\nSECTION 16 DIRECT ROLLOVER PROVISIONS………………………………………………………….47
\n 16.1 Application of Article………………………………………………………47
\n 16.2 Definitions………………………………………………………………..47
\n<\/c><\/s><\/table>\nAPPENDIX A<\/p>\n
(v)<\/p>\n
POLO RALPH LAUREN CORPORATION<\/p>\n
PROFIT SHARING RETIREMENT SAVINGS PLAN<\/p>\n
(FOR HOURLY EMPLOYEES OF FASHIONS OUTLET OF AMERICA, INC.
\n AND SUBSIDIARIES AND POLO CLOTHING CO., INC.)<\/p>\n
AMENDED AND RESTATED
\n GENERALLY EFFECTIVE AS OF MARCH 31, 2001<\/p>\n
WHEREAS, Polo Ralph Lauren, (hereinafter, the “Employer”)
\nsponsors and maintains the Polo Ralph Lauren Corporation Profit Sharing
\nRetirement Savings Plan (for Hourly Employees of Fashions Outlet of America,
\nInc. and Subsidiaries and Polo Clothing Co., Inc.) (hereinafter, the “Plan”);
\nand<\/p>\n
WHEREAS the Employer wishes to amend and restate the Plan to
\nconform with the requirements of the Uniform Services Employment and
\nReemployment Rights Act of 1994, the Small Business Job Protection Act of 1996,
\nthe Taxpayer Relief Act of 1997, the Surface Transportation Revenue Act of 1998,
\nthe Internal Revenue Service Restructuring and Reform Act of 1998 and other
\napplicable laws, regulations, and announcements.<\/p>\n
NOW, THEREFORE, the Employer hereby adopts the following
\namended and restated Plan, effective March 31, 2001 (or such other dates as may
\nbe specified herein, or such earlier dates as are required in order to comply
\nwith any of the foregoing legislative changes, regulations and announcements)
\nwith such Plan to be applicable (except as otherwise expressly provided to the
\ncontrary herein) only to those eligible employees who are actively employed (or,
\non a qualified leave of absence from which they return within the designated
\nperiod) on or after March 31, 2001, and with such Plan to read as follows:<\/p>\n
SECTION 1<\/p>\n
DEFINITIONS<\/p>\n
The following words and phrases as used herein shall have the
\nfollowing meanings, unless a different meaning is plainly required by the
\ncontext; and the following rules of interpretation shall apply in reading this
\ninstrument. Pronouns shall be interpreted so that the masculine pronoun shall
\ninclude the feminine and the singular shall include the plural. The words
\n“hereof,” “herein” and other singular compounds shall refer to the Plan in its
\nentirety and not to any particular provision or section, unless so limited by
\nthe text. All references herein to specific sections shall mean sections of this
\ndocument unless otherwise qualified.<\/p>\n
1.1 Accrued Benefit means the sum of the balance in the
\nMember’s Profit Sharing Contribution Account, Basic Contribution Account,
\nTop-Heavy Contribution Account, Matching Contribution Account and Rollover
\nAccount.<\/p>\n
2<\/p>\n
1.2 Actual Contribution Ratio (ACR), with respect to any
\nMember for a Plan Year, means a fraction of which the numerator equals the
\nMatching Contributions paid to the Trust for a Plan Year on behalf of such
\nMember and of which the denominator equals the Member’s Compensation for the
\nPlan Year.<\/p>\n
1.3 Actual Deferral Ratio (ADR), with respect to any Member
\nfor a Plan Year, means a fraction of which the numerator equals the Basic
\nContributions paid to the Trust for the Plan Year on behalf of such Member and
\nof which the denominator equals the Member’s Compensation for the Plan Year.<\/p>\n
1.4 Additional Basic Contribution means a qualified
\nnonelective contribution as defined in Treasury regulation
\n1.401(k)-1(g)(13)(ii).<\/p>\n
1.5 Adjustment Factor means the dollar limitation in effect at
\nthe beginning of the taxable year prescribed by the Secretary of the Treasury
\nunder section 402(g) of the Code, as applied to such items and in such manner as
\nthe Secretary shall provide.<\/p>\n
1.6 Affiliated Company means:<\/p>\n
(a) any corporation which is a member of a controlled
\ngroup of corporations, including those within the meaning of section 1563(a) of
\nthe Code, determined without regard to sections 1563(a)(4) and (e)(3)(C),
\nincluding the Employer;<\/p>\n
(b) any organization under common control with the
\nEmployer within the meaning of section 414(c) of the Code;<\/p>\n
(c) any organization which is included with the Employer
\nin an affiliated service group within the meaning of section 414(m) of the Code;
\nor<\/p>\n
(d) any other entity required to be aggregated with the
\nEmployer pursuant to regulations under section 414(o) of the Code.<\/p>\n
1.7 Annual Addition means the total for the Limitation Year of
\nthe items listed below allocated to the account of an Employee under all defined
\ncontribution plans sponsored by an Affiliated Company (except that, for the
\npurpose of this Section, “more than 50%” shall be substituted for “80%” each
\nplace it appears in section 1563 of the Code):<\/p>\n
(a) Employer contributions to a Member’s accounts;<\/p>\n
(b) Forfeitures;<\/p>\n
(c) the total amount of a Member’s nondeductible employee
\ncontributions for the Limitation Year (but not including Rollover
\nContributions); and<\/p>\n
(d) amounts described in sections 415(l)(1) and 419A(d)(2)
\nof the Code;<\/p>\n
3<\/p>\n
(e) except that the Annual Addition for any Limitation
\nYear beginning before January 1, 1987, shall not be recomputed to treat
\nnondeductible Employee contributions as an Annual Addition.<\/p>\n
1.8 Basic Contribution means an elective deferral made by a
\nMember pursuant to Section 3.2 of the Plan.<\/p>\n
1.9 Basic Contribution Account means an account established
\nand maintained on behalf of a Member to which his Basic Contributions are
\nallocated.<\/p>\n
1.10 Beneficiary means the person, persons, or trust
\ndesignated by written, revocable designation filed with the Plan Administrator
\nby the Member to receive payments in the event of such Member’s death.<\/p>\n
1.11 Board means the Board of Directors or Committee or other
\nbody authorized and empowered pursuant to law to act for the Plan Sponsor.<\/p>\n
1.12 Break in Service means a Plan Year during which a Member
\nfails to be credited with more than 500 Hours of Service.<\/p>\n
1.13 Code means the Internal Revenue Code of 1986, and the
\nsame as may be amended from time to time.<\/p>\n
1.14 Compensation means, except as hereafter specified, salary
\nand wages, overtime pay, fees, tips, profits, bonuses and commissions paid by
\nthe Employer to an Employee, including the Basic Contribution made hereunder
\nduring the Plan Year, elective deferrals made pursuant to section 125 of the
\nCode, amounts not includable in a Employee’s gross income pursuant to section
\n132(f) of the Code, and all other earnings reportable under sections 6041 and
\n6051 of the Code on Form W-2 received by an Employee from the Employer, but
\nexcluding all other Employer contributions to benefit plans and all other forms
\nof compensation such as severance pay. For purposes of Section 7, the Employer
\nmay elect for a specific Plan Year to limit the period taken into account for
\nthe determination of Compensation to the period during which the Employee is a
\nMember. This limit shall be applied uniformly to all Members under the Plan for
\nthe Plan Year in accordance with section 1.401(k)-1(g)(2)(i). Notwithstanding
\nthe preceding sentence, for any Plan Year beginning on or after the Effective
\nDate, Compensation shall exclude any remuneration received by a Member in excess
\nof $170,000, as adjusted by the Secretary of the Treasury, for cost of living,
\nat the same time and in the same manner as under section 415(d) of the Code. The
\ncost-of-living adjustment in effect for a calendar year applies to any period,
\nnot exceeding 12 months, over which compensation is determined (determination
\nperiod) beginning in such calendar year. If a determination period consists of
\nfewer than 12 months, the annual compensation limit, as adjusted, will be
\nmultiplied by a fraction, the numerator of which is the number of months in the
\ndetermination period, and the denominator of which is 12.<\/p>\n
(a) For purposes of the nondiscrimination tests set forth
\nin Section 7, and except as provided in section 414(s) of the Code, Compensation
\nmeans any income received by the Employee from the Employer in accordance with
\nsection <\/p>\n
4<\/p>\n
415(c)(3) of the Code, for the Plan Year for which compliance with the
\ntests is being measured.<\/p>\n
(b) For purposes of measuring the limits set forth in
\nsection 415 of the Code, Compensation shall mean earned income, wages, salaries,
\nfees, commissions, percentage of profits, tips, and all other earnings of a
\nMember reportable on Form W-2 for the Plan Year, but specifically excluding the
\nfollowing:<\/p>\n
(i) Employer contributions made on behalf of an
\n Employee to a SEP to the extent they are deductible by the Employee
\n under section 219(b)(2) of the Code;<\/p>\n
(ii) distributions from a deferred compensation plan
\n (except from an unfunded nonqualified plan when includible in gross
\n income);<\/p>\n
(iii) amounts realized from the exercise of a
\n nonqualified stock option, or when restricted stock (or property) held
\n by an Employee either becomes freely transferable or is no longer
\n subject to a substantial risk of forfeiture;<\/p>\n
(iv) amounts realized from the sale, exchange or other
\n disposition of stock acquired under a qualified stock option; and<\/p>\n
(v) other amounts which receive special tax benefits,
\n such as premiums for group term life insurance (to the extent excludable
\n from gross income) and Employer contributions towards the purchase of an
\n annuity contract described in section 403(b) of the Code.<\/p>\n
1.15 Disability means a physical or mental condition of a
\nMember resulting from bodily injury, disease or mental disorder which renders
\nhim incapable of continuing his usual and customary employment with the
\nEmployer. The disability of a Member shall be determined by a licensed physician
\nchosen by the Plan Administrator. The determination shall be applied uniformly
\nto all Members.<\/p>\n
1.16 Early Retirement Date means the date on which a Member
\nhas attained age 55 and has completed at least 7 Years of Service.<\/p>\n
1.17 Earned Income means with respect to a Self-Employed
\nIndividual or Shareholder-Employee, the net earnings from self-employment in the
\ntrade or business with respect to which the Plan is established, for which the
\npersonal services of the individual are a material income-producing factor. Net
\nearnings shall be determined without regard to items not included in gross
\nincome and the deductions allocable to such items; however, net earnings shall
\nbe determined with regard to the deductions allowed to the Employer by section
\n164(f) of the Code for taxable years beginning after December 31, 1989. Net
\nearnings are reduced by contributions by the Employer to a qualified plan to the
\nextent deductible under section 404 of the Code.<\/p>\n
5<\/p>\n
1.18 Effective Date of this amended and restated Plan means
\nMarch 31, 2001.<\/p>\n
1.19 Eligibility Computation Period means:<\/p>\n
(a) the twelve-consecutive-month period commencing with
\nthe date an Employee first is credited with an Hour of Service; and<\/p>\n
(b) thereafter any Plan Year commencing with the Plan Year
\nin which occurs the first anniversary of the date an Employee first is credited
\nwith an Hour of Service.<\/p>\n
1.20 Eligible Employee means any Employee of the Employer who
\nsatisfies the following conditions:<\/p>\n
(a) he is not a leased employee within the meaning of
\nsection 414(n)(2) of the Code;<\/p>\n
(b) he is an Hourly Employee of Fashions Outlet of
\nAmerica, Inc. or its subsidiaries or of Polo Clothing Co., Inc.;<\/p>\n
(c) he is not covered by a collective bargaining
\nagreement, unless such collective bargaining agreement specifically provides for
\ncoverage under the Plan; and<\/p>\n
(d) he is classified as a “common law” employee by the
\nEmployer.<\/p>\n
Notwithstanding anything contained herein to the contrary, an individual
\nclassified as an “independent contractor” by the Employer, or any individual who
\nrenders services for the Employer while on the payroll of an entity other than
\nthe Employer, shall not be deemed to be an Eligible Employee even if such
\nindividual is deemed to be a common law employee of the Employer for any other
\npurpose by any governmental authority, including without limitation, the
\nInternal Revenue Service, Department of Labor or a court of competent
\njurisdiction.<\/p>\n
1.21 Employee means an individual in the employ of the
\nEmployer and shall include leased employees within the meaning of section
\n414(n)(2) of the Code. Contributions or benefits provided a leased employee by
\nthe leasing organization that are attributable to services performed for the
\nEmployer shall be treated as provided by the Employer.<\/p>\n
1.22 Employer means Fashions Outlet of America, Inc., Polo
\nClothing Co., Inc. and any other business organization which succeeds to its
\nbusiness and elects to continue this Plan, and any subsidiaries of Fashions
\nOutlet of America, Inc. and any Affiliated Company which adopts this Plan with
\nthe consent of the Plan Sponsor.<\/p>\n
6<\/p>\n
1.23 Entry Date means the first day after an Employee of the
\nEmployer fulfills all eligibility requirements for participation in the Plan, as
\ndescribed in Section 1.20.<\/p>\n
1.24 ERISA means the Employee Retirement Income Security Act
\nof 1974, and the same as may be amended from time to time.<\/p>\n
1.25 Fiscal Year means the twelve-month period ending on the
\nSaturday closest to March 31 divided into four fiscal quarters.<\/p>\n
1.26 Forfeiture means that portion of a Member’s Accrued
\nBenefit, as determined under the Plan’s vesting schedule, which may be
\nrelinquished by the Member.<\/p>\n
1.27 Fund means all assets of the Trust.<\/p>\n
1.28 “Highly Compensated Employee” means, with respect to any
\nPlan Year, any Employee of the Employer (whether or not eligible for membership
\nin the Plan) who:<\/p>\n
(a) at any time during such Plan Year or the preceding
\nPlan Year was a “five (5) percent owner” (within the meaning of section
\n416(i)(1) of the Code) of the Employer or an Affiliated Company; or<\/p>\n
(b) during the preceding Plan Year had Compensation in
\nexcess of $85,000 (as adjusted in accordance section 415(d) of the Code).<\/p>\n
(c) “Compensation” shall mean for the purpose of this
\nSection, section 415(c)(3) of the Code compensation.<\/p>\n
1.29 Hour of Service means each hour for which an Employee is
\ndirectly or indirectly paid or entitled to be paid by the Employer or an
\nAffiliated Company regardless of whether employment duties are performed, and
\neach hour for which back pay, irrespective of mitigation of damages, has been
\neither awarded or agreed to by the Employer or Affiliated Company. These hours
\nshall be credited to an Employee for the computation period during which his
\nemployment duties were performed; but in the event a payment is made or due for
\na reason other than the performance of duties, hours shall be credited for the
\ncomputation period during which the absence from work occurred or to which a
\nback pay agreement or award pertains. However, no Employee shall be credited
\nwith duplicate Hours of Service as a result of a back pay agreement or award.
\nHours of Service shall also include each hour (credited on the basis of the
\nEmployee’s customary workday) during which an Employee is on an uncompensated
\nexcused Leave of Absence, provided that such Employee shall be credited with no
\nmore than 501 Hours of Service for each complete Plan Year during which the
\nuncompensated Leave of Absence is in effect. Hours of Service for service
\nperformed, for the period prior to the acquisition date, for a company
\nsubsequently acquired by the Employer shall be credited for eligibility purposes
\nonly to the extent expressly so provided in Appendix A. Notwithstanding any
\nprovision in this Plan to the contrary, contributions, benefits and <\/p>\n
7<\/p>\n
service credit with respect to qualified military service will be provided in
\naccordance with section 414(u) of the Code.<\/p>\n
(a) For purposes of determining the number of Hours of
\nService completed in any applicable computation period, the Employer may
\nmaintain accurate records of actual hours completed for all Employees. The
\nnumber of Hours of Service to be credited to an Employee for periods during
\nwhich no employment duties are performed shall be determined in accordance with
\nsections 2530.200b-2(b) and 2530.200b-2(c) of the Department of Labor
\nregulations in Title 29 of the Code of Federal Regulations.<\/p>\n
(b) In instances where actual Hours of Service are not
\nmaintained, an Employee shall be credited with 45 Hours of Service for each week
\nin which such Employee would otherwise be credited with at least one Hour of
\nService.<\/p>\n
(c) Notwithstanding (a) and (b) above and solely for the
\npurpose of preventing a Break in Service, an Employee shall be credited with
\nHours of Service during an absence by reason of:<\/p>\n
(i) the pregnancy of the Employee;<\/p>\n
(ii) the birth of a child of the Employee;<\/p>\n
(iii) the placement of the child with the Employee in
\n connection with the adoption of such child by the Employee;<\/p>\n
(iv) the care of the child beginning immediately after
\n such birth or placement;<\/p>\n
(v) leave under the Family and Medical Leave Act of
\n 1993; or<\/p>\n
(vi) qualified military service under section 414(u)
\n of the Code;<\/p>\n
provided the Employee, shall during the period of his absence, be credited with
\nthe number of Hours of Service which would have been credited to him at his
\nnormal work rate but for such absence or, if the number of Hours of Service
\nbased on a normal rate is indeterminable, the Employee shall be credited with 8
\nHours of Service per day of such absence. Notwithstanding the foregoing, the
\nEmployee shall be credited with no more than 501 Hours of Service during said
\nabsence.<\/p>\n
(d) In instances where actual Hours of Service are
\nmaintained, the maternity\/paternity leave described in (c) above shall be
\ncredited to the computation period in which the absence began if necessary to
\navoid a Break in Service or if not necessary, then to the following computation
\nperiod.<\/p>\n
8<\/p>\n
(e) For the purposes of vesting only, an Hour of Service
\nshall include each hour of employment with The Ralph Lauren Home Collection
\noperations of J.P. Stevens & Co. Inc. for which an Employee was entitled to
\nCompensation prior to commencement of such operations by Polo Ralph Lauren
\nCorporation.<\/p>\n
(f) For purposes of eligibility and vesting, an Hour of
\nService shall include each hour of employment with Ralph Lauren Womenswear, Inc.
\n(“RLW”) or Bidermann Industries Corporation (“BIC”) for which an Employee was
\nentitled to compensation prior to the purchase by The Ralph Lauren Womenswear
\nCompany, L.P. (“Womenswear”) of certain assets of RLW on October 16, 1995,
\nprovided that such Employee became an Employee of Womenswear or any Affiliated
\nCompany between October 16, 1995 and December 31, 1995, and provided further
\nthat such Employee has not received from RLW or BIC any payment in respect of or
\nrelating to such Employee’s termination of employment by RLW or BIC. For
\npurposes of computing eligibility and vesting service under this section 1.29(f)
\nonly, an Employee shall be credited with one hundred and ninety (190) Hours of
\nService for each calendar month in which he\/she is credited with at least one
\n(1) Hour of Service during a period of employment with RLW or BIC, Inc. prior to
\nOctober 16, 1995.<\/p>\n
(g) For purposes of eligibility and vesting, an Hour of
\nService shall include each hour of service with Englewood Travel, Inc. (“EWI”)
\nand Adelman Travel Systems, Inc. (“ATS”) for which an Employee was entitled to
\ncompensation prior to such Employee’s employment by Polo Wings II, Inc.
\n(“Wings”), provided that such Employee became an Employee of Wings or any
\nAffiliated Company between May 13, 1996 and July 31, 1996; that such Employee
\nwas employed by EWI immediately prior to such transfer, and that such employee
\nwas, while an employee of EWI or ATS, engaged in providing travel services to
\nPolo Ralph Lauren, L.P. or its predecessor Polo Ralph Lauren Corporation
\n(“Polo”) on Polo’s premises pursuant to a written contract between EWI or ATS
\nand Polo. For purposes of computing eligibility and vesting service under this
\nsection 1.29 (g) only, an Employee shall be credited with one hundred and ninety
\n(190) Hours of Service for each calendar month in which he\/she is credited with
\nat least one (1) Hour of Service during a period of employment with EWI or ATS,
\nprior to May 13, 1996.<\/p>\n
(h) For purposes of eligibility and vesting, an Hour of
\nService shall include each hour of employment with Polo Retail Corporation
\n(“Retail”) for which an Employee was entitled to compensation prior to the
\npurchase by the Company of Retail on April 3, 1997, provided that such Employee
\nwas employed by Retail immediately prior to such sale. For purposes of computing
\neligibility and vesting service under this section 1.29(h) only, if the actual
\nnumber of Hours of Service cannot be calculated, an Employee shall be credited
\nwith one hundred and ninety (190) Hours of Service for each calendar month in
\nwhich he\/she is credited with at least (1) Hour of Service during a period of
\nemployment with Retail prior to January 1, 1997.<\/p>\n
1.30 Hourly Employee means any nonexempt (for purposes of
\novertime) Employee whose compensation is calculated on the basis of an hourly
\nrate as <\/p>\n
9<\/p>\n
distinguished from “salaried” Employees who receive a salary based on a weekly,
\nmonthly, annual or similar basis.<\/p>\n
1.31 Leave of Absence means any temporary absence from
\nemployment authorized by the Employer based on its normal practices. An
\nEmployee’s Period of Service shall continue uninterrupted during such leave.<\/p>\n
1.32 Limitation Year shall be the Plan Year.<\/p>\n
1.33 Matching Contribution means a contribution made on behalf
\nof a Member pursuant to Section 3.3 of the Plan.<\/p>\n
1.34 Matching Contribution Account means an account
\nestablished and maintained on behalf of a Member to which his Matching
\nContributions are allocated.<\/p>\n
1.35 Member means any Eligible Employee included in the
\nmembership of the Plan as provided in Section 2 hereof. A Member shall continue
\nto be a Member as long as he has an Accrued Benefit hereunder.<\/p>\n
1.36 Non-Highly Compensated Employee means any Employee who is
\nnot a Highly Compensated Employee.<\/p>\n
1.37 Normal Retirement Date means the Member’s 65th birthday.<\/p>\n
1.38 Owner-Employee means a sole proprietor who owns the
\nentire interest in the Employer or a partner who owns more than 10% of either
\nthe capital interest or the profits interest in the Employer and who receives
\nremuneration for personal services from the Employer.<\/p>\n
1.39 Period of Service means the period between an Employee’s
\ndate of hire or rehire, as applicable, and the date on which he ceases to be an
\nEmployee.<\/p>\n
1.40 Plan means Polo Ralph Lauren Corporation Profit Sharing
\nRetirement Savings Plan (for Hourly Employees of Fashions Outlet of America,
\nInc. and subsidiaries and Polo Clothing Co., Inc.), as set forth herein.<\/p>\n
1.41 Plan Administrator is the individual or entity provided
\nfor in Section 12 hereof.<\/p>\n
1.42 Plan Sponsor means Fashions Outlet of America, Inc. or
\nits successor.<\/p>\n
1.43 Plan Year means the twelve-month period ending on the
\nSaturday closest to March 31.<\/p>\n
1.44 Prior Plan means the qualified plan of the Employer in
\neffect through March 30, 2001.<\/p>\n
10<\/p>\n
1.45 Profit Sharing Contribution means a contribution made by
\nthe Employer pursuant to Section 3.1.<\/p>\n
1.46 Profit Sharing Contribution Account means an account
\nestablished and maintained on behalf of a Member to which his Profit Sharing
\nContributions are allocated.<\/p>\n
1.47 Retirement means the termination of a Member’s employment
\nwith the Employer on his Early or Normal Retirement Date or such later date on
\nwhich he actually terminates employment.<\/p>\n
1.48 Rollover Account means the account established and
\nmaintained pursuant to Section 6 of the Plan.<\/p>\n
1.49 Rollover Contribution means the amount contributed to the
\nPlan pursuant to Section 6.8.<\/p>\n
1.50 Self-Employed Individual means an individual who has
\nEarned Income for the taxable year from the trade or business for which the Plan
\nis established, and shall also include an individual who would have Earned
\nIncome but for the fact that the trade or business had no net profits for the
\ntaxable year. A Self-Employed Individual shall be treated as an Employee.<\/p>\n
1.51 Shareholder-Employee means a Member who owns more than
\nfive percent (5%) of the Employer’s outstanding capital stock during any year in
\nwhich the Employer elected to be taxed as an “S” corporation under the Code.<\/p>\n
1.52 Spouse means the husband or wife of a Member on the date
\nbenefits under the Plan commence. However, if the Member should die prior to the
\ndate benefits under the Plan would have commenced to him, then the Spouse shall
\nbe the husband or wife to whom the Member had been married throughout the
\none-year period preceding the date of his death.<\/p>\n
1.53 Top-Heavy Contribution means a contribution made by an
\nEmployer pursuant to Section 8 of the Plan.<\/p>\n
1.54 Top-Heavy Contribution Account means an account
\nestablished and maintained on behalf of a Member to which Top-Heavy
\nContributions, if any, are allocated.<\/p>\n
1.55 Trust means a trust, intended to qualify under section
\n501(a) of the Code, constituting the legal agreement between the Plan Sponsor
\nand the Trustee, fixing the rights and liabilities with respect to managing and
\ncontrolling the Fund for the purposes of the Plan.<\/p>\n
1.56 Trustee means the individual or entity designated by the
\nBoard as trustee(s) or any successor trustee(s) of the Trust.<\/p>\n
11<\/p>\n
1.57 Valuation Date means, every business day during a Plan
\nYear.<\/p>\n
1.58 Year of Service means the period of service with the
\nEmployer and any Affiliated Company used to determine vesting pursuant to
\nSection 5 of the Plan as follows:<\/p>\n
(a) except as otherwise provided below, each Plan Year
\nduring which an Employee completes at least 1,000 Hours of Service;<\/p>\n
(b) for Years of Service (or fractions thereof) prior to
\nApril 1, 1989, any period which was a year of service (or fraction thereof)
\nunder such plan in effect on March 31, 1989;<\/p>\n
(c) for Years of Service after April 1, 1990, except as
\nprovided in paragraph (b) of this Section, each twelve (12) consecutive month
\ncomputation period during which the Member is credited with at least 1,000 Hours
\nof Service. Except for eligibility purposes herein, the computation period shall
\nbe the Plan Year. For purposes of eligibility, such computation period shall be
\nthe Eligibility Computation Period.<\/p>\n
Notwithstanding the foregoing,<\/p>\n
(i) if an Employee is rehired prior to incurring a
\n Break in Service, his Years of Service shall be computed as though his
\n service had not been severed,<\/p>\n
(ii) an Employee who is absent by reason of service in
\n the armed forces of the United States, and who returns to service with
\n the Employer within the time during which his reemployment rights are
\n protected by federal law, shall be treated as though his employment had
\n not been severed, and<\/p>\n
(iii) if the Employer is an Affiliated Company, Years
\n of Service shall be determined as if all Affiliated Companies were a
\n single employer, excluding, however, employment during periods when the
\n Employer was not a member of the Affiliated Company. In addition, if the
\n Employer maintains the plan of a predecessor employer, service with such
\n employer will be treated as service for the Employer.<\/p>\n
(d) For purposes of vesting only, a Year of Service shall
\ninclude employment with The Ralph Lauren Home Collection operations of J.P.
\nStevens & Co. Inc. prior to commencement of such operations by Polo Ralph Lauren
\nCorporation.<\/p>\n
(e) Years of service completed prior to January 1, 1982
\nfor Members who were covered under the Polo Players, Ltd. Deferred Savings Plan
\nwill not be counted for vesting purposes.<\/p>\n
(f) Notwithstanding the foregoing, Members of the Polo
\nPlayer, Ltd. Deferred Savings Plan are required to complete 800 Hours of Service<\/p>\n
12<\/p>\n
between January 1, 1990 through December 31, 1990 to receive a Year of Service
\nfor vesting credit.<\/p>\n
(g) Years of Service for service performed, for the period
\nprior to the acquisition date, for a company subsequently acquired by the
\nEmployer shall be credited only to the extent expressly so provided in Appendix
\nA.<\/p>\n
(h) If a Member incurs a Break in Service, his Years of
\nService before that Break in Service (and not disregarded by reason of any prior
\nBreak in Service) shall be taken into account only if following the Break in
\nService the Member completes one Year of Service, and:<\/p>\n
(i) before the Break in Service the Member had a
\n vested interest in his Accrued Benefit;<\/p>\n
(ii) effective for consecutive Breaks in Service
\n ending before January 1, 1985, the aggregate number of the Member’s
\n Years of Service before the Break in Service (and not disregarded by
\n reason of any prior Break in Service) equal or exceed the aggregate
\n number of his consecutive Breaks in Service; or<\/p>\n
(iii) effective for consecutive Breaks in Service
\n ending on or after January 1, 1985, the aggregate number of the Member’s
\n consecutive Breaks in Service is less than five (excluding Years of
\n Service which were disregarded by reason of any prior Break in Service)
\n before such Break in Service.<\/p>\n
If a Member’s Years of Service are disregarded pursuant to the preceding
\nparagraph, then such Member shall be treated as a new Employee, for eligibility
\npurposes, upon reemployment. If they may not be disregarded pursuant to the
\npreceding paragraph, then such Member shall continue to participate in the Plan
\nor, if terminated, shall participate immediately upon reemployment.<\/p>\n
(i) For purposes of eligibility and vesting, a Year of
\nService shall include each year of employment with RLW or BIC for which an
\nEmployee was entitled to compensation prior to the purchase by Womenswear of
\ncertain assets of RLW on October 16, 1995, provided that such Employee became an
\nEmployee of Womenswear or any Affiliated Company between October 16, 1995 and
\nDecember 15, 1995, and provided further that such Employee has not received from
\nRLW or BIC any payment in respect of or relating to such Employee’s termination
\nof employment by RLW or BIC.<\/p>\n
(j) For purposes of eligibility and vesting, a Year of
\nService shall include each year of continuous employment with EWI and ATS for
\nwhich an Employee was entitled to compensation prior to such Employee’s
\nemployment by Wings provided that such Employee became an Employee of Wings or
\nany Affiliated Company between May 13, 1996 and July 31, 1996, and provided
\nfurther that such Employee was employed by EWI or ATS prior to May 13, 1996 and
\nwas engaged in rendering travel <\/p>\n
13<\/p>\n
services to the Company, Polo Ralph Lauren, L.P. or its predecessor Polo on
\nPolo’s premises pursuant to a written contract between EWI or ATS and Polo.<\/p>\n
(k) For purposes of eligibility and vesting, a Year of
\nService shall include each year of continuous employment with Retail for which
\nan Employee was entitled to compensation prior to the purchase by the Company of
\nRetail on April 3, 1997, provided that such Employee was employed by Retail
\nimmediately prior to such sale.<\/p>\n
SECTION 2<\/p>\n
MEMBERSHIP IN THE PLAN<\/p>\n
2.1 Current Members. Each Employee who was participating in
\nthe Prior Plan on March 30, 2001 shall automatically continue as a Member
\nhereunder. Each other Employee who is an Eligible Employee as of the Effective
\nDate shall become a Member of the Plan on such date.<\/p>\n
2.2 New or Reemployed Members. Each other Employee shall
\nbecome a Member on the Entry Date coincident with or next following the date he
\nqualifies as an Eligible Employee. A reemployed Employee shall become a Member
\non the next Entry Date following his date of reemployment if he had been a
\nMember of the Plan during his prior period of employment and had incurred a
\nprior Break in Service such as would cause his Years of Service to be
\ndisregarded, or had become eligible but had not yet entered the Plan. Otherwise,
\na reemployed Employee shall become a Member of the Plan as of the date of his
\nreemployment.<\/p>\n
2.3 Changes in Category. If an Employee’s status changes
\neither from a category of ineligibility to a category of eligibility, or from a
\ncategory of eligibility to a category of ineligibility, his employment during
\nthe period of ineligibility shall be considered as Years of Service for vesting
\npurposes hereunder. For purposes of Section 3, only Compensation earned from the
\nEmployer during a period in which the Employee is both an Eligible Employee and
\na Member shall be considered in determining the amount of the contribution made
\nto the Trust on behalf of the Employee.<\/p>\n
If a Member’s status changes to a category of ineligibility,
\nhe shall become a Member immediately upon returning to an eligible class of
\nEmployees if he has not incurred a Break in Service; otherwise, eligibility
\nshall be determined in accordance with Section 1.12. If an ineligible Employee’s
\nstatus changes to a category of eligibility, he shall become a Member
\nimmediately if he has otherwise satisfied the requirements of Section 1.20.<\/p>\n
14<\/p>\n
SECTION 3<\/p>\n
CONTRIBUTIONS<\/p>\n
3.1 Profit Sharing Contributions. The Employer may, in its
\nsole discretion, elect to make a Profit Sharing Contribution to the Plan. The
\nProfit Sharing Contribution with respect to any given Plan Year shall be
\nallocated solely among the “eligible Members” (as hereafter defined) for such
\nPlan Year, in proportion to Compensation. For purposes of this Section only, a
\nMember shall be an eligible Member with respect to any given Plan Year only if
\nsuch person:<\/p>\n
(a) has, not later than the last day of such Plan Year (i)
\ncompleted at least one Eligibility Computation Period during which such person
\nis credited with at least 1,000 Hours of Service and (ii) attained age 21,<\/p>\n
(b) is credited with at least 1,000 Hours of Service
\nduring such Plan Year, and<\/p>\n
(c) is an Employee on the last day of such Plan Year.<\/p>\n
Solely for the purpose of determining who is an eligible Member, a Member shall
\nbe deemed to be employed on the last day of a given Plan Year if such Member
\nterminated employment with the Employer on the Friday before the Saturday that
\nis the last day of the Plan Year. Such Member shall be eligible to receive an
\nallocation hereunder whether or not the Member elects to defer a portion of his
\nincome to this or any other tax-qualified plan sponsored by the Employer. Each
\nMember’s share of the Profit Sharing Contribution shall be deposited to his
\nProfit Sharing Contribution Account.<\/p>\n
All contributions to the Plan pursuant to this Section shall
\nbe in cash, except to the extent that the Plan Administration, in accordance
\nwith such written rules and procedures as shall be established by the Plan
\nAdministrator (and which rules and procedures shall be annexed to, and shall
\nbecome a part of, the Plan) determines to instead denominate such contribution
\nwith respect to any one or more Plan Years in the form of shares of Polo Ralph
\nLauren Corporation Class A Common Stock.<\/p>\n
3.2 Basic Contributions.<\/p>\n
(a) Each Member who is a Non-Highly Compensated Employee
\nmay authorize the Employer to reduce his Compensation by any whole percentage
\nbetween 0% and 15% of such Compensation, but in no event to exceed the
\nappropriate Adjustment Factor.<\/p>\n
(b) Each Member who is a Highly Compensated Employee may
\nauthorize the Employer to reduce his Compensation by any whole percentage
\nbetween 0% and 6% of Compensation, but in no event to exceed the appropriate
\nAdjustment Factor.<\/p>\n
15<\/p>\n
Such amount shall be deposited as Basic Contributions
\nhereunder to the Member’s Basic Contribution Account. Each Eligible Employee
\nshall file a written election form with the Plan Administrator prior to the date
\nthat he becomes a Member specifying the portion of his Compensation that is to
\nbe contributed to the Plan as a Basic Contribution. The election of the Member
\nshall remain in effect until the Member files a new election with the Plan
\nAdministrator.<\/p>\n
3.3 Matching Contributions. The Employer shall make a Matching
\nContribution, which shall equal $.50 for each $l.00 deposited to such Member’s
\nBasic Contribution Account; provided, however, that a Matching Contribution with
\nrespect to any given Member shall only be made with respect to amounts deposited
\nto such Member’s Basic Contribution Account will respect to periods beginning
\nafter the date that such Member first becomes an “eligible Member” (as hereafter
\ndefined). For purposes of this Section only, a Member shall become an eligible
\nMember only after the later of:<\/p>\n
(a) the end of the first Eligibility Computation Period
\nduring which such person is credited with at least 1,000 Hours of Service, and<\/p>\n
(b) such person’s attainment of age 21.<\/p>\n
The Matching Contribution shall be credited to the Member’s
\nMatching Contribution Account. Notwithstanding the preceding, no Matching
\nContributions shall be made with respect to a Member’s Basic Contributions in
\nexcess of 6% of his Compensation. Compensation, for purposes of this Section,
\nshall mean only Compensation earned by an Employee while he is a Member of the
\nPlan.<\/p>\n
All contributions to the Plan pursuant to this Section shall
\nbe in cash, except to the extent that the Plan Administration, in accordance
\nwith such written rules and procedures as shall be established by the Plan
\nAdministrator (and which rules and procedures shall be annexed to, and shall
\nbecome a part of, the Plan) determines to instead denominate one-half of such
\ncontribution (or, at the Member’s election, one hundred percent of such
\ncontribution), and with respect to such periods of time as shall be determined
\nby the Plan Administration, in the form of shares of Polo Ralph Lauren
\nCorporation Class A Common Stock.<\/p>\n
3.4 Adjustments to Contribution Limits. Notwithstanding
\nSections 3.2 and 3.3, the maximum Basic Contribution deferral percentage and the
\namount of Employer Matching Contributions may be increased or decreased at the
\ndiscretion of the Board, provided that no such adjustment may be made without at
\nleast thirty (30) days’ written notice to all Members.<\/p>\n
3.5 Adjustments to Contributions. A Member may increase or
\ndecrease the rate of Basic Contributions effective as of any Valuation Date by
\nsubmitting a new election to the Plan Administrator. A Member may suspend Basic
\nContributions at any time by submitting written notice to the Plan
\nAdministrator. Suspensions during the Plan Year shall be effective as soon as
\npracticable after the election to suspend is filed <\/p>\n
16<\/p>\n
with the Plan Administrator. A Member may recommence Basic Contributions to the
\nPlan effective as of any Valuation Date by submitting a new written election to
\nthe Plan Administrator, prior to such Valuation Date.<\/p>\n
3.6 Distribution of “Excess Deferral Amounts”. Notwithstanding
\nany other provision of the Plan, Excess Deferral Amounts as adjusted for income
\nor losses thereon shall be distributed to Members who claim such Excess Deferral
\nAmounts for the preceding calendar year.<\/p>\n
(a) For purposes of this Section, Excess Deferral Amount
\nshall mean the amount of a Member’s Basic Contribution that causes a Member’s
\nBasic Contribution to exceed the appropriate Adjustment Factor. Excess Deferral
\nAmount shall also mean the amount of Basic Contributions for a calendar year
\nthat the Member allocates to this Plan pursuant to a claim procedure which shall
\nrequire that the Member’s claim shall be in writing and shall be submitted to
\nthe Plan Administrator no later than March 1 following the year in which the
\nExcess Deferral was made. Said claim shall specify the Member’s Excess Deferral
\nAmount for the preceding calendar year; and shall be accompanied by the Member’s
\nwritten statement that if such amounts are not distributed, such Excess Deferral
\nAmount, when added to amounts deferred under other plans or arrangements
\ndescribed in sections 401(k), 408(k), 457, 501(c)(18) or 403(b) of the Code,
\nshall exceed the appropriate Adjustment Factor for the year in which the
\ndeferral occurred.<\/p>\n
(b) A Member who has an Excess Deferral during a taxable
\nyear may receive a corrective distribution during the same year. Such a
\ncorrective distribution shall be made if:<\/p>\n
(i) the Member designates the distribution as an
\n Excess Deferral;<\/p>\n
(ii) the correcting distribution is made after the
\n date on which the Plan received the Excess Deferral; and<\/p>\n
(iii) the Plan Administrator designates the
\n distribution as a distribution of an Excess Deferral.<\/p>\n
(c) The Excess Deferral distributed to a Member with
\nrespect to a calendar year shall be adjusted to reflect income or loss in the
\nMember’s Basic Contribution Account for the taxable year allocable thereto. The
\nincome or loss allocable to such Excess Deferral Amount shall be determined by
\nthe method generally used under the Plan to allocate income or loss to a
\nMember’s account.<\/p>\n
(d) Excess Deferral Amounts, as adjusted for income and
\nlosses, shall be distributed to a Member no later than April 15 of the year
\nfollowing the calendar year in which such Excess Deferral was made.<\/p>\n
3.7 Overall Limits on Contributions. Contributions made on
\nbehalf of any Member during any Plan Year shall be subject to the following:<\/p>\n
17<\/p>\n
(a) In no event shall the Annual Addition for a Member
\nexceed the lesser of:<\/p>\n
(i) 25% of the Member’s Compensation, under Section
\n 1.14(b) for the Limitation Year, or<\/p>\n
(ii) the “defined contribution dollar limitation,”
\n which shall mean $35,000.<\/p>\n
(b) For purposes of the Annual Addition hereunder, Basic
\nContributions made on behalf of a Member during a payroll period which begins in
\none Plan Year but ends in the next succeeding Plan Year shall be deemed an
\nAnnual Addition for the next succeeding Plan Year, pursuant to Treasury
\nregulation 1.415-6(b)(7). If the excess Annual Additional results from a
\ncontribution made under Section 3.2, the excess, together with allocable
\nearnings, determined in such manner as is deemed reasonable by the Plan
\nAdministrator, shall be distributed to the contributing Member to the extent
\npermitted by Treasury regulation 1.415-6(b)(6).<\/p>\n
(c) If the Annual Addition must be limited for any Member
\nafter application of paragraph (b), the excess amounts in the Member’s account,
\ntogether with allocable earnings, determined in such manner as is deemed
\nreasonable by the Plan Administrator, will be used to reduce Employer
\ncontributions for the next Limitation Year (and succeeding Limitation Years, as
\nnecessary) for that Member if that Member is covered by the Plan as of the end
\nof the Limitation Year. However, if that Member is not covered by the Plan as of
\nthe end of the Limitation Year, then the excess amounts will be held unallocated
\nin a suspense account for the Limitation Year and allocated and reallocated in
\nthe next Limitation Year to all of the remaining Members in the Plan.
\nFurthermore, the excess amounts will be used to reduce Employer contributions
\nfor the next Limitation Year (and succeeding Limitation Years, as necessary) for
\nall of the remaining Members in the Plan. Excess amounts may not be distributed
\nto Members or former Members except as provided in paragraph (b).<\/p>\n
(d) This Section 3.7 shall be satisfied prior to
\nsatisfying the ADP test.<\/p>\n
(e) In addition to any other limitations contained in this
\nSection, if the Employer or an Affiliated Company maintains or maintained a
\ndefined benefit plan and the amount contributed to the Trust in respect of any
\nPlan Year would cause the amount allocated to any Member under all defined
\ncontribution plans maintained by the Employer or an Affiliated Company to exceed
\nthe maximum allocation as determined in subsection (d), then the allocation with
\nrespect to such Member shall be reduced by the amount of such excess. To the
\nextent administratively feasible, the limitation of this subsection shall be
\napplied to the Member’s benefit payable from the defined benefit plan prior to
\nreduction of the Member’s Annual Additions under this Plan. The excess
\nallocation shall be reallocated or held in a suspense account in accordance with
\nsubsection (c).<\/p>\n
18<\/p>\n
(f) If this Plan provides contributions or benefits for
\none or more Owner-Employees who control both the business for which this Plan is
\nestablished and one or more other trades or businesses, this Plan and the plan
\nestablished for other trades or businesses must, when considered as a single
\nplan, satisfy sections 401(a) and (d) of the Code for the employees of this and
\nall other trades or businesses.<\/p>\n
If the Plan provides contributions or benefits for one or more
\nOwner-Employees who control one or more other trades or businesses, the
\nemployees of the other trades or businesses must be included in a plan which
\nsatisfies sections 401(a) and (d) of the Code and which provides contributions
\nand benefits not less favorable than those provided for Owner-Employees under
\nthis Plan.<\/p>\n
If an individual is covered as an Owner-Employee under the
\nplans of two or more trades or businesses which are not controlled, and the
\nindividual controls a trade or business, then the contributions or benefits of
\nthe employees under the plan of the trades or businesses which are controlled
\nmust be as favorable as those provided for him under the most favorable plan of
\nthe trade or business which is not controlled.<\/p>\n
For purposes of the preceding paragraphs, an Owner-Employee,
\nor two or more Owner-Employees, will be considered to control a trade or
\nbusiness if the Owner-Employee, or two or more Owner-Employees together:<\/p>\n
(1) own the entire interest in an
\n unincorporated trade or business, or<\/p>\n
(2) in the case of a partnership, own more
\n than 50 percent of either the capital interest or the profits interest
\n in the partnership.<\/p>\n
For purposes of the preceding sentence, an Owner-Employee, or
\ntwo or more Owner-Employees, shall be treated as owning any interest in a
\npartnership which is owned, directly or indirectly, by a partnership which such
\nOwner-Employee, or such two or more Owner-Employees, is considered to control
\nwithin the meaning of the preceding sentence.<\/p>\n
3.8 Permitted Employer Refunds. Employer contributions
\nhereunder are made with the understanding that this Plan shall qualify under
\nsection 401 of the Code, and that such contributions shall be deductible under
\nsection 404 of the Code. Any contribution that is disallowed as a deduction
\nshall be refunded to the Employer within one year of such disallowance if the
\nEmployer has filed the application for the determination or qualification of
\nthis Plan with the IRS by the time prescribed by law for filing the Employer’s
\nreturn for the taxable year in which this Plan was adopted, or by such later
\ndate as the Secretary of the Treasury may prescribe.<\/p>\n
(a) Any contribution made by the Employer due to a mistake
\nof fact shall be refunded to the Employer within one year of such contribution.<\/p>\n
19<\/p>\n
(b) Refunds of contributions due to a disallowance, denial
\nor mistake of fact shall be governed by the following requirements:<\/p>\n
(i) earnings attributable to the amount being refunded
\n shall remain in the Plan, but losses thereto must reduce the amount to
\n be refunded; and<\/p>\n
(ii) in no event may a refund be made that would cause
\n the Accrued Benefit of any Member to be reduced to less than that which
\n the Member’s Accrued Benefit would have been had the mistaken amount not
\n been contributed.<\/p>\n
3.9 Timing of Deposits. Employer shall make payment of the
\nBasic Contribution to the Trust under the terms hereof no later than the time
\nperiod permitted by applicable law and regulations. All other Employer
\ncontributions under the Plan shall be deposited to the Trust prior to the due
\ndate for filing the Employer’s Federal Income Tax Return for the Fiscal Year in
\nwhich the Plan Year ends, including any extension thereto. In no event shall the
\nEmployer Contributions be made in excess of the amount deductible under
\napplicable federal law now or hereafter in effect limiting the allowable
\ndeduction for contributions to profit sharing plans. The contributions to this
\nPlan when taken together with all other contributions made by the Employer to
\nother qualified retirement plans shall not exceed the maximum amount deductible
\nunder section 404(a) of the Code.<\/p>\n
3.10 Profits Not Required. The Employer shall make all
\ncontributions to this Plan without regard to current or accumulated earnings or
\nprofit for the taxable year or years ending with or within such Plan Year.
\nHowever, the Plan shall continue to be designed to qualify as a profit sharing
\nplan for purposes of sections 401(a), 402, 404, 412 and 417 of the Code.<\/p>\n
SECTION 4<\/p>\n
MEMBER ACCOUNTS<\/p>\n
4.1 Establishment of Accounts. A Profit Sharing Contribution
\nAccount, Basic Contribution Account, Top-Heavy Contribution Account, Matching
\nContribution Account and Rollover Account shall be established for each Member
\nin accordance with Sections 3, 6 and 8, or under the Polo Players, Ltd. Deferred
\nSavings Plan as applicable. All contributions by or on behalf of a Member shall
\nbe deposited to the appropriate account.<\/p>\n
4.2 Valuation of Accounts. As of each Valuation Date, the
\naccounts of each Member shall be adjusted to reflect any appreciation or
\ndepreciation in the fair market value of a fund and income or losses of a fund
\nwhich gain or loss shall be allocated pro rata to each Member’s account. The
\nfair market value of the Fund shall be determined by the Trustee and
\ncommunicated to the Plan Administrator in writing. Each Member shall be
\nfurnished with a statement as soon as practicable after each Valuation <\/p>\n
20<\/p>\n
Date, setting forth the value of his Accrued Benefit. It shall represent the
\nfair market value of all securities or other property held for each respective
\nfund, plus cash and accrued earnings, less accrued expenses and proper charges
\nagainst the fund as of the Valuation Date. The Trustee’s determination shall be
\nfinal and conclusive for all purposes of this Plan.<\/p>\n
4.3 Adjustment to Accounts. When determining the value of
\nMember accounts, any deposits due which have not been deposited to the fund on
\nbehalf of the Member shall be added to his accounts; and any withdrawals or
\ndistributions made which have not been paid out shall be subtracted from the
\naccounts. Similarly, adjustment of accounts for appreciation or depreciation of
\na fund shall be deemed to have been made as of the Valuation Date on which the
\nadjustment relates, notwithstanding that they are actually made as of a later
\ndate.<\/p>\n
4.4 Directed Investments. Within the context of the Trust, the
\nTrustee at the direction of the Plan Administrator shall establish one or more
\ninvestment funds having such investment objectives as may be ascribed to each
\nsuch fund by the Plan Administrator (“Investment Funds”). Such Investment Funds
\nmay consist of the Trust’s investment in (i) one or more pooled funds
\nestablished by the Trustee, if it is a bank or trust company, for the investment
\nof the assets of tax qualified pension, and\/or profit-sharing plans, (ii) one or
\nmore mutual funds, (iii) one or more contracts issued by an insurance company,
\nand\/or (iv) any other investment vehicle suitable for the investment of assets
\nof the Trust and designated by the Plan Administrator.<\/p>\n
The Plan Administrator shall provide information to Members
\nregarding the Investment Funds available under the Plan, including a description
\nof the investment objectives and types of investments of each such Investment
\nFund. If a prospectus is required to be issued with respect to any such
\nInvestment Fund, the Plan Administrator will inform Members of the availability
\nof such prospectus or, if required by law, arrange to furnish a copy of the
\nprospectus to each Member.<\/p>\n
A Member’s Basic and Matching Contribution Accounts shall be
\ninvested as selected by each Member in one or more of the Investment Funds. A
\nMember shall make such investment selections in writing, or otherwise in
\naccordance with procedures established by the Plan Administrator. The Member may
\nselect investment in one or more of the Investment Funds in multiples of 1%. The
\ninvestment selection of a Member shall apply uniformly to all of his accounts.<\/p>\n
4.5 Administration of Investments. Contributions made by or on
\nbehalf of a Member shall continue to be invested in the manner selected by the
\nMember until the effective date of a new designation which has been properly
\ncompleted and filed with the Plan Administrator. If any Member fails to make an
\ninitial designation, he shall be deemed to have elected investment in an
\nInvestment Fund comprised of fixed income or similar types of investments as
\ndetermined by the Plan Administrator. A designation filed by a Member changing
\nhis investment option shall apply to investment of future deposits and\/or to
\namounts already accumulated in his accounts. A Member may change his investment
\noption effective as of any Valuation Date by providing written notice to <\/p>\n
21<\/p>\n
the Plan Administrator at least 30 days prior to the Valuation Date on which the
\nchange is to occur, or within such lesser period prior to the Valuation Date
\nwhich is acceptable to the Plan Administrator.<\/p>\n
Notwithstanding the foregoing, if a Member files a designation
\nwith the Plan Administrator which changes his investment selection with regard
\nto amounts already accumulated in his accounts, the Plan Administrator shall
\neffectuate the investment change by making an estimated transfer between funds
\nin accordance with the designation filed by the Member, based on the value of
\nthe Member’s accounts as of the Valuation Date preceding the effective date of
\nthe designation, plus deposits and less withdrawals between the preceding
\nValuation Date and the effective date of the designation. This estimated
\ntransfer shall be made by the Plan Administrator as soon as practicable after
\nthe effective date of the designation. Any remaining adjustments to the transfer
\nbetween investment funds on behalf of a Member pursuant to a valid designation
\nshall occur after the valuation of Plan assets for the preceding period is
\ncompleted. No Member shall have any recourse against the Plan Administrator,
\nPlan Sponsor, or any Plan fiduciary for any losses sustained or earnings lost as
\na result of the timeliness or accuracy of any transfer between investment funds
\nmade pursuant to a valid designation.<\/p>\n
4.6 Investments for Terminated Members. Any Member who ceases
\nto be an Employee shall continue to have the authority to direct the investment
\nof his accounts. The Plan Administrator and Trustee shall have no authority to
\ndirect the investment of any Member’s account hereunder other than as the Member
\nso directs in accordance with the provisions of Sections 4.4 and 4.5.<\/p>\n
4.7 Valuation Adjustments. The Member’s account balances shall
\nbe adjusted as of each Valuation Date, in accordance with Section 4.2, based on
\nthe performance of the Investment Fund(s) selected by the Member. Each account
\nshall be valued separately.<\/p>\n
SECTION 5<\/p>\n
VESTING AND FORFEITURES<\/p>\n
5.1 Vesting Schedule. A Member shall have a fully vested
\ninterest in his Basic Contribution Account and Rollover Account in all
\ninstances. A Member’s vested interest in his Profit Sharing Contribution Account
\nand Matching Contribution Account shall be determined by the occurrence of the
\nfollowing events:<\/p>\n
(a) full vesting shall occur upon the death or Disability
\nof a Member;<\/p>\n
(b) full vesting shall occur when a Member attains his
\nNormal Retirement Date or his Early Retirement Date; and<\/p>\n
22<\/p>\n
(c) except as otherwise stated above, the Member’s vested
\npercentage in his Profit Sharing Contribution Account and Matching Contribution
\nAccount shall be determined in accordance with the following schedule:<\/p>\n
\n\n Years of Service Vested Percentage
\n —————- —————–
\n
\nLess than 2 years 0%
\nAfter 2 years but less than 3 40%
\nAfter 3 years but less than 4 60%
\nAfter 4 years but less than 5 80%
\nAfter 5 years 100%
\n<\/c><\/s><\/caption>\n<\/table>\n (d) Notwithstanding the vesting schedule above, the vested percentage
\nof a Member’s Account shall not be less than the vested percentage attained as
\nof the later of the Effective Date or adoption date of this amendment and
\nrestatement.<\/p>\n
5.2 Forfeitures Reallocated. A Member’s vested Accrued Benefit shall be
\ndetermined in accordance with Section 5.1 as of the date he terminates
\nemployment. The nonvested portion shall be forfeited on the earlier of:<\/p>\n
(a) the date on which the Member receives a distribution of his vested
\nAccrued Benefit, if any; or<\/p>\n
(b) five (5) consecutive one-year Breaks in Service from the Member’s
\ndate of termination.<\/p>\n
Said Forfeiture shall be reallocated as additional Profit Sharing
\nContributions, in accordance with Section 3.1, to Members still employed on the
\nlast day of the Plan Year. Solely for these purposes, a Member shall be deemed
\nto be employed on the last day of the Plan Year if such Member terminated
\nemployment with the Employer on the Friday before the Saturday that is the last
\nday of the Plan Year.<\/p>\n
For purposes of this Section 5.2, if the value of a Member’s vested
\nAccrued Benefit is zero, the Member shall be deemed to have received a
\ndistribution of such vested Accrued Benefit. A Member’s vested Accrued Benefit
\nshall not include accumulated deductible Employee contributions within the
\nmeaning of section 72(o)(5)(B) of the Code for Plan Years beginning prior to
\nJanuary 1, 1989.<\/p>\n
A distribution made no later than the close of the second Plan Year
\nfollowing the year in which the Member terminates participation in the Plan is
\ndeemed to be made on termination, in accordance with section 411(a)(7)(B) of the
\nCode.<\/p>\n
5.3 Change in Vesting Schedule. A Member with at least three (3) Years of
\nService as of the expiration date of the election period (as set forth below)
\nmay elect to have his nonforfeitable percentage computed under the Plan without
\nregard to an amendment or restatement of the Plan. If a Member fails to make
\nsuch election, then<\/p>\n
23<\/p>\n
such Member shall be subject to the new vesting schedule. The Member’s election
\nperiod shall commence on the adoption date of the amendment and shall end 60
\ndays after the latest of:<\/p>\n
(a) the adoption date of the amendment;<\/p>\n
(b) the effective date of the amendment; or<\/p>\n
(c) the date the Member receives written notice of the amendment from
\nthe Employer or Administrator,<\/p>\n
except, however, that any Employee who was a Member as of the later of the
\nEffective Date or adoption date of an amendment and restatement and who
\ncompleted three (3) Years of Service shall be subject to the pre-amendment
\nvesting schedule, provided such schedule is more liberal than the new vesting
\nschedule.<\/p>\n
For purposes of this Section 5.3, a Member shall be considered to have
\ncompleted three (3) Years of Service whether or not consecutive, without regard
\nto the exceptions of section 411(a)(4) of the Code.<\/p>\n
SECTION 6<\/p>\n
DISTRIBUTIONS<\/p>\n
6.1 Distribution of Benefit. A Member who ceases to be an Employee for any
\nreason other than death shall be entitled to receive his vested Accrued Benefit.
\nA Member’s Beneficiary shall be entitled to receive the Member’s vested Accrued
\nBenefit in the event of the Member’s death. A Member or Beneficiary who is
\nentitled to payment under this Section may elect one of the following options:<\/p>\n
Option A. A lump sum payment equal to the value of the Member’s vested Accrued
\n Benefit determined as of any Valuation Date coincident with or
\n following the date he ceases to be an Employee.<\/p>\n
Option B. A lump sum payment after the Valuation Date specified under Option
\n A. as the Member (or Surviving Spouse) requests pursuant to the
\n limitations set forth in Section 6.5 of this Plan. The amount
\n payable shall be equal to the Member’s vested Accrued Benefit
\n determined as of the Valuation Date immediately following the date
\n payment is requested.<\/p>\n
Option C. Substantially equal monthly, quarterly, semiannual or annual cash
\n installments over a period not to exceed the joint and last survivor
\n life expectancy of the Member and his Beneficiary. Such payments to
\n a Member must commence as provided in Section 6.6 of this Plan, and
\n shall continue to the Member’s Beneficiary after the Member’s death
\n until the entire vested Accrued Benefit has been distributed. A
\n Member (or in the case of a deceased Member, the Beneficiary) may
\n elect to receive the unpaid portion of his vested Accrued Benefit in
\n a lump sum payment as of<\/p>\n
24<\/p>\n
any Valuation Date by submitting a written request to the Plan
\n Administrator.<\/p>\n
All distributions required under this Section 6 shall be determined and
\nmade in accordance with the regulations under section 401(a)(9) of the Code,
\nincluding the minimum distribution incidental benefit requirement of section
\n1.401(a)(9) -2 of the regulations.<\/p>\n
6.2 Election of Benefits. The Member shall notify the Plan Administrator,
\nin writing, of the form and timing of benefit payments. An election may be
\nrevoked and a new written election may be filed with the Plan Administrator any
\ntime prior to the commencement of benefits. Payment of benefits shall commence
\nas soon as practicable under the option the Member has designated; but in no
\nevent later than as provided under Section 6.6 hereof. Notwithstanding the
\nforegoing, if an Employee separates from service with the Employer for reasons
\nother than death, the Employee’s vested Accrued Benefit will be paid to him
\nautomatically in accordance with Option A, unless the value of his vested
\nAccrued Benefit exceeds $5,000; provided that if the Employee’s vested Accrued
\nBenefit exceeds $5,000 on the date that the Employee separates from service and
\nthen on any subsequent date the value of the Employee’s vested Accrued Benefit
\nis not greater than $5,000, the Employee’s vested Accrued Benefit will be paid
\nto him automatically in accordance with Option A at that time.<\/p>\n
6.3 Rehire Prior to Incurring Five (5) Consecutive Breaks in Service. If
\nthe Member terminates his employment and is rehired by the Employer prior to the
\ndate that he would incur his fifth consecutive Break in Service, any amounts
\npreviously forfeited shall be restored by the Employer if such Member’s vested
\nAccrued Benefit had remained in the Trust until the date the Member was rehired
\nor if the Member had received a distribution and repays the entire amount which
\nwas distributed on or before the earlier of five years after the first date on
\nwhich the Member is subsequently reemployed by the Employer, or the close of the
\nfirst period of five consecutive one-year Breaks in Service after the
\nwithdrawal. The Member’s vested interest in such an instance shall be determined
\nthereafter as if he did not have a break in employment. The Employer shall make
\nsufficient contributions equal to the amount forfeited at the time distribution
\noccurred. If the Member does not repay the amount which was distributed to him,
\nnew accounts shall be opened upon his reentry into the Plan and the amount
\nforfeited during the Member’s prior employment may not be recovered. If a Member
\nreceives or is deemed to receive a distribution pursuant to this Section 6 and
\nthe Member resumes employment covered under this Plan, the Member’s
\nEmployer-derived Accrued Benefit will be restored to the amount on the date of
\ndistribution if the Member repays to the Plan the full amount of the
\ndistribution attributable to Employer contributions before the earlier of 5
\nyears after the first date on which the Member is subsequently reemployed by the
\nEmployer, or the date the Member incurs 5 consecutive one-year Breaks in Service
\nfollowing the date of the distribution.<\/p>\n
6.4 Death Prior to Total Distribution. If a Member dies before his entire
\ninterest has been distributed to him, the remaining portion of such interest
\nshall be distributed in a lump sum as soon as practicable after the next
\nValuation Date, and in no<\/p>\n
25<\/p>\n
event later than five (5) years after the Member’s date of death unless Option
\nC. has been chosen by the Member prior to his death.<\/p>\n
6.5 Distribution Limitation. In accordance with section 401(a) of the Code
\nand unless he elects otherwise, a Member shall commence distribution hereunder
\nno later than 60 days after the close of the Plan Year in which occurs the later
\nof his Normal Retirement Date, the tenth anniversary of the year in which a
\nMember has commenced participation in the Plan or the date of the Member’s
\ntermination of employment. Notwithstanding the foregoing, the failure of a
\nMember (and, if married, his Spouse) to consent to a distribution while a
\nbenefit is immediately distributable within the meaning of this Section shall be
\ndeemed to be an election to defer commencement of payment of any benefit
\nsufficient to satisfy this Section.<\/p>\n
6.6 Mandatory Distributions. A Member’s benefits shall be distributed to
\nhim not later than April 1 of the calendar year following the later of (x) the
\ncalendar year in which the Member attains age 70-1\/2, or (y) the calendar year
\nin which the Member retires; provided that clause (y) shall not apply to any
\nMember who is a “five (5) percent owner” (as defined in section 416(i) of the
\nCode). Notwithstanding the foregoing, if a Member had attained age 70-1\/2 before
\nJanuary 1, 1988 and was not a “five (5) percent owner” at any time during the
\nPlan Year ending with or within the calendar year in which the Member attained
\nage 66-1\/2 or any subsequent Plan Year, his benefits shall be distributed to him
\nnot later than April 1 of the calendar year following the later of (A) the
\ncalendar year in which the Member attains age 70-1\/2 or (B) the calendar year in
\nwhich the Member retires. The restrictions imposed by this Section shall not
\napply if a Member has, prior to January 1, 1984, made a written designation to
\nhave his retirement benefit paid in an alternative method acceptable under
\nsection 401(a) of the Code as in effect prior to the enactment of the Tax Equity
\nand Fiscal Responsibility Act of 1982. Any such written designation made by a
\nMember shall be binding upon the Plan Administrator. The Member shall be
\nrequired to withdraw during any Plan Year only the minimum amount required to
\nsatisfy the Code.<\/p>\n
6.7 Earnings on Undistributed Benefits. A Member’s Accrued Benefit shall
\nshare in investment income and\/or depreciation in accordance with the provisions
\nof Section 4 until his vested Accrued Benefit, valued as of the Valuation Date
\nimmediately following his date of termination, is distributed to him.<\/p>\n
6.8 Rollovers Into the Plan. Subject to approval of the Plan
\nAdministrator, an Employee may roll over to the Trust amounts accumulated for
\nthe Employee under any other qualified retirement plan or plans. The amount
\nrolled over shall become subject to all of the terms and conditions of this Plan
\nand Trust Agreement after it is rolled over, except that it shall be fully
\nvested and nonforfeitable at all times. The amounts rolled over shall be
\ndeposited in a separate account herein referred to as an Employee’s Rollover
\nAccount and shall be invested as other accounts. An Employee who makes a
\nrollover contribution to this Plan shall not otherwise participate in the Plan
\nuntil he qualifies as an Eligible Employee hereunder.<\/p>\n
26<\/p>\n
6.9 Evidence in Writing. The Plan Administrator may require the Member to
\nfurnish a letter or other evidence in writing from the Administrator of the plan
\nfrom which the rollover originates, stating that the acceptance of the rollover
\nshall not affect the tax qualified status of the Plan.<\/p>\n
6.10 Hardship Withdrawal. A Member may apply in writing to the Plan
\nAdministrator for a hardship withdrawal from his vested Accrued Benefit at any
\ntime. The withdrawal must satisfy the criteria set forth below and may be
\napproved or disapproved at the discretion of the Plan Administrator. Hardship
\nwithdrawals from a Member’s Basic Contribution Account are not permitted from
\nincome on a Member’s Basic Contribution, except to the extent of earnings on or
\nbefore December 31, 1988, nor are such withdrawals permitted to include amounts
\ntreated as Basic Contributions as a result of the application of the special
\nnondiscrimination requirements under rules prescribed by the Secretary of the
\nTreasury for Employer contributions that are used to meet the vesting and
\nwithdrawal restrictions for Basic Contributions. The circumstances which may
\nwarrant approval of a Member’s application for a hardship withdrawal are:<\/p>\n
(a) General Rule. For purposes of this Plan, a hardship distribution
\nmust be made on account of an immediate and heavy financial need of the Member
\nand must be in an amount not to exceed the sum necessary to satisfy such
\nfinancial need.<\/p>\n
(b) Immediate and Heavy Financial Need. The determination of whether a
\nMember has an immediate and heavy financial need shall be made on the basis of
\nwhether a request satisfies the definition of “immediate and heavy financial
\nneed,” including those deemed needs as set forth below. A financial need shall
\nnot fail to qualify as immediate and heavy merely because such need was
\nreasonably foreseeable or voluntarily incurred by the Member.<\/p>\n
(c) Deemed Immediate and Heavy Financial Need. A distribution shall be
\ndeemed to be made on account of an immediate and heavy financial need of the
\nMember if the distribution is on account of:<\/p>\n
(i) expenses for medical care described in section 213(d) of the
\n Code previously incurred by the Member, the Member’s spouse, or any
\n dependents of the Member (as defined in section 152 of the Code) or
\n amounts necessary to obtain medical services, which constitute medical
\n expenses described in section 213(d) of the Code;<\/p>\n
(ii) costs directly related to the purchase (excluding mortgage
\n payments) of a principal residence for the Member;<\/p>\n
(iii) payment of tuition and related educational fees for the next
\n twelve months of post-secondary education for the Member, the Member’s
\n spouse, children or dependents;<\/p>\n
27<\/p>\n
(iv) the need to prevent the eviction of the Member from his
\n principal residence or foreclosure on the mortgage of the Member’s
\n principal residence; or<\/p>\n
(v) such other events set forth by the Commissioner of the Internal
\n Revenue Service through the publication of revenue rulings, notices, and
\n other documents of general applicability.<\/p>\n
(d) Distribution Deemed Necessary to Satisfy Financial Need (Suspension
\nMethod). A distribution shall be deemed to be necessary to satisfy an immediate
\nand heavy financial need of a Member if all of the following requirements are
\nsatisfied:<\/p>\n
(i) the distribution is not in excess of the amount of the immediate
\n and heavy financial need of the Member plus anticipated federal, state and
\n local income taxes and penalties on distribution;<\/p>\n
(ii) the Member has obtained all distributions, other than hardship
\n distributions, and all nontaxable (at the time of the loan) loans
\n currently available under all plans maintained by an Affiliated Company;<\/p>\n
(iii) the Member’s elective and after-tax contributions under this
\n Plan (and any other qualified or nonqualified plan of deferred
\n compensation maintained by an Affiliated Company) are suspended under a
\n legally enforceable arrangement for at least twelve months after receipt
\n of the hardship distribution; and<\/p>\n
(iv) the Member may not make elective contributions for the Member’s
\n taxable year immediately following the taxable year of the hardship
\n distribution in excess of the Dollar Limit for such next taxable year less
\n the amount of such Member’s elective contributions for the taxable year of
\n the hardship distribution.<\/p>\n
(e) The determination of the existence of financial hardship and the
\namount required to be distributed to meet the need created by the hardship must
\nbe made in a uniform and nondiscriminatory manner.<\/p>\n
6.11 Withdrawals Permitted After Age 59-1\/2. Notwithstanding the
\nforegoing, a Member may apply in writing to the Plan Administrator for a
\nwithdrawal from all or a portion of his vested Accrued Benefit any time after
\nattaining age 59-1\/2. Such withdrawal shall not be subject to the requirements
\nset forth in Section 6.10 but is subject to the conditions set forth below.<\/p>\n
6.12 Conditions for Withdrawals. The following conditions apply to
\nwithdrawals made under Sections 6.10 and 6.11:<\/p>\n
(a) a Member may make only two hardship withdrawals and one age 59-1\/2
\nwithdrawal in any 12-month period;<\/p>\n
28<\/p>\n
(b) all withdrawals shall be based on the value of the Member’s
\napplicable accounts as of the Valuation Date immediately preceding the
\nwithdrawal request. Notwithstanding the foregoing, the Plan Administrator, in
\nits sole discretion, shall base a withdrawal under this Section on the value of
\na Member’s vested Accrued Benefit as of the date of the withdrawal; and<\/p>\n
(c) any withdrawal hereunder by a married Member shall be subject to
\nthe written consent of his Spouse.<\/p>\n
SECTION 7<\/p>\n
ACTUAL DEFERRAL AND ACTUAL
\n CONTRIBUTION PERCENTAGE TESTING<\/p>\n
7.1 Actual Deferral Percentage Test. The actual deferral percentage (ADP)
\nof Basic Contributions allocated to Members who are Highly Compensated Employees
\nshall not exceed the greater of (a) or (b) as follows:<\/p>\n
(a) the ADP of Members who are Non-Highly Compensated Employees times
\n1.25; or<\/p>\n
(b) the ADP of Members who are Non-Highly Compensated Employees times
\n2.0, but not to exceed the ADP of Members who are Non-Highly Compensated
\nEmployees by more than two percentage points.<\/p>\n
7.2 ADP Formula.<\/p>\n
(a) The ADP for a specified group of Members for a Plan Year shall be
\nthe average of the Actual Deferral Ratios (ADR) calculated separately for each
\nMember in such group.<\/p>\n
The Plan Administrator shall determine as soon as practicable after
\nthe end of the Plan Year whether the ADP for Highly Compensated Employees
\nsatisfies either of the tests contained in Section 7.1. In the event neither
\ntest is satisfied, the Employer may elect either of the following:<\/p>\n
(i) to reduce the allowable Basic Contribution for Highly
\n Compensated Employees as provided in Sections 7.3 and 7.5; or<\/p>\n
(ii) to make an Additional Basic Contribution (subject to the
\n requirements of Section 7.6) on behalf of some or all of the Non-Highly
\n Compensated Employees eligible to make contributions under Section 3.1 in
\n such amount or amounts as it determines are necessary to satisfy the
\n requirements of Section 7.1, within the time period required by any
\n applicable law or regulation.<\/p>\n
(b) The Plan shall take into account the ADRs of all Eligible Employees
\nfor purposes of the ADP test. For this purpose, an Eligible Employee is any
\nEmployee who is directly or indirectly eligible to make a Basic Contribution
\nunder the <\/p>\n
29<\/p>\n
Plan for all or a portion of a Plan Year, including an Employee who would be
\neligible but for his failure to make required contributions and an Employee
\nwhose eligibility to make Basic Contributions has been suspended because of an
\nelection to take a hardship distribution. In the case of an Eligible Employee
\nwho makes no elective contributions, the ADR that is to be included in
\ndetermining the ADP is zero.<\/p>\n
(c) A Basic Contribution shall be taken into account under the ADP test
\nfor a Plan Year only if it relates to Compensation that either would have been
\nreceived by the Employee in the Plan Year (but for the deferral election) or is
\nattributable to services performed by the Employee in the Plan Year and would
\nhave been received by the Employee within 2-1\/2 months after the close of the
\nPlan Year (but for the deferral election).<\/p>\n
(d) A Basic Contribution shall be taken into account under the ADP test
\nfor a Plan Year only if it is contributed to the Trust before the last day of
\nthe twelve-month period immediately following the Plan Year to which the
\ncontribution relates and is allocated within the Plan Year to which the
\ncontribution relates. A Basic Contribution is considered allocated as of a date
\nwithin a Plan Year if the allocation is not contingent on participation or
\nperformance of services after such date.<\/p>\n
(e) The ADR and ADP shall be calculated to the nearest .01%.<\/p>\n
7.3 Calculations of Excess Contributions. The Excess Contributions for a
\nHighly Compensated Employee shall be determined and distributed in the following
\nmanner:<\/p>\n
(a) “Excess Contributions” shall mean, with respect to any Plan Year,
\nthe excess of:<\/p>\n
(i) the aggregate amount of Basic Contributions actually taken into
\n account in computing the ADP of Highly Compensated Employees for such Plan
\n Year, over<\/p>\n
(ii) the maximum amount of Basic Contributions permitted by the ADP
\n test in accordance with Section 7.1.<\/p>\n
(b) The amount of Excess Contributions attributable to each Highly
\nCompensated Employee shall be calculated and distributed by reducing Basic
\nContributions made by, or on behalf of, the Highly Compensated Employee who has
\nmade the greatest dollar amount of Basic Contributions with respect to such Plan
\nYear (or, in the event that more than one Highly Compensated Employee shall have
\nmade Basic Contributions of an equal amount, the Basic Contributions of each
\nsuch Highly Compensated Employee) so that the amount of Basic Contributions of
\nsuch Highly Compensated Employee (or Highly Compensated Employees, as the case
\nmay be) shall equal the amount of Basic Contributions with respect to such Plan
\nYear of the Highly Compensated Employee (or the Highly Compensated Employees, as
\nthe case may be) who shall have made the next greatest amount of Basic
\nContributions with respect to such Plan Year, and an amount equal to the amount
\nof reduction (or reductions, as the case<\/p>\n
30<\/p>\n
may be) shall be distributed to such Highly Compensated Employee (or Highly
\nCompensated Employees, as the case may be), provided, however, that the amount
\nof the reduction and the amount to be distributed shall in no event exceed the
\nExcess Contributions with respect to that Plan Year; and if the Excess
\nContributions with respect to that Plan Year shall exceed the amount distributed
\nto such Highly Compensated Employee (or Highly Compensated Employees, as the
\ncase may be) in accordance with the provisions of Section 7.3(a), then further
\nreductions shall be made in accordance with the provisions of Section 7.3(a)
\nuntil the amount distributed shall equal the Excess Contributions.<\/p>\n
7.4 Failure to Correct Excess Contributions. Failure to correct Excess
\nContributions by the close of the Plan Year following the Plan Year for which
\nthey were made shall cause the cash or deferred arrangement to fail to satisfy
\nthe requirements of section 401(k)(3) of the Code for the Plan Year for which
\nthe Excess Contributions were made and for all subsequent years they remain in
\nthe Trust. Also, the Employer shall be liable for a 10% excise tax on the amount
\nof Excess Contributions unless corrected by distribution or recharacterization
\nof Excess Contributions within 2-1\/2 months after the close of the Plan Year for
\nwhich they were made.<\/p>\n
7.5 Distribution of Excess Contributions. Excess Contributions shall be
\ndistributed to Members on whose behalf such Excess Contributions were made no
\nlater than the last day of the Plan Year following the Plan Year for which they
\nwere made. Excess Contributions shall be adjusted in the manner utilized under
\nSections 4.2 and 4.3 to reflect income earned and losses incurred for the Plan
\nYear on the Member’s Basic Contributions Account.<\/p>\n
7.6 Additional Basic and Matching Contributions. Additional Basic
\nContributions and Matching Contributions may be treated as Basic Contributions
\nfor purposes of the ADP test only if such contributions are nonforfeitable when
\nmade and subject to the same distribution restrictions that apply to elective
\ncontributions. Additional Basic Contributions and Matching Contributions which
\nmay be treated as Basic Contributions must satisfy these requirements without
\nregard to whether they are actually taken into account as Basic Contributions
\nfor purposes of satisfying the ADP tests.<\/p>\n
Additional Basic Contributions and\/or Matching Contributions may be
\ntreated as Basic Contributions only if the conditions described in section
\n1.401(k)-1(b)(5) of the Treasury regulations are satisfied.<\/p>\n
The amount of the Additional Basic Contribution for Non-Highly
\nCompensated Employees, or the reduction in the allowable Basic Contribution
\ndeferral percentage for Highly Compensated Employees shall be such that at least
\none of the tests contained in Section 7.1 is satisfied.<\/p>\n
7.7 Matching Contributions. Any Matching Contributions made on account of
\nan Excess Contribution or deferral in excess of the Dollar Limit shall be
\nforfeited and shall be used to reduce Matching Contributions for the year of
\nforfeiture.<\/p>\n
31<\/p>\n
7.8 Actual Contribution Percentage Test. The actual contribution
\npercentage (ACP) of contributions deposited to the Plan for Members who are
\nHighly Compensated Employees shall not exceed the greater of (a) or (b) as
\nfollows:<\/p>\n
(a) the ACP of Members who are Non-Highly Compensated Employees times
\n1.25; or<\/p>\n
(b) the ACP of Members who are Non-Highly Compensated Employees times
\n2.0, but not to exceed the ACP of Members who are Non-Highly Compensated
\nEmployees by more than two percentage points.<\/p>\n
7.9 ACP Formula.<\/p>\n
(a) The ACP for a specified group of Members for a Plan Year shall be
\nthe average of the Actual Contribution Ratios (ACR) calculated separately for
\neach Member in such group.<\/p>\n
The Plan Administrator shall determine as soon as practicable after
\nthe end of the Plan Year whether the ACP for Highly Compensated Employees
\nsatisfies either of the tests contained in Section 7.8. In the event neither
\ntest is satisfied, the Employer may elect either of the following:<\/p>\n
(i) to reduce the allowable Matching Contribution for Highly
\n Compensated Employees as provided in Sections 7.10 and 7.11; or<\/p>\n
(ii) to make an additional contribution on behalf of some or all of
\n the Non-Highly Compensated Employees eligible to make contributions under
\n Section 3.1 in such amount or amounts as it determines are necessary to
\n satisfy the requirements of Section 7.8, within the time period required
\n by any applicable law or regulation.<\/p>\n
(b) The Plan shall take into account the ACRs of all Eligible Employees
\nfor purposes of the ACP test. For this purpose, an Eligible Employee is any
\nEmployee who is directly or indirectly eligible to receive an allocation of
\nMatching Contributions including an Employee who would be eligible but for his
\nfailure to make required contributions and an Employee whose right to receive
\nMatching Contributions has been suspended because of an election not to
\nparticipate. In the case of an Eligible Employee who receives no Matching
\nContributions, the ACR that is to be included in determining the ACP is zero.<\/p>\n
(c) A Matching Contribution shall be taken into account under the ACP
\ntest for a Plan Year only if it is made on account of the Eligible Employee’s
\nBasic Contributions for the Plan Year contributed to the Trust before the last
\nday of the twelve-month period immediately following the Plan Year to which the
\ncontributions relate and is allocated within the Plan Year to which the
\ncontributions relate. Qualified Matching Contributions which are used to meet
\nthe requirements of section 401(k)(3)(A) of the Code are not taken into account.<\/p>\n
32<\/p>\n
(d) The ACR and ACP shall be calculated to the nearest .01%.<\/p>\n
(e) Additional Basic Contributions may be treated as Matching
\nContributions for purposes of the ACP test of section 401(m) of the Code only if
\nsuch contributions are nonforfeitable when made and distributable only under the
\nfollowing circumstances:<\/p>\n
(i) the Employee’s Retirement, death, Disability or separation from
\n service;<\/p>\n
(ii) the termination of the Plan without establishment of a
\n successor plan;<\/p>\n
(iii) the Employee’s attainment of age 59-1\/2;<\/p>\n
(iv) the sale or other disposition by a corporation to an unrelated
\n corporation, which does not maintain the Plan, of substantially all of the
\n assets used in a trade or business, but only with respect to Employees who
\n continue employment with the acquiring corporation; and<\/p>\n
(v) the sale or other disposition by a corporation of its interest
\n in a subsidiary to an unrelated entity which does not maintain the Plan,
\n but only with respect to Employees who continue employment with the
\n subsidiary. Additional Basic Contributions which may be treated as
\n Matching Contributions must satisfy these requirements without regard to
\n whether they are actually taken into account as Matching Contributions.<\/p>\n
7.10 Calculation of Excess Aggregate Contributions. The Excess Aggregate
\nContributions for a Highly Compensated Employee shall be determined and
\ndistributed in the following manner:<\/p>\n
(a) “Excess Aggregate Contributions” shall mean, with respect to any
\nPlan Year, the excess of:<\/p>\n
(i) the aggregate Matching Contributions taken into account in
\n computing the numerator of the ADP actually made on behalf of the Highly
\n Compensated Employees for such Plan Year, over<\/p>\n
(ii) the maximum Matching Contributions permitted by the ADP test in
\n accordance with Section 7.8.<\/p>\n
(b) The amount contributed to the Matching Contribution Account
\n(“Cumulative Amount”) with respect to each such Member shall be calculated by
\nreducing the Cumulative Amount made on behalf of the Member who has been
\ncredited with the greatest Cumulative Amount with respect to such Plan Year (or,
\nin the event that more than one Member shall have been credited with a
\nCumulative Amount of an equal amount, the Cumulative Amount of each such Member)
\nshall be reduced so that the amount of Cumulative Amount of such Member (or
\nMembers, as the case may be)<\/p>\n
33<\/p>\n
shall equal the Cumulative Amount with respect to such Plan Year of the Member
\nwho shall have been credited with the next greatest Cumulative Amount with
\nrespect to such Plan Year, and an amount equal to the amount of reduction (or
\nreductions, as the case may be) shall be forfeited, provided, however, that the
\namount to be forfeited shall in no event exceed the Excess Aggregate
\nContributions, and (ii) in the event that the Cumulative Amount attributable to
\na Member who shall have been credited with the greatest Cumulative Amount with
\nrespect to such Plan Year is less than the Excess Aggregate Contributions, then
\nfurther reductions shall be made in accordance with the provisions of the
\nprevious sentence of this Section 7.10(b) until such time as the amount
\nallocated to each such Member refunded in accordance with this Section 7.10(b)
\nshall equal the Excess Aggregate Contributions.<\/p>\n
7.11 Distribution of Excess Aggregate Contribution. Excess Aggregate
\nContributions shall be distributed to Members on whose behalf such Excess
\nAggregate Contributions were made, to the extent vested, no later than the last
\nday of the Plan Year following the Plan Year for which they were made. Nonvested
\nExcess Aggregate Contributions shall be applied as provided in Section 7.13.
\nExcess Aggregate Contributions shall be adjusted in the manner utilized under
\nSections 4.2 and 4.3 to reflect income earned or loss as incurred for the Plan
\nYear on the Member’s Matching Contribution Account.<\/p>\n
7.12 Additional Contributions. Basic Contributions and\/or Additional Basic
\nContributions may be treated as Matching Contributions only if the conditions
\ndescribed in Treasury regulation 1.401(m)-1(b)(5) are satisfied.<\/p>\n
7.13 Forfeitures. Amounts forfeited by Highly Compensated Employees under
\nSection 7.11 shall be treated as an Annual Addition under the Plan and shall be
\napplied to reduce future Employer Matching Contributions. No forfeiture arising
\nunder this Section shall be allocated to the account of any Highly Compensated
\nEmployee.<\/p>\n
7.14 Aggregate Limit. The sum of the ADP and ACP for Highly Compensated
\nEmployees, determined after any corrections required to meet the ADP test or ACP
\ntest, shall not exceed the Aggregate Limit as defined herein. If the Aggregate
\nLimit is exceeded for any particular Plan Year, the Plan Administrator may
\nrecharacterize, to the maximum extent permitted under Sections 401(k) and 401(m)
\nof the Code and the regulations thereunder, Participants’ Basic Contributions
\nand Matching Contributions for purposes of satisfying the Aggregate Limit, and,
\nif after any such recharacterization, the Aggregate Limit is still not
\nsatisfied, the Employer may, in its sole discretion, either (i) make Additional
\nBasic Contributions on behalf of some or all of the Non-Highly Compensated
\nEmployees eligible to make contributions to the Plan pursuant to Section 3.1 in
\nsuch amount or amounts as its determines are necessary to satisfy the Aggregate
\nLimit, or (ii) reduce either the ADR or the ACR for all affected Highly
\nCompensated Employees, in accordance with Section 7.3 or 7.10(a), as applicable,
\nand such reductions shall be treated, for each affected Highly Compensated
\nEmployee, as an Excess Contribution or an Excess Aggregate Contribution, as
\napplicable. “Aggregate Limit” means the greater of (a) or (b) below:<\/p>\n
34<\/p>\n
(a) the sum of<\/p>\n
(i) 125% of the greater of the ADP for eligible Non-Highly
\n Compensated Employees, or the ACP for eligible Non-Highly Compensated
\n Employees for the Plan Year; and<\/p>\n
(ii) two plus the lesser of such ADP or ACP, but not greater than
\n 200% of the lesser amount; or<\/p>\n
(b) the sum of<\/p>\n
(i) 125% of the lesser of the ADP for the eligible Non-Highly
\n Compensated Employees or the ACP for the eligible Non-Highly Compensated
\n Employees for the Plan Year; and<\/p>\n
(ii) two plus the greater of such ADP or ACP, but not greater than
\n 200% of the greater amount.<\/p>\n
7.15 Special Rules.<\/p>\n
(a) The ADR and ACR for any Member who is a Highly Compensated Employee
\nfor the Plan Year and who is eligible to make Basic Contributions, or to have
\nMatching Contributions allocated to his account, or to make after-tax
\ncontributions under two or more plans that are maintained by an Affiliated
\nCompany shall be determined as if all such contributions were made under a
\nsingle plan.<\/p>\n
(b) In the event that this Plan satisfies the requirements of sections
\n410(b) and 401(a)(4) of the Code only if aggregated with one or more other
\nplans, or if one or more other plans satisfy the requirements of sections 410(b)
\nand 401(a)(4) of the Code only if aggregated with this Plan, then the
\ncontribution percentages and deferral percentages of Members shall be determined
\nas if all such plans were a single plan.<\/p>\n
(c) The determination and treatment of the contribution percentage of
\nany Member shall satisfy such other requirements as may be prescribed by the
\nSecretary of the Treasury.<\/p>\n
SECTION 8<\/p>\n
TOP-HEAVY PROVISIONS<\/p>\n
8.1 Top-Heavy Preemption. During any Plan Year in which this Plan is
\nTop-Heavy, as defined in Section 8.2 below, the Plan shall be governed in
\naccordance with this Section, which shall control over other provisions.<\/p>\n
8.2 Top-Heavy Definitions. For purposes of this Section, the following
\ndefinitions shall apply:<\/p>\n
35<\/p>\n
(a) “Compensation” means Compensation as defined in Section 1.14(c) for
\nan entire Plan Year, including amounts contributed by the Employer pursuant to a
\nsalary reduction agreement which are excludable from the Employee’s gross income
\nunder sections 125, 132(f), 402(e)(3) or 402(h) of the Code.<\/p>\n
(b) “Contribution Rate” means the sum of contributions made by the
\nEmployer under this Plan, excluding salary deferral contributions made under
\nthis or any other plan maintained by the Employer, plus forfeitures allocated to
\nthe Member’s accounts for the Plan Year, divided by his Compensation for the
\nPlan Year. To determine the Contribution Rate, the Plan Administrator shall
\nconsider all qualified defined contribution plans (within the meaning of the
\nCode) maintained by the Employer as a single plan.<\/p>\n
(c) “Determination Date” means the last day of the preceding Plan Year,
\nexcept in the initial Plan Year, Determination Date means the last day of such
\nPlan Year. For purposes of testing the Top-Heavy status of Required and
\nPermissive Aggregation Groups, Determination Date means the last day of each
\nrespective plan’s Plan Year which occurs in the calendar year coincident with
\nthe Determination Date of this Plan.<\/p>\n
(d) “Key Employee” means any Employee or former Employee (and the
\nBeneficiaries of such Employee) who at any time during the “Determination
\nPeriod” was an officer of the Employer if such individual’s annual Compensation
\nexceeds 50 percent of the dollar limitation under section 415(b)(1)(A) of the
\nCode, an owner (or considered an owner under section 318 of the Code) of one of
\nthe ten largest interests in the Employer if such individual’s compensation
\nexceeds 100 percent of the dollar limitation under section 415(c)(1)(A) of the
\nCode, a 5-percent owner of the Employer, or a 1-percent owner of the Employer
\nwho has an annual compensation of more than $150,000. Annual compensation means
\ncompensation as defined in section 415(c)(3) of the Code, but includes amounts
\ncontributed by the Employer pursuant to a salary reduction agreement which are
\nexcludible from the Employee’s gross income under sections 125, 457, 402(g)(3)
\nor 402(h) of the Code. The “Determination Period” is the Plan Year containing
\nthe Determination Date and the 4 preceding Plan Years.<\/p>\n
The determination of who is a Key Employee will be made in
\naccordance with section 416(i)(1) of the Code and the regulations thereunder.<\/p>\n
(e) “Non-Key Employee” means any Employee currently eligible to
\nparticipate in the Plan who is not a Key Employee.<\/p>\n
(f) “Permissive Aggregation Group” means the Required Aggregation Group
\nplus any other qualified plans maintained by the Employer and Affiliated
\nCompanies, but only if such resultant group would satisfy, in the aggregate, the
\nrequirements of sections 401(a)(4) and 410 of the Code. The Plan Administrator
\nshall determine which plans to take into account in determining the Permissive
\nAggregation Group.<\/p>\n
36<\/p>\n
(g) “Required Aggregation Group” means:<\/p>\n
(i) each qualified plan of the Employer and Affiliated Companies
\n (including any terminated plan that covered a Key Employee and was
\n maintained within the five-year period ending on the Determination Date)
\n in which at least one (1) Key Employee participates during the Plan Year
\n containing the Determination Date or any of the four preceding Plan Years;
\n and<\/p>\n
(ii) any other qualified plan of the Employer and Affiliated
\n Companies which enables a plan described in (i) above to meet the
\n requirements of sections 401(a)(4) or 410 of the Code.<\/p>\n
(h) “Top-Heavy” shall describe the status of the Plan in any Plan Year
\nif the “Top-Heavy Ratio” as of the Determination Date exceeds sixty percent
\n(60%).<\/p>\n
(i) “Top-Heavy Ratio” is a fraction as of the Determination Date, as
\n follows:<\/p>\n
Accrued Benefit of all Key Employees
\n Accrued Benefits of all Employees<\/p>\n
(ii) Notwithstanding (i) above, the Top-Heavy Ratio shall be
\n computed pursuant to section 416(g) of the Code, and any regulations
\n issued thereunder.<\/p>\n
(iii) For Plan Years beginning after December 31, 1986, solely for
\n the purpose of determining if the Plan, or any other plan included in a
\n Required Aggregation Group of which this Plan is a part, is Top-Heavy
\n (within the meaning of section 416(g) of the Code) the accrued benefit of
\n an Employee other than a Key Employee (within the meaning of section
\n 416(i)(1) of the Code) shall be determined (a) under the method, if any,
\n that uniformly applies for accrual purposes under all plans maintained by
\n the Affiliated Employers, or if there is no such method, then (b) as if
\n such benefit accrued not more rapidly than the slowest accrual rate
\n permitted under the fractional accrual rule of section 411(b)(1)(C) of the
\n Code.<\/p>\n
(iv) For purposes of this Section only, “Accrued Benefit” shall
\n include or exclude Rollovers pursuant to regulation 1.416-1, T-32.<\/p>\n
(v) If an individual is not a Key Employee but was a Key Employee in
\n a prior year or if any individual has not performed services for the
\n Employer at any time during the five (5) year period ending on the
\n Determination Date, any Accrued Benefit for such individual shall not be
\n taken into account in determining the Top-Heavy status of the Plan.<\/p>\n
(vi) The Accrued Benefit of any Employee (other than a Key Employee)
\n shall be determined:<\/p>\n
37<\/p>\n
(1) under the method which is used for accrual purposes for
\n all plans of the Employer or, if there is no such method,<\/p>\n
(2) as if such benefit accrued not more rapidly than the
\n slowest accrual rate permitted under section 411(b)(1)(C) of the
\n Code.<\/p>\n
(vii) The value of Account Balances and the present value of Accrued
\n Benefits will be determined as of the most recent Valuation Date that
\n falls within or ends with the 12-month period ending on the Determination
\n Date, except as provided in section 416 of the Code and the regulations
\n thereunder for the first and second plan years of a defined benefit plan.<\/p>\n
(viii) The Accrued Benefit shall include any part of any account
\n balance distributed in the 5-year period ending on the Determination Date.<\/p>\n
(ix) The present value shall be based only on the interest rate and
\n mortality rates specified in the defined benefit plan.<\/p>\n
8.3 Aggregation of Plans. All Required Aggregation Groups shall be
\nconsidered (pursuant to section 416(g) of the Code) with this Plan in
\ndetermining whether this Plan is Top Heavy.<\/p>\n
(a) If such aggregation constitutes a Top-Heavy group, each plan so
\naggregated shall be considered Top-Heavy.<\/p>\n
(b) If such aggregation does not constitute a Top-Heavy group, none of
\nthe plans so aggregated shall be considered Top-Heavy.<\/p>\n
At the direction of the Plan Administrator and subject to the restrictions
\nof sections 401(a)(4) and 410 of the Code, Permissive Aggregation Groups may be
\nconsidered with this Plan plus any Required Aggregation Groups to determine
\nwhether such group is Top-Heavy. If such aggregation does not constitute a
\nTop-Heavy group, none of the plans so aggregated shall be considered Top-Heavy.<\/p>\n
8.4 Minimum Contribution Rate. Subject to Section 8.7 below, for any Plan
\nYear in which this Plan is Top-Heavy, a minimum contribution shall be made for
\neach Non-Key Employee as of the last day of the Plan Year which shall equal the
\nlesser of:<\/p>\n
(a) three (3%) percent of Compensation; or<\/p>\n
(b) the highest Contribution Rate received by a Key Employee in that
\nPlan Year.<\/p>\n
38<\/p>\n
This Top-Heavy Contribution shall be made irrespective of such Non-Key
\nEmployee’s Hours of Service, Compensation or failure to make contributions, as
\napplicable hereunder.<\/p>\n
8.5 Deposit of Minimum Contribution. The Plan Administrator shall deposit
\nany minimum contribution made under this Section to a “Top-Heavy Contribution
\nAccount” for each Non-Key Employee. Such account shall become part of his
\nAccrued Benefit and shall vest pursuant to Section 8.6 hereof.<\/p>\n
8.6 Top-Heavy Vesting Schedule. In any Plan Year in which this Plan is
\nTop-Heavy, any Member who is credited with at least one Hour of Service during
\nsuch Plan Year shall vest in accordance with Section 5.1 or the following
\nschedule, whichever produces the greater benefit:<\/p>\n
\n\n Years of Service Vested Percentage
\n —————- —————–
\n
\n Less than 2 years 0%
\n After 2 years but less than 3 20%
\n After 3 years but less than 4 40%
\n After 4 years but less than 5 60%
\n After 5 years but less than 6 80%
\n After 6 or more years 100%
\n<\/c><\/s><\/caption>\n<\/table>\n During any Plan Year in which this Plan is not Top-Heavy, vesting shall be
\ndetermined pursuant to Section 5, except that nonforfeitable rights obtained
\nunder the Top-Heavy vesting schedule shall continue as such.<\/p>\n
SECTION 9<\/p>\n
DESIGNATION OF BENEFICIARY<\/p>\n
9.1 Named Beneficiary. Each Member may designate in writing, filed with
\nthe Plan Trustee, a Beneficiary to whom, in the event of the Member’s death, all
\nbenefits or any unpaid balance of benefits shall be payable. However, each
\nmarried Member who designates a Beneficiary other than his Spouse must provide
\nthe Plan Trustee with a spousal consent to the designation of such other
\nBeneficiary. Such spousal consent shall set forth the effects of such waiver and
\nmust be either notarized or witnessed by a Plan representative. Subject to such
\nspousal consent the Beneficiary (Beneficiaries) so designated may be changed by
\nthe Member at any time. The facts as shown by the records of the Plan Trustee at
\nthe time of death shall be conclusive as to the identity of the proper payee and
\nthe amount property payable, and payment made in accordance with such facts
\nshall constitute a complete discharge of any and all obligations hereunder.<\/p>\n
39<\/p>\n
9.2 No Named Beneficiary. If no such designation is on file with the Plan
\nTrustee at the time of death of the Member, or if such designation is not
\neffective for any reason, then such death benefit shall be payable to the
\ndeceased Member’s Spouse, if living. If such Spouse is not living, payment shall
\nbe made to the deceased Member’s estate.<\/p>\n
SECTION 10<\/p>\n
MANAGEMENT OF THE FUND<\/p>\n
10.1 Contributions Deposited to Trust. All contributions to the Plan by
\nthe Employer and Employees shall be committed in trust to the Trustee selected
\nby the Plan Sponsor subject to the terms of the Trust created in Section 1 of
\nthe Trust Agreement, to be held, managed, and disposed of by the Trustee in
\naccordance with the aforementioned terms of the Trust and this Plan. The Trustee
\nselected may be changed from time to time by the Employer.<\/p>\n
10.2 No Reversion to Employer. The Trust shall continue to contain such
\nprovisions as shall render it impossible, except as is provided under Sections
\n3.8 and 11.3, for any part of the corpus of the Trust or income thereon to be at
\nany time used for, or diverted to, purposes other than for the exclusive benefit
\nof Members or their Beneficiaries; and it may contain such other provisions
\nrelating to the custody, management and disposition of the Fund by the Trustee
\nas shall be deemed advisable by the Employer.<\/p>\n
SECTION 11<\/p>\n
DISCONTINUANCE AND LIABILITIES<\/p>\n
11.1 Termination. The Plan may be terminated at any time by the Plan
\nSponsor, but only upon condition that such action is taken under the Trust
\nAgreement or otherwise, as shall render it impossible at any time under the
\nTrust for any part of the corpus of the Trust or income thereon to be at any
\ntime used for, or diverted to, purposes other than for the exclusive benefit of
\nactive and retired employees, except as is provided under Sections 3.8 and 11.3.
\nIf the Plan is terminated the Fund shall be held for distribution by the
\nTrustee, who shall distribute to the Members then participating in the Fund the
\nfull amount standing to their credit on the date of such termination, less the
\nadministrative costs to the Trustee for such distribution in accordance with the
\nmethods specified under Section 6.<\/p>\n
In the event that the Employer sponsors any other defined contribution
\nplan, if a Member does not consent to a distribution upon termination of this
\nPlan, that Member’s Accrued Benefit shall be transferred to the other aforesaid
\ndefined contribution plan. Notwithstanding the foregoing, if the Employer
\nsponsors any other defined contribution plan, all salary deferral contributions
\nwill be transferred to said plan upon the termination of this Plan.<\/p>\n
40<\/p>\n
11.2 No Liability for Employer. The Employer shall have no liability with
\nrespect to the payment of benefits or otherwise under the Plan, except to pay
\nover to the Trustee as provided in the Plan such contributions as are made by
\nthe Employer and any and all contributions made by the Members. Further, the
\nEmployer shall have no liability with respect to the administration of the Trust
\nor of the Fund held by the Trustee, and each Member and\/or Beneficiary shall
\nlook solely to the Fund for any payments or benefits under the Plan.<\/p>\n
11.3 Administrative Expenses. The Employer may elect to pay all
\nadministrative expenses of the Plan, including compensation of the Trustee,
\nconsultants, auditor and counsel, but the Employer shall not be obliged to pay
\nsuch expenses. If Employer elects not to pay such expenses, they shall be paid
\nfrom the Trust. Any expenses directly relating to the investments of the Trust,
\nsuch as taxes, commissions, and registration charges, shall be paid from the
\nTrust.<\/p>\n
11.4 Nonforfeitability Due to Termination(s). Upon termination, partial
\ntermination or upon permanent discontinuance of contributions under the Plan,
\nthe rights of all affected Employees to their Accrued Benefits accrued to the
\ndate of such termination, partial termination or discontinuance, shall become
\nnonforfeitable.<\/p>\n
11.5 Exclusive Benefit Rule. This Plan and Trust are for the exclusive
\nbenefits of the Members and their Beneficiaries. This Plan should be interpreted
\nin a manner consistent with this intent and with the intention of the Employer
\nthat the Trust satisfy those provisions of the Code relating to employees’
\ntrusts.<\/p>\n
11.6 Mergers. In the case of any merger or consolidation of the Plan with,
\nor transfer of Plan assets or liabilities to, any other plan, provisions shall
\nbe made so that each Member in the Plan on the date thereof (if the Plan then
\nterminated) would receive a benefit immediately after the merger, consolidation
\nor transfer which is equal to or greater than the benefit he would have been
\nentitled to receive immediately prior to the merger, consolidation or transfer
\n(if the Plan had then terminated).<\/p>\n
11.7 Non-Allocated Trust Assets. Any portion of the Fund which is
\nunallocated at the time of termination of the Plan shall be allocated among
\nMembers of the Plan in a nondiscriminatory manner selected by the Plan
\nAdministrator.<\/p>\n
SECTION 12<\/p>\n
ADMINISTRATION<\/p>\n
12.1 Appointment of Plan Administrator. The Board shall appoint, on behalf
\nof all Members, a Plan Administrator or committee to act as Plan Administrator.
\nThe Plan Administrator may be removed by the Board at any time and may resign at
\nany time by submitting a written resignation to the Board. A new Plan
\nAdministrator shall be appointed as soon as possible in the event that the Plan
\nAdministrator is removed or resigns from his position.<\/p>\n
12.2 Responsibilities and Duties. The Plan Administrator shall:<\/p>\n
41<\/p>\n
(a) be responsible for the day-to-day administration of the Plan. He
\nmay appoint other persons or entities to perform any of his fiduciary functions.
\nSuch appointment shall be made and accepted by the appointee in writing and
\nshall be effective upon the written approval of the Board. The Plan
\nAdministrator and any such appointee may employ advisors and other persons
\nnecessary or convenient to help him carry out his duties including his fiduciary
\nduties. The Plan Administrator shall have the right to remove any such appointee
\nfrom his position. Any person, group of persons or entity may serve in more than
\none fiduciary capacity.<\/p>\n
(b) maintain or cause to be maintained accurate and detailed records
\nand accounts of employees and of their rights under the Plan and of all
\ninvestments, receipts, disbursements and other transactions. Such accounts,
\nbooks and records relating thereto shall be open at all reasonable times to
\ninspection and audit by the Board and by persons designated thereby.<\/p>\n
(c) be the “named fiduciary,” as defined under Section 402(a)(1) of
\nERISA, and shall have the authority to act with respect to any claim for
\nbenefits under the Plan. The Plan Administrator in its capacity as named
\nfiduciary shall have the exclusive discretionary right to interpret the Plan,
\nincluding those provisions governing eligibility and benefits, and to determine
\nany questions arising under or in connection with the administration of the
\nPlan, including without limitation, the authority to make factual determinations
\nand resolve claims in accordance with Section 12.3. The Plan Administrator shall
\nhave full discretionary power and authority to determine the entitlement, rights
\nor eligibility of employees, Members and\/or any other persons, and the amount of
\nbenefits, if any due under the Plan. The Plan Administrator shall also have the
\ndiscretionary right and authority to remedy ambiguities, inconsistencies or
\nomissions arising under or in connection with the Plan. The construction and
\ninterpretations of the Plan and the determinations of the Plan Administrator
\nhereunder, including, but not limited to, those pursuant to Section 12.3, shall
\nbe final and binding on all persons to the maximum extent permitted by law.<\/p>\n
12.3 Claims Procedure. Each Member or Beneficiary must claim any benefit
\nto which he believes he is entitled under this Plan by a written notification to
\nthe Plan Administrator.<\/p>\n
The Plan Administrator shall decide whether to honor a claim within ninety
\n(90) days of the date on which the claim is filed, unless special circumstances
\nrequire a longer period for adjudication and the claimant is notified in writing
\nof the reasons for an extension of time; provided, however, that no extensions
\nshall be permitted beyond ninety (90) days after the date on which the claimant
\nreceived notice of the extension of time from the Plan Administrator. If the
\nPlan Administrator fails to notify the claimant of his decision to grant or deny
\nsuch claim within the time specified by this subsection. such claim shall be
\ndeemed to have been denied by the Plan Administrator and the review procedure
\ndescribed below shall become available to the claimant.<\/p>\n
If a claim is denied, it must be denied within a reasonable period of time
\nand be contained in a written notice stating the following:<\/p>\n
42<\/p>\n
(a) the specific reason for the denial;<\/p>\n
(b) a specific reference to the Plan provision on which the denial is
\nbased;<\/p>\n
(c) a description of additional information necessary for the claimant
\nto perfect his claim, if any, and an explanation of why such material is
\nnecessary; and<\/p>\n
(d) an explanation of the Plan’s claim review procedure.<\/p>\n
The claimant shall have sixty (60) days to request a review of the denial by the
\nPlan Administrator, who shall provide a full and fair review. The request for
\nreview must be written and submitted to the same person who handles initial
\nclaims. The claimant may review pertinent documents, and he may submit issues
\nand comments in writing. The decision by the Plan Administrator with respect to
\nthe review must be given within sixty (60) days after receipt of the request,
\nunless special circumstances require an extension (such as for a hearing). In no
\nevent shall the decision be delayed beyond one hundred and twenty (120) days
\nafter receipt of the request for review. The decision shall be written in a
\nmanner calculated to be understood by the claimants and it shall include
\nspecific reasons and refer to specific Plan provisions as to its effect.<\/p>\n
12.4 Trustee Has Authority to Invest. All Funds of the Plan shall be
\ninvested by the Trustee in accordance with the provisions of the Plan and Trust
\nAgreement, and the Trustee shall have full authority and liability in this
\nregard. To the extent that individual Members are permitted to direct investment
\nof their account balances, and to the extent a Member exercises such right to
\ndirect investment, the Trustee shall be relieved from any liability therefor.<\/p>\n
12.5 Indemnification. To the extent permitted by law, the Plan Sponsor may
\nbe the Plan Administrator. In the event the Plan Sponsor is designated as the
\nPlan Administrator, an individual or committee shall be appointed to represent
\nthe Plan Sponsor in this capacity. The Plan Sponsor shall indemnify any
\nindividual who is serving as Plan Administrator or who is acting on behalf of
\nthe Plan Sponsor in this capacity. Such individual shall be indemnified from any
\nand all liability that may arise by reason of his action or failure to act
\nconcerning this Plan, excepting any willful misconduct or criminal acts.<\/p>\n
12.6 Removal for Personal Involvement. No individual may participate in
\nthe consideration of any matter of or question concerning the Plan which
\nspecifically and uniquely relates to him because of his participation under the
\nPlan.<\/p>\n
43<\/p>\n
SECTION 13<\/p>\n
AMENDMENTS<\/p>\n
13.1 Amendment Restrictions. The provisions of this Plan may be amended at
\nany time and from time to time by the Plan Sponsor or any authorized
\nrepresentative thereof, provided that:<\/p>\n
(a) no such amendment shall be effective unless this Plan, as so
\namended, shall be for the exclusive benefit of persons in, or formerly in, the
\nemploy of Employer, or their Beneficiaries; (b) no such amendment shall operate
\nto deprive a Member of any rights or benefits irrevocably vested in him under
\nthe Plan prior to such amendment;<\/p>\n
(c) each such amendment shall be adopted pursuant to the laws of the
\nstate of incorporation of the Employer, and a copy of such amendment shall be
\nfiled with the Trustee and the Plan Administrator; and<\/p>\n
(d) no such amendment shall be effective to the extent that it
\ndecreases a Member’s Accrued Benefit. For purposes of this Section 13, a Plan
\namendment which has the effect of decreasing a Member’s Accrued Benefit or
\neliminating an optional form of benefit, with respect to benefits attributable
\nto service before the amendment, shall be treated as reducing an Accrued
\nBenefit.<\/p>\n
If any amendment shall be necessary or desirable to conform to the
\nprovisions and requirements of the Code or any amendment thereto, or any
\nregulation issued pursuant thereto, no such amendment thereto shall be
\nconsidered prejudicial to the interest of a Member or his Beneficiary, or a
\ndiversion of any part of Fund to a purpose other than for their exclusive
\nbenefit.<\/p>\n
13.2 Amending the Plan. The Board may amend the Plan at any time by board
\nresolution or by such other action permitted by the Plan Sponsor’s charter,
\nbylaws, or such other method permitted by the laws of the state of incorporation
\nof the Plan Sponsor.<\/p>\n
13.3 Retroactive Amendments. Any modification or amendment of the Plan may
\nbe made retroactive if, on the advice of counsel, such retroactivity is deemed
\nto be necessary in order for the Plan to conform to or satisfy the conditions of
\nany law, governmental regulations or ruling, or to meet the requirements of
\napplicable sections of the Code, or the corresponding regulations.<\/p>\n
SECTION 14<\/p>\n
LOANS<\/p>\n
14.1 Permitted Loans. A Member may make application to the Plan
\nAdministrator to borrow from his vested Accrued Benefit. That application must
\nbe<\/p>\n
44<\/p>\n
made in writing and must specify the amount and term requested. The Plan
\nAdministrator shall determine whether the application for a loan is to be
\napproved after an evaluation of all necessary documentation. All applications
\nfor loans shall be evaluated in a uniform and nondiscriminatory manner, and
\nloans shall not be made available to Highly Compensated Employees in an amount
\ngreater than that for other Employees. Loans that are granted shall be subject
\nto the following conditions:<\/p>\n
(a) the aggregate amount of all such loans to a Member shall not exceed
\nthe lesser of:<\/p>\n
(i) $50,000, reduced by the greatest value of any outstanding loan
\n balance owed by the Member during the one-year period ending on the day
\n before the loan is made, or<\/p>\n
(ii) 50% of his vested Accrued Benefit;<\/p>\n
(b) the minimum amount of any loan made hereunder shall be $1,000;<\/p>\n
(c) a fee shall be charged for processing a loan application, and such
\nfee shall be such amount as is then charged for such purpose under the Plan’s
\nloan program;<\/p>\n
(d) loans must be repaid in full before a new loan will be granted; and<\/p>\n
(e) an employee may have payroll deductions taken out of his regular or
\nseverance pay check to pay back his loan.<\/p>\n
14.2 Collateral Required. A note shall be signed by the Member and his or
\nher Spouse, if any, pledging not more than 50% of his vested Accrued Benefit
\nequal to the value of the outstanding loan balance and such other collateral as
\nmay from time to time be required by controlling law or regulation.<\/p>\n
Where the account balance is to be used as collateral, written spousal
\nconsent shall be obtained no earlier than the beginning of the 90-day period
\nthat ends on the date on which the loan is to be so secured. The consent must
\nacknowledge the effect of the loan and must be witnessed by the Plan
\nAdministrator or a notary public.<\/p>\n
14.3 Repayment. The loan shall be repaid in substantially equal
\ninstallments consisting of principal and interest at least quarterly. The term
\nof the loan is not to exceed five (5) years unless the loan is used to buy or
\nbuild the Member’s principal residence. Principal residence status shall be
\ndetermined at the time of the loan. Loan repayments are to be deducted from the
\nsalary paid by the Employer to such Member, except that any loan made to a
\nnon-Employee shall be repaid by that non-Employee in substantially equal monthly
\ninstallments.<\/p>\n
45<\/p>\n
14.4 Interest Charges. Interest shall be charged on loans based on the
\nprime rate plus 2%.<\/p>\n
14.5 Failure to Make Timely Payment. In the event an installment payment
\nis not paid within thirty (30) days following the due date of an installment,
\nthe Plan Administrator shall give written notice to the Member sent to his last
\nknown address. If such installment payment is not made within thirty (30) days
\nthereafter, the Plan Administrator shall have the right to accelerate the loan
\nand to reduce the Member’s Accrued Benefit to the extent permitted by law by the
\namount of the unpaid loan balance including interest then due. If the Member’s
\nAccrued Benefit must be used to eliminate any Plan loan which is in default, the
\nMember’s various accounts shall be depleted in the following order:<\/p>\n
(a) Profit Sharing Contribution Account, to the extent vested<\/p>\n
(b) Matching Contribution Account, to the extent vested<\/p>\n
(c) Rollover Account<\/p>\n
(d) Basic Contribution Account<\/p>\n
14.6 Termination of Employment. In the event of the termination of a
\nMember’s employment before the loan is repaid in full, the unpaid balance
\nthereof, together with interest immediately due thereon, shall become due and
\npayable; and the Trustee shall first satisfy the indebtedness from the amount
\npayable to the Member or to the Member’s Beneficiary before making any payments
\nto the Member or to the Member’s Beneficiary. Employees can repay the loan in
\nfull upon termination.<\/p>\n
14.7 Loans to Non-Employees. Any Member who ceases to be an active
\nEmployee may be eligible to borrow from the Plan under terms and conditions
\nreflecting valid economic differences between active Members and other Members
\nwhich would be considered in a normal commercial setting, such as the
\nunavailability of payroll deductions for repayment. In addition, there will be
\nan annual fee for the administration of each of such loans as determined by the
\nPlan Administrator, and such fee shall be the amount as is then charged for such
\npurpose under the Plan’s loan program. In no event will loans be unreasonably
\nwithheld from any applicant. Notwithstanding the foregoing, however, no loan
\nwill be made available to a terminated Employee unless he is also a “party in
\ninterest” as that term is defined in ERISA section 3(14).<\/p>\n
14.8 No Loans to Owner-Employees. Loans shall not be made to any
\nShareholder-Employee or Owner-Employee unless an exemption for such loan is
\nobtained pursuant to ERISA section 408 and further provided that such loan would
\nnot be subject to tax pursuant to section 4975 of the Code.<\/p>\n
14.9 General Administration. The Trustee and the Plan Administrator shall
\nhave the right to establish such procedures as may be reasonable, necessary or
\ndesirable to carry out the provisions of this Section 14.<\/p>\n
46<\/p>\n
14.10 Qualified Military Leave. Notwithstanding anything in Section 14 to
\nthe contrary, loan repayments will be suspended under the Plan as permitted
\nunder section 414(u)(4) of the Code.<\/p>\n
SECTION 15<\/p>\n
MISCELLANEOUS<\/p>\n
15.1 “Spendthrift” Provision. Except as provided under section 401(a)(13)
\nof the Code (and the regulations thereunder), no benefits payable under the Plan
\nwill be subject to the claim or legal process of any creditor of any Member or
\nBeneficiary, and no Member or Beneficiary may alienate, transfer, anticipate or
\nassign benefits under the Plan.<\/p>\n
The preceding paragraph shall also apply to the creation, assignment, or
\nrecognition of a right to any interest or benefit payable with respect to a
\nMember pursuant to a domestic relations order, unless the order is determined to
\nbe a Qualified Domestic Relations Order (as defined in section 414(p) of the
\nCode). The Plan Administrator shall establish reasonable procedures in
\naccordance with Section 15.2 to determine the qualified status of domestic
\nrelations orders and to administer distributions under such qualified orders.<\/p>\n
15.2 QDRO Exception. In the event that a Qualified Domestic Relations
\nOrder (as defined in section 414(p) of the Code) (“QDRO”) is issued with respect
\nto any Member, the Plan Administrator shall notify the Member and the alternate
\npayee(s) of the order received and segregate and conservatively invest the
\nportion of the Member’s Accrued Benefit which would be payable to the alternate
\npayee(s) as if the order received were a QDRO. Within 18 months of the order,
\nthe Plan Administrator shall proceed with either (a) or (b) as follows:<\/p>\n
(a) if the order is determined to be a QDRO, the Plan Administrator
\nshall pay the alternate payee(s), notwithstanding Section 6, (i) at the time
\nspecified in such order or, if the order permits, (ii) as soon after the Plan
\nAdministrator approves the order as is administratively feasible provided such
\ndistribution is permitted under applicable provisions of the Code; or<\/p>\n
(b) if the order is determined not to be a QDRO, or the issue remains
\nundetermined, the Plan Administrator shall pay the portions of the Member’s
\nAccrued Benefit segregated in accordance with the above to the Member or
\nBeneficiary (Beneficiaries) who are otherwise entitled to such benefit.<\/p>\n
If, 18 months after issuance of the order, a determination is made that
\nthe order is a QDRO, the determination shall be applied prospectively only.<\/p>\n
Notwithstanding any provision in the Plan to the contrary, a distribution
\nmay be made to an alternate payee even if the distribution is made with respect
\nto a Member who has not separated from service and the distribution commences
\nprior to the<\/p>\n
47<\/p>\n
Member’s “earliest retirement age” (as defined in section 414(p)(4)(B) of the
\nCode). If the value of the benefit to be paid to the alternate payee does not
\nexceed $5,000, the distribution shall automatically be made in the form of a
\nlump sum as soon as administratively feasible following the date that the
\ndomestic relations order is deemed to be qualified. If the value of the benefit
\nto be paid to the alternate payee exceeds $5,000, a distribution may be made
\nprior to the earliest retirement age only if the alternate payee consents in
\nwriting to such early distribution; provided that if on any later date the value
\nof the benefit to be paid to the alternate payee is not greater than $5,000, the
\nvalue of the benefit to be paid to the alternate payee shall be automatically
\ndistributed in the form of a lump sum as soon as administratively feasible
\nfollowing the later of the (i) the date that the value of the benefit is not
\ngreater than $5,000, and (ii) the date that the domestic relations order is
\ndeemed to be qualified.<\/p>\n
15.3 No Guarantee of Employment. Nothing contained in this Plan or the
\nTrust shall be held or construed to create any liability upon the Employer to
\nretain any Employee in its employ. The Employer reserves the right to
\ndiscontinue the services of any Employee without any liability except for salary
\nor wages that may be due and unpaid whenever, in its judgment, its best
\ninterests so require.<\/p>\n
15.4 State Law. The Plan shall be construed, administered and governed in
\nall respects in accordance with the laws of the State of New York to the extent
\nsuch laws are not superseded by federal law. If any provision herein is held by
\na court of competent jurisdiction to be invalid or unenforceable, the remaining
\nprovisions hereof shall continue to be fully effective.<\/p>\n
SECTION 16<\/p>\n
DIRECT ROLLOVER PROVISIONS<\/p>\n
16.1 Application of Article. This Article applies to distributions made on
\nor after January 1, 1993. Notwithstanding any provision of the Plan to the
\ncontrary that would otherwise limit a Distributee’s election under this Article,
\na Distributee may elect, at the time and in the manner prescribed by the Plan
\nAdministrator, to have any portion of an Eligible Rollover Distribution paid
\ndirectly to an Eligible Retirement Plan specified by the Distributee in a Direct
\nRollover.<\/p>\n
16.2 Definitions.<\/p>\n
(a) Eligible Rollover Distribution. An Eligible Rollover Distribution
\nis any distribution of all or any portion of any benefit due to the Distributee,
\nexcept that an Eligible Rollover Distribution does not include: any distribution
\nthat is one of a series of substantially equal periodic payments (not less
\nfrequently than annually) made for the life (or life expectancy) of the
\nDistributee and the Distributee’s designated beneficiary, or for a specified
\nperiod of ten (10) years or more; any distribution to the extent such
\ndistribution is required under section 401(a)(9) of the Code; the portion of any
\ndistribution that is not includible in gross income (determined without regard
\nto the exclusion for net unrealized appreciation with respect to employer<\/p>\n
48<\/p>\n
securities); and any other distribution(s) that is reasonably expected to total
\nless than $200 during a Plan Year; effective January 1, 2000, any hardship
\ndistributions as described in Section 401(k)(2)(B)(i)(IV), which are
\nattributable to the Member’s Basic Contributions under Treasury Regulation
\n1.401(k)-(d)(2)(ii).<\/p>\n
(b) Eligible Retirement Plan. An Eligible Retirement Plan is an
\nindividual retirement account described in section 408(a) of the Code, an
\nindividual retirement annuity described in section 408(b) of the Code, an
\nannuity plan described in section 403(a) of the Code, or a qualified trust that
\nis part of a defined contribution plan described in section 401(a) of the Code,
\nthat accepts the Distributee’s Eligible Rollover Distribution. However, in the
\ncase of an Eligible Rollover Distribution to the surviving spouse, an Eligible
\nRetirement Plan is an individual retirement account or individual retirement
\nannuity.<\/p>\n
(c) Distributee. A Distributee includes an Employee or former Employee.
\nIn addition, the Employee’s or former Employee’s surviving spouse and the
\nEmployee’s or former Employee’s spouse or former spouse who is the alternate
\npayee under a qualified domestic relations order, as defined in Section 414(p)
\nof the Code, are Distributees with regard to the interest of the spouse or
\nformer spouse.<\/p>\n
(d) Direct Rollover. A Direct Rollover is a payment by the Plan to the
\nEligible Retirement Plan specified by the Distributee.<\/p>\n
APPENDIX A<\/p>\n
\n\n Eligibility Vesting
\n ——————- ——————-
\n Original Original
\n Date of Hire Date of Hire
\nAcquired Companies by Acquired Company by Acquired Company
\n—————— ——————- ——————-
\n
\nFranklin Specialty Stores X
\nPolo Players X X
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