1
EXHIBIT 4.7
GROUP 1 AUTOMOTIVE, INC.
401(k) SAVINGS PLAN
Effective Date: July 1, 1999
2
GROUP 1 AUTOMOTIVE, INC.
401(k) SAVINGS PLAN
THIS AGREEMENT AND DECLARATION OF TRUST is by and between GROUP 1
AUTOMOTIVE, INC., a Delaware corporation, hereinafter referred to as the
"COMPANY," and XXXXXXX XXXXX TRUST COMPANY, FSB, hereinafter referred to as
"TRUSTEE."
W I T N E S S E T H :
WHEREAS, the Company, desiring to aid its employees in making provision for
their retirement, has decided to adopt the following GROUP 1 AUTOMOTIVE, INC.
401(k) SAVINGS PLAN (the "PLAN");
NOW THEREFORE, the Plan is hereby adopted as follows, effective as of
July 1, 1999:
(i)
3
TABLE OF CONTENTS
PAGE
I. DEFINITIONS AND CONSTRUCTION...........................................................................I-1
1.1 DEFINITIONS...................................................................................I-1
(1) ACCOUNT(s)...........................................................................I-1
(2) ACT..................................................................................I-1
(3) BEFORE-TAX ACCOUNT...................................................................I-1
(4) BEFORE-TAX CONTRIBUTIONS.............................................................I-1
(5) BENEFIT COMMENCEMENT DATE............................................................I-1
(6) BUSINESS UNIT........................................................................I-1
(7) CODE.................................................................................I-1
(8) COMMITTEE............................................................................I-1
(9) COMPANY..............................................................................I-1
(10) COMPANY STOCK........................................................................I-1
(11) COMPENSATION.........................................................................I-1
(12) CONTROLLED ENTITY....................................................................I-2
(13) DIRECT ROLLOVER......................................................................I-3
(14) DIRECTORS............................................................................I-3
(15) DISTRIBUTEE..........................................................................I-3
(16) EFFECTIVE DATE.......................................................................I-3
(17) ELIGIBLE EMPLOYEE....................................................................I-3
(18) ELIGIBLE RETIREMENT PLAN.............................................................I-3
(19) ELIGIBLE ROLLOVER DISTRIBUTION.......................................................I-3
(20) EMPLOYEE.............................................................................I-4
(21) EMPLOYER.............................................................................I-4
(22) EMPLOYER CONTRIBUTION ACCOUNT........................................................I-4
(23) EMPLOYER CONTRIBUTIONS...............................................................I-4
(24) EMPLOYER MATCHING CONTRIBUTIONS......................................................I-4
(25) EMPLOYER SAFE HARBOR CONTRIBUTIONS...................................................I-4
(26) EMPLOYMENT COMMENCEMENT DATE.........................................................I-4
(27) HIGHLY COMPENSATED EMPLOYEE..........................................................I-4
(28) HOUR OF SERVICE......................................................................I-5
(29) INVESTMENT FUND......................................................................I-5
(30) LEASED EMPLOYEE......................................................................I-5
(31) MEMBER...............................................................................I-5
(32) NORMAL RETIREMENT DATE...............................................................I-6
(33) PARTICIPATION SERVICE................................................................I-6
(34) PERIOD OF SERVICE....................................................................I-6
(35) PERIOD OF SEVERANCE..................................................................I-6
(36) PLAN.................................................................................I-6
(37) PLAN YEAR............................................................................I-6
(38) REEMPLOYMENT COMMENCEMENT DATE.......................................................I-6
(39) ROLLOVER CONTRIBUTION ACCOUNT........................................................I-6
(ii)
4
(40) ROLLOVER CONTRIBUTIONS...............................................................I-6
(41) SEASONAL EMPLOYEE....................................................................I-6
(42) SERVICE..............................................................................I-6
(43) SEVERANCE FROM SERVICE DATE..........................................................I-7
(44) TRUST................................................................................I-7
(45) TRUST AGREEMENT......................................................................I-7
(46) TRUST FUND...........................................................................I-7
(47) TRUSTEE..............................................................................I-7
(48) VESTED INTEREST......................................................................I-7
(49) VESTING SERVICE......................................................................I-7
(50) YEAR OF SERVICE......................................................................I-7
1.2 NUMBER AND GENDER.............................................................................I-7
1.3 HEADINGS......................................................................................I-7
1.4 CONSTRUCTION..................................................................................I-8
II. PARTICIPATION.........................................................................................II-1
2.1 ELIGIBILITY FOR EMPLOYEES OTHER THAN SEASONAL EMPLOYEES......................................II-1
2.2 ELIGIBILITY FOR SEASONAL EMPLOYEES...........................................................II-1
2.3 PARTICIPATION SERVICE........................................................................II-2
2.4 YEAR OF SERVICE..............................................................................II-2
III. CONTRIBUTIONS........................................................................................III-1
3.1 BEFORE-TAX CONTRIBUTIONS....................................................................III-1
3.2 EMPLOYER MATCHING CONTRIBUTIONS.............................................................III-2
3.3 EMPLOYER SAFE HARBOR CONTRIBUTIONS..........................................................III-2
3.4 RESTRICTIONS ON EMPLOYER MATCHING CONTRIBUTIONS.............................................III-3
3.5 RETURN OF CONTRIBUTIONS.....................................................................III-3
3.6 DISPOSITION OF EXCESS DEFERRALS AND EXCESS CONTRIBUTIONS....................................III-3
3.7 ROLLOVER CONTRIBUTIONS......................................................................III-5
IV. ALLOCATIONS AND LIMITATIONS...........................................................................IV-1
4.1 SUSPENDED AMOUNTS............................................................................IV-1
4.2 ALLOCATION OF CONTRIBUTIONS..................................................................IV-1
4.3 APPLICATION OF FORFEITURES...................................................................IV-2
4.4 VALUATION OF ACCOUNTS........................................................................IV-2
4.5 LIMITATIONS AND CORRECTIONS..................................................................IV-2
V. INVESTMENT OF ACCOUNTS.................................................................................V-1
5.1 INVESTMENT OF ACCOUNTS........................................................................V-1
VI. RETIREMENT BENEFITS...................................................................................VI-1
6.1 RETIREMENT BENEFITS..........................................................................VI-1
(iii)
5
VII. DISABILITY BENEFITS..................................................................................VII-1
7.1 DISABILITY BENEFITS.........................................................................VII-1
7.2 TOTAL AND PERMANENT DISABILITY DETERMINED...................................................VII-1
VIII. SEVERANCE BENEFITS AND DETERMINATION OF VESTED INTEREST.............................................VIII-1
8.1 NO BENEFITS UNLESS HEREIN SET FORTH........................................................VIII-1
8.2 SEVERANCE BENEFIT..........................................................................VIII-1
8.3 DETERMINATION OF VESTED INTEREST...........................................................VIII-1
8.4 CREDITING OF VESTING SERVICE...............................................................VIII-2
8.5 FORFEITURE OF VESTING SERVICE..............................................................VIII-2
8.6 FORFEITURES OF NONVESTED ACCOUNT BALANCE...................................................VIII-2
8.7 RESTORATION OF FORFEITED ACCOUNT BALANCE...................................................VIII-3
8.8 SPECIAL FORMULA FOR DETERMINING VESTED INTEREST FOR PARTIAL ACCOUNTS.......................VIII-3
IX. DEATH BENEFITS........................................................................................IX-1
9.1 DEATH BENEFITS...............................................................................IX-1
9.2 DESIGNATION OF BENEFICIARIES.................................................................IX-1
X. TIME AND FORM OF PAYMENT OF BENEFITS...................................................................X-1
10.1 DETERMINATION OF BENEFIT COMMENCEMENT DATE....................................................X-1
10.2 FORM OF PAYMENT AND PAYEE.....................................................................X-2
10.3 DIRECT ROLLOVER ELECTION......................................................................X-2
10.4 UNCLAIMED BENEFITS............................................................................X-2
10.5 CLAIMS REVIEW.................................................................................X-3
XI. IN-SERVICE WITHDRAWALS................................................................................XI-1
11.1 IN-SERVICE WITHDRAWALS.......................................................................XI-1
11.2 RESTRICTION ON IN-SERVICE WITHDRAWALS........................................................XI-2
XII. LOANS................................................................................................XII-1
12.1 ELIGIBILITY FOR LOAN........................................................................XII-1
12.2 MAXIMUM LOAN................................................................................XII-1
XIII. ADMINISTRATION OF THE PLAN..........................................................................XIII-1
13.1 APPOINTMENT OF COMMITTEE..................................................................XIII-1
13.2 TERM, VACANCIES, RESIGNATION, AND REMOVAL..................................................XIII-1
13.3 OFFICERS, RECORDS, AND PROCEDURES..........................................................XIII-1
13.4 MEETINGS...................................................................................XIII-1
13.5 SELF-INTEREST OF MEMBERS...................................................................XIII-1
13.6 COMPENSATION AND BONDING...................................................................XIII-2
13.7 COMMITTEE POWERS AND DUTIES................................................................XIII-2
13.8 EMPLOYER TO SUPPLY INFORMATION.............................................................XIII-3
(iv)
6
13.9 TEMPORARY RESTRICTIONS.....................................................................XIII-3
13.10 INDEMNIFICATION............................................................................XIII-3
XIV. TRUSTEE AND ADMINISTRATION OF TRUST FUND.............................................................XIV-1
14.1 APPOINTMENT, RESIGNATION, REMOVAL, AND REPLACEMENT OF TRUSTEE...............................XIV-1
14.2 TRUST AGREEMENT.............................................................................XIV-1
14.3 PAYMENT OF EXPENSES.........................................................................XIV-1
14.4 TRUST FUND PROPERTY.........................................................................XIV-1
14.5 DISTRIBUTIONS FROM MEMBERS' ACCOUNTS........................................................XIV-2
14.6 PAYMENTS SOLELY FROM TRUST FUND.............................................................XIV-2
14.7 NO BENEFITS TO THE EMPLOYER.................................................................XIV-2
XV. FIDUCIARY PROVISIONS..................................................................................XV-1
15.1 ARTICLE CONTROLS.............................................................................XV-1
15.2 GENERAL ALLOCATION OF FIDUCIARY DUTIES.......................................................XV-1
15.3 FIDUCIARY DUTY...............................................................................XV-1
15.4 DELEGATION OF FIDUCIARY DUTIES...............................................................XV-1
15.5 INVESTMENT MANAGER...........................................................................XV-2
XVI. AMENDMENTS...........................................................................................XVI-1
16.1 RIGHT TO AMEND..............................................................................XVI-1
16.2 LIMITATION ON AMENDMENTS....................................................................XVI-1
XVII. DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION, PARTIAL TERMINATION, AND MERGER OR CONSOLIDATION......XVII-1
17.1 RIGHT TO DISCONTINUE CONTRIBUTIONS, TERMINATE, OR PARTIALLY TERMINATE......................XVII-1
17.2 PROCEDURE IN THE EVENT OF DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION, OR
PARTIAL TERMINATION........................................................................XVII-1
17.3 MERGER, CONSOLIDATION, OR TRANSFER.........................................................XVII-1
XVIII. PARTICIPATING EMPLOYERS..............................................................................XVIII-1
18.1 DESIGNATION OF OTHER EMPLOYERS............................................................XVIII-1
18.2 SINGLE PLAN...............................................................................XVIII-2
XIX. MISCELLANEOUS PROVISIONS.............................................................................XIX-1
19.1 NOT CONTRACT OF EMPLOYMENT..................................................................XIX-1
19.2 ALIENATION OF INTEREST FORBIDDEN............................................................XIX-1
19.3 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT REQUIREMENTS......................XIX-1
19.4 PAYMENTS TO MINORS AND INCOMPETENTS.........................................................XIX-1
19.5 ACQUISITION AND HOLDING OF COMPANY STOCK....................................................XIX-1
19.6 MEMBER'S AND BENEFICIARY'S ADDRESSES........................................................XIX-2
(v)
7
19.7 INCORRECT INFORMATION, FRAUD, CONCEALMENT, OR ERROR.........................................XIX-2
19.8 SEVERABILITY................................................................................XIX-2
19.9 JURISDICTION................................................................................XIX-2
XX. TOP-HEAVY STATUS......................................................................................XX-1
20.1 ARTICLE CONTROLS.............................................................................XX-1
20.2 DEFINITIONS..................................................................................XX-1
(a) ACCOUNT BALANCE.....................................................................XX-1
(b) ACCRUED BENEFIT.....................................................................XX-1
(c) AGGREGATION GROUP...................................................................XX-1
(d) ASSUMPTIONS.........................................................................XX-2
(e) DETERMINATION DATE..................................................................XX-2
(f) KEY EMPLOYEE........................................................................XX-2
(g) PLAN YEAR...........................................................................XX-2
(h) REMUNERATION........................................................................XX-2
(i) VALUATION DATE......................................................................XX-2
20.3 TOP-HEAVY STATUS.............................................................................XX-2
20.4 TERMINATION OF TOP-HEAVY STATUS..............................................................XX-3
20.5 EFFECT OF ARTICLE............................................................................XX-4
APPENDIX A
(vi)
8
I.
DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. Where the following words and phrases appear in the
Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.
(1) ACCOUNT(S): A Member's Before-Tax Account, Employer Contribution
Account, and/or Rollover Contribution Account, including the amounts
credited thereto.
(2) ACT: The Employee Retirement Income Security Act of 1974, as amended.
(3) BEFORE-TAX ACCOUNT: An individual account for each Member, which is
credited with the Before-Tax Contributions made by the Employer on such
Member's behalf and the Employer Safe Harbor Contributions, if any,
made on such Member's behalf pursuant to Section 3.3 to satisfy the
restrictions set forth in Section 3.1(e) and which is credited with (or
debited for) such account's allocation of net income (or net loss) and
changes in value of the Trust Fund.
(4) BEFORE-TAX CONTRIBUTIONS: Contributions made to the Plan by the
Employer on a Member's behalf in accordance with the Member's elections
to defer Compensation under the Plan's qualified cash or deferred
arrangement as described in Section 3.1.
(5) BENEFIT COMMENCEMENT DATE: With respect to each Member or beneficiary,
the date such Member's or beneficiary's benefit is paid to him from the
Trust Fund.
(6) BUSINESS UNIT: An operating unit of the Employer's business, whether or
not separately incorporated, as determined by the Directors.
(7) CODE: The Internal Revenue Code of 1986, as amended.
(8) COMMITTEE: The administrative committee appointed by the Directors to
administer the Plan.
(9) COMPANY: Group 1 Automotive, Inc.
(10) COMPANY STOCK: The common stock of Group 1 Automotive, Inc.
(11) COMPENSATION: The total of all wages, salaries, fees for professional
service and other amounts received in cash or in kind by a Member for
services actually rendered or labor performed for the Employer while a
Member and an Employee to the extent such amounts are includable in
gross income, subject to the following adjustments and limitations:
(A) The following shall be excluded:
I-1
9
(i) reimbursements and other expense allowances;
(ii) cash and noncash fringe benefits;
(iii) moving expenses;
(iv) Employer contributions to or payments from this or
any other deferred compensation program, whether such
program is qualified under section 401(a) of the Code
or nonqualified;
(v) welfare benefits;
(vi) amounts realized from the receipt or exercise of a
stock option that is not an incentive stock option
within the meaning of section 422 of the Code;
(vii) amounts realized at the time property described in
section 83 of the Code is freely transferable or no
longer subject to a substantial risk of forfeiture;
(viii) amounts realized as a result of an election described
in section 83(b) of the Code;
(ix) any amount realized as a result of a disqualifying
disposition within the meaning of section 421(a) of
the Code; and
(x) any other amounts that receive special tax benefits
under the Code but are not hereinafter included.
(B) Elective contributions made on a Member's behalf by the
Employer that are not includable in income under section 125
or section 402(e)(3) of the Code and any amounts that are not
includable in the gross income of a Member under a salary
reduction agreement by reason of the application of section
132(f) of the Code shall be included.
(C) The Compensation of any Member taken into account for purposes
of the Plan shall be limited to $160,000 for any Plan Year
with such limitation to be:
(i) adjusted automatically to reflect any amendments to
section 401(a)(17) of the Code and any cost-of-living
increases authorized by section 401(a)(17) of the
Code; and
(ii) prorated for a Plan Year of less than twelve months
and to the extent otherwise required by applicable
law.
(12) CONTROLLED ENTITY: Each corporation that is a member of a controlled
group of corporations, within the meaning of section 1563(a)
(determined without regard to sections 1563(a)(4) and
I-2
10
1563(e)(3)(C)) of the Code, of which the Employer is a member, each
trade or business (whether or not incorporated) with which the Employer
is under common control, and each member of an affiliated service
group, within the meaning of section 414(m) of the Code, of which the
Employer is a member.
(13) DIRECT ROLLOVER: A payment by the Plan to an Eligible Retirement Plan
designated by a Distributee.
(14) DIRECTORS: The Board of Directors of the Company.
(15) DISTRIBUTEE: Each (A) Member entitled to an Eligible Rollover
Distribution, (B) Member's surviving spouse with respect to the
interest of such surviving spouse in an Eligible Rollover Distribution,
and (C) former spouse of a Member who is an alternate payee under a
qualified domestic relations order, as defined in section 414(p) of the
Code, with regard to the interest of such former spouse in an Eligible
Rollover Distribution.
(16) EFFECTIVE DATE: July 1, 1999; except that provisions of the Plan
required to have an earlier effective date by applicable statute and/or
regulation shall be effective as of the required effective date in such
statute and/or regulation as to any plan merged into this Plan.
(17) ELIGIBLE EMPLOYEE: Each Employee other than (A) an Employee whose terms
and conditions of employment are governed by a collective bargaining
agreement, unless such agreement provides for his coverage under the
Plan, (B) a nonresident alien who receives no earned income from the
Employer that constitutes income from sources within the United States,
and (C) an Employee who is a Leased Employee. Notwithstanding any
provision of the Plan to the contrary, no individual who is designated,
compensated, or otherwise classified or treated by the Employer as an
independent contractor or other non-common law employee shall be
eligible to become a Member of the Plan.
(18) ELIGIBLE RETIREMENT PLAN: (A) With respect to a Distributee other than
a surviving spouse, an individual retirement account described in
section 408(a) of the Code, an individual retirement annuity described
in section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a qualified plan described in section 401(a) of
the Code, which under its provisions and applicable law may accept such
Distributee's Eligible Rollover Distribution and (B) with respect to a
Distributee who is a surviving spouse, an individual retirement account
described in section 408(a) of the Code or an individual retirement
annuity described in section 408(b) of the Code.
(19) ELIGIBLE ROLLOVER DISTRIBUTION: Any distribution of all or any portion
of the Accounts of a Distributee other than (A) 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, (B) a distribution to the extent
such distribution is required under section 401(a)(9) of the Code, (C)
the portion of a distribution that is not includable in gross income
(determined without
I-3
11
regard to the exclusion for net unrealized appreciation with respect to
employer securities), (D) a loan treated as a distribution under
section 72(p) of the Code and not excepted by section 72(p)(2), (E) a
loan in default that is a deemed distribution, (F) any corrective
distribution provided in Sections 3.6 and 4.6(b), (G) a distribution
pursuant to Section 11.1(c) from the Before-Tax Account of a Member who
has not attained age 59 1/2, and (H) any other distribution so
designated by the Internal Revenue Service in revenue rulings, notices,
and other guidance of general applicability.
(20) EMPLOYEE: Each (A) individual employed by the Employer and (B) Leased
Employee.
(21) EMPLOYER: The Company and each entity that has been designated to
participate in the Plan pursuant to the provisions of Article XVIII.
(22) EMPLOYER CONTRIBUTION ACCOUNT: An individual account for each Member,
which is credited with the sum of (A) the Employer Matching
Contributions made on such Member's behalf, and (B) the Employer Safe
Harbor Contributions, if any, made on such Member's behalf pursuant to
Section 3.3 to satisfy the restrictions set forth in Section 3.4 and
which is credited with (or debited for) such account's allocation of
net income (or net loss) and changes in value of the Trust Fund.
(23) EMPLOYER CONTRIBUTIONS: The total of Employer Matching Contributions
and Employer Safe Harbor Contributions.
(24) EMPLOYER MATCHING CONTRIBUTIONS: Contributions made to the Plan by the
Employer pursuant to Section 3.2.
(25) EMPLOYER SAFE HARBOR CONTRIBUTIONS: Contributions made to the Plan by
the Employer pursuant to Section 3.3.
(26) EMPLOYMENT COMMENCEMENT DATE: The date on which an individual first
performs an Hour of Service.
(27) HIGHLY COMPENSATED EMPLOYEE: Each Employee who performs services during
the Plan Year for which the determination of who is highly compensated
is being made (the "Determination Year") and who:
(A) is a five-percent owner of the Employer (within the meaning of
section 416(i)(1)(A)(iii) of the Code) at any time during the
Determination Year or the twelve-month period immediately
preceding the Determination Year (the "Look-Back Year"); or
(B) For the Look-Back Year, receives compensation (within the
meaning of section 414(q)(4) of the Code; "compensation" for
purposes of this Paragraph) in excess of $80,000 (with such
amount to be adjusted automatically to reflect any
cost-of-living
I-4
12
adjustments authorized by section 414(q)(1) of the Code)
during the Look-Back Year.
For purposes of the preceding sentence, (i) all employers aggregated
with the Employer under section 414(b), (c), (m), or (o) of the Code
shall be treated as a single employer and (ii) a former Employee who
had a separation year (generally, the Determination Year such Employee
separates from service) prior to the Determination Year and who was an
active Highly Compensated Employee for either such separation year or
any Determination Year ending on or after such Employee's fifty-fifth
birthday shall be deemed to be a Highly Compensated Employee. To the
extent that the provisions of this Paragraph are inconsistent or
conflict with the definition of a "highly compensated employee" set
forth in section 414(q) of the Code and the Treasury regulations
thereunder, the relevant terms and provisions of section 414(q) of the
Code and the Treasury regulations thereunder shall govern and control.
(28) HOUR OF SERVICE: Each hour for which an individual is directly or
indirectly paid, or entitled to payment, by the Employer or a
Controlled Entity for the performance of duties or for reasons other
than the performance of duties; provided, however, that no more than
501 Hours of Service shall be credited to an individual on account of
any continuous period during which he performs no duties. Such Hours of
Service shall be credited to the individual for the computation period
in which such duties were performed or in which occurred the period
during which no duties were performed. An Hour of Service also includes
each hour, not credited above, for which back pay, irrespective of
mitigation of damages, has been either awarded or agreed to by the
Employer or a Controlled Entity. These Hours of Service shall be
credited to the individual for the computation period to which the
award or agreement pertains rather than the computation period in which
the award, agreement, or payment is made. The number of Hours of
Service to be credited to an individual for any computation period
shall be governed by 29 CFR Sections 2530.200b-2(b) and (c). Hours of
Service shall also include any hours required to be credited by federal
law other than the Act or the Code, but only under the conditions and
to the extent so required by such federal law.
(29) INVESTMENT FUND: Investment funds made available from time to time for
the investment of plan assets as described in Article V.
(30) LEASED EMPLOYEE: Each person who is not an employee of the Employer or
a Controlled Entity but who performs services for the Employer or a
Controlled Entity pursuant to an agreement (oral or written) between
the Employer or a Controlled Entity and any leasing organization,
provided that such person has performed such services for the Employer
or a Controlled Entity or for related persons (within the meaning of
section 144(a)(3) of the Code) on a substantially full-time basis for a
period of at least one year and such services are performed under
primary direction or control by the Employer or a Controlled Entity.
(31) MEMBER: Each individual who (A) has met the eligibility requirements
for participation in the Plan and elected to participate in the Plan
pursuant to Article II or (B) has made a Rollover Contribution in
accordance with Section 3.7, but only to the extent provided in
I-5
13
Section 3.7. For purposes of Article V only, the beneficiary of a
deceased Member and any alternate payee under a qualified domestic
relations order (as defined in Section 19.2) shall have the rights of a
Member.
(32) NORMAL RETIREMENT DATE: The date a Member attains the age of
sixty-five.
(33) PARTICIPATION SERVICE: The measure of service used in determining
eligibility to participate in the Plan by an Employee other than a
Seasonal Employee as determined pursuant to Section 2.3.
(34) PERIOD OF SERVICE: Each period of an individual's Service commencing on
his Employment Commencement Date or a Reemployment Commencement Date,
if applicable, and ending on a Severance from Service Date.
Notwithstanding the foregoing, a period during which an individual is
absent from Service by reason of the individual's pregnancy, the birth
of a child of the individual, the placement of a child with the
individual in connection with the adoption of such child by the
individual, or for the purposes of caring for such child for the period
immediately following such birth or placement shall not constitute a
Period of Service between the first and second anniversary of the first
date of such absence. A Period of Service shall also include any period
required to be credited as a Period of Service by federal law other
than the Act or the Code, but only under the conditions and to the
extent so required by such federal law.
(35) PERIOD OF SEVERANCE: Each period of time commencing on an individual's
Severance from Service Date and ending on a Reemployment Commencement
Date.
(36) PLAN: The Group 1 Automotive, Inc. 401(k) Savings Plan, as amended from
time to time.
(37) PLAN YEAR: The twelve-consecutive month period commencing January 1 of
each year except that the first Plan Year of the Plan shall commence
July 1, 1999, and end December 31, 1999.
(38) REEMPLOYMENT COMMENCEMENT DATE: The first date upon which an individual
performs an Hour of Service following a Severance from Service Date.
(39) ROLLOVER CONTRIBUTION ACCOUNT: An individual account for a Member,
which is credited with the Rollover Contributions of such Member and
which is credited with (or debited for) such account's allocation of
net income (or net loss) and changes in value of the Trust Fund.
(40) ROLLOVER CONTRIBUTIONS: Contributions made by a Member pursuant to
Section 3.7.
(41) SEASONAL EMPLOYEE: Any Employee who is employed on a seasonal basis and
is so classified under the Employer's employment policies.
(42) SERVICE: The period of an individual's employment with the Employer or
a Controlled Entity. In addition, the Committee, in its discretion, may
credit individuals with Service for
I-6
14
employment with any other entity, but only if and when such individual
becomes an Eligible Employee and only if such crediting of Service (A)
has a legitimate business reason, (B) does not by design or operation
discriminate significantly in favor of Highly Compensated Employees,
and (C) is applied to all similarly-situated Eligible Employees.
(43) SEVERANCE FROM SERVICE DATE: The first date on which an individual
terminates his Service following his Employment Commencement Date or a
Reemployment Commencement Date, if applicable. Notwithstanding the
foregoing, the Severance from Service Date of an individual who is
absent from Service by reason of the individual's pregnancy, the birth
of a child of the individual, the placement of a child with the
individual in connection with the adoption of such child by the
individual, or for purposes of caring for such child for the period
immediately following such birth or placement shall be the second
anniversary of the first date of such absence.
(44) TRUST: The trust(s) established under the Trust Agreement(s) to hold
and invest contributions made under the Plan and income thereon, and
from which the Plan benefits are distributed.
(45) TRUST AGREEMENT: The agreement(s) entered into between the Company and
the Trustee establishing the Trust, as such agreement(s) may be amended
from time to time.
(46) TRUST FUND: The funds and properties held pursuant to the provisions of
the Trust Agreement for the use and benefit of the Members, together
with all income, profits, and increments thereto.
(47) TRUSTEE: The trustee or trustees qualified and acting under the Trust
Agreement at any time.
(48) VESTED INTEREST: The portion of a Member's Accounts which, pursuant to
the Plan, is nonforfeitable.
(49) VESTING SERVICE: The measure of service used in determining a Member's
Vested Interest as determined pursuant to Sections 8.4 and 8.5.
(50) YEAR OF SERVICE: The measure of service used in determining a Seasonal
Employee's eligibility to participate in the Plan as determined
pursuant to Section 2.4.
1.2 NUMBER AND GENDER. Wherever appropriate herein, words used in the
singular shall be considered to include the plural and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.
1.3 HEADINGS. The headings of Articles and Sections herein are included
solely for convenience, and if there is any conflict between such headings and
the text of the Plan, the text shall control.
I-7
15
1.4 CONSTRUCTION. It is intended that the Plan be qualified within the
meaning of section 401(a) of the Code and that the Trust be tax exempt under
section 501(a) of the Code, and all provisions herein shall be construed in
accordance with such intent.
I-8
16
II.
PARTICIPATION
2.1 ELIGIBILITY FOR EMPLOYEES OTHER THAN SEASONAL EMPLOYEES. Each
Eligible Employee other than a Seasonal Employee shall become a Member upon the
later of the date on which such Eligible Employee completes six months of
Participation Service or the date on which such Eligible Employee attains the
age of eighteen. Notwithstanding the foregoing, with respect to Employees other
than seasonal Employees:
(a) An Eligible Employee who was a Member of the Plan prior to
a termination of employment shall remain a Member upon his reemployment
as an Eligible Employee;
(b) An Employee who has completed six months of Participation
Service and has attained the age of eighteen but who has not become a
Member of the Plan because he was not an Eligible Employee shall become
a Member of the Plan upon the date he becomes an Eligible Employee as a
result of a change in his employment status;
(c) An Eligible Employee who had completed six months of
Participation Service but who had not attained the age of eighteen
prior to a termination of his employment shall become a Member upon the
date of his reemployment;
(d) A Member who ceases to be an Eligible Employee but remains
an Employee shall continue to be a Member but, on and after the date he
ceases to be an Eligible Employee, he shall no longer be entitled to
defer Compensation hereunder or share in allocations of Employer
Contributions unless and until he shall again become an Eligible
Employee.
2.2 ELIGIBILITY FOR SEASONAL EMPLOYEES. Each Eligible Employee who is a
Seasonal Employee shall become a Member upon the later of the date on which such
Eligible Employee completes one Year of Service or the date on which such
Eligible Employee attains the age of eighteen. Notwithstanding the foregoing,
with respect to Seasonal Employees:
(a) An Eligible Employee who was a Member of the Plan prior to
a termination of employment shall remain a Member upon his reemployment
as an Eligible Employee;
(b) An Employee who has completed one Year of Service and has
attained the age of eighteen but who has not become a Member of the
Plan because he was not an Eligible Employee shall become a Member of
the Plan upon the date he becomes an Eligible Employee as a result of a
change in his employment status;
II-1
17
(c) An Eligible Employee who had completed one Year of Service
but who had not attained the age of eighteen prior to a termination of
his employment shall become a Member upon the date of his reemployment;
(d) A Member who ceases to be an Eligible Employee but remains
an Employee shall continue to be a Member but, on and after the date he
ceases to be an Eligible Employee, he shall no longer be entitled to
defer Compensation hereunder or share in allocations of Employer
Contributions unless and until he shall again become an Eligible
Employee.
2.3 PARTICIPATION SERVICE.
(a) Subject to the remaining Paragraphs of this Section, an
individual shall be credited with Participation Service in an amount equal to
his aggregate Periods of Service whether or not such Periods of Service are
completed consecutively.
(b) Paragraph (a) above notwithstanding, if an individual
terminates his Service (at a time other than during a leave of absence) and
subsequently resumes his Service, if his Reemployment Commencement Date is
within twelve months of his Severance from Service Date, such Period of
Severance shall be treated as a Period of Service for purposes of Paragraph (a)
above.
(c) Paragraph (a) above notwithstanding, if an individual
terminates his Service during a leave of absence and subsequently resumes his
Service, if his Reemployment Commencement Date is within twelve months of the
beginning of such leave of absence, such Period of Severance shall be treated as
a Period of Service for purposes of Paragraph (a) above.
(d) In the case of an individual who terminates employment at
a time when he does not have any Vested Interest in his Employer Contribution
Account but who then incurs a Period of Severance which equals or exceeds the
greater of (1) five years or (2) his Period of Service prior to such Period of
Severance, such individual's Period of Service completed before such Period of
Severance shall be disregarded in determining his Participation Service.
2.4 YEAR OF SERVICE: An individual completes one Year of Service on the
last day of the twelve-consecutive month period beginning with the individual's
Employment Commencement Date or any Plan Year (including calendar years prior to
the Effective Date) commencing after such individual's Employment Commencement
Date during which such individual completes 1,000 Hours of Service.
II-2
18
III.
CONTRIBUTIONS
3.1 BEFORE-TAX CONTRIBUTIONS.
(a) A Member may elect to defer an integral percentage of from
1% to 15% (or such lesser percentage as may be prescribed from time to time by
the Committee) of his Compensation for a Plan Year by having the Employer
contribute the amount so deferred to the Plan. Compensation for a Plan Year not
so deferred by such election shall be received by such Member in cash. A
Member's election to defer an amount of his Compensation pursuant to this
Section shall be made by authorizing his Employer, in the manner prescribed by
the Committee, to reduce his Compensation in the elected amount and the
Employer, in consideration thereof, agrees to contribute an equal amount to the
Plan. The Compensation elected to be deferred by a Member pursuant to this
Section shall become a part of the Employer's Before-Tax Contributions and shall
be allocated in accordance with Section 4.2(a). Compensation for a Plan Year not
so deferred by a Member shall be received by such Member in cash.
(b) A Member's deferral election shall remain in force and
effect for all periods following the effective date of such election (which
shall be as soon as administratively feasible after the election is made) until
modified or terminated or until such Member terminates his employment. A Member
who has elected to defer a portion of his Compensation may change his deferral
election percentage (within the percentage limits set forth in Paragraph (a)
above) by communicating such new deferral election percentage to his Employer in
the manner and within the time period prescribed by the Committee.
(c) A Member may cancel his deferral election by communicating
such cancellation to his Employer in the manner and within the time period
prescribed by the Committee. A Member who so cancels his deferral election may
resume deferrals by communicating his new deferral election to his Employer in
the manner and within the time period prescribed by the Committee.
(d) In restriction of the Members' elections provided in
Paragraphs (a), (b), and (c) above, the Before-Tax Contributions and the
elective deferrals (within the meaning of section 402(g)(3) of the Code) under
all other plans, contracts, and arrangements of the Employer on behalf of any
Member for any calendar year shall not exceed $10,000 (with such amount to be
adjusted automatically to reflect any cost-of-living adjustments authorized by
section 402(g)(5) of the Code).
(e) In further restriction of the Members' elections provided
in Paragraphs (a), (b), and (c) above, it is specifically provided that one of
the "actual deferral percentage" tests set forth in section 401(k)(3) of the
Code and the Treasury regulations thereunder must be met in each Plan Year with
respect to which the Plan does not satisfy the alternative method of satisfying
the nondiscrimination requirements as set forth in section 401(k)(12) of the
Code. Such testing shall utilize the prior year testing method as such term is
defined in Internal Revenue Service Notice 98-1.
III-1
19
If multiple use of the alternative limitation (within the meaning of section
401(m)(9) of the Code and Treasury regulation Section 1.401(m)-2(b)) occurs
during a Plan Year, such multiple use shall be corrected in accordance with the
provisions of Treasury regulation Section 1.401(m)-2(c); provided, however, that
if such multiple use is not eliminated by making Employer Safe Harbor
Contributions, then the "actual contribution percentages" of all Highly
Compensated Employees participating in the Plan shall be reduced, and the excess
contributions distributed, in accordance with the provisions of Section 3.6(c)
and applicable Treasury regulations, so that there is no such multiple use.
(f) If the restrictions set forth in Paragraph (d) or (e)
above would not otherwise be met for any Plan Year, the Compensation deferral
elections made pursuant to Paragraphs (a), (b), and (c) above of affected
Members may be reduced by the Committee on a temporary and prospective basis in
such manner as the Committee shall determine.
(g) As soon as administratively feasible following the end of
each payroll period, but no later than the time required by applicable law, the
Employer shall contribute to the Trust, as Before-Tax Contributions with respect
to each Member, an amount equal to the amount of Compensation elected to be
deferred, pursuant to Paragraphs (a) and (b) above (as adjusted pursuant to
Paragraph (f) above), by such Member during such payroll period. Such
contributions, as well as the contributions made pursuant to Sections 3.2 and
3.3, shall be made without regard to current or accumulated profits of the
Employer. Notwithstanding the foregoing, the Plan is intended to qualify as a
profit sharing plan for purposes of sections 401(a), 402, 412, and 417 of the
Code.
3.2 EMPLOYER MATCHING CONTRIBUTIONS. For each Plan Year, the Employer
may contribute to the Trust, as Employer Matching Contributions, a discretionary
amount based upon the Before-Tax Contributions that were made pursuant to
Section 3.1 on behalf of each Member who (a) was an Eligible Employee on the
last day of such Plan Year or (b) terminated employment during such Plan Year on
or after Normal Retirement Date or by reason of total and permanent disability
(as defined in Section 7.2) or death. The Directors shall determine whether
Employer Matching Contributions will be made for the Plan Year, the matching
percentage, and the percentage of a Member's Compensation upon which the match
shall be based. The Directors may make different such determinations for
different Business Units of the Employer. The Employer may contribute Employer
Matching Contributions in the form of cash or shares of Company Stock or a
combination thereof.
3.3 EMPLOYER SAFE HARBOR CONTRIBUTIONS. In addition to the Employer
Matching Contributions made pursuant to Section 3.2 for each Plan Year, the
Employer, in its discretion, may contribute to the Trust as a "safe harbor
contribution" for such Plan Year the amounts necessary to cause the Plan to
satisfy the restrictions set forth in Section 3.1(e) (with respect to certain
restrictions on Before-Tax Contributions) and Section 3.4 (with respect to
certain restrictions on Employer Matching Contributions. Amounts contributed in
order to satisfy the restrictions set forth in Section 3.1(e) shall be
considered "qualified matching contributions" (within the meaning of Treasury
regulation Section 1.401(k)-1(g)(13)) for purposes of such Section, and amounts
contributed in order to satisfy the restrictions set forth in Section 3.4 shall
be considered Employer Matching Contributions for purposes of such Section. Any
amounts contributed pursuant to this Paragraph shall be allocated in accordance
with the provisions of Sections 4.2(d) and (e).
III-2
20
3.4 RESTRICTIONS ON EMPLOYER MATCHING CONTRIBUTIONS. In restriction of
the Employer Matching Contributions hereunder, it is specifically provided that
one of the "actual contribution percentage" tests and/or alternative methods of
satisfying such tests set forth in section 401(m) of the Code and the Treasury
regulations thereunder must be met in each Plan Year. Such testing shall utilize
the prior year testing method as such term is defined in Internal Revenue
Service Notice 98-1. The Committee may elect, in accordance with applicable
Treasury regulations, to treat Before-Tax Contributions to the Plan as Employer
Matching Contributions for purposes of meeting this requirement.
3.5 RETURN OF CONTRIBUTIONS. Anything to the contrary herein
notwithstanding, the establishment of the Plan and contributions made under the
Plan are contingent upon an initial determination by the Internal Revenue
Service that the Plan is, as of the Effective Date, a qualified Plan and Trust
within the meaning of sections 401(a) and 501(a) of the Code. If such a
determination is not received by the Employer after it has had an opportunity to
amend the Plan and Trust to so qualify, the Plan shall not be effective and the
Employer's contributions to the Plan, adjusted for any net earnings or losses of
the Trust Fund attributable thereto, shall be returned to the Employer by the
Trustee within one year after the date of denial of qualification of the Plan.
Moreover, the Employer's contributions to the Plan are contingent upon the
deductibility of such contributions under section 404 of the Code. To the extent
that a deduction for contributions is disallowed, such contributions shall, upon
the written demand of the Employer, be returned to the Employer by the Trustee
within one year after the date of disallowance, reduced by any net losses of the
Trust Fund attributable thereto but not increased by any net earnings of the
Trust Fund attributable thereto, which net earnings shall be treated as a
forfeiture in accordance with Section 4.3. Finally, if Employer contributions
are made under a mistake of fact, such contributions shall, upon the written
demand of the Employer, be returned to the Employer by the Trustee within one
year after the payment thereof, reduced by any net losses of the Trust Fund
attributable thereto but not increased by any net earnings of the Trust Fund
attributable thereto, which net earnings shall be treated as a forfeiture in
accordance with Section 4.3.
3.6 DISPOSITION OF EXCESS DEFERRALS AND EXCESS CONTRIBUTIONS.
(a) Anything to the contrary herein notwithstanding, any
Before-Tax Contributions to the Plan for a calendar year on behalf of a Member
in excess of the limitations set forth in Section 3.1(d) and any "excess
deferrals" from other plans allocated to the Plan by such Member no later than
March 1 of the next following calendar year within the meaning of, and pursuant
to the provisions of, section 402(g)(2) of the Code, shall be distributed to
such Member not later than April 15 of the next following calendar year.
(b) Anything to the contrary herein notwithstanding, if, for
any Plan Year, the aggregate Before-Tax Contributions made by the Employer on
behalf of Highly Compensated Employees exceeds the maximum amount of Before-Tax
Contributions permitted on behalf of such Highly Compensated Employees pursuant
to Section 3.1(e), an excess amount shall be determined by reducing Before-Tax
Contributions made on behalf of Highly Compensated Employees in order of their
highest actual deferral percentages in accordance with section 401(k)(8)(B)(ii)
of the Code and the Treasury regulations thereunder. Once determined, such
excess shall be distributed to Highly
III-3
21
Compensated Employees in order of the highest dollar amounts contributed on
behalf of such Highly Compensated Employees in accordance with section
401(k)(8)(C) of the Code and the Treasury regulations thereunder before the end
of the next following Plan Year.
(c) Anything to the contrary herein notwithstanding, if, for
any Plan Year, the aggregate Employer Matching Contributions allocated to the
Accounts of Highly Compensated Employees exceeds the maximum amount of such
Employer Matching Contributions permitted on behalf of such Highly Compensated
Employees pursuant to Section 3.4, an excess amount shall be determined by
reducing Employer Matching Contributions made on behalf of Highly Compensated
Employees in order of their highest contribution percentages in accordance with
section 401(m)(6)(B)(ii) of the Code and Treasury regulations thereunder. Once
determined, such excess shall be distributed to Highly Compensated Employees in
order of the highest dollar amounts contributed on behalf of such Highly
Compensated Employees in accordance with section 401(m)(6)(C) of the Code and
the Treasury regulations thereunder (or, if such excess contributions are
forfeitable, they shall be forfeited) before the end of the next following Plan
Year. Employer Matching Contributions shall be forfeited pursuant to this
Paragraph only if distribution of all vested Employer Matching Contributions is
insufficient to meet the requirements of this Paragraph. If vested Employer
Matching Contributions are distributed to a Member and nonvested Employer
Matching Contributions remain credited to such Member's Accounts, such nonvested
Employer Matching Contributions shall vest at the same rate as if such
distribution had not been made.
(d) In coordinating the disposition of excess deferrals and
excess contributions pursuant to this Section, such excess deferrals and excess
contributions shall be disposed of in the following order:
(1) First, Before-Tax Contributions that constitute
excess deferrals described in Paragraph (a) above that are not
considered in determining the amount of Employer Matching Contributions
pursuant to Section 3.2 shall be distributed;
(2) Next, excess Before-Tax Contributions that
constitute excess deferrals described in Paragraph (a) above that are
considered in determining the amount of Employer Matching Contributions
pursuant to Section 3.2 shall be distributed;
(3) Next, excess Before-Tax Contributions described
in Paragraph (b) above that are not considered in determining the
amount of Employer Matching Contributions pursuant to Section 3.2 shall
be distributed;
(4) Next, excess Before-Tax Contributions described
in Paragraph (b) above that are considered in determining the amount of
Employer Matching Contributions pursuant to Section 3.2 shall be
distributed;
(5) Next, excess Employer Matching Contributions
described in Paragraph (c) above shall be distributed (or, if
forfeitable, forfeited); and
III-4
22
(6) Finally, Employer Matching Contributions that
relate to Before Tax Contributions that have been distributed pursuant
to the provisions of Paragraph (2) or (4) above that were not
distributed or forfeited pursuant to the provisions of Paragraph (5)
above shall be forfeited.
(e) Any distribution or forfeiture of excess deferrals or
excess contributions pursuant to the provisions of this Section shall be
adjusted for income or loss allocated thereto in the manner determined by the
Committee in accordance with any method permissible under applicable Treasury
regulations. Any forfeiture pursuant to the provisions of this Section shall be
considered to have occurred on the date which is 2 1/2 months after the end of
the Plan Year.
3.7 ROLLOVER CONTRIBUTIONS. Qualified Rollover Contributions may be
made to the Plan by any Member of amounts received by such Member from certain
individual retirement accounts or annuities or from an employees' trust
described in section 401(a) of the Code, which is exempt from tax under section
501(a) of the Code, but only if any such Rollover Contribution is made pursuant
to and in accordance with applicable provisions of the Code and Treasury
regulations promulgated thereunder. A Rollover Contribution of amounts that are
"eligible rollover distributions" within the meaning of section 402(f)(2)(A) of
the Code may be made to the Plan irrespective of whether such eligible rollover
distribution was paid to the Member or paid to the Plan as a "direct" Rollover
Contribution. A direct Rollover Contribution to the Plan may be effectuated only
by wire transfer directed to the Trustee or by issuance of a check made payable
to the Trustee, which is negotiable only by the Trustee and which identifies the
Member for whose benefit the Rollover Contribution is being made. Any Member
desiring to effect a Rollover Contribution to the Plan must execute and file
with the Committee the form prescribed by the Committee for such purpose. The
Committee may require as a condition to accepting any Rollover Contribution that
such Member furnish any evidence that the Committee in its discretion deems
satisfactory to establish that the proposed Rollover Contribution is in fact
eligible for rollover to the Plan and is made pursuant to and in accordance with
applicable provisions of the Code and Treasury regulations. All Rollover
Contributions to the Plan must be made in cash. A Rollover Contribution shall be
credited to the Rollover Contribution Account of the Member for whose benefit
such Rollover Contribution is being made as of the last day of the month in
which such Rollover Contribution is made.
III-5
23
IV.
ALLOCATIONS AND LIMITATIONS
4.1 SUSPENDED AMOUNTS. All contributions, forfeitures, and the net
income (or net loss) of the Trust Fund shall be held in suspense until allocated
or applied as provided herein.
4.2 ALLOCATION OF CONTRIBUTIONS.
(a) Before-Tax Contributions made by the Employer on a
Member's behalf for each payroll period pursuant to Section 3.1 shall be
allocated to such Member's Before-Tax Account.
(b) The Employer Matching Contributions for each Plan Year
pursuant to Section 3.2 shall be allocated to the Employer Contribution Accounts
of the Members for whom such contributions were made.
(c) The Employer Safe Harbor Contribution, if any, made
pursuant to Section 3.3 for a Plan Year in order to satisfy the restrictions set
forth in Section 3.1(e) shall be allocated to the Before-Tax Accounts of Members
who (1) received an allocation of Before-Tax Contributions for such Plan Year
and (2) were not Highly Compensated Employees for such Plan Year (each such
Member individually referred to as an "Eligible Member" for purposes of this
Paragraph). Such allocation shall be made, first, to the Before-Tax Account of
the Eligible Member who received the least amount of Compensation for such Plan
Year until the limitation set forth in Section 4.6 has been reached as to such
Eligible Member, then to the Before-Tax Account of the Eligible Member who
received the next smallest amount of Compensation for such Plan Year until the
limitation set forth in Section 4.6 has been reached as to such Eligible Member,
and continuing in such manner until the Employer Safe Harbor Contribution for
such Plan Year has been completely allocated or the limitation set forth in
Section 4.6 has been reached as to all Eligible Members. Any remaining Employer
Safe Harbor Contribution for such Plan Year shall be allocated among the
Before-Tax Accounts of all Members who were Eligible Employees during such Plan
Year, with the allocation to each such Member's Before-Tax Account being the
portion of such remaining Employer Safe Harbor Contribution which is in the same
proportion that such Member's Compensation for such Plan Year bears to the total
of all such Members' Compensation for such Plan Year.
(d) The Employer Safe Harbor Contribution, if any, made
pursuant to Section 3.3 for a Plan Year in order to satisfy the restrictions set
forth in Section 3.4 shall be allocated to the Employer Contribution Accounts of
Members who (1) received an allocation of Employer Matching Contributions for
such Plan Year and (2) were not Highly Compensated Employees for such Plan Year
(each such Member individually referred to as an "Eligible Member" for purposes
of this Paragraph). Such allocation shall be made, first, to the Employer
Contribution Account of the Eligible Member who received the least amount of
Compensation for such Plan Year until the limitation set forth in Section 4.5
has been reached as to such Eligible Member, then to the
IV-1
24
Employer Contribution Account of the Eligible Member who received the next
smallest amount of Compensation for such Plan Year until the limitation set
forth in Section 4.5 has been reached as to such Eligible Member, and continuing
in such manner until the Employer Safe Harbor Contribution for such Plan Year
has been completely allocated or the limitation set forth in Section 4.5 has
been reached as to all Eligible Members. Any remaining Employer Safe Harbor
Contribution for such Plan Year shall be allocated among the Employer
Contribution Accounts of all Members who were Eligible Employees during such
Plan Year, with the allocation to each such Member's Employer Contribution
Account being the portion of such remaining Employer Safe Harbor Contribution
which is in the same proportion that such Member's Compensation for such Plan
Year bears to the total of all such Members' Compensation for such Plan Year.
(e) If an Employer Safe Harbor Contribution is made in order
to satisfy the restrictions set forth in both Section 3.1(e) and Section 3.4 for
the same Plan Year, the Employer Safe Harbor Contribution made in order to
satisfy the restrictions set forth in Section 3.1(e) shall be allocated pursuant
to Paragraph (c) above prior to allocating the Employer Safe Harbor Contribution
made in order to satisfy the restrictions set forth in Section 3.4 (pursuant to
Paragraph (d) above). In determining the application of the limitations set
forth in Section 4.5 to the allocations of Employer Safe Harbor Contributions,
all Annual Additions (as such term is defined in Section 4.5) to a Member's
Accounts other than Employer Safe Harbor Contributions shall be considered
allocated prior to Employer Safe Harbor Contributions.
(f) All contributions to the Plan shall be considered
allocated to Members' Accounts no later than the last day of the Plan Year for
which they were made, as determined pursuant to Article III, except that, for
purposes of Section 4.4, contributions shall be considered allocated to Members'
Accounts when received by the Trustee.
4.3 APPLICATION OF FORFEITURES. Any amounts that are forfeited under
any provision hereof during a Plan Year shall be applied to reduce Employer
Matching Contributions. Prior to such application, forfeited amounts shall be
invested in the Investment Fund(s) determined by the Committee.
4.4 VALUATION OF ACCOUNTS. All amounts contributed to the Trust Fund
shall be invested as soon as administratively feasible following their receipt
by the Trustee, and the balance of each Account shall reflect the result of
daily pricing of the assets in which such Account is invested from the time of
receipt by the Trustee until the time of distribution.
4.5 LIMITATIONS AND CORRECTIONS.
(a) For purposes of this Section, the following terms and
phrases shall have these respective meanings:
(1) "Annual Additions" of a Member for any Limitation
Year shall mean the total of (A) the Employer Contributions, Before-Tax
Contributions, and forfeitures, if any, allocated to such Member's
Accounts for such year, (B) Member's contributions, if any,
IV-2
25
(excluding any Rollover Contributions) for such year, and (C) amounts
referred to in sections 415(l)(1) and 419A(d)(2) of the Code.
(2) "415 Compensation" shall mean the total of all
amounts paid by the Employer to or for the benefit of a Member for
services rendered or labor performed for the Employer, which are
required to be reported on the Member's federal income tax withholding
statement or statements (Form W-2 or its subsequent equivalent),
subject to the following adjustments and limitations:
(A) The following shall be included:
(i) elective deferrals (as defined
in section 402(g)(3) of the Code) from compensation to be paid
by the Employer to the Member; and
(ii) any amount which is contributed
or deferred by the Employer at the election of the Member and
which is not includible in the gross income of the Member by
reason of section 125 of the Code; and
(iii) Any amounts that are not
includable in the gross income of a Member under a salary
reduction agreement by reason of the application of section
132(f) of the Code.
(B) The 415 Compensation of any Member taken
into account for purposes of the Plan shall be limited to
$160,000 for any Plan Year with such limitation to be:
(i) adjusted automatically to reflect any
amendments to section 401(a)(17) of the Code and any
cost-of-living increases authorized by section
401(a)(17) of the Code; and
(ii) prorated for a Plan Year of less than
twelve months and to the extent otherwise required by
applicable law.
(3) "Limitation Year" shall mean the Plan Year.
(4) "Maximum Annual Additions" of a Member for any
Limitation Year shall mean the lesser of (A) $30,000 (with such amount
to be adjusted automatically to reflect any cost-of-living adjustment
authorized by section 415(d) of the Code) or (B) 25% of such Member's
415 Compensation during such Limitation Year, except that the
limitation in this Clause (B) shall not apply to any contribution for
medical benefits (within the meaning of section 419A(f)(2) of the Code)
after separation from service with the Employer or a Controlled Entity
which is otherwise treated as an Annual Addition or to any amount
otherwise treated as an Annual Addition under section 415(l)(1) of the
Code.
IV-3
26
(b) Contrary Plan provisions notwithstanding, in no event
shall the Annual Additions credited to a Member's Accounts for any Limitation
Year exceed the Maximum Annual Additions for such Member for such year. If as a
result of a reasonable error in estimating a Member's compensation, a reasonable
error in determining the amount of elective deferrals (within the meaning of
section 402(g)(3) of the Code) that may be made with respect to any individual
under the limits of section 415 of the Code, or because of other limited facts
and circumstances, the Annual Additions that would be credited to a Member's
Accounts for a Limitation Year would nonetheless exceed the Maximum Annual
Additions for such Member for such year, the excess Annual Additions which, but
for this Section, would have been allocated to such Member's Accounts shall be
disposed of as follows:
(1) First, by returning to such Member any such
excess Annual Additions in the form of Before-Tax Contributions on
behalf of such Member that would not have been considered in
determining the amount of Employer Matching Contributions pursuant to
Section 3.2 shall be distributed to such Member, adjusted for income or
loss allocated thereto;
(2) Next, any such excess Annual Additions in the
form of Before-Tax Contributions on behalf of such Member that would
have been considered in determining the amount of Employer Matching
Contributions pursuant to Section 3.2 shall be distributed to such
Member, adjusted for income or loss allocated thereto, and the Employer
Matching Contributions that would have been allocated to such Member's
Accounts based upon such distributed Before-Tax Contributions shall be
treated as a forfeiture.
(c) For purposes of determining whether the Annual Additions
under this Plan exceed the limitations herein provided, all defined contribution
plans of the Employer are to be treated as one defined contribution plan. In
addition, all defined contribution plans of Controlled Entities shall be
aggregated for this purpose. For purposes of this Section only, a "Controlled
Entity" (other than an affiliated service group member within the meaning of
section 414(m) of the Code) shall be determined by application of a more than
50% control standard in lieu of an 80% control standard. If the Annual Additions
credited to a Member's Accounts for any Limitation Year under this Plan plus the
additions credited on his behalf under other defined contribution plans required
to be aggregated pursuant to this Paragraph would exceed the Maximum Annual
Additions for such Member for such Limitation Year, the Annual Additions under
this Plan and the additions under such other plans shall be reduced on a pro
rata basis and allocated, reallocated, or returned in accordance with applicable
plan provisions regarding Annual Additions in excess of Maximum Annual
Additions.
(d) In the case of a Member who also participated in a defined
benefit plan of the Employer or a Controlled Entity (as defined in Paragraph (d)
above), the Employer shall reduce the Annual Additions credited to the Accounts
of such Member under this Plan pursuant to the provisions of Paragraph (b) to
the extent necessary to prevent the limitation set forth in section 415(e) of
the Code from being exceeded. Notwithstanding the foregoing, the provisions of
this Paragraph shall apply only if such defined benefit plan does not provide
for a reduction of benefits
IV-4
27
thereunder to ensure that the limitation set forth in section 415(e) of the Code
is not exceeded. Further, this Paragraph shall not apply for Limitation Years
beginning after December 31, 1999.
(e) If the limitations set forth in this Section would not
otherwise be met for any Limitation Year, the Compensation deferral elections
pursuant to Section 3.1 of affected Members may be reduced by the Committee on a
temporary and prospective basis in such manner as the Committee shall determine.
IV-5
28
V.
INVESTMENT OF ACCOUNTS
5.1 INVESTMENT OF ACCOUNTS.
(a) Each Member shall designate, in accordance with the
procedures established from time to time by the Committee, the manner in which
the amounts allocated to each of his Accounts shall be invested from among the
Investment Funds made available from time to time by the Committee. A Member may
designate one of such Investment Funds for all the amounts allocated to such
Account or he may split the investment of the amounts allocated to his Accounts
between such Investment Funds in such increments as the Committee may prescribe.
If a Member fails to make a designation, then his Accounts shall be invested in
the Investment Fund or Funds designated by the Committee from time to time in a
uniform and nondiscriminatory manner.
(b) A Member may change his investment designation for future
contributions to be allocated to his Accounts. Any such change shall be made in
accordance with the procedures established by the Committee, and the frequency
of such changes may be limited by the Committee.
(c) A Member may elect to convert his investment designation
with respect to the amounts already allocated to his Accounts. Any such
conversion shall be made in accordance with the procedures established by the
Committee, and the frequency of such conversions may be limited by the
Committee.
V-1
29
VI.
RETIREMENT BENEFITS
6.1 RETIREMENT BENEFITS. A Member who terminates his employment on or
after his Normal Retirement Date shall be entitled to a retirement benefit,
payable at the time and in the form provided in Article X, equal to the value of
his Accounts on his Benefit Commencement Date. Any contribution allocable to a
Member's Accounts after his Benefit Commencement Date shall be distributed, if
his benefit was paid in a lump sum, or used to increase his payments, if his
benefit is being paid on a periodic basis, as soon as administratively feasible
after the date that such contribution is paid to the Trust Fund.
VI-1
30
VII.
DISABILITY BENEFITS
7.1 DISABILITY BENEFITS. In the event a Member's employment is
terminated, and such Member is totally and permanently disabled, as determined
pursuant to Section 7.2, such Member shall be entitled to a disability benefit,
payable at the time and in the form provided in Article X, equal to the value of
his Accounts on his Benefit Commencement Date. Any contribution allocable to a
Member's Accounts after his Benefit Commencement Date shall be distributed, if
his benefit was paid in a lump sum, or used to increase his payments, if his
benefit is being paid on a periodic basis, as soon as administratively feasible
after the date that such contribution is paid to the Trust Fund.
7.2 TOTAL AND PERMANENT DISABILITY DETERMINED. A Member shall be
considered totally and permanently disabled if the Committee determines, based
on a written medical opinion (unless waived by the Committee as unnecessary),
that such Member is permanently incapable of performing his job for physical or
mental reasons.
VII-1
31
VIII.
SEVERANCE BENEFITS AND DETERMINATION OF VESTED INTEREST
8.1 NO BENEFITS UNLESS HEREIN SET FORTH. Except as set forth in this
Article, upon termination of employment of a Member prior to his Normal
Retirement Date for any reason other than total and permanent disability (as
defined in Section 7.2) or death, such Member shall acquire no right to any
benefit from the Plan or the Trust Fund.
8.2 SEVERANCE BENEFIT. Each Member whose employment is terminated prior
to his Normal Retirement Date for any reason other than total and permanent
disability (as defined in Section 7.2) or death shall be entitled to a severance
benefit, payable at the time and in the form provided in Article X, equal to his
Vested Interest in the value of his Accounts on his Benefit Commencement Date. A
Member's Vested Interest in any contribution allocable to his Accounts after his
Benefit Commencement Date shall be distributed, if his benefit was paid in a
lump sum, or used to increase his payments, if his benefit is being paid on a
periodic basis, as soon as administratively feasible after the date that such
contribution is paid to the Trust Fund.
8.3 DETERMINATION OF VESTED INTEREST.
(a) A Member shall have a 100% Vested Interest in his
Before-Tax Account and Rollover Contribution Account, if any, at all times.
(b) A Member's Vested Interest in his Employer Contribution
Account shall be determined by such Member's years of Vesting Service in
accordance with the following schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
Less than 1 year 0%
1 year 20%
2 years 40%
3 years 60%
4 years 80%
5 years or more 100%
(c) Paragraph (b) above notwithstanding, a Member shall have a
100% Vested Interest in his Employer Contribution Account (1) upon the
attainment of his Normal Retirement Date while employed by the Employer or a
Controlled Entity, (2) upon the termination of his employment with the Employer
at a time when he is totally and permanently disabled (as defined in Section
7.2), (3) upon the death of such Member while an Employee, or (4) if such Member
is an affected Member, the occurrence of an event described in, under the
conditions set forth in, Section 17.2.
VIII-1
32
8.4 CREDITING OF VESTING SERVICE.
(a) Subject to the remaining Paragraphs of this Section, an
individual shall be credited with Vesting Service in an amount equal to his
aggregate Periods of Service whether or not such Periods of Service are
completed consecutively.
(b) Paragraph (a) above notwithstanding, if an individual
terminates his Service (at a time other than during a leave of absence) and
subsequently resumes his Service, if his Reemployment Commencement Date is
within twelve months of his Severance from Service Date, such Period of
Severance shall be treated as a Period of Service for purposes of Paragraph (a)
above.
(c) Paragraph (a) above notwithstanding, if an individual
terminates his Service during a leave of absence and subsequently resumes his
Service, if his Reemployment Commencement Date is within twelve months of the
beginning of such leave of absence, such Period of Severance shall be treated as
a Period of Service for purposes of Paragraph (a) above.
8.5 FORFEITURE OF VESTING SERVICE.
(a) In the case of an individual who terminates employment at
a time when he has a 0% Vested Interest in his Employer Contribution Account and
who then incurs a Period of Severance that equals or exceeds the greater of five
years or his aggregate Period of Service completed before such Period of
Severance, such individual's Period of Service completed before such Period of
Severance shall be forfeited and completely disregarded in determining his years
of Vesting Service.
(b) In the case of a Member who terminates employment with the
Employer at a time when he has a Vested Interest of more than 0% but less than
100% and who then incurs a Period of Severance of five consecutive years, such
Member's years of Vesting Service completed after such Period of Severance shall
be disregarded for purposes of determining such Member's Vested Interest in any
Plan benefits derived from Employer Contributions made on his behalf before such
Period of Severance, but his years of Vesting Service completed before such
Period of Severance shall not be disregarded in determining his Vested Interest
in any Plan benefits derived from Employer Contributions made on his behalf
after such Period of Severance.
(c) A Member who terminates employment with the Employer at a
time when he has a 100% Vested Interest shall not forfeit any of his Vesting
Service for purposes of determining such Member's Vested Interest in any Plan
benefits derived from Employer Contributions made on his behalf.
8.6 FORFEITURES OF NONVESTED ACCOUNT BALANCE.
(a) With respect to a Member who terminates employment with
the Employer with a Vested Interest in his Employer Contribution Account that is
less than 100% and receives a distribution from the Plan of the balance of his
Vested Interest in his Accounts in the form of a lump sum distribution by the
close of the second Plan Year following the Plan Year in which his
VIII-2
33
employment is terminated, the nonvested portion of such terminated Member's
Employer Contribution Account as of his Benefit Commencement Date shall become a
forfeiture as of his Benefit Commencement Date.
(b) With respect to a Member who terminates employment with
the Employer with a Vested Interest in his Employer Contribution Account less
than 100% and who is not otherwise subject to the forfeiture provisions of
Paragraph (a) above (or Section 8.8 below), the nonvested portion of his
Employer Contribution Account shall be forfeited as of the earlier of (1) the
date the Member completes a Period of Severance of five consecutive years or (2)
the date of the terminated Member's death.
8.7 RESTORATION OF FORFEITED ACCOUNT BALANCE. In the event that the
nonvested portion of a terminated Member's Employer Contribution Account becomes
a forfeiture pursuant to Section 8.6, the terminated Member shall, upon
subsequent reemployment with the Employer prior to incurring a Period of
Severance of five consecutive years, have the forfeited amount restored to such
Member's Employer Contribution Account, unadjusted by any subsequent gains or
losses of the Trust Fund; provided, however, that such restoration shall be made
only if such Member repays in cash an amount equal to the amount so distributed
to him pursuant to Section 8.6 within five years from the date the Member is
reemployed. Any such restoration shall be made as soon as administratively
feasible following the date of repayment. Notwithstanding anything to the
contrary in the Plan, forfeited amounts to be restored by the Employer pursuant
to this Section shall be charged against and deducted from forfeitures for the
Plan Year in which such amounts are restored that would otherwise be available
to reduce Employer Matching Contributions. If such forfeitures otherwise
available are not sufficient to provide such restoration, the Employer shall
make a special contribution to the Plan of the portion of such restoration not
provided by forfeitures (which special contribution shall be made without regard
to current or accumulated earnings and profits).
8.8 SPECIAL FORMULA FOR DETERMINING VESTED INTEREST FOR PARTIAL
ACCOUNTS. With respect to a Member whose Vested Interest in his Employer
Contribution Account is less than 100% and who makes a withdrawal from or
receives a termination distribution from his Employer Contribution Account other
than a lump sum distribution by the close of the second Plan Year following the
Plan Year in which his employment is terminated, any amount remaining in his
Employer Contribution Account shall continue to be maintained as a separate
account. At any relevant time, such Member's nonforfeitable portion of his
separate account shall be determined in accordance with the following formula:
X=P(AB + (R X D)) - (R X D)
For purposes of applying the formula: X is the nonforfeitable portion of such
separate account at the relevant time; P is the Member's Vested Interest in his
Employer Contribution Account at the relevant time; AB is the balance of such
separate account at the relevant time; R is the ratio of the balance of such
separate account at the relevant time to the balance of such separate account
after the withdrawal or distribution; and D is the amount of the withdrawal or
distribution. For all other purposes of the Plan, a Member's separate account
shall be treated as an Employer Contribution Account. Upon his incurring a
Period of Severance of five consecutive years, the forfeitable portion
VIII-3
34
of a Member's separate account and Employer Contribution Account shall be
forfeited as of the end of the Plan Year during which the Member completes such
Period of Severance if not forfeited earlier pursuant to the provisions of
Section 8.6.
VIII-4
35
IX.
DEATH BENEFITS
9.1 DEATH BENEFITS. Upon the death of a Member while an Employee, the
Member's designated beneficiary shall be entitled to a death benefit, payable at
the time and in the form provided in Article X, equal to the value of the
Member's Accounts on his Benefit Commencement Date. Any contribution allocable
to a Member's Accounts after his Benefit Commencement Date shall be distributed,
if the death benefit was paid in a lump sum, or used to increase his payments,
if the death benefit is being paid on a periodic basis, as soon as
administratively feasible after the date that such contribution is paid to the
Trust Fund.
9.2 DESIGNATION OF BENEFICIARIES.
(a) Each Member shall have the right to designate the
beneficiary or beneficiaries to receive payment of his benefit in the event of
his death. Each such designation shall be made by executing the beneficiary
designation form prescribed by the Committee and filing such form with the
Committee. Any such designation may be changed at any time by such Member by
execution and filing of a new designation in accordance with this Section.
Notwithstanding the foregoing, if a Member who is married on the date of his
death has designated an individual or entity other than his surviving spouse as
his beneficiary, such designation shall not be effective unless (1) such
surviving spouse has consented thereto in writing and such consent (A)
acknowledges the effect of such specific designation, (B) either consents to the
specific designated beneficiary (which designation may not subsequently be
changed by the Member without spousal consent) or expressly permits such
designation by the Member without the requirement of further consent by such
spouse, and (C) is witnessed by a Plan representative (other than the Member) or
a notary public or (2) the consent of such spouse cannot be obtained because
such spouse cannot be located or because of other circumstances described by
applicable Treasury regulations. Any such consent by such surviving spouse shall
be irrevocable.
(b) If no beneficiary designation is on file with the
Committee at the time of the death of the Member or if such designation is not
effective for any reason as determined by the Committee, the designated
beneficiary or beneficiaries to receive such death benefit shall be as follows:
(1) If a Member leaves a surviving spouse, his
designated beneficiary shall be such surviving spouse; and
(2) If a Member leaves no surviving spouse, his
designated beneficiary shall be (A) such Member's executor or
administrator or (B) his heirs at law if there is no administration of
such Member's estate.
(c) Notwithstanding the preceding provisions of this Section
and to the extent not prohibited by state or federal law, if a Member is
divorced from his spouse and at the time of his
IX-1
36
death is not remarried to the person from whom he was divorced, any designation
of such divorced spouse as his beneficiary under the Plan filed prior to the
divorce shall be null and void unless the contrary is expressly stated in
writing filed with the Committee by the Member. The interest of such divorced
spouse failing hereunder shall vest in the persons specified in Paragraph (b)
above as if such divorced spouse did not survive the Member.
IX-2
37
X.
TIME AND FORM OF PAYMENT OF BENEFITS
10.1 DETERMINATION OF BENEFIT COMMENCEMENT DATE.
(a) Subject to the provisions of the remaining Paragraphs of
this Section, a Member's Benefit Commencement Date shall be the date that is as
soon as administratively feasible after the date the Member or his beneficiary
becomes entitled to a benefit pursuant to Article VI, VII, VIII, or IX.
(b) Unless (1) the Member has attained age sixty-five or died,
(2) the Member consents to a distribution pursuant to Paragraph (a) within the
ninety-day period ending on the date payment of his benefit hereunder is to
commence pursuant to Paragraph (a), or (3) the Member's Vested Interest in his
Accounts is not in excess of $5,000, the Member's Benefit Commencement Date
shall be deferred to the date which is as soon as administratively feasible
after the earlier of the date the Member attains age sixty-five or the Member's
date of death, or such earlier date as the Member may elect by written notice to
the Committee prior to such date. No less than thirty days (unless such
thirty-day period is waived by an affirmative election in accordance with
applicable Treasury regulations) and no more than ninety days before his Benefit
Commencement Date, the Committee shall inform the Member of his right to defer
his Benefit Commencement Date and shall describe the Member's Direct Rollover
election rights pursuant to Section 10.3 below.
(c) A Member's Benefit Commencement Date shall in no event be
later than the sixtieth day following the close of the Plan Year during which
such Member attains, or would have attained, his Normal Retirement Date or, if
later, terminates his employment with the Employer or a Controlled Entity.
(d) A Member's Benefit Commencement Date shall be in
compliance with the provisions of section 401(a)(9) of the Code and applicable
Treasury regulations thereunder and shall in no event be later than:
(1) April 1 of the calendar year following the later
of (A) the calendar year in which such Member attains the age of
seventy and one-half or (B) the calendar year in which such Member
terminates his employment with the Employer (provided, however, that
clause (B) of this sentence shall not apply in the case of a Member who
is a "five-percent owner" (as defined in section 416 of the Code) with
respect to the Plan Year ending in the calendar year in which such
Member attains the age of seventy and one-half); and
(2) In the case of a benefit payable pursuant to
Article IX, the last day of the five-year period following the death of
such Member.
The provisions of this Section notwithstanding, a Member may not elect to defer
the receipt of his benefit hereunder to the extent that such deferral creates a
death benefit that is more than incidental
X-1
38
within the meaning of section 401(a)(9)(G) of the Code and applicable Treasury
regulations thereunder.
(e) Subject to the provisions of Paragraph (d), a Member's
Benefit Commencement Date shall not occur unless the Article VI, VII, VIII, or
IX event entitling the Member (or his beneficiary) to a benefit constitutes a
distributable event described in section 401(k)(2)(B) of the Code and shall not
occur while the Member is employed by the Employer or any Controlled Entity
(irrespective of whether the Member has become entitled to a distribution of his
benefit pursuant to Article VI, VII, VIII, or IX).
10.2 FORM OF PAYMENT AND PAYEE.
(a) Subject to the provisions of Paragraph (b) below, a
Member's benefit shall be provided from the balance of such Member's Accounts
under the Plan and shall be paid in cash in one lump sum on the Member's Benefit
Commencement Date. Except as provided in Section 19.4, the Member's benefit
shall be paid to the Member unless the Member has died prior to his Benefit
Commencement Date, in which case the Member's benefit shall be paid to his
beneficiary designated in accordance with the provisions of Section 9.2.
(b) Benefits shall be paid (or transferred pursuant to Section
10.3) in cash except that a Member (or his designated beneficiary or legal
representative in the case of a deceased Member) may elect to have the portion
of his Accounts invested in Company Stock paid (or transferred pursuant to
Section 10.3) in full shares of Company Stock with any balance (including
fractional shares of Company Stock) to be paid or transferred in cash.
Conversions of Company Stock to cash and cash to Company Stock shall be based
upon the value of Company Stock on the Member's Benefit Commencement Date.
10.3 DIRECT ROLLOVER ELECTION. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a Distributee's election under
this Section, a Distributee may elect, at the time and in the manner prescribed
by the Committee, to have all or any portion of an Eligible Rollover
Distribution (other than any portion attributable to the offset of an
outstanding loan balance of such Member pursuant to the Plan's loan procedure)
paid directly to an Eligible Retirement Plan specified by the Distributee in a
Direct Rollover. Prior to any Direct Rollover pursuant to this Section, the
Committee may require the Distributee to furnish the Committee with a statement
from the plan, account, or annuity to which the benefit is to be transferred
verifying that such plan, account, or annuity is, or is intended to be, an
Eligible Retirement Plan.
10.4 UNCLAIMED BENEFITS. In the case of a benefit payable on behalf of
a Member, if the Committee is unable to locate the Member or beneficiary to whom
such benefit is payable, upon the Committee's determination thereof, such
benefit shall be forfeited. Notwithstanding the foregoing, if subsequent to any
such forfeiture the Member or beneficiary to whom such benefit is payable makes
a valid claim for such benefit, such forfeited benefit shall be restored to the
Plan in the manner provided in Section 8.7.
X-2
39
10.5 CLAIMS REVIEW.
(a) In any case in which a claim for Plan benefits of a Member
or beneficiary is denied or modified, the Committee shall furnish written notice
to the claimant within ninety days after receipt of such claim for Plan benefits
(or within 180 days if additional information requested by the Committee
necessitates an extension of the ninety-day period and the claimant is informed
of such extension in writing within the original ninety-day period), which
notice shall:
(1) State the specific reason or reasons for the
denial or modification;
(2) Provide specific reference to pertinent Plan
provisions on which the denial or modification is based;
(3) Provide a description of any additional material
or information necessary for the Member, his beneficiary, or
representative to perfect the claim and an explanation of why such
material or information is necessary; and
(4) Explain the Plan's claim review procedure
described in Paragraph (b) below.
(b) In the event a claim for Plan benefits is denied or
modified, if the Member, his beneficiary, or a representative of such Member or
beneficiary desires to have such denial or modification reviewed, he must,
within sixty days following receipt of the notice of such denial or
modification, submit a written request for review by the Committee of its
initial decision. In connection with such request, the Member, his beneficiary,
or the representative of such Member or beneficiary may review any pertinent
documents upon which such denial or modification was based and may submit issues
and comments in writing. Within sixty days following such request for review the
Committee shall, after providing a full and fair review, render its final
decision in writing to the Member, his beneficiary or the representative of such
Member or beneficiary stating specific reasons for such decision and making
specific references to pertinent Plan provisions upon which the decision is
based. If special circumstances require an extension of such sixty-day period,
the Committee's decision shall be rendered as soon as possible, but not later
than 120 days after receipt of the request for review. If an extension of time
for review is required, written notice of the extension shall be furnished to
the Member, beneficiary, or the representative of such Member or beneficiary
prior to the commencement of the extension period.
X-3
40
XI.
IN-SERVICE WITHDRAWALS
11.1 IN-SERVICE WITHDRAWALS.
(a) A Member may withdraw from his Rollover Contribution
Account any or all amounts held in such Account at any time.
(b) A Member who has attained age fifty-nine and one-half may
withdraw from his Accounts an amount not exceeding his Vested Interest. Such
withdrawal shall come, first, from the Member's Rollover Contribution Account,
second, from his Vested Interest in his Employer Contribution Account and,
finally, from his Before-Tax Account.
(c) A Member who has a financial hardship, as determined by
the Committee, and who has made all available withdrawals pursuant to the
Paragraphs above and pursuant to the provisions of any other plans of the
Employer and any Controlled Entities of which he is a member and who has
obtained all available loans pursuant to Article XII and pursuant to the
provisions of any other plans of the Employer and any Controlled Entities of
which he is a member may withdraw from his Employer Contribution Account and his
Before-Tax Account amounts not to exceed the lesser of (1) such Member's Vested
Interest in such Accounts or (2) the amount determined by the Committee as being
available for withdrawal pursuant to this Paragraph. Such withdrawal shall come,
first, from the Member's Vested Interest in his Employer Contribution Account
and, second, from his Before-Tax Account. For purposes of this Paragraph,
financial hardship shall mean the immediate and heavy financial needs of the
Member. A withdrawal based upon financial hardship pursuant to this Paragraph
shall not exceed the amount required to meet the immediate financial need
created by the hardship and not reasonably available from other resources of the
Member. The amount required to meet the immediate financial need may include any
amounts necessary to pay any federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution. The determination of the
existence of a Member's financial hardship and the amount required to be
distributed to meet the need created by the hardship shall be made by the
Committee. The decision of the Committee shall be final and binding, provided
that all Members similarly situated shall be treated in a uniform and
nondiscriminatory manner. A withdrawal shall be deemed to be made on account of
an immediate and heavy financial need of a Member if the withdrawal is for:
(1) Expenses for medical care described in section
213(d) of the Code previously incurred by the Member, the Member's
spouse, or any dependents of the Member (as defined in section 152 of
the Code) or necessary for those persons to obtain medical care
described in section 213(d) of the Code and not reimbursed or
reimbursable by insurance;
(2) Costs directly related to the purchase of a
principal residence of the Member (excluding mortgage payments);
XI-1
41
(3) Payment of tuition and related educational fees,
and room and board expenses, for the next twelve months of
post-secondary education for the Member or the Member's spouse,
children, or dependents (as defined in section 152 of the Code);
(4) Payments necessary to prevent the eviction of the
Member from his principal residence or foreclosure on the mortgage of
the Member's principal residence; or
(5) Such other financial needs that the Commissioner
of Internal Revenue may deem to be immediate and heavy financial needs
through the publication of revenue rulings, notices, and other
documents of general applicability.
The above notwithstanding, (1) withdrawals under this Paragraph from a Member's
Before-Tax Account shall be limited to the sum of the Member's Before-Tax
Contributions to the Plan, less any previous withdrawals of such amounts, and
(2) Employer Contributions utilized to satisfy the restrictions in Section
3.1(e), and income allocable thereto, shall not be subject to withdrawal. A
Member who makes a withdrawal under this Paragraph may not make elective
contributions or employee contributions to the Plan or any other qualified or
nonqualified plan of the Employer or any Controlled Entity for a period of
twelve months following the date of such withdrawal. Further, such Member may
not make elective contributions under the Plan or any other plan maintained by
the Employer or any Controlled Entity for such Member's taxable year immediately
following the taxable year of the withdrawal in excess of the applicable limit
set forth in Section 3.1(d) for such next taxable year less the amount of such
Member's elective contributions for the taxable year of the withdrawal.
11.2 RESTRICTION ON IN-SERVICE WITHDRAWALS.
(a) Notwithstanding the provisions of this Article, not more
than one withdrawal pursuant to Section 11.1 (other than Paragraph (c) thereof)
may be made in any one Plan Year and no withdrawal shall be made from an Account
to the extent such Account has been pledged to secure a loan from the Plan.
(b) If a Member's Account from which a withdrawal is made is
invested in more than one Investment Fund, the Member shall designate which
Investment Fund, or combination of Investment Funds, from which the withdrawal
shall be made. In the absence of such designation, the withdrawal shall be made
pro rata from each Investment Fund in which such Account is invested.
(c) All withdrawals under this Article shall be paid in cash.
(d) Any withdrawal hereunder that constitutes an Eligible
Rollover Distribution shall be subject to the Direct Rollover election described
in Section 10.3.
(e) This Article shall not be applicable to a Member following
termination of employment and the amounts in such Member's Accounts shall be
distributable only in accordance with the provisions of Article X.
XI-2
42
XII.
LOANS
12.1 ELIGIBILITY FOR LOAN. Upon application by (1) any Member who is an
Employee or (2) any Member no longer employed by the Employer, a beneficiary of
a deceased Member or an alternate payee under a qualified domestic relations
order, as defined in section 414(p)(8) of the Code, who retains an Account
balance under the Plan and who is a party-in-interest, as that term is defined
in section 3(14) of the Act, as to the Plan (an individual who is eligible to
apply for a loan under this Article being hereinafter referred to as a "Member"
for purposes of this Article), the Committee may in its discretion direct the
Trustee to make a loan or loans to such Member. Such loans shall be made
pursuant to the provisions of the Committee's written loan procedure, which
procedure is hereby incorporated by reference as a part of the Plan.
12.2 MAXIMUM LOAN.
(a) A loan to a Member may not exceed 50% of the then value of
such Member's Vested Interest in his Accounts.
(b) Paragraph (a) above to the contrary notwithstanding, the
amount of a loan made to a Member under this Article shall not exceed an amount
equal to the difference between:
(1) The lesser of $50,000 (reduced by the excess, if
any, of (A) the highest outstanding balance of loans from the Plan
during the one-year period ending on the day before the date on which
the loan is made over (B) the outstanding balance of loans from the
Plan on the date on which the loan is made) or one-half of the present
value of the Member's total nonforfeitable accrued benefit under all
qualified plans of the Employer or a Controlled Entity; minus
(2) The total outstanding loan balance of the Member
under all other loans from all qualified plans of the Employer or a
Controlled Entity.
XII-1
43
XIII.
ADMINISTRATION OF THE PLAN
13.1 APPOINTMENT OF COMMITTEE. The general administration of the Plan
shall be vested in the Committee which shall be appointed by the Directors and
shall consist of one or more persons. Any individual, whether or not an
Employee, is eligible to become a member of the Committee. Each member of the
Committee shall, before entering upon the performance of his duties, qualify by
signing a consent to serve as a member of the Committee under and pursuant to
the Plan and by filing such consent with the records of the Committee. For
purposes of the Act, the Committee shall be the Plan "administrator" and shall
be the "named fiduciary" with respect to the general administration of the Plan
(except as to the investment of the assets of the Trust Fund).
13.2 TERM, VACANCIES, RESIGNATION, AND REMOVAL. Each member of the
Committee shall serve until he resigns, dies, or is removed by the Directors. At
any time during his term of office, a member of the Committee may resign by
giving written notice to the Directors and the Committee, such resignation to
become effective upon the appointment of a substitute member or, if earlier, the
lapse of thirty days after such notice is given as herein provided. At any time
during his term of office, and for any reason, a member of the Committee may be
removed by the Directors with or without cause, and the Directors may in their
discretion fill any vacancy that may result therefrom. Any member of the
Committee who is an Employee shall automatically cease to be a member of the
Committee as of the date he ceases to be employed by the Employer or a
Controlled Entity.
13.3 OFFICERS, RECORDS, AND PROCEDURES. The Committee may select
officers and may appoint a secretary who need not be a member of the Committee.
The Committee shall keep appropriate records of its proceedings and the
administration of the Plan and shall make available for examination during
business hours to any Member or beneficiary such records as pertain to that
individual's interest in the Plan. The Committee shall designate the person or
persons who shall be authorized to sign for the Committee and, upon such
designation, the signature of such person or persons shall bind the Committee.
13.4 MEETINGS. The Committee shall hold meetings upon such notice and
at such time and place as it may from time to time determine. Notice to a member
shall not be required if waived in writing by that member. A majority of the
members of the Committee duly appointed shall constitute a quorum for the
transaction of business. All resolutions or other actions taken by the Committee
at any meeting where a quorum is present shall be by vote of a majority of those
present at such meeting and entitled to vote. Resolutions may be adopted or
other action taken without a meeting upon written consent signed by all of the
members of the Committee.
13.5 SELF-INTEREST OF MEMBERS. No member of the Committee shall have
any right to vote or decide upon any matter relating solely to himself under the
Plan or to vote in any case in which his individual right to claim any benefit
under the Plan is particularly involved. In any case in which a Committee member
is so disqualified to act and the remaining members cannot agree, the Directors
XIII-1
44
shall appoint a temporary substitute member to exercise all the powers of the
disqualified member concerning the matter in which he is disqualified.
13.6 COMPENSATION AND BONDING. The members of the Committee shall not
receive compensation with respect to their services for the Committee. To the
extent required by the Act or other applicable law, or required by the Company,
members of the Committee shall furnish bond or security for the performance of
their duties hereunder.
13.7 COMMITTEE POWERS AND DUTIES. The Committee shall supervise the
administration and enforcement of the Plan according to the terms and provisions
hereof and shall have all powers necessary to accomplish these purposes,
including, but not by way of limitation, the right, power, authority, and duty:
(a) To make rules, regulations, and bylaws for the
administration of the Plan that are not inconsistent with the terms and
provisions hereof, provided such rules, regulations, and bylaws are
evidenced in writing and copies thereof are delivered to the Trustee
and to the Company, and to enforce the terms of the Plan and the rules
and regulations promulgated thereunder by the Committee;
(b) To construe in its discretion all terms, provisions,
conditions, and limitations of the Plan, and, in all cases, the
construction necessary for the Plan to qualify under the applicable
provisions of the Code shall control;
(c) To correct any defect or to supply any omission or to
reconcile any inconsistency that may appear in the Plan in such manner
and to such extent as it shall deem expedient in its discretion to
effectuate the purposes of the Plan;
(d) To employ and compensate such accountants, attorneys,
investment advisors, and other agents, employees, and independent
contractors as the Committee may deem necessary or advisable for the
proper and efficient administration of the Plan;
(e) To determine in its discretion all questions relating to
eligibility;
(f) To make a determination in its discretion as to the right
of any person to a benefit under the Plan and to prescribe procedures
to be followed by distributees in obtaining benefits hereunder;
(g) To prepare, file, and distribute, in such manner as the
Committee determines to be appropriate, such information and material
as is required by the reporting and disclosure requirements of the Act;
(h) To furnish the Employer any information necessary for the
preparation of such Employer's tax return or other information that the
Committee determines in its discretion is necessary for a legitimate
purpose;
XIII-2
45
(i) To require and obtain from the Employer and the Members
any information or data that the Committee determines is necessary for
the proper administration of the Plan;
(j) To instruct the Trustee as to the loans to Members
pursuant to the provisions of Article XII;
(k) To appoint investment managers pursuant to Section 15.5;
(l) To receive and review reports from the Trustee and from
investment managers as to the financial condition of the Trust Fund,
including its receipts and disbursements;
(m) To establish or designate Investment Funds as investment
options as provided in Article V; and
(n) To direct the Trustee as to the exercise of rights or
privileges to acquire, convert, or exchange Company Stock pursuant to
Section 5.4.
13.8 EMPLOYER TO SUPPLY INFORMATION. The Employer shall supply full and
timely information to the Committee, including, but not limited to, information
relating to each Member's Compensation, age, retirement, death, or other cause
of termination of employment and such other pertinent facts as the Committee may
require. The Employer shall advise the Trustee of such of the foregoing facts as
are deemed necessary for the Trustee to carry out the Trustee's duties under the
Plan. When making a determination in connection with the Plan, the Committee
shall be entitled to rely upon the aforesaid information furnished by the
Employer.
13.9 TEMPORARY RESTRICTIONS. In order to ensure an orderly transition
in the transfer of assets to the Trust Fund from another trust fund maintained
under the Plan or from the trust fund of a plan that is merging into the Plan or
transferring assets to the Plan, the Committee may, in its discretion,
temporarily prohibit or restrict withdrawals, loans, changes to contribution
elections, changes of investment designation of future contributions, transfers
of amounts from one Investment Fund to another Investment Fund, or such other
activity as the Committee deems appropriate; provided that any such temporary
cessation or restriction of such activity shall be in compliance with all
applicable law.
13.10 INDEMNIFICATION. The Company shall indemnify and hold harmless
each member of the Committee and each Employee who is a delegate of the
Committee against any and all expenses and liabilities arising out of his
administrative functions or fiduciary responsibilities, including any expenses
and liabilities that are caused by or result from an act or omission
constituting the negligence of such individual in the performance of such
functions or responsibilities, but excluding expenses and liabilities that are
caused by or result from such individual's own gross negligence or willful
misconduct. Expenses against which such individual shall be indemnified
hereunder shall include, without limitation, the amounts of any settlement or
judgment, costs, counsel fees, and related charges reasonably incurred in
connection with a claim asserted or a proceeding brought or settlement thereof.
XIII-3
46
XIV.
TRUSTEE AND ADMINISTRATION OF TRUST FUND
14.1 APPOINTMENT, RESIGNATION, REMOVAL, AND REPLACEMENT OF TRUSTEE.
(a) The Trustee shall be appointed, removed, and replaced by
and in the sole discretion of the Directors. The Trustee shall be the "named
fiduciary" with respect to investment of the Trust Fund's assets.
(b) Any Trustee may resign at any time by giving at least
thirty days' written notice of such resignation to the Directors. Any Trustee
may be removed, with or without cause, by the Directors on written notice of
such removal to such Trustee. The Directors may appoint a successor Trustee by
authorizing the execution of a new Trust Agreement with the successor Trustee, a
copy of which shall be delivered to the Committee and the former Trustee. If
there would be no other Trustee then acting, the actual appointment and
qualification of a successor Trustee to whom the Trust Fund may be transferred
are conditions which must be fulfilled before the resignation or removal of a
Trustee shall become effective. The Directors may by resolution increase or
decrease the number of Trustees at any time acting hereunder.
14.2 TRUST AGREEMENT. As a means of administering the assets of the
Plan, the Company has entered into a Trust Agreement with Xxxxxxx Xxxxx Trust
Company, FSB as Trustee. The administration of the assets of the Plan and the
duties, obligations, and responsibilities of the Trustee shall be governed by
the Trust Agreement. The Trust Agreement may be amended from time to time as the
Company deems advisable in order to effectuate the purposes of the Plan. The
Trust Agreement is incorporated herein by reference and thereby made a part of
the Plan.
14.3 PAYMENT OF EXPENSES. All expenses incident to the administration
of the Plan and Trust, including but not limited to, legal, accounting, Trustee
fees, direct expenses of the Employer and the Committee in the administration of
the Plan, and the cost of furnishing any bond or security required of the
Committee shall be paid by the Trustee from the Trust Fund, and, until paid,
shall constitute a claim against the Trust Fund which is paramount to the claims
of Members and beneficiaries; provided, however, that (a) the obligation of the
Trustee to pay such expenses from the Trust Fund shall cease to exist to the
extent such expenses are paid by the Employer and (b) in the event the Trustee's
compensation is to be paid, pursuant to this Section, from the Trust Fund, any
individual serving as Trustee who already receives full-time pay from an
employer or an association of employers whose employees are participants in the
Plan, or from an employee organization whose members are participants in the
Plan, shall not receive any additional compensation for serving as Trustee. This
Section shall be deemed to be a part of any contract to provide for expenses of
Plan and Trust administration, whether or not the signatory to such contract is,
as a matter of convenience, the Employer.
14.4 TRUST FUND PROPERTY. All income, profits, recoveries,
contributions, forfeitures, and any and all moneys, securities, and properties
of any kind at any time received or held by the Trustee
XIV-1
47
hereunder shall be held for investment purposes as a commingled Trust Fund. The
Committee shall maintain Accounts in the name of each Member, but the
maintenance of an Account designated as the Account of a Member shall not mean
that such Member shall have a greater or lesser interest than that due him by
operation of the Plan and shall not be considered as segregating any funds or
property from any other funds or property contained in the commingled fund. No
Member shall have any title to any specific asset in the Trust Fund.
14.5 DISTRIBUTIONS FROM MEMBERS' ACCOUNTS. Distributions from a
Member's Accounts shall be made by the Trustee only if, when, and in the amount
and manner directed in writing by the Committee. Any distribution made to a
Member or for his benefit shall be debited to such Member's Account or Accounts.
All distributions hereunder shall be made in cash except as otherwise
specifically provided herein.
14.6 PAYMENTS SOLELY FROM TRUST FUND. All benefits payable under the
Plan shall be paid or provided for solely from the Trust Fund, and neither the
Employer nor the Trustee assumes any liability or responsibility for the
adequacy thereof. The Committee or the Trustee may require execution and
delivery of such instruments as are deemed necessary to assure proper payment of
any benefits.
14.7 NO BENEFITS TO THE EMPLOYER. No part of the corpus or income of
the Trust Fund shall be used for any purpose other than the exclusive purpose of
providing benefits for the Members and their beneficiaries and of defraying
reasonable expenses of administering the Plan. Anything to the contrary herein
notwithstanding, the Plan shall not be construed to vest any rights in the
Employer other than those specifically given hereunder.
XIV-2
48
XV.
FIDUCIARY PROVISIONS
15.1 ARTICLE CONTROLS. This Article shall control over any contrary,
inconsistent or ambiguous provisions contained in the Plan.
15.2 GENERAL ALLOCATION OF FIDUCIARY DUTIES. Each fiduciary with
respect to the Plan shall have only those specific powers, duties,
responsibilities and obligations as are specifically given him under the Plan.
The Directors shall have the sole authority to appoint and remove the Trustee
and members of the Committee. Except as otherwise specifically provided herein,
the Committee shall have the sole responsibility for the administration of the
Plan, which responsibility is specifically described herein. Except as otherwise
specifically provided herein and in the Trust Agreement, the Trustee shall have
the sole responsibility for the administration, investment, and management of
the assets held under the Plan. It is intended under the Plan that each
fiduciary shall be responsible for the proper exercise of his own powers,
duties, responsibilities, and obligations hereunder and shall not be responsible
for any act or failure to act of another fiduciary except to the extent provided
by law or as specifically provided herein.
15.3 FIDUCIARY DUTY. Each fiduciary under the Plan, including, but not
limited to, the Committee and the Trustee as "named fiduciaries," shall
discharge his duties and responsibilities with respect to the Plan:
(a) Solely in the interest of the Members, for the exclusive
purpose of providing benefits to Members and their beneficiaries and of
defraying reasonable expenses of administering the Plan and Trust;
(b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims;
(c) By diversifying the investments of the Plan so as to
minimize the risk of large losses, unless under the circumstances it is
prudent not to do so; and
(d) In accordance with the documents and instruments governing
the Plan insofar as such documents and instruments are consistent with
applicable law.
No fiduciary shall cause the Plan or Trust Fund to enter into a "prohibited
transaction" as provided in section 4975 of the Code or section 406 of the Act.
15.4 DELEGATION OF FIDUCIARY DUTIES. The Committee may appoint
subcommittees, individuals or any other agents as it deems advisable and may
delegate to any of such appointees any or all of the powers and duties of the
Committee. Such appointment and delegation must specify in writing the powers or
duties being delegated, and must be accepted in writing by the delegatee.
XV-1
49
Upon such appointment, delegation and acceptance, the delegating Committee
members shall have no liability for the acts or omissions of any such delegatee,
as long as the delegating Committee members do not violate any fiduciary
responsibility in making or continuing such delegation.
15.5 INVESTMENT MANAGER. The Committee may, in its sole discretion,
appoint an "investment manager," with power to manage, acquire or dispose of any
asset of the Plan and to direct the Trustee in this regard, so long as:
(a) The investment manager is (1) registered as an investment
adviser under the Investment Advisers Act of 1940, (2) not registered
as an investment adviser under such act by reason of paragraph (1) of
section 203A(a) of such act, is registered as an investment adviser
under the laws of the state (referred to in such paragraph (1)) in
which it maintains its principal office and place of business, and, at
the time it last filed the registration form most recently filed by it
with such state in order to maintain its registration under the laws of
such state, also filed a copy of such form with the Secretary of Labor,
(3) a bank, as defined in the Investment Advisers Act of 1940, or (4)
an insurance company qualified to do business under the laws of more
than one state; and
(b) Such investment manager acknowledges in writing that he is
a fiduciary with respect to the Plan.
Upon such appointment, the Committee shall not be liable for the acts of the
investment manager, as long as the Committee members do not violate any
fiduciary responsibility in making or continuing such appointment. The Trustee
shall follow the directions of such investment manager and shall not be liable
for the acts or omissions of such investment manager. The investment manager may
be removed by the Committee at any time and within the Committee's sole
discretion.
XV-2
50
XVI.
AMENDMENTS
16.1 RIGHT TO AMEND. Subject to Section 16.2 and any other limitations
contained in the Act or the Code, the Directors may from time to time amend, in
whole or in part, any or all of the provisions of the Plan on behalf of the
Company and all Employers; provided, however, that amendments to the Plan which
do not have a significant cost impact on the Employer and amendments necessary
to acquire and maintain a qualified status for the Plan under the Code, whether
or not retroactive, may be made by the Committee.
16.2 LIMITATION ON AMENDMENTS. No amendment of the Plan shall be made
that would vest in the Employer, directly or indirectly, any interest in or
control of the Trust Fund. No amendment shall be made that would vary the Plan's
exclusive purpose of providing benefits to Members and their beneficiaries and
of defraying reasonable expenses of administering the Plan or that would permit
the diversion of any part of the Trust Fund from that exclusive purpose. No
amendment shall be made that would reduce any then nonforfeitable interest of a
Member. No amendment shall increase the duties or responsibilities of the
Trustee unless the Trustee consents thereto in writing.
XVI-1
51
XVII.
DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION,
PARTIAL TERMINATION, AND MERGER OR CONSOLIDATION
17.1 RIGHT TO DISCONTINUE CONTRIBUTIONS, TERMINATE, OR PARTIALLY
TERMINATE. The Employer has established the Plan with the bona fide intention
and expectation that from year to year it will be able to, and will deem it
advisable to, make its contributions as herein provided. However, the Directors
realize that circumstances not now foreseen, or circumstances beyond its
control, may make it either impossible or inadvisable for the Employer to
continue to make its contributions to the Plan. Therefore, the Directors shall
have the power to discontinue contributions to the Plan, terminate the Plan, or
partially terminate the Plan at any time hereafter. Each member of the Committee
and the Trustee shall be notified of such discontinuance, termination, or
partial termination.
17.2 PROCEDURE IN THE EVENT OF DISCONTINUANCE OF CONTRIBUTIONS,
TERMINATION, OR PARTIAL TERMINATION.
(a) If the Plan is amended so as to permanently discontinue
Employer Contributions, or if Employer Contributions are in fact permanently
discontinued, the Vested Interest of each affected Member shall be 100%,
effective as of the date of discontinuance. In case of such discontinuance, the
Committee shall remain in existence and all other provisions of the Plan that
are necessary, in the opinion of the Committee, for equitable operation of the
Plan shall remain in force.
(b) If the Plan is terminated or partially terminated, the
Vested Interest of each affected Member shall be 100%, effective as of the
termination date or partial termination date, as applicable. Unless the Plan is
otherwise amended prior to dissolution of the Company, the Plan shall terminate
as of the date of dissolution of the Company.
(c) Upon discontinuance of contributions, termination, or
partial termination, any previously unallocated contributions, forfeitures, and
net income (or net loss) shall be allocated among the Accounts of the Members on
such date of discontinuance, termination, or partial termination according to
the provisions of Article IV. Thereafter, the net income (or net loss) shall
continue to be allocated to the Accounts of the Members until the balances of
the Accounts are distributed.
(d) In the case of a termination or partial termination of the
Plan, and in the absence of a Plan amendment to the contrary, the Trustee shall
pay the balance of the Accounts of a Member for whom the Plan is so terminated,
or who is affected by such partial termination, to such Member, subject to the
time of payment, form of payment, and consent provisions of Article X.
17.3 MERGER, CONSOLIDATION, OR TRANSFER. This Plan and Trust Fund may
not merge or consolidate with, or transfer its assets or liabilities to, any
other plan, unless immediately thereafter each Member would, in the event such
other plan terminated, be entitled to a benefit which is equal
XVII-1
52
to or greater than the benefit to which he would have been entitled if the Plan
were terminated immediately before the merger, consolidation, or transfer.
XVII-2
53
XVIII.
PARTICIPATING EMPLOYERS
18.1 DESIGNATION OF OTHER EMPLOYERS.
(a) The Committee may designate any entity or organization
eligible by law to participate in the Plan and the Trust as an Employer by
written instrument delivered to the Secretary of the Company, the Trustee, and
the designated Employer. Such written instrument shall specify the effective
date of such designated participation, may incorporate specific provisions
relating to the operation of the Plan that apply to the designated Employer only
and shall become, as to such designated Employer and its Employees, a part of
the Plan and the Trust Agreement.
(b) Each designated Employer shall be conclusively presumed to
have consented to its designation and to have agreed to be bound by the terms of
the Plan and Trust Agreement and any and all amendments thereto upon its
submission of information to the Committee required by the terms of or with
respect to the Plan or upon making a contribution to the Trust Fund pursuant to
the terms of the Plan; provided, however, that the terms of the Plan may be
modified so as to increase the obligations of an Employer only with the consent
of such Employer, which consent shall be conclusively presumed to have been
given by such Employer upon its submission of any information to the Committee
required by the terms of or with respect to the Plan or upon making a
contribution to the Trust Fund pursuant to the terms of the Plan following
notice of such modification.
(c) The provisions of the Plan and the Trust Agreement shall
apply separately and equally to each Employer and its Employees in the same
manner as is expressly provided for the Company and its Employees, except that
the power to appoint or otherwise affect the Committee or the Trustee and the
power to amend or terminate the Plan and Trust Agreement shall be exercised by
the Directors, or the Committee, if applicable, alone.
(d) Transfer of employment among Employers shall not be
considered a termination of employment hereunder, and Service with one shall be
considered as Service with all others.
(e) Any Employer may, by appropriate action of its Board of
Directors or noncorporate counterpart that is communicated in writing to the
Secretary of the Company, the Trustee, and to the Committee, terminate its
participation in the Plan and the Trust. Moreover, the Committee may, in its
discretion, terminate an Employer's Plan and Trust participation at any time by
written instrument delivered to the Secretary of the Company, the Trustee, and
the designated Employer.
XVIII-1
54
18.2 SINGLE PLAN. For purposes of the Code and the Act, the Plan as
adopted by the Employers shall constitute a single plan rather than a separate
plan of each Employer. All assets in the Trust Fund shall be available to pay
benefits to all Members and their beneficiaries.
XVIII-2
55
XIX.
MISCELLANEOUS PROVISIONS
19.1 NOT CONTRACT OF EMPLOYMENT. The adoption and maintenance of the
Plan shall not be deemed to be a contract between the Employer and any person or
to be consideration for the employment of any person. Nothing herein contained
shall be deemed to give any person the right to be retained in the employ of the
Employer or to restrict the right of the Employer to discharge any person at any
time nor shall the Plan be deemed to give the Employer the right to require any
person to remain in the employ of the Employer or to restrict any person's right
to terminate his employment at any time.
19.2 ALIENATION OF INTEREST FORBIDDEN. Except as otherwise provided
with respect to "qualified domestic relations orders" and certain judgments and
settlements pursuant to section 206(d) of the Act and sections 401(a)(13) and
414(p) of the Code and except as otherwise provided under other applicable law,
no right or interest of any kind in any benefit shall be transferable or
assignable by any Member or any beneficiary or be subject to anticipation,
adjustment, alienation, encumbrance, garnishment, attachment, execution, or levy
of any kind. Plan provisions to the contrary notwithstanding, the Committee
shall comply with the terms and provisions of any "qualified domestic relations
order," including an order that requires distributions to an alternate payee
prior to a Member's "earliest retirement age" as such term is defined in section
206(d)(3)(E)(ii) of the Act and section 414(p)(4)(B) of the Code, and shall
establish appropriate procedures to effect the same.
19.3 UNIFORMED SERVICES EMPLOYMENT AND REEMPLOYMENT RIGHTS ACT
REQUIREMENTS. Notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with section 414(u) of the Code.
19.4 PAYMENTS TO MINORS AND INCOMPETENTS. If a Member or beneficiary
entitled to receive a benefit under the Plan is a minor or is determined by the
Committee in its discretion to be incompetent or is adjudged by a court of
competent jurisdiction to be legally incapable of giving valid receipt and
discharge for a benefit provided under the Plan, the Committee may pay such
benefit to the duly appointed guardian or conservator of such Member or
beneficiary for the account of such Member or beneficiary. If no guardian or
conservator has been appointed for such Member or beneficiary, the Committee may
pay such benefit to any third party who is determined by the Committee, in its
sole discretion, to be authorized to receive such benefit for the account of
such Member or beneficiary. Such payment shall operate as a full discharge of
all liabilities and obligations of the Committee, the Trustee, the Employer, and
any fiduciary of the Plan with respect to such benefit.
19.5 ACQUISITION AND HOLDING OF COMPANY STOCK. The Plan is specifically
authorized to acquire and hold up to 100% of its assets in Company Stock so long
as Company Stock is a "qualifying employer security," as such term is defined in
Section 407(d)(5) of the Act.
XIX-1
56
19.6 MEMBER'S AND BENEFICIARY'S ADDRESSES. It shall be the affirmative
duty of each Member to inform the Committee of, and to keep on file with the
Committee, his current mailing address and the current mailing address of his
designated beneficiary. If a Member fails to keep the Committee informed of his
current mailing address and the current mailing address of his designated
beneficiary, neither the Committee, the Trustee, the Employer, nor any fiduciary
under the Plan shall be responsible for any late or lost payment of a benefit or
for failure of any notice to be provided timely under the terms of the Plan.
19.7 INCORRECT INFORMATION, FRAUD, CONCEALMENT, OR ERROR. Any contrary
provisions of the Plan notwithstanding, if, because of a human or systems error,
or because of incorrect information provided by or correct information failed to
be provided by, fraud, misrepresentation, or concealment of any relevant fact
(as determined by the Committee) by any person the Plan enrolls any individual,
pays benefits under the Plan, incurs a liability or makes any overpayment or
erroneous payment, the Plan shall be entitled to recover from such person the
benefit paid or the liability incurred, together with all expenses incidental to
or necessary for such recovery.
19.8 SEVERABILITY. If any provision of this Plan shall be held illegal
or invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof. In such case, each provision shall be fully
severable and the Plan shall be construed and enforced as if said illegal or
invalid provision had never been included herein.
19.9 JURISDICTION. The situs of the Plan hereby created is Texas. All
provisions of the Plan shall be construed in accordance with the laws of Texas
except to the extent preempted by federal law.
XIX-2
57
XX.
TOP-HEAVY STATUS
20.1 ARTICLE CONTROLS. Any Plan provisions to the contrary
notwithstanding, the provisions of this Article shall control to the extent
required to cause the Plan to comply with the requirements imposed under section
416 of the Code.
20.2 DEFINITIONS. For purposes of this Article, the following terms and
phrases shall have these respective meanings:
(a) ACCOUNT BALANCE: As of any Valuation Date, the aggregate
amount credited to an individual's account or accounts under a
qualified defined contribution plan maintained by the Employer or a
Controlled Entity (excluding employee contributions that were
deductible within the meaning of section 219 of the Code and rollover
or transfer contributions made after December 31, 1983, by or on behalf
of such individual to such plan from another qualified plan sponsored
by an entity other than the Employer or a Controlled Entity), increased
by (1) the aggregate distributions made to such individual from such
plan during a five-year period ending on the Determination Date and (2)
the amount of any contributions due as of the Determination Date
immediately following such Valuation Date.
(b) ACCRUED BENEFIT: As of any Valuation Date, the present
value (computed on the basis of the Assumptions) of the cumulative
accrued benefit (excluding the portion thereof that is attributable to
employee contributions that were deductible pursuant to section 219 of
the Code, to rollover or transfer contributions made after December 31,
1983, by or on behalf of such individual to such plan from another
qualified plan sponsored by an entity other than the Employer or a
Controlled Entity, to proportional subsidies or to ancillary benefits)
of an individual under a qualified defined benefit plan maintained by
the Employer or a Controlled Entity increased by (1) the aggregate
distributions made to such individual from such plan during a five-year
period ending on the Determination Date and (2) the estimated benefit
accrued by such individual between such Valuation Date and the
Determination Date immediately following such Valuation Date. Solely
for the purpose of determining top-heavy status, the Accrued Benefit of
an individual shall be determined under (1) the method, if any, that
uniformly applies for accrual purposes under all qualified defined
benefit plans maintained by the Employer and the Controlled Entities or
(2) if there is no such method, as if such benefit accrued not more
rapidly than under the slowest accrual rate permitted under section
411(b)(1)(C) of the Code.
(c) AGGREGATION GROUP: The group of qualified plans maintained
by the Employer and each Controlled Entity consisting of (1) each plan
in which a Key Employee participates and each other plan that enables a
plan in which a Key Employee participates to meet the requirements of
section 401(a)(4) or 410 of the Code or (2) each plan in which a Key
Employee participates, each other plan that enables a plan in which a
Key Employee participates to meet the requirements of section 401(a)(4)
or 410 of the Code and any other
XX-1
58
plan that the Employer elects to include as a part of such group;
provided, however, that the Employer may elect to include a plan in
such group only if the group will continue to meet the requirements of
sections 401(a)(4) and 410 of the Code with such plan being taken into
account.
(d) ASSUMPTIONS: The interest rate and mortality assumptions
specified for top-heavy status determination purposes in any defined
benefit plan included in the Aggregation Group which includes the Plan.
(e) DETERMINATION DATE: For the first Plan Year of any plan,
the last day of such Plan Year and for each subsequent Plan Year of
such plan, the last day of the preceding Plan Year.
(f) KEY EMPLOYEE: A "key employee" as defined in section
416(i) of the Code and the Treasury regulations thereunder.
(g) PLAN YEAR: With respect to any plan, the annual accounting
period used by such plan for annual reporting purposes.
(h) REMUNERATION: 415 Compensation as defined in Section
4.5(a)(2).
(i) VALUATION DATE: With respect to any Plan Year of any
defined contribution plan, the most recent date within the twelve-month
period ending on a Determination Date as of which the trust fund
established under such plan was valued and the net income (or loss)
thereof allocated to participants' accounts. With respect to any Plan
Year of any defined benefit plan, the most recent date within a
twelve-month period ending on a Determination Date as of which the plan
assets were valued for purposes of computing plan costs for purposes of
the requirements imposed under section 412 of the Code.
20.3 TOP-HEAVY STATUS.
(a) The Plan shall be deemed to be top-heavy for a Plan Year
if, as of the Determination Date for such Plan Year, (1) the sum of Account
Balances of Members who are Key Employees exceeds 60% of the sum of Account
Balances of all Members unless an Aggregation Group including the Plan is not
top-heavy or (2) an Aggregation Group including the Plan is top-heavy. An
Aggregation Group shall be deemed to be top-heavy as of a Determination Date if
the sum (computed in accordance with section 416(g)(2)(B) of the Code and the
Treasury regulations promulgated thereunder) of (1) the Account Balances of Key
Employees under all defined contribution plans included in the Aggregation Group
and (2) the Accrued Benefits of Key Employees under all defined benefit plans
included in the Aggregation Group exceeds 60% of the sum of the Account Balances
and the Accrued Benefits of all individuals under such plans. Notwithstanding
the foregoing, the Account Balances and Accrued Benefits of individuals who are
not Key Employees in any Plan Year but who were Key Employees in any prior Plan
Year shall not be considered in determining the top-heavy status of the Plan for
such Plan Year. Further, notwithstanding the foregoing, the Account Balances and
Accrued Benefits of individuals who have
XX-2
59
not performed services for the Employer or any Controlled Entity at any time
during the five-year period ending on the applicable Determination Date shall
not be considered.
(b) If the Plan is determined to be top-heavy for a Plan Year,
the Employer shall contribute to the Plan for such Plan Year on behalf of each
Member who is not a Key Employee and who has not terminated his employment as of
the last day of such Plan Year an amount equal to:
(1) The lesser of (A) 3% of such Member's
Remuneration for such Plan Year or (B) a percent of such Member's
Remuneration for such Plan Year equal to the greatest percent
determined by dividing for each Key Employee the amounts allocated to
such Key Employee's Before-Tax Account and Employer Contribution
Account for such Plan Year by such Key Employee's Remuneration; reduced
by
(2) The amount of Employer Safe Harbor Contributions,
if any, allocated to such Member's Accounts pursuant to Section 4.2(c)
for such Plan Year.
The minimum contribution required to be made for a Plan Year pursuant to this
Paragraph for a Member employed on the last day of such Plan Year shall be made
regardless of whether such Member is otherwise ineligible to receive an
allocation of the Employer's contributions for such Plan Year. If such
forfeitures otherwise available are not sufficient to provide such restoration,
the Employer shall make a special contribution to the Plan of the portion of
such restoration not provided by forfeitures (which special contribution shall
be made without regard to current or accumulated earnings and profits).
Notwithstanding the foregoing, if the Plan is deemed to be top-heavy for a Plan
Year, the Employer's contribution for such Plan Year pursuant to this Paragraph
shall be increased by substituting "4%" in lieu of "3%" in Clause (1) hereof to
the extent that the Directors determine to so increase such contribution to
comply with the provisions of section 416(h)(2) of the Code. Notwithstanding the
foregoing, no contribution shall be made pursuant to this Paragraph for a Plan
Year with respect to a Member who is a participant in another defined
contribution plan sponsored by the Employer or a Controlled Entity if such
Member receives under such other defined contribution plan (for the plan year of
such plan ending with or within the Plan Year of the Plan) a contribution which
is equal to or greater than the minimum contribution required by section
416(c)(2) of the Code. Notwithstanding the foregoing, no contribution shall be
made pursuant to this Paragraph for a Plan Year with respect to a Member who is
a participant in a defined benefit plan sponsored by the Employer or a
Controlled Entity if such Member accrues under such defined benefit plan (for
the plan year of such plan ending with or within the Plan Year of this Plan) a
benefit that is at least equal to the benefit described in section 416(c)(1) of
the Code. If the preceding sentence is not applicable, the requirements of this
Paragraph shall be met by providing a minimum benefit under such defined benefit
plan which, when considered with the benefit provided under the Plan as an
offset, is at least equal to the benefit described in section 416(c)(1) of the
Code.
20.4 TERMINATION OF TOP-HEAVY STATUS. If the Plan has been deemed to be
top-heavy for one or more Plan Years and thereafter ceases to be top-heavy, the
provisions of this Article shall cease to apply to the Plan effective as of the
Determination Date on which it is determined no longer to be top-heavy.
XX-3
60
20.5 EFFECT OF ARTICLE. Notwithstanding anything contained herein to
the contrary, the provisions of this Article shall automatically become
inoperative and of no effect to the extent not required by the Code or the Act.
XX-4
61
EXECUTED this ____ day of ___________, 19_____.
GROUP 1 AUTOMOTIVE, INC.
By:
--------------------------------
62
APPENDIX A
SPECIAL PROVISIONS APPLICABLE TO
FORMER PARTICIPANTS IN
SMC INVESTMENT, INC. 401(k) PROFIT SHARING PLAN
In addition to the form of payment of a Member's Accounts set forth in
Section 10.2, a former participant in the SMC Investment, Inc. 401(k) Profit
Sharing Plan, or a beneficiary of such a former participant, may elect to have
the portion of his Accounts attributable to amounts transferred to the Plan from
such plan in connection with the merger of such plan into the Plan paid in the
form of monthly, quarterly, or annual installments over a fixed reasonable
period of time, not exceeding the life expectancy of the Member, or the joint
life and last survivor expectancy of the Member and his designated beneficiary.
Such installments shall be payable only in cash and not in the form of Company
Stock as permitted under Section 10.2(b) in the case of lump sum distributions.
At the direction of the Committee, the Trustee may pay such
installments by the purchase of a commercial annuity contract and the
distribution of such contract to the Member or beneficiary. Thereupon, the Plan
shall have no further liability with respect to the amount used to purchase the
annuity contract, and such Member or beneficiary shall look solely to the
company issuing such contract for such annuity payments. All certificates for
commercial annuity benefits shall be nontransferable, except for surrender to
the issuing company, and no benefit thereunder may be sold, assigned,
discounted, or pledged (other than as collateral for a loan from the company
issuing same). Notwithstanding the foregoing, the terms of any such commercial
annuity contract shall conform with the time of payment and consent provisions
of Section 10.1 and with the provisions of this Appendix.
