Document:

Exhibit 10.1

 

FIRST CONSULTING GROUP,

INC.

ASSOCIATE 401(k) AND

STOCK OWNERSHIP PLAN

 

 

FIRST CONSULTING GROUP, INC.

ASSOCIATE 401(k)

AND STOCK OWNERSHIP PLAN

 

WHEREAS, First Consulting Group, Inc.

(hereinafter referred to as the “Employer”) heretofore adopted the First

Consulting Group, Inc. Associate 401(k) and Stock Ownership Plan (hereinafter

referred to as the “Plan”) for the benefit of its eligible Associates; and

 

WHEREAS,

the Employer

reserved the right to amend the Plan; and

 

WHEREAS,

the Employer

heretofore amended the Plan from time to time; and

 

WHEREAS,

the First

Consulting Group, Inc. dba First Consulting Group Profit Sharing 401(k) Plan

was merged into the Plan effective as of January 1, 1996, and the Integrated

Systems Consulting Group, Inc. 401(k) Plan and the WaveFront Consulting, Inc.

401(k) and Profit Sharing Plan were merged into the Plan effective as of April

1, 1999; and

 

WHEREAS,

the Employer

wishes to amend the Plan in order to comply with changes permitted or required

by the Uruguay Round Agreements Act (“GATT”), the Uniformed Services Employment

and Reemployment Rights Act of 1994 (“USERRA”), the Small Business Job

Protection Act of 1996 (“SBJPA”), the Taxpayer Relief Act of 1997 (“TRA’97”)

and to add or modify certain administrative provisions; and

 

WHEREAS,

it is intended

that the Plan is to continue to be a qualified plan under Section 401(a)

of the Internal Revenue Code for the exclusive benefit of the Participants and

their Beneficiaries;

 

NOW,

THEREFORE, the

Plan is hereby amended by restating the Plan in its entirety as follows, with

such restatement also constituting an amendment of the First Consulting Group,

Inc. dba First Consulting Group Profit Sharing 401(k) Plan, the Integrated

Systems Consulting Group, Inc. 401(k) Plan and the WaveFront Consulting, Inc.

401(k) and Profit Sharing Plan for the purposes of complying with GATT, USERRA,

SBJPA and TRA’97 for the applicable periods:

 

 

Table of Contents

 

	

  ARTICLE

  ONE—DEFINITIONS

  
	

   

  	

  1.1

  	

  Account

  
	

   

  	

  1.2

  	

  Administrator

  
	

   

  	

  1.3

  	

  ASOP Fund

  
	

   

  	

  1.4

  	

  ASOP Loan

  
	

   

  	

  1.5

  	

  Associate

  
	

   

  	

  1.6

  	

  Beneficiary

  
	

   

  	

  1.7

  	

  Break in

  Service

  
	

   

  	

  1.8

  	

  Code

  
	

   

  	

  1.9

  	

  Compensation

  
	

   

  	

  1.10

  	

  Disability

  
	

   

  	

  1.11

  	

  Early

  Retirement Date

  
	

   

  	

  1.12

  	

  Effective Date

  
	

   

  	

  1.13

  	

  Employer

  
	

   

  	

  1.14

  	

  Employer Stock

  
	

   

  	

  1.15

  	

  Employment Date

  
	

   

  	

  1.16

  	

  First Share Contributions

  
	

   

  	

  1.17

  	

  Highly-Compensated

  Associate

  
	

   

  	

  1.18

  	

  Hour of Service

  
	

   

  	

  1.19

  	

  Leased Employee

  
	

   

  	

  1.20

  	

  Nonhighly-Compensated

  Associate

  
	

   

  	

  1.21

  	

  Normal Retirement Date

  
	

   

  	

  1.22

  	

  Participant

  
	

   

  	

  1.23

  	

  Plan

  
	

   

  	

  1.24

  	

  Plan Year

  
	

   

  	

  1.25

  	

  Prior Plan

  
	

   

  	

  1.26

  	

  Trust

  
	

   

  	

  1.27

  	

  Trustee

  
	

   

  	

  1.28

  	

  Valuation Date

  
	

   

  	

  1.29

  	

  Year of Vesting

  Service or Service

  
	

   

  	

   

  	

   

  
	

  ARTICLE

  TWO—SERVICE DEFINITIONS AND RULES

  
	

   

  	

  2.1

  	

  Year

  of Vesting Service

  
	

   

  	

  2.2

  	

  Break in Service

  
	

   

  	

  2.3

  	

  Leave of

  Absence

  
	

   

  	

  2.4

  	

  Rule of Parity

  on Return to Employment

  
	

   

  	

  2.5

  	

  Service

  in Excluded Job Classifications or With Related Companies

  
	

   

  	

   

  	

   

  
	

  ARTICLE THREE—PLAN

  PARTICIPATION

  
	

   

  	

  3.1

  	

  Participation

  
	

   

  	

  3.2

  	

  Re-Employment of

  Former Participant

  
	

   

  	

  3.3

  	

  Termination of Eligibility

  
	

   

  	

  3.4

  	

  Compliance

  with USERRA

  

 

 

	

  ARTICLE FOUR—ELECTIVE

  DEFERRALS, EMPLOYER CONTRIBUTIONS,  

  
	

   

  	

  ROLLOVERS AND TRANSFERS

  FROM OTHER PLANS

  
	

   

  	

  4.1

  	

  Elective

  Deferrals

  
	

   

  	

  4.2

  	

  Employer Matching

  Contributions

  
	

   

  	

  4.3

  	

  Employer Profit

  Sharing Contributions

  
	

   

  	

  4.4

  	

  Special

  Contribution for Certain Participants

  
	

   

  	

  4.5

  	

  Rollovers

  and Transfers of Funds From Other Plans

  
	

   

  	

  4.6

  	

  Timing

  of Contributions

  
	

   

  	

   

  	

   

  
	

  ARTICLE FIVE—ACCOUNTING

  RULES

  
	

   

  	

  5.1

  	

  Investment

  of Accounts and Accounting Rules

  
	

   

  	

  5.2

  	

  Participants Omitted in

  Error

  
	

   

  	

   

  	

   

  
	

  ARTICLE

  SIX—VESTING, RETIREMENT AND DISABILITY BENEFITS

  
	

   

  	

  6.1

  	

  Vesting

  
	

   

  	

  6.2

  	

  Forfeiture of Nonvested

  Balance

  
	

   

  	

  6.3

  	

  Distribution

  of Less Than Entire Vested Account Balance

  
	

   

  	

  6.4

  	

  Normal

  Retirement

  
	

   

  	

  6.5

  	

  Disability

  
	

   

  	

  6.6

  	

  Early

  Retirement

  
	

   

  	

   

  	

   

  
	

  ARTICLE

  SEVEN—MANNER AND TIME OF DISTRIBUTING BENEFITS

  
	

   

  	

  7.1

  	

  Manner of

  Payment

  
	

   

  	

  7.2

  	

  Time of

  Commencement of Benefit Payments

  
	

   

  	

  7.3

  	

  Furnishing

  Information

  
	

   

  	

  7.4

  	

  Minimum

  Distribution Rules for Installment Payments

  
	

   

  	

  7.5

  	

  Joint and

  Survivor Annuity

  
	

   

  	

  7.6

  	

  Amount

  of Death Benefit

  
	

   

  	

  7.7

  	

  Designation of Beneficiary

  
	

   

  	

  7.8

  	

  Distribution of Death

  Benefits

  
	

   

  	

  7.9

  	

  Qualified

  Pre-Retirement Survivor Annuity

  
	

   

  	

  7.10

  	

  Eligible

  Rollover Distributions

  
	

   

  	

   

  	

   

  
	

  ARTICLE

  SEVEN A—SPECIAL EMPLOYER STOCK PROVISIONS

  
	

   

  	

  7A.1

  	

  Valuation

  of Employer Stock

  
	

   

  	

  7A.2

  	

  Allocation

  of Employer Stock Purchased with Proceeds of ASOP Loan

  
	

   

  	

  7A.3

  	

  Privileges and Restrictions

  on Employer Stock; In General

  
	

   

  	

  7A.4

  	

  Privileges and

  Restrictions Applicable to Securities Acquired with ASOP Loans

  
	

   

  	

  7A.5

  	

  Voting Employer

  Stock

  
				

 

 

	

  ARTICLE

  EIGHT—LOANS AND IN-SERVICE WITHDRAWALS

  
	

   

  	

  8.1

  	

  Loans

  
	

   

  	

  8.2

  	

  Hardship

  Distributions

  
	

   

  	

  8.3

  	

  Withdrawals After Age 591⁄2

  
	

   

  	

  8.4

  	

  Withdrawals

  of Rollover Contributions

  
	

   

  	

  8.5

  	

  Diversification

  
	

   

  	

   

  	

   

  
	

  ARTICLE

  NINE—ASOP LOANS

  
	

   

  	

  9.1

  	

  ASOP Loans

  
	

   

  	

  9.2

  	

  Primary Benefit Requirement

  
	

   

  	

  9.3

  	

  Use

  of ASOP Loan Proceeds

  
	

   

  	

  9.4

  	

  Liability

  and Collateral of Plan for ASOP Loan

  
	

   

  	

  9.5

  	

  Default

  
	

   

  	

  9.6

  	

  Release of

  Collateral for ASOP Loan

  
	

   

  	

  9.7

  	

  Income

  
	

   

  	

   

  	

   

  
	

  ARTICLE

  TEN—ADMINISTRATION OF THE PLAN

  
	

   

  	

  10.1

  	

  Plan

  Administration

  
	

   

  	

  10.2

  	

  Claims

  Procedure

  
	

   

  	

  10.3

  	

  Trust Agreement

  
	

   

  	

   

  	

   

  
	

  ARTICLE

  ELEVEN—SPECIAL COMPLIANCE PROVISIONS

  
	

   

  	

  11.1

  	

  Distribution

  of Excess Deferral Amounts

  
	

   

  	

  11.2

  	

  Limitations on

  401(k) Contributions

  
	

   

  	

  11.3

  	

  Nondiscrimination

  Test for Employer Matching Contributions

  
	

   

  	

  11.4

  	

  Limitation

  on the Multiple Use Alternative

  
	

   

  	

   

  	

   

  
	

  ARTICLE

  TWELVE—LIMITATION ON ANNUAL ADDITIONS

  
	

   

  	

  12.1

  	

  Rules

  and Definitions

  
	

   

  	

   

  	

   

  
	

  ARTICLE THIRTEEN—AMENDMENT

  AND TERMINATION

  
	

   

  	

  13.1

  	

  Amendment

  
	

   

  	

  13.2

  	

  Termination

  of the Plan

  
	

   

  	

  13.3

  	

  Distribution

  Upon Sale or Disposition of Stock or Assets

  
	

   

  	

   

  	

   

  
	

  ARTICLE

  FOURTEEN—TOP-HEAVY PROVISIONS

  
	

   

  	

  14.1

  	

  Applicability

  
	

   

  	

  14.2

  	

  Definitions

  
	

   

  	

  14.3

  	

  Allocation

  of Employer Contributions and Forfeitures for a Top-Heavy Plan Year

  
	

   

  	

  14.4

  	

  Vesting

  

 

 

	

  ARTICLE

  FIFTEEN—MISCELLANEOUS PROVISIONS

  
	

   

  	

  15.1

  	

  Plan Does Not Affect

  Employment

  
	

   

  	

  15.2

  	

  Successor to the Employer

  
	

   

  	

  15.3

  	

  Repayments to the Employer

  
	

   

  	

  15.4

  	

  Benefits

  Not Assignable

  
	

   

  	

  15.5

  	

  Merger of Plans

  
	

   

  	

  15.6

  	

  Investment Experience

  Not a Forfeiture

  
	

   

  	

  15.7

  	

  Construction

  
	

   

  	

  15.8

  	

  Governing

  Documents

  
	

   

  	

  15.9

  	

  Governing Law

  
	

   

  	

  15.10

  	

  Headings

  
	

   

  	

  15.11

  	

  Counterparts

  
	

   

  	

  15.12

  	

  Location

  of Participant or Beneficiary Unknown

  

 

 

ARTICLE

ONE—DEFINITIONS

 

For purposes of the Plan, unless the context or an alternative

definition specified within another Article provides otherwise, the following

words and phrases shall have the definitions provided:

 

1.1                               “ACCOUNT” shall mean the individual bookkeeping accounts

maintained for a Participant under the Plan which shall consist of the

following sub-Accounts:

 

Pre-Tax (401(k)) Contributions Account which shall be credited with any

elective deferrals made by the Participant pursuant to Section 4.1 or under a

Prior Plan and any earnings thereon.

 

Matching Contributions Account which shall consist of any Employer

matching contributions made on behalf of the Participant pursuant to Section

4.2 or under a Prior Plan which are not part of the ASOP Fund, and any earnings

thereon.

 

ASOP Matching Contributions Account which shall consist of any Employer

matching contributions made on behalf of the Participant pursuant to Section

4.2 which are part of the ASOP Fund, and any earnings thereon.

 

First Share Account which shall consist of any First Share Contributions

made on behalf of the Participant which are part of the ASOP Fund, and any

earnings thereon.

 

Profit Sharing Account which shall consist of any Employer profit sharing

contributions made on behalf of the Participant pursuant to Section 4.3 or

under a Prior Plan which are not part of the ASOP Fund, and any earnings

thereon.

 

ASOP Profit Sharing Account which shall consist of any Employer

profit sharing contributions made on behalf of the Participant pursuant to

Section 4.3 which are part of the ASOP Fund, and any earnings thereon.

 

Rollover Account which shall consist of any rollover contributions

made by the Participant pursuant to Section 4.5 or under a Prior Plan and any

earnings thereon.

 

Special Contribution Account which shall consist of any special

Employer contributions made on behalf of the Participant pursuant to Section

4.4 and any earnings thereon.

 

1.2                               “ADMINISTRATOR” shall mean the Plan Administrator

appointed from time to time in accordance with the provisions of Article Ten

hereof.

 

1.3                               “ASOP FUND” shall mean that portion of the Trust

comprising the “employee stock ownership” portion of the Plan (within the

meaning of Section 4975(e)(7) of the Code), the assets of which shall be

invested in shares of Employer Stock; provided, however, that a portion thereof

shall be invested in cash and cash equivalents for purposes of liquidity.

 

1

 

1.4                               “ASOP LOAN” shall mean a loan made in accordance with

Article Nine.

 

1.5                               “ASSOCIATE” shall mean a common law employee of the

Employer.

 

1.6                               “BENEFICIARY” shall mean any person, trust,

organization, or estate entitled to receive payment under the terms of the Plan

upon the death of a Participant.

 

1.7                               “BREAK IN SERVICE” shall have the meaning set forth in

Section 2.2.

 

1.8                               “CODE” shall mean the Internal Revenue Code of 1986, as

amended from time to time.

 

1.9                               “COMPENSATION” shall mean the compensation paid to a

Participant by the Employer for the Plan Year, but exclusive of bonuses,

relocation payments, fringe benefits, any program of deferred compensation or

additional benefits payable other than in cash and any compensation received

prior to his becoming a Participant in the Plan.  Compensation shall, however, include any amounts deferred under a

salary reduction agreement in accordance with Section 4.1 or under a Code

Section 125 plan maintained by the Employer.

 

In addition to other applicable limitations set forth

in the Plan, and notwithstanding any other provision of the Plan to the

contrary, the annual Compensation of each Participant taken into account under

the Plan shall not exceed the OBRA ‘93 annual compensation limit.  The OBRA ‘93 annual compensation limit is

$150,000, as adjusted by the Secretary of the Treasury or his delegate for increases

in the cost of living in accordance with Section 401(a)(17)(B) of the

Code.  The cost-of-living adjustment in

effect for a calendar year applies to any period, not exceeding twelve (12)

months, over which Compensation is determined (determination period) beginning

in such calendar year.  If a

determination period consists of fewer than twelve (12) months, the

OBRA ’93 annual compensation limit shall be multiplied by a fraction, the

numerator of which is the number of months in the determination period, and the

denominator of which is twelve (12).

 

Any reference in the Plan to the limitation under

Section 401(a)(17) of the Code shall mean the OBRA ‘93 annual compensation

limit set forth in this provision.

 

If Compensation for any prior determination period is

taken into account in determining a Participant’s benefits accruing in the

current Plan Year, the Compensation for that prior determination period shall

be subject to the OBRA ‘93 annual compensation limit in effect for that prior

determination period.

 

For purposes of determining who is a

Highly-Compensated Associate, Compensation shall mean compensation as defined

in Code Section 414(q)(4).

 

2

 

1.10                        “DISABILITY” shall mean any inability to engage in any

substantial gainful activity by reason of any medically determinable physical

or mental impairment which can be expected to result in death or to be of

long-continued and indefinite duration, within the meaning of Section 72(m)(7)

of the Code.  Notwithstanding the

foregoing, the Administrator shall determine that a Participant has incurred a

Disability if the Participant qualifies for disability benefits under the

Employer’s LTD plan, and shall presume conclusively that a Participant covered

by such LTD plan but who does not so qualify has not incurred a Disability.

 

1.11                        “EARLY RETIREMENT DATE” shall mean the date on which a

Participant retires early pursuant to Section 6.6.

 

1.12                        “EFFECTIVE DATE.”  The Plan’s initial Effective Date is December 1,

1995.  The Effective Date of this

restated Plan, on and after which it supersedes the terms of the existing Plan

document, is January 1, 2000, except where the provisions of the Plan, or

the requirements of applicable law, shall otherwise specifically provide.  The rights of any Participant who separated

from the Employer’s Service prior to the applicable date shall be established

under the terms of the Plan and Trust as in effect at the time of the

Participant’s separation from Service, unless the Participant subsequently

returns to Service with the Employer. 

Rights of spouses and Beneficiaries of such Participants shall also be

governed by those documents.

 

1.13                        “EMPLOYER” shall mean First Consulting Group, Inc.

and any subsidiary or affiliate which is a member of its “related group” (as

defined in Section 2.5) which has adopted the Plan (a “Participating

Affiliate”), and shall include any successor(s) thereto which adopt this

Plan.  Any such subsidiary or affiliate

of First Consulting Group, Inc. may adopt the Plan with the approval of its

board of directors (or noncorporate counterpart) subject to the approval of

First Consulting Group, Inc.  The

provisions of this Plan shall apply equally to each Participating Affiliate and

its Associates except as specifically set forth in the Plan; provided, however,

notwithstanding any other provision of this Plan, the amount and timing of

contributions under Article 4 to be made by any Employer which is a

Participating Affiliate shall be made subject to the approval of First

Consulting Group, Inc.  For purposes

hereof, each Participating Affiliate shall be deemed to have appointed First

Consulting Group, Inc. as its agent to act on its behalf in all matters

relating to the administration, amendment, termination of the Plan and the

investment of the assets of the Plan. 

For purposes of the Code and ERISA, the Plan as maintained by First

Consulting Group, Inc. and the Participating Affiliates shall constitute a

single plan rather than a separate plan of each Participating Affiliate.  All assets in the Trust shall be available

to pay benefits to all Participants and their Beneficiaries.

 

1.14                        “EMPLOYER STOCK” shall mean any class of stock of the

Employer which both constitutes “qualifying employer securities” as defined in

Section 407(d) of the Employee Retirement Income Security Act of 1974, as

amended, and “employer securities” as defined in Section 409(l) of the Code.

 

3

 

1.15                        “EMPLOYMENT DATE” shall mean the first date as of which an

Associate is credited with an Hour of Service, provided that, in the case of a

Break in Service, the Employment Date shall be the first date thereafter as of

which an Associate is credited with an Hour of Service.

 

1.16                        “FIRST SHARE CONTRIBUTIONS” shall mean contributions made by the Employer

prior to January 1, 1999 in shares of Employer Stock or cash applied to the

purchase of Employer Stock.

 

1.17                        “HIGHLY-COMPENSATED

ASSOCIATE” shall

mean, effective for years beginning after December 31, 1996, any Associate of

the Employer who:

 

(a)                                  was a five percent (5%) owner of the

Employer (as defined in Code Section 416(i)(1)) during the “determination year”

or “look-back year”; or

 

(b)                                 earned more than $80,000 (as increased by

cost-of-living adjustments) of Compensation from the Employer during the

“look-back year” and, if the Employer elects, was in the top twenty percent

(20%) of Associates by Compensation for such year.  Such election was made under the WaveFront Consulting, Inc.

401(k) and Profit Sharing Plan for the 1997 and 1998 Plan Years.

 

An Associate who separated from Service prior to the

“determination year” shall be treated as a Highly-Compensated Associate for the

“determination year” if such Associate was a Highly-Compensated Associate when

such Associate separated from Service, or was a Highly-Compensated Associate at

any time after attaining age fifty-five (55).

 

For purposes of this Section, the “determination year”

shall be the Plan Year for which a determination is being made as to whether an

Associate is a Highly-Compensated Associate. 

The “look-back year” shall be the twelve (12) month period immediately

preceding the “determination year”.  Notwithstanding

the foregoing, and effective solely for the 1997 Plan Year, the Employer,

pursuant to Notice 97-45, elected to utilize the calendar year calculation

election.

 

In determining whether an Associate is a

Highly-Compensated Associate for the Plan Year beginning in 1997, the

amendments to Section 414(q) stated above shall be treated as having been in

effect for the Plan Year beginning in 1996.

 

1.18                        “HOUR OF SERVICE” shall have the meaning set forth below:

 

(a)                                  An Hour of Service is each hour for which

an Associate is paid, or entitled to payment, for the performance of duties for

the Employer, during the applicable computation period.

 

(b)                                 An Hour of Service is each hour for which

an Associate is paid, or entitled to payment, by the Employer on account of a

period of time during which no duties are performed (irrespective of whether

the employment relationship has terminated) due to vacation,

 

4

 

holiday, illness, incapacity (including disability),

layoff, jury duty, military duty, or leave of absence.  Notwithstanding the preceding sentence,

 

(i)                                     No more than five hundred and one (501)

Hours of Service shall be credited under this paragraph (b) to any Associate on

account of any single continuous period during which the Associate performs no

duties (whether or not such period occurs in a single computation period);

 

(ii)                                  An hour for which an Associate is

directly or indirectly paid, or entitled to payment, on account of a period

during which no duties are performed shall not be credited to the Associate if

such payment is made or due under a plan maintained solely for the purpose of complying

with applicable workmen’s compensation, or unemployment compensation or

disability insurance laws; and

 

(iii)                               Hours of Service shall not be credited

for a payment which solely reimburses an Associate for medical or medically

related expenses incurred by the Associate.

 

For purposes of this paragraph (b), a payment shall be

deemed to be made by or due from the Employer regardless of whether such

payment is made by or due from the Employer directly, or indirectly through,

among others, a trust fund, or insurer, to which the Employer contributes or

pays premiums and regardless of whether contributions made or due to the trust

fund, insurer or other entity are for the benefit of particular Associates or

are on behalf of a group of Associates in the aggregate.

 

(c)                                  An Hour of Service is each hour for which

back pay, irrespective of mitigation of damages, is either awarded or agreed to

by the Employer.  The same Hours of

Service shall not be credited both under paragraph (a) or paragraph (b), as the

case may be, and under this paragraph (c). 

Thus, for example, an Associate who receives a back pay award following

a determination that he was paid at an unlawful rate for Hours of Service

previously credited shall not be entitled to additional credit for the same

Hours of Service.  Crediting of Hours of

Service for back pay awarded or agreed to with respect to periods described in

paragraph (b) shall be subject to the limitations set forth in that paragraph.

 

1.19                        “LEASED EMPLOYEE” shall mean, effective January 1, 1997,

any person who, pursuant to an agreement between the Employer and any other

person or organization, has performed services for the Employer (determined in

accordance with Code Section 414(n)(6)) on a substantially full-time basis

for a period of at least one (1) year and where such services are performed

under the primary direction and control of the Employer.  A person shall not be considered a Leased

Employee if the total number of Leased Employees does not exceed twenty percent

(20%) of the Nonhighly-Compensated Associates employed by the Employer, and if

any such person is covered by a money purchase pension plan providing

(a) a nonintegrated employer contribution rate of at least ten percent

(10%) of compensation, as defined in Section 12.1(b)(2) of the Plan but

including amounts contributed pursuant to a salary reduction agreement which

are excludable from the employee’s gross income under Code Sections 125, 402(g)

or 403(b), (b) immediate participation, and (c) full and immediate vesting.

 

5

 

1.20                        “NONHIGHLY-COMPENSATED

ASSOCIATE” shall

mean an Associate of the Employer who is not a Highly-Compensated Associate.

 

1.21                        “NORMAL RETIREMENT DATE” shall mean the Participant’s sixty-second

(62nd) birthday or, if later, the fifth (5th) anniversary

of the Participant’s commencement of initial Plan participation.

 

1.22                        “PARTICIPANT” shall mean any Associate who has

satisfied the eligibility requirements of Article Three and who is

participating in the Plan.

 

1.23                        “PLAN” shall mean the First Consulting Group, Inc. Associate

401(k) and Stock Ownership Plan, as set forth herein and as may be amended from

time to time.

 

1.24                        “PLAN YEAR” shall mean the twelve (12)-consecutive

month period beginning January 1 and ending December 31.

 

1.25                        “PRIOR PLAN” shall mean the First Consulting Group,

Inc. dba First Consulting Group Profit Sharing 401(k) Plan, the Integrated

Systems Consulting Group, Inc. 401(k) Plan or the WaveFront Consulting, Inc.

401(k) and Profit Sharing Plan as in effect from time to time prior to the

merger of each of these plans into the Plan.

 

1.26                        “TRUST” shall mean the Trust Agreement entered into between

the Employer and the Trustee forming part of this Plan, together with any

amendments thereto.  “Trust Fund” shall

mean any and all property held by the Trustee pursuant to the Trust Agreement,

together with income therefrom.

 

1.27                        “TRUSTEE” shall mean the Trustee or Trustees appointed by the

Employer, and any successors thereto.

 

1.28                        “VALUATION DATE” shall mean the date or dates established

by the Administrator for the valuation of the assets of the Plan.  In no event shall the assets of the Plan be

valued less frequently than once each Plan Year.

 

1.29                        “YEAR OF VESTING

SERVICE” or “SERVICE” and the special rules with respect to crediting

Service are in Article Two of the Plan.

 

6

 

ARTICLE

TWO—SERVICE DEFINITIONS AND RULES

 

Service is the period of employment credited under the Plan.  Definitions and special rules related to

Service are as follows:

 

2.1                               YEAR OF VESTING SERVICE.  An Associate shall be credited with a

Year of Vesting Service for each Plan Year in which he is credited with at

least one thousand (1,000) Hours of Service. 

For such purposes, an Associate shall be credited with a Year of Vesting

Service upon completion of the one thousandth (1,000th) hour in each

such twelve (12)-month period.

 

With respect to periods prior to January 1, 1996, a

Participant’s Years of Vesting Service and Breaks in Service shall be such

number of such years as are determined under the provisions of the First

Consulting Group, Inc. dba First Consulting Group Profit Sharing 401(k) Plan as

in effect through December 31, 1995 if the Participant was a participant in that

plan.

 

With respect to periods prior to April 1, 1999, a

Participant’s Years of Vesting Service and Breaks in Service shall be such

number of such years as are determined under the provisions of the Integrated

Systems Consulting Group, Inc. 401(k) Plan as in effect through March 31, 1999

if the Participant was a participant in that plan.  For purposes of the foregoing calculations of Years of Vesting

Service and Breaks in Service, each Participant shall be treated in the manner

set forth in Section 1.410(a)-7(f)(1) of the Income Tax Regulations, which are

incorporated herein by reference, and shall be credited with one hundred and

ninety (190) Hours of Service for each month since his employment anniversary

during which he would be required to be credited with one Hour of Service under

the Plan.

 

With respect to periods prior to April 1, 1999, a

Participant’s Years of Vesting Service and Breaks in Service shall be such

number of such years as are determined under the provisions of the WaveFront

Consulting Group, Inc. 401(k) and Profit Sharing Plan as in effect through

March 31, 1999 if the Participant was a participant in the plan.

 

With respect to Participants employed by FCG

Management Services, LLC and serving as a dedicated member of the project staff

at the New York and Presbyterian Hospital account on January 1, 2000, each such

Participant’s Years of Vesting Service and Breaks in Service as of January 1,

2000 shall be such number of such years as are determined under the provisions

of The New York Hospital Employees’ Retirement Plan as in effect through

December 31, 1999 if the Participant was a participant in that plan.

 

In addition to the foregoing, with respect to any

individual who becomes an Associate as a result of (a) the Employer’s

acquisition of such individual’s employer, (b) the Employer’s acquisition

of all, or substantially all, of such employer’s operating assets, or (c) the

terms of an outsourcing agreement between such individual’s employer and the

Employer, each such Associate’s prior period of employment with such employer

shall be taken into account in determining such Associate’s Year(s) of Vesting

Service and Break(s) in Service.

 

2.2                               BREAK IN SERVICE.  A Break in Service shall mean each Plan

Year in which an Associate or Participant is not credited with at least five

hundred and one (501) Hours of Service.

 

7

 

2.3                               LEAVE OF ABSENCE.  A Participant on an unpaid leave of

absence pursuant to the Employer’s normal personnel policies shall be credited

with Hours of Service at his regularly-scheduled weekly rate while on such

leave, provided the Employer acknowledges in writing that the leave is with its

approval.  These Hours of Service shall

be credited only for purposes of determining if a Break in Service has occurred

and, unless specified otherwise by the Employer in writing, shall not be

credited for eligibility to participate in the Plan, vesting, or qualification

to receive an allocation of Employer contributions and forfeitures.  Hours of Service during a paid leave of

absence shall be credited as provided in Section 1.18.

 

For any individual who is absent from work for any

period by reason of the individual’s pregnancy, birth of the individual’s

child, placement of a child with the individual in connection with the

individual’s adoption of the child, or by reason of the individual’s caring for

the child for a period beginning immediately following such birth or adoption,

the Plan shall treat as Hours of Service, solely for determining if a Break in

Service has occurred, the following Hours of Service:

 

(a)                                  the Hours of Service which otherwise

normally would have been credited to such individual but for such absence; or

 

(b)                                 in any case where the Administrator is

unable to determine the Hours of Service, on the basis of an assumed eight (8)

hours per day.

 

In no event shall more than five hundred and one (501)

of such hours be credited by reason of such period of absence.  The Hours of Service shall be credited in

the Plan Year which starts after the leave of absence begins.  However, the Hours of Service shall instead

be credited in the Plan Year in which the absence begins if it is necessary to

credit the Hours of Service in that computation period to avoid the occurrence

of a Break in Service.

 

2.4                               RULE OF PARITY ON RETURN

TO EMPLOYMENT. 

An Associate who returns to employment after a Break in Service shall

retain credit for his pre-Break Years of Vesting Service, subject to the

following rules:

 

(a)                                  If a Participant incurs five (5) or more

consecutive Breaks in Service, any Years of Vesting Service performed

thereafter shall not be used to increase the nonforfeitable interest in his

Account accrued prior to such five (5) or more consecutive Breaks in Service.

 

(b)                                 If, when a Participant incurred a Break

in Service, he had not completed sufficient Years of Vesting Service to be

credited with a vested benefit under the schedule set forth in Section 6.1, his

pre-Break Years of Vesting Service shall be disregarded if his consecutive

Breaks in Service equal or exceed five (5).

 

8

 

2.5          SERVICE IN EXCLUDED JOB

CLASSIFICATIONS OR WITH RELATED COMPANIES

 

(a)                                  Service while a Member of an Ineligible Classification of

Associates. 

An Associate who is a member of an ineligible classification of

Associates shall not be eligible to participate in the Plan while a member of

such ineligible classification. 

However, if any such Associate is transferred to an eligible classification,

such Associate shall be credited with any prior Years of Vesting Service

completed while a member of such an ineligible classification.  For this purpose, an Associate shall be

considered a member of an ineligible classification of Associates for any

period during which he is employed in a job classification which is excluded

from participating in the Plan under Section 3.1 below.

 

(b)                                 Service with Related Group Members.  Subject to Section 2.1, for each Plan Year

in which the Employer is a member of a “related group”, as hereinafter defined,

all Service of an Associate or Leased Employee (hereinafter collectively

referred to as “Associate” solely for purposes of this Section 2.5(b)) with any

one or more members of such related group shall be treated as employment by the

Employer for purposes of determining the Associate’s Years of Vesting

Service.  The transfer of employment by

any such Associate to another member of the related group shall not be deemed

to constitute a retirement or other termination of employment by the Associate

for purposes of this Section, but the Associate shall be deemed to have

continued in employment with the Employer for purposes of determining the

Associate’s Years of Vesting Service. 

For purposes of this subsection (b), “related group” shall mean the Employer

and all corporations, trades or businesses (whether or not incorporated) which

constitute a controlled group of corporations with the Employer, a group of

trades or businesses under common control with the Employer, or an affiliated

service group which includes the Employer, within the meaning of Section

414(b), Section 414(c), or Section 414(m), respectively, of the Code or any

other entity required to be aggregated under Code Section 414(o).

 

(c)                                  Construction.  This Section is included in the Plan to comply with the Code

provisions regarding the crediting of Service, and not to extend any additional

rights to Associates in ineligible classifications other than as required by

the Code and regulations thereunder.

 

9

 

ARTICLE THREE—PLAN PARTICIPATION

 

3.1                               PARTICIPATION.  All Associates participating in the Plan as of January

1, 2000 shall continue to participate, subject to the terms hereof.

 

Subject to the following provisions of this Section,

each other Associate shall become a Participant under the Plan effective as of

the first Monday of the “calendar quarter” (that is, each three (3) month

period beginning January 1, April 1, July 1 or October 1) coincident with or

next following the Associate’s Employment Date.

 

In no event, however, shall any Associate (or other

individual) participate under the Plan while he is:  (i) included in a unit of Associates covered by a collective

bargaining agreement between the Employer and the Associate representatives under

which retirement benefits were the subject of good faith bargaining, unless the

terms of such bargaining agreement expressly provides for the inclusion in the

Plan; (ii) employed as an independent contractor on the payroll records of the

Employer (regardless of any subsequent reclassification by the Employer, any

governmental agency or court), (iii) employed as a Leased Employee; (iv)

employed as a nonresident alien who receives no earned income (within the

meaning of Section 911(d)(2) of the Code) from the Employer which constitutes

income from sources within the United States (within the meaning of Section

861(a)(3) of the Code); or (v) employed on as an intern.

 

3.2                               RE-EMPLOYMENT OF FORMER

PARTICIPANT.  A vested Participant (or a nonvested Participant whose

prior Service cannot be disregarded) whose participation ceased because of

termination of employment with the Employer shall resume participating upon his

reemployment; provided, however, that such an individual shall be entitled to

commence elective deferrals as soon as administratively possible following his

return to participation in the Plan.

 

3.3                               TERMINATION OF

ELIGIBILITY.  In the event a Participant is no longer a member of an

eligible class of Associates and he becomes ineligible to participate, such

Associate shall resume participating upon his return to an eligible class of

Associates; provided, however, that such an individual shall be entitled to

commence elective deferrals as soon as administratively possible following his

return to participation in the Plan.

 

In the event an Associate who is not a member of an

eligible class of Associates becomes a member of an eligible class, such

Associate shall participate upon becoming a member of an eligible class of

Associates, if such Associate has otherwise satisfied the eligibility

requirements of Section 3.1 and would have otherwise previously become a

Participant; provided, however, that such an individual shall be entitled to

commence elective deferrals as soon as administratively possible following his

becoming a Participant.

 

3.4                               COMPLIANCE WITH USERRA.  Notwithstanding any provision of this

Plan to the contrary, for reemployments on or after December 12, 1994,

Participants shall receive service credit and be eligible to make deferrals and

receive Employer contributions with respect to periods of qualified

 

10

 

military service (within the meaning of Section

414(u)(5) of the Code) in accordance with Section 414(u) of the Code.

 

11

 

ARTICLE

FOUR—ELECTIVE DEFERRALS,

EMPLOYER CONTRIBUTIONS,

ROLLOVERS AND TRANSFERS FROM OTHER PLANS

 

4.1          ELECTIVE DEFERRALS

 

(a)                                  Elections.  A Participant may elect to defer a portion of his

Compensation for a Plan Year.  The

amount of a Participant’s Compensation that is deferred in accordance with the

Participant’s election shall be withheld by the Employer from the Participant’s

Compensation.  The amount deferred on

behalf of each Participant shall be contributed by the Employer to the Plan and

allocated to the Participant’s Pre-Tax (401(k)) Contributions Account.

 

(b)                                 Changes in Election.  A Participant may prospectively elect to

change or revoke the amount (or percentage) of his elective deferrals during

the Plan Year by filing a written election with the Employer, or via such other

method as permitted by applicable law.

 

(c)                                  Limitations on Deferrals.  No Participant shall defer on a pre-tax

basis an amount which exceeds $10,000 (or such amount as adjusted for

cost-of-living increases under Section 402(g) of the Code) for any calendar

year ending with or within the Plan Year.

 

(d)                                 Administrative Rules.  All elections made under this Section

4.1, including the amount and frequency of deferrals, shall be subject to the

rules of the Administrator which shall be consistently applied and which may be

changed from time to time.

 

4.2          EMPLOYER MATCHING

CONTRIBUTIONS

 

(a)                                  Employer Matching Contributions.  For each Plan Year, the Employer may, in

its sole discretion, contribute to the Plan, on behalf of each Participant

eligible under Section 4.2(b), a matching contribution equal to a percentage

(as determined by the Employer’s board of directors) of the elective deferrals

made by each such Participant; provided, however, that the Employer may

determine that any such matching contribution shall not exceed a percentage (as

determined by its board of directors) of each eligible Participant’s

Compensation for the Plan Year and may determine to establish a different

maximum percentage for Highly-Compensated Associates than for

Nonhighly-Compensated Associates; and provided further, that, to the extent

determined by the board of directors of First Consulting Group, Inc., any

matching contributions under this Section may be designated as a “loan

repayment contribution” and to the extent of such designation shall be applied

to the repayment of any ASOP Loan designated by First Consulting Group, Inc.

 

(b)                                 Eligibility for Employer Matching Contributions.  To be eligible for a share of Employer

matching contributions under Section 4.2(a), a Participant must be employed by

the Employer on the last day of the period for which such matching contribution

is made to the Plan; provided, however, that any Participant whose employment

with the Employer was involuntarily terminated by the Employer between December

6, 1999 and December

 

12

 

31, 1999 shall nevertheless be entitled to share in

any matching contributions made for the period ending December 31, 1999.

 

Notwithstanding the foregoing provisions of this

Section 4.2, in no event shall any Participant who is employed by FCG

Management Services, LLC and who is serving as a dedicated member of the

project staff at New York and Presbyterian Hospital account be eligible to

share in any Employer matching contributions.

 

4.3          EMPLOYER PROFIT SHARING

CONTRIBUTIONS

 

(a)                                  Employer Profit Sharing Contributions.  As of the last day of a Plan Year, the

Employer may, in its sole discretion, elect to make a profit sharing contribution

to the Plan for such year, in cash or in the form of Employer Stock, in an

amount determined by the Employer.

 

(b)                                 Eligibility for Profit Sharing Contributions.  To be eligible for an allocation of any

Employer profit sharing contribution made for any Plan Year, a Participant must

be employed by the Employer on the last day of the Plan Year.

 

(c)                                  Allocation of Employer Profit Sharing Contributions.  Any profit sharing contribution under

Section 4.3 shall be allocated among eligible Participants in the following

order of priorities:

 

(1)                                  Such amounts shall first be allocated

among all eligible Participants based on the ratio that each such Participant’s

“Credited Compensation” bears to the total “Credited Compensation” of all such

eligible Participants; provided that the total amount allocated to all

Participants under this step shall not exceed the total “Credited Compensation”

of all eligible Participants, multiplied by the greater of five and

seven-tenths percent (5.7%) or the percentage equal to the portion of the rate

of tax (which is attributable to old-age insurance) under Code Section 3111(a),

as said rate is in effect at the beginning of the Plan Year.

 

“Credited Compensation”

shall mean the sum of a Participant’s Compensation, plus his Compensation in

excess of the FICA taxable wage base that is in effect on the first day of the

Plan Year.

 

(2)                                  The balance of the available

contribution, if any, shall be allocated among all eligible Participants based

on the ratio that each such Participant’s Compensation bears to the total

Compensation of all such eligible Participants.

 

Notwithstanding the foregoing provisions of this

Section 4.3, to the extent determined by the board of directors of First

Consulting Group, Inc., any profit sharing contributions under this Section 4.3

may be designated as “loan repayment contributions” and to the extent of such

designation shall be applied to the repayment of any ASOP Loan designated by

First Consulting Group, Inc..  In the

event of such a determination and designation, such profit sharing

contributions shall not be allocated in accordance with the foregoing

provisions of this

 

13

 

subsection (c), but shall be allocated in the

proportion that each such eligible Participant’s Compensation bears to the

Compensation of all eligible Participants.

 

4.4                               SPECIAL CONTRIBUTION FOR

CERTAIN PARTICIPANTS. 

As of the last day of each calendar quarter, the Employer may, in its

sole discretion, cause FCG Management Services, LLC to make a “special”

contribution on behalf of each eligible Participant employed by FCG Management

Services, LLC serving as a dedicated member of the project staff at the New

York Presbyterian Hospital account (a “FCGMS-NYPH Associate”) in an amount determined

as follows:

 

(i)                                     Each FCGMS-NYPH Associate employed at the

“Manager” level and above, and any other FCGMS-NYPH Associate who was entitled

to receive a nine percent (9%) cash balance contribution under The New York

Hospital Employees’ Retirement Plan as of December 31, 1999, shall be entitled

to receive a special contribution in an amount equal to nine percent (9%) of

his Compensation for such “calendar quarter” (that is, each three (3)-month

period beginning January 1, April 1, July 1 or October 1).

 

(ii)                                  Each other FCGMS-NYPH Associate who was

an active participant in the New York Hospital Employees’ Retirement Plan prior

to January 1, 1992 shall be entitled to receive a special contribution in an

amount based on his “Years of Creditable Service”, as defined below, determined

as follows:

 

	

  Years of

  Creditable Service

  	

   

  	

  Percentage

  of Compensation

  Each Calendar Quarter

  	

   

  
	

  1 through 4

  	

   

  	

  5

  	

  %

  
	

  5 through 9

  	

   

  	

  6

  	

  %

  
	

  10 through 14

  	

   

  	

  7

  	

  %

  
	

  15 through 19

  	

   

  	

  8

  	

  %

  
	

  20 through 24

  	

   

  	

  10

  	

  %

  
	

  25 through 29

  	

   

  	

  12

  	

  %

  
	

  30 and over

  	

   

  	

  15

  	

  %

  

 

(iii)                               All other FCGMS-NYPH Associates shall be

entitled to receive a special contribution in an amount based on his Years of

Creditable Service as follows:

 

	

  Years of

  Creditable Service

  	

   

  	

  Percentage

  of Compensation

  Each Calendar Quarter

  	

   

  
	

  1 through 4

  	

   

  	

  5

  	

  %

  
	

  5 through 9

  	

   

  	

  6

  	

  %

  
	

  10 through 14

  	

   

  	

  7

  	

  %

  
	

  15 through 19

  	

   

  	

  8

  	

  %

  
	

  20 and over

  	

   

  	

  10

  	

  %

  

 

In order to be eligible for the special contributions

set forth in this Section 4.4, each FCGMS-NYPH Associate must have been

credited with at least one (1) Year of Creditable Service and

 

14

 

must be employed by FCG Management Services, LLC on

the last day of the calendar quarter for which the special contribution is to

be made.

 

For purposes of this Section 4.4, each such FCGMS-NYPH

Associate’s Year(s) of Creditable Service as of January 1, 2000 shall be such

number of such years as determined under the provisions of The New York

Hospital Employees’ Retirement Plan as in effect through December 31, 1999.  Thereafter, each FCGMS-NYPH Associate shall

be credited with an additional Year of Creditable Service for each Year of

Vesting Service completed under the Plan after December 31, 1999.

 

4.5                               ROLLOVERS AND TRANSFERS

OF FUNDS FROM OTHER PLANS.  With the approval of the Administrator, there may be

paid to the Trustee amounts which have been held under other plans qualified

under Code Section 401 either (a) maintained by the Employer which have

been discontinued or terminated with respect to any Associate, or

(b) maintained by another employer with respect to which any Associate has

ceased to participate.  Any such

transfer or rollover may also be made by means of an Individual Retirement

Account qualified under Section 408 of the Code, where the Individual

Retirement Account was used as a conduit from the former plan.  Any amounts so transferred on behalf of any

Associate shall be nonforfeitable and shall be maintained under the

Participant’s Rollover Account.

 

4.6                               TIMING OF CONTRIBUTIONS.  Employer contributions shall be made to

the Plan no later than the time prescribed by law for filing the Employer’s

Federal income tax return (including extensions) for its taxable year ending

with or within the Plan Year.  Elective

deferrals under Section 4.1 shall be paid to the Plan as soon as administratively

possible, but no later than the fifteenth (15th) business day of the

month following the month in which such deferrals would have been payable to

the Participant in cash, or such later date as permitted or prescribed by the

Department of Labor.

 

15

 

ARTICLE

FIVE—ACCOUNTING RULES

 

5.1          INVESTMENT OF ACCOUNTS

AND ACCOUNTING RULES

 

(a)                                  Investment Funds.  Subject to the provisions of Article Seven A and

Section 8.5 below, the investment of Participants’ Accounts shall be made in a

manner consistent with the provisions of the Trust.  The Administrator, in its discretion, may allow the Trust to

provide for separate funds for the directed investment of all or a portion of

each Participant’s Account.

 

However, any Employer matching contributions and First

Share Contributions made after December 31, 1995 and prior to January 1,

2000 shall be invested primarily in Employer Stock.  Any Employer matching contributions made after December 31, 1999

shall be made in the form of Employer Stock or in the form of cash (the

investment of such cash shall in turn be subject to the Participant’s

direction) as each such Participant may elect prior to the beginning of such

Plan Year, in accordance with procedures established by the Administrator.

 

(b)                                 Participant Direction of Investments.  Each Participant may direct how his

Account (or such portion thereof which is subject to his investment direction)

is to be invested among the available investment funds in the percentage

multiples established by the Administrator. 

In the event a Participant fails to make an investment election, with

respect to all or any portion of his Account subject to his investment

direction, the Trustee shall invest all or such portion of his Account in the

investment fund to be designated by the Administrator.  A Participant may change his investment

election, with respect to future contributions and, if applicable, forfeitures,

and/or amounts previously accumulated in the Participant’s Account in accordance

with procedures established by the Administrator.  Any such change in a Participant’s investment election shall be

effective at such time as may be prescribed by the Administrator.  If the Plan’s recordkeeper or investments

are changed, the Administrator may apply such administrative rules and

procedures as are necessary to provide for the transfer of records and/or

assets, including without limitation, the suspension of Participant’s

investment directions, withdrawals and distributions for such period of time as

is necessary, and the transfer of Participants’ Accounts to designated funds or

an interest bearing account until such change has been completed.

 

(c)                                  Allocation of Investment Experience.  As of each Valuation Date, the investment

fund(s) of the Trust shall be valued at fair market value, and the income,

loss, appreciation and depreciation (realized and unrealized), and any paid

expenses of the Trust attributable to such fund shall be apportioned among

Participants’ Accounts within the fund based upon the value of each Account

within the fund as of the preceding Valuation Date.

 

5.2                               PARTICIPANTS OMITTED IN

ERROR. 

In the

event a Participant is not allocated a share of the Employer contribution

and/or forfeitures as a result of an administrative error in any Plan Year, the

Employer may elect to either (a) make an additional contribution on behalf

of such

 

16

 

omitted Participant in an appropriate amount, or

(b) deduct the appropriate amount from the next succeeding Employer

contribution and/or forfeitures and allocate such amount to the Participant’s

Account.

 

17

 

ARTICLE

SIX—VESTING, RETIREMENT AND

DISABILITY BENEFITS

 

6.1                               VESTING.  A Participant shall at all times have a

nonforfeitable (vested) right to any amounts credited to his Pre-Tax (401(k))

Contributions Account and his Rollover Account.

 

Except as otherwise provided with respect to Early or

Normal Retirement, Disability or death, the vested interest of each Participant

to any amounts credited to his Matching Contributions Account, his ASOP

Matching Contributions Account, his First Share Account, his Profit Sharing

Account, his ASOP Profit Sharing Account and his Special Contribution Account

shall be determined in accordance with the following table:

 

	

  Years of Vesting Service

  	

   

  	

  Vested

  Percentage

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Less

  than 1 year

  	

   

  	

  0

  	

  %

  
	

  1

  year but less than 2

  	

   

  	

  20

  	

  %

  
	

  2

  years but less than 3

  	

   

  	

  40

  	

  %

  
	

  3

  years but less than 4

  	

   

  	

  60

  	

  %

  
	

  4

  years but less than 5

  	

   

  	

  80

  	

  %

  
	

  5

  years and thereafter

  	

   

  	

  100

  	

  %

  

 

6.2                               FORFEITURE OF NONVESTED

BALANCE.  The nonvested portion of a Participant’s Account, as

determined in accordance with Section 6.1, shall be forfeited as soon as

administratively practical following the earlier of (i) the date on which the

Participant receives distribution of his vested Account or (ii) the last day of

the Plan Year in which occurs the fifth (5th) year anniversary of

his separation from Service.  The amount

forfeited shall be used to pay Plan expenses and/or used to reduce Employer

contributions the Plan.

 

If the Participant returns to the employment of the

Employer prior to incurring five (5) consecutive Breaks in Service, and prior

to receiving distribution of his vested Account, the nonvested portion shall be

restored.  However, if the nonvested

portion of the Participant’s Account was allocated as a forfeiture as the

result of the Participant receiving distribution of his vested Account balance,

the nonvested portion shall be restored if:

 

(a)                                  the Participant resumes employment prior

to incurring five (5) consecutive Breaks in Service; and

 

(b)                                 the Participant repays to the Plan, as of

the earlier of (i) the date which is five (5) years after his reemployment date

or (ii) the date which is the last day of the period in which the Participant

incurs five (5) consecutive Breaks in Service, an amount equal to the total

distribution made to the Participant.

 

The nonvested amount shall be restored to the

Participant’s Account, without interest or adjustment for interim Trust

valuation experience, by a special Employer contribution or from the next

succeeding Employer contribution and forfeitures, as appropriate.

 

18

 

6.3                               DISTRIBUTION OF LESS

THAN ENTIRE VESTED ACCOUNT BALANCE.  If a distribution (including a withdrawal) of any

portion of a Participant’s Account is made to the Participant at a time when he

has a vested percentage in such Account equal to less than one-hundred percent

(100%), a separate record shall be maintained of said Account balance.  The Participant’s vested interest at any

time in this separate account shall be an amount equal to the formula P(AB+D)-D, where

P

is the vested percentage at the relevant time, AB is the Account balance at

the relevant time, and D is the amount of the distribution (or

withdrawal) made to the Participant.

 

6.4                               NORMAL RETIREMENT.  A Participant who is in the employment of

the Employer at his Normal Retirement Date shall have a nonforfeitable interest

in one hundred percent (100%) of his Account, if not otherwise one hundred

percent (100%) vested under the vesting schedule in Section 6.1.  A Participant who continues employment with

the Employer after his Normal Retirement Date shall continue to participate

under the Plan.

 

6.5                               DISABILITY.  If a Participant incurs a Disability, the

Participant shall have a nonforfeitable interest in one hundred percent (100%)

of his Account, if not otherwise one hundred percent (100%) vested under the

vesting schedule in Section 6.1.  Payment

of such Participant’s Account balance shall be made at the time and in the

manner specified in Article Seven, following receipt by the Administrator of

the Participant’s written distribution request.

 

6.6                               EARLY RETIREMENT.  A Participant who separates from Service

on or after the later of (i) the date the Participant attains age fifty-five

(55) or (ii) the fifth (5th) anniversary of the Participant’s

commencement of initial Plan participation shall have a nonforfeitable interest

in one hundred percent (100%) of his Account, if not otherwise one hundred

percent (100%) vested under the vesting schedule in Section 6.1

 

19

 

ARTICLE

SEVEN—MANNER AND TIME OF DISTRIBUTING BENEFITS

 

7.1                               MANNER OF PAYMENT.  Subject to the provisions of Section 7.5

and/or Section 7.9, the Participant’s vested Account shall be distributed

to the Participant (or to the Participant’s Beneficiary in the event of the

Participant’s death) by either of the following methods, as elected by the

Participant or, when applicable, the Participant’s Beneficiary:

 

(a)           in a single lump-sum payment; or

 

(b)                                 provided the Participant’s vested Account

exceeds $3,500 (or, effective for Plan Years beginning after December 31, 1997,

$5,000), in periodic installments (at least annual), subject to the minimum

distribution rules of Section 7.4; or

 

(c)                                  by purchase of a nontransferable annuity

from an insurance company; or

 

(d)                                 to the extent the Participant’s vested

Account is invested in Employer Stock, in a single payment in the form of whole

shares of Employer Stock, with any fractional shares, and the cash and cash

equivalent portions of such Stock, being distributed in cash.

 

7.2                               TIME OF COMMENCEMENT OF BENEFIT PAYMENTS. 

Subject to

the following provisions of this Section, unless the Participant elects

otherwise, distribution of the Participant’s vested Account shall be made or

commence no later than the sixtieth (60) day after the later of the close of

the Plan Year in which:  (a) the

Participant attains age sixty-five (65) (or Normal Retirement Date, if earlier)

or (b) the date the Participant terminates Service with the Employer.

 

Notwithstanding the foregoing, if the Participant’s

vested Account does not exceed $3,500 (or, effective for Plan Years beginning

after December 31, 1997, $5,000), the Participant’s vested Account shall be

distributed to the Participant (or, in the event of the Participant’s death,

his Beneficiary) in a lump-sum payment as soon as administratively practicable

following the date the Participant retires, dies or otherwise separates from

Service.

 

Notwithstanding any provision contained herein to the

contrary, a Participant who is not vested in any portion of his Account balance

attributable to Employer contributions shall be deemed to have received

distribution of such portion of his Account as of the end of the Plan Year

following the Plan Year in which he separates from Service.

 

For years beginning after December 31, 1996, in no

event shall distribution of the Participant’s vested Account be made or

commence later than the April 1st following the end of the calendar year in

which the Participant attains age seventy and one-half (701⁄2), or, except for a

Participant who is a five percent (5%) owner of the Employer (within the

meaning of Section 401(a)(9) of the Code), if later, the April 1st following

the calendar year in which the Participant retires or otherwise separates from

Service.  In addition, any Participant

attaining age seventy and one-half (701⁄2) may elect to receive distribution of

his vested Account in accordance with the provisions of this Article Seven.

 

20

 

7.3                               FURNISHING INFORMATION.  Prior to the payment of any benefit under

the Plan, each Participant or Beneficiary may be required to complete such

administrative forms and furnish such proof as may be deemed necessary or

appropriate by the Employer, Administrator, and/or Trustee.

 

7.4                               MINIMUM DISTRIBUTION RULES FOR INSTALLMENT PAYMENTS.  If

a distribution is made in installments the following rules shall apply:

 

(a)                                  Payments to Participant or to Participant and Surviving

Spouse. 

Payment

shall commence no later than a date provided for in Section 7.2.  The amount to be distributed each year shall

be at least equal to the vested balance in the Participant’s Account as of the

preceding Valuation Date multiplied by the following fraction:  the numerator shall be one (1) and the

denominator shall be the life expectancy of the Participant (or the joint life

expectancies of the Participant and the Participant’s spouse) determined as of

the Valuation Date preceding the first payment and reduced by one for each

succeeding year.

 

(b)                                 Payments to Participant and Non-Spouse Beneficiary.  Payment shall commence no later than a

date provided for in Section 7.2.  The

amount to be distributed each year shall be at least equal to the vested

balance in the Participant’s Account as of the preceding Valuation Date

multiplied by the following fraction: 

the numerator shall be one (1) and the denominator shall be the joint

life expectancies of the Participant and the Participant’s Beneficiary computed

as of the Valuation Date preceding the first payment and reduced by one (1) for

each succeeding year.  Payments shall be

restricted under this option to insure compliance with the minimum distribution

incidental death benefit requirement of Section 401(a)(9) of the Code and the

regulations promulgated thereunder.

 

(c)                                  Payments to Beneficiary.  Payment shall commence no later than a

date provided for in Section 7.8.  The

amount to be distributed each year shall be at least equal to the vested

balance in the Participant’s Account as of the preceding Valuation Date

multiplied by the following fraction: 

the numerator shall be one (1) and the denominator shall be the life

expectancy of the Participant’s Beneficiary computed as of the Valuation Date

preceding the first payment and reduced by one (1) for each succeeding year.

 

(d)                                 Recalculation of Life Expectancy.  If distribution is to be made over the

life expectancy of the Participant or, where the Participant’s spouse is his

Beneficiary, the life expectancy of the Participant’s surviving spouse, or the

joint life expectancies of the Participant and his spouse, such life expectancy

or joint life expectancies shall not be recalculated.

 

7.5                               JOINT AND SURVIVOR ANNUITY.  Notwithstanding the foregoing provisions

of this Article Seven, except for the portion of the Participant’s vested

Account, if any, which is payable in the form of whole shares of Employer Stock

pursuant to Section 7.1(d), the provisions of this Section 7.5 shall apply to

any distribution made to a Participant following his retirement or other

termination of employment.

 

21

 

(a)                                  Annuity

Form of Payment:  If distribution of a Participant’s vested

Account balance commences during his lifetime, his vested Account shall be

applied to the purchase of a “single life annuity” for a Participant

who is unmarried as of his benefit commencement date, or if the Participant is

married as of his benefit commencement date, applied to the purchase of a “qualified

joint and survivor annuity”.

 

A “qualified joint and survivor annuity” is

an immediate annuity for the life of the Participant with a survivor annuity

for the life of the spouse which is not less than fifty percent (50%), and not

more than one hundred percent (100%), of the amount of the annuity which is

payable during the joint lives of the Participant and his spouse.

 

A “single life annuity” is an annuity for

the life of the Participant.

 

(b)                                 Waiver

of Annuity:  The Participant may, at any time during

the “election

period”, elect to waive the annuity form of payment described above

and elect either an optional form of payment set forth under Section 7.1 or elect

an alternative form of annuity payment provided under the Plan.  These additional annuity options include for

a married Participant a single life annuity, and for an unmarried Participant a

joint and 50%, 75% or 100% survivor annuity.

 

The “election period” under this Section shall

be the ninety (90)-day period prior to the “annuity starting date,” which date

shall be the first day of the first period in which an amount is payable as an

annuity or, if such benefit is not payable as an annuity, the first day on

which the Participant may begin to receive distribution from the Plan.

 

An election to waive the applicable annuity form of

payment under the Plan must be made in writing in a form acceptable to the

Administrator.  In addition, an election

by a married Participant to waive the qualified joint and survivor annuity

shall not take effect unless (1) the Participant’s spouse consents in

writing to the election, (2) the election designates a specific alternate

Beneficiary, if applicable, including any class of Beneficiaries or any

contingent Beneficiaries, which may not be changed without spousal consent

(unless the Participant’s spouse expressly permits designations by the

Participant without any further spousal consent), (3) the spouse’s consent

acknowledges the effect of the election, and (4) the spouse’s consent is

witnessed by a notary public.  In

addition, the Participant’s waiver of a qualified joint and survivor annuity

shall not be effective unless the election designates a form of benefit payment

which may not be changed without spousal consent (or the Participant’s spouse

expressly permits designation by the Participant without any further spousal

consent).  Notwithstanding the

foregoing, spousal consent hereunder shall not be required if it is established

to the satisfaction of the Administrator that the spouse’s consent cannot be

obtained because such spouse cannot be located, or because of such other

circumstances as may be prescribed in regulations pursuant to Section 417 of

the Code.

 

Any consent by a spouse obtained under this Section

(or establishment that the consent of such spouse cannot be obtained) shall be

effective only with respect to such spouse. 

A consent that permits designations by the Participant without any

requirement of further consent by such spouse must acknowledge that the spouse

has the right to limit consent to

 

22

 

a specific Beneficiary, and a specific form of benefit

where applicable, and that the spouse voluntarily elects to relinquish either

or both of such rights.  No consent

obtained under this provision shall be valid unless the Participant has

received notice as provided below.  In

addition, any waiver made in accordance with this Section may be revoked at any

time prior to the commencement of benefits under the Plan.  A Participant is not limited to the number

of revocations or elections that may be made hereunder.

 

(c)                                  Notice

Requirement:  The Administrator shall provide to each

Participant, not more than ninety (90) days prior to the commencement of

benefits, a written explanation of:

 

(1)                                  the terms and conditions of the qualified

joint and survivor annuity or life annuity;

 

(2)                                  the Participant’s right to waive such

applicable annuity and the effect of such waiver;

 

(3)                                  the rights of the Participant’s spouse

regarding the required consent to an election to waive the qualified joint and

survivor annuity; and

 

(4)                                  the right to make, and the effect of, a

revocation of an election to waive the applicable annuity.

 

(d)                                 Restrictions:  Notwithstanding anything contained herein to the

contrary, if the vested balance of the Participant’s Account does not exceed

$3,500 (or, effective for Plan Years beginning after December 31, 1997,

$5,000), distribution of the Participant’s vested Account shall be made in the

form of a lump sum payment.  However, no

distribution shall be made pursuant to this subsection after the first day of

the first period for which an amount is received as an annuity unless the

Participant and the Participant’s spouse, if applicable, consent in writing to

such distribution.  For purposes of this

subsection, “vested balance of a Participant’s Account” shall mean the

aggregate value of a Participant’s vested Account balance attributable to

Employer contributions, elective deferrals and rollover contributions, if

applicable, whether vested before or upon the death of a Participant.

 

7.6          AMOUNT OF DEATH BENEFIT

 

(a)                                  Death Before Termination of Employment.  In the event of the death of a

Participant while in the employ of the Employer, vesting in the Participant’s

Account shall be one hundred percent (100%), if not otherwise one hundred

percent (100%) vested under Section 6.1, with the credit balance of the

Participant’s Account being payable to his Beneficiary.

 

(b)                                 Death After Termination of Employment.  In the event of the death of a former

Participant after termination of employment, but prior to the complete

distribution of his vested Account balance under the Plan, the undistributed

vested balance of the Participant’s Account shall be paid to the Participant’s

Beneficiary.

 

23

 

7.7                               DESIGNATION OF

BENEFICIARY.  Each Participant shall file with the Administrator a

designation of Beneficiary to receive payment of any death benefit payable

hereunder if such Beneficiary should survive the Participant.  However, no Participant who is married shall

be permitted to designate a Beneficiary other than his spouse unless the

Participant’s spouse has signed a written consent witnessed by a notary public,

which provides for the designation of an alternate Beneficiary.

 

Subject to the above, Beneficiary designations may

include primary and contingent Beneficiaries, and may be revoked or amended at

any time in similar manner or form, and the most recent designation shall

govern.  A designation of a Beneficiary

made by an unmarried Participant shall cease to be effective upon his

marriage.  In the absence of an

effective designation of Beneficiary, the Participant’s vested Account shall be

paid to the surviving spouse of the Participant, or, if no surviving spouse, to

the Participant’s surviving issue, by right of representation, or, if none, to

the Participant’s surviving parents, or, if none, to the Participant’s

surviving brothers and sisters and nephews and nieces who are children of

deceased brothers and sisters, or, if none, to the Participant’s estate.  Notification to Participants of the death

benefits under the Plan and the method of designating a Beneficiary shall be

given at the time and in the manner provided by regulations and rulings under

the Code.

 

In the event of the death of a Beneficiary who has

become entitled to receive benefits under the Plan, any benefits remaining to

be paid to the Beneficiary shall be paid to his estate.

 

7.8                               DISTRIBUTION OF DEATH

BENEFITS.  Subject to the provisions of Section 7.2 and 7.9

below, if applicable, the Beneficiary shall be allowed to designate the mode of

receiving benefits in accordance with Section 7.1, unless the Participant had

designated a method in writing and indicated that the method was not revocable

by the Beneficiary.

 

(a)                                  Distribution Beginning Before Death.  If the Participant dies after distribution

of his vested Account has commenced, any survivor’s benefit must be paid at

least as rapidly as under the method of payment in effect at the time of the

Participant’s death.

 

(b)                                 Distribution Beginning After Death.  If the Participant dies before

distribution of his vested Account has commenced, distribution of the Participant’s

vested Account shall be completed by December 31 of the calendar year

containing the fifth anniversary of the Participant’s death, except as provided

below:

 

(i)                                     if any portion of the Participant’s

vested Account is payable to a designated Beneficiary, and if distribution is

to be made over the life or over a period certain not greater than the life

expectancy of the designated Beneficiary (pursuant to the provisions of Section

7.1 above) such payments shall commence on or before December 31 of the calendar

year immediately following the calendar year in which the Participant died;

 

(ii)                                  if the designated Beneficiary is the

Participant’s surviving spouse, the date distribution is required to begin

shall not be earlier than the later of (A) December

 

24

 

31 of the calendar year immediately following the

calendar year in which the Participant died and (B) December 31 of the calendar

year in which the Participant would have attained age seventy and one-half (701⁄2).

 

For purposes of this paragraph (b), if the surviving

spouse dies after the Participant, but before payments to such spouse begin,

the provisions of this paragraph, with the exception of paragraph (ii) herein,

shall be applied as if the surviving spouse were the Participant.

 

Notwithstanding the foregoing, if the Participant has

no designated Beneficiary (within the meaning of Section 401(a)(9) of the Code

and the regulations thereunder), distribution of the Participant’s vested

Account must be completed by December 31 of the calendar year containing the

fifth anniversary of the Participant’s death.

 

 

7.9                               QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY.  Notwithstanding the foregoing provisions

of this Article Seven, the provisions of this Section 7.9 shall apply in the

event a Participant dies before distribution of benefits has commenced and is

survived by his spouse.

 

(a)                                  If a Participant dies before distribution

of benefits has commenced and is survived by his spouse, his vested Account

balance, if payable to the Participant’s surviving spouse, shall be applied to

the purchase of an annuity for the life of the Participant’s surviving

spouse.  The Participant’s surviving

spouse may commence the payment of the qualified pre-retirement survivor

annuity under this Section within a reasonable period following the

Participant’s death.

 

(b)                                 The Participant may elect to waive such

survivor annuity death benefit during the period commencing on the first day of

the Plan Year in which the Participant attains age thirty-five (35) (or the

date he terminates employment, if earlier) and ending on the date of his

death.  Any such election, however,

shall not take effect unless it is accompanied by the written consent of the

Participant’s spouse, which consent acknowledges the effect of such election

and is witnessed by a notary public.  A

Participant who will not yet attain age thirty-five (35) as of the end of any

current Plan Year may make a special qualified election to waive the qualified

pre-retirement survivor annuity for the period beginning on the date of such

election and ending on the first day of the Plan Year in which the Participant

will attain age thirty-five (35).  Such

election shall not be valid unless the Participant receives a written

explanation of the qualified pre-retirement survivor annuity in such terms as

are comparable to the explanation required under Section 7.9(c).  Qualified pre-retirement survivor annuity

coverage shall be reinstated automatically as of the first day of the Plan Year

in which the Participant attains age thirty-five (35).  Any new waiver on or after such date shall

be subject to the full requirements of this Section.

 

The election to waive such survivor annuity death

benefit must be made in writing in a form acceptable to the Administrator and

must include the Participant’s designation of a Beneficiary.  The designation of a Beneficiary may not be

changed unless a new consent is signed by the Participant’s spouse.

 

25

 

In the event of such an election, hereunder, any death

benefit shall be paid to the Participant’s Beneficiary in a manner selected by

the Beneficiary or Participant subject to the provisions of Section 7.8.

 

(c)                                  The Administrator shall furnish to each

Participant, subject to the provisions of this Section 7.9, a written

explanation of:  (1) the terms and

conditions of the survivor annuity death benefit; (2) the Participant’s

right to make, and the effect of, an election to waive the survivor annuity

death benefit, and to revoke such election; and (3) the right of the

Participant’s spouse to prevent such an election by withholding the necessary

consent.  Such explanation shall be

provided to the Participant within the period beginning on the later of the

first day of the Plan Year in which the Participant attains age thirty-two (32)

and ending on the last day of the Plan Year preceding the Plan Year in which

the Participant attains age thirty-five (35), or within a reasonable period

after the Participant commences participation in the Plan, or after the

Participant separates from Service if the Participant has not attained age

thirty-five (35) at the time of his separation from Service.

 

For purposes of the preceding paragraph, a “reasonable

period” shall mean the end of the two (2)-year period beginning one (1) year

prior to the date the applicable event occurs, and ending one (1) year after

that date.  In the case of a Participant

who separates from Service before the Plan Year in which age thirty-five (35)

is attained, notice shall be provided within the two (2) year period beginning

one (1) year prior to separation and ending one (1) year after separation.  If such a Participant thereafter returns to

employment with the Employer, the applicable period for such Participant shall

be redetermined.

 

Following the Participant’s death, if such death

benefit is to be paid to the Participant’s surviving spouse in the form of a

survivor annuity, the surviving spouse may elect to waive the survivor annuity

and receive any optional form of death benefit available under the Plan.

 

Notwithstanding the foregoing, the provisions of this

Section shall not apply if the vested balance of the Participant’s Account does

not exceed $3,500 (or, effective for Plan Years beginning after December 31,

1997, $5,000).

 

7.10                        ELIGIBLE ROLLOVER DISTRIBUTIONS.  Notwithstanding the foregoing provisions

of this Article Seven, the provisions of this Section 7.10 shall apply to

distributions made under the Plan.

 

(a)                                  A distributee may elect, at the time and

in the manner prescribed by the Administrator, to have any portion of an

eligible rollover distribution paid directly to an eligible retirement plan

specified by the distributee in a direct rollover.

 

(b)                                 Definitions:

 

(i)                                     Eligible Rollover Distribution. 

An eligible rollover distribution is any distribution of all or any

portion of the balance to the credit of the distributee, except that an

 

26

 

 

eligible rollover distribution does not include:  any distribution that is one of a series of

substantially equal periodic payments (not less frequently than annually) made

for the life (or life expectancy) of the distributee or the joint lives (or

joint life expectancies) of the distributee and the distributee’s designated

Beneficiary, or for a specified period of ten (10) years or more; any

distribution to the extent such distribution is required under Section

401(a)(9) of the Code; any withdrawals of elective deferrals pursuant to

Section 8.2; and the portion of any distribution that is not includable in

gross income (determined without regard to the exclusion for net unrealized

appreciation with respect to employer securities).

 

(ii)                                  Eligible Retirement Plan.  An eligible

retirement plan is 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 trust described in Section 401(a) of the Code, that accepts the

distributee’s eligible rollover distribution. 

However, in the case of an eligible rollover distribution to the

surviving spouse, an eligible retirement plan is an individual retirement

account or individual retirement annuity.

 

(iii)                               Distributee.  A distributee

includes an Associate or former Associate. 

In addition, the Associate’s or former Associate’s surviving spouse and

the Associate’s or former Associate’s spouse or former spouse who is the

alternate payee under a qualified domestic relations order, as defined in

Section 414(p) of the Code, are distributees with regard to the interest of the

spouse or former spouse.

 

(iv)                              Direct Rollover.  A direct

rollover is a payment by the Plan to the eligible retirement plan specified by

the distributee.

 

(c)                                  If a distribution is one to which

Sections 401(a)(11) and 417 of the Code do not apply, such distribution may

commence less than thirty (30) days after the notice required under

Section 1.411(a)-11(c) of the Income Tax Regulations is given, provided that:

 

(i)                                     the Administrator clearly informs the

Participant that the Participant has a right to a period of at least thirty

(30) days after receiving the notice to consider the decision of whether or not

to elect a distribution (and, if applicable, a particular distribution option),

and

 

(ii)                                  the Participant, after receiving the

notice, affirmatively elects a distribution.

 

(d)                                 Effective January 1, 1997, if a

distribution is one to which Sections 401(a)(11) and 417 of the Code applies,

the distribution may commence less than thirty (30) days, but not less than

seven (7) days, after the notice required under Section 1.411(a)-11(c) of the

Income Tax Regulations is given, provided that the requirements of paragraphs

(c)(i) and (c)(ii) above are satisfied with respect to both the Participant and

the Participant’s spouse, if applicable.

 

27

 

ARTICLE

SEVEN A—SPECIAL EMPLOYER STOCK PROVISIONS

 

7A.1                      VALUATION OF EMPLOYER STOCK.  The Administrator or Trustee

shall ascertain the value of Employer Stock in accordance with the requirements

of Section 401(a)(28) of the Code and the applicable regulations promulgated

thereunder.  All valuations relied upon

for purposes of any purchase, exchange or distribution by the Plan of Employer

Stock not readily tradable on an established securities market shall be made by

an independent appraiser meeting requirements similar to those contained in

Treasury Regulations pursuant to Section 170(a)(1) of the Code.  The Administrator’s records shall reflect

the tax cost or adjusted basis of all shares of Employer Stock acquired

pursuant to the Plan.

 

7A.2                      ALLOCATION OF EMPLOYER STOCK PURCHASED WITH PROCEEDS OF ASOP LOAN. 

Pursuant to the provisions of Article Nine, the Trustee may be directed

by the Employer to borrow money for the purpose of acquiring shares of Employer

Stock.  While any such ASOP Loan or

portion thereof remains outstanding, such shares of Employer Stock shall be

held in a suspense account and shall be allocated among the ASOP Accounts of

Participants, in accordance with the provisions of Article Nine, at such time

and in such amounts as the ASOP Loan has been reduced by principal payments, or

if appropriate, principal and interest payments.  For purposes of Article Twelve, the Annual Addition of each

Participant for any Plan Year in which allocations are made pursuant to the

provisions of this Section 7A.2 shall be calculated by reference to the amount

of Employer contributions applied to payments under the ASOP Loan, rather than to

the current value of shares of Employer Stock released from the suspense

account.

 

7A.3                      PRIVILEGES AND

RESTRICTIONS ON EMPLOYER STOCK; IN

GENERAL.  Subject to Section 7A.4, any shares

of Employer Stock contributed to or otherwise acquired by the Trust or

distributed to a Participant, Former Participant or Beneficiary pursuant to the

Plan may be made subject to such lawful rights, privileges or restrictions as

the Employer may, from time to time, confer or impose, including, without

limitation, a right on the part of the distributee to cause the Employer to

purchase the securities or any portion thereof, a right of first refusal in the

Employer or the Trust to purchase all or any portion of the securities thereof

from the distributee, and restrictions on transfer whether arising under

applicable securities laws or otherwise; provided, however, that the Employer

shall not confer any such rights or privileges or impose any such restrictions

in a manner that discriminates in favor of Participants who are Highly-Compensated

Associates.  The Employer shall from

time to time notify the Administrator and the Trustee of any rights, privileges

or restrictions that will be applicable to shares of securities contributed to,

acquired by, or distributed from the Trust.

 

7A.4                      PRIVILEGES AND RESTRICTIONS APPLICABLE TO SECURITIES ACQUIRED WITH ASOP

LOAN.  Notwithstanding any other provision of the Plan or the

Trust Agreement, the following terms or conditions shall at all times apply to

any shares of Employer Stock acquired with proceeds of an ASOP Loan:

 

28

 

(a)                                  Right of First Refusal.  Shares of Employer Stock acquired with

the proceeds of an ASOP Loan may, but need not be, subject to a right of first

refusal which meets the requirements of this paragraph (a).  Securities subject to a right must be stock

or an equity security, or a debt security convertible into stock or an equity

security, and must not be publicly traded at the time the right may be

exercised.  The right of first refusal

may be in favor of the Employer, the Trust or both in any order of

priority.  The selling price and other

terms under the right must not be less favorable to the seller than the greater

of the value of the security determined under Treasury Regulations Section

54.4975-11(d)(5), or the purchase price and other terms offered by a buyer,

other than the Employer or the Trust, making a good faith offer to purchase the

security.  The right of first refusal

must lapse no later than 14 days after the security holder gives to the holder

of the right written notice that an offer by a third party to purchase the

security has been received.

 

(b)                                 Put Option.  Shares of Employer Stock acquired with the proceeds of

an ASOP Loan must be subject to a put option, if at the time of their

distribution such shares are either subject to a trading limitation, or is not

publicly traded.  For purposes of this

paragraph (b), a “trading limitation” on a security is a restriction under any

federal or state securities law, any regulation thereunder, or an agreement,

not prohibited by Treasury Regulations Section 54.4975-7(b) affecting the

security so as to make the security not as freely tradable as one not subject

to such a restriction.  The put option

must be exercisable only by a Participant, former Participant or Beneficiary

(any and all such persons being hereinafter in this Section 7.4A referred to

generally as the “Participant”) or by any donee of the Participant or by a

person to whom the security passes by reason of a Participant’s death.  The put option must permit a Participant to

put the security to the Employer, and it may grant the Trust an option to

assume the rights and obligations of the Employer at the time that the put

option is exercised, but under no circumstances may the put option bind the

Trust.  If federal or state law will be

violated by the Employer’s honoring such a put option, the put option must

permit the security to be put, in a manner consistent with such law, to a third

party (for example, but without limitation, to a related employer or a

shareholder other than the Trust) that has substantial net worth at the time

the ASOP Loan is made and whose net worth is reasonably expected to remain

substantial.

 

(c)                                  Duration of Put Option:

 

(1)                                  General Rule. 

A put option may be exercisable at any time during a period which

includes at least (A) sixty (60) days beginning on the date the security

subject to the put option is distributed by the Trustee and (B) sixty (60) days

in the next following Plan Year, in accordance with regulations issued pursuant

to Section 409 of the Code.

 

(2)                                  Special Rule. 

In the case of a security that is publicly traded without restrictions

when distributed, but ceases to be so traded within the put option period(s)

set forth in subparagraph (1), the Employer must notify each security holder in

writing on or before the tenth (10th) day after the date the

security ceases to be so traded that during the remainder of such period(s) the

security is subject to a put option. 

The number of days between such tenth (10th) day and the date

on which notice is actually given, if later than the tenth (10th)

day, must be added to the 

 

29

 

duration of the put option.  The notice must inform distributees of the terms of the put

options that they are to hold.

 

(d)                                 Other Put Option Provisions.

 

(1)                                  Manner of Exercise. 

A put option is exercised by the holder’s notifying the Employer in

writing that the put option is being exercised.

 

(2)                                  Time Excluded from Duration of Put Option. 

The period during which a put option is exercisable does not include any

time when a distributee is unable to exercise it because the party bound by the

put option is prohibited from honoring it by applicable federal or state law.

 

(3)                                  Price.  The price at

which a put option must be exercisable is the value of the security, as

determined under Treasury Regulations Section 54.4975-11(d)(5).

 

(4)                                  Payment Terms. 

The provisions for payment under a put option must provide that the

Employer, or the Trust if the Plan so elects, shall repurchase the shares of

Employer Stock as follows:

 

(A)                              If the distribution constitutes a total

distribution within the meaning of Section 409(h)(5) of the Code, payment of

the fair market value of the repurchased shares shall be made in five (5)

substantially equal annual payments, of which the first shall be paid not later

than thirty (30) days after the Participant exercises the put option.  The purchaser shall pay a reasonable rate of

interest and provide adequate security on amounts not paid after thirty (30)

days.

 

(B)                                If the distribution does not constitute a

total distribution, the purchaser shall pay the Participant an amount equal to

the fair market value of the shares repurchased no later than thirty (30) days

after the Participant exercises the put option.

 

(5)                                  Payment Restrictions. 

Payment under a put option must not be restricted by the provisions of

an ASOP Loan or any other arrangement, including the terms of the Employer’s

Articles of Incorporation, unless so required by applicable law.

 

(e)                                  Nonterminable Provisions.  The foregoing provisions of this Section

7A.4 shall not terminate, notwithstanding the repayment of an ASOP Loan or the

cessation of treatment of this Plan as an employee stock ownership plan within

the meaning of Section 4975(e)(7) of the Code.

 

7A.5                      VOTING EMPLOYER STOCK.  Each Participant (or Beneficiary) shall

be entitled to direct the Trustee as to the manner in which shares of Employer

Stock then allocated to his Account shall be voted on all matters presented for

a vote to shareholders.  Each

Participant (or Beneficiary) who is so entitled shall be provided with a proxy

statement and other materials 

 

30

 

provided to the applicable shareholders in connection

with each shareholder meeting, together with a form upon which voting

instructions may be given to the Trustee. 

Any allocated Employer Stock with respect to which voting instructions

are not given (by the Participant or Beneficiary), and any shares of Employer

Stock which are not then allocated to Participant’s Accounts, shall be voted in

the manner determined by the Administrator.

 

31

 

ARTICLE

EIGHT—LOANS AND IN-SERVICE WITHDRAWALS

 

8.1          LOANS.

 

(a)                                  Permissible Amount and Procedures.  Effective October 19, 2000, the

Administrator may, in accordance with a uniform and nondiscriminatory policy,

direct the Trustee to grant a loan to the Participant, which loan shall be

secured by the Participant’s vested Account balance (excluding, however,

any  portion of the Participant’s vested

Account which is a part of the ASOP Fund). 

The Participant’s signature shall be required on a promissory note.  In addition, if the Participant is married,

such Participant’s spouse shall be required to consent in writing to the making

of the loan.  Such written consent must

(1) be obtained within the ninety (90)-day period preceding the granting

of the loan, (2) acknowledge the effect of the loan, and (3) be

witnessed by a notary public.  Such

consent shall thereafter be binding with respect to the consenting spouse or

any subsequent spouse with respect to that loan.  In determining a rate of interest on such loan, the Administrator

may refer to the rate of interest used for obligations of a comparable nature

by commercial lending institutions within a radius of fifty (50) miles of the

Employer’s principal place of business. 

Participant loans shall be treated as segregated investments, and

interest repayments shall be credited only to the Participant’s Account.

 

(b)                                 Limitation on Amount of Loans.  A Participant’s loan shall not exceed the

lesser of:

 

(1)                                  $50,000, which amount shall be reduced by

the highest outstanding loan balance during the preceding twelve (12)-month

period; or

 

(2)                                  one-half (1⁄2) of the vested value of the

Participant’s Account, determined as of the Valuation Date preceding the date

of the Participant’s loan.

 

Any loan must be repaid within five (5) years, unless

made for the purpose of acquiring the primary residence of the Participant, in

which case such loan may be repaid over a longer period of time not to exceed

ten (10) years.  The repayment of any

loan must be made in at least quarterly installments of principal and interest;

provided, however, that this requirement shall not apply for a period, not

longer than one year, that a Participant is on a leave of absence (“Leave”),

either without pay from the Employer or at a rate of pay (after income and

employment tax withholding) that is less than the amount of the installment

payments required under the terms of the loan. 

However, the loan must be repaid by the latest date permitted under

Section 72(p)(2)(B) of the Code and the installments due after the Leave ends

(or, if earlier, upon the expiration of the first year of the Leave) must not

be less than those required under the terms of the original loan.

 

If a Participant defaults on any outstanding loan, the

unpaid balance, and any interest due thereon, shall become due and payable in

accordance with the terms of the underlying promissory note; provided, however,

that such foreclosure on the promissory note and attachment of security shall

not occur until a distributable event occurs in accordance with the provisions

of Article Seven.

 

32

 

If a Participant terminates employment while any loan

balance is outstanding, the unpaid balance, and any interest due thereon, shall

become due and payable in accordance with the terms of the underlying

promissory note.  If such amount is not

paid to the Plan, it shall be charged against the amounts that are otherwise

payable to the Participant or the Participant’s Beneficiary under the

provisions of the Plan.

 

Notwithstanding the foregoing provisions of this

Section, no loan shall be made to any Participant who is a five percent (5%) or

greater shareholder-employee of an electing small business (Subchapter S)

corporation, an owner of more than ten percent (10%) of either the capital

interest or the profits interest of an unincorporated Employer, or a family

member (as defined in Section 267(c)(4) of the Code) of such Participant,

unless an exemption for the loan is obtained pursuant to Section 408 of the

Employee Retirement Income Security Act of 1974, as amended.

 

In the case of a Participant who has loans outstanding

from other plans of the Employer (or a member of the Employer’s related group

(within the meaning of Section 2.5(b)), the Administrator shall be responsible

for reporting to the Trustee the existence of said loans in order to aggregate

all such loans within the limits of Section 72(p) of the Code.

 

8.2                               HARDSHIP DISTRIBUTIONS.  In the case of a financial hardship

resulting from a proven immediate and heavy financial need, a Participant may,

with his spouse’s written and notarized consent, if applicable, receive a

distribution not to exceed the lesser of (i) the value of the Participant’s

Pre-Tax (401(k)) Contributions Account, without regard to earnings thereon and

without regard to any “fail safe” contributions made under Section 11.02, or

(ii) the amount necessary to satisfy the financial hardship.  The amount of any such immediate and heavy

financial need may include any amounts necessary to pay Federal, state or local

income taxes reasonably anticipated to result from the distribution.  Such distribution shall be made in

accordance with nondiscriminatory and objective standards consistently applied

by the Administrator.

 

Hardship distributions under this Section shall be

deemed to be the result of an immediate and heavy financial need if such

distribution is to (a) pay expenses for medical care (as described in Section

213(d) of the Code) previously incurred by the Participant, the Participant’s

spouse, or any dependents of the Participant (as defined in Section 152 of the

Code), or to permit the Participant, the Participant’s spouse, or any

dependents of the Participant to obtain such medical care, (b) purchase the

principal residence of the Participant (excluding mortgage payments), (c) pay

tuition and related educational fees for the next twelve (12) months of

post-secondary education for the Participant, Participant’s spouse, or any of

the Participant’s dependents or (d) prevent the eviction of the Participant

from his principal residence or foreclosure on the Participant’s principal

residence.  In addition, any hardship

distribution hereunder shall only be made provided that the funds for such

hardship are not available from other financial resources of the Participant,

the Participant’s spouse or the Participant’s minor children.  Distributions paid pursuant to this Section

shall be deemed to be made as of the Valuation Date immediately preceding the

hardship distribution, and the Participant’s Account shall be reduced

accordingly.

 

33

 

The provisions of this Section (relating to hardship

distributions) are intended to comply with Treasury Regulations issued under

Section 401(k) of the Code, and shall be so interpreted.

 

8.3                               WITHDRAWALS AFTER AGE

591⁄2. 

After

attaining age fifty-nine and one-half (591⁄2), a Participant, by giving

written notice to the Administrator, may, with his spouse’s written and

notarized consent, if applicable, withdraw from the Plan a sum (a) not in

excess of the credit balance of his Pre-Tax (401(k)) Contributions Account, his

vested Profit Sharing Account, his vested ASOP Profit Sharing Account, and his

vested Matching Contributions Account (to the extent derived from Employer

matching contributions made prior to January 1, 1996) and (b) not less

than such minimum amount as the Administrator may establish from time to time

to facilitate administration of the Plan. 

Any such withdrawals shall be made in accordance with nondiscriminatory

and objective standards consistently applied by the Administrator.

 

8.4                               WITHDRAWALS OF ROLLOVER CONTRIBUTIONS.  A Participant, by giving written notice

to the Administrator, may, with his spouse’s written and notarized consent, if

applicable, withdraw from the Plan a sum (a) not in excess of the credit

balance of the Participant’s Rollover Account and (b) not less than such

minimum amount as the Administrator may establish from time to time to

facilitate administration of the Plan. 

Any such withdrawals shall be made in accordance with nondiscriminatory

and objective standards consistently applied by the Administrator.

 

8.5                               DIVERSIFICATION.  The provisions of this Section 8.5 shall

apply to any Participant who has attained age fifty-five (55) and who has

completed at least ten (10) years of participation in the Plan, excluding any

period prior to December 1, 1995 (a “Qualified Participant”).

 

Each Qualified Participant shall be permitted to

direct the Plan as to the diversification of twenty-five percent (25%) of the

value of the vested portion of the Participant’s ASOP Accounts in the manner

provided below, within ninety (90) days after the last day of each Plan Year

during the Participant’s “Qualified Election Period.”  For this purpose, “Qualified Election Period” shall mean the six

(6) Plan Year period beginning with the Plan Year in which the Participant

first became a Qualified Participant. 

Within ninety (90) days after the close of the last Plan Year in the

Participant’s Qualified Election Period, a Qualified Participant may direct the

Plan as to the diversification of fifty percent (50%) of the value of the

vested portion of such ASOP Accounts.

 

A Qualified Participant’s diversification election

shall be provided to the Administrator in writing and may specify either of the

options set forth below.

 

(i)                                     At the election of the Qualified

Participant, the Plan shall distribute, in a single sum cash distribution

(notwithstanding Section 409(d) of the Code) the portion of the Participant’s

Accounts (that are subject to the diversification election described in this

Section 8.5), within ninety (90) days after the last day of the period during

which the election can be made.

 

34

 

(ii)                                  A Qualified Participant who has a right

to elect to receive a cash distribution under (i) above may elect instead to

transfer the portion of the Participant’s Accounts that are distributable in

cash and covered by such election from the ASOP Fund to one or more of the

other investment funds available under the Plan.  Such investment change shall be made no later than ninety (90)

days after the last day of the period during which the election can be made.

 

35

 

ARTICLE

NINE—ASOP LOANS

 

9.1                               ASOP LOANS.  Provided the provisions of this Article

are satisfied, an ASOP Loan may be made to the Plan by a “Disqualified Person”

(as defined by Section 4975(e)(2) of the Code), or may be guaranteed by a

Disqualified Person.  An ASOP Loan may be

a direct loan of cash, a purchase-money transaction, or an assumption of the

obligations of the Plan.  The term

guarantee includes an unsecured guarantee and the use of assets of a

Disqualified Person as collateral for a loan, even though the use of assets may

not be a guarantee under applicable state law. 

An amendment of a loan solely in order to qualify as a loan meeting the

requirements hereunder shall not be deemed a refinancing of the loan or the

making of another loan.

 

9.2                               PRIMARY BENEFIT

REQUIREMENT.  An ASOP Loan made or guaranteed by a Disqualified

Person must be primarily for the benefit of the Participants and their

Beneficiaries.

 

The terms of an ASOP Loan, whether or not between

independent parties shall, at the time the ASOP Loan is made, be at least as

favorable to the Plan as the terms of a comparable loan resulting from arm’s

length negotiations between independent parties.  The interest rate shall not be in excess of a reasonable rate.

 

9.3                               USE OF ASOP LOAN PROCEEDS.  The proceeds of an ASOP Loan made or

guaranteed by a Disqualified Person shall be used within a reasonable time

after their receipt by the Plan only for any or all of the following purposes:

 

(a)                                  To acquire shares of Employer Stock;

 

(b)                                 to repay such ASOP Loan; or

 

(c)                                  to repay a prior ASOP Loan meeting the

requirements of this Article.  A new

ASOP Loan, the proceeds of which are so used, must satisfy the provisions of

this Article.

 

Except as provided herein, or as otherwise required by

applicable law, no security acquired with the proceeds of an ASOP Loan described

in this Article shall be subject to put, call or other option, or buy-sell or

similar arrangement while held by and when distributed from the Plan, whether

or not the Plan is then an employee stock ownership plan.

 

9.4                               LIABILITY AND COLLATERAL OF PLAN FOR ASOP LOAN. 

An ASOP

Loan shall be without recourse against the Plan.  Furthermore, the only asset of the Plan that shall be given as

collateral is shares of Employer Stock which were either acquired with the

proceeds of the ASOP Loan or used as collateral on a prior ASOP Loan meeting

the requirements of this Article, and repaid with the proceeds of the current

ASOP Loan.  No person entitled to

payment under the ASOP Loan shall have any right to assets of the Plan other

than:

 

(a)                                  collateral given for the ASOP Loan;

 

36

 

 

(b)                                 cash contributions that are made under

the Plan to meet its obligations under the ASOP Loan; and

 

(c)                                  earnings attributable to such collateral

and the investment of such cash contributions.

 

The payments made with respect to an ASOP Loan by the

Plan during a Plan Year shall not exceed an amount equal to the sum of such

contributions and earnings received during or prior to the year less such

payments in prior years.  Such

contributions and earnings shall be accounted for separately in books of

account of the Plan until the ASOP Loan is repaid.

 

9.5                               DEFAULT.  In the event of default on an ASOP Loan,

the value of Plan assets transferred in satisfaction of the ASOP Loan shall not

exceed the amount of default.  If the

lender is a Disqualified Person, the ASOP Loan shall provide for a transfer of

Plan assets upon default only upon, and to the extent of, the failure of the

Plan to meet the payment schedule of the ASOP Loan.  For purposes of this Section, the making of a guarantee does not

make a person a lender.

 

9.6                               RELEASE OF COLLATERAL

FOR ASOP LOAN

 

(a)                                  General Rule.  In general, an ASOP Loan shall provide for the release from

encumbrance of Plan assets used as collateral for the ASOP Loan.  For each Plan Year during the duration of

the ASOP Loan, the number of shares of Employer Stock released shall equal the

number of shares then encumbered under the ASOP Loan multiplied by a fraction

as follows:  the numerator of the

fraction shall be the amount of principal and interest paid on the ASOP Loan

for such Plan Year; the denominator of the fraction shall be the sum of the

numerator plus the principal and interest to be paid for all future years.  The number of future years under the ASOP

Loan shall be definitely ascertainable and shall be determined without taking

into account any possible extensions or renewal periods.  If the interest rate under the ASOP Loan is

variable, the interest to be paid in future years shall be computed by using

the interest rate applicable as of the end of the Plan Year.  Where ASOP Loan payments for a Plan Year are

made in semiannual or more frequent (“periodic”) installments, the shares of

Employer Stock required to be released for the Plan Year shall likewise be released

in periodic installments reflecting such payments. The number of shares

released in those installments, other than the last periodic payment in any

Plan Year, shall be determined, in the case of each such payment, by reference

to the principal and interest amounts included in such payment and by

determining future payments on the basis of the interest rate applicable at the

time of such payment  The number of

shares released in the last installment for the Plan Year shall be the total

number of shares required to be released for the Plan Year less the number of

shares released in prior installments during the Plan Year.  If collateral includes more than one class

of securities, the number of securities of each class to be released for a Plan

Year shall be determined by applying the same fraction to each class.

 

(b)                                 Special Rule.  Release of Employer Stock from encumbrance may be determined

solely with reference to principal payments made during the Plan Year,

provided:

 

37

 

(i)                                     the ASOP Loan shall provide for annual

payments of principal and interest at a cumulative rate that is not less rapid

at any time than level annual payments of such amounts for ten (10) years;

 

(ii)                                  interest included in any ASOP Loan

payment shall be disregarded only to the extent that it would be determined to

be interest under standard loan amortization tables; and

 

(iii)                               Employer Stock shall not be released

solely with respect to principal payments from such time as the sum of the

expired duration period of the ASOP Loan, the renewal period, the extension

period, and the duration of the new ASOP Loan exceeds ten years, by reason of a

renewal, extension, or refinancing.

 

(c)                                  Suspense Account.  All assets acquired by the Plan with the

proceeds of an ASOP Loan shall be added to and maintained in a suspense

account.  They are to be withdrawn from

the suspense account as if all securities in the suspense account were

encumbered.  As of the end of each Plan

Year, the Plan shall consistently allocate to the Participants’ Accounts

securities or other non-monetary units representing Participants’ interest in

assets withdrawn from the suspense account.

 

9.7                               INCOME.  Income with respect to shares of Employer

Stock acquired with the proceeds of an ASOP Loan must be allocated as income of

the Plan except to the extent that the use of income from such securities is

used to repay the ASOP Loan. 

Notwithstanding the foregoing, cash dividends on shares of Employer

Stock allocated to a Participant’s ASOP Account shall be credited to that

Participant’s Account, or may, in the sole discretion of the Employer, be

distributed to the Participant within 90 days after the close of the Plan Year

in which paid to the extent of the Participant’s vested interest in his or her

total Account.  Cash dividends paid on

shares of Employer Stock held in the suspense account shall be used to make

payments on ASOP Loans the proceeds of which were used to acquire the shares

with respect to which the dividends are paid, or shall be used to purchase

additional shares of Employer Stock, or shall be credited to the suspense

account.

 

38

 

ARTICLE

TEN—ADMINISTRATION OF THE PLAN

 

10.1                        PLAN ADMINISTRATION.  The Employer shall be the Plan

Administrator, hereinbefore and hereinafter called the Administrator, and

“named fiduciary” (for purposes of Section 402(a)(1) of the Employee Retirement

Income Security Act of 1974, as amended from time to time) of the Plan, unless

the Employer, by action of its board of directors, shall designate a person or

committee of persons to be the Administrator and named fiduciary.  The administration of the Plan, as provided

herein, including a determination of the payment of benefits to Participants

and their Beneficiaries, shall be the responsibility of the Administrator;

provided, however, that the Administrator may delegate any of its powers,

authority, duties or responsibilities to any person or committee of

persons.  The Administrator shall have

full discretion to interpret the terms of the Plan, to determine factual

questions that arise in the course of administering the Plan, to adopt rules

and regulations regarding the administration of the Plan, to determine the

conditions under which benefits become payable under the Plan, and to make any

other determinations that the Administrator believes are necessary and

advisable for the administration of the Plan. 

Any determination made by the Administrator shall be final and binding

on all parties.

 

In the event more than one party shall act as

Administrator, all actions shall be made by majority decisions.  In the administration of the Plan, the

Administrator may (a) employ agents to carry out nonfiduciary responsibilities

(other than Trustee responsibilities), (b) consult with counsel, who may

be counsel to the Employer, and (c) provide for the allocation of

fiduciary responsibilities (other than Trustee responsibilities) among its

members.  Actions dealing with fiduciary

responsibilities shall be taken in writing and the performance of agents,

counsel and fiduciaries to whom fiduciary responsibilities have been delegated

shall be reviewed periodically.

 

The expenses of administering the Plan and the

compensation of all employees, agents, or counsel of the Administrator,

including accounting fees, recordkeeper’s fees, and the fees of any benefit

consulting firm, shall be paid by the Plan, or shall be paid by the Employer if

the Employer so elects.  To the extent

required by applicable law, compensation may not be paid by the Plan to

full-time employees of the Employer.

 

In the event the Employer pays the expenses of

administering the Plan, the Employer may seek reimbursement from the Plan for

the payment of such expenses. 

Reimbursement shall be permitted only for Plan expenses paid by the

Employer within the last twelve (12)-month period.

 

The Administrator shall obtain from the Trustee, not

less often than annually, a report with respect to the value of the assets held

in the Trust Fund, in such form as may be required by the Administrator.

 

The Administrator shall administer the Plan and adopt

such rules and regulations as, in the opinion of the Administrator, are

necessary or advisable to implement and administer the Plan and to transact its

business.

 

39

 

10.2        CLAIMS PROCEDURE

 

(a)                                  Pursuant to procedures established by the

Administrator, claims for benefits under the Plan made by a Participant or

Beneficiary (the “claimant”) must be submitted in writing to the Administrator.  Approved claims shall be processed and

instructions issued to the Trustee or custodian authorizing payment as claimed.

 

If a claim is denied in whole or in part, the

Administrator shall notify the claimant whose claim for benefit has been denied

within ninety (90) days after receipt of the claim (or within one hundred

eighty (180) days, if special circumstances require an extension of time for

processing the claim, and provided written notice indicating the special

circumstances and the date by which a final decision is expected to be rendered

is given to the claimant within the initial ninety (90) day period).  If notification is not given in such period,

the claim shall be considered denied as of the last day of such period and the

claimant may request a review of the claim.

 

The notice of the denial of the claim shall be written

in a manner calculated to be understood by the claimant and shall set forth the

following:

 

(i)                                     the specific reason or reasons for the

denial of the claim;

 

(ii)                                  the specific references to the pertinent

Plan provisions on which the denial is based;

 

(iii)                               a description of any additional material

or information necessary to perfect the claim, and an explanation of why such

material or information is necessary; and

 

(iv)                              a statement that any appeal of the denial

must be made by giving to the Administrator, within sixty (60) days after

receipt of the denial of the claim, written notice of such appeal, such notice

to include a full description of the pertinent issues and basis of the claim.

 

(b)                                 Upon denial of a claim in whole or part,

the claimant (or his duly authorized representative) shall have the right to

submit a written request to the Administrator for a full and fair review of the

denied claim, to be permitted to review documents pertinent to the denial, and

to submit issues and comments in writing. 

Any appeal of the denial must be given to the Administrator within the

period of time prescribed under (a)(iv) above. 

If the claimant (or his duly authorized representative) fails to appeal

the denial to the Administrator within the prescribed time, the Administrator’s

adverse determination shall be final, binding and conclusive.

 

The Administrator may hold a hearing or otherwise

ascertain such facts as it deems necessary and shall render a decision which

shall be binding upon both parties.  The

Administrator shall advise the claimant of the results of the review within

sixty (60) days after receipt of the written request for the review, unless

special circumstances require an extension of time for processing, in which

case a decision shall be rendered as soon as possible but not later than one

hundred twenty (120) days after receipt of the request for

 

40

 

review.  If such

extension of time is required, written notice of the extension shall be

furnished to the claimant prior to the commencement of the extension.  The decision of the review shall be written

in a manner calculated to be understood by the claimant and shall include

specific reasons for the decision and specific references to the pertinent Plan

provisions on which the decision is based. 

The decision of the Administrator shall be final, binding and

conclusive.

 

10.3                        TRUST AGREEMENT.  The Trust Agreement entered into by and

between the Employer and the Trustee, including any supplements or amendments

thereto, or any successor Trust Agreement, is incorporated by reference herein.

 

41

 

ARTICLE

ELEVEN—SPECIAL COMPLIANCE PROVISIONS

 

11.1                        DISTRIBUTION

OF EXCESS DEFERRAL AMOUNTS. Notwithstanding any other provision of the

Plan, “Excess Deferral Amounts” (as defined below) (and income or loss

allocable thereto, including all earnings, expenses and appreciation or

depreciation in value, whether or not realized) shall be distributed no later

than each April 15 to Participants who claim Excess Deferral Amounts for the

preceding calendar year.

 

“Excess Deferral Amount” shall mean the amount of

elective deferrals for a calendar year that the Participant designates to the

Plan pursuant to the following procedure. 

The Participant’s designation: 

shall be submitted to the Administrator in writing no later than March

1; shall specify the Participant’s Excess Deferral Amount for the preceding

calendar year; and shall be accompanied by the Participant’s written statement

that if the Excess Deferral Amount is not distributed, it will, when added to

amounts deferred under other plans or arrangements described in Section 401(k),

408(k) or 403(b) of the Code, exceed the limit imposed on the Participant by

Section 402(g) of the Code for the year in which the deferral occurred.

 

An Excess Deferral Amount, and the income or loss

allocable thereto, may be distributed before the end of the calendar year in

which the elective deferrals were made. 

A Participant who has an Excess Deferral Amount for a taxable year,

taking into account only his elective deferrals under the Plan or any other

plans of the Employer (including any member of the Employer’s related group

(within the meaning of Section 2.5(b)) shall be deemed to have designated the

entire amount of such Excess Deferral Amount.

 

11.2                        LIMITATIONS ON 401(k)

CONTRIBUTIONS

 

(a)                                  Average Actual Deferral Percentage Test.  Amounts contributed as elective deferrals

under Section 4.1(a), and any “fail-safe” contributions made under this

Section, are considered to be amounts deferred pursuant to Section 401(k) of

the Code.  For purposes of this Section,

these amounts are referred to as the “deferred amounts.”  For purposes of the “average actual deferral

percentage test” described below, (i) such deferred amounts must be made before

the last day of the twelve (12)-month period immediately following the Plan

Year to which the contributions relate, and (ii) the deferred amounts relate to

Compensation that either (A) would have been received by the Participant in the

Plan Year but for the Participant’s election to make deferrals, or (B) is

attributable to services performed by the Participant in the Plan Year but for

the Participant’s election to make deferrals, would have been received by the

Participant within two and one-half (21⁄2) months after the close of the Plan

Year.  The Employer shall maintain

records sufficient to demonstrate satisfaction of the average actual deferral

percentage test and the deferred amounts used in such test.

 

Effective for Plan Years beginning on or after January

1, 1997, as of the last day of each Plan Year, the deferred amounts for the

Participants who are Highly-Compensated Associates for the Plan Year shall

satisfy either of the following tests:

 

42

 

(1)                                  The average actual deferral percentage

for the eligible Participants who are Highly-Compensated Associates for the

Plan Year shall not exceed the average actual deferral percentage for eligible

Participants who are Nonhighly-Compensated Associates for the Plan Year

multiplied by 1.25; or

 

(2)                                  The average actual deferral percentage

for eligible Participants who are Highly-Compensated Associates for the Plan

Year shall not exceed the average actual deferral percentage of eligible

Participants who are Nonhighly-Compensated Associates for the Plan Year

multiplied by two (2), provided that the average actual deferral

percentage for eligible Participants who are Highly-Compensated Associates for

the Plan Year does not exceed the average actual deferral percentage for

eligible Participants who are Nonhighly-Compensated Associates by more than two

(2) percentage points, or such lesser amount as the Secretary of the Treasury

shall prescribe to prevent the multiple use of this alternative limitation with

respect to any Highly-Compensated Associate.

 

Notwithstanding the foregoing, if elected by the

Employer, the foregoing percentage tests shall be applied as though the

references therein to “the Plan Year” read “the prior Plan Year;” provided,

however, the change in testing methods complies with the requirements set forth

in Notice 98-1 and any other superseding guidance.

 

Effective for testing years after December 31, 1998,

in the event the Plan changes from the current year testing method to the prior

year testing method, then, for purposes of the first testing year for which the

change is effective, the average actual deferral percentage for Nonhighly-Compensated

Associates for the prior year shall be determined by taking into account only

(a) elective deferrals for those Nonhighly-Compensated Associates that were

taken into account for purposes of the average actual deferral percentage test

(and not the actual contribution percentage test) under the current year

testing method for the prior year and (b) any qualified nonelective

contributions that were allocated to the Accounts of those

Nonhighly-Compensated Associates for the prior year but were not used to

satisfy the actual average deferral percentage test or the average contribution

percentage test under the current year testing method for the prior year.

 

In the event the Plan changes from the current year to

the prior year testing method for the first time for either the 1997 or 1998

testing year, the average actual deferral percentage for Nonhighly-Compensated

Associates used for that testing year shall be the same as the average actual

deferral percentage for Nonhighly-Compensated Associates used for the prior

testing year.

 

For purposes of the above tests, the “actual deferral

percentage” shall mean the ratio (expressed as a percentage) that the deferred

amounts, which are allocated to the Participant’s Account as of any day in the

Plan Year, on behalf of each eligible Participant for the Plan Year bears to

the eligible Participant’s compensation (within the meaning of Section

1.414(s)-1(d)(2) of the Income Tax Regulations) for the Plan Year.  The “average actual deferral percentage”

shall mean the average (expressed as a percentage) of the actual deferral

percentages of the eligible Participants in each group. “Eligible

 

43

 

Participant” shall mean each Associate who is eligible

to participate in the Plan under Section 3.1.

 

For purposes of this Section 11.2, the actual deferral

percentage for any eligible Participant who is a Highly-Compensated Associate

for the Plan Year and who is eligible to have elective deferrals allocated to

his account under two (2) or more plans or arrangements described in Code

Section 401(k) that are maintained by the Employer or any employer who is a

related group member (within the meaning of Section 2.5(b)) shall be determined

as if all such deferrals were made under a single arrangement.  In the event that this Plan satisfies the

requirements of Code Section 401(k), 401(a)(4) or 410(b) only if aggregated

with one (1) or more other plans, or if one (1) or more other plans satisfy the

requirements of such Sections of the Code only if aggregated with this Plan,

then the provisions of this Section 11.2 shall be applied by determining

the actual deferral percentage of eligible Participants as if all such plans

were a single plan.  Any adjustments to

the Nonhighly-Compensated Associate actual deferral percentage for the prior

year shall be made in accordance with Notice 98-1 and any superseding guidance,

unless the Employer has elected to use the current year testing method.  Plans may be aggregated in order to satisfy Section

401(k) of the Code only if they have the same Plan Year and use the same

average actual deferral percentage testing method.

 

For purposes of determining the actual deferral

percentage of a Participant who is classified as a Highly-Compensated Associate

as the result of being a five percent (5%) owner, or who is one of the ten (10)

highest paid Highly-Compensated Associates, the deferred amount and the

compensation of such Participant shall include the deferred amounts and

compensation of his family members (as defined in Code Section 414(q)(6)(B))

participating in the Plan.  Such family

members shall be disregarded in determining the average actual deferral

percentage for Participants who are Nonhighly-Compensated Associates.  The application of the family aggregation

rule set forth in this paragraph, however, shall not apply for Plan Years

beginning on and after January 1, 1997.

 

The determination and treatment of deferred amounts

and the actual deferral percentage of any Participant shall be subject to the

prescribed requirements of the Secretary of the Treasury.

 

In the event the average actual deferral percentage

test is not satisfied for a Plan Year, the Employer, in its discretion, may

make a special “fail-safe” contribution for eligible Participants who are

Nonhighly-Compensated Associates and who are employed on the last day of the

Plan Year (“Eligible Nonhighly-Compensated Associate(s)”).  The fail safe contribution shall be

allocated first to the Eligible Nonhighly-Compensated Associate whose Compensation

is the lowest of all Eligible Nonhighly-Compensated Associates in an amount

that does not exceed the limitations on annual additions set forth under

Article Twelve of the Plan; then to the Eligible Nonhighly-Compensated

Associate with the second lowest Compensation of all Eligible

Nonhighly-Compensated Associates in the same manner as set forth above, and

continuing to be allocated to Eligible Nonhighly-Compensated Associates in the

order of ascending Compensation until the average actual deferral percentage

test is satisfied.

 

44

 

 

(b)                                 Distributions of Excess Contributions.

 

(1)                                  In General.  If the

average actual deferral percentage test of Section 11.2(a) is not satisfied for

a Plan Year, then the “excess contributions”, and income allocable thereto,

shall be distributed, to the extent required under Treasury regulations, no

later than the last day of the Plan Year following the Plan Year for which the

excess contributions were made. 

However, if such excess contributions are distributed later than two and

one-half (21⁄2) months following the last day of the Plan Year in which such

excess contributions were made, a ten percent (10%) excise tax shall be imposed

upon the Employer with respect to such excess contributions.

 

(2)                                  Excess Contributions. 

For purposes of this Section, “excess contributions” shall consist of

the excess of the aggregate amount of deferred amounts made by or on behalf of

the Highly-Compensated Associates for such Plan Year over the maximum amount of

all such contributions permitted under the test under Section 11.2(a).  In order to comply with Section 401(k)(8)(C)

of the Code (as amended by the Small Business Job Protection Act of 1996), effective

January 1, 1997, excess contributions shall be allocated to the

Highly-Compensated Associates with the largest amounts of contributions taken

into account in calculating the average actual deferral percentage test for the

year in which the excess arose, beginning with the Highly-Compensated Associate

with the largest amount of such contributions and continuing in descending

order until all the excess contributions have been allocated.

 

(3)                                  Determination of Income. 

The income allocable to excess contributions allocated to each

Participant shall be determined by multiplying the income allocable to the

Participant’s deferred amounts for the Plan Year by a fraction, the numerator

of which is the excess contributions made on behalf of the Participant for the

Plan Year, and the denominator of which is the sum of the Participant’s Account

balances attributable to the Participant’s deferred amounts on the last day of

the Plan Year.

 

(4)                                  Maximum Distributable Amount. 

The excess contributions to be distributed to a Participant shall be

adjusted for income and, if there is a loss allocable to the excess

contribution, shall in no event be less than the lesser of the Participant’s

Account under the Plan or the Participant’s deferred amounts for the Plan

Year.  Excess contributions shall be

distributed from that portion of the Participant’s Account attributable to such

deferred amounts to the extent allowable under Treasury regulations.

 

11.3        NONDISCRIMINATION TEST

FOR EMPLOYER MATCHING CONTRIBUTIONS

 

(a)                                  Average Contribution Percentage Test.  The provisions of this Section shall

apply if Employer matching contributions are made in any Plan Year under

Section 4.2.

 

45

 

Effective for Plan Years beginning on or after January

1, 1997, as of the last day of each Plan Year, the average contribution

percentage for Highly-Compensated Associates for the Plan Year shall satisfy

either of the following tests:

 

(1)                                  The average contribution percentage for

eligible Participants who are Highly-Compensated Associates for the Plan Year

shall not exceed the average contribution percentage for eligible Participants

who are Nonhighly-Compensated Associates for the Plan Year multiplied by 1.25;

or

 

(2)                                  The average contribution percentage for

eligible Participants who are Highly-Compensated Associates for the Plan Year

shall not exceed the average contribution percentage for eligible Participants

who are Nonhighly-Compensated Associates for the Plan Year multiplied by two

(2), provided that the average contribution percentage for eligible

Participants who are Highly-Compensated Associates for the Plan Year does not

exceed the average contribution percentage for eligible Participants who are

Nonhighly-Compensated Associates by more than two (2) percentage points or such

lesser amount as the Secretary of the Treasury shall prescribe to prevent the

multiple use of this alternative limitation with respect to any

Highly-Compensated Associate.

 

Notwithstanding the foregoing, if elected by the

Employer, the foregoing percentage tests shall be applied as though the

references therein to “the Plan Year” read “the prior Plan Year;” provided,

however, the change in testing methods complies with the requirements set forth

in Notice 98-1 and any other superseding guidance.

 

Effective for testing years beginning after December

31, 1998, in the event the Plan changes from the current year testing method to

the prior year testing method, then, for purposes of the first testing year for

which the change is effective, the average contribution percentage for

Nonhighly-Compensated Associates for the prior year shall be determined by

taking into account only (a) matching contributions for those

Nonhighly-Compensated Associates that were taken into account for purposes of

the average contribution percentage test (and not the average actual deferral

percentage test) under the current year testing method for the prior year, and

(b) any qualified nonelective contributions that were allocated to the Accounts

of those Nonhighly-Compensated Associates for the prior year but that were not

used to satisfy the average contribution percentage test or the average actual

deferral percentage test under the current year testing method for the prior

year.

 

In the event the Plan changes from the current year to

the prior year testing method for the first time for either the 1997 or 1998

testing year, the average contribution percentage for Nonhighly-Compensated

Associates used for that testing year shall be the same as the average

contribution percentage for Nonhighly-Compensated Associates used for the prior

testing year.

 

46

 

For purposes of the above tests, the “average

contribution percentage” shall mean the average (expressed as a percentage) of

the contribution percentages of the “eligible Participants” in each group.  The “contribution percentage” shall mean the

ratio (expressed as a percentage) that the sum of Employer matching

contributions and elective deferrals (to the extent such elective deferrals are

not used to satisfy the average actual deferral percentage test of

Section 11.2) under the Plan on behalf of the eligible Participant for the

Plan Year bears to the eligible Participant’s compensation (within the meaning

of Section 1.414(s)-1(d)(2) of the Income Tax Regulations) for the Plan

Year.  Such average contribution

percentage shall be determined without regard to matching contributions that

are used either to correct excess contributions hereunder or because

contributions to which they relate are excess deferrals under Section 11.1 or

excess contributions under Section 11.2. 

“Eligible Participant” shall mean each Associate who is eligible to

participate in the Plan under Section 3.1.

 

For purposes of this Section 11.3, the contribution

percentage for any eligible Participant who is a Highly-Compensated Associate

for the Plan Year and who is eligible to have Employer matching contributions,

elective deferrals and/or after-tax contributions allocated to his account

under two (2) or more plans described in Section 401(a) of the Code or under

arrangements described in Section 401(k) of the Code that are maintained by the

Employer or any member of the Employer’s related group (within the meaning of

Section 2.5(b)), shall be determined as if all such contributions were made

under a single plan.

 

In the event that this Plan satisfies the requirements

of Section 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one

(1) or more other plans, or if one (1) or more other plans satisfy the

requirements of such Sections of the Code only if aggregated with this Plan,

then the provisions of this Section 11.3 shall be applied by determining the

contribution percentages of eligible Participants as if all such plans were a

single plan.  Any adjustments to the

Nonhighly-Compensated Associate actual contribution percentage for the prior

year shall be made in accordance with Notice 98-1 and any superseding guidance,

unless the Employer has elected to use the current year testing method.  Plans may be aggregated in order to satisfy

Section 401(m) of the Code only if they have the same Plan Year and use the

same average contribution percentage testing method.

 

For purposes of determining the contribution

percentage of an eligible Participant who is classified as a Highly-Compensated

Associate as the result of being a five percent (5%) owner or who is one of the

ten (10) highest paid Highly-Compensated Associates, the Employer matching

contributions, elective deferrals (to the extent not used to satisfy the

average actual deferral percentage test of Section 11.2) and compensation of

such Participant shall include the Employer matching contributions, such

elective deferrals and compensation of his family members (as defined in Code

Section 414(q)(6)(B)) participating in the Plan.  Such family members shall be disregarded in determining the

average contribution percentage for eligible Participants who are

Nonhighly-Compensated Associates.  The

application of the family aggregation rule set forth in this paragraph,

however, shall not apply for Plan Years beginning on and after January 1, 1997.

 

47

 

The determination and treatment of the contribution

percentage of any Participant shall satisfy such other requirements as may be

prescribed by the Secretary of the Treasury.

 

(b)                                Distribution of Excess Employer Matching Contributions.

 

(1)                                  In General.  If the

nondiscrimination tests of Section 11.3(a) are not satisfied for a Plan Year,

then the “excess aggregate contributions”, and any income allocable thereto,

shall be forfeited, if otherwise forfeitable, no later than the last day of the

Plan Year following the Plan Year for which the nondiscrimination tests are not

satisfied, and shall be used to reduce Employer contributions under Section 4.2.  To the extent that such “excess aggregate

contributions” are nonforfeitable, such excess contributions shall be

distributed to the Participant on whose behalf the excess contributions were

made no later than the last day of the Plan Year following the Plan Year for

which such “excess aggregate contributions” were made.  However, if such excess aggregate

contributions are distributed later than two and one-half (21⁄2) months following

the last day of the Plan Year in which such excess aggregate contributions were

made, a ten percent (10%) excise tax shall be imposed upon the Employer with

respect to such excess aggregate contributions.  For purposes of the limitations of Section 12.1(b)(1) of the

Plan, excess aggregate contributions shall be considered annual additions.

 

(2)                                  Excess Aggregate Contributions. 

For purposes of this Section, “excess aggregate contributions” shall

consist of the excess of the amount of Employer matching contributions and

elective deferrals (to the extent not used to satisfy the average actual

deferral percentage test of Section 11.2) made on behalf of the

Highly-Compensated Associates for such Plan Year over the maximum amount of all

such contributions permitted under the nondiscrimination tests under Section

11.3(a).  In order to comply with

Section 401(m)(6)(C) of the Code (as amended by the Small Business Job

Protection Act of 1996), effective January 1, 1997, excess contributions shall

be allocated to the Highly-Compensated Associate with the largest “contribution

percentage amounts” (as defined below) taken into account in calculating the

average contribution percentage test for the year in which the excess arose,

beginning with the Highly-Compensated Associate with the largest contribution

percentage amounts and continuing in descending order until all the excess

aggregate contributions have been allocated.

 

For purposes of the

preceding paragraph, “contribution percentage amounts” shall mean the sum of

Employer matching contributions and elective deferrals (to the extent not used

to satisfy the average actual deferral percentage test of Section 11.2) made

under the Plan on behalf of the Participant for the Plan Year.

 

(3)                                  Determination of Income. 

The income allocable to excess contributions allocated to each

Participant shall be determined by multiplying the income allocable to the

Employer matching contributions such elective deferrals by a fraction, the

numerator of which is the excess aggregate contributions on behalf of the

Participant for the Plan Year, and the denominator of which is the sum of the

 

48

 

Participant’s Account

balances attributable to Employer matching contributions and such elective

deferrals, on the last day of the Plan Year.

 

Notwithstanding the

foregoing, to the extent otherwise required to comply with the requirements of

Section 401(a)(4) of the Code and the regulations thereunder, vested matching

contributions may be forfeited.

 

11.4                        LIMITATION ON THE

MULTIPLE USE ALTERNATIVE. 

The sum of the average actual deferral percentage of Highly-Compensated

Associates under Section 11.2(a) and the average contribution percentage of

Highly-Compensated Associates under Section 11.3(a) shall not exceed the

“aggregate limit,” as defined in Section 401(m)(9) of the Code and the

regulations promulgated thereunder.

 

If the aggregate limit is

exceeded, the average contribution percentage of the Highly-Compensated

Associates shall be reduced in accordance with the provisions of

Section 11.3(b).  In lieu of

reducing the average contribution percentage, the Administrator may reduce the

average actual deferral percentage of the Highly-Compensated Associates in

accordance with the provisions of Section 11.2(b).  The reductions under this Section shall be

made only to the extent necessary to comply with the restrictions on the

multiple use of the “alternative limitation” within the meaning of Code

Section 401(m)(9).

 

49

 

ARTICLE

TWELVE—LIMITATION ON ANNUAL ADDITIONS

 

12.1        RULES AND DEFINITIONS

 

(a)           Rules                  The following rules shall limit additions

to Participants’ Accounts:

 

(1)                                  If the Participant does not participate,

and has never participated, in another qualified plan maintained by the

Employer, the amount of annual additions which may be credited to the

Participant’s Account for any limitation year shall not exceed the lesser of

the “maximum permissible” amount (as hereafter defined) or any other limitation

contained in this Plan.  If the Employer

contribution that would otherwise be allocated to the Participant’s Account

would cause the annual additions for the limitation year to exceed the maximum

permissible amount, the amount allocated shall be reduced so that the annual

additions for the limitation year shall equal the maximum permissible amount.

 

(2)                                  Prior to determining the Participant’s

actual compensation for the limitation year, the Employer may determine the

maximum permissible amount for a Participant on the basis of a reasonable

estimation of the Participant’s compensation for the limitation year, uniformly

determined for all Participants similarly situated.

 

(3)                                  As soon as is administratively feasible

after the end of the limitation year, the maximum permissible amount for the

limitation year shall be determined on the basis of the Participant’s actual

compensation for the limitation year.

 

(4)                                  If, as a result of the allocation of

forfeitures, a reasonable error in estimating a Participant’s annual

Compensation, a reasonable error in determining elective deferrals, the

limitations of Section 415 of the Code are exceeded, such excess amount shall

be disposed of as follows:

 

(A)                              Any nondeductible Associate after-tax

contributions (plus attributable earnings) and, to the extent elected by the

Administrator pursuant to a nondiscriminatory procedure, elective deferrals

under Section 4.1(a) (plus attributable earnings), to the extent they would

reduce the excess amount, shall be returned to the Participant.

 

(B)                                If an excess amount still exists after

the application of subparagraph (A), and the Participant is covered by the Plan

at the end of the limitation year, the excess amount in the Participant’s

Account shall be used to reduce Employer contributions (including any

allocation of forfeitures, if applicable) for such Participant in the next

limitation year, and each succeeding limitation year if necessary;

 

(C)                                If an excess amount still exists after

the application of subparagraph (A), and the Participant is not covered by the

Plan at the end of the limitation year, the excess amount shall be held

unallocated in a suspense account 

 

50

 

and applied to reduce

future Employer contributions (including allocation of any forfeitures) for all

remaining Participants in the next limitation year, and each succeeding

limitation year if necessary.  Excess

amounts may not be distributed to Participants or former Participants.

 

(D)                               If a suspense account is in existence at

any time during the limitation year pursuant to this Section 12.1(a)(4), it

shall not participate in the allocation of the Trust’s investment gains and

losses.  In addition, all amounts held

in the suspense account shall be allocated and reallocated to Participants’

Accounts before any Employer or Associate contributions may be made for the

limitation year.

 

(5)                                  If, in addition to this Plan, the

Participant is covered under another defined contribution plan maintained by

the Employer, or a welfare benefit fund, as defined in Code Section 419(e),

maintained by the Employer, or an individual medical account, as defined in

Code Section 415(1)(2), maintained by the Employer which provides an annual

addition, the annual additions which may be credited to a Participant’s account

under all such plans for any such limitation year shall not exceed the maximum

permissible amount.  Benefits shall be

reduced under any discretionary defined contribution plan before they are

reduced under any defined contribution pension plan.  If both plans are discretionary contribution plans, they shall first

be reduced under this Plan.  Any excess

amount attributable to this Plan shall be disposed of in the manner described

in Section 12.1(a)(4).

 

(6)                                  If the Employer maintains, or at any time

maintained, a qualified defined benefit plan covering any Participant in this

Plan, the sum of the Participant’s defined benefit plan fraction and defined

contribution plan fraction shall not exceed 1.0 in any limitation year.  The annual additions which may be credited

to the Participant’s Account under this Plan for any limitation year shall be

limited so that if the limitations of Code Section 415(e) become applicable,

benefits under a defined benefit plan shall have first been provided before

benefits under a defined contribution plan are provided.

 

The combined limitation

set forth in the preceding paragraph shall not apply to any limitation year

beginning after December 31, 1999.

 

(7)                                  In any Plan Year in which the Plan

becomes a Super Top-Heavy Plan (as defined in Section 14.2(b)), the

denominators of the defined benefit fraction and defined contribution fraction

shall be computed using one hundred percent (100%) of the maximum dollar

limitation instead of one hundred and twenty-five percent (125%).

 

(8)                                  In any year in which the Plan is a

Top-Heavy Plan (as defined in Section 14.2(c)) (but not a Super Top-Heavy

Plan), the limitations shall be similarly reduced, subject to the special

provisions of Section 14.3, which provide for the use of the one hundred and

twenty-five percent (125%) limitation subject to the added minimum allocations.

 

51

 

(b)           Definitions.

 

(1)                                  Annual additions: 

The following amounts credited to a Participant’s Account for the

limitation year shall be treated as annual additions:

 

(A)                              Employer contributions;

 

(B)                                Elective deferrals;

 

(C)                                Associate after-tax contributions, if

any;

 

(D)                               Forfeitures, if any; and

 

(E)                                 Amounts allocated after March 31,

1984 to an individual medical account, as defined in Section 415(l)(2) of the

Code, which is part of a pension or annuity plan maintained by the

Employer.  Also, amounts derived from

contributions paid or accrued after December 31, 1985 in taxable years

ending after such date which are attributable to post-retirement medical

benefits allocated to the separate account of a Key Employee, as defined in

Section 419A(d)(3), and amounts under a welfare benefit fund, as defined in

Section 419(e), maintained by the Employer, shall be treated as annual

additions to a defined contribution plan.

 

Employer and employee contributions

taken into account as annual additions shall include “excess contributions” as

defined in Section 401(k)(8)(B) of the Code, “excess aggregate contributions”

as defined in Section 401(m)(6)(B) of the Code, and “excess deferrals” as

defined in Section 402(g) of the Code, regardless of whether such amounts are

distributed, recharacterized or forfeited, unless such amounts constitute

excess deferrals that were distributed to the Participant no later than April

15 of the taxable year following the taxable year of the Participant in which

such deferrals were made.

 

For this purpose, any

excess amount applied under Section 12.1(a)(4) in the limitation year to reduce

Employer contributions shall be considered annual additions for such limitation

year.

 

Notwithstanding the

foregoing, for any Plan Year in which no more than one-third (1/3rd)

of the Employer contributions are allocated to the ASOP Fund on behalf of

Participants who are Highly-Compensated Associates, the annual addition shall

not include (1) forfeitures of shares of Employer Stock which were acquired

with the proceeds of an ASOP Loan and (2) contributions of the Employer

which are applied to the payment of interest on an ASOP Loan.

 

(2)                                  Compensation: 

For purposes of determining maximum permitted benefits under this

Section, compensation shall include all of a Participant’s earned income,

wages, salaries, and fees for professional services, and other amounts received

for 

 

52

 

personal services actually

rendered in the course of employment with the Employer, including, but not

limited to, commissions paid to salesmen, compensation for services on the

basis of a percentage of profits, commissions on insurance premiums, tips and

bonuses, and effective for limitation years beginning after December 31, 1997,

including also any elective deferrals (as defined in Section 402(g)(3) of the

Code) made by an Associate to the Plan and any amount contributed or deferred

by an Associate on an elective basis and not includable in the gross income of

the Associate under Section 125 of the Code; and excluding the following:

 

(A)                              Except as provided in the preceding

paragraph of this Section 12.1(b)(2), Employer contributions to a plan of

deferred compensation which are not included in the Associate’s gross income

for the taxable year in which contributed, or Employer contributions under a

simplified employee pension plan (funded with individual retirement accounts or

annuities) to the extent such contributions are deductible by the Associate, or

any distributions from a plan of deferred compensation;

 

(B)                                Amounts realized from the exercise of a

nonqualified stock option, or when restricted stock (or property) held by the

Associate either becomes freely transferable or is no longer subject to a

substantial risk of forfeiture;

 

(C)                                Amounts realized from the sale, exchange,

or other disposition of stock acquired under a qualified stock option; and

 

(D)                               Other amounts which received special tax

benefits, or contributions made by the Employer (whether or not under a salary

reduction agreement) toward the purchase of an annuity described in Section

403(b) of the Code (whether or not the amounts are actually excludable from the

gross income of the Associate).

 

Compensation shall be

measured on the basis of compensation paid in the limitation year.

 

(3)                                  Defined benefit fraction: 

This shall mean a fraction, the numerator of which is the sum of the

Participant’s projected annual benefits under all the defined benefit plans

maintained or previously maintained by the Employer, and the denominator of

which is the lesser of one hundred and twenty-five percent (125%) of the dollar

limitation in effect for the limitation year under Section 415(b)(1)(A) of the

Code or one hundred and forty percent (140%) of the highest average

compensation including any adjustment under Code Section 415(b).

 

(4)                                  Defined contribution fraction: 

This shall mean a fraction, the numerator of which is the sum of the

annual additions to the Participant’s account under all the defined

contribution plans (whether or not terminated), welfare benefit funds, and

individual medical accounts maintained by the Employer for the current and all

prior limitation years, and the denominator of which is the sum of the maximum 

 

53

 

aggregate amounts for the

current and all prior limitation years of Service with the Employer, regardless

of whether a defined contribution plan was maintained by the Employer.

 

The maximum aggregate amount

in any limitation year is the lesser of one hundred and twenty-five percent

(125%) of the dollar limitation then in effect under Section 415(c)(1)(A) of

the Code or thirty-five (35%) of the Participant’s compensation for such year.

 

If the Associate, as of

the end of the first day of the first limitation year beginning after

December 31, 1986, was a participant in one (1) or more defined

contribution plans maintained by the Employer which were in existence on

May 5, 1986, the numerator of this fraction shall be adjusted if the sum

of this fraction and the defined benefit fraction would otherwise exceed 1.0

under the terms of this Plan.  Under the

adjustment, an amount equal to the product of (i) the excess of the sum of the

fractions over 1.0 and (ii) the denominator of this fraction, will be

permanently subtracted from the numerator of this fraction.  The adjustment is calculated using the

fractions as they would be computed as of the end of the last limitation year

beginning before January 1, 1987, and disregarding any changes in the

terms and conditions of the Plan made after May 5, 1986, but using the

Code Section 415 limitation applicable to the first limitation year

beginning on or after January 1, 1987.

 

The annual addition for

any limitation year beginning before January 1, 1987, shall not be recomputed

to treat all Associate contributions as annual additions.

 

(5)                                  Defined contribution dollar limitation: 

Effective January 1, 1995, this shall mean $30,000, as adjusted under

Section 415(d) of the Code.

 

(6)                                  Employer:  This term

refers to the Employer that adopts this Plan, and all members of a controlled

group of corporations (as defined in Section 414(b) of the Code, as modified by

Section 415(h)), commonly-controlled trades or businesses (as defined in

Section 414(c), as modified by Section 415(h)), or affiliated service groups

(as defined in Section 414(m)) of which the Employer is a part, or any other

entity required to be aggregated with the Employer under Code Section 414(o).

 

(7)                                  Highest average compensation: 

This means the average compensation for the three (3) consecutive

limitation years with the Employer that produces the highest average.

 

(8)                                  Limitation year: 

This shall mean the Plan Year, unless the Employer elects a different

twelve (12) consecutive month period. 

The election shall be made by the adoption of a Plan amendment by the

Employer.  If the limitation year is

amended to a different twelve (12) consecutive month period, the new limitation

year must begin on a date within the limitation year in which the amendment is

made.

 

54

 

(9)                                  Maximum permissible amount: 

This shall mean an amount equal to the lesser of the defined

contribution dollar limitation or twenty-five percent (25%) of the

Participant’s compensation for the limitation year.  If a short limitation year is created because of an amendment

changing the limitation year to a different twelve (12)-consecutive month

period, the maximum permissible amount shall not exceed the defined

contribution dollar limitation multiplied by the following fraction:

 

Number of months

in the short limitation year

12

 

(10)                            Projected annual benefit: 

This is the annual retirement benefit (adjusted to an actuarially

equivalent straight life annuity if such benefit is expressed in a form other

than a straight life annuity or qualified joint and survivor annuity) to which

the Participant would be entitled under the terms of the plan, assuming:

 

(A)                              the Participant will continue employment

until normal retirement age under the plan (or current age, if later), and

 

(B)                                the Participant’s compensation for the

current limitation year and all other relevant factors used to determine

benefits under the plan will remain constant for all future limitation years.

 

55

 

ARTICLE

THIRTEEN—AMENDMENT AND TERMINATION

 

13.1                        AMENDMENT.  The Employer, by resolution of its board

of directors, (or, to the extent permitted by resolution of such board of

directors, by action of a duly authorized officer of the Employer) shall have

the right to amend, alter or modify the Plan at any time, or from time to time,

in whole or in part.  Any such amendment

shall become effective under its terms upon adoption by the Employer.  However, no amendment affecting the duties,

powers or responsibilities of the Trustee may be made without the written

consent of the Trustee.  No amendment

shall be made to the Plan which shall:

 

(a)                                  make it possible (other than as provided

in Section 15.3) for any part of the corpus or income of the Trust Fund (other

than such part as may be required to pay taxes and administrative expenses) to

be used for or diverted to purposes other than the exclusive benefit of the

Participants or their Beneficiaries;

 

(b)                                 decrease a Participant’s account balance

or eliminate an optional form of payment with respect to benefits accrued as of

the later of (i) the date such amendment is adopted, or (ii) the date the

amendment becomes effective; or

 

(c)                                  alter the schedule for vesting in a

Participant’s Account with respect to any Participant with three (3) or more

Years of Vesting Service without his consent or deprive any Participant of any

nonforfeitable portion of his Account.

 

Notwithstanding the other

provisions of this Section or any other provisions of the Plan, any amendment

or modification of the Plan may be made retroactively if necessary or

appropriate to conform to or to satisfy the conditions of any law, governmental

regulation, or ruling, and to meet the requirements of the Employee Retirement

Income Security Act of 1974, as it may be amended.

 

13.2                        TERMINATION OF THE PLAN.  The Employer, by resolution of its board

of directors, reserves the right at any time and in its sole discretion to

discontinue payments under the Plan and to terminate the Plan.  In the event the Plan is terminated, or upon

complete discontinuance of contributions under the Plan by the Employer, the

rights of each Participant to his Account on the date of such termination or

discontinuance of contributions, to the extent of the fair market value under

the Trust Fund, shall become fully vested and nonforfeitable.  The Employer shall direct the Trustee to

distribute the Trust Fund in accordance with the Plan’s distribution provisions

to the Participants and their Beneficiaries, each Participant or Beneficiary

receiving a portion of the Trust Fund equal to the value of his Account as of

the date of distribution.  These

distributions may be implemented by the continuance of the Trust and the

distribution of the Participants’ Account shall be made at such time and in

such manner as though the Plan had not terminated, or by any other appropriate

method, including rollover into Individual Retirement Accounts.  Upon distribution of the Trust Fund, the

Trustee shall be discharged from all obligations under the Trust and no

Participant or Beneficiary shall have any further right or claim therein.  In the event of the partial termination of

the Plan, the Accounts of all affected 

 

56

 

Participants shall become

fully vested and nonforfeitable and the provisions of the preceding paragraph

shall apply with respect to such Participants’ Accounts.

 

13.3                        DISTRIBUTION UPON SALE

OR DISPOSITION OF STOCK OR ASSETS.  The vested balances of affected Participants (as

defined below) may be distributed, in a single lump-sum payment, as soon as

administratively practical following:

 

(i)                                     the sale or other disposition of the

Employer’s interest in a subsidiary (within the meaning of Section 409(d)(3) of

the Code) to an entity that is not a “related group member” (within the meaning

of Section 2.5(b)), provided that the Employer and not the acquirer continues

to maintain the Plan after the disposition. 

In this case, affected Participants shall be those Participants who

continue employment with such subsidiary.

 

(ii)                                  the sale or other disposition of

“substantially all” (within the meaning of Section 1.401(k)-1(d)(4) of the

Income Tax Regulations) of the assets used by the Employer in a trade or

business to an unrelated corporation, provided that the Employer and not the

acquirer continues to maintain the Plan after the disposition.  In this case, affected Participants shall be

those Participants who continue employment with the corporation acquiring such

assets.

 

57

 

ARTICLE

FOURTEEN—TOP-HEAVY PROVISIONS

 

14.1                        APPLICABILITY.  The provisions of this Article shall

become applicable only for any Plan Year in which the Plan is a Top-Heavy Plan

(as defined in Section 14.2(c)).  The

determination of whether the Plan is a Top-Heavy Plan shall be made each Plan

Year by the Administrator.

 

14.2                        DEFINITIONS.  For purposes of this Article, the

following definitions shall apply:

 

(a)                                  “Key Associate”:  “Key Associate”

shall mean any Associate or former Associate (and the Beneficiaries of such

Associate) who, at any time during the determination period, was (1) an

officer of the Employer earning compensation (as defined in Section 416(i) of

the Code) in excess of fifty percent (50%) of the dollar limitation under

Section 415(b)(1)(A) of the Code, (2) an owner (or considered an owner

under Section 318 of the Code) of both more than a one-half percent (1⁄2%)

interest in the Employer and one of the ten (10) largest interests in the

Employer if such individual’s compensation exceeds the dollar limitation under

Section 415(c)(1)(A) of the Code, (3) a five percent (5%) owner of the

Employer, or (4) a one percent (1%) owner of the Employer who has an

annual compensation of more than $150,000. 

For purposes of this Section, annual compensation shall mean

compensation as defined in Code Section 415(c)(3), but including amounts

contributed by the Employer pursuant to a salary reduction agreement which are

excludable from the Associate’s income under Code Sections 125, 402(g), 402(h)

or 403(b).  The determination period of

the Plan is the Plan Year containing the “determination date” as defined in

Section 14.2(c)(4) and the four (4) preceding Plan Years.

 

The determination of who

is a Key Associate (including the terms “5% owner” and “1% owner”) shall be

made in accordance with Section 416(i)(1) of the Code and the regulations

thereunder.

 

(b)                                 “Super Top-Heavy Plan”:  The Plan

shall constitute a “Super Top-Heavy Plan” if it meets the test for status as a

Top-Heavy Plan, where “90%” is substituted for “60%” at each place in Section

14.2(c).

 

(c)                                  “Top-Heavy Plan”:

 

(1)                                  The Plan shall constitute a “Top-Heavy

Plan” if any of the following conditions exist:

 

(A)                              The top-heavy ratio for the Plan exceeds

sixty percent (60%) and the Plan is not part of any required aggregation group

or permissive aggregation group of plans; or

 

(B)                                The Plan is part of a required

aggregation group of plans (but is not part of a permissive aggregation group)

and the top-heavy ratio for the group of plans exceeds sixty percent (60%); or

 

58

 

(C)                                The Plan is a part of a required

aggregation group of plans and part of a permissive aggregation group and the

top-heavy ratio for the permissive aggregation group exceeds sixty percent

(60%).

 

(2)                                  If the Employer maintains one (1) or more

defined contribution plans (including any simplified employee pension plan

funded with individual retirement accounts or annuities) and the Employer

maintains or has maintained one (1) or more defined benefit plans which have

covered or could cover a Participant in this Plan, the top-heavy ratio is a

fraction, the numerator of which is the sum of account balances under the

defined contribution plans for all Key Associates and the actuarial equivalents

of accrued benefits under the defined benefit plans for all Key Associates, and

the denominator of which is the sum of the account balances under the defined

contribution plans for all Participants and the actuarial equivalents of

accrued benefits under the defined benefit plans for all Participants.  Both the numerator and denominator of the

top-heavy ratio shall include any distribution of an account balance or an

accrued benefit made in the five (5)-year period ending on the determination

date and any contribution due to a defined contribution pension plan but unpaid

as of the determination date.  In

determining the accrued benefit of a non-Key Associate who is participating in

a plan that is part of a required aggregation group, the method of determining

such benefit shall be either (i) in accordance with the method, if any,

that uniformly applies for accrual purposes under all plans maintained by the

Employer or any member of the Employer’s related group (within the meaning of

Section 2.5(b)), or (ii) if there is no such method, as if such benefit

accrued not more rapidly than the slowest accrual rate permitted under the

fractional accrual rate of Code Section 411(b)(1)(C).

 

(3)                                  For purposes of (1) and (2) above, the

value of account balances and the actuarial equivalents of accrued benefits

shall be determined as of the most recent Valuation Date that falls within or

ends with the twelve (12)-month period ending on the determination date.  The account balances and accrued benefits of

a Participant who is not a Key Associate but who was a Key Associate in a prior

year shall be disregarded.  The accrued

benefits and account balances of Participants who have performed no Hours of

Service with any Employer maintaining the plan for the five (5)-year period

ending on the determination date shall be disregarded.  The calculations of the top-heavy ratio, and

the extent to which distributions, rollovers, and transfers are taken into

account shall be made under Section 416 of the Code and regulations issued

thereunder.  Deductible Associate

contributions shall not be taken into account for purposes of computing the

top-heavy ratio.  When aggregating

plans, the value of account balances and accrued benefits shall be calculated

with reference to the determination dates that fall within the same calendar

year.

 

(4)                                  Definition of terms for Top-Heavy status:

 

(A)                              “Top-heavy ratio” shall mean the following:

 

59

 

(1)                                  If the Employer maintains one or more

defined contribution plans (including any simplified employee pension plan

funded with individual retirement accounts or annuities) and the Employer has

never maintained any defined benefit plans which have covered or could cover a

Participant in this Plan, the top-heavy ratio is a fraction, the numerator of

which is the sum of the account balances of all Key Associates as of the

determination date (including any part of any account balance distributed in

the five (5)-year period ending on the determination date), and the denominator

of which is the sum of the account balances (including any part of any account

balance distributed in the five (5)-year period ending on the determination

date) of all Participants as of the determination date.  Both the numerator and the denominator shall

be increased by any contributions due but unpaid to a defined contribution

pension plan as of the determination date.

 

(B)                                “Permissive aggregation group” shall mean the required aggregation group of plans

plus any other plan or plans of the Employer which, when considered as a group

with the required aggregation group, would continue to satisfy the requirements

of Sections 401(a)(4) and 410 of the Code.

 

(C)                                “Required aggregation group” shall mean (i) each qualified plan of the

Employer (including any terminated plan) in which at least one Key Associate

participates, and (ii) any other qualified plan of the Employer which

enables a plan described in (i) to meet the requirements of Section 401(a)(4)

or 410 of the Code.

 

(D)                               “Determination date” shall mean, for any Plan Year subsequent to the first

Plan Year, the last day of the preceding Plan Year.  For the first Plan Year of the Plan, “determination date” shall

mean the last day of that Plan Year.

 

(E)                                 “Valuation Date” shall mean the last day of the Plan Year.

 

(F)                                 Actuarial equivalence shall be based on

the interest and mortality rates utilized to determine actuarial equivalence

when benefits are paid from any defined benefit plan.  If no rates are specified in said plan, the following shall be

utilized:  pre- and post-retirement

interest — five percent (5%); post-retirement mortality based on the Unisex

Pension (1984) Table as used by the Pension Benefit Guaranty Corporation on the

date of execution hereof.

 

14.3                        ALLOCATION OF EMPLOYER

CONTRIBUTIONS AND FORFEITURES FOR A TOP-HEAVY PLAN YEAR.

 

60

 

(a)                                  Except as otherwise provided below, in

any Plan Year in which the Plan is a Top-Heavy Plan, the Employer contributions

and forfeitures allocated on behalf of any Participant who is a non-Key

Associate shall not be less than the lesser of three percent (3%) of such

Participant’s compensation (as defined in Section 12.1(b)(2) and as limited by Section

401(a)(17) of the Code) or the largest percentage of Employer contributions,

elective deferrals, and forfeitures as a percentage of the Key Associate’s

compensation (as defined in Section 12.1(b)(2) and as limited by Section

401(a)(17) of the Code), allocated on behalf of any Key Associate for that Plan

Year.  This minimum allocation shall be

made even though, under other Plan provisions, the Participant would not

otherwise be entitled to receive an allocation or would have received a lesser

allocation for the Plan Year because of insufficient Employer contributions

under Article Four or the Participant’s failure to make elective deferrals

under Section 4.1.

 

(b)                                 The minimum allocation under this Section

shall not apply to any Participant who was not employed by the Employer on the

last day of the Plan Year.

 

(c)                                  Neither elective deferrals nor Employer

matching contributions may be taken into account for the purpose of satisfying

the minimum allocation.

 

(d)                                 For purposes of the Plan, a non-Key

Associate shall be any Associate or Beneficiary of such Associate, any former

Associate, or Beneficiary of such former Associate, who is not or was not a Key

Associate during the Plan Year ending on the determination date, nor during the

four (4) preceding Plan Years.

 

(e)                                  If no defined benefit plan has ever been

part of a permissive or required aggregation group of plans of the Employer,

the contributions and forfeitures under this step shall be offset by any

allocation of contributions and forfeitures under any other defined

contribution plan of the Employer with a Plan Year ending in the same calendar

year as this Plan’s Valuation Date.

 

(f)                                    There shall be no duplication of the

minimum benefits required under Code Section 416.  Benefits shall be provided under defined contribution plans

before under defined benefit plans.  If

a defined benefit plan (active or terminated) is part of the permissive or

required aggregation group of plans, the allocation method of subparagraph (a)

above shall apply, except that “3%” shall be increased to “5%.”

 

(g)                                 There shall be no duplication of the

minimum benefits required under Code Section 416.  Benefits shall be provided under defined contribution plans

before defined benefit plans.  If a

defined benefit plan (active or terminated) is part of the permissive or

required aggregation group of plans, and if any Participant in the Plan would

have his benefits limited due to the application of the Code limitation rule in

Section 12.1 in a Plan Year in which the Plan is a Top-Heavy Plan but not a

Super Top-Heavy Plan, the allocation method of subparagraph (f) above shall

apply, except that “5%” shall be increased to “7.5%.”  In the event any Participant in the Plan would have his benefits

limited due to the application of the special Code limitation rule in Section

12.1 in a Plan Year in which the Plan is a Top-Heavy Plan but not a Super

Top-Heavy Plan and the Participant is 

 

61

 

covered only by a defined

contribution plan, the allocation method of subparagraph (a) shall apply,

except that “3%” shall be increased to “4%”.

 

14.4                        VESTING.  The provisions contained in Section 6.1

relating to vesting shall continue to apply in any Plan Year in which the Plan

is a Top-Heavy Plan, and apply to all benefits within the meaning of Section

411(a)(7) of the Code except those attributable to Associate contributions and

elective deferrals under Section 4.1, including benefits accrued before

the effective date of Section 416 and benefits accrued before the Plan became a

Top-Heavy Plan.  Further, no reduction

in vested benefits may occur in the event the Plan’s status as a Top-Heavy Plan

changes for any Plan Year and the vesting schedule is amended.  In addition, if a Plan’s status changes from

a Top-Heavy Plan to that of a non-Top-Heavy Plan, a Participant with three (3)

Years of Vesting Service shall continue to have his vested rights determined

under the schedule which he selects, in the event the vesting schedule is

subsequently amended.

 

Payment of a Participant’s

vested Account balance under this Section shall be made in accordance with the

provisions of Article Seven.

 

62

 

ARTICLE

FIFTEEN — MISCELLANEOUS PROVISIONS

 

15.1                        PLAN DOES NOT AFFECT

EMPLOYMENT.  Neither the creation of this Plan, any amendment

thereto, the creation of any fund nor the payment of benefits hereunder shall

be construed as giving any legal or equitable right to any Associate or

Participant against the Employer, its officers or Associates, or against the

Trustee.  All liabilities under this

Plan shall be satisfied, if at all, only out of the Trust Fund held by the

Trustee.  Participation in the Plan

shall not give any Participant any right to be retained in the employ of the

Employer, and the Employer hereby expressly retains the right to hire and

discharge any Associate at any time with or without cause, as if the Plan had

not been adopted, and any such discharged Participant shall have only such

rights or interests in the Trust Fund as may be specified herein.

 

15.2                        SUCCESSOR TO THE

EMPLOYER.  In the event of the merger, consolidation,

reorganization or sale of assets of the Employer, under circumstances in which

a successor person, firm, or corporation shall carry on all or a substantial

part of the business of the Employer, and such successor shall employ a

substantial number of Associates of the Employer and shall elect to carry on

the provisions of the Plan, such successor shall be substituted for the

Employer under the terms and provisions of the Plan upon the filing in writing

with the Trustee of its election to do so.

 

15.3                        REPAYMENTS TO THE

EMPLOYER.  Notwithstanding any provisions of this Plan to the

contrary:

 

(a)                                  Any monies or other Plan assets

attributable to any contribution made to this Plan by the Employer because of a

mistake of fact shall be returned to the Employer within one (1) year after the

date of contribution.

 

(b)                                 Any monies or other Plan assets

attributable to any contribution made to this Plan by the Employer shall be

refunded to the Employer, to the extent such contribution is predicated on the

deductibility thereof under the Code and the income tax deduction for such

contribution is disallowed.  Such amount

shall be refunded within one (1) taxable year after the date of such

disallowance or within one (1) year of the resolution of any judicial or

administrative process with respect to the disallowance.  All Employer contributions hereunder are

expressly contributed based upon such contributions’ deductibility under the

Code.

 

15.4                        BENEFITS NOT ASSIGNABLE.  Except as provided in Section 414(p) of

the Code with respect to “qualified domestic relations orders,” the rights of

any Participant or his Beneficiary to any benefit or payment hereunder shall

not be subject to voluntary or involuntary alienation or assignment.

 

With respect to any “qualified domestic relations

order” relating to the Plan, the Plan shall permit distribution to an alternate

payee under such order at any time, irrespective of whether the 

 

63

 

Participant has attained his “earliest retirement age”

(within the meaning of Section 414(p)(4)(B) of the Code) under the Plan.  A distribution to an alternate payee prior

to the Participant’s attainment of his earliest retirement age shall, however,

be available only if the order specifies distribution at that time or permits

an agreement between the Plan and the alternate payee to authorize an earlier

distribution.  Nothing in this paragraph

shall, however, give a Participant a right to receive distribution at a time

otherwise not permitted under the Plan nor does it permit the alternate payee

to receive a form of payment not otherwise permitted under the Plan or under

said Section 414(p) of the Code.

 

15.5                        MERGER OF PLANS.  In the case of any merger or

consolidation of this Plan with, or transfer of the assets or liabilities of

the Plan to, any other plan, the terms of such merger, consolidation or

transfer shall be such that each Participant would receive (in the event of

termination of this Plan or its successor immediately thereafter) a benefit

which is no less than what the Participant would have received in the event of

termination of this Plan immediately before such merger, consolidation or

transfer.

 

15.6                        INVESTMENT EXPERIENCE NOT A FORFEITURE.  The decrease in value of any Account due

to adverse investment experience shall not be considered an impermissible

“forfeiture” of any vested balance.

 

15.7                        CONSTRUCTION.  Wherever appropriate, the use of the masculine gender

shall be extended to include the feminine and/or neuter or vice versa; and the

singular form of words shall be extended to include the plural; and the plural

shall be restricted to mean the singular.

 

15.8                        GOVERNING DOCUMENTS.  A Participant’s rights shall be

determined under the terms of the Plan as in effect at the Participant’s date

of separation from Service.

 

15.9                        GOVERNING LAW.  The provisions of this Plan shall be construed under

the laws of the state of the situs of the Trust, except to the extent such laws

are preempted by Federal law.

 

15.10                 HEADINGS.  The Article headings and Section numbers

are included solely for ease of reference. 

If there is any conflict between such headings or numbers and the text

of the Plan, the text shall control.

 

15.11                 COUNTERPARTS.  This Plan may be executed in any number of

counterparts, each of which shall be deemed an original; said counterparts

shall constitute but one and the same instrument, which may be sufficiently

evidenced by any one counterpart.

 

64

 

15.12                 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN.  In the event that all or any portion of

the distribution payable to a Participant or to a Participant’s Beneficiary

hereunder shall, at the expiration of five (5) years after it shall become

payable, remain unpaid solely by reason of the inability of the Administrator

to ascertain the whereabouts of such Participant or Beneficiary, after sending

a registered letter, return receipt requested, to the last known address, and

after further diligent effort, the amount so distributable shall be used to pay

Plan expenses and/or reallocated in the same manner as a forfeiture under

Section 6.2 pursuant to this Plan.  In

the event a Participant or Beneficiary is located subsequent to the forfeiture

of his Account balance, such Account balance shall be restored.

 

 

 

 

IN

WITNESS WHEREOF, the

Employer, by its duly authorized officer, has caused this Plan to be executed

on the                            

day of                            ,

2000.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  FIRST

  CONSULTING GROUP, INC.

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  By 

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Authorized Officer

  	

   

  

 

65May 5, 2000

 

EXHIBIT 10.2

 

[FCG LETTERHEAD]

 

June 10, 2002

 

 

Mr. David S. Lipson

771 Eagle Farm Road

Villanova, PA 19085

 

Re:          Registration Rights

Agreement

 

Dear David:

 

As we discussed, this letter is to confirm certain matters with respect

to:  (a) the Registration Rights

Agreement dated December 18, 1998 (the “Rights Agreement”), among First

Consulting Group, Inc. (“FCG”) and the holders named therein (the “Holders”),

including yourself; (b) the letter agreement between FCG and you dated May 5,

2000, which letter extended your registration rights until June 18, 2001; and

(c) the letter agreement between FCG and you dated May 7, 2001, which letter

extended your registration rights until June 18, 2002.

 

In conjunction with the foregoing, FCG hereby agrees to grant you demand

and piggyback registration rights on your Registrable Securities for an

additional year, expiring June 18, 2003. 

Your demand and piggyback registration rights shall be on the same terms

and conditions as set forth in the Rights Agreement, except that: (1) Section

2.1(c)(ii) and the last sentence of Section 2.2(a) of the Rights Agreement are

superseded hereby; and (2) if FCG is not required to file a registration

statement for your Registrable Securities at any time during the additional one

year period pursuant to Section 2.1(c)(iv) of the Rights Agreement, then you

shall have the right to demand registration of your Registrable Securities for

180 days after the earlier of (a) expiration of the 180TH day

following the effective date of the registration statement filed by FCG that

qualifies under Section 2.1(c)(iv) or (b) the date, if any, that FCG sends

written notice to you waiving FCG’s rights under Section 2.1(c)(iv).

 

 

	

  FIRST CONSULTING

  GROUP, INC.

  	

   

  	

  LEGAL DEPARTMENT

  
	

  111 W. OCEAN BLVD., 4TH FLOOR

  	

   

  	

  TEL:

  (562) 624-5395

  
	

  LONG BEACH, CA 90802

  	

   

  	

  FAX:

  (562) 983-9384

  

 

 

Mr. David S. Lipson

June 10, 2002

Page 2

 

In addition, if FCG files a registration statement registering shares

of FCG common stock for public sale during 2002, FCG currently intends to allow

the Holders to include their Registrable Securities (as defined in the Rights

Agreement) in such registration statement on the same terms and conditions as

Section 2.1 of the Rights Agreement, as if such registration statement were

being filed pursuant to the demand registration rights granted in Section 2.1

of the Rights Agreement.  Of course,

FCG’s decision to file a registration would be based on, among other factors,

future market conditions for FCG common stock, the mutual selection of and

agreement with an underwriter or underwriters, and approval of FCG’s Board of

Directors.

 

Very Truly Yours,

 

FIRST CONSULTING GROUP, INC.

 

 

	

  By:

  	

   

  	

  /s/

  	

  Michael A. Zuercher

  	

   

  
	

   

  	

   

  	

  Michael A. Zuercher

  	

   

  
	

   

  	

   

  	

  Vice President & General Counsel

  	

   

  

 

 

Agreed and acknowledged as of the

date first written above:

 

 

	

  /s/ David S. Lipson

  	

   

  
	

  David S. Lipson

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