Section 19.1 unless it is required in order to maintain the
qualified status of the Plan upon its termination. The Trustee's and
Employer's authority shall continue beyond the Plan's termination
date until all Trust assets have been liquidated and distributed.
19.5 Amendment and Termination Procedures
The following procedural requirements shall govern the adoption of
any amendment or termination (a "Change") of the Plan and Trust:
(a) The Company may adopt any Change by action of its board of
directors in accordance with its normal procedures.
(b) The Committee, if acting as Administrator in accordance with
Section 15.6, may adopt any Change within the scope of its
authority provided under Section 19.1 and in the manner
specified in Section 15.7(a).
(c) Any Change must be (1) set forth in writing, and (2) signed and
dated by an executive officer of the Company or, in the case of
a Change adopted by the Committee, at least one of its members.
(d) If the effective date of any Change is not specified in the
document setting forth the Change, it shall be effective as of
the date it is signed by the last person whose signature is
required under clause (2) above, except to the extent that
another effective date is necessary to
64
maintain the qualified status of the Plan and Trust under Code
sections 401(a) and 501(a).
(e) No Change shall become effective until it is accepted and signed
by the Trustee (which acceptance shall not unreasonably be
withheld).
19.6 Termination of Employer's Participation
Any Employer may, at any time and for any reason, terminate its Plan
participation by action of its board of directors in accordance with
its normal procedures. Written notice of such action shall be signed
and dated by an executive officer of the Employer and delivered to
the Company. If the effective date of such action is not specified,
it shall be effective on, or as soon as reasonably practicable after,
the date of delivery. Upon the Employer's request, the Company may
instruct the Trustee and Administrator to spin off all affected
Accounts and underlying assets into a separate qualified plan under
which the Employer shall assume the powers and duties of the Company.
Alternatively, the Company may continue to maintain the Accounts
under the Plan.
19.7 Replacement of the Trustee
The Trustee may resign as Trustee under the Plan and Trust or may be
removed by the Company at any time upon at least 90 days written
notice (or less if agreed to by both parties). In such event, the
Company shall appoint a successor trustee by the end of the notice
period. The successor trustee shall then succeed to all the powers
and duties of the Trustee under the Plan and Trust. If no successor
trustee has been named by the end of the notice period, the Company's
chief executive officer shall become the trustee, or if he or she
declines, the Trustee may petition the court for the appointment of a
successor trustee.
19.8 Final Settlement and Accounting of Trustee
(a) Final Settlement. As soon as administratively feasible after its
resignation or removal as Trustee, the Trustee shall transfer to
the successor trustee all property currently held by the Trust.
However, the Trustee is authorized to reserve such sum of money
as it may deem advisable for payment of its accounts and
expenses in connection with the settlement of its accounts or
other fees or expenses payable by the Trust. Any balance
remaining after payment of such fees and expenses shall be paid
to the successor trustee.
(b) Final Accounting. The Trustee shall provide a final accounting
to the Administrator within 90 days of the date Trust assets are
transferred to the successor trustee.
65
(c) Administrator Approval. Approval of the final accounting shall
automatically occur 90 days after such accounting has been
received by the Administrator, unless the Administrator files a
written objection with the Trustee within such time period. Such
approval shall be final as to all matters and transactions
stated or shown therein and binding upon the Administrator.
66
APPENDIX A - INVESTMENT FUNDS
I. Investment Funds Available
The Investment Funds offered under the Plan as of the Effective Date
include this set of daily valued funds, except that the Company Stock Fund
shall instead be effective at such later date as determined by the
Administrator:
Category Funds
-------- ------
Money Market Money Market
------------
Income Income Accumulation
------
Balanced Fidelity Asset Manager
--------
Equity Xxxxxx 100
------- Company Stock
IDS New Dimensions
S&P 500 Stock
Xxxxxxxxx Foreign
II. Default Investment Fund
The default Investment Fund as of the Effective Date is the Income
Accumulation Fund.
III. Maximum Percentage Restrictions Applicable to Certain Investment Funds
At such time as the Company Stock Fund is offered as an Investment Fund
under the Plan, the maximum percentage of a Participant's or Beneficiary's
total election that he or she may direct to the Company Stock Fund shall be
25%.
00
XXXXXXXX X - PAYMENT OF PLAN FEES AND EXPENSES
As of the Effective Date, payment of Plan fees and expenses shall be as follows:
I. Investment Management Fees: These are paid by Participants in that
management fees reduce the investment return reported and credited to
Participants.
II. Custom Fund Maintenance Fees: The Employer shall pay the maintenance fees
for Investment Funds that are Custom Funds as such term is defined in
Section 16. These are paid by the Employer on a quarterly basis.
III. Recordkeeping Fees: These are paid by the Employer on a quarterly basis.
IV. Loan Fees: A $3.50 per month fee is assessed and billed/collected quarterly
from the Account of each Participant who has an outstanding loan balance.
V. Investment Fund Election Changes: For each Investment Fund election change
by a Participant, in excess of four changes per year, a $10 fee shall be
assessed and billed/collected quarterly from the Participant's Account.
VI. Periodic Installment Payment Fees: A $3.00 per check fee shall be assessed
and billed/collected quarterly from the Account of each Participant for
whom a check representing a periodic installment payment is issued.
VII. Additional Fees Paid by Employer: All other Plan related fees and expenses
shall be paid by the Employer. To the extent that the Administrator later
elects that any such fees shall be borne by Participants, estimates of the
fees shall be determined and reconciled, at least annually, and the fees
shall be assessed monthly and billed/collected from Accounts quarterly.
68
APPENDIX C - LOAN INTEREST RATE
As of the Effective Date, the interest rate charged on Participant loans shall
be equal to the prime rate published in The Wall Street Journal at the time the
loan is processed, plus 1%. If multiple prime rates are published in The Wall
Street Journal, the prime rate selected shall be the rate closest to the last
prime rate used for this purpose.
69
