As filed with the Securities and Exchange Commission on July 15, 1997
File No. 333-_____
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SOUTHWEST GAS CORPORATION
(Exact name of Registrant as specified in its charter)
California 88-0085720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5241 Spring Mountain Road
P.O. Box 98510
Las Vegas, Nevada 89193-8510
(Address of principal executive offices) (Zip Code)
SOUTHWEST GAS CORPORATION EMPLOYEES' INVESTMENT PLAN
(Full title of the plan)
GEORGE C. BIEHL
Senior Vice President/Chief Financial Officer and Corporate Secretary
Southwest Gas Corporation
5241 Spring Mountain Road
P.O. Box 98510
Las Vegas, Nevada 89193-8510
(Name and address of agent for service)
(702) 876-7237
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
-------------------------------
Amount Proposed maximum Proposed maximum Amount of
to be offering price per aggregate Registration
Title of securities being registered registered(1)(2) share(3) offering price(3) fee(3)
- ------------------------------------ ----------------- ------------------ ----------------- ------------
Common Stock ($1 par value) 400,000 shares $19-1/16 $7,625,000 $2,310.61
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this Registration Statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan
described herein.
(2) The shares of common stock being registered consist of shares to be
acquired by the Trustee pursuant to the plan for the account of
participants. Each share is accompanied by a common share purchase
right pursuant to the Registrant's Rights Agreement, dated March 5, 1996
with Harris Trust Company, as Rights Agent.
(3) Pursuant to Rule 457(h), the maximum offering price, per share and in the
aggregate, and the registration fee were calculated based upon the average
of the high and low prices of the Common Stock on July 9, 1997, as
reported on the New York Stock Exchange and published in The Western
Edition of The Wall Street Journal.
AS PERMITTED BY RULE 429, THE PROSPECTUS WITH RESPECT TO THIS REGISTRATION
STATEMENT ALSO RELATES TO REGISTRANT'S REGISTRATION STATEMENT ON FORM S-8
(33-58135).
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PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance
with Rule 428 under the Securities Act of 1933 and the Note to Part
I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of Southwest Gas Corporation (the "Company")
filed with the Securities and Exchange Commission are incorporated herein by
reference:
(a) Annual Report on Form 10-K for the Company's fiscal year ended
December 31, 1996 and the Southwest Gas Corporation Employees'
Investment Plan Annual Report on Form 11-K for the year ended
December 31, 1996;
(b) Quarterly Report on Form 10-Q for the Company's quarterly period
ended March 31, 1997;
(c) Current Reports on Form 8-K dated February 11, 1997 and April 30,
1997; and
(d) Description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed on June 8, 1979, and any
amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement contained herein or in a document,
all or a portion of which is incorporated or deemed to be incorporated by
reference herein, shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or amended, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Company's Common Stock, $1.00 par value, (the "Common Stock") is
registered pursuant to Section 12 of the Exchange Act, and, therefore, the
description of securities is omitted.
S-1
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Robert M. Johnson, Esq., as Assistant General Counsel for the Company,
has given an opinion to the Securities and Exchange Commission upon the
validity of the shares of Common Stock registered.
The financial statements incorporated by reference in this Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports included in the Annual Report on
Form 10-K for the year ended December 31, 1996, and the Southwest Gas
Corporation Employees' Investment Plan Annual Report on Form 11-K for the year
ended December 31, 1996, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation contain a provision which
eliminates the liability of directors for monetary damages to the fullest
extent permissible under California law. The General Corporation Law of
California (the "Law") (i) authorizes the elimination of liability of
directors for monetary damages in an action brought by a shareholder in the
right of the Company (referred to herein as a "derivative action") or by the
Company for breach of a director's duties to the Company and its shareholders
and (ii) authorizes the Company to indemnify directors and officers for
monetary damages for all acts or omissions committed by them in their
respective capacities; provided, however, that liability is not limited nor
may indemnification be provided for (a) acts or omissions that involve
intentional misconduct or knowing and culpable violation of law, (b) for acts
or omissions that a director or officer believes to be contrary to the best
interests of the Company or its shareholders or that involve the absence of
good faith on the part of a director or officer seeking indemnification,
(c) for any transaction from which a director or officer derives an improper
personal benefit, (d) for acts or omissions that show a reckless disregard for
the director's or officer's duty to the Company or its shareholders in
circumstances in which such person was aware, or should have been aware, in
the ordinary course of performing his or her duties, of a risk of serious
injury to the Company or its shareholders, (e) for acts or omissions that
constitute an unexcused pattern of inattention that amounts to an abdication
of the director's or officer's duty to the Company or its shareholders, and
(f) for liabilities arising under Section 310 (contracts in which a director
has a material financial interest) and Section 316 (certain unlawful
dividends, distributions, loans and guarantees) of the Law. In addition, the
Company may not indemnify directors and officers in circumstances in which
indemnification is expressly prohibited by Section 317 of the Law.
The bylaws of the Company provide that the Company has the power to
indemnify directors and officers to the fullest extent permitted under
California law and the Company's Articles of Incorporation. The Company has
entered into indemnification agreements with its directors and officers which
require that the Company indemnify such directors and officers in all cases to
the fullest extent permitted by applicable provisions of the Law. The Company
also maintains a directors' and officers' liability insurance policy insuring
directors and officers of the Company for covered losses as defined in the
policy.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
4.1 Amended and Restated Southwest Gas Corporation Employees'
Investment Plan
5.1 Opinion of Counsel of Southwest regarding legality of the
securities to be registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Counsel of Southwest (included in opinion filed as
Exhibit 5.1 to this Registration Statement)
24.1 Powers of Attorney (included on pages S-4 through S-6 of this
Registration Statement)
__________
S-2
In lieu of the opinion of counsel or determination letter contemplated by
Item 601(b)(5) of Regulation S-K, Registrant hereby confirms that it has
submitted the Plan and undertakes that it will submit all amendments thereto
to the Internal Revenue Service (IRS) in a timely manner, and that it has made
or will make all changes required by the IRS in order to qualify the Plan
under Section 401 of the Internal Revenue Code.
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, unless the information required to be included in
such post-effective amendment is contained in a periodic report filed by
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 and incorporated herein by reference;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement, unless the information required to be included in
such post-effective amendment is contained in a periodic report filed by
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 and incorporated herein by reference;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
The undersigned Registrant hereby further undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and each filing of the annual report of
the Plan pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
S-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Las Vegas, State of Nevada, on the 10th day of
July, 1997.
SOUTHWEST GAS CORPORATION
By MICHAEL O. MAFFIE
-------------------------------------
Michael O. Maffie
President and Chief Executive Officer
SIGNATURES
Each person whose signature appears below constitutes and appoints
Michael O. Maffie and George C. Biehl his true and lawful attorneys-in-fact
and agents, each acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to
do and perform each and every act and thing necessary and requisite to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated.
Signature Title Date
--------- ----- ----
/s/ MICHAEL O. MAFFIE Director, President and July 10, 1997
- ----------------------------- Chief Executive Officer
(Michael O. Maffie) (Principal Executive Officer)
/s/ GEORGE C. BIEHL Senior Vice President, July 10, 1997
- ----------------------------- Chief Financial Officer and
(George C. Biehl) Corporate Secretary
(Principal Financial Officer)
/s/ EDWARD A. JANOV Vice President, Controller July 10, 1997
- ----------------------------- and Chief Accounting Officer
(Edward A. Janov) (Principal Accounting Officer)
/s/ RALPH C. BATASTINI Director July 10, 1997
- -----------------------------
(Ralph C. Batastini)
/s/ MANUEL J. CORTEZ Director July 10, 1997
- -----------------------------
(Manuel J. Cortez)
S-4
/s/ LLOYD T. DYER Director July 10, 1997
- -----------------------------
(Lloyd T. Dyer)
/s/ KENNY C. GUINN Chairman of the Board July 10, 1997
- ----------------------------- of Directors
(Kenny C. Guinn)
/s/ THOMAS Y. HARTLEY Director July 10, 1997
- -----------------------------
(Thomas Y. Hartley)
/s/ MICHAEL B. JAGER Director July 10, 1997
- -----------------------------
(Michael B. Jager)
/s/ LEONARD R. JUDD Director July 10, 1997
- -----------------------------
(Leonard R. Judd)
/s/ JAMES R. LINCICOME Director July 10, 1997
- -----------------------------
(James R. Lincicome)
/s/ CAROLYN M. SPARKS Director July 10, 1997
- -----------------------------
(Carolyn M. Sparks)
/s/ ROBERT S. SUNDT Director July 10, 1997
- -----------------------------
(Robert S. Sundt)
S-5
The Plan
Each person whose signature appears below constitutes and appoints
Michael O. Maffie and George C. Biehl his true and lawful attorneys-in-fact
and agents, each acting alone, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to
do and perform each and every act and thing necessary and requisite to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, the
Southwest Gas Corporation Employees' Investment Plan Committee has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Las Vegas, State
of Nevada, on the 10th day of July, 1997.
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
COMMITTEE
GEORGE C. BIEHL
-------------------------
George C. Biehl
JAMES P. KANE
-------------------------
James P. Kane
FRED W. COVER
-------------------------
Fred W. Cover
THOMAS R. SHEETS
-------------------------
Thomas R. Sheets
S-6
Exhibit 4.1
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
Amended and Restated -- Effective January 1, 1989
Amended -- Effective January 1, 1989
Amended -- Effective April 1, 1992
Amended and Restated -- Effective December 1, 1994
Amended and Restated -- Effective July 1, 1996
INTRODUCTION
The Southwest Gas Corporation Employee's Investment Plan, as amended and
restated here, constitutes a continuation of the Plan as originally effective
April 1, 1965. The Plan is a profit sharing plan with a cash or deferred
arrangement.
Effective January 1, 1989, the Plan was amended and restated. The
purpose of the amendment was to change Plan provisions in light of tax law
changes and to comply with the provisions of the Tax Reform Act of 1986,
Omnibus Reconciliation Act and various Regulations requiring changes to
documentation. This document makes additional changes to the Plan which
include changes necessary for the plan to comply with subsequent tax law
changes. This restatement of the Plan shall be effective
July 1, 1996; provided, however, that if a provision of this restatement of
the Plan has a specific effective date other than July 1, 1996, the date so
specified shall be the effective date of such provision.
TABLE OF CONTENTS
-----------------
ARTICLE Page
- ------- ----
1. DEFINITIONS
------------
Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliated Company. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Alternate Payee . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company Matching Contributions. . . . . . . . . . . . . . . . . . . . 3
Company Matching Contributions Account. . . . . . . . . . . . . . . . 3
Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Deferral Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Entry Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Five Percent Owner. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Frozen After Tax Account. . . . . . . . . . . . . . . . . . . . . . . 6
Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Leased Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . 6
Normal Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . 6
Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Period of Severance . . . . . . . . . . . . . . . . . . . . . . . . . 7
Permanently and Totally Disabled. . . . . . . . . . . . . . . . . . . 8
Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Qualified Consent . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Qualified Domestic Relations Order (QDRO) . . . . . . . . . . . . . . 8
Rollover Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Spouse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Total Vested Account Balance. . . . . . . . . . . . . . . . . . . . .11
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Trust Fund or Funds . . . . . . . . . . . . . . . . . . . . . . . . .11
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
USERRA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Valuation Date. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Valuation Period. . . . . . . . . . . . . . . . . . . . . . . . . . .11
Vested. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Voice Response System . . . . . . . . . . . . . . . . . . . . . . . .11
2. PARTICIPATION
-------------
2.01 Eligibility to Become a Participant. . . . . . . . . . . . . .12
2.02 Participation in the Plan. . . . . . . . . . . . . . . . . . .12
2.03 Reemployment . . . . . . . . . . . . . . . . . . . . . . . . .13
2.04 Employment After Normal Retirement Age . . . . . . . . . . . .13
3. CONTRIBUTIONS
-------------
3.01 Contribution of Participants' Deferrals. . . . . . . . . . . .14
3.02 Company Matching Contributions . . . . . . . . . . . . . . . .15
3.03 Maximum Amount of Participant Deferrals. . . . . . . . . . . .16
3.04 Limitation on Deferrals. . . . . . . . . . . . . . . . . . . .18
3.05 Limitation on Company Matching Contributions . . . . . . . . .28
3.06 Limitation on Annual Additions . . . . . . . . . . . . . . . .36
3.07 Allocation of Forfeitures. . . . . . . . . . . . . . . . . . .40
3.08 Rollover Contributions . . . . . . . . . . . . . . . . . . . .40
3.09 Employer Error . . . . . . . . . . . . . . . . . . . . . . . .41
3.10 Inclusion of Ineligible Employee . . . . . . . . . . . . . . .42
4. INVESTMENT OF CONTRIBUTIONS AND VALUATION OF ACCOUNTS
-----------------------------------------------------
4.01 Participants' Accounts . . . . . . . . . . . . . . . . . . . .43
4.02 Investment Funds . . . . . . . . . . . . . . . . . . . . . . .43
4.03 Investment of Company Matching Contributions . . . . . . . . .44
4.04 Allocation of Investment Income on a Valuation Date. . . . . .44
4.05 Limitation on Participant Investment Instructions. . . . . . .45
5. WITHDRAWALS, LOANS AND QUALIFIED DOMESTIC RELATIONS ORDERS
----------------------------------------------------------
5.01 Withdrawal of Frozen After Tax Contributions . . . . . . . . .46
5.02 Withdrawal of Company Matching Contributions . . . . . . . . .46
5.03 Loans to Participants. . . . . . . . . . . . . . . . . . . . .47
5.04 Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . .49
5.05 Qualified Domestic Relations Orders. . . . . . . . . . . . . .53
ii
6. VESTING OF RETIREMENT, DISABILITY, DEATH, AND TERMINATION OF
EMPLOYMENT BENEFITS
------------------------------------------------------------
6.01 Vesting Due to Attainment of Normal Retirement Age and Normal
Retirement Benefits. . . . . . . . . . . . . . . . . . . . . .55
6.02 Vesting Due to Disability and Disability Benefits. . . . . . .55
6.03 Vesting Due to Death and Death Benefits. . . . . . . . . . . .56
6.04 Vesting Upon Termination of Employment and Termination of
Employment Benefits. . . . . . . . . . . . . . . . . . . . . .56
6.05 Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . .57
6.06 Reinstatement of Forfeited Accounts. . . . . . . . . . . . . .58
7. DISTRIBUTION OF BENEFITS
-------------------------
7.01 Form of Distribution . . . . . . . . . . . . . . . . . . . . .60
7.02 Timing of Distributions. . . . . . . . . . . . . . . . . . . .60
7.03 Eligible Rollover Distributions. . . . . . . . . . . . . . . .62
8. PLAN ADMINISTRATION
-------------------
8.01 Appointment of Committee . . . . . . . . . . . . . . . . . . .64
8.02 Powers and Duties. . . . . . . . . . . . . . . . . . . . . . .64
8.03 Actions by the Committee . . . . . . . . . . . . . . . . . . .66
8.04 Interested Committee Members . . . . . . . . . . . . . . . . .66
8.05 Investment Manager . . . . . . . . . . . . . . . . . . . . . .67
8.06 Indemnification. . . . . . . . . . . . . . . . . . . . . . . .67
8.07 Conclusiveness of Action . . . . . . . . . . . . . . . . . . .67
8.08 Payment of Expenses. . . . . . . . . . . . . . . . . . . . . .68
8.09 Claims for Benefits. . . . . . . . . . . . . . . . . . . . . .68
8.10 Request for Review of Denial . . . . . . . . . . . . . . . . .69
8.11 Decision on Review of Denial . . . . . . . . . . . . . . . . .69
8.12 Notice of Time Limit . . . . . . . . . . . . . . . . . . . . .70
8.13 Corrections Pursuant to Remedial Programs. . . . . . . . . . . 70
9. AMENDMENT, TERMINATION, AND MERGER OF THE PLAN
----------------------------------------------
9.01 Right to Amend the Plan. . . . . . . . . . . . . . . . . . . .71
9.02 Right to Terminate the Plan. . . . . . . . . . . . . . . . . .71
9.03 Plan Merger and Consolidation. . . . . . . . . . . . . . . . .71
10. TRUST FUND AND THE TRUSTEE
--------------------------
10.01 Selection of Trustee. . . . . . . . . . . . . . . . . . . . . .73
11. TOP-HEAVY PLAN REQUIREMENTS
---------------------------
11.01 General Rule. . . . . . . . . . . . . . . . . . . . . . . . . .74
11.02 Vesting Provisions. . . . . . . . . . . . . . . . . . . . . . .74
iii
11.03 Minimum Contribution Provision. . . . . . . . . . . . . . . . .74
11.04 Limitation on Compensation. . . . . . . . . . . . . . . . . . .75
11.05 Limitation on Contributions . . . . . . . . . . . . . . . . . .75
11.06 Coordination with Other Plans . . . . . . . . . . . . . . . . .76
11.07 Determination of Top-Heavy Status. . . . . . . . . . .. . . . .77
11.08 Definition of Key Employee . . . . . . . . . .. . . . . . . . .80
11.09 Definition of Non-Key Employee . . . .. . . . . . . . . . . . .81
12. USERRA
-------
12.01 Qualified Military Service . . . . . . . . . . . . . . . . . . 82
12.02 Eligibility and Vesting. . . . . . . . . . . . . . . . . . . . 82
12.03 Make-up Deferrals and Company Matching Contributions . . . . . 82
12.04 Loan Repayment Suspension. . . . . . . . . . . . . . . . . . . 84
13. MISCELLANEOUS
-------------
13.01 Limitation on Distributions . . . . . . . . . . . . . . . . . .85
13.02 Limitation on Reversion of Contributions. . . . . . . . . . . .85
13.03 Voluntary Plan. . . . . . . . . . . . . . . . . . . . . . . . .86
13.04 Nonalienation of Benefits . . . . . . . . . . . . . . . . . . .87
13.05 Inability to Receive Benefits . . . . . . . . . . . . . . . . .87
13.06 Unclaimed Benefits. . . . . . . . . . . . . . . . . . . . . . .87
13.07 Limitation of Rights. . . . . . . . . . . . . . . . . . . . . .88
13.08 Invalid Provisions. . . . . . . . . . . . . . . . . . . . . . .89
13.09 One Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . .89
13.10 Use and Form of Words . . . . . . . . . . . . . . . . . . . . .89
13.11 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . .89
13.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . .89
SCHEDULE A - INVESTMENT FUNDS
- -----------------------------
Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92
Designation of Investment Funds . . . . . . . . . . . . . . . . . . . . . . 92
Transfer Between and Among Investment Funds . . . . . . . . . . . . . . . . 92
iv
ARTICLE 1
----------
DEFINITIONS
------------
When used in this document the following words and phrases have the meaning
specified below. Additional words and phrases may be defined in the text of
the Plan.
ACCOUNTS means a Participant's Company Matching Contributions Account,
Deferral Account, Frozen After Tax Account, and Rollover Account.
AFFILIATED COMPANY means the Company, any corporation that is included in a
controlled group of corporations within the meaning of Code Section 414(b) of
which group the Company is also a member, any trade or business that is under
common control with the Company within the meaning of Code Section 414(c), any
member of an affiliated service group within which the Company is also
included within the meaning of Code Section 414(m), and any other entity
required to be aggregated with the Company pursuant to regulations under Code
Section 414(o).
ALTERNATE PAYEE means any Spouse, former Spouse, child or other dependent of a
Participant having rights to receive all, or a portion of, a Participant's
benefits payable under this Plan pursuant to a Qualified Domestic Relations
Order.
BENEFICIARY means the person, persons, or entity designated by the Participant
to receive any death benefit that may become payable under the Plan. The
Beneficiary of a married Participant will be his Spouse unless the Participant
designates a Beneficiary other than his Spouse and the Spouse executes a
Qualified Consent. The Spouse may revoke such consent at any time prior to
the payment of any benefits to the designated Beneficiary. The Committee may
dispense with the Spouse's consent if the Spouse cannot be located, or for
such other reasons as provided in Treasury Regulations. A Participant may
designate primary and contingent Beneficiaries. If more than one Beneficiary
is named, the Participant may specify the sequence and/or proportion in which
payments will be made to each Beneficiary. In the absence of a specification
1
of sequence or proportions, payments will be made in equal shares to all named
Beneficiaries. If no Beneficiary has been designated or if the Committee is
unable to locate a designated Beneficiary or if no designated Beneficiary is
living at the time of the Participant's death, payment of such death benefit,
if any, to the extent permitted by law, will be made to the Participant's
surviving Spouse or, if none, the Participant's estate. Any minor's share may
be paid to such adult or adults as have, in the opinion of the committee,
assumed custody and support of such minor. However, the Committee reserves
the right to delay the payment of any minor's share until the receipt of a
court order designating the adult or adults to whom such payment shall be
made. Any death benefit that becomes payable to executors or administrators
will be paid in one lump sum. The Committee may require proof of death before
payment of any death benefit under the Plan. The Committee shall have the
rights set forth in Article 12.05 with respect to an incompetent
Beneficiary(ies).
BOARD means the Board of Directors of Southwest Gas Corporation.
BUSINESS DAY means a workday in which the Wall Street Stock Exchange is open,
ending at 4:00 p.m. Eastern Standard Time. All transactions occurring after
4:00 p.m. Eastern Standard Time on a Business Day will be processed on the
following Business Day.
CODE means the Internal Revenue Code of 1986, as periodically amended.
COMMITTEE means the Employees' Investment Plan Committee as described in
Article 8.
COMPANY means Southwest Gas Corporation and any other Affiliated Company, unit
or division of the Company which adopts the Plan by resolution of its board of
directors, provided such resolution is accepted by the Board. Except as
otherwise provided in the terms and conditions prescribed by Southwest Gas
Corporation, all provisions of the Plan will apply to such Affiliated Company
and its Employees.
2
COMPANY MATCHING CONTRIBUTIONS means contributions made by the Company
pursuant to Article 3.02.
COMPANY MATCHING CONTRIBUTIONS ACCOUNT means the account maintained for a
Participant which is: (a) credited with Company Matching Contributions and
forfeitures; (b) adjusted for investment results; and (c) charged with
distributions and withdrawals.
COMPENSATION means:
(a) For purposes of determining an Eligible Employee's benefits under the
Plan, the actual wages paid to an Eligible Employee during the applicable
period, including sales incentive payments, but excluding pay for
overtime hours, flexible benefit dollars, bonuses, or other special
payments, and the Company's contributions toward insurance, retirement,
and other fringe benefits or employee welfare plans or programs other
than severance pay arrangements.
(b) For purposes of Section 3.04, Section 3.05, Section 3.06, and Article 11
only, an Eligible Employee's earned income, wages, salaries, fees for
professional services, and other amounts received for personal services
actually rendered in the course of employment with the Company
(including, but not limited to, overtime, other special payments,
bonuses, incentive compensation, commissions on insurance premiums, or
tips), whether actually paid in cash or in kind during the Plan Year by
the Company, excluding:
(i) Company contributions to a plan of deferred compensation;
(ii) Any group insurance or other health and welfare plan maintained
by the Company;
(iii) Distributions from a plan of deferred compensation;
(iv) Any amounts realized from the exercise of a nonqualified stock
option;
(v) The sale, exchange, or other disposition of stock acquired under
a qualified stock option;
(vi) Other amounts that receive special tax benefits; or
(vii) Any contributions made toward the purchase of an annuity
described in Code Section 403(b) whether or not such amounts
3
are actually excludable from the gross income of the Eligible
Employee.
Compensation will mean only Compensation actually paid or includable in gross
income in the Plan Year. In no case will amounts deferred pursuant to Code
Section 125 be included as Compensation under this subsection (b).
Notwithstanding any language in this subsection (b) to the contrary, effective
for Plan Years beginning after December 31, 1996, "Compensation" for the
purpose described in this subsection shall include an Eligible Employee's
elective deferrals under Code Section 402(g)(3), and amounts that pursuant to
Code Sections 125 or 457 are contributed or deferred (at the Eligible
Employee's election) and are not includible in the Eligible Employee's gross
income in the tax year contributed or deferred.
(c) The annual Compensation taken into account under the Plan for any Plan
Year beginning on or after January 1, 1989, shall not exceed the
maximum dollar amount ($200,000 for the year beginning in 1989 and any
other amount that applies for a later year, including the limit of
$150,000 that applies for the year beginning in 1994) that is permitted
as of the beginning of the year under Code Section 401(a)(17)
(determined after giving effect to any statutory changes affecting Code
Section 401(a)(17) and any indexing or other adjustments pursuant to
Code Section 401(a)(17) that are applicable for the year of the
determination). In the case of a short Plan Year or other period of
less than 12 months requiring a reduction of the Code Section
401(a)(17) annual limit, the otherwise applicable limit shall be
prorated by multiplying it by a fraction, the numerator of which is the
number of months in the short period and the denominator of which is
12. Moreover, effective January 1, 1987, to December 31, 1996, in
determining an Employee's Compensation for purposes of the Code Section
401(a)(17) limit, the rules of Code Section 414(q)(6) (requiring the
aggregation of Compensation paid to family members of certain Five
Percent Owners and the ten most highly compensated Employees) shall
apply, except that in applying such rules, the term "family" shall
include only the Spouse of the Employee and any lineal descendants of
the Employee who have not attained age 19 before the close of the year.
4
If, as a result of the application of such rules, the adjusted annual
Code Section 401(a)(17) Compensation limit is exceeded, then such limit
shall be prorated among the affected individuals in proportion to each
such individual's Compensation as determined prior to the application
of the Code Section 401(a)(17) limit.
Effective for Plan Years beginning after December 31, 1996, the aforesaid
family aggregation rules shall no longer apply.
DEFERRAL ACCOUNT means the account maintained for a Participant that is: (a)
Credited with Company contributions into the Plan attributable to the
Participant's Deferrals under Section 3.01, (b) Adjusted for investment
results, and (c) Adjusted for distributions and withdrawals.
DEFERRALS means an amount contributed to this Plan by the Company in lieu of
being paid to a Participant as salary or wages. Deferrals will be made under
salary reduction arrangements between each Eligible Employee and the Company.
Section 3.01 contains the provisions under which Deferrals may be made.
Deferrals consist of Matched Deferrals as described in Section 3.01(a) and
Unmatched Deferrals, if any, as described in Section 3.01(b).
EFFECTIVE DATE means April 1, 1965. Notwithstanding the foregoing, the
effective date of this restatement of the Plan shall be July 1, 1996,
provided, however, that if a provision of this restatement of the Plan has a
specific effective date other than July 1, 1996, the date so specified shall
be the effective date of such provision.
ELIGIBLE EMPLOYEE means any Employee who is employed by the Company (excluding
any person included in a unit of employees covered by an agreement that the
United States Secretary of Labor finds to be a collective bargaining agreement
between employee representatives and the Company, if such agreement does not
call for inclusion in the Plan and there is evidence that retirement benefits
were the subject of good faith bargaining between the Company and employee
representatives) and who has met the eligibility requirements of Section 2.01
of the Plan.
5
EMPLOYEE means any person who is employed by an Affiliated Company, including
a Leased Employee of such Company.
ENTRY DATE means the first day of the first full pay period after becoming
eligible to participate in the Plan.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
FIVE PERCENT OWNER means any person who owns (or is considered as owning
within the meaning of Code Section 318) more than five percent (5%) of the
outstanding stock of the Company or stock possessing more than five percent
(5%) of the total combined voting power of all stock of the Company.
FROZEN AFTER TAX ACCOUNT means the account maintained for a Participant which
is: (a) credited with contributions attributable to the Participant's after-tax
contributions under the terms of the Plan as it was constituted on
December 31, 1984; (b) adjusted for distributions and withdrawals; and (c)
adjusted for investment results. Effective January 1, 1985, Participant
after-tax contributions shall not be allowed.
HOUR OF SERVICE means an hour for which an Employee is directly or indirectly
paid, or entitled to payment, by the Company for the performance of duties.
These hours shall be credited to the Employee for the Plan Year in which the
duties are performed. The computation of nonwork hours included in this
definition will be computed in accordance with the provisions of Department of
Labor Regulation Section 2530.200b-2.
LEASED EMPLOYEE means a leased employee within the meaning of Code Section
414(n).
NORMAL RETIREMENT AGE means age sixty-five (65).
Normal Retirement Date means the first day of the month following attainment
6
of Normal Retirement Age.
PARTICIPANT means any former or current Eligible Employee whose Accounts have
not been subsequently distributed and forfeited in full.
PERIOD OF SEVERANCE:
(a) "Period of Severance" means, for any Employee, the period beginning on
the Employee's severance from Service date and ending on the date the
Employee next completes an Hour of Service. An Employee's severance
from Service date will occur on the earlier of:
(i) The date on which the Employee quits, retires, is discharged,
or dies, or
(ii) The first anniversary of the first date of a period in which
an Employee remains absent from Service (with or without pay)
with the Company for any reason other than resignation,
retirement, discharge, or death, such as vacation, holiday,
sickness, disability, leave of absence, or layoff.
A one (1) year Period of Severance is a twelve (12) consecutive-month
period beginning on the Employee's severance from Service date in which
the Employee does not perform an Hour of Service. A Period of
Severance shall be calculated in a manner that complies with the Family
and Medical Leave Act of 1994.
(b) Subject to verification by the Committee, an Employee will be deemed
not to have incurred a Period of Severance during the twenty four (24)
consecutive-month period that the Employee is first absent from
employment by reason of:
(i) The Employee's pregnancy;
(ii) Birth of a child of the Employee;
7
(iii) Placement of a child with the Employee in connection with the
adoption of the child by the Employee; or
(iv) Caring for such child for a period beginning immediately
following the birth or placement for adoption.
PERMANENTLY AND TOTALLY DISABLED means a disability due to sickness or injury
which renders a Participant incapable of performing any Service for the
Company for which he is qualified by education, training, or experience.
Evidence of disability satisfactory to the Committee will be required.
PLAN means the Plan designated as the Southwest Gas Corporation Employees'
Investment Plan as described in this document and as it may be periodically
amended.
PLAN YEAR means the period beginning on January 1 and ending on December 31.
The Plan Year will be the limitation year for purposes of Code Section 415 and
Section 3.06 of the Plan.
QUALIFIED CONSENT means a written consent executed by a Participant's Spouse
in the presence of an authorized Plan representative or notary public which by
its terms acknowledges the effect of the consent. Such consent must designate
any non-Spouse Beneficiary(ies), any class of non-Spouse Beneficiaries, or any
contingent Beneficiaries which may not be changed without a second Qualified
Consent unless the first Qualified Consent permits the Participant to: (a)
designate a different Beneficiary without the Spouse's consent; and (b)
acknowledges that the Spouse has the right to limit consent to a specific
Beneficiary. A Qualified Consent shall be valid only with respect to the
Spouse who signs it.
QUALIFIED DOMESTIC RELATIONS ORDER (QDRO) means any judgment, decree or order
(including approval of a property settlement agreement), which relates to the
provision of child support, alimony or marital property rights made pursuant
to State domestic relations law (including community property law), which
8
recognizes an Alternate Payee's right to, or assigns to an Alternate Payee the
right to, all or a portion of the benefits otherwise receivable under this
Plan and which specifies: (a) the name and last known address of the
Participant and each Alternate Payee covered by the QDRO; (b) the amount or
percentage of the Participant's benefits to be paid to each Alternate Payee,
or the manner in which the amount or percentage is to be determined; and (c)
the number of payments or period to which the QDRO applies. The QDRO may not
require this Plan to provide increased benefits or any type or form of benefit
or option not provided for in Article 7 or require payment of benefits
required to be paid to another Alternate Payee by a previous QDRO.
ROLLOVER ACCOUNT means the account maintained for a Participant which is: (a)
credited with any Article 3.08 rollover tendered to and accepted by the Trust;
(b) adjusted for investment results; and (c) charged with distributions and
(if allowed) withdrawals.
SERVICE means, with respect to any Employee, his period or periods of
employment with an Affiliated Company that are counted as "Service" in
accordance with the following rules:
(a) Each Employee shall be credited with Service under the Plan for the
period or periods during which such Employee maintains an employment
relationship with the Affiliated Company. An Employee's employment
relationship will commence on the date the Employee first renders one
Hour of Service and ends on his severance from Service date. Service
will also include the following periods:
(i) Periods of leave of absence with or without pay granted to the
Employee by the Affiliated Company in a like and
nondiscriminatory manner for any purpose including, but not
limited to, sickness, accident, or military leave. Such
Employee shall not be considered to have terminated employment
during such leave of absence unless he fails to return to the
employ of the Company at or prior to the expiration date of
such leave, in which case he shall be deemed to have
terminated as of the date of commencement of such leave.
9
(ii) Periods during which a person is Permanently and Totally
Disabled. Such person shall not be considered to have
terminated employment during such period of disability unless
he fails to return to the employ of the Company at the
expiration of such period, in which case he shall be deemed to
have terminated as of his date of recovery.
(iii) The period of time between an Employee's severance from
Service date by reason of a resignation, discharge, or
retirement and his reemployment date, if the Employee returns
to Service on or before such first anniversary date.
(b) In the case of a person who incurs five (5) consecutive one (1) year
Periods of Severance, whose whole years of Service prior to his
severance are less than five (5) years, who is not Vested pursuant to
Section 6.04 at the time he incurs such five (5) consecutive one (1)
year Periods of Severance, but is then reemployed by the Company; his
Service prior to such five (5) consecutive one (1) year Periods of
Severance shall be forfeited and shall not be included in determining
his Service under paragraph (a) above. Such person's Service at the
time of a one (1) year Period of Severance shall not include any
Service disregarded by virtue of the application of this subparagraph
to any prior one (1) year Period of Severance.
(c) Subject to (b) above, all periods of an Employee's Service, whether or
not consecutive, will be aggregated. Service will be measured in
elapsed years and fractions of years whereby each twelve (12) complete
calendar months will constitute one year, each completed calendar month
will constitute one-twelfth (1/12) of a year, and partial calendar
months which when aggregated equal thirty (30) days will constitute
one-twelfth (1/12) of a year.
SPOUSE means the person to whom the Participant has been legally married
throughout the one year period ending on the earlier of the date the
Participant receives or begins to receive his benefit payment from the Plan,
or the date of the Participant's death.
10
TOTAL VESTED ACCOUNT BALANCE means the value of the Participant's Deferral
Account, Frozen After Tax Account, and Rollover Account, as well as the Vested
portion of his Company Matching Contributions Account.
TRUST means one or more Trusts established pursuant to the Trust Agreement for
purposes of funding the benefits of this Plan.
TRUST AGREEMENT means one or more Trust Agreements executed by the Company and
provided for the administration of the Trust.
TRUST FUND OR FUNDS means the total amount of contributions made by the
Participants and the Company together with the net earnings on them, that will
be used to provide the benefits to Participants and their Beneficiaries under
the Plan.
TRUSTEE means the Trustee of the Trust and any successor Trustee as appointed
in the Trust Agreement.
USERRA means the Uniform Services Employment and Reemployment Rights Act of
1994.
VALUATION DATE means the close of business of each Business Day.
VALUATION PERIOD means daily.
VESTED means nonforfeitable. The Vested portion of a Participant's Account is
determined in accordance with the provisions of Article 6.
VOICE RESPONSE SYSTEM means a system of telephonic or other verbal or
electronic communication with the Plan Trustee or recordkeeper that has been
approved by the Committee for the purpose of making certain elections under
the Plan.
11
ARTICLE 2
---------
PARTICIPATION
-------------
2.01 ELIGIBILITY TO BECOME A PARTICIPANT
(a) ALL PARTICIPANTS
Effective April 1, 1992, any Eligible Employee shall be eligible to
participate in the Plan. Notwithstanding the foregoing, an
individual who is a Leased Employee shall not be eligible to
participate in the Plan and neither shall an individual who is a
nonresident alien who has received no earned income within the
meaning of Code Section 911(d)(2) from the Company which constitutes
Code Section 861(a)(3) income from sources within the United States.
(b) AFFILIATED COMPANY EMPLOYEES
If a company other than Southwest Gas Corporation becomes an
Affiliated Company after December 31, 1988, any employee of such
company may elect to become an Eligible Employee as of the later of
the employee's date of hire by such company or the date such company
adopts the Plan.
2.02 PARTICIPATION IN THE PLAN
An Eligible Employee shall become a Participant on the Entry Date
coincident with or first following successful completion of enrollment
through the Voice Response System, authorizing the Company to withhold
such contributions from his Compensation and to pay the same amount to
the Trustee, designating the allocation of these contributions between
the Investment Funds, and designating a Beneficiary.
12
2.03 REEMPLOYMENT
If an Eligible Employee who met the eligibility requirements of Section
2.01 and whose employment has terminated is subsequently rehired as an
Eligible Employee, he may elect to participate pursuant to Section 2.02
and enter the Plan on the following Entry Date. A rehired Employee who
had not met the eligibility requirements of Section 2.01 before his
employment terminated will be eligible to enter the Plan on the first
Entry Date after he satisfies the requirements of Section 2.01. If an
Eligible Employee terminates employment and is rehired in the same Plan
Year, he may elect to participate pursuant to Section 2.02 on the date he
is rehired, and enter the Plan on the following Entry Date.
2.04 EMPLOYMENT AFTER NORMAL RETIREMENT AGE
A Participant who continues in the employ of the Company after Normal
Retirement Age will continue to be eligible to be a Participant.
13
ARTICLE 3
---------
CONTRIBUTIONS
-------------
3.01 CONTRIBUTION OF PARTICIPANT'S DEFERRALS
(a) MATCHED DEFERRALS
Upon enrollment or reenrollment in the Plan, each Participant must
elect to reduce his Compensation in a fixed whole percentage of not
less than 2 percent and not more than 6 percent. The Company will
make payments to the Plan within the time frame required by
applicable laws and regulations of the amount of the reduction, to
be credited to the Participant's Deferral Account. Amounts deferred
under this subsection will be contributed as Matched Deferrals.
(b) UNMATCHED DEFERRALS
A Participant making Matched Deferrals at the maximum percentage
rate may elect to further reduce his Compensation in a fixed whole
percentage of not less than 1 percent and not more than 10 percent.
The Company will make payments to the Plan within the time frame
required by applicable laws and regulations of the amount of the
reduction to be credited to the Participant's Deferral Account.
Amounts deferred under this subsection will be contributed as
Unmatched Deferrals.
(c) CHANGE IN PERCENTAGE OR SUSPENSION OF DEFERRALS
A Participant's Deferral percentage will remain in effect until the
Participant elects to change the percentage. A Participant may
elect to change or suspend his Deferral percentage or resume all
suspended Deferrals through the Voice Response System. Changes to
14
a Participant's Deferral percentage may be made on a daily basis
and will be effective as soon as practicable thereafter, but in no
event will such change become effective prior to the beginning of
the Participant's next full pay period.
(d) STATUS OF DEFERRALS
Participant Deferrals under this section will be made by payroll
deductions authorized by the Participant and will be paid to the
Plan by the Company. Participant Deferrals constitute Company
contributions under the Plan and are intended to qualify as
elective contributions under Code Section 401(k).
3.02 COMPANY MATCHING CONTRIBUTIONS
(a) The Company will, on behalf of eligible Participants, contribute an
amount which equals the sum of the amounts to be allocated to the
Company Matching Contributions Account of each eligible
Participant. The amount allocated to the Company Matching
Contributions Account for each eligible Participant will equal
fifty percent (50%) of the eligible Participant's Matched Deferrals
plus forfeitures allocated under Section 3.07. The maximum Company
Matching Contribution under this Plan equals three percent (3%) of
a Participant's Compensation. For purposes of this Section
3.02(a), the term "eligible Participant" means any Participant
other than a Participant who is an officer of the Company or who
has been selected to participate in the Company's executive
deferral plan.
(b) Payment of Company Matching Contributions for a Plan Year ending in
or with the Company's taxable year will be made at any time during
such taxable year or after its close, but not later than the date,
including extensions, on which the Company's federal income tax
return is due with respect to such taxable year.
(c) Each Company Matching Contribution will be a complete discharge of
15
the financial obligations of the Company under the Plan with
respect to the period for which it is made.
3.03 MAXIMUM AMOUNT OF PARTICIPANT DEFERRALS
(a) AMOUNT. No Eligible Employee who is a Participant will be
permitted to make Deferrals under this Plan during any calendar
year in excess of the sum of: (I) seven thousand dollars ($7,000);
and (ii) the accumulated increments, if any, as of the last day of
such calendar year, which have been added to the seven thousand
dollars ($7,000) for cost-of-living increases under Code Section
402(g). The foregoing limit shall not apply to Deferrals of
amounts attributable to service performed in 1986 and described in
Section 1105(c)(5) of the Tax Reform Act of 1986.
(b) DEFINITIONS. "Excess Deferrals" mean the amount by which:
(i) The sum of: (A) a Participant's Deferrals under the Plan for
a given calendar year; and (B) his or her Deferrals under any
other Code Section 401(k) qualified plan, a simplified
employee pension plan, a Code Section 501(c)(18) plan or a
Code Section 403(b) annuity for such calendar year exceeds
(ii) The sum of: (A) seven thousand dollars ($7,000); and (B) the
accumulated increments, if any, as of the last day of such
calendar year, which have been added to the seven thousand
dollars ($7,000) for cost-of-living increases under Code
Section 402(g).
(c) TREATMENT OF EXCESS DEFERRALS. If a Participant has made Excess
Deferrals, the following provisions shall apply:
16
(i) In the event that a Participant (or the Company under the
circumstances described in Treas. Reg. 1.402(g)-1(e)(2))
notifies the Committee in writing on or prior to March 1 of a
given calendar year that: (A) he or she has Excess Deferrals
included with his or her Deferrals under this Plan for the
immediately preceding calendar year; and (B) the amount of
such Excess Deferrals which are to be allocated to this Plan
for such immediately preceding calendar year, the Committee
shall direct the Trustee to make a single payment from the
Trust Fund, adjusted for any applicable Trust Fund investment
income or loss thereon, to the Participant by April 15
immediately following the calendar year in which the Excess
Deferrals occurred.
(ii) Excess Deferrals to be distributed under this Section 3.03
shall be adjusted to include any applicable Trust Fund
investment income or loss thereon for the immediately
preceding calendar year. The investment income or loss
attributable to the Excess Deferrals for the immediately
preceding calendar year shall be the sum of the income or
loss allocable to the Participant's Deferral Account for the
immediately preceding calendar year multiplied by a fraction:
(A) the numerator of which is the Participant's Excess
Deferrals; and (B) the denominator of which is the balance in
the Participant's Deferral Account on the last day of the
immediately preceding calendar year reduced by the income and
increased by the loss allocable to said Deferral Account for
the calendar year. The distribution shall reduce the
Participant's Deferral Account as of the date it is
distributed. The portion of a Participant's Excess Deferrals
to be distributed in accordance with this Section 3.03 shall
be reduced by any Excess Contributions previously distributed
to the Participant with respect to the same Plan Year under
Section 3.04. The lump-sum distribution amount shall be
debited from the Participant's Deferral Account as of the
date it is distributed. The Committee shall establish such
17
rules and give such timely directions to the Trustee as the
Committee, in its sole discretion, deems appropriate to carry
out the provisions of this paragraph.
(iii) Any Excess Deferrals which are distributed to the Participant
as provided above shall not be included in the Participant's
taxable income for purposes of federal income taxes for the
calendar year in which the deferrals are distributed but
shall be included in his or her taxable income for the
calendar year in which the Excess Deferrals were made.
Earnings and losses attributable to the distributed Excess
Deferrals shall be included in the Participant's taxable
income in the calendar year in which the deferrals are
distributed.
3.04 LIMITATION ON DEFERRALS
(a) DEFINITIONS. For purposes of this Section 3.04, the following terms
shall have the following meanings:
(i) "Actual Deferral Percentage" means, with respect to Higher
Compensated Employees and Lower Compensated Employees for a
Plan Year, the average of the ratios (expressed as
percentages), calculated separately for each Employee in the
group applying to him or her and hereafter referred to as the
"Actual Deferral Ratio," of the Employees' Deferrals for the
Plan Year to the Employees' Compensation for the Plan Year.
Notwithstanding the foregoing, if a Higher Compensated
Employee is eligible to participate in two (2) or more plans
of the Employer which are subject to Code Section 401(k), the
Actual Deferral Ratio for the Higher Compensated Employee
will be determined by treating all such plans as a single
plan. If a Higher Compensated Employee or a Lower
Compensated Employee makes no pre-tax deposits during a Plan
Year, the Employee's Actual Deferral Ratio will be zero for
such Plan Year.
18
If during the Determination Year or Look-Back Year, an
individual employed by the Employer is an Employee and is a
Family Member of either a Five Percent Owner, or a Higher
Compensated Employee who is one of the ten (10) most highly
compensated Employees of the Company (ranked on the basis of
Compensation paid by the Company during such year), the
Actual Deferral Ratio for the Five Percent Owner or Higher
Compensated Employee and such Family Member (who together
shall be treated as one Higher Compensated Employee) shall be
the ratio determined by combining the Deferrals and
Compensation of all eligible Family Members.
Effective for Plan Years beginning after December 31, 1996,
the aforesaid family aggregation rules shall no longer apply.
Deferrals will be taken into account in determining a
Participant's Actual Deferral Ratio for a Plan Year only if
such contributions are: (a) allocated to the contributing
Participant's applicable Plan account, as of a date within
such year, i.e.: (b) are not contingent on the Participant's
Plan participation or performance of future services
subsequent to such date; (c) are actually paid to the Trust
by the end of the twelfth (12th) month following the close of
the Plan Year; and (d) relate to Compensation that either
would have been received by the Participant in the Plan Year
(but for being contributed as a Deferral to the Plan) or is
attributable to services performed by the Participant in the
Plan Year and would have been received by the Participant
within two and one-half months after the close of the Plan
Year (but for being contributed to the Plan as a Deferral).
(ii) "Determination Year" means the Plan Year for which the
determination of who are Higher Compensated Employees is
being made.
19
(iii) "Company" means, for purposes of this Section 3.04, the
Company and other employers aggregated under Code Section
414(b), (c), (m) or (o).
(iv) "Excess Contributions" mean the amount of Deferrals of Higher
Compensated Employees made during the Plan Year that cause
the Actual Deferral Percentage for the group to exceed the
level of Deferrals allowed by Section 3.04(b).
(v) "Excess Deferrals" mean the Deferrals defined in Section
3.03.
(vi) "Family Member" means, with respect to any Higher Compensated
Employee, the Higher Compensated Employee's Spouse and lineal
ascendants or descendants and the spouses of such lineal
ascendants or descendants. Legal adoption shall be taken
into account in determining whether an individual is a Family
Member.
(vii) "Higher Compensated Employees" mean employees who in the
Determination Year are eligible to participate in this Plan
(including individuals who are eligible to participate in
this Plan and who would be Higher Compensated Employees but
elect not to participate) and who in the Determination Year
or Look-Back Year:
(A) Were a Five Percent Owner;
(B) Received Compensation from the Company exceeding
seventy five thousand dollars ($75,000) (or such
higher amount adjusted in accordance with regulations
prescribed by the Secretary of Treasury or his or her
delegate under Code Section 414(q));
(C) Received Compensation from the Company exceeding
20
fifty thousand dollars ($50,000) (or such higher
amount adjusted in accordance with regulations
prescribed by the Secretary of Treasury or his or her
delegate under Code Section 414(q)) and were in the
Top Paid Group; or
(D) Were at any time an officer of the Company who
received Compensation during such year exceeding
fifty percent (50%) of the dollar limitation in
effect for such year under Code Section 415(b)(1)(A).
For purposes of this subparagraph (D), the number of
officers shall be limited to fifty (50) Employees (or
if lesser, the greater of three (3) Employees or ten
percent (10%) of the combined total of Employees);
and if for any year no officer of the Employer earns
Compensation greater than the amount referred to in
this subparagraph (D) the highest paid officer of the
Company, if an Employee, shall be treated as a Higher
Compensated Employee.
As an alternative to the above, if: (A) at all times during
any Plan Year, the Company maintained significant business
activities and employed employees in at least two (2)
significantly separate geographic areas; and (B) the Company
satisfies such other conditions as the Secretary of Treasury
or his or her delegate may prescribe, then the Company may
make the following election in determining whether an
Employee is a Higher Compensated Employee for such Plan Year:
(A) item (vii)(B) above shall be applied by substituting
fifty thousand dollars "($50,000)" (or such higher amount
adjusted in accordance with regulations prescribed by the
Secretary of Treasury or his or her delegate under Code
Section 414(q)) for seventy-five thousand dollars
"($75,000)"; and (B) item (vii)(C) above shall not apply.
Notwithstanding the above, an Employee who fits in item
21
(vii)(B), (vii)(C), or (vii)(D) above in the Determination
Year, but not in the Look-Back Year, will not be a Higher
Compensated Employee unless: (A) he or she is a Five Percent
Owner in the Determination Year or the Look-Back Year; or (B)
he or she is one of the one hundred (100) highest paid
Employees of the Employer during the Determination Year.
"Higher Compensated Employees" also means any individuals who
were Employees, separated from service with the Company
before the Determination Year, and were Higher Compensated
Employees in the Plan Year they separated from service with
the Company or any Plan Year ending on or after they attained
age fifty-five (55).
If an Employee is, during a Determination Year or Look-Back
Year, a Family Member of either a Five Percent Owner who is
an active or former Employee or a Higher Compensated Employee
who is one of the ten (10) most highly compensated Higher
Compensated Employees ranked on the basis of Compensation
paid by the Company during such year, then the Family Member
and the Five Percent Owner or top-ten Higher Compensated
Employee shall be aggregated. In such case, the Family
Member and Five Percent Owner or top-ten Higher Compensated
Employee shall be treated as a single Employee receiving
Compensation and Plan contributions or benefits equal to the
sum of such Compensation and contributions or benefits of the
Family Member and Five Percent Owner or top-ten Higher
Compensated Employee.
The determination of who is a Higher Compensated Employee,
including determinations of the number and identity of
Employees in the Top-Paid Group, the top one hundred (100)
Employees, the number of Employees treated as officers, and
the Compensation that is considered, will be made in
accordance with Code Section 414(q) and the regulations
thereunder.
22
Notwithstanding any language to the contrary in this
subsection, effective for Plan Years beginning after December
31, 1996, the term "Higher Compensated Employees" shall for a
given Determination Year mean solely Eligible Employees able
to participate in the Plan during such Plan Year whether or
not participating, and who:
(A) are a Five Percent Owner during the Determination
Year; or
(B) for the Look-Back Year, had compensation exceeding
eighty thousand dollars ($80,000) (this dollar amount
shall be adjusted at the same time and in the same
manner as under Code Section 415(d)) and (if the
Company elects for the Look-Back Year immediately
preceding the Determination Year in a manner
consistent with guidance prescribed by the Internal
Revenue Service; provided such guidance is issued) is
in the Top Paid Group of Eligible Employees in the
Look-Back Year.
In determining which Eligible Employees are Higher
Compensated Employees for the first Plan Year after
December 31, 1996, the family aggregation rules set forth
in this subsection shall not be applied in such Plan Year
or the proceeding Plan Year.
(viii)"Look-Back Year" means the twelve-month period immediately
preceding the Determination Year.
(ix) "Lower Compensated Employees" mean Employees who in the
Determination Year are eligible to participate in the Plan
(including individuals who are eligible to participate in
this Plan and who would be Lower Compensated Employees but
elect not to participate) and who are not Higher Compensated
Employees.
23
(x) "Top Paid Group" means the top twenty percent (20%) of the
Employees ranked on the basis of Compensation during the
year; provided, however, that Employees described in Code
Section 414(q)(8) and Q&A 9(b) of Temporary Treasury
Regulation Section 1.414 (q)-1T are excluded in the manner
provided therein.
(b) 401(k) Nondiscrimination Test. Each Plan Year the annual allocation
derived from a Participant's Deferrals shall satisfy one of the
following tests or any other test which might be prescribed under
Code Section 401(k):
(I) The Actual Deferral Percentage for Higher Compensated
Employees shall not exceed the Actual Deferral Percentage for
Lower Compensated Employees multiplied by 1.25; or
(ii) The Actual Deferral Percentage for Higher Compensated
Employees shall not exceed 2 multiplied by the Actual
Deferral Percentage for Lower Compensated Employees; and the
excess for the Actual Deferral Percentage for Higher
Compensated Employees over the Actual Deferral Percentage for
Lower Compensated Employees shall not exceed 2 percentage
points.
Notwithstanding the foregoing provisions of this subsection, effective
for Plan Years beginning after December 31, 1996, the Actual Deferral
Percentage for Lower Compensated Employees that shall, except as provided
in the following sentence, be used in applying the tests set forth in
this subsection for a Determination Year shall be the Actual Deferral
Percentage for Lower Compensated Employees in the Look-Back Year. The
Company may elect (in a manner consistent with guidance prescribed by the
Internal Revenue Service; provided such guidance is issued) to use, when
applying the tests set forth in this subsection, the Actual Deferral
24
Percentage of Lower Compensated Employees in the Determination Year
rather than that of the Look-Back Year.
(c) Treatment of Excess Contributions. If the limits in Section 3.04(b)
are exceeded in any Plan Year, the following provisions shall apply:
(i) Notwithstanding any provisions of this Plan to the contrary,
if the Committee determines that a Higher Compensated
Employee's Deferrals for any Plan Year will cause this Plan
to fail to meet the nondiscrimination test of Section
3.04(b), the Committee, in its sole discretion, may reduce
(or suspend, if necessary) the rate of future Deferrals of
the Higher Compensated Employee.
The Committee shall make the reduction on a uniform basis.
It shall first apply to Higher Compensated Employees then
contributing the highest rate of Section 3.01 unmatched
Deferrals and then to Higher Compensated Employees then
contributing the next highest rate of Section 3.01 unmatched
Deferrals and so on, in descending order, from the highest
rate. If the reduction of Section 3.01 unmatched Deferrals
is not sufficient, then the reduction shall apply to Higher
Compensated Employees then contributing the highest rate of
Section 3.01 matched Deferrals and then to Higher Compensated
Employees then contributing the next highest rate of Section
3.01 matched Deferrals and so on, in descending order from
the highest rate. The Committee shall establish such rules
as the Committee, in its sole discretion, deems appropriate
to carry out the provisions of this paragraph. For the
purposes of this subsection, the phrases "rate of Section 3.01
Unmatched Deferrals" and "rate of Section 3.01 Matched
Deferrals" shall, for Plan Years beginning after
December 31, 1996, refer to the dollar amount of such
Deferrals.
(ii) In the event that the Deferrals allocated to Higher
25
Compensated Employees for any Plan Year result in Excess
Contributions, the Committee shall direct the Trustee to
distribute the Excess Contributions, adjusted for any
applicable Trust Fund investment income or loss thereon, to
the affected Higher Compensated Employees by March 15
following the Plan Year in which the Excess Contributions
occurred but in no event later than the close of the Plan
Year following the Plan Year in which the Excess
Contributions occurred. To determine the portion of the
Excess Contributions to be distributed to each Higher
Compensated Employee, the Committee shall direct the Trustee
to distribute the Deferrals allocated to Higher Compensated
Employees for the Plan Year in which the Excess Contributions
occurred to the extent necessary to prevent the Actual
Deferral Percentage for the group of Higher Compensated
Employees from exceeding the permissible Actual Deferral
Percentage for the group.
The Committee shall direct the Trustee to make the
distribution on a uniform basis. It shall first be made with
respect to Higher Compensated Employees with the highest
Actual Deferral Ratio for the Plan Year and then with respect
to Higher Compensated Employees with the next highest Actual
Deferral Ratio for the Plan Year and so on, in descending
order from the highest rate until the test in Section 3.04(b)
is satisfied. For the purposes of this subsection, the phrase
"Actual Deferral Ratio" shall for Plan Years beginning after
December 31, 1996, refer to the dollar amount of such
Deferrals.
The portion of the Excess Contributions applicable to each
Higher Compensated Employee shall be distributed to the
Higher Compensated Employee in a single payment. The portion
of each Higher Compensated Employee's Excess Contributions
that is to be distributed in accordance with this Section
3.04 shall be reduced by any Excess Deferrals previously
distributed to the Higher Compensated Employee with respect
to the same Plan Year under Section 3.03.
26
(iii) Excess Contributions to be distributed under this Section
3.04 with respect to a Higher Compensated Employee shall be
adjusted to include any applicable Trust Fund investment
income or loss on such contributions in the immediately
preceding calendar year. The investment income or loss
attributable to the Higher Compensated Employee's Excess
Contributions for the immediately preceding Plan Year shall
be determined by multiplying the income or loss attributable
to the Higher Compensated Employee's Deferrals in such year
by a fraction having as its numerator the Employee's Excess
Contributions for such year and having as its denominator the
sum of: (A) the balance in the Higher Compensated Employee's
Deferral Account at the beginning of the Plan Year, plus (B)
the Higher Compensated Employee's Deferrals for the Plan
Year. The distribution shall reduce the Participant's
Deferral Account as of the date it is distributed. The
Committee shall establish such rules and give such timely
directions to the Trustee as the Committee, in its sole
discretion, deems appropriate to carry out the provisions of
this paragraph.
(iv) In the case of a Higher Compensated Employee whose Actual
Deferral Ratio is determined under the family aggregation
rules, the determination of the amount of Excess
Contributions shall be made by combining the Deferrals and
Compensation of all Family Members, the Excess Contributions
shall be reduced in accordance with the method described in
subparagraphs (c)(I-iii) above and the Excess Contributions
for the family unit shall be allocated among the Family
Members in proportion to the Deferrals of each Family Member
that have been combined to determine the Actual Deferral
Ratio. Effective for Plan Years beginning after December 31,
1996, the aforesaid family aggregation rules shall no longer
apply.
27
3.05 LIMITATION ON COMPANY MATCHING CONTRIBUTIONS
(a) DEFINITIONS. For purposes of this Section 3.05, the following terms
shall have the following meanings:
(i) "Aggregate Limit" means the greater of:
(A) the sum of:
(1) one hundred twenty five percent (125%) of the greater
of: (a) the Actual Deferral Percentage of Lower
Compensated Employees for such Plan Year; or (b) the
Contribution Percentage of Lower Compensated
Employees for such Plan Year; and
(2) two (2) percentage points plus the lesser of
(A)(1)(a) or (A)(1)(b); provided, however, that this
amount shall not exceed two hundred percent (200%) of the
lesser of (A)(1)(a) or (A)(1)(b);
or
(B) the sum of:
(1) one hundred twenty five percent (125%) of the lesser
of: (a) the Actual Deferral Percentage of the Lower
Compensated Employees for such Plan Year; or (b) the
Contribution Percentage of the Lower Compensated
Employees for the Plan Year; and
(2) two (2) percentage points plus the greater of
28
(B)(1)(a) or (B)(1)(b); provided, however, in no
event shall this amount exceed two hundred percent
(200%) of the greater of (B)(1)(a) or (B)(1)(b).
(ii) "Contribution Percentage" means, with respect to Higher
Compensated Employees and Lower Compensated Employees for a
Plan Year, the average of the ratios (expressed as
percentages), calculated separately for each Employee in the
group applying to him or her and hereinafter referred to as
"Contribution Percentage Ratio," of the Company Section 3.02
matching contributions on behalf of the Employee (and
Deferrals, if the Company makes a Section 3.05(d) election )
for the Plan Year to the Employee's Compensation for the Plan
Year. Notwithstanding the foregoing, if a Higher Compensated
Employee is eligible to participate in two (2) or more plans
of the Company which are subject to Code Section 401(m), the
Contribution Percentage Ratio for the Higher Compensated
Employee will be determined by treating all such plans as a
single plan.
If, during the Determination Year or Look-Back Year, an
individual employed by the Company is an Employee and is a
Family Member of either a Five Percent Owner, or a Higher
Compensated Employee who is one of the ten (10) most highly
compensated Employees of the Company (ranked on the basis of
Compensation paid by the Company during such year), the
Contribution Percentage Ratio for the Five Percent Owner or
Higher Compensated Employee and such Family Member (who
together shall be treated as one Higher Compensated Employee)
must be determined by combining the Company Section 3.02
matching contributions, (and Deferrals, if the Company makes
a Section 3.05(d) election) and Compensation of all Family
Members. Except to the extent taken into account in the
immediately preceding sentence, the Company Section 3.02
matching contributions, (and Deferrals, if the Company makes
29
a Section 3.05(d) election) and Compensation of all Family
Members are disregarded in determining the Contribution
Percentage for the groups of Higher Compensated Employees and
Lower Compensated Employees. Effective for Plan Years
beginning after December 31, 1996, the aforesaid family
aggregation rules shall no longer apply. The Company's
Section 3.02 matching contribution will be taken into account
in determining a Participant's Contribution Percentage Ratio
for a Plan Year only if such contribution is made on account
of the Participant's Deferrals for the Plan Year, is (under the
terms of the Plan) allocated to the Participant's applicable
account as of a date within that year, and is actually paid to
the Trust by no later than the twelfth (12th) month following
the close of that year. Qualified matching contributions
which are used to meet the requirements of Code Section
401(k)(3)(A) are not to be taken into account for purposes of
Section 3.05(a).
(iii) "Determination Year" means the Determination Year defined in
Section 3.04.
(iv) "Company" means, for purposes of this Section 3.05, the
Company defined in Section 3.04.
(v) "Excess Aggregate Contributions" mean the amount of the
Company Section 3.02 matching contributions on behalf of
Higher Compensated Employees (and Deferrals of Higher
Compensated Employees, if the Company makes a Section 3.05(d)
election) for a Plan Year that causes the Contribution
Percentage for the group to exceed the limits allowed by
Sections 3.05(b) and (if applicable) 3.05(c).
(vi) "Excess Contributions" mean the contributions defined in
Section 3.04.
30
(vii) "Excess Deferrals" mean the Deferrals defined in Section
3.03.
(viii) "Family Member" means the Family Member defined in Section
3.04.
(ix) "Higher Compensated Employees" mean the Higher Compensated
Employees defined in Section 3.04.
(x) "Look-Back Year" means the Look-Back Year defined in Section
3.04.
(xi) "Lower Compensated Employees" mean the Lower Compensated
Employees defined in Section 3.04.
(b) 401(M) NONDISCRIMINATION TEST. Each Plan Year the Company Section
3.02 matching contributions on behalf of Participants (and
Deferrals, if the Company makes a Section 3.05(d) election) shall
satisfy one of the following tests or any other test which might be
prescribed under Code Section 401(m):
(i) The Contribution Percentage for Higher Compensated Employees
shall not exceed the Contribution Percentage for Lower
Compensated Employees multiplied by 1.25; or
(ii) The Contribution Percentage for Higher Compensated Employees
shall not exceed 2 multiplied by the Contribution Percentage
for Lower Compensated Employees; and the excess of the
Contribution Percentage for Higher Compensated Employees over
the Contribution Percentage for Lower Compensated Employees
shall not exceed 2 percentage points.
Notwithstanding the foregoing provisions of this subsection,
effective for the Plan Years beginning after December 31, 1996, the
Compensation Percentage for Lower Compensated Employees that shall,
31
except as provided in the following sentence, be used in applying
the tests set forth in this subsection for a Determination Year
shall be the Compensation Percentage for Lower Compensated Employees
in the Look-Back Year. The Company may elect (in a manner
consistent with guidance prescribed by the Internal Revenue Service;
provided such guidance is issued) to use, when applying the tests
set forth in this subsection, the Compensation Percentage of Lower
Compensated Employees in the Determination Year rather than that of
the Look-Back Year.
(c) MULTIPLE USE. For Plan Years beginning after December 31, 1988, if
the sum of all Higher Compensated Employees' Actual Deferral
Percentage and Contribution Percentage exceeds the Aggregate Limit,
then the Contribution Percentage of Higher Compensated Employees
shall be reduced in the manner set forth in Section 3.05(e) so that
the Aggregate Limit is not exceeded. The Actual Deferral Percentage
and the Contribution Percentage of Higher Compensated Employees are
determined after any corrections required to meet the tests set
forth in Sections 3.04(b), 3.05(b) and (if applicable) 3.05(c).
Multiple use does not occur if both the Actual Deferral Percentage
and the Contribution Percentage of Higher Compensated Employees do
not exceed 1.25 multiplied by the Actual Deferral Percentage and the
Contribution Percentage of Lower Compensated Employees.
(d) COMPANY ELECTION In computing the Contribution Percentage, the
Company, in accordance with Treasury Regulation Section
1.401(m)-1(b)(5), may, to the extent allowed by such regulation,
elect to use Deferrals in determining the Contribution Percentage.
The Committee shall establish such rules and give such directions to
the Trustee as shall be appropriate to carry out Section 3.05(c).
(e) TREATMENT OF EXCESS AGGREGATE CONTRIBUTIONS. If the limits in
Sections 3.05(b) and (if applicable) 3.05(c) are exceeded in any
Plan Year, the following provisions shall apply:
32
(i) In the event that the Company Section 3.02 matching
contributions (and Deferrals, if the Company makes a section
3.05(d) election) allocated to Higher Compensated Employees
for any Plan Year result in Excess Aggregate Contributions,
the Committee shall direct the Trustee to distribute the
Excess Aggregate Contributions, adjusted for any applicable
Trust Fund investment income or loss thereon, to the affected
Higher Compensated Employees, if they are Vested in the
amounts, by March 15 following the Plan Year in which the
Excess Aggregate Contributions occurred but in no event later
than the close of the Plan Year following the Plan Year in
which the Excess Aggregate Contributions occurred. If the
affected Higher Compensated Employees are not Vested in such
amounts, the Committee shall direct the Trustee to treat the
nonvested portion of the Excess Aggregate Contributions as a
forfeiture (allocable to the Plan Year in which the Excess
Aggregate Contributions occurred) and allocate them according
to the rules in Section 6; provided, however, that no amount
of the forfeited Excess Aggregate Contributions shall be
allocated to a Higher Compensated Employee whose share of
Company Section 3.02 matching contributions (and Deferrals,
if the Company makes a Section 3.05(d) election) is adjusted
under this Section 3.05.
To determine the portion of the Excess Aggregate
Contributions to be distributed to, or forfeited by, each
Higher Compensated Employee, the Committee shall direct the
Trustee to distribute, or cause to be forfeited, the Company
Section 3.02 matching contributions (and Deferrals, if the
Company makes a Section 3.05(d) election) allocated to the
Higher Compensated Employee for the Plan Year in which the
Excess Aggregate Contributions occurred to the extent
necessary to prevent the Contribution Percentage for the
group of Higher Compensated Employees form exceeding the
permissible Contribution Percentage for the group.
33
The Committee shall direct the Trustee to make the
distribution, or cause the forfeiture to be made, on a
uniform basis. It shall first be made with respect to the
Higher Compensated Employee with the highest Contribution
Percentage for the Plan Year and then with respect to the
Higher Compensated Employee with the next highest
Contribution Percentage for the Plan Year and so on, in
descending order from the highest rate until the tests in
Section 3.05(b) and (if applicable) 3.05(c) are satisfied.
The portion of the Vested Excess Aggregate Contributions
applicable to each Higher Compensated Employee shall be
distributed to the Higher Compensated Employee in a single
payment. If the Company has elected under Section 3.05(d) to
count Deferrals in the determination of Excess Aggregate
Contributions, the portion of the Excess Aggregate
Contributions applicable to each Higher Compensated Employee
that is to be distributed or forfeited in accordance with
this Section 3.05 shall be reduced by any Excess Deferrals
and Excess Contributions previously distributed to the Higher
Compensated Employee with respect to the same Plan Year under
Sections 3.03 and 3.04.
(ii) Excess Aggregate Contributions to be distributed or forfeited
under this Section 3.05 with respect to a Higher Compensated
Employee shall be adjusted to include any applicable Trust
Fund investment income or loss thereon. The investment
income or loss attributable to the Higher Compensated
Employee's Excess Aggregate Contributions for the immediately
preceding Plan Year, shall be the income or loss allocable to
the Higher Compensated Employee's Company Matching
Contributions Account, (and Deferral Account, if the Company
makes a Section 3.05(d) election) to the extent there is a
distribution or forfeiture attributable to said Accounts
multiplied by a fraction: (A) the numerator of which is the
34
Higher Compensated Employee's Excess Aggregate Contributions
for the preceding Plan Year; and (B) the denominator of which
is the sum of: (I) the balance in such accounts at the
beginning of the preceding Plan Year; plus (ii) the Company
Section 3.02 Matching Contributions and, if applicable, the
Participant's Deferrals if the Company makes a Section
3.05(d) election, for such Plan Year. The distribution or
forfeiture shall reduce the Participant's Company Matching
Contribution Account, (and Deferral Account, if the Company
makes a Section 3.05(d) election) as of the date it is
distributed or forfeited, to the extent there is a
distribution or forfeiture attributable to said Accounts.
The Committee shall establish such rules and give such timely
directions to the Trustee as the Committee, in its sole
discretion, deems appropriate to carry out the provisions of
this paragraph.
(iii) If the Higher Compensated Employee's Compensation Percentage
Ratio is determined by combining the Company Section 3.02
matching contributions, (and Deferrals, if the Company makes
a Section 3.05(d) election) and Compensation of all Family
Members, the Excess Aggregate Contributions shall be reduced
in accordance with the method described in subparagraphs
(e)(I) through (e)(ii) above and the Excess Aggregate
Contributions for the family unit shall be allocated among
the Family Members in proportion to the Company Section 3.02
matching contributions (and Deferrals, if the Company makes a
Section 3.05(d) election) of each Family Member that are
combined to determine the Contribution Percentage Ratio.
Effective for Plan Years beginning after December 31, 1996,
the aforesaid family aggregation rules shall no longer apply.
35
3.06 LIMITATION ON ANNUAL ADDITIONS
(a) BASIC LIMITATION
Notwithstanding any provisions of this Plan to the contrary, the
Annual Additions allocated to any Participant's Accounts for a Plan
Year will not exceed the lesser of (I) twenty-five percent (25%) of
the Participant's Compensation paid in such year, or (ii) $30,000,
or, if greater, twenty-five percent (25%) of the dollar limitation
in effect under Code Section 415(c)(1)(A).
For purposes of this Section, "Annual Additions" means the total
amount of Company Matching Contributions, Participant Deferrals,
Participant after-tax contributions, if any, and forfeitures, if
any, allocated to the Participant's Accounts during the Plan Year.
(b) PARTICIPATION IN OTHER DEFINED CONTRIBUTION PLANS
The limitation of this Section 3.06 with respect to any Participant
who at any time has participated in any other qualified defined
contribution plan (as defined in ERISA Section 3(34) and Code
Section 414(I)) maintained by an Affiliated Company will apply as if
the total contributions allocated under all such defined
contribution plans in which the Participant has participated were
allocated under one Plan.
(c) PARTICIPATION IN THIS PLAN AND DEFINED BENEFIT PLAN
If a Participant has been a Participant in a qualified defined
benefit plan (as defined in ERISA Section 3(35) and Code Section
414(j)) maintained by an Affiliated Company, the sum of the
Participant's Defined Benefit Plan Fraction and Defined Contribution
Plan Fraction for any year will not exceed 1. For purposes of this
36
subsection (c) only, the following words and phrases have the
meanings specified below:
(i) "Defined Benefit Plan Fraction" for any Plan Year means a
fraction where the numerator is the Participant's Projected
Annual Benefit, as defined below, as of the end of the year
and the denominator is the lesser of one and twenty-five
hundredths multiplied by the dollar limitation in effect
under Code Section 415(b)(1)(A) for such Plan Year or one and
four-tenths multiplied by 100 percent of the Participant's
average annual Compensation for the highest 3 consecutive
calendar Years of Participation.
(ii) "Defined Contribution Plan Fraction" for any Plan Year means
a fraction, not to exceed one, where the numerator is the sum
of all Annual Additions made on behalf of the Participant to
his Accounts in such Plan Year and for all previous Plan
Years, and the denominator is the sum of the lesser of (A) or
(B) determined for such Plan Year and for each previous Plan
Year during which the Participant was employed by the
Affiliated Company:
(A) One and twenty-five hundredths multiplied by the
dollar limitation in effect under Code Section
415(c)(1)(A) for such Plan Year.
(B) One and four-tenths multiplied by twenty-five percent
of the Participant's Compensation in such Plan Year.
(iii) "Participant's Projected Annual Benefit" means the annual
benefit to which the Participant would be entitled under all
Affiliated Company-sponsored defined benefit plans, assuming
the Participant continues employment until Normal Retirement
Date; the Participant's Compensation continues until Normal
Retirement Date at the rate in effect during the current
calendar year; and all other factors relevant for determining
benefits under the Plan remain constant at the level in
37
effect during the current calendar year.
In the event that the Participant's Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction for any Plan
Year exceed one, adjustments will be made by first reducing
the amount in the numerator of the Defined Benefit Plan
Fraction, to the extent possible, and then by reducing the
amount in the numerator of the Defined Contribution Plan
Fraction.
Effective for Plan Years beginning after 1999, the provisions of
this subsection (c) shall no longer apply.
(d) TREATMENT OF EXCESS ANNUAL ADDITIONS
If as a result of an allocation of forfeitures, a reasonable error
in estimating a Participant's Compensation, a reasonable error in
determining a Participant's Deferrals, or other facts and
circumstances that the Internal Revenue Service finds justifies the
availability of this Section 3.06(d), the Annual Additions allocated
to a Participant's Accounts for any Plan Year exceed the limitation
in Section 3.06(a), the following provisions shall apply:
(i) First, amounts attributable to the Participant's Unmatched
Deferrals, and if necessary, his Matched Deferrals, will be
reduced. Such amounts will be returned to the Company
employing the Participant, solely for the purpose of enabling
the Company to withhold any federal, state, or local taxes
due on such amounts. The Company will pay all remaining
amounts to the Participant.
(ii) Second, the Company Matching Contribution allocated to the
Participant's Company Matching Contributions Account will be
38
reduced. The amount of the reduction will be allocated and
reallocated to other Participants who have made deferrals in
such year.
(iii) If, however, the reallocation to other Participants in the
Plan pursuant to subparagraph (ii) above of the excess
amounts (and net earnings attributable to the excess amounts)
causes the limitation contained in Section 3.06(a) to be
exceeded with respect to every Participant for the Plan Year,
the Committee shall direct the Trustee to hold the excess
amounts unallocated in a suspense account for the Plan Year
and to allocate and reallocate the excess amounts during the
next Plan Year (subject to the limitation set forth in
Section 3.06(a)) to all the Participants in the Plan in such
Plan Year, before any Company Section 3.02 matching
contributions or Section 6 forfeitures may be made to the
Plan for that Plan Year. If a suspense account is in
existence at any time during a Plan Year, investment gains or
losses of the Trust Fund will not be allocated to the
suspense account.
(iv) The excess amounts that are to be distributed to, or
forfeited by, each Participant in accordance with this
Section 3.06 shall be reduced by any Excess Deferrals, Excess
Contributions and Excess Aggregate Contributions previously
distributed to the Participant with respect to the same Plan
Year under Sections 3.03, 3.04, and 3.05.
(e) The determination of the limitation on Annual Additions described in
this Section 3.06 will be made considering the Employees of all
Affiliated Companies as employed by a single employer. Such
determination will be made assuming the phrase, "more than fifty
percent" is substituted for the phrase "at least eighty percent" each
place it appears in Code Section 1563(a)(1).
3.07 ALLOCATION OF FORFEITURES
39
Amounts forfeited pursuant to Section 6.05 will, except as otherwise
provided in the Plan, be allocated quarterly, to Participants who are
active or suspended as of the last day of the calendar quarter for which
the forfeitures are being allocated. Such forfeitures will be allocated
to the Company Matching Contributions Account of such Participants by the
fifteenth (15th) of the month following each quarter end. The amount to
be allocated will bear the same ratio to the total forfeitures for such
calendar quarter as the Participant's Company Matching Contributions for
the calendar quarter bear to the Company Matching Contributions of all
Participants for the calendar quarter.
3.08 ROLLOVER CONTRIBUTIONS
Effective January 1, 1993, the Committee shall decide whether to accept a
transfer of assets from a Code Section 401(a)(31) eligible retirement
plan with respect to a person who is or is about to become a Participant
in this Plan, provided the transfer of such assets to this Plan qualifies
as a direct or sixty (60) day rollover of a Code Section 401(1)(31)
eligible rollover distribution.
The Committee shall require the Participant to provide reasonable
evidence that any such amount meets the above requirements. Failure of
the Participant to provide such evidence will preclude the Plan's
acceptance of any such amount. Furthermore the Plan shall not be
required to accept any transfer from another qualified plan.
The Committee may establish other uniform rules and procedures,
consistent with the requirements of the Code and this Section 3.08,
concerning the acceptance of rollover contributions, including rules that
limit or prohibit wire transfers and other payments that are made
directly to this Plan from another Plan in lieu of having the Participant
receive a check payable to this Plan's Trustee for delivery to a Plan
representative who is authorized to receive rollover contributions.
3.09 EMPLOYER ERROR
40
If the Company makes an incorrect Section 3.02 matching contribution on
behalf of a Participant as a result of an error by the Company, then,
notwithstanding Section 3.02, the Company shall increase or decrease
Section 3.02 matching contributions to the Participant's Company Matching
Contributions Account within a reasonable time after discovery of the
error to the extent necessary, and allowed by law, to correct the error
as long as the Section 3.02 matching contributions when averaged over the
Plan Year equal the amount of contributions required under Section 3.02.
The Section 3.02 matching contributions shall be adjusted for earnings or
losses which would have accrued to the Participant s Company Matching
Contributions Account if the correct Section 3.02 matching contribution
had been made. Alternatively, the Company may recover from the Trust
Fund a Section 3.02 matching contribution made as a result of a mistake
of fact if the requirements of the Trust are satisfied.
If the Company makes an incorrect Deferral on behalf of Participant as a
result of an error by the Company, then, notwithstanding the percentage
limitations set forth in Section 3.01, the Participant may elect to
increase or decrease his or her Deferrals to the extent necessary to
correct the error as long as his or her Deferrals when averaged over the
Plan Year do not exceed the percentage limitations set forth in Sections
3.01. The Deferrals made pursuant to this Section 3.09 shall not be
adjusted for earnings or losses which would have accrued to the
Participant's Accounts if the correct deposit had been made.
If the Company makes an incorrect Section 3.07 forfeiture allocation on
behalf of a Participant as a result of an error by the Company, then,
notwithstanding Section 3.07, the Company shall increase or decrease
Section 3.07 forfeiture allocation to the Participant's Company Matching
Contributions Account within a reasonable time after discovery of the
error to the extent necessary, and allowed by law, to correct the error.
The Section 3.07 forfeiture allocation shall be adjusted for earnings or
losses which would have accrued to the Participant's Company Matching
Contributions Account if the correct Section 3.07 forfeiture allocation
had been made. Alternatively, the Company may recover from the Trust
41
Fund a Section 3.07 forfeiture allocation made as a result of a mistake
of fact if the requirements of the Trust are satisfied.
Notwithstanding the foregoing, any Deferrals and Company Section 3.02
matching contributions made pursuant to this Section 3.09 shall be
subject to the limitations set forth in Sections 3.03, 3.04, 3.05, and
3.06. Furthermore, any Company Section 3.07 forfeiture allocation made
pursuant to this Section 3.09 shall be subject to the limitations set
forth in Section 3.06.
3.10 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, a non Eligible Employee is erroneously included as
a Participant in the Plan and discovery of such erroneous inclusion is
not made until after a Deferral for the Plan Year has been made, the
Company may, if allowed by law, recover the Deferral, and any earnings
thereon, from the Trust Fund and refund it to such Employee, when a
distributable event under Code Section 401(k) occurs. The Company may
recover a Section 3.02 matching contribution or a Section 3.07 forfeiture
allocation from the Trust Fund if and only if the requirements of the
Trust are satisfied.
42
ARTICLE 4
---------
INVESTMENT OF CONTRIBUTIONS AND
-------------------------------
VALUATION OF ACCOUNTS
---------------------
4.01 PARTICIPANTS' ACCOUNTS
The Committee will establish and maintain in the name of each Participant
a Company Matching Contributions Account, a Deferral Account, a Frozen
After Tax Account, and a Rollover Account. A Participant's Accounts will
be credited with contributions and forfeitures, charged with withdrawals
and distributions, and adjusted for investment results as determined
under the Plan and otherwise as set forth in the Plan.
4.02 INVESTMENT FUNDS
Upon enrollment or reenrollment, each Participant will have his Accounts
invested in the Trust Fund. The Trust Fund will consist of those
Investment Funds described in Schedule A attached to this Plan and
incorporated as part of the Plan. Each Participant will have the right
upon enrollment, reenrollment, and during participation, to elect the
Investment Fund(s) under which future contributions to his Deferral
Account, Rollover Account and Frozen After Tax Account will be invested,
by making such election through the Voice Response System. The election
will include the percentage, subject to the restrictions in Schedule A,
of future contributions to be invested in each Investment Fund, with the
total of the percentages equal to one hundred percent (100%). Such
election for future contributions will be effective as soon as
administratively practicable on or after the Business Day such election
is received by the Voice Response System.
In addition, each Participant will also have the right to have all or any
part of his Deferral Account, Rollover Account or Frozen After Tax
Account transferred among and between the Investment Fund(s), subject to
43
the restrictions set forth in Schedule A, by making such election through
the Voice Response System. Transfers in a Participant's Accounts will
take place as soon as administratively practicable on or after the
Business Day such election is received by the Voice Response System.
Except as provided in Section 4.03 below, the Committee will exercise
voting, tender, and other rights with respect to the Investment Funds.
4.03 INVESTMENT OF COMPANY MATCHING CONTRIBUTIONS AND VOTING OF COMPANY STOCK
The Committee will have the right to elect the Investment Funds under
which Contributions made to the Company Matching Contributions Account of
each Participant will be invested. However, upon reaching age fifty
(50), a Participant may elect the Investment Fund(s) in which the present
balance of his Company Matching Contributions Account, as well as all
future contributions to his Company Matching Contributions Account, will
be invested, using the procedures and following the timing for a transfer
of a Participant's Account set forth above in Section 4.02.
This Plan may acquire and hold qualifying securities of the Company. If
all or part of a Participant's Company Matching Contribution Account or
other accounts is invested in Company stock, such Participant shall be
entitled to the voting rights based on the value of such stock in his
Account. The Trustee will vote the Company stock that is not voted by
Participants in the same ratio that the stock is voted by the
Participants who exercised their voting rights. The Committee, in a
nondiscriminatory manner, will make any other necessary decisions arising
out of the acquisition or holding of Company securities.
4.04 ALLOCATION OF INVESTMENT INCOME ON A VALUATION DATE
All determinations of a Participant's Account balances shall be based on
the value as of the last available or coincident Valuation Date.
44
Accounts are debited and credited on the actual date of a transaction.
Dividends and interest are posted on the date declared. Realized gains
and losses are debited or credited at the time of the transaction (i.e.,
exchanges, withdrawals).
4.05 LIMITATION ON PARTICIPANT INVESTMENT INSTRUCTIONS
Notwithstanding anything else in this Plan to the contrary, the Committee
will, unless in its discretion it determines otherwise, decline to carry
out a Participant's investment instructions if such instructions:
* Would result in a prohibited transaction described in ERISA
Section 406 or Code Section 4975;
* Would generate income that would be taxable to the Plan;
* Would not be in accordance with the Plan;
* Would cause a fiduciary to maintain the indicia of ownership of
any Plan assets outside the jurisdiction of the district courts
of the United States other than as permitted by ERISA Section
404(b) and 29 CFR 2550.404b-1;
* Would jeopardize the Plan's tax qualified status under the
Code; or
* Could result in a loss in excess of a Participant's or
Beneficiary's account balance.
45
ARTICLE 5
----------
WITHDRAWALS, LOANS AND QUALIFIED
-------------------------------
DOMESTIC RELATIONS ORDERS
------------------------
5.01 WITHDRAWAL OF FROZEN AFTER TAX CONTRIBUTIONS
Through the Voice Response System, a Participant may withdraw, in cash,
from his Frozen After Tax Account a minimum of five hundred dollars
($500) or one hundred percent (100%) of the value of his Frozen After Tax
Account, if less, as of the date of the request. Only Participants who
are ERISA Section 3(14) parties in interest can request and receive such
withdrawal. Withdrawals from a Participant's Frozen After Tax Account
will be first withdrawn from pre-1987 voluntary contributions and the
remainder thereafter from pre-1987 earnings and post-1986 earnings.
Withdrawals will be processed as soon as administratively practicable on
or after the Business Day the request for withdrawal is received by the
Voice Response System. A Participant will be permitted to make such a
withdrawal once in any twelve (12) month period.
5.02 WITHDRAWAL OF COMPANY MATCHING CONTRIBUTIONS
Through the Voice Response System, a Participant may withdraw, in a cash
lump sum distribution, or Section 7.03 eligible rollover distribution,
from his Company Matching Contributions Account a minimum of five hundred
dollars ($500) or one hundred percent (100%) of the value of his Company
Matching Contributions Account, if less, as of the date of the request.
Only Participants who are ERISA Section 3(14) parties in interest can
request and receive such withdrawal. A Participant will be permitted to
make such a withdrawal only if he has previously withdrawn all amounts
available to him in accordance with section 5.01 and only if his Company
46
Matching Contributions Account is one hundred percent (100%) vested. A
Participant will be permitted to make such a withdrawal once in any
twelve (12) month period.
5.03 LOANS TO PARTICIPANTS
(a) A Participant may request, and if eligible, receive a loan through
the Voice Response System. Only Participants who are ERISA Section
3(14) parties in interest can request and receive a Plan loan.
(b) The loan request will be reviewed to comply with the provisions of
the Plan and ERISA and according to a uniform nondiscriminatory
policy for approval of loan applications (which policy may be
changed from time to time as the Committee may deem appropriate). A
Participant will only be able to borrow from his Deferral Account.
The loan request must be for an amount at least equal to one
thousand dollars ($1,000) and shall not exceed the lesser of:
(i) $50,000, reduced by the excess (if any) of (1) the highest
outstanding balance of loans from the Plan (and any qualified
plan of the Company or an Affiliated Company) during the 12
months ending on the day before the date on which the loan
was made over (2) the outstanding balance of loans from the
Plan (and any qualified plan of the Company or an Affiliated
Company) on the date on which the loan was made, or
(ii) one-half the value of the Vested portion of the Participant's
Accounts.
(c) The Participant shall pledge no more than one-half (1/2) of the value
of the then Vested portion of his Plan Accounts as security for the
repayment of the loan.
(d) The Participant's endorsement on the loan check shall evidence his
obligation to repay his loan from the Plan.
47
(e) With respect to any loan, the Participant shall execute a consent to
the repayment of his loan by withholding payroll and the Company
shall pay to Trustee the withheld amount.
(f) Installment payments on a Plan loan shall be made not less
frequently than as payroll is paid to the borrowing Participant, and
in all circumstances not less frequently than quarterly, in
installments of principal and interest.
(g) No Plan loan shall extend over a period greater than five (5) years.
(h) Interest shall be charged on any Plan loan at a rate equaling two
percent (2%) plus the prime rate of interest. The prime rate of
interest shall be the prime rate published in the Wall Street
Journal, updated on the last Business Day of the last quarter prior
to the making of the loan.
(i) In the event the Participant fails to repay all or any portion of
Plan loan or loans when the same become due and payable, the loan
shall be in default and the Trustee may (in addition to any other
legal remedies the Trustee may have) when a distribution event
occurs, deduct the unpaid amount of such loan, plus accrued interest
thereon, from the Vested portion of the Participant's Plan Accounts.
(j) A Participant shall receive a Plan loan only if he satisfies all
applicable requirements of this Section 5.03.
(k) The Trustee shall send truth-in-lending disclosures with all loans
issued.
(l) If a Participant requests and is granted a loan, a loan check will
be generated directly from the Participant's Accounts. Except for
Participants that are subject to the provisions of Section 16 of the
Securities Exchange Act of 1934, as amended, Participants will not
be permitted to specify the Investment Funds from which the loan is
disbursed.
48
(m) Principal and interest payments on a Participant's loan will be
deposited directly to the Participant's Accounts and invested in the
Investment Funds selected pursuant to Section 4.02 above.
(n) A Participant may only have one loan of the type described in
subparagraph (b) above outstanding at any one time.
(o) A Participant may prepay the entire outstanding loan balance in
respect to any loan at any time without penalty.
(p) If the Trustee determines that a financing statement, or any other
document, should be filed under the Uniform Commercial Code the
Trustee shall make such filing.
5.04 HARDSHIP WITHDRAWALS
(a) HARDSHIP WITHDRAWAL ADMINISTRATIVE RULES. Subject to the approval
of the Committee, a Participant may be permitted to withdraw from
the Participant's Deferral Account to meet the financial hardship.
Only Participants who are ERISA Section 3(14) parties in interest
can request and receive such withdrawal. The withdrawal will be
divided among the Investment Funds in the same proportion as the
Participant's Deferral Account is invested in the Investment Funds.
A Participant may not withdraw any interest earned on his Deferral
Account. The Committee shall establish rules for determining the
value of the Participant's Deferral Account when a hardship
withdrawal is requested.
(b) HARDSHIP WITHDRAWAL CONDITIONS TO BE MET. The Committee will
determine, in a nondiscriminatory manner, and in accordance with
applicable Treasury Regulations, whether a Participant has a
49
financial hardship. A distribution may be made on account of
financial hardship if the distribution is necessary in light of
immediate and heavy financial need of the Participant and if such
distribution is necessary to satisfy the need.
(i) A distribution will be deemed to be on account of "immediate
and heavy financial need" if it is required for:
(A) Code Section 213(d) medical expenses previously
incurred by the Participant, the Participant's
Spouse, or the Participant's Code Section 152
dependents or necessary for these persons to obtain
Code Section 213(d) medical care;
(B) The purchase (excluding mortgage payments), but not
the construction, repair, remodeling, refinancing, or
leasing of the Participant's principal residence;
(C) The payment of tuition and related educational fees
for the next twelve (12) months of post-secondary
education for the Participant, the Participant's
Spouse, or the Participant's children or other Code
Section 152 dependents;
(D) The need to prevent the eviction of the Participant
from his or her principal residence or the
foreclosure of the mortgage on the Participant's
principal residence; or
(E) Such other events that the Commissioner of the
Internal Revenue Service specifies, through the
publication of revenue rulings, notices, and other
documents of general availability, as giving rise to
a deemed immediate and heavy financial need.
50
(ii) The withdrawal described in subparagraph (I) must:
(A) Be in an amount not exceeding the amount of the need
arising under subparagraph (I); the amount of an
immediate and heavy financial need may include any
amounts necessary to pay federal, state, or local
income taxes or penalties reasonably anticipated to
result from the distribution;
(B) Not be made until the Participant has obtained all
withdrawals, other than hardship withdrawals, and all
nontaxable loans (determined at the time of the loan)
that are currently available under all qualified and
nonqualified plans of the Company;
(C) Result in the Participant being suspended from making
Deferrals to this Plan, and all other qualified and
nonqualified plans of deferred compensation
maintained by the Company, for one year beginning on
the date the Participant receives a hardship
withdrawal pursuant to this Section 5.04; and
(D) Result in the reduction of the Participant's maximum
Deferrals to this Plan (and all other plans
maintained by the Company), for the Participant's tax
year immediately following the tax year in which the
Participant receives a withdrawal under this Section
5.04, to an amount not in excess of the Code Section
402(g) limit for such following tax year less the
amount of the Participant's Deferrals for the tax
year in which the Participant receives the hardship
withdrawal.
(iii) TIME OF DISTRIBUTION. A hardship withdrawal application and
procedures will be sent to the Participant as soon as
51
practicable on or after the business day in which the request
is received through the Voice Response System. If the
application is not received and approved within thirty (30)
days from the date of request, the Participant will be
required to reactivate his request for a withdrawal through
the Voice Response System. Distribution will be in a single
cash payment; provided, however, if all or part of the
distribution is a Section 7.03 Eligible Rollover
Distribution, the distribution shall be made in one of the
three following forms that the Participant must elect among:
(A) A single cash payment;
(B) If allowed by Section 7.03, a direct rollover of the
Eligible Rollover Distribution; or
(C) If allowed by Section 7.03, a partial cash payment
and a direct rollover of the remainder of the
eligible rollover distribution.
Effective January 1, 1994, if a distribution is one to which
Code Sections 401(a)(11) and 417 do not apply, such
distribution may commence less than thirty (30) days after
the notice required under Treasury Regulation Section
1.411(a)-11(c) is given, provided that:
(A) The Committee clearly informs the Participant that
the Participant has a right to a period of at least
thirty (30) days after receiving the notice to
consider the decision of whether or not to elect a
distribution (and, if applicable, a particular
distribution option); and
(B) The Participant, after receiving the notice,
affirmatively elects a distribution.
(iv) ADMINISTRATIVE BURDEN. A withdrawal by a Participant shall
not impose undue administrative burden upon the Company, the
52
Trustee or the Committee, or in any way adverse the rights or
interests of other Participants. Undue administrative burden
will be subject to review and determination by the Committee.
A Participant shall not be permitted to make up any amounts
withdrawn.
5.05 QUALIFIED DOMESTIC RELATIONS ORDER
(a) PERIOD OF DETERMINATION. Pending its determination of whether a
domestic relations order (DRO) is a Qualified Domestic Relations
Order, the Committee shall direct the Trustee to ban any loans or
withdrawals from the Participant's Plan Accounts, and to separately
account for the amounts which would have been payable to the
Alternate Payee during the determination period (described below) if
the DRO had been determined to be a Qualified Domestic Relations
Order. Once the DRO is deemed to be a Qualified Domestic Relations
Order, the Committee shall direct the Trustee to segregate the
amount payable to the Alternate Payee into a separate account. The
law provides an 18-month period from the date on which the DRO
requires the first payment to the Alternate Payee for the Committee
to determine if the DRO is a Qualified Domestic Relations Order. If
the Committee determines that the DRO is not a Qualified Domestic
Relations Order or if the issue is not resolved within the 18-month
period, the Committee shall direct the Trustee to pay the separate
account, adjusted for earnings and losses thereon, to the person who
would have been entitled to the amounts if there were no DRO. Any
determination that a DRO is a Qualified Domestic Relations Order
made after the close of the 18-month period shall be applied
prospectively only.
(b) PAYMENT. An Alternate Payee's interest in the Vested amount in a
Participant's Accounts, to the extent possible, shall be segregated
into a separate subaccount. If consented to in writing by the
Alternate Payee, the separate subaccount shall be distributed in a
lump sum or, if all or part of the distribution is a Section 7.03
53
Eligible Rollover Distribution and a direct rollover is allowed by
Section 7.03, a direct rollover at the time specified in the
Qualified Domestic Relations Order even when the order requires
payment to be made to the Alternate Payee before the Participant's
earliest retirement age as defined in Code Section 414(p)(4). Other
matters, including the allocation of future Deferrals, Company
Matching Contributions, forfeitures and Trust Fund earnings or
losses to the segregated subaccount, shall be governed by the
procedures adopted by the Committee hereunder and by the terms of
the Qualified Domestic Relations Order; provided, however, that the
Participant's Accounts, including any segregated subaccount, shall
not receive a greater or lesser aggregate allocation than if the
segregated subaccount had not been established. If the Committee
makes a decision under this Section 5.05 which affects a
Participant's or Alternate Payee's Accounts, the Committee Shall
notify the Trustee, the affected Participant and the Alternate
Payee.
54
ARTICLE 6
---------
VESTING OF RETIREMENT DISABILITY, DEATH,
--------------------------------------
AND TERMINATION OF EMPLOYMENT BENEFITS
---------------------------------------
6.01 VESTING DUE TO ATTAINMENT OF NORMAL RETIREMENT AGE AND NORMAL RETIREMENT
BENEFITS
The Company Matching Contributions Account of a Participant will become,
if it has not already done so, one hundred percent (100%) Vested on the
date the Participant attains his Normal Retirement Age. A Participant is
always fully Vested in his Deferral Account, Frozen After Tax Account,
and Rollover Account. A Participant's retirement benefit shall be the
amount credited to his Accounts as of the Valuation Date preceding
distribution of such benefit plus Section 3 contributions to such
Accounts on behalf of the Participant after such Valuation Date.
6.02 VESTING DUE TO DISABILITY AND DISABILITY BENEFITS
The Company Matching Contributions Account of a Participant whose
employment with the Company is terminated because he is Permanently and
Totally Disabled will become, if it has not already done so, one hundred
percent (100%) Vested on the date the Participant's employment terminates
due to the Participant becoming Permanently and Totally Disabled. A
Participant is always fully Vested in his Deferral Account, Frozen After
Tax Account, and Rollover Account. A Participant's disability benefit
shall be the amount credited to his Accounts as of the Valuation Date
preceding distribution of such benefit plus Section 3 contributions to
such Accounts on behalf of the Participant after such Valuation Date.
55
6.03 VESTING DUE TO DEATH AND DEATH BENEFITS
The Company Matching Contributions Account of a Participant whose
employment with the Company is terminated due to death will become, if it
has not already done so, one hundred percent (100%) Vested on the
Participant's date of death. A Participant is always fully Vested in his
Deferral Account, Frozen After Tax Account, and Rollover Account. A
Participant's death benefit shall be the amount credited to his Accounts
as of the Valuation Date preceding distribution of such benefit plus
Section 3 contributions to such Accounts on behalf of the Participant
after such Valuation Date.
6.04 VESTING UPON TERMINATION OF EMPLOYMENT AND TERMINATION OF EMPLOYMENT
BENEFITS
(a) The benefit payable under the Plan in the case of a Participant
whose employment with the Company is terminated for any reason other
than described in Sections 6.01, 6.02, or 6.03 will be equal to the
sum of (I) the Vested value of his Accounts on the Valuation Date
immediately preceding payment of such benefits, and (ii) Article 3
subsequent contributions to the Accounts on behalf of the
Participant. The Vested value of a Participant's Accounts will be
equal to:
(I) The Participant's Deferral Account value; plus
(ii) The Participant's Frozen After Tax Account value; plus
(iii) The Participant's Rollover Account value; plus
(iv) The Vested portion of a Participant's Company Matching
Contributions Account determined as follows:
56
YEARS OF SERVICE VESTED PERCENTAGE
Less than 1 0%
1 20%
2 40%
3 60%
4 80%
5 and over 100%
For purposes of Section 6.04, the term "Year of Service" is a whole year
of Service which is twelve (12) months of Service (thirty (30) days is
deemed to be a month in the case of the aggregation of fractional
amounts).
6.05 FORFEITURES
The non-Vested portion of a Participant's Company Matching Contributions
Account, if any, will be forfeited upon the earlier to occur of (a) the
date the Participant incurs his fifth consecutive one (1) year Period of
Severance or (b) the date that the Vested portion of the Participant's
Company Matching Contributions Account is paid out according to the
following paragraph. Any such forfeitures will be applied first to
reinstate the forfeited portions of Company Matching Contributions
Accounts of rehired Participants and lost and missing Participants and
Beneficiaries as described in subsections 6.06(a) and 12.06. If the
amount of forfeitures available is insufficient to reinstate the Accounts
required to be reinstated for certain rehired Participants, the Company
will make an additional contribution in an amount required to reinstate
such Accounts fully.
If, upon Participant's termination of employment, the Vested amount in
his Participant's Accounts does not exceed $3,500 (or any other amount as
may, by regulations of the Secretary of the Treasury, be established as
the maximum amount that may be paid out in such event without the
Participant's consent), the Committee shall direct the Trustee to
distribute, before the close of the second Plan Year following the Plan
Year in which the Participant's termination of employment occurred, the
then Vested amount in such Accounts to the Participant. If the then
57
Vested amount in a Participant's Accounts exceeds $3,500, the Participant
may file with the Committee a written request and consent to the payment
of the entire Vested amount of such Accounts. If such a filing is made,
the Committee shall direct the Trustee to pay out such amount in a
distribution before the close of the second Plan Year following the Plan
Year in which the Participant's termination of employment occurred.
6.06 REINSTATEMENT OF FORFEITED ACCOUNTS
(a) With respect to the Participant who receives a distribution
pursuant to Article 6.05 and whose Termination Date occurs before
he is one hundred percent Vested in his Company Matching
Contributions Account, the Participant may repay to the Plan the
full amount distributed to him from such Account; provided,
however, that the repayment must occur before the earlier of: (a)
the date five (5) years after the date he is subsequently re-employed
by the Company, or (b) the day the Participant incurs his fifth (5th)
consecutive one (1) year Period of Severance commencing
after the date of the distribution. After such repayment, the
balance in the Participant's Company Matching Contributions Account
shall be adjusted to the value of the balance in his Company
Matching Contributions Account on the date the repaid distribution
was originally made to the Participant. The difference between the
amount repaid by the Participant and the balance in his Company
Matching Contributions Account on the date the repaid distribution
was originally made shall be funded by all unallocated forfeitures
incurred in the Plan Year of repayment to the extent necessary to
reinstate the Participant's Company Matching Contributions Account
in full, and to the extent such forfeitures are inadequate, by
additional Company contributions.
(b) With respect to a Participant who terminates employment without
being one hundred percent vested in his Company Matching
Contributions Account and who is reemployed after incurring five
(5) consecutive one (1) year Periods of Severance, Years of Service
subsequent to his reemployment will not increase the Vested
58
percentage of the amount in his Company Matching Contributions
Account as of such prior termination of employment.
59
ARTICLE 7
---------
DISTRIBUTION OF BENEFITS
-------------------------
7.01 FORM OF DISTRIBUTION
Amounts distributable pursuant to Article 6 will be distributed as
follows:
(a) If any Investment Fund is invested in whole or in part in common
stock of the Company, distributions from such Investment Fund will
be made in full shares of common stock of the Company plus cash in
lieu of any fractional share. Upon written application to the
Committee a Participant or, if applicable, his Beneficiary may
request a single sum payment entirely in cash.
(b) Distribution from other Investment Funds will be made in a single
sum payment in cash.
7.02 TIMING OF DISTRIBUTIONS
(a) Subject to the provisions of subsection (c) below, distributions
under the Plan pursuant to Article 6 will begin as soon as
practicable, but not later than sixty (60) days following the end of
the Plan Year in which the Participant attains age sixty-five (65)
or terminates employment, if later. If a Participant is rehired by
the Company before his benefit is distributed by the Trustee, such
Participant will not be entitled to receive the distribution until
he again terminates his employment with the Company.
(b) If the Vested value of the Participant's Accounts exceeds $3,500
dollars (or any other amount as may, by regulations of the Secretary
of the Treasury, be established as the maximum amount that may be
60
paid out in such event without the Participant's consent), the
Participant may request, through the Voice Response System, a
distribution commencing before he attains age sixty five (65). If a
Participant postpones his distribution to age sixty five (65), he
will continue to share in the allocation of investment income
pursuant to Section 4.04 up to the earlier of his Normal Retirement
Age or as soon as administratively practicable on or after the
Business Day on which his request to receive his nonforfeitable
Accounts is received through the Voice Response System.
(c) An Eligible Employee who is a Participant and who has attained his
Normal Retirement Age may elect through the Voice Response System to
defer receipt of his distribution to a date not later that April 1
following the Plan Year in which the Participant attains age 70-1/2.
However, a Participant who elects to defer receipt of benefits may
not do so to the extent that he is creating a death benefit that is
more than incidental.
Effective for Plan Years beginning after December 31, 1996, a
Participant other than a Five Percent Owner may defer receipt of his
distribution to April 1 of the Plan Year following the later of (I)
the calendar year the Participant attains 70 1/2 or (ii) the
calendar year in which the Participant retires. A Participant other
than a Five Percent Owner, who has not retired from Service with the
Company, and who is currently receiving Plan distributions, may,
effective in the first Plan Year beginning after December 31, 1996,
request a cessation of such distributions until April 1 of the Plan
Year following his retirement.
(d) The benefit payable to a Beneficiary will be paid no later than five
(5) years after the Participant's death.
(e) Notwithstanding anything in this Plan to the contrary, all Plan
distributions shall be determined and made in accordance with Code
Section 401(a)(9) and the Treasury Regulations thereunder including
the minimum distribution incidental benefit requirement of Treasury
61
Regulation Section 1.401(a)(9)-2.
7.03 ELIGIBLE ROLLOVER DISTRIBUTIONS
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Article 7, effective
for distributions made on or after January 1, 1993, a distributee may
elect, at the time and in the manner prescribed by the Committee, to have
any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct
rollover. For purposes of this Section, the following definitions shall
apply.
An "eligible rollover distribution" is any distribution of all or any
portion of the balance to the credit of the distributee, except that an
"eligible rollover distribution" does not include: 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 and the distributee's designated Beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under Code Section 401(a)(9) of the Code;
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); and provided further
that the determination of what constitutes an "eligible rollover
distribution" shall at all time be made in accordance with the current
rules of Code Section 402(c), which shall be controlling for this
purpose.
An "eligible retirement plan" is an individual retirement account
described in Section 408(a), an individual retirement annuity described
in Code Section 408(b), an annuity plan described in Code Section 403(a),
or a qualified Trust described in Code Section 401(a) that accepts 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.
62
A "distributee" includes a Participant or former Participant. In
addition, the Participant's or former Participant's surviving Spouse and
the Participant's or former Participant's Spouse or former Spouse who is
the Alternate Payee under a Qualified Domestic Relations Order are
distributed with regard to the interest of the Spouse or former Spouse.
A "direct rollover" is a payment by the Plan to the eligible retirement
plan specified by the distributee.
In prescribing the manner of making elections with respect to eligible
rollover distributions, as described above, the Committee may provide for
the uniform, nondiscriminatory application of any restrictions permitted
under applicable Sections of the Code and related rules and regulations,
including a requirement that a distributee may not elect a partial direct
rollover in an amount less that $500 and a requirement that a distributee
may not elect to make a direct rollover from a single eligible rollover
distribution to more than one eligible retirement plan. Moreover, 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 30 days after the
notice required under Section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(1) The Trustee 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
(2) The Participant, after receiving the notice, affirmatively elects a
distribution through the Voice Response System.
63
ARTICLE 8
----------
PLAN ADMINISTRATION
-------------------
8.01 APPOINTMENT OF COMMITTEE
The Plan shall be administered by a Committee appointed by the President
of the Company, subject to the approval of the Board. The Committee
shall be composed of no more than five and no fewer than three members
who shall hold office at the pleasure of the Board. Such members may,
but need not, be Employees. Any person appointed a member of the
Committee shall signify acceptance by filing a written acceptance with
the Secretary of the Committee. Any member of the Committee may resign
by delivering a written resignation to the President of the Company and
the Secretary of the Committee. Such resignation shall be effective no
earlier than the date of the written notice.
8.02 POWERS AND DUTIES
The Committee will have full power to administer the Plan and shall
determine questions of interpretation or policy. The Committee's
construction or determination shall be final and binding on all parties.
The Committee may correct any defect, supply any omission, or reconcile
any inconsistency in the manner and to the extent deemed necessary or
advisable to carry out the purpose of this Plan. The Committee shall
have all powers necessary or appropriate to accomplish the Committee's
duties under this Plan. The Committee is the named fiduciary within the
meaning of Section 402(a) of ERISA for purposes of Plan administration.
The Committee's powers and duties, unless properly delegated, will
include, but will not be limited to:
(a) Allocating fiduciary responsibilities, other than Trustee
responsibilities as defined in ERISA Section 405(c), among the named
fiduciaries and to designate one or more other persons to carry out
fiduciary responsibilities.
64
(b) Designating agents to carry out responsibilities relating to the
Plan, other than fiduciary responsibilities.
(c) Deciding factual and nonfactual questions relating to eligibility,
Service, and amounts of benefits.
(d) Deciding disputes that may arise with regard to the rights of
Employees, Participants and their legal representatives, or
Beneficiaries under the terms of the Plan. Decisions by the
Committee will be deemed final in each case.
(e) Obtaining information from the Company with respect to its Employees
as necessary to determine the rights and benefits of Participants
under the Plan. The Committee may rely conclusively on such
information furnished by the Company.
(f) Compiling and maintaining all records necessary for the Plan.
(g) Authorizing the Trustee to make payment of all benefits as they
become payable under the Plan.
(h) Engaging such legal, administrative, consulting, actuarial,
investment, accounting, and other professional services as the
Committee deems proper.
(i) Adopting rules and regulations for the administration of the Plan
that are not inconsistent with the Plan. The Committee may, in a
nondiscriminatory manner, waive the timing requirements of any
notice or other requirements described in the Plan. Any such waiver
will not obligate the Committee to waive any subsequent timing or
other requirements for other Participants.
(j) Performing other actions provided for in other parts of this Plan.
65
(k) Upon receipt of a domestic relations order, notifying the
Participant and the Alternate Payee (which notice shall include this
Plan's procedure for determining whether the order is a Qualified
Domestic Relations Order) of the receipt of the order; and within a
reasonable time, determining whether the order constitutes a
Qualified Domestic Relations Order by: (a) personal review of the
order; (b) receipt of an opinion of counsel; (c) seeking judicial
interpretation and determination; or (d) any combination or all of
the foregoing; and, upon said determination, communicating its
decision in writing to the Participant, the Alternate Payee, and if
the decision affects a Participant's or Alternate Payee's Accounts,
the Trustee, as soon as practicable.
8.03 ACTIONS BY THE COMMITTEE
A majority of the members composing the Committee at any time will
constitute a quorum. The Committee may act at a meeting, or in writing
without a meeting, by the vote or assent of a majority of its members.
The Committee will elect one of its members as Chairperson and may elect
a Secretary who may, but need not, be a member of the Committee. The
Secretary will record all action taken by the Committee. The Committee
will have authority to designate in writing one of its members or any
other person as the person authorized to execute papers and perform other
ministerial duties on behalf of the Committee.
8.04 INTERESTED COMMITTEE MEMBERS
No member of the Committee will participate in an action of the Committee
on a matter which applies solely to that member. Such matters will be
determined by a majority of the remainder of the Committee.
66
8.05 INVESTMENT MANAGER
The Committee, by action reflected in its minutes, may appoint one or
more investment managers, as defined in Section 3(38) of ERISA, to manage
all or a portion of the assets of the Plan or to select Investment Funds.
An investment manager will discharge its duties in accordance with
applicable law and in particular in accordance with Section 404(a)(1) of
ERISA. An investment manager, when appointed, will have full power to
either manage the assets of the Plan for which it has responsibility or
to select Investment Funds, and neither the Company nor the Committee
will thereafter have responsibility for the management of such assets or,
if applicable, selecting Investment Funds.
8.06 INDEMNIFICATION
The Company, by this adoption, indemnifies and holds the members of the
Committee, jointly and severally, harmless from the effects and
consequences of their acts, omissions, and conduct in their official
capacities, except to the extent that the effects and consequences result
from their own willful misconduct, breach of good faith, or gross
negligence in the performance of their duties. The foregoing right of
indemnification will not be exclusive of other rights to which each such
member may be entitled by any contract or other instrument or as a matter
of law.
8.07 CONCLUSIVENESS OF ACTION
Any action on matters within the discretion of the Committee will be
conclusive, final, and binding upon all Participants in the Plan and upon
all persons claiming any rights, including Beneficiaries.
67
8.08 PAYMENT OF EXPENSES
The members of the Committee will serve without compensation for their
services. The compensation or fees of accountants and other specialists
and any other costs of administering the Plan or Trust Fund will be paid
by the Trust Fund unless paid by the Company in its discretion.
8.09 CLAIMS FOR BENEFITS
Any claim for benefits under this Plan shall be made in writing by a
Participant or Beneficiary, or his authorized representative, to the
Committee. If a claim for benefits is wholly or partially denied,
the Committee, within ninety (90) calendar days after receipt of the
claim, shall notify the Participant or the Beneficiary of the denial
of the claim. The notice of denial: (a) shall be in writing; (b)
shall be written in a manner calculated to be understood by the
Participant or the Beneficiary; and (c) shall contain: (1) the
specific reason or reasons for denial of the claim; (2) a
specific reference to the Plan provisions upon which the
denial is based; (3) a description of any additional material or
information necessary to perfect the claim, along with an explanation
of why the material or information is necessary; and (4) an explanation
of the claim review procedure.
The ninety (90) calendar day period, under special circumstances, may be
extended up to an additional ninety (90) calendar days upon written
notice of the extension to the Participant or the Beneficiary which
notice shall specify the special circumstances and the extended date of
the decision. Notice of the extension must be given prior to expiration
of the initial ninety (90) calendar day period. If no notice of decision
is given within the periods specified above, the claim shall be deemed to
have been denied on the last day of the applicable ninety (90) or one
hundred eighty (180) day period and the Participant or the Beneficiary,
or his or her authorized representative, may file a request for review as
provided in Section 8.10.
68
8.10 REQUEST FOR REVIEW OF DENIAL
Within sixty (60) days after the receipt by the Participant or
Beneficiary of a claim denial (or after the date a claim is deemed
denied), the Participant or the Beneficiary has a maximum of sixty (60)
calendar days to file a written request that the Committee conduct a full
and fair review of the denied claim. The claimant, or his authorized
representative, may review pertinent documents and submit issues and
comments in writing to the Committee in connection with the review.
8.11 DECISION ON REVIEW OF DENIAL
The Committee shall provide the Participant or the Beneficiary with a
final written decision on the review of the denial within sixty (60) days
after the receipt of the aforesaid request for review, except that if
there are special circumstances (such as the need to hold a hearing, if
necessary) which require an extension of time for processing, the
aforesaid sixty (60) day period shall, upon written notice to the
Participant or Beneficiary, be extended an additional sixty (60) days.
The decision on review of the denial shall: (a) be written in a manner
calculated to be understood by the Participant or the Beneficiary; (b)
include the specific reason or reasons for the decision; and (c) contain
a specific reference to the Plan provisions upon which the decision is
based. If the decision on review is not delivered to the Participant or
the Beneficiary within the periods specified, the claim shall be
considered denied on review on the last day of the applicable sixty (60)
or one hundred twenty (120) day review period.
8.12 NOTICE OF TIME LIMITS
When a Participant or a Beneficiary files a claim, the Committee shall
notify him or her of the claim and review procedure including the time
periods involved.
69
8.13 CORRECTIONS PURSUANT TO REMEDIAL PROGRAMS
In the event there has been an operational defect in the administration
of the Plan, the Board, or if appropriate the Committee, may take such
actions as are necessary to correct such defects provided that such
actions are pursuant to an Internal Revenue Service Administrative Policy
Regarding Sanctions, Voluntary Compliance Resolution Program, or Closing
Agreement Program, collectively referred to as "Programs," or any other
program that the Internal Revenue Service creates as a successor or
modification to such Programs or any remedial program instituted by the
U.S. Department of Labor.
70
ARTICLE 9
---------
AMENDMENT, TERMINATION, AND MERGER OF THE PLAN
----------------------------------------------
9.01 RIGHT TO AMEND THE PLAN
The Board will have the right at any time and from time to time to adopt
a written amendment, amending in whole or in part, any provision of the
Plan. The Committee shall also have the power to adopt written
amendments to the Plan that (I) are necessary or appropriate to satisfy
the Code or ERISA, and all regulations thereto, or (ii) do not increase
the rate of Section 3.02 Company Matching Contribution or costs to the
Plan. No such amendment shall increase the duties or responsibilities of
the Trustee without the Trustee's written consent. No amendment will be
made to this Plan that attempts to transfer any part of the corpus or
income of the Trust Fund to purposes other than the exclusive benefit of
Participants and their Beneficiaries, nor may any amendment disturb the
Vested rights of any Participant.
9.02 RIGHT TO TERMINATE THE PLAN
The Board will have the right to adopt a written amendment to terminate
the Plan in whole or in part at any time. To the extent required under
the Code, upon termination, partial termination, or complete
discontinuance of contributions to the Plan, all Accounts of affected
Participants will become one hundred percent (100%) Vested.
9.03 PLAN MERGER AND CONSOLIDATION
If the Plan is merged or consolidated with any other Plan, or if the
assets or liabilities of the Plan are transferred to any other Plan, each
Participant will be entitled to a benefit immediately after the merger,
consolidation, or transfer, determined as if the Plan had then
71
terminated, at least equal to the benefit to which the Participant would
have been entitled had the Plan terminated immediately before such
merger, consolidation, or transfer.
72
ARTICLE 10
-----------
TRUST FUND AND THE TRUSTEE
--------------------------
10.01 SELECTION OF TRUSTEE
The Board or its authorized delegate will select a Trustee to hold the
Trust Fund in accordance with the terms of an agreement. Except to the
extent otherwise provided in this Plan, responsibility for the
management, investment, and disposition of Plan assets will belong to the
Trustee except to the extent the Committee reserves such responsibility
for itself or appoints an Investment Manager pursuant to Section 8.05.
To the extent the Committee or Investment Manager is given this
responsibility, the Trustee will not be liable by reason of its taking or
refraining from taking any action at the direction of the Committee or
Investment Manager. If the Trustee manages and invests the Trust Fund,
the agreement with the Trustee may include a provision authorizing the
Trust Fund or a portion thereof to be invested in a joint or associated
Trust Fund or Common Trust Fund.
The Board may, from time to time, adopt a resolution causing a change in
Trustees or the termination of the Trust and invest Plan assets in any
other method acceptable under ERISA.
73
ARTICLE 11
----------
TOP-HEAVY PLAN REQUIREMENTS
---------------------------
11.01 GENERAL RULE
For any Plan Year for which this Plan is a Top-Heavy Plan, as defined in
Section 11.07, and despite any other provisions of this Plan to the
contrary, this Plan will be subject to the provisions of this Article 11.
11.02 VESTING PROVISIONS
Each Eligible Employee who has completed an Hour of Service during the
Plan Year in which the Plan is Top-Heavy will have the Vested portion of
his Company Matching Contributions Account determined according to
Section 6.04.
11.03 MINIMUM CONTRIBUTION PROVISION
Each Eligible Employee who is a Non-Key Employee, as defined in Section
11.09 and is employed on the last day of the Plan Year even if such
Eligible Employee has failed to complete one thousand (1,000) Hours of
Service during such Plan Year or was excluded from the Plan for failing
to make Deferrals to the Plan, will be entitled to have the aggregate of
Contributions and forfeitures allocated to his Company Matching
Contributions Account and Deferral Account equal not less than three
percent (3%) (the "Minimum Contribution Percentage") of his Compensation.
This Minimum Contribution Percentage will be reduced for any Plan Year to
the percentage at which such contributions (including forfeitures) are
made or are required to be made under the Plan for the Plan Year for the
Key Employee for whom such percentage is the highest for such Plan Year.
For this purpose, the percentage with respect to a Key Employee, as
74
defined in Section 11.08, will be determined by dividing such
contributions (including forfeitures) made for such Key Employee by the
amount of his total Compensation for the Plan Year.
Contributions considered under the first paragraph of this Section 11.03
will include the contributions described above under this Plan and
contributions under all other defined contribution plans required to be
included in an Aggregation Group (as defined in Section 11.07), but will
not include any plan required in such aggregation group if the Plan
enables a defined contribution plan required to be included in such group
to meet the requirements of the Code prohibiting discrimination as to
contributions or benefits in favor of Employees who are officers,
shareholders, or the highly compensated or prescribing the minimum
participation standards.
Contributions considered under this Section will not include any
contributions under the Social Security Act or any other federal or state
law.
11.04 LIMITATION ON COMPENSATION
A Participant's annual Compensation taken into account under this Article
11, for purposes of computing benefits under this Plan will be as
indicated in Article 1.
11.05 LIMITATION ON CONTRIBUTIONS
In the event that the Company also maintains a defined benefit plan
providing benefits on behalf of Participants in this Plan, one of the two
following provisions will apply:
(a) If for the Plan Year this Plan would not be a "top-heavy" Plan as
defined in Section 11.07 below if "ninety percent (90%)" were
substituted for "sixty percent (60%)," then Section 11.03 will apply
for such Plan Year as if amended so that the "four percent (4%)"
were substituted for "three percent (3%)."
75
(b) If for the Plan Year this Plan either
(i) is subject to Section 11.05(a) but does not provide the
additional minimum contribution as required therein or
(ii) would continue to be a "Top-Heavy Plan" as defined in Section
11.07 if "ninety percent (90%)" were substituted for "sixty
percent (60%)," then the denominator of both the Defined
Contribution Plan Fraction and the Defined Benefit Plan
Fraction will be calculated as set forth in Section 3.04(c) for
the Plan Year by substituting "one" for "one and twenty-five
hundredths" in each place such figure appears except with
respect to any individual for whom there are no Company
Matching Contributions or forfeitures allocated or any accruals
for such individual under the defined benefit plan.
11.06 COORDINATION WITH OTHER PLANS
In the event that the Company maintains a Top-Heavy Defined Benefit Plan
under which contributions or benefits are provided on behalf of a
Participant in this Plan, such other plan will be treated as a part of
this Plan pursuant to applicable principles set forth in Revenue Ruling
81-202 in determining whether the plans are providing benefits at least
equal to the minimum benefit required under the Defined Benefit Plan. If
the Plan is subject to Section 11.05(b) but the Company does not
substitute "one" for "one and twenty-five hundredths" as required by
Section 11.05(b), the applicable percentage under the Defined Benefit
Plan will be increased by one percentage point (up to a maximum of ten
percentage points).
If the Company maintains more than one plan, Non-Key Employees covered
under only a Defined Benefit Plan will receive the defined benefit
minimum. Non-Key Employees covered only by a Defined Contribution Plan
76
will receive the defined contribution minimum. Where all plans involved
are Defined Contribution Plans, only this Plan need provide the minimum
contribution for all Participants of the required aggregation group.
11.07 DETERMINATION OF TOP-HEAVY STATUS
The Plan will be a Top-Heavy Plan for any Plan Year if, as of the
Determination Date (as defined in subsection (b) below), the aggregate
value of Accounts (as defined in subsection (d) below) under the Plan for
all Key Employees (as defined in Section 11.08 below) exceeds 60 percent
(60%) of the value of the aggregate of the Accounts for all Employees, or
if this Plan is required to be in an Aggregation Group (as defined in
subsection (a) below) which for such Plan Year is a Top-Heavy Group (as
defined in subsection (c) below).
For purposes of this Article, the capitalized words have the following
meanings:
(a) "Aggregation Group" means the group of plans, if any, that includes
both the group of plans required to be aggregated and the group of
plans permitted to be aggregated.
(i) The group of plans required to be aggregated (the "required
aggregation group") includes:
(A) Each plan of the Affiliated Company in which a Key
Employee is a Participant, (in the Plan year containing
the determination date or any of the four preceding years)
including Collectively Bargained Plans, and
(B) Each other plan, including Collectively Bargained Plans,
of the Affiliated Company that enables a plan in which a
Key Employee is a Participant to meet the requirements of
the Code prohibiting discrimination as to contributions or
77
benefits in favor of Employees who are officers,
shareholders, or highly compensated or prescribing the
minimum participation standards.
(ii) The group of plans that are permitted to be aggregated (the
"permissive aggregation group") includes the required
aggregation group plus one or more plans of the Affiliated
Company that is not part of the required aggregation group and
that the Committee certifies as a plan within the permissive
aggregation group. Such plan or plans may be added to the
permissive aggregation group only if, after the addition, the
aggregation group as a whole continues not to discriminate as
to contributions or benefits in favor of officers,
shareholders, or the highly compensated and to meet the minimum
participation standards under the Code.
(b) "Determination Date" means for any Plan Year the last day of the
immediately preceding Plan Year. However, for the first Plan Year
of this Plan, Determination Date means the last day of that Plan
Year.
(c) "Top-Heavy Group" means the Aggregation Group, if as of the
applicable Determination Date, the sum of the present value of the
cumulative accrued benefits for Key Employees under all Defined
Benefit Plans included in the Aggregation Group plus the aggregate
of the Accounts of Key Employees under all Defined Contribution
Plans included in the Aggregation Group exceeds sixty percent of the
sum of the present value of the cumulative accrued benefits for all
Employees, excluding former Key Employees, under all such Defined
Benefit Plans plus the aggregate Accounts for all Employees,
excluding former Key Employees, under all such Defined Contribution
Plans. If the Aggregation Group that is a Top-Heavy Group is a
required aggregation group, each plan in the group will be a
Top-Heavy Plan. If the Aggregation Group that is a Top-Heavy Group
is a permissive aggregation group, only those plans that are part of
78
the required aggregation group will be treated as Top-Heavy Plans.
If the Aggregation Group is not a Top-Heavy Group, no plan within
such group will be a Top-Heavy Plan.
(d) "Value of Accounts" means the sum of (I) the value, as of the most
recent Valuation Date occurring within the twelve months ending on
the Determination Date, of the Participant's Accounts and (ii)
contributions due to such Accounts as of the Determination Date,
minus (iii) withdrawals from such Accounts since such Valuation
Date.
(e) In determining whether this Plan constitutes a Top-Heavy Plan, the
Committee will make the following adjustments:
(i) When more than one plan is aggregated, the Committee will
determine separately for each plan as of each plan's
Determination Date the present value of the accrued benefits or
account balance. The results will then be aggregated by adding
the results of each plan as of the Determination Dates for such
plans that fall within the same calendar year.
(ii) In determining the present value of the cumulative accrued
benefit or the amount of the account of any Employee, such
present value or account will include the amount in dollar
value of the aggregate distributions made to each Employee
under the applicable plan during the 5-year period ending on
the Determination Date unless reflected in the value of the
accrued benefit or account balance as of the most recent
Valuation Date. The amounts will include distributions to
Employees representing the entire amount credited to their
Accounts under the applicable plan.
(iii) Further, in making such determination, such present value
or such account will not include any rollover contribution
(or similar transfer) initiated by the Employee.
79
(f) In any case where an individual is a Non-Key Employee with respect
to an applicable Plan but was a Key Employee with respect to such
plan for any previous Plan Year, any accrued benefit and any account
of such Employee will be altogether disregarded. For this purpose,
to the extent that a Key Employee is deemed to be a Key Employee if
he or she met the definition of Key Employee within any of the four
preceding Plan Years, this provision will apply following the end of
such period of time.
(g) Further, in making such determination, if an Participant has not
performed any Service for the Company at any time during the
five-year period ending on the Determination Date, any accrued
benefit or the account for such Participant will not be included.
11.08 DEFINITION OF KEY EMPLOYEE
"Key Employee" means any Employee (including a former or deceased
Employee) under this Plan who, at any time during the Plan Year in
question or during any of the four preceding Plan Years, is or was
one of the following:
(a) An officer of the Company having Annual Compensation of fifty
percent or more of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year. Whether an individual is an
officer will be determined by the Company on the basis of all the
facts and circumstances, such as an individual's authority, duties,
and term of office, not on the mere fact that the individual has the
title of an officer. For any such Plan Year, officers will be no
more than the fewer of:
(i) 50 Employees; or
(ii) The greater of 3 Employees or 10 percent of the Employees.
80
For this purpose, the highest-paid officers will be selected.
(b) One of the ten (10) Employees having annual Compensation from the
Company of more than the limitation in effect under Code Section
415(c)(1)(A), and owning (or considered as owning, within the
meaning of the constructive ownership rules of the Code) both more
than one-half percent interest and the largest interests in the
Company. If two Employees have the same interest in the Company,
the Employee having greater annual Compensation from the Company
will be treated as having a larger interest.
(c) Any person who owns (or is considered as owning, within the meaning
of the constructive ownership rules of the Code) more than five
percent of the outstanding stock of the Company or stock possessing
more than five percent of the combined voting power of all stock of
the Company.
(d) A one percent owner of the Company having Annual Compensation from
the Company of more than $150,000 and possessing more than 1 percent
of the combined total voting power of all stock of the Company. For
purposes of this Section 11.08, a Beneficiary of a Key Employee will
be treated as a Key Employee. For purposes of subsections (c) and
(d), each Company and/or Affiliated Company is treated separately in
determining ownership percentages; but, in determining the amount of
Compensation, an Employee's total Compensation is taken into
account.
11.09 DEFINITION OF NON-KEY EMPLOYEE
The term "Non-Key Employee" means any Employee (and any Beneficiary of an
Employee) who is not a Key Employee.
81
ARTICLE 12
----------
USERRA
------
12.01 QUALIFIED MILITARY SERVICE
(a) For purposes of this Article VB, the term "Qualified Military
Service" shall mean any service in the uniformed service
(as defined by USERRA) by an individual who is entitled under
USERRA to reemployment rights with respect to the Company.
(b) This Article 12 shall be administered in a manner consistent with
guidance issued by the Internal Revenue Service; provided such
guidance is issued.
12.02 ELIGIBILITY AND VESTING
Notwithstanding any provision of the Plan to the contrary, effective
December 12, 1994: (1) a Participant reemployed under USERRA shall be
treated under the Plan as not having incurred a Break in Service with the
Company for vesting or eligibility purposes because of the individual's
period of Qualified Military Service; and (2) each period of Qualified
Military Service served by a Participant, upon reemployment under USERRA,
shall be considered under the Plan to be service with the Company for the
purpose of (I) determining the nonforfeitability of the Participant's
accrued benefits under the Plan and (ii) determining the accrual of
benefits under the Plan.
12.03 MAKE-UP DEFERRALS AND COMPANY MATCHING CONTRIBUTIONS
(a) Notwithstanding any provision of the Plan to the contrary, effective
December 12, 1994; with respect to a Participant, who under USERRA
is entitled to make up a Deferral, such Participant may:
82
(1) make additional Deferrals during the period which (I) begins on
the date of the Participant's reemployment with the Company,
and (ii) has the same length as the lesser of:
(a) the product of: (I) three (3), and (ii) the period of
Qualified Military Service which resulted in the USERRA
rights; and
(b) five (5) years; and
(2) If such Deferrals are made by the Participant, the Company
shall make a Company Matching Contribution based on the
additional Deferrals in paragraph (1) above, if any, that would
have been required had the Deferrals actually been made during
the period of the Qualified Military Service. Such
contributions shall be made within the time-frame provided for
in paragraph (1) above.
(b) The amount of the additional Deferrals that the Company must permit
a reemployed Participant to elect is an amount less than but not
exceeding the maximum amount of the Deferrals that the Participant
would have been permitted to make: (1) under the Plan under the
limitations in Code Section 414(u)(1)(A); (2) during the period of
Qualified Military Service; (3) if the Participant had continued to
be employed by the Company during this period, and received
"Compensation" (as determined below); and (4) as adjusted for any
Deferrals actually made during the period of Qualified Military
Service. No make-up Deferrals may exceed the amount the Participant
would have been permitted or required to contribute had the
Participant remained continuously employed by the Company throughout
the period of Qualified Military Service.
(c) Investment income or loss shall not be credited on any make-up
Deferrals, or Company Matching Contributions made as a result
83
thereof, until such contributions are made. A Participant covered
under USERRA shall not share in forfeitures, in any, allocated
during the period of the Participant's Qualified Military Service.
(d) For purposes of determining allowable make-up Deferrals, a
Participant covered by USERRA shall be treated as having received
Compensation from the Employer during the period of the Employee's
Qualified Military Service equal to: (1) the Compensation of the
Participant would have received during the period of Qualified
Military Service (determined based on the rate of pay the
Participant would have received from the Company but for absence
during the period of Qualified Military Service); or (2) if the
Compensation the Participant would have received during the period
of Qualified Military Service was not reasonably certain, the
Participant's average Compensation from the Company during (I) the
twelve-month period immediately before the Qualified Military
Service or (ii) if shorter, the period of employment with the
Company immediately before the Qualified Military Service.
12.04 LOAN REPAYMENT SUSPENSION
Notwithstanding any language in this Plan to the contrary effective
December 12, 1994, the Committee may, in its discretion, decide that the
loan repayment obligation of a Participant on Qualified Military Service
will be suspended during all or part of such service.
84
ARTICLE 13
----------
MISCELLANEOUS
-------------
13.01 LIMITATION ON DISTRIBUTIONS
Notwithstanding any provision of this Plan regarding payment to
Beneficiaries, Participants, or any other person, the Committee may
withhold payment to any person if the Committee determines that such
payment may expose the Plan to conflicting claims for payment. As a
condition for any payments, the Committee may require such consent,
representations, releases, waivers, or other information as it deems
appropriate. The Committee may, in its discretion, comply with the
terms of any judgment or other judicial decree, order, settlement, or
agreement including, but not limited to, a Qualified Domestic Relations
Order as defined in Code Section 414(p).
13.02 LIMITATION OF REVERSION OF CONTRIBUTIONS
Except as provided in subsections (a) through (c) below, Company Matching
Contributions made under the Plan will be held for the exclusive benefit
of Participants and their Beneficiaries and may not revert to the
Company.
(a) In the case of contributions conditioned on the Plan's initial
qualification under Section 401(a) and 401(k) of the Internal
Revenue Code, if the Plan does not qualify, such contributions may
be returned to the Company within one year after the date the Plan's
qualification is denied. The maximum Company Matching Contribution
that may be returned to the Company will not exceed the amount
actually contributed to the Plan, or the value of such contribution
on the date it is returned to the Company, if less.
85
(b) Unless the Board, in a resolution authorizing a Plan contribution,
states that the contribution is made unconditionally and without
regard to its deductibility under the appropriate section of the
Code, any contribution by the Employer to the Trust (except a top
heavy contribution) is conditioned upon the deductibility of the
contribution by the Employer under the applicable section of the
Code. To the extent any such deduction is disallowed or made as a
result of a mistake of fact, the Employer may demand repayment of
such disallowed contribution and the Trustee shall return such
contribution within one (1) year following (I) a final determination
of the disallowance, whether by agreement with the Internal Revenue
Service or by final decision of a court of competent jurisdiction,
or (ii) the date of the mistaken contribution, whichever applies.
Earnings of the Plan attributable to the excess or mistaken
contribution may not be returned to the Employer, but any losses
attributable thereto must reduce the amount so returned.
13.03 VOLUNTARY PLAN
The Plan is purely voluntary on the part of the Company and neither the
establishment of the Plan nor any Plan amendment nor the creation of any
fund or account, nor the payment of any benefits will be construed as
giving any Employee or any person legal or equitable right against the
Company, the Trustee, or the Committee unless specifically provided for
in this Plan or conferred by affirmative action of the Committee or the
Company according to the terms and provisions of this Plan. Such actions
will not be construed as giving any Employee or Participant the right to
be retained in the service of the Company. All Employees and/or
Participants will remain subject to discharge to the same extent as
though this Plan had not been established.
86
13.04 NONALIENATION OF BENEFITS
Participants and their Beneficiaries are entitled to all the benefits
specifically set out under the terms of the Plan, but said benefits or
any of the property rights in the Plan will not be assignable or
distributable to any creditor or other claimant of such Participant. A
Participant will not have the right to anticipate, assign, pledge,
accelerate, or in any way dispose of or encumber any of the monies or
benefits or other property that may be payable or become payable to such
Participant or his Beneficiary provided, however, the Company, Trustee,
or Committee shall recognize and comply with a properly executed
Qualified Domestic Relations Order.
13.05 INABILITY TO RECEIVE BENEFITS
If the Committee receives evidence that a person entitled to receive any
payment under the Plan is physically or mentally incompetent to receive
payment and to give a valid release, and another person or an institution
is maintaining or has custody of such person, and no Guardian, Committee,
or other representative of the estate of such person has been duly
appointed by a court of competent jurisdiction, then any distribution
made under the Plan may be made to such other person or institution. The
release of such other person or institution will be a valid and complete
discharge for the payment of such distribution.
13.06 UNCLAIMED BENEFITS
If the Committee is unable, after reasonable and diligent effort, to
locate a Participant or Beneficiary who is entitled to a distribution
under the Plan, the distribution due such person will be forfeited after
two years. If, however, the Participant or Beneficiary later files a
claim for such benefit, it will be reinstated without any interest earned
thereon. Notification by certified or registered mail to the last known
address of the Participant or Beneficiary will be deemed a reasonable and
diligent effort to locate such person. The reinstatement of benefits
shall be funded by forfeitures incurred in the Plan Year of reinstatement
87
to the extent necessary to reinstate the benefits in full, and to the
extent such forfeitures are inadequate, by additional Company
contributions.
Notwithstanding anything in this Plan to the contrary, if after the
adoption of a resolution to terminate the Plan a Participant's or
Beneficiary's benefit under the Plan remains payable due to the inability
of the Committee or Trustee to locate such Participant or Beneficiary,
the Committee or Trustee shall attempt to locate the Participant or
Beneficiary by either (a) mailing a notice (describing the Plan benefits
due such person) to such Participant or Beneficiary's last known address
as supplied by the Social Security Administration, or (b) request,
pursuant to Revenue Procedure 94-22 and Internal Revenue Service Policy
Statement P-1-187, that the Internal Revenue Service forward a notice
similar to that described in clause (a) to such person.
If the Participant or Beneficiary cannot be located after the Committee
or the Trustee has taken the notification step described in clause (a) or
(b) of the preceding paragraph, the Trustee shall deposit all Plan
benefits payable to the lost or missing Participant or Beneficiary in an
interest bearing savings account at a federally insured bank; the lost or
missing Participant or Beneficiary shall be listed as the sole owner of
such account and have the unconditional right to withdraw all funds
therein.
13.07 LIMITATION OF RIGHTS
Nothing expressed or implied in the Plan is intended or will be construed
to confer upon or give to any person, firm, or association other than the
Company, the Participants, the Beneficiaries, and their successors in
interest any right, remedy, or claim under or by reason of this Plan.
88
13.08 INVALID PROVISIONS
In case any provision of this Plan is held illegal or invalid for any
reason, the illegality or invalidity will not affect the remaining parts
of the Plan. The Plan will be construed and enforced as if the illegal
and invalid provisions had never been included.
13.09 ONE PLAN
This Plan may be executed in any number of counterparts, each of which
will be deemed an original and the counterparts will constitute one and
the same instrument and may be sufficiently evidenced by any one
counterpart.
13.10 USE AND FORM OF WORDS
Whenever any words are used herein in the masculine gender, they will be
construed as though they were also used in the feminine gender in all
cases where they would apply, and vice versa. Whenever any words are
used herein in the singular form, they will be construed as though they
were also used in the plural form in all cases where they would apply,
and vice versa.
13.11 HEADINGS
Headings of Articles and Sections are inserted solely for convenience and
reference, and constitute no part of the Plan.
13.12 GOVERNING LAW
The Plan will be governed by and construed according to the federal laws
governing Employee benefit plans qualified under the Code and according
89
to the laws of the State of Nevada where such laws are not in conflict
with the aforementioned federal laws.
90
IN WITNESS WHEREOF, Southwest Gas Corporation has adopted this Plan
this 1st day of July, 1997.
--- ----
SOUTHWEST GAS CORPORATION
Date: 8/8/96
---------------------------
By: /s/ Michael O. Maffie
---------------------------
Title President and Chief Executive Officer
-------------------------------------
91
SOUTHWEST GAS CORPORATION
EMPLOYEE'S INVESTMENT PLAN
SCHEDULE A -- INVESTMENT PLANS
------------------------------
INVESTMENT FUNDS
- ----------------
Southwest Gas Stock Fund
Fidelity Investment Grade Bond Fund
Fidelity Retirement Money Market Fund
Fidelity Contra Fund
Fidelity Asset Manager
Fidelity Asset Manager - Growth
Fidelity Asset Manager - Income
Fidelity Growth & Income Portfolio
Fidelity Low Priced Stock Fund
Hartford GIC (frozen)
DESIGNATION OF INVESTMENT FUNDS
- -------------------------------
A Participant's Deferrals and Excess
Contributions may be invested entirely at his
discretion, in increments of 10 percent (10%),
among the Investment Funds. In the complete
absence of any designation, the Participant's
Deferrals and/or Excess Deferrals will be
invested in the Southwest Gas Stock Fund.
A Participant's Company Matching Contributions
Account will be invested in the Southwest Gas
Stock Fund, except as otherwise determined
under the rules in (b) below relating to
transfers between Investment Funds.
TRANSFER BETWEEN AND AMONG INVESTMENT FUNDS
- -------------------------------------------
(a) A Participant may transfer amounts
representing his Deferrals and Excess
Deferrals from one Investment Fund to
another, one (1) time per Investment Fund
per month, up to twelve (12) times per
calendar year. Transfer of amounts from
the Southwest Gas Stock Fund to another
Investment Fund will be subject to ability
to convert shares of stock to cash.
92
Further, transfer of amounts to or from the Southwest
Gas Stock Fund by Participants who are subjected to
Section 16 or the Securities Exchange Act of 1934, as
amended, may only make such transfers six (6) months
following the date of the most recent "opposite way"
transfer.
(b) Upon attaining age 50, a Participant may
transfer amounts representing his Company
Matching Contributions Account invested in
the Southwest Gas Stock Fund to any of the
Investment Funds, in accordance with
Section 4.03 and (a) above.
(c) The investment of a Participant's entire
Account Balance is subject to the rules of
Section 7.02 once the Participant becomes
entitled to a distribution pursuant to
Section 7.02.
93
Exhibit 5.1
July 11, 1997
Southwest Gas Corporation
5241 Spring Mountain Road
Las Vegas, NV 89102
Ladies and Gentlemen:
As counsel for Southwest Gas Corporation (the "Company"), I have examined the
Registration Statement on Form S-8 to be filed by the Company with the
Securities and Exchange Commission, in connection with the registration under
the Securities Act of 1933, as amended, of 400,000 shares of the Company's $1
par value Common Stock (the "Stock") pursuant to the provisions of the Company's
Employees' Investment Plan. I also have examined the steps taken by the Company
and its Board of Directors, in connection with the authorization and proposed
issuance and sale of the Stock; and I am familiar with resolutions adopted by
the Board of Directors of the Company in connection therewith. I am also
familiar with the application filed by the Company with the California Public
Utilities Commission for authority to issue the Stock, and the order issued
by said Commission authorizing the issuance of same.
Based on the foregoing and upon such other matters as I deem relevant in the
circumstances, it is my opinion that the Company has received all required
authorizations from state regulatory agencies having jurisdiction over the
issuance of the Stock by the Company. Subject to the actions authorized by the
Company's Board of Directors being taken, the Stock, upon issuance and sale
thereof in the manner specified in the Registration Statement, will be duly
authorized, legally and validly issued, fully paid, and nonassessable
outstanding Stock of the Company.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement, and I further consent to the use of my name under the caption
"Interests of Named Experts and Counsel" in the Registration Statement and the
Prospectus which forms a part thereof.
Respectfully submitted,
Robert M. Johnson
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated
February 7, 1997, incorporated by reference in Southwest Gas Corporation's
(the "Company") Form 10-K for the year ended December 31, 1996, and our report
dated June 25, 1997, included in the Company's Form 11-K for the year ended
December 31, 1996, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
July 11, 1997
