-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, McMBYFl2yLQFqXeWC44keqISS4/v/zLVHJbaCN0Eu7QAZYDB9d6X92Jftdtg80BS WNidcEUgrXcnwSLPVE+5Yw== 0000950149-99-002182.txt : 19991203 0000950149-99-002182.hdr.sgml : 19991203 ACCESSION NUMBER: 0000950149-99-002182 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19991202 EFFECTIVENESS DATE: 19991202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAFEWAY INC CENTRAL INDEX KEY: 0000086144 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 943019135 STATE OF INCORPORATION: DE FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-91975 FILM NUMBER: 99767912 BUSINESS ADDRESS: STREET 1: 5918 STONERIDGE MALL RD CITY: PLEASANTON STATE: CA ZIP: 94588 BUSINESS PHONE: 9254673000 MAIL ADDRESS: STREET 1: 5918 STONERIDGE MALL ROAD CITY: PLEASANTON STATE: CA ZIP: 94588 FORMER COMPANY: FORMER CONFORMED NAME: SAFEWAY STORES INC DATE OF NAME CHANGE: 19900226 S-8 1 REGISTRATION STATEMENT FOR FORM S-8 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 2, 1999 REGISTRATION NO. 333-______ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SAFEWAY INC. (Exact name of registrant as specified in its charter) DELAWARE 5918 Stoneridge Mall Road 94-3019135 (State or other jurisdiction of Pleasanton, California 94588 (I.R.S. Employer incorporation or organization) (Address of principal executive offices) (Zip) Identification Number)
-------------------- RANDALLS FOOD MARKETS, INC. ESOP/401(K) SAVINGS PLAN DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR UNION EMPLOYEES, AS AMENDED DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR NON-UNION EMPLOYEES, AS AMENDED (Full titles of the plans) -------------------- Michael C. Ross, Esq. Senior Vice President, Secretary And General Counsel SAFEWAY INC. 5918 Stoneridge Mall Road Pleasanton, California 94588 (925) 467-3000 (Name, address and telephone number, including area code, of agent for service) Copies to: Scott R. Haber, Esq. Latham & Watkins 505 Montgomery Street, Suite 1900 San Francisco, California 94111 (415) 391-0600 -------------------- Calculation of Registration Fee
================================================================================================= Proposed Proposed Maximum Title of Amount Maximum Aggregate Amount of Securities to to be Offering Price Offering Registration be Registered (1) Registered Per Share Price (2) Fee - ------------------------------------------------------------------------------------------------- Common Stock, $0.01 par value - ------------------------------------------------------------------------------------------------- Randalls Food 2,500,000 (2) $93,225,000 $24,611.40 Markets, Inc. ESOP/401(k) Savings Plan - ------------------------------------------------------------------------------------------------- Dominick's Finer Foods, 1,000,000 (2) $37,290,000 $9,844.56 - -------------------------------------------------------------------------------------------------
1 2 - ------------------------------------------------------------------------------------------------- Inc. 401(K) Retirement Plan for Union Employees, as amended - ------------------------------------------------------------------------------------------------- Dominick's Finer 500,000 (2) $18,645,000 $4,922.28 Foods, Inc. 401(K) Retirement Plan for Non-Union Employees, as amended ================================================================================================= Total 4,000,000 (2) $149,160,000 $39,378.24 =================================================================================================
(1) In addition, pursuant to Rule 416(c), this registration statement also covers an indeterminate amount of interests to be offered or sold pursuant to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan, the Dominick's Finer Foods, Inc. 401(K) Retirement Plan for Union Employees, as amended, and the Dominick's Finer Foods, Inc. 401(K) Retirement Plan for Non-Union Employees, as amended, described herein. (2) Estimated for the purpose of calculating the registration fee pursuant to Rule 457(c) for the shares registered hereunder (the average ($37.29) of the high ($37.94) and low ($36.63) prices for the Company's Common Stock quoted on the New York Stock Exchange on November 23, 1999). 2 3 I. INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS The information called for in Part I of Form S-8 is not being filed with or included in this Form S-8 (by incorporation by reference or otherwise) in accordance with the rules and regulations of the Securities and Exchange Commission (the "Commission"). II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. We incorporate by reference the following documents we or the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan, the Dominick's Finer Foods, Inc. 401(K) Retirement Plan for Union Employees, as amended, and the Dominick's Finer Foods, Inc. 401(K) Retirement Plan for Non-Union Employees, as amended (collectively, the "Plans") filed with the Commission pursuant to Section 13 of the Exchange Act (Commission file number 1-41): - Safeway's Annual Report on Form 10-K for the fiscal year ended January 2, 1999; - Safeway's Quarterly Report on Form 10-Q for the period ended March 27, 1999; - Safeway's Quarterly Report on Form 10-Q for the period ended June 19, 1999; - Safeway's Quarterly Report on Form 10-Q for the period ended September 11, 1999; - Safeway's Current Reports on Form 8-K dated February 11, 1999, February 23, 1999, April 23, 1999, August 4, 1999 and September 14, 1999; - Description of our common stock contained in our registration statement on Form 8-A filed with the Commission on February 20, 1990, including the amendment on Form 8 dated March 26, 1990; and - All documents filed by us or the Plans with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold. Information that we or the Plans file later with the Commission will automatically update and supersede this information. ITEM 4. DESCRIPTION OF SECURITIES. Not Applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not Applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. As permitted by the Delaware General Corporation Law, the Company's Restated Certificate of Incorporation provides that a director of the Company will not be personally liable to the Company or its 3 4 stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability (i) for breach of the duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law (governing distributions to stockholders), or (iv) for any transaction for which a director derives an improper personal benefit. In addition, Section 145 of the Delaware General Corporation law and Article III, Section 13 of the Company's bylaws, under certain circumstances, provide for the indemnification of the Company's officers, directors, employees and agents against liabilities which they may incur in such capacities. A summary of the circumstances in which such indemnification is provided for is contained herein, but that description is qualified in its entirety by reference to Article III, Section 13 of the Company's bylaws. In general, any officer, director, employee or agent will be indemnified against expenses, including attorney's fees, fines, settlements or judgments, which were actually and reasonably incurred, in connection with a legal proceeding, other than one brought by or on behalf of the Company, to which he was a party as a result of such relationship, if he acted in good faith, and in the manner he believed to be in or not opposed to the Company's best interest and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. If the action is brought by or on behalf of the Company, the person to be indemnified must have acted in good faith and in a manner he reasonably believed to be in or not opposed to the Company's best interest, but no indemnification will be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery of Delaware, or the court in which such action was brought, determines upon application that, despite adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expense which such Court of Chancery or such other court shall deem proper. Any indemnification under the previous paragraphs (unless ordered by a court) will be made by the Company only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper under the circumstances because he has met the applicable standard of conduct set forth above. Such determination will be made (i) by the Company's board of directors by a majority vote of a quorum of disinterested directors who were not parties to such actions, (ii) if such quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. To the extent that a director, officer, employee or agent of the Company is successful on the merits or otherwise in defense of any action, suit or proceeding referred to in the previous paragraph, he will be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. Expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding may be paid by the Company in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it is ultimately determined that he is not entitled to be indemnified by the Company as authorized by the Company's bylaws. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the Company's board of directors deems appropriate. The indemnification and advancement of expenses provided by, or granted pursuant to, Section 13 of the Company's bylaws is not deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. If a claim for indemnification or payment of expenses under Section 13 of the Company's bylaws is not paid in full within ninety (90) days after a written claim therefor has been received by the Company, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action, the Company has the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law. The Company's board of directors may authorize, by a vote of a majority of a quorum of the Company's board of directors, the Company to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation partnership, joint venture, trust or other enterprise against 4 5 any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the provisions of Section 13 of the Company's bylaws. The Company's board of directors may authorize the Company to enter into a contract with any person who is or was a director, officer, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise providing for indemnification rights equivalent to or, if the Company's board of directors so determines, greater than those provided for in Section 13 of the Company's bylaws. The Company has also purchased insurance for its directors and officers for certain losses arising from claims or charges made against them in their capacities as directors and officers of the Company. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not Applicable. ITEM 8. EXHIBITS. 4.1 Randalls Food Markets, Inc. ESOP/401(k) Savings Plan (amended and restated as of April 1, 1997). 4.2 First Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan. 4.3 Second Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan. 4.4 Third Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan. 4.5 Fourth Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan. 4.6 Dominick's Finer Foods, Inc. 401(K) Retirement Plan for Union Employees, as amended. 4.7 Dominick's Finer Foods, Inc. 401(K) Retirement Plan for Non-Union Employees, as amended. 5.1 Randalls Plan Internal Revenue Service Determination letter (see Item 9(d)). 5.2 Dominick's Union Plan Internal Revenue Service Determination letter (see Item 9(d)). 5.3 Dominick's Non-Union Plan Internal Revenue Service Determination letter (see Item 9(d)). 23.1 Consent of Deloitte & Touche LLP. 24 Power of Attorney. (Incorporated by reference in the signature page to the Registration Statement).
- --------------- ITEM 9. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, 5 6 represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3 or Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (d) Pursuant to Item 8(b) of Form S-8, in lieu of an Internal Revenue Service ("IRS") determination letter that the Plans are qualified under Section 401 of the Internal Revenue Code, the undersigned registrant hereby undertakes that it has submitted the Plans and the amendments thereto, and will submit any future amendments, to the IRS in a timely manner and will make all changes required by the IRS to qualify the Plans. 6 7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Pleasanton, State of California on this 2nd day of December 1999. SAFEWAY INC. By: /s/ MICHAEL C. ROSS ------------------------------------ Michael C. Ross Senior Vice President, Secretary and General Counsel POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Michael C. Ross with full power of substitution and full power to act without the other, such person's true and lawful attorney-in-fact and agent to act for such person in such person's name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement on Form S-8, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully, to all intents and purposes, as such person might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on December 2, 1999.
Signature Title --------- ----- /s/ Steven A. Burd Chairman, President and Chief Executive Officer - ------------------------------------------ (Principal Executive Officer) Steven A. Burd /s/ David G. Weed Executive Vice President, Chief Financial Officer - ------------------------------------------ (Principal Financial Officer and Principal David G. Weed Accounting Officer) /s/ James H. Greene, Jr. Director - ------------------------------------------ James H. Greene, Jr. /s/ Paul Hazen Director - ------------------------------------------ Paul Hazen /s/ Henry R. Kravis Director - ------------------------------------------ Henry R. Kravis /s/ Robert I. MacDonnell Director - ------------------------------------------ Robert I. MacDonnell /s/ Peter A. Magowan Director - ------------------------------------------ Peter A. Magowan
8 /s/ George R. Roberts Director - ------------------------------------------ George R. Roberts /s/ Rebecca A. Stirn Director - ------------------------------------------ Rebecca A. Stirn /s/ William Y. Tauscher Director - ------------------------------------------ William Y. Tauscher
9 Pursuant to the requirements of the Securities and Exchange Act of 1933, as amended, the Benefit Plans Committee has caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Houston, Texas on December 1, 1999. RANDALLS FOOD MARKETS, INC. ESOP/401(K) SAVINGS PLAN By: /s/ Janice R. Schilmoeller --------------------------------- Name: Janice R. Schilmoeller Title: Vice President of Risk Management 10 Pursuant to the requirements of the Securities and Exchange Act of 1933, as amended, the Benefit Plans Committee has caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Hartford, Connecticut on December 1, 1999. DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR UNION EMPLOYEES, AS AMENDED By: /s/ Dewayne Howard --------------------------------------- Name: Dewayne Howard Title: Director of Human Resources of Dominick's Finer Foods, Inc. 11 Pursuant to the requirements of the Securities and Exchange Act of 1933, as amended, the Benefit Plans Committee has caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Hartford, Connecticut on December 1, 1999. DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR NON-UNION EMPLOYEES, AS AMENDED By: /s/ Dewayne Howard --------------------------------------- Name: Dewayne Howard Title: Director of Human Resources of Dominick's Finer Foods, Inc. 12 INDEX TO EXHIBITS Exhibit 4.1 Randalls Food Markets, Inc. ESOP/401(k) Savings Plan (amended and restated as of April 1, 1997). 4.2 First Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan. 4.3 Second Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan. 4.4 Third Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan. 4.5 Fourth Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan. 4.6 Dominick's Finer Foods, Inc. 401(K) Retirement Plan for Union Employees, as amended. 4.7 Dominick's Finer Foods, Inc. 401(K) Retirement Plan for Non-Union Employees, as amended. 5.1 Randalls Plan Internal Revenue Service Determination letter (see Item 9(d)). 5.2 Dominick's Union Plan Internal Revenue Service Determination letter (see Item 9(d)). 5.3 Dominick's Non-Union Plan Internal Revenue Service Determination letter (see Item 9(d)). 23.1 Consent of Deloitte & Touche LLP. 24 Power of Attorney. (Incorporated by reference in the signature page to the Registration Statement).
EX-4.1 2 RANDALLS FOOD MARKETS, INC. 1 EXHIBIT 4.1 RANDALLS FOOD MARKETS, INC. ESOP/401(k) SAVINGS PLAN (AMENDED AND RESTATED AS OF APRIL 1, 1997) 2 RANDALLS FOOD MARKETS, INC. ESOP/401(k) SAVINGS PLAN (Amended and Restated as of April 1, 1997) WITNESSETH: WHEREAS, effective June 24, 1986, the Employer established the Randall's Food Markets, Inc. Salaried Employee Stock Ownership Plan and its related trust (collectively the "Salaried ESOP") so as to enable its eligible salaried employees to acquire a proprietary interest in capital stock of the Employer; and WHEREAS, effective June 24, 1986, the Employer established the Randall's Food Markets, Inc. Hourly Paid Employee Stock Ownership Plan and its related trust (collectively the "Hourly ESOP") so as to enable its eligible hourly paid employees to acquire a proprietary interest in capital stock of the Employer; and WHEREAS, effective January 1, 1994, the Employer merged the Hourly ESOP into the Salaried ESOP, and the surviving plan was renamed the Randalls Food Markets, Inc. Employee Stock Ownership Plan (the "Combined ESOP"); and WHEREAS, in Section 9.1 of the Combined ESOP, the Employer reserved the right to amend the Combined ESOP at any time; and WHEREAS, the Employer desires to amend the Combined ESOP to (i) freeze the ESOP portion of the Combined ESOP, and (ii) add a cash or deferred arrangement feature under Code Section 401(k). NOW, THEREFORE, effective April 1, 1997, subject to a favorable determination from the Internal Revenue Service with respect to the qualification hereof, the Employer hereby renames the Combined ESOP the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan (the "Plan") and amends and restates the Plan. The terms of this amendment and restatement shall apply only to (i) those individuals who are Former Participants with an Account balance on April 1, 1997, but only with respect to the investment and distribution of such Accounts, and (ii) those individuals who are Participants on or after April 1, 1997. The amended and restated Plan shall read as follows: 3 ARTICLE 1. DEFINITIONS 1.1 "Account" means, with respect to each Participant, the value of all accounts maintained on behalf of a Participant. 1.2 "Act" means the Employee Retirement Income Security Act of 1974, as it may be amended from time to time. 1.3 "Administrator" means the "Randalls Employee Benefits Committee" designated by the Employer pursuant to Section 2.4 to administer the Plan on behalf of the Employer. 1.4 "Affiliated Employer" means the Employer and any corporation which is a member of a controlled group of corporations (as defined in Code Section 414(b)) which include the Employer; any trade or business (whether or not incorporated) which is under common control (as defined in Code Section 414(c)) with the Employer; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Code Section 414(m)) which includes the Employer; and any other entity required to be aggregated with the Employer pursuant to Regulations under Code Section 414(o). 1.5 "Anniversary Date" means the last day of the Plan Year. 1.6 "Beneficiary" means the person to whom the share of a deceased Participant's total account is payable, subject to the restrictions of Sections 7.2 and 7.6. 1.7 "Code" means the Internal Revenue Code of 1986, as amended. 1.8 "Company Stock" shall mean common stock issued by the Employer (or by a corporation which is a member of the controlled group of corporations in which the Employer is a member) which is readily tradeable on an established securities market. If there is no common stock which meets the foregoing requirement, the term "Company Stock" means common stock issued by the Employer (or by a corporation which is a member of the same controlled group) having a combination of voting power and dividend rights equal to or in excess of: (A) that class of common stock of the Employer (or of any other such corporation) having the greatest voting power, and (B) that class of stock of the Employer (or of any other such corporation) having the greatest dividend rights. Noncallable preferred stock shall be deemed to be "Company Stock" if such stock is convertible at any time into stock which constitutes "Company Stock" hereunder and if such conversion is at a conversion price which (as of the date of the acquisition by the Trust) is reasonable. 1.9 "Company Stock Account" shall mean the account of a Participant which is or has been credited with the shares of Company Stock purchased and paid for by the Trust Fund or contributed to the Trust Fund, or any funds received in exchange for tendered shares of Company Stock in accordance with Section 8.3. Effective April 1, 1997, the balance in each Participant's Company Stock Account shall be fully Vested at all times and shall not be subject to forfeiture for any reason. 2 4 1.10 "Compensation" shall mean a Participant's wages for the Plan Year within the meaning of Code Section 3401(a) (for the purposes of income tax withholding at the source) but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). For purposes of this Section, the determination of Compensation shall be made by excluding bonuses and including amounts which are contributed by the Employer pursuant to a salary reduction agreement and which are not includible in the gross income of the Participant under Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or 457, and Employee contributions described in Code Section 414(h)(2) that are treated as Employer contributions. Compensation shall be recognized as of an Employee's effective date of participation pursuant to Section 3.3. In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, the annual Compensation of each Employee taken into account under the Plan shall not exceed the "OBRA `93 Annual Compensation Limit." The "OBRA `93 Annual Compensation Limit" is $150,000, as adjusted for increases in the cost of living in accordance with Code Section 401(a)(17)(B). The cost of living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined ("Determination Period") beginning in such calendar year. If a Determination Period consists of fewer than 12 months, the "OBRA `93 Annual Compensation Limit" will be multiplied by a fraction, the numerator of which is the number of months in the Determination Period, and the denominator of which is 12. Any reference in this Plan to the limitation under Code Section 401(a)(17) shall mean the "OBRA `93 Annual Compensation Limit" set forth in this Section. If Compensation for any prior Determination Period is taken into account in determining a Participant's benefits accruing in the current Plan Year, the Compensation for that prior Determination Period is subject to the "OBRA `93 Annual Compensation Limit" in effect for that prior Determination Period. For this purpose, for Determination Periods beginning before the first day of the first Plan Year beginning on or after January 1, 1994, the "OBRA `93 Annual Compensation Limit" is $150,000. 1.11 "Contract" or "Policy" shall mean a life insurance policy or annuity contract (group or individual) issued by the insurer as elected. 1.12 "Current Obligations" shall mean Trust obligations arising from extension of credit to the Trust and payable in cash within (1) year from the date an Employer contribution is due. 1.13 "Deferred Compensation" with respect to any Participant means that portion of such Participant's total Compensation which has been contributed to the Plan in accordance with the Participant's deferral election pursuant to Section 4.2, excluding any such amounts distributed as excess "annual additions" pursuant to Section 4.11(a). 3 5 1.14 "Elective Account" means the account established and maintained by the Administrator for each Participant with respect to his total interest in the Plan and Trust resulting from the Elective Contributions. A separate accounting shall be maintained with respect to that portion of the Elective Account attributable to Elective Contributions pursuant to Section 4.2 and any Qualified Non-Elective Contributions. 1.15 "Elective Contribution" means the contributions to the Plan that are made pursuant to the Participant's deferral election provided in Section 4.2. 1.16 "Eligible Employee" means any Employee who has satisfied the provisions of Section 3.1. 1.17 "Employee" means any person who is employed by the Employer, but excludes any person who is employed as an independent contractor. Employees whose employment is governed by the terms of a collective bargaining agreement between Employee representatives (within the meaning of Code Section 7701(a)(46) and the Employer under which retirement benefits were the subject of good faith bargaining between the parties, unless such agreement expressly provides for such coverage in this Plan, will not be eligible to participate in the Plan. The term "Employee" shall also include any leased employee which, effective January 1, 1997, means any person (other than an Employee of the recipient) who pursuant to an agreement between the recipient and any leasing organization has performed services for the recipient on a substantially full-time basis for a period of at least one year, and such services are performed under the primary direction or control of the Employer. Contributions or benefits provided a leased employee by the leasing organization which are attributable to services performed for the recipient Employer shall be treated as provided by the Employer. A leased employee shall not be considered an Employee of the Employer if: (i) such employee is covered by a money purchase pension plan providing: (1) a nonintegrated employer contribution rate of at least 10 percent of compensation (as defined in Code Section 415(c)(3), but including amounts contributed pursuant to a salary reduction agreement which are excludable from the employee's gross income under Code Section 125, 402(e)(3), 402(h) or 403(b)), (2) immediate participation, and (3) full and immediate vesting; and (ii) leased employees do not constitute more than 20 percent of the Employer's nonhighly compensated workforce. Leased employees will not be eligible to participate in the Plan. 1.18 "Employee After-Tax Account" shall mean the account which is credited with the shares of Company Stock and Investment Funds resulting from the Participant's Employee contributions made prior to April 1, 1997. Any balance in the Employee After-Tax Account shall be fully Vested at all times and shall not be subject to Forfeiture for any reason. Prior to April 1, 1997, the Employee After-Tax Account was referred to as the "ESOP Contribution Account." 4 6 1.19 "Employer" means Randalls Food Markets, Inc., a Texas corporation and any Participating Employer (as defined in Section 11.1) which shall adopt this Plan; any successor which shall maintain this Plan; and any predecessor which has maintained this Plan. 1.20 "ESOP" means an employee stock ownership plan that meets the requirements of Code Section 4975(e)(7) and Regulation 54.4975-11. 1.21 "Excess Aggregate Contributions" means, with respect to any Plan Year, the excess of the aggregate amount of the Matching Contributions and any qualified non-elective contributions or elective deferrals taken into account pursuant to Section 4.8(c) on behalf of Highly Compensated Participants for such Plan Year, over the maximum amount of such contributions permitted under the limitations of Section 4.8(a). 1.22 "Excess Contributions" means, with respect to a Plan Year, the excess of Elective Contributions made on behalf of Highly Compensated Participants for the Plan Year over the maximum amount of such contributions permitted under Section 4.6(a). Excess Contributions shall be treated as "annual additions" pursuant to Section 4.10(b). 1.23 "Excess Deferred Compensation" means, with respect to any taxable year of a Participant, the excess of the aggregate amount of such Participant's Deferred Compensation and the elective deferrals pursuant to Section 4.2(g) actually made on behalf of such Participant for such taxable year, over the dollar limitation provided for in Code Section 402(g), which is incorporated herein by reference. Excess Deferred Compensation shall be treated as an "annual addition" pursuant to Section 4.10(b) when contributed to the Plan unless distributed to the affected Participant not later than the first April 15th following the close of the Participant's taxable year. However, Excess Deferred Compensation of Non-Highly Compensated Participants is not taken into account for purposes of Section 4.6(a) to the extent such Excess Deferred Compensation occurs pursuant to Section 4.2(f). 1.24 "Exempt Loan" shall mean a loan made to the Plan by a disqualified person or a loan to the Plan which is guaranteed by a disqualified person and which satisfies the requirements of Section 2550.408b-3 of the Department of Labor Regulations and Section 54.4975-7(b) of the Treasury Regulations and Section 5.3 hereof. 1.25 "Fiduciary" means any person who (a) exercises any discretionary authority or discretionary control respecting management of the Plan or exercises any authority or control respecting management or disposition of its assets, (b) renders investment advice for a fee or other compensation, direct or indirect, with respect to any monies or other property of the Plan or has any authority or responsibility to do so, or (c) has any discretionary authority or discretionary responsibility in the administration of the Plan, including, but not limited to, the Trustee, the Employer and its representative body, and the Administrator. 1.26 "Fiscal Year" means the Employer's accounting year of not less than fifty-two (52) nor more than fifty-three (53) weeks ending on the last Saturday in June. 5 7 1.27 "Forfeiture" means that portion of a Participant's Account that is not Vested, and occurs on the earlier of: (a) the distribution of the entire Vested portion of a Participant's Account, or (b) the last day of the Plan Year in which the Participant incurs five (5) consecutive 1-Year Breaks in Service. 1.28 "Former Participant" means a person who has been a Participant, but who has ceased to be a Participant for any reason. 1.29 "414(s) Compensation" means, with respect to any Participant, such Participant's "415 Compensation" paid during a Plan Year. The amount of "414(s) Compensation" with respect to any Participant shall include "414(s) Compensation" for the entire twelve month period ending on the last day of such Plan Year. For purposes of this Section, the determination of "414(s) Compensation" shall be made by including amounts which are contributed by the Employer pursuant to a salary reduction agreement and which are not includible in the gross income of the Participant under Code Sections 125, 402(e)(3), 402(h), 403(b) or 457, and Employee contributions described in Code Section 414(h)(2) that are treated as Employer contributions. In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, the annual Compensation of each Employee taken into account under the Plan shall not exceed the "OBRA `93 Annual Compensation Limit." The "OBRA `93 Annual Compensation Limit" is $150,000, as adjusted for increases in the cost of living in accordance with Code Section 401(a)(17)(B). The cost of living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined ("Determination Period") beginning in such calendar year. If a Determination Period consists of fewer than 12 months, the "OBRA `93 Annual Compensation Limit" will be multiplied by a fraction, the numerator of which is the number of months in the Determination Period, and the denominator of which is 12. Any reference in this Plan to the limitation under Code Section 401(a)(17) shall mean the "OBRA `93 Annual Compensation Limit" set forth in this Section. If Compensation for any prior Determination Period is taken into account in determining a Participant's benefits accruing in the current Plan Year, the Compensation for that prior Determination Period is subject to the "OBRA `93 Annual Compensation Limit" in effect for that prior Determination Period. For this purpose, for Determination Periods beginning before the first day of the first Plan Year beginning on or after January 1, 1994, the "OBRA `93 Annual Compensation Limit" is $150,000. 1.30 "415 Compensation" means compensation as defined in Section 4.10(d) of the Plan. 6 8 1.31 "Highly Compensated Employee" means any Employee or former Employee who is a highly compensated employee as defined in Code Section 414(q) and the Regulations thereunder. Generally, any Employee or former Employee is considered a Highly Compensated Employee if such Employee or former Employee performed services for the Employer during the "determination year" and is one or more of the following groups: (a) Employees who at any time during the "determination year" or "look-back year" were "five percent owners." "Five-percent owner" means any person who owns (or is considered as owning within the meaning of Code Section 318) more than five percent of the outstanding stock of the Employer or stock possessing more than five percent of the total combined voting power of all stock of the Employer or, in the case of an unincorporated business, any person who owns more than five percent of the capital or profits interest in the Employer. In determining percentage ownership hereunder, employers that would otherwise be aggregated under Code Sections 414(b), (c), (m) and (o) shall be treated as separate employers. (b) Employees who received "415 Compensation" during the "look-back year" from the Employer in excess of $75,000. In determining whether an individual has "415 Compensation" of more than $75,000, "415 Compensation" from each employer required to be aggregated under Code Sections 414(b), (c), (m) and (o) shall be taken into account. (c) Employees who received "415 Compensation" during the "look-back year" from the Employer in excess of $50,000 and were in the top-paid group of Employees for the Plan Year. An Employee is in the top-paid group of Employees for any year if such Employee is in the group consisting of the top twenty (20) percent of the Employees when ranked on the basis of "415 Compensation" paid during the year. For the purpose of determining the number of Employees in the top-paid group, (a) Employees with less than six (6) months of service; (b) Employees who normally work less than 172 hours per week; (c) Employees who normally work less than six (6) months during a year; (d) Employees who have not yet attained age 21; and (e) except to the extent provided in Regulations, Employees who are included in a unit of Employees covered by a collective bargaining agreement between employee representatives and the Employer shall be excluded. In determining whether an individual has "415 Compensation" of more than $50,000, "415 Compensation" from each employer required to be aggregated under Code Section 414(b), (c), (m) and (o) shall be taken into account. (d) Employees who during the "look-back year" were officers as defined in Section 1.36(a) and received "415 Compensation" during the "look-back year" from the Employer greater than 50 percent of the limit in effect under Code Section 415(b)(1)(A) for any such Plan Year. The number of officers shall be limited to the lesser of (i) 50 employees; or (ii) the greater of 3 employees or 10 percent of all employees. For the purpose of determining the number of officers, the Employees excluded in paragraph (c) above for purposes of determining the top-paid group shall be excluded. However, such Employees shall still be considered for the purpose of identifying the particular 7 9 Employees who are officers. If the Employer does not have at least one officer whose annual "415 Compensation" is in excess of 50 percent of the Code Section 415(b)(1)(A) limit, then the highest paid officer of the Employer will be treated as a Highly Compensated Employee. (e) Employees who are in the group consisting of the 100 Employees paid the greatest "415 Compensation" during the "determination year" and are also described in (b), (c) or (d) above when these paragraphs are modified to substitute "determination year" for "look-back year." The "look-back year" shall be the calendar year ending with or within the Plan Year for which testing is being performed, and the "determination year" (if applicable) shall be the period of time, if any, which extends beyond the "look-back year" and ends on the last day of the Plan Year for which testing is being performed (the "lag period"). If the "lag period" is less than twelve months long, the threshold amounts specified in (b), (c) and (d) above shall be prorated based upon the number of months in the "lag period." Notwithstanding the foregoing, for Plan Years beginning after December 31, 1996, "Highly Compensated Employee" shall mean any Employee who is in one or more of the following groups: (a) Employees who at any time during the Plan Year being tested or the prior Plan Year were "five-percent owners." (b) Employees who, during the prior Plan Year: (1) received "415 Compensation" in excess of $80,000 (or such other amount as determined by the Secretary of the Treasury which reflects cost-of-living increases in accordance with Code Section 414(q)(1)), and (2) if the Employer elects the application of this clause (2) for the prior Plan Year, was in the top-paid group of employees for the prior Plan Year. A former Employee shall be treated as a Highly Compensated Employee if (1) such former Employee was a Highly Compensated Employee when he separated from Service or (2) such former Employee was a Highly Compensated Employee at any time after attaining age fifty-five (55). For purposes of this Section, the determination of "415 Compensation" shall be based only on "415 Compensation" which is actually paid and shall be made by including amounts that would otherwise be excluded from a Participant's gross income by reason of the application of Code Sections 125, 402(e)(3), 402(h)(1)(B) and, in the case of Employer contributions made pursuant to a salary reduction agreement, by including amounts that would otherwise be excluded from a participant's gross income by reason of the application of Code Section 403(b). 8 10 In determining who is a Highly Compensated Employee, Employees who are non-resident aliens and who received no earned income (within the meaning of Code Section 911(d)(2)) from the Employer constituting United States source income within the meaning of Code Section 861(a)(3) shall not be treated as Employees. Additionally, all Employers shall be taken into account as a single employer and leased employees within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall be considered Employees unless such leased employees are covered by a plan described in Code Section 414(n)(5) and are not covered in any qualified plan maintained by the Employer. The exclusion of leased employees for this purpose shall be applied on a uniform and consistent basis for all of the Employer's retirement plans. 1.32 "Highly Compensated Participant" shall mean any Highly Compensated Employee who is eligible to participate in the Plan. 1.33 "Hour of Service" shall mean (1) each hour for which an Employee is directly or indirectly compensated or entitled to compensation by the Employer for the performance of duties during the applicable computation period; (2) each hour for which an Employee is directly or indirectly compensated or entitled to compensation by the Employer (irrespective of whether the employment relationship has terminated) for reasons other than performance of duties (such as vacation, holidays, sickness, jury duty, disability, lay-off, involuntary military duty or leave of absence) during the applicable computation period; (3) each hour for which back pay is awarded or agreed to by the Employer without regard to mitigation of damages. Notwithstanding the above, (i) no more than 501 Hours of Service are required to be credited to an Employee on account of any single continuous period during which the Employee performs no duties (whether or not such period occurs in a single computation period); (ii) an hour for which an Employee is directly or indirectly paid, or entitled to payment, on account of a period during which no duties are performed is not required to be credited to the Employee if such payment is made or due under a plan maintained solely for the purpose of complying with applicable worker's compensation, or unemployment compensation or disability insurance laws; and (iii) Hours of Service are not required to be credited for a payment which solely reimburses an Employee for medical or medically related expenses incurred by the Employee. For purposes of this Section, a payment shall be deemed to be made by or due from the Employer regardless of whether such payment is made by or due from the Employer directly, or indirectly through, among others, a trust fund, or insurer, to which the Employer contributes or pays premiums and regardless of whether contributions made or due to the trust fund, insurer, or other entity are for the benefit of particular Employees or are on behalf of a group of Employees in the aggregate. An Hour of Service must be counted for the purpose of determining a Year of Service, a year of participation for purposes of accrued benefits, a 1-Year Break in Service, and employment commencement date (or reemployment commencement date). The provisions of Department of Labor regulations 2530.200b-2(b) and (c) are incorporated herein by reference. 1.34 "Investment Funds" means the funds into which the assets of the Trust Fund shall be invested as set forth in Section 4.13. 9 11 1.35 "Investment Manager" means any person, firm or corporation who is a registered investment adviser under the Investment Advisers Act of 1940, a bank or an insurance company, and (a) who has the power to manage, acquire, or dispose of Plan assets, and (b) who acknowledges in writing his fiduciary responsibility to the Plan. 1.36 "Key Employee" means those Employees defined in Code Section 416(i) and the Treasury Regulations thereunder. Generally, they shall include any Employee or former Employee (and his Beneficiaries) who, at any time during the Plan Year or any of the preceding four (4) Plan Years, is: (a) an officer of the Employer (as that term is defined within the meaning of the regulations under Code Section 416) having annual "415 Compensation" greater than 50 percent of the amount in effect under Code Section 415(b)(1)(A) for any such Plan Year. Whether an individual is an officer shall be determined by the Employer on the basis of all the facts and circumstances, such as an individual's authority, duties, and term of office, not on the mere fact that the individual has the title of an officer. For any such Plan Year, officers considered to be Key Employees will be no more than the fewer of: (1) Fifty (50) Employees; or (2) Ten percent (10%) of the Employees or, if greater than ten percent (10%), three (3) Employees. For this purpose, the highest paid officers shall be selected. For purposes of determining the number of officers taken into account, Employees excluded for purposes of determining the top-paid group pursuant to Section 1.31(c) shall be excluded. (b) one of the ten Employees having annual "415 Compensation" from the Employer for a Plan Year greater than the dollar limitation in effect under Code Section 415(c)(1)(A) for the calendar year in which such Plan Year ends and owning (or considered as owning within the meaning of Code Section 318) both more than one-half percent (2%) interest and the largest interests in the Employer. (c) a "five percent owner" of the Employer. (d) a "one percent owner" of the Employer having annual "415 Compensation" from the Employer of more than $150,000. "One percent owner" means any person who owns (or is considered as owning within the meaning of Code Section 318) at least one percent (1%) of the outstanding stock of the Employer or stock possessing more than one percent (1%) of the total combined voting power of all stock of the Employer. 1.37 "Late Retirement Date" means the first day of the month coinciding with or next following a Participant's actual Retirement Date after having reached his Normal Retirement Date. 10 12 1.38 "Matching Contribution" means the contributions to the Plan that are made pursuant to Section 4.1(a)(2). 1.39 "Matching Contribution Account" means the account established and maintained by the Administrator for each Participant with respect to his total interest in the Plan and Trust resulting from the Employer's Matching Contributions. 1.40 "Non-Highly Compensated Employee" means any Employee or former Employee who is not a Highly Compensated Employee. 1.41 "Non-Highly Compensated Participant" means any Participant who is not a Highly Compensated Employee. 1.42 "Non-Key Employee" means any Employee or former Employee (and his Beneficiaries) who is not a Key Employee. 1.43 "Non-Texas Resident" means a Participant who is not a resident of the State of Texas. 1.44 "Non-Top Heavy Plan Year" means a Plan Year which is not a Top Heavy Plan Year. 1.45 "Normal Retirement Date" means the first day of the month coinciding with or next following the Participant's Normal Retirement Age (65th birthday). A Participant shall become fully Vested in his Account upon attaining his Normal Retirement Age. 1.46 "1-Year Break in Service" means a Plan Year during which an Employee has not completed more than 500 Hours of Service with the Employer. An Employee shall not incur a 1-Year Break in Service for the Plan Year in which he becomes a Participant, dies, retires or suffers Total and Permanent Disability. Further, solely for the purpose of determining whether a Participant has incurred a 1-Year Break in Service, Hours of Service shall be recognized for "authorized leaves of absence" and "maternity and paternity leaves of absence." "Authorized leave of absence" means an unpaid, temporary cessation from active employment with the Employer pursuant to an established nondiscriminatory policy, whether occasioned by illness, military service, or any other reason. A "maternity or paternity leave of absence" shall mean an absence from work for any period by reason of the Employee's pregnancy, birth of the Employee's child, placement of a child with the Employee in connection with the adoption of such child, or any absence for the purpose of caring for such child for a period immediately following such birth or placement. For this purpose, Hours of Service shall be credited for the computation period in which the absence from work begins, only if credit therefor is necessary to prevent the Employee from incurring a 1-Year Break in Service, or, in any other case, in the immediately following computation period. The Hours of Service credited for a "maternity or paternity leave of absence" shall be those which would normally have been credited but for such absence, or, in any case in which the 11 13 Administrator is unable to determine such hours normally credited, eight (8) Hours of Service per day. The total Hours of Service required to be credited for a "maternity or paternity leave of absence" shall not exceed 501. 1.47 "Other Investments Account" shall mean the account of a Participant which is credited with his share of Forfeitures. 1.48 "Participant" shall mean any Eligible Employee who elects to participate in the Plan as provided in Sections 3.2 and 3.3, and has not for any reason become ineligible to participate further in the Plan. 1.49 "Plan" shall mean this instrument, including all amendments thereto. 1.50 "Plan Year" means the Plan's accounting year of not less than fifty-two (52) nor more than fifty-three (53) weeks ending on the last Saturday in June. 1.51 "Qualified Non-Elective Contribution" means the Employer's contributions to the Plan made pursuant to Section 4.7(b). Such contributions shall be considered an Elective Contribution for the purposes of the Plan and used to satisfy the Actual Deferral Percentage tests of Section 4.6(a). In addition, the Employer's contributions to the Plan that are made pursuant to Section 4.9(f) and used to satisfy the Actual Contribution Percentage tests of Section 4.8(a) shall be considered Qualified Non-Elective Contributions and be subject to the provisions of Sections 4.2(d) and 4.2(e). 1.52 "Regulation" means the Income Tax Regulations as promulgated by the Secretary of the Treasury or his delegate, and as amended from time to time. 1.53 "Retired Participant" means a person who has been a Participant, but who has become entitled to retirement benefits under the Plan. 1.54 "Retirement Date" means the date as of which a Participant retires, whether such retirement occurs on a Participant's Normal Retirement Date or Late Retirement Date (see Section 7.1). 1.55 "Super Top Heavy Plan" means a plan described in Section 2.2(b). 1.56 "Suspense Account" means the total forfeitable portion of all Former Participants' Accounts which has not yet become a Forfeiture during any Plan Year. 1.57 "Terminated Participant" means a person who has been a Participant, but whose employment has been terminated other than by death, Total and Permanent Disability or retirement. 1.58 "Top Heavy Plan" means a plan described in Section 2.2(a). 12 14 1.59 "Top Heavy Plan Year" means a Plan Year during which the Plan is a Top Heavy Plan. 1.60 "Total and Permanent Disability" means a physical or mental condition of a Participant resulting from bodily injury, disease, or mental disorder which renders him incapable of continuing his usual and customary employment with the Employer. The disability of a Participant shall be determined by a licensed physician chosen by the Administrator. The determination shall be applied uniformly to all Participants. 1.61 "Trustee" means the person or entity named as trustee herein or in any separate trust forming a part of this Plan, and any successors. 1.62 "Trust Fund" means the assets of the Plan and Trust as the same shall exist from time to time. 1.63 "Unallocated Company Stock Suspense Account" means an account containing Company Stock acquired with the proceeds of an Exempt Loan and which has not been released from such account and allocated to the Participants' Company Stock Accounts. 1.64 "Vested" means the portion of a Participant's Account that is nonforfeitable. 1.65 "Year of Service" shall mean the computation period of twelve (12) consecutive months, herein set forth, during which an Employee has at least 1,000 Hours of Service. For purposes of eligibility for participation, the initial computation period shall begin with the date on which the Employee first performs an Hour of Service. The participation computation period beginning after a 1-Year Break in Service shall be measured from the date on which an Employee again performs an Hour of Service. The participation computation period shall shift to the Plan Year which includes the anniversary of the date on which the Employee first performed an Hour of Service. For vesting purposes, a Year of Service shall be all Years of Service in which an Employee completes 1,000 Hours of Service with the Employer commencing from the Employee's date of hire. Notwithstanding the foregoing, vesting service under the Tom Thumb Food & Drugs, Inc. Profit Sharing Plan shall count for vesting purposes under this Plan. Years of Service with any corporation, trade or business which is a member of a controlled group of corporations or under common control (as defined by Code Sections 414(b) and 414(c)), is a member of an affiliated service group (as defined by Code Section 414(m)), or with any other entity required to be aggregated with an Employer under Code Section 414(o) shall be recognized. 13 15 ARTICLE 2. TOP HEAVY AND ADMINISTRATION 2.1 Top Heavy Plan Requirements (a) For any Top Heavy Plan Year, the Plan shall provide the following: (1) special vesting requirements of Code Section 416(b) pursuant to Section 7.4 of the Plan; (2) special minimum allocation requirements of Code Section 416(c) pursuant to Section 4.5 of the Plan. 2.2 Determination of Top Heavy Status (a) This Plan shall be a Top Heavy Plan for any Plan Year in which, as of the Determination Date, (1) the Present Value of Accrued Benefits of Key Employees and (2) the sum of the Aggregate Accounts of Key Employees under this Plan and all plans of an Aggregation Group, exceeds sixty percent (60%) of the Present Value of Accrued Benefits and the Aggregate Accounts of all Key and Non-Key Employees under this Plan and all plans of an Aggregation Group. If any Participant is a Non-Key Employee for any Plan Year, but such Participant was a Key Employee for any prior Plan Year, such Participant's Present Value of Accrued Benefit and/or Aggregate Account balance shall not be taken into account for purposes of determining whether this Plan is a Top Heavy or Super Top Heavy Plan (or whether any Aggregation Group which includes this Plan is a Top Heavy Group). If a Participant or Former Participant has not performed any services for any Employer maintaining the Plan at any time during the five year period ending on the Determination Date, any Accrued Benefit for such Participant or Former Participant (and the Aggregate Account of such individual) shall not be taken into account for the purposes of determining whether this Plan is a Top Heavy or Super Top Heavy Plan. (b) This Plan shall be a Super Top Heavy Plan for any Plan Year in which, as of the Determination Date, (1) the Present Value of Accrued Benefits of Key Employees and (2) the sum of the Aggregate Accounts of Key Employees under this Plan and all plans of an Aggregation Group, exceeds ninety percent (90%) of the Present Value of Accrued Benefits and the Aggregate Accounts of all Key and Non-Key Employees under this Plan and all plans of an Aggregation Group. (c) Aggregate Account: A Participant's Aggregate Account as of the Determination Date is the sum of: (1) his Participant's Account balance as of the most recent valuation occurring within a twelve (12) month period ending on the Determination Date; 14 16 (2) an adjustment for any contributions due as of the Determination Date. Such adjustment shall be the amount of any contributions actually made after the valuation date but on or before the Determination Date, except for the first Plan Year when such adjustment shall also reflect the amount of any contributions made after the Determination Date that are allocated as of a date in that first Plan Year; (3) any Plan distributions made within the Plan Year that includes the Determination Date or within the four (4) preceding Plan Years. However, in the case of distributions made after the valuation date and prior to the Determination Date, such distributions are not included as distributions for top heavy purposes to the extent that such distributions are already included in the Participant's Aggregate Account balance as of the valuation date. Notwithstanding anything herein to the contrary, all distributions, including distributions made prior to January 1, 1984, and distributions under a terminated plan which if it had not been terminated would have been required to be included in an Aggregation Group, will be counted. Further, distributions from the Plan (including the cash value of life insurance policies) of a Participant's Account balance because of death shall be treated as a distribution for the purposes of this paragraph. (4) any Employee contributions, whether voluntary or mandatory. However, amounts attributable to tax deductible qualified voluntary employee contributions shall not be considered to be a part of the Participant's Aggregate Account balance. (5) with respect to unrelated rollovers and plan-to-plan transfers (ones which are both initiated by the Employee and made from a plan maintained by one employer to a plan maintained by another employer), if this Plan provides the rollovers or plan-to-plan transfers, it shall always consider such rollovers or plan-to-plan transfers as a distribution for the purposes of this Section. If this Plan is the plan accepting such rollovers or plan-to-plan transfers, it shall not consider such rollovers or plan-to-plan transfers as part of the Participant's Aggregate Account balance. (6) with respect to related rollovers and plan-to-plan transfers (ones either not initiated by the Employee or made to a plan maintained by the same employer), if this Plan provides the rollover or plan-to-plan transfer, it shall not be counted as a distribution for purposes of this Section. If this Plan is the plan accepting such rollover or plan-to-plan transfer, it shall consider such rollover or plan-to-plan transfer as part of the Participant's Aggregate Account balance, irrespective of the date on which such rollover or plan-to-plan transfer is accepted. (7) For the purposes of determining whether two employers are to be treated as the same employer in (5) and (6) above, all employers aggregated under Code Section 414(b), (c), (m) and (o) are treated as the same employer. 15 17 (d) "Aggregation Group" means either a Required Aggregation Group or a Permissive Aggregation Group as hereinafter determined. (1) Required Aggregation Group: In determining a Required Aggregation Group hereunder, each plan of the Employer in which a Key Employee is a participant in the Plan Year containing the Determination Date or any of the four preceding Plan Years, and each other plan of the Employer which enables any plan in which a Key Employee participates to meet the requirements of Code Sections 401(a)(4) or 410, will be required to be aggregated. Such group shall be known as a Required Aggregation Group. In the case of a Required Aggregation Group, each plan in the group will be considered a Top Heavy Plan if the Required Aggregation Group is a Top Heavy Group. No plan in the Required Aggregation Group will be considered a Top Heavy Plan if the Required Aggregation Group is not a Top Heavy Group. (2) Permissive Aggregation Group: The Employer may also include any other plan not required to be included in the Required Aggregation Group, provided the resulting group, taken as a whole, would continue to satisfy the provisions of Code Sections 401(a)(4) and 410. Such group shall be known as a Permissive Aggregation Group. In the case of a Permissive Aggregation Group, only a plan that is part of the Required Aggregation Group will be considered a Top Heavy Plan if the Permissive Aggregation Group is a Top Heavy Group. No plan in the Permissive Aggregation Group will be considered a Top Heavy Plan if the Permissive Aggregation Group is not a Top Heavy Group. (3) Only those plans of the Employer in which the Determination Dates fall within the same calendar year shall be aggregated in order to determine whether such plans are Top Heavy Plans. (4) An Aggregation Group shall include any terminated plan of the Employer if it was maintained within the last five (5) years ending on the Determination Date. (e) "Determination Date" means (a) the last day of the preceding Plan Year, or (b) in the case of the first Plan Year, the last day of such Plan Year. (f) Present Value of Accrued Benefit: In the case of a defined benefit plan, the Present Value of Accrued Benefit for a Participant other than a Key Employee shall be as determined using the single accrual method used for all plans of the Employer, or if no such single method exists, using a method which results in benefits accruing not more rapidly than the slowest accrual rate permitted under Code Section 411(b)(1)(C). The determination of the Present Value of Accrued Benefit shall be determined as of the most recent valuation date that falls within or ends with the 12-month period ending on the 16 18 Determination Date except as provided in Code Section 416 and the Regulations thereunder for the first and second plan years of a defined benefit plan. (g) "Top Heavy Group" means an Aggregation Group in which, as of the Determination Date, the sum of: (1) the Present Value of Accrued Benefits of Key Employees under all defined benefit plans included in the group, and (2) the Aggregate Accounts of Key Employees under all defined contribution plans included in the group, exceeds sixty percent (60%) of a similar sum determined for all Participants. 2.3 Powers and Responsibilities of the Employer (a) The Employer shall be empowered to appoint and remove the Trustee and the Administrator from time to time as it deems necessary for the proper administration of the Plan to assure that the Plan is being operated for the exclusive benefit of the Participants and their Beneficiaries in accordance with the terms of the Plan, the Code, and the Act. (b) The Employer shall establish a "funding policy and method," i.e., it shall determine whether the Plan has a short run need for liquidity (e.g., to pay benefits) or whether liquidity is a long run goal and investment growth (and stability of same) is a more current need, or shall appoint a qualified person to do so. The Employer or its delegate shall communicate such needs and goals to the Trustee, who shall coordinate such Plan needs with its investment policy. The communication of such a "funding policy and method" shall not, however, constitute a directive to the Trustee as to investment of the Trust Funds. Such "funding policy and method" shall be consistent with the objectives of this Plan and with the requirements of Title I of the Act. (c) The Employer may in its discretion appoint an Investment Manager to manage all or a designated portion of the assets of the Plan. In such event, the Trustee shall follow the written directives of the Investment Manager in investing the assets of the Plan managed by the Investment Manager. (d) The Employer shall periodically review the performance of any Fiduciary or other person to whom duties have been delegated or allocated by it under the provisions of this Plan or pursuant to procedures established hereunder. This requirement may be satisfied by formal periodic review by the Employer or by a qualified person specifically designated by the Employer, through day-to-day conduct and evaluation, or through other appropriate ways. 17 19 2.4 Assignment and Designation of Administrative Authority Any person, including, but not limited to, the Employees of the Employer, shall be eligible to serve as an Administrator. The Employer shall notify the Trustee of the name or names of the persons authorized to act as Administrator of the Plan. An Administrator may resign by delivering his written resignation to the Employer or be removed by the Employer by delivery of written notice of removal, to take effect at a date specified therein, or upon delivery to the Administrator if no date is specified. Until notified by the Employer that a person or persons is no longer the Administrator, the Trustee may continue to rely on the authority of such person. The Employer, upon the resignation or removal of an Administrator, shall promptly designate in writing a successor to this position. If the Employer does not appoint an Administrator, the Employer will function as the Administrator. 2.5 Allocation and Delegation of Responsibilities If more than one person is appointed as Administrator, the responsibilities of each Administrator may be specified by the Employer and accepted in writing by each Administrator. Promptly upon receipt of such written acceptance, the Employer shall notify the Trustee of the responsibilities of each Administrator. In the event that no such delegation is made by the Employer, the Administrators may allocate the responsibilities among themselves, in which event the Administrators shall notify the Employer and the Trustee in writing of such action and specify the responsibilities of each Administrator. The Trustee thereafter shall accept and rely upon any documents executed by the appropriate Administrator until such time as the Employer or the Administrators file with the Trustee a written revocation of such designation. 2.6 Powers and Duties of the Administrator The primary responsibility of the Administrator is to administer the Plan for the exclusive benefit of the Participants and their Beneficiaries, subject to the specific terms of the Plan. The Administrator shall administer the Plan in accordance with its terms and shall have the power to determine all questions arising in connection with the administration, interpretation, and application of the Plan. Any such determination by the Administrator shall be conclusive and binding upon all persons; provided however, all determinations with regard to the Trustee shall be made by the Employer. The Administrator may establish procedures, correct any defect, supply any information, or reconcile any inconsistency in such manner and to such extent as shall be deemed necessary or advisable to carry out the purpose of the Plan; provided, however, that any procedure, discretionary act, interpretation or construction shall be done in a nondiscriminatory manner based upon uniform principles consistently applied and shall be consistent with the intent that the Plan shall continue to be deemed a qualified plan under the terms of Code Section 401(a), and shall comply with the terms of the Act and all regulations issued pursuant thereto. The Administrator shall have all powers necessary or appropriate to accomplish his duties under this Plan. The Administrator shall be charged with the duties of the general administration of the Plan, including, but not limited to, the following: 18 20 (a) to determine all questions relating to the eligibility of Employees to participate or remain a Participant hereunder; (b) to compute, certify, and direct the Trustee with respect to the amount and the kind of benefits to which any Participant shall be entitled hereunder; (c) to authorize and direct the Trustee with respect to all nondiscretionary or otherwise directed disbursements from the Trust; (d) to maintain all necessary records for the administration of the Plan; (e) to interpret the provisions of the Plan and to make and publish such rules for regulation of the Plan as are consistent with the terms hereof; (f) to determine the size and type of any Contract to be purchased from any insurer, and to designate the insurer from which such Contract shall be purchased; (g) to compute and certify to the Employer and to the Trustee from time to time the sums of money necessary or desirable to be contributed to the Trust Fund; (h) to consult with the Employer and the Trustee regarding the short and long-term liquidity needs of the Plan in order that the Trustee can exercise any investment discretion in a manner designed to accomplish specific objectives; (i) to assist any Participant regarding his rights, benefits, or elections available under the Plan. 2.7 Records and Reports The Administrator shall keep a record of all actions taken and shall keep all other books of account, records, and other data that may be necessary for proper administration of the Plan and shall be responsible for supplying all information and reports to the Internal Revenue Service, Department of Labor, Participants, Beneficiaries and others as required by law. 2.8 Appointment of Advisers The Administrator or the Trustee may appoint counsel, specialists, advisers, and other persons as the Administrator or the Trustee deems necessary or desirable in connection with the administration of this Plan. 2.9 Information from Employer To enable the Administrator to perform his functions, the Employer shall supply full and timely information to the Administrator on all matters relating to the Compensation of all Participants, their Hours of Service, their Years of Service, their retirement, death, disability, or termination of employment, and such other pertinent facts as the Administrator may require; and the Administrator shall advise the Trustee of such of the foregoing facts as may be pertinent to 19 21 the Trustee's duties under the Plan. The Administrator may rely upon such information as is supplied by the Employer and shall have no duty or responsibility to verify such information. 2.10 Payment of Expenses All expenses of administration may be paid out of the Trust Fund unless paid by the Employer. Such expenses shall include any expenses incident to the functioning of the Administrator, including, but not limited to, fees of accountants, counsel, and other specialists and their agents, and other costs of administering the Plan. Until paid, the expenses shall constitute a liability of the Trust Fund. However, the Employer may reimburse the Trust Fund for any administration expense incurred. Any administration expense paid to the Trust Fund as a reimbursement shall not be considered an Employer contribution. 2.11 Majority Actions Except where there has been an allocation and delegation of administrative authority pursuant to Section 2.5, if there shall be more than one Administrator, they shall act by a majority of their number, but may authorize one or more of them to sign all papers on their behalf. 2.12 Claims Procedure Claims for benefits under the Plan may be filed with the Administrator on forms supplied by the Employer. Written notice of the disposition of a claim shall be furnished to the claimant within 90 days after the application is filed. In the event the claim is denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Plan shall be cited, and, where appropriate, an explanation as to how the claimant can perfect the claim will be provided. In addition, the claimant shall be furnished with an explanation of the Plan's claims review procedure. 2.13 Claims Review Procedure Any Employee, former Employee, or Beneficiary of either, who has been denied a benefit by a decision of the Administrator pursuant to Section 2.12 shall be entitled to request the Administrator to give further consideration to his claim by filing with the Administrator (on a form which may be obtained from the Administrator) a request for a hearing. Such request, together with a written statement of the reasons why the claimant believes his claim should be allowed, shall be filed with the Administrator no later than 60 days after receipt of the written notification provided for in Section 2.12. The Administrator shall then conduct a hearing within the next 60 days, at which the claimant may be represented by an attorney or any other representative of his choosing and at which the claimant shall have an opportunity to submit written and oral evidence and arguments in support of his claim. At the hearing (or prior thereto upon 5 business days written notice to the Administrator) the claimant or his representative shall have an opportunity to review all documents in the possession of the Administrator which are pertinent to the claim at issue and its disallowance. A final decision as to the allowance of the claim shall be made by the Administrator within 60 days of receipt of the appeal (unless there 20 22 has been an extension of 60 days due to special circumstances, provided the delay and the special circumstances occasioning it are communicated to the claimant within the 60 day period). Such communication shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision and specific references to the pertinent Plan provisions on which the decision is based. ARTICLE 3. ELIGIBILITY 3.1 Conditions of Eligibility Any Employee who has completed one (1) Year of Service and has reached his twenty-first (21st) birthday shall be eligible to participate hereunder as of the date he has satisfied such requirement. 3.2 Application for Participation In order to become a Participant hereunder, each Eligible Employee must make application to the Employer for participation in the Plan and agree to the terms hereof and properly authorize the Employer to make payroll deductions for Participant's contributions as provided in Section 4.1. Upon his participation in this Plan, such Employee shall automatically be bound by the terms and conditions of the Plan and all amendments hereto. 3.3 Effective Date of Participation An Employee who has become eligible to be a Participant shall become a Participant effective as of the Sunday next following the date such Employee met the eligibility requirements of Section 3.1 and applied for participation pursuant to Section 3.2, provided said Employee was still employed as of such date (or if not employed on such date, as of the date of rehire if a 1-Year Break in Service has not occurred). 3.4 Determination of Eligibility The Administrator shall determine the eligibility of each Employee for participation in the Plan based upon information furnished by the Employer. Such determination shall be conclusive and binding upon all persons, as long as the same is made in accordance with the Plan and the Act. Such determination shall be subject to review per Section 2.13. 3.5 Termination of Eligibility In the event a Participant shall go from a classification of an Eligible Employee to a noneligible Employee, such Participant shall become a Former Participant and shall continue to vest in his interest in the Plan for each Year of Service completed while a noneligible Employee, until such time as his Participant's Account shall be forfeited or distributed pursuant to the terms of the Plan. Additionally, his interest in the Plan shall continue to share in the earnings of the Trust Fund. 21 23 ARTICLE 4. CONTRIBUTION AND ALLOCATION 4.1 Employer Contribution (a) For each Plan Year, the Employer shall contribute to the Plan: (1) The amount of the total salary reduction elections of all Participants made pursuant to Section 4.2(a), which amount shall be deemed the Elective Contributions; plus (2) A contribution equal to 100% of each Participant's Elective Contribution, which amount shall be deemed the Matching Contribution. In applying the matching percentage in the previous sentence, only Elective Contributions up to 5% of Compensation shall be considered. (b) The Employer Contributions for any Plan Year, subject to the limitation provided above, shall not exceed the maximum amount allowable as a deduction to the Employer under the provisions of Code Section 404. (c) To the extent necessary to provide the top heavy minimum allocations as set forth in Section 4.5(j), the Employer shall make a contribution even if it exceeds the amount which is deductible under Code Section 404. 4.2 Participant's Salary Reduction Election (a) Each Participant may elect to defer from one percent (1%) to fifteen percent (15%) (in whole percentage points) of his Compensation subject to the limitations of this Section. The amount by which Compensation is reduced shall be that Participant's Deferred Compensation and shall be allocated to the Participant's Elective Account. Elections by Participants pursuant to this Section shall be effective as soon as administratively possible in relation to the payroll procedures of the Employer. (b) At any time during the Plan Year, a Participant may change his election as to the rate of Deferred Compensation upward or downward within the foregoing limitations, to be effective as of the first pay period following such change. A notice of election change shall be made in accordance with procedures established by the Administrator. (c) A Participant may temporarily suspend Elective Contributions under the Plan, as of the first day of any pay period without terminating his participation in the Plan, in accordance with procedures established by the Administrator. A Participant may resume Elective Contributions, specifying the first day of the pay period in which Elective Contributions are to resume, in accordance with procedures established by the Administrator. 22 24 (d) The balance in each Participant's Elective Account shall be fully Vested at all times and shall not be subject to forfeiture for any reason. (e) Amounts held in a Participant's Elective Account may not be distributable prior to the earlier of: (1) his separation from service, Total and Permanent Disability, or death; (2) his attainment of age 592; (3) termination of the Plan without establishment of a "successor plan," as that term is described in Regulation 1.401(k)-1(d)(3) by the Employer or an Affiliated Employer; (4) the date of the sale by the Employer to an entity that is not an Affiliated Employer of substantially all of the assets of an Employer's trade or business (within the meaning of Code Section 409(d)(2)) with respect to a Participant who continues employment with the corporation acquiring such assets; (5) the date of the sale by the Employer or an Affiliated Employer of substantially all of its interest in a subsidiary (within the meaning of Code Section 409(d)(3)) to an entity which is not an Affiliated Employer with respect to a Participant who continues employment with such subsidiary; or (6) proven financial hardship, subject to the limitations of Sections 4.2(h) and 7.14. (f) A Participant's Deferred Compensation made pursuant to this Plan and all other plans, contracts or arrangements of the Employer shall not exceed, during any taxable year of the Participant, the limitation imposed by Code Section 402(g), as in effect at the beginning of such taxable year. If such dollar limitation is exceeded, a Participant will be deemed to have notified the Administrator of such excess amount which shall be distributed in a manner consistent with Section 4.2(g). The dollar limitation shall be adjusted annually pursuant to the method provided in Code Section 415(d) in accordance with Regulations. (g) If a Participant's Deferred Compensation under this Plan together with any elective deferrals (as defined in Regulation 1.402(g)-1(b)) under another qualified cash or deferred arrangement (as defined in Code Section 401(k)), a simplified employee pension (as defined in Code Section 408(k)), a salary reduction arrangement (within the meaning of Code Section 3121(a)(5)(D)), a deferred compensation plan under Code Section 457, or a trust described in Code Section 501(c)(18) cumulatively exceed the limitation imposed by Code Section 402(g) (as adjusted annually in accordance with the method provided in Code Section 415(d) pursuant to Regulations) for such Participant's taxable year, the Participant may, not later than March 1 following the close of his taxable year, 23 25 notify the Administrator in writing of such excess and request that his Deferred Compensation under this Plan be reduced by an amount specified by the Participant. In such event, the Administrator may direct the Trustee to distribute such excess amount, and any income allocable to such amount, to the Participant not later than the first April 15th following the close of the Participant's taxable year. Any distribution of less than the entire amount of Excess Deferred Compensation and income shall be treated as a pro rata distribution of Excess Deferred Compensation and income. The amount distributed shall not exceed the Participant's Deferred Compensation under the Plan for the taxable year. Any distribution on or before the last day of the Participant's taxable year must satisfy each of the following conditions: (1) the distribution must be made after the date on which the Plan received the Excess Deferred Compensation; (2) the Participant shall designate the distribution as Excess Deferred Compensation; and (3) the Plan must designate the distribution as a distribution of Excess Deferred Compensation. Any distribution made pursuant to this Section 4.2(g) shall be made first from unmatched Deferred Compensation and, thereafter, simultaneously from Deferred Compensation which is matched and matching contributions which relate to such Deferred Compensation. (h) In the event a Participant has received a hardship distribution from his Participant's Elective Account pursuant to Section 7.14, or pursuant to Regulation 1.401(k)-1(d)(2)(iii)(B) from any other plan maintained by the Employer, then such Participant shall not be permitted to elect to have Deferred Compensation contributed to the Plan on his behalf until the first day of the calendar quarter following a period of twelve (12) months following the receipt of distribution. Furthermore, the dollar limitation under Code Section 402(g) shall be reduced, with respect to the Participant's taxable year following the taxable year in which the hardship distribution was made, by the amount of such Participant's Deferred Compensation, if any, pursuant to this Plan (and any other plan maintained by the Employer) for the taxable year of the hardship distribution. (i) The Employer and/or the Administrator shall adopt any procedures necessary to implement the salary reduction elections provided for herein. (j) All amounts allocated to a Participant's Elective Account shall be invested pursuant to Section 4.13. (k) In any case, where any of the foregoing provisions of this Section 4.2 are not in conformity with regulations of the Department of the Treasury that are from time 24 26 to time promulgated, the nonconforming provision may be amended retroactively to assure conformity. 4.3 Amount of Employer's Contribution The Employer shall determine the amount of contribution to be made to the Plan. In determining such contribution, the Employer shall be entitled to rely upon an estimate of the total Compensation for all Participants and the Participant's Elective Contributions. The Employer's determination of such contribution shall be binding on all Participants, the Employer, and the Trustee. The Trustee shall have no right or duty to inquire into the amount of the Employer's contribution or the method used in determining the amount of the Employer's contribution, but shall be accountable only for funds actually received by the Trustee. 4.4 Time of Payment of Employer's Contribution Employer contributions will be paid in cash or other property within the time prescribed by law, including extensions of time, for the filing of the Employer's federal income tax return for the Employer's fiscal year. Notwithstanding the foregoing, Employer contributions with respect to Non-Texas Residents shall be paid in cash. Property contributed to the Plan will be valued at its then fair market value. Employer Elective Contributions accumulated through payroll deductions shall be paid to the Trustee as of the earliest date on which such contributions can reasonably be segregated from the Employer's general assets, but in any event by the fifteenth (15th) business day of the month following the month in which such amounts would otherwise have been payable to the Participant in cash, unless such time period may be extended pursuant to regulations promulgated by the Department of Labor. The provisions of Department of Labor regulations 2510.3-102 are incorporated herein by reference. Furthermore, any additional Employer contributions which are allocable to the Participant's Elective Account for a Plan Year shall be paid to the Plan no later than the twelve-month period immediately following the close of such Plan Year. Notwithstanding the above, to the extent that the Plan has Current Obligations, the Employer's contribution will be paid to the Plan in cash in sufficient timely amounts to meet the terms of Current Obligations. 4.5 Allocation of Contribution, Earnings and Forfeitures (a) The Administrator shall establish and maintain certain accounts in the name of each Participant to which the Administrator shall credit all amounts allocated to each such Participant as hereafter set forth. However, the Administrator may separately account for that portion of each Participant's Account attributable to Top Heavy Plan Years and Non-Top Heavy Plan Years. (b) The Employer shall provide the Administrator with all information required by the Administrator to make a proper allocation of the Elective and Matching 25 27 Contributions for each Plan Year. Within 45 days after the date of receipt by the Administrator of such information, the Administrator shall allocate such contribution as follows: (1) With respect to the Elective Contribution made pursuant to Section 4.2, to each Participant's Elective Account in an amount equal to the Participant's Deferred Compensation for the year. (2) With respect to the Matching Contribution made pursuant to Section 4.1(a)(2), to each Participant's Matching Contribution Account in accordance with Section 4.1(a)(2). Except, however, a Participant who does not perform an Hour of Service on the last day of a calendar quarter shall not share in the Matching Contribution for that calendar quarter, unless required pursuant to Section 4.5(l). A Participant who is eligible to share in the Matching Contribution shall immediately be Vested in any such Matching Contribution allocated to his Account. (c) The Company Stock Account of each Participant will be credited with his allocable share of the Investment Funds, Company Stock (including fractional shares) purchased and paid for by the Participants or the Plan, with Forfeitures of Company Stock and with stock dividends on Company Stock held in his Company Stock Account. Company Stock acquired by the Plan with the proceeds of an Exempt Loan will only be allocated to each Participant's Company Stock Account upon release from the Unallocated Company Stock Suspense Account as provided in Section 4.5(g) herein. Company Stock acquired with the proceeds of an Exempt Loan will be an asset of the Trust Fund and maintained in the Unallocated Company Stock Suspense Account. Notwithstanding the foregoing, no Non-Texas Resident shall maintain a Company Stock Account. (d) Net Income (or loss) of the Trust Fund will be determined as of the last day of each calendar quarter. Net Income (or loss) of the Trust Fund shall be allocated in the same proportion that each Participant's and Former Participant's nonsegregated accounts (other than each Participant's and Former Participant's Company Stock Account) bear to the total of all Participants' and Former Participants' nonsegregated accounts (other than Participants' and Former Participants' Company Stock Account) as of such date. Each segregated account maintained on behalf of a Participant or Former Participant shall be credited or charged with its separate earnings and losses. Net Income (or Loss) does not include the interest paid under any installment contract for the purchase of Company Stock by the Trust Fund or on any loan used by the Trust Fund to purchase Company Stock, nor does it include income received by the Trust Fund with respect to Company Stock acquired with the proceeds of an Exempt Loan to the extent such income is used to repay the loan; all income received by the Trust Fund from Company Stock acquired with the proceeds of an Exempt Loan which have not been 26 28 allocated to a Participant's Company Stock Account shall be used to repay such loan until the loan is fully repaid. (e) The Administrator shall establish accounting procedures for the purpose of making the allocations, valuations and adjustments to Participants' Accounts provided for in this Section. Should the Administrator determine that the strict application of its accounting procedures will not result in an equitable and nondiscriminatory allocation among the Participants' Accounts, it may modify its procedures for the purpose of achieving an equitable and nondiscriminatory allocation in accordance with the general concepts of the Plan and the provisions of this Section, provided, however, that such adjustments to achieve equity shall not reduce the Vested portion of a Participant's Account. (f) Separate accounts shall be maintained for all inactive Participants who have a Vested interest in the Plan. Such separate accounts shall not require a segregation of the Plan assets and no Participant shall acquire any right to or interest in any specific asset of the Trust as a result of the allocations provided for in the Plan. All allocations will be made as of the Anniversary Date referred to in this Section. (g) All Company Stock acquired by the Plan with the proceeds of an Exempt Loan must be added to and maintained in the Unallocated Company Stock Suspense Account. Such Company Stock shall be released and withdrawn from that account as if all Company Stock in that account were encumbered. For each Plan Year during the duration of the loan, the number of shares of Company Stock released shall equal the number of encumbered shares held immediately before release for the current Plan Year multiplied by a fraction, the numerator of which is the amount of principal paid for the Plan Year and the denominator of which is the sum of the numerator plus the principal to be paid for all future Plan Years. As of each Anniversary Date, the Plan must consistently allocate to each Participant's Account, non-monetary units (shares and fractional shares of Company Stock) representing each Participant's interest in assets withdrawn from the Unallocated Company Stock Suspense Account. Income earned with respect to Company Stock in the Unallocated Company Stock Suspense Account shall be used to repay the Exempt Loan used to purchase such Company Stock. Any income which is not so used must be allocated as income of the Plan. (h) Cash dividends on shares of Company Stock allocable to Participants' Accounts may be paid to Participants, as determined in the sole discretion of the Administrator, within 90 days after the close of the Plan Year in which the dividend is paid. (i) As of each Anniversary Date any amounts which became Forfeitures since the last Anniversary Date shall first be made available to reinstate previously forfeited account balances of Former Participants, if any, in accordance with Section 7.4(d). The remaining Forfeitures, if any, shall be allocated among the Participants' Accounts of those Participants who are actively contributing to this Plan as of the Anniversary Date 27 29 and each other Participant who retired during the Plan Year ending on such Anniversary Date under Section 7.1 in the same proportion that each such Participant's Compensation for the Plan Year bears to the total Compensation of all such Participants for the Plan Year. Provided, however, that in the event the allocation of Forfeitures provided herein shall cause the "annual addition" (as defined in Section 4.10) to any Participant's Account to exceed the amount allowable by the Code, the excess shall be reallocated in accordance with Section 4.11. Except, however, a Participant who performs less than a Year of Service during any Plan Year shall not share in the Plan Forfeitures for that year, unless required pursuant to Section 4.5(l) or unless such Participant retires during the Plan Year. (j) Minimum Allocations Required for Top Heavy Plan Years: Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of the Employer's contributions and Forfeitures allocated to the Participant's Account of each Non-Key Employee shall be equal to at least three percent (3%) of such Non-Key Employee's "415 Compensation." However, if (i) the sum of the Employer's contributions and Forfeitures allocated to the Participant's Account of each Key Employee for such Top Heavy Plan Year is less than three percent (3%) of each Key Employee's "415 Compensation" and (ii) this Plan is not required to be included in an Aggregation Group to enable a defined benefit plan to meet the requirements of Code Section 401(a)(4) or 410, the sum of the Employer's contributions and Forfeitures allocated to the Participant's Account of each Non-Key Employee shall be equal to the largest percentage allocated to the Participant's Account of each Key Employee. Except, however, no such minimum allocation shall be required in this Plan for any Non-Key Employee who participates in another defined contribution plan subject to Code Section 412 providing such benefits included with this Plan in a Required Aggregation Group. (k) For purposes of the minimum allocations set forth above, the percentage allocated to the Participant's Account of any Key Employee shall be equal to the ratio of the sum of the Employer's contribution and Forfeitures allocated on behalf of such Key Employee divided by the "415 Compensation" for such Key Employee. (l) For any Top Heavy Plan Year, the minimum allocations set forth above shall be allocated to the Participant's Account of all Non-Key Employees who are Participants and who are employed by the Employer on the last day of the Plan Year, including Non-Key Employees who have (1) failed to complete a Year of Service; (2) declined to make mandatory contributions (if required) to the Plan; and (3) been excluded from participation because of their level of Compensation. (m) In lieu of the above, if a Non-Key Employee participates in this Plan and a defined benefit pension plan included in a Required Aggregation Group which is top heavy, a minimum allocation of five percent (5%) of "415 Compensation" shall be provided under this Plan. 28 30 The extra minimum allocation (required by Section 4.10(n) to provide higher limitations) will not be provided. (n) For the purposes of this Section, "415 Compensation" shall be as defined in Section 4.10(d). (o) Any Participant who terminated employment during the Plan Year for any reason including death, Total and Permanent Disability or retirement, shall share only in the allocations of earnings or losses as provided in this Section. However, if any non-segregated account of a Participant has been distributed prior to the subsequent Anniversary Date or other valuation date, no earnings and losses shall be credited. (p) If a Former Participant is reemployed after five (5) consecutive 1-Year Breaks in Service, then separate accounts shall be maintained as follows: (1) one account for nonforfeitable benefits attributable to pre-break service; and (2) one account representing his status in the Plan attributable to post-break service. 4.6 Actual Deferral Percentage Tests (a) For each Plan Year, the annual allocation derived from Elective Contributions to a Participant's Elective Account shall satisfy one of the following tests: (1) The "Actual Deferral Percentage" for the Highly Compensated Participant group shall not be more than the "Actual Deferral Percentage" of the Non-Highly Compensated Participant group multiplied by 1.25, or (2) The excess of the "Actual Deferral Percentage" for the Highly Compensated Participant group over the "Actual Deferral Percentage" for the Non-Highly Compensated Participant group shall not be more than two percentage points. Additionally, the "Actual Deferral Percentage" for the Highly Compensated Participant group shall not exceed the "Actual Deferral Percentage" for the Non-Highly Compensated Participant group multiplied by 2. The provisions of Code Section 401(k)(3) and Regulation 1.401(k)-1(b) are incorporated herein by reference. Notwithstanding the foregoing, for each Plan Year beginning after December 31, 1996, the annual allocation derived from Elective Contributions to a Participant's Elective Account shall satisfy one of the following tests: (1) The "Actual Deferral Percentage" for the Highly Compensated Participant group for the Plan Year being tested shall not be more than the "Actual 29 31 Deferral Percentage" of the Non-Highly Compensated Participant group for the previous Plan Year multiplied by 1.25, or (2) The excess of the "Actual Deferral Percentage" for the Highly Compensated Participant group for the Plan Year being tested over the "Actual Deferral Percentage" for the Non-Highly Compensated Participant group for the previous Plan Year shall not be more than two percentage points. Additionally, the "Actual Deferral Percentage" for the Highly Compensated Participant group for the Plan Year being tested shall not exceed the "Actual Deferral Percentage" for the Non-Highly Compensated Participant group for the previous Plan Year multiplied by 2. The provisions of Code Section 401(k)(3) and Regulation 1.401(k)-1(b) are incorporated herein by reference. For purposes of this Section, the individuals taken into account in determining the Actual Deferral Percentage for the Non-Highly Compensated Participant group for the previous Plan Year shall be those individuals who were Non-Highly Compensated Participants during the previous Plan Year, without regard to the individuals' status in the current Plan Year. For Plan Years beginning after December 31, 1996, the Employer may elect to apply the limit under this Section based on the "Actual Deferral Percentage" for the Non-Highly Compensated Participant group for the Plan Year being tested rather than the previous Plan Year, but if the Employer so elects, such election may not be changed except as provided by the Secretary of Treasury. In the case of the first Plan Year beginning after December 31, 1996 for which this Plan provides for Elective Contributions, the "Actual Deferral Percentage" for the Non-Highly Compensated Participant group for the previous Plan Year shall be (i) three percent (3%), or (ii) if the Employer elects, the "Actual Deferral Percentage" for the Non-Highly Compensated Participant group determined for such Plan Year. To prevent the multiple use of the alternate method described in (2) above and in Code Section 401(m)(9)(A), any Highly Compensated Participant eligible to make Elective Contributions pursuant to Section 4.2 and to make Employee contributions or to receive matching contributions under this Plan or under any other plan maintained by the Employer or an Affiliated Employer shall have his actual contribution ratio reduced pursuant to Regulation 1.401(m)-2, the provisions of which are incorporated herein by reference. (b) For the purposes of this Section, "Actual Deferral Percentage" means, with respect to the Highly Compensated Participant group and Non-Highly Compensated Participant group for a Plan Year, the average of the ratios, calculated separately for each Employee in such group, of the amount of Elective Contributions allocated to each Participant's Elective Account for such Plan Year, to such Employee's "414(s) Compensation" for such Plan Year. The actual deferral ratio for each Employee and the "Actual Deferral Percentage" for each group shall be calculated to the nearest one- 30 32 hundredth of one percent. Employer Elective Contributions allocated to each Non-Highly Compensated Participant's Elective Account shall be reduced by Excess Deferred Compensation to the extent such excess amounts are made under this Plan or any other plan maintained by the Employer. (c) For the purposes of Sections 4.6(a) and 4.7, a Highly Compensated Participant and a Non-Highly Compensated Participant shall include any Employee eligible to make a deferral election pursuant to Section 4.2, whether or not such deferral election was made or suspended pursuant to Section 4.2. (d) For the purposes of this Section and Code Sections 401(a)(4), 410(b) and 401(k), if two or more plans that include cash or deferred arrangements are considered one plan for the purposes of Code Section 401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii)), the cash or deferred arrangements included in such plans shall be treated as one arrangement. In addition, two or more cash or deferred arrangements may be considered as a single arrangement for purposes of determining whether or not such arrangements satisfy Code Sections 401(a)(4), 410(b) and 401(k). In such a case, the cash or deferred arrangements included in such plans and the plans including such arrangements shall be treated as one arrangement and as one plan for purposes of this Section and Code Sections 401(a)(4), 410(b) and 401(k). Plans may be aggregated under this paragraph (d) only if they have the same plan year. Notwithstanding the above, an ESOP or the ESOP portion of this Plan may not be combined with the non-ESOP portion of this Plan for purposes of determining whether the ESOP or this Plan satisfies this Section and Code Sections 401(a)(4), 410(b) and 401(k). (e) For the purposes of this Section, if a Highly Compensated Participant is a participant under two (2) or more cash or deferred arrangements (other than a cash or deferred arrangement that is part of an ESOP) of the Employer or an Affiliated Employer, all such cash or deferred arrangements shall be treated as one (1) cash or deferred arrangement for the purpose of determining the deferral percentage with respect to such Highly Compensated Participant. However, if the cash or deferred arrangements have different Plan Years, this paragraph shall be applied by treating all cash or deferred arrangements ending with or within the same calendar year as a single arrangement. (f) Notwithstanding the above, the determination and treatment of Elective Contributions and the "Actual Deferral Percentage" of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 4.7 Adjustment to Actual Deferral Percentage Tests In the event that the initial allocations of the Elective Contributions made pursuant to Section 4.2 do not satisfy one of the tests set forth in Section 4.6(a), the Administrator shall adjust the Elective Contribution pursuant to the options set forth below: 31 33 (1) On or before the 15th day of the third month following the end of each Plan Year, the Highly Compensated Participant having the highest actual deferral ratio shall have his portion of Excess Contributions (as defined below) (and any income allocable to such portion) distributed to him until one of the tests set forth in Section 4.6(a) is satisfied, or until his actual deferral ratio equals the actual deferral ratio of the Highly Compensated Participant having the second highest actual deferral ratio. This process continues until one of the tests set forth in Section 4.6(a) is satisfied. For each Highly Compensated Participant, the amount of Excess Contributions is equal to the Elective Contributions made on behalf of such Highly Compensated Participant (determined prior to the application of this paragraph) minus the amount determined by multiplying the Highly Compensated Participant's actual deferral ratio (determined after application of this paragraph) by his Compensation. (2) For Plan Years beginning after December 31, 1996, this paragraph (2) shall apply in the place of paragraph (1). On or before the 15th day of the third month following the end of each Plan Year, Excess Contributions (as defined below) shall be distributed to Highly Compensated Participants in accordance with the following procedure: (i) The dollar amount of Excess Contributions for each Highly Compensated Participant shall be calculated. For this purpose, the amount of Excess Contributions for a Highly Compensated Participant for a Plan Year is the amount (if any) by which the employee's Elective Contributions must be reduced for the employee's actual deferral ratio to equal the highest permitted actual deferral ratio under the Plan. To calculate the highest permitted actual deferral ratio under the Plan, the actual deferral ratio of the Highly Compensated Participant with the highest actual deferral ratio is reduced by the amount required to cause the employee's actual deferral ratio to equal the percentage of the Highly Compensated Participant with the next highest actual deferral ratio. If a lesser reduction would enable the Plan to satisfy one of the tests under Section 4.6(a), only this lesser reduction may be made. This process is repeated until the Plan satisfies one of the tests under Section 4.6(a). The highest actual deferral ratio remaining under the Plan after the leveling is the highest permitted actual deferral ratio. (ii) The total dollar amounts calculated under (i) above shall be determined. Such total amount shall be distributed in accordance with (iii) and (iv) below. (iii) The Elective Contributions of the Highly Compensated Participant with the highest dollar amount of Elective Contributions shall be reduced by the amount required to cause that Highly Compensated 32 34 Participant's Elective Contributions to equal the dollar amount of the Elective Contributions of the Highly Compensated Participant with the next highest dollar amount of Elective Contributions. Such amount shall be distributed to the Highly Compensated Participant with the highest dollar amount of Elective Contributions. If more than one Highly Compensated Participant has the highest dollar amount of Elective Contributions, such amount shall be distributed equally to such Highly Compensated Participants. However, if a lesser reduction, when added to the total dollar amount already distributed under this paragraph (iii), would equal the amount determined under paragraph (ii), only the lesser reduction amount shall be distributed. (iv) If the total amount distributed after the application of paragraph (iii) is less than the amount determined under paragraph (ii), the application of paragraph (iii) shall be repeated. In determining the amount of Excess Contributions to be distributed with respect to an affected Highly Compensated Participant as determined herein, such amount shall be reduced by any Excess Deferred Compensation previously distributed to such affected Highly Compensated Participant for his taxable year ending with or within such Plan Year. If there is a loss allocable to such excess amount, the distribution shall in no event be less than the lesser of the Participant's Elective Account or the Participant's Deferred Compensation for the Plan Year. (3) With respect to the distribution of Excess Contributions pursuant to this paragraph (a), such distribution: (i) may be postponed, but not later than the close of the Plan Year following the Plan Year to which they are allocable; (ii) shall be made simultaneously from Deferred Compensation and matching contributions which relate to such Deferred Compensation; (iii) shall be adjusted for income; and (iv) shall be designated by the Employer as a distribution of Excess Contributions (and income). (4) Any distribution of less than the entire amount of Excess Contributions shall be treated as a pro rata distribution of Excess Contributions and income. (b) Within twelve (12) months after the end of the Plan Year, if necessary, the Employer may make a special Qualified Non-Elective Contribution on behalf of Non-Highly Compensated Participants in an amount sufficient to satisfy one of the tests set forth in Section 4.6(a). Such contribution shall be allocated to the Participant's Elective 33 35 Account of each Non-Highly Compensated Participant in the same proportion that each Non-Highly Compensated Participant's Compensation for the year bears to the total Compensation of all Non-Highly Compensated Participants. (c) If during a Plan Year the projected aggregate amount of Elective Contributions to be allocated to all Highly Compensated Participants under this Plan would, by virtue of the tests set forth in Section 4.6(a), cause the Plan to fail such tests, then the Administrator may automatically reduce proportionately or in the order provided in Section 4.7(a) each affected Highly Compensated Participant's deferral election made pursuant to Section 4.2 by an amount necessary to satisfy one of the tests set forth in Section 4.6(a). 4.8 Maximum Contribution Percentage - Section 401(m) Test (a) For each Plan Year, the "Actual Contribution Percentage" for the Highly Compensated Participant group shall not exceed the greater of: (1) 125 percent of such percentage for the Non-Highly Compensated Participant group; or (2) the lesser of 200 percent of such percentage for the Non-Highly Compensated Participant group, or such percentage for the Non-Highly Compensated Participant group plus 2 percentage points. Notwithstanding the foregoing, for each Plan Year beginning after December 31, 1996, the "Actual Contribution Percentage" for the Highly Compensated Participant group shall not exceed the greater of: (1) 125 percent of such percentage for the Non-Highly Compensated Participant group for the previous Plan Year; or (2) the lesser of 200 percent of such percentage for the Non-Highly Compensated Participant group for the previous Plan Year, or such percentage for the Non-Highly Compensated Participant group for the previous Plan Year plus 2 percentage points. For purposes of this Section, the individuals taken into account in determining the Actual Contribution Percentage for the Non-Highly Compensated Participant group for the previous Plan Year shall be those individuals who were Non-Highly Compensated Participants during the previous Plan Year, without regard to the individuals' status in the current Plan Year. The Employer may elect to apply the limit under this Section based on the "Actual Contribution Percentage" for the Non-Highly Compensated Participant group for the Plan Year being tested rather than the previous Plan Year, but if the Employer so elects, such election may not be changed except as provided by the Secretary of Treasury. 34 36 To prevent the multiple use of the alternative method described in (2) above and Code Section 401(m)(9)(A), any Highly Compensated Participant eligible to make elective deferrals under any cash or deferred arrangement maintained by the Employer and to make Employee contributions or to receive matching contributions under this Plan or any other plan maintained by the Employer shall have his actual contribution ratio reduced pursuant to Regulation 1.401(m)-2. The provisions of Code Section 401(m) and Regulations 1.401(m)-1(b) and 1.401(m)-2 are incorporated herein by reference. (b) For the purposes of this Section and Section 4.9, "Actual Contribution Percentage" for a Plan Year means, with respect to the Highly Compensated Participant group and Non-Highly Compensated Participant group, the average of the ratios (calculated separately for each Participant in each group) of: (1) the sum of Matching Contributions made pursuant to Section 4.1(a)(2) (and, for Plan Years beginning prior to April 1, 1997, Employee contributions) (collectively, "Aggregate Contributions") on behalf of each such Participant for such Plan Year; to (2) the Participant's "414(s) Compensation" for such Plan Year. (c) For purposes of determining the "Actual Contribution Percentage" and the amount of Excess Aggregate Contributions pursuant to Section 4.9(d), only Matching Contributions (and, for Plan Years beginning prior to April 1, 1997, Employee contributions) contributed to the Plan prior to the end of the succeeding Plan Year shall be considered. In addition, the Administrator may elect to take into account, with respect to Employees eligible to have Matching Contributions pursuant to Section 4.1(a)(2) allocated to their accounts, elective deferrals (as defined in Regulation 1.402(g)-1(b)) and qualified non-elective contributions (as defined in Code Section 401(m)(4)(C)) contributed to any plan maintained by the Employer. Such elective deferrals and qualified non-elective contributions shall be treated as Employer contributions subject to Regulation 1.401(m)-1(b)(5) which is incorporated herein by reference. However, the Plan Year must be the same as the plan year of the plan to which the elective deferrals and the qualified non-elective contributions are made. (d) For purposes of this Section and Code Sections 401(a)(4), 410(b) and 401(m), if two or more plans of the Employer to which matching contributions, Employee contributions, or both, are made are treated as one plan for purposes of Code Sections 401(a)(4) or 410(b) (other than the average benefits test under Code Section 410(b)(2)(A)(ii), such plans shall be treated as one plan. In addition, two or more plans of the Employer to which matching contributions, Employee contributions, or both, are made may be considered as a single plan for purposes of determining whether or not such plans satisfy Code Sections 401(a)(4), 410(b) and 401(m). In such a case, the aggregated plans must satisfy this Section and Code Sections 401(a)(4), 410(b) and 401(m) as though such aggregated plans were a single plan. Plans may be aggregated under this paragraph only if they have the same plan year. 35 37 Notwithstanding the above, an ESOP or the ESOP portion of this Plan may not be combined with the non-ESOP portion of this Plan for purposes of determining whether the ESOP or this Plan satisfies this Section and Code Sections 401(a)(4), 410(b) and 401(m). (e) If a Highly Compensated Participant is a participant under two or more plans which are maintained by the Employer to which matching contributions, Employee contributions, or both, are made, all such contributions on behalf of such Highly Compensated Participant shall be aggregated for purposes of determining such Highly Compensated Participant's actual contribution ratio. However, if the plans have different plan years, this paragraph shall be applied by treating all plans ending with or within the same calendar year as a single plan. For purposes of this paragraph, contributions under a plan that is an ESOP may not be aggregated with contributions under a plan that is not an ESOP. (f) For purposes of Sections 4.8(a) and 4.9, a Highly Compensated Participant and Non-Highly Compensated Participant shall include any Employee eligible to have Matching Contributions made pursuant to Section 4.1(a)(2) allocated to his account for the Plan Year. 4.9 Adjustment to Actual Contribution Percentage Tests (a) In the event that the "Actual Contribution Percentage" for the Highly Compensated Participant group exceeds the "Actual Contribution Percentage" for the Non-Highly Compensated Participant group pursuant to Section 4.8(a), the Administrator (on or before the fifteenth day of the third month following the end of the Plan Year, but in no event later than the close of the following Plan Year) shall direct the Trustee to distribute to the Highly Compensated Participant having the highest actual contribution ratio his Excess Aggregate Contributions (and income allocable to such contributions) until either one of the tests set forth in Section 4.8(a) is satisfied, or until his actual contribution ratio equals the actual contribution ratio of the Highly Compensated Participant having the second highest actual contribution ratio. This process shall continue until one of the tests set forth in Section 4.8(a) is satisfied. In lieu of the previous paragraph, for Plan Years beginning after December 31, 1996, in the event that the "Actual Contribution Percentage" for the Highly Compensated Participant group exceeds the "Actual Contribution Percentage" for the Non-Highly Compensated Participant group pursuant to Section 4.8(a), the Administrator (on or before the fifteenth day of the third month following the end of the Plan Year, but in no event later than the close of the following Plan Year) shall direct the Trustee to distribute Excess Aggregate Contributions in accordance with the following procedure: (1) The dollar amount of Excess Aggregate Contributions for each Highly Compensated Participant shall be calculated. For this purpose, the amount of Excess Aggregate Contributions for a Highly Compensated Participant for a Plan Year is the amount (if any) by which the employee's Aggregate 36 38 Contributions must be reduced for the employee's actual contribution ratio to equal the highest permitted actual contribution ratio under the Plan. To calculate the highest permitted actual contribution ratio under the Plan, the actual contribution ratio of the Highly Compensated Participant with the highest actual contribution ratio is reduced by the amount required to cause the employee's actual contribution ratio to equal the percentage of the Highly Compensated Participant with the next highest actual contribution ratio. If a lesser reduction would enable the Plan to satisfy one of the tests under Section 4.8(a), only this lesser reduction may be made. This process is repeated until the Plan satisfies one of the tests under Section 4.8(a). The highest actual contribution ratio remaining under the Plan after the leveling is the highest permitted actual contribution ratio. (2) The total dollar amounts calculated under (1) above shall be determined. Such total amount shall be distributed in accordance with (3) and (4) below. (3) The Aggregate Contributions of the Highly Compensated Participant with the highest dollar amount of Aggregate Contributions shall be reduced by the amount required to cause that Highly Compensated Participant's Aggregate Contributions to equal the dollar amount of the Aggregate Contributions of the Highly Compensated Participant with the next highest dollar amount of Aggregate Contributions. Such amount shall be distributed to the Highly Compensated Participant with the highest dollar amount of Aggregate Contributions. If more than one Highly Compensated Participant has the highest dollar amount of Aggregate Contributions, such amount shall be distributed equally to such Highly Compensated Participants. However, if a lesser reduction, when added to the total dollar amount already distributed under this paragraph (3), would equal the amount determined under paragraph (2), only the lesser reduction amount shall be distributed. (4) If the total amount distributed after the application of paragraph (3) is less than the amount determined under paragraph (2), the application of paragraph (3) shall be repeated. (b) Any distribution of less than the entire amount of Excess Aggregate Contributions (and income) shall be treated as a pro rata distribution of Excess Aggregate Contributions and income thereon. Distribution of Excess Aggregate Contributions shall be designated by the Employer as a distribution of Excess Aggregate Contributions (and income). (c) Excess Aggregate Contributions shall be treated as Employer contributions for purposes of Code Sections 404 and 415 even if distributed from the Plan. 37 39 (d) For each Highly Compensated Participant, the amount of Excess Aggregate Contributions is equal to the Matching Contributions made pursuant to Section 4.1(a)(2) (and, for Plan Years beginning prior to April 1, 1997, Employee contributions) and any qualified non-elective contributions or elective deferrals taken into account pursuant to Section 4.8(c) on behalf of the Highly Compensated Participant (determined prior to the application of this paragraph) minus the amount determined by multiplying the Highly Compensated Participant's actual contribution ratio (determined after application of this paragraph) by his "414(s) Compensation." The actual contribution ratio must be rounded to the nearest one-hundredth of one percent. In no case shall the amount of Excess Aggregate Contribution with respect to any Highly Compensated Participant exceed the amount of Matching Contributions and any qualified non-elective contributions or elective deferrals taken into account pursuant to Section 4.8(c) on behalf of the Highly Compensated Participant for such Plan Year. (e) If during a Plan Year the projected aggregate amount of Matching Contributions to be allocated to all Highly Compensated Participants under this Plan would, by virtue of the tests set forth in Section 4.8(a), cause the Plan to fail such tests, then the Administrator may automatically reduce proportionately or in the order provided in Section 4.9(a) each affected Highly Compensated Participant's projected share of such contributions by an amount necessary to satisfy one of the tests set forth in Section 4.8(a). (f) Notwithstanding the above, within twelve (12) months after the end of the Plan Year, the Employer may make a special Qualified Non-Elective Contribution on behalf of Non-Highly Compensated Participants in an amount sufficient to satisfy one of the tests set forth in Section 4.8(a). Such contribution shall be allocated to the Participant's Elective Account of each Non-Highly Compensated Participant in the same proportion that each Non-Highly Compensated Participant's Compensation for the year bears to the total Compensation of all Non-Highly Compensated Participants. A separate accounting shall be maintained for the purpose of excluding such contributions from the "Actual Deferral Percentage" tests pursuant to Section 4.6(a). 4.10 Maximum Annual Additions (a) Notwithstanding the foregoing, the maximum "annual additions" credited to a Participant's accounts for any "limitation year" shall equal the lesser of: (1) $30,000 (or, if greater, one-fourth of the dollar limitation in effect under Code Section 415(b)(1)(A)) or (2) twenty-five percent (25%) of the Participant's "415 Compensation" for such "limitation year." For any short "limitation year," the dollar limitation in (1) above shall be reduced by a fraction, the numerator of which is the number of full months in the short "limitation year" and the denominator of which is twelve (12). (b) For purposes of applying the limitations of Code Section 415, "annual additions" means the sum credited to a Participant's accounts for any "limitation year" of (1) Employer contributions, (2) Employee contributions, (3) Forfeitures, (4) amounts allocated to an individual medical account, as defined in Code Section 415(l)(2), which is 38 40 part of a pension or annuity plan maintained by the Employer and (5) amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits allocated to the separate account of a key employee (as defined in Code Section 419A(d)(3)) under a welfare benefit plan (as defined in Code Section 419(e)) maintained by the Employer. Except, however, the "415 Compensation" limitation referred to in paragraph (a)(2) above shall not apply to: (1) any contribution for medical benefits (within the meaning of Code Section 419A(f)(2)) after separation from service which is otherwise treated as an "annual addition," or (2) any amount otherwise treated as an "annual addition" under Code Section 415(l)(1). (c) For purposes of applying the limitations of Code Section 415, the transfer of funds from one qualified plan to another is not an "annual addition." In addition, the following are not Employee contributions for purposes of Section 4.10(b)(2): (1) rollover contributions (as defined in Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)); (2) repayments of loans made to a Participant from the Plan; (3) repayments of distributions received by an Employee pursuant to Code Section 411(a)(7)(B) (cash-outs); (4) repayments of distributions received by an Employee pursuant to Code Section 411(a)(3)(D) (mandatory contributions); and (5) Employee contributions to a simplified employee pension excludable from gross income under Code Section 408(k). The limitations of Code Section 415 shall not apply to (1) Forfeitures of Company Stock purchased with the proceeds of an Exempt Loan and (2) Employer contributions which are deductible under Code Section 404(a)(9)(B) and charged against a Participant's Account, if no more than one-third of the Employer contributions for the year which are deductible under Code Section 404(a)(9) are allocated to the Participants' Accounts of Highly Compensated Employees. (d) For purposes of applying the limitations of Code Section 415, "415 Compensation" means a Participant's wages, salaries, fees for professional services and other amounts received (without regard to whether or not an amount is paid in cash) for personal services actually rendered in the course of employment with the Employer maintaining the Plan to the extent that the amounts are includible in gross income (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses, fringe benefits, and reimbursements or other expense allowances under a nonaccountable plan (as described in Regulation 1.62-2(c)) for a Plan Year. "415 Compensation" for a self-employed individual shall be equal to his earned income. "415 Compensation" shall exclude (1)(A) contributions made by the Employer to a plan of deferred compensation to the extent that the contributions are not includable in the gross income of the Participant for the taxable year in which contributed, (B) Employer contributions made on behalf of an Employee to a simplified employee pension plan described in Code Section 408(k) to the extent such contributions are excludable from the Employee's gross income, (C) any distributions from a plan of deferred compensation; (2) amounts realized from the exercise of a non-qualified stock option or when restricted stock (or property) held by an 39 41 Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (3) amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (4) other amounts which receive special tax benefits, or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of any annuity contract described in Code Section 403(b) (whether or not the contributions are actually excludable from the gross income of the Employee). (e) For purposes of applying the limitations of Code Section 415, the "limitation year" shall be the Plan Year. (f) The limitation stated in paragraph (a)(1) above shall be adjusted annually as provided in Code Section 415(d) pursuant to the regulations prescribed by the Secretary of the Treasury. The adjusted limitation is effective as of January 1st of each calendar year and is applicable to "limitation years" ending with or within that calendar year. (g) For the purpose of this Section, all qualified defined benefit plans (whether terminated or not) ever maintained by the Employer shall be treated as one defined benefit plan, and all qualified defined contribution plans (whether terminated or not) ever maintained by the Employer shall be treated as one defined contribution plan. (h) For the purpose of this Section, if the Employer is a member of a controlled group of corporations, trades or businesses under common control (as defined by Code Section 1563(a) or Code Section 414(b) and (c) as modified by Code Section 415(h)) is a member of an affiliated service group (as defined by Code Section 414(m)), or is a member of a group of entities required to be aggregated pursuant to Regulations under Code Section 414(o), all Employees of such Employers shall be considered to be employed by a single Employer. (i) For the purpose of this Section, if this Plan is a Code Section 413(c) plan, all Employers of a Participant who maintain this Plan will be considered to be a single Employer. (1) If a Participant participates in more than one defined contribution plan maintained by the Employer which have different Anniversary Dates, the maximum "annual additions" under this Plan shall equal the maximum "annual additions" for the "limitation year" minus any "annual additions" previously credited to such Participant's accounts during the "limitation year." (2) If a Participant participates in both a defined contribution plan subject to Code Section 412 and a defined contribution plan not subject to Code Section 412 maintained by the Employer which have the same Anniversary Date, "annual additions" will be credited to the Participant's accounts under the defined contribution plan subject to Code Section 412 prior to crediting "annual 40 42 additions" to the Participant's accounts under the defined contribution plan not subject to Code Section 412. (3) If a Participant participates in more than one defined contribution plan not subject to Code Section 412 maintained by the Employer which have the same Anniversary Date, the maximum "annual additions" under this Plan shall equal the product of (A) the maximum "annual additions" for the "limitation year" minus any "annual additions" previously credited under subparagraphs (1) or (2) above, multiplied by (B) a fraction (i) the numerator of which is the "annual additions" which would be credited to such Participant's accounts under this Plan without regard to the limitations of Code Section 415 and (ii) the denominator of which is such "annual additions" for all plans described in this subparagraph. (k) If an Employee is (or has been) a Participant in one or more defined benefit plans and one or more defined contribution plans maintained by the Employer, the sum of the defined benefit plan fraction and the defined contribution plan fraction for any "limitation year" may not exceed 1.0. (l) The defined benefit plan fraction for any "limitation year" is a fraction, the numerator of which is the sum of the Participant's projected annual benefits under all the defined benefit plans (whether or not terminated) maintained by the Employer, and the denominator of which is the lesser of 125 percent of the dollar limitation determined for the "limitation year" under Code Sections 415(b) and (d) or 140 percent of the amount which may be taken into account under Code Section 415(b)(1)(B) with respect to the Participant under the plan for such year, including any adjustments under Code Section 415(b). Notwithstanding the above, if the Participant was a participant as of the first day of the first "limitation year" beginning after December 31, 1986, in one or more defined benefit plans maintained by the Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125 percent of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last "limitation year" beginning before January 1, 1987, disregarding any changes in the terms and conditions of the plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 for all "limitation years" beginning before January 1, 1987. (m) The defined contribution plan fraction for any "limitation year" is a fraction, the numerator of which is the sum of the annual additions to the Participant's Account under all the defined contribution plans (whether or not terminated) maintained by the Employer for the current and all prior "limitation years" (including the annual additions attributable to the Participant's nondeductible Employee contributions to all defined benefit plans, whether or not terminated, maintained by the Employer, and the annual additions attributable to all welfare benefit funds, as defined in Code Section 419(e), and individual medical accounts, as defined in Code Section 415(l)(2), maintained 41 43 by the Employer), and the denominator of which is the sum of the maximum aggregate amounts for the current and all prior "limitation years" of service with the Employer (regardless of whether a defined contribution plan was maintained by the Employer). The maximum aggregate amount in any "limitation year" is the lesser of 125 percent of the dollar limitation determined under Code Sections 415(b) and (d) in effect under Code Section 415(c)(1)(A) or 35 percent of the Participant's Compensation for such year. If the employee was a Participant as of the end of the first day of the first limitation year beginning after December 31, 1986, in one or more defined contribution plans maintained by the Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the defined benefit fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the fractions over 1.0 times (2) the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last limitation year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan made after May 5, 1986, but using the Section 415 limitation applicable to the first limitation year beginning on or after January 1, 1987. The annual addition for any "limitation year" beginning before January 1, 1987 shall not be recomputed to treat all Employee contributions as annual additions. (n) Notwithstanding the foregoing, for any "limitation year" in which the Plan is a Top Heavy Plan, 100 percent shall be substituted for 125 percent in paragraph 4.10(l) and 4.10(m) unless the extra minimum allocation is being provided pursuant to Section 4.5. However, for any "limitation year" in which the Plan is a Super Top Heavy Plan, 100 percent shall be substituted for 125 percent in any event. (o) Notwithstanding anything contained in this Section to the contrary, the limitations, adjustments and other requirements prescribed in this Section shall at all times comply with the provisions of Code Section 415 and the Regulations thereunder, the terms of which are specifically incorporated herein by reference. 4.11 Adjustment for Excessive Annual Additions (a) If as a result of the allocation of Forfeitures, a reasonable error in estimating a Participant's Compensation or other facts and circumstances to which Regulation 1.415-6(b)(6) shall be applicable, the "annual additions" under this Plan would cause the maximum "annual additions" to be exceeded for any Participant, the Administrator shall (1) distribute any elective deferrals (within the meaning of Code Section 402(g)(3)) credited for the "limitation year" to the extent that the return would reduce the "excess amount" in the Participant's accounts (2) hold any "excess amount" remaining after the return of any elective deferrals in a "Section 415 suspense account" (3) use the "Section 415 suspense account" in the next "limitation year" (and succeeding "limitation years" if necessary) to reduce Employer contributions for the Participant if 42 44 that Participant is covered by the Plan as of the end of the "limitation year," or if the Participant is not so covered, allocate and reallocate the "Section 415 suspense account" in the next "limitation year" (and succeeding "limitation years" if necessary) to all Participants in the Plan before any Employer or Employee contributions which would constitute "annual additions" are made to the Plan for such "limitation year" (4) reduce Employer contributions to the Plan for such "limitation year" by the amount of the "Section 415 suspense account" allocated and reallocated during such "limitation year." (b) For purposes of this Article, "excess amount" for any Participant for a "limitation year" shall mean the excess, if any, of (1) the "annual additions" which would be credited to his account under the terms of the Plan without regard to the limitations of Code Section 415 over (2) the maximum "annual additions" determined pursuant to Section 4.10. (c) For purposes of this Section, "Section 415 suspense account" shall mean an unallocated account equal to the sum of "excess amounts" for all Participants in the Plan during the "limitation year." The "Section 415 suspense account" shall not share in any earnings or losses of the Trust Fund. 4.12 Transfers and Rollovers from Other Qualified Plans (a) With the consent of the Administrator, amounts may be transferred from other qualified plans by Participants, provided that the trust from which such funds are transferred permits the transfer to be made and the transfer will not jeopardize the tax exempt status of the Plan or create adverse tax consequences for the Employer. The amounts transferred shall be set up in a separate account herein referred to as a "Rollover Account." Such account shall be fully Vested at all times and shall not be subject to Forfeiture for any reason. (b) Amounts in a Participant's Rollover Account shall be held by the Trustee pursuant to the provisions of this Plan and may not be withdrawn by, or distributed to the Participant, in whole or in part, except as provided in paragraphs (c) and (d) of this Section. (c) Except as permitted by Regulations (including Regulation 1.411(d)-4), amounts attributable to elective contributions (as defined in Regulation 1.401(k)-1(g)(3)), including amounts treated as elective contributions, which are transferred from another qualified plan in a plan-to-plan transfer shall be subject to the distribution limitations provided for in Regulation 1.401(k)-1(d). (d) Any distributions of amounts held in a Participant's Rollover Account shall be made in a manner which is consistent with and satisfies the provisions of Section 7.5, including, but not limited to, all notice and consent requirements of Code Section 411(a)(11) and the Regulations thereunder. Furthermore, such amounts shall be considered as part of a Participant's benefit in determining whether an involuntary cash-out of benefits without Participant's consent may be made. 43 45 (e) All amounts allocated to a Participant's Rollover Account shall be invested in Investment Funds in accordance with the direction of the Participant pursuant to Section 4.13. (f) For purposes of this Section, the term "qualified plan" shall mean any tax qualified plan under Code Section 401(a). The term "amounts transferred from other qualified plans" shall mean: (i) amounts transferred to this Plan directly from another qualified plan; (ii) distributions from another qualified plan which are eligible rollover distributions and which are either transferred by the Employee to this Plan within sixty (60) days following his receipt thereof or are transferred pursuant to a direct rollover; (iii) amounts transferred to this Plan from a conduit individual retirement account provided that the conduit individual retirement account has no assets other than assets which (A) were previously distributed to the Employee by another qualified plan as a lump-sum distribution (B) were eligible for tax-free rollover to a qualified plan and (C) were deposited in such conduit individual retirement account within sixty (60) days of receipt thereof and other than earnings on said assets; and (iv) amounts distributed to the Employee from a conduit individual retirement account meeting the requirements of clause (iii) above, and transferred by the Employee to this Plan within sixty (60) days of his receipt thereof from such conduit individual retirement account. (g) Prior to accepting any rollovers to which this Section applies, the Administrator may require the Employee to establish that the amounts to be rolled over to this Plan meet the requirements of this Section and may also require the Employee to provide an opinion of counsel satisfactory to the Employer that the amounts to be rolled over meet the requirements of this Section. (h) A Participant's Rollover Account shall not accept any direct or indirect transfers (as that term is defined and interpreted under Code Section 401(a)(11) and the Regulations thereunder) from a defined benefit plan, money purchase plan (including a target benefit plan), stock bonus or profit sharing plan which would otherwise have provided for a life annuity form of payment to the Participant. (i) Notwithstanding anything herein to the contrary, a transfer directly to this Plan from another qualified plan (or a transaction having the effect of such a transfer) shall be permitted only if it will not result in the elimination or reduction of any protected benefits under Code Section 411(d)(6). 4.13 Directed Investment Account (a) Participant's Accounts shall be invested at the Participant's election in the Investment Funds as the Administrator may approve for investment purposes. Except as provided in paragraph (c), a Participant may not direct the investment of his Company Stock Account. That portion of the Account of a Participant who directs the investment thereof shall be considered a Directed Investment Account which shall not share in Trust Fund earnings. 44 46 (b) The Trustee shall divide the Trust Fund into the number and types of Investment Funds as the Administrator may approve for investment purposes. Designation by a Participant to the various Investment Funds shall be in increments of five percent (5%). The Administrator shall implement rules and requirements pertaining to changes by Participants in their investment allocations among the Investment Funds. (c) Each Qualified Participant who has not attained age sixty (60) may elect within ninety (90) days after the end of each calendar quarter or within ninety (90) days after the close of each Plan Year during the Qualified Election Period to direct the Trustee in writing as to the investment of 25 percent of the Qualified Participant's Company Stock Account (to the extent such portion exceeds the amount to which a prior election under this subparagraph applies). Each Qualified Participant who has attained age sixty (60) may elect within ninety (90) days after the end of each calendar quarter or within ninety (90) days after the close of each Plan Year during the Qualified Election Period to direct the Trustee in writing as to the investment of up to 100 percent of the Qualified Participant's Company Stock Account (to the extent such portion exceeds the amount to which a prior election under this subparagraph applies). If the Qualified Participant elects to direct the Trustee as to the investment of his Company Stock Account, such direction shall be effective no later than 180 days after the close of the Plan Year to which such direction applies. In lieu of directing the Trustee as to the investment of his Company Stock Account, the Qualified Participant may elect a distribution in cash or Company Stock of the portion of his Company Stock Account covered by the election within ninety (90) days after the last day of the period during which the election can be made. (d) For the purposes of this Section the following definitions shall apply: (1) "Qualified Participant" means any Participant or Former Participant who has completed ten (10) Years of Service as a Participant and has attained age 55. (2) "Qualified Election Period" shall mean the six (6) Plan Year period beginning with the later of (i) the first Plan Year in which the Participant first becomes a Qualified Participant or (ii) the first Plan Year beginning after December 31, 1986. (e) A separate Directed Investment Account shall be established for each Participant who has directed an investment. Transfers between the Participant's regular account and his Directed Investment Account shall be charged and credited as the case may be to each account. The Directed Investment Account shall not share in Trust Fund earnings, but it shall be charged or credited as appropriate with the net earnings, gains, losses and expenses as well as any appreciation or depreciation in market value during each Plan Year attributable to such account. To the extent so directed, the Trustees are relieved of their fiduciary responsibilities as provided in Section 404 of the Act. 45 47 ARTICLE 5. FUNDING AND INVESTMENT POLICY 5.1 Application of Cash Employer contributions in cash and other cash received by the Trust Fund shall first be applied to pay any Current Obligations of the Trust Fund. 5.2 Transactions Involving Company Stock All purchases or sales of Company Stock and the price of such purchases or sales shall be made as the Administrator instructs the Trustee. All purchases of Company Stock shall be made at a price which, in the judgment of the Administrator, does not exceed the fair market value thereof. All sales of Company Stock shall be made at a price which, in the judgment of the Administrator, is not less than the fair market value thereof. The valuation rules set forth in Article 6 shall be applicable. 5.3 Loans to the Trust (a) The Plan may borrow money for any lawful purpose, provided, the proceeds of an Exempt Loan are used within a reasonable time after receipt only for any or all of the following purposes: (1) To acquire Company Stock. (2) To repay such loan. (3) To repay a prior Exempt Loan. (b) All loans to the Trust which are made or guaranteed by a disqualified person must satisfy all requirements applicable to Exempt Loans including but not limited to the following: (1) The loan must be at a reasonable rate of interest; (2) Any collateral pledged to the creditor by the Plan shall consist only of the Company Stock purchased with the borrower funds; (3) Under the terms of the loan, any pledge of Company Stock shall provide for the release of shares so pledged on a pro-rata basis pursuant to Section 4.5(g); (4) Under the terms of the loan, the creditor shall have no recourse against the Plan except with respect to such collateral, earnings attributable to such collateral, Employer contributions (other than contributions of Company Stock) that are made to meet Current Obligations and earnings attributable to such contributions; 46 48 (5) The loan must be for a specific term and may not be payable at the demand of any person, except in the cause of a default; (6) In the event of default upon an Exempt Loan, the value of the Trust Fund transferred in satisfaction of the Exempt Loan shall not exceed the amount of default. If the lender is a disqualified person, an Exempt Loan shall provide for a transfer of Trust Funds upon default only upon and to the extent of the failure of the Plan to meet the payment schedule of the Exempt Loan; and (7) Exempt Loan payments during a Plan Year must not exceed an amount equal to: (A) the sum, over all Plan Years, of all Employer contributions made by the Employer to the Plan with respect to such Exempt Loan and earnings on such Employer contributions, less (B) the sum of the Exempt Loan payments in all preceding Plan Years. A separate accounting shall be maintained for such Employer contributions and earnings until the Exempt Loan is repaid. (c) The term "disqualified person" means a person who is a Fiduciary, a person providing services to the Plan, an Employer any of whose Employees are covered by the Plan, an employee organization any of whose members are covered by the Plan, an owner, direct or indirect, of 50% or more of the total combined voting power of all classes of voting stock or of the total value of all classes of the stock, or an officer, director, 10% or more shareholder, or a highly compensated Employee. ARTICLE 6. VALUATIONS 6.1 Valuation of the Trust Fund The Administrator shall direct the Trustee, as of each Anniversary Date, and at such other date or dates deemed necessary by the Administrator, herein called "valuation date," to determine the net worth of the assets comprising the Trust Fund as it exists on the "valuation date" prior to taking into consideration any contribution to be allocated for that Plan Year. In determining such net worth, the Trustee shall value the assets comprising the Trust Fund at their fair market value as of the "valuation date" and shall deduct all expenses for which the Trustee has not yet obtained reimbursement from the Employer or the Trust Fund. The Administrator shall have the duty of determining the fair market value (or sometimes referred to as "value") of Company Stock. For purposes of Section 5.2, 7.11 and this Section, valuations must be made in good faith and based on all relevant factors for determining the fair market value of securities. In the case of a transaction between a Plan and a disqualified person, value must be determined as of the date of the transaction. For all other Plan purposes, value must be determined as of the most recent valuation date under the Plan. An independent appraisal will not in itself be a good faith determination of value in the case of a transaction between the Plan and a disqualified person. However, in other cases, a determination of fair market value based on at least an annual appraisal independently arrived at by a person who customarily makes such appraisals and who 47 49 is independent of any party to the transaction will be deemed to be a good faith determination of value. 6.2 Annual Statement The Administrator shall, as soon as possible after each Anniversary Date, but in any event no later than two hundred ten (210) days thereafter, furnish each Participant with a written statement showing as of the Anniversary Date and in comparative form for the prior Plan Year: (a) The balance in each of his accounts as of the preceding Anniversary Date. (b) The amount of Employer contributions and Forfeitures allocated to his accounts for the Plan Year. (c) The adjustment to his accounts to reflect his share of any dividends and the income and expenses of the Trust Fund for the Plan Year. (d) The new balances in each of his accounts, including the number of shares of Company Stock. (e) Such other information as may be required under the Act, the Code and regulations thereunder. ARTICLE 7. DETERMINATION AND DISTRIBUTION OF BENEFITS 7.1 Determination of Benefits upon Retirement Every Participant may terminate his employment with the Employer and retire for the purposes hereof on his Normal Retirement Date. Upon such Normal Retirement Date, all amounts credited to such Participant's Account shall become distributable. However, a Participant may postpone the termination of his employment with the Employer to a later date, in which event the participation of such Participant in the Plan shall continue until his Late Retirement Date. Upon a Participant's Retirement Date, or as soon thereafter as is practicable, the Trustee shall distribute all amounts credited to such Participant's Account in accordance with Sections 7.5 and 7.6. 7.2 Determination of Benefits upon Death (a) Upon the death of a Participant before his Retirement Date or other termination of his employment, all amounts credited to such Participant's Account shall become fully Vested. On or before the Anniversary Date coinciding with or next following such death, the Administrator shall direct the Trustee, in accordance with the provisions of Sections 7.5 and 7.6, to distribute the value of the deceased Participant's Account to the Participant's Beneficiary. 48 50 (b) On or before the Anniversary Date coinciding with or next following the death of a Former Participant, the Trustee, in accordance with the provisions of Sections 7.5 and 7.6, shall distribute any remaining amounts credited to the account of such deceased Former Participant to such Former Participant's Beneficiary. (c) Any security interest held by the Plan by reason of an outstanding loan to the Participant or Former Participant shall be taken into account in determining the amount of the death benefit. (d) The Administrator may require such proper proof of death and such evidence of the right of any person to receive payment of the value of the account of a deceased Participant or Former Participant as the Administrator may deem desirable. The Administrator's determination of death and of the right of any person to receive payment shall be conclusive. (e) The Beneficiary of the death benefit payable pursuant to this Section shall be the Participant's spouse. Except, however, the Participant may designate a Beneficiary other than his spouse if: (1) the spouse has waived her right to be the Participant's Beneficiary, or (2) the Participant is legally separated or has been abandoned (within the meaning of local law) and the Participant has a court order to such effect (and there is no "qualified domestic relations order" as defined in Code Section 414(p) which provides otherwise), or (3) the Participant has no spouse, or (4) the spouse cannot be located. In such event, the designation of a Beneficiary shall be made on a form satisfactory to the Administrator. A Participant may at any time revoke his designation of a Beneficiary or change his Beneficiary by filing written notice of such revocation or change with the Administrator. However, the Participant's spouse must again consent in writing to any such change or revocation. In the event no valid designation of Beneficiary exists at the time of the Participant's death, the death benefit shall be payable to his estate. (f) Any consent by the Participant's spouse to waive any rights to the death benefit must be in writing, must acknowledge the effect of such waiver, and be witnessed by a Plan representative or a notary public. Further, the spouse's consent must be irrevocable and must acknowledge the specific nonspouse Beneficiary. 49 51 7.3 Determination of Benefits in Event of Disability In the event of a Participant's Total and Permanent Disability prior to his Retirement Date or separation from service, all amounts credited to such Participant's Account shall become fully Vested. On or before the Anniversary Date coinciding with or next following the event of Total and Permanent Disability, the Trustee, in accordance with the provisions of Sections 7.5 and 7.6, shall distribute to such Participant all amounts credited to such Participant's Account as though he had retired. 7.4 Determination of Benefits upon Termination (a) On or before the Anniversary Date coinciding with or subsequent to the termination of a Participant's employment for any reason other than death, Total and Permanent Disability or retirement, the Administrator may direct the Trustee to segregate the amount of the Vested portion of such Terminated Participant's Account and invest the aggregate amount thereof in a separate, federally insured savings account, certificate of deposit, common or collective trust fund of a bank or a deferred annuity. In the event the Vested portion of a Participant's Account is not segregated, the amount shall remain in a separate account for the Terminated Participant and share in allocations per Section 4.5 until such time as a distribution is made to the Terminated Participant. The amount of the Terminated Participant's Account which is not Vested shall be credited to the Suspense Account (which will always share in gains and losses of the trust) and shall, subsequently, be allocated to the accounts of the remaining Participants in accordance with the terms of the Plan at such time as the amount becomes a Forfeiture. If a portion of a Participant's Account is forfeited, Company Stock allocated to such account must be forfeited only after the Other Investment Account has been depleted. If interest in more than one class of Company Stock has been allocated to a Participant's Account, the Participant must be treated as forfeiting the same proportion of each such class. Distribution of the funds due to a Terminated Participant shall be made on the occurrence of an event which would result in the distribution had the Terminated Participant remained in the employ of the Employer (upon the Participant's death, Total and Permanent Disability, Early or Normal Retirement). However, at the discretion of the Administrator, but subject to Section 7.5(i), the Administrator may direct the Trustee to cause the entire Vested portion of the Terminated Participant's Account to be payable to such Terminated Participant. Terminated Participants who are under the age of fifty-five (55) at the time of termination may elect distribution of all or part of the Vested portion of their Participant's Account. The distribution will be made as soon as administratively possible after the end of the calendar quarter of termination. If the total amount of the vested portion of the Participant's Account does not exceed $3,500 and has never exceeded $3,500 at the time of any prior distribution, distribution will automatically be made at the time of termination. 50 52 (b) Effective April 1, 1997, each active Participant shall immediately become fully Vested in his Account. Each other Participant shall become fully Vested in his Account immediately upon entry into the Plan. (c) The computation of a Participant's nonforfeitable percentage of his interest in the Plan shall not be reduced as the result of any direct or indirect amendment to this Article. In the event that the Plan is amended to change or modify any vesting schedule, a Participant with at least three (3) Years of Service as of the expiration date of the election period may elect to have his nonforfeitable percentage computed under the Plan without regard to such amendment. If a Participant fails to make such election, then such Participant shall be subject to the new vesting schedule. The Participant's election period shall commence on the adoption date of the amendment and shall end 60 days after the latest of: (1) the adoption date of the amendment, (2) the effective date of the amendment, or (3) the date the Participant receives written notice of the amendment from the Employer or Administrator. (1) If any Former Participant shall be reemployed by the Employer before a 1-Year Break in Service occurs, he shall continue to participate in the Plan in the same manner as if such termination had not occurred. (2) If any Former Participant shall be reemployed by the Employer before five (5) consecutive 1-Year Breaks in Service, and such Former Participant had received a distribution of his entire Vested interest prior to his reemployment, his forfeited account shall be reinstated only if he repays the full amount distributed to him before the earlier of five (5) years after the first date on which the Participant is subsequently reemployed by the Employer or the close of the first period of five (5) consecutive 1-Year Breaks in Service commencing after the distribution. In the event the Former Participant does repay the full amount distributed to him, the undistributed portion of the Participant's Account must be restored in full, unadjusted by any gains or losses occurring subsequent to the Anniversary Date or other valuation date preceding his termination. The source for such reinstatement shall first be any Forfeitures occurring during the year. If such source is insufficient, then the Employer shall contribute an amount which is sufficient to restore any such forfeited Accounts. (3) If any Former Participant is reemployed after a 1-Year Break in Service has occurred, Years of Service shall include Years of Service prior to his 1-Year Break in Service subject to the following rules: (i) If a Former Participant has a 1-Year Break in Service, his pre-break and post-break service shall be used for computing Years of 51 53 Service for eligibility and for vesting purposes only after he has been employed for one (1) Year of Service following the date of his reemployment with the Employer; (ii) Each non-vested Former Participant shall lose credits otherwise allowable under (i) above if his consecutive 1-Year Breaks in Service equal five (5); (iii) After five (5) consecutive 1-Year Breaks in Service, a Former Participant's Vested Account balance attributable to pre-break service shall not be increased as a result of post-break service; (iv) If a Former Participant who has not had his Years of Service before a 1-Year Break in Service disregarded pursuant to (ii) above completes one (1) Year of Service for eligibility purposes following his reemployment with the Employer, he shall participate in the Plan retroactively from his date of reemployment; (v) If a Former Participant who has not had his Years of Service before a 1-Year Break in Service disregarded pursuant to (ii) above completes a Year of Service (a 1-Year Break in Service previously occurred, but employment had not terminated), he shall participate in the Plan retroactively from the first day of the Plan Year during which he completes one (1) Year of Service. 7.5 Distribution of Benefits (a) The Administrator, in accordance with the Participant's or Beneficiary's election, shall direct the Trustee to distribute to a Participant or his Beneficiary any amount to which he is entitled under the Plan in one or more of the following methods: (i) one lump-sum payment in cash or in property; (ii) payments over a period certain in monthly, quarterly, semiannual or annual cash installments after first having (A) segregated the aggregate amount thereof in a separate, federally insured savings account, certificate of deposit in a bank or savings and loan association, money market certificate or other liquid short-term security or (B) purchased a nontransferable annuity contract providing for such payment. The period over which such payment is to be made shall not extend beyond the Participant's life expectancy (or the life expectancy of the Participant and his designated Beneficiary). If the Participant's entire interest is to be distributed in other than a lump sum, then the amount to be distributed each year must be at least an amount equal to the quotient obtained by dividing the Participant's entire interest by the life expectancy of the Participant or the joint and last survivor expectancy of the Participant and his designated Beneficiary. (b) Notwithstanding anything herein to the contrary, the Administrator may, unless the Participant elects (with the consent of the Participant's spouse) a later distribution date, commence distribution of the Participant's Company Stock Account 52 54 balance not later than one year after the close of the Plan Year (i) in which the Participant separates from service on account of retirement or death, or (ii) which is the fifth Plan Year following the Plan Year in which the Participant otherwise separates from service; provided, however, any Company Stock allocated to a Participant's Company Stock Account purchased by means of an Exempt Loan, may not be distributed until after such Exempt Loan is repaid in full. (c) The distribution of a Participant's benefits may not commence prior to the later of the Participant's Normal Retirement Age or age 62 if the Vested portion of the Participant's Account exceeds or has ever exceeded $3,500 at the time of any prior distribution, unless the distribution is consented to in writing by the Participant and his spouse or, if the Participant is deceased, the Participant's surviving spouse. With regard to this required consent: (1) The Participant must be informed of his right to defer receipt of the distribution. If a Participant fails to consent, it shall be deemed an election to defer the distribution of any benefit. However, any election to defer the receipt of benefits shall not apply with respect to distributions which are required under Section 7.5(e). (2) Notice of the rights specified under this paragraph shall be provided no less than 30 days and no more than 90 days before the first day on which all events have occurred which entitle the Participant to such benefit. (3) Written consent of the Participant to the distribution must not be made before the Participant receives the notice and must not be made more than 90 days before the first day on which all events have occurred which entitle the Participant to such benefit. (4) No consent shall be valid if a significant detriment is imposed under the Plan on any Participant who does not consent to the distribution. (d) Subject to Sections 7.5(e) and 7.5(h), upon termination of employment by retirement or otherwise, a Participant may direct that his benefit remain in the Plan in the form of Company Stock until such time as the Participant requests a distribution. Any part of a Participant's benefit which is retained in the Plan after the Anniversary Date on which his participation ends will continue to be treated as an Elective Account, Matching Contribution Account, Employee After-Tax Account, Company Stock Account, Rollover Account or as an Other Investments Account, as the case may be, as provided in Article 4. However, none of such accounts will be credited with any further Participant or Employer contributions or Forfeitures. (e) Notwithstanding any provision in the Plan to the contrary, effective January 1, 1997, the distribution of a Participant's benefits shall be made in accordance with the following requirements and shall otherwise comply with Code Section 401(a)(9) and the Regulations thereunder (including Regulation Section 1.401(a)(9)-2): 53 55 (1) A Participant's benefits shall be distributed to him not later than April 1st of the calendar year following the later of (i) the calendar year in which the Participant attains age 702 or (ii) the calendar year in which the Participant retires, provided, however, that this clause (ii) shall not apply in the case of a Participant who is a "five (5) percent owner" with respect to the Plan Year ending in the calendar year in which he attains age 702. Alternatively, distributions to a Participant must begin no later than the applicable April 1st as determined under the preceding sentence and must be made over the life expectancy of the Participant (or the life expectancies of the Participant and his designated Beneficiary) in accordance with Regulations. (2) Distributions to a Participant and his Beneficiaries shall only be made in accordance with the incidental death benefit requirements of Code Section 401(a)(9)(G) and the Regulations thereunder. Additionally, for calendar years beginning prior to 1989, distributions may also be made under an alternative method which provides that the then present value of the payments to be made over the period of the Participant's life expectancy exceeds fifty percent (50%) of the then present value of the total payments to be made to the Participant and his Beneficiaries. (f) Notwithstanding any provision in the Plan to the contrary, distributions upon the death of a Participant shall be made in accordance with the following requirements and shall otherwise comply with Code Section 401(a)(9) and the Regulations thereunder. If it is determined pursuant to Regulations that the distribution of a Participant's interest has begun and the Participant dies before his entire interest has been distributed to him, the remaining portion of such interest shall be distributed at least as rapidly as under the method of distribution selected pursuant to Section 7.5 as of his date of death. If a Participant dies before he has begun to receive any distributions of his interest under the Plan or before distributions are deemed to have begun pursuant to Regulations, then his death benefit shall be distributed to his Beneficiaries by December 31st of the calendar year in which the fifth anniversary of his date of death occurs. However, the 5-year distribution requirement of the preceding paragraph shall not apply to any portion of the deceased Participant's interest which is payable to or for the benefit of a designated Beneficiary. In such event, such portion may, at the election of the Participant (or the Participant's designated Beneficiary) be distributed over a period not extending beyond the life expectancy of such designated Beneficiary provided such distribution begins not later than December 31st of the calendar year immediately following the calendar year in which the Participant died. Except, however, in the event the Participant's spouse (determined as of the date of the Participant's death) is his Beneficiary, the requirement that distributions commence within one year of a Participant's death shall not apply. In lieu thereof, distributions must commence on or before the later of: (1) December 31st of the calendar year immediately following the calendar year in which the Participant died; or (2) December 31st of the calendar year in 54 56 which the Participant would have attained age 702. If the surviving spouse dies before the distributions to such spouse begin, then the 5-year distribution requirement of this Section shall apply as if the spouse were the Participant. (g) For purposes of Section 7.5(f), the election by a designated Beneficiary to be excepted from the 5-year distribution requirement must be made no later than December 31st of the calendar year following the calendar year of the Participant's death. Except, however, with respect to a designated Beneficiary who is the Participant's surviving spouse, the election must be made by the earlier of: (1) December 31st of the calendar year immediately following the calendar year in which the Participant died or, if later, the calendar year in which the Participant would have attained age 702; or (2) December 31st of the calendar year which contains the fifth anniversary of the date of the Participant's death. An election by a designated Beneficiary must be in writing and shall be irrevocable as of the last day of the election period stated herein. In the absence of an election by the Participant or a designated Beneficiary, the 5-year distribution requirement shall apply. (h) For purposes of this Section, the life expectancy of a Participant and a Participant's spouse may, at the election of the Participant or the Participant's spouse, be redetermined in accordance with such rules as may be prescribed by Treasury regulations. The election, once made, shall be irrevocable. If no election is made by the time distributions must commence, then the life expectancy of the Participant and the Participant's spouse shall not be subject to recalculation. Further, life expectancy and joint and last survivor expectancy shall be computed using the return multiples of Regulation 1.72-9. (i) Except as limited by Sections 7.5 and 7.6, whenever the Trustee is to make a distribution on or as of an Anniversary Date, the distribution may be made or begun on such date or as soon thereafter as is practicable. However, unless a Participant elects in writing to defer the receipt of benefits (such election may not result in a death benefit that is more than incidental), the payment of benefits will begin not later than the 60th day after the close of the Plan Year in which the latest of the following events occurs: (1) the date on which the Participant attains the earlier of age 65 or the Normal Retirement Age specified under the Plan, (2) the 10th anniversary of the year in which the Participant commenced participation in the Plan, or (3) the date the Participant terminates his service with the Employer. 7.6 How Plan Benefit will be Distributed (a) Distribution of a Participant's Company Stock Account may be made in cash or Company Stock or both, provided, however, that if a Participant or Beneficiary so demands, such Company Stock Account shall be distributed only in the form of Company 55 57 Stock. Prior to making a distribution of benefits, the Administrator shall advise the Participant or his Beneficiary, in writing, of the right to demand that his Company Stock Account be distributed solely in Company Stock. If the Participant or his Beneficiary fails to make such demand in writing within 90 days after receipt of such written notice, the Administrator shall direct the Trustee to make such distribution in such form as the Administrator, in his sole discretion, shall determine. (b) If a Participant or Beneficiary demands that his Company Stock Account be distributed solely in Company Stock, distribution of a Participant's Company Stock Account will be made entirely in whole shares or other units of Company Stock. Any fractional unit value unexpended will be distributed in cash. If Company Stock is not available for purchase by the Trustee, then the Trustee shall hold such balance until Company Stock is acquired and then make such distribution. If the Trustee is unable to purchase the Company Stock required for distribution, he shall make distribution in cash within one (1) year after the date the distribution was to be made, except in the case of a retirement distribution which shall be made within sixty (60) days after the close of the Plan Year in which a Participant's retirement occurs. (c) The Trustee will make distribution from the Trust only on instructions from the Administrator. (d) Notwithstanding anything contained herein to the contrary, if the Employer's charter or by-laws restrict ownership of substantially all shares of Company Stock to Employees and the Trust Fund, as described in Code Section 409(h)(2), the distribution of a Participant's Company Stock Account may be made entirely in cash without granting the Participant the right to demand distribution in shares of Company Stock. (e) Except as otherwise provided herein, Company Stock distributed by the Trustee may be restricted as to sale or transfer by the by-laws or articles of incorporation of the Employer, provided restrictions are applicable to all Company Stock of the same class. If a Participant is required to offer the sale of his Company Stock to the Employer before offering to sell his Company Stock to a third party, in no event may the Employer pay a price less than that offered to the distributed by another potential buyer making a bona fide offer and in no event shall the Trustee pay a price less than the fair market value of the Company Stock. (f) Except as otherwise provided in this Plan, a Participant is not entitled to any payment, withdrawal or distribution under the Plan during his participation. If any such partial distribution is made, the Participant's benefit when computed will be reduced by the amount of any such advance. (g) If Company Stock acquired with the proceeds of an Exempt Loan (described in Section 5.3 hereof) is available for distribution and consists of more than one class, a Participant or his Beneficiary to whom a distribution of such Company Stock is being made must receive substantially the same proportion of each class. 56 58 7.7 Distribution for Minor Beneficiary In the event a distribution is to be made to a minor, then the Administrator may, in the Administrator's sole discretion, direct that such distribution be paid to the legal guardian, or if none, to a parent of such Beneficiary or a responsible adult with whom the Beneficiary maintains his residence, or to the custodian for such Beneficiary under the Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted by the laws of the state in which said Beneficiary resides. Such a payment to the legal guardian or parent of a minor Beneficiary shall fully discharge the Trustee, Employer, and Plan from further liability on account thereof. 7.8 Location of Participant or Beneficiary Unknown In the event that all, or any portion, of the distribution payable to a Participant or his Beneficiary hereunder shall, at the expiration of five (5) years after it shall become payable, remain unpaid solely by reason of the inability of the Administrator, after sending a registered letter, return receipt requested, to the last known address, and after further diligent effort, to ascertain the whereabouts of such Participant or his Beneficiary, the amount so distributable shall be reallocated in the same manner as a Forfeiture pursuant to the Plan. In the event a Participant or Beneficiary is located subsequent to his benefit being reallocated, such benefit shall be restored. 7.9 Right of First Refusals (a) If any Participant, his Beneficiary or any other person to whom shares of Company Stock are distributed from the Plan (the "Selling Participant") shall, at any time, desire to sell some or all of such shares (the "Offered Shares") to a third party (the "Third Party"), the Selling Participant shall give written notice of such desire to the Employer and the Administrator, which notice shall contain the number of shares offered for sale, the proposed terms of the sale and the names and addresses of both the Selling Participant and Third Party. Both the Trust Fund and the Employer shall each have the right of first refusal for a period of fourteen (14) days from the date the Selling Participant gives such written notice to the Employer and the Administrator (such fourteen (14) day period to run concurrently against the Trust Fund and the Employer) to acquire the Offered Shares. As between the Trust Fund and the Employer, the Trust Fund shall have priority to acquire the shares pursuant to the right of first refusal. The selling price and terms shall be the same as offered by the Third Party. (b) If the Trust Fund and the Employer do not exercise their right of first refusal within the required fourteen (14) day period provided above, the Selling Participant shall have the right, at any time following the expiration of such fourteen (14) day period, to dispose of the Offered Shares to the Third Party; provided, however, that (i) no disposition shall be made to the Third Party on terms more favorable to the Third Party than those set forth in the written notice delivered by the Selling Participant above, and (ii) if such disposition shall not be made to a third party on the terms offered to the Employer and the Trust Fund, the offered Shares shall again be subject to the right of first refusal set forth above. 57 59 (c) The closing pursuant to the exercise of the right of first refusal under Section 7.9(a) above shall take place at such place agreed upon between the Administrator and the Selling Participant, but not later than ten (10) days after the Employer or the Trust Fund shall have notified the Selling Participant of the exercise of the right of first refusal. At such closing, the Selling Participant shall deliver certificates representing the Offered Shares duly endorsed in blank for transfer, or with stock powers attached duly executed in blank with all required transfer tax stamps attached or provided for, and the Employer or the Trust Fund shall deliver the purchase price, or an appropriate portion thereof, to the Selling Participant. (d) Except as provided in this Paragraph (d), no Company Stock acquired with the proceeds of an Exempt Loan complying with the requirements of Section 5.3 hereof shall be subject to a right of first refusal. Company Stock, which is acquired with the proceeds of an Exempt Loan which is distributed to a Participant or Beneficiary shall be subject to the right of first refusal, provided for in Paragraph (a) of this Section only so long as the Company Stock is not publicly traded. The term "publicly traded" refers to a securities exchange registered under Section 6 of the Securities Exchange Act of 1934 (the "1934 Act") (15 U.S.C. 78f) or that is quoted on a system sponsored by a national securities association registered under Section l5A(b) of the 1934 Act (15 U.S.C. 780). In addition, in the case of Company Stock which was acquired with the proceeds of a loan described in Section 5.3, the selling price and other terms under the right must not be less favorable to the seller than the greater of the value of the security determined under 26 CFR 54.4975-11(d)(5), or the purchase price and other terms offered by a buyer (other than the Employer or the Trust Fund), making a good faith offer to purchase the security. The right of first refusal must lapse no later than fourteen (14) days after the security holder gives notice to the holder of the right that an offer by a third party to purchase the security has been made. The right of first refusal shall comply with the provisions of Paragraphs (a), (b) and (c) of this Section, except to the extent those provisions may conflict with the provisions of this paragraph. 7.10 Stock Certificate Legend Certificates for shares distributed pursuant to the Plan shall contain the following legend: "The shares represented by this certificate are transferable only upon compliance with the terms of the RANDALLS FOOD MARKETS, INC. ESOP/401(k) SAVINGS PLAN (Amended and Restated as of April 1, 1997), which grants to Randalls Food Markets, Inc. and the Trust Fund, a right of first refusal, a copy of said Plan being on file in the office of the Company." 7.11 Put Option (a) If Company Stock which was not acquired with the proceeds of an Exempt Loan is distributed to a Participant and such Company Stock is not readily tradable on an established securities market, a Participant has a right to require the Employer to repurchase the Company Stock distributed to such Participant under a fair valuation 58 60 formula, as required by the Revenue Act of 1978. Such Stock shall be subject to the provisions of Section 7.11(c), except to the extent the provisions of 7.11(c) may conflict with any applicable regulations promulgated under the Revenue Act of 1978. (b) Company Stock which is acquired with the proceeds of an Exempt Loan and which is not publicly traded when distributed, or if it is subject to a trading limitation when distributed, must be subject to a put option. For purposes of this paragraph, a "trading limitation" on a Company Stock is a restriction under any Federal or State securities law or any regulation thereunder, or an agreement (not prohibited by Section 7.12) affecting the Company Stock which would make the Company Stock not as freely tradeable as stock not subject to such restriction. (c) The put option must be exercisable only by a Participant, by the Participant's donees, or by a person (including an estate or its distributee) to whom the Company Stock passes by reason of a Participant's death. (Under this paragraph "Participant" means a Participant and the Beneficiaries of the Participant under the Plan.) The put option must permit a Participant to put the Company Stock to the Employer. Under no circumstances may the put option bind the Plan. If it is known at the time a loan is made that Federal or State law will be violated by the Employer's honoring such put option, the put option must permit the Company Stock to be put, in a manner consistent with such law, to a third party (e.g., an affiliate of the Employer or a shareholder other than the Plan) that has substantial net worth at the time the loan is made and whose net worth is reasonably expected to remain substantial. The put option shall commence as of the day following the date the Company Stock is distributed to the former Participant and end 60 days thereafter and if not exercised within such 60-day period, an additional 60-day option shall commence on the first day of the fifth month of the Plan Year next following the date the stock was distributed to the former Participant (or such other 60-day period as provided in regulations promulgated by the Secretary of the Treasury). However, in the case of Company Stock that is publicly traded without restrictions when distributed but ceases to be so traded within either of the 60-day periods described herein after distribution, the Employer must notify each holder of such Company Stock in writing on or before the tenth day after the date the Company Stock ceases to be so traded that for the remainder of the applicable 60-day period the Company Stock is subject to the put option. The number of days between the tenth day and the date on which notice is actually given, if later than the tenth day, must be added to the duration of the put option. The notice must inform distributees of the term of the put options that they are to hold. The terms must satisfy the requirements of this paragraph. The put option is exercised by the holder notifying the Employer in writing that the put option is being exercised; the notice shall state the name and address of the holder and the number of shares to be sold. The period during which a put option is exercisable does not include any time when a distributee is unable to exercise it because the party bound by the put option is prohibited from honoring it by applicable Federal or State law. 59 61 The price at which a put option must be exercisable is the value of the Company Stock determined in accordance with Paragraph (d)(5) of 26 CFR 54.4975-11. The provisions for payment under the put option shall not exceed a 60 day period from the exercise date of the put option. (d) An arrangement involving the Plan that creates a put option must not provide for the issuance of put options other than as provided under this Section. The Plan (and the Trust Fund) must not otherwise obligate itself to acquire Company Stock from a particular holder thereof at an indefinite time determined upon the happening of an event such as the death of the holder. 7.12 Nonterminable Protections and Rights Except as provided in Section 7.9 and Section 7.11, no Company Stock acquired with the proceeds of a loan described in Section 5.3 hereof may be subject to a put, call, or other option, or buy-sell or similar arrangement when held by and when distributed from the Trust Fund, whether or not the Plan is then an ESOP. The protections and rights granted in this Section and in Section 7.9 and Section 7.11 are nonterminable, and such protections and rights shall continue to exist under the terms of this Plan so long as any Company Stock acquired with the proceeds of a loan described in Section 5.3 hereof is held by the Trust Fund or by any Participant or other person for whose benefit such protections and rights have been created, and neither the repayment of such loan nor the failure of the Plan to be an ESOP, nor an amendment of the Plan shall cause a termination of said protections and rights. 7.13 Withdrawals from Employee After-Tax Account During the last month of any calendar quarter of any calendar year, a Participant may request that the Administrator distribute to him or her up to 100% of the value, determined as of the end of such calendar quarter, of the Participant's Employee After-Tax Account. The Administrator upon receiving such request may direct the Trustee to make the requested distribution to the Participant. Distribution payments to a Participant will be made as soon as administratively possible after the quarter in which the distribution request is made. 7.14 Hardship Withdrawals (a) A Participant may at any time file with the Administrator an appropriate written request for a hardship withdrawal in either a dollar amount or a percentage figure from his Elective Account. A Participant may withdraw up to the lesser of 100% of his Elective Account valued as of the last Anniversary Date or other valuation date or the amount necessary to satisfy the immediate and heavy financial need of the Participant. Notwithstanding the foregoing, however, no Participant may withdraw any income of the Trust Fund allocated to his Elective Account. Any distribution made pursuant to this Section shall be deemed to be made as of the first day of the Plan Year or, if later, the valuation date immediately preceding the date of distribution, and the Participant's Elective Account shall be reduced accordingly. The determination of whether an immediate and heavy financial need exists shall be based on all relevant facts and 60 62 circumstances including, but not limited to, any amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the distribution. A need shall not be disqualified because it was reasonably foreseeable or voluntarily incurred. Withdrawal under this Section shall be authorized if the distribution is on account of: (1) Expenses for medical care described in Code Section 213(d) previously incurred by the Participant, his spouse, or any of his dependents (as defined in Code Section 152) or necessary for these persons to obtain medical care; (2) The costs directly related to the purchase of a principal residence for the Participant (including mortgage payments); (3) Funeral expenses for a member of the Participant's immediate family; (4) Payment of tuition and related educational fees for the next twelve (12) months of post-secondary education for the Participant, his spouse, children or dependents; or (5) Payments necessary to prevent the eviction of the Participant from his principal residence or foreclosure on the mortgage of the Participant's principal residence. (b) No distribution shall be made pursuant to this Section unless the Administrator determines, based upon all relevant facts and circumstances, that the amount to be distributed is not in excess of the amount required to relieve the financial need and that such need cannot be satisfied from other resources reasonably available to the Participant. For this purpose, the Participant's resources shall be deemed to include those assets of his spouse and minor children that are reasonably available to the Participant. A distribution may be treated as necessary to satisfy a financial need if the Administrator relies on the Participant's representation that the need cannot be relieved: (1) Through reimbursement or compensation by insurance or otherwise; (2) By reasonable liquidation of the Participant's assets, to the extent such liquidation would not itself increase the amount of such need; (3) By cessation of elective deferrals under the Plan; or (4) By other distributions or loans from the Plan or any other qualified retirement plan, or by borrowing from commercial sources on reasonable commercial terms, to the extent such amounts would not themselves increase the amount of the need. 61 63 (c) Notwithstanding the above, distributions from the Participant's Elective Account pursuant to this Section shall be limited solely to the Participant's total Deferred Compensation as of the date of distribution, reduced by the amount of any previous distribution pursuant to this Section. (d) Any distribution made pursuant to this Section shall be made in a manner which is consistent with and satisfies the provisions of Section 7.5, including, but not limited to, all notice and consent requirements of Code Sections 411(a)(11) and the Regulations thereunder. 7.15 Participant Loans A Participant may make application to the Administrator to borrow from his Account (not including his Employee After-Tax Account or his Company Stock Account), and the Administrator in its sole discretion may permit such a loan. Loans shall be granted in a uniform and nondiscriminatory manner on terms and conditions determined by the Administrator which shall not result in more favorable treatment of highly compensated employees and shall be set forth in written procedures promulgated by the Administrator in accordance with applicable governmental regulations. All such loans shall also be subject to the following terms and conditions: (a) The amount of the loan when added to the amount of any outstanding loan or loans to the Participant from any other plan of the Employer or an Affiliated Employer which is qualified under Code Section 401(a) shall not exceed the lesser of (i) $50,000, reduced by the excess, if any, of the highest outstanding balance of loans from all such plans during the one-year period ending on the day before the date on which such loan was made over the outstanding balance of loans from the Plan on the date on which such loan was made or (ii) fifty percent (50%) of the present value of the Participant's Vested Account balance under the Plan. In no event shall a loan of less than $500 or more than $50,000 be made to a Participant. A Participant may not have more than one (1) loan outstanding at a time under this Plan. (b) The loan shall be for a term not to exceed five (5) years, unless the loan is used to acquire any dwelling unit which within a reasonable time is to be used as a principal residence of the Participant. The loan shall be evidenced by a note signed by the Participant. The loan shall be payable in periodic installments and shall bear interest at a reasonable rate which shall be determined by the Administrator on a uniform and consistent basis and set forth in the procedures in accordance with applicable governmental regulations. Payments by a Participant who is an Employee will be made by means of payroll deduction from the Participant's compensation. If the Participant is not receiving compensation from the Employer, the loan repayment shall be made in accordance with the terms and procedures established by the Administrator. A Participant may repay an outstanding loan in full at any time. (c) In the event an installment payment is not paid within seven (7) days following the monthly due date, the Administrator shall give written notice to the 62 64 Participant sent to his last known address. If such installment payment is not made within thirty (30) days thereafter, the Administrator shall proceed with foreclosure in order to collect the full remaining loan balance or shall make such other arrangements with the Participant as the Administrator deems appropriate. Foreclosures need not be effected until occurrence of a distributable event under the terms of the Plan and no rights against the Participant or the security shall be deemed waived by the Plan as a result of such delay. (d) The unpaid balance of the loan, together with interest thereon, shall become due and payable upon the date of distribution of the Account and the Trustee shall first satisfy the indebtedness from the amount payable to the Participant or to the Participant's Beneficiary before making any payments to the Participant or to the Beneficiary. (e) Any loan to a Participant under the Plan shall be adequately secured. Such security shall include a pledge of a portion of the Participant's right, title and interest in the Trust Fund which shall not exceed fifty percent (50%) of the present value of the Participant's Vested Account balance under the Plan as determined immediately after the loan is extended. Such pledge shall be evidenced by the execution of a promissory note by the Participant which shall grant the security interest and provide that, in the event of any default by the Participant on a loan repayment, the Administrator shall be authorized to take any and all appropriate lawful actions necessary to enforce collection of the unpaid loan. (f) A request by a Participant for a loan shall be made in writing to the Administrator and shall specify the amount of the loan. If a Participant's request for a loan is approved by the Administrator, the Administrator shall furnish the Trustee with written instructions directing the Trustee to make the loan in a lump-sum payment of cash to the Participant. The cash for such payment shall be obtained by redeeming proportionately as of the date of payment the Investment Fund or Funds, or portions thereof, that are credited to the particular Account of such Participant. (g) A loan to a Participant shall be considered an investment of the separate Account(s) of the Participant from which the loan is made. All loan repayments shall be credited pro rata to such separate Account(s) and reinvested exclusively in shares of one or more of the Investment Funds in accordance with Section 4.13. 7.16 Qualified Domestic Relations Order Distribution All rights and benefits, including elections, provided to a Participant in this Plan shall be subject to the rights afforded to any "alternate payee" under a "qualified domestic relations order." Furthermore, a distribution to an "alternate payee" shall be permitted if such distribution is authorized by a "qualified domestic relations order," even if the affected Participant has not separated from service and has not reached the "earliest retirement age" under the Plan. For the purposes of this Section, "alternate payee," "qualified domestic relations order" and "earliest retirement age" shall have the meaning set forth under Code Section 414(p). 63 65 7.17 Payment of Distribution Directly to Eligible Retirement Plan (a) Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee's election under this Section, a Distributee may elect, at the time and in the manner prescribed by the Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. (b) For purposes of this Section, the following definitions shall apply: (1) Eligible Rollover Distribution. An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee's designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (2) Eligible Retirement Plan. An Eligible Retirement Plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. (3) Distributee. A Distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are Distributees with regard to the interest of the spouse or former spouse. (4) Direct Rollover: A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee. 64 66 ARTICLE 8. TRUSTEE 8.1 Basic Responsibilities of the Trustee The Trustee shall have the following categories of responsibilities: (a) Consistent with the "funding policy and method" determined by the Employer and delivered to the Trustee, to invest, manage, and control the Plan assets subject, however, to the direction of the Administrator or an Investment Manager if the Employer or Administrator should appoint such manager as to all or a portion of the assets of the Plan in accordance with the provisions of Section 2.3(c); (b) At the direction of the Administrator, to pay benefits required under the Plan to be paid to Participants, or, in the event of their death, to their Beneficiaries; (c) To maintain records of receipts and disbursements and furnish to the Employer and/or Administrator for each Fiscal Year a written annual report; (d) If there shall be more than one Trustee, they shall act by a majority of their number, but may authorize one or more of them to sign papers on their behalf. 8.2 Voting Company Stock Except as provided hereafter, the Trustee shall vote all Company Stock held by the Trust in the sole discretion of the Trustee in accordance with the Trustee's fiduciary duties under the Act. Notwithstanding the foregoing, if the Employer has a "registration-type class of securities," each Participant or Beneficiary, if applicable, shall be entitled to direct the Trustee as to the manner in which shares of Company Stock which are entitled to vote and which are allocated to such Participant's (or Beneficiary's, if applicable) Company Stock Account or Employee After-Tax Account are to be voted. If the Employer does not have a registration-type class of securities, each Participant or Beneficiary, if applicable, shall be entitled to direct the Trustee as to the manner in which shares of Company Stock allocated to such Participant's (or Beneficiary's, if applicable) Company Stock Account or Employee After-Tax Account are to be voted with respect to any corporate matter which involves the voting of such shares with respect to the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all assets of a trade or business, or such similar transaction as prescribed in the Regulations. For purposes of this Section 8.2, the term "registration-type class of securities" shall mean (i) a class of securities required to be registered under Section 12 of the Securities Exchange Act of 1934 (the "1934 Act") and (ii) a class of securities which would be required to be so registered except for the exemption from registration provided in subsection (g)(2)(H) of such Section 12. To the extent that Participants or Beneficiaries are, in accordance with the foregoing provisions, entitled to direct the Trustee as to the manner in which shares of Company Stock are to be voted, such voting rights shall be exercised in accordance with the following provisions of this Section 8.2. 65 67 (a) As soon as practicable before each annual or special shareholders' meeting of the Employer, the Trustee shall furnish to each Participant a copy of the proxy solicitation material sent generally to shareholders, together with a form requesting confidential directions on how the shares allocated to such Participant's Company Stock Account and Employee After-Tax Account (including fractional shares to 1/1000th of a share) are to be voted. The materials furnished to the Participants shall include a notice from the Trustee explaining that (i) allocated shares of Company Stock will be voted or not voted by the Trustee in accordance with directions of Participants, acting in their capacity as "named fiduciaries" as such term is defined in section 402(a)(2) of the Act (hereinafter, "Named Fiduciaries") with respect to allocated shares to the extent permitted by applicable law, if the Trustee determines that following such directions will not violate the Act; (ii) unallocated shares of Company Stock will be voted at the Trustee's discretion; (iii) by timely returning the proxy solicitation and pursuant thereto specifically directing the Trustee how the allocated shares subject to the decision of the Participant are to be voted, such Participant is consenting to his appointment as Named Fiduciary hereunder, to the extent permitted by applicable law, with respect to allocated shares for which he is entitled to provide the Trustee with voting directions; (iv) a Participant's consent to appointment as a Named Fiduciary or failure to consent to such appointment shall be binding only with respect to the specific proxy solicitations; and (v) in the event the Participant does not timely return the form or fails to consent to appointment as a Named Fiduciary, the allocated shares for which he is entitled to provide the Trustee with directions will be voted at the Trustee's discretion. The materials shall also include such information as is reasonably determined by the Trustee to be necessary to Participants to reach a reasonably informed decision as to (A) the consequences of consenting to be appointed a Named Fiduciary, and (B) how to vote the shares. The Administrator and the Trustee may also provide Participants with such other material concerning the matters to be voted as the Trustee or the Administrator in its discretion determine to be appropriate, provided, however, that prior to any distribution of materials by the Administrator, the Trustee shall be furnished with complete copies of all such materials. The Employer and the Administrator shall cooperate with the Trustee to ensure that Participants receive the requisite information in a timely manner. Upon timely receipt of such voting directions, the Trustee (after combining votes of fractional shares to give effect to the greatest extent to Participants' directions), shall vote the shares in accordance with subsections (b) through (e) of this Section 8.2. The directions received by the Trustee from Participants shall be held by the Trustee in strict confidence and shall not be divulged or released to any person, including directors, officers or employees of the Employer, or of any other company, except as otherwise required by law. (b) With respect to all corporate matters submitted to shareholders, the Trustee shall vote shares of Company Stock allocated to the Company Stock Account and the Employee After-Tax Account of any Participant (including fractional shares to 1/1000th of a share) in accordance with the directions of such Participant as a Named Fiduciary only if the Trustee determines that the Participant directions are proper and not contrary to the Act. For purposes of this subsection, a Participant's directions with respect to allocated shares are proper and not contrary to the Act if (i) the Trustee 66 68 determines that Participants have not been subjected to coercion or undue pressure in making their decisions and that clearly false information or misleading information is not distributed to the Participants (or that any false or misleading information that may have been distributed by other parties is corrected), and (ii) the Trustee determines that following the Participant directions would not violate the Act. (c) If voting directions for shares of Company Stock allocated to the Company Stock Account and the Employee After-Tax Account of any Participant are not timely received by the Trustee, the Trustee shall treat the non-receipt as a refusal by the Participant to be appointed as Named Fiduciary with respect to that proxy solicitation. Thereafter, in connection with such proxy solicitation, such allocated and undirected shares shall be voted in the sole discretion of the Trustee in accordance with the Trustee's fiduciary duties under the Act. (d) The Trustee shall vote shares of Company Stock that are unallocated to the Company Stock Account or the Employee After-Tax Account of any Participant in the sole discretion of the Trustee in accordance with the Trustee's fiduciary duties under the Act. (e) For purposes of this Section 8.2, with respect to shares of Company Stock allocated to the Company Stock Account and the Employee After-Tax Account of a deceased Participant, such Participant's Beneficiary, as a Named Fiduciary, shall be entitled to direct the Trustee how to vote such shares as if such Beneficiary were the Participant. Such Beneficiary shall also be treated as the Participant for all other purposes of this Section 8.2. 8.3 Tender or Exchange Offer for Company Stock (a) In the event an offer shall be received by the Trustee (including a tender offer for shares of Company Stock subject to Section 14(d)(1) of the 1934 Act or subject to Rule 13e-4 promulgated under the 1934 Act, as those provisions may from time to time be amended) to purchase or exchange any shares of Company Stock held by the Trust, the Trustee shall advise each Participant who has shares of Company Stock credited to such Participant's Company Stock Account and Employee After-Tax Account in writing of the terms of the offer as soon as practicable after its commencement and shall furnish each Participant with a form by which he may direct the Trustee confidentially whether or not to tender or exchange shares allocated to such Participant's Company Stock Account and Employee After-Tax Account. The materials furnished to Participants shall include a notice from the Trustee explaining that (i) allocated shares of Company Stock subject to the offer will be tendered or exchanged or will not be tendered or exchanged by the Trustee in accordance with directions of Participants, acting in their capacity as Named Fiduciaries with respect to allocated shares to the extent permitted by applicable law, if the Trustee determines that following such directions will not violate the Act; (ii) unallocated shares of Company Stock subject to the offer will be tendered or exchanged or will not be tendered or exchanged by the Trustee at the Trustee's discretion; 67 69 (iii) by timely returning the form and pursuant thereto specifically directing that the allocated shares subject to the decision of the Participant either be tendered or exchanged or not tendered or exchanged, such Participant is consenting to his appointment as Named Fiduciary hereunder, to the extent permitted by applicable law, with respect to allocated shares for which he is entitled to provide the Trustee with directions; (iv) a Participant's consent to appointment as a Named Fiduciary or failure to consent to such appointment shall be binding only with respect to the specific tender or exchange offer described in the materials sent to the Participant by the Trustee; and (v) in the event the Participant does not timely return the form or fails to consent to appointment as a Named Fiduciary, the allocated shares for which he is entitled to provide the Trustee with directions will either be tendered or exchanged or not tendered or exchanged at the Trustee's discretion. The materials shall also include such information as is reasonably determined by the Trustee to be necessary to Participants to reach a reasonably informed decision as to (A) the consequences of consenting or not consenting to be appointed a Named Fiduciary, and (B) whether to tender or exchange, including such documents as are prepared by any person and provided to the shareholders of the Employer pursuant to the 1934 Act. The Administrator and the Trustee may also provide Participants with such other material concerning the tender or exchange offer as the Trustee or the Administrator in its discretion determine to be appropriate, provided, however, that prior to any distribution of materials by the Administrator, the Trustee shall be furnished with complete copies of all such materials. The Employer and the Administrator shall cooperate with the Trustee to ensure that Participants receive the requisite information in a timely manner. The directions received by the Trustee from Participants shall be held by the Trustee in strict confidence and shall not be divulged or released to any person, including directors, officers or employees of the Employer, or of any other company, except as otherwise required by law. (b) The Trustee shall tender or not tender shares or exchange or not exchange shares of Company Stock allocated to the Company Stock Account and the Employee After-Tax Account of any Participant (including fractional shares to 1/1000th of a share) to the extent directed by the Participant as a Named Fiduciary only if the Trustee determines that the Participant directions are proper and not contrary to the Act. For purposes of this subsection, a Participant's directions with respect to allocated shares are proper and not contrary to the Act if (i) the Trustee determines that Participants have not been subjected to coercion or undue pressure in making their decisions and that clearly false information or misleading information is not distributed to the Participants (or that any false or misleading information that may have been distributed by other parties is corrected), and (ii) the Trustee determines that following the Participant directions would not violate the Act. (c) If tender or exchange directions for shares of Company Stock allocated to the Company Stock Account and the Employee After-Tax Account of any Participant are not timely received by the Trustee, the Trustee shall treat the non-receipt as a refusal by the Participant to be appointed as Named Fiduciary with respect to that tender or exchange offer. Thereafter, in connection with such tender or exchange offer, such 68 70 allocated and undirected shares shall be tendered or exchanged or not tendered or exchanged in the sole discretion of the Trustee in accordance with the Trustee's fiduciary duties under the Act. (d) The Trustee shall tender or exchange or not tender or exchange the shares of Company Stock that are unallocated to the Company Stock Account or the Employee After-Tax Account of any Participant in the sole discretion of the Trustee in accordance with the Trustee's fiduciary duties under the Act. (e) In the event, under the terms of a tender offer or otherwise, any shares of Company Stock tendered for sale, exchange or transfer pursuant to such offer may be withdrawn from such offer, the Trustee shall, in accordance with the applicable terms and conditions of subsections (a) through (d) above, and the responsibilities and the fiduciary duties of the Trustee as set forth in such subsections, follow such directions which are timely received by the Trustee from the Participants, respecting the withdrawal of such shares from such offer. (f) In the event that an offer for fewer than all of the shares of Company Stock held by the Trustee shall be received by the Trustee, shares shall be tendered in accordance with subsections (a) through (e) of this Section 8.3, and shares sold, exchanged or transferred pursuant to such tender shall be on a pro-rata basis based on the total number of shares tendered by the Trustee; provided, however, that any such shares so sold, exchanged, or transferred from any Participant's accounts shall come first from such Participant's Employee After-Tax Account, and once all shares from such account have been sold, exchanged or transferred, next from such Participant's Company Stock Account. (g) In the event an offer shall be received by the Trustee and directions shall be solicited from Participants pursuant to subsections (a)-(f) of this Section 8.3 regarding such offer, and prior to the termination of such offer, another offer is received by the Trustee for the securities subject to the first offer, the Trustee shall treat the offer as a new offer for purposes of apprising Participants of their rights to direct the Trustee and for purposes of providing Participants with the opportunity to accept or reject their appointment as Named Fiduciaries and shall use its best efforts under the circumstances to solicit directions from Participants to the Trustee (i) with respect to securities tendered for sale, exchange or transfer pursuant to the first offer, whether to withdraw such tender, if possible, and if withdrawn, whether to tender any securities so withdrawn for sale, exchange or transfer pursuant to the second offer and (ii) with respect to securities not tendered for sale, exchange or transfer pursuant to the first offer, whether to tender or not to tender such securities for sale, exchange or transfer pursuant to the second offer. The Trustee shall follow all such directions received in a timely manner from Participants in the same manner and in the same proportion as provided in subsections (a)-(f) of this Section 8.3. In the event a Participant who failed to consent to his appointment as a Named Fiduciary so consents in response to a subsequent offer, the shares with respect to which the Participant would have been entitled to direct the Trustee shall once again be 69 71 subject to that consenting Participant's direction with respect to the new offer. In the event a Participant who directed the Trustee with respect to an earlier offer fails to direct the Trustee in response to a subsequent offer, the Participant shall be deemed to have refused appointment as a Named Fiduciary and the allocated shares he would have been entitled to direct shall be subject to the discretion of the Trustee as provided in subsection (c) of this Section 8.3. With respect to any further offer for any Company Stock received by the Trustee and subject to any earlier offer (including successive offers from one or more existing offerors), the Trustee shall act in the same manner as described above. (h) Neither a Participant's instructions to the Trustee to tender or exchange shares of Company Stock pursuant to this Section 8.3 nor an actual tender or exchange of shares of Company Stock pursuant to this Section 8.3 shall be deemed a withdrawal or suspension from the Plan or a forfeiture of any portion of the Participant's interest in the Plan. Funds received in exchange for tendered shares shall be credited to the Employee After-Tax Account and/or the Company Stock Account, as applicable in accordance with the ordering method provided in Section 8.3(f), of the Participant whose shares were tendered or the Suspense Account for which such shares were tendered. The Trustee shall invest such funds as permitted in accordance with the terms of the Plan and the Trust Agreement. (i) The Trustee shall take all steps necessary, including the appointment of a corporate Trustee, and/or an outside independent administrator to the extent that such action, after consultation with the Employer and the Administrator, is found necessary to maintain the confidentiality of Participant responses and/or adequately discharge their obligations as Named Fiduciaries. (j) For purposes of this Section 8.3, with respect to shares of Company Stock allocated to the Company Stock Account and the Employee After-Tax Account of a deceased Participant, such Participant's Beneficiary, as a Named Fiduciary, shall be entitled to direct the Trustee whether or not to tender or exchange such shares as if such Beneficiary were the Participant. Such Beneficiary shall also be treated as the Participant for all other purposes of this Section 8.3. ARTICLE 9. AMENDMENT, TERMINATION, AND MERGERS 9.1 Amendment The Employer shall have the right at any time to amend the Plan. However, no such amendment shall authorize or permit any part of the Trust Fund (other than such part as is required to pay taxes and administration expenses) to be used for or diverted to purposes other than for the exclusive benefit of the Participants or their Beneficiaries or estates; no such amendment shall cause any reduction in the amount credited to the account of any Participant or cause or permit any portion of the Trust Fund to revert to or become the property of the Employer; and no such amendment which affects the rights, duties or responsibilities of the Trustee and Administrator may be made without the Trustee's and Administrator's written 70 72 consent. Any such amendment shall become effective as provided therein upon its execution. The Trustee shall not be required to execute any such amendment unless the Trust provisions contained herein are a part of the Plan and the amendment affects the duties of the Trustee hereunder. In addition, no such amendment shall have the effect of terminating the protections and rights set forth in Section 7.12, unless such termination shall then be permitted under the applicable provisions of the Code and Treasury Regulations; such a termination is currently expressly prohibited by Section 54.4975-11(a)(3)(ii) of the Treasury Regulations. For the purposes of this Section, a Plan amendment which has the effect of eliminating or reducing an early retirement benefit or eliminating an optional form of benefit (as provided in Treasury regulations) shall be treated as reducing the amount credited to the account of a Participant. 9.2 Termination The Employer shall have the right at any time to terminate the Plan by delivering to the Trustee and Administrator written notice of such termination. A complete discontinuance of the Employer's contributions to the Plan shall be deemed to constitute a termination. Upon any termination (full or partial) or complete discontinuance of contributions, all amounts credited to the affected Participants' Accounts shall become 100% Vested and shall not thereafter be subject to forfeiture and all unallocated amounts shall be allocated to the accounts of all Participants in accordance with the provisions hereof. Upon such termination of the Plan, the Employer, by written notice to the Trustee and Administrator, may direct either: (a) complete distribution of the assets in the Trust Fund to the Participants, in cash or in kind, in one "qualified total distribution" (as such term is defined in the Code) as soon as the Trustee deems it to be in the best interests of the Participants; or, (b) continuation of the Trust created by this agreement and the distribution of benefits at such time and in such manner as though the Plan had not been terminated. 9.3 Merger or Consolidation This Plan and Trust may be merged or consolidated with, or its assets and/or liabilities may be transferred to any other Plan and Trust only if the benefits which would by a Participant of this Plan, in the event of a termination of the Plan immediately after such transfer, merger or consolidation, are at least equal to the benefits the Participant would have received if the Plan had terminated immediately before the transfer, merger or consolidation. 71 73 ARTICLE 10. MISCELLANEOUS 10.1 Participant's Rights This Plan shall not be deemed to constitute a contract between the Employer and any Participant or to be a consideration or an inducement for the employment of any Participant or Employee. Nothing contained in this Plan shall be deemed to give any Participant or Employee the right to be retained in the service of the Employer or to interfere with the right of the Employer to discharge any Participant or Employee at any time regardless of the effect which such discharge shall have upon him as a Participant of this Plan. 10.2 Alienation (a) Subject to the exceptions provided below, no benefit which shall be payable out of the Trust Fund to any person (including a Participant or his Beneficiary) shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void; and no such benefit shall in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements, or torts of any such person, nor shall it be subject to attachment or legal process for or against such person, and the same shall not be recognized by the Trustee, except to such extent as may be required by law. (b) This provision shall not apply to the extent a Participant or Beneficiary is indebted to the Plan, for any reason, under any provision of the Plan. At the time a distribution is to be made to or for a Participant's or Beneficiary's benefit, such proportion of the amount distributed as shall equal such indebtedness shall be paid by the Trustee to the Trustee or the Administrator, at the direction of the Administrator, to apply against or discharge such indebtedness. Prior to making a payment, however, the Participant or Beneficiary must be given written notice by the Administrator that such indebtedness is to be so paid in whole or part from his Participant's Account. If the Participant or Beneficiary does not agree that the indebtedness is a valid claim against his Vested Participant's Account, he shall be entitled to a review of the validity of the claim in accordance with procedures provided in Sections 2.12 and 2.13. (c) This provision shall not apply to a "qualified domestic relations order" defined in Code Section 414(p), and those other domestic relations orders permitted to be so treated by the Administrator under the provisions of the Retirement Equity Act of 1984. The Administrator shall establish a written procedure to determine the qualified status of domestic relations orders and to administer distributions under such qualified orders. Further, to the extent provided under a "qualified domestic relations order," a former spouse of a Participant shall be treated as the spouse or surviving spouse for all purposes under the Plan. 72 74 10.3 Construction of Plan This Plan and Trust shall be construed and enforced according to the Act and the laws of the State of Texas, other than its laws respecting choice of law, to the extent not preempted by the Act. 10.4 Gender and Number Wherever any words are used herein in the masculine, feminine or neuter gender, they shall be construed as though they were also used in another gender in all cases where they would so apply, and whenever any words are used herein in the singular or plural form, they shall be construed as though they were also used in the other form in all cases where they would so apply. 10.5 Legal Action In the event any claim, suit, or proceeding is brought regarding the Trust and/or Plan established hereunder to which the Trustee or the Administrator may be a party, and such claim, suit, or proceeding is resolved in favor of the Trustee or Administrator, they shall be entitled to be reimbursed from the Trust Fund for any and all costs, attorney's fees, and other expenses pertaining thereto incurred by them for which they shall have become liable. 10.6 Prohibition Against Diversion of Funds Except as provided below and otherwise specifically permitted by law, it shall be impossible by operation of the Plan or of the Trust, by termination of either, by power of revocation or amendment, by the happening of any contingency, by collateral arrangement or by any other means, for any part of the corpus or income of any trust fund maintained pursuant to the Plan or any funds contributed thereto to be used for, or diverted to, purposes other than the exclusive benefit of Participants, Retired Participants, or their Beneficiaries. 10.7 Return of Funds (a) Notwithstanding anything herein to the contrary, if, pursuant to an application filed by or in behalf of the Plan, the Commissioner of Internal Revenue Service or his delegate should determine that the Plan does not initially qualify as a tax-exempt plan and trust under Sections 401 and 501 of the Code, and such determination is not contested, or if contested, is finally upheld, then the Plan shall be void ab initio and all amounts contributed to the Plan by the Employer, less expenses paid, shall be returned within one year and the Plan shall terminate, and the Trustee shall be discharged from all further obligations. (b) Notwithstanding any provisions to the contrary, except Sections 3.6, 3.7, and 4.2(c), any contribution by the Employer to the Trust Fund is conditioned upon the deductibility of the contribution by the Employer under the Code and, to the extent any such deduction is disallowed, the Employer may within one (1) year following a final determination of the disallowance, whether by agreement with the Internal Revenue 73 75 Service or by final decision of a court of competent jurisdiction, demand repayment of such disallowed contribution and the Trustee shall return such contribution within one (1) year following the disallowance. Earnings of the Plan attributable to the excess contribution may not be returned to the Employer, but any losses attributable thereto must reduce the amount so returned. (c) In the event the Employer shall make an excessive or erroneous contribution under a mistake of fact pursuant to Section 403(c)(2)(A) of the Act, the Employer may demand repayment of such excessive or erroneous contribution at any time within one (1) year following the time of payment and the Trustees shall return such amount to the Employer within the one (1) year period. Earnings of the Plan attributable to the excess or erroneous contributions may not be returned to the Employer but any losses attributable thereto must reduce the amount so returned. 10.8 Bonding Every Fiduciary, except a bank or an insurance company, unless exempted by the Act and regulations thereunder, shall be bonded in an amount not less than 10% of the amount of the funds such Fiduciary handles; provided, however, that the minimum bond shall be $1,000 and the maximum bond, $500,000. The amount of funds handled shall be determined at the beginning of each Plan Year by the amount of funds handled by such person, group, or class to be covered and their predecessors, if any, during the preceding Plan Year, or if there is no preceding Plan Year, then by the amount of the funds to be handled during the then current year. The bond shall provide protection to the Plan against any loss by reason of acts of fraud or dishonesty by the Fiduciary alone or in connivance with others. The surety shall be a corporate surety company (as such term is used in Section 412(a)(2) of the Act), and the bond shall be in a form approved by the Secretary of Labor. Notwithstanding anything in the Plan to the contrary, the cost of such bonds shall be an expense of and may, at the election of the Administrator, be paid from the Trust Fund or by the Employer. 10.9 Employer's and Trustee's Protective Clause Neither the Employer nor the Trustee, nor their successors, shall be responsible for the validity of any Contract issued hereunder or for the failure on the part of the insurer to make payments provided by any such Contract, or for the action of any person which may delay payment or render a Contract null and void or unenforceable in whole or in part. 10.10 Insurer's Protective Clause Any insurer who shall issue Contracts hereunder shall not have any responsibility for the validity of this Plan or for the tax or legal aspects of this Plan. The insurer shall be protected and held harmless in acting in accordance with any written direction of the Trustee, and shall have no duty to see to the application of any funds paid to the Trustee, nor be required to question any actions directed by the Trustee. Regardless of any provision of this Plan, the insurer shall not be required to take or permit any action or allow any benefit or privilege contrary to the terms of any Contract which it issues hereunder, or the rules of the insurer. 74 76 10.11 Receipt and Release for Payments Any payment to any Participant, his legal representative, Beneficiary, or to any guardian or committee appointed for such Participant or Beneficiary in accordance with the provisions of the Plan, shall, to the extent thereof, be in full satisfaction of all claims hereunder against the Trustee and the Employer, either of whom may require such Participant, legal representative, Beneficiary, guardian or committee, as a condition precedent to such payment, to execute a receipt and release thereof in such form as shall be determined by the Trustee or Employer. 10.12 Action by the Employer Whenever the Employer under the terms of the Plan is permitted or required to do or perform any act or matter or thing, it shall be done and performed by a person duly authorized by its legally constituted authority. 10.13 Named Fiduciaries and Allocation of Responsibility The "Named Fiduciaries" of this Plan are (1) the Employer, (2) the Administrator, (3) the Trustee and (4) any Investment Manager appointed hereunder. The Named Fiduciaries shall have only those specific powers, duties, responsibilities, and obligations as are specifically given them under the Plan. In general, the Employer shall have the sole responsibility for making the contributions provided for under Section 4.1; and shall have the sole authority to appoint and remove the Trustee, the Administrator, and any Investment Manager which may be provided for under the Plan; to formulate the Plan's "funding policy and method"; and to amend or terminate, in whole or in part, the Plan. The Administrator shall have the sole responsibility for the administration of the Plan, which responsibility is specifically described in the Plan. The Trustee shall have the sole responsibility of management of the assets held under the Trust, except those assets, the management of which has been assigned to an Investment Manager, who shall be solely responsible for the management of the assets assigned to it, all as specifically provided in the Plan. Each Named Fiduciary warrants that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the Plan, authorizing or providing for such direction, information or action. Furthermore, each Named Fiduciary may rely upon any such direction, information or action of another Named Fiduciary as being proper under the Plan, and is not required under the Plan to inquire into the propriety of any such direction, information or action. It is intended under the Plan that each Named Fiduciary shall be responsible for the proper exercise of its own powers, duties, responsibilities and obligations under the Plan. No Named Fiduciary shall guarantee the Trust Fund in any manner against investment loss or depreciation in asset value. Any person or group may serve in more than one Fiduciary capacity. 10.14 Headings The headings and subheadings of this Plan have been inserted for convenience of reference and are to be ignored in any construction of the provisions hereof. 75 77 10.15 Uniformity All provisions of this Plan shall be interpreted and applied in a uniform, nondiscriminatory manner. 10.16 Securities and Exchange Commission Approval The Company may request an interpretative letter from the Securities and Exchange Commission stating that the transfers of Company Stock contemplated hereunder do not involve transactions requiring a registration of such Company Stock under the Securities Act of 1933. In the event that a favorable interpretative letter is not obtained, the Employer reserves the right to amend the Plan and Trust retroactively to their effective dates in order to obtain a favorable interpretative letter or to terminate the Plan. 10.17 Indemnification Neither the Employer, any of its officers or directors, the Administrator nor the Trustee shall be personally liable for any action or inaction with respect to any duty or responsibility imposed upon such person by the terms of the Plan, unless such action or inaction is judicially determined to be a breach of that person's fiduciary responsibility with respect to the Plan under any applicable law. The Employer may indemnify or purchase insurance to underwrite indemnity for the Administrator and/or the Employer's board of directors against any personal liability or expense except for his own gross negligence. ARTICLE 11. PARTICIPATING EMPLOYERS 11.1 Adoption by Other Employers Notwithstanding anything herein to the contrary, with the consent of the Employer and Trustee, any other corporation or entity, whether an affiliate or subsidiary or not, may adopt this Plan and all of the provisions hereof, and participate herein and be known as a Participating Employer, by a properly executed document evidencing said intent and will of such Participating Employer. 11.2 Requirements of Participating Employers (a) Each such Participating Employer shall be required to use the same Trustee as provided in this Plan. (b) The Trustee may, but shall not be required to, commingle, hold and invest as one Trust Fund all contributions made by Participating Employers, as well as all increments thereof. (c) The transfer of any Participant from or to an Employer participating in this Plan, whether he be an Employee of the Employer or a Participating Employer, shall not affect such Participant's rights under the Plan, and all amounts credited to such 76 78 Participant's Account as well as his accumulated service time with the transferor or predecessor, and his length of participation in the Plan, shall continue to his credit. (d) All rights and values forfeited by termination of employment shall insure only to the benefit of the Employee-Participants of the Participating Employer by which the forfeiting Participant was employed. (e) Any expenses of the Trust which are to be paid by the Employer or borne by the Trust Fund shall be paid by each Participating Employer in the same proportion that the total amount standing to the credit of all Participants employed by such Employer bears to the total standing to the credit of all Participants. 11.3 Designation of Agent Each Participating Employer shall be deemed to be a part of this Plan; provided, however, that with respect to all of its relations with the Trustee and Administrator for the purpose of this Plan, each Participating Employer shall be deemed to have designated irrevocably the Employer as its agent. Unless the context of the Plan clearly indicates the contrary, the word "Employer" shall be deemed to include each Participating Employer as related to its adoption of the Plan. 11.4 Employee Transfers It is anticipated that an Employee may be transferred between Participating Employers, and in the event of any such transfer, the Employee involved shall carry with him his accumulated service and eligibility. No such transfer shall effect a termination of employment hereunder, and the Participating Employer to which the Employee is transferred shall thereupon become obligated hereunder with respect to such Employee in the same manner as was the Participating Employer from whom the Employee was transferred. 11.5 Participating Employer's Contribution All contributions made by a Participating Employer, as provided for in this Plan, shall be determined separately on the basis of its total Compensation paid, and shall be paid to and held by the Trustee for the exclusive benefit of the Employees of the Participating Employer and the Beneficiaries of such Employees, subject to all the terms and conditions of this Plan. Any Forfeiture by an Employee of a Participating Employer subject to allocation during each Plan Year shall be allocated for the benefit of all Participants of the Plan in accordance with the provisions of this Plan. 11.6 Amendment Amendment of this Plan by the Employer at any time when there shall be a Participating Employer hereunder shall only be by the written action of each and every Participating Employer and with the consent of the Trustee where such consent is necessary in accordance with the terms of this Plan. 77 79 11.7 Discontinuance of Participation Any Participating Employer shall be permitted to discontinue or revoke its participation in the Plan. At the time of any such discontinuance or revocation, satisfactory evidence thereof and of any applicable conditions imposed shall be delivered to the Trustee. The Trustee shall thereafter upon receiving written direction from the Administrator transfer, deliver and assign Contracts and other Trust Fund assets allocable to the Participants of such Participating Employer to such new Trustee as shall have been designated by such Participating Employer, in the event that it has established a separate pension plan for its Employees. If no successor is designated, the Trustee shall retain such assets for the Employees of said Participating Employer pursuant to the provisions of Article VII hereof. In no such event shall any part of the corpus or income of the Trust as it relates to such Participating Employer be used for or diverted for purposes other than for the exclusive benefit of the Employees of such Participating Employer. 11.8 Administrator's Authority The Administrator shall have authority to make any and all necessary rules or regulations, binding upon all Participating Employers and all Participants, to effectuate the purpose of this Article. 11.9 Participating Employer Contribution for Affiliate If any Participating Employer is prevented in whole or in part from making a contribution to the Trust Fund which it would otherwise have made under the Plan by reason of having no current or accumulated earnings or profits, or because such earnings or profits are less than the contribution which it would otherwise have made, then, pursuant to Code Section 404(a)(3)(B), so much of the contribution which such Participating Employer was so prevented from making may be made, for the benefit of the participating employees of such Participating Employer, by the other Participating Employers who are members of the same affiliated group within the meaning of Code Section 1504 to the extent of their current or accumulated earnings or profits, except that such contribution by each such other Participating Employer shall be limited to the proportion of its total current and accumulated earnings or profits remaining after adjustment for its contribution to the Plan made without regard to this paragraph which the total prevented contribution bears to the total current and accumulated earnings or profits of all the Participating Employers remaining after adjustment for all contributions made to the Plan without regard to this paragraph. A Participating Employer on behalf of whose employees a contribution is made under this paragraph shall not reimburse the contributing Participating Employers. 78 80 IN WITNESS WHEREOF, this Plan has been executed this 1st day of April, 1997 to be effective as of the day and year first above written. RANDALLS FOOD MARKETS, INC. By: /s/ Janice R. Schilmoeller ------------------------------------- Name: JANICE R. SCHILMOELLER ----------------------------------- Title: Vice President of Risk Management ---------------------------------- Consented to: RANDALLS FOOD MARKETS, INC. EMPLOYEE BENEFITS COMMITTEE By: /s/ Janice R. Schilmoeller ------------------------------------- Name: JANICE R. SCHILMOELLER ----------------------------------- For the Administrator 79 81 TABLE OF CONTENTS
PAGE ---- ARTICLE 1. DEFINITIONS.......................................................................2 ARTICLE 2. TOP HEAVY AND ADMINISTRATION.....................................................14 2.1 TOP HEAVY PLAN REQUIREMENTS.........................................................14 2.2 DETERMINATION OF TOP HEAVY STATUS...................................................14 2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER.........................................17 2.4 ASSIGNMENT AND DESIGNATION OF ADMINISTRATIVE AUTHORITY..............................18 2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES.......................................18 2.6 POWERS AND DUTIES OF THE ADMINISTRATOR..............................................18 2.7 RECORDS AND REPORTS.................................................................19 2.8 APPOINTMENT OF ADVISERS.............................................................19 2.9 INFORMATION FROM EMPLOYER...........................................................19 2.10 PAYMENT OF EXPENSES...............................................................20 2.11 MAJORITY ACTIONS..................................................................20 2.12 CLAIMS PROCEDURE..................................................................20 2.13 CLAIMS REVIEW PROCEDURE...........................................................20 ARTICLE 3. ELIGIBILITY......................................................................21 3.1 CONDITIONS OF ELIGIBILITY...........................................................21 3.2 APPLICATION FOR PARTICIPATION.......................................................21 3.3 EFFECTIVE DATE OF PARTICIPATION.....................................................21 3.4 DETERMINATION OF ELIGIBILITY........................................................21 3.5 TERMINATION OF ELIGIBILITY..........................................................21 ARTICLE 4. CONTRIBUTION AND ALLOCATION......................................................22 4.1 EMPLOYER CONTRIBUTION...............................................................22 4.2 PARTICIPANT'S SALARY REDUCTION ELECTION.............................................22 4.3 AMOUNT OF EMPLOYER'S CONTRIBUTION...................................................25 4.4 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION..........................................25 4.5 ALLOCATION OF CONTRIBUTION, EARNINGS AND FORFEITURES................................25 4.6 ACTUAL DEFERRAL PERCENTAGE TESTS....................................................29 4.7 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS......................................31 4.8 MAXIMUM CONTRIBUTION PERCENTAGE - SECTION 401(M) TEST...............................34 4.9 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS..................................36 4.10 MAXIMUM ANNUAL ADDITIONS..........................................................38 4.11 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS.........................................42 4.12 TRANSFERS AND ROLLOVERS FROM OTHER QUALIFIED PLANS................................43 4.13 DIRECTED INVESTMENT ACCOUNT.......................................................45 ARTICLE 5. FUNDING AND INVESTMENT POLICY....................................................46 5.1 APPLICATION OF CASH.................................................................46 5.2 TRANSACTIONS INVOLVING COMPANY STOCK................................................46 5.3 LOANS TO THE TRUST..................................................................46 ARTICLE 6. VALUATIONS.......................................................................47 6.1 VALUATION OF THE TRUST FUND.........................................................47 6.2 ANNUAL STATEMENT....................................................................48
i 82 ARTICLE 7. DETERMINATION AND DISTRIBUTION OF BENEFITS.......................................48 7.1 DETERMINATION OF BENEFITS UPON RETIREMENT...........................................48 7.2 DETERMINATION OF BENEFITS UPON DEATH................................................49 7.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY....................................50 7.4 DETERMINATION OF BENEFITS UPON TERMINATION..........................................50 7.5 DISTRIBUTION OF BENEFITS............................................................52 7.6 HOW PLAN BENEFIT WILL BE DISTRIBUTED................................................56 7.7 DISTRIBUTION FOR MINOR BENEFICIARY..................................................57 7.8 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN......................................57 7.9 RIGHT OF FIRST REFUSALS.............................................................57 7.10 STOCK CERTIFICATE LEGEND..........................................................59 7.11 PUT OPTION........................................................................59 7.12 NONTERMINABLE PROTECTIONS AND RIGHTS..............................................60 7.13 WITHDRAWALS FROM EMPLOYEE AFTER-TAX ACCOUNT.......................................60 7.14 HARDSHIP WITHDRAWALS..............................................................61 7.15 PARTICIPANT LOANS.................................................................62 7.16 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION...................................64 7.17 PAYMENT OF DISTRIBUTION DIRECTLY TO ELIGIBLE RETIREMENT PLAN......................64 ARTICLE 8. TRUSTEE..........................................................................65 8.1 BASIC RESPONSIBILITIES OF THE TRUSTEE...............................................65 8.2 VOTING COMPANY STOCK................................................................65 8.3 TENDER OR EXCHANGE OFFER FOR COMPANY STOCK..........................................67 ARTICLE 9. AMENDMENT, TERMINATION, AND MERGERS..............................................71 9.1 AMENDMENT...........................................................................71 9.2 TERMINATION.........................................................................71 9.3 MERGER OR CONSOLIDATION.............................................................72 ARTICLE 10. MISCELLANEOUS...................................................................72 10.1 PARTICIPANT'S RIGHTS..............................................................72 10.2 ALIENATION........................................................................72 10.3 CONSTRUCTION OF PLAN..............................................................73 10.4 GENDER AND NUMBER.................................................................73 10.5 LEGAL ACTION......................................................................73 10.6 PROHIBITION AGAINST DIVERSION OF FUNDS............................................73 10.7 RETURN OF FUNDS...................................................................73 10.8 BONDING...........................................................................74 10.9 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE........................................74 10.10 INSURER'S PROTECTIVE CLAUSE.......................................................75 10.11 RECEIPT AND RELEASE FOR PAYMENTS..................................................75 10.12 ACTION BY THE EMPLOYER............................................................75 10.13 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY................................75 10.14 HEADINGS..........................................................................76 10.15 UNIFORMITY........................................................................76 10.16 SECURITIES AND EXCHANGE COMMISSION APPROVAL.......................................76 10.17 INDEMNIFICATION...................................................................76 ARTICLE 11. PARTICIPATING EMPLOYERS.........................................................76 11.1 ADOPTION BY OTHER EMPLOYERS.......................................................76 11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS...........................................77 11.3 DESIGNATION OF AGENT..............................................................77 11.4 EMPLOYEE TRANSFERS................................................................77
ii 83 11.5 PARTICIPATING EMPLOYER'S CONTRIBUTION.............................................77 11.6 AMENDMENT.........................................................................78 11.7 DISCONTINUANCE OF PARTICIPATION...................................................78 11.8 ADMINISTRATOR'S AUTHORITY.........................................................78 11.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE.................................78
iii EX-4.2 3 FIRST AMENDMENT TO THE RANDALLS FOOD MARKETS 1 EXHIBIT 4.2 FIRST AMENDMENT TO THE RANDALLS FOOD MARKETS, INC. ESOP/401(k) SAVINGS PLAN (AMENDED AND RESTATED AS OF APRIL 1, 1997) W I T N E S S E T H: WHEREAS, Randalls Food Markets, Inc. (the "Employer") presently maintains the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan (the "Plan"); and WHEREAS, the Employer, pursuant to Section 9.1 of the Plan, has the right to amend the Plan from time to time subject to certain limitations. NOW, THEREFORE, in order to make various revisions desired by the Employer, the Plan is hereby amended in the following manner: 1. Effective April 1, 1997, Section 1.33A is hereby added to the Plan as follows: 1.33A "Income" means the income or losses allocable to "excess amounts" which shall equal the sum of the allocable gain or loss for the "applicable computation period" and the allocable gain or loss for the period between the "applicable computation period" and the date of distribution ("gap period"). The income allocable to "excess amounts" for the "applicable computation period" and the "gap period" is calculated separately and is determined by multiplying the income for the "applicable computation period" or the "gap period" by a fraction. The numerator of the fraction is the "excess amount" for the "applicable computation period". The denominator of the fraction is the total "account balance" attributable to "Employer contributions" as of the end of the "applicable computation period" or the "gap period", reduced by the gain allocable to such total amount for the "applicable computation period" or the "gap period" and increased by the loss allocable to such total amount for the "applicable computation period" or the "gap period." The provisions of this Section shall be applied: (a) For purposes of Section 4.2(g), by substituting: (1) "Excess Deferred Compensation" for "excess amounts"; (2) "taxable year of the participant" for "applicable computation period"; (3) "Deferred Compensation" for "Employer contributions"; and (4) "Participant's Elective Account" for "account balance." (b) For purposes of Section 4.7(a), by substituting: (1) "Excess Contributions" for "excess amounts"; (2) "Plan Year" for "applicable computation period"; 2 (3) "Elective Contributions" for "Employer contributions"; and (4) "Participant's Elective Account" for "account balance." (c) For purposes of Section 4.9(a), by substituting: (1) "Excess Aggregate Contributions" for "excess amounts"; (2) "Plan Year" for "applicable computation period"; (3) "Matching Contributions made pursuant to Section 4.1(a)(2) and any qualified non-elective contributions or elective deferrals taken into account pursuant to Section 4.8(c)" for "Employer contributions"; and (4) "Matching Contribution Account" for "account balance." In lieu of the "fractional method" described above, a "safe harbor method" may be used to calculate the allocable Income for the "gap period." Under the "safe harbor method," allocable Income for the "gap period" shall be deemed to equal ten percent (10%) of the Income allocable to "excess amounts" for the "applicable computation period" multiplied by the number of calendar months in the "gap period." For purposes of determining the number of calendar months in the "gap period," a distribution occurring on or before the fifteenth day of the month shall be treated as having been made on the last day of the preceding month and a distribution occurring after such fifteenth day shall be treated as having been made on the first day of the next subsequent month. Effective April 1, 1997, Sections 4.2(g), 4.7(a), 4.9(a) and 4.9(b) are hereby amended by changing all references to "income" therein to "Income." IN WITNESS WHEREOF, the Employer has executed this First Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan on this 10th day of May, 1997. RANDALLS FOOD MARKETS, INC. By: /s/ Janice R. Schilmoeller _____________________________________ Name: JANICE R. SCHILMOELLER ___________________________________ Title: Vice President of Risk Management __________________________________ 2 EX-4.3 4 SECOND AMENDMENT TO THE RANDALLS FOOD MARKET 1 EXHIBIT 4.3 SECOND AMENDMENT TO THE RANDALLS FOOD MARKETS, INC. ESOP/401(k) SAVINGS PLAN (Amended and Restated as of April 1, 1997) W I T N E S S E T H: WHEREAS, Randalls Food Markets, Inc. (the "Employer") presently maintains the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan (the "Plan"); and WHEREAS, the Plan represents the amendment and restatement of the Randalls Food Markets, Inc. Employee Stock Ownership Plan (the "ESOP"); and WHEREAS, the ESOP applied for a determination from the Internal Revenue Service ("IRS") with respect to the ESOP's qualified status prior to the restatement of the ESOP; and WHEREAS, after the restatement of the ESOP, the IRS issued a favorable determination with respect to the ESOP subject to the adoption of certain amendments to the ESOP; and WHEREAS, the Employer adopted the amendments to the ESOP required by the IRS; and WHEREAS, the Employer, pursuant to Section 9.1 of the Plan, has the right to amend the Plan from time to time subject to certain limitations. NOW, THEREFORE, in order to incorporate the amendments required by the IRS with respect to the ESOP into the Plan, the Plan is hereby amended in the following manner: 1. Effective June 25, 1989, Section 1.10 is hereby amended in its entirety to read as follows: 1.10 "Compensation" shall mean a Participant's wages for the Plan Year within the meaning of Code Section 3401(a) (for the purposes of income tax withholding at the source) but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)). For purposes of this Section, the determination of Compensation shall be made by excluding bonuses and including amounts which are contributed by the Employer pursuant to a salary reduction agreement and which are not includible in the gross income of the Participant under Code Sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or 457, and Employee contributions described in Code Section 414(h)(2) that are treated as Employer contributions. Compensation shall be recognized as of an Employee's effective date of participation pursuant to Section 3.3. Compensation in excess of $200,000 shall be disregarded. Such amount shall be adjusted at the same time and in such manner as permitted under Code Section 415(d), except that the dollar increase in effect on January 1 of any calendar year shall be effective for the Plan Year beginning with or within such calendar year and the first 2 adjustment to the $200,000 limitation shall be effective on January 1, 1990. For any short Plan Year the Compensation limit shall be an amount equal to the Compensation limit for the calendar year in which the Plan Year begins multiplied by the ratio obtained by dividing the number of full months in the short Plan Year by twelve (12). For Plan Years beginning prior to January 1, 1997, in applying this limitation, the family group of a Highly Compensated Participant who is subject to the Family Member aggregation rules of Code Section 414(q)(6) because such participant is either a "five-percent owner" of the Employer or one of the ten (10) Highly Compensated Employees paid the greatest "415 Compensation" during the year, shall be treated as a single participant, except that for this purpose Family Members shall include only the affected participant's spouse and any lineal descendants who have not attained age nineteen (19) before the close of the year. If, as a result of the application of such rules the adjusted $200,000 limitation is exceeded, then the limitation shall be prorated among the affected Family Members in proportion to each such Family Member's Compensation prior to the application of this limitation, or the limitation shall be adjusted in accordance with any other method permitted by Regulations. "Family Member" means, with respect to an affected Employee, such Employee's spouse, such Employee's lineal descendants and ascendants and their spouses, all as described in Code Section 414(q)(6)(B). For Plan Years beginning prior to January 1, 1997, if, as a result of such rules, the maximum "annual addition" limit of Section 4.10(a) would be exceeded for one or more of the affected Family Members, the prorated Compensation of all affected Family Members shall be adjusted to avoid or reduce any excess. The prorated Compensation of any affected Family Members whose allocation would exceed the limit shall be adjusted downward to the level needed to provide an allocation equal to such limit. The prorated Compensation of affected Family Members not affected by such limit shall then be adjusted upward on a pro rata basis not to exceed each such affected Family Member's Compensation as determined prior to application of the Family Member rule. The resulting allocation shall not exceed such individual's maximum "annual addition" limit. If, after these adjustments, an "excess amount" still results, such "excess amount" shall be disposed of in the manner described in Section 4.11(a) pro rata among all affected Family Members. In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, the annual Compensation of each Employee taken into account under the Plan shall not exceed the "OBRA `93 Annual Compensation Limit." The "OBRA `93 Annual Compensation Limit" is $150,000, as adjusted for increases in the cost of living in accordance with Code Section 401(a)(17)(B). The cost of living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined ("Determination Period") beginning in such calendar year. If a Determination Period consists of fewer than 12 months, the "OBRA `93 Annual Compensation Limit" will be multiplied by a fraction, the numerator of which is the number of months in the Determination Period, and the denominator of which is 12. Any reference in this Plan to the limitation under Code Section 401(a)(17) shall mean the "OBRA `93 Annual Compensation Limit" set forth in this Section. 2 3 If Compensation for any prior Determination Period is taken into account in determining a Participant's benefits accruing in the current Plan Year, the Compensation for that prior Determination Period is subject to the "OBRA `93 Annual Compensation Limit" in effect for that prior Determination Period. For this purpose, for Determination Periods beginning before the first day of the first Plan Year beginning on or after January 1, 1994, the "OBRA `93 Annual Compensation Limit" is $150,000. 2. Effective June 25, 1989, Section 1.31 is hereby amended in its entirety to read as follows: 1.31 "Highly Compensated Employee" means any Employee or former Employee who is a highly compensated employee as defined in Code Section 414(q) and the Regulations thereunder. Generally, any Employee or former Employee is considered a Highly Compensated Employee if such Employee or former Employee performed services for the Employer during the "determination year" and is one or more of the following groups: (a) Employees who at any time during the "determination year" or "look-back year" were "five percent owners." "Five-percent owner" means any person who owns (or is considered as owning within the meaning of Code Section 318) more than five percent of the outstanding stock of the Employer or stock possessing more than five percent of the total combined voting power of all stock of the Employer or, in the case of an unincorporated business, any person who owns more than five percent of the capital or profits interest in the Employer. In determining percentage ownership hereunder, employers that would otherwise be aggregated under Code Sections 414(b), (c), (m) and (o) shall be treated as separate employers. (b) Employees who received "415 Compensation" during the "look-back year" from the Employer in excess of $75,000. In determining whether an individual has "415 Compensation" of more than $75,000, "415 Compensation" from each employer required to be aggregated under Code Sections 414(b), (c), (m) and (o) shall be taken into account. (c) Employees who received "415 Compensation" during the "look-back year" from the Employer in excess of $50,000 and were in the top-paid group of Employees for the Plan Year. An Employee is in the top-paid group of Employees for any year if such Employee is in the group consisting of the top twenty (20) percent of the Employees when ranked on the basis of "415 Compensation" paid during the year. For the purpose of determining the number of Employees in the top-paid group, (a) Employees with less than six (6) months of service; (b) Employees who normally work less than 172 hours per week; (c) Employees who normally work less than six (6) months during a year; (d) Employees who have not yet attained age 21; and (e) except to the extent provided in Regulations, Employees who are included in a unit of Employees covered by a collective bargaining agreement between employee representatives and the Employer shall be excluded. In determining whether an individual has 3 4 "415 Compensation" of more than $50,000, "415 Compensation" from each employer required to be aggregated under Code Section 414(b), (c), (m) and (o) shall be taken into account. (d) Employees who during the "look-back year" were officers as defined in Section 1.36(a) and received "415 Compensation" during the "look-back year" from the Employer greater than 50 percent of the limit in effect under Code Section 415(b)(1)(A) for any such Plan Year. The number of officers shall be limited to the lesser of (i) 50 employees; or (ii) the greater of 3 employees or 10 percent of all employees. For the purpose of determining the number of officers, the Employees excluded in paragraph (c) above for purposes of determining the top-paid group shall be excluded. However, such Employees shall still be considered for the purpose of identifying the particular Employees who are officers. If the Employer does not have at least one officer whose annual "415 Compensation" is in excess of 50 percent of the Code Section 415(b)(1)(A) limit, then the highest paid officer of the Employer will be treated as a Highly Compensated Employee. (e) Employees who are in the group consisting of the 100 Employees paid the greatest "415 Compensation" during the "determination year" and are also described in (b), (c) or (d) above when these paragraphs are modified to substitute "determination year" for "look-back year." The "look-back year" shall be the calendar year ending with or within the Plan Year for which testing is being performed, and the "determination year" (if applicable) shall be the period of time, if any, which extends beyond the "look-back year" and ends on the last day of the Plan Year for which testing is being performed (the "lag period"). If the "lag period" is less than twelve months long, the threshold amounts specified in (b), (c) and (d) above shall be prorated based upon the number of months in the "lag period." Notwithstanding the foregoing, for Plan Years beginning after December 31, 1996, "Highly Compensated Employee" shall mean any Employee who is in one or more of the following groups: (a) Employees who at any time during the Plan Year being tested or the prior Plan Year were "five-percent owners." (b) Employees who, during the prior Plan Year: (i) received "415 Compensation" in excess of $80,000 (or such other amount as determined by the Secretary of the Treasury which reflects cost-of-living increases in accordance with Code Section 414(q)(1)), and (ii) if the Employer elects the application of this clause (2) for the prior Plan Year, was in the top-paid group of employees for the prior Plan Year. 4 5 A former Employee shall be treated as a Highly Compensated Employee if (1) such former Employee was a Highly Compensated Employee when he separated from Service or (2) such former Employee was a Highly Compensated Employee at any time after attaining age fifty-five (55). For purposes of this Section, the determination of "415 Compensation" shall be based only on "415 Compensation" which is actually paid and shall be made by including amounts that would otherwise be excluded from a Participant's gross income by reason of the application of Code Sections 125, 402(e)(3), 402(h)(1)(B) and, in the case of Employer contributions made pursuant to a salary reduction agreement, by including amounts that would otherwise be excluded from a participant's gross income by reason of the application of Code Section 403(b). Additionally, the $75,000 and $50,000 amounts specified in (b) and (c) above shall be adjusted at such time and in such manner as is provided in Regulations. In the case of such an adjustment, the dollar limits which shall be applied are those for the calendar year in which the "determination year" or "look-back year" begins. In determining who is a Highly Compensated Employee, Employees who are non-resident aliens and who received no earned income (within the meaning of Code Section 911(d)(2)) from the Employer constituting United States source income within the meaning of Code Section 861(a)(3) shall not be treated as Employees. Additionally, all Employers shall be taken into account as a single employer and leased employees within the meaning of Code Sections 414(n)(2) and 414(o)(2) shall be considered Employees unless such leased employees are covered by a plan described in Code Section 414(n)(5) and are not covered in any qualified plan maintained by the Employer. The exclusion of leased employees for this purpose shall be applied on a uniform and consistent basis for all of the Employer's retirement plans. For Plan Years beginning prior to January 1, 1997, if any individual is a Family Member of a 5-percent owner or of a Highly Compensated Employee in the group consisting of the ten (10) Highly Compensated Employees paid the greatest compensation during the year, then (i) such individual shall not be considered a separate employee, and (ii) any compensation paid to such individual (and any applicable contribution or benefit on behalf of such individual) shall be treated as if it were paid to (or on behalf of) the 5-percent owner or Highly Compensated Employee. Except as provided in Regulations, the rules of this paragraph shall be applied in determining the compensation of (or any contributions or benefits on behalf of) any employee for purposes of any Section of this Plan with respect to which a Highly Compensated Employee is defined by reference to this Section. 3. Effective June 24, 1986, Section 4.5(g) is hereby amended in its entirety to read as follows: (g) All Company Stock acquired by the Plan with the proceeds of an Exempt Loan must be added to and maintained in the Unallocated Company Stock Suspense Account. Such Company Stock shall be released and withdrawn from that account as if all Company Stock in that account were encumbered. For 5 6 each Plan Year during the duration of the loan, the number of shares of Company Stock released shall equal the number of encumbered shares held immediately before release for the current Plan Year multiplied by a fraction, the numerator of which is the amount of principal paid for the Plan Year and the denominator of which is the sum of the numerator plus the principal to be paid for all future Plan Years. The Exempt Loan must provide for annual payments of principal and interest at a cumulative rate that is not less rapid at any time than level annual payments of such amounts for ten (10) years. Interest included in any payment is disregarded for purposes of the fraction described above only to the extent that it would be determined to be interest under standard loan amortization tables. As of each Anniversary Date, the Plan must consistently allocate to each Participant's Account non-monetary units (shares and fractional shares of Company Stock) representing each Participant's interest in assets withdrawn from the Unallocated Company Stock Suspense Account. Income earned with respect to Company Stock in the Unallocated Company Stock Suspense Account shall be used to repay the Exempt Loan used to purchase such Company Stock. Any income which is not so used must be allocated as income of the Plan. 4. Effective June 25, 1989, Section 4.5(j) is hereby amended in its entirety to read as follows: (j) Minimum Allocations Required for Top Heavy Plan Years: Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of the Employer's contributions and Forfeitures allocated to the Participant's Account of each Non-Key Employee shall be equal to at least three percent (3%) of such Non-Key Employee's "415 Compensation." However, if (i) the sum of the Employer's contributions and Forfeitures allocated to the Participant's Account of each Key Employee for such Top Heavy Plan Year is less than three percent (3%) of each Key Employee's "415 Compensation" and (ii) this Plan is not required to be included in an Aggregation Group to enable a defined benefit plan to meet the requirements of Code Section 401(a)(4) or 410, the sum of the Employer's contributions and Forfeitures allocated to the Participant's Account of each Non-Key Employee shall be equal to the largest percentage allocated to the Participant's Account of each Key Employee. However, for Plan Years beginning after December 31, 1988, in determining whether a Non-Key Employee has received the required minimum allocation, such Non-Key Employee's deferred compensation and matching contributions needed to satisfy the "Actual Contribution Percentage" tests pursuant to Section 4.8 shall not be taken into account. Except, however, no such minimum allocation shall be required in this Plan for any Non-Key Employee who participates in another defined contribution plan subject to Code Section 412 providing such benefits included with this Plan in a Required Aggregation Group. 6 7 5. Effective June 28, 1987, Section 4.13(c) is hereby amended in its entirety to read as follows: (c) Each Qualified Participant who has not attained age sixty (60) may elect within ninety (90) days after the end of each calendar quarter or within ninety (90) days after the close of each Plan Year during the Qualified Election Period to direct the Trustee in writing as to the investment of 25 percent of the Qualified Participant's Company Stock Account (to the extent such portion exceeds the amount to which a prior election under this subparagraph applies). Each Qualified Participant who has attained age sixty (60) may elect within ninety (90) days after the end of each calendar quarter or within ninety (90) days after the close of each Plan Year during the Qualified Election Period to direct the Trustee in writing as to the investment of up to 100 percent of the Qualified Participant's Company Stock Account (to the extent such portion exceeds the amount to which a prior election under this subparagraph applies). If the Qualified Participant elects to direct the Trustee as to the investment of his Company Stock Account, such direction shall be effective no later than 180 days after the close of the Plan Year to which such direction applies. In lieu of directing the Trustee as to the investment of his Company Stock Account, the Qualified Participant may elect a distribution in cash or Company Stock of the portion of his Company Stock Account covered by the election within ninety (90) days after the last day of the period during which the election can be made. The Plan shall offer at least three (3) investment options to each Qualified Participant making an election under this paragraph. 6. Effective June 24, 1986, Section 7.4(a) is hereby amended in its entirety to read as follows: (a) On or before the Anniversary Date coinciding with or subsequent to the termination of a Participant's employment for any reason other than death, Total and Permanent Disability or retirement, the Administrator may direct the Trustee to segregate the amount of the Vested portion of such Terminated Participant's Account and invest the aggregate amount thereof in a separate, federally insured savings account, certificate of deposit, common or collective trust fund of a bank or a deferred annuity. In the event the Vested portion of a Participant's Account is not segregated, the amount shall remain in a separate account for the Terminated Participant and share in allocations per Section 4.5 until such time as a distribution is made to the Terminated Participant. The amount of the Terminated Participant's Account which is not Vested shall be credited to the Suspense Account (which will always share in gains and losses of the trust) and shall, subsequently, be allocated to the accounts of the remaining Participants in accordance with the terms of the Plan at such time as the amount becomes a Forfeiture. If a portion of a Participant's Account is forfeited, Company Stock allocated to such account must be forfeited only after the Other Investment Account has been depleted. If interest in more than one class of Company Stock 7 8 has been allocated to a Participant's Account, the Participant must be treated as forfeiting the same proportion of each such class. Distribution of the funds due to a Terminated Participant shall be made on the occurrence of an event which would result in the distribution had the Terminated Participant remained in the employ of the Employer (upon the Participant's death, Total and Permanent Disability, Early or Normal Retirement). However, if such Terminated Participant is reemployed by the Employer before distribution is required to be made under this paragraph, such distribution shall be postponed. Distribution to a Participant shall not include any Company Stock acquired after December 31, 1986 with the proceeds of an Exempt Loan until the close of the Plan Year in which such loan is repaid in full. Any distribution under this paragraph shall be made in a manner which is consistent with and satisfies the provisions of Sections 7.5 and 7.6, including, but not limited to, all notice and consent requirements of Code Section 411(a)(11) and the Regulations thereunder. If the value of a Terminated Participant's Vested benefit derived from Employer and Employee contributions does not exceed $3,500 and has never exceeded $3,500 at the time of any prior distribution, the Administrator shall direct the Trustee to cause the entire Vested benefit to be paid to such Participant in a single lump sum. Terminated Participants who are under the age of fifty-five (55) at the time of termination may elect distribution of all or part of the Vested portion of their Participant's Account. The distribution will be made as soon as administratively possible after the end of the calendar quarter of termination. 7. Effective June 24, 1986, Section 7.6(a) is hereby amended in its entirety to read as follows: (a) Distribution of a Participant's benefit may be made in cash or Company Stock or both, provided, however, that if a Participant or Beneficiary so demands, such benefit shall be distributed only in the form of Company Stock. Prior to making a distribution of benefits, the Administrator shall advise the Participant or his Beneficiary, in writing, of the right to demand that benefits be distributed solely in Company Stock. If the Participant or his Beneficiary fails to make such demand in writing within 90 days after receipt of such written notice, the Administrator shall direct the Trustee to make such distribution entirely in cash. 8. Effective June 24, 1986, Section 7.11(c) is hereby amended in its entirety to read as follows: (c) The put option must be exercisable only by a Participant, by the Participant's donees, or by a person (including an estate or its distributee) to whom the Company Stock passes by reason of a Participant's death. (Under this paragraph "Participant" means a Participant and the Beneficiaries of the 8 9 Participant under the Plan.) The put option must permit a Participant to put the Company Stock to the Employer. Under no circumstances may the put option bind the Plan. However, it shall grant the Plan an option to assume the rights and obligations of the Employer at the time that the put option is exercised. If it is known at the time a loan is made that Federal or State law will be violated by the Employer's honoring such put option, the put option must permit the Company Stock to be put, in a manner consistent with such law, to a third party (e.g., an affiliate of the Employer or a shareholder other than the Plan) that has substantial net worth at the time the loan is made and whose net worth is reasonably expected to remain substantial. The put option shall commence as of the day following the date the Company Stock is distributed to the former Participant and end 60 days thereafter and if not exercised within such 60-day period, an additional 60-day option shall commence in the Plan Year next following the date the stock was distributed to the former Participant (or such other 60-day period as provided in regulations promulgated by the Secretary of the Treasury). In no event shall the second 60-day put option period end prior to the date which is 15 months after the date of distribution. However, in the case of Company Stock that is publicly traded without restrictions when distributed but ceases to be so traded within 15 months after distribution, the Employer must notify each holder of such Company Stock in writing on or before the tenth day after the date the Company Stock ceases to be so traded that for the remainder of the 15-month period the Company Stock is subject to the put option. The number of days between the tenth day and the date on which notice is actually given, if later than the tenth day, must be added to the duration of the put option. The notice must inform distributees of the term of the put options that they are to hold. The terms must satisfy the requirements of this paragraph. The put option is exercised by the holder notifying the Employer in writing that the put option is being exercised; the notice shall state the name and address of the holder and the number of shares to be sold. The period during which a put option is exercisable does not include any time when a distributee is unable to exercise it because the party bound by the put option is prohibited from honoring it by applicable Federal or State law. The price at which a put option must be exercisable is the value of the Company Stock determined in accordance with Paragraph (d)(5) of 26 CFR 54.4975-11. The provisions for payment under the put option shall not exceed a 60 day period from the exercise date of the put option. 9 10 IN WITNESS WHEREOF, the Employer has executed this Second Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan on this 10th day of May, 1997. RANDALLS FOOD MARKETS, INC. By: /s/ Janice R. Schilmoeller ____________________________________ Name: JANICE R. SCHILMOELLER __________________________________ Title: Vice President of Risk Management _________________________________ 10 EX-4.4 5 THIRD AMENDMENT TO THE RANDALLS FOOD MARKETS 1 EXHIBIT 4.4 THIRD AMENDMENT TO THE RANDALLS FOOD MARKETS, INC. ESOP/401(k) SAVINGS PLAN (Amended and Restated as of April 1, 1997) W I T N E S S E T H: WHEREAS, Randalls Food Markets, Inc. (the "Employer") presently maintains the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan (the "Plan"); and WHEREAS, the Employer, pursuant to Section 9.1 of the Plan, has the right to amend the Plan from time to time subject to certain limitations. NOW, THEREFORE, in order to make various revisions desired by the Employer, the Plan is hereby amended in the following manner: 1. Effective April 1, 1997, Section 1.50 is hereby amended in its entirety to read as follows: 1.50 "Plan Year" means the Plan's accounting year of twelve (12) months commencing on July 1 of each year and ending on the following June 30. 2. Effective as of the date this Amendment is executed, Section 1.65 is hereby amended in its entirety to read as follows: 1.65 "Year of Service" shall mean the computation period of twelve (12) consecutive months, herein set forth, during which an Employee has at least 1,000 Hours of Service. For purposes of eligibility for participation, the initial computation period shall begin with the date on which the Employee first performs an Hour of Service. The participation computation period beginning after a 1-Year Break in Service shall be measured from the date on which an Employee again performs an Hour of Service. The participation computation period shall shift to the Plan Year which includes the anniversary of the date on which the Employee first performed an Hour of Service. For vesting purposes, a Year of Service shall be all Years of Service in which an Employee completes 1,000 Hours of Service with the Employer commencing from the Employee's date of hire. Notwithstanding the foregoing, vesting service under the Tom Thumb Food & Drugs, Inc. Profit Sharing Plan shall count for vesting purposes under this Plan, but only with respect to an Employee who became an Employee as a result of the Employer's acquisition of Thumb Food & Drugs, Inc. Years of Service with any corporation, trade or business which is a member of a controlled group of corporations or under common control (as defined by Code Sections 414(b) and 414(c)), is a member of an affiliated service group (as defined by Code Section 414(m)), or with any other entity required to be aggregated with an Employer under Code Section 414(o) shall be recognized. 2 3. Effective as of the date this Amendment is executed, Section 4.5(i) is hereby amended in its entirety to read as follows: (i) As of each Anniversary Date any amounts which became Forfeitures since the last Anniversary Date shall first be made available to reinstate previously forfeited account balances of Former Participants, if any, in accordance with Section 7.4(d). The remaining Forfeitures, if any, shall be used to reduce the contribution of the Employer hereunder for the Plan Year in which such Forfeitures occur. 4. Effective April 1, 1997, Section 4.13(d)(1) is hereby amended in its entirety to read as follows: (1) "Qualified Participant" means any Participant or Former Participant who has completed ten (10) Years of Service and has attained age 55. 5. Effective April 1, 1997, Section 5.2 is hereby amended in its entirety to read as follows: 5.2 Transactions Involving Company Stock All purchases of Company Stock shall be made at a price which, in the judgment of the Administrator, does not exceed the fair market value thereof. All sales of Company Stock shall be made at a price which, in the judgment of the Administrator, is not less than the fair market value thereof. The valuation rules set forth in Article 6 shall be applicable. 6. Effective April 1, 1997, Section 6.1 is hereby amended in its entirety to read as follows: 6.1 Valuation of the Trust Fund The Administrator shall direct the Trustee, as of each Anniversary Date, and at such other date or dates deemed necessary by the Administrator, herein called "valuation date," to determine the net worth of the assets comprising the Trust Fund as it exists on the "valuation date" prior to taking into consideration any contribution to be allocated for that Plan Year. In determining such net worth, the Trustee shall value the assets comprising the Trust Fund at their fair market value as of the "valuation date" and shall deduct all expenses for which the Trustee has not yet obtained reimbursement from the Employer or the Trust Fund. As of the last day of each calendar quarter, the Trustee shall determine the value of the Company Stock held by the Trust Fund. For purposes of Section 5.2, 7.11 and this Section, valuations must be made in good faith and based on all relevant factors for determining the fair market value of securities. In the case of a transaction between a Plan and a disqualified person, value must be determined as of the date of the transaction. For all other Plan purposes, value must be determined as of the most recent valuation date under the Plan. An independent appraisal will not in itself be a good faith determination of value in the case of a transaction between the Plan and a disqualified person. However, in other cases, a 2 3 determination of fair market value based on at least an annual appraisal independently arrived at by a person who customarily makes such appraisals and who is independent of any party to the transaction will be deemed to be a good faith determination of value. Company Stock not readily tradeable on an established securities market shall be valued by an independent appraiser meeting requirements similar to the requirements of the regulations prescribed under Code Section 170(a)(1). The Trustee shall be responsible for employing one or more independent appraisers for purposes of determining the value of such Company Stock. 7. Effective April 1, 1997, Section 7.4(d)(2) is hereby amended in its entirety to read as follows: (2) If any Former Participant shall be reemployed by the Employer before five (5) consecutive 1-Year Breaks in Service, and such Former Participant had received a distribution of his entire Vested interest prior to his reemployment, his forfeited account shall be reinstated only if he repays the full amount distributed to him before the earlier of five (5) years after the first date on which the Participant is subsequently reemployed by the Employer or the close of the first period of five (5) consecutive 1-Year Breaks in Service commencing after the distribution. In the event the Former Participant does repay the full amount distributed to him, the undistributed portion of the Participant's Account must be restored in full, unadjusted by any gains or losses occurring subsequent to the Anniversary Date or other valuation date preceding his termination. The source for such reinstatement shall first be any Forfeitures occurring during the year; provided, however, that no Forfeiture consisting of Company Stock may be used to restore an Account of a Former Participant who did not have a Company Stock Account at the time of such Former Participant's termination of employment. If the Forfeitures occurring during the year are insufficient to restore forfeited Accounts, then the Employer shall contribute an amount which is sufficient to restore any such forfeited Accounts. 8. Effective April 1, 1997, Section 7.5(b) is hereby amended in its entirety to read as follows: (b) If the Participant elects, the Administrator will commence distribution of the Participant's Account balance not later than one year after the close of the Plan Year (i) in which the Participant separates from service by reason of the attainment of Normal Retirement Age, disability or death, or (ii) which is the fifth Plan Year following the Plan Year in which the Participant otherwise separates from service, except that this clause (ii) shall not apply if the Participant is reemployed by the Employer before distribution is required to begin under this clause (ii). Notwithstanding anything herein to the contrary, any Company Stock allocated to a Participant's Company Stock Account purchased by means of an Exempt Loan may not be distributed until after such Exempt Loan is repaid in full. 3 4 9. Effective April 1, 1997, Section 7.13 is hereby amended in its entirety to read as follows: 7.13 Withdrawals from Employee After-Tax Account A Participant may, at any time, request that the Administrator distribute to him or her up to 100% of the portion of such Participant's Employee After-Tax Account which is not invested in Company Stock. The Administrator upon receiving such request may direct the Trustee to make the requested distribution to the Participant. Such distribution will be made as soon as administratively possible after the distribution request is made. During the last month of any calendar quarter of any calendar year, a Participant may request that the Administrator distribute to him or her up to 100% of the value, determined as of the end of such calendar quarter, of the portion of such Participant's Employee After-Tax Account which is invested in Company Stock. The Administrator upon receiving such request may direct the Trustee to make the requested distribution to the Participant. Such distribution will be made as soon as administratively possible after the quarter in which the distribution request is made. 10. Effective April 1, 1997, Section 7.14(a)(2) is hereby amended in its entirety to read as follows: (2) The costs directly related to the purchase of a principal residence for the Participant (excluding mortgage payments); 11. Effective April 1, 1997, Section 7.14(a)(4) is hereby amended in its entirety to read as follows: (4) Payment of tuition, related educational fees and room and board expenses for the next twelve (12) months of post-secondary education for the Participant, his spouse, children or dependents; or 12. Effective April 1, 1997, Section 7.14(e) is hereby added to the Plan as follows: (e) A Participant's elective deferrals and voluntary Employee contributions to this Plan and all other plans maintained by the Employer will be suspended for twelve (12) months after receipt of a hardship distribution, or the Participant, pursuant to a legally enforceable agreement, will suspend his elective deferrals and voluntary Employee contributions to the Plan and all other plans maintained by the Employer for twelve (12) months after receipt of the hardship distribution. 13. Effective April 1, 1997, Section 7.14(f) is hereby added to the Plan as follows: (f) A Participant may not make elective deferrals to this Plan and all other plans maintained by the Employer for the Participant's taxable year immediately following the taxable year of a hardship distribution in excess of the applicable limit under Code Section 402(g) for such next taxable year less the amount of such Participant's elective deferrals for the taxable year of the hardship distribution. 4 5 14. Effective April 1, 1997, Section 8.2 is hereby amended in its entirety to read as follows: 8.2 Voting Company Stock Except as provided hereafter, the Trustee shall vote all Company Stock held by the Trust in the sole discretion of the Trustee in accordance with the Trustee's fiduciary duties under the Act. Notwithstanding the foregoing, if the Employer has a "registration-type class of securities," each Participant or Beneficiary, if applicable, shall be entitled to direct the Trustee as to the manner in which shares of Company Stock which are entitled to vote and which are allocated to such Participant's (or Beneficiary's, if applicable) Account are to be voted. If the Employer does not have a registration-type class of securities, each Participant or Beneficiary, if applicable, shall be entitled to direct the Trustee as to the manner in which shares of Company Stock allocated to such Participant's (or Beneficiary's, if applicable) Account are to be voted with respect to any corporate matter which involves the voting of such shares with respect to the approval or disapproval of any corporate merger or consolidation, recapitalization, reclassification, liquidation, dissolution, sale of substantially all assets of a trade or business, or such similar transaction as prescribed in the Regulations. For purposes of this Section 8.2, the term "registration-type class of securities" shall mean (i) a class of securities required to be registered under Section 12 of the Securities Exchange Act of 1934 (the "1934 Act") and (ii) a class of securities which would be required to be so registered except for the exemption from registration provided in subsection (g)(2)(H) of such Section 12. To the extent that Participants or Beneficiaries are, in accordance with the foregoing provisions, entitled to direct the Trustee as to the manner in which shares of Company Stock are to be voted, such voting rights shall be exercised in accordance with the following provisions of this Section 8.2. (a) As soon as practicable before each annual or special shareholders' meeting of the Employer, the Trustee shall furnish to each Participant a copy of the proxy solicitation material sent generally to shareholders, together with a form requesting confidential directions on how the shares allocated to such Participant's Account (including fractional shares to 1/1000th of a share) are to be voted. The materials furnished to the Participants shall include a notice from the Trustee explaining that (i) allocated shares of Company Stock will be voted or not voted by the Trustee in accordance with directions of Participants, acting in their capacity as "named fiduciaries" as such term is defined in section 402(a)(2) of the Act (hereinafter, "Named Fiduciaries") with respect to allocated shares to the extent permitted by applicable law, if the Trustee determines that following such directions will not violate the Act; (ii) unallocated shares of Company Stock will be voted at the Trustee's discretion; (iii) by timely returning the proxy solicitation and pursuant thereto specifically directing the Trustee how the allocated shares subject to the decision of the Participant are to be voted, such Participant is consenting to his appointment as Named Fiduciary hereunder, to the extent permitted by applicable law, with respect to allocated shares for which he is entitled to provide the Trustee with voting directions; (iv) a Participant's consent to appointment as a Named Fiduciary or failure to consent to such appointment shall be binding only with respect to the specific proxy solicitations; and (v) in the event the Participant does not timely return the form or fails to consent to 5 6 appointment as a Named Fiduciary, the allocated shares for which he is entitled to provide the Trustee with directions will be voted at the Trustee's discretion. The materials shall also include such information as is reasonably determined by the Trustee to be necessary to Participants to reach a reasonably informed decision as to (A) the consequences of consenting to be appointed a Named Fiduciary, and (B) how to vote the shares. The Administrator and the Trustee may also provide Participants with such other material concerning the matters to be voted as the Trustee or the Administrator in its discretion determine to be appropriate, provided, however, that prior to any distribution of materials by the Administrator, the Trustee shall be furnished with complete copies of all such materials. The Employer and the Administrator shall cooperate with the Trustee to ensure that Participants receive the requisite information in a timely manner. Upon timely receipt of such voting directions, the Trustee (after combining votes of fractional shares to give effect to the greatest extent to Participants' directions), shall vote the shares in accordance with subsections (b) through (e) of this Section 8.2. The directions received by the Trustee from Participants shall be held by the Trustee in strict confidence and shall not be divulged or released to any person, including directors, officers or employees of the Employer, or of any other company, except as otherwise required by law. (b) With respect to all corporate matters submitted to shareholders, the Trustee shall vote shares of Company Stock allocated to the Account of any Participant (including fractional shares to 1/1000th of a share) in accordance with the directions of such Participant as a Named Fiduciary only if the Trustee determines that the Participant directions are proper and not contrary to the Act. For purposes of this subsection, a Participant's directions with respect to allocated shares are proper and not contrary to the Act if (i) the Trustee determines that Participants have not been subjected to coercion or undue pressure in making their decisions and that clearly false information or misleading information is not distributed to the Participants (or that any false or misleading information that may have been distributed by other parties is corrected), and (ii) the Trustee determines that following the Participant directions would not violate the Act. (c) If voting directions for shares of Company Stock allocated to the Account of any Participant are not timely received by the Trustee, the Trustee shall treat the non-receipt as a refusal by the Participant to be appointed as Named Fiduciary with respect to that proxy solicitation. Thereafter, in connection with such proxy solicitation, such allocated and undirected shares shall be voted in the sole discretion of the Trustee in accordance with the Trustee's fiduciary duties under the Act. (d) The Trustee shall vote shares of Company Stock that are unallocated to the Account of any Participant in the sole discretion of the Trustee in accordance with the Trustee's fiduciary duties under the Act. (e) For purposes of this Section 8.2, with respect to shares of Company Stock allocated to the Account of a deceased Participant, such Participant's Beneficiary, as a Named Fiduciary, shall be entitled to direct the Trustee how to vote such shares as if such Beneficiary were the Participant. Such 6 7 Beneficiary shall also be treated as the Participant for all other purposes of this Section 8.2. 15. Effective April 1, 1997, Section 8.3 is hereby amended in its entirety to read as follows: 8.3 Tender or Exchange Offer for Company Stock (a) In the event an offer shall be received by the Trustee (including a tender offer for shares of Company Stock subject to Section 14(d)(1) of the 1934 Act or subject to Rule 13e-4 promulgated under the 1934 Act, as those provisions may from time to time be amended) to purchase or exchange any shares of Company Stock held by the Trust, the Trustee shall advise each Participant who has shares of Company Stock credited to such Participant's Account in writing of the terms of the offer as soon as practicable after its commencement and shall furnish each Participant with a form by which he may direct the Trustee confidentially whether or not to tender or exchange shares allocated to such Participant's Account. The materials furnished to Participants shall include a notice from the Trustee explaining that (i) allocated shares of Company Stock subject to the offer will be tendered or exchanged or will not be tendered or exchanged by the Trustee in accordance with directions of Participants, acting in their capacity as Named Fiduciaries with respect to allocated shares to the extent permitted by applicable law, if the Trustee determines that following such directions will not violate the Act; (ii) unallocated shares of Company Stock subject to the offer will be tendered or exchanged or will not be tendered or exchanged by the Trustee at the Trustee's discretion; (iii) by timely returning the form and pursuant thereto specifically directing that the allocated shares subject to the decision of the Participant either be tendered or exchanged or not tendered or exchanged, such Participant is consenting to his appointment as Named Fiduciary hereunder, to the extent permitted by applicable law, with respect to allocated shares for which he is entitled to provide the Trustee with directions; (iv) a Participant's consent to appointment as a Named Fiduciary or failure to consent to such appointment shall be binding only with respect to the specific tender or exchange offer described in the materials sent to the Participant by the Trustee; and (v) in the event the Participant does not timely return the form or fails to consent to appointment as a Named Fiduciary, the allocated shares for which he is entitled to provide the Trustee with directions will either be tendered or exchanged or not tendered or exchanged at the Trustee's discretion. The materials shall also include such information as is reasonably determined by the Trustee to be necessary to Participants to reach a reasonably informed decision as to (A) the consequences of consenting or not consenting to be appointed a Named Fiduciary, and (B) whether to tender or exchange, including such documents as are prepared by any person and provided to the shareholders of the Employer pursuant to the 1934 Act. The Administrator and the Trustee may also provide Participants with such other material concerning the tender or exchange offer as the Trustee or the Administrator in its discretion determine to be appropriate, provided, however, that prior to any distribution of materials by the Administrator, the Trustee shall be furnished with complete copies of all such materials. The Employer and the Administrator shall cooperate with the Trustee 7 8 to ensure that Participants receive the requisite information in a timely manner. The directions received by the Trustee from Participants shall be held by the Trustee in strict confidence and shall not be divulged or released to any person, including directors, officers or employees of the Employer, or of any other company, except as otherwise required by law. (b) The Trustee shall tender or not tender shares or exchange or not exchange shares of Company Stock allocated to the Account of any Participant (including fractional shares to 1/1000th of a share) to the extent directed by the Participant as a Named Fiduciary only if the Trustee determines that the Participant directions are proper and not contrary to the Act. For purposes of this subsection, a Participant's directions with respect to allocated shares are proper and not contrary to the Act if (i) the Trustee determines that Participants have not been subjected to coercion or undue pressure in making their decisions and that clearly false information or misleading information is not distributed to the Participants (or that any false or misleading information that may have been distributed by other parties is corrected), and (ii) the Trustee determines that following the Participant directions would not violate the Act. (c) If tender or exchange directions for shares of Company Stock allocated to the Account of any Participant are not timely received by the Trustee, the Trustee shall treat the non-receipt as a refusal by the Participant to be appointed as Named Fiduciary with respect to that tender or exchange offer. Thereafter, in connection with such tender or exchange offer, such allocated and undirected shares shall be tendered or exchanged or not tendered or exchanged in the sole discretion of the Trustee in accordance with the Trustee's fiduciary duties under the Act. (d) The Trustee shall tender or exchange or not tender or exchange the shares of Company Stock that are unallocated to the Account of any Participant in the sole discretion of the Trustee in accordance with the Trustee's fiduciary duties under the Act. (e) In the event, under the terms of a tender offer or otherwise, any shares of Company Stock tendered for sale, exchange or transfer pursuant to such offer may be withdrawn from such offer, the Trustee shall, in accordance with the applicable terms and conditions of subsections (a) through (d) above, and the responsibilities and the fiduciary duties of the Trustee as set forth in such subsections, follow such directions which are timely received by the Trustee from the Participants, respecting the withdrawal of such shares from such offer. (f) In the event that an offer for fewer than all of the shares of Company Stock held by the Trustee shall be received by the Trustee, shares shall be tendered in accordance with subsections (a) through (e) of this Section 8.3, and shares sold, exchanged or transferred pursuant to such tender shall be on a pro-rata basis based on the total number of shares tendered by the Trustee; provided, however, that any such shares so sold, exchanged, or transferred from any Participant's accounts shall come first from such Participant's Employee After-Tax Account, and once all shares from such account have been sold, exchanged or 8 9 transferred, next from such Participant's Company Stock Account, and once all shares from such account have been sold, exchanged or transferred, next from any other account which holds shares of Company Stock on behalf of such Participant. (g) In the event an offer shall be received by the Trustee and directions shall be solicited from Participants pursuant to subsections (a)-(f) of this Section 8.3 regarding such offer, and prior to the termination of such offer, another offer is received by the Trustee for the securities subject to the first offer, the Trustee shall treat the offer as a new offer for purposes of apprising Participants of their rights to direct the Trustee and for purposes of providing Participants with the opportunity to accept or reject their appointment as Named Fiduciaries and shall use its best efforts under the circumstances to solicit directions from Participants to the Trustee (i) with respect to securities tendered for sale, exchange or transfer pursuant to the first offer, whether to withdraw such tender, if possible, and if withdrawn, whether to tender any securities so withdrawn for sale, exchange or transfer pursuant to the second offer and (ii) with respect to securities not tendered for sale, exchange or transfer pursuant to the first offer, whether to tender or not to tender such securities for sale, exchange or transfer pursuant to the second offer. The Trustee shall follow all such directions received in a timely manner from Participants in the same manner and in the same proportion as provided in subsections (a)-(f) of this Section 8.3. In the event a Participant who failed to consent to his appointment as a Named Fiduciary so consents in response to a subsequent offer, the shares with respect to which the Participant would have been entitled to direct the Trustee shall once again be subject to that consenting Participant's direction with respect to the new offer. In the event a Participant who directed the Trustee with respect to an earlier offer fails to direct the Trustee in response to a subsequent offer, the Participant shall be deemed to have refused appointment as a Named Fiduciary and the allocated shares he would have been entitled to direct shall be subject to the discretion of the Trustee as provided in subsection (c) of this Section 8.3. With respect to any further offer for any Company Stock received by the Trustee and subject to any earlier offer (including successive offers from one or more existing offerors), the Trustee shall act in the same manner as described above. (h) Neither a Participant's instructions to the Trustee to tender or exchange shares of Company Stock pursuant to this Section 8.3 nor an actual tender or exchange of shares of Company Stock pursuant to this Section 8.3 shall be deemed a withdrawal or suspension from the Plan or a forfeiture of any portion of the Participant's interest in the Plan. Funds received in exchange for tendered shares shall be credited to the Account, as applicable in accordance with the ordering method provided in Section 8.3(f), of the Participant whose shares were tendered or the Suspense Account for which such shares were tendered. The Trustee shall invest such funds as permitted in accordance with the terms of the Plan and the Trust Agreement. (i) The Trustee shall take all steps necessary, including the appointment of a corporate Trustee, and/or an outside independent administrator to the extent that such action, after consultation with the Employer and the 9 10 Administrator, is found necessary to maintain the confidentiality of Participant responses and/or adequately discharge their obligations as Named Fiduciaries. (j) For purposes of this Section 8.3, with respect to shares of Company Stock allocated to the Account of a deceased Participant, such Participant's Beneficiary, as a Named Fiduciary, shall be entitled to direct the Trustee whether or not to tender or exchange such shares as if such Beneficiary were the Participant. Such Beneficiary shall also be treated as the Participant for all other purposes of this Section 8.3. IN WITNESS WHEREOF, the Employer has executed this Third Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan on this 14th day of September, 1997. RANDALLS FOOD MARKETS, INC. By: /s/ Janice R. Schilmoeller ____________________________________ Name: JANICE R. SCHILMOELLER __________________________________ Title: Vice President of Risk Management _________________________________ 10 EX-4.5 6 FOURTH AMENDMENT TO THE RANDALLS FOOD MARKETS 1 EXHIBIT 4.5 FOURTH AMENDMENT TO THE RANDALLS FOOD MARKETS, INC. ESOP/401(k) SAVINGS PLAN (Amended and Restated as of April 1, 1997) W I T N E S S E T H: WHEREAS, Randalls Food Markets, Inc. (the "Employer") presently maintains the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan (the "Plan"); and WHEREAS, the Employer, pursuant to Section 9.1 of the Plan, has the right to amend the Plan from time to time subject to certain limitations. NOW, THEREFORE, (a) in response to guidance issued by the Internal Revenue Service with respect to the implementation of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended by the Small Business Job Protection Act of 1996, (b) to implement certain provisions of the Taxpayer Relief Act of 1997, and (c) to make certain other changes desired by the Employer, the Plan is hereby amended in the following manner: 1. Effective as of the date this Fourth Amendment is executed, Section 1.27 is hereby amended in its entirety to read as follows: 1.27 "Forfeiture" means that portion of a Participant's Account that is not Vested, and occurs on the earlier of: (a) the distribution of the entire Vested portion of a Participant's Account, or (b) the last day of the Plan Year in which the Participant incurs five (5) consecutive 1-Year Breaks in Service. In addition, the term "Forfeiture" shall also include amounts deemed to be Forfeitures pursuant to any other provision of this Plan. 2. Effective as of the date this Fourth Amendment is executed, Section 4.2(d) is hereby amended in its entirety to read as follows: (d) The balance in each Participant's Elective Account shall be fully Vested at all times and shall not be subject to forfeiture for any reason except as provided for in Sections 4.2(g) and 4.7(a)(3). 3. Effective as of the date this Fourth Amendment is executed, Section 4.2(g) is hereby amended in its entirety to read as follows: (g) If a Participant's Deferred Compensation under this Plan together with any elective deferrals (as defined in Regulation 1.402(g)-1(b)) under another qualified cash or deferred arrangement (as defined in Code Section 401(k)), a simplified employee pension (as defined in Code Section 408(k)), a salary reduction arrangement (within the meaning of Code Section 3121(a)(5)(D)), a 2 deferred compensation plan under Code Section 457, or a trust described in Code Section 501(c)(18) cumulatively exceed the limitation imposed by Code Section 402(g) (as adjusted annually in accordance with the method provided in Code Section 415(d) pursuant to Regulations) for such Participant's taxable year, the Participant may, not later than March 1 following the close of his taxable year, notify the Administrator in writing of such excess and request that his Deferred Compensation under this Plan be reduced by an amount specified by the Participant. In such event, the Administrator may direct the Trustee to distribute such excess amount, and any income allocable to such amount, to the Participant not later than the first April 15th following the close of the Participant's taxable year. Any distribution of less than the entire amount of Excess Deferred Compensation and income shall be treated as a pro rata distribution of Excess Deferred Compensation and income. The amount distributed shall not exceed the Participant's Deferred Compensation under the Plan for the taxable year. Any distribution on or before the last day of the Participant's taxable year must satisfy each of the following conditions: (1) the distribution must be made after the date on which the Plan received the Excess Deferred Compensation; (2) the Participant shall designate the distribution as Excess Deferred Compensation; and (3) the Plan must designate the distribution as a distribution of Excess Deferred Compensation. Any distribution made pursuant to this Section 4.2(g) shall be made first from unmatched Deferred Compensation and, thereafter, from Deferred Compensation which is matched. Matching contributions which relate to such Deferred Compensation shall be forfeited. 4. Effective as of the date this Fourth Amendment is executed, Section 4.5(i) is hereby amended in its entirety to read as follows: (i) As of each Anniversary Date any amounts which became Forfeitures since the last Anniversary Date shall first be made available to reinstate previously forfeited account balances of Former Participants, if any, in accordance with Section 7.4(d). The remaining Forfeitures, if any, shall be used to reduce the contribution of the Employer hereunder for the Plan Year in which such Forfeitures occur and/or to satisfy expenses of administration pursuant to Section 2.10. 5. Effective as of the date this Fourth Amendment is executed, Section 4.7(a)(3)(ii) is hereby amended in its entirety to read as follows: (ii) shall be made first from unmatched Deferred Compensation and, thereafter, from Deferred Compensation which 2 3 is matched. Matching contributions which relate to such Deferred Compensation shall be forfeited; 6. Effective as of the date this Fourth Amendment is executed, the first paragraph of Section 4.9(a) is hereby amended in its entirety to read as follows: (a) In the event that the "Actual Contribution Percentage" for the Highly Compensated Participant group exceeds the "Actual Contribution Percentage" for the Non-Highly Compensated Participant group pursuant to Section 4.8(a), the Administrator (on or before the fifteenth day of the third month following the end of the Plan Year, but in no event later than the close of the following Plan Year) shall direct the Trustee to distribute to the Highly Compensated Participant having the highest actual contribution ratio his Excess Aggregate Contributions (and income allocable to such contributions) until either one of the tests set forth in Section 4.8(a) is satisfied, or until his actual contribution ratio equals the actual contribution ratio of the Highly Compensated Participant having the second highest actual contribution ratio. This process shall continue until one of the tests set forth in Section 4.8(a) is satisfied. The distribution of Excess Aggregate Contributions shall be made first from Employee contributions and, thereafter, from Employer contributions. Matching contributions which relate to such Employee contributions shall be forfeited. 7. Effective as of April 1, 1997, Section 7.4(a) is hereby amended in its entirety to read as follows: (a) On or before the Anniversary Date coinciding with or subsequent to the termination of a Participant's employment for any reason other than death, Total and Permanent Disability or retirement, the Administrator may direct the Trustee to segregate the amount of the Vested portion of such Terminated Participant's Account and invest the aggregate amount thereof in a separate, federally insured savings account, certificate of deposit, common or collective trust fund of a bank or a deferred annuity. In the event the Vested portion of a Participant's Account is not segregated, the amount shall remain in a separate account for the Terminated Participant and share in allocations per Section 4.5 until such time as a distribution is made to the Terminated Participant. The amount of the Terminated Participant's Account which is not Vested shall be credited to the Suspense Account (which will always share in gains and losses of the trust) and shall, subsequently, be allocated to the accounts of the remaining Participants in accordance with the terms of the Plan at such time as the amount becomes a Forfeiture. If a portion of a Participant's Account is forfeited, Company Stock allocated to such account must be forfeited only after the Other Investment Account has been depleted. If interest in more than one class of Company Stock has been allocated to a Participant's Account, the Participant must be treated as forfeiting the same proportion of each such class. 3 4 Distribution of the funds due to a Terminated Participant shall be made on the occurrence of an event which would result in the distribution had the Terminated Participant remained in the employ of the Employer (upon the Participant's death, Total and Permanent Disability, Early or Normal Retirement). However, at the election of the Participant, the Administrator shall direct the Trustee to cause the entire Vested portion of the Terminated Participant's Account to be payable to such Terminated Participant. Distribution to a Participant shall not include any Company Stock acquired after December 31, 1986 with the proceeds of an Exempt Loan until the close of the Plan Year in which such loan is repaid in full. Any distribution under this paragraph shall be made in a manner which is consistent with and satisfies the provisions of Sections 7.5 and 7.6, including, but not limited to, all notice and consent requirements of Code Section 411(a)(11) and the Regulations thereunder. If the value of a Terminated Participant's Vested benefit derived from Employer and Employee contributions does not exceed $3,500 and has never exceeded $3,500 at the time of any prior distribution, the Administrator shall direct the Trustee to cause the entire Vested benefit to be paid to such Participant in a single lump sum. Effective July 1, 1998, if the value of a Terminated Participant's Vested benefit derived from Employer and Employee contributions does not exceed $5,000 and has never exceeded $5,000 at the time of any prior distribution, the Administrator shall direct the Trustee to cause the entire Vested benefit to be paid to such Participant in a single lump sum. Terminated Participants who are under the age of fifty-five (55) at the time of termination may elect distribution of all or part of the Vested portion of their Participant's Account. The distribution will be made as soon as administratively possible after the end of the calendar quarter of termination. 8. Effective as of July 1, 1998, Section 7.5(c) is hereby amended in its entirety to read as follows: (c) The distribution of a Participant's benefits may not commence prior to the later of the Participant's Normal Retirement Age or age 62 if the Vested portion of the Participant's Account exceeds or has ever exceeded $5,000 at the time of any prior distribution, unless the distribution is consented to in writing by the Participant and his spouse or, if the Participant is deceased, the Participant's surviving spouse. With regard to this required consent: (1) The Participant must be informed of his right to defer receipt of the distribution. If a Participant fails to consent, it shall be deemed an election to defer the distribution of any benefit. However, any election to defer the receipt of benefits shall not apply with respect to distributions which are required under Section 7.5(e). (2) Notice of the rights specified under this paragraph shall be provided no less than 30 days and no more than 90 days before the first 4 5 day on which all events have occurred which entitle the Participant to such benefit. (3) Written consent of the Participant to the distribution must not be made before the Participant receives the notice and must not be made more than 90 days before the first day on which all events have occurred which entitle the Participant to such benefit. (4) No consent shall be valid if a significant detriment is imposed under the Plan on any Participant who does not consent to the distribution. 9. Effective as of January 1, 1997, Section 7.5(e) is hereby amended in its entirety to read as follows: (e) Notwithstanding any provision in the Plan to the contrary, the distribution of a Participant's benefits shall be made in accordance with the following requirements and shall otherwise comply with Code Section 401(a)(9) and the Regulations thereunder (including Regulation Section 1.401(a)(9)-2), the provisions of which are incorporated herein by reference: (1) A Participant's benefits shall be distributed to him not later than April 1st of the calendar year following the calendar year in which the Participant attains age 702 if such Participant attains age 702 prior to January 1, 1999. With respect to a Participant who attains age 702 on or after January 1, 1999, such Participant's benefits shall be distributed to him not later than the April 1st of the calendar year following the later of (i) the calendar year in which the Participant attains age 702 or (ii) the calendar year in which the Participant retires, provided, however, that this clause (ii) shall not apply in the case of a Participant who is a "five (5) percent owner" with respect to the Plan Year ending in the calendar year in which he attains age 702. Alternatively, distributions to a Participant must begin no later than the applicable April 1st as determined under the preceding sentences and must be made over the life expectancy of the Participant (or the life expectancies of the Participant and his designated Beneficiary) in accordance with Regulations. (2) Distributions to a Participant and his Beneficiaries shall only be made in accordance with the incidental death benefit requirements of Code Section 401(a)(9)(G) and the Regulations thereunder. 5 6 IN WITNESS WHEREOF, the Employer has executed this Fourth Amendment to the Randalls Food Markets, Inc. ESOP/401(k) Savings Plan on this 22nd day of June, 1998. RANDALLS FOOD MARKETS, INC. By: /s/ Janice R. Schilmoeller ____________________________________ Name: JANICE R. SCHILMOELLER __________________________________ Title: Vice President of Risk Management _________________________________ 6 EX-4.6 7 DOMINICK'S FINER FOODS, INC. 1 EXHIBIT 4.6 DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR UNION EMPLOYEES IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 2 TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINITIONS.....................................................1 ARTICLE II. SERVICE .......................................................14 ARTICLE III. ELIGIBILITY, ENROLLMENT AND PARTICIPATION......................18 ARTICLE IV. CONTRIBUTIONS..................................................20 ARTICLE V. LIMITATIONS ON ALLOCATIONS.....................................28 ARTICLE VI. DISTRIBUTION OF BENEFITS.......................................36 ARTICLE VII. RETIREMENT BENEFITS............................................46 ARTICLE VIII. JOINT AND SURVIVOR ANNUITY REQUIREMENTS........................47 ARTICLE IX. TERMINATION OF EMPLOYMENT......................................53 ARTICLE X. WITHDRAWALS....................................................55 ARTICLE XI. FIDUCIARY DUTIES AND RESPONSIBILITIES..........................60 ARTICLE XII. THE ADMINISTRATOR..............................................61 ARTICLE XIII. PARTICIPANTS' RIGHTS...........................................64 ARTICLE XIV. AMENDMENT OR TERMINATION OF THE PLAN...........................67 ARTICLE XV. SUBSTITUTION OF PLANS..........................................70 ARTICLE XVI. MISCELLANEOUS..................................................71
i 3 ARTICLE I. DEFINITIONS 1.1 ACCRUED BENEFIT. The term Accrued Benefit means the value on any applicable date of the Participant's Account. 1.2 ACTIVE PARTICIPANT. The term Active Participant means any Participant who (a) performs duties as an Employee for the Employer, and (b) is not an Inactive Participant. 1.3 ACTUAL DEFERRAL PERCENTAGE. The term Actual Deferral Percentage means the average of the Actual Deferral Ratios of a specified group, computed to the nearest one-hundredth of one percent. 1.4 ACTUAL DEFERRAL PERCENTAGE TEST. (A) For each Plan Year, the Plan shall satisfy the Actual Deferral Percentage Test described in section 401(k)(3) and the regulations thereunder, which are herein incorporated by reference. The Plan satisfies the Actual Deferral Percentage Test for a Plan Year only if: (1) The Actual Deferral Percentage for the group of eligible Highly Compensated Employees is not more than the Actual Deferral Percentage for the group of all other eligible Employees multiplied by 1.25; or (2) The excess of the Actual Deferral Percentage for the group of eligible Highly Compensated Employees over the Actual Deferral Percentage for the group of all other eligible Employees is not more than two percentage points, and the Actual Deferral Percentage for the group of eligible Highly Compensated Employees is not more than the Actual Deferral Percentage for the group of all other eligible Employees multiplied by two. (B) Special Rules. (1) For purposes of determining the Actual Deferral Percentage Test, Elective Deferral Contributions, Qualified Nonelective Contributions, and Qualified Matching Contributions must be allocated to the Employee's Account as of a date within the Plan Year being tested and must be made before the last day of the twelve-month period immediately following the Plan Year to which such contributions relate. (2) The Excess Deferrals of a Highly Compensated Employee shall be taken into account for purposes of the Actual Deferral Percentage Test. Conversely, the Excess Deferrals of an Employee who is a Nonhighly Compensated Employee shall not be taken into account for purposes of the Actual Deferral Percentage Test. 4 (3) The Employer shall maintain records sufficient to demonstrate satisfaction of the Actual Deferral Percentage Test, including the extent to which Qualified Nonelective Contributions and Qualified Matching Contributions are taken into account. 1.5 ACTUAL DEFERRAL RATIO. (A) An Employee's Actual Deferral Ratio for the Plan Year is the sum of the Employee's Deferral Percentage Amounts allocated to the Employee's Account for the Plan Year (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of this section), divided by the Employee's Compensation taken into account for the Plan Year. If an eligible Employee makes no Elective Deferral Contributions, and no Qualified Matching Contributions or Qualified Nonelective Contributions are taken into account with respect to the Employee, the Actual Deferral Ratio of the Employee is zero. (B) Special Rules. (1) In the event that this Plan is aggregated with one or more plans for purposes of section 410(b) of the Code (other than for purposes of the average benefit percentage test), or if one or more other plans satisfy the requirements of section 410(b) of the Code (other than the average benefit percentage test) only if aggregated with this Plan, then this section shall be applied by determining the Actual Deferral Ratio of Employees as if all such plans were a single plan. Plans may be aggregated only if they have the same Plan Year. (2) The Actual Deferral Ratio of a Highly Compensated Employee who is eligible to participate in more than one cash or deferred arrangement (as described in section 401(k) of the Code) of the same Employer shall be calculated by treating all the cash or deferred arrangements in which the Employee is eligible to participate as one arrangement. If the cash or deferred arrangements that are treated as a single arrangement under the preceding sentence are parts of plans that have different Plan Years, the cash or deferred arrangements are treated as a single arrangement with respect to the Plan Years ending with or within the same calendar year. However, plans that are not permitted to be aggregated under Treasury Regulation section 1.401(k)-l(b)(3)(ii)(B) are not aggregated for purposes of this section. (3) For purposes of determining the Actual Deferral Ratio of a Participant who is a 5 percent owner or one of the 10 most Highly Compensated Employees, the Deferral Percentage Amounts and Compensation of such Participant shall include the Deferral Percentage Amounts (including any amounts required to be taken into account under subparagraphs (B)(1) and 2 5 (B)(2) of this section) and Compensation for the Plan Year of Family Members. If an Employee is required to be aggregated as a member of more than one family group under the Plan, all eligible Employees who are members of those family groups that include that Employee are aggregated as one family group. Family Members, with respect to such Highly Compensated Employees, shall be disregarded as separate Employees in determining the Actual Deferral Percentage both for Participants who are Non-highly Compensated Employees and for Participants who are Highly Compensated Employees. (4) The determination and treatment of the Actual Deferral Ratio amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 1.6 ANNUITY. The term Annuity means a series of payments made over a specified period of time which, for a fixed annuity are, of equal, specified amounts, and for a variable annuity increase or decrease to reflect changes in investment performance of the underlying portfolio. 1.7 ANNUITY STARTING DATE. The term Annuity Starting Date means the first day of the first period for which an amount is payable as an Annuity. In the case of a benefit not payable in the form of an Annuity, the term Annuity Starting Date means the first day on which all events have occurred which entitle the Participant to such benefit. 1.8 BENEFICIARY. The Participant's Spouse is the designated Beneficiary of the Participant's entire Vested Interest. However, each Participant shall have the right to designate another Beneficiary and to specify the form of death benefit the Beneficiary is to receive, subject to the requirements of the "Qualified Election" provisions of Article VIII, Joint and Survivor Annuity Requirements. The Participant may change the Beneficiary and/or the form of death benefit at any time, subject to the requirements of the "Qualified Election" provisions of Article VIII, Joint and Survivor Annuity Requirements. If any distribution hereunder is made to a Beneficiary in the form of an Annuity, and if such Annuity provides for a death benefit then such Beneficiary shall also have the right to designate a Beneficiary and to change that Beneficiary from time to time. As an alternative to receiving the benefit in the form of an Annuity, the Beneficiary may elect to receive a single cash payment or any other form of payment provided for in the Plan. If a Beneficiary has not been designated, or if a Beneficiary designation or change of Beneficiary designation does not meet the requirements of the "Qualified Election" provisions of Article VIII, Joint and Survivor Annuity Requirements, (including any 3 6 designation made prior to August 23, 1984 by a married Participant who has an Hour of Service on or after August 23, 1984), or if no designated Beneficiary survives the Participant, the Participant's entire Vested Interest shall be distributed to the Participant's Spouse, if living; otherwise in equal shares to any surviving children of the Participant. In the event none of the above named individuals survives the Participant, the Participant's entire Vested Interest shall be paid to the executor or administrator of the Participant's estate. 1.9 BOARD OF DIRECTORS. The term Board of Directors means the Employer's board of directors or other comparable governing body. 1.10 CODE. The term Code means the Internal Revenue Code of 1986, as amended from time to time. 1.11 COLLECTIVE BARGAINING AGREEMENT. The term Collective Bargaining Agreement means the collective bargaining contract(s) in force and effect between the Union and the Employer which provides for payments to be made to this Plan, together with any modifications or amendments thereto or extensions thereof. 1.12 COMPENSATION. (A) Except as otherwise provided in the Plan, the term Compensation means wages within the meaning of section 3401(a) of the Code for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(2) of the Code). Notwithstanding the foregoing, Compensation shall be reduced by all of the following items (even if includible in gross income): reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation, and welfare benefits. (B) Compensation shall include only that Compensation which is actually paid to the Participant during the determination period. Except as provided elsewhere in the Plan, the determination period shall be the Plan Year. (C) Compensation shall include any amount which is contributed by the Employer pursuant to a salary reduction agreement and which is not includible in the gross income of the employee under sections 125, 402(e)(3), 402(h), or 403(b) of the Code; Compensation deferred under an eligible deferred compensation plan within the meaning of section 457(d) of the Code; and employee contributions described in section 414(h)(2) of the Code that are picked up by the employing unit and, thus, are treated as employer contributions. 4 7 (D) The annual Compensation of each Participant taken into account for determining all benefits provided under the Plan for any determination period shall not exceed $200,000. This limitation shall be adjusted by the Secretary of the Treasury at the time and in the same manner as under section 415(d) of the Code, except that the dollar increase in effect on January 1 of any calendar year is effective for determination periods beginning in such calendar year and the first adjustment to the $200,000 limitation is effected on January 1, 1990. If the period for determining Compensation used in calculating an Employee's allocation for a determination period is a short Plan Year (i.e., shorter than 12 months), the annual Compensation limit is an amount equal to the otherwise applicable annual Compensation limit multiplied by a fraction, the numerator of which is the number of months in the short Plan Year, and the denominator of which is 12. In determining the Compensation of a Participant for purposes of this limitation, the rules of section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the Spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year. If, as a result of the application of such rules, the adjusted $200,000 limitation is exceeded, then either the limitation shall be prorated among the affected individuals in proportion to each such individual's Compensation as determined under this section prior to the application of this limitation, or the limitation shall be allocated among the affected individuals in an objective and nondiscriminatory manner based on a reasonable, good faith interpretation of section 401(a)(17) of the Code. The method chosen in the preceding sentence shall be uniformly applied to all affected individuals in a Plan Year and shall be applied consistently from year to year. If Compensation for any prior determination period is taken into account in determining an Employee's allocations or benefits for the current determination period, the Compensation for such prior determination period is subject to the applicable annual Compensation limit in effect for that prior year. For this purpose, for years beginning before January 1, 1990, the applicable annual Compensation limit is $200,000. (E) In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, for Plan Years beginning on or after January 1, 1994, the annual Compensation of each Employee taken into account under the Plan shall not exceed the OBRA `93 annual Compensation limit. The OBRA `93 annual Compensation limit is $150,000, as adjusted by the Commissioner for increases in the cost of living in accordance with section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA `93 annual Compensation limit will be multiplied by a fraction, the 5 8 numerator of which is the number of months in the determination period, and the denominator of which is 12. For Plan Years beginning on or after January 1, 1994, any reference in this Plan to the limitation under section 401(a)(17) of the Code shall mean the OBRA `93 annual Compensation limit set forth in this provision. If Compensation for any prior determination period is taken into account in determining an employee's benefits accruing in the current Plan Year, the Compensation for that prior determination period is subject to the OBRA `93 annual Compensation limit in effect for that prior determination period. For this purpose, for determination periods beginning before the first day of the first Plan Year beginning on or after January 1, 1994, the OBRA `93 annual Compensation limit is $150,000. 1.13 CONSIDERED NET PROFITS. The term Considered Net Profits means the entire amount of the accumulated or current operating profits (excluding capital gains from the sale or involuntary conversion of capital or business assets) of the Employer after all expenses and charges other than (i) the contributions made by the Employer to the Plan, and (ii) federal or state or local taxes based upon or measured by income, as determined by the Employer, either on an estimated basis or a final basis, in accordance with the generally accepted accounting principles used by the Employer. When the amount of Considered Net Profits has been determined by the Employer, and the contributions are made by the Employer on the basis of such determination, for any Plan Year, such determination and contribution shall be final and conclusive and shall not be subject to change because of any adjustments in income or expense which may be required by the Internal Revenue Service or otherwise. Such determination and contribution shall not be open to question by any Participant either before or after the contributions by the Employer have been made. 1.14 CONTRIBUTION PERIOD. The term Contribution Period means that regular period specified by the Employer in Article IV for which contributions shall be made. 1.15 DEFERRAL PERCENTAGE AMOUNTS. The term Deferral Percentage Amounts means an Employee's Elective Deferral Contributions for the Plan Year. The term Deferral Percentage Amounts also includes Qualified Nonelective Contributions and Qualified Matching Contributions treated as Elective Deferral Contributions and taken into account in determining the Employee's Actual Deferral Ratio for the Plan Year. 1.16 DISABILITY. The term Disability means a Participant's incapacity to engage in any substantial gainful activity because of a medically determinable physical or mental impairment which can be expected to result in death, or to be of long, continued and indefinite duration. Such determination of Disability shall be made by the Administrator with the advice of competent medical authority. All Participants in similar circumstances will be treated alike. 6 9 1.17 DISABILITY RETIREMENT DATE. The term Disability Retirement Date means the first day of the month after the Plan Administrator has determined that a Participant's incapacity is a Disability. 1.18 EFFECTIVE DATE. The term Effective Date means January 1, 1993. 1.19 ELECTIVE DEFERRAL CONTRIBUTION. The term Elective Deferral Contribution means any Employer Contribution made to the Plan at the election of the Participant, in lieu of cash compensation, and includes contributions made pursuant to a Salary Deferral Agreement or other deferral mechanism. Solely for purposes of the dollar limitation specified in section 402(g) of the Code, with respect to any taxable year, a Participant's Elective Deferral Contributions are the sum of all employer contributions made on behalf of such Participant pursuant to an election to defer under any qualified cash or deferred arrangement as described in section 401(k) of the Code, any simplified employee pension cash or deferred arrangement described in section 402(h)(1)(B) of the Code, any plan as described under section 501(c)(18) of the Code, and any employer contributions made on behalf of a Participant for the purchase of a tax sheltered annuity contract under section 403(b) of the Code pursuant to a salary reduction agreement. The term Elective Deferral Contribution shall not include any deferrals properly distributed as excess annual additions. 1.20 EMPLOYEE. The term Employee means an individual who performs services for the Employer and who is either a common law employee of the Employer or a self-employed individual/owner employee treated as an Employee pursuant to Code section 401(c)(1). The term Employee also includes a Leased Employee who is treated as an Employee of the Employer-recipient pursuant to the provisions of Code section 414(n) or 414(o). For purposes of determining the Highly Compensated Employees, the Employer may elect, on a reasonable and consistent basis, to treat such Leased Employees covered by a plan described in Code section 414(n)(5) as Employees. 1.21 EMPLOYEE CONTRIBUTIONS. The term Employee Contributions means any contributions to the Plan or any other plan that are designated or treated at the time of contribution as after-tax Employee Contributions and are allocated to a separate account to which the attributable earnings and losses are allocated. Such term includes Employee Contributions applied to the purchase of life insurance policies. Such term does not include repayment of loans or buy-back of benefits described in code section (411)(a)(7)(c) or employee contributions transferred to this Plan. 1.22 EMPLOYER. The term Employer means Dominick's Finer Foods, Inc., Supermarket Training Systems, Inc. and any successor organization to such Employer which elects to continue the Plan. In the case of a group of employers which constitutes a controlled group of corporations (as defined in Code section 414(b)), or which constitutes trades or 7 10 businesses (whether or not incorporated) which are under common control (as defined in Code section 414(c)), or which constitutes an affiliated service group (as defined in Code section 414(m)), all such employers shall be considered a single employer for purposes of participation, vesting and determination of Highly Compensated Employees. 1.23 EMPLOYER CONTRIBUTION. The term Employer Contribution means any contribution made to the Plan by the Employer on behalf of a Participant, other than an Employee Contribution or Rollover Contribution. 1.24 ENTRY DATE. The term Entry Date means either the Effective Date or the first day of the month thereafter when an Employee who has fulfilled the eligibility requirements commences participation in the Plan. Any Employee who has satisfied the maximum eligibility requirements permissible under ERISA, shall be eligible to commence participation in this Plan no later than the earlier of (A) or (B) below, as applicable, provided that the Employee has not separated from the Service of the Employer: (A) The first day of the first Plan Year beginning after the date on which the Employee satisfied such requirements; or (B) The date six months after the date on which the Employee satisfied such requirements. If an Employee is not in the active Service of the Employer as of his initial Entry Date, his subsequent Entry Date shall be the date he returns to the active Service of the Employer, provided he still meets the eligibility requirements. If an Employee does not enroll as a Participant as of his initial Entry Date, his subsequent Entry Date shall be the applicable Entry Date as specified above when the Employee actually enrolls as a Participant. 1.25 ERISA. The term ERISA means the Employee Retirement Income Security Act of 1974 (PL 93-406) as it may be amended from time to time, and any regulations issued pursuant thereto as such Act and such regulations affect this Plan and Trust. 1.26 EXCESS CONTRIBUTION. (A) The term Excess Contribution means, with respect to a Plan Year, the excess of Deferral Percentage Amounts made on behalf of eligible Highly Compensated Employees for the Plan Year (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of Section 1.8 of the Plan) over the maximum amount of such contributions permitted under the Actual Deferral Percentage Test for the Plan Year. The amount of Excess Contributions for each Highly Compensated Employee is determined by using the method described in paragraph (B) of this section. 8 11 (B) The amount of Excess Contributions for a Highly Compensated Employee for a Plan Year is the amount (if any) by which the Employee's Elective Deferral Contributions must be reduced for the Employee's Actual Deferral Ratio to equal the highest permitted Actual Deferral Ratio under the Plan. To calculate the highest permitted Actual Deferral Ratio under the Plan, the Actual Deferral Ratio of the Highly Compensated Employee with the highest Actual Deferral Ratio is reduced by the amount required to cause the Employee's Actual Deferral Ratio to equal the ratio of the Highly Compensated Employee with the next highest Actual Deferral Ratio. If a lesser reduction would enable the arrangement to satisfy the Actual Deferral Percentage Test, only this lesser reduction shall be made. This process shall be repeated until the cash or deferred arrangement satisfies the Actual Deferral Percentage Test. The highest Actual Deferral Ratio remaining under the Plan after leveling is the highest permitted Actual Deferral Ratio. 1.27 EXCESS DEFERRALS. The term Excess Deferrals means those Elective Deferral Contributions that are includible in a Participant's gross income under section 402(g) of the Code to the extent such Participant's Elective Deferral Contributions for a taxable year exceed the dollar limitation under such Code section. 1.28 FAIL-SAFE CONTRIBUTION. The term Fail-Safe Contribution means a Nonelective Contribution, designated by the Employer at the time of contribution as a Qualified Nonelective Contribution, which is contributed to the Plan solely for the purposes of satisfying the Actual Contribution Percentage Test and is made in accordance with the provisions of Article IV of this Plan. 1.29 FAMILY MEMBER. The term Family Member means, with respect to any Employee, such Employee's Spouse and lineal ascendants and descendants and the spouses of such lineal ascendants and descendants. 1.30 FIDUCIARY. The term Fiduciary means any, or all, of the following, as applicable: (A) Any Person who exercises any discretionary authority or control respecting the management of the Plan or its assets; or (B) Any Person who renders investment advice for a fee or other compensation, direct or indirect, respecting any monies or other property of the Plan or has authority or responsibility to do so; or (C) Any Person who has discretionary authority or responsibility in the administration of the Plan; or (D) Any Person who has been designated by a Named Fiduciary pursuant to authority granted by the Plan, who acts to carry out a fiduciary responsibility, subject to any exceptions granted directly or indirectly by ERISA. 9 12 1.31 FORFEITURE. The term Forfeiture means the amount, if any, by which the value of a Participant's Account exceeds his Vested Interest following such Participant's Termination of Employment, and at the time specified in Section 9.1. 1.32 INACTIVE PARTICIPANT. The term Inactive Participant means any Participant who does not currently meet the requirements to be an Active Participant due to a suspension of the performance of duties for the Employer. In addition, a Participant who ceases to meet the eligibility requirements in accordance with Section 3.1 shall be considered an Inactive Participant. 1.33 INSTALLMENT REFUND ANNUITY. The term Installment Refund Annuity means an annuity which provides fixed monthly payments for a period certain of not less than three nor more than 15 years. If the Participant dies before the period certain expires, the annuity will be paid to the Participant's Beneficiary for the remainder of the period certain. The period certain shall be chosen by the Participant at the time the annuity is purchased, and the Installment Refund Annuity will be the amount of benefit which can be purchased with the Participant's Vested Interest. The Installment Refund Annuity is not a life annuity and in no event shall the period certain extend to a period which equals or exceeds the life expectancy of the Participant. 1.34 JOINT AND SURVIVOR ANNUITY. The term Joint and Survivor Annuity means an Annuity for the life of the Participant with a survivor Annuity for the life of the Participant's Spouse which is not less than one-half, nor greater than, the amount of the Annuity payable during the joint lives of the Participant and the Participant's Spouse. The Joint and Survivor Annuity will be the amount of benefit which can be purchased with the Participant's vested account balance. In the case of an unmarried Participant, Joint and Survivor Annuity means an Annuity payable over the Participant's life. 1.35 LATE RETIREMENT DATE. The term Late Retirement Date means the first day of the month coinciding with or next following the date a Participant is separated from Service with the Employer after his Normal Retirement Age, for any reason other than death. 1.36 LEASED EMPLOYEE. The term Leased Employee means any person (other than an Employee of the recipient) who, pursuant to an agreement between the recipient and any other person ("leasing organization"), has performed services for the recipient (or for the Employer and related persons determined in accordance with Code section 414(n)(6)) on a substantially full-time basis for a period of at least one year, and such services are of a type historically performed by employees in the business field of the recipient Employer. 1.37 NAMED FIDUCIARY. The term Named Fiduciary means the Plan Administrator, the Trustee and any other Fiduciary designated in writing by the Employer, and any successor thereto. 1.38 NONELECTIVE CONTRIBUTIONS. The term Nonelective Contributions means contributions made by the Employer (other than Matching Contributions) that the 10 13 Participant may not elect to have paid in cash or other benefits instead of being contributed to the Plan. 1.39 NONHIGHLY COMPENSATED EMPLOYEE. The term Nonhighly Compensated Employee means an Employee who is not a Highly Compensated Employee. 1.40 NORMAL RETIREMENT AGE. The term Normal Retirement Age means the date the Participant attains age 55. 1.41 NORMAL RETIREMENT DATE. The term Normal Retirement Date means the first day of the month coinciding with or next following the date a Participant attains his Normal Retirement Age. 1.42 PARTICIPANT. The term Participant means any Employee of the Employer, who is or becomes eligible to participate under this Plan in accordance with its provisions and shall include an Active Participant and an Inactive Participant. 1.43 PARTICIPANT'S ACCOUNT. The term Participant's Account means the sum of the following sub-accounts held on behalf of each Participant: - Elective Deferral Contributions, if any, and earnings thereon. - Prior Employer Contributions, if any, and earnings thereon. - Prior Employee Contributions, if any, and earnings thereon. - Rollover Contributions, if any, and earnings thereon. A Participant's Account shall be invested in accordance with the rules established by the Plan Administrator, which shall be applied in a consistent and nondiscriminatory manner. 1.44 PERSON. The term Person means any natural person, partnership, corporation, trust or estate. 1.45 PLAN. The term Plan means Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Union Employees, the terms of which are set forth herein as it may be amended from time to time. 1.46 PLAN ADMINISTRATOR. The terms Plan Administrator and Administrator are used interchangeably throughout the Plan and shall mean the Employer. 1.47 PLAN YEAR. The term Plan Year means the 12-month period commencing on January 1 and ending on the following December 31. 1.48 PRIOR EMPLOYEE CONTRIBUTIONS. The term Prior Employee Contributions means Employee Contributions that were made prior to January 1, 1993. Prior Employee Contributions shall be considered to be Employee Contributions for purposes of 11 14 determining a Participant's Vested Interest, pursuant to Article 1. In addition, Prior Employee Contributions shall also be considered to be Employee Contributions for the purposes of determining the Actual Contribution Ratio pursuant to Article I and Annual Additions pursuant to Article V. 1.49 PRIOR EMPLOYER CONTRIBUTIONS. The term Prior Employer Contributions means employer contributions that were made prior to the Effective Date of this Plan. 1.50 ROLLOVER CONTRIBUTION. The term Rollover Contribution means an amount representing all or part of a distribution from a pension or profit-sharing plan meeting the requirements of Code section 401(a) that is eligible for rollover to this Plan in accordance with the requirements set forth in Code section 402 or Code section 408(d)(3), whichever is applicable. 1.51 SALARY DEFERRAL AGREEMENT. The term Salary Deferral Agreement means an agreement between a Participant and the Employer to defer the Participant's Compensation for the purpose of making Elective Deferral Contributions to the Plan. 1.52 TERMINATION OF EMPLOYMENT. The term Termination of Employment means a severance of the Employer-Employee relationship which occurs prior to a Participant's Normal Retirement Age for any reason other than Disability or death. 1.53 TRUST. The term Trust means the trust agreement entered into by the Employer, the Administrator and the Trustee. 1.54 TRUSTEE. The term Trustee means one or more persons collectively appointed and acting under the trust agreement, and any successor thereto. 1.55 UNION. The term Union means an eligible Union or Local that has collectively bargained for participation in this plan. 1.56 VESTED INTEREST. The term Vested Interest on any date means the nonforfeitable right to an immediate or deferred benefit in the amount which is equal to the following: (A) the value on that date of that portion of the Participant's Account that is attributable to the following contributions: - Elective Deferral Contributions, if any - Employee Contributions, if any - Rollover Contributions, if any (B) plus the value on that date of that portion of the Participant's Account that is attributable to and derived from: - Prior Employer Contributions, if any 12 15 Such contributions pursuant to Subsection (B), plus the earnings thereon, shall be, at any relevant time, a part of the Participant's Vested Interest equal to an amount ("X") determined by the following formula: X = P(AB + D) - D For the purposes of applying this formula: P = The Participant's Vesting Percentage at the relevant time. AB = The account balance attributable to such contributions, plus the earnings thereon, at the relevant time. D = The amount of the distribution. 1.57 VESTING PERCENTAGE. The term Vesting Percentage means the percentage used to determine a Participant's Vested Interest in contributions made by the Employer, plus the earnings thereon, credited to his Participant's Account that are not 100% immediately vested. The Vesting Percentage for each Participant shall be determined in accordance with the following schedule based on Years of Service with the Employer.
Years of Service Vesting Percentage ---------------- ------------------ Less than 1 0% 1 but less than 2 10% 2 but less than 3 20% 3 but less than 4 30% 4 but less than 5 40% 5 but less than 6 60% 6 but less than 7 80% 7 or more 100%
However, if an Active Participant dies prior to attaining his Normal Retirement Age, his Vesting Percentage shall be 100%. 13 16 ARTICLE II. SERVICE 2.1 SERVICE. The term Service means active employment with the Employer as an Employee. For purposes of determining Service, employment with any company which is under common control with the Employer as specified in section 414 of the Internal Revenue Code shall be treated as employment with the Employer. 2.2 ABSENCE FROM EMPLOYMENT. Absence from employment on account of a leave of absence authorized by the Employer pursuant to the Employer's established leave policy will be counted as employment with the Employer provided that such leave of absence is of not more than two years' duration. Absence from employment on account of active duty with the Armed Forces of the United States will be counted as employment with the Employer. If the Employee does not return to active employment with the Employer, his Service will be deemed to have ceased on the date the Administrator receives notice that such Employee will not return to the active Service of the Employer. The Employer's leave policy shall be applied in a uniform and nondiscriminatory manner to all Participants under similar circumstances. FOR PURPOSES OF ELIGIBILITY, THE FOLLOWING PROVISIONS SHALL APPLY: 2.3 HOUR OF SERVICE. The term Hour of Service means a period of Service during which an Employee shall be credited with one Hour of Service as described in (A), (B), (C), and (D) below: (A) Each hour for which an Employee is directly or indirectly paid, or entitled to payment, by the Employer for the performance of duties. These hours shall be credited to the Employee for the computation period or periods in which the duties are performed; and (B) Each hour for which an Employee is directly or indirectly paid, or entitled to payment, by the Employer for reasons (such as vacation, sickness or Disability) other than for the performance of duties. Hours under this Subsection shall be calculated and credited pursuant to section 2530.200b-2 of the Department of Labor Regulations which are incorporated herein by this reference; and (C) Each hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by the Employer. These hours shall be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made; and (D) Each hour for which an Employee is on an authorized unpaid leave (such as service with the Armed Forces, jury duty, educational leave). These hours shall be credited to the Employee for the computation period or periods in which such 14 17 authorized leave takes place. However, no more than 501 hours shall be credited under this subparagraph (D). Hours of Service will be credited for employment with other members of an affiliated service group (under Internal Revenue Code section 414(m)), a controlled group of corporations (under Internal Revenue Code section 414(b)), or a group of trades or businesses under common control (under Internal Revenue Code section 414(c)), of which the adopting employer is a member. Hours of Service will also be credited for any individual considered an Employee under Internal Revenue Code section 414(n). Solely for purposes of determining whether a One-Year Break in Service, as defined in Section 2.4, for participation and vesting purposes has occurred in a computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, eight Hours of Service per day of such absence. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of a birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. The Hours of Service credited under this paragraph shall be credited (1) in the computation period in which the absence begins if the crediting is necessary to prevent a Break in Service in that period, or (2) in all other cases, in the following computation period. 2.4 ONE-YEAR BREAK IN SERVICE. Except as provided below regarding eligibility, the term One-Year Break in Service means any Plan Year during which an Employee fails to complete more than 500 Hours of Service. 2.5 YEAR(S) OF SERVICE. The term Year(s) of Service means a 12-consecutive-month period during which an Employee has completed at least 1,000 Hours of Service. For purposes of determining Years of Service and Breaks in Service for eligibility, the twelve-consecutive-month period shall begin with the date on which an Employee's employment commenced and, where additional periods are necessary, on succeeding anniversaries of his employment commencement date. The employment commencement date is the date on which the Employee first performs an Hour of Service for the Employer maintaining the Plan. The eligibility requirement specified in Article III is one or more full Years of Service. Such requirement shall be met upon completion of at least 1,000 Hours of Service for each Year of Service specified. FOR PURPOSES OF VESTING, THE FOLLOWING PROVISIONS SHALL APPLY: 15 18 2.6 PERIOD OF SERVICE. The term Period of Service or Service means the Employer-Employee relationship which begins on the Employee's employment date and continues until his Severance from Service Date. An Employee's Period of Service shall include any Period of Severance beginning on his Severance from Service Date, which is less than 12 months. 2.7 PERIOD OF SEVERANCE. The term Period of Severance means a period of time commencing on the Participant's Severance from Service Date and ending on the date such individual is re-employed by the Employer. 2.8 SEVERANCE FROM SERVICE DATE. The Severance from Service Date shall be the earliest of (A), (B), or (C) below. (A) The date the Employee terminates employment by reason of a quit, discharge, permanent Disability, retirement or death. (B) The second anniversary of the first day the Employee is absent from Service for maternity or paternity reasons, as described in the following Section 2.6. (C) The first anniversary of the first day the Employee separates from Service for any other reason such as an authorized leave of absence, sickness, vacation, etc., after which the Employee does not return to work. 2.9 ONE-YEAR BREAK IN SERVICE. The term One-Year Break in Service shall mean a 12-consecutive-month Period of Severance, beginning on the Employee's Severance from Service Date. In the case of an individual who is absent from Service for maternity or paternity reasons, the 12-consecutive-month period beginning on the first anniversary of the first date of such absence shall not constitute a One-Year Break in Service. An absence from Service for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. 2.10 YEAR(S) OF SERVICE. The term Year(s) of Service means a Period of Service equaling 12 months. Service counted in computing Years of Service need not be consecutive or continuous, and all fractional Periods of Service shall be aggregated. 2.11 SERVICE UPON RE-EMPLOYMENT. An Employee shall be considered a re-employed Employee when he is rehired following a One-Year Break in Service. Upon 16 19 re-employment, all Service, including Service prior to any One-Year Break in Service, shall be aggregated in determining such re-employed Employee's Vesting Percentage. 2.12 PREDECESSOR ORGANIZATION SERVICE. For purposes of this Article, Service with a predecessor organization of the Employer shall be treated as Service with the Employer in any case in which the Employer maintains the Plan of such predecessor organization. 17 20 ARTICLE III. ELIGIBILITY, ENROLLMENT AND PARTICIPATION 3.1 ELIGIBILITY. Each Employee who was a Participant prior to the Effective Date and who is in the Service of the Employer on the Effective Date shall continue as a Participant in the Plan. Each other Employee, excluding a Leased Employee, shall be eligible to become a Participant as of the Effective Date or the Entry Date when he first meets the following requirement(s): - Age 21 - 900 Hours of Service during first six months of employment or 1,000 Hours of Service per year - Membership in a collective bargaining unit represented by an eligible Union or Local that has collectively bargained for participation in this plan - Not a non-resident alien with no U.S.-source income - Not an Independent Contractor 3.2 ENROLLMENT AND PARTICIPATION. Each eligible Employee may enroll as of his Entry Date by completing and delivering to the Administrator an enrollment form and, if applicable, a Salary Deferral Agreement. He will then become a Participant as of his Entry Date. 3.3 RE-EMPLOYED EMPLOYEE. In the case of an individual who ceases to be an Employee and is subsequently rehired as an Employee, the following provisions shall apply in determining his eligibility to again participate in the Plan: (A) If the Employee had met the eligibility requirement(s) specified in Section 3.1 prior to his separation from employment, he shall become an Active Participant in the Plan as of the date he is re-employed, after completing the applicable form(s), in accordance with Section 3.2. (B) If the Employee had not met the eligibility requirement(s) specified in Section 3.1 prior to his separation from employment, he shall be eligible to participate in the Plan on the first Entry Date following his fulfillment of such eligibility requirement(s). For purposes of this Subsection, all Years of Service with the Employer, including any Years of Service prior to any Breaks in Service, shall be taken into account. 3.4 ELIGIBLE CLASS. In the event a Participant becomes ineligible to participate because he is no longer a member of an eligible class of Employees, such Employee shall participate immediately upon his return to an eligible class of Employees. 18 21 In the event an Employee who is not a member of the eligible class of Employees becomes a member of the eligible class, such Employee shall participate immediately if such Employee has satisfied the minimum age requirement and would have previously become a Participant had he been in the eligible class. 19 22 ARTICLE IV. CONTRIBUTIONS 4.1 ELECTIVE DEFERRAL CONTRIBUTIONS. Each Active Participant may enter into a written Salary Deferral Agreement with the Employer in an amount equal to not less than 1% nor more than 15% of his Compensation for the Contribution Period. In consideration of such agreement, the Employer will make a contribution for each Contribution Period on behalf of the Participant in an amount equal to the total amount by which the Participant's Compensation from the Employer was deferred during the Contribution Period pursuant to the Salary Deferral Agreement then in effect. Elective Deferral Contributions shall be paid by the Employer to the Trust not less frequently than monthly, but in no event later than 90 days following the date the amounts were deferred. Salary Deferral Agreements shall be governed by the following provisions: (A) Amounts contributed pursuant to a Salary Deferral Agreement shall be 100% vested and non-forfeitable at all times. (B) No Participant shall be permitted to have Elective Deferral Contributions made under this Plan, or any other qualified plan maintained by the Employer, during any taxable year, in excess of the dollar limitation contained in section 402(g) of the Code in effect at the beginning of the taxable year. However, this $7,000 limit shall not apply to certain amounts deferred in 1987 that were attributable to Service performed in 1986. (C) Amounts contributed pursuant to a Salary Deferral Agreement, which are not in excess of the limit described in Subsection (B) above, shall be subject to the Limitations on Allocations in accordance with Article V. Elective Deferral Contributions that are in excess of the limit described in Subsection (B) shall also be subject to the Limitations on Allocations in accordance with Article V. (D) A Salary Deferral Agreement may be changed by a Participant four times during the Plan Year, on January 1, April 1, July 1 and October 1, by filing written notice thereof with the Administrator. Such notice shall be effective, and the Salary Deferral Agreement shall be changed on the date specified in such notice or as soon as administratively possible, which date must be at least 15 days after such notice is filed. (E) Elective Deferral Contributions shall be subject to the Actual Deferral Percentage Test limitations. (F) Correction of Excess Contributions. (1) If the Employer determines prior to the end of the Plan Year that the Actual Deferral Percentage Test may not be satisfied, the Employer may take the corrective action specified in Section 4.11 of the Plan. 20 23 (2) If, after the end of the Plan Year, the Employer determines that the Plan will fail the Actual Deferral Percentage Test, the Employer shall take the corrective action specified in Section 4.13 or Section 4.16 of the Plan, or a combination of such corrective actions, in order to ensure that the Plan does not fail the Actual Deferral Percentage Test for the Plan Year being tested. 4.2 FAIL-SAFE CONTRIBUTION. The Employer reserves the right to make a discretionary Nonelective Contribution to the Plan for any Plan Year, if the Employer determines that such a contribution is necessary to ensure that the Actual Deferral Percentage Test will be satisfied for that Plan Year. Such amount shall be designated by the Employer at the time of contribution and shall be known as a Fail-Safe Contribution. The Fail-Safe Contribution shall be made on behalf of all eligible non-Highly Compensated Employees who are Participants and who are considered under the Actual Deferral Percentage Test. This contribution shall be allocated to the Participant's Account of each such Participant in an amount equal to a fixed percentage of such Participant's Compensation. The fixed percentage shall be equal to the minimum fixed percentage necessary to be contributed by the Employer on behalf of each eligible non-Highly Compensated Employee who is a Participant so that the Actual Deferral Percentage Test is satisfied. The Fail-Safe Contribution for any Plan Year as determined above shall be paid to the Trust at the end of the Plan Year, or as soon as possible on or after the last day of such Plan Year, but in no event later than the date which is prescribed by law for filing the Employer's income tax return, including any extensions thereof. 4.3 PROFITS NOT REQUIRED. Contributions to this Plan shall not be precluded because the Employer does not have Considered Net Profits. Notwithstanding the existence of Considered Net Profits, the Employer may determine in its sole discretion that it will make no contributions for such Plan Year. 4.4 PAYMENT OF EXPENSES. The Employer may contribute to the Plan the amount necessary, to pay any applicable expense charges and administration charges. In lieu of the Employer's contributing the amount necessary to pay such charges, these expenses may be paid from the Trust fund. 4.5 ALLOCATION OF FORFEITURES. The contributions made by the Employer shall be reduced by any Forfeitures available as an Employer credit in accordance with Section 9.3. 4.6 CREDITING OF ELECTIVE DEFERRAL AND OTHER CONTRIBUTIONS. Elective Deferral Contributions and other contributions made by the Employer shall be credited to the Participant Account of each Participant for whom such contributions are made, in accordance with the provisions of Article XIII. 21 24 4.7 ROLLOVER CONTRIBUTIONS. The Plan may receive Rollover Contributions on behalf of an Employee. Receipt of a Rollover Contribution shall be subject to the approval of the Plan Administrator. Before approving the receipt of a Rollover Contribution, the Plan Administrator may request any documents or other information from an Employee or opinions of counsel which the Plan Administrator deems necessary to establish that such amount is a Rollover Contribution. A Participant's Account shall be maintained on behalf of each Employee from whom Rollover Contributions are received, regardless of such Employee's eligibility to participate in the Plan in accordance with the requirements of Article III, and Rollover Contributions may be invested in any manner authorized under the provisions of this Plan. Rollover Contributions received from an Employee who is not otherwise eligible to participate in the Plan may not be withdrawn in accordance with the provisions of Article X until such Employee becomes a Participant, except that such Employee may receive a distribution of his Participant's Account if his Termination of Employment occurs. Rollover Contributions shall be credited to the Participant's Account and may be invested in any manner authorized under the provisions of this Plan. 4.8 TRANSFERS. Without regard to the Limitations on Allocations imposed under Article V, the Plan may receive, directly from another qualified pension or profit sharing plan meeting the requirements of Internal Revenue Code section 401 (a), all or part of the entire amount distributable on behalf of a Participant from such plan. Likewise, the Plan may receive Transfers representing the assets of any predecessor plan. Transfers may be invested in any manner authorized under the provisions of this Plan. 4.9 SUSPENSION OF ELECTIVE DEFERRAL CONTRIBUTIONS. The following provisions shall apply with respect to suspension of Elective Deferral Contributions. (A) Elective Suspension. An Active Participant may elect to suspend his Salary Deferral Agreement for Elective Deferral Contributions by filing a written notice thereof with the Administrator at any time. The Salary Deferral Agreement shall be suspended on the date specified in such notice, which date must be at least 15 days after such notice is filed. The notice shall specify the period for which such suspension shall be effective. Such period may extend indefinitely. (B) Suspension for Leave. A Participant who is absent from employment on account of an authorized leave of absence or military leave shall have his Salary Deferral Agreement suspended during such leave. Such suspension of contributions shall be effective on the date payment of Compensation by the Employer to him ceases, and shall remain in effect until payment of Compensation is resumed. 22 25 (C) Withdrawal Suspension. An Active Participant who elects a withdrawal in accordance with Article X may have his Salary Deferral Agreement suspended on the date such election becomes effective. Such suspension shall remain in effect for the number of months specified therein. (D) Non-Elective Suspension. An Active Participant who ceases to meet the eligibility requirements as specified in Section 3.1 but who remains in the employ of the Employer, shall have his Salary Deferral Agreement suspended, effective as of the date he ceases to meet the eligibility requirements. Such suspension shall remain in effect until he again meets such eligibility requirements. The Participant may elect to reactivate his Salary Deferral Agreement for Elective Deferral Contributions by filing a written notice thereof with the Plan Administrator. The Salary Deferral Agreement shall be reactivated at any time following the expiration of the suspension period described above. 4.10 LIMITATION OF ELECTIVE DEFERRAL CONTRIBUTIONS. If the Employer determines prior to the end of the Plan Year that the Plan may not satisfy the Actual Deferral Percentage Test for the Plan Year, the Employer may require that the amount of Elective Deferral Contributions being allocated to the accounts of Highly Compensated Employees be reduced to the extent necessary to prevent Excess Contributions from being made to the Plan. Although the Employer may reduce the amount of Elective Deferral Contributions that may be allocated to the Participant's Account of Highly Compensated Employees, the affected Employees shall continue to participate in the Plan. When the situation that resulted in the reduction of Elective Deferral Contributions ceases to exist, the Employer shall reinstate the amount of Elective Deferral Contributions elected by the Participant in the Salary Deferral Agreement to the fullest extent possible for all affected Participants in a nondiscriminatory manner. 4.11 LIMITATION OF MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS. If the Employer determines prior to the end of the Plan Year that the Plan may not satisfy the Actual Contribution Percentage Test for the Plan Year, the Employer may require that the amount of Matching Contributions or Employee Contributions, or both, being allocated to the Accounts of Highly Compensated Employees be reduced to the extent necessary to prevent Excess Aggregate Contributions from being made to the Plan. 4.12 CORRECTIVE DISTRIBUTION OF EXCESS CONTRIBUTIONS. (A) The Employer may distribute Excess Contributions (and income allocable thereto) to the appropriate Highly Compensated Employee after the close of the Plan Year in which the Excess Contribution arose and within 12 months after the close of that Plan Year. 23 26 (B) The income allocable to Excess Contributions is equal to the sum of the allocable gain or loss for the Plan Year and shall be determined as follows: (1) The income allocable to Excess Contributions is determined by multiplying the income for the Plan Year allocable to Deferral Percentage Amounts by a fraction. The numerator of the fraction is the Excess Contributions attributable to the Employee for the Plan Year. The denominator of the fraction is equal to the sum of (A) the total account balance of the Employee attributable to Deferral Percentage Amounts as of the beginning of the Plan Year, plus (B) the Employee's Deferral Percentage Amounts for the Plan Year. (2) The allocable gain or loss for the period between the end of the Plan Year and the date of distribution shall not be taken into consideration when determining the income allocable to Excess Contributions. (C) The amount of Excess Contributions to be distributed with respect to an Employee for a Plan Year shall be reduced by Excess Deferrals previously distributed to the Employee for the Employee's taxable year ending with or within the Plan Year. (D) The distribution of Excess Contributions made to the Family Members of a family group that was combined for purposes of determining a Highly Compensated Employee's Actual Deferral Ratio shall be allocated among the Family Members in proportion to the Elective Deferral Contribution (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of Section 1.8 of the Plan) of each Family Member that is combined to determine the Actual Deferral Ratio. (E) A corrective distribution of Excess Contributions (and income) shall be made without regard to any Participant or spousal consent or any notice otherwise required under sections 411 (a)(11) and 417 of the Code. (F) Any Matching Contributions or Qualified Matching Contributions that relate to the Excess Contribution being distributed shall be forfeited. The Matching Contribution so forfeited shall be in proportion to the applicable Employee's vested and nonvested interest in Matching Contributions under the Plan for the Plan Year in which the Excess Contribution arose. Forfeitures of Matching Contributions or Qualified Matching Contributions that relate to Excess Contributions shall be applied to reduce Employer contributions or pay Plan expenses. (G) In no case may the amount of Excess Contributions to be distributed for a Plan Year with respect to any Highly Compensated Employee exceed the amount of Elective Deferral Contributions made on behalf of the Highly Compensated Employee for the Plan Year. 24 27 (H) In the event of a complete termination of the Plan during the Plan Year in which an Excess Contribution arose, the corrective distribution must be made as soon as administratively feasible after the date of the termination of the Plan, but in no event later than 12 months after the date of termination. (I) Any distribution of less than the entire amount of Excess Contributions with respect to any Highly Compensated Employee shall be treated as a pro-rata distribution of Excess Contributions and allocable income or loss. 4.13 CORRECTIVE DISTRIBUTION OF EXCESS DEFERRALS. Notwithstanding any other provision of the Plan, Excess Deferrals, plus any income and minus any loss allocable thereto, may be distributed to any Participant to whose account Excess Deferrals were allocated for the individual's taxable year. Such a corrective distribution shall be made in accordance with this section. (A) Correction of Excess Deferrals After Taxable Year. (1) Not later than the March 15 following the close of a Participant's taxable year, the Participant may notify the Plan of the amount of Excess Deferrals received by the Plan during that taxable year. The notification shall be in writing, shall specify the Participant's Excess Deferrals, and shall be accompanied by the Participant's written statement that if such amounts are not distributed, these amounts, when added to all other Elective Deferral Contributions made on behalf of the Participant during the taxable year, shall exceed the dollar limitation specified in section 402(g) of the Code. (2) The Participant is deemed to have notified the Plan of Excess Deferrals if, not later than the March 1 following the close of a Participant's taxable year, the Employer notifies the Plan on behalf of the Participant of the Excess Deferrals. Such Excess Deferrals shall be calculated by taking into account only Elective Deferral Contributions under the Plan and any other plans of the Employer. (3) Not later than the April 15 following the close of the taxable year, the Plan shall distribute to the Participant the amount of Excess Deferrals designated under subparagraphs (1) or (2) above. (B) Correction of Excess Deferrals During the Taxable Year. A Participant who has an Excess Deferral during a taxable year may receive a corrective distribution during the same year. Such a corrective distribution shall be made if: (1) The Participant designates the distribution as an Excess Deferral. The designation shall be made in the same manner as the notification described in subparagraph (A)(1) of this section. The Participant will be deemed to have designated the distribution as an Excess Deferral if the Employer 25 28 makes the designation on behalf of the Participant to the extent that the Participant has Excess Deferrals for the taxable year calculated by taking into account only Elective Deferral Contributions to the Plan and other plans of the Employer. (2) The corrective distribution is made after the date on which the Plan received the Excess Deferral. (3) The Plan designates the distribution as a distribution of Excess Deferrals. (C) If the Participant provides the Employer with satisfactory evidence and written notice to demonstrate that all Elective Deferral Contributions by the participant in this Plan and any other qualified plan exceed the applicable limit under section 402(g) of the Code for such individual's taxable year, then the Plan Administrator may (but is not required to) distribute sufficient Elective Deferral Contributions (not to exceed the amount of Elective Deferral Contributions actually contributed on behalf of the Participant to this Plan during the Participant's taxable year) from this Plan to allow the Participant to comply with the applicable limit. The evidence provided by the Participant must establish clearly the amount of Excess Deferrals. The Participant must present this evidence to the Plan Administrator by the March 1 following the end of the calendar year in which the Excess Deferrals occurred. (D) Income Allocable to Excess Deferrals. The income allocable to Excess Deferrals is equal to the sum of allocable gain or loss for the taxable year of the individual and shall be determined as follows: (1) The gain or loss allocable to Excess Deferrals is determined by multiplying the income for the taxable year allocable to Elective Deferral Contributions by a fraction. The numerator of the fraction is the Excess Deferrals by the Employee for the taxable year. The denominator of the fraction is equal to the sum of: (a) The total account balance of the Employee attributable to Elective Deferral Contributions as of the beginning of the Plan Year, plus (b) The Employee's Elective Deferral Contributions for the taxable year. (2) The income allocable to Excess Deferrals shall not include the allocable gain or loss for the period between the end of the taxable year and the date of distribution. (E) No Employee or Spousal Consent Required. A corrective distribution of Excess Deferrals (and income) shall be made without regard to any notice or consent otherwise required under sections 411(a)(11) and 417 of the Code. 26 29 (F) Any Matching Contributions or Qualified Matching Contributions that relate to the Excess Deferral being distributed shall be forfeited. The Matching Contribution so forfeited shall be in proportion to the applicable Employee's vested and nonvested interest in Matching Contributions under the Plan for the Plan Year in which the Excess Deferral arose. Forfeitures of Matching Contributions or Qualified Matching Contributions that relate to Excess Deferrals shall be applied to reduce Employer contributions or pay Plan expenses. 27 30 ARTICLE V. LIMITATIONS ON ALLOCATIONS 5.1 LIMITATION ON ALLOCATIONS. Definitions - The following definitions are atypical terms which refer only to terms used in the Limitations on Allocations Sections of this Article V. (A) Annual Additions. The term Annual Additions shall mean the sum of the following amounts allocated on behalf of a Participant for a Limitation Year. (1) all contributions made by the Employer which shall include: - Elective Deferral Contributions, if any; - Nonelective Contributions, if any; (2) all Forfeitures, if any; (3) all Employee Contributions, if any. For the purposes of this Article, Excess Amounts reapplied under Section 5.2(D) shall also be included as Annual Additions. Also, for the purposes of this Article, Employee Contributions are determined without regard to deductible employee contributions within the meaning of section 72(o)(5) of the Code. Amounts allocated after March 31, 1984, to an individual medical account, as defined in Internal Revenue Code section 415(l)(1), which is part of a defined benefit plan maintained by the Employer, are treated as Annual Additions to a defined contribution plan. Also, amounts derived from contributions paid or accrued attributable to post-retirement medical benefits allocated to the separate account of a key employee, as defined in Internal Revenue Code section 419A(d)(3), under a welfare benefit fund, as defined in Internal Revenue Code section 419(e), maintained by the Employer, are treated as Annual Additions to a defined contribution plan. Contributions do not fail to be Annual Additions merely because they are Excess Deferrals or Excess or merely because Excess Contributions are corrected through distribution or recharacterization. Excess Deferrals that are distributed in accordance with Section 4.15 of the Plan are not Annual Additions. Forfeited Matching Contributions that are forfeited because the contributions to which they relate are treated as Excess Aggregate Contributions, Excess Contributions, or Excess Deferrals and that are reallocated to the Participant Accounts of other Participants for the Plan Year in which the forfeiture occurs, are treated as Annual Additions for the Participants to whose accounts they are reallocated and for the Participants from whose accounts they are forfeited. 28 31 (B) Compensation. The term Compensation means wages within the meaning of section 3401(a) of the Code for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(2) of the Code). For Limitation Years beginning after December 31, 1991, for purposes of applying the limitations of this article, Compensation for a Limitation Year is the Compensation actually paid or made available during such Limitation Year. (C) Defined Contribution Dollar Limitation. The term Defined Contribution Dollar Limitation shall mean $30,000 or, if greater, one-fourth of the defined benefit dollar limitation set forth in Internal Revenue Code section 415(b)(1) as in effect for the Limitation Year. (D) Employer. The term Employer shall mean the Employer that adopts this Plan. In the case of a group of employers which constitutes a controlled group of corporations (as defined in Internal Revenue Code section 414(b) as modified by section 415(h)), or which constitutes trades or business (whether or not incorporated) which are under common control (as defined in section 414(c) as modified by section 415(h)), or affiliated service groups (as defined in section 414(m)) of which the adopting Employer is a part, all such employers shall be considered a single Employer for purposes of applying the limitations of this Article. (E) Excess Amount. The term Excess Amount shall mean the excess of the Participant's Annual Additions for the Limitation Year over the Maximum Permissible Amount. (F) Limitation Year. The term Limitation Year shall mean the Plan Year. (G) Maximum Permissible Amount. The term Maximum Permissible Amount shall mean the lesser of (1) the Defined Contribution Dollar Limitation, or (2) 25% of the Participant's Compensation for the Limitation Year. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different period of 12 consecutive months, the Maximum Permissible Amount for the short Limitation Year will be the lesser of (1) the Defined Contribution Dollar Limitation multiplied by a fraction, the numerator of which is the number of months in the short Limitation Year, and the denominator of which is 12, or (2) 25% of the Participant's Compensation for the short Limitation Year. 5.2 LIMITATIONS ON ALLOCATIONS. If the Employer does not maintain any qualified plan in addition to this Plan: 29 32 (A) The amount of Annual Additions which may be allocated under this Plan on a Participant's behalf for a Limitation Year shall not exceed the lesser of the Maximum Permissible Amount or any other limitation contained in this Plan. (B) Prior to the determination of the Participant's actual Compensation for a Limitation Year, the Maximum Permissible Amount may be determined on the basis of the Participant's estimated annual Compensation. Such Compensation shall be determined on a reasonable basis and shall be uniformly determined for all Participants similarly situated. Any employer contributions based on estimated annual Compensation shall be reduced by any Excess Amounts carried over from prior years. (C) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for such Limitation Year shall be determined on the basis of the Participant's actual Compensation for such Limitation Year. In the event a Participant separates from the Service of the Employer prior to the end of the Limitation Year, the Maximum Permissible Amount for such Participant shall be determined prior to any distribution of his Participant's Account on the basis of his actual Compensation. Any Excess Amounts shall be disposed of in accordance with Section 5.2(D). (D) If there is an Excess Amount with respect to a Participant for a Limitation Year as a result of a reasonable error in estimating the Participant's annual compensation, an allocation of forfeitures, a reasonable error in determining the amount of elective deferrals (within the meaning of section 402(g)(3) of the Code) that may be made with respect to any individual under the limits of section 415 of the Code, or under other limited facts and circumstances which the commissioner finds justified, such Excess Amount shall be disposed of as follows: (1) Any Employee Contributions (including earnings and losses thereon) shall be returned to the Participant, to the extent that the return would reduce the Excess Amount. This distribution shall be made as soon as administratively feasible after the Excess Amount is determined. Employee Contributions so returned shall be disregarded for purposes of the Actual Contribution Percentage Test. (2) If, after the application of subparagraph (1), an Excess Amount still exists, (excluding Elective Deferral Contributions) such Excess Amount shall be held unallocated in a suspense account for the Limitation Year and allocated and reallocated in the next Limitation Year to all Participants in the Plan. The excess amount must be used to reduce Employer Contributions for the next Limitation Year (and succeeding Limitation Years, as necessary) for all of the Participants in the Plan. For purposes of this subparagraph, the Excess Amount may not be distributed to Participants or former Participants. 30 33 (3) If, after the application of subparagraph (2) an Excess Amount still exists, then the Participant's Elective Deferral Contributions (including earnings and losses thereon) allocated for the Limitation Year shall be returned to the Participant to the extent that an Excess Amount exists. This distribution shall be made as soon as administratively feasible after the Excess Amount is determined. Any Elective Deferral Contributions returned under this paragraph shall be disregarded for purposes of the Actual Deferral Percentage Test. (4) Alternatively, if after the application subparagraph (1) an Excess Amount still exists, the Plan Administrator may elect to dispose of the Excess Amount by applying the procedure in subparagraph (3) before applying the procedure in subparagraph (2). If the Plan Administrator makes this election, the Plan Administrator must apply it uniformly to all Participants in a Limitation Year. (5) If a suspense account is in existence at any time during a Limitation Year pursuant to this section, it will not participate in the allocation of investment gains or losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants' Accounts before any Employer Contributions or Employee Contributions which would constitute Annual Additions may be made to the Plan for that Limitation Year. 5.3 LIMITATIONS ON ALLOCATIONS. If the Employer maintains one or more defined contribution plans in addition to this Plan: (A) The amount of Annual Additions which may be allocated under this Plan on a Participant's behalf for a Limitation Year, shall not exceed the lesser of: (1) The Maximum Permissible Amount, reduced by the sum of any Annual Additions allocated to the Participant's Account for the same Limitation Year under this Plan and such other defined contribution plan; or (2) Any other limitation contained in this Plan. Prior to the determination of the Participant's actual Compensation for the Limitation Year, the amounts referred to in Subsection (1) above may be determined on the basis of the Participant's estimated annual Compensation for such Limitation Year. Such estimated annual Compensation shall be determined for all Participants similarly situated. Any contribution made by the Employer based on estimated annual Compensation shall be reduced by any Excess Amounts carried over from prior years, if applicable. 31 34 (B) As soon as is administratively feasible after the end of the Limitation Year, the amounts referred to in Section 5.3(A) shall be determined on the basis of the Participant's actual Compensation for such Limitation Year. (C) If amounts are contributed to a Participant's Account under this Plan on an allocation date which does not coincide with the allocation date(s) for all such other plans, and if a Participant's Annual Additions under this Plan and all such other plans result in an Excess Amount, such Excess Amount shall be deemed to have derived from those contributions last allocated. (D) If an Excess Amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the Excess Amount attributable to this Plan will be the product of (1) and (2) below: (1) The total Excess Amount allocated as of such date (including any amount which would have been allocated but for the limitations of Internal Revenue Code section 415). (2) The ratio of (1) the amount allocated to the Participant as of such date under this Plan, divided by (2) the total amount allocated as of such date under all qualified defined contribution plans (determined without regard to the limitations of Internal Revenue Code section 415). (E) Any Excess Amounts attributed to this Plan shall be disposed of as provided in Section 5.2(D). 5.4 LIMITATIONS ON ALLOCATIONS. If the Employer maintains a defined benefit plan in addition to this Plan: (A) If an individual is a Participant at any time in both this Plan and a defined benefit plan maintained by the Employer, the sum of the Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction for any year may not exceed 1.0. In the event that the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction exceeds 1.0, the Defined Contribution Plan Fraction will be reduced until the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction does not exceed 1.0. If an individual was a Participant in this Plan or in any other defined contribution plan maintained by the Employer which was in existence on July 1, 1982, the numerator of the Defined Contribution Plan Fraction will be adjusted if the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the Fractions over 1.0 times (2) the denominator of the Defined Contribution Plan Fraction, will be permanently subtracted from the numerator of the Defined Contribution Plan Fraction. The adjustment is calculated using the Fractions as they would be 32 35 computed as of the later of the end of the last Limitation Year beginning before January 1, 1983, or June 30, 1983. This adjustment also will be made if at the end of the last Limitation Year beginning before January 1, 1984, the sum of the Fractions exceeds 1.0 because of accruals or additions that were made before the limitations of this Article became effective to any plans of the Employer in existence on July 1, 1982. In addition, if an individual was a Participant in this Plan or in any other defined contribution plan maintained by the Employer which was in existence on May 6, 1986, the numerator of the Defined Contribution Plan Fraction will be adjusted if the Employer's defined benefit plan was also in existence on May 6, 1986, and the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the Fractions over 1.0 times (2) the denominator of the Defined Contribution Plan Fraction, will be permanently subtracted from the numerator of the Defined Contribution Plan Fraction. This adjustment is calculated using the Fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987. In the event that a Participant's accrued benefit as of December 31, 1986, under the defined benefit plan exceeds the defined benefit dollar limitation set forth in Internal Revenue Code section 415(b)(1), the amount of that accrued benefit shall be used in both the numerator and the denominator of the Defined Benefit Plan Fraction in making this adjustment. For purposes of this Section 5.4, all defined benefit plans of the Employer, whether or not terminated, will be treated as one defined benefit plan and all defined contribution plans of the Employer, whether or not terminated, will be treated as one defined contribution plan. (B) The Defined Benefit Plan Fraction for any year is a fraction, the numerator of which is the Participant's Projected Annual Benefit under the defined benefit plan (determined as of the close of the Limitation Year), and the denominator of which is the lesser of (1) or (2) below: (1) 1.25 times the dollar limitation in effect under Internal Revenue Code section 415(b)(1)(A) on the last day of the Limitation Year; or (2) 1.4 times the amount which may be taken into account under Internal Revenue Code section 415(b)(1)(B) with respect to such Participant for the Limitation Year. Notwithstanding the above, if the Participant was a participant in one or more defined benefit plans maintained by the Employer which were in existence on July 1, 1982, the denominator of the Defined Benefit Plan Fraction will not be less than 125% of the sum of the annual benefits under such plans which the Participant had accrued as of the later of the end of the last Limitation Year 33 36 beginning before January 1, 1983 or June 30, 1983. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Internal Revenue Code section 415 as in effect at the end of the 1982 Limitation Year. (C) A Participant's Projected Annual Benefit is equal to the annual benefit to which the Participant would be entitled under the terms of the defined benefit plan based upon the following assumptions: (1) The Participant will continue employment until reaching Normal Retirement Age as determined under the terms of the plan (or current age, if that is later); (2) The Participant's Compensation for the Limitation Year under consideration will remain the same until the date the Participant attains the age described in sub-division (1) of this subparagraph; and (3) All other relevant factors used to determine benefits under the plan for the Limitation Year under consideration will remain constant for all future Limitation Years. (D) The Defined Contribution Plan Fraction for any Limitation Year is a fraction, the numerator of which is the sum of the Annual Additions to the Participant's Accounts in such Limitation Year and for all prior Limitation Years, and the denominator of which is the lesser of (1) or (2) below for such Limitation Year and for all prior Limitation Years of such Participant's employment (assuming for this purpose, that Internal Revenue Code section 415(c) had been in effect during such prior Limitation Years): (1) 1.25 times the dollar limitation in effect under Internal Revenue Code section 415(c)(1)(A) on the last day of the Limitation Year; or (2) 1.4 times the amount which may be taken into account under Internal Revenue Code section 415(c)(1)(B) with respect to such Participant for the Limitation Year. For the purposes of determining these Limitations on Allocations, any non-deductible employee contributions made under a defined benefit plan will be considered to be a separate defined contribution plan and will be considered to be part of the Annual Additions for the appropriate Limitation Year. Annual Additions for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat all Employee Contributions as Annual Additions. (E) Notwithstanding the foregoing, at the election of the Plan Administrator, in computing the Defined Contribution Plan Fraction with respect to any Plan Year 34 37 ending after December 31, 1982, the denominator shall be an amount equal to the product of: (1) The denominator of the Defined Contribution Plan Fraction, computed in accordance with the rules in effect for the Plan Year ending in 1982; and (2) the transition fraction, which is a fraction (a) the numerator of which is the lesser of (i) $51,875, or (ii) 1.4 times 25% of the Compensation of the Participant for the Plan Year ending in 1981, and (b) the denominator of which is the lesser of (i) $41,500, or (ii) 25% of the Compensation of the Participant for the Plan Year ending in 1981. 35 38 ARTICLE VI. DISTRIBUTION OF BENEFITS 6.1 DISTRIBUTIONS IN GENERAL. Each Participant may elect, with his Spouse's consent if required, a distribution in the form of an Annuity, a single sum cash payment, or a combination of the above. All distributions are subject to the provisions of Article VIII, Joint and Survivor Annuity Requirements. 6.2 TIMING OF DISTRIBUTIONS. If the value of a Participant's Vested Interest exceeds (or at the time of any prior distribution exceeded) $3,500 and is immediately distributable (as defined in Section 8.5), the Participant and his Spouse, if required, must consent to the distribution before it is made. Instead of consenting to a distribution, the Participant may make a written election to defer the distribution for a specified period of time ending no later than the Participant's attainment of age 62. A Participant whose actual retirement date is on or after his Normal Retirement Date may make a written election to defer the distribution for a specified period of time subject to the requirements of Section 6.4. All such elections to defer shall be irrevocable. If the Participant and Spouse, if applicable, do not consent to a distribution or if no election to defer is made within 90 days after receiving a written explanation of the optional forms of benefit available pursuant to Income Tax Regulation 1.411(a)(11), all benefits shall be deferred to, and distribution shall be made as of the Participant's attainment of age 62. The distribution will be made in the form of a single sum cash payment (in the case of a Participant's meeting the requirements of Section 8.1 (A)) or in accordance with Section 8.2 (in the case of a Participant's not meeting the requirements of Section 8.1 (A)), unless the Participant elects another form of benefit within the 90-day period prior to the date the distribution is made. If the value of a Participant's Vested Interest is $3,500 or less at the time it becomes payable, the distribution shall be made in the form of a single sum cash payment and shall be made upon such Participant's Termination of Employment. Such a distribution may not be deferred. Unless the Participant elects otherwise, the payment of benefits under this Plan to the Participant shall begin not later than the 60th day after the close of the Plan Year in which the later of (A) or (B), below, occurs: (A) the date on which the Participant attains his Normal Retirement Age or age 62, if later; or (B) the date on which the Participant terminates his Service (including Termination of Employment, death or Disability) with the Employer. Notwithstanding the foregoing, the failure of a Participant and Spouse, if required, to consent to a distribution while a benefit is immediately distributable shall be deemed to 36 39 be an election to defer commencement of payment of any benefit sufficient to satisfy the above paragraph. 6.3 DISTRIBUTION LIMITATION. Elective Deferral Contributions, Qualified Nonelective Contributions and Qualified Matching Contributions, and income allocable to each, are not distributable to a Participant or a Beneficiary, in accordance with such Participant's or Beneficiary's election, earlier than upon the Participant's Termination of Employment, death, or disability. Such amounts may also be distributed upon: (A) Termination of the Plan without the establishment or maintenance of a successor plan. For purposes of this paragraph, a successor plan is any other defined contribution plan maintained by the same employer. However, if fewer than two percent of the Employees who are eligible under the Plan at the time of its termination are or were eligible under another defined contribution plan at any time during the 24 month period beginning 12 months before the time of the termination, the other plan is not a successor plan. The term "defined contribution plan" means a plan that is a defined contribution plan as defined in section 414(i) of the Code, but does not include an employee stock ownership plan as defined in section 4975(e) or 409 of the Code or a simplified employee pension as defined in section 408(k) of the Code. A plan is a successor plan only if it exists at the time the Plan is terminated or within the period ending 12 months after, distribution of all assets from the Plan. After March 31, 1988, a distribution may be made under this paragraph only if it is a lump sum distribution. The term "lump sum distribution" has the same meaning provided in section 402(e)(4) of the Code, without regard to subparagraphs (A)(i) through (iv), (B), and (H) of that section. (B) The disposition by the Employer to an unrelated corporation of substantially all the assets (within the meaning of section 409(b)(2) of the Code) used in the trade or business of the Employer if the Employer continues to maintain this Plan after the disposition. However, a distribution may be made under this paragraph only to an Employee who continues employment with the corporation acquiring such assets. In addition, this requirement is satisfied only if the purchaser does not maintain the Plan after the disposition. A purchaser maintains the plan of the seller if it adopts the plan or otherwise becomes an employer whose employees accrue benefits under the Plan. A purchaser also maintains the Plan if the Plan is merged or consolidated with, or any assets or liabilities are transferred from the Plan to a plan maintained by the purchaser in a transaction subject to section 414(l)(1) of the Code. A purchaser is not treated as maintaining the Plan merely because the 37 40 Plan that it maintains accepts rollover contributions of amounts distributed by the Plan. For purposes of this paragraph, the sale of "substantially all" the assets used in a trade or business means the sale of at least 85 percent of the assets. After March 31, 1988, a distribution may be made under this paragraph only if it is a lump sum distribution. The term "lump sum distribution" has the same meaning provided in section 402(e)(4) of the Code, without regard to subparagraphs (A)(i) through (iv), (B), and (H) of that section. (C) The disposition by the Employer to an unrelated entity or individual of the Employer's interest in a subsidiary (within the meaning of section 409(d)(3) of the Code) if the Employer continues to maintain this Plan. However, a distribution may be made under this paragraph only to an Employee who continues employment with such subsidiary. In addition, this requirement is satisfied only if the purchaser does not maintain the Plan after the disposition. A purchaser maintains the plan of the seller if it adopts the plan or otherwise becomes an employer whose employees accrue benefits under the Plan. A purchaser also maintains the Plan if the Plan is merged or consolidated with, or any assets or liabilities are transferred from the Plan to a plan maintained by the purchaser in a transaction subject to section 414(l)(1) of the Code. A purchaser is not treated as maintaining the Plan merely because the Plan that it maintains accepts rollover contributions of amounts distributed by the Plan. After March 31, 1988, a distribution may be made under this paragraph only if it is a lump sum distribution. The term "lump sum distribution" has the same meaning provided in section 402(e)(4) of the Code, without regard to subparagraphs (A)(i) through (iv), (B), and (H) of that section. (D) In the case of Elective Deferral Contributions only, the attainment of age 59-1/2, as described in Section 10.1 of the Plan. (E) In the case of Elective Deferral Contributions only, the hardship of the Participant, as described in Section 10.2 of the Plan. 6.4 COMMENCEMENT OF DISTRIBUTIONS. Notwithstanding the provisions of the preceding Tuning of Distributions Section, distributions to a Participant will commence no later than the date determined in accordance with the provisions of this Section. Distribution to a Participant must commence no later than the required beginning date. The first required beginning date of a Participant is the first day of April of the calendar year following the calendar year in which the Participant attains age 70-1/2. 38 41 The required beginning date of a Participant who attains age 70-1/2 before January 1, 1988, shall be the first day of April of the calendar year following the calendar year in which the later of retirement or attainment of age 70-1/2 occurs. Distribution to such Participant must commence no later than the first day of April following the calendar year in which the Participant's Termination of Employment occurs. If distribution to any Participant is made in other than a single sum payment, the second payment shall be distributed no later than the December 31 following the April 1 by which the first payment was required to be distributed. Each succeeding payment shall be distributed no later than each December 31 thereafter. 6.5 DISTRIBUTION REQUIREMENTS. (A) Except as otherwise provided in Article VIII, the requirements of this Section shall apply to any distribution of a Participant's Accrued Benefit. (B) All distributions required under this Article shall be determined and made in accordance with the Income Tax Regulations under section 401(a)(9), including the minimum distribution incidental benefit requirement of section 1.401(a)(9)-2 of the regulations. (C) Limits on Settlement Options. Distributions, if not made in a lump sum, may only be made over one of the following periods (or a combination thereof): (1) the life of the Participant, (2) the life of the Participant and a designated Beneficiary, (3) a period certain not extending beyond the life expectancy of the Participant, or (4) a period certain not extending beyond the joint and last survivor expectancy of the Participant and a designated Beneficiary. (D) Minimum Amounts to be Distributed. If the Participant's entire Vested Interest is to be distributed in other than a lump sum, then the amount to be distributed each year must be at least an amount equal to the quotient obtained by dividing the Participant's entire Vested Interest by the life expectancy of the Participant or the joint and last survivor expectancy of the Participant and designated Beneficiary. Life expectancy and joint and last survivor expectancy are computed by the use of the return multiples contained in section 1.72-9 of the Income Tax Regulations. For purposes of this computation, a Participant's life expectancy may be recalculated no more frequently than annually; however, the life expectancy of a Beneficiary other than the Participant's Spouse may not be recalculated. 39 42 (1) If the Participant's Spouse is not the designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the life expectancy of the Participant. (2) For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first distribution calendar year, shall not be less than the quotient obtained by dividing the Participant's benefit by the lesser of (1) the applicable life expectancy or (2) if the Participant's Spouse is not the designated Beneficiary, the applicable divisor determined from the table set forth in Q&A-4 of section 1.401(a)(9)-2 of the Income Tax Regulations. Distributions after the death of the Participant shall be distributed using the applicable life expectancy in subsection (d)(1) above as the relevant divisor without regard to regulations section 1.401(a)(9)-2. (3) The minimum distribution required for the Participant's first distribution calendar year must be made on or before the Participant's required beginning date. The minimum distribution for other calendar years, including the minimum distribution for the distribution calendar year in which the Employee's required beginning date occurs, must be made on or before December 31 of that distribution calendar year. 6.6 NON-TRANSFERABLE. The Participant's right to any Annuity payments, benefits, and refunds is not transferable and shall be free from the claims of all creditors to the fullest extent permitted by law. 6.7 DEATH DISTRIBUTION PROVISIONS. If the Participant dies before distribution of his Vested Interest commences, the following provisions shall apply: (A) If a distribution is to be made to a Beneficiary other than the Surviving Spouse: (1) If the present value of the Participant's Vested Interest exceeds (or at the time of any prior distribution exceeded) $3,500, unless the Beneficiary elects another form of distribution, that portion of the Participant's Vested Interest payable to the Beneficiary will be distributed in the form of a single sum cash payment within a reasonable period of time after the Plan Administrator is notified of the Participant's death. (2) If the present value of the Participant's Vested Interest is $3,500 or less at the time it becomes payable, the distribution shall always be made in the form of a single sum cash payment and shall be paid within a reasonable period of time after the Plan Administrator is notified of the Participant's death. 40 43 (B) If the distribution is to be made to a Beneficiary who is the Surviving Spouse, such distribution will be made in accordance with the following: (1) If the Participant had never elected a life Annuity form of distribution under the Plan: (a) If the present value of the Participant's Vested Interest exceeds (or at the time of any prior distribution exceeded) $3,500, unless the surviving spouse elects another form of distribution, that portion of the Participant's Vested Interest payable to the Surviving Spouse will be distributed in the form of a single sum cash payment within a reasonable period of time after the Plan Administrator is notified of the Participant's death. (b) If the present value of the Participant's Vested Interest payable to the Surviving Spouse is $3,500 or less at the time it becomes payable, the distribution shall always be made in the form of a single sum cash payment and shall be made within a reasonable period of time after the Plan Administrator is notified of the Participant's death. (2) If the Participant had previously elected a life Annuity form of distribution under the Plan: (a) If the present value of the Participant's Vested Interest exceeds (or at the time of any prior distribution exceeded) $3,500 and is immediately distributable (as defined in Section 8.5), the Surviving Spouse must consent to the distribution before it is made. If the Surviving Spouse does not consent to a distribution, all benefits shall be deferred to a date that complies with the terms of Section 6.8 (B). The distribution shall be made in accordance with the provisions of Section 8.3. (b) If the present value of the Participant's Vested Interest is $3,500 or less at the time it becomes payable, the distribution shall always be made in the form of a single sum cash payment and shall be paid within a reasonable period of time after the Plan Administrator is notified of the Participant's death. 6.8 DEATH DISTRIBUTION COMMENCEMENT DATE. Upon the death of the Participant, the following distribution provisions shall take effect: (A) If the Participant dies after distribution of his entire Vested Interest has commenced, the remaining portion of such Vested Interest will continue to be 41 44 distributed at least as rapidly as under the method of distribution being used prior to the Participant's death. In no event shall distribution of the Participant's remaining Vested Interest be made in a lump sum after the Participant's death unless such distribution is consented to, in writing, by the Participant's Surviving Spouse, if any. (B) If the Participant dies before distribution of his Vested Interest commences, the Participant's entire Vested Interest will be distributed no later than five years after the Participant's death except to the extent that an election is made to receive distributions in accordance with (1) or (2) below: (1) If any portion of the Participant's Vested Interest is payable to a designated Beneficiary, distributions may be made in substantially equal installments over the life or life expectancy of the designated Beneficiary (or over a period not extending beyond the life expectancy of such Beneficiary), commencing no later than one year after the Participant's death; (2) If the designated Beneficiary is the Participant's Surviving Spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the date on which the Participant would have attained age 70-1/2. However, the Surviving Spouse may elect, at any time following the Participant's death, to defer the date on which distributions will begin until no later than the date on which the Participant would have attained age 70-1/2 and, if the Spouse dies before payments begin, subsequent distributions shall be made as if the Spouse had been the Participant. (C) For purposes of (B) above, payments will be calculated by use of the return multiples specified in section 1.72-9 of the Income Tax Regulations. Life expectancy of a Surviving Spouse may be recalculated annually; however, in the case of any other designated Beneficiary, such life expectancy will be calculated at the time payment first commences without further recalculation. (D) For purposes of this Section (Death Distribution Commencement Date) any amount paid to a child of the Participant will be treated as if it had been paid to the Surviving Spouse if the amount becomes payable to the Surviving Spouse when the child reaches the age of majority. 6.9 TRANSITIONAL RULE. (A) Notwithstanding the other requirements of this Article and subject to the requirements of Article VIII, distribution on behalf of any Employee may be made in accordance with all of the following requirements (regardless of when such distribution commences): 42 45 (1) The distribution by the Plan is one which would not have disqualified such Plan under Internal Revenue Code section 401(a)(9) as in effect prior to amendment by the Deficit Reduction Act of 1984. (2) The distribution is in accordance with a method of distribution designated by the Employee whose interest in the trust is being distributed or, if the Employee is deceased, by a Beneficiary of such Employee. (3) Such designation was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984. (4) The Employee had accrued a benefit under the Plan as of December 31, 1983. (5) The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority. (B) A distribution upon death will not be covered by this Transitional Rule unless the information in the designation contains the required information described above with respect to the distribution to be made upon the death of the Employee. (C) For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the Employee or the Beneficiary, to whom such distribution is being made, will be presumed to have designated the method of distribution under which the distribution is being made if the method of distribution was specified in writing and the distribution satisfies the requirements in Subsections (A) (1) and (A) (5). (D) If a designation is revoked, any subsequent distribution must satisfy the requirements of Internal Revenue Code section 401(a)(9) as amended. Any changes in the designation will be considered to be a revocation of the designation. However, the mere substitution or addition of another Beneficiary (one not named in the designation) under the designation will not be considered to be a revocation of the designation, so long as such substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life). 6.10 ALTERNATE PAYEE SPECIAL DISTRIBUTION. Distributions pursuant to Section 16.8 may be made without regard to the age or employment status of the Participant. 43 46 ARTICLE VI.-A DIRECT ROLLOVERS 6A.1 Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee's election under this Article, a Distributee may elect at the time and in the manner prescribed by the Plan Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover, except as otherwise provided by the Employer's administrative procedures as permitted by regulations. In addition, a Distributee's election of a Direct Rollover shall be subject to the following requirements: (A) If the Distributee elects to have only a portion of an Eligible Rollover Distribution paid to an Eligible Retirement Plan in a Direct Rollover, that portion must be equal to at least $500. (B) If the entire amount of a Distributee's Eligible Rollover Distribution is $500 or less, the distribution may not be divided. Instead, the entire amount must either be paid to the Distributee or to an Eligible Retirement Plan in a Direct Rollover. (C) A Distributee may not elect a Direct Rollover if the Distributee's Eligible Rollover Distributions during a year are reasonably expected by the Plan Administrator to total less than $200 (or any lower minimum amount specified by the Plan Administrator). (D) A Distributee may not elect a Direct Rollover of an Offset Amount. (E) A Distributee's election to make or not make a Direct Rollover with respect to one payment in a series of periodic payments shall apply to all subsequent payments in the series, except that a Distributee shall be permitted at any time to change, with respect to subsequent payments in the series of periodic payments, a previous election to make or not make a Direct Rollover. A change of election shall be accomplished by the Distributee notifying the Plan Administrator of the change. Such notice must be in the form and manner prescribed by the Plan Administrator. 6A.2 Definitions. (A) Direct Rollover: A Direct Rollover is a payment by the plan to the Eligible Retirement Plan specified by the Distributee. (B) Distributee: A Distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's Surviving Spouse and the Employee's or former Employee's Spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, are Distributees with regard to the interest of the Spouse or former Spouse. 44 47 (C) Eligible Retirement Plan: An Eligible Retirement Plan is an individual retirement account described in section 408(a) of the code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the Surviving Spouse, an Eligible Retirement Plan is an individual retirement account or an individual retirement annuity. (D) Eligible Rollover Distribution: An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (E) Offset Amount: An Offset Amount is the amount by which a Participant's Account is reduced to repay a loan from the Plan (including the enforcement of the Plan's security interest in the Participant's Account). 45 48 ARTICLE VII. RETIREMENT BENEFITS 7.1 NORMAL RETIREMENT. A Participant who attains his Normal Retirement Age shall have a Vesting Percentage of 100%. If a Participant retires from the active Service of the Employer on his Normal Retirement Date, he shall be entitled to receive a distribution of the entire value of his Participant's Account as of his Normal Retirement Date. 7.2 LATE RETIREMENT. A Participant may continue in the Service of the Employer after his Normal Retirement Age, and in such event he shall retire on his Late Retirement Date. Such Participant shall continue as a Participant under this Plan until such Late Retirement Date. The Participant shall have a Vesting Percentage of 100% and shall be entitled to receive a distribution of the entire value of his Participant's Account as of his Late Retirement Date. 7.3 DISABILITY RETIREMENT. A Participant who retires from the Service of the Employer on account of Disability shall have a Vesting Percentage of 100% and shall be entitled to receive a distribution of the entire value of his Participant's Account as of his Disability Retirement Date. 46 49 ARTICLE VIII. JOINT AND SURVIVOR ANNUITY REQUIREMENTS 8.1 GENERAL. The provisions of this Article shall take precedence over any conflicting provision in this Plan. The provisions of this Article shall apply to any Participant who is credited with at least one Hour of Service with the Employer on or after August 23, 1984, and such other Participants as provided in Section 8.7, unless: (A) upon the death of the Participant the Participant's entire Vested Interest will be paid to the Participant's Surviving Spouse, but if there is no Surviving Spouse, or, if the Surviving Spouse has already consented in a manner conforming to a Qualified Election, then to the Participant's designated Beneficiary; (B) the Participant does not elect payments in the form of a Life Annuity and has not previously elected payments in the form of a Life Annuity under the Plan, and (C) as to the Participant, the Plan is not a direct or indirect transferee of a defined benefit plan, money purchase pension plan (including a target benefit plan), stock bonus, or profit-sharing plan which would otherwise provide for a Life Annuity form of payment to the Participant. 8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an optional form of benefit is selected pursuant to a Qualified Election within the ninety-day period ending on the first day on which all events have occurred which entitle the Participant to a benefit, a married Participant's Vested Interest will be paid in the form of a Qualified Joint and Survivor Annuity. An unmarried Participant will be provided a single Life Annuity unless the Participant elects another form of benefit during the applicable Election Period. 8.3 PAYMENT OF QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an optional form of benefit has been selected within the Election Period pursuant to a Qualified Election, if a married Participant dies before his Annuity Starting Date, then the Participant's entire Vested Interest, less the amount of any unpaid loan balance outstanding under the terms of Article X-A, shall be applied toward the purchase of an immediate Annuity for the life of the Surviving Spouse. As an alternative to receiving the benefit in this form of an Annuity, the Surviving Spouse may elect to receive a single cash payment or any other form of payment provided for in the Plan within a reasonable time after the Participant's death. 8.4 DEFINITIONS. (A) Election Period: The period which begins on the first day of the Plan Year in which the Participant attains age 35 and ends on the date of the Participant's 47 50 death. If a Participant separates from Service prior to the first day of the Plan Year in which age 35 is attained, with respect to the account balance as of the date of separation, the Election Period shall begin on the date of separation. A Participant who has not attained age 35 as of the end of a Plan Year, may make a special Qualified Election to waive the Qualified Preretirement Survivor Annuity for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age 35. Such election shall not be valid unless the Participant receives a written explanation of the Qualified Preretirement Survivor Annuity in such terms as are comparable to the explanation required under Section 8.6 (A). Qualified Preretirement Survivor Annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age 35. Any new waiver on or after such date shall be subject to the full requirements of this Article. (B) Qualified Election: A waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity shall not be effective unless: (a) the Participant's Spouse consents in writing to the election; (b) the election designates a specific Beneficiary, including any class of Beneficiaries or any contingent Beneficiaries, which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further spousal consent); (c) the Spouse's consent acknowledges the effect of the election; and (d) the Spouse's consent is witnessed by a Plan representative or notary public. Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity shall not be effective unless the election designates a form of benefit payment which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further spousal consent). If it is established to the satisfaction of a Plan representative that such written consent cannot be obtained because: (1) there is no Spouse; (2) the Spouse cannot be located; (3) the Participant is legally separated or has been abandoned within the meaning of local law, and the Participant has a court order to such effect; (4) of other circumstances as the Secretary of the Treasury may by regulations prescribe, the Participant's election to waive coverage will be considered a Qualified Election. Any consent by a Spouse obtained under this provision (or establishment that the consent of a Spouse may not be obtained) shall be effective only with respect to 48 51 such Spouse. A consent that permits designations by the Participant without any requirement of further consent by such Spouse must acknowledge that the Spouse has the right to limit consent to a specific Beneficiary, and a specific form of benefit where applicable, and that the Spouse voluntarily elects to relinquish either or both of such rights. A revocation of a prior waiver may be made by a Participant without the consent of the Spouse at any time before the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in Section 8.6 below. (C) Qualified Joint and Survivor Annuity: An immediate Annuity for the life of the Participant with a survivor Annuity for the life of the Spouse which is not less than 50% and not more than 100% of the amount of the Annuity which is payable during the joint lives of the Participant and the Spouse and which is the amount of benefit which can be purchased with the Participant's entire Vested Interest. If no survivor Annuity percentage has been specified in an election, the percentage payable to the Spouse will be 50%. Notwithstanding the above paragraph, a Qualified Joint and Survivor Annuity for an unmarried Participant shall mean an Annuity for the life of the Participant. (D) Qualified Preretirement Survivor Annuity: A survivor Annuity for the life of the Spouse in the amount which can be purchased with the Participant's entire Vested Interest. (E) Spouse (Surviving Spouse): The Spouse or Surviving Spouse of the Participant. A former Spouse may be treated as the Spouse or Surviving Spouse to the extent provided under a Qualified Domestic Relations Order as described in Internal Revenue Code section 414(p). 8.5 CONSENT REQUIREMENTS. Only the Participant need consent to the commencement of a distribution in the form of a Qualified Joint and Survivor Annuity while the account balance is immediately distributable. Neither the consent of the Participant nor the Participant's Spouse shall be required to the extent that a distribution is required to satisfy section 401(a)(9) or section 415 of the Code. An account balance is immediately distributable if any part of the account balance could be distributed to the Participant (or Surviving Spouse) before the Participant attains (or would have attained if not deceased) the later of Normal Retirement Age or age 62. 8.6 NOTICE REQUIREMENTS. (A) In the case of a Qualified Joint and Survivor Annuity as described in Section 8.4 (C), the Plan Administrator shall provide each Participant within a reasonable period prior to the commencement of benefits a written explanation of: (i) the terms and conditions of a Qualified Joint and Survivor Annuity; (ii) the Participant's right to make and the effect of an election to waive the Qualified 49 52 Joint and Survivor Annuity form of benefit; (iii) the rights of a Participant's Spouse; (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity; (v) a general description of the eligibility conditions and other material features of the optional forms of benefit; and (vi) sufficient additional information to explain the relative values of the optional forms of benefit available to them under this Plan. (B) In the case of a Qualified Preretirement Survivor Annuity as described in Section 8.4 (D), the Plan Administrator shall provide each Participant within the period beginning on the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35, a written explanation of the Qualified Preretirement Survivor Annuity in such terms and in such manner as would be comparable to the explanation provided for meeting the requirements of Section 8.6 (A) to a Qualified Joint and Survivor Annuity. If a Participant enters the Plan after the first day of the Plan Year in which the Participant attained age 32, the Plan Administrator shall provide notice no later than the close of the second Plan Year succeeding the entry of the Participant in the Plan. If a Participant enters the Plan after he has attained age 35, the Plan Administrator shall provide notice within a reasonable period of time following the entry of the Participant in the Plan. If a Participant's Termination of Employment occurs before the Participant attains age 35, the Plan Administrator shall provide notice within one year of such Termination of Employment. 8.7 TRANSITIONAL RULES. (A) Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the previous Sections of this Article must be given the opportunity to elect to have the prior Sections of this Article relating to the Qualified Preretirement Survivor Annuity apply if such Participant is credited with at least one Hour of Service under this Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and such Participant had at least 10 Years of Service for vesting purposes when he separated from Service. (B) Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under this Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any Service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his or her benefits paid in accordance with Section 8.7 (D). 50 53 (C) The respective opportunities to elect (as described in Sections 8.7 (A) and 8.7 (B) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to said Participants. (D) Any Participant who has elected pursuant to Section 8.7 (B) of this Article and any Participant who does not elect under Section 8.7 (A) or who meets the requirements of Section 8.7 (A) except that such Participant does not have at least 10 Years of Service for vesting purposes when he separates from Service, shall have his benefits distributed in accordance with all of the following requirements if benefits would have been payable in the form of a life annuity: (1) Automatic Joint and Survivor Annuity. If benefits in the form of a life annuity become payable to a married Participant who: (a) begins to receive payments under the Plan on or after Normal Retirement Age; or (b) dies on or after Normal Retirement Age while still working for the Employer; or (c) begins to receive payments on or after the Qualified Early Retirement Age; or (d) separates from Service on or after attaining Normal Retirement Age (or the Qualified Early Retirement Age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits; then such benefits will be received under this Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the election period. The election period must begin at least six months before the Participant attains Qualified Early Retirement Age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time. (2) Election of Early Survivor Annuity: A Participant who is employed after attaining the Qualified Early Retirement Age will be given the opportunity to elect, during the election period, to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such Annuity must not be less than the payments which would have been made to the Spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his or her death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (1) the 51 54 90th day before the Participant attains the Qualified Early Retirement Age, or (2) the date on which participation begins, and ends on the date the Participant terminates employment. (3) For purposes of this Section 8.7 (D): (a) Qualified Early Retirement Age is the latest of: (i) the earliest date, under the Plan, on which the Participant may elect to receive retirement benefits; or (ii) the first day of the 120th month beginning before the Participant reaches Normal Retirement Age; or (iii) the date the Participant begins participation. (b) Qualified Joint and Survivor Annuity is an Annuity for the life of the Participant with a survivor annuity for the life of the Spouse as described in Section 8.4 (C). 52 55 ARTICLE IX. TERMINATION OF EMPLOYMENT 9.1 DISTRIBUTION. As of a Participant's Termination of Employment, he shall be entitled to receive a distribution of his entire Vested Interest. Such distribution shall be further subject to the terms and conditions of Article VI. If at the time of his Termination of Employment the Participant's Vesting Percentage is not 100% and the Participant does not take a distribution from the portion of his Vested Interest subject to the Vesting Percentage, the non-vested portion of his Participant's Account will become a Forfeiture upon the date the Participant incurs five consecutive One-Year Breaks in Service. If at the time of his Termination of Employment the Participant's Vesting Percentage is not 100% and such Participant does take a distribution from the portion of his Vested Interest subject to the Vesting Percentage, or if the Participant's Vesting Percentage is 0%, the non-vested portion of his Participant's Account will become a Forfeiture immediately. If the Participant, whose non-vested portion of his Participant's Account became a Forfeiture in accordance with the terms of the preceding paragraph, is later rehired by the Employer and re-enrolls in the Plan, Subsection (A), (B) or (C) below, as applicable, will apply: (A) If the Participant was 0% vested at his Termination of Employment and did not incur five consecutive One-Year Breaks in Service after such date, the amount which became a Forfeiture, if any, shall be restored by the Employer at the time such Participant re-enrolls in the Plan. The Forfeiture, so restored, shall be included as part of that portion of his Participant's Account subject to the Vesting Percentage. (B) If the Participant's Vesting Percentage was not 100% at his Termination of Employment and if the Participant did not incur five consecutive One-Year Breaks in Service after such date, the Participant shall be entitled to repay the portion of the distribution made at his Termination of Employment derived from Employer Contributions. The portion of the repayment that is attributable to amounts that were subject to the Vesting Percentage will no longer be considered a distribution for purposes of determining the Participant's Vested Interest. The repayment of such portion must be made before the Participant has incurred five consecutive One-Year Breaks in Service following the date he received the distribution or five years after the Participant is rehired by the Employer, whichever is earlier. If the Participant elects to make such repayment, the amount which became a Forfeiture, if any, shall be restored by the Employer at the same time such repayment is made. The Forfeiture, so restored, and the repayment shall be 53 56 included as part of that portion of his Participant's Account subject to the Vesting Percentage. However, if the Participant does not elect to repay the distribution made in accordance with this Article within the period of time specified above, that Forfeiture shall remain a Forfeiture. (C) If the Participant had incurred five consecutive One-Year Breaks in Service after his Termination of Employment, the amount which became a Forfeiture shall remain a Forfeiture and such Participant shall be prohibited from repaying a distribution made at his Termination of Employment. 9.2 NO FURTHER RIGHTS OR INTEREST. A Participant shall have no further interest in or any rights to any portion of his Participant's Account that becomes a Forfeiture due to his Termination of Employment once the Participant incurs five consecutive One-Year Breaks in Service in accordance with Article II. 9.3 APPLICATION OF FORFEITURES. Any Forfeiture arising in accordance with the provisions of Section 9.1 shall be used by the Employer to reduce and in lieu of the contributions made by the Employer next due under Article IV, or to pay Plan expenses, at the earliest opportunity after such Forfeiture becomes available. The provisions of the preceding sentence notwithstanding, in the event that a former Participant is rehired by the Employer and the Employer is required by the provisions of Section 9.1 of this Plan to restore the amount of a separate account that had been created upon such Participant's prior Termination of Employment and later forfeited, Forfeitures, if any, will first be used to restore such separate account to its value as of such Participant's prior Termination of Employment date. In the event that the available Forfeitures are not sufficient to make such restoration, the Employer will make an additional contribution sufficient to make such restoration. 54 57 ARTICLE X. WITHDRAWALS 10.1 WITHDRAWAL FOR SERIOUS FINANCIAL HARDSHIP OF ELECTIVE DEFERRAL CONTRIBUTIONS. Distributions of Elective Deferral Contributions may be made to a Participant in the event of a hardship. For purposes of this section, a distribution is made on account of hardship only if the distribution is made both on account of an immediate and heavy financial need of the Employee and is necessary to satisfy the financial need. In addition, for Plan Years beginning after December 31, 1988 any distribution on account of hardship shall be limited to the distributable amount described in paragraph (C) of this section. (A) The following are the only financial needs considered immediate and heavy for purposes of this section: (1) Expenses for medical care described in section 213(d) of the Code previously incurred by the Employee, the Employee's Spouse, or any dependents of the Employee (as defined in section 152 of the Code) or necessary for these persons to obtain medical care described in section 213(d) of the Code; (2) Payment of tuition and related educational fees for the next 12 months of post-secondary education for the Employee, his Spouse, children, or dependents (as defined in section 152 of the Code); (3) Costs directly related to the purchase of a principal residence for the Employee (excluding mortgage payments); or (4) Payments necessary to prevent the eviction of the Employee from the Employee's principal residence or foreclosure on the mortgage on that residence. (B) A distribution will be considered as necessary to satisfy an immediate and heavy financial need of the Employee only if all of the following requirements are satisfied: (1) The hardship distribution is not in excess of the amount of the immediate and heavy financial need of the Employee. The amount of an immediate and heavy financial need may include the amounts necessary to apply any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution. (2) The Employee had obtained all distributions, other than hardship distributions, and all nontaxable (at the time of the loan) loans currently available under all plans maintained by the Employer. 55 58 (3) The Employee is suspended from making Elective Deferral Contributions and Employee Contributions to the Plan for at least 12 months after receipt of the hardship distribution. In addition, the Employee must be prohibited under the terms of the plan or an otherwise enforceable agreement from making Elective Deferral Contributions and Employee Contributions to all other plans maintained by the Employer for at least 12 months after receipt of the hardship distribution. For this purpose, the phrase "all other plans of the Employer" means all qualified and nonqualified plans of deferred compensation maintained by the Employer. The phrase includes a stock option, stock purchase, or similar plan, or a cash or deferred arrangement that is part of a cafeteria plan within the meaning of section 125 of the Code. However, it does not include the mandatory employee contribution part of a defined benefit plan. It also does not include a health or welfare benefit plan, including one that is part of a cafeteria plan within the meaning of section 125 of the Code. (4) The Employee may not make Elective Deferral Contributions to the Plan for the Employee's taxable year immediately following the taxable year of the hardship distribution in excess of the applicable limit under section 402(g) of the Code for such taxable year less the amount of such Employee's Elective Deferral Contributions for the taxable year of the hardship distribution. In addition, all other plans maintained by the Employer must limit the Employee's Elective Deferral Contributions for the next taxable year to the applicable limit under section 402(g) of the Code for that year minus the Employee's Elective Deferral Contributions for the year of the hardship distribution. (C) The distributable amount is equal to the Employee's total Elective Deferral Contribution as of the date of distribution, reduced by the amount of previous distributions of Elective Deferral Contributions on account of hardship. The Employee's total Elective Deferral Contributions shall be increased by income allocable to Elective Deferral Contributions. In the case of income allocable to Elective Deferral Contributions, the distributable amount may only include amounts that were credited to the Employee's Account as of December 31, 1988. 10.2 WITHDRAWAL OF PRIOR EMPLOYER CONTRIBUTIONS. A Participant may elect to withdraw from his Participant's Account, at any time, an amount equal to any whole percentage (not exceeding 100%) of his Vested Interest in his Participant's Account attributable to the value of his Prior Employer Contributions, including earnings. 10.3 WITHDRAWAL OF PRIOR EMPLOYEE CONTRIBUTIONS. A Participant may elect to withdraw from his Participant's Account, at any time, an amount equal to any whole 56 59 percentage (not exceeding 100%) of his Vested Interest in his Participant's Account attributable to the value of his Prior Employee Contributions, including earnings. 10.4 WITHDRAWAL OF ROLLOVER CONTRIBUTIONS. At any time a Participant may elect to withdraw from his Participant's Account an amount up to 100% of the value of that portion of his account attributable to his Rollover Contributions as defined in Article IV. Such an election shall become effective in accordance with the Notification Section below. 10.5 NOTIFICATION. The Participant shall notify the Administrator in writing of his election to make a withdrawal under the preceding provisions of this Article X. Any such election shall be effective as of the date specified in such notice, which date must be at least 15 days after such notice is filed. Payment of the withdrawal shall be subject to the terms and conditions of Article VI. 10.6 NON-REPAYMENT. Withdrawals made in accordance with this Article X may not be repaid. 10.7 SPOUSAL CONSENT TO WITHDRAWAL. Prior to obtaining a withdrawal in accordance with this Article X, a married Participant must obtain spousal consent in accordance with the provisions of Article VIII unless such Participant meets the requirements set forth in Sections 8.1(A), (B) and (C). 57 60 ARTICLE X.-A LOANS 10A.1 LOANS TO PARTICIPANTS. The Plan Administrator may make a bona fide loan to a Participant, in an amount which, when added to the outstanding balance of all other loans to the Participant from all qualified plans of the Employer, does not exceed the lesser of $50,000 reduced by the excess of the Participant's highest outstanding loan balance during the 12 months preceding the date on which the loan is made over the outstanding loan balance on the date the new loan is made, or 50% of the Participant's Vested Interest in his Participant's Account. Participants will be limited to only one outstanding loan at a time. The loan shall be made under such terms, security interest, and conditions as the Plan Administrator deems appropriate, provided, however, that all loans granted hereunder: (A) are available to all Participants and Beneficiaries, who are parties-in-interest pursuant to section 3(14) of ERISA, on a reasonably equivalent basis; (B) are not made available to Highly Compensated Employees on a basis greater than the basis made available to other Employees; (C) bear a reasonable rate of interest; (D) are adequately secured; (E) unless a Participant meets the requirements set forth in Sections 8.1(A), (B) and (C), are made only after a Participant obtains the consent of his Spouse, if any, to use his Participant's Account as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting Spouse or any subsequent Spouse with respect to that loan. A new consent shall be required if the Participant's Account is used for renegotiation, extension, renewal or other revision of the loan. (F) are made in accordance with and subject to all of the provisions of this Article. 10A.2 LOAN PROCEDURES. The Plan Administrator shall establish a written set of procedures, set forth in the summary plan description, by which all loans will be administered. Such rules, which are incorporated herein by reference, will include, but not be limited to, the following: (A) the person or persons authorized to administer the loan program, identified by name or position; 58 61 (B) the loan application procedure; (C) the basis for approving or denying loans; (D) any limits on the types of loans permitted; (E) the procedure for determining a "reasonable" interest rate; (F) acceptable collateral; (G) default conditions; and (H) steps which will be taken to preserve Plan assets in the event of default. 59 62 ARTICLE XI. FIDUCIARY DUTIES AND RESPONSIBILITIES 11.1 GENERAL FIDUCIARY STANDARD OF CONDUCT. Each Fiduciary of the Plan shall discharge his duties hereunder solely in the interest of the Participants and their Beneficiaries and for the exclusive purpose of providing benefits to Participants and their Beneficiaries and defraying reasonable expenses of administering the Plan. Each Fiduciary shall act with the care, skill, prudence, and diligence under the circumstances that a prudent man acting in a like capacity and familiar with such matters would use in conducting an enterprise of like character and with like aims, in accordance with the documents and instruments governing this Plan, insofar as such documents and instruments are consistent with this standard. 11.2 SERVICE IN MULTIPLE CAPACITIES. Any Person or group of persons may serve in more than one fiduciary capacity with respect to this Plan. 11.3 LIMITATIONS ON FIDUCIARY LIABILITY. Nothing in this Plan shall be construed to prevent any Fiduciary from receiving any benefit to which he may be entitled as a Participant or Beneficiary in this Plan, so long as the benefit is computed and paid on a basis which is consistent with, the terms of this Plan as applied to all other Participants and Beneficiaries. Nor shall this Plan be interpreted to prevent any Fiduciary from receiving any reasonable compensation for services rendered, or for the reimbursement of expenses properly and actually incurred in the performance of his duties with the Plan; except that no Person so serving who already receives full-time pay from an Employer shall receive compensation from this Plan, except for reimbursement of expenses properly and actually incurred. 11.4 INVESTMENT MANAGER. When an Investment Manager has been appointed, he is required to acknowledge in writing that he has undertaken a Fiduciary responsibility with respect to the Plan. 60 63 ARTICLE XII. THE ADMINISTRATOR 12.1 DESIGNATION AND ACCEPTANCE. The Employer shall designate a person or persons to serve as Administrator under the Plan and such person, by joining in the execution of this Plan and Trust Agreement accepts such appointment and agrees to act in accordance with the terms of the Plan. 12.2 DUTIES AND AUTHORITY. The Administrator shall administer the Plan in a nondiscriminatory manner for the exclusive benefit of Participants and their Beneficiaries. The Administrator shall perform all such duties as are necessary to operate, administer, and manage the Plan in accordance with the terms thereof, including but not limited to the following: (A) To determine all questions relating to a Participant's coverage under the Plan; (B) To maintain all necessary records for the administration of the Plan; (C) To compute and authorize the payment of retirement income and other benefit payments to eligible Participants and Beneficiaries; (D) To interpret and construe the provisions of the Plan and to make regulations which are not inconsistent with the terms thereof; and (E) To advise or assist Participants regarding any rights, benefits, or elections available under the Plan. The Administrator shall take all such actions as are necessary to operate, administer, and manage the Plan as a retirement program which is at all times in full compliance with any law or regulation affecting this Plan. The Administrator may allocate certain specified duties of plan administration to an individual or group of individuals who, with respect to such duties, shall have all reasonable powers necessary or appropriate to accomplish them. 12.3 EXPENSES AND COMPENSATION. All expenses of administration may be paid out of the Trust fund unless paid by the Employer. Such expenses shall include any expenses incident to the functioning of the Administrator, including, but not limited to, fees of accountants, counsel, and other specialists and their agents, and other costs of administering the Plan. Until paid, the expenses shall constitute a liability of the Trust fund. However, the Employer may reimburse the Trust fund for any administration expense incurred. Any administration expense paid to the Trust fund as a reimbursement shall not be considered an Employer Contribution. Nothing shall prevent the Administrator from receiving reasonable compensation for services rendered in 61 64 administering this Plan, unless the Administrator already receives full-time pay from any Employer adopting the Plan. 12.4 INFORMATION FROM EMPLOYER. To enable the Administrator to perform his functions, the Employer shall supply full and timely information to the Administrator on all matters relating to this Plan as the Administrator may require. 12.5 ADMINISTRATIVE COMMITTEE; MULTIPLE SIGNATURES. In the event that more than one person has been duly nominated to serve on the Administrative Committee and has signified in writing the acceptance of such designation, the signature(s) of one or more persons may be accepted by an interested party as conclusive evidence that the Administrative Committee has duly authorized the action therein set forth and as representing the will of and binding upon the whole Administrative Committee. No person receiving such documents or written instructions and acting in good faith and in reliance thereon shall be obliged to ascertain the validity of such action under the terms of this Plan. The Administrative Committee shall act by a majority of its members at the time in office and such action may be taken either by a vote at a meeting or in writing without a meeting. 12.6 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. The Administrator, or any member of the Administrative Committee, may resign at any time by delivering to the Employer a written notice of resignation, to take effect at a date specified therein, which shall not be less than 30 days after the delivery thereof, unless such notice shall be waived. The Administrator may be removed with or without cause by the Employer by delivery of written notice of removal, to take effect at a date specified therein, which shall be not less than 30 days after delivery thereof, unless such notice shall be waived. The Employer, upon receipt of or giving notice of the resignation or removal of the Administrator, shall promptly designate a successor Administrator who must signify acceptance of this position in writing. In the event no successor is appointed, the Board of Directors of the Employer will function as the Administrative Committee until a new Administrator has been appointed and has accepted such appointment. 12.7 INVESTMENT MANAGER. The Administrator may appoint, in writing, an Investment Manager or Managers to whom is delegated the authority to manage, acquire, invest or dispose of all or any part of the Trust assets. With regard to the assets entrusted to his care, the Investment Manager shall provide written instructions and directions to the Trustee, who shall in turn be entitled to rely upon such written direction. This appointment and delegation shall be evidenced by a signed written agreement. 12.8 DELEGATION OF DUTIES. The Administrator shall have the power, to the extent permitted by law, to delegate the performance of such Fiduciary and non-Fiduciary duties, responsibilities and functions as the Administrator shall deem advisable for the 62 65 proper management and administration of the Plan in the best interests of the Participants and their Beneficiaries. 63 66 ARTICLE XIII. PARTICIPANTS' RIGHTS 13.1 GENERAL RIGHTS OF PARTICIPANTS AND BENEFICIARIES. The Plan is established and the Trust assets are held for the exclusive purpose of providing benefits for such Employees and their Beneficiaries as have qualified to participate under the terms of the Plan. 13.2 FILING A CLAIM FOR BENEFITS. A Participant or Beneficiary or the Employer acting in his behalf, shall notify the Administrator of a claim of benefits under the Plan. Such request shall be in writing to the Administrator and shall set forth the basis of such claim and shall authorize the Administrator to conduct such examinations as may be necessary to determine the validity of the claim and to take such steps as may be necessary to facilitate the payment of any benefits to which the Participant or Beneficiary may be entitled under the terms of the Plan. A decision by the Administrator shall be made promptly and not later than 90 days after the Administrator's receipt of the claim of benefits under the Plan, unless special circumstances require an extension of the time for processing, in which case a decision shall be rendered as soon as possible, but not later than 180 days after the initial receipt of the claim of benefits. 13.3 DENIAL OF CLAIM. Whenever a claim for benefits by any Participant or Beneficiary has been denied by a Plan Administrator, a written notice, prepared in a manner calculated to be understood by the Participant must be provided, setting forth (1) the specific reasons for the denial; (2) the specific reference to pertinent Plan provisions on which the denial is based; (3) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (4) an explanation of the Plan's claim review procedure. 13.4 REMEDIES AVAILABLE TO PARTICIPANTS. A Participant or Beneficiary may (1) request a review by a Named Fiduciary, other than the Administrator, upon written application to the Plan; (2) review pertinent Plan documents; and (3) submit issues and comments in writing to a Named Fiduciary. A Participant or Beneficiary shall have 60 days after receipt by the claimant of written notification of a denial of a claim to request a review of a denied claim. A decision by a Named Fiduciary shall be made promptly and not later than 60 days after the Named Fiduciary's receipt of a request for review, unless special circumstances require an extension of the time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of a request for review. The decision on review by a Named Fiduciary shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, and specific references to the pertinent Plan provisions on which the decision is based. 64 67 A Participant or Beneficiary shall be entitled, either in his own name or in conjunction with any other interested parties, to bring such actions in law or equity or to undertake such administrative actions or to seek such relief as may be necessary or appropriate to compel the disclosure of any required information, to enforce or protect his rights, to recover present benefits due to him, or to clarify his rights to future benefits under the Plan. 13.5 REINSTATEMENT OF BENEFIT. In the event any portion of a distribution which is payable to a Participant or a Beneficiary shall remain unpaid on account of the inability of the Plan Administrator, after diligent effort, to locate such Participant or Beneficiary, the amount so distributable shall be treated as a Forfeiture under the Plan. If a claim is made by the Participant or Beneficiary for any benefit forfeited under this section, such benefit shall be reinstated. 13.6 LIMITATION OF RIGHTS. Participation hereunder shall not grant any Participant the right to be retained in the Service of the Employer or any other rights or interest in the Plan or Trust fund other than those specifically herein set forth. 13.7 PARTICIPANT CONTRIBUTIONS. Each Participant, regardless of his length of Service with the Employer, shall be fully vested (100%) at all times in any portion of his Participant's Account attributable to the following: - Rollover Contributions - Prior Employee Contributions. 13.8 MERGERS OR TRANSFERS. In the case of any merger or consolidation with or transfer of assets or liabilities to any other qualified plan after September 2, 1974, the following conditions must be met: (A) The sum of the account balances in each plan shall equal the fair market value (determined as of the date of the merger or transfer as if the plans had then terminated) of the entire plan assets. (B) The assets of each plan shall be combined to form the assets of the plan as merged (or transferred). (C) Immediately after the merger (or transfer), each Participant in the plan merged (or transferred) shall have an account balance equal to the sum of the account balances the Participant had in the plans immediately prior to the merger (or transfer). (D) Immediately after the merger (or transfer) each Participant in the plan merged (or transferred) shall be entitled to the same optional benefit forms as he was entitled to immediately prior to the merger (or transfer). 65 68 In the case of any merger or consolidation with or transfer of assets or liabilities to any defined benefit plan after September 2, 1974, one of the plans before such merger, consolidation, or transfer shall be converted into the other type of plan and either the rules described above, applicable to the merger of two defined contribution plans, or the rules applicable to the merger of two defined benefit plans, as appropriate, shall be applied. 13.9 PARTICIPANT'S ACCOUNT AND VALUATION. A Participant's Account shall be maintained on behalf of each Participant until such account is distributed in accordance with the terms of this Plan. At least once per year, as of the last day of the Plan Year, each Participant's Account shall be adjusted for any earnings, gains, losses, contributions, withdrawals, loans, and expenses, attributable to such Plan Year, in order to obtain a new valuation of the Participant's Account. 13.10 INVESTMENT OF CONTRIBUTIONS. Each Participant shall have the exclusive authority to direct the investment of contributions made to his Participant's Account. In accordance with the procedures established by the Plan Administrator, the Participant shall elect to have a specified percentage invested in one or more investment funds, as long as the designated percentage for each fund is a whole number, and the sum of the percentages allocated is equal to 100%. In addition, the Participant may change such election once every month at any time. All investment changes are subject to the rules of the investment fund(s) in which the Participant's Account is or is to be invested. 13.11 TRANSFERS BETWEEN INVESTMENT FUNDS. A Participant may designate amounts invested pursuant to the section above to be transferred between the investment funds once every month at any time in accordance with the procedures established by the Plan Administrator. Notwithstanding the above, the transfer of amounts between investment funds shall be subject to the rules of the investment funds in which the Participant's Account is invested or is to be invested. 66 69 ARTICLE XIV. AMENDMENT OR TERMINATION OF THE PLAN 14.1 AMENDMENT OF PLAN. The Employer shall have the right from time to time to modify or amend, in whole or in part, any or all provisions of the Plan, provided that a Board of Directors' resolution pursuant to such modification or amendment shall first be adopted and provided further that the modification or amendment is signed by the Employer and the Administrator. Upon any such modification or amendment the Administrator and the Trustee shall be furnished a copy thereof. No amendment shall deprive any Participant or Beneficiary of any Vested Interest hereunder. Any Participant having not less than three Years of Service shall be permitted to elect, in writing, to have his Vesting Percentage computed under the Plan without regard to such amendment. The period during which the election must be made by the Participant shall begin no later than the date the Plan Amendment is adopted and end no later than after the latest of the following dates: (A) The date which is 60 days after the day the amendment is adopted; or (B) The date which is 60 days after the day the amendment becomes effective; or The date which is 60 days after the day the Participant is issued written notice of the amendment by the Employer or Administrator. Such written election by a Participant shall be made to the Administrator. No amendment to the Plan shall decrease a Participant's Account balance or eliminate an optional form of distribution. Notwithstanding the preceding sentence, a Participant's Account balance may be reduced to the extent permitted under Internal Revenue Code section 412(c)(8). Furthermore, no amendment to the Plan shall have the effect of decreasing a Participant's Vested Interest determined without regard to such amendment as of the later of the date such amendment is adopted or the date it becomes effective. 14.2 CONDITIONS OF AMENDMENT. The Employer shall not make any amendment which would cause the Plan to lose its status as a qualified plan within the meaning of section 401(a) of the Code. 14.3 TERMINATION OF THE PLAN. The Employer intends to continue the Plan indefinitely for the benefit of its Employees, but reserves the right to terminate the Plan at any time by resolution of its Board of Directors. Upon such termination, the liability of the Employer to make contributions hereunder shall terminate. 14.4 FULL VESTING. Upon the termination or partial termination of the Plan, or upon complete discontinuance of Employer contributions, the rights of all affected Participants in and to the amounts credited to each such Participant's Account shall be 100% vested and nonforfeitable. 67 70 14.5 DISTRIBUTIONS UPON PLAN TERMINATION. If this Plan is terminated and the Employer does not maintain or establish another defined contribution plan, pursuant to Code section 401(k)(10)(A)(i), each Participant shall receive a total distribution, in the form of a lump-sum distribution as defined in Code section 401(k)(10)(B)(ii), of his Participant's Account in accordance with the terms and conditions of Article VI. However, if this Plan is terminated and the Employer does maintain or establish another defined contribution plan as discussed in the above paragraph, or if the Plan is only partially terminated, each Participant shall receive a total distribution of his Participant's Account, excluding any amounts attributable to Elective Deferral Contributions and contributions made by the Employer designated as 401(k) contributions in accordance with the terms and conditions of Article VI. In such a situation, any amounts in a Participant's Account attributable to Elective Deferral Contributions and contributions made by the Employer designated as 401(k) contributions may be distributed only upon the occurrence of an event described in Article VI. No Participant and/or spousal consent will be required for a distribution where no successor plan exists. However, if the Employer does maintain a successor plan, Participant and/or spousal consent is required for a distribution exceeding $3,500. The Participant's Account will be transferred to such successor plan if the required consents are not received. 14.6 APPLICATION OF FORFEITURES. Upon the termination of the Plan, any Forfeitures which have not been applied as of such termination to reduce the contribution made by the Employer shall be credited on a pro rata basis to the Participant's Account of the then Active Participants in the same manner as the last contribution made by the Employer under the Plan. 14.7 APPROVAL BY THE INTERNAL REVENUE SERVICE. Notwithstanding any other provisions of this Plan, the Employer's adoption of this Plan is subject to the condition precedent that the Employer's Plan shall be approved and qualified by the Internal Revenue Service as meeting the requirements of section 401(a) of the Internal Revenue Code and that the Trust established in connection herewith shall be entitled to exemption under the provisions of section 501(a). In the event the Plan initially fails to qualify and the Internal Revenue Service issues a final ruling that the Employer's Plan or Trust fails to so qualify as of the Effective Date, all liability of the Employer to make further contributions hereunder shall cease. The Plan Administrator, Trustee and any other Named Fiduciary shall be notified immediately by the Employer, in writing, of such failure to qualify. Upon such notification, the value of the Participants' Accounts shall be distributed in cash to the Employer, subject to the terms and conditions of Article VI. That portion of such distribution which is attributable to Participant Contributions as specified in Section 13.7, if any, shall be paid to the Participant, and the balance of such distribution shall be paid to the Employer. 68 71 14.8 SUBSEQUENT UNFAVORABLE DETERMINATION. If the Employer is notified subsequent to initial favorable qualification that the Plan is no longer qualified within the meaning of section 401(a) of the Internal Revenue Code, or that the Trust is no longer entitled to exemption under the provisions of section 501(a), and if the Employer shall fail within a reasonable time to make any necessary changes in order that the Plan and/or Trust shall so qualify, the Participants' Accounts shall be fully vested and nonforfeitable and shall be disposed of as if the Plan had terminated, in the manner set forth in this Article XIV. 69 72 ARTICLE XV. SUBSTITUTION OF PLANS 15.1 SUBSTITUTION OF PLANS. Subject to the provisions of Section 13.8 the Employer may substitute an individually designed plan or a master or prototype plan for this Plan without terminating this Plan as embodied herein and this shall be deemed to constitute an amendment and restatement in its entirety of this Plan as heretofore adopted by the Employer, provided, however, that the Employer shall have certified to the Trustee that this Plan is being continued on a restated basis which meets the requirements of section 401(a) of the Internal Revenue Code and ERISA. 15.2 TRANSFER OF ASSETS. Upon 90 days written notification from the Employer that a different plan meeting the requirements set forth in Section 15.1 above has been executed and entered into by the Administrator and the Employer, and after the Trustee has been furnished the Employer's certification in writing that the Employer intends to continue the Plan as a qualified Plan under section 401(a) of the Internal Revenue Code and ERISA, assets which represent the value of all Participant's Accounts may be transferred in accordance with the instructions received from or on behalf of the Employer. The Trustee may rely fully on the representations or directions of the Employer with respect to any such transfer and shall be fully protected and discharged with respect to any such transfer made in accordance with such representations, instructions, or directions. 70 73 ARTICLE XVI. MISCELLANEOUS 16.1 NON-REVERSION. This Plan has been established by the Employer for the exclusive benefit of the Participants and their Beneficiaries. Except as otherwise provided in Sections 14.7, 16.7, and 16.8, under no circumstances shall any funds contributed hereunder, at any time, revert to or be used by the Employer, nor shall any such funds or assets of any kind be used other than for the benefit of the Participants or their Beneficiaries. 16.2 GENDER AND NUMBER. When necessary to the meaning hereof, and except when otherwise indicated by the context, either the masculine or the neuter pronoun shall be deemed to include the masculine, the feminine, and the neuter, and the singular shall be deemed to include the plural. 16.3 REFERENCE TO THE CODE AND ERISA. Any reference to any section of the Internal Revenue Code, ERISA, or to any other statute or law shall be deemed to include any successor law of similar import. 16.4 GOVERNING LAW. The Plan and Trust shall be governed and construed in accordance with the laws of the state where the Trustee has its principal office if the Trustee is a corporation or an association, otherwise under the laws of the state where the Employer has its principal office. 16.5 COMPLIANCE WITH THE CODE AND ERISA. This Plan is intended to comply with all requirements for qualification under the Internal Revenue Code and ERISA, and if any provision hereof is subject to more than one interpretation or any term used herein is subject to more than one construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with the Plan being so qualified. If any provision of the Plan is held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions, and this Plan shall be construed and enforced as if such provision had not been included. 16.6 NON-ALIENATION. It is a condition of the Plan, and all rights of each Participant shall be subject thereto, that no right or interest of any Participant in the Plan shall be assignable or transferable in whole or in part either directly or by operation of law or otherwise, including. but without limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no right or interest of any Participant in the Plan shall be liable for or subject to any obligation or liability of such Participant. The preceding sentence shall not preclude the enforcement of a federal tax levy made pursuant to section 6331 of the Code or the collection by the United States on a judgement resulting from an unpaid tax assessment. 16.7 CONTRIBUTION RECAPTURE. Notwithstanding any other provisions of this Plan, (1) in the case of a contribution which is made by an Employer by a mistake of fact, Section 16.1 shall not prohibit the return of such contribution to the Employer within one year 71 74 after the payment of the contribution, and (2) if a contribution is conditioned upon the deductibility of the contribution under section 404 of the Code, then, to the extent the deduction is disallowed, Section 16.1 shall not prohibit the return to the Employer of such contribution (to the extent disallowed) within one year after the disallowance of the deduction. The amount which may be returned to the Employer is the excess of (1) the amount contributed over (2) the amount that would have been contributed had there not occurred a mistake of fact or a mistake in determining the deduction. Earnings attributable to the excess contribution may not be returned to the Employer, but losses attributable thereto must reduce the amount to be so returned. Furthermore, if the withdrawal of the amount attributable to the mistaken contribution would cause the balance of the individual account of any Participant to be reduced to less than the balance which would have been in the account had the mistaken amount not been contributed, then the amount to be returned to the Employer would have to be limited so as to avoid such reduction. 16.8 QUALIFIED DOMESTIC RELATIONS ORDERS. Notwithstanding any other provisions of this Plan, the Participant's Account may be segregated and distributed pursuant to a Qualified Domestic Relations Order within the meaning of Internal Revenue Code section 414(p). The Plan Administrator shall establish procedures for determining if a Domestic Relations Order is qualified within the meaning of section 414(p). 72 75 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan under the terms thereof, and WHEREAS, the Employer desires to amend the Plan to provide for its funding through a Group Annuity Contract issued by Connecticut General Life Insurance Company and to transfer all Plan assets; and WHEREAS, the Employer now desires to amend the Plan and restate its provisions to comply with the requirements of the Tax Reform Act of 1986 (TRA `86), the Omnibus Budget Reconciliation Act of 1986 (OBRA `86), and the Unemployment Compensation Amendment of 1992 (UCA `92) if applicable; NOW THEREFORE, the Plan is hereby amended and restated in its entirety effective January 1, 1993 except as follows: 1. Effective for calendar years beginning on January 1, 1987, the provisions regarding limits on Elective Deferral Contributions shall be amended and governed by the terms of Article IV of the Plan attached hereto. 2. Effective on the first day of the Plan Year beginning in 1987, the provisions relating to the special nondiscrimination test for Elective Deferral Contributions under Code section 401(k), as defined in Article I, shall be amended and governed by the terms of the Plan attached hereto. 3. Effective on the first day of the Plan Year beginning in 1987, the provisions relating to the special nondiscrimination test for Matching Contributions and Employee Contributions under Code section 401(m), as defined in Article I, shall be amended and governed by the terms of the Plan attached hereto. 4. Effective on the first day of the Plan Year beginning in 1987, the provisions defining Highly Compensated Employee shall be amended and governed by the terms of Article I of the Plan attached hereto. 73 76 5. Effective on the first day of the Plan Year beginning in 1987, the provisions regarding loans shall be amended and governed by the terms of Article X-A of the Plan attached hereto. However, prior to October 18, 1989, if a Participant's Vested Interest in his Participant's Account was less than $20,000, the Participant was able to borrow up to the lesser of $10,000 or his Vested Interest attributable to contributions which were available for loans. 6. Effective on the first day of the Plan Year beginning in 1987, the provisions regarding Limitations on Allocations shall be amended and governed by the terms of Article V of the Plan attached hereto. 7. Effective on the first day of the Plan Year beginning in 1987, contributions made to this Plan shall no longer require Considered Net Profits. 8. Effective on the first day of the Plan Year beginning in 1989, Compensation for purposes of the Plan shall be limited to a maximum of $200,000. 9. Effective on January 1, 1989, the provisions relating to required minimum distributions shall be amended and governed by the terms of the Plan attached hereto. 10. Effective on the first day of the Plan Year beginning in 1989, the provisions relating to withdrawals for Serious Financial Hardship shall be amended and governed by the terms of Article X of the Plan attached hereto. 11. Effective on the first day of the 1992 Plan Year, the provisions relating to the determination of a financial need for a Serious Financial Hardship shall be liberalized in accordance with the rules set forth in the final 401(k) regulations. 12. Effective on the first day of the 1992 Plan Year, the provisions relating to the correction of excess Annual Additions shall be amended and governed by the terms of Article V of the Plan attached hereto. 13. Effective January 1, 1993, the provisions relating to Direct Rollovers shall be added to the Plan as governed by the terms of Article VI-A of the Plan attached hereto. 14. Effective for Plan Years beginning in 1994, Compensation shall be limited to a maximum of $150,000. 15. The terms of the Plan as heretofore set forth shall no longer apply with respect to Participants under the Plan who have not terminated employment (including terminations on account of Retirement, death or Disability); and the terms of the Plan with respect to such Participants shall henceforth be as set forth in the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Union Employees, a copy of which is attached to and forms a part of this amendment. 16. The Plan and Trust as amended and restated, shall represent a continuation of the prior Plan and Trust as heretofore set forth and shall not abridge or curtail any rights accorded to Participants under said prior instrument. 74 77 IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have hereunto affixed their signatures. Executed at on June 24, 1994 -------------------------- DOMINICK'S FINER FOODS, INC. By /s/ Charles L.B. - ---------------------------------- -------------------------------------- Witness Title S.V.P. Human Resources ----------------------------------- Accepted this 24th day of June, 1994. By /s/ Chris Wendt - ---------------------------------- -------------------------------------- Witness Administrator Accepted this 21st day of July, 1994. /s/ Maria E. Malave By /s/ J.G.S. - ---------------------------------- -------------------------------------- Witness Trustee IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 75 78 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan in section 14.1 thereof, and WHEREAS, the Employer now desires to amend the Plan to reflect that investment changes and transfers may be made at any time; and NOW THEREFORE, the Plan is hereby amended effective June 30, 1995 as follows: 1. Section 13.10 is deleted in its entirety and replaced with the following: "13.10 INVESTMENT OF CONTRIBUTIONS. Each Participant shall have the exclusive authority to direct the investment of contributions made to his Participant's Account. In accordance with the procedures established by the Plan Administrator, the Participant shall elect to have a specified percentage invested in one or more investment funds, as long as the designated percentage for each fund is a whole number, and the sum of the percentages allocated is equal to 100%. In addition, the Participant may change such election at any time. All investment changes are subject to the rules of the investment fund(s) in which the Participant's Account is or is to be invested." 2. Section 13.11 is deleted in its entirety and replaced with the following: "13.11 TRANSFERS BETWEEN INVESTMENT FUNDS. A Participant may designate amounts invested pursuant to the section above to be transferred between the investment funds at any time in accordance with the procedures established by the Plan Administrator. Notwithstanding the above, the transfer of amounts between investment funds shall be subject to the rules of the investment funds in which the Participant's Account is invested or is to be invested." 76 79 IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have hereunto affixed their signatures. Executed at Dominick's Finer Foods on November 15, 1995 DOMINICK'S FINER FOODS, INC. /s/ A.S. By /s/ Robert G. M. - ---------------------------------- -------------------------------------- Witness Title President & C.O.O. ----------------------------------- Accepted this 15th day of November, 1995. /s/ L. Alexander By /s/ L. Canter - ---------------------------------- -------------------------------------- Witness Administrator Accepted this ___ day of _________. By - ---------------------------------- -------------------------------------- Witness Trustee IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 77 80 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan in section 14.1 thereof; and WHEREAS, the Employer now desires to amend the Plan to reflect that Participants may have two outstanding loans at a time; and NOW THEREFORE, the Plan is hereby amended effective October 1, 1995 as follows: Section 10A.1 is deleted in its entirety and replaced with the following: "10A.1 LOANS TO PARTICIPANTS. The Plan Administrator may make a bona fide loan to a Participant, in an amount which, when added to the outstanding balance of all other loans to the Participant from all qualified plans of the Employer, does not exceed the lesser of $50,000 reduced by the excess of the Participant's highest outstanding loan balance during the 12 months preceding the date on which the loan is made over the outstanding loan balance on the date the new loan is made, or 50% of the Participant's Vested Interest in his Participant's Account. Participants will be limited to only two outstanding loan at a time. The loan shall be made under such terms, security interest, and conditions as the Plan Administrator deems appropriate, provided, however, that all loans granted hereunder: (A) are available to all Participants and Beneficiaries, who are parties-in-interest pursuant to section 3(14) of ERISA, on a reasonably equivalent basis; (B) are not made available to Highly Compensated Employees on a basis greater than the basis made available to other Employees; (C) bear a reasonable rate of interest; (D) are adequately secured; (E) unless a Participant meets the requirements set forth in Sections 8.1(A), (B) and (C), are made only after a Participant obtains the consent of his 78 81 Spouse, if any, to use his Participant's Account as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting Spouse or any subsequent Spouse with respect to that loan. A new consent shall be required if the Participant's Account is used for renegotiation, extension, renewal or other revision of the loan. (F) are made in accordance with and subject to all of the provisions of this Article." IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have hereunto affixed their signatures. Executed at Dominick's Finer Foods on November 15, 1995 DOMINICK'S FINER FOODS, INC. /s/ A.S. By /s/ R.G.M. - ---------------------------------- -------------------------------------- Witness Title President & C.O.O. ---------------------------------- Accepted this 15th day of November, 1995. /s/ A.S. By /s/ L. Canter - ---------------------------------- -------------------------------------- Witness Administrator By - ---------------------------------- -------------------------------------- Witness Trustee Accepted this ___ day of _________. 79 82 IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 80 83 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan in Section 14.1 thereof; and WHEREAS, the Employer now desires to amend the Plan to define the term Highly Compensated Employee, to permit deferral elections to be revocable, to permit age 59-1/2 withdrawals, and to permit terminated Participants to make withdrawals; NOW THEREFORE, the Plan is hereby amended effective January 1, 1996 as follows: 1. Section 1.31A is added to the Plan as follows: "HIGHLY COMPENSATED EMPLOYEE. The term Highly Compensated Employee means any Highly Compensated Active Employee or Highly Compensated Former Employee as further defined herein. For purposes of the determination of Highly Compensated Employees, the term Compensation means Compensation as defined in Article V of the Plan, but includes the amount of any elective contributions made by the Employer on the Employee's behalf to a cafeteria plan established in accordance with the provisions of Code section 125, a qualified cash or deferred arrangement in accordance with the provisions of Code section 402(e)(3), a simplified employee pension plan in accordance with the provisions of Code section 402(h), or a tax sheltered annuity plan maintained in accordance with the provisions of Code section 403(b). A "Highly Compensated Active Employee" is any Employee who performs services for the Employer during the current Plan Year and who, during the current Plan Year or the 12-month period immediately preceding such Plan Year: (A) Owns (or is considered to own within the meaning of section 318 of the Code, as modified by section 416(i)(1)(B)(iii) of the Code), more than 5% of the outstanding stock of the Employer or stock possessing more than 5% of the total combined voting power of all stock of the Employer, or, if the Employer is other than a corporation, owns more than 5% of the capital or profits interest in the Employer. The determination of 5% ownership shall be made separately for each member of a controlled group 81 84 of corporations (as defined in Code section 414(b)), or of a group of trades or businesses (whether or not incorporated) that are under common control (as defined in Code section 414(c)), or of an affiliated service group (as defined in Code section 414(m)); or (B) Receives Compensation in excess of $75,000 multiplied by the applicable cost-of-living adjustment factor prescribed under Code section 415(d) and then prorated in the case of a short Plan Year; or (C) Receives Compensation in excess of $50,000, as adjusted for cost-of-living increases in accordance with Code section 415(d) and then prorated in the case of a short Plan Year, and is in the top 20% of Employees ranked by Compensation; or (D) Is, at any time, an officer of the Employer and receives Compensation in excess of 50% of the amount in effect under Code section 415(b)(1)(A) for the applicable period. If no officer receives Compensation in excess of the amount specified above, the highest paid officer for the applicable period shall be a Highly Compensated Employee. In no event if there are more than 500 Employees, shall more than 50 Employees or, if there are less than 500 Employees, shall the greater of three Employees or 10% of all Employees, be taken into account as officers. In determining both the top 20% of Employees ranked by Compensation for purposes of paragraph (C) above, and officers of the Employer for purposes of paragraph (D) above, Employees who have not completed six months of Service by the end of the applicable period, Employees who normally work less than 17-1/2 hours per week, Employees who normally work less than six months during a year, Employees who have not attained 21, and nonresident aliens who receive no earned income from U.S. sources shall be excluded. Also excluded under the above paragraph are Employees who are covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement. Such Employees will be excluded only if retirement benefits were the subject of good faith bargaining, 90% of the Employees of the Employer are covered by the agreement, and the Plan covers only Employees who are not covered by the agreement. Notwithstanding the above provisions, an Employee, other than a 5% owner as described in paragraph (A) above who was not highly compensated during the 12-month period immediately preceding the current Plan Year will not be considered to be a Highly Compensated Employee in the current Plan Year unless 82 85 such Employee is one of the top 100 Employees ranked by Compensation for the current Plan Year. A "Highly Compensated Former Employee" is any former Employee who separated from Service with the Employer in a Plan Year preceding the current Plan Year and was a Highly Compensated Active Employee in either: (A) the Plan Year in which his separation from Service occurred; or (B) any Plan Year ending on or after such former Employee's 55th birthday. A former Employee is an Employee who performs no services for the Employer during a Plan Year (for example, by reason of a leave of absence)." 2. Section 10.9 is added to the Plan as follows: "WITHDRAWAL AFTER AGE 59-1/2. A Participant who has attained age 59-1/2, may elect to withdraw from his Participant's Account, at any time, an amount which is equal to any whole percentage (not exceeding 100%) of his Vested Interest in his Participant's Account attributable to: - Elective Deferral Contributions, including earnings - Prior Employer Contributions, including earnings - Rollover Contributions, including earnings - Prior Employee Contributions, including earnings." NOW THEREFORE, the Plan is hereby amended effective June 1, 1996 as follows: 1. Section 6.1 is deleted in its entirety and replace with the following: "DISTRIBUTION IN GENERAL. Each Participant may elect, with his Spouse's consent if required, a distribution in the form of an Annuity, a single sum cash payment, or a combination of the above. A Participant who is no longer an Employee of the Employer, may elect a distribution from his Participant's Account, at any time, an amount which is equal to any whole percentage (not exceeding 100%) of his Vested Interest in his Participant's Account. All distributions are subject to the provisions of Article VIII, Joint and Survivor Annuity Requirements." 2. The second paragraph of Section 6.2 is deleted in its entirety and replaced with the following: 83 86 "Instead of consenting to a distribution, the Participant may make a written election to defer the distribution for a specified period of time ending no later than the Participant's attainment of age 62. A Participant whose actual retirement date is on or after his Normal Retirement Date may make a written election to defer the distribution for a specified period of time subject to the requirements of Section 6.4. All such elections to defer shall be revocable." 84 87 IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have hereunto affixed their signatures. Executed at _______________________ on _____________________, 19_____ DOMINICK'S FINER FOODS, INC. /s/ Sonya M.B. By /s/ Robert A.M. - ----------------------------------- -------------------------------------- Witness Title President and C.E.O. ----------------------------------- Accepted this 7th day of October, 1996. /s/ Margaret S. By /s/ L.M. - ----------------------------------- -------------------------------------- Witness Administrator Accepted this 21st day of October, 1996. /s/ S.A. Coelho By /s/ Robert W.S. - ----------------------------------- -------------------------------------- Witness Trustee IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 85 88 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 40l(k) Retirement Plan for Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan in Section 14.1 thereof; and WHEREAS, the Employer now desires to amend the Plan to reflect changes in the Plan's entry dates and eligibility requirements; NOW THEREFORE, the Plan is hereby amended effective July 1, 1997 as follows: 1. Section 1.24 is deleted in its entirety and replaced with the following: "ENTRY DATE. The term Entry Date means either the Effective Date or the first scheduled payroll period thereafter when an Employee who has fulfilled the eligibility requirements commences participation in the Plan. If an Employee is not in the active Service of the Employer as of his initial Entry Date, his subsequent Entry Date shall be the date he returns to the active Service of the Employer, provided he still meets the eligibility requirements. If an Employee does not enroll as a Participant as of his initial Entry Date, his subsequent Entry Date shall be the applicable Entry Date as specified above when the Employee actually enrolls as a Participant." 2. Section 3.1 is deleted in its entirety and replaced with the following: "ELIGIBILITY. Each Employee who was a Participant prior to the Effective Date and who is in the Service of the Employer on the Effective Date shall continue as a Participant in the Plan. Each other Employee, excluding a Leased Employee, shall be eligible to become a Participant as of the Effective Date or the Entry Date when he first meets the following requirement(s): - Age 18 - Six months of employment - Membership in a collective bargaining unit represented by an eligible Union or Local that has collectively bargained for participation in this plan - Not a non-resident alien with no U.S.-source income 86 89 - Not an Independent Contractor" IN WITNESS WHEREOF, the Employer and the Administrator have hereunto affixed their signatures. Executed at ____________________ on _____________________, 19_____ DOMINICK'S FINER FOODS, INC. /s/ Margaret S. By /s/ Robert A. M. - ------------------------------------ -------------------------------------- Witness Title ----------------------------------- Accepted this 21st day of July, 1997. By /s/ Laurie M. - ------------------------------------ -------------------------------------- Witness Administrator IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 87 90 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Union Employees (hereinafter referred to as the "Plan") effective March 25,1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan under the terms thereof, and WHEREAS, the Employer now desires to amend the Plan under the Small Business Job Protection Act of 1996 ("SBJPA") as it relates to all employees who reach age 70-1/2 in a calendar year beginning after December 31, 1998 under Section 6.4 of the Plan; and NOW THEREFORE, the Plan is hereby amended effective December 31, 1998 as follows: Section 6.4 of the Plan entitled "COMMENCEMENT OF DISTRIBUTIONS" is hereby amended by deleting the last sentence of the second paragraph and the entire third and fourth paragraphs thereof, and adding in their place the following: "The first required beginning date of a Participant is the first day of April of the calendar year following the later of (i) the calendar year in which the Participant attains age 70-1/2, or (ii) the calendar year in which the Participant retires." 88 91 IN WITNESS WHEREOF, the Employer and the Administrator have hereunto affixed their signatures. Executed at 505 Railroad Ave. on December 23, 1998 DOMINICK'S FINER FOODS, INC. /s/ Margaret S. By /s/ D.C. Howard - ------------------------------------ -------------------------------------- Witness Title Director Human Resources ----------------------------------- Accepted this ___ day of _________. By - ------------------------------------ -------------------------------------- Witness Administrator IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 89 EX-4.7 8 DOMINICK'S FINER FOODS, INC. 1 EXHIBIT 4.7 DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR NON-UNION EMPLOYEES IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 2 Table Of Contents ARTICLE I. DEFINITIONS.......................................................1 ARTICLE II. SERVICE.........................................................16 ARTICLE III. ELIGIBILITY, ENROLLMENT AND PARTICIPATION......................19 ARTICLE IV. CONTRIBUTIONS...................................................21 ARTICLE V. LIMITATIONS ON ALLOCATIONS.......................................32 ARTICLE VI. DISTRIBUTIONS OF BENEFITS.......................................39 ARTICLE VI-A. DIRECT ROLLOVERS..............................................46 ARTICLE VII. RETIREMENT BENEFITS............................................48 ARTICLE VIII. JOINT AND SURVIVOR ANNUITY REQUIREMENTS.......................49 ARTICLE IX. TERMINATION OF EMPLOYMENT.......................................54 ARTICLE X. WITHDRAWALS......................................................56 ARTICLE X-A. LOANS..........................................................58 ARTICLE XI. FIDUCIARY DUTIES AND RESPONSIBILITIES...........................60 ARTICLE XII. THE ADMINISTRATOR..............................................61 ARTICLE XIII. PARTICIPANTS' RIGHTS..........................................63 ARTICLE XIV. AMENDMENT OR TERMINATION OF THE PLAN...........................66 ARTICLE XV. SUBSTITUTION OF PLANS...........................................68 ARTICLE XVI. MISCELLANEOUS..................................................69 ARTICLE XVI-A. TOP-HEAVY PROVISIONS.........................................71 2 3 ARTICLE I. DEFINITIONS 1.1 ACCRUED BENEFIT. The term Accrued Benefit means the value on any applicable date of the Participant's Account. 1.2 ACTIVE PARTICIPANT. The term Active Participant means any Participant who (a) performs duties as an Employee for the Employer, and (b) is not an Inactive Participant. 1.3 ACTUAL CONTRIBUTION PERCENTAGE. The term Actual Contribution Percentage means the average of the Actual Contribution Ratios of a specified group computed to the nearest one-hundredth of one percent. 1.4 ACTUAL CONTRIBUTION PERCENTAGE TEST. (A) For each Plan Year, the Plan shall satisfy the contribution percentage requirement described in section 401(m)(2) of the Code and the regulations thereunder, which are incorporated herein. The Plan satisfies the Actual Contribution Percentage Test if: (1) The Actual Contribution Percentage for the group of eligible Highly Compensated Employees is not more than the Actual Contribution Percentage for the group of all other eligible Employees multiplied by 1.25; or (2) The excess of the Actual Contribution Percentage for the group of eligible Highly Compensated Employees over the Actual Contribution Percentage for the group of all other eligible Employees is not more than two percentage points, and the Actual Contribution Percentage for the group of eligible Highly Compensated Employees is not more than the Actual Contribution Percentage for the group of all other eligible Employees multiplied by two. (B) Special Rules. (1) For purposes of determining the Actual Contribution Percentage Test, Employee Contributions are considered to have been made in the Plan Year in which they were contributed to the Plan. Matching Contributions and Qualified Nonelective Contributions will be considered for a Plan Year only if allocated to the Employee's Account as of any date within the Plan Year being tested and only if made before the last day of the twelve-month period immediately following the Plan Year to which such contributions relate. 1 4 (2) A Matching Contribution that is forfeited to correct Excess Aggregate Contributions, or because the contribution to which it relates is treated as an Excess Contribution, Excess Deferral, or Excess Aggregate Contribution, shall not be taken into account for purposes of the Actual Contribution Percentage Test. (3) The Employer shall maintain records sufficient to demonstrate satisfaction of the Actual Contribution Percentage Test, including records showing the extent to which Qualified Nonelective Contributions and Elective Deferral Contributions are taken into account. 1.5 ACTUAL CONTRIBUTION RATIO. (A) An Employee's Actual Contribution Ratio is the sum of the Contribution Percentage Amounts allocated to the Employee's Account for the Plan Year (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of this section) divided by the Employee's Compensation for the Plan Year. If no Matching Contributions, Employee Contributions, Qualified Nonelective Contributions, or Elective Deferral Contributions are taken into account with respect to an eligible Employee, the Actual Contribution Ratio of the Employee is zero. (B) Special Rules. (1) In the event that this Plan is aggregated with one or more plans for purposes of section 410(b) of the Code (other than for purposes of the average benefit percentage test), or if one or more other plans satisfy the requirements of section 410(b) of the Code (other than the average benefit percentage test) only if aggregated with this Plan, then this section shall be applied by determining the Actual Contribution Ratios of Employees as if all such plans were a single plan. Plans may be aggregated only if they have the same Plan Year. (2) The Actual Contribution Ratio of a Highly Compensated Employee who is eligible to participate in more than one plan of the Employer to which Employee Contributions or Matching Contributions are made shall be calculated by treating all such plans in which the Employee is eligible to participate as one plan. For Plan Years beginning after December 31, 1988, if a Highly Compensated Employee participates in two or more plans that have different plan years, all plans ending with or within the same calendar year shall be treated as a single plan. However, plans that are not permitted to be aggregated under Treasury Regulation section 1.401(m)-I(b)(3)(ii) shall not be aggregated for purposes of this section. (3) For purposes of determining the Actual Contribution Ratio of a Participant who is a 5-percent owner or one of the ten most highly-paid Highly 2 5 Compensated Employees, the, Contribution Percentage Amounts and Compensation of such Participant shall include the Contribution Percentage Amounts (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of this section) and Compensation for the Plan Year of all Family Members. If the Participant is required to be aggregated as a member of more than one family group under the Plan, all eligible Employees who are members of those family groups that include that Employee are aggregated as one family group. Family Members, with respect to Highly Compensated Employees, shall be disregarded as separate Employees in determining the Actual Contribution Ratio both for Participants who are Nonhighly Compensated Employees and for Participants who are Highly Compensated Employees. (4) The determination and treatment of the Actual Contribution Ratio amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 1.6 ACTUAL DEFERRAL PERCENTAGE. The term Actual Deferral Percentage means the average of the Actual Deferral Ratios of a specified group, computed to the nearest one-hundredth of one percent. 1.7 ACTUAL DEFERRAL PERCENTAGE TEST. (A) For each Plan Year, the Plan shall satisfy the Actual Deferral Percentage Test described in section 401(k)(3) and the regulations thereunder, which are herein incorporated by reference. The Plan satisfies the Actual Deferral Percentage Test for a Plan Year only if: (1) The Actual Deferral Percentage for the group of eligible Highly Compensated Employees is not more than the Actual Deferral Percentage for the group of all other eligible Employees multiplied by 1.25; or (2) The excess of the Actual Deferral Percentage for the group of eligible Highly Compensated Employees over the Actual Deferral Percentage for the group of all other eligible Employees is not more than two percentage points, and the Actual Deferral Percentage for the group of eligible Highly Compensated Employees is not more than the Actual Deferral Percentage for the group of all other eligible Employees multiplied by two. (B) Special Rules. 3 6 (1) For purposes of determining the Actual Deferral Percentage Test, Elective Deferral Contributions, Qualified Nonelective Contributions, and Qualified Matching Contributions must be allocated to the Employee's Account as of a date within the Plan Year being tested and must be made before the last day of the twelve-month period immediately following the Plan Year to which such contributions relate. (2) The Excess Deferrals of a Highly Compensated Employee shall be taken into account for purposes of the Actual Deferral Percentage Test. Conversely, the Excess Deferrals of an Employee who is a Nonhighly Compensated Employee shall not be taken into account for purposes of the Actual Deferral Percentage Test. (3) The Employer shall maintain records sufficient to demonstrate satisfaction of the Actual Deferral Percentage Test, including the extent to which Qualified Nonelective Contributions and Qualified Matching Contributions are taken into account. 1.8 ACTUAL DEFERRAL RATIO. (A) An Employee's Actual Deferral Ratio for the Plan Year is the sum of the Employee's Deferral Percentage Amounts allocated to the Employee's Account for the Plan Year (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of this section), divided by the Employee's Compensation taken into account for the Plan Year. If an eligible Employee makes no Elective Deferral Contributions, and no Qualified Matching Contributions or Qualified Nonelective Contributions are taken into account with respect to the Employee, the Actual Deferral Ratio of the Employee is zero. (B) Special Rules. (1) In the event that this Plan is aggregated with one or more plans for purposes of section 410(b) of the Code (other than for purposes of the average benefit percentage test), or if one or more other plans satisfy the requirements of section 410(b) of the Code (other than the average benefit percentage test) only if aggregated with this Plan, then this section shall be applied by determining the Actual Deferral Ratio of Employees as if all such plans were a single plan. Plans may be aggregated only if they have the same Plan Year. (2) The Actual Deferral Ratio of a Highly Compensated Employee who is eligible to participate in more than one cash or deferred arrangement (as described in section 401(k) of the Code) of the same Employer shall be calculated by treating all the cash or deferred arrangements in which the Employee is eligible to participate as one arrangement. If the cash or deferred arrangements that are treated as a single arrangement under the 4 7 preceding sentence are parts of plans that have different Plan Years, the cash or deferred arrangements are treated as a single arrangement with respect to the Plan Years ending with or within the same calendar year. However, plans that are not permitted to be aggregated under Treasury Regulation section 1.401(k)-I(b)(3)(ii)(B) are not aggregated for purposes of this section. (3) For purposes of determining the Actual Deferral Ratio of a Participant who is a 5 percent owner or one of the 10 most Highly Compensated Employees, the Deferral Percentage Amounts and Compensation of such Participant shall include the Deferral Percentage Amounts (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of this section) and Compensation for the Plan Year of Family Members. If an Employee is required to be aggregated as a member of more than one family group under the Plan, all eligible Employees who are members of those family groups that include that Employee are aggregated as one family group. Family Members, with respect to such Highly Compensated Employees, shall be disregarded as separate Employees in determining the Actual Deferral Percentage both for Participants who are Non-highly Compensated Employees and for Participants who are Highly Compensated Employees. (4) The determination and treatment of the Actual Deferral Ratio amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 1.9 ANNUITY. The term Annuity means a series of payments made over a specified period of time which, for a fixed annuity are, of equal, specified amounts, and for a variable annuity increase or decrease to reflect changes in investment performance of the underlying portfolio. 1.10 ANNUITY STARTING DATE. The term Annuity Starting Date means the first day of the first period for which an amount is payable as an Annuity. In the case of a benefit not payable in the form of an Annuity, the term Annuity Starting Date means the first day on which all events have occurred which entitle the Participant to such benefit. 1.11 BENEFICIARY. The Participant's Spouse is the designated Beneficiary of the Participant's entire Vested Interest. However, each Participant shall have the right to designate another Beneficiary and to specify the form of death benefit the Beneficiary is to receive, subject to the requirements of the "Qualified Election" provisions of Article VIII, Joint and Survivor Annuity Requirements. The Participant may change the Beneficiary and/or the form of death benefit at any time, subject to the requirements of 5 8 the "Qualified Election" provisions of Article VIII, Joint and Survivor Annuity Requirements. If any distribution hereunder is made to a Beneficiary in the form of an Annuity, and if such Annuity provides for a death benefit, then such Beneficiary shall also have the right to designate a Beneficiary and to change that Beneficiary from time to time. As an alternative to receiving the benefit in the form of an Annuity, the Beneficiary may elect to receive a single cash payment or any other form of payment provided for in the Plan. If a Beneficiary has not been designated, or if a Beneficiary designation or change of Beneficiary designation does not meet the requirements of the "Qualified Election" provisions of Article VIII, Joint and Survivor Annuity Requirements, (including any designation made prior to August 23, 1984 by a married Participant who has an Hour of Service on or after August 23, 1984), or if no designated Beneficiary survives the Participant, the Participant's entire Vested Interest shall be distributed to the Participant's Spouse, if living; otherwise in equal shares to any surviving children of the Participant. In the event none of the above named individuals survives the Participant, the Participant's entire Vested Interest shall be paid to the executor or administrator of the Participant's estate. 1.12 BOARD OF DIRECTORS. The term Board of Directors means the Employer's board of directors or other comparable governing body. 1.13 CODE. The term Code means the Internal Revenue Code of 1986, as amended from time to time. 1.14 COMPENSATION. (A) Except as otherwise provided in the Plan, the term Compensation means wages within the meaning of section 3401(a) of the Code for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(2) of the Code). Notwithstanding the foregoing, Compensation shall be reduced by all of the following items (even if includible in gross income): reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation, and welfare benefits. (B) Compensation shall include only that Compensation which is actually paid to the Participant during the determination period. Except as provided elsewhere in the Plan, the determination period shall be the Plan Year. (C) Compensation shall include any amount which is contributed by the Employer pursuant to a salary reduction agreement and which is not includible in the gross 6 9 income of the employee under sections 125, 402(e)(3), 402(h), or 403(b) of the Code; Compensation deferred under an eligible deferred compensation plan within the meaning of section 457(d) of the Code; and employee contributions described in section 414(h)(2) of the Code that are picked up by the employing unit and, thus, are treated as employer contributions. (D) The annual Compensation of each Participant taken into account for determining all benefits provided under the Plan for any determination period shall not exceed $200,000. This limitation shall be adjusted by the Secretary of the Treasury at the time and in the same manner as under section 415(d) of the Code, except that the dollar increase in effect on January 1 of any calendar year is effective for determination periods beginning in such calendar year and the first adjustment to the $200,000 limitation is effected on January 1, 1990. If the period for determining Compensation used in calculating an Employee's allocation for a determination period is a short Plan Year (i.e., shorter than 12 months), the annual Compensation limit is an amount equal to the otherwise applicable annual Compensation limit multiplied by a fraction, the numerator of which is the number of months in the short Plan Year, and the denominator of which is 12. In determining the Compensation of a Participant for purposes of this limitation, the rules of section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the Spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year. If, as a result of the application of such rules, the adjusted $200,000 limitation is exceeded, then either the limitation shall be prorated among the affected individuals in proportion to each such individual's Compensation as determined under this section prior to the application of this limitation, or the limitation shall be allocated among the affected individuals in an objective and nondiscriminatory manner based on a reasonable, good faith interpretation of section 401(a)(17) of the Code. The method chosen in the preceding sentence shall be uniformly applied to all affected individuals in a Plan Year and shall be applied consistently from year to year. If Compensation for any prior determination period is taken into account in determining an Employee's allocations or benefits for the current determination period, the Compensation for such prior determination period is subject to the applicable annual Compensation limit in effect for that prior year. For this purpose, for years beginning before January 1, 1990, the applicable annual Compensation limit is $200,000. (E) In addition to other applicable limitations set forth in the Plan, and notwithstanding any other provision of the Plan to the contrary, for Plan Years beginning on or after January 1, 1994, the annual Compensation of each Employee taken into account under the Plan shall not exceed the OBRA `93 annual Compensation limit. The OBRA `93 annual Compensation limit is 7 10 $150,000, as adjusted by the Commissioner for increases in the cost of living in accordance with section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA `93 annual Compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12. For Plan Years beginning on or after January 1, 1994, any reference in this Plan to the limitation under section 401(a)(17) of the Code shall mean the OBRA `93 annual Compensation limit set forth in this provision. If Compensation for any prior determination period is taken into account in determining an employee's benefits accruing in the current Plan Year, the Compensation for that prior determination period is subject to the OBRA `93 annual Compensation limit in effect for that prior determination period. For this purpose, for determination periods beginning before the first day of the first Plan Year beginning on or after January 1, 1994, the OBRA `93 annual Compensation limit is $150,000. 1.15 CONSIDERED NET PROFITS. The term Considered Net Profits means the entire amount of the accumulated or current operating profits (excluding capital gains from the sale or involuntary conversion of capital or business assets) of the Employer after all expenses and charges other than (i) the contributions made by the Employer to the Plan, and (ii) federal or state or local taxes based upon or measured by income, as determined by the Employer, either on an estimated basis or a final basis, in accordance with the generally accepted accounting principles used by the Employer. When the amount of Considered Net Profits has been determined by the Employer, and the contributions are made by the Employer on the basis of such determination, for any Plan Year, such determination and contribution shall be final and conclusive and shall not be subject to change because of any adjustments in income or expense which may be required by the Internal Revenue Service or otherwise. Such determination and contribution shall not be open to question by any Participant either before or after the contributions by the Employer have been made. 1.16 CONTRIBUTION PERCENTAGE AMOUNTS. The term Contribution Percentage Amounts means the sum of the Employee Contributions, Matching Contributions, and Qualified Matching Contributions (to the extent not taken into account for purposes of the Actual Deferral Percentage Test) made under the Plan on behalf of the Employee for the Plan Year. The term Contribution Percentage Amounts also includes Qualified Nonelective Contributions and Elective Deferral Contributions treated as Matching Contributions and taken into account in determining the Employee's Actual Contribution Ratio for the Plan Year. 1.17 CONTRIBUTION PERIOD. The term Contribution Period means that regular period specified by the Employer in Article IV for which contributions shall be made. 8 11 1.18 DEFERRAL PERCENTAGE AMOUNTS. The term Deferral Percentage Amounts means an Employee's Elective Deferral Contributions for the Plan Year. The term Deferral Percentage Amounts also includes Qualified Nonelective Contributions and Qualified Matching Contributions treated as Elective Deferral Contributions and taken into account in determining the Employee's Actual Deferral Ratio for the Plan Year. 1.19 DISABILITY. The term Disability means a Participant's incapacity to engage in any substantial gainful activity because of a medically determinable physical or mental impairment which can be expected to result in death, or to be of long, continued and indefinite duration. Such determination of Disability shall be made by the Administrator with the advice of competent medical authority. All Participants in similar circumstances will be treated alike. 1.20 DISABILITY RETIREMENT DATE. The term Disability Retirement Date means the first day of the month after the Plan Administrator has determined that a Participant's incapacity is a Disability. 1.21 EFFECTIVE DATE. The term Effective Date means January 1, 1993. 1.22 ELECTIVE DEFERRAL CONTRIBUTION. The term Elective Deferral Contribution means any Employer Contribution made to the Plan at the election of the Participant, in lieu of cash compensation, and includes contributions made pursuant to a Salary Deferral Agreement or other deferral mechanism. Solely for purposes of the dollar limitation specified in section 402(g) of the Code, with respect to any taxable year, a Participant's Elective Deferral Contributions are the sum of all employer contributions made on behalf of such Participant pursuant to an election to defer under any qualified cash or deferred arrangement as described in section 401(k) of the Code, any simplified employee pension cash or deferred arrangement described in section 402(h)(1)(B) of the Code, any plan as described under section 501(c)(18) of the Code, and any employer contributions made on behalf of a Participant for the purchase of a tax sheltered annuity contract under section 403(b) of the Code pursuant to a salary reduction agreement. The term Elective Deferral Contribution shall not include any deferrals property distributed as excess annual additions. 1.23 EMPLOYEE. The term Employee means an individual who performs services for the Employer and who is either a common law employee of the Employer or a self-employed individual/owner employee treated as an Employee pursuant to Code section 401(c)(1). The term Employee also includes a Leased Employee who is treated as an Employee of the Employer-recipient pursuant to the provisions of Code section 414(n) or 414(o). For purposes of determining the Highly Compensated Employees, the Employer may elect, on a reasonable and consistent basis, to treat such Leased Employees covered by a plan described in Code section 414(n)(5) as Employees. 9 12 1.24 EMPLOYEE CONTRIBUTIONS. The term Employee Contributions means any contributions to the Plan or any other plan that are designated or treated at the time of contribution as after-tax Employee Contributions and are allocated to a separate account to which the attributable earnings and losses are allocated. Such term includes Employee Contributions applied to the purchase of life insurance policies. Such term does not include repayment of loans or buy-back of benefits described in code section (411)(a)(7)(c) or employee contributions transferred to this Plan. 1.25 EMPLOYER. The term Employer means Dominick's Finer Foods, Inc., Supermarket Training Systems, Inc. and any successor organization to such Employer which elects to continue the Plan. In the case of a group of employers which constitutes a controlled group of corporations (as defined in Code section 414(b)), or which constitutes trades or businesses (whether or not incorporated) which are under common control (as defined in Code section 414(c)), or which constitutes an affiliated service group (as defined in, Code section 414(m)), all such employers shall be considered a single employer for purposes of participation, vesting, Top-Heavy provisions and determination of Highly Compensated Employees. 1.26 EMPLOYER CONTRIBUTION. The term Employer Contribution means any contribution made to the Plan by the Employer on behalf of a Participant other than an Employee Contribution or Rollover Contribution. 1.27 ENTRY DATE. The term Entry Date means either the Effective Date or the first day of the month thereafter when an Employee who has fulfilled the eligibility requirements commences participation in the Plan. Any Employee who has satisfied the maximum eligibility requirements permissible under ERISA, shall be eligible to commence participation in this Plan no later than the earlier of (A) or (B) below, as applicable, provided that the Employee has not separated from the Service of the Employer: (A) The first day of the first Plan Year beginning after the date on which the Employee satisfied such requirements; or (B) The date six months after the date on which the Employee satisfied such requirements. If an Employee is not in the active Service of the Employer as of his initial Entry Date, his subsequent Entry Date shall be the date he returns to the active Service of the Employer, provided he still meets the eligibility requirements. If an Employee does not enroll as a Participant as of his initial Entry Date, his subsequent Entry Date shall be the applicable Entry Date as specified above when the Employee actually enrolls as a Participant. 10 13 1.28 ERISA. The term ERISA means the Employee Retirement Income Security Act of 1974 (PL 93-406) as it may be amended from time to time, and any regulations issued pursuant thereto as such Act and such regulations affect this Plan and Trust. 1.29 EXCESS AGGREGATE CONTRIBUTIONS. (A) The term Excess Aggregate Contributions means, with respect to any Plan Year, the excess of the aggregate amount of the Contribution Percentage Amounts actually made on behalf of Highly Compensated Employees for the Plan Year (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of Section 1.5 of the Plan), over the maximum amount of contributions permitted under the Actual Contribution Percentage Test. The amount of Excess Aggregate Contributions for each Highly Compensated Employee is determined by using the method described in paragraph (B) of this section. (B) The amount of Excess Aggregate Contributions for a Highly Compensated Employee for a Plan Year is the amount (if any) by which the Employee's Employee Contributions and Matching Contributions must be reduced for the Employee's Actual Contribution Ratio to equal the highest permitted Actual Contribution Ratio under the Plan. To calculate the highest permitted Actual Contribution Ratio under the Plan, the Actual Contribution Ratio of the Highly Compensated Employee with the highest Actual Contribution Ratio is reduced by the amount required to cause the Employee's Actual Contribution Ratio to equal the ratio of the Highly Compensated Employee with the next highest Actual Contribution Ratio. If a lesser reduction would enable the Plan to satisfy the Actual Contribution Percentage Test, only this lesser reduction may be made. This process shall be repeated until the Plan satisfies the Actual Contribution Percentage Test. The highest Actual Contribution Percentage Ratio remaining under the Plan after leveling is the highest permitted Actual Contribution Ratio. For each Highly Compensated Employee, the amount of Excess Aggregate Contributions for a Plan Year is equal to the total Contribution Percentage Amounts (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of Section 1.5 of the Plan), minus the amount determined by multiplying the Employees's highest permitted Actual Contribution Ratio (determined after application of this section) by the compensation used in determining the ratio. 1.30 EXCESS CONTRIBUTION. (A) The term Excess Contribution means, with respect to a Plan Year, the excess of Deferral Percentage Amounts made on behalf of eligible Highly Compensated Employees for the Plan Year (including any amounts required to be taken into 11 14 account under subparagraphs (B)(1) and (B)(2) of Section 1.8 of the Plan) over the maximum amount of such contributions permitted under the Actual Deferral Percentage Test for the Plan Year. The amount of Excess Contributions for each Highly Compensated Employee is determined by using the method described in paragraph (B) of this section. (B) The amount of Excess Contributions for a Highly Compensated Employee for a Plan Year is the amount (if any) by which the Employee's Elective Deferral Contributions must be reduced for the Employee's Actual Deferral Ratio to equal the highest permitted Actual Deferral Ratio under the Plan. To calculate the highest permitted Actual Deferral Ratio under the Plan, the Actual Deferral Ratio of the Highly Compensated Employee with the highest Actual Deferral Ratio is reduced by the amount required to cause the Employee's Actual Deferral Ratio to equal the ratio of the Highly Compensated Employee with the next highest Actual Deferral Ratio. If a lesser reduction would enable the arrangement to satisfy the Actual Deferral Percentage Test, only this lesser reduction shall be made. This process shall be repeated until the cash or deferred arrangement satisfies the Actual Deferral Percentage Test. The highest Actual Deferral Ratio remaining under the Plan after leveling is the highest permitted Actual Deferral Ratio. 1.31 EXCESS DEFERRALS. The term Excess Deferrals means those Elective Deferral Contributions that are includible in a Participant's gross income under section 402(g) of the Code to the extent such Participant's Elective Deferral Contributions for a taxable year exceed the dollar limitation under such Code section. 1.32 FAIL-SAFE CONTRIBUTION. The term Fail-Safe Contribution means a Nonelective Contribution, designated by the Employer at the time of contribution as a Qualified Nonelective Contribution, which is contributed to the Plan solely for the purposes of satisfying either the Actual Deferral Percentage Test or the Actual Contribution Percentage Test and is made in accordance with the provisions of Article IV of this Plan. 1.33 FAMILY MEMBER. The term Family Member means, with respect to any Employee, such Employee's Spouse and lineal ascendants and descendants and the spouses of such lineal ascendants and descendants. 1.34 FIDUCIARY. The term Fiduciary means any, or all, of the following, as applicable: (A) Any Person who exercises any discretionary authority or control respecting the management of the Plan or its assets; or (B) Any Person who renders investment advice for a fee or other compensation, direct or indirect, respecting any monies or other property of the Plan or has authority or responsibility to do so; or 12 15 (C) Any Person who has discretionary authority or responsibility in the administration of the Plan; or (D) Any Person who has been designated by a Named Fiduciary pursuant to authority granted by the Plan, who acts to carry out a fiduciary responsibility, subject to any exceptions granted directly or indirectly by ERISA. 1.35 FORFEITURE. The term Forfeiture means the amount, if any, by which the value of a Participant's Account exceeds his Vested Interest following such Participant's Termination of Employment, and at the, time specified in Section 9.1. 1.36 HIGHLY COMPENSATED EMPLOYEE. The term Highly Compensated Employee means any Highly Compensated Active Employee or Highly Compensated Former Employee as further defined herein. For purposes of the determination of Highly Compensated Employees, the term Compensation means Compensation as defined in Article V of the Plan, but includes the amount of any elective contributions made by the Employer on the Employee's behalf to a cafeteria plan established in accordance with the provisions of Code section 125, a qualified cash or deferred arrangement in accordance with the provisions of Code section 402(e)(3), a simplified employee pension plan in accordance with the provisions of Code section 402(h), or a tax sheltered annuity plan maintained in accordance with the provisions of Code, section 403(b). A "Highly Compensated Active Employee" is any Employee who performs services for the Employer during the current Plan Year and who, during the current Plan Year or the 12-month period immediately preceding such Plan Year: (A) Owns (or is considered to own within the meaning of section 318 of the Code, as modified by section 416(i)(1)(B)(iii) of the Code), more than 5% of the outstanding stock of the Employer or stock possessing more than 5% of the total combined voting power of all stock of the Employer, or, if the Employer is other than a corporation, owns more than 5% of the capital or profits interest in the Employer. The determination of 5% ownership shall be made separately for each member of a controlled group of corporations (as defined in Code section 414(b)), or of a group of trades or businesses (whether or not incorporated) that are under common control (as defined in Code section 414(c)), or of an affiliated service group (as defined in Code section 414(m)); or (B) Receives Compensation in excess of $75,000 multiplied by the applicable cost-of-living adjustment factor prescribed under Code section 415(d) and then prorated in the case of a short Plan Year; or (C) Receives Compensation in excess of $50,000, as adjusted for cost-of-living increases in accordance with Code section 415(d) and then prorated in the case of 13 16 a short Plan Year, and is in the top 20% of Employees ranked by Compensation; or (D) Is, at any time, an officer of the Employer and receives Compensation in excess of 50% of the amount in effect under Code section 415(b)(1)(A) for the applicable period. If no officer receives Compensation in excess of the amount specified above, the highest paid officer for the applicable period shall be a Highly Compensated Employee. In no event if there are more than 500 Employees, shall more than 50 Employees or, if there are less than 500 Employees, shall the greater of three Employees or 10% of all Employees, be taken into account as officers. In determining both the top 20% of Employees ranked by Compensation for purposes of paragraph (C) above, and officers of the Employer for purposes of paragraph (D) above, Employees who have not completed six months of Service by the end of the applicable period, Employees who normally work less than 17-1/2 hours per week, Employees who normally work less than six months during a year, Employees who have not attained 21, and nonresident aliens who receive no earned income from U.S. sources shall be excluded. Also excluded under the above paragraph are Employees who are covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement. Such Employees will be excluded only if retirement benefits were the subject of good faith bargaining, 90% of the Employees of the Employer are covered by the agreement, and the Plan covers only Employees who are not covered by the agreement. Notwithstanding the above provisions, an Employee, other than a 5% owner as described in paragraph (A) above who was not highly compensated during the 12-month period immediately preceding the current Plan Year will not be considered to be a Highly Compensated Employee in the current Plan Year unless such Employee is one of the top 100 Employees ranked by Compensation for the current Plan Year. A "Highly Compensated Former Employee" is any former Employee who separated from Service with the Employer in a Plan Year preceding the current Plan Year and was a Highly Compensated Active Employee in either: (A) the Plan Year in which his separation from Service occurred; or (B) any Plan Year ending on or after such former Employee's 55th birthday. A former Employee is an Employee who performs no services for the Employer during a Plan Year (for example, by reason of a leave of absence). 14 17 1.37 INACTIVE PARTICIPANT. The term Inactive Participant means any Participant who does not currently meet the requirements to be an Active Participant due to a suspension of the performance of duties for the Employer. In addition, a Participant who ceases to meet the eligibility requirements in accordance with Section 3.1 shall be considered an Inactive Participant. 1.38 INSTALLMENT REFUND ANNUITY. The term Installment Refund Annuity means an annuity which provides fixed monthly payments for a period certain of not less than three nor more than 15 years. If the Participant dies before the period certain expires, the annuity will be paid to the Participant's Beneficiary, for the remainder of the period certain. The period certain shall be chosen by the Participant at the time the annuity is purchased, and the Installment Refund Annuity will be the amount of benefit which can be purchased with the Participant's Vested Interest. The Installment Refund Annuity is not a life annuity and in no event shall the period certain extend to a period which equals or exceeds the life expectancy of the Participant. 1.39 JOINT AND SURVIVOR ANNUITY. The term Joint and Survivor Annuity means an Annuity for the life of the Participant with a survivor Annuity for the life of the Participant's Spouse which is not less than one-half, nor greater than, the amount of the Annuity payable during the joint lives of the Participant and the Participant's Spouse. The Joint and Survivor Annuity will be the amount of benefit which can be purchased with the Participant's vested account balance. In the case of an unmarried Participant, Joint and Survivor Annuity means an Annuity payable over the Participant's life. 1.40 LATE RETIREMENT DATE. The term Late Retirement Date means the first day of the month coinciding with or next following the date a Participant is separated from Service with the Employer after his Normal Retirement Age, for any reason other than death. 1.41 LEASED EMPLOYEE. The term Leased Employee means any person (other than an Employee of the recipient) who, pursuant to an agreement between the recipient and any other person ("leasing organization"), has performed services for the recipient (or for the Employer and related persons determined in accordance with Code section 414(n)(6)) on a substantially full-time basis for a period of at least one year, and such services are of a type historically performed by employees in the business field of the recipient Employer. 1.42 MATCHING CONTRIBUTIONS. The term Matching Contributions means contributions made by the Employer to the Plan on behalf of a Participant on account of either Elective Deferral Contributions, if any, Employee Contributions, if any, or required contributions, if any. 1.43 NAMED FIDUCIARY. The term Named Fiduciary means the Plan Administrator, the Trustee and any, other Fiduciary designated in writing by the Employer, and any successor thereto. 15 18 1.44 NONELECTIVE CONTRIBUTIONS. The term Nonelective Contributions means contributions made by the Employer (other than Matching Contributions) that the Participant may not elect to have paid in cash or other benefits instead of being contributed to the Plan. 1.45 NONHIGHLY COMPENSATED EMPLOYEE. The term Nonhighly Compensated Employee means an Employee who is not a Highly Compensated Employee. 1.46 NORMAL RETIREMENT AGE. The term Normal Retirement Age means the date the Participant attains age 55. 1.47 NORMAL RETIREMENT DATE. The term Normal Retirement Date means the first day of the month coinciding with or next following the date a Participant attains his Normal Retirement Age. 1.48 PARTICIPANT. The term Participant means any Employee of the Employer, who is or becomes eligible to participate under this Plan in accordance with its provisions and shall include an Active Participant and an inactive Participant. 1.49 PARTICIPANT'S ACCOUNT. The term Participant's Account means the sum of the following sub-accounts held on behalf of each Participant: - Elective Deferral Contributions, if any, and earnings thereon. - Matching Contributions, if any, and earnings thereon. - Qualified Matching Contributions, if any, and earnings thereon. - Qualified Nonelective Contributions, if any, and earnings thereon. - Prior Employer Contributions, if any, and earnings thereon. - Prior Employee Contributions, if any, and earnings thereon. - Rollover Contributions, if any, and earnings thereon. A Participant's Account shall be invested in accordance with the rules established by the Plan Administrator, which shall be applied in a consistent and nondiscriminatory manner. 1.50 PERSON. The term Person means any natural person, partnership, corporation, trust or estate. 1.51 PLAN. The term Plan means Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Non-Union Employees, the terms of which are set forth herein as it may be amended from time to time. 16 19 1.52 PLAN ADMINISTRATOR. The terms Plan Administrator and Administrator are used interchangeably throughout the Plan and shall mean the Employer. 1.53 PLAN YEAR. The term Plan Year means the 12-month period commencing on January 1 and ending on the following December 31. 1.54 PRIOR EMPLOYEE CONTRIBUTIONS. The term Prior Employee Contributions means Employee Contributions that were made prior to January 1, 1993. Prior Employee Contributions shall be considered to be Employee Contributions for purposes of determining a Participant's Vested Interest, pursuant to Article I. In addition, Prior Employee Contributions shall also be considered to be Employee Contributions for the purposes of determining the Actual Contribution Ratio pursuant to Article I and Annual Additions pursuant to Article V. 1.55 PRIOR EMPLOYER CONTRIBUTIONS. The term Prior Employer Contributions means employer contributions that were made prior to the Effective Date of this Plan. 1.56 QUALIFIED MATCHING CONTRIBUTIONS. The term Qualified Matching Contributions shall mean Matching Contributions which are subject to the distribution and nonforfeitability requirements under section 401(k) of the Code when made. 1.57 QUALIFIED NONELECTIVE CONTRIBUTIONS. The term Qualified Nonelective Contributions shall mean Nonelective Contributions which are subject to the distribution and nonforfeitability requirements under section 401(k) of the Code when made. 1.58 ROLLOVER CONTRIBUTION. The term Rollover Contribution means an amount representing all or part of a distribution from a pension or profit-sharing plan meeting the requirements of Code section 401(a), that is eligible for rollover to this Plan in accordance with the requirements set forth in Code section 402 or Code section 408(d)(3), whichever is applicable. 1.59 SALARY DEFERRAL AGREEMENT. The term Salary Deferral Agreement means an agreement between a Participant and the Employer to defer the Participant's Compensation for the purpose of making Elective Deferral Contributions to the Plan. 1.60 TERMINATION OF EMPLOYMENT. The term Termination of Employment means a severance of the Employer-Employee relationship which occurs prior to a Participant's Normal Retirement Age for any reason other than Disability or death. 1.61 TRUST. The term Trust means the trust agreement entered into by the Employer, the Administrator and the Trustee. 1.62 TRUSTEE. The term Trustee means one or more persons collectively appointed and acting under the trust agreement, and any successor thereto. 17 20 1.63 VESTED INTEREST. The term Vested Interest on any date means the nonforfeitable right to an immediate or deferred benefit in the amount which is equal to the following: (A) the value on that date of that portion of the Participant's Account that is attributable to the following contributions: - Elective Deferral Contributions, if any - Employee Contributions, if any - Rollover Contributions, if any - Matching Contributions, if any - Qualified Matching Contributions, if any - Qualified Nonelective Contributions, if any (B) plus the value on that date of that portion of the Participant's Account that is attributable to and derived from: - Prior Employer Contributions, if any Such contributions pursuant to Subsection (B), plus the earnings thereon, shall be, at any relevant time, a part of the Participant's Vested Interest equal to an amount ("X") determined by the following formula: X = P(AB + D) - D For the purposes of applying this formula: P = The Participant's Vesting Percentage at the relevant time. AB = The account balance attributable to such contributions, plus the earnings thereon, at the relevant time. D = The amount of the distribution. 1.64 VESTING PERCENTAGE. The term Vesting Percentage means the percentage used to determine a Participant's Vested Interest in contributions made by the Employer, plus the earnings thereon, credited to his Participant's Account that are not 100% immediately vested. The Vesting Percentage for each Participant shall be determined in accordance with the following schedule based on Years of Service with the Employer.
Years of Service Vesting Percentage ---------------- ------------------ Less than 1 0%
18 21 1 but less than 2 10% 2 but less than 3 20% 3 but less than 4 30% 4 but less than 5 40% 5 but less than 6 60% 6 but less than 7 80% 7 or more 100%
However, if an Active Participant dies prior to attaining his Normal Retirement Age, his Vesting Percentage shall be 100%. 19 22 ARTICLE II. SERVICE 2.1 SERVICE. The term Service means active employment with the Employer as an Employee. For purposes of determining Service, employment with any company which is under common control with the Employer as specified in section 414 of the Internal Revenue Code shall be treated as employment with the Employer. 2.2 ABSENCE FROM EMPLOYMENT. Absence from employment on account of a leave of absence authorized by the Employer pursuant to the Employer's established leave policy will be counted is employment with the Employer provided that such leave of absence is of not more than two years' duration. Absence from employment on account of active duty with the Armed Forces of the United States will be counted as employment with the Employer. If the Employee does not return to active employment with the Employer, his Service will be deemed to have ceased on the date the Administrator receives notice that such Employee will not return to the active Service of the Employer. The Employer's leave policy shall be applied in a uniform and nondiscriminatory manner to all Participants under similar circumstances. FOR PURPOSES OF ELIGIBILITY, THE FOLLOWING PROVISIONS SHALL APPLY: 2.3 HOUR OF SERVICE. The term Hour of Service means a period of Service during which an Employee shall be credited with one Hour of Service as described in (A), (B), (C), and (D) below: (A) Each hour for which an Employee is directly or indirectly paid, or entitled to payment, by the Employer for the performance of duties. These hours shall be credited to the Employee for the computation period or periods in which the duties are performed; and (B) Each hour for which an Employee is directly or indirectly paid, or entitled to payment, by the Employer for reasons (such as vacation, sickness or Disability) other than for the performance of duties. Hours under this Subsection shall be calculated and credited pursuant to section 2530.200b-2 of the Department of Labor Regulations which are incorporated herein by this reference; and (C) Each hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by the Employer. These hours shall be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made; and 20 23 (D) Each hour for which an Employee is on an authorized unpaid leave (such as service with the Armed Forces, jury duty, educational leave). These hours shall be credited to the Employee for the computation period or periods in which such authorized leave takes place. However, no more than 501 hours shall be credited under this subparagraph (D). Hours of Service will be credited for employment with other members of an affiliated service group (under Internal Revenue Code section 414(m)), a controlled group of corporations (under Internal Revenue Code section 414(b)), or a group of trades or businesses under common control (under Internal Revenue Code section 414(c)), of which the adopting employer is a member. Hours of Service will also be credited for any individual considered an Employee under Internal Revenue Code section 414(n). Solely for purposes of determining whether a One-Year Break in Service, as defined in Section 2.4, for participation and vesting purposes has occurred in a computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, eight Hours of Service per day of such absence. For purposes of this paragraph, an absence from work for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of a birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. The Hours of Service credited under this paragraph shall be credited (1) in the computation period in which the absence begins if the crediting is. necessary to prevent a Break in Service in that period, or (2) in all other cases, in the following computation period. 2.4 ONE-YEAR BREAK IN SERVICE. Except as provided below regarding eligibility, the term One-Year Break in Service means any Plan Year during which an Employee fails to complete more than 500 Hours of Service. 2.5 YEAR(S) OF SERVICE. The term Year(s) of Service means a 12-consecutive-month period during which an Employee has completed at least 1,000 Hours of Service. For purposes of determining Years of Service and Breaks in Service for eligibility, the twelve-consecutive-month period shall begin with the date on which an Employee's employment commenced and, where additional periods are necessary, on succeeding anniversaries of his employment commencement date. The employment commencement date is the date on which the Employee first performs an Hour of Service for the Employer maintaining the Plan. The eligibility requirement specified in Article III is one or more full Years of Service. Such requirement shall be met upon completion of at least 1,000 Hours of Service for each Year of Service specified. 21 24 FOR PURPOSES OF VESTING, THE FOLLOWING PROVISIONS SHALL APPLY: 2.6 PERIOD OF SERVICE. The term Period of Service or Service means the Employer-Employee relationship which begins on the Employee's employment date and continues until his Severance from Service Date. An Employee's Period of Service shall include any Period of Severance beginning on his Severance from Service Date, which is less than 12 months. 2.7 PERIOD OF SEVERANCE. The term Period of Severance means a period of time commencing on the Participant's Severance from Service Date and ending on the date such individual is re-employed by the Employer. 2.8 SEVERANCE FROM SERVICE DATE. The Severance from Service Date shall be the earliest of (A), (B), or (C) below. (A) The date the Employee terminates employment by reason of a quit, discharge, permanent Disability, retirement or death. (B) The second anniversary of the first day the Employee is absent from Service for maternity or paternity reasons, as described in the following Section 2.6. (C) The first anniversary of the first day the Employee separates from Service for any other reason such as an authorized leave of absence, sickness, vacation, etc., after which the Employee does not return to work. 2.9 ONE-YEAR BREAK IN SERVICE. The term One-Year Break in Service shall mean a 12-consecutive-month Period of Severance, beginning on the Employee's Severance from Service Date. In the case of an individual who is absent from Service for maternity or paternity reasons, the 12-consecutive-month period beginning on the first anniversary of the first date of such absence shall not constitute a One-Year Break in Service. An absence from Service for maternity or paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) for purposes of caring for such child for a period beginning immediately following such birth or placement. 2.10 YEAR(S) OF SERVICE. The term Year(s) of Service means a Period of Service equaling 12 months. Service counted in computing Years of Service need not be consecutive or continuous, and all fractional Periods of Service shall be aggregated. 2.11 SERVICE UPON RE-EMPLOYMENT. An Employee shall be considered a re-employed Employee when he is rehired following a One-Year Break in Service. Upon 22 25 re-employment, all Service, including Service prior to any One-Year Break in Service, shall be aggregated in determining such re-employed Employee's Vesting Percentage. 2.12 PREDECESSOR ORGANIZATION SERVICE. For purposes of this Article, Service with a predecessor organization of the Employer shall be treated as Service with the Employer in any case in which the Employer maintains the Plan of such predecessor organization. 23 26 ARTICLE III. ELIGIBILITY, ENROLLMENT AND PARTICIPATION 3.1 ELIGIBILITY. Each Employee who was a Participant prior to the Effective Date and who is in the Service of the Employer on the Effective Date shall continue as a Participant in the Plan. Each other Employee, excluding a Leased Employee, shall be eligible to become a Participant as of the Effective Date or the Entry Date when he first meets the following requirement(s): - Age 21 - 900 Hours of Service during first six months of employment or 1,000 Hours of Service per year - Not in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between Employee representatives and the Employer, if there is evidence that retirement benefits were the subject of good faith bargaining between such Employee representatives and the Employer, unless the collective bargaining agreement provides for coverage under this Plan. - Not a non-resident alien with no U.S.-source income - Not an Independent Contractor 3.2 ENROLLMENT AND PARTICIPATION. Each eligible Employee may enroll as of his Entry Date by completing and delivering to the Administrator an enrollment form and, if applicable, a Salary Deferral Agreement. He will then become a Participant as of his Entry Date. 3.3 RE-EMPLOYED EMPLOYEE. In the case of an individual who ceases to be an Employee and is subsequently rehired as an Employee, the following provisions shall apply in determining his eligibility to again participate in the Plan: (A) If the Employee had met the eligibility requirement(s) specified in Section 3.1 prior to his separation from employment, he shall become an Active Participant in the Plan as of the date he is re-employed, after completing the applicable form(s), in accordance with Section 3.2. (B) If the Employee had not met the eligibility requirement(s) specified in Section 3.1 prior to his separation from employment, he shall be eligible to participate in the Plan on the first Entry Date following his fulfillment of such eligibility requirement(s). For purposes of this Subsection, all Years of Service with the Employer, including any Years of Service prior to any Breaks in Service, shall be taken into account. 24 27 3.4 ELIGIBLE CLASS. In the event a Participant becomes ineligible to participate because he is no longer a member of an eligible class of Employees, such Employee shall participate immediately upon his return to an eligible class of Employees. In the event an Employee who is not a member of the eligible class of Employees becomes a member of the eligible class, such Employee shall participate immediately if such Employee has satisfied the minimum age requirement and would have previously become a Participant had he been in the eligible class. 25 28 ARTICLE IV. CONTRIBUTIONS 4.1 ELECTIVE DEFERRAL CONTRIBUTIONS. Each Active Participant may enter into a written Salary Deferral Agreement with the Employer in an amount equal to not less than 1% nor more than 15% of his; Compensation for the Contribution Period. In consideration of such agreement, the Employer will make a contribution for each Contribution Period on behalf of the Participant in an amount equal to the total amount by which the Participant's Compensation from the Employer was deferred during the Contribution Period pursuant to the Salary Deferral Agreement then in effect. Elective Deferral Contributions shall be paid by the Employer to the Trust not less frequently than monthly, but in no event later than 90 days following the date the amounts were deferred. Salary Deferral Agreements shall be governed by the following provisions: (A) Amounts contributed pursuant to a Salary Deferral Agreement shall be 100% vested and non-forfeitable at all times. (B) No Participant shall be permitted to have Elective Deferral Contributions made under this Plan., or any other qualified plan maintained by the Employer, during any taxable year, in excess of the dollar limitation contained in section 402(g) of the Code in effect at the beginning of the taxable year. However, this $7,000 limit shall not apply to certain amounts deferred in 1987 that were attributable to Service performed in 1986. (C) Amounts contributed pursuant to a Salary Deferral Agreement, which are not in excess of the limit described in Subsection (B) above, shall be subject to the Limitations on Allocations in accordance with Article V. Elective Deferral Contributions that are in excess of the limit described in Subsection (B) shall also be subject to the Limitations on Allocations in accordance with Article V. (D) A Salary Deferral Agreement may be changed by a Participant four times during the Plan Year, on January 1, April 1, July I and October 1, by filing written notice thereof with the Administrator. Such notice shall be effective, and the Salary Deferral Agreement shall be changed on the date specified in such notice or as soon as administratively possible, which date must be at least 15 days after such notice is filed. (E) Elective Deferral Contributions shall be subject to the Actual Deferral Percentage Test limitations. (F) Correction of Excess Contributions. (1) If the Employer determines prior to the end of the Plan Year that the Actual Deferral Percentage Test may not be satisfied, the Employer may take the corrective action specified in Section 4.11 of the Plan. 26 29 (2) If, after the end of the Plan Year, the Employer determines that the Plan will fail the Actual Deferral Percentage Test, the Employer shall take the corrective action specified in Section 4.13 or Section 4.16 of the Plan, or a combination of such corrective actions, in order to ensure that the Plan does not fail the Actual Deferral Percentage Test for the Plan Year being tested. 4.2 MATCHING CONTRIBUTIONS. The Employer shall make a Matching Contribution in an amount equal to a discretionary amount to be determined by the Employer for each $1.00 by which a Participant defers his Compensation pursuant to a Salary Deferral Agreement, subject to the Limitations on Allocations specified in Article V. The contribution as described above, for any Plan Year, shall be paid to the Trust at the end of the Plan Year, or as soon as possible on or after the last day of such Plan Year, but in any event not later than the date which is prescribed by law for filing the Employer's income tax return, including any extension thereof. Matching Contributions shall be subject to the Actual Contribution Percentage Test. The Employer may designate at the time of contribution that all or a portion of such Matching Contributions be treated as Qualified Matching Contributions. If the Employer determines prior to the end of the Plan Year that the Actual Contribution Percentage Test may not be satisfied, the Employer may take the corrective action specified in Section 4.12 of the Plan. If, after the end of the Plan Year, the Employer determines that the Plan will fail the Actual Contribution Percentage Test, the Employer shall take the corrective action specified in Section 4.14 or Section 4.16 of the Plan, or a combination of such corrective actions, in order to ensure that the Plan does not fail the Actual Contribution Percentage Test for the Plan Year being tested. Such Matching Contribution shall be allocated as of the last day of the Plan Year for which such contribution is made to each Participant who: - is an Active Participant as of the last day of the Plan Year. Notwithstanding the above provision, an allocation will be made on behalf of a Participant who dies, retires, or becomes disabled during the Plan Year. 4.3 FAIL-SAFE CONTRIBUTION. The Employer reserves the right to make a discretionary Nonelective Contribution to the Plan for any Plan Year, if the Employer determines that such a contribution is necessary to ensure that either the Actual Deferral Percentage Test or the Actual Contribution Percentage Test will be satisfied for that Plan Year. Such amount shall be designated by the Employer at the time of contribution as a Qualified Nonelective Contribution and shall be known as a Fail-Safe Contribution. 27 30 The Fail-Safe Contribution shall be made on behalf of all eligible non-Highly Compensated Employees who are Participants and who are considered under the Actual Deferral Percentage Test or the Actual Contribution Percentage Test. This contribution shall be allocated to the Participant's Account of each such Participant in an amount equal to a fixed percentage of such Participant's Compensation. The fixed percentage shall be equal to the minimum fixed percentage necessary to be contributed by the Employer on behalf of each eligible non-Highly Compensated Employee who is a Participant so that the Actual Deferral Percentage Test or the Actual Contribution Percentage Test is satisfied. The Fail-Safe Contribution for any Plan Year as determined above shall be paid to the Trust at the end of the Plan Year, or as soon as possible on or after the last day of such Plan Year, but in no event later than the date which is prescribed by law for filing the Employer's income tax return, including any extensions thereof. 4.4 PROFITS NOT REQUIRED. Contributions to this Plan shall not be precluded because the Employer does not have Considered Net Profits. Notwithstanding the existence of Considered Net Profits, the Employer may determine in its sole discretion that it will make no contributions for such Plan Year. 4.5 PAYMENT OF EXPENSES. The Employer may contribute to the Plan the amount necessary, to pay any applicable expense charges and administration charges. In lieu of the Employer's contributing the amount necessary to pay such charges, these expenses may be paid from the Trust fund. 4.6 ALLOCATION OF FORFEITURES. The contributions made by the Employer shall be reduced by any, Forfeitures available as an Employer credit in accordance with Section 9.3. 4.7 CREDITING OF ELECTIVE DEFERRAL AND OTHER CONTRIBUTIONS. Elective Deferral Contributions and other contributions made by the Employer shall be credited to the Participant Account of each Participant for whom such contributions are made, in accordance with the provisions of Article XIII. 4.8 ROLLOVER CONTRIBUTIONS. The Plan may receive Rollover Contributions on behalf of an Employee, Receipt of a Rollover Contribution shall be subject to the approval of the Plan Administrator. Before approving the receipt of a Rollover Contribution, the Plan Administrator may request any documents or other information from an Employee or opinions of counsel which the Plan Administrator deems necessary to establish that such amount is a Rollover Contribution. A Participant's Account shall be maintained on behalf of each Employee from whom Rollover Contributions are received, regardless of such Employee's eligibility to participate in the Plan in accordance with the requirements of Article III, and Rollover Contributions may be invested in any manner authorized under the provisions of this Plan. 28 31 Rollover Contributions received from an Employee who is not otherwise eligible to participate in the Plan may not be, withdrawn in accordance with the provisions of Article X until such Employee becomes a Participant, except that such Employee may receive a distribution of his Participant's Account if his Termination of Employment occurs. Rollover Contributions shall be credited to the Participant's Account and may be invested in any manner authorized under the provisions of this Plan. 4.9 TRANSFERS. Without regard to the Limitations on Allocations imposed under Article V, the Plan may receive, directly from another qualified pension or profit sharing plan meeting the requirements of Internal Revenue Code section 401 (a), all or part of the entire amount distributable on behalf of a Participant from such plan. Likewise, the Plan may receive Transfers representing the assets of any predecessor plan. Transfers may be invested in any manner authorized under the provisions of this Plan. 4.10 SUSPENSION OF ELECTIVE DEFERRAL CONTRIBUTIONS. The following provisions shall apply with respect to suspension of Elective Deferral Contributions. (A) Elective Suspension. An Active Participant may elect to suspend his Salary Deferral Agreement for Elective Deferral Contributions by filing a written notice thereof with the Administrator at any time. The Salary Deferral Agreement shall be suspended on the date specified in such notice, which date must be at least 15 days after such notice is filed. The notice shall specify the period for which such suspension shall be effective. Such period may extend indefinitely. (B) Suspension for Leave. A Participant who is absent from employment on account of an authorized leave of absence or military leave shall have his Salary Deferral Agreement suspended during such leave. Such suspension of contributions shall be effective on the date payment of Compensation by the Employer to him ceases, and shall remain in effect until payment of Compensation is resumed. (C) Withdrawal Suspension. An Active Participant who elects a withdrawal in accordance with Article X may have his Salary Deferral Agreement suspended on the date such election becomes effective. Such suspension shall remain in effect for the number of months specified therein. (D) Non-Elective Suspension. An Active Participant who ceases to meet the eligibility requirements as specified in Section 3.1 but who remains in the employ of the Employer, shall have his Salary Deferral Agreement suspended, effective as of the date he ceases to meet the eligibility requirements. Such suspension shall remain in effect until he again meets such eligibility requirements. The Participant may elect to reactivate his Salary Deferral Agreement for Elective Deferral Contributions by filing a written notice thereof with the Plan Administrator. The 29 32 Salary Deferral Agreement shall be reactivated at any time following the expiration of the suspension period described above. 4.11 LIMITATION OF ELECTIVE DEFERRAL CONTRIBUTIONS. If the Employer determines prior to the end of the Plan Year that the Plan may not satisfy the Actual Deferral Percentage Test for the Plan Year, the Employer may require that the amount of Elective Deferral Contributions being allocated to the accounts of Highly Compensated Employees be reduced to the extent necessary to prevent Excess Contributions from being made to the Plan. Although the Employer may reduce the amount of Elective Deferral Contributions that may be allocated to the Participant's Account of Highly Compensated Employees, the affected Employees shall continue to participate in the Plan. When the situation that resulted in the reduction of Elective Deferral Contributions ceases to exist, the Employer shall reinstate the amount of Elective Deferral Contributions elected by the Participant in the Salary Deferral Agreement to the fullest extent possible for all affected Participants iii a nondiscriminatory manner. 4.12 LIMITATION OF MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS. If the Employer determines prior to the end of the Plan Year that the Plan may not satisfy the Actual Contribution Percentage Test for the Plan Year, the Employer may require that the amount of Matching Contributions or Employee Contributions, or both, being allocated to the Accounts of Highly Compensated Employees be reduced to the extent necessary to prevent Excess Aggregate Contributions from being made to the Plan. 4.13 CORRECTIVE DISTRIBUTION OF EXCESS CONTRIBUTIONS. (A) The Employer may distribute Excess Contributions (and income allocable thereto) to the appropriate Highly Compensated Employee after the close of the Plan Year in which the Excess Contribution arose and within 12 months after the close of that Plan Year. (B) The income allocable to Excess Contributions is equal to the sum of the allocable gain or loss for the Plan Year and shall be determined as follows: (1) The income allocable to Excess Contributions is determined by multiplying the income for the Plan Year allocable to Deferral Percentage Amounts by a fraction. The numerator of the fraction is the Excess Contributions attributable to the Employee for the Plan Year. The denominator of the fraction is equal to the sum of (A) the total account balance of the Employee attributable to Deferral Percentage Amounts as of the beginning of the Plan Year, plus (B) the Employee's Deferral Percentage Amounts for the Plan Year. 30 33 (2) The allocable gain or loss for the period between the end of the Plan Year and the date of distribution shall not be taken into consideration when determining the income allocable to Excess Contributions. (C) The amount of Excess Contributions to be distributed with respect to an Employee for a Plan Year shall be reduced by Excess Deferrals previously distributed to the Employee for the Employee's taxable year ending with or within the Plan Year. (D) The distribution of Excess Contributions made to the Family Members of a family group that was combined for purposes of determining a Highly Compensated Employee's Actual Deferral Ratio shall be allocated among the Family Members in proportion to the Elective Deferral Contribution (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of Section 1.8 of the Plan) of each Family Member that is combined to determine the Actual Deferral Ratio. (E) A corrective distribution of Excess Contributions (and income) shall be made without regard to any Participant or spousal consent or any notice otherwise required under sections 411 (a)(11) and 417 of the Code. (F) Any Matching Contributions or Qualified Matching Contributions that relate to the Excess Contribution being distributed shall be forfeited. The Matching Contribution so forfeited shall be in proportion to the applicable Employee's vested and nonvested interest in Matching Contributions under the Plan for the Plan Year in which the Excess Contribution arose. Forfeitures of Matching Contributions or Qualified Matching Contributions that relate to Excess Contributions shall be applied to reduce Employer contributions or pay Plan expenses. (G) In no case may the amount of Excess Contributions to be distributed for a Plan Year with respect to any Highly Compensated Employee exceed the amount of Elective Deferral Contributions made on behalf of the Highly Compensated Employee for the Plan Year. (H) In the event of a complete termination of the Plan during the Plan Year in which an Excess Contribution arose, the corrective distribution must be made as soon as administratively feasible after the date of the termination of the Plan, but in no event later than 12 months after the date of termination. (I) Any distribution of less than the entire amount of Excess Contributions with respect to any Highly, Compensated Employee shall be treated as a pro-rata distribution of Excess Contributions and allocable income or loss. 4.14 CORRECTION OF EXCESS AGGREGATE CONTRIBUTIONS. 31 34 (A) Excess Aggregate Contributions may be corrected using one of the methods described in subparagraphs (1) and (2) below. The Employer shall elect the method of correction to be used and shall apply such method to the correction of the Excess Aggregate Contribution for the Plan Year. (1) Method 1: (a) Any unmatched Employee Contributions (and income) allocated to the Plan for the Plan Year in which the Excess Aggregate Contribution arose shall be distributed to the appropriate Employee after the close of the Plan Year in which the Excess Aggregate Contribution arose and within 12 months after the close of that Plan Year. (b) If, after the application of subparagraph (1)(a) above, an Excess Aggregate Contribution still exists, the remaining Excess Aggregate Contribution (and income) shall be forfeited, if forfeitable, or distributed on a pro-rata basis from the Employee's Account attributable to Contribution Percentage Amounts. The, distribution or forfeiture shall be made after the close of the Plan Year in which the Excess Aggregate Contribution arose and within 12 months after the close of that Plan Year. Whether an amount is distributed or forfeited under this subparagraph (b) shall be determined based on the rules set forth in paragraph (B) of this section. (2) Method 2: (a) Any Matching Contributions (and Qualified Matching Contributions, to the extent not taken into account for purposes of the Actual Deferral Percentage Test), and income allocable thereto, shall be forfeited, if forfeitable, or distributed to the appropriate Highly Compensated Employee. The distribution or forfeiture shall be made after the close of the Plan Year in which the Excess Aggregate Contribution arose and within 12 months after the close of that Plan Year. Whether an amount is forfeited or distributed shall be determined under the rules set forth in paragraph (B) of this section. (B) Determination of Distributable and Forfeitable Amounts. For purposes of paragraph (A) of this section: (1) An Excess Aggregate Contribution attributable to Employee Contributions, vested Matching Contributions, Qualified Matching Contributions (and, if applicable, Qualified Nonelective Contributions and Elective Deferral Contributions) shall be distributed to the appropriate 32 35 Highly Compensated Employee in accordance with the terms of this section. (2) An Excess Aggregate Contribution attributable to an Employee's nonvested Matching Contributions shall be forfeited in accordance with the terms of this section. (3) A Highly Compensated Employee's vested and nonvested interest in Matching Contributions (and income allocable thereto) attributable to Excess Aggregate Contributions shall be based on the proportion that represents the Employee's Vested Interest in Matching Contributions under the Plan for the Plan Year in which the Excess Aggregate Contribution arose. (C) Forfeited Excess Aggregate Contributions. In accordance with paragraph (B) of this section, the amount that represents the Employee's nonvested interest in Matching Contributions (and income), and is attributable to Excess Aggregate Contributions, shall be forfeited and, as such, shall be applied to reduce Employer contributions or pay expenses. (D) Income Allocable to Excess Aggregate Contributions. For purposes of this section, the income allocable to Excess Aggregate Contributions is equal to the sum of the allocable gain or loss for the Plan Year, and shall be determined as follows: (1) The income allocable to Excess Aggregate Contributions is determined by multiplying the income for the Plan Year allocable to Contribution Percentage Amounts by a fraction. The numerator of the fraction is the Excess Aggregate Contributions for the Employee for the Plan Year. The denominator of the fraction is equal to the sum of (A) the total account balance of the Employee attributable to Contribution Percentage Amounts as of the beginning of the Plan Year, plus (B) the Contribution Percentage Amounts for the Plan Year. (2) The allocable gain or loss for the period between the end of the Plan Year and the date of correction shall not be taken into consideration when determining the income allocable to Excess Aggregate Contributions. (E) The distribution of Excess Aggregate Contributions (and income) made to Family Members of a family group that was combined for purposes of determining a Highly Compensated Employee's Actual Contribution Ratio shall be allocated among Family Members in proportion to the Contribution Percentage Amounts (including any amounts required to be taken into account under subparagraphs (B)(1) and (B)(2) of Section 1.5 of the Plan) of each Family Member that are combined to determine the Actual Contribution Ratio. 33 36 (F) In the event of a complete termination of the Plan during the Plan Year in which an Excess Aggregate Contribution arose, the corrective distribution or forfeiture shall be made as soon as administratively feasible after the date of termination of the Plan, but in no event later than 12 months after the date of termination. (G) If the entire account balance of a Highly Compensated Employee is distributed during the Plan Year in which the Excess Aggregate Contribution arose, the distribution shall be deemed to have been a corrective distribution of Excess Aggregate Contributions (and income) to the extent that a corrective distribution would otherwise have been required. (H) Any distribution of less than the entire amount of Excess Aggregate Contributions (and income) shall be treated as a pro-rata distribution of Excess Aggregate Contributions and allocable income or loss. (I) In no case may the amount of Excess Aggregate Contributions distributed to a Highly Compensated Employee exceed the amount of Employee Contributions and Matching Contributions made on behalf of the Highly Compensated Employee for the Plan Year. (J) A distribution of Excess Aggregate Contributions (and income) shall be made under this section without regard to any notice or consent otherwise required under sections 411(a)(11) and 417 of the Code. 4.15 CORRECTIVE DISTRIBUTION OF EXCESS DEFERRALS. Notwithstanding any other provision of the Plan, Excess Deferrals, plus any income and minus any loss allocable thereto, may be distributed to any Participant to whose account Excess Deferrals were allocated for the individual's taxable year. Such a corrective distribution shall be made in accordance with this section. (A) Correction of Excess Deferrals After Taxable Year. (1) Not later than the March 15 following the close of a Participant's taxable year, the Participant may notify the Plan of the amount of Excess Deferrals received by the Plan during that taxable year. The notification shall be in writing, shall specify the Participant's Excess Deferrals, and shall be accompanied by the Participant's written statement that if such amounts are not distributed, these amounts, when added to all other Elective Deferral Contributions made on behalf of the Participant during the taxable year, shall exceed the dollar limitation specified in section 402(g) of the Code. (2) The Participant is deemed to have notified the Plan of Excess Deferrals if, not later than the March 1 following the close of a Participant's taxable year, the Employer notifies the Plan on behalf of the Participant of the Excess Deferrals. Such Excess Deferrals shall be calculated by taking into 34 37 account only Elective Deferral Contributions under the Plan and any other plans of the Employer. (3) Not later than the April 15 following the close of the taxable year, the Plan shall distribute to the Participant the amount of Excess Deferrals designated under subparagraphs (1) or (2) above. (B) Correction of Excess Deferrals During the Taxable Year. A Participant who has an Excess Deferral during a taxable year may receive a corrective distribution during the same year. Such a corrective distribution shall be made if: (1) The Participant designates the distribution as an Excess Deferral. The designation shall be made in the same manner as the notification described in subparagraph (A)(1) of this section. The Participant will be deemed to have designated the distribution as an Excess Deferral if the Employer makes the designation on behalf of the Participant to the extent that the Participant has Excess Deferrals for the taxable year calculated by taking into account only Elective Deferral Contributions to the Plan and other plans of the Employer. (2) The corrective distribution is made after the date on which the Plan received the Excess Deferral. (3) The Plan designates the distribution as a distribution of Excess Deferrals. (C) If the Participant provides the Employer with satisfactory evidence and written notice to demonstrate that all Elective Deferral Contributions by the participant in this Plan and any other qualified plan exceed the applicable limit under section 402(g) of the Code for such individual's taxable year, then the Plan Administrator may (but is not required to) distribute sufficient Elective Deferral Contributions (not to exceed the amount of Elective Deferral Contributions actually contributed on behalf of the Participant to this Plan during the Participant's taxable year) from Plan to allow the Participant to comply with the applicable limit. The evidence provided by the Participant must establish clearly the amount of Excess Deferrals. The Participant must present this evidence to the Plan Administrator by the March 1 following the end of the calendar year in which the Excess Deferrals occurred. (D) Income Allocable to Excess Deferrals. The income allocable to Excess Deferrals is equal to tile sum of allocable gain or loss for the taxable year of the individual and shall be determined as follows: (1) The gain or loss allocable to Excess Deferrals is determined by multiplying the income for the taxable year allocable to Elective Deferral Contributions by a fraction. The numerator of the fraction is the Excess Deferrals by the Employee for the taxable year. The denominator of the fraction is equal to the sum of: 35 38 (a) The total account balance of the Employee attributable to Elective Deferral Contributions as of the beginning of the Plan Year, plus (b) The Employee's Elective Deferral Contributions for the taxable year. (2) The income allocable to Excess Deferrals shall not include the allocable gain or loss for the period between the end of the taxable year and the date of distribution. (E) No Employee or Spousal Consent Required. A corrective distribution of Excess Deferrals (and income) shall be made without regard to any notice or consent otherwise required under sections 411(a)(11) and 417 of the Code. (F) Any Matching Contributions or Qualified Matching Contributions that relate to the Excess Deferral being distributed shall be forfeited. The Matching Contribution so forfeited shall be in proportion to the applicable Employee's vested and nonvested interest in Matching Contributions under the Plan for the Plan Year in which the Excess Deferral arose. Forfeitures of Matching Contributions or Qualified Matching Contributions that relate to Excess Deferrals shall be applied to reduce Employer contributions or pay Plan expenses. 4.16 QUALIFIED CONTRIBUTIONS. In lieu of distributing Excess Contributions as provided in Section 4.13 of the Plan, or Excess Aggregate Contributions as provided in Section 4.14 of the Plan, the Employer may take the actions specified below in order to satisfy the Actual Deferral Percentage Test or the Actual Contribution Percentage Test, or both, pursuant to the regulations under the Code. (A) At the election of the Employer, Qualified Nonelective Contributions or Qualified Matching Contributions, or both, may be taken into account as Elective Deferral Contributions for purposes of calculating the Actual Deferral Ratio of a Participant. The amount of Qualified Nonelective Contributions or Qualified Matching Contributions made under the terms of this Plan and taken into account as Elective Deferral Contributions for purposes of calculating the Actual Deferral Ratio, subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be such Qualified Nonelective Contributions or Qualified Matching Contributions, or both, that are needed to meet the Actual Deferral Percentage Test. (B) At the election of the Employer, Qualified Nonelective Contributions or Elective Deferral Contributions, or both, may be taken into account as Matching Contributions for purposes of calculating the Actual Contribution Ratio of a Participant. 36 39 (C) The amount of Qualified Nonelective Contributions or Elective Deferral Contributions made under the terms of this Plan and taken into account for purposes of calculating the Actual Contribution Ratio, subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be such Qualified Nonelective Contributions or Elective Deferral Contributions, or both, that are needed to meet the Actual Contribution Percentage Test. (D) Any Qualified Nonelective Contribution, Qualified Matching Contribution, and Elective Deferral Contribution taken into account under paragraphs (A) or (B) must be allocated to the Employee's Account as of a date within the Plan Year in which the Excess Contribution or Excess Aggregate Contribution arose and must be paid to the Plan no later than the 12-month period immediately following the Plan Year to which the contribution relates. 4.17 MULTIPLE USE OF ALTERNATIVE LIMITATION. (A) Multiple use of the alternative limitation occurs if all of the conditions of this paragraph (A) are satisfied: (1) One or more Highly Compensated Employee of the Employer are eligible employees in both a cash or deferred arrangement subject to section 401(k) and a plan maintained by the Employer subject to section 401(m). (2) The sum of the Actual Deferral Percentage of the entire group of eligible Highly Compensated Employees under the arrangement subject to section 401(k) and the Actual Contribution Percentage of the entire group of eligible Highly Compensated Employees under the Plan subject to section 401(m) exceeds the aggregate limit of paragraph (C) of this section. (3) Actual Deferral Percentage of the entire group of eligible Highly Compensated Employees under the arrangement subject to section 401(k) exceeds the amount described in section 401(k)(3)(A)(ii)(I). (4) The Actual Contribution Percentage of the entire group of eligible Highly Compensated Employees under the arrangement subject to section 401(m) exceeds the amount described in section 401(m)(2)(A)(i). (B) For purposes of this section, the aggregate limit is the greater of: (1) The sum of - (a) 1.25 times the greater of the relevant Actual Deferral Percentage or the relevant Actual Contribution Percentage, and (b) Two percentage points plus the lesser of the relevant Actual Deferral Percentage or the relevant Actual Contribution 37 40 Percentage. In no event, however, may this amount exceed twice the lesser of the relevant Actual Deferral Percentage or the Actual Contribution Percentage; or (2) The sum of - (a) 1.25 times the lesser of the relevant Actual Deferral Percentage or the relevant Actual Contribution Percentage, and (b) Two percentage points plus the greater of the relevant Actual Deferral Percentage or the relevant Actual Contribution Percentage. In no event, however, may this amount exceed twice the greater of the relevant Actual Deferral Percentage or the relevant Actual Contribution Percentage. (C) For purposes of paragraph (B) of this section, the term "relevant Actual Deferral Percentage" means the Actual Deferral Percentage of the group of Nonhighly Compensated Employees under the arrangement subject to section 401(k) for the Plan Year, and the term "relevant Actual Contribution Percentage" means the Actual Contribution Percentage of the group of Nonhighly Compensated Employees eligible under the Plan subject to section 401(m) for the Plan Year beginning with or within the Plan Year of the arrangement subject to section 401(k). (D) The Actual Deferral Percentage and Actual Contribution Percentage of the group of eligible Highly Compensated Employees are determined after use of Qualified Nonelective Contributions and Qualified Matching Contributions to meet the requirements of the Actual Deferral Percentage Test and after use of Qualified Nonelective Contributions and Elective Deferral Contributions to meet the requirements of the Actual Contribution Percentage Test. The Actual Deferral Percentage and Actual Contribution Percentage of the group of Highly Compensated Employees are determined after any corrective distribution or forfeiture of Excess Deferrals, Excess Contributions, or Excess Aggregate Contributions and after recharacterization of Excess Contributions required without regard to this section. Only plans and arrangements maintained by the Employer are taken into account under paragraph (B). If the Employer maintains two or more cash or deferred arrangements subject to section 401(k) that must be mandatorily disaggregated pursuant to section 401(k)- 1 (g)(11)(iii) multiple use is tested separately with respect to each plan. (E) If multiple use of the alternative limit occurs with respect to two or more plans or arrangements maintained by the Employer, it shall be corrected by reducing the Actual Contribution Percentage of Highly Compensated Employees in the manner described in paragraph (F) of this section. Instead of making this reduction, the Employer may eliminate the multiple use of the alternative limitation by making Qualified Nonelective Contributions to the Plan. 38 41 (F) The amount of the reduction by which each Highly Compensated Employee's Actual Contribution Ratio is reduced shall be treated as an Excess Aggregate Contribution. The Actual Contribution Percentage of all Highly Compensated Employees under the plan subject to reduction shall be reduced so that there is no multiple use of the alternative limitation. 39 42 ARTICLE V. LIMITATIONS ON ALLOCATIONS 5.1 LIMITATIONS ON ALLOCATIONS. Definitions - The following definitions are atypical terms which refer only to terms used in the Limitations on Allocations Sections of this Article V. (A) Annual Additions. The term Annual Additions shall mean the sum of the following amounts allocated on behalf of a Participant for a Limitation Year: (1) all contributions made by the Employer which shall include: - Elective Deferral Contributions, if any; - Matching Contributions, if any; - Qualified Matching Contributions, if any; - Nonelective Contributions, if any; - Qualified Nonelective Contributions, if any; (2) all Forfeitures, if any; (3) all Employee Contributions, if any. For the purposes of this Article, Excess Amounts reapplied under Section 5.2 (D) shall also be included as Annual Additions. Also, for the purposes of this Article, Employee Contributions are determined without regard to deductible employee contributions within the meaning of section 72(o)(5) of the Code. Amounts allocated after March 31, 1984, to an individual medical account, as defined in Internal Revenue Code section 415(l)(1), which is part of a defined benefit plan maintained by the Employer, are treated as Annual Additions to a defined contribution plan. Also, amounts derived from contributions paid or accrued attributable to post-retirement medical benefits allocated to the separate account of a key employee, as defined in Internal Revenue Code section 419A(d)(3), under a welfare benefit fund, as defined in Internal Revenue Code section 419(e), maintained by the Employer, are treated as Annual Additions to a defined contribution plan. Contributions do not fail to be Annual Additions merely because they are Excess Deferrals, Excess Contributions or Excess Aggregate Contributions or merely because Excess Contributions or Excess Aggregate Contributions are corrected through distribution or recharacterization. Excess Deferrals that are distributed in accordance with Section 4.15 of the Plan are not Annual Additions. 40 43 Forfeited Matching Contributions that are forfeited because the contributions to which they relate are treated as Excess Aggregate Contributions, Excess Contributions, or Excess Deferrals and that are reallocated to the Participant Accounts of other Participants for the Plan Year in which the forfeiture occurs, are treated as Annual Additions for the Participants to whose accounts they are reallocated and for the Participants from whose accounts they are forfeited. (B) Compensation. The term Compensation means wages within the meaning of section 3401(a) of the Code for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in section 3401(a)(2) of the Code). For Limitation Years beginning after December 31, 1991, for purposes of applying the limitations of this article, Compensation for a Limitation Year is the Compensation actually paid or made available during such Limitation Year. (C) Defined Contribution Dollar Limitation. The term Defined Contribution Dollar Limitation shall mean $30,000 or, if greater, one-fourth of the defined benefit dollar limitation set forth in Internal Revenue Code section 415(b)(1) as in effect for the Limitation Year. (D) Employer. The term Employer shall mean the Employer that adopts this Plan. In the case of a group of employers which constitutes a controlled group of corporations (as defined in Internal Revenue Code section 414(b) as modified by section 415(h)), or which constitutes trades or business (whether or not incorporated) which are under common control (as defined in section 414(c) as modified by section 415(h)), or affiliated service groups (as defined in section 414(m)) of which the adopting Employer is a part, all such employers shall be considered a single Employer for purposes of applying the limitations of this Article. (E) Excess Amount. The term Excess Amount shall mean the excess of the Participant's Annual Additions for the Limitation Year over the Maximum Permissible Amount. (F) Limitation Year. The term Limitation Year shall mean the Plan Year. (G) Maximum Permissible Amount. The term Maximum Permissible Amount shall mean the lesser of (1) the Defined Contribution Dollar Limitation, or (2) 25% of the Participant's Compensation for the Limitation Year. If a short Limitation Year is created because of an amendment changing the Limitation Year to a different period of 12 consecutive months, the Maximum Permissible Amount for the short Limitation Year will be the lesser of (1) the Defined Contribution Dollar 41 44 Limitation multiplied by a fraction, the numerator of which is the number of months in the short Limitation Year, and the denominator of which is 12, or (2) 25% of the Participant's Compensation for the short Limitation Year. 5.2 LIMITATIONS ON ALLOCATIONS. If the Employer does not maintain any qualified plan in addition to this Plan: (A) The amount of Annual Additions which may be allocated under this Plan on a Participant's behalf for a Limitation Year shall not exceed the lesser of the Maximum Permissible Amount or any other limitation contained in this Plan. (B) Prior to the determination of the Participant's actual Compensation for a Limitation Year, the Maximum Permissible Amount may be determined on the basis of the Participant's estimated annual Compensation. Such Compensation shall be determined on a reasonable basis and shall be uniformly determined for all Participants similarly situated. Any employer contributions based on estimated annual Compensation shall be reduced by any Excess Amounts carried over from prior years. (C) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for such Limitation Year shall be determined on the basis of the Participant's actual Compensation for such Limitation Year. In the event a Participant separates from the Service of the Employer prior to the end of the Limitation Year, the Maximum Permissible Amount for such Participant shall be determined prior to any distribution of his Participant's Account on the basis of his actual Compensation. Any Excess Amounts shall be disposed of in accordance with Section 5.2 (D). (D) If there is an Excess Amount with respect to a Participant for a Limitation Year as a result of a reasonable error in estimating the Participant's annual compensation, an allocation of forfeitures, a reasonable error in determining the amount of elective deferrals (within the meaning of section 402(g)(3) of the Code) that may be made with respect to any individual under the limits of section 415 of the Code, or under other limited facts and circumstances which the commissioner finds justified, such Excess Amount shall be disposed of as follows: (1) Any Employee Contributions (including earnings and losses thereon) shall be returned to the Participant, to the extent that the return would reduce the Excess Amount. This distribution shall be made as soon as administratively feasible after the Excess Amount is determined. Employee Contributions so returned shall be disregarded for purposes of the Actual Contribution Percentage Test. (2) If, after the application of subparagraph (1), an Excess Amount still exists, (excluding Elective Deferral Contributions) such Excess Amount shall be held unallocated in a suspense account for the Limitation Year and 42 45 allocated and reallocated in the next Limitation Year to all Participants in the Plan. The excess amount must be used to reduce Employer Contributions for the next Limitation Year (and succeeding Limitation Years, as necessary) for all of the Participants in the Plan. For purposes of this subparagraph, the Excess Amount may not be distributed to Participants or former Participants. (3) If, after the application of subparagraph (2) an Excess Amount still exists, then the Participant's Elective Deferral Contributions (including earnings and losses thereon) allocated for the Limitation Year shall be returned to the Participant to the extent that. an Excess Amount exists. This distribution shall be made as soon as administratively feasible after the Excess Amount is determined. Any Elective Deferral Contributions returned under this paragraph shall be disregarded for purposes of the Actual Deferral Percentage Test. (4) Alternatively, if after the application subparagraph (1) an Excess Amount still exists, the Plan Administrator may elect to dispose of the Excess Amount by applying the procedure in subparagraph (3) before applying the procedure in subparagraph (2). If the Plan Administrator makes this election, the Plan Administrator must apply it uniformly to all Participants in a Limitation Year. (5) If a suspense account is in existence at any time during a Limitation Year pursuant to this section, it will not participate in the allocation of investment gains or losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participants' Accounts before any Employer Contributions or Employee Contributions which would constitute Annual Additions may be made to the Plan for that Limitation Year. 5.3 LIMITATIONS ON ALLOCATIONS. If the Employer maintains one or more defined contribution plans in addition to this Plan: (A) The amount of Annual Additions which may be allocated under this Plan on a Participant's behalf for a Limitation Year, shall not exceed the lesser of: (1) The Maximum Permissible Amount, reduced by the sum of any Annual Additions allocated to the Participant's Account for the same Limitation Year under this Plan and such other defined contribution plan; or (2) Any other limitation contained in this Plan. Prior to the determination of the Participant's actual Compensation for the Limitation Year, the amounts referred to in Subsection (1) above may be 43 46 determined on the basis of the Participant's estimated annual Compensation for such Limitation Year. Such estimated annual Compensation shall be determined for all Participants similarly situated. Any contribution made by the Employer based on estimated annual Compensation shall be reduced by any Excess Amounts carried over from prior years, if applicable. (B) As soon as is administratively feasible after the end of the Limitation Year, the amounts referred to in Section 5.3 (A) shall be determined on the basis of the Participant's actual Compensation for such Limitation Year. (C) If amounts are contributed to a Participant's Account under this Plan on an allocation date which does not coincide with the allocation date(s) for all such other plans, and if a Participant's Annual Additions under this Plan and all such other plans result in an Excess Amount, such Excess Amount shall be deemed to have derived from those contributions last allocated. (D) If an Excess Amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the Excess Amount attributable to this Plan will be the product of (1) and (2) below: (1) The total Excess Amount allocated as of such date (including any amount which would have been allocated but for the limitations of Internal Revenue Code section 415). (2) The ratio of (1) the amount allocated to the Participant as of such date under this Plan, divided by (2) the total amount allocated as of such date under all qualified defined contribution plans (determined without regard to the limitations of Internal Revenue Code section 415). (E) Any Excess Amounts attributed to this Plan shall be disposed of as provided in Section 5.2 (D). 5.4 LIMITATIONS ON ALLOCATIONS. If the Employer maintains a defined benefit plan in addition to this Plan: (A) If an individual is a Participant at any time in both this Plan and a defined benefit plan maintained by the Employer, the sum of the Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction for any year may not exceed 1.0. In the event that the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction exceeds 1.0, the Defined Contribution Plan Fraction will be reduced until the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction does not exceed 1.0. 44 47 If an individual was a Participant in this Plan or in any other defined contribution plan maintained by the Employer which was in existence on July 1, 1982, the numerator of the Defined Contribution Plan Fraction will be adjusted if the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the Fractions over 1.0 times (2) the denominator of the Defined Contribution Plan Fraction, will be permanently subtracted from the numerator of the Defined Contribution Plan Fraction. The adjustment is calculated using the Fractions as they would be computed as of the later of the end of the last Limitation Year beginning before January 1, 1983, or June 30, 1983. This adjustment also will be made if at the end of the last Limitation Year beginning before January 1, 1984, the sum of the Fractions exceeds 1.0 because of accruals or additions that were made before the limitations of this Article became effective to any plans of the Employer in existence on July 1, 1982. In addition, if an individual was a Participant in this Plan or in any other defined contribution plan maintained by the Employer which was in existence on May 6, 1986, the numerator of the Defined Contribution Plan Fraction will be adjusted if the Employer's defined benefit plan was also in existence on May 6, 1986, and the sum of the Defined Contribution Plan Fraction and the Defined Benefit Plan Fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of (1) the excess of the sum of the Fractions over 1.0 times (2) the denominator of the Defined Contribution Plan Fraction, will be permanently subtracted from the numerator of the Defined Contribution Plan Fraction. This adjustment is calculated using the Fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987. In the event that a Participant's accrued benefit as of December 31, 1986, under the defined benefit plan exceeds the defined benefit dollar limitation set forth in Internal Revenue Code section 415(b)(1), the amount of that accrued benefit shall be used in both the numerator and the denominator of the Defined Benefit Plan Fraction in making this adjustment. For purposes of this Section 5.4, all defined benefit plans of the Employer, whether or not terminated, will be treated as one defined benefit plan and all defined contribution plans of the Employer, whether or not terminated, will be treated as one defined contribution plan. (B) The Defined Benefit Plan Fraction for any year is a fraction, the numerator of which is the Participant's Projected Annual Benefit under the defined benefit plan (determined as of the close of the Limitation Year), and the denominator of which is the lesser of (1) or (2) below: (1) 1.25 times the dollar limitation in effect under Internal Revenue Code section 415(b)(1)(A) on the last day of the Limitation Year; or 45 48 (2) 1.4 times the amount which may be taken into account under Internal Revenue Code section 415(b)(1)(B) with respect to such Participant for the Limitation Year. Notwithstanding the above, if the Participant was a participant in one or more defined benefit plans maintained by the Employer which were in existence on July 1, 1982, the denominator of the Defined Benefit Plan Fraction will not be less than 125% of the sum of the annual benefits under such plans which the Participant had accrued as of the later of the end of the last Limitation Year beginning before January 1, 1983 or June 30, 1983. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Internal Revenue Code section 415 as in effect at the end of the 1982 Limitation Year. (C) A Participant's Projected Annual Benefit is equal to the annual benefit to which the Participant would be entitled under the terms of the defined benefit plan based upon the following assumptions: (1) The Participant will continue employment until reaching Normal Retirement Age as determined under the terms of the plan (or current age, if that is later); (2) The Participant's Compensation for the Limitation Year under consideration will remain the same until the date the Participant attains the age described in sub-division (1) of this subparagraph; and (3) All other relevant factors used to determine benefits under the plan for the Limitation Year under consideration will remain constant for all future Limitation Years. (D) The Defined Contribution Plan Fraction for any Limitation Year is a fraction, the numerator of which is the sum of the Annual Additions to the Participant's Accounts in such Limitation Year and for all prior Limitation Years, and the denominator of which is the lesser of (1) or (2) below for such Limitation Year and for all prior Limitation Years of such Participant's employment (assuming for this purpose, that Internal Revenue Code section 415(c) had been in effect during such prior Limitation Years): (1) 1.25 times the dollar limitation in effect under Internal Revenue Code section 415(c)(1)(A) on the last day of the Limitation Year; or (2) 1.4 times the amount which may be taken into account under Internal Revenue Code section 415(c)(1)(B) with respect to such Participant for the Limitation Year. 46 49 For the purposes of determining these Limitations on Allocations, any non-deductible employee contributions made under a defined benefit plan will be considered to be a separate defined contribution plan and will be considered to be part of the Annual Additions for the appropriate Limitation Year. Annual Additions for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat all Employee Contributions as Annual Additions. (E) Notwithstanding the foregoing, at the election of the Plan Administrator, in computing the Defined Contribution Plan Fraction with respect to any Plan Year ending after December 31, 1982, the denominator shall be an amount equal to the product of: (1) The denominator of the Defined Contribution Plan Fraction, computed in accordance with the rules in effect for the Plan Year ending in 1982; and (2) the transition fraction, which is a fraction (a) the numerator of which is the lesser of: (i) $51,875, or (ii) 1.4 times 25% of the Compensation of the Participant for the Plan Year ending in 1981, and (b) the denominator of which is the lesser of (i) $41,500, or (ii) 25% of the Compensation of the Participant for the Plan Year ending in 1981. 47 50 ARTICLE VI. DISTRIBUTION OF BENEFITS 6.1 DISTRIBUTIONS IN GENERAL. Each Participant may elect, with his Spouse's consent if required, a distribution in the form of an Annuity, a single sum cash payment, or a combination of the above. All distributions are subject to the provisions of Article VIII, Joint and Survivor Annuity Requirements. 6.2 TIMING OF DISTRIBUTIONS. If the value of a Participant's Vested Interest exceeds (or at the time of any prior distribution exceeded) $3,500 and is immediately distributable (as defined in Section 8.5), the Participant and his Spouse, if required, must consent to the distribution before it is made. Instead of consenting to a distribution, the Participant may make a written election to defer the distribution for a specified period of time ending no later than the Participant's attainment of age 62. A Participant whose actual retirement date is on or after his Normal Retirement Date may make a written election to defer the distribution for a specified period of time subject to the requirements of Section 6.4. All such elections to defer shall be irrevocable. If the Participant and Spouse, if applicable, do not consent to a distribution or if no election to defer is made within 90 days after receiving a written explanation of the optional forms of benefit available pursuant to Income Tax Regulation 1.411 (a)(11), all benefits shall be deferred to, and distribution shall be made as of the Participant's attainment of age 62. The distribution will be made in the form of a single sum cash payment (in the case of a Participant's meeting the requirements of Section 8.1 (A)) or in accordance with Section 8.2 (in the case of a Participant's not meeting the requirements of Section 8.1(A)), unless the Participant elects another form of benefit within the 90-day period prior to the date the distribution is made. If the value of a Participant's Vested Interest is $3,500 or less at the time it becomes payable, the distribution shall be made in the form of a single sum cash payment and shall be made upon such Participant's Termination of Employment. Such a distribution may not be deferred. Unless the Participant elects otherwise, the payment of benefits under this Plan to the Participant shall begin not later than the 60th day after the close of the Plan Year in which the later of (A) or (B), below, occurs: (A) the date on which the Participant attains his Normal Retirement Age or age 62, if later; or (B) the date on which the Participant terminates his Service (including Termination of Employment, death or Disability) with the Employer. 48 51 Notwithstanding the foregoing, the failure of a Participant and Spouse, if required, to consent to a distribution while a benefit is immediately distributable shall be deemed to be an election to deter commencement of payment of any benefit sufficient to satisfy the above paragraph. 6.3 DISTRIBUTION LIMITATION. Elective Deferral Contributions, Qualified Nonelective Contributions and Qualified Matching Contributions, and income allocable to each, are not distributable to a Participant or a Beneficiary, in accordance with such Participant's or Beneficiary's election, earlier than upon the Participant's Termination of Employment, death, or disability. Such amounts may also be distributed upon: (A) Termination of the Plan without the establishment or maintenance of a successor plan. For purposes of this paragraph, a successor plan is any other defined contribution plan maintained by the same employer. However, if fewer than two percent of the Employees who are eligible under the Plan at the time of its termination are or were eligible under another defined contribution plan at any time during the 24 month period beginning 12 months before the time of the termination, the other plan is not a successor plan. The term "defined contribution plan" means a plan that is a defined contribution plan as defined in section 414(i) of the Code, but does not include an employee stock ownership plan as defined in section 4975(e) or 409 of the Code or a simplified employee pension as defined in section 408(k) of the Code. A plan is a successor plan only if it exists at the time the Plan is terminated or within the period ending 12 months after distribution of all assets from the Plan. After March 31, 1988, a distribution may be made under this paragraph only if it is a lump sum distribution. The term "lump sum distribution" has the same meaning provided in section 402(e)(4) of the Code, without regard to subparagraphs (A)(i) through (iv), (B), and (H) of that section. (B) The disposition by the Employer to an unrelated corporation of substantially all the assets (within the meaning of section 409(b)(2) of the Code) used in the trade or business of the Employer if the Employer continues to maintain this Plan after the disposition. However, a distribution may be made under this paragraph only to an Employee who continues employment with the corporation acquiring such assets. In addition, this requirement is satisfied only if the purchaser does not maintain the Plan after the disposition. A purchaser maintains the plan of the seller if it adopts the plan or otherwise becomes an employer whose employees accrue benefits under the Plan. A purchaser also maintains the Plan if the Plan is merged or consolidated with, or any assets or liabilities are transferred from the Plan to a 49 52 plan maintained by the purchaser in a transaction subject to section 414(l)(1) of the Code. A purchaser is not treated as maintaining the Plan merely because the Plan that it maintains accepts rollover contributions of amounts distributed by the Plan. For purposes of this paragraph, the sale of "substantially all" the assets used in a trade or business means the sale of at least 85 percent of the assets. After March 31, 1988, a distribution may be made under this paragraph only if it is a lump sum distribution. The term "lump sum distribution" has the same meaning provided in section 402(e)(4) of the Code, without regard to subparagraphs, (A)(i) through (iv), (B), and (H) of that section. (C) The disposition by the Employer to an unrelated entity or individual of the Employer's interest in a subsidiary (within the meaning of section 409(d)(3) of the Code) if the Employer continues to maintain this Plan. However, a distribution may be made under this paragraph only to an Employee who continues employment with such subsidiary. In addition, this requirement is satisfied only if the purchaser does not maintain the Plan after the disposition. A purchaser maintains the plan of the seller if it adopts the plan or otherwise becomes an employer whose employees accrue benefits under the Plan. A purchaser also maintains the Plan if the Plan is merged or consolidated with, or any assets or liabilities are transferred from the Plan to a plan maintained by the purchaser in a transaction subject to section 414(l)(1) of the Code. A purchaser is not treated as maintaining the Plan merely because the Plan that it maintains accepts rollover contributions of amounts distributed by the Plan. After March 31, 1988, a distribution may be made under this paragraph only if it is a lump sum distribution. The term "lump sum distribution" has the same meaning provided in section 402(e)(4) of the Code, without regard to subparagraphs (A)(i) through (iv), (B), and (H) of that section. (D) In the case of Elective Deferral Contributions only, the attainment of age 59-1/2, as described in Section 10.1 of the Plan. (E) In the case of Elective Deferral Contributions only, the hardship of the Participant, as described in Section 10.3 of the Plan. 6.4 COMMENCEMENT OF DISTRIBUTIONS. Notwithstanding the provisions of the preceding Timing; of Distributions Section, distributions to a Participant will commence no later than the date determined in accordance with the provisions of this Section. 50 53 Distribution to a Participant must commence no later than the required beginning date. The first required beginning date of a Participant is the first day of April of the calendar year following the calendar year in which the Participant attains age 70-1/2. The required beginning date of a Participant who attains age 70-1/2 before January 1, 1988, shall be the first day of April of the calendar year following the calendar year in which the later of retirement or attainment of age 70-1/2 occurs, provided the Participant was not a 5% owner in the Plan Year ending in the year in which the Participant attained age 66-1/2 or any later Plan Year. A Participant is treated as a 5% owner for purposes of this section if such Participant is a 5% owner as defined in section 416(i) of the Code (determined in accordance with section 416 but without regard to whether the Plan is Top-Heavy). The required beginning date of a Participant who is a 5% owner during any year beginning after December 31, 1979, is the first day of April following the later of: (A) the calendar year in which the Participant attained age 70-1/2, or (B) the earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a 5% owner, or the calendar year in which the Participant retires. Once distributions have begun to a 5% owner under this section, they must continue to be distributed, even if the Participant ceases to be a 5% owner in a subsequent year. Distribution to such Participant must commence no later than the first day of April following the calendar year in which the Participant's Termination of Employment occurs. If distribution to any Participant is made in other than a single sum payment, the second payment shall be distributed no later than the December 31 following the April 1 by which the first payment was required to be distributed. Each succeeding payment shall be distributed no later than each December 31 thereafter. 6.5 DISTRIBUTION REQUIREMENTS. (A) Except as otherwise provided in Article VIII, the requirements of this Section shall apply to my distribution of a Participant's Accrued Benefit. (B) All distributions required under this Article shall be determined and made in accordance with the Income Tax Regulations under section 401(a)(9), including the minimum distribution incidental benefit requirement of section 1.401(a)(9)-2 of the regulations. (C) Limits on Settlement Options. Distributions, if not made in a lump sum, may only be made over one of the following periods (or a combination thereof): (1) the life of the Participant, 51 54 (2) the life of the Participant and a designated Beneficiary, (3) a period certain not extending beyond the life expectancy of the Participant, or (4) a period certain not extending beyond the joint and last survivor expectancy of die Participant and a designated Beneficiary. (D) Minimum Amounts to be Distributed. If the Participant's entire Vested Interest is to be distributed in other than a lump sum, then the amount to be distributed each year must be at least an amount equal to the quotient obtained by dividing the Participant's entire Vested Interest by the life expectancy of the Participant or the joint and last survivor expectancy of the Participant and designated Beneficiary. Life expectancy and joint and last survivor expectancy are computed by the use of the return multiples contained in section 1.72-9 of the Income Tax Regulations. For purposes of this computation, a Participant's life expectancy may be recalculated no more frequently than annually; however, the life expectancy of a Beneficiary other than the Participant's Spouse may not be recalculated. (1) If the Participant's Spouse is not the designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the life expectancy of the Participant. (2) For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first distribution calendar year, shall not be less than the quotient obtained by dividing the Participant's benefit by the lesser of (1) the applicable life expectancy or (2) if the Participant's Spouse is not the designated Beneficiary, the applicable divisor determined from the table set forth in Q&A-4 of section 1.401(a)(9)-2 of the Income Tax Regulations. Distributions after the death of the Participant shall be distributed using the applicable life expectancy in subsection (d)(1) above as the relevant divisor without regard to regulations section 1.401(a)(9)-2. (3) The minimum distribution required for the Participant's first distribution calendar year must be made on or before the Participant's required beginning date. The minimum distribution for other calendar years, including the minimum distribution for die distribution calendar year in which the Employee's required beginning date occurs, must be made on or before December 31 of that distribution calendar year. 6.6 NON-TRANSFERABLE. The Participant's right to any Annuity payments, benefits, and refunds is not transferable and shall be free from the claims of all creditors to the fullest extent permitted by law. 52 55 6.7 DEATH DISTRIBUTION PROVISIONS. If the Participant dies before distribution of his Vested interest commences, the following provisions shall apply: (A) If a distribution is to be made to a Beneficiary other than the Surviving Spouse: (1) If the present value of the Participant's Vested Interest exceeds (or at the time of any prior distribution exceeded) $3,500, unless the Beneficiary elects another form of distribution, that portion of the Participant's Vested Interest payable to the Beneficiary will be distributed in the form of a single sum cash payment within a reasonable period of time after the Plan Administrator is notified of the Participant's death. (2) If the present value of the Participant's Vested Interest is $3,500 or less at the time it becomes payable, the distribution shall always be made in the form of a single sum cash payment and shall be paid within a reasonable period of time after the Plan Administrator is notified of the Participant's death. (B) If the distribution is to be made to a Beneficiary who is the Surviving Spouse, such distribution will be made in accordance with the following: (1) If the Participant had never elected a life Annuity form of distribution under the Plan: (a) If the present value of the Participant's Vested Interest exceeds (or at the time of any prior distribution exceeded) $3,500, unless the surviving spouse elects another form of distribution, that portion of the Participant's Vested Interest payable to the Surviving Spouse will be distributed in the form of a single sum cash payment within a reasonable period of time after the Plan Administrator is notified of the Participant's death. (b) If the present value of the Participant's Vested Interest payable to the Surviving Spouse is $3,500 or less at the time it becomes payable, the distribution shall always be made in the form of a single sum cash payment and shall be made within a reasonable period of time after the Plan Administrator is notified of the Participant's death. (2) If the Participant had previously elected a life Annuity form of distribution under the Plan: (a) If the present value of the Participant's Vested Interest exceeds (or at the time of any prior distribution exceeded) $3,500 and is immediately distributable (as defined in Section 8.5), the Surviving Spouse must consent to the distribution before it is made. If the 53 56 Surviving Spouse does not consent to a distribution, all benefits shall be deferred to a date that complies with the terms of Section 6.8 (B). The distribution shall be made in accordance with the provisions of Section 83. (b) If the present value of the Participant's Vested Interest is $3,500 or less at the time it becomes payable, the distribution shall always be made in the form of a single sum cash payment and shall be paid within a reasonable period of time after the Plan Administrator is notified of the Participant's death. 6.8 DEATH DISTRIBUTION COMMENCEMENT DATE. Upon the death of the Participant, the following distribution provisions shall take effect: (A) If the Participant dies after distribution of his entire Vested Interest has commenced, the remaining portion of such Vested Interest will continue to be distributed at least as rapidly as under The method of distribution being used prior to the Participant's death. In no event shall distribution of the Participant's remaining Vested Interest be made in a lump sum after the Participant's death unless such distribution is consented to, in writing, by the Participant's Surviving Spouse, if any. (B) If the Participant dies before distribution of his Vested Interest commences, the Participant's entire Vested Interest will be distributed no later than five years after the Participant's death except to the extent that an election is made to receive distributions in accordance with (1) or (2) below: (1) If any portion of the Participant's Vested Interest is payable to a designated Beneficiary, distributions may be made in substantially equal installments over the life or Life expectancy of the designated Beneficiary (or over a period not extending beyond the Life expectancy of such Beneficiary), commencing no later than one year after the Participant's death; (2) If the designated Beneficiary is the Participant's Surviving Spouse, the date distributions are required to begin in accordance with (1) above shall not be earlier than the date on which the Participant would have attained age 70-1/2. However, the Surviving Spouse may elect, at any time following the Participant's death, to defer the date on which distributions will begin until no later than the date on which the Participant would have attained age 70-1/2 and, if the Spouse dies before payments begin, subsequent distributions shall be made as if the Spouse had been the Participant. 54 57 (C) For purposes of (B) above, payments will be calculated by use of the return multiples specified in section 1.72-9 of the Income Tax Regulations. Life expectancy of a Surviving Spouse may be recalculated annually; however, in the case of any other designated Beneficiary, such life expectancy will be calculated at the time payment first commences without further recalculation. (D) For purposes of this Section (Death Distribution Commencement Date) any amount paid to a child of the Participant will be treated as if it had been paid to the Surviving Spouse if the amount becomes payable to the Surviving Spouse when the child reaches the age of majority. 6.9 TRANSITIONAL RULE. (A) Notwithstanding the other requirements of this Article and subject to the requirements of Article VII, distribution on behalf of any Employee may be made in accordance with all of the following requirements (regardless of when such distribution commences): (1) The distribution by the Plan is one which would not have disqualified such Plan under Internal Revenue Code section 401(a)(9) as in effect prior to amendment by the Deficit Reduction Act of 1984. (2) The distribution is in accordance with a method of distribution designated by the Employee whose interest in the trust is being distributed or, if the Employee is deceased, by a Beneficiary of such Employee. (3) Such designation was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984. (4) The Employee had accrued a benefit under the Plan as of December 31, 1983. (5) The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority. (B) A distribution upon death will not be covered by this Transitional Rule unless the information in the designation contains the required information described above with respect to the distribution to be made upon the death of the Employee. (C) For any distribution which commences before January 1, 1984, but continues after December :31, 1983, the Employee or the Beneficiary, to whom such distribution is being made, will be presumed to have designated the method of distribution under which the distribution is being made if the method of distribution was 55 58 specified in writing and the distribution satisfies the requirements in Subsections (A)(1) and (A)(5). (D) If a designation is revoked, any subsequent distribution must satisfy the requirements of Internal Revenue Code section 401(a)(9) as amended. Any changes in the designation will be considered to be a revocation of the designation. However, the mere substitution or addition of another Beneficiary (one not named in the designation) under the designation will not be considered to be a revocation of the designation, so long as such substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life). 6.10 ALTERNATE PAYEE SPECIAL DISTRIBUTION. Distributions pursuant to Section 16.8 may be made without regard to the age or employment status of the Participant. 56 59 ARTICLE VI-A DIRECT ROLLOVERS 6A.1 Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee's election under this Article, a Distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover, except as otherwise provided by the Employer's administrative procedures as permitted by regulations. In addition, a Distributee's election of a Direct Rollover shall be subject to the following requirements: (A) If the Distributee elects to have only a portion of an Eligible Rollover Distribution paid to an Eligible Retirement Plan in a Direct Rollover, that portion must be equal to at least $500. (B) If the entire amount of a Distributee's Eligible Rollover Distribution is $500 or less, the distribution may not be divided. Instead, the entire amount must either be paid to the Distributee or to an Eligible Retirement Plan in a Direct Rollover. (C) A Distributee may not elect a Direct Rollover if the Distributee's Eligible Rollover Distributions during a year are reasonably expected by the Plan Administrator to total less than $200 (or any lower minimum amount specified by the Plan Administrator). (D) A Distributee may not elect a Direct Rollover of an Offset Amount. (E) A Distributee's election to make or not make a Direct Rollover with respect to one payment in a series of periodic payments shall apply to all subsequent payments in the series, except that a Distributee shall be permitted at any time to change, with respect to subsequent payments in the series of periodic payments, a previous election to make or not make a Direct Rollover. A change of election shall be accomplished by the Distributee notifying the Plan Administrator of the change. Such notice must be in the form and manner prescribed by the Plan Administrator. 6A.2 Definitions. (A) Direct Rollover: A Direct Rollover is a payment by the plan to the Eligible Retirement Plan specified by the Distributee. (B) Distributee: A Distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's Surviving Spouse and the Employee's or former Employee's Spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, are Distributees with regard to the interest of the Spouse or former Spouse. 57 60 (C) Eligible Retirement Plan: An Eligible Retirement Plan is an individual retirement account described in section 408(a) of the code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the Surviving Spouse, an Eligible Retirement Plan is an individual retirement account or an individual retirement annuity. (D) Eligible Rollover Distribution: An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (E) Offset Amount: An Offset Amount is the amount by which a Participant's Account is reduced to repay a loan from the Plan (including the enforcement of the Plan's security interest in the Participant's Account). 58 61 ARTICLE VII. RETIREMENT BENEFITS 7.1 NORMAL RETIREMENT. A Participant who attains his Normal Retirement Age shall have a Vesting Percentage of 100%. If a Participant retires from the active Service of the Employer on his Normal Retirement Date, he shall be entitled to receive a distribution of the entire value of his Participant's Account as of his Normal Retirement Date. 7.2 LATE RETIREMENT. A Participant may continue in the Service of the Employer after his Normal Retirement Age, and in such event he shall retire on his Late Retirement Date. Such Participant shall continue as a Participant under this Plan until such Late Retirement Date. The Participant shall have a Vesting Percentage of 100% and shall be entitled to receive a distribution of the entire value of his Participant's Account as of his Late Retirement Date. 7.3 DISABILITY RETIREMENT. A Participant who retires from the Service of the Employer on account of Disability shall have a Vesting Percentage of 100% and shall be entitled to receive a distribution of the entire value of his Participant's Account as of his Disability Retirement Date. 59 62 ARTICLE VIII. JOINT AND SURVIVOR ANNUITY REQUIREMENTS 8.1 GENERAL. The provisions of this Article shall take precedence over any conflicting provision in this Plan. The provisions of this Article shall apply to any Participant who is credited with at least one Hour of Service with the Employer on or after August 23, 1984, and such other Participants as provided in Section 8.7, unless: (A) upon the death of the Participant the Participant's entire Vested Interest will be paid to the Participant's Surviving Spouse, but if there is no Surviving Spouse, or, if the Surviving Spouse has already consented in a manner conforming to a Qualified Election, then to the Participant's designated Beneficiary; (B) the Participant does not elect payments in the form of a Life Annuity and has not previously elected payments in the form of a Life Annuity under the Plan, and (C) as to the Participant, the Plan is not a direct or indirect transferee of a defined benefit plan, money purchase pension plan (including a target benefit plan), stock bonus, or profit-sharing plan which would otherwise provide for a Life Annuity form of payment to the Participant. 8.2 PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an optional form of benefit is selected pursuant to a Qualified Election within the ninety-day period ending on the first day on which all events have occurred which entitle the Participant to a benefit, a married Participant's Vested Interest will be paid in the form of a Qualified Joint and Survivor Annuity. An unmarried Participant will be provided a single Life Annuity unless the Participant elects another form of benefit during the applicable Election Period. 8.3 PAYMENT OF QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an optional form of benefit has been selected within the Election Period pursuant to a Qualified Election, if a married Participant dies before his Annuity Starting Date, then the Participant's entire Vested Interest, less the amount of any unpaid loan balance outstanding under the terms of Article X-A, shall be applied toward the purchase of an immediate Annuity for the life of the Surviving Spouse. As an alternative to receiving the benefit in this form of an Annuity, the Surviving Spouse may elect to receive a single cash payment or any other form of payment provided for in the Plan within a reasonable time after the Participant's death. 60 63 8.4 DEFINITIONS. (A) Election Period: The period which begins on the first day of the Plan Year in which the Participant attains age 35 and ends on the date of the Participant's death. If a Participant separates from Service prior to the first day of the Plan Year in which age 35 is attained, with respect to the account balance as of the date of separation, the Election Period shall begin on the date of separation. A Participant who has not attained age 35 as of the end of a Plan Year, may make a special Qualified Election to waive the Qualified Preretirement Survivor Annuity for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age 35. Such election shall not be valid unless the Participant receives a written explanation of the Qualified Preretirement Survivor Annuity in such terms as are comparable to the explanation required under Section 8.6 (A). Qualified Preretirement Survivor Annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age 35. Any new waiver on or after such date shall be subject to the full requirements of this Article. (B) Qualified Election: A waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity. Any waiver of a Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor Annuity shall not be effective unless: (a) the Participant's Spouse consents in writing to the election; (b) the election designates a specific Beneficiary, including any class of Beneficiaries or any contingent Beneficiaries, which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further spousal consent); (c) the Spouse's consent acknowledges the effect of the election; and (d) the Spouse's consent is witnessed by a Plan representative or notary public. Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity shall not be effective unless the election designates a form of benefit payment which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further spousal consent). If it is established to the satisfaction of a Plan representative that such written consent cannot be obtained because: (1) there is no Spouse; (2) the Spouse cannot be located; (3) the Participant is legally separated or has been abandoned within the meaning of local law, and the Participant has a court order to such effect; (4) of other circumstances as the Secretary of the Treasury may by regulations prescribe, 61 64 the Participant's election to waive coverage will be considered a Qualified Election. Any consent by a Spouse obtained under this provision (or establishment that the consent of a Spouse may not be obtained) shall be effective only with respect to such Spouse. A consent that permits designations by the Participant without any requirement of further consent by such Spouse must acknowledge that the Spouse has the right to limit consent to a specific Beneficiary, and a specific form of benefit where applicable, and that the Spouse voluntarily elects to relinquish either or both of such rights. A revocation of a prior waiver may be made by a Participant without the consent of the Spouse at any time before the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the Participant has received notice as provided in Section 8.6 below. (C) Qualified Joint and Survivor Annuity: An immediate Annuity for the life of the Participant with a survivor Annuity for the life of the Spouse which is not less than 50% and not more than 100% of the amount of the Annuity which is payable during the joint lives of the Participant and the Spouse and which is the amount of benefit which can be purchased with the Participant's entire Vested Interest. If no survivor Annuity percentage has been specified in an election, the percentage payable to the Spouse will be 50%. Notwithstanding the above paragraph, a Qualified Joint and Survivor Annuity for an unmarried Participant shall mean an Annuity for the life of the Participant. (D) Qualified Preretirement Survivor Annuity: A survivor Annuity for the life of the Spouse in the amount which can be purchased with the Participant's entire Vested Interest. (E) Spouse (Surviving Spouse): The Spouse or Surviving Spouse of the Participant. A former Spouse may be treated as the Spouse or Surviving Spouse to the extent provided under a Qualified Domestic Relations Order as described in Internal Revenue Code section 414(p). 8.5 CONSENT REQUIREMENTS. Only the Participant need consent to the commencement of a distribution in the form of a Qualified Joint and Survivor Annuity while the account balance is immediately distributable. Neither the consent of the Participant nor the Participant's Spouse shall be required to the extent that a distribution is required to satisfy section 401(a)(9) or section 415 of the Code. An account balance is immediately distributable if any part of the account balance could be distributed to the Participant (or Surviving Spouse) before the Participant attains (or would have attained if not deceased) the later of Normal Retirement Age or age 62. 8.6 NOTICE REQUIREMENTS. 62 65 (A) In the case of a Qualified Joint and Survivor Annuity as described in Section 8.4 (C), the Plan Administrator shall provide each Participant within a reasonable period prior to the commencement of benefits a written explanation of (i) the terms and conditions of a Qualified Joint and Survivor Annuity; (ii) the Participant's right to make and the effect of an election to waive the Qualified Joint and Survivor Annuity form of benefit; (iii) the rights of a Participant's Spouse; (iv) the right to make, and the effect of, a revocation of a previous election to waive the Qualified Joint and Survivor Annuity; (v) a general description of the eligibility conditions and other material features of the optional forms of benefit; and (vi) sufficient additional information to explain the relative values of the optional forms of benefit available to them under this Plan. (B) In the case of a Qualified Preretirement Survivor Annuity as described in Section 8.4 (D), the Plan Administrator shall provide each Participant within the period beginning on the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35, a written explanation of the Qualified Preretirement Survivor Annuity in such terms and in such manner as would be comparable to the explanation provided for meeting the requirements of Section 8.6 (A) to a Qualified Joint and Survivor Annuity. If a Participant enters the Plan after the first day of the Plan Year in which the Participant attained age 32, the Plan Administrator shall provide notice no later than the close of the second Plan Year succeeding the entry of the Participant in the Plan. If a Participant enters the Plan after he has attained age 35, the Plan Administrator shall provide notice within a reasonable period of time following the entry of the Participant in the Plan. If a Participant's Termination of Employment occurs before the Participant attains age 35, the Plan Administrator shall provide notice within one year of such Termination of Employment. 8.7 TRANSITIONAL RULES. (A) Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the previous Sections of this Article must be given the opportunity to elect to have the prior Sections of this Article relating to the Qualified Preretirement Survivor Annuity apply if such Participant is credited with at least one Hour of Service under this Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and such Participant had at least 10 Years of Service for vesting purposes when he separated from Service. 63 66 (B) Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under this Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any Service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his or her benefits paid in accordance with Section 8.7 (D). (C) The respective opportunities to elect (as described in Sections 8.7 (A) and 8.7 (B) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to said Participants. (D) Any Participant who has elected pursuant to Section 8.7 (B) of this Article and any Participant who does not elect under Section 8.7 (A) or who meets the requirements of Section 8.7 (A) except that such Participant does not have at least 10 Years of Service for vesting purposes when he separates from Service, shall have his benefits distributed in accordance with all of the following requirements if benefits would have been payable in the form of a life annuity: (1) Automatic Joint and Survivor Annuity. If benefits in the form of a life annuity become payable to a married Participant who: (a) begins to receive payments under the Plan on or after Normal Retirement Age; or (b) dies on or after Normal Retirement Age while still working for the Employer; or (c) begins to receive payments on or after the Qualified Early Retirement Age; or (d) separates from Service on or after attaining Normal Retirement Age (or the Qualified Early Retirement Age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits; then such benefits will be received under this Plan in the form of a Qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the election period. The election period must begin at least six months before the Participant attains Qualified Early Retirement Age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time. (2) Election of Early Survivor Annuity: A Participant who is employed after attaining the Qualified Early Retirement Age will be given the opportunity to elect, during the election period, to have a survivor annuity payable on 64 67 death. If the Participant elects the survivor annuity, payments under such Annuity must not be less than the payments which would have been made to the Spouse under the Qualified Joint and Survivor Annuity if the Participant had retired on the day before his or her death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (1) the 90th day before the Participant attains the Qualified Early Retirement Age, or (2) the date on which participation begins, and ends on the date the Participant terminates employment. (3) For purposes of this Section 8.7 (D) : (a) Qualified Early Retirement Age is the latest of: (i) the earliest date, under the Plan, on which the Participant may elect to receive retirement benefits; or (ii) the first day of the 120th month beginning before the Participant reaches Normal Retirement Age; or (iii) the date the Participant begins participation. (b) Qualified Joint and Survivor Annuity is an Annuity for the life of the Participant with a survivor annuity for the life of the Spouse as described in Section 8.4(C). 65 68 ARTICLE IX. TERMINATION OF EMPLOYMENT 9.1 DISTRIBUTION. As of a Participant's Termination of Employment, he shall be entitled to receive a distribution of his entire Vested Interest. Such distribution shall be further subject to the terms and conditions of Article VI. If at the time of his Termination of Employment the Participant's Vesting Percentage is not 100% and the Participant does not take a distribution from the portion of his Vested Interest subject to the Vesting Percentage, the non-vested portion of his Participant's Account will become a Forfeiture upon the date the Participant incurs five consecutive One-Year Breaks in Service. If at the time of his Termination of Employment the Participant's Vesting Percentage is not 100% and such Participant does take a distribution from the portion of his Vested Interest subject to the Vesting Percentage, or if the Participant's Vesting Percentage is 0%, the non-vested portion of his Participant's Account will become a Forfeiture immediately. If the Participant, whose non-vested portion of his Participant's Account became a Forfeiture in accordance with the terms of the preceding paragraph, is later rehired by the Employer and re-enrolls in the Plan, Subsection (A), (B) or (C) below, as applicable, will apply: (A) If the Participant was 0% vested at his Termination of Employment and did not incur five consecutive One-Year Breaks in Service after such date, the amount which became a Forfeiture, if any, shall be restored by the Employer at the time such Participant re-enrolls in the Plan. The Forfeiture, so restored, shall be included as part of that portion of his Participant's Account subject to the Vesting Percentage. (B) If the Participant's Vesting Percentage was not 100% at his Termination of Employment and if the Participant did not incur five consecutive One-Year Breaks in Service after such date, the Participant shall be entitled to repay the portion of the distribution made at his Termination of Employment derived from Employer Contributions. The portion of the repayment that is attributable to amounts that were subject to the Vesting Percentage will no longer be considered a distribution for purposes of determining the Participant's Vested Interest. The repayment of such portion must be made before the Participant has incurred five consecutive One-Year Breaks in Service following the date he received the distribution or five years after the Participant is rehired by the Employer, whichever is earlier. If the Participant elects to make such repayment, the amount which became a Forfeiture, if any, shall be restored by the Employer at the same time such repayment is made. The Forfeiture, so restored, and the repayment shall be 66 69 included as part of that portion of his Participant's Account subject to the Vesting Percentage. However, if the Participant does not elect to repay the distribution made in accordance with this Article within the period of time specified above, that Forfeiture shall remain a Forfeiture. (C) If the Participant had incurred five consecutive One-Year Breaks in Service after his Termination of Employment, the amount which became a Forfeiture shall remain a Forfeiture and such Participant shall be prohibited from repaying a distribution made at his Termination of Employment. 9.2 NO FURTHER RIGHTS OR INTEREST. A Participant shall have no further interest in or any rights to any portion of his Participant's Account that becomes a Forfeiture due to his Termination of Employment once the Participant incurs five consecutive One-Year Breaks in Service in accordance with Article II. 9.3 APPLICATION OF FORFEITURES. Any Forfeiture arising in accordance with the provisions of Section 9.1 shall be used by the Employer to reduce and in lieu of the contributions made by the Employer next due under Article IV, or to pay Plan expenses, at the earliest opportunity after such Forfeiture becomes available. The provisions of the preceding sentence notwithstanding, in the event that a former Participant is rehired by the Employer and the Employer is required by the provisions of Section 9.1 of this Plan to restore the amount of a separate account that had been created upon such Participant's prior Termination of Employment and later forfeited, Forfeitures, if any, will first be used to restore such separate account to its value as of such Participant's prior Termination of Employment date. In the event that the available Forfeitures are not sufficient to make such restoration, the Employer will make an additional contribution sufficient to make such restoration. 67 70 ARTICLE X. WITHDRAWALS 10.1 WITHDRAWAL FOR SERIOUS FINANCIAL HARDSHIP OF ELECTIVE DEFERRAL CONTRIBUTIONS. Distributions of Elective Deferral Contributions may be made to a Participant in the event of a hardship. For purposes of this section, a distribution is made on account of hardship only if the distribution is made both on account of an immediate and heavy financial need of the Employee and is necessary to satisfy the financial need. In addition, for Plan Years beginning after December 31, 1988 any distribution on account of hardship shall be limited to the distributable amount described in paragraph (C) of this section. (A) The following are the only financial needs considered immediate and heavy for purposes of this section: (1) Expenses for medical care described in section 213(d) of the Code previously incurred by the Employee, the Employee's Spouse, or any dependents of the Employee (as defined in section 152 of the Code) or necessary for these persons to obtain medical care described in section 213(d) of the Code; (2) Payment of tuition and related educational fees for the next 12 months of post-secondary education for the Employee, his Spouse, children, or dependents (as defined in section 1.52 of the Code); (3) Costs directly related to the purchase of a principal residence for the Employee (excluding mortgage payments); or (4) Payments necessary to prevent the eviction of the Employee from the Employee's principal residence or foreclosure on the mortgage on that residence. (B) A distribution will be considered as necessary to satisfy an immediate and heavy financial need of the Employee only if all of the following requirements are satisfied: (1) The hardship distribution is not in excess of the amount of the immediate and heavy financial need of the Employee. The amount of an immediate and heavy financial need may include the amounts necessary to apply any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution. (2) The Employee had obtained all distributions, other than hardship distributions, and all nontaxable (at the time of the loan) loans currently available under all plans maintained by the Employer. 68 71 (3) The Employee is suspended from making Elective Deferral Contributions and Employee Contributions to the Plan for at least 12 months after receipt of the hardship distribution. In addition, the Employee must be prohibited under the terms of the plan or an otherwise enforceable agreement from making Elective Deferral Contributions and Employee Contributions to all other plans maintained by the Employer for at least 12 months after receipt of the hardship distribution. For this purpose, the phrase "all other plans of the Employer" means all qualified and nonqualified plans of deferred compensation maintained by the Employer. The phrase includes a stock option, stock purchase, or similar plan, or a cash or deferred arrangement that is part of a cafeteria plan within the meaning of section 125 of the Code. However, it does not include the mandatory employee contribution part of a defined benefit plan. It also does not include a health or welfare benefit plan, including one that is part of a cafeteria plan within the meaning of section 125 of the Code. (4) The Employee may not make Elective Deferral Contributions to the Plan for the Employee's taxable year immediately following the taxable year of the hardship distribution in excess of the applicable limit under section 402(g) of the Code for such taxable year less the amount of such Employee's Elective Deferral Contributions for die taxable year of the hardship distribution. In addition, all other plans maintained by the Employer must limit the Employee's Elective Deferral Contributions for the next taxable year to the applicable limit under section 402(g) of the Code for that year minus the Employee's Elective Deferral Contributions for the year of the hardship distribution. (C) The distributable amount is equal to the Employee's total Elective Deferral Contribution as of the date of distribution, reduced by the amount of previous distributions of Elective Deferral Contributions on account of hardship. The Employee's total Elective Deferral Contributions shall be increased by income allocable to Elective Deferral Contributions. In the case of income allocable to Elective Deferral Contributions, the distributable amount may only include amounts that were credited to the Employee's Account as of December 31, 1988. 10.2 WITHDRAWAL OF PRIOR EMPLOYER CONTRIBUTIONS. A Participant may elect to withdraw from his Participant's Account, at any time, an amount equal to any whole percentage (not exceeding 100%) of his Vested Interest in his Participant's Account attributable to the value of his Prior Employer Contributions, including earnings. 10.3 WITHDRAWAL OF PRIOR EMPLOYEE CONTRIBUTIONS. A Participant may elect to withdraw from his Participant's Account, at any time, an amount equal to any whole 69 72 percentage (not exceeding 100%) of his Vested Interest in his Participant's Account attributable to the value of his Prior Employee Contributions, including earnings. 10.4 WITHDRAWAL OF ROLLOVER CONTRIBUTIONS. At any time a Participant may elect to withdraw from his Participant's Account an amount up to 100% of the value of that portion of his account attributable to his Rollover Contributions as defined in Article IV. Such an election shall become effective in accordance with the Notification Section below. 10.5 NOTIFICATION. The Participant shall notify the Administrator in writing of his election to make a withdrawal under the preceding provisions of this Article X. Any such election shall be effective as of the date specified in such notice, which date must be at least 15 days after such notice is filed. Payment of the withdrawal shall be subject to the terms and conditions of Article VI. 10.6 NON-REPAYMENT. Withdrawals made in accordance with this Article X may not be repaid. 10.7 SPOUSAL CONSENT TO WITHDRAWAL. Prior to obtaining a withdrawal in accordance with this Article X, a married Participant must obtain spousal consent in accordance with the provisions of Article VIII unless such Participant meets the requirements set forth in Sections 8.1(A), (B) and (C). 70 73 ARTICLE X-A LOANS 10A.1 LOANS TO PARTICIPANTS. The Plan Administrator may make a bona fide loan to a Participant, in an amount which, when added to the outstanding balance of all other loans to the Participant from all qualified plans of the Employer, does not exceed the lesser of $50,000 reduced by the excess of the Participant's highest outstanding loan balance during the 12 months preceding the date on which the loan is made over the outstanding loan balance on the date the new loan is made, or 50% of the Participant's Vested Interest in his Participant's Account. Participants will be limited to only one outstanding loan at a time. The loan shall be made under such terms, security interest, and conditions as the Plan Administrator deems appropriate, provided, however, that all loans granted hereunder: (A) are available to all Participants and Beneficiaries, who are parties-in-interest pursuant to section 3(14) of ERISA, on a reasonably equivalent basis; (B) are not made available to Highly Compensated Employees on a basis greater than the basis made available to other Employees; (C) bear a reasonable rate of interest; (D) are adequately secured; (E) unless a Participant meets the requirements set forth in Sections 8.1(A), (B) and (C), are made only after a Participant obtains the consent of his Spouse, if any, to use his Participant's Account as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting Spouse or any subsequent Spouse with respect to that loan. A new consent shall be required if the Participant's Account is used for renegotiation, extension, renewal or other revision of the loan. (F) are made in accordance with and subject to all of the provisions of this Article. 10A.2 LOAN PROCEDURES. The Plan Administrator shall establish a written set of procedures, set forth in the summary plan description, by which all loans will be administered. Such rules, which are incorporated herein by reference, will include, but not be limited to, the following: (A) the person or persons authorized to administer the loan program, identified by name or position; 71 74 (B) the loan application procedure; (C) the basis for approving or denying loans; (D) any limits on the types of loans permitted; (E) the procedure for determining a "reasonable" interest rate; (F) acceptable collateral; (G) default conditions; and (H) steps which will be taken to preserve Plan assets in the event of default. 72 75 ARTICLE XI. FIDUCIARY DUTIES AND RESPONSIBILITIES 11.1 GENERAL FIDUCIARY STANDARD OF CONDUCT. Each Fiduciary of the Plan shall discharge his duties hereunder solely in the interest of the Participants and their Beneficiaries and for the exclusive purpose of providing benefits to Participants and their Beneficiaries and defraying reasonable expenses, of administering the Plan. Each Fiduciary shall act with the care, skill, prudence, and diligence under the circumstances that a prudent man acting in a like capacity and familiar with such matters would use in conducting an enterprise of like character and with like aims, in accordance with the documents and instruments governing this Plan, insofar as such documents and instruments are consistent with this standard. 11.2 SERVICE IN MULTIPLE CAPACITIES. Any Person or group of persons may serve in more than one fiduciary capacity with respect to this Plan. 11.3 LIMITATIONS ON FIDUCIARY LIABILITY. Nothing in this Plan shall be construed to prevent any Fiduciary from receiving any benefit to which he may be entitled as a Participant or Beneficiary in this Plan, so long as the benefit is computed and paid on a basis which is consistent with the terms of this Plan as applied to all other Participants and Beneficiaries. Nor shall this Plan be interpreted to prevent any Fiduciary from receiving any reasonable compensation for services rendered, or for the reimbursement of expenses properly and actually incurred in the performance of his duties with the Plan; except that no Person so serving who already receives full-time pay from an Employer shall receive compensation from this Plan, except for reimbursement of expenses properly and actually incurred. 11.4 INVESTMENT MANAGER. When an Investment Manager has been appointed, he is required to acknowledge in writing that he has undertaken a Fiduciary responsibility with respect to the Plan. 73 76 ARTICLE XII. THE ADMINISTRATOR 12.1 DESIGNATION AND ACCEPTANCE. The Employer shall designate a person or persons to serve as Administrator under the Plan and such person, by joining in the execution of this Plan and Trust Agreement accepts such appointment and agrees to act in accordance with the terms of the Plan. 12.2 DUTIES AND AUTHORITY. The Administrator shall administer the Plan in a nondiscriminatory manner for the exclusive benefit of Participants and their Beneficiaries. The Administrator shall perform all such duties as are necessary to operate, administer, and manage the Plan in accordance with the terms thereof, including but not limited to the following: (A) To determine all questions relating to a Participant's coverage under the Plan; (B) To maintain all necessary records for the administration of the Plan; (C) To compute and authorize the payment of retirement income and other benefit payments to eligible Participants and Beneficiaries; (D) To interpret and construe the provisions of the Plan and to make regulations which are not inconsistent with the terms thereof; and (E) To advise or assist Participants regarding any rights, benefits, or elections available under the Plan. The Administrator shall take all such actions as are necessary to operate, administer, and manage the Plan as a retirement program which is at all times in full compliance with any law or regulation affecting this Plan. The Administrator may allocate certain specified duties of plan administration to an individual or group of individuals who, with respect to such duties, shall have all reasonable powers necessary or appropriate to accomplish them. 12.3 EXPENSES AND CONDENSATION. All expenses of administration may be paid out of the Trust fund unless paid by the Employer. Such expenses shall include any expenses incident to the functioning of the Administrator, including, but not limited to, fees of accountants, counsel, and other specialists and their agents, and other costs of administering the Plan. Until paid, the expenses shall constitute a liability of the Trust fund. However, the Employer may reimburse the Trust fund for any administration expense incurred. Any administration expense paid to the Trust fund as a reimbursement shall not be considered an Employer Contribution. Nothing shall prevent the Administrator from receiving reasonable compensation for services rendered in 74 77 administering this Plan, unless the Administrator already receives full-time pay from any Employer adopting the Plan. 12.4 INFORMATION FROM EMPLOYER. To enable the Administrator to perform his functions, the Employer shall supply full and timely information to the Administrator on all matters relating to this Plan as the Administrator may require. 12.5 ADMINISTRATIVE COMMITTEE; MULTIPLE SIGNATURES. In the event that more than one person has been duly nominated to serve on the Administrative Committee and has signified in writing the acceptance of such designation, the signature(s) of one or more persons may be accepted by an interested party as conclusive evidence that the Administrative Committee has duly authorized the action therein set forth and as representing the will of and binding upon the whole Administrative Committee. No person receiving such documents or written instructions and acting in good faith and in reliance thereon shall be obliged to ascertain the validity of such action under the terms of this Plan. The Administrative Committee shall act by a majority of its members at the time in office and such action may be taken either by a vote at a meeting or in writing without a meeting. 12.6 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. The Administrator, or any member of the Administrative Committee, may resign at any time by delivering to the Employer a written notice of resignation, to take effect at a date specified therein, which shall not be less than 30 days after the delivery thereof, unless such notice shall be waived. The Administrator may be removed with or without cause by the Employer by delivery of written notice of removal, to take effect at a date specified therein, which shall be not less than 30 days after delivery thereof, unless such notice shall be waived. The Employer, upon receipt of or giving notice of the resignation or removal of the Administrator, shall promptly designate a successor Administrator who must signify acceptance of this position in writing. In the event no successor is appointed, the Board of Directors of the Employer will function as the Administrative Committee until a new Administrator has been appointed and has accepted such appointment. 12.7 INVESTMENT MANAGER. The Administrator may appoint, in writing, an Investment Manager or Managers to whom is delegated the authority to manage, acquire, invest or dispose of all or any part of the Trust assets. With regard to the assets entrusted to his care, the Investment Manager shall provide written instructions and directions to the Trustee, who shall in turn be entitled to rely upon such written direction. This appointment and delegation shall be evidenced by a signed written agreement. 12.8 DELEGATION OF DUTIES. The Administrator shall have the power, to the extent permitted by law, to delegate the performance of such Fiduciary and non-Fiduciary duties, responsibilities and functions as the Administrator shall deem advisable for the 75 78 proper management and administration of the Plan in the best interests of the Participants and their Beneficiaries. 76 79 ARTICLE XIII. PARTICIPANTS' RIGHTS 13.1 GENERAL RIGHTS OF PARTICIPANTS AND BENEFICIARIES. The Plan is established and the Trust assets are held for the exclusive purpose of providing benefits for such Employees and their Beneficiaries as have qualified to participate under the terms of the Plan. 13.2 FILING A CLAIM FOR BENEFITS. A Participant or Beneficiary or the Employer acting in his behalf, shall notify the Administrator of a claim of benefits under the Plan. Such request shall be in writing to the Administrator and shall set forth the basis of such claim and shall authorize the Administrator to conduct such examinations as may be necessary to determine the validity of the claim and to take such steps as may be necessary to facilitate the payment of any benefits to which the Participant or Beneficiary may be entitled under the terms of the Plan. A decision by the Administrator shall be made promptly and not later than 90 days after the Administrator's receipt of the claim of benefits under the Plan, unless special circumstances require an extension of the time for processing, in which case a decision shall be rendered as soon as possible, but not later than 180 days after the initial receipt of the claim of benefits. 13.3 DENIAL OF CLAIM. Whenever a claim for benefits by any Participant or Beneficiary has been denied by a Plan Administrator, a written notice, prepared in a manner calculated to be understood by the Participant, must be provided, setting forth (1) the specific reasons for the denial; (2) the specific reference to pertinent Plan provisions on which the denial is based; (3) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (4) an explanation of the Plan's claim review procedure. 13.4 REMEDIES AVAILABLE TO PARTICIPANTS. A Participant or Beneficiary may (1) request a review by a Named Fiduciary, other than the Administrator, upon written application to the Plan; (2) review pertinent Plan documents; and (3) submit issues and comments in writing to a Named Fiduciary. A Participant or Beneficiary shall have 60 days after receipt by the claimant of written notification of a denial of a claim to request a review of a denied claim. A decision by a Named Fiduciary shall be made promptly and not later than 60 days after the Named Fiduciary's receipt of a request for review, unless special circumstances require an extension of the time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of a request for review. The decision on review by a Named Fiduciary shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, and specific references to the pertinent Plan provisions on which the decision is based. 77 80 A Participant or Beneficiary shall be entitled, either in his own name or in conjunction with any other interested parties, to bring such actions in law or equity or to undertake such administrative actions or to seek such relief as may be necessary or appropriate to compel the disclosure of any required information, to enforce or protect his rights, to recover present benefits due to him, or to clarify his rights to future benefits under the Plan. 13.5 REINSTATEMENT OF BENEFIT. In the event any portion of a distribution which is payable to a Participant or a Beneficiary shall remain unpaid on account of the inability of the Plan Administrator, after diligent effort, to locate such Participant or Beneficiary, the amount so distributable shall be treated as; a Forfeiture under the Plan. If a claim is made by the Participant or Beneficiary for any benefit forfeited under this section, such benefit shall be reinstated. 13.6 LIMITATION OF RIGHTS. Participation hereunder shall not grant any Participant the right to be retained in the Service of the Employer or any other rights or interest in the Plan or Trust fund other than those specifically herein set forth. 13.7 PARTICIPANT CONTRIBUTIONS. Each Participant, regardless of his length of Service with the Employer, shall be fully vested (100%) at all times in any portion of his Participant's Account attributable to the following: - Rollover Contributions - Prior Employee Contributions. 13.8 MERGERS OR TRANSFERS. In the case of any merger or consolidation with or transfer of assets or liabilities to any other qualified plan after September 2, 1974, the following conditions must be met: (A) The sum of the account balances in each plan shall equal the fair market value (determined as of the date of the merger or transfer as if the plans had then terminated) of the entire plan assets. (B) The assets of each plan shall be combined to form the assets of the plan as merged (or transferred). (C) Immediately after the merger (or transfer), each Participant in the plan merged (or transferred) shall have an account balance equal to the sum of the account balances the Participant had in the plans immediately prior to the merger (or transfer). (D) Immediately after the merger (or transfer) each Participant in the plan merged (or transferred) shall be entitled to the same optional benefit forms as he was entitled to immediately prior to the merger (or transfer). 78 81 In the case of any merger or consolidation with or transfer of assets or liabilities to any defined benefit plan after September 2, 1974, one of the plans before such merger, consolidation, or transfer shall be converted into the other type of plan and either the rules described above, applicable to the merger of two defined contribution plans, or the rules applicable to the merger of two defined benefit plans, as appropriate, shall be applied. 13.9 PARTICIPANT'S ACCOUNT AND VALUATION. A Participant's Account shall be maintained on behalf of each Participant until such account is distributed in accordance with the terms of this Plan. At least once per year, as of the last day of the Plan Year, each Participant's Account shall be adjusted for any earnings, gains, losses, contributions, withdrawals, loans, and expenses, attributable to such Plan Year, in order to obtain a new valuation of the Participant's Account. 13.10 INVESTMENT OF CONTRIBUTIONS. Each Participant shall have the exclusive authority to direct the investment of contributions made to his Participant's Account. In accordance with the procedures established by the Plan Administrator, the Participant shall elect to have a specified percentage invested in one or more investment funds, as long as the designated percentage for each fund is a whole number, and the sum of the percentages allocated is equal to 100%. In addition, the Participant may change such election once a month at any time. All investment changes are subject to the rules of the investment fund(s) in which the Participant's Account is or is to be invested. 13.11 TRANSFERS BETWEEN INVESTMENT FUNDS. A Participant may designate amounts invested pursuant to the section above to be transferred between the investment funds once every month at any time in accordance with the procedures established by the Plan Administrator. Notwithstanding the above, the transfer of amounts between investment funds shall be subject to the rules of the investment funds in which the Participant's Account is invested or is to be invested. 79 82 ARTICLE XIV. AMENDMENT OR TERMINATION OF THE PLAN 14.1 AMENDMENT OF PLAN. The Employer shall have the right from time to time to modify or amend, in whole or in part, any or all provisions of the Plan, provided that a Board of Directors' resolution pursuant to such modification or amendment shall first be adopted and provided further that the modification or amendment is signed by the Employer and the Administrator. Upon any such modification or amendment the Administrator and the Trustee shall be furnished a copy thereof. No amendment shall deprive any Participant or Beneficiary of any Vested Interest hereunder. Any Participant having not less than three Years of Service shall be permitted to elect, in writing, to have his Vesting Percentage computed under the Plan without regard to such amendment. The period during which the election must be made by the Participant shall begin no later than the date the Plan Amendment is adopted and end no later than after the latest of the following dates: (A) The date which is 60 days after the day the amendment is adopted; or (B) The date which is 60 days after the day the amendment becomes effective; or (C) The date which is 60 days after the day the Participant is issued written notice of the amendment by the Employer or Administrator. Such written election by a Participant shall be made to the Administrator. No amendment to the Plan shall decrease a Participant's Account balance or eliminate an optional form of distribution. Notwithstanding the preceding sentence, a Participant's Account balance may be reduced to the extent permitted under Internal Revenue Code section 412(c)(8). Furthermore, no amendment to the Plan shall have the effect of decreasing a Participant's Vested Interest determined without regard to such amendment as of the later of the date such amendment is adopted or the date it becomes effective. 14.2 CONDITIONS OF AMENDMENT. The Employer shall not make any amendment which would cause the Plan to lose its status as a qualified plan within the meaning of section 401(a) of the Code. 14.3 TERMINATION OF THE PLAN. The Employer intends to continue the Plan indefinitely for the benefit of its Employees, but reserves the right to terminate the Plan at any time by resolution of its Board of Directors. Upon such termination, the liability of the Employer to make contributions hereunder shall terminate. 14.4 FULL VESTING. Upon the termination or partial termination of the Plan, or upon complete discontinuance of Employer contributions, the rights of all affected Participants in and to the amounts credited to each such Participant's Account shall be 100% vested and nonforfeitable. 80 83 14.5 DISTRIBUTIONS UPON PLAN TERMINATION. If this Plan is terminated and the Employer does not maintain or establish another defined contribution plan, pursuant to Code section 401(k)(10)(A)(i), each Participant shall receive a total distribution, in the form of a lump-sum distribution as defined in Code section 401(k)(10)(B)(ii), of his Participant's Account in accordance with the terms and conditions of Article VI. However, if this Plan is terminated and the Employer does maintain or establish another defined contribution plan as discussed in the above paragraph, or if the Plan is only partially terminated, each Participant shall receive a total distribution of his Participant's Account, excluding any amounts attributable to Elective Deferral Contributions and contributions made by the Employer designated as 401(k) contributions in accordance with the terms and conditions of Article VI. In such a situation, any amounts in a Participant's Account attributable to Elective Deferral Contributions and contributions made by the Employer designated as 401(k) contributions may be distributed only upon the occurrence of an event described in Article VI. No Participant and/or spousal consent will be required for a distribution where no successor plan exists. However, if the Employer does maintain a successor plan, Participant and/or spousal consent is required for a distribution exceeding $3,500. The Participant's Account will be transferred to such successor plan if the required consents are not received. 14.6 APPLICATION OF FORFEITURES. Upon the termination of the Plan, any Forfeitures which have riot been applied as of such termination to reduce the contribution made by the Employer shall be credited on a pro rata basis to the Participant's Account of the then Active Participants in the same manner as the last contribution made by the Employer under the Plan. 14.7 APPROVAL BY THE INTERNAL REVENUE SERVICE. Notwithstanding any other provisions of this Plan, the Employer's adoption of this Plan is subject to the condition precedent that the Employer's Plan shall be approved and qualified by the Internal Revenue Service as meeting the requirements of section 401(a) of the Internal Revenue Code and that the Trust established in connection herewith shall be entitled to exemption under the provisions of section 501(a). In the event the Plan initially fails to qualify and the Internal Revenue Service issues a final ruling that the Employer's Plan or Trust fails to so qualify as of the Effective Date, all liability of the Employer to make further contributions hereunder shall cease. The Plan Administrator, Trustee and any other Named Fiduciary shall be notified immediately by the Employer, in writing, of such failure to qualify. Upon such notification, the value of the Participants' Accounts shall be distributed in cash to the Employer, subject to the terms and conditions of Article VI. That portion of such distribution which is attributable to Participant Contributions as specified in Section 13.7, if any, shall be paid to the Participant, and the balance of such distribution shall be paid to the Employer. 81 84 14.8 SUBSEQUENT UNFAVORABLE DETERMINATION. If the Employer is notified subsequent to initial favorable qualification that the Plan is no longer qualified within the meaning of section 401(a) of the Internal Revenue Code, or that the Trust is no longer entitled to exemption under the provisions of section 501(a), and if the Employer shall fail within a reasonable time to make any necessary changes in order that the Plan and/or Trust shall so qualify, the Participants' Accounts shall be fully vested and nonforfeitable and shall be disposed of as if the Plan had terminated, in the manner set forth in this Article XIV. 82 85 ARTICLE XV. SUBSTITUTION OF PLANS 15.1 SUBSTITUTION OF PLANS. Subject to the provisions of Section 13.8 the Employer may substitute an individually designed plan or a master or prototype plan for this Plan without terminating this Plan as embodied herein and this shall be deemed to constitute an amendment and restatement in its entirety of this Plan as heretofore adopted by the Employer; provided, however, that the Employer shall have certified to the Trustee that this Plan is being continued on a restated basis which meets the requirements of section 401(a) of the Internal Revenue Code and ERISA. 15.2 TRANSFER OF ASSETS. Upon 90 days written notification from the Employer that a different plan meeting the requirements set forth in Section 15.1 above has been executed and entered into by the Administrator and the Employer, and after the Trustee has been furnished the Employer's certification in writing that the Employer intends to continue the Plan as a qualified Plan under section 401(a) of the Internal Revenue Code and ERISA, assets which represent the value of all Participant's Accounts maybe transferred in accordance with the instructions received from or on behalf of the Employer. The Trustee may rely fully on the representations or directions of the Employer with respect to any such transfer and shall be fully protected and discharged with respect to any such transfer made in accordance with such representations, instructions, or directions. 83 86 ARTICLE XVI. MISCELLANEOUS 16.1 NON-REVERSION. This Plan has been established by the Employer for the exclusive benefit of the Participants and their Beneficiaries. Except as otherwise provided in Sections 14.7, 16.7, and 16.8, under no circumstances shall any funds contributed hereunder, at any time, revert to or be used by the Employer, nor shall any such funds or assets of any kind be used other than for the benefit of the Participants or their Beneficiaries. 16.2 GENDER AND NUMBER. When necessary to the meaning hereof, and except when otherwise indicated by the context, either the masculine or the neuter pronoun shall be deemed to include the masculine, the feminine, and the neuter, and the singular shall be deemed to include the plural. 16.3 REFERENCE TO THE CODE AND ERISA. Any reference to any section of the Internal Revenue Code, ERISA, or to any other statute or law shall be deemed to include any successor law of similar import. 16.4 GOVERNING LAW. The Plan and Trust shall be governed and construed in accordance with the laws of the state where the Trustee has its principal office if the Trustee is a corporation or an association, otherwise under the laws of the state where the Employer has its principal office. 16.5 COMPLIANCE WITH THE CODE AND ERISA. This Plan is intended to comply with all requirements for qualification under the Internal Revenue Code and ERISA, and if any provision hereof is subject to more than one interpretation or any term used herein is subject to more than one construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with the Plan being so qualified. If any provision of the Plan is held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions, and this Plan shall be construed and enforced as if such provision had not been included. 16.6 NON-ALIENATION. It is a condition of the Plan, and all rights of each Participant shall be subject thereto, that no right or interest of any Participant in the Plan shall be assignable or transferable in whole or in part, either directly or by operation of law or otherwise, including, but without limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no right or interest of any Participant in the Plan shall be liable for or subject to any obligation or liability of such Participant. The preceding sentence shall not preclude the enforcement of a federal tax levy made pursuant to section 6331 of the Code or the collection by the United States on a judgement resulting from an unpaid tax assessment. 16.7 CONTRIBUTION RECAPTURE. Notwithstanding any other provisions of this Plan, (1) in the case of a contribution which is made by an Employer by a mistake of fact, Section 16.1 shall not prohibit the return of such contribution to the Employer within one year 84 87 after the payment of the contribution, and (2) if a contribution is conditioned upon the deductibility of the contribution under section 404 of the Code, then, to the extent the deduction is disallowed, Section 16.1 shall not prohibit the return to the Employer of such contribution (to the extent disallowed) within one year after the disallowance of the deduction. The amount which may be returned to the Employer is the excess of (1) the amount contributed over (2) the amount that would have been contributed had there not occurred a mistake of fact or a mistake in determining the deduction. Earnings attributable to the excess contribution may not be returned to the Employer, but losses attributable thereto must reduce the amount to be so returned. Furthermore, if the withdrawal of the amount attributable to the mistaken contribution would cause the balance of the individual account of any Participant to be reduced to less than the balance which would have been in the account had the mistaken amount not been contributed, then the amount to be returned to the Employer would have to be limited so as to avoid such reduction. 16.8 QUALIFIED DOMESTIC RELATIONS ORDERS. Notwithstanding any other provisions of this Plan, the Participant's Account may be segregated and distributed pursuant to a Qualified Domestic Relations Order within the meaning of Internal Revenue Code section 414(p). The Plan Administrator shall establish procedures for determining if a Domestic Relations Order is qualified within the meaning of section 414(p). 85 88 ARTICLE XVI-A TOP-HEAVY PROVISIONS 16A.1 DEFINITIONS. The following definitions are atypical terms used only in this Article XVI-A. (A) Compensation. The term Compensation, whenever used in this Article XVI-A, means Compensation as defined in Article V of the Plan, but includes the amount of any elective contributions made by the Employer on the Employee's behalf to a cafeteria plan established in accordance with the provisions of Code section 125, a qualified cash or deferred arrangement in accordance with the provisions of Code section 402(e)(3), a simplified employee pension plan in accordance with the provisions of Code section 402(h), or a tax sheltered annuity plan maintained in accordance with the provisions of Code section 403(b). (B) Key Employee. The term Key Employee means any Employee or former Employee (including deceased Employees) of the Employer who at any time during the Plan Year or the four preceding Plan Years was: (1) An officer of the Employer, but in no event if there are more than 500 Employees, shall more than 50 Employees be considered Key Employees. If there are less than 500 Employees, in no event shall the greater of three Employees or 10% of all Employees, be, taken into account under this Subsection as Key Employees. If the number of officers is limited by the terms of the preceding sentence, the Employees with the highest Compensation will be considered to be officers. In no event shall an officer whose annual Compensation is less than 50% of the dollar limitation in effect under Code section 415(b)(1)(A) as adjusted from time to time, be a Key Employee for any such Plan Year. In making a determination under this Subsection, Employees who have not completed six months of Service by the end of the applicable Plan Year, Employees who normally work less than 17-1/2 hours per week, Employees who normally work less than six months during a year, Employees who have not attained 21, and nonresident aliens who receive no earned income from U.S. sources, shall be excluded. Also excluded under the above paragraph are Employees who are covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement. Such Employees will be excluded only if retirement benefits were the subject of good faith bargaining, 90% of the Employees of the Employer are covered by the agreement, and the Plan covers only Employees who are not covered by the agreement. 86 89 (2) One of the 10 Employees who has annual Compensation greater than the amount in effect under Internal Revenue Code section 415(c)(1)(A) and who owns (or is considered to own within the meaning of Internal Revenue Code section 318, as modified by section 416(i)(1)(B)(iii)) both more than 1/2% interest and the largest interest in the Employer. If two or more Employees own equal interests in the Employer, the ranking of ownership share will be in descending order of such Employees' Compensation. If the Employer is other than a corporation, the term "interest" as used herein shall refer to capital or profits interest. (3) An Employee who owns (or is considered to own within the meaning of Internal Revenue Code section 318, as modified by section 416(i)(1)(B)(iii)) more than 5% of the outstanding stock of the Employer or stock possessing more than 5% of the total combined voting power of all stock of the Employer. If the Employer is other than a corporation, an Employee who owns, or is considered to own, more than 5% of the capital or profits interest in the Employer. The determination of 5% ownership shall be made separately for each member of a controlled group of corporations (as defined in Code section 414(b)), or of a group of trades or businesses (whether or not incorporated) that are under common control (as defined in Code section 414(c)), or of an affiliated service group (as defined in Code section, 414(m)). (4) An Employee who owns (or is considered to own within the meaning of Internal Revenue Code section 318, as modified by section 416(i)(1)(B)(iii)) more than 1% of the outstanding stock of the Employer or stock possessing more than 1% of the total combined voting power of all stock of the Employer, and whose annual Compensation is more than $150,000. If the Employer is other than a corporation, an Employee who owns, or is considered to own, more than 1% of the capital or profits interest in the Employer, and whose annual Compensation is more than $150,000. For the purposes of paragraphs (2), (3) and (4) above, if an Employee's ownership interest changes during a given Plan Year, his ownership interest for that Plan Year is the largest interest owned at any time during the Plan Year. The Beneficiary of any deceased Employee who was a Key Employee shall be considered a Key Employee for the same period as the deceased Employee would have been so considered. (C) Non-Key Employee. The term Non-Key Employee means any Employee or former Employee of the Employer who is not a Key Employee. The Beneficiary of any deceased Employee who is a Non-Key Employee shall be considered a 87 90 Non-Key Employee for the same period as the deceased Employee would have been so considered. (D) Determination Date. The term Determination Date means, with respect to a Plan Year, the last day of the preceding Plan Year, or, in the case of the first Plan Year of a plan, the last day of the first Plan Year. (E) Valuation Date. The term Valuation Date means, with respect to a Plan Year, the last day of the preceding Plan Year and is the date on which Account Balances are valued for the purpose of determining the Plan's Top-Heavy status. (F) Account Balance. The term Account Balance means the value of the Participant's Account standing to the credit of a Participant, a former Participant, or the Beneficiary of a former Participant, as the case may be, as of the Valuation Date. Such Account Balance shall include any contributions due as of the Determination Date and all distributions made to the Participant (or former Participant or Beneficiary, as the case may be) during the Plan Year or the preceding four Plan Years, except for distributions of Related Rollovers. However, the Account Balance shall not include any deductible Employee Contributions made pursuant to Internal Revenue Code section 219 or Unrelated Rollovers made to the Plan after December 31, 1983. A Related Rollover is a Rollover Contribution or Transfer that either was not initiated by the Employee or was made to a plan maintained by the same Employer. An Unrelated Rollover is a Rollover Contribution or Transfer that was initiated by the Employee and was made from a plan maintained by one employer to a plan maintained by another employer. For purposes of this Subsection (F), the term Employer shall include all employers that are required to be aggregated in accordance with Internal Revenue Code sections 414(b), (c) or (m). (G) Required Aggregation Group. The term Required Aggregation Group means all of the plans of the Employer which cover a Key Employee, including any such plan maintained by the Employer pursuant to the terms of a collective bargaining agreement, and each other plan of the Employer which enables any plan in which a Key Employee participates to satisfy the requirements of Internal Revenue Code sections 401(a)(4) or 410. (H) Permissive Aggregation Group. The term Permissive Aggregation Group means all of the plans of the Employer which are included in the Required Aggregation Group plus any plans of the Employer which provide comparable benefits to the benefits provided by the plans in the Required Aggregation Group and are not included in the Required Aggregation Group, but which satisfy the requirements 88 91 of Internal Revenue Code sections 401(a)(4) and 410 when considered together with the Required Aggregation Group, including any plan maintained by the Employer pursuant to a collective bargaining agreement which does not include a Key Employee. (I) Top-Heavy Plan. The Plan is Top-Heavy if it meets the requirements of Section 16A.2. (J) Super Top-Heavy Plan. The Plan is Super Top-Heavy if it meets the requirements of Section 16A.3. (K) Terminated Plan. A plan shall be considered to be a Terminated Plan if it: (1) has been formally terminated; (2) has ceased crediting service for benefit accruals and vesting; or (3) has been or is distributing all plan assets to Participants (or Beneficiaries) as soon as administratively possible. With the exception of the Minimum Employer Contribution Requirements and the Minimum Vesting Requirements, the Top-Heavy provisions of this Article XVI-A will apply to any Terminated Plan which was maintained at any time during the five years ending on the Determination Date. (L) Frozen Plan. A plan shall be considered to be a Frozen Plan if all benefit accruals have ceased but all assets have not been distributed to Participants or Beneficiaries. The Top-Heavy provisions of this Article XVI-A will apply to any such Frozen Plan. 16A.2 TOP-HEAVY PLAN STATUS. This Plan shall be determined to be Top-Heavy if, as of the Determination Date, the aggregate of the Account Balances of Key Employees exceeds 60% of the aggregate of the Account Balances of all Employees covered by the Plan. The determination of whether the Plan is Top-Heavy shall be made after aggregating all plans in the Required Aggregation Group, and after aggregating any other plans which are in the Permissive Aggregation Group, if such permissive aggregation thereby eliminates the Top-Heavy status of any plan within such Required Aggregation Group. In determining whether this Plan is Top-Heavy, the Account Balance of a former Key Employee who is now a Non-Key Employee will be disregarded. Likewise, for Plan Years beginning after December 31, 1984, the Account Balance of any Employee who has not performed an Hour of Service during the five-year period ending on the Determination Date will be excluded. 89 92 16A.3 SUPER TOP-HEAVY PLAN STATUS. This Plan shall be determined to be Super Top-Heavy if, as of the Determination Date, the Plan would meet the test specified in Section 16A.2 above, if 90% were substituted for 60% in each place where it appears. The Plan may be permissively aggregated in order to avoid being Super Top-Heavy. 16A.4 TOP-HEAVY REQUIREMENTS. Notwithstanding anything in the Plan to the contrary, if the Plan is Top-Heavy with respect to any Plan Year beginning after December 31, 1983, then the Plan shall meet the following requirements for such Plan Year: (A) Compensation Limit. The annual Compensation of each Participant taken into account under the Plan shall not exceed $150,000; however, such dollar limitation shall be adjusted to take into account any adjustments made by the Secretary of the Treasury or his delegate pursuant to Internal Revenue Code section 416(d)(2). (B) Minimum Employer Contribution Requirements. A Minimum Employer Contribution of 3% of each Eligible Employee's Compensation will be made on behalf of each Eligible Employee in the Plan. If the actual Employer Contribution made or required to be made for Key Employees is less than 3%, the Minimum Employer Contribution required hereunder shall not exceed the percentage contribution made for the Key Employee for whom the percentage of Employer Contributions and Forfeitures relative to the first $150,000 of Compensation is the highest for the Plan Year after taking into account contributions or benefits under other qualified plans in the Plan's Required Aggregation Group. However, if a Participant in this Plan is also a participant in a defined benefit plan maintained by the Employer, such Participant shall receive the Top-Heavy minimum benefit under the defined benefit plan in lieu of the Minimum Employer Contribution described herein. Such minimum benefit will be equal to the Participant's average yearly Compensation during his five highest-paid consecutive years, multiplied by the lesser of 2% per Year of Service or 20%. Compensation periods and Years of Service to be taken into account in the calculation of this benefit shall be subject to any limitations set forth in the defined benefit plan. For any Limitation Year in which this Plan is Top-Heavy but not Super Top-Heavy, the Minimum Employer Contribution shall be increased to 4% of each Eligible Employee's Compensation in order to preserve the use of the factor 1.25 in the denominators of the fractions described in Section 5.4 (B) (1) and Section 5.4 (D) (1). A Participant who receives the Top-Heavy minimum benefit in lieu of the Minimum Employer Contribution shall receive an increased minimum benefit equal to the Participant's average yearly Compensation during his five highest-paid consecutive years, multiplied by the lesser of 3% per Year of Service or 20% plus one percentage point (to a maximum of 10 percentage points) for each year that this Plan is maintained. Compensation periods and Years of 90 93 Service to be taken into account in the calculation of this increased minimum benefit shall be subject to any limitations set forth in the defined benefit plan. For any Limitation Year in which this Plan is Super Top-Heavy, the factor of 1.25 in the denominators of the fractions described in Sections 5.4 (B) (1) and 5.4 (D) (1) shall be reduced to 1.0. The Minimum Employer Contribution payable in such years shall be 3% of each Eligible Employee's Compensation and the defined benefit Top-Heavy minimum benefit shall be average Compensation multiplied by the lesser of 2% per Year of Service or 20%. Eligible Employees are all Non-Key Employees who are Participants in the Plan as of the last day of the Plan Year regardless of whether they had completed 1,000 Hours of Service during the Plan Year. Also included are Non-Key Employees who would have been Participants as of the last day of the Plan Year except: - The Employee's Compensation was below a required minimum level or - The Employee chose not to make Elective Deferral Contributions when he was eligible to do so. Elective Deferral Contributions and Matching Contributions made to Key Employees shall be taken into account as Employer Contributions allocated to such Key Employees when determining whether a lower Minimum Employer Contribution is permissible for purposes of this section. However, Elective Deferral Contributions made by Non-Key Employees shall not be used towards satisfying the Minimum Employer Contribution required to be allocated to Non-Key Employees pursuant to this section. Matching Contributions made on behalf of Non-Key Employees may, at the option of the Employer, be used to satisfy the Minimum Employer Contribution requirement. However, for Plan Years beginning after December 31, 1988, to the extent that Matching Contributions are used for this purpose, they shall not be used to satisfy the Actual Contribution Percentage Test. (C) Minimum Vesting Requirements. Vesting shall be determined in accordance with the following schedule:
Years of Service Vesting Percentage ---------------- ------------------ Less than 1 0% 1 but less than 2 10% 2 but less than 3 20% 3 but less than 4 40% 4 but less than 5 60%
91 94 5 but less than 6 80% 6 or more 100%
92 95 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR NON-UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 401 (k) Retirement Plan for Non-Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan under the terms thereof; and WHEREAS, the Employer desires to amend the Plan to provide for its funding through a Group Annuity Contract issued by Connecticut General Life Insurance Company and to transfer all Plan assets; and WHEREAS, the Employer now desires to amend the Plan and restate its provisions to comply with the requirements of the Tax Reform Act of 1986 (TRA `86), the Omnibus Budget Reconciliation Act of 1986 (OBRA `86), and the Unemployment Compensation Amendment of 1992 (UCA `92) if applicable; NOW THEREFORE, the Plan is hereby amended and restated in its entirety effective January 1, 1993 except as follows: 1. Effective for calendar years beginning on January 1, 1987, the provisions regarding limits on Elective Deferral Contributions shall be amended and governed by the terms of Article IV of the Plan attached hereto. 2. Effective on the first day of the Plan Year beginning in 1987, the provisions relating to the special nondiscrimination test for Elective Deferral Contributions under Code section 401(k), as defined in Article I, shall be amended and governed by the terms of the Plan attached hereto. 3. Effective on the first day of the Plan Year beginning in 1987, the provisions relating to the special nondiscrimination test for Matching Contributions and Employee Contributions under Code section 401 (m), as defined in Article I, shall be amended and governed by the terms of the Plan attached hereto. 4. Effective on the first day of the Plan Year beginning in 1987, the provisions defining Highly Compensated Employee shall be amended and governed by the terms of Article I of the Plan attached hereto. 5. Effective on the first day of the Plan Year beginning in 1987, the provisions regarding loans shall be amended and governed by the terms of Article X-A of the Plan attached hereto. However, prior to October 18, 1989, if a Participant's Vested Interest in his Participant's Account was less than $20,000, the Participant was able to borrow up to the 93 96 lesser of $10,000 or his Vested Interest attributable to contributions which were available for loans. 6. Effective on the first day of the Plan Year beginning in 1987, the provisions regarding Limitations on Allocations shall be amended and governed by the terms of Article V of the Plan attached hereto. 7. Effective on the first day of the Plan Year beginning in 1987, contributions made to this Plan shall no longer require Considered Net Profits. 8. Effective on the first day of the Plan Year beginning in 1989, Compensation for purposes of the Plan shall be limited to a maximum of $200,000. 9. Effective on January 1, 1989, the provisions relating to required minimum distributions shall be amended and governed by the terms of the Plan attached hereto. 10. Effective on the first day of the Plan Year beginning in 1989, the provisions relating to withdrawals for Serious Financial Hardship shall be amended and governed by the terms of Article X of the Plan attached hereto. 11. Effective on the first day of the Plan Year beginning in 1992, gap period earnings associated with Excess Contributions shall not be distributed. 12. Effective on the first day of the Plan Year beginning in 1992, gap period earnings associated with Excess Aggregate Contributions shall not be distributed. 13. Effective on the first day of the 1992 Plan Year, the provisions relating to the determination of a financial need for a Serious Financial Hardship shall be liberalized in accordance with the rules set forth in the final 401(k) regulations. 14. Effective on the first day of the 1992 Plan Year, the provisions relating to the correction of excess Annual Additions shall be amended and governed by the terms of Article V of the Plan attached hereto. 15. Effective January 1, 1993, the provisions relating to Direct Rollovers shall be added to the Plan as governed by the terms of Article VI-A of the Plan attached hereto. 16. Effective for Plan Years beginning in 1994, Compensation shall be limited to a maximum of $150,000. 17. The terms of the Plan as heretofore set forth shall no longer apply with respect to Participants under the Plan who have not terminated employment (including terminations on account of Retirement, death or Disability); and the terms of the Plan with respect to such Participants shall henceforth be as set forth in the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Non-Union Employees, a copy of which is attached to and forms a part of this amendment. 94 97 18. The Plan and Trust as amended and restated, shall represent a continuation of the prior Plan and Trust as heretofore set forth and shall not abridge or curtail any rights accorded to Participants under said prior instrument. IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have hereunto affixed their signatures. Executed at on June 24 , 1994 - ----------------------------------- ---------------------------------------- DOMINICK'S FINER FOODS, INC. By: /s/ Charles L. B. - ----------------------------------- ------------------------------------- Witness Title: S.V.P. Human Resources ---------------------------------- Accepted this 24th day of June, 1994. By: /s/ Chris Wendt. - ----------------------------------- ------------------------------------- Witness Administrator Accepted this 21st day of July, 1994. /s/ Maria E. Malave By: /s/ J. G. S. - ----------------------------------- ------------------------------------- Witness Trustee IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 95 98 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR NON-UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Non-Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan in section 14.1 thereof, and WHEREAS, the Employer now desires to amend the Plan to reflect that investment changes and transfers may be made at any time; and NOW THEREFORE, the Plan is hereby amended effective June 30, 1995 as follows: 1. Section 13.10 is deleted in its entirety and replaced with the following: "13.10 INVESTMENT OF CONTRIBUTIONS. Each Participant shall have the exclusive authority to direct the investment of contributions made to his Participant's Account. In accordance with the procedures established by the Plan Administrator, the Participant shall elect to have a specified percentage invested in one or more investment funds, as long as the designated percentage for each fund is a whole number, and the sum of the percentages allocated is equal to 100%. In addition,, the Participant may change such election at any time. All investment changes are subject to the rules of the investment fund(s) in which the Participant's Account is or is to be invested." 2. Section 13.11 is deleted in its entirety and replaced with the following: "13.11 TRANSFERS BETWEEN INVESTMENT FUNDS. A Participant may designate amounts invested pursuant to the section above to be transferred between the investment funds at any time in accordance with the procedures established by the Plan Administrator. Notwithstanding the above, the transfer of amounts between investment funds shall be subject to the rules of the investment funds in which the Participant's Account is invested or is to be invested." IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have hereunto affixed their signatures. Executed at Dominick's Finer Foods on November 15, 1995 DOMINICK'S FINER FOODS, INC. 96 99 /s/ A. S. By /s/ Robert G. M. - ----------------------------------- ------------------------------------- Title President and C.O.O. ---------------------------------- Accepted this 15th day of November 15, 1995. /s/ A. S. By /s/ L. Canter - ----------------------------------- ------------------------------------- Witness Administrator Accepted this ______ day of ____________, ______. By - ----------------------------------- ------------------------------------- Witness Trustee IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 97 100 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR NON-UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Non-Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan in section 14.1 thereof; and WHEREAS, the Employer now desires to amend the Plan to reflect that Participants may have two outstanding loans at a time; and NOW THEREFORE, the Plan is hereby amended effective October 1, 1995 as follows: Section 10A.1 is deleted in its entirety and replaced with the following: "10A.1 LOANS TO PARTICIPANTS. The Plan Administrator may make a bona fide loan to a Participant, in an amount which, when added to the outstanding balance of all other loans to the Participant from all qualified plans of the Employer, does not exceed the lesser of $50,000 reduced by the excess of the Participant's highest outstanding loan balance during the 12 months preceding the date on which the loan is made over the outstanding loan balance on the date the new loan is made, or 50% of the Participant's Vested Interest in his Participant's Account. Participants will be limited to only two outstanding loan at a time. The loan shall be made under such terms, security interest, and conditions as the Plan Administrator deems appropriate, provided, however, that all loans granted hereunder: (A) are available to all Participants and Beneficiaries, who are parties-in-interest pursuant to section 3(14) of ERISA, on a reasonably equivalent basis; (B) are not made available to Highly Compensated Employees on a basis greater than the basis made available to other Employees; (C) bear a reasonable rate of interest; (D) are adequately secured; (E) unless a Participant meets the requirements set forth in Sections 8.1 (A), (B) and (C), are made only after a Participant obtains the consent of his Spouse, if any, to use his Participant's Account as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a plan 98 101 representative or notary public. Such consent shall thereafter be binding with respect to the consenting Spouse or any subsequent Spouse with respect to that loan. A new consent shall be required if the Participant's Account is used for renegotiation, extension, renewal or other revision of the loan. (F) are made in accordance with and subject to all of the provisions of this Article." IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have hereunto affixed their signatures. Executed at Dominick's Finer Foods on November 15, 1995. DOMINICK'S FINER FOODS, INC. /s/ A. S. By /s/ Robert A. M. - ----------------------------------- ------------------------------------- Witness Title President and C.O.O. ----------------------------------- Accepted this 15th day of November, 1995. /s/ A. S. By /s/ L. Canter - ----------------------------------- ------------------------------------- Witness Administrator Accepted this ______ day of ___________________, ________ By - ----------------------------------- ------------------------------------- Witness Trustee IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 99 102 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR NON-UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Non-Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan in Section 14.1 thereof, and WHEREAS, the Employer now desires to amend the Plan to permit deferral elections to be revocable, to permit age 59-1/2 withdrawals, to permit terminated Participants to make withdrawals and to revise the definition of Compensation for purposes of Article 16A; NOW THEREFORE, the Plan is hereby amended effective January 1, 1996 as follows: 1. Section 16A. 1 (A) is deleted in its entirety and replaced with the following: "(A) Compensation. For purpose of Section 16A.4, the term Compensation means Compensation as defined in Article V of the Plan. However, for purposes of Section 16A. 1 (B), the term Compensation means Compensation as defined in Article V, but includes the amount of any elective contributions made by the Employer on the Employee's behalf to a cafeteria plan established in accordance with the provisions of Code section 125, a qualified cash or deferred arrangement in accordance with the provisions of code section 402(e)(3), a simplified employee pension plan in accordance with the provisions of Code section 402(h)(1)(B), or a tax-sheltered annuity plan maintained in accordance with the provisions of Code section 403(b)." 2. Section 10.8 is added to the Plan as follows: "WITHDRAWAL AFTER AGE 59-1/2. A Participant who has attained age 59-1/2, may elect to withdraw from his Participant's Account, at any time, an amount which is equal to any whole percentage (not exceeding 100%) of his Vested Interest in his Participant's Account attributable to: - Elective Deferral Contributions, including earnings - Matching Contributions, including earnings - Prior Employer Contributions, including earnings - Rollover Contributions, including earnings - Prior Employee Contributions, including earnings." 100 103 NOW THEREFORE, the Plan is hereby amended effective June 1, 1996 as follows: 1. Section 6.1 is deleted in its entirety and replace with the following: "DISTRIBUTION IN GENERAL. Each Participant may elect, with his Spouse's consent if required, a distribution in the form of an Annuity, a single sum cash payment, or a combination of the above. A Participant who is no longer an Employee of the Employer, may elect a distribution from his Participant's Account, at any time, an amount which is equal to any whole percentage (not exceeding 100%) of his Vested Interest in his Participant's Account. All distributions are subject to the provisions of Article VIII, Joint and Survivor Annuity Requirements." 2. The second paragraph of Section 6.2 is deleted in its entirety and replaced with the following: "Instead of consenting to a distribution, the Participant may make a written election to defer the distribution for a specified period of time ending no later than the Participant's attainment of age 62. A Participant whose actual retirement date is on or after his Normal Retirement Date may make a written election to defer the distribution for a specified period of time subject to the requirements of Section 6.4. All such elections to defer shall be revocable." IN WITNESS WHEREOF, the Employer, the Administrator and the Trustee have hereunto affixed their signatures. Executed at on ------------------------ ------------------------------------- DOMINICK'S FINER FOODS, INC. /s/ S.M.B. By /s/ Robert C. M. - ----------------------------------- -------------------------------------- Witness Title President and C.E.O. ----------------------------------- Accepted this 7th day of October, 1996. /s/ Margeret S. By /s/ L.M. - ----------------------------------- -------------------------------------- Witness Administrator Accepted this 21st day of October, 1996. /s/ S. A. Coelho By /s/ Robert S. - ----------------------------------- -------------------------------------- Witness Trustee 101 104 IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 102 105 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR NON-UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 401(k) Retirement Plan for Non-Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan in Section 14.1 thereof; and WHEREAS, the Employer now desires to amend the Plan to reflect changes in the Plan's entry dates and eligibility requirements; NOW THEREFORE, the Plan is hereby amended effective July 1, 1997 as follows: 1. Section 1.27 is deleted in its entirety and replaced with the following: "ENTRY DATE. The term Entry Date means either the Effective Date or the first scheduled payroll period thereafter when an Employee who has fulfilled the eligibility requirements commences participation in the Plan. If an Employee is not in the active Service of the Employer as of his initial Entry Date, his subsequent Entry Date shall be the date he returns to the active Service of the Employer, provided he still meets the eligibility requirements. If an Employee does not enroll as a Participant as of his initial Entry Date, his subsequent Entry Date shall be the applicable Entry Date as specified above when the Employee actually enrolls as a Participant." 2. Section 3.1 is deleted in its entirety and replaced with the following: "ELIGIBILITY. Each Employee who was a Participant prior to the Effective Date and who is in the Service of the Employer on the Effective Date shall continue as a Participant in the Plan. Each other Employee, excluding a Leased Employee, shall be eligible to become a Participant as of the Effective Date or the Entry Date when he first meets the following requirement(s): - Age 18 - Six months of employment - Not in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between Employee representative and the Employer, if there is evidence that retirement benefits were the subject of good 103 106 faith bargaining between such Employee representatives and the Employer, unless the collective bargaining agreement provides for coverage under this Plan. - Not a non-resident alien with no U.S.-source income - Not an Independent Contractor" IN WITNESS WHEREOF, the Employer and the Administrator have hereunto affixed their signatures. Executed at on ------------------------ -------------------------------------- DOMINICK'S FINER FOODS, INC. /s/ Margaret S. By /s/ Robert G. M. - ----------------------------------- -------------------------------------- Witness Title ----------------------------------- Accepted this 21st day of July, 1997. /s/ Margaret S. By /s/ L.M. - ----------------------------------- -------------------------------------- Witness Administrator IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 104 107 AMENDMENT TO DOMINICK'S FINER FOODS, INC. 401(K) RETIREMENT PLAN FOR NON-UNION EMPLOYEES WHEREAS, Dominick's Finer Foods, Inc. (hereinafter referred to as the "Employer") established the Dominick's Finer Foods, Inc. 40l(k) Retirement Plan for Non-Union Employees (hereinafter referred to as the "Plan") effective March 25, 1957 for the benefit of its eligible Employees and their Beneficiaries; and WHEREAS, the Employer reserved the right to amend the Plan under the terms thereof:, and WHEREAS, the Employer now desires to amend the Plan under the Small Business Job Protection Act of 1996 ("SBJPA") as it relates to all employees who are not 5% owners and reach age 70-1/2 in a calendar year beginning after December 31, 1998 under Section 6.4 of the Plan; and NOW THEREFORE, the Plan is hereby amended effective December 31, 1998 as follows: Section 6.4 of the Plan entitled "COMMENCEMENT OF DISTRIBUTIONS" is hereby amended by deleting the last sentence of the second paragraph and the entire third and fourth paragraphs thereof, and adding in their place the following: "The first required beginning date of a Participant is the first day of April of the calendar year following the later of (i) the calendar year in which the Participant attains age 70 1/2, or (ii) the calendar year in which the Participant retires. Notwithstanding the foregoing, for a Participant who is a five (50/6) owner of the Employer (as determined under Code Section 416(i)) at any time during the Plan Year, payment of the Participant's benefit must begin not later than April 1 of the calendar year following the calendar year in which the Participant attains age 70 1/2." IN WITNESS WHEREOF, the Employer and the Administrator have hereunto affixed their signatures. Executed at 505 Railroad Ave. on 12-23-98 ------------------------ -------------------------------------- DOMINICK'S FINER FOODS, INC. /s/ Margaret S. By /s/ D. C. Howard - ----------------------------------- -------------------------------------- Witness Title Director Human Resources ----------------------------------- Accepted this ______ day of ___________________, ________ By - ----------------------------------- -------------------------------------- Witness Administrator 105 108 Accepted this ______ day of ___________________, ________ By - ----------------------------------- -------------------------------------- Witness Trustee IMPORTANT NOTE Neither Connecticut General Life Insurance Company nor any of its employees can provide you with legal advice in connection with the execution of this document. Prior to execution of this document, you should consult your attorney on whether this document is appropriate for you. 106 EX-23.1 9 CONSENT OF DELOITTE & TOUCHE LLP 1 Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Safeway Inc. on Form S-8 of our report dated March 5, 1999, incorporated by reference in the Annual Report on Form 10-K of Safeway Inc. for the year ended January 2, 1999. /s/ DELOITTE & TOUCHE LLP San Francisco, California November 29, 1999 -----END PRIVACY-ENHANCED MESSAGE-----