FIRST AMENDMENT
TO THE
GRAY COMMUNICATIONS SYSTEMS, INC.
CAPITAL ACCUMULATION PLAN
THIS AMENDMENT to the Gray Communications Systems, Inc. Capital
Accumulation Plan, made this _______ day of ________, 1997, by Gray
Communications Systems, Inc., a corporation organized and existing under the
laws of the State of Georgia (hereinafter referred to as the "Employer"), to be
effective January 1, 1997, or as otherwise indicated.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Employer has previously adopted the Gray Communications
Systems, Inc. Capital Accumulation Plan (hereinafter referred to as the "Plan");
and
WHEREAS, the Employer wishes to amend the Plan at this time in order
to reflect recent changes in Federal law, to provide for investment in Class B
common stock of the Employer, and for other purposes;
NOW THEREFORE, the Plan is hereby amended in the following
particulars:
1.
The Preamble of the Plan is changed by deleting the references to
Sections 41 and 409 of the Code.
2.
Section 1.03 of the Plan is amended to read as follows:
1.03 AFFILIATED COMPANY: Any company or organization directly or
indirectly controlled by, controlling, or under common control with
the Company, within the meaning of Section 1563(a) of the Internal
Revenue Code, determined without regard to Sections 1563(a)(4) and
1563(e)(3)(C) thereof, or Section 414(c) of the Code or is a member
of an affiliated service group within the meaning of Section 414(m) of
the Code.
3.
Section 1.11 of the Plan is amended to read as follows:
(c) for all purposes under the Plan except Articles 15 and 16,
and for purposes of Article 15 beginning with the 1998 Plan Year,
Earnings shall include any amount contributed by the Employer on
behalf of an Employee pursuant to a salary reduction agreement which
is not includable in the gross income of the Employee under
Section 125, 402(a)(8), or 402(h) of the Code; and
4.
Section 1.29 of the Plan is amended to read as follows:
1.29 SHARE OF COMPANY STOCK: A share of common stock of the
Company. Effective beginning January 1997 for Employer Contributions
under Article 4 and beginning April 1997 for Participant Contributions
under Article 3, and investment elections and transfers of Accounts
under Article 5, Class B Common Stock shall be used.
5.
Section 2.02 of the Plan is amended by replacing the third
paragraph with the following:
With respect to a Rollover, Plan to Plan Transfer, or Contribution
under Section 4.02(b), an Employee shall automatically become a
Participant at the time of rollover, transfer, or Contribution.
6.
The first paragraph of Section 3.09 of the Plan is amended to read
as follows:
ROLLOVER CONTRIBUTIONS: Any employee upon commencement of
Employment may make a rollover contribution to the Trust Fund of all
or any portion of the entire amount which is an eligible rollover
distribution, as defined in Section 402(c)(4) of the Code and Treasury
Regulation Section 1.402(c)-2, Q&A 3 and 4, provided such rollover
contribution is either (i) a direct transfer from another qualified
plan or (ii) received on or before the 60th day immediately following
the date the Employee received such distribution from a qualified plan
or conduit individual retirement account or annuity. Only cash or its
equivalent may be contributed to the Plan.
7.
Section 4.02(b) of the Plan is amended to read as follows:
(b) To satisfy either the Actual Deferral Percentage Test of
Section 16.02 or the Actual Contribution Percentage Test of Section
16.03, contribute or reclassify amounts which may be designated as
"qualified non-elective contributions" within the meaning of
Section 401(m)(4)(C) of the Code or as "qualified matching
contributions" within the meaning of Treasury Regulations issued
pursuant to Sections 401(k) and (m) of the Code, which amounts may be
allocated, at the direction of the Employer and in accordance with
applicable Treasury Regulations, only among the appropriate
Accounts of those who are not Highly Compensated Employees according
to Article 16. Qualified nonelective contributions will be
allocated to all such eligible Employees. Qualified
matching contributions will be allocated to all such Employees who
have made contributions during the Plan Year. Any contributions
made under this Section 4.02(b) shall be fully vested and
nonforfeitable, shall be identified as allocable or reallocable to
the Company Additional Contribution Accounts of the affected
Participants, and may be withdrawn pursuant to Section 8.03.
8.
Section 7.04 of the Plan is amended by deleting "in" between
"Contribution" and "Account" in item (i) of the second paragraph.
9.
Section 7.06 of the Plan is amended by replacing the first
sentence of the first paragraph with the following:
Subject to the following paragraph, benefits shall be paid or
made available under the Plan upon the direction of the
Committee as soon as practicable after termination of
Employment occurs.
10.
Section 7.07(d) is amended to read as follows:
(d) For purposes of this Section, the term "required
beginning date" means April 1 of the calendar year following
the calendar year in which the Participant attains age
70 1/2, or such other date as may be prescribed by regulations.
Provided however, in the case of a Participant who is not a 5%
owner included under Section 14.02(b)(3) the term "required
beginning date" means April 1 of the calendar year following the
later of: (1) the calendar year in which the Participant attains
70 1/2, or (2) the calendar year in which the Participant retires
or otherwise terminates Employment.
11.
The last paragraph of Section 7.07 of the Plan is amended to
read as follows:
Distributions will be made in accordance with the regulations
under Section 401(a)(9) of the Code, and (to the extent consistent
with Section 401(a)(9) of the Code), the minimum distribution
requirements in Section 1.401(a)(9)-1 of the Proposed Treasury
Regulations, and the minimum distribution incidental death benefit
requirements of Section 1.401(a)(9)-2 of the Proposed Treasury
Regulations.
12.
Section 8.03 of the Plan is amended by replacing the first
paragraph with the following:
Upon written application by a Participant for a Specified
Hardship Withdrawal and approval by the Plan Administrator, the
Participant may withdraw from his Accounts as follows, in the
order indicated.
(1) Non Tax-Deferred Employee Contribution Account;
(2) Rollover Account;
(3) Vested Value of Matching Company Contribution Account under
Section 4.01 and Vested Value of Company Additional
Contribution Account under Section 4.02(a);
(4) Company Additional Contribution Account under Section
4.02(b);
(5) Tax-Deferred Employee Contribution Account, excluding
investment return;
13.
Section 8.03(h) of the Plan is amended by adding the following
at the end of the first sentence:
(but not including any health or welfare benefit plan, including
one that is part of a cafeteria plan under Section 125 of the
Code).
14.
Section 11.05 of the Plan is amended by deleting the reference
to Section 409 of the Code.
15.
Section 12.01 of the Plan is amended by replacing "411(d)(b)"
with "411(d)(6)."
16.
Section 12.03 of the Plan is amended by replacing "4976(3)"
with "4975(e)(7)."
17.
Section 15.02 is amended by inserting the following as the
first paragraph:
This Section shall not apply after the 1999 Plan Year.
18.
Article 16 of the Plan is amended to read as follows:
SPECIAL 401(k) AND 401(m) NONDISCRIMINATION RULES
16.01 DEFINITIONS: For purposes of this Article 16, the following
words and phrases shall have the following meanings:
(a) ACTUAL DEFERRAL PERCENTAGE: The ratio (to the nearest
one-hundredth of one percent (1/100%)), of Elective Deferrals and
Qualified Employer Deferral Contributions on behalf of the
Eligible Participant for the Plan Year to the Eligible
Participant's Earnings for the Plan Year.
Such Elective Deferrals and/or Qualified Employer Deferral Contributions
shall be taken into account for a Plan Year only if allocated to the
Employee's Accounts as of a date within that Plan Year. For this
purpose, an elective contribution is considered allocated as of a date
within a Plan Year if the allocation is not contingent on participation
or performance of services after such date, and the elective
contribution is actually paid to the Trust Fund no later than twelve
(12) months after the Plan Year to which the contribution relates.
Such Elective Deferrals and/or Qualified Employer Deferral Contributions
shall be taken into account for a Plan Year only if they relate to
Earnings that either would have been received by the Employee in the
Plan Year (but for the deferral election) or are attributable to
services performed by the Employee in the Plan Year and would have been
received by the Employee within 2-1/2 months after the close of the Plan
Year (but for the deferral election).
For this purpose, the Employer may elect to take into account Qualified
Nonelective Contributions and/or qualified matching contributions
allocated to the Participant's Accounts for the Plan Year only if the
conditions described in Section 401(k)(3) and Section 1.401(k)-1(b)(5)
of the regulations are satisfied.
(b) ADJUSTMENT FACTOR: The cost of living adjustment factor prescribed by
the Secretary of the Treasury under Section 415(d) of the Code, as
applied to such items and in such manner as the Secretary shall provide.
(c) AVERAGE ACTUAL DEFERRAL PERCENTAGE (ADP): The average (to the nearest
one-hundredth of one percent (1/100%)) of the Actual Deferral
Percentages of the Eligible Participants in a group.
(d) AVERAGE CONTRIBUTION PERCENTAGE (ACP): The average (to the nearest
one-hundredth of one percent (1/100%)) of the Contribution Percentages
of the Eligible Participants in a group.
(e) CONTRIBUTION PERCENTAGE: The ratio (to the nearest one-hundredth of one
percent (1/100%)), of the sum of the Employee Contributions and
Matching Contributions under the plan on behalf of the Eligible
Participant for the Plan Year to the Eligible Participant's Earnings for
the Plan Year. For this purpose, the Employer may elect to take into
account Elective Deferrals and/or Qualified Nonelective Contributions
allocated to a Participant's Accounts, instead of under sub-section (a),
only if the conditions described in Section 401(m)(3) of the Code and
Section 1.401(m)-1(b)(5) of the regulations are satisfied. These
conditions include:
(1) The nonelective contributions, including Qualified Nonelective
Contribution treated as matching contributions under this
sub-section (e), satisfy the requirements of Section 401(a)(4) of
the Code;
(2) The nonelective contributions, excluding Qualified Nonelective
Contributions treated as matching contributions under this
subsection (e) and Qualified Nonelective Contributions treated as
Qualified Employer Deferral Contributions for purposes of subsection
(a), satisfy the requirements of Section 401(a)(4) of the Code;
(3) The elective contributions, including those treated as matching
contributions under this subsection (e), satisfy the requirements of
Section 401(k)(3) of the Code.
(f) DEFERRAL AMOUNT: The amount of Elective Deferrals for a calendar year
that the Participant allocates to this Plan pursuant to the claim
procedure set forth in Section 16.02(b).
(g) ELECTIVE DEFERRALS: Contributions made to the Plan during the Plan Year
by the Employer, at the election of the Participant, in lieu of cash
compensation and including contributions made pursuant to a salary
reduction agreement.
(h) ELIGIBLE PARTICIPANT: For purposes of Section 16.02, any Employee of the
Employer who is directly or indirectly eligible to have Elective
Deferrals, or Qualified Employer Deferral Contributions allocated to his
Accounts for the Plan Year, including:
(1) an Employee who would be a Plan Participant but for the failure to
make required contributions;
(2) an Employee whose right to make contributions under Article 3 or
receive matching contributions under Article 4 has been suspended
because of an election (other than certain one-time elections) not
to participate; a distribution; or a loan;
(3) an Employee who cannot make an Elective Deferral under Article 3,
because Article 16 of this Plan and Section 415 of the Code prevents
the Employee from receiving additional "annual additions", as
defined in Section 16.01.
In the case of an Eligible Participant who makes no Elective Deferrals
under Sections 3.01 or 3.02 or who receives no Employer Contributions
under Section 4.02(b), the Actual Deferral Percentage to be included in
deferring the ADP is zero.
For purposes of Section 16.03, any Employee of the Employer who is
directly or indirectly eligible to have Employee Contributions or
Matching Contributions allocated to his Account for the Plan Year,
including:
(1) an Employee who would be a Plan Participant but for the failure to
make required contributions;
(2) an Employee whose right to make contributions under Article 3 or
receive matching contributions under Article 4 has been suspended
because of an election (other than certain one-time elections) not
to participate;
(3) an Employee who cannot make a contribution under Article 3 or
receive matching contributions under Article 4, because Article 16
of this Plan and Section 415(c)(1) or Section 415(e) of the Code
prevents the Employee from receiving additional "annual additions",
as defined in Section 16.01.
In the case of an Eligible Participant who makes no contributions under
Section 3.03 or who receives no Employer Contributions under Section
4.01 or 4.02(a), the Contribution Percentage to be included in
determining the ACP is zero.
(i) EMPLOYEE CONTRIBUTIONS: Contributions to the Plan made by a Participant
during the Plan Year.
(j) EXCESS AGGREGATE CONTRIBUTIONS: The excess of:
(1) the aggregate amount of the Employee Contributions and Matching
Contributions, any recharacterized contributions under Section
16.02(e)(2) and, if taken into account under Section 16.03, the
Deferral Amounts actually made on behalf of Highly Compensated
Eligible Participants for the Plan Year, over
(2) the maximum amount of the Contributions permitted under the
limitations of Section 16.03, determined under the "leveling
method".
Under the leveling method, the Excess Aggregate Contributions of the
Highly Compensated Employee with the highest Contribution amount shall
be reduced to the greater of the next highest such amount or an amount
which will produce an Average Contribution Percentage that will satisfy
the test under Section 16.03(a). This reduction process will be repeated
as necessary to satisfy the test for such Plan Year.
The amount of Excess Aggregate Contributions for a Highly Compensated
Employee is equal to the total of contributions under subsection (1), minus
the amount of the Contribution determined under the previous paragraphs.
(k) EXCESS CONTRIBUTIONS: The excess of:
(1) the aggregate amount of Deferral Amounts and Qualified Employer
Deferral Contributions actually contributed on behalf of Highly
Compensated Eligible Participants for the Plan Year, over
(2) the maximum amount of Deferral Amounts permitted under the
limitations of Section 16.02, determined under the "leveling method".
Under the leveling method, the Excess Contributions of the Highly
Compensated Employee with the highest Deferral Amount shall be reduced to
the greater of the next highest such Amount or an Amount which will produce
an Average Actual Deferral Percentage that will satisfy the test under
Section 16.02(b). This reduction process will be repeated as necessary to
satisfy the test for such Plan Year.
(l) HIGHLY COMPENSATED EMPLOYEE: For each Plan Year, a Highly Compensated
Active Employee or Highly Compensated Former Employee is determined under
the following rules:
(1) A Highly Compensated Active Employee shall include:
(A) any Employee who performs service for the Employer during the
determination year and who, during the look-back year: received
Earnings from the Employer in excess of $80,000 (as modified by
the Adjustment Factor) and is in the top 20% of the Employees when
Employees are ranked on the basis of Earnings during the look-back
year.
(B) an Employee who is a Five-Percent Owner at any time during the
look-back year or determination year. A five--Percent Owner is a
person who owns (or is considered as owning within the meaning of
Code Section 318) more than five percent (5%) of the outstanding
stock of the Employer or Affiliated Company, or stock possessing
more than five percent (5%) of the total combined voting power of
all stock of the Employer or Affiliated Company.
(2) A Highly Compensated Former Employee shall include an Employee who
terminated employment with the Employer (or was deemed to have
terminated employment) before the determination year, performs no
service for the Employer during the determination year and was a
Highly Compensated Active Employee for the separation year or any
determination year ending on or after the Employee's 55th birthday.
(3) The determination of who is a Highly Compensated Employee, shall be
made in accordance with Code Section 414(g) and the regulations
thereunder.
(4) For purposes of this Section the determination year shall be the
Plan Year; and the look-back year shall be the twelve-month period
immediately preceding the determination year.
(m) NONHIGHLY COMPENSATED EMPLOYEE: An Employee of the Employer who is not a
Highly Compensated Employee.
(n) QUALIFIED EMPLOYER DEFERRAL CONTRIBUTIONS: Qualified Non-elective
Contributions taken into account under the terms of the Plan in determining
the Actual Deferral Percentage.
(o) QUALIFIED NONELECTIVE CONTRIBUTIONS: Contributions (other than Matching
Contributions) made by the Employer and allocated to Participants' Accounts
that the Participant may not elect to receive in cash until distributed
from the Plan; that are 100 percent vested and nonforfeitable when made;
and that are not distributable under the terms of the Plan to Participants
or their Beneficiaries earlier than the earlier of:
(1) separation from service, death, or disability of the participant;
(2) attainment of the age of 59 1/2 by the Participant;
(3) termination of the Plan without establishment of a successor plan;
(4) qualification for a Specified Hardship under Section 8.03.
16.02 ELECTIVE DEFERRALS:
(a) MAXIMUM DEFERRAL: No Employee shall be permitted to have Elective
Deferrals made under this Plan during any calendar year in excess
of $9,500, modified by the Adjustment Factor as provided by the
Secretary of the Treasury.
(b) DISTRIBUTION OF EXCESS DEFERRALS: Excess Deferrals and income
allocable thereto shall be distributed no later than each April 15
to Participants who claim such allocable Excess Deferrals for the
preceding calendar year.
The Participant's claim shall be in writing; shall be submitted to
the Plan Administrator no later than March 1; shall specify the
Participant's Excess Deferral Amount for the preceding calendar
year; and shall be accompanied by the Participant's written
statement that if such amounts are not distributed, such Excess
Deferral Amount, when added to amounts deferred under other plans or
arrangements described in Sections 401(k), 408(k) or 403(b) of the
Code, exceeds the limit imposed on the Participant by Section
402(g) of the Code for the year in which the deferral occurred.
The Excess Deferral Amount distributed to a Participant with respect
to a calendar year shall be adjusted for income and, if there is a
loss allocable to the Excess Deferral, shall in no event be less
than the lesser of the Participant's Account under the Plan or the
Participant's Elective Deferrals for the Plan Year.
(c) MAXIMUM ADP:
(1) The ADP for the determination year for Eligible Participants
who are Highly Compensated Employees shall not exceed the ADP
for the look back year for Eligible Participants who are
Nonhighly Compensated employees, multiplied by 1.25; or
(2) The ADP for the determination year for Eligible Participants
who are Highly Compensated Employees shall not exceed the 200%
of the ADP for the lookback year for Eligible Participants
who are Nonhighly Compensated Employees, and the excess of the
ADP for the determination year for Eligible Participants who
are Highly Compensated Employees over the ADP for the look
back year for Eligible Participants who are Nonhighly
Compensated Employees shall not be more than 2%.
(d) SPECIAL RULES:
(1) For purposes of this Section 16.02, the Actual Deferral
Percentage for any Eligible Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to
have Elective Deferrals or Qualified Employer Deferral
Contributions allocated to his account under two or more plans
or arrangements described in Section 401(k) of the Code that
are maintained by the Employer or an Affiliated Company and
that are aggregated for purposes of Section 401(a)(4) or
Section 410(b) (other than Section 410(b)(2)(A)(ii)) of the
Code shall be determined as if all such Elective Deferrals and
Qualified Employer Deferral Contributions were made under a
single arrangement. If this Plan and one or more other plans
are permissibly aggregated for purposes of the test described
in Sections 16.02(c), then the aggregated plans must also
satisfy sections 401(a)(4) and 410(b) of the Code as though
they constituted a single plan.
(2) Beginning with the 1999 Plan Year, the requirements of
Sub-section (c) shall not apply for any Plan Year for which a
Qualified Nonelective Contribution of 3% or more is made under
the provisions of Section 4.02(b), provided each eligible
Employee is provided with a written notice of his rights and
obligations under this arrangement within a reasonable period
before such year.
(3) For purposes of this Article, for the 1997 Plan Year, "the ADP
for Nonhighly Compensated Employees for 1997" shall be
substituted for "the ADP for the look-back year for Eligible
Participants who are Nonhighly Compensated Employees," in
Section 16.02(c).
(e) CORRECTION OF EXCESS CONTRIBUTIONS: If the above limitations of
Sections 16.02(c) and 16.02(d) would be exceeded in any Plan Year,
the Committee shall take one or more of the following actions (in
any order it deems advisable):
(1) Limit Future Tax-Deferred Contributions: The Committee may
limit future Basic or Supplemental Tax-Deferred Employee
Contributions for some or all Highly Compensated Employees to
the extent it deems necessary to pass the ADP test or the
Multiple Use Test.
(2) Recharacterize Excess Contributions: The Committee may
recharacterize Excess Contributions as after-tax contributions
for some or all Highly Compensated Employees to the extent
it deems necessary to pass the ADP test or the Multiple Use
Test. Any contributions so recharacterized shall be included
in the Participant's taxable income and shall remain subject
to the nonforfeitability requirements and distribution
limitations that apply to elective contributions.
The amount of Excess Contributions recharacterized as
after-tax contributions with respect to a Highly Compensated
Employee, when added to the amount of actual Supplemental Non
Tax-Deferred Employee Contributions made by the Participant,
may not exceed the maximum amount of Supplemental Non
Tax-Deferred Contributions that the Participant is permitted
to make under the Plan in the absence of recharacterization
(which maximum amount shall be determined without reference to
the limitations of Section 16.03(a) of this Plan).
(3) Return Excess Contributions: Excess Contributions and income
allocable thereto shall be distributed no later than the last
day of each Plan Year, to Participants on whose behalf such
Excess Contributions were made for the preceding Plan Year.
The Employer will be liable for a 10% excise tax on the amount
of Excess Contributions unless they are distributed within
2-1/2 months after the close of the Plan Year for which they
are made.
The income allocable to Excess Contributions shall be
determined by multiplying income allocable to the
Participant's Elective Deferrals and Qualified Employer
Deferral Contributions for the Plan Year by a fraction. The
numerator of the fraction is the Excess Contribution on behalf
of the Participant for the Plan Year. The denominator of
the fraction is the sum of the Participant's Account balances
attributable to Elective Deferrals and Qualified Employer
Deferral Contributions on the last day of the preceding Plan
Year plus the Participant's Elective Deferrals and Qualified
Employer Deferral Contributions for the Plan Year. No income
shall be included for the period between the end of the Plan
Year and the date of distribution (the "gap period").
The Excess Contributions to be distributed to the Participant
shall be adjusted for income; and shall, if there is a loss
allocable to the Excess Contributions, in no event be less
than the lesser of the Participant's Account under the Plan or the
Participant's Elective Deferrals and Qualified Employer Deferral
Contributions for the Plan Year.
Amounts distributed under this Subsection (e) shall first be
treated as distributions from the Participant's Elective Deferral
account and shall be treated as distributed from the Participant's
Qualified Employer Deferral Contribution account only to the
extent such Excess Contributions exceed the balance in the
Participant's Elective Deferral account.
If the entire account balance of a Highly Compensated Employee is
distributed during the Plan Year in which the Excess Contribution
occurred, the distribution is deemed to have been a corrective
distribution to the extent that a corrective distribution would have
been required.
(4) The amount of Excess Contributions to be recharacterized or
distributed under this Section 16.02(e) with respect to a
Participant for a Plan Year shall be reduced by any Excess Deferrals
previously distributed to the Participant for the same Plan Year.
Similarly, the amount of Excess Deferrals that may be distributed
with respect to a Participant for a Plan Year under Section
16.02(b) shall be reduced by any Excess Contributions previously
distributed or recharacterized with respect to the Participant for
the same Plan Year.
(5) Any correction of Excess Contributions in accordance with this
Section 16.02(e) shall be accomplished no later than March 15 of
the Plan Year following the Plan Year with respect to which the
Excess Contributions were originally made to the Plan.
16.03 EMPLOYEE AND MATCHING COMPANY CONTRIBUTIONS:
(a) MAXIMUM ACP:
(1) The ACP for the determination year for Eligible Participants
who are Highly Compensated Employees shall not exceed 125% of
the ACP for the look back year for Eligible Participants who
are Nonhighly Compensated Employees; or
(2) The ACP for the determination year for Eligible Participants who
are Highly Compensated Employees shall not exceed 200% of the
ACP for the look back year for Eligible Participants who are
Nonhighly Compensated Employees and the excess of the ACP for
the determination year for Eligible Participants who are Highly
Compensated Employees over the ACP for the look back year for
Eligible Participants who are Nonhighly Compensated Employees
shall not be more than 2%.
(b) SPECIAL RULES:
(1) For purposes of this Section 16.03, the Contribution Percentage
for any Eligible Participant who is a Highly Compensated Employee
for the Plan Year and who is eligible to make Employee
Contributions, or to receive Matching Contributions, Qualified
Nonelective Contributions or Elective Deferrals allocated to
his account under two or more plans described in Section 401(a)
of the Code or arrangements described in Section 401(k) of the
Code that are maintained by the Employer or an Affiliated
Company shall be determined as if all such contributions and
Elective Deferrals were made under a single plan.
(2) In the event that this Plan satisfies the requirements of Section
410(b) of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of
Section 410(b) of the Code only if aggregated with this Plan, then
this Section shall be applied by determining the Contribution
Percentages of Eligible Participants as if all such plans were a
single plan.
(3) For purposes of determining the Contribution Percentages, the
Committee may elect to take into account Elective Deferrals and/or
Qualified Employer Deferral Contributions allocated to a
Participant's Accounts, subject to the requirements
of Sections 401(a)(4) and 401(m) of the Code and the regulations
thereunder.
(4) The determination and treatment of the Contribution Percentage
of any Participant shall satisfy such other requirements as may
be prescribed by the Secretary of the Treasury.
(5) Beginning with the 1999 Plan Year, the requirements of this
subsection and subsection (c) shall not apply for Matching
Contributions under Section 4.01, if Section 16.02(d)(2) of this
Plan applies, provided each eligible Employee is provided with
a written notice of his rights and obligations under this
arrangement within a reasonable period before such year.
(6) For purposes of this Article for the 1997 Plan Year, "the ACP
for Nonhighly Compensated Employees for 1997" shall be
substituted for "the ACP for the look-back year for Eligible
Participants who are Nonhighly Compensated Participants" in
Section 16.03(a).
(c) MULTIPLE USE TEST: For each Plan Year, Sections 16.02(c)(2) and
16.03(a)(2) shall not be applied to satisfy the ADP test and
ACP test for the same Plan Year, unless:
(1) the ADP for all Highly Compensated Employees exceeds the
amount described in Section 16.02(c)(1);
(2) the ACP for all Highly Compensated Employees exceeds the
amount described in Section 16.03(a)(1);
(3) the sum of the ADP and the ACP for all Highly Compensated
Participants does not exceed the greater of the sum of (A)
and (B), or the sum of (C) and (D), where
(A) equals 125% of the greater of the ADP and the ACP for
all Nonhighly Compensated Participants.
(B) equals either 200% of the lesser of the ADP and the
ACP for all Nonhighly Compensated Participants or, if
less, the lesser of the ADP or the ACP for all Nonhighly
Compensated employees plus 2%.
(C) equals 125% of the lesser of the ADP and the ACP for all
Nonhighly Compensated Participants.
(D) equals either 200% of the greater of the ADP and the ACP
for all Nonhighly Compensated Participants or, if less,
the greater of the ADP or the ACP for all Nonhighly
Compensated Employees plus 2%.
In the event of a required reduction for Highly Compensated
Employees due to the Multiple Use Test, such reduction will be
made first under subsection 16.03(d) and then under subsection
16.02(e).
(d) CORRECTION OF EXCESS AGGREGATE CONTRIBUTIONS: If the Plan fails
or is projected to fail the ACP test, the Committee shall
take one or more of the following actions (in any order it
deems advisable) to pass the test(s):
(1) Limit Future Employee Contributions: The Committee may
limit future Supplemental Employee Contributions and/or
Company Matching Contributions for some or all Highly
Compensated Employees to the extent it deems necessary.
(2) Use Tax-Deferred Contributions: The Committee may
consider a portion of Tax-Deferred Contributions for some
or all Nonhighly Compensated Employees to be Employee
Contributions to the extent such Contributions are not
necessary to pass the ADP test or the Multiple Use Test.
(3) Return Excess Aggregate Contributions: Excess Aggregate
Contributions and income allocable thereto shall be
forfeited, if otherwise forfeitable under the terms of
this Plan, or if not forfeitable, distributed after the
Plan Year in which the Excess Aggregate Contributions
occurred, but no later than the last day of the
subsequent Plan Year, for each Plan Year beginning after
December 31, 1987.
The income allocable to Excess Aggregate Contributions
shall be determined by multiplying the income allocable
to the Participant's Employee Contributions and Matching
Employer Contributions for the Plan Year by a fraction.
The numerator of the fraction is the Excess Aggregate
Contributions on behalf of the Participant for the Plan
Year. The denominator of the fraction is the sum of the
Participant's Account balances attributable to Employee
Contributions and Matching Employer Contributions on the
last day of the preceding Plan Year, plus the amounts of
the Employee Contributions and Matching Employer
Contributions for the Plan Year. No income shall be
included for the period between the end of the Plan Year
and the date of distribution (the "gap period").
The Excess Aggregate Contributions to be distributed to a
Participant shall be adjusted for income, and, if there
is a loss allocable to the Excess Aggregate Contribution,
shall in no event be less than the lesser of the
Participant's Account under the Plan or the
Participants's Employee Contributions and Matching
Contributions for the Plan Year.
Notwithstanding any other provision herein, if any
Supplemental Non Tax-Deferred Employee Contributions are
treated as Excess Aggregate Contributions, then any
Matching Contributions that the Employer has made with
respect to such contributions shall be forfeited, and
shall be treated in accordance with Section 4.04.
(4) Notwithstanding any other provision herein, the amount of
the Excess Aggregate Contributions for a year shall be
calculated only after the determination of the amount of
the Excess Contributions that are to be recharacterized
as after-tax contributions in accordance with Section
16.02(e)(2).
(5) Any correction of Excess Aggregate Contributions in
accordance with this Section 16.03(d) shall be
accomplished no later than March 15 of the Plan Year
following the Plan Year with respect to which the
Excess Aggregate Contributions were originally made to
the Plan.
Excess Aggregate Contributions shall be distributed
from the Participant's Employee Contribution Account,
and forfeited if otherwise forfeitable under the terms
of the Plan (or, if not forfeitable, distributed) from
the Participant's Matching Contribution account in
proportion to the Participant's Employee Contributions
and Matching Contributions for the Plan Year.
Any distribution or forfeiture of Excess Aggregate
Contributions will be made on the basis of the
respective portions of such amounts that are attributable
to each Highly Compensated Employee.
If the entire Account balance of a Highly Compensated
Employee is distributed during the Plan Year in which
the Excess Aggregate Contribution occurred, the
distribution is deemed to have been a corrective
distribution to the extent that a corrective
distribution would have been required.
Amounts forfeited by Highly Compensated Employees under
this Section 16.03 shall be treated as Annual Additions
under Article 15 and applied to reduce employer
contributions.
19.
All other provisions of the Plan not inconsistent herewith are
hereby confirmed and ratified.
IN WITNESS WHEREOF, the Employer has caused this Amendment to be
executed on the day and year first above written.
GRAY COMMUNICATIONS SYSTEMS, INC.
By:
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