\nSECTION 16 DIRECT ROLLOVER PROVISIONS………………………………………………………….47
\n 16.1 Application of Article……………………………………………………..47
\n 16.2 Definitions……………………………………………………………….47<\/p>\nAppendix A
\n<\/c><\/s><\/table>\n
v<\/p>\n
POLO RALPH LAUREN CORPORATION<\/p>\n
PROFIT SHARING RETIREMENT SAVINGS PLAN<\/p>\n
AMENDED AND RESTATED<\/p>\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 (hereinafter, the “Plan”); and<\/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
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 <\/p>\n
2<\/p>\n
paid to the Trust for a Plan Year on behalf of such Member and of which the
\ndenominator equals the Member’s Compensation for the Plan 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
\nEmployer in an affiliated service group within the meaning of section 414(m) of
\nthe Code; or<\/p>\n
(d) any other entity required to be aggregated with
\nthe Employer 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
\nemployee contributions for the Limitation Year (but not including Rollover
\nContributions); and<\/p>\n
(d) amounts described in sections 415(l)(1) and
\n419A(d)(2) of the Code;<\/p>\n
3<\/p>\n
(e) except that, the Annual Addition for any
\nLimitation Year beginning before January 19, 1987, shall not be recomputed to
\ntreat nondeductible 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
\nforth in Section 7, and except as provided in section 414(s) of the Code,
\nCompensation means any income received by the Employee from the Employer in
\naccordance with section <\/p>\n
4<\/p>\n
415(c)(3) of the Code, for the Plan Year for which compliance with the tests is
\nbeing 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
\n other 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
\n excludable from gross income) and Employer contributions towards the
\n purchase of an annuity contract described in section 403(b) of the
\n 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
\nwith the date an Employee first is credited with an Hour of Service; and<\/p>\n
(b) thereafter any Plan Year commencing with the Plan
\nYear in which occurs the first anniversary of the date an Employee first is
\ncredited with 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 not an Hourly Employee of Fashions Outlet
\nof America, Inc., its subsidiaries or 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 this Plan; and<\/p>\n
(d) he is classified as a “common law” employee by
\nthe Employer.<\/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 Polo Ralph Lauren Corporation and any
\nother business organization which succeeds to its business and elects to
\ncontinue this Plan, and any Affiliated Company which adopts this Plan with the
\nconsent 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
\npreceding Plan Year was a “five (5) percent owner” (within the meaning of
\nsection 416(i)(1) of the Code) of the Employer or an Affiliated Company; or<\/p>\n
(b) during the preceding Plan Year had Compensation
\nin excess of $85,000 (as adjusted in accordance section 415(d) of the Code).<\/p>\n
(c) “Compensation” shall mean, for the purpose of
\nthis Section, 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 maintain
\naccurate records of actual hours completed for all Employees. The number of
\nHours of Service to be credited to an Employee for periods during which no
\nemployment duties are performed shall be determined in accordance with sections
\n2530.200b-2(b) and 2530.200b-2(c) of the Department of Labor regulations in
\nTitle 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
\n after 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
\nService shall include each hour of employment with The Ralph Lauren Home
\nCollection operations of J.P. Stevens & Co. Inc. for which an Employee was
\nentitled to Compensation prior to commencement of such operations by Polo Ralph
\nLauren Corporation.<\/p>\n
(f) For purposes of eligibility and vesting, an Hour
\nof Service shall include each hour of employment with Ralph Lauren Womenswear,
\nInc. (“RLW”) or Bidermann Industries Corporation (“BIC”) for which an Employee
\nwas entitled to compensation prior to the purchase by The Ralph Lauren
\nWomenswear Company, L.P. (“Womenswear”) of certain assets of RLW on October 16,
\n1995, provided that such Employee became an Employee of Womenswear or any
\nAffiliated Company between October 16, 1995 and December 31, 1995, and provided
\nfurther that such Employee has not received from RLW or BIC any payment in
\nrespect of or relating to such Employee’s termination of employment by RLW or
\nBIC.<\/p>\n
For purposes of computing eligibility and vesting service
\nunder this section 1.29(f) only, an Employee shall be credited with one hundred
\nand ninety (190) Hours of Service for each calendar month in which he\/she is
\ncredited with at least one (1) Hour of Service during a period of employment
\nwith RLW or BIC, Inc. prior to October 16, 1995.<\/p>\n
(g) For purposes of eligibility and vesting, an Hour
\nof Service shall include each hour of service with Englewood Travel, Inc.
\n(“EWI”) and Adelman Travel Systems, Inc. (“ATS”) for which an Employee was
\nentitled to compensation prior to such Employee’s employment by Polo Wings II,
\nInc. (“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
\nof Service 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
9<\/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 distinguished from “salaried” Employees who receive a salary based on a
\nweekly, monthly, 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 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 Polo Ralph Lauren Corporation or its
\nsuccessor.<\/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
\nYear during which an Employee completes at least 1,000 Hours of Service;<\/p>\n
(b) for Years of Service (or fractions thereof),
\nprior to April 1, 1989, any period which was a year of service (or fraction
\nthereof) under such plan in effect on March 31, 1989;<\/p>\n
(c) for Years of Service after April 1, 1990, except
\nas provided 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
\n incurring a Break in Service, his Years of Service shall be computed as
\n though his service had not been severed,<\/p>\n
(ii) an Employee who is absent by reason of
\n service in the armed forces of the United States, and who returns to
\n service with the Employer within the time during which his reemployment
\n rights are protected by federal law, shall be treated as though his
\n employment had not been severed, and<\/p>\n
(iii) if the Employer is an Affiliated Company,
\n Years of Service shall be determined as if all Affiliated Companies
\n were a single employer, excluding, however, employment during periods
\n when the Employer was not a member of the Affiliated Company. In
\n addition, if the Employer maintains the plan of a predecessor employer,
\n service with such employer will be treated as service for the Employer.<\/p>\n
(d) For purposes of vesting only, a Year of Service
\nshall include employment with The Ralph Lauren Home Collection operations of
\nJ.P. Stevens & Co. Inc. prior to commencement of such operations by Polo Ralph
\nLauren Corporation.<\/p>\n
(e) Years of service completed prior to January 1,
\n1982 for Members who were covered under the Polo Players, Ltd. Deferred Savings
\nPlan will not be counted for vesting purposes.<\/p>\n
(f) Notwithstanding the foregoing, Members of the
\nPolo Player, Ltd. Deferred Savings Plan are required to complete 800 Hours of
\nService <\/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
\nperiod prior 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
\nof Service before that Break in Service (and not disregarded by reason of any
\nprior Break in Service) shall be taken into account only if following the Break
\nin Service the Member completes one Year of Service, and:<\/p>\n
(i) before the Break in Service the Member had
\n a vested interest in his Accrued Benefit,<\/p>\n
(ii) effective for consecutive Breaks in
\n Service ending before January 1, 1985, the aggregate number of the
\n Member’s Years of Service before the Break in Service (and not
\n disregarded by reason of any prior Break in Service) equal or exceed
\n the aggregate number of his consecutive Breaks in Service; or<\/p>\n
(iii) effective for consecutive Breaks in
\n Service ending on or after January 1, 1985, the aggregate number of the
\n Member’s consecutive Breaks in Service is less than five (excluding
\n Years of Service which were disregarded by reason of any prior Break in
\n Service) before such Break in Service.<\/p>\n
If a Member’s Years of Service are disregarded pursuant to the
\npreceding paragraph, then such Member shall be treated as a new Employee, for
\neligibility purposes, upon reemployment. If they may not be disregarded pursuant
\nto the preceding paragraph, then such Member shall continue to participate in
\nthe Plan or, if terminated, shall participate immediately upon reemployment.<\/p>\n
(i) For purposes of eligibility and vesting, a Year
\nof Service 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 31, 1995, provided further that such Employee became an Employee of
\nWomenswear or any Affiliated Company between October 16, 1995 and December 31,
\n1995, and provided further that such Employee has not received from RLW or BIC
\nany payment in respect of or relating to such Employee’s termination of
\nemployment by RLW or BIC.<\/p>\n
(j) For purposes of eligibility and vesting, a Year
\nof Service 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 <\/p>\n
13<\/p>\n
between May 13, 1996 and July 31, 1996, and provided further that such Employee
\nwas employed by EWI or ATS prior to May 13, 1996 and was engaged in rendering
\ntravel services to Polo Ralph Lauren, L.P. or its predecessor Polo on Polo’s
\npremises pursuant to a written contract between EWI or ATS and Polo.<\/p>\n
(k) For purposes of eligibility and vesting, a Year
\nof Service shall include each year of continuous employment with Retail for
\nwhich an Employee was entitled to compensation prior to the purchase by the
\nCompany of Retail on April 3, 1997, provided that such Employee was employed by
\nRetail immediately 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
\nYear (i) completed at least one Eligibility Computation Period during which such
\nperson is credited with at least 1,000 Hours of Service and (ii) attained age
\n21,<\/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
\nMember, a Member shall be deemed to be employed on the last day of a given Plan
\nYear if such Member terminated employment with the Employer on the Friday before
\nthe Saturday that is the last day of the Plan Year. Such Member shall be
\neligible to receive an allocation hereunder whether or not the Member elects to
\ndefer a portion of his income to this or any other tax-qualified plan sponsored
\nby the Employer. Each Member’s share of the Profit Sharing Contribution shall be
\ndeposited to his Profit 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
\nEmployee may authorize the Employer to reduce his Compensation by any whole
\npercentage between 0% and 15% of such Compensation, but in no event to exceed
\nthe appropriate Adjustment Factor.<\/p>\n
(b) Each Member who is a Highly Compensated Employee
\nmay authorize 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
\nPeriod during which such person is credited with at least 1,000 Hours of
\nService, 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
\nAmount shall mean the amount of a Member’s Basic Contribution that causes a
\nMember’s Basic Contribution to exceed the appropriate Adjustment Factor. Excess
\nDeferral Amount shall also mean the amount of Basic Contributions for a calendar
\nyear that the Member allocates to this Plan pursuant to a claim procedure which
\nshall require that the Member’s claim shall be in writing and shall be submitted
\nto the 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
\ntaxable year 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
\n an Excess Deferral;<\/p>\n
(ii) the correcting distribution is made after
\n the 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
\nand losses, 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
\nMember exceed the lesser of:<\/p>\n
(i) 25% of the Member’s Compensation, under
\n Section 1.14(b) for the Limitation Year; or<\/p>\n
(ii) the “defined contribution dollar
\n limitation,” which shall mean $35,000.<\/p>\n
(b) For purposes of the Annual Addition hereunder,
\nBasic Contributions made on behalf of a Member during a payroll period which
\nbegins in one Plan Year but ends in the next succeeding Plan Year shall be
\ndeemed an Annual Addition for the next succeeding Plan Year, pursuant to
\nTreasury regulation 1.415-6(b)(7). If the excess Annual Additional results from
\na contribution 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
\nMember after application of paragraph (b), the excess amounts in the Member’s
\naccount, together with allocable earnings, determined in such manner as is
\ndeemed reasonable 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
\nthis Section, 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
\nfor one or more Owner-Employees who control both the business for which this
\nPlan is established and one or more other trades or businesses, this Plan and
\nthe plan established for other trades or businesses must, when considered as a
\nsingle plan, satisfy sections 401(a) and (d) of the Code for the employees of
\nthis and all 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
(i) own the entire interest in an unincorporated
\n trade or business, or<\/p>\n
(ii) in the case of a partnership, own more than 50
\n percent of either the capital interest or the profits interest in the
\n 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
\nmistake of fact shall be refunded to the Employer within one year of such
\ncontribution.<\/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
\n refunded shall remain in the Plan, but losses thereto must reduce the
\n amount to be refunded; and<\/p>\n
(ii) in no event may a refund be made that would
\n cause the Accrued Benefit of any Member to be reduced to less than that
\n which the Member’s Accrued Benefit would have been had the mistaken
\n amount not 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
\nDisability of a Member;<\/p>\n
(b) full vesting shall occur when a Member attains
\nhis Normal Retirement Date or his Early Retirement Date; and<\/p>\n
22<\/p>\n
(c) except as otherwise stated above, the Member’s
\nvested percentage in his Profit Sharing Contribution Account and Matching
\nContribution Account shall be determined in accordance with the following
\nschedule:<\/p>\n
\n\n Vested
\n Years of Service Percentage
\n
\n Less than 2 years 0%
\n After 2 years but less than 3 40%
\n After 3 years but less than 4 60%
\n After 4 years but less than 5 80%
\n After 5 years 100%
\n<\/c><\/s><\/caption>\n<\/table>\n (d) Notwithstanding the vesting schedule above, the
\nvested percentage of a Member’s Account shall not be less than the vested
\npercentage attained as of the later of the Effective Date or adoption date of
\nthis amendment and restatement.<\/p>\n
5.2 Forfeitures Reallocated. A Member’s vested Accrued Benefit
\nshall be determined 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
\ndistribution of his vested Accrued Benefit, if any; or<\/p>\n
(b) five (5) consecutive one-year Breaks in Service
\nfrom the Member’s date of termination.<\/p>\n
Said Forfeiture shall be reallocated as additional Profit
\nSharing Contributions, in accordance with Section 3.1, to Members still employed
\non the last day of the Plan Year. Solely for these purposes, a Member shall be
\ndeemed to 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
\nvested Accrued 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
\nYear following the year in which the Member terminates participation in the Plan
\nis deemed to be made on termination, in accordance with section 411(a)(7)(B) of
\nthe Code.<\/p>\n
5.3 Change in Vesting Schedule. A Member with at least three
\n(3) Years of Service as of the expiration date of the election period (as set
\nforth below) may elect to have his nonforfeitable percentage computed under the
\nPlan without regard to an<\/p>\n
23<\/p>\n
amendment or restatement of the Plan. If a Member fails to make such election,
\nthen such Member shall be subject to the new vesting schedule. The Member’s
\nelection period shall commence on the adoption date of the amendment and shall
\nend 60 days 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
\nthe amendment from the 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
\nto have completed three (3) Years of Service whether or not consecutive, without
\nregard to 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
\nEmployee for any reason other than death shall be entitled to receive his vested
\nAccrued Benefit. A Member’s Beneficiary shall be entitled to receive the
\nMember’s vested Accrued Benefit in the event of the Member’s death. A Member or
\nBeneficiary who is entitled to payment under this Section may elect one of the
\nfollowing options:<\/p>\n
Option A. A lump sum payment equal to the value of the Member’s
\n vested Accrued Benefit determined as of any Valuation Date
\n coincident with or following the date he ceases to be an
\n Employee.<\/p>\n
Option B. A lump sum payment after the Valuation Date specified under
\n Option A. as the Member (or Surviving Spouse) requests
\n pursuant to the limitations set forth in Section 6.5 of this
\n Plan. The amount payable shall be equal to the Member’s vested
\n Accrued Benefit determined as of the Valuation Date
\n immediately following the date payment is requested.<\/p>\n
Option C. Substantially equal monthly, quarterly, semiannual or
\n annual cash installments over a period not to exceed the joint
\n and last survivor life expectancy of the Member and his
\n Beneficiary. Such payments to a Member must commence as
\n provided in Section 6.6 of this Plan, and shall continue to
\n the Member’s Beneficiary after the Member’s death until the
\n entire vested Accrued Benefit has been distributed. A Member
\n (or in the case of a deceased Member, the Beneficiary) may
\n elect to receive the <\/p>\n
24<\/p>\n
unpaid portion of his vested Accrued Benefit in a lump sum
\n payment as of any Valuation Date by submitting a written
\n request to the Plan Administrator.<\/p>\n
All distributions required under this Section 6 shall be
\ndetermined and made in accordance with the regulations under section 401(a)(9)
\nof the Code, including the minimum distribution incidental benefit requirement
\nof section 1.401(a)(9)-2 of the regulations.<\/p>\n
6.2 Election of Benefits. The Member shall notify the Plan
\nAdministrator, in writing, of the form and timing of benefit payments. An
\nelection may be revoked and a new written election may be filed with the Plan
\nAdministrator any time prior to the commencement of benefits. Payment of
\nbenefits shall commence as soon as practicable under the option the Member has
\ndesignated, but in no event later than as provided under Section 6.6 hereof.
\nNotwithstanding the foregoing, if an Employee separates from service with the
\nEmployer for reasons other than death, the Employee’s vested Accrued Benefit
\nwill be paid to him automatically in accordance with Option A, unless the value
\nof his vested Accrued Benefit exceeds $5,000; provided that if the Employee’s
\nvested Accrued Benefit exceeds $5,000 on the date that the Employee separates
\nfrom service and then on any subsequent date the value of the Employee’s vested
\nAccrued Benefit is not greater than $5,000, the Employee’s vested Accrued
\nBenefit will be paid to him automatically in accordance with Option A at that
\ntime.<\/p>\n
6.3 Rehire Prior to Incurring Five (5) Consecutive Breaks in
\nService. If the Member terminates his employment and is rehired by the Employer
\nprior to the date that he would incur his fifth consecutive Break in Service,
\nany amounts previously forfeited shall be restored by the Employer if such
\nMember’s vested Accrued Benefit had remained in the Trust until the date the
\nMember was rehired or if the Member had received a distribution and repays the
\nentire amount which was distributed on or before the earlier of five years after
\nthe first date on which the Member is subsequently reemployed by the Employer,
\nor the close of the first period of five consecutive one-year Breaks in Service
\nafter the withdrawal. The Member’s vested interest in such an instance shall be
\ndetermined thereafter as if he did not have a break in employment. The Employer
\nshall make sufficient contributions equal to the amount forfeited at the time
\ndistribution occurred. If the Member does not repay the amount which was
\ndistributed to him, new accounts shall be opened upon his reentry into the Plan
\nand the amount forfeited during the Member’s prior employment may not be
\nrecovered. If a Member receives or is deemed to receive a distribution pursuant
\nto this Section 6 and the Member resumes employment covered under this Plan, the
\nMember’s Employer-derived Accrued Benefit will be restored to the amount on the
\ndate of distribution 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
\nhis entire interest has been distributed to him, the remaining portion of such
\ninterest shall be <\/p>\n
25<\/p>\n
distributed in a lump sum as soon as practicable after the next Valuation Date,
\nand in no event later than five (5) years after the Member’s date of death
\nunless Option C. has been chosen by the Member prior to his death.<\/p>\n
6.5 Distribution Limitation. In accordance with section 401(a)
\nof the Code and unless he elects otherwise, a Member shall commence distribution
\nhereunder no later than 60 days after the close of the Plan Year in which occurs
\nthe later of his Normal Retirement Date, the tenth anniversary of the year in
\nwhich a Member has commenced participation in the Plan or the date of the
\nMember’s termination of employment. Notwithstanding the foregoing, the failure
\nof a Member (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
\ndistributed to him not later than April 1 of the calendar year following the
\nlater of (x) the calendar year in which the Member attains age 70-1\/2, or (y)
\nthe calendar year in which the Member retires; provided that clause (y) shall
\nnot apply to any Member who is a “five (5) percent owner” (as defined in section
\n416(i) of the Code). Notwithstanding the foregoing, if a Member had attained age
\n70-1\/2 before January 1, 1988 and was not a “five (5) percent owner” at any time
\nduring the Plan Year ending with or within the calendar year in which the Member
\nattained age 66-1\/2 or any subsequent Plan Year, his benefits shall be
\ndistributed to him not later than April 1 of the calendar year following the
\nlater of (A) the calendar year in which the Member attains age 70-1\/2 or (B) the
\ncalendar year in which the Member retires. The restrictions imposed by this
\nSection shall not apply if a Member has, prior to January 1, 1984, made a
\nwritten designation to have his retirement benefit paid in an alternative method
\nacceptable under section 401(a) of the Code as in effect prior to the enactment
\nof the Tax Equity and Fiscal Responsibility Act of 1982. Any such written
\ndesignation made by a Member shall be binding upon the Plan Administrator. The
\nMember shall be required to withdraw during any Plan Year only the minimum
\namount required to satisfy the Code.<\/p>\n
6.7 Earnings on Undistributed Benefits. A Member’s Accrued
\nBenefit shall share in investment income and\/or depreciation in accordance with
\nthe provisions of Section 4 until his vested Accrued Benefit, valued as of the
\nValuation Date immediately following his date of termination, is distributed to
\nhim.<\/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
\nthe Member to furnish a letter or other evidence in writing from the
\nAdministrator of the plan from which the rollover originates stating that the
\nacceptance of the rollover shall not affect the tax qualified status of the
\nPlan.<\/p>\n
6.10 Hardship Withdrawal. A Member may apply in writing to the
\nPlan Administrator for a hardship withdrawal from his vested Accrued Benefit at
\nany time. 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
\nhardship distribution must be made on account of an immediate and heavy
\nfinancial need of the Member and must be in an amount not to exceed the sum
\nnecessary to satisfy such financial need.<\/p>\n
(b) Immediate and Heavy Financial Need. The
\ndetermination of whether a Member has an immediate and heavy financial need
\nshall be made on the basis of whether a request satisfies the definition of
\n“immediate and heavy financial need,” including those deemed needs as set forth
\nbelow. A financial need shall not fail to qualify as immediate and heavy merely
\nbecause such need was reasonably foreseeable or voluntarily incurred by the
\nMember.<\/p>\n
(c) Deemed Immediate and Heavy Financial Need. A
\ndistribution shall be deemed to be made on account of an immediate and heavy
\nfinancial need of the Member if the distribution is on account of:<\/p>\n
(i) expenses for medical care described in
\n section 213(d) of the Code previously incurred by the Member, the
\n Member’s spouse, or any dependents of the Member (as defined in section
\n 152 of the Code) or amounts necessary to obtain medical services, which
\n constitute medical expenses described in section 213(d) of the Code;<\/p>\n
(ii) costs directly related to the purchase
\n (excluding mortgage payments) of a principal residence for the Member;<\/p>\n
(iii) payment of tuition and related
\n educational fees for the next twelve months of post-secondary education
\n for the Member, the Member’s spouse, children or dependents;<\/p>\n
27<\/p>\n
(iv) the need to prevent the eviction of the
\n Member from his principal residence or foreclosure on the mortgage of
\n the Member’s principal residence; or<\/p>\n
(v) such other events set forth by the
\n Commissioner of the Internal Revenue Service through the publication of
\n revenue rulings, notices, and other documents of general applicability.<\/p>\n
(d) Distribution Deemed Necessary to Satisfy
\nFinancial Need (Suspension Method). A distribution shall be deemed to be
\nnecessary to satisfy an immediate and heavy financial need of a Member if all of
\nthe following requirements are satisfied:<\/p>\n
(i) the distribution is not in excess of the
\n amount of the immediate and heavy financial need of the Member plus
\n anticipated federal, state and local income taxes and penalties on
\n distribution;<\/p>\n
(ii) the Member has obtained all distributions,
\n other than hardship distributions, and all nontaxable (at the time of
\n the loan) loans currently available under all plans maintained by an
\n Affiliated Company;<\/p>\n
(iii) the Member’s elective and after-tax
\n contributions under this Plan (and any other qualified or nonqualified
\n plan of deferred compensation maintained by an Affiliated Company) are
\n suspended under a legally enforceable arrangement for at least twelve
\n months after receipt of the hardship distribution; and<\/p>\n
(iv) the Member may not make elective
\n contributions for the Member’s taxable year immediately following the
\n taxable year of the hardship distribution in excess of the Dollar Limit
\n for such next taxable year less the amount of such Member’s elective
\n contributions for the taxable year of the hardship distribution.<\/p>\n
(e) The determination of the existence of financial
\nhardship and the amount required to be distributed to meet the need created by
\nthe hardship must be made in a uniform and nondiscriminatory manner.<\/p>\n
6.11 Withdrawals Permitted After Age 59-1\/2. Notwithstanding
\nthe foregoing, 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
\napply to withdrawals made under Sections 6.10 and 6.11:<\/p>\n
(a) a Member may make only two hardship withdrawals
\nand one age 59-1\/2 withdrawal in any 12-month period;<\/p>\n
28<\/p>\n
(b) all withdrawals shall be based on the value of
\nthe Member’s applicable accounts as of the Valuation Date immediately preceding
\nthe withdrawal request. Notwithstanding the foregoing, the Plan Administrator,
\nin its sole discretion, shall base a withdrawal under this Section on the value
\nof a Member’s vested Accrued Benefit as of the date of the withdrawal; and<\/p>\n
(c) any withdrawal hereunder by a married Member
\nshall be subject to the written consent of his Spouse.<\/p>\n
SECTION 7<\/p>\n
ACTUAL DEFERRAL AND ACTUAL<\/p>\n
CONTRIBUTION PERCENTAGE TESTING<\/p>\n
7.1 Actual Deferral Percentage Test. The actual deferral
\npercentage (ADP) of Basic Contributions allocated to Members who are Highly
\nCompensated Employees shall not exceed the greater of (a) or (b) as follows:<\/p>\n
(a) the ADP of Members who are Non-Highly Compensated
\nEmployees, times 1.25; or<\/p>\n
(b) the ADP of Members who are Non-Highly Compensated
\nEmployees times 2.0, but not to exceed the ADP of Members who are Non-Highly
\nCompensated Employees 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
\nPlan Year shall be the average of the Actual Deferral Ratios (ADR) calculated
\nseparately for each Member in such group.<\/p>\n
The Plan Administrator shall determine as soon as practicable
\nafter the 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
\n for Highly Compensated Employees as provided in Sections 7.3 and 7.5;
\n or<\/p>\n
(ii) to make an Additional Basic Contribution
\n (subject to the requirements of Section 7.6) on behalf of some or all
\n of the Non-Highly Compensated Employees eligible to make contributions
\n under Section 3.1 in such amount or amounts as it determines are
\n necessary to satisfy the requirements of Section 7.1, within the time
\n period required by any applicable law or regulation.<\/p>\n
(b) The Plan shall take into account the ADRs of all
\nEligible Employees for purposes of the ADP test. For this purpose, an Eligible
\nEmployee is any Employee who is directly or indirectly eligible to make a Basic
\nContribution under 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
\nunder the ADP test for a Plan Year only if it relates to Compensation that
\neither would have been received by the Employee in the Plan Year (but for the
\ndeferral election) or is attributable to services performed by the Employee in
\nthe Plan Year and would have been received by the Employee within 2-1\/2 months
\nafter the close of the Plan Year (but for the deferral election).<\/p>\n
(d) A Basic Contribution shall be taken into account
\nunder the ADP test for a Plan Year only if it is contributed to the Trust before
\nthe last day of the twelve-month period immediately following the Plan Year to
\nwhich the contribution relates and is allocated within the Plan Year to which
\nthe contribution relates. A Basic Contribution is considered allocated as of a
\ndate within 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
\nnearest .01%.<\/p>\n
7.3 Calculations of Excess Contributions. The Excess
\nContributions for a Highly Compensated Employee shall be determined and
\ndistributed in the following manner:<\/p>\n
(a) “Excess Contributions” shall mean, with respect
\nto any Plan Year, the excess of:<\/p>\n
(i) the aggregate amount of Basic Contributions
\n actually taken into account in computing the ADP of Highly Compensated
\n Employees for such Plan Year, over<\/p>\n
(ii) the maximum amount of Basic Contributions
\n permitted by the ADP test in accordance with Section 7.1.<\/p>\n
(b) The amount of Excess Contributions attributable
\nto each Highly Compensated Employee shall be calculated and distributed by
\nreducing Basic Contributions made by, or on behalf of, the Highly Compensated
\nEmployee who has made the greatest dollar amount of Basic Contributions with
\nrespect to such Plan Year (or, in the event that more than one Highly
\nCompensated Employee shall have made Basic Contributions of an equal amount, the
\nBasic Contributions of each such Highly Compensated Employee) so that the amount
\nof Basic Contributions of such Highly Compensated Employee (or Highly
\nCompensated Employees, as the case may be) shall equal the amount of Basic
\nContributions with respect to such Plan Year of the Highly Compensated Employee
\n(or the Highly Compensated Employees, as the case may be) who shall have made
\nthe next greatest amount of Basic Contributions with respect to such Plan Year,
\nand an amount equal to the amount of 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
\ncorrect Excess Contributions by the close of the Plan Year following the Plan
\nYear for which they were made shall cause the cash or deferred arrangement to
\nfail to satisfy the requirements of section 401(k)(3) of the Code for the Plan
\nYear for which the Excess Contributions were made and for all subsequent years
\nthey remain in the Trust. Also, the Employer shall be liable for a 10% excise
\ntax on the amount of Excess Contributions unless corrected by distribution or
\nrecharacterization of Excess Contributions within 2-1\/2 months after the close
\nof the Plan Year for which they were made.<\/p>\n
7.5 Distribution of Excess Contributions. Excess Contributions
\nshall be distributed to Members on whose behalf such Excess Contributions were
\nmade no later than the last day of the Plan Year following the Plan Year for
\nwhich they were made. Excess Contributions shall be adjusted in the manner
\nutilized under Sections 4.2 and 4.3 to reflect income earned and losses incurred
\nfor the Plan Year on the Member’s Basic Contributions Account.<\/p>\n
7.6 Additional Basic and Matching Contributions. Additional
\nBasic Contributions and Matching Contributions may be treated as Basic
\nContributions for purposes of the ADP test only if such contributions are
\nnonforfeitable when made and subject to the same distribution restrictions that
\napply to elective contributions. Additional Basic Contributions and Matching
\nContributions which may be treated as Basic Contributions must satisfy these
\nrequirements without regard to whether they are actually taken into account as
\nBasic Contributions for purposes of satisfying the ADP tests.<\/p>\n
Additional Basic Contributions and\/or Matching Contributions
\nmay be treated as Basic Contributions only if the conditions described in
\nsection 1.401(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
\naccount of an Excess Contribution or deferral in excess of the Dollar Limit
\nshall be forfeited and shall be used to reduce Matching Contributions for the
\nyear of forfeiture.<\/p>\n
31<\/p>\n
7.8 Actual Contribution Percentage Test. The actual
\ncontribution percentage (ACP) of contributions deposited to the Plan for Members
\nwho are Highly Compensated Employees shall not exceed the greater of (a) or (b)
\nas follows:<\/p>\n
(a) the ACP of Members who are Non-Highly Compensated
\nEmployees times 1.25; or<\/p>\n
(b) the ACP of Members who are Non-Highly Compensated
\nEmployees times 2.0, but not to exceed the ACP of Members who are Non-Highly
\nCompensated Employees 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
\nPlan Year shall be the average of the Actual Contribution Ratios (ACR)
\ncalculated separately for each Member in such group.<\/p>\n
The Plan Administrator shall determine as soon as practicable
\nafter the 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
\n Contribution for Highly Compensated Employees as provided in Sections
\n 7.10 and 7.11; or<\/p>\n
(ii) to make an additional contribution on
\n behalf of some or all of the Non-Highly Compensated Employees eligible
\n to make contributions under Section 3.1 in such amount or amounts as it
\n determines are necessary to satisfy the requirements of Section 7.8,
\n within the time period required by any applicable law or regulation.<\/p>\n
(b) The Plan shall take into account the ACRs of all
\nEligible Employees for purposes of the ACP test. For this purpose, an Eligible
\nEmployee is any Employee who is directly or indirectly eligible to receive an
\nallocation of Matching Contributions including an Employee who would be eligible
\nbut for his failure to make required contributions and an Employee whose right
\nto receive Matching Contributions has been suspended because of an election not
\nto participate. 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
\naccount under the ACP test for a Plan Year only if it is made on account of the
\nEligible Employee’s Basic Contributions for the Plan Year contributed to the
\nTrust before the last day of the twelve-month period immediately following the
\nPlan Year to which the contributions relate and is allocated within the Plan
\nYear to which the contributions relate. Qualified Matching Contributions which
\nare used to meet the requirements of section 401(k)(3)(A) of the Code are not
\ntaken into account.<\/p>\n
32<\/p>\n
(d) The ACR and ACP shall be calculated to the nearest
\n.01%.<\/p>\n
(e) Additional Basic Contributions may be treated as
\nMatching Contributions for purposes of the ACP test of section 401(m) of the
\nCode only if such contributions are nonforfeitable when made and distributable
\nonly under the following circumstances:<\/p>\n
(i) the Employee’s Retirement, death, Disability or
\n separation from service;<\/p>\n
(ii) the termination of the Plan without
\n establishment of a 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
\n to an unrelated corporation, which does not maintain the Plan, of
\n substantially all of the assets used in a trade or business, but only
\n with respect to Employees who continue employment with the acquiring
\n corporation; and<\/p>\n
(v) the sale or other disposition by a corporation of
\n its interest in a subsidiary to an unrelated entity which does not
\n maintain the Plan, but only with respect to Employees who continue
\n employment with the subsidiary. Additional Basic Contributions which
\n may be treated as Matching Contributions must satisfy these
\n requirements without regard to whether they are actually taken into
\n account as Matching Contributions.<\/p>\n
7.10 Calculation of Excess Aggregate Contributions. The Excess
\nAggregate Contributions for a Highly Compensated Employee shall be determined
\nand distributed in the following manner:<\/p>\n
(a) “Excess Aggregate Contributions” shall mean, with
\nrespect to any Plan Year, the excess of:<\/p>\n
(i) the aggregate Matching Contributions taken into
\n account in computing the numerator of the ADP actually made on behalf
\n of the Highly Compensated Employees for such Plan Year, over<\/p>\n
(ii) the maximum Matching Contributions permitted by
\n the ADP test in accordance with Section 7.8.<\/p>\n
(b) The amount contributed to the Matching Contribution
\nAccount (“Cumulative Amount”) with respect to each such Member shall be
\ncalculated by reducing the Cumulative Amount made on behalf of the Member who
\nhas been credited with the greatest Cumulative Amount with respect to such Plan
\nYear (or, in 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) shall<\/p>\n
33<\/p>\n
equal the Cumulative Amount with respect to such Plan Year of the Member who
\nshall have been credited with the next greatest Cumulative Amount with respect
\nto 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
\nAggregate Contributions shall be distributed to Members on whose behalf such
\nExcess Aggregate Contributions were made, to the extent vested, no later than
\nthe last day of the Plan Year following the Plan Year for which they were made.
\nNonvested Excess Aggregate Contributions shall be applied as provided in Section
\n7.13. Excess Aggregate Contributions shall be adjusted in the manner utilized
\nunder Sections 4.2 and 4.3 to reflect income earned or loss as incurred for the
\nPlan Year on the Member’s Matching Contribution Account.<\/p>\n
7.12 Additional Contributions. Basic Contributions and\/or
\nAdditional Basic Contributions may be treated as Matching Contributions only if
\nthe conditions described in Treasury regulation 1.401(m)-1(b)(5) are satisfied.<\/p>\n
7.13 Forfeitures. Amounts forfeited by Highly Compensated
\nEmployees under Section 7.11 shall be treated as an Annual Addition under the
\nPlan and shall be applied to reduce future Employer Matching Contributions. No
\nforfeitures arising under this Section shall be allocated to the account of any
\nHighly Compensated Employee.<\/p>\n
7.14 Aggregate Limit. The sum of the ADP and ACP for Highly
\nCompensated Employees, determined after any corrections required to meet the ADP
\ntest or ACP test, shall not exceed the Aggregate Limit as defined herein. If the
\nAggregate Limit is exceeded for any particular Plan Year, the Plan Administrator
\nmay recharacterize, to the maximum extent permitted under Sections 401(k) and
\n401(m) of the Code and the regulations thereunder, Participants’ Basic
\nContributions and Matching Contributions for purposes of satisfying the
\nAggregate Limit, and, if after any such recharacterization, the Aggregate Limit
\nis still not satisfied, the Employer may, in its sole discretion, either (i)
\nmake Additional Basic Contributions on behalf of some or all of the Non-Highly
\nCompensated Employees eligible to make contributions to the Plan pursuant to
\nSection 3.1 in such amount or amounts as its determines are necessary to satisfy
\nthe Aggregate Limit, or (ii) reduce either the ADR or the ACR for all affected
\nHighly Compensated Employees, in accordance with Section 7.3 or 7.10(a), as
\napplicable, and such reductions shall be treated, for each affected Highly
\nCompensated Employee, as an <\/p>\n
34<\/p>\n
Excess Contribution or an Excess Aggregate Contribution, as applicable.
\n“Aggregate Limit” means the greater of (a) or (b) below:<\/p>\n
(a) the sum of<\/p>\n
(i) 125% of the greater of the ADP for eligible
\n Non-Highly Compensated Employees, or the ACP for eligible Non-Highly
\n Compensated Employees for the Plan Year; and<\/p>\n
(ii) two plus the lesser of such ADP or ACP, but not
\n greater than 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
\n Non-Highly Compensated Employees or the ACP for the eligible Non-Highly
\n Compensated Employees for the Plan Year; and<\/p>\n
(ii) two plus the greater of such ADP or ACP, but not
\n greater than 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
\nCompensated Employee for the Plan Year and who is eligible to make Basic
\nContributions, or to have Matching Contributions allocated to his account, or to
\nmake after-tax contributions under two or more plans that are maintained by an
\nAffiliated Company shall be determined as if all such contributions were made
\nunder a single plan.<\/p>\n
(b) In the event that this Plan satisfies the requirements
\nof sections 410(b) and 401(a)(4) of the Code only if aggregated with one or more
\nother plans, or if one or more other plans satisfy the requirements of sections
\n410(b) and 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
\npercentage of any Member shall satisfy such other requirements as may be
\nprescribed by the Secretary 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
\nPlan is Top-Heavy, as defined in Section 8.2 below, the Plan shall be governed
\nin accordance with this Section, which shall control over other provisions.<\/p>\n
35<\/p>\n
8.2 Top-Heavy Definitions. For purposes of this Section, the
\nfollowing definitions shall apply:<\/p>\n
(a) “Compensation” means Compensation as defined in
\nSection 1.14(c) for an entire Plan Year, including amounts contributed by the
\nEmployer pursuant to a salary reduction agreement which are excludable from the
\nEmployee’s gross income under Sections 125, 132(f), 402(e)(3) or 402(h) of the
\nCode.<\/p>\n
(b) “Contribution Rate” means the sum of
\ncontributions made by the Employer under this Plan, excluding salary deferral
\ncontributions made under this or any other plan maintained by the Employer, plus
\nforfeitures allocated to the Member’s accounts for the Plan Year, divided by his
\nCompensation for the Plan Year. To determine the Contribution Rate, the Plan
\nAdministrator shall consider all qualified defined contribution plans (within
\nthe meaning of the Code) maintained by the Employer as a single plan.<\/p>\n
(c) “Determination Date” means the last day of the
\npreceding Plan Year, except in the initial Plan Year, Determination Date means
\nthe last day of such Plan Year. For purposes of testing the Top-Heavy status of
\nRequired and Permissive Aggregation Groups, Determination Date means the last
\nday of each respective plan’s Plan Year which occurs in the calendar year
\ncoincident with the Determination Date of this Plan.<\/p>\n
(d) “Key Employee” means any Employee or former
\nEmployee (and the Beneficiaries of such Employee) who at any time during the
\n“Determination Period” was an officer of the Employer if such individual’s
\nannual Compensation exceeds 50 percent of the dollar limitation under section
\n415(b)(1)(A) of the Code, an owner (or considered an owner under section 318 of
\nthe Code) of one of the ten largest interests in the Employer if such
\nindividual’s compensation exceeds 100 percent of the dollar limitation under
\nsection 415(c)(1)(A) of the Code, a 5-percent owner of the Employer, or a
\n1-percent owner of the Employer who has an annual compensation of more than
\n$150,000. Annual compensation means compensation as defined in section 415(c)(3)
\nof the Code, but includes amounts contributed by the Employer pursuant to a
\nsalary reduction agreement which are excludible from the Employee’s gross income
\nunder sections 125, 457, 402(g)(3) or 402(h) of the Code. The “Determination
\nPeriod” is the Plan Year containing the Determination Date and the 4 preceding
\nPlan 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
\neligible to participate in the Plan who is not a Key Employee.<\/p>\n
(f) “Permissive Aggregation Group” means the Required
\nAggregation Group plus any other qualified plans maintained by the Employer and
\nAffiliated Companies but only if such resultant group would satisfy in the
\naggregate, the requirements of sections 401(a)(4) and 410 of the Code. The Plan
\nAdministrator shall<\/p>\n
36<\/p>\n
determine which plans to take into account in determining the Permissive
\nAggregation Group.<\/p>\n
(g) “Required Aggregation Group” means:<\/p>\n
(i) each qualified plan of the Employer and
\n Affiliated Companies (including any terminated plan that covered a Key
\n Employee and was maintained within the five-year period ending on the
\n Determination Date) in which at least one (1) Key Employee participates
\n during the Plan Year containing the Determination Date or any of the
\n four preceding Plan Years; and<\/p>\n
(ii) any other qualified plan of the Employer and
\n Affiliated Companies which enables a plan described in (i) above, to
\n meet the requirements of sections 401(a)(4) or 410 of the Code.<\/p>\n
(h) “Top-Heavy” shall describe the status of the Plan in
\nany Plan Year if the “Top-Heavy Ratio” as of the Determination Date exceeds
\nsixty percent (60%).<\/p>\n
(i) “Top-Heavy Ratio” is a fraction as of the
\n Determination Date, as follows:<\/p>\n
Accrued Benefit of all Key Employees<\/p>\n
Accrued Benefits of all Employees<\/p>\n
(ii) Notwithstanding (i) above, the Top-Heavy Ratio
\n shall be computed pursuant to section 416(g) of the Code, and any
\n regulations issued thereunder.<\/p>\n
(iii) For Plan Years beginning after December 31,
\n 1986, solely for the purpose of determining if the Plan, or any other
\n plan included in a Required Aggregation Group of which this Plan is a
\n part, is Top-Heavy (within the meaning of section 416(g) of the Code)
\n the accrued benefit of an Employee other than a Key Employee (within
\n the meaning of section 416(i)(1) of the Code) shall be determined (a)
\n under the method if any, that uniformly applies for accrual purposes
\n under all plans maintained by the Affiliated Employers, or if there is
\n no such method, then (b) as if such benefit accrued not more rapidly
\n than the slowest accrual rate permitted under the fractional accrual
\n rule of section 411(b)(1)(C) of the Code.<\/p>\n
(iv) For purposes of this Section only, “Accrued
\n Benefit” shall include or exclude Rollovers pursuant to regulation
\n 1.416-1,T-32.<\/p>\n
(v) If an individual is not a Key Employee but was a
\n Key Employee in a prior year or if any individual has not performed
\n services for the Employer at any time during the five (5) year period
\n ending on the Determination Date, any Accrued Benefit for such
\n individual shall not be taken into account in determining the Top-Heavy
\n status of the Plan.<\/p>\n
37<\/p>\n
(vi) The Accrued Benefit of any Employee (other than
\n a Key Employee) shall be determined:<\/p>\n
(1) under the method which is used for
\n accrual purposes for all plans of the Employer or, if there is
\n no such method,<\/p>\n
(2) as if such benefit accrued not more
\n rapidly than the slowest accrual rate permitted under section
\n 411(b)(1)(C) of the Code.<\/p>\n
(vii) The value of Account Balances and the present
\n value of Accrued Benefits will be determined as of the most recent
\n Valuation Date that falls within or ends with the 12-month period
\n ending on the Determination Date, except as provided in section 416 of
\n the Code and the regulations thereunder for the first and second plan
\n years of a defined benefit plan.<\/p>\n
(viii) The Accrued Benefit shall include any part of
\n any account balance distributed in the 5-year period ending on the
\n Determination Date.<\/p>\n
(ix) The present value shall be based only on the
\n interest rate and mortality rates specified in the defined benefit
\n plan.<\/p>\n
8.3 Aggregation of Plans. All Required Aggregation Groups
\nshall be considered (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
\ngroup, each plan so aggregated shall be considered Top-Heavy.<\/p>\n
(b) If such aggregation does not constitute a
\nTop-Heavy group, none of the plans so aggregated shall be considered Top-Heavy.<\/p>\n
At the direction of the Plan Administrator and subject to the
\nrestrictions of sections 401(a)(4) and 410 of the Code, Permissive Aggregation
\nGroups may be considered with this Plan plus any Required Aggregation Groups to
\ndetermine whether such group is Top-Heavy. If such aggregation does not
\nconstitute a Top-Heavy group, none of the plans so aggregated shall be
\nconsidered Top-Heavy.<\/p>\n
8.4 Minimum Contribution Rate. Subject to Section 8.7 below,
\nfor any Plan Year in which this Plan is Top-Heavy, a minimum contribution shall
\nbe made for each Non-Key Employee as of the last day of the Plan Year which
\nshall equal the lesser of:<\/p>\n
(a) three (3%) percent of Compensation; or<\/p>\n
38<\/p>\n
(b) the highest Contribution Rate received by a Key
\nEmployee in that Plan Year.<\/p>\n
This Top-Heavy Contribution shall be made irrespective of such
\nNon-Key Employee’s Hours of Service, Compensation or failure to make
\ncontributions, as applicable hereunder.<\/p>\n
8.5 Deposit of Minimum Contribution. The Plan Administrator
\nshall deposit any minimum contribution made under this Section to a “Top-Heavy
\nContribution Account” for each Non-Key Employee. Such account shall become part
\nof his Accrued 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
\nPlan is Top-Heavy, any Member who is credited with at least one Hour of Service
\nduring such 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 Vested
\n Service Percentage
\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,
\nvesting shall be determined pursuant to Section 5, except that nonforfeitable
\nrights obtained under 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,
\nfiled with the Plan Trustee, a Beneficiary to whom, in the event of the Member’s
\ndeath all benefits or any unpaid balance of benefits shall be payable. However,
\neach married Member who designates a Beneficiary other than his Spouse must
\nprovide the 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<\/p>\n
39<\/p>\n
accordance with such facts shall constitute a complete discharge of any and all
\nobligations hereunder.<\/p>\n
9.2 No Named Beneficiary. If no such designation is on file
\nwith the Plan Trustee at the time of death of the Member, or if such designation
\nis not effective 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
\nthe Plan by the Employer and Employees shall be committed in trust to the
\nTrustee selected by the Plan Sponsor subject to the terms of the Trust created
\nin Section 1 of the Trust Agreement to be held, managed, and disposed of by the
\nTrustee in accordance with the aforementioned terms of the Trust and this Plan.
\nThe Trustee selected may be changed from time to time by the Employer.<\/p>\n
10.2 No Reversion to Employer. The Trust shall continue to
\ncontain such provisions as shall render it impossible, except as is provided
\nunder Sections 3.8 and 11.3, for any part of the corpus of the Trust or income
\nthereon to be at any time used for, or diverted to, purposes other than for the
\nexclusive benefit of Members or their Beneficiaries; and it may contain such
\nother provisions relating to the custody, management and disposition of the Fund
\nby the Trustee as 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
\nthe Plan Sponsor, but only upon condition that such action is taken under the
\nTrust Agreement or otherwise, as shall render it impossible at any time under
\nthe Trust 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
\ncontribution plan, if a Member does not consent to a distribution upon
\ntermination of this Plan, that Member’s Accrued Benefit shall be transferred to
\nthe other aforesaid defined contribution plan. Notwithstanding the foregoing, if
\nthe Employer sponsors any other defined<\/p>\n
40<\/p>\n
contribution plan all salary deferral contributions will be transferred to said
\nplan upon the termination of this Plan.<\/p>\n
11.2 No Liability for Employer. The Employer shall have no
\nliability with respect to the payment of benefits or otherwise under the Plan,
\nexcept to pay over to the Trustee as provided in the Plan such contributions as
\nare made by the Employer and any and all contributions made by the Members.
\nFurther, the Employer shall have no liability with respect to the administration
\nof the Trust or of the Fund held by the Trustee, and each Member and\/or
\nBeneficiary shall look solely to the Fund for any payments or benefits under the
\nPlan.<\/p>\n
11.3 Administrative Expenses. The Employer may elect to pay
\nall administrative 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
\ntermination, partial termination or upon permanent discontinuance of
\ncontributions under the Plan, the rights of all affected Employees to their
\nAccrued Benefits accrued to the date of such termination, partial termination or
\ndiscontinuance, shall become nonforfeitable.<\/p>\n
11.5 Exclusive Benefit Rule. This Plan and Trust are for the
\nexclusive benefits of the Members and their Beneficiaries. This Plan should be
\ninterpreted in a manner consistent with this intent and with the intention of
\nthe Employer that the Trust satisfy those provisions of the Code relating to
\nemployees’ trusts.<\/p>\n
11.6 Mergers. In the case of any merger or consolidation of
\nthe Plan with, or transfer of Plan assets or liabilities to, any other plan,
\nprovisions shall be made so that each Member in the Plan on the date thereof (if
\nthe Plan then terminated) would receive a benefit immediately after the merger,
\nconsolidation or transfer which is equal to or greater than the benefit he would
\nhave been entitled to receive immediately prior to the merger, consolidation or
\ntransfer (if the Plan had then terminated).<\/p>\n
11.7 Non-Allocated Trust Assets. Any portion of the Fund which
\nis unallocated 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
\nappoint, on behalf of all Members, a Plan Administrator or committee to act as
\nPlan Administrator. The Plan Administrator may be removed by the Board at any
\ntime and may resign at any time by submitting a written resignation to the
\nBoard. A new Plan Administrator shall be<\/p>\n
41<\/p>\n
appointed as soon as possible in the event that the Plan Administrator is
\nremoved or resigns from his position.<\/p>\n
12.2 Responsibilities and Duties. The Plan Administrator
\nshall:<\/p>\n
(a) be responsible for the day-to-day administration of the
\nPlan. He may appoint other persons or entities to perform any of his fiduciary
\nfunctions. Such appointment shall be made and accepted by the appointee in
\nwriting and shall 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
\nrecords and 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
\n402(a)(1) of ERISA, and shall have the authority to act with respect to any
\nclaim for benefits under the Plan. The Plan Administrator in its capacity as
\nnamed fiduciary shall have the exclusive discretionary right to interpret the
\nPlan, including those provisions governing eligibility and benefits, and to
\ndetermine any questions arising under or in connection with the administration
\nof the Plan, including without limitation, the authority to make factual
\ndeterminations and resolve claims in accordance with Section 12.3. The Plan
\nAdministrator shall have full discretionary power and authority to determine the
\nentitlement, rights or eligibility of employees, Members and\/or any other
\npersons, and the amount of benefits, if any due under the Plan. The Plan
\nAdministrator shall also have the discretionary right and authority to remedy
\nambiguities, inconsistencies or omissions arising under or in connection with
\nthe Plan. The construction and interpretations of the Plan and the
\ndeterminations of the Plan Administrator hereunder, including, but not limited
\nto, those pursuant to Section 12.3, shall be final and binding on all persons to
\nthe maximum extent permitted by law.<\/p>\n
12.3 Claims Procedure. Each Member or Beneficiary must claim
\nany benefit to which he believes he is entitled under this Plan by a written
\nnotification to the Plan Administrator.<\/p>\n
The Plan Administrator shall decide whether to honor a claim
\nwithin ninety (90) days of the date on which the claim is filed, unless special
\ncircumstances require a longer period for adjudication and the claimant is
\nnotified in writing of the reasons for an extension of time; provided, however,
\nthat no extensions shall be permitted beyond ninety (90) days after the date on
\nwhich the claimant received notice of the extension of time from the Plan
\nAdministrator. If the Plan Administrator fails to notify the claimant of his
\ndecision to grant or deny such claim within the time specified by this<\/p>\n
42<\/p>\n
subsection, such claim shall be deemed to have been denied by the Plan
\nAdministrator and the review procedure described below shall become available to
\nthe claimant.<\/p>\n
If a claim is denied, it must be denied within a reasonable
\nperiod of time, and be contained in a written notice stating the following:<\/p>\n
(a) the specific reason for the denial;<\/p>\n
(b) a specific reference to the Plan provision on
\nwhich the denial is based;<\/p>\n
(c) a description of additional information necessary
\nfor the claimant to perfect his claim, if any, and an explanation of why such
\nmaterial is necessary; and<\/p>\n
(d) an explanation of the Plan’s claim review
\nprocedure.<\/p>\n
The claimant shall have sixty (60) days to request a review of
\nthe denial by the Plan Administrator, who shall provide a full and fair review.
\nThe request for review must be written and submitted to the same person who
\nhandles initial claims. The claimant may review pertinent documents, and he may
\nsubmit issues and comments in writing. The decision by the Plan Administrator
\nwith respect to the review must be given within sixty (60) days after receipt of
\nthe request, unless special circumstances require an extension (such as for a
\nhearing). In no event shall the decision be delayed beyond one hundred and
\ntwenty (120) days after receipt of the request for review. The decision shall be
\nwritten in a manner calculated to be understood by the claimants and it shall
\ninclude specific 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
\nshall be invested by the Trustee in accordance with the provisions of the Plan
\nand Trust Agreement, and the Trustee shall have full authority and liability in
\nthis regard. To the extent that individual Members are permitted to direct
\ninvestment of their account balances, and to the extent a Member exercises such
\nright to direct investment, the Trustee shall be relieved from any liability
\ntherefor.<\/p>\n
12.5 Indemnification. To the extent permitted by law, the Plan
\nSponsor may be the Plan Administrator. In the event the Plan Sponsor is
\ndesignated as the Plan Administrator, an individual or committee shall be
\nappointed to represent the Plan Sponsor in this capacity. The Plan Sponsor shall
\nindemnify any individual who is serving as Plan Administrator or who is acting
\non behalf of the Plan Sponsor in this capacity. Such individual shall be
\nindemnified from any and all liability that may arise by reason of his action or
\nfailure to act concerning this Plan, excepting any willful misconduct or
\ncriminal acts.<\/p>\n
12.6 Removal for Personal Involvement. No individual may
\nparticipate in the consideration of any matter of or question concerning the
\nPlan which specifically and uniquely relates to him because of his participation
\nunder the Plan.<\/p>\n
43<\/p>\n
SECTION 13<\/p>\n
AMENDMENTS<\/p>\n
13.1 Amendment Restrictions. The provisions of this Plan may
\nbe amended at any time and from time to time by the Plan Sponsor or any
\nauthorized representative thereof, provided that:<\/p>\n
(a) no such amendment shall be effective unless this
\nPlan, as so amended shall be for the exclusive benefit of persons in, or
\nformerly in, the employ of Employer, or their Beneficiaries;<\/p>\n
(b) no such amendment shall operate to deprive a
\nMember of any rights or benefits irrevocably vested in him under the Plan prior
\nto such amendment;<\/p>\n
(c) each such amendment shall be adopted pursuant to
\nthe laws of the state of incorporation of the Employer, and a copy of such
\namendment shall be filed with the Trustee and the Plan Administrator; and<\/p>\n
(d) no such amendment shall be effective to the
\nextent that it decreases a Member’s Accrued Benefit. For purposes of this
\nSection 13, a Plan amendment which has the effect of decreasing a Member’s
\nAccrued Benefit or eliminating an optional form of benefit, with respect to
\nbenefits attributable to service before the amendment, shall be treated as
\nreducing an Accrued Benefit.<\/p>\n
If any amendment shall be necessary or desirable to conform to
\nthe provisions 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
\ntime by board resolution or by such other action permitted by the Plan Sponsor’s
\ncharter, bylaws, or such other method permitted by the laws of the state of
\nincorporation of the Plan Sponsor.<\/p>\n
13.3 Retroactive Amendments. Any modification or amendment of
\nthe Plan may be made retroactive if, on the advice of counsel, such
\nretroactivity is deemed to be necessary in order for the Plan to conform to or
\nsatisfy the conditions of any law, governmental regulations or ruling, or to
\nmeet the requirements of applicable sections of the Code, or the corresponding
\nregulations.<\/p>\n
SECTION 14<\/p>\n
LOANS<\/p>\n
14.1 Permitted Loans. A Member may make application to the
\nPlan Administrator to borrow from his vested Accrued Benefit. That application
\nmust be <\/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
\nshall not exceed the lesser of:<\/p>\n
(i) $50,000, reduced by the greatest value of any
\n outstanding loan balance owed by the Member during the one-year period
\n ending on the day 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
\n$1,000;<\/p>\n
(c) a fee shall be charged for processing a loan
\napplication, and such fee shall be such amount as is then charged for such
\npurpose under the Plan’s loan program;<\/p>\n
(d) loans must be repaid in full before a new loan will be
\ngranted; and<\/p>\n
(e) an employee may have payroll deductions taken out of
\nhis regular or severance pay check to pay back his loan.<\/p>\n
14.2 Collateral Required. A note shall be signed by the Member
\nand his or her Spouse, if any, pledging not more than 50% of his vested Accrued
\nBenefit equal to the value of the outstanding loan balance and such other
\ncollateral as may from time to time be required by controlling law or
\nregulation.<\/p>\n
Where the account balance is to be used as collateral, written
\nspousal consent shall be obtained no earlier than the beginning of the 90-day
\nperiod that ends on the date on which the loan is to be so secured. The consent
\nmust acknowledge 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
\nequal installments consisting of principal and interest at least quarterly. The
\nterm of the loan is not to exceed five (5) years unless the loan is used to buy
\nor build 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
\nbased on the prime rate plus 2%.<\/p>\n
14.5 Failure to Make Timely Payment. In the event an
\ninstallment payment is not paid within thirty (30) days following the due date
\nof an installment the Plan Administrator shall give written notice to the Member
\nsent to his last known address. If such installment payment is not made within
\nthirty (30) days thereafter, the Plan Administrator shall have the right to
\naccelerate the loan and to reduce the Member’s Accrued Benefit to the extent
\npermitted by law by the amount of the unpaid loan balance including interest
\nthen due. If the Member’s Accrued Benefit must be used to eliminate any Plan
\nloan which is in default, the Member’s various accounts shall be depleted in the
\nfollowing order:<\/p>\n
(a) Profit Sharing Contribution Account to the extent
\nvested<\/p>\n
(b) Matching Contribution Account, to the extent
\nvested<\/p>\n
(c) Rollover Account<\/p>\n
(d) Basic Contribution Account.<\/p>\n
14.6 Termination of Employment. In the event of the
\ntermination of a Member’s employment before the loan is repaid in full, the
\nunpaid balance thereof, together with interest immediately due thereon, shall
\nbecome due and payable, and the Trustee shall first satisfy the indebtedness
\nfrom the amount payable to the Member or to the Member’s Beneficiary before
\nmaking any payments to the Member or to the Member’s Beneficiary. Employees can
\nrepay the loan in full upon termination.<\/p>\n
14.7 Loans to Non-Employees. Any Member who ceases to be an
\nactive Employee may be eligible to borrow from the Plan under terms and
\nconditions reflecting valid economic differences between active Members and
\nother Members which would be considered in a normal commercial setting, such as
\nthe unavailability of payroll deductions for repayment. In addition, there will
\nbe an annual fee for the administration of each of such loans as determined by
\nthe Plan Administrator, and such fee shall be such amount as is then charged for
\nsuch purpose under the Plan’s loan program. In no event will loans be
\nunreasonably withheld from any applicant. Notwithstanding the foregoing,
\nhowever, no loan will be made available to a terminated Employee unless he is
\nalso a “party in interest” 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
\nany Shareholder-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
\nAdministrator shall have the right to establish such procedures as may be
\nreasonable, necessary or desirable to carry out the provisions of this Section
\n14.<\/p>\n
46<\/p>\n
14.10 Qualified Military Leave. Notwithstanding anything in
\nSection 14 to the contrary, loan repayments will be suspended under the Plan as
\npermitted under 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
\n401(a)(13) of the Code (and the regulations thereunder), no benefits payable
\nunder the Plan will be subject to the claim or legal process of any creditor of
\nany Member or Beneficiary, and no Member or Beneficiary may alienate, transfer,
\nanticipate or assign benefits under the Plan.<\/p>\n
The preceding paragraph shall also apply to the creation,
\nassignment, or recognition of a right to any interest or benefit payable with
\nrespect to a Member pursuant to a domestic relations order, unless the order is
\ndetermined to be a Qualified Domestic Relations Order (as defined in section
\n414(p) of the Code). The Plan Administrator shall establish reasonable
\nprocedures in accordance with Section 15.2 to determine the qualified status of
\ndomestic relations orders and to administer distributions under such qualified
\norders.<\/p>\n
15.2 QDRO Exception. In the event that a Qualified Domestic
\nRelations Order (as defined in section 414(p) of the Code) (“QDRO”) is issued
\nwith respect to any Member, the Plan Administrator shall notify the Member and
\nthe alternate payee(s) of the order received and segregate and conservatively
\ninvest the portion of the Member’s Accrued Benefit which would be payable to the
\nalternate payee(s) as if the order received were a QDRO. Within 18 months of the
\norder, the 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
\nAdministrator shall pay the alternate payee(s), notwithstanding Section 6, (i)
\nat the time specified in such order or, if the order permits, (ii) as soon after
\nthe Plan Administrator approves the order as is administratively feasible
\nprovided such distribution is permitted under applicable provisions of the Code;
\nor<\/p>\n
(b) if the order is determined not to be a QDRO, or
\nthe issue remains undetermined, the Plan Administrator shall pay the portions of
\nthe Member’s Accrued Benefit segregated in accordance with the above to the
\nMember or Beneficiary (Beneficiaries) who are otherwise entitled to such
\nbenefit.<\/p>\n
If, 18 months after issuance of the order, a determination is
\nmade that the order is a QDRO, the determination shall be applied prospectively
\nonly.<\/p>\n
Notwithstanding any provision in the Plan to the contrary, a
\ndistribution may be made to an alternate payee even if the distribution is made
\nwith respect to a <\/p>\n
47<\/p>\n
Member who has not separated from service and the distribution commences prior
\nto the Member’s “earliest retirement age” (as defined in section 414(p)(4)(B) of
\nthe Code). If the value of the benefit to be paid to the alternate payee does
\nnot exceed $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
\nPlan or the Trust shall be held or construed to create any liability upon the
\nEmployer to retain any Employee in its employ. The Employer reserves the right
\nto discontinue the services of any Employee without any liability except for
\nsalary or 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
\ngoverned in all respects in accordance with the laws of the State of New York to
\nthe extent such laws are not superseded by federal law. If any provision herein
\nis held by a court of competent jurisdiction to be invalid or unenforceable, the
\nremaining provisions 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
\ndistributions made on or after January 1, 1993. Notwithstanding any provision of
\nthe Plan to the contrary that would otherwise limit a Distributee’s election
\nunder this Article, a Distributee may elect, at the time and in the manner
\nprescribed by the Plan Administrator, to have any portion of an Eligible
\nRollover Distribution paid directly to an Eligible Retirement Plan specified by
\nthe Distributee in a Direct Rollover.<\/p>\n
16.2 Definitions.<\/p>\n
(a) Eligible Rollover Distribution. An Eligible
\nRollover Distribution is any distribution of all or any portion of any benefit
\ndue to the Distributee, except that an Eligible Rollover Distribution does not
\ninclude: any distribution that is one of a series of substantially equal
\nperiodic payments (not less frequently than annually) made for the life (or life
\nexpectancy) of the Distributee and the Distributee’s designated beneficiary, or
\nfor a specified period of ten (10) years or more; any distribution to the extent
\nsuch distribution is required under section 401(a)(9) of the Code; the portion
\nof any distribution that is not includible in gross income (determined<\/p>\n
48<\/p>\n
without regard to the exclusion for net unrealized appreciation with respect to
\nemployer securities); and any other distribution(s) that is reasonably expected
\nto total less than $200 during a Plan Year; effective January 1, 2000, any
\nhardship distributions 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
\nPlan is an individual retirement account described in section 408(a) of the
\nCode, an individual retirement annuity described in section 408(b) of the Code,
\nan annuity plan described in section 403(a) of the Code, or a qualified trust
\nthat is part of a defined contribution plan described in section 401(a) of the
\nCode, that accepts the Distributee’s Eligible Rollover Distribution. However, in
\nthe case of an Eligible Rollover Distribution to the surviving spouse, an
\nEligible Retirement Plan is an individual retirement account or individual
\nretirement annuity.<\/p>\n
(c) Distributee. A Distributee includes an Employee
\nor former Employee. In addition, the Employee’s or former Employee’s surviving
\nspouse and the Employee’s or former Employee’s spouse or former spouse who is
\nthe alternate payee under a qualified domestic relations order, as defined in
\nSection 414(p) of the Code, are Distributees with regard to the interest of the
\nspouse or former spouse.<\/p>\n
(d) Direct Rollover. A Direct Rollover is a payment
\nby the Plan to the Eligible Retirement Plan specified by the Distributee.<\/p>\n
APPENDIX A<\/p>\n
\n\n ELIGIBILITY VESTING
\n ————- ————-
\n ACQUIRED COMPANIES FROM ORIGINAL FROM ORIGINAL
\n————————— DATE OF HIRE DATE OF HIRE
\n BY ACQUIRED BY ACQUIRED
\n COMPANY COMPANY
\n ————- ————-
\n
\nFranklin Specialty Stores X<\/p>\nPolo Players X X
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