|
As filed with the Securities and Exchange Commission on August 26, 2002
United States FORM S-8 SOUTHWEST
GAS CORPORATION |
|
California (State or other jurisdiction of incorporation or organization) |
88-0085720 (I.R.S. Employer Identification No.) |
|
5241 Spring Mountain Road P.O. Box 98510 Las Vegas, Nevada (Address of principal executive offices) |
89193-8510 (Zip Code) |
|
SOUTHWEST GAS
CORPORATION EMPLOYEES' INVESTMENT PLAN GEORGE C.
BIEHL (702) 876-7237 CALCULATION OF REGISTRATION FEE |
| Title of securities being registered | Amount to be registered (1)(2) |
Proposed maximum offering price per share (3) |
Proposed maximum aggregate offering price (3) |
Amount of registration fee | ||||
|---|---|---|---|---|---|---|---|---|
| Common Stock ($1 par value) | 400,000 shares | $22.35 | $8,940,000 | $822.48 | ||||
|
(1) (2) (3) |
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. 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 February 9, 1999, as amended, with Harris Trust Company, as Rights Agent. 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 composite prices of the Common Stock as reported by the Consolidated Tape Association on August 21, 2002 of $22.35. |
|
As permitted by Rule 429, the Prospectus with respect to this Registration Statement also relates to Registrant's Registration Statement on Form S-8 (333-35556). |
PART IINFORMATION 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 IIINFORMATION REQUIRED IN THE REGISTRATION STATEMENTItem 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, 2001 and Employees’ Investment Plan Annual Report on Form 11-K for the year ended December 31, 2001. |
| (b) | Quarterly Reports on Form 10-Q for the Company’s quarters ended March 31, 2002 and June 30, 2002. |
| (c) | 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. Arthur Andersen LLP has not consented to the incorporation by reference in this prospectus of their report on the financial statements of Southwest Gas Corporation for the year ended December 31, 2001 and their report on the financial statements of the Southwest Gas Corporation Employees' Investment Plan for the year ended December 31, 2000, and we have dispensed with the requirement to file their consent in reliance upon Rule 437a of the Securities Act of 1933. Because Arthur Andersen LLP has not consented to the incorporation by reference of their report in this prospectus, you will not be able to recover against Arthur Andersen LLP under Section 11 of the Securities Act of 1933 for any untrue statements of a material fact contained in the financial statements audited by Arthur Andersen LLP or any omissions to state a material fact required to be stated therein. The financial statements incorporated in this Prospectus by reference to the Annual Report on Form 11-K of the Southwest Gas Corporation Employees' Investment Plan for the year ended December 31, 2001 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 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 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. |
|
S-2 Item 8. Exhibits |
| 4.1 | Amended and Restated Southwest Gas Corporation Employees' Investment Plan |
| 5.1 | Opinion of Counsel of Southwest Gas Corporation regarding legality of the securities to be registered |
| 23.1 | Consent of PricewaterhouseCoopers LLP |
| 23.2 | Consent of Counsel of Southwest Gas Corporation (included in opinion filed as Exhibit 5.1 to this Registration Statement) |
| 24.1 | Powers of Attorney |
|
__________ 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 Exchange Act 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 Exchange Act 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 Exchange Act (and each filing of the annual report of the Plan pursuant to Section 15(d) of the Exchange Act) 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 |
|
S-3 |
|
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-4 |
SIGNATURESPursuant 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 August 26, 2002. |
|
By |
SOUTHWEST
GAS CORPORATION /s/ MICHAEL O. MAFFIE Michael O. Maffie President and Chief Executive Officer |
SIGNATURESPursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated. |
|
Signature /s/ MICHAEL O. MAFFIE (Michael O. Maffie) /s/ GEORGE C. BIEHL (George C. Biehl) /s/ ROY R. CENTRELLA (Roy R. Centrella) /s/ MANUEL J. CORTEZ * (Manuel J. Cortez) /s/ MARK M. FELDMAN * (Mark M. Feldman) /s/ DAVID H. GUNNING * (David H. Gunning) /s/ THOMAS Y. HARTLEY * (Thomas Y. Hartley) |
Title President and Chief Executive Officer (Principal Executive Officer) Executive Vice President, Chief Financial Officer and Corporate Secretary (Principal Financial Officer) Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) Director Director Director Chairman of the Board of Directors |
Date August 26, 2002 August 26, 2002 August 26, 2002 August 26, 2002 August 26, 2002 August 26, 2002 August 26, 2002 |
|
S-5 |
|
Signature /s/ MICHAEL B. JAGER * (Michael B. Jager) /s/ LEONARD R. JUDD * (Leonard R. Judd) /s/ JAMES J. KROPID * (James J. Kropid) /s/ CAROLYN M. SPARKS * (Carolyn M. Sparks) /s/ TERRANCE L. WRIGHT * (Terrance L. Wright) |
Title Director Director Director Director Director |
Date August 26, 2002 August 26, 2002 August 26, 2002 August 26, 2002 August 26, 2002 |
| * By |
/s/ GEORGE C. BIEHL (George C. Biehl) Attorney-in-fact |
|
S-6 |
The PlanPursuant to the requirements of the Securities Act of 1933, the Southwest Gas Corporation Benefits 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 August 26, 2002. |
SOUTHWEST
GAS CORPORATION
|
|
/s/ GEORGE C. BIEHL (George C. Biehl) /s/ JAMES P. KANE (James P. Kane) /s/ THOMAS R. SHEETS (Thomas R. Sheets) /s/ FRED W. COVER (Fred W. Cover) |
|
S-7 Exhibit Index |
|
Exhibit Number 4.1 5.1 23.1 23.2 24.1 |
Description Amended and Restated Southwest Gas Corporation Employees' Investment Plan Opinion of Counsel of Southwest Gas Corporation regarding legality of the securities to be registered Consent of PricewaterhouseCoopers LLP Consent of Counsel of Southwest Gas Corporation (included in opinion filed as Exhibit 5.1 to this Registration Statement) Powers of Attorney |
SOUTHWEST GAS CORPORATION
EMPLOYEES' INVESTMENT PLAN
Amended and Restated -- Effective January 1, 1989
Amended and Restated -- Effective December 1, 1994
Amended and Restated -- Effective July 1, 1996
Amended and Restated -- Effective October 1, 2001
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.
The purposes of this Fourth Amendment are to amend and restate the
terms of the Plan to: (a) change the Plan's eligibility rules; (b) change the
Plan's claims procedures to comply with new ERISA claims procedure regulations;
(c) cause the Plan to adopt model amendment language out of Internal Revenue
Service Notice 2000- 18, dealing with Code Section 401(a)(9) regulations, and
Notice 2001-37, dealing with the definition of compensation and qualified
transportation fringe benefits; (d) make changes to the Plan so as to cause the
Plan to comply with changes made by the Uruguay Round Agreements, Pub. L.
103-465 (GATT); the Uniformed Services Employment and Reemployment Rights Act of
1994) (USERRA); The Small Business Job Protection Act of 1996, Pub. L. 104-188
(SBJPA) (including Code Section 414(u); the Tax Payer Relief Act of 1997
(TRA'97); and The Internal Revenue Service Restructuring and Reform Act of 1998
(RRA), (e) adopt changes to the Plan to comply with the mandatory requirements
and selected options permitted by the Economic Growth and Tax Relief
Reconciliation Act of 2001 (EGTRRA) and (f), effective as January 1, 2002, to
designate the portion of the Plan invested in Company Stock (consisting of (i)
Company Matching Contributions and (ii) Participant Deferrals), as an Employee
Stock Ownership Plan ("ESOP"), as defined in Code Section 4975.
As amended, the Plan contains an ESOP which is designed to invest
primarily in qualifying employer securities. It is the intention of the Company
that (i) the non-ESOP portion of the Plan (the "Profit-Sharing Plan") shall be a
profit-sharing plan that is qualified under Code Sections 401(a) and 401(k),
(ii) the ESOP portion of the Plan shall be both a stock bonus plan and an
employee stock ownership plan that is qualified under Code Sections 401(a) and
4975(e)(7) and described in ERISA Section 407(d)(6), (iii) that the Profit-
Sharing Plan and the ESOP together shall constitute a single plan under Treasury
Regulation Section 1.414(1)-1(b)(1); (iv) that the Plan shall satisfy the
requirements of ERISA; and (v) that the Trust Fund maintained under the Plan
shall be tax-exempt under Code Section 501(a).
The provisions in the other sections of the Plan shall apply to the
ESOP in the same fashion as they apply to the Profit Sharing Plan, except to the
extent such provisions are by their terms inapplicable to the ESOP. The
amendment of the Plan to include the ESOP shall not affect any beneficiary
designation or other applicable agreements, elections, or consents that
Participants, spouses or beneficiaries validly executed under the terms of the
Plan before the January 1, 2002 effective date of the ESOP, and such
designations, elections, and consents shall be applied under the ESOP in the
same manner as they applied under the Plan before the addition of the ESOP.
This restatement of the Plan shall be effective on October 1, 2001;
provided, however, that if a provision of this restatement of the Plan has a
specific effective date other than October 1, 2001, 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 1
Business Day 1
Code 2
Committee 2
Company 2
Company Matching Contributions 2
Company Matching Contributions Account 2
Company Stock 2
Compensation 2
Deferral Account 4
Deferrals 4
Effective Date 4
Eligible Employee 4
Employee 4
Employee Stock Ownership Plan 4
Employer Securities 5
Entry Date 5
ERISA 5
Five Percent Owner 5
Frozen After Tax Account 5
Hour of Service 5
Leased Employee 5
Normal Retirement Age 5
Normal Retirement Date 5
Participant 5
Period of Severance 6
Permanently and Totally Disabled 6
Plan 6
Plan Year 6
Qualified Consent 6
Qualified Domestic Relations Order (QDRO) 7
Rollover Account 7
Service 7
Spouse 8
Total Vested Account Balance 8
Trust 8
Trust Agreement 8
Trust Fund or Funds 8
Trustee 8
i
USERRA 8
Valuation Date 8
Valuation Period 8
Vested 8
Voice Response System 9
2. PARTICIPATION
-------------
2.01 Eligibility to Become a Participant 9
2.02 Participation in the Plan 9
2.03 Reemployment 9
2.04 Employment After Normal Retirement Age 9
3. CONTRIBUTIONS
-------------
3.01 Contribution of Participants' Deferrals 10
3.02 Company Matching Contributions 11
3.03 Maximum Amount of Participant Deferrals 11
3.04 Limitation on Deferrals 13
3.05 Limitation on Company Matching Contributions 19
3.06 Limitation on Annual Additions 24
3.07 Allocation of Forfeitures 27
3.08 Rollover Contributions 27
3.09 Employer Error 28
3.10 Inclusion of Ineligible Employee 29
4. INVESTMENT OF CONTRIBUTIONS AND VALUATION OF ACCOUNTS
-----------------------------------------------------
4.01 Participants' Accounts 29
4.02 Investment Funds 29
4.03 Investment of Company Matching Contributions and
Voting of Company Stock 30
4.04 Allocation of Investment Income on a Valuation Date 30
4.05 Limitation on Participant Investment Instructions 31
5. WITHDRAWALS, LOANS AND QUALIFIED DOMESTIC RELATIONS ORDERS
----------------------------------------------------------
5.01 Withdrawal of Frozen After Tax Contributions 31
5.02 Withdrawal of Company Matching Contributions 32
5.03 Loans to Participants 32
5.04 Hardship Withdrawals 33
5.05 Qualified Domestic Relations Order 36
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 37
6.02 Vesting Due to Disability and Disability Benefits 37
6.03 Vesting Due to Death and Death Benefits 37
6.04 Vesting Upon Termination of Employment and
Termination of Employment Benefits 37
ii
6.05 Forfeitures 38
6.06 Reinstatement of Forfeited Accounts 39
7. DISTRIBUTION OF BENEFITS
------------------------
7.01 Form of Distribution 39
7.02 Timing of Distributions 40
7.03 Eligible Rollover Distributions 42
8. PLAN ADMINISTRATION
-------------------
8.01 Appointment of Committee 43
8.02 Powers and Duties 43
8.03 Actions by the Committee 45
8.04 Interested Committee Members 45
8.05 Investment Manager 45
8.06 Indemnification 45
8.07 Conclusiveness of Action 45
8.08 Payment of Expenses 46
8.09 Claims for Benefits 46
8.10 Request for Review of Denial 47
8.11 Decision on Review of Denial 47
8.12 Notice of Time Limits 48
8.13 Corrections Pursuant to Remedial Programs 48
9. AMENDMENT, TERMINATION, AND MERGER OF THE PLAN
----------------------------------------------
9.01 Right to Amend the Plan 48
9.02 Right to Terminate the Plan 48
9.03 Plan Merger and Consolidation 49
10. TRUST FUND AND THE TRUSTEE
--------------------------
10.01 Selection of Trustee 49
11. TOP-HEAVY PLAN REQUIREMENTS
---------------------------
11.01 General Rule 49
11.02 Vesting Provisions 50
11.03 Minimum Contribution Provision 50
11.04 Limitation on Compensation 50
11.05 Limitation on Contributions 51
11.06 Coordination with Other Plans 51
11.07 Determination of Top-Heavy Status 51
11.08 Definition of Key Employee 54
11.09 Definition of Non-Key Employee 55
12. USERRA
------
12.01 Qualified Military Service 55
iii
12.02 Eligibility and Vesting 55
12.03 Make-up Deferrals and Company Matching Contributions 56
12.04 Loan Repayment Suspension 57
13. MISCELLANEOUS
-------------
13.01 Limitation on Distributions 57
13.02 Limitation on Reversion of Contributions 57
13.03 Voluntary Plan 58
13.04 Nonalienation of Benefits 58
13.05 Inability to Receive Benefits 58
13.06 Unclaimed Benefits 58
13.07 Limitation of Rights 59
13.08 Invalid Provisions 59
13.09 One Plan 59
13.10 Use and Form of Words 60
13.11 Headings 60
13.12 Governing Law 60
14. Employee Stock Ownership Plan
-----------------------------
14.01 Purpose 60
14.02 Investment in Company Stock 60
14.03 Company Matching Contributions 61
14.04 Diversification 61
14.05 Voting of Employer Securities 61
14.06 Form of Distributions 61
14.07 Dividends 61
SCHEDULE A - INVESTMENT PLANS
-----------------------------
Investment Funds A-i
Designation of Investment Funds A-ii
Transfer Between and Among Investment Funds A-ii
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 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 New York 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.
1
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 or the Committee.
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.
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.
COMPANY STOCK means share of Company common stock.
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 and elective
contributions that are not includible in gross income under Code
Sections 125, 402 and 403(b), 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
2
(vii) Any contributions made toward the purchase of an annuity
described in Code Section 403(b) whether or not such amounts
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. 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. Notwithstanding
any provision of this Plan to the contrary, the following sentence that
includes the model language of Internal Revenue Service Notice 2001-37
shall apply on and after January 1, 2001. For Plan Years beginning on
and after January 1, 2001, for purposes of applying the limitations
described in Section 3.06, the top-heavy plan rules of Article 11, the
Section 3.05(a) of "Compensation Percentage" and the Section 3.04(a)
definition of "Actual Deferral Percentage," Compensation paid or made
available during such Plan Years shall include elective amounts that
are not includible in the gross income of the employee by reason of
Code Section 132(f)(4).
(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 and $200,000 for
the year beginning January 1, 2002) 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. 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
3
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 October 1, 2001, provided,
however, that if a provision of this restatement of the Plan has a specific
effective date other than October 1, 2001, the date so specified shall be the
effective date of such provision.
ELIGIBLE EMPLOYEE means any Employee who is employed by the Company and who (a)
is not included in a unit of Employees covered by a collective bargaining
agreement (as so determined by the Secretary of Labor) between Employee
representatives and the Company if retirement benefits were the subject of good
faith bargaining between such employee representatives and the Company unless
such collective bargaining agreement expressly provides for the inclusion of
such persons as Participants in the Plan, and (b) is not an non-resident alien
individual described in Code Section 414(b)(3)(C) (a nonresident alien
individual without income from performing services in the United States).
Additionally, an individual who is not an Employee shall not be eligible to
participate in the Plan even if such person is subsequently determined by a
court of law or regulatory body to have been a common law Employee of the
Company.
EMPLOYEE means any person who is employed by the Company and receives regular
Compensation from the Company. The term "Employee" shall not include any person
who is not recorded as being an employee on the payroll records of the Company
including any such person who is subsequently reclassified by a court of law or
regulatory body as a common law employee of the Company. Consistent with the
foregoing and for purposes of clarification only, the term Employee does not
include (a) a Code Section 414(n) leased employee, (b) a leased employee other
than a Code Section 414(n) leased employee, or (c) any individual who performs
services for the Employer as an independent contractor, or under any other
non-employee classification, or through a temporary help firm, employee leasing
firm, or professional employer organization.
EMPLOYEE STOCK OWNERSHIP PLAN OR ESOP means the portion of Participants'
Deferral and Company Matching Contribution Accounts invested in the Southwest
Gas Stock Fund and are designated as, and are intended to constitute, an
employee stock ownership plan within the meaning of Code Section 4975(e)(7) and
ERISA Section 407(d)(6).
4
EMPLOYER SECURITIES means shares of Company Stock that meet the requirements of
Code Section 409(l). For purposes of the Plan, as the context requires, this
term also refers to and includes Company Stock.
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 an individual that (a) is not an Employee, (b) provides
services to the Company pursuant to an agreement between a leasing organization
and the Company, (c) has performed services for the Company on a substantially
full-time basis for a period of at least a year, (d) effective for Plan Years
beginning after December 31, 1996, provides services under the primary direction
or control of the Company, and (e) effective for Plan Years beginning before
January 1, 1997, provides services to the Company of a type historically
performed by Employees in the Company's primary business field. Additionally, an
individual who satisfies the requirements to be a "Leased Employee" shall not be
considered to be an employee for Code nondiscrimination testing purposes if (a)
he is covered by a money purchase plan of the leasing organization that provides
(1) a nonintegrated employer contribution rate of at least 10 percent of
compensation, as defined in Code Section 415(c)(3), but including amounts
contributed pursuant to a salary reduction agreement which are excludable from
his/her gross income under Code Sections 125, 402(g)(3), 402(h), or 403(b), (2)
immediate participation, and (3) full and immediate vesting; and (b) Lease
Employees do not constitute more than twenty percent (20%) of the Company's
non-highly compensated workforce.
NORMAL RETIREMENT AGE means age sixty-five (65).
NORMAL RETIREMENT DATE means the first day of the month following attainment of
Normal Retirement Age.
5
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;
(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 the Committee determines whether a Participant is 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
6
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
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.
(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.
7
(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.
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.
8
VOICE RESPONSE SYSTEM means a system of telephonic or other verbal or electronic
communication with the Plan Trustee or record-keeper that has been approved by
the Committee for the purpose of making certain elections under the Plan.
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.
(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 in a manner acceptable
to the Committee or the Board.
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, or in such other manner as is
allowed by the Committee from time to time, 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.
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 shall, if administratively practicable, 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 shall, if administratively practicable, 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.
9
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.
-------------------
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 one percent (1%) and not
more than fifty-four percent (54%) or the cash compensation
payable to the Participant after all other applicable
withholdings. 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 or in such other manner as is approved by the
Committee from time to time. Changes to a Participant's
Deferral election 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). Elective contributions invested by
Participants in the Southwest Gas Stock Fund are also intended
to qualify as contributions under the ESOP provisions of the
Plan.
10
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 the financial obligations of the Company under
the Plan with respect to the period for which it is made.
(d) Company Matching Contributions invested in the Southwest Gas
Stock Fund are also intended to qualify as contributions under
the ESOP provisions of the Plan.
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 or any other qualified plan
maintained by the Company during any taxable year in excess of
the dollar limitation contained in Code Section 402(g) in
effect for such taxable years, except to the extent permitted
under Section 3.03(b) of the Plan and Code Section 414(v), if
applicable. 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) Catch-Up Contributions
----------------------
For Plan Years beginning after December 31, 2001, Participants
who have attained age 50 before the close of the Plan Year
shall (at such times and in such manner as is determined by
the Committee with respect to all Participants eligible to
make catch-up contributions) be eligible to make catch-up
contributions in accordance with, and subject to the
limitations of Code Section 414(v). Such catch-up
contributions shall not be taken into account for purposes of
the provisions of the Plan implementing the required
limitations of Code Sections 402(g) and 415.
11
(c) 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 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).
(d) Treatment of Excess Deferrals.
-----------------------------
If a Participant has made Excess Deferrals, the following
provisions shall apply:
(i) In the event that a Participant (or the Company under
the circumstances described in Treas. Reg.
Section 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 has Excess Deferrals included with
his 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
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.
12
(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 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.
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
13
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.
(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 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
14
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 (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.
15
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 Look Back 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. The Employer did not make a Top Paid
Group election in Plan Years occurring
during the period in 1997-2001.
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.
(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
16
(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 Determination 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 Percentage of Lower
Compensated Employees in the Look-Back Year instead of the
Determination Year. In the Plan Years beginning January 1,
1997, 1998, 1999, 2000 and 2001, the Company elected to
utilize the Actual Deferral Percentage of Lower Compensated
Employees for the Determination 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
17
dollar amount of such Deferrals. In Plan Years
beginning prior to January 1, 1997, the phrase "rate
of Section 3.01 Unmatched Deferrals" shall refer to
the ratio of a Higher Compensated Employee's
Unmatched Deferrals to Compensation and the phrase
"rate of Section 3.01 Matched Deferrals" shall refer
to the ratio of a Higher Compensated Employee's
Matched Deferrals to Compensation.
(ii) In the event that the Deferrals allocated to Higher
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 and for Plan Years
beginning before January 1, 1997, shall mean the
Actual Deferral Ratio of a Higher Compensated
Employee.
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.
(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
18
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 immediately preceding Plan Year,
plus (B) the Higher Compensated Employee's Deferrals
for such 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.
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.
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
19
(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 (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 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 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
20
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.
(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.
21
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, 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
Determination 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
Look-Back Year rather than that of the Determination Year.
Pursuant to the two foregoing sentences, in the
Plan Years beginning January 1, 1997, 1998, 1999, 2000 and
2001, the Company elected to utilize the ACP of Lower
Compensated Employees in the Determination 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.
The multiple use test described in Treasury Regulation section
1.401(m)-2 and in this subsection shall not apply for Plan
Years beginning after December 31, 2001.
(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:
(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
22
investment income or loss thereon, to the Higher
Compensated Employees with the highest Contribution
Percentage, 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 from
exceeding the permissible Contribution Percentage for
the group.
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. For the purpose of
this subparagraph, the phrase "Contribution
Percentage" shall for Plan Years beginning after
December 31, 1996, refer to the dollar amount of
contributions that are considered in determining a
Participant's Contribution Percentage, and for Plan
Years beginning before January 1, 1997, shall mean a
Participant's Contribution Percentage Ratio.
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.
23
(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
Higher Compensated Employee's Excess Aggregate
Contributions for the immediately preceding Plan
Year; and (B) the denominator of which is the sum of:
(i) the balance in such accounts at the beginning of
the immediately 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.
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) as adjusted by Code Section 415(d).
For purposes of this Section, "Annual Additions" means the
total amount of Company Matching Contributions, Participant
24
Deferrals, Participant after-tax contributions, if any, and
forfeitures, if any, allocated to the Participant's Accounts
during the Plan Year.
For Plan Years beginning before January 1, 2002, and
notwithstanding any provision of this Plan to the contrary,
the Annual Additions allocated to any Participant's Accounts
for a Plan Year will not exceed the lessor of (i) twenty-five
percent (25%) of the Participant's Compensation paid in such
years, or (ii) $30,000, or, if greater, twenty-five percent
(25%) of the dollar limitation in effect under Code Section
415(c)(1)(A) as adjusted by Code Section 415(d).
For Plan Years beginning after December 31, 2001, and
notwithstanding any provisions of this Plan to the contrary
(except to the extent permitted under Section 3.03(b) of the
Plan and Code Section 414(v)), the Annual Additions that may
be contributed or allocated to any Participant's Accounts for
a Plan Year will not exceed the lessor of (i) $40,000, as
adjusted for increases in the cost-of-living under Code
Section 415(d), or (ii) one-hundred percent (100%) of the
Participant's Compensation, within the meaning of Code Section
415(c)(3) within such years.
The one-hundred percent (100%) Compensation limit referred to
herein shall not apply to any contribution for medical
benefits after separation from service (within the meaning of
Code Sections 401(h) or 419A(f)(2)) which is otherwise treated
as an annual addition.
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, without regard to any rollover
contribution as delineated in Code Section 415(c)(2).
(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 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
25
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 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
26
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 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
- ---- -------------------------
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, if administratively
practicable, 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
27
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(a)(31)(C) eligible rollover distribution.
After December 31, 2001, the Committee shall decide whether to accept
rollover distributions from Code Sections 401(a) and 403(a) qualified
plans, Code Section 403(b) annuity contracts, and Code Section 457(b)
eligible plans maintained by a state, political subdivision of a state,
or any agency or instrumentality of a state or a political subdivision
of a state 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 under the
provisions of Code Section 401(a)(31).
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
--------------
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
28
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 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.
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 or
in such other manner as is allowed by the Committee from time to time.
The election will include the percentage, subject to the restrictions
in Schedule A, of future contributions to be invested in each
29
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 or
by the Committee and/or its designee if the Committee creates an
alternative method of making such elections.
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 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. The Committee may create alternative rules allowing for such
transfers.
Except for Participant Deferrals invested in Employer Securities and 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
-----
All Company Matching Contributions shall be primarily invested in the
Southwest Gas Stock Fund, and shall be a part of the Employee Stock
Ownership Plan. Such contributions shall be based on the fair market
value of the Company Stock at the time contributed by the Company or
purchased by the Trustee from the Company, in the open market, or in
privately negotiated transactions. 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 Employer Securities, 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 Employer 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.
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).
30
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.
Furthermore, notwithstanding any language in this Plan to the contrary,
the Committee may establish any and all rules and regulations it deems
necessary to provide and allow for a change in Plan record keeper,
and/or Trustee, or a change in Investment Funds, as determined by the
Committee, that are available to Plan Participants. Such rules and
regulations may include, but not be limited to, limits or prohibitions,
during specified time periods, on the availability of Participant
enrollments, withdrawals, distributions, loans, rollover contributions,
Investment Fund transfers, and/or changes in Deferral elections.
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
31
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 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 and will supersede the terms of
this Section 5.03, if inconsistent therewith). 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, when added to the
outstanding balance of all other loans from the Plan to the
Participant, 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.
(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.
32
(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 legally required 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.
(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
33
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 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.
(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;
34
(B) Not be made until the Participant has
obtained all withdrawals (including the
election to receive dividends under Article
14), 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, if prior to January 1, 2002, and
for six (6) months if such withdrawal occurs
after December 31, 2001; 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 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
35
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 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 in its discretion 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 and distributed in a
lump sum or, if all or part of the distribution is a Section
7.03 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
36
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.
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.
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
37
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) Subject to Section 14.03 below, the Vested portion of
a Participant's Company Matching Contributions
Account determined as follows:
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. If the Participant is zero
percent vested in such account he shall be deemed to have received a
distribution of such vested account balance on the date he terminated
employment with the Company.
Notwithstanding any other provision of this Plan to the contrary, 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 $5,000 (or any other amount
as may be established, by regulations of the Secretary of the Treasury,
as the maximum amount that may be paid out in such event without the
Participant's consent), the Committee shall direct the Trustee to
immediately, or as soon as administratively practicable, distribute the
Accounts, but no later than the close of the second Plan Year following
the Plan Year in which the Participant's termination of employment
38
occurred, the then Vested amount in such Accounts to the Participant.
Effective January 1, 2002, the determination as to whether the Vested
amount in a Participant's Accounts does not exceed $5,000 shall be made
without regard to that portion of the Account Balance that is
attributable to rollover contributions (and earnings allocable thereto)
within the meaning of Code Sections 402(c), 403(b)(8),
408(d)(3)(A)(ii), and 457(e)(16). If the then Vested amount in a
Participant's Accounts exceeds $5,000, without regard to such rollover
contributions, the Participant may request, through the Voice Response
System, a distribution of the entire Vested amount of such Accounts.
The Trustee shall distribute the Accounts as soon as administratively
practicable, but no later than the close of the second Plan Year
following the Plan Year in which the Participant's termination of
employment occurred. Investment income will continue to be allocated
pursuant to Section 4.04 above to the earlier of the Business Day of or
the first Business Day after the request for distribution is made.
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 percentage of the amount in his
Company Matching Contributions Account as of such prior
termination of employment.
ARTICLE 7
DISTRIBUTION OF BENEFITS
------------------------
7.01 Form of Distribution
- ---- --------------------
Amounts distributable pursuant to Article 6 will be distributed as
follows:
39
(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) Prior to January 1, 1998 the following rule shall apply:
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 later of the end of the Plan Year in which the
Participant attains age sixty-five (65) or terminates
employment. 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.
Effective January 1, 1998, the following rule shall apply:
Subject to the provisions of subsection (c) below,
distributions pursuant to Article 6 of the Plan will begin as
soon as practicable, but not later than April 1 following the
end of the Plan Year in which the Participant attains age
seventy and one-half (70 1/2) or terminates employment
(effective January 1, 2002, terminates employment includes
severance from employment), if later. If a Participant is
rehired by the Company before his benefit is distributed by
the Trustee and subject to the provisions of subsection (c)
below, 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 ($5,000 effective October 1, 1998) (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
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. Effective
January 1, 2002, the determination as to whether the Vested
amount in a Participant's Accounts does not exceed $5,000
shall be made without regard to that portion of the Account
Balance that is attributable to rollover contributions (and
earnings allocable thereto) within the meaning of Code
Sections 402(c), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16).
40
(c) Prior to January 1, 1998, the following rules shall apply:
(i) 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.
(ii) 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 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.
Effective January 1, 1998, A Participant who is a
Five Percent Owner may only defer receipt of his
distribution to April 1 following the end of the Plan
Year in which the Participant attains age seventy and
one-half (70 2), regardless of his employment status
with the Company. 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 Regulation
Section 1.401(a)(9)-2. Furthermore, notwithstanding any other
provision of this Plan to the contrary, with respect to
distributions under the Plan made for calendar years beginning
on or after January 1, 2002, the following language from the
Code Section 401(a)(9) model amendment contained in Internal
Revenue Service Announcement 2001-18 shall apply: "The Plan
will apply the minimum distribution requirements of Code
Section 401(a)(9) in accordance with the regulations under
section 401(a)(9) that were proposed on January 17, 2001,
notwithstanding any provision of the Plan to the contrary.
This change shall continue in effect until the end of the last
calendar year beginning before the effective date of final
regulations under Code Section 401(a)(9) or such other date as
may be specified in guidance published by the Internal Revenue
Service."
41
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" shall, effective January 1, 2000,
mean a distribution described in Code Section 402(c)(4). Prior to
January 1, 2000, the term "eligible rollover distribution" shall mean
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); 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. After December 31, 2001, the term
"eligible rollover distribution" shall include after-tax employee
contributions which are not includible in gross income (provided, that
such contributions may be transferred only to an individual retirement
account or annuity described in Code Sections 408(a) or (b), or a
qualified defined contribution plan described in Code Sections 401(a)
or 403(a) that agrees to separately account for amounts so transferred,
including separately accounting for the portion of such distribution
which is includible in gross income and the portion of such
distribution which is not so includable); and exclude any amount that
is distributed on account of hardship, as provided for in Section 5.04
of the Plan, shall not be an eligible rollover distribution and the
distributee may not elect to have any portion of such a distribution
paid directly to an eligible retirement plan.
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. After
December 31, 2001, an "eligible retirement plan" shall also include an
annuity contract described in Code Section 403(b) and an eligible plan
under Code Section 457(b) (which is maintained by a state, political
subdivision of a state, or any agency or instrumentality of a state or
political subdivision of a state and which agrees to separately account
of amounts so transferred). 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. After December 31, 2001, the definition of "eligible
retirement plan" shall also apply in the case of a distribution to a
surviving Spouse, or to a Spouse or former Spouse who is the alternate
payee under a qualified domestic relation order, as defined in Code
Section 414(p).
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
42
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:
(a) 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
(b) The Participant, after receiving the notice, affirmatively
elects a distribution through the Voice Response System.
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, at the request of the Company's President,
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. If a member of the Committee is an
Employee of the Company, he shall be deemed to have resigned upon his
termination of employment with the Company. The Board or the President
of the Company, may remove one or more members of the Committee at any
time.
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
43
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.
(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.
(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
44
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.
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.
45
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
- ---- -------------------
Prior to January 1, 2002, the following rules shall apply to a claim
for benefits. Any claim for benefits under this Plan shall be made in
writing by a Participant or Beneficiary or other party making the claim
(the "Claimant") 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 Claimant 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 Claimant; 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 Claimant 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 Claimant, or his or her authorized
representative, may file a request for review as provided in Section
8.10.
Effective January 1, 2002, any claim for benefits under the Plan shall
be made in writing to the Committee. If such claim for benefits is
wholly or partially denied, the Committee shall, within a reasonable
period of time not to exceed ninety (90) days after receipt of the
claim, notify the Claimant of the denial of the claim. Such notice of
denial (a) shall be in writing, (b) shall be written in a manner
calculated to be understood by the Claimant, and (c) shall contain (1)
the specific reason or reasons for denial of the claim, (2) a specific
reference to the pertinent 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 such
material or information is necessary, and (4) an explanation of the
claim review procedures. The ninety day period may, under special
circumstances, be extended up to an additional ninety days upon written
notice of such extension to the Claimant which notice shall specify the
extraordinary circumstances and the extended date of the decision, the
time limits applicable to such procedures and a statement of the
Claimant's right to bring a civil action under ERISA Section 502(a)
following an adverse benefit determination upon review. Notice of
extension must be given prior to expiration of the initial ninety (90)
day period. The extension notice shall indicate the special
circumstances that require an extension of time and the date by which
the Committee expects to render a decision on the claim. If the claim
46
is denied the Claimant may file a request for review as provided in
Section 8.10.
8.10 Request for Review of Denial
- ---- ----------------------------
Effective prior to January 1, 2002, within sixty (60) days after the
receipt by the Claimant of a claim denial (or after the date a claim is
deemed denied), the Claimant 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.
Effective January 1, 2002, Within sixty (60) days after the receipt of
the decision denying a claim by the Claimant, the Claimant may file a
written request with the Committee that it conduct a full and fair
review of the denial of the claim for benefits. The Claimant or his/her
duly 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
- ---- ----------------------------
Effective prior to January 1, 2002, the Committee shall provide the
Claimant 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 Claimant, 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 Claimant; (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 Claimant 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.
Effective January 1, 2002, the Committee shall deliver to the Claimant
a written decision on the review of the denial within a reasonable
period of time not to exceed 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 Claimant be extended an
additional sixty (60) days. Notice of an extension shall be given
within the initial sixty (60) day review period. The extension notice
shall indicate the special circumstances that require an extension of
time and the date by which the Committee expects to render a decision
upon review. Upon review the Claimant shall be given the opportunity to
(1) submit written comments, documents, records, and other information
relating to its claim and (2) request and receive, free of charge,
reasonable access to, and copies of, all documents, records, and other
information relevant to the Claimant's claim for benefits. Whether a
document, record, or other information is relevant to a claim for
benefits shall be determined by reference to applicable ERISA
regulations. The review of a denied claim shall take into account all
comments, documents, records, and other information submitted by the
Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit
47
determination. The decision on review shall be written in a manner
calculated to be understood by the Claimant and, if adverse, shall (1)
include the specific reason or reasons for the decision, (2) contain a
specific reference to the pertinent Plan provisions upon which the
decision is based, (3) contain a statement that the Claimant is
entitled to receive, upon request and free of charge, reasonable access
to, and copies of, all documents, records, and other information
relevant to the Claimant's claim for benefits (whether a document,
record, or other information is relevant to a claim for benefits shall
be determined by reference to applicable ERISA Regulations), and (4)
contain a statement describing the Claimant's right to bring an action
under ERISA Section 502(a).
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.
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,
Closing Agreement Program, Self-Correction Program or Voluntary
Correction 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.
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
48
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
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.
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.
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.
49
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 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.
Effective for Plan Years beginning on and after January 1, 2002,
Employer matching contributions shall be taken into account for
purposes of satisfying the minimum contribution requirements of section
416(c)(2) of the Code and the plan. The preceding sentence shall apply
with respect to matching contributions under the Plan or, if the Plan
provides that the minimum contribution requirement shall be met in
another plan, such other plan. Employer matching contributions that are
used to satisfy the minimum contribution requirements shall be treated
as matching contributions for purposes of the actual contribution
percentage test and other requirements of section 401(m) of the Code.
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.
50
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 in Plan Years beginning before
January 1, 2000:
(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%)."
(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
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
51
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 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.
For Plan Years beginning after December 31, 2001, for
purposes of determining the present values of accrued
benefits, and the amounts of account balances of
Employees as of the Determination Date, the following
rules shall apply:
(A) Distributions during year ending on the
Determination Date. The present values of
accrued benefits and the amounts of account
balances of an Employee as of the
Determination Date shall be increased by the
distributions made with respect to the
Employee under the Plan and any plan
aggregated with the Plan under
section 416(g)(2) of the Code during
the 1-year period ending on the
Determination Date. The preceding sentence
shall also apply to distributions under a
terminated plan which, had it not been
terminated, would have been aggregated with
the Plan under section 416(g)(2)(A)(i) of
the Code. In the case of a distribution made
52
for a reason other than separation from
service, death, or disability, this
provision shall be applied by substituting
"5-year period" for "1-year period."
(B) Employees not performing services during
year ending on the Determination Date. The
accrued benefits and accounts of any
individual who has not performed services
for the Employer during the 1-year period
ending on the Determination Date shall not
be taken into account.
(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 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
53
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.
(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.
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.
54
(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.
For Plan Years beginning after December 31, 2001, "Key
Employee" means, for purposes of determining whether the Plan
is a top-heavy plan under Code Section 416(g), any Employee or
former Employee (including any deceased Employee) who at any
time during the Plan Year that includes the Determination Date
was an officer of the Employer having annual compensation
greater than $130,000 (as adjusted under Code Section
416(i)(1) for Plan Years beginning after December 31, 2002), a
5-percent owner of the Employer, or a 1- percent owner of the
Employer having annual compensation of more than $150,000. For
this purpose, annual compensation means compensation within
the meaning of Code Section 415(c)(3). The determination of
who is a Key Employee will be made in accordance with Code
Section 416(i)(1) and the applicable regulations and other
guidance of general applicability issued thereunder.
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.
ARTICLE 12
USERRA
------
12.01 Qualified Military Service
- ----- --------------------------
(a) For purposes of this Article VII, 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
55
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:
(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
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
56
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.
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 on 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.
(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
57
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.
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.
Except for a Qualified Domestic Relations Order, and/or an offset or
assignment described in Code Section 401(a)(13)(A) or (C), 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.
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
58
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 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.
If a missing Participant procedure is established by the Pension
Benefit Guarantee Corporation, or other federal agency, and applies to
defined contribution plans, the Committee may utilize such program.
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.
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.
59
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 to the laws of the State of Nevada where such laws are not in
conflict with the aforementioned federal laws.
ARTICLE 14
EMPLOYEE STOCK OWNERSHIP PLAN
-----------------------------
14.01 Purpose.
- ----- -------
The Southwest Gas Stock Fund shall be considered and designated as an
Employee Stock Ownership Plan ("ESOP"). The purpose of the ESOP is to
allocate to Participants and their Beneficiaries an ownership interest
in the Company through the distribution of Company Stock (or the fair
market value of such Company Stock) following a Participant's
termination of service. Neither the Company, its officers, directors,
Employees or shareholders, nor any fiduciary of the Plan shall have any
responsibility for the value of any stock or other securities of the
Company allocated to the Account of, or distributed to, any Participant
or Beneficiary hereunder, it being understood that such stock or
securities may decline in value or become wholly worthless due to risks
and circumstances which cannot be foreseen and which may not be within
the control of any such person or entities.
14.02 Investment in Company Stock.
- ----- ---------------------------
A principal purpose of the ESOP is to provide the opportunity for
Employees to acquire Employer Securities. Accordingly, Company Matching
Contributions shall be invested primarily in Employer Securities. Such
contributions will be made in original issue Company Stock or cash to
be used to purchase Employer Securities either directly from the
Company, in the open-market, or in privately negotiated transactions.
Other cash received for investment in the Southwest Gas Stock Fund will
be used primarily to purchase Employer Securities. If Employer
Securities are not available for purchase, or if the Trustee determines
that the purchase of additional Employer Securities is not prudent or
would not further the purpose of the Plan, the Trustee shall, to the
extent not inconsistent with the Plan's continued tax qualification as
an employee stock ownership plan under Section 4975(e)(7) of the Code,
60
invest the assets of the ESOP in other securities or investments. All
purchases of Employer Securities shall be made at prices which, in the
judgment of the Trustee, do not exceed the fair market value of such
Employer Securities at the time of purchase.
14.03 Company Matching Contributions; Vesting.
- ----- ---------------------------------------
(a) Company Matching Contributions
------------------------------
Payment of Company Matching Contributions will be made to the
Southwest Gas Stock Fund, as set forth above in Section 3.02.
(b) Vesting
-------
Effective January 1, 2002 and notwithstanding the provisions
set forth above in Section 6.04, dividends paid on Company
Stock will be fully Vested with the Participant, without
regard to whether the Participant is Vested in the Company
Stock with respect to which the dividend is paid.
14.04 Diversification.
- ----- ---------------
Upon reaching age fifty (50), a Participant may elect to transfer his
Account Balances attributable to Employer Securities to any other
Investment Fund, and invest future Company Matching Contributions in
any other Investment Fund.
14.05 Voting of Employer Securities.
- ----- -----------------------------
All Employer Securities held within the ESOP portion of the Plan shall
be voted by the Participant or the Trustee as set forth above in
Section 4.03 and in the Trust Agreement. Any shares of Employer
Securities not credited to Participant Accounts shall be voted by the
Trustee in the same ratio that the securities are voted by the
Participants who exercised their voting rights.
14.06 Form of Distributions.
- ----- ---------------------
Participant Accounts held within the ESOP shall be distributed as set
forth above in Section 7.01(a).
14.07 Dividends.
- ----- ---------
Dividends paid by the Company with respect to shares of Employer
Securities held in the ESOP shall, in the discretion of the Committee,
be: (i) retained and reinvested in the Plan; (ii) distributed to
Participants or their Beneficiaries within 90 days after the end of the
Plan Year in which they were received; (iii) paid in cash directly to
the Participant or their Beneficiaries or (iv) paid to the Plan, where
the Participants can subsequently elect to reinvest the dividends into
their ESOP accounts or take a cash distribution within 90 days after
the end of the Plan Year in which such dividends were received.
61
IN WITNESS WHEREOF, Southwest Gas Corporation has adopted this Plan
this 5th day of October 2001.
SOUTHWEST GAS CORPORATION
By:
---------------------------------------
Title: President & Chief Executive Officer
62
SOUTHWEST GAS CORPORATION
EMPLOYEE'S INVESTMENT PLAN
Schedule A -- Investment Plans
------------------------------
Investment Funds
- ----------------
Effective March 16, 2001
- ------------------------
Southwest Gas Stock Fund
Fidelity Investment Grade Bond Fund
Fidelity Retirement Money Market Portfolio
Fidelity Contrafund
Fidelity Asset Manager - Growth
Fidelity Growth & Income Portfolio
Fidelity Low Priced Stock Fund
Vanguard Index 500 Portfolio
Vanguard International Growth Fund
Effective January 15, 2002
- --------------------------
Fidelity Retirement Money Market Fidelity Freedom Income Fund
Portfolio Fidelity Freedom 2000 Fund
Fidelity U.S. Bond Index Fund Fidelity Freedom 2010 Fund
Vanguard 500 Index Fund - Admiral Fidelity Freedom 2020 Fund
Shares Fidelity Freedom 2030 Fund
Fidelity Growth & Income Portfolio Fidelity Freedom 2040 Fund
Fidelity Contrafund
Fidelity Low-Priced Stock Fund
Brown Capital Management, Inc.-
Small Company Fund
Vanguard International Growth Fund
- Admiral Shares
Southwest Gas Stock Fund
Fidelity Asset Manager: Growth
A-i
Designation of Investment Funds
- -------------------------------
A Participant's Deferrals and Excess Contributions may be invested
entirely at his discretion, in increments of 1 percent (1%), among the
Investment Funds. In the complete absence of any designation, the
Participant's Deferrals and/or Excess Deferrals will be invested in the
Fidelity Retirement Money Market Portfolio.
A Participant's Company Matching Contributions Account will be invested
in the Southwest Gas Stock Fund as provided for in Section 4.03 of the
Plan, 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 the requirement that fifty percent (50%) of all
funds invested in the ESOP remain invested in Employer
Securities and the rules in (b) below.
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 Employer Securities and other cash received for
investment in 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.
A-ii
|
EXHIBIT 5.1 August 26, 2002 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, and that, 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 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. Respectfully submitted, Robert M. Johnson |
|
EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTSWe hereby consent to the incorporation by reference in this Registration Statement of our report dated June 27, 2002, relating to the financial statements for the year ended December 31, 2001, which appears in the Annual Report of Southwest Gas Corporation Employees’ Investment Plan on Form 11-K for the year ended December 31, 2001. We also consent to the references to us under the heading “Experts” in such Registration Statement. PricewaterhouseCoopers LLP Los Angeles, California |
|
EXHIBIT 24.1 ISSUANCE AND
SALE OF COMMON STOCK THROUGH THE
|