EXHIBIT 4.1
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The CharterBank 401(k) Plan and Adoption Agreement.
Exhibit 4.1
ADOPTION AGREEMENT FOR
PENSION & BENEFIT FINANCIAL SERVICES, INC.
NON-STANDARDIZED 401(K) PROFIT SHARING
PLAN AND TRUST
The undersigned Employer adopts the PENSION & BENEFIT FINANCIAL SERVICES, INC.
Non-Standardized 401(k) Profit Sharing Plan and Trust for those Employees who
shall qualify as Participants hereunder, to be known as the
A1 CHARTER BANK 401(k) PLAN
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(Enter Plan Name)
It shall be effective as of the date specified below. The Employer hereby
selects the following Plan specifications:
CAUTION: The failure to properly fill out this Adoption Agreement may result in
disqualification of the Plan.
EMPLOYER INFORMATION
B1 Name of Employer Charter Bank
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_____________________________________________________
B2 Address 600 Third Avenue
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West Point , GA 31833
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City State Zip
Telephone (706) 645-1391
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B3 Employer Identification Number 63-0333687
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B4 Date Business Commenced 1954
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B5 TYPE OF ENTITY
a. ( ) S Corporation
b. ( ) Professional Service Corporation
c. (X) Corporation
d. ( ) Sole Proprietorship
e. ( ) Partnership
f. ( ) Other ___
AND, is the Employer a member of...
g. a controlled group? ( ) Yes (X) No
h. an affiliated service group? ( ) Yes (X) No
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Copyright 1997-R PENSION & BENEFIT FINANCIAL SERVICES, INC.
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B6 NAMES OF TRUSTEE(S)
a. Pension & Benefit Trust Company
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b. ________________________________________________________________________
c. ________________________________________________________________________
d. ________________________________________________________________________
e. ________________________________________________________________________
B7 TRUSTEES' ADDRESS
a. ( ) Use Employer Address
b. (X) 260 Commerce Street, Third Floor
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Street
Montgomery , Alabama 36104
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City State Zip
B8 LOCATION OF EMPLOYER'S PRINCIPAL OFFICE:
a. (X) State b. ( ) Commonwealth of c. Georgia and this Plan and Trust
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shall be governed under the same.
B9 EMPLOYER FISCAL YEAR means the 12 consecutive month period:
Commencing on a. October 1/st/ (e.g., January 1st) and
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month day
ending on b. September 30/th/ .
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month day
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PLAN INFORMATION
C1 EFFECTIVE DATE
This Adoption Agreement of the PENSION & BENEFIT FINANCIAL SERVICES, INC.
Non-Standardized 401(k) Profit Sharing Plan and Trust shall:
a. ( ) establish a new Plan and Trust effective as of __ (hereinafter
called the "Effective Date").
b. (X) constitute an amendment and restatement in its entirety of a
previously established qualified Plan and Trust of the Employer
which was effective April 1, 1995 (hereinafter called the
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"Effective Date"). Except as specifically provided in the Plan, the
effective date of this amendment and restatement is January 1, 2000
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(For TRA '86 amendments, enter the first day of the first Plan Year
beginning in 1989).
C2 PLAN YEAR means the 12 consecutive month period:
Commencing on a. January 1st (e.g., January 1st) and
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Ending on b. December 31/st/.
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IS THERE A SHORT PLAN YEAR?
c. (X) No
d. ( ) Yes, beginning _______
and ending ___________________________________.
C3 ANNIVERSARY DATE of Plan (Annual Valuation Date)
a. December 31/st/
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month day
C4 PLAN NUMBER assigned by the Employer (select one)
a. ( ) 001 b. (X) 002 c. ( ) 003 d. ( ) Other _________
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C5 NAME OF PLAN ADMINISTRATOR (Document provides for the Employer to appoint
an Administrator. If none is named, the Employer will become the
Administrator.)
a. (X) Employer (Use Employer Address)
b. ( ) Name _______________________________________________________________
Address ( ) Use Employer Address
________________________________________________________________
___________________________________, ____________ _____________
City State Zip
Telephone_______________________________
Administrator's I.D. Number_____________
C6 PLAN'S AGENT FOR SERVICE OF LEGAL PROCESS
a. (X) Employer (Use Employer Address)
b. ( ) Name _______________________________________________________________
Address ____________________________________________________________
_____________________________________________________________
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ELIGIBILITY, VESTING AND RETIREMENT AGE
D1 ELIGIBLE EMPLOYEES (Plan Section 1.15) shall mean:
a. (X) all Employees who have satisfied the eligibility requirements.
b. ( ) all Employees who have satisfied the eligibility requirements
except those checked below:
1. ( ) Employees paid by commissions only.
2. ( ) Employees hourly paid.
3. ( ) Employees paid by salary.
4. ( ) Employees whose employment is governed by a collective
bargaining agreement between the Employer and "employee
representatives" under which retirement benefits were the
subject of good faith bargaining. For this purpose, the term
"employee representatives" does not include any organization
more than half of whose members are employees who are
owners, officers, or executives of the Employer.
5. ( ) Highly Compensated Employees.
6. ( ) Employees who are non-resident aliens who received no earned
income (within the meaning of Code Section 91(d)(2)) from
the Employer which constitutes income from sources within
the United States (within the meaning of Code Section
861(a)(3)).
7. ( ) Other ____
NOTE: For purposes of this section, the term Employee shall include all
Employees of this Employer and any leased employees deemed to be
Employees under Code Section 414(n) or 414(o).
D2 EMPLOYEES OF AFFILIATED EMPLOYERS (Plan Section 1.16)
Employees of Affiliated Employers:
a. ( ) will not or N/A
b. (X) will
be treated as Employees of the Employer adopting the Plan.
NOTE: If D2b is elected, each Affiliated Employer should execute this
Adoption Agreement as a Participating Employer.
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D3 HOURS OF SERVICE (Plan Section 1.31) will be determined on the basis of the
method selected below. Only one method may be selected. The method selected
will be applied to all Employees covered under the Plan.
a. (X) On the basis of actual hours for which an employee is paid or
entitled to payment.
b. ( ) On the basis of days worked. An Employee will be credited with
ten (10) Hours of Service if under the Plan such Employee would
be credited with at least one (1) Hour of Service during the day.
c. ( ) On the basis of weeks worked. An Employee will be credited forty-
five (45) Hours of Service if under the Plan such Employee would
be credited with at least one (1) Hour of Service during the day.
d. ( ) On the basis of semi-monthly payroll periods. An Employee will be
credited ninety-five (95) Hours of Service if under the Plan such
Employee would be credited with at least one (1) Hour of Service
during the semi-monthly payroll period.
e. ( ) On the basis of months worked. An Employee will be credited one
hundred ninety (190) Hours of Service if under the Plan such
Employee would be credited with at least one (1) Hour of Service
during the month.
D4 CONDITIONS OF ELIGIBILITY (Plan Section 3.1)
(Check either a OR b and c, and if applicable, d)
Any Eligible Employee will be eligible to participate in the Plan if such
Eligible Employee has satisfied the service and age requirements, if any,
specified below:
a. ( ) NO AGE OR SERVICE REQUIRED.
b. (X) SERVICE REQUIREMENT (may not exceed 1 year)
1. ( ) None
2. ( ) 1/2 Year of Service
3. ( ) 1 Year of Service
4. (X) Other 3 Months
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NOTE: If the Year(s) of Service selected is or includes a fractional
year, an Employee will not be required to complete any specified
number of Hours of Service to receive credit for such fractional
year. If expressed in Months of Service, an Employee will not be
required to complete any specified number of Hours of Service in
a particular month.
c. (X) AGE REQUIREMENT (may not exceed 21)
1. ( ) N/A - No Age Requirement.
2. (X) 20 1/2
3. ( ) 21
4. ( ) Other ________
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d. ( ) FOR NEW PLANS ONLY - Regardless of any of the above age or
service requirement, any Eligible Employee who was employed on
the Effective Date of the Plan shall be eligible to participate
hereunder and shall enter the Plan as of such date.
D5 EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.2)
An Eligible Employee shall become a Participant as of:
a. ( ) the first day of the Plan Year in which he met the requirements.
b. ( ) the first day of the Plan Year in which he met the requirements,
if he met the requirements in the first 6 months of the Plan
Year, or as of the first day of the next succeeding Plan Year if
he met the requirements in the last 6 months of the Plan Year.
c. (X) the earlier of the first day of the seventh month or the first
day of the Plan Year coinciding with or next following the date
on which he met the requirements.
d. ( ) the first day of the Plan Year following the date on which he met
the requirements. (Eligibility must be 1/2 Year of Service or
less or 1 1/2 Years of Service or less if 100% immediate vesting
is selected and age 20 1/2 or less.)
e. ( ) the first day of the month coinciding with or next following the
date on which he met the requirements.
f. ( ) Other:___________________________, provided that an Employee who
has satisfied the maximum age and service requirements that are
permissible in Section D4 above and who is otherwise entitled to
participate, shall commence participation no later than the
earlier of (a) 6 months after such requirements are satisfied, or
(b) the first day of the first Plan Year after such requirements
are satisfied, unless the Employee separates from service before
such participation date.
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D6 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4(b))
The vesting schedule, based on number of Years of Service, shall be as
follows:
a. ( ) 100% upon entering Plan. (Required if eligibility requirement is
greater than one (1) Year of Service.)
b. (X) 0-2 years 0% c. ( ) 0-4 years 0%
3 years 100% 5 years 100%
d. ( ) 0-1 year 0% e. ( ) 1 year 25%
2 years 20% 2 years 50%
3 years 40% 3 years 75%
4 years 60% 4 years 100%
5 years 80%
6 years 100%
f. ( ) 1 year 20% g. ( ) 0-2 years 0%
2 years 40% 3 years 20%
3 years 60% 4 years 40%
4 years 80% 5 years 60%
5 years 100% 6 years 80%
h. ( ) Other - Must be at least as liberal as either c. or g. above.
Years of Service Percentage
____________________ __________
____________________ __________
____________________ __________
____________________ __________
____________________ __________
____________________ __________
____________________ __________
____________________ __________
____________________ __________
____________________ __________
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D7 FOR AMENDED PLANS (Plan Section 6.4(f)) If the vesting schedule has been
amended to a less favorable schedule, enter the pre-amended schedule below:
a. ( ) Vesting schedule has not been amended or amended schedule is more
favorable in all years.
b. (X) Years of Service Percentage
0 100
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________________ __________
________________ __________
________________ __________
________________ __________
________________ __________
D8 TOP HEAVY VESTING (Plan Section 6.(c)) If this Plan becomes a Top Heavy
Plan, the following vesting schedule, based on number of Years of Service,
for such Plan Year and each succeeding Plan Year, whether or not the Plan
is a Top Heavy Plan, shall apply and shall be treated as a Plan amendment
pursuant to this Plan. Once effective, this schedule shall also apply to
any contributions made prior to the effective date of Code Section 416
and/or before the Plan became a Top Heavy Plan.
a. (X) N/A (D6a, b, d or f was selected)
b. ( ) 0-1 year 0% c. ( ) 0-2 years 0%
2 years 20% 3 years 100%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
NOTE: This section does not apply to the Account balances of any
Participant who does not have an Hour of Service after the Plan
has initially become top heavy. Such Participant's Account
balance attributable to Employer contributions and Forfeitures
will be determined without regard to this section.
D9 VESTING (Plan Section 6.4(h)) In determining Years of Service for vesting
purposes, Years of Service attributable to the following shall be EXCLUDED:
a. ( ) Service prior to the Effective Date of the Plan b. (X) N/A
or a predecessor plan.
c. ( ) Service prior to the time an Employee attained d. (X) N/A
age 18.
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D10 PLAN SHALL RECOGNIZE SERVICE WITH PREDECESSOR EMPLOYER
a. ( ) No.
b. (X) Yes: Years of Service with Citizens National Bank shall be
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recognized for the purpose of this Plan.
NOTE: If the predecessor Employer maintained this qualified Plan, then
Years of Service with such predecessor Employer shall be recognized
pursuant to Section 1.74 and b. must be marked.
D11. NORMAL RETIREMENT AGE ("NRA") (Plan Section 1.42) means:
a. (X) the date a Participant attains his 65th birthday. (not to exceed
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65th)
b. ( ) the later of the date a Participant attains his ___ birthday (not to
exceed 65th) or the c. __ (not to exceed 5th) anniversary of the
first day of the Plan Year in which participation in the Plan
commenced.
D12 NORMAL RETIREMENT DATE (Plan Section 1.43) shall commence:
a. (X) as of the Participant's "NRA."
OR (must select b. or c. AND 1. or 2.)
b. ( ) as of the first day of the month....
c. ( ) as of the Anniversary Date....
1. ( ) coinciding with or next following the Participant's "NRA."
2. ( ) nearest the Participant's "NRA."
D13 EARLY RETIREMENT DATE (Plan Section 1.12) means the:
a. ( ) No Early Retirement provision provided.
b. (X) date on which a Participant...
c. ( ) first day of the month coinciding with or next following the date on
which a Participant...
d. ( ) Anniversary Date coinciding with or next following the date on which
a Participant....
AND, if b, c, or d. was selected . . .
1. (X) attains his 55/th/ birthday and has
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2. (X) completed at least 10 Years of Service.
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CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS
E1 a. COMPENSATION (Plan Section 1.9) with respect to any Participant means:
1. ( ) Wages, tips and other Compensation on Form W-2.
2. (X) Section 3401(a) wages (wages for withholding purposes).
3. ( ) 415 safe-harbor compensation.
AND COMPENSATION:
1. ( ) shall
2. (X) shall not
exclude (even if includible in gross income) reimbursements or other
expense allowances, fringe benefits (cash or noncash), moving expenses,
deferred compensation, and welfare benefits.
b. COMPENSATION shall be
1. (X) actually paid (must be selected if Plan is integrated)
2. ( ) accrued
c. HOWEVER, for non-integrated plans, Compensation shall exclude (select
all that apply):
1. (X) N/A. No exclusions
2. ( ) overtime
3. ( ) bonuses
4. ( ) commissions
5. ( ) other __
d. FOR PURPOSES OF THIS SECTION E1, Compensation shall be based on:
1. (X) the Plan Year.
2. ( ) the Fiscal Year coinciding with or ending within the Plan Year.
3. ( ) the Calendar Year coinciding with or ending within the Plan
Year.
NOTE: The Limitation Year shall be the same as the year on which
Compensation is based.
e. HOWEVER, for an Employee's first year of participation, Compensation
shall be recognized as of:
1. ( ) the first day of the Plan Year.
2. (X) the date the Participant entered the Plan.
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f. IN ADDITION, COMPENSATION and "414(s) Compensation"
1. (X) shall 2. ( ) shall not include compensation which is currently
includible in the Participant's gross income by reason of the
application of Code Sections 125, 402(a)(8), 402(h)(1)(B) or 403(b).
E2 SALARY REDUCTION ARRANGEMENT - ELECTIVE CONTRIBUTION
(Plan Section 11.2) Each Employee may elect to have his compensation
reduced by:
a. ( ) __%
b. (X) up to 15%
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c. ( ) from __% to __%
d. ( ) up to the maximum percentage allowable not to exceed the limits of
Code Sections 401(k), 404 and 415.
AND...
e. (X) A Participant may elect to commence salary reductions as of January
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1/st/ and July 1/st/ (ENTER AT LEAST ONE DATE OR PERIOD). A
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Participant may modify the amount of salary reductions as of January
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1/st/, April 1/st/, July 1/st/, October 1/st/ and any time bonuses
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are paid (ENTER AT LEAST ONE DATE OR PERIOD).
AND...
Shall cash bonuses paid within 2 1/2 months after the end of the Plan
Year be subject to the salary reduction election?
f. ( ) Yes
g. (X) No
E3 FORMULA FOR DETERMINING EMPLOYER'S MATCHING CONTRIBUTION
(Plan Section 11.1(b))
a. ( ) N/A. There shall be no matching contributions.
b. ( ) The Employer shall make matching contributions equal to __% (e.g.
50%) of the Participant's salary reductions
c. (X) The Employer may make matching contributions equal to a
discretionary percentage, to be determined by the Employer, of the
Participant's salary reductions.
d. ( ) The Employer shall make matching contributions equal to the sum of
__% of the portion of the Participant's salary reduction which does
not exceed __% of the Participant's Compensation plus __% of the
portion of the Participant's salary reduction which exceeds __% of
the Participant's Compensation, but does not exceed __% of the
Participant's Compensation.
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e. ( ) The Employer shall make matching contributions equal to the
percentage determined under the following schedule:
Participant's Total Matching Percentage
Years of Service
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FOR PLANS WITH MATCHING CONTRIBUTIONS
f. (X) Matching contributions g. ( ) shall h. (X) shall not be used in
satisfying the deferral percentage tests. (If used, full vesting
and restrictions on withdrawals will apply and the match will be
deemed to be an Elective Contribution).
i. (X) Shall a Year of Service be required in order to share in the
matching contribution?
With respect to Plan Years beginning after 1989...
1. ( ) Yes (Could cause Plan to violate minimum participation
and coverage requirements under Code Section 401(a)(26)
and 410)
2. (X) No
With respect to Plan Years beginning before 1990...
1. (X) N/A, new Plan, or same as years beginning after 1989
2. ( ) Yes
3. ( ) No
j. ( ) In determining matching contributions, only salary reductions up
to __% of a Participant's Compensation will be matched.
k. (X) N/A
l. ( ) The matching contribution made on behalf of a Participant for
any Plan Year shall not exceed $__
m. (X) N/A
n. (X) Matching contributions shall be made on behalf of
1. (X) all Participants,
2. ( ) only Non-Highly Compensated Employees.
o. ( ) Notwithstanding anything in the Plan to the contrary, all
matching contributions which relate to distributions of Excess
Deferred Compensation, Excess Contributions, and Excess
Aggregate Contributions shall be Forfeited. (Select this option
only if it is applicable.)
E4 WILL A DISCRETIONARY EMPLOYER CONTRIBUTION BE PROVIDED (OTHER THAN A
DISCRETIONARY MATCHING OR QUALIFIED NON-ELECTIVE CONTRIBUTION) (Plan
Section 11.1(c))?
a. ( ) No.
b. ( ) Yes, the Employer may make a discretionary contribution out of
its current or accumulated Net Profit.
c. (X) Yes, the Employer may make a discretionary contribution which is
not limited to its current or accumulated Net Profit.
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IF YES (b. or c. is selected above), the Employer's discretionary
contribution shall be allocated as follows:
d. (X) FOR A NON-INTEGRATED PLAN
The Employer discretionary contribution for the Plan Year shall be
allocated in the same ratio as each Participant's Compensation bears to
the total of such Compensation of all Participants.
e. ( ) FOR AN INTEGRATED PLAN
The Employer discretionary contribution for the Plan Year shall be
allocated in accordance with Plan Section 4.3(b)(3) based on a
Participant's Compensation in excess of:
f. ( ) The Taxable Wage Base.
g. ( ) The greater of $10,000 or 20% of the Taxable Wage Base.
h. ( ) __% of the Taxable Wage Base. (See Note below)
i. ( ) $__. (see Note below)
NOTE: The integration percentage of 5.7% shall be reduced to:
1. 4.3% if h. or i. above is more than 20% and less than or equal to
80% of the Taxable Wage Base.
2. 5.4% if h. or i. above is less than 100% and more than 80% of the
Taxable Wage Base.
E5 QUALIFIED NON-ELECTIVE CONTRIBUTIONS (Plan Section 11.1(d))
a. (X) N/A. There shall be no Qualified Non-Elective Contributions except
as provided in Sections 11.5(b) and 11.7(h).
b. ( ) The Employer shall make a Qualified Non-Elective Contribution equal
to __% of the total Compensation of all Participants eligible to
share in the allocations.
c. ( ) The Employer may make a Qualified Non-Elective Contribution in an
amount to be determined by the Employer.
E6. FORFEITURES (Plan Section 4.3(e))
a. Forfeitures of contributions other than matching contributions shall
be...
1. (X) added to the Employer's contribution under the Plan.
2. ( ) allocated to all Participants eligible to share in the
allocations in the same proportion that each Participant's
Compensation for the year bears to the Compensation of all
Participants for such year.
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b. Forfeitures of matching contributions shall be...
1. ( ) N/A. No matching contributions or match is fully vested.
2. (X) used to reduce the Employer's matching contribution.
3. ( ) allocated to all Participants eligible to share in the
allocations in proportion to each such Participant's
Compensation for the year.
4. ( ) allocated to all Non-Highly Compensation Employee's eligible to
share in the allocations in proportion to each such
Participant's Compensation for the year.
E7 ALLOCATIONS TO ACTIVE PARTICIPANTS (Plan Section 4.3)
With respect to Plan Years beginning after 1989, a Participant...
a. (X) shall (Plan may become discriminatory)
b. ( ) shall not
be required to complete a Year of Service in order to share in any Non-
Elective Contributions (other than matching contributions) or Qualified
Non-Elective Contributions. For Plan Years beginning before 1990, the Plan
provides that a Participant must complete a Year of Service to share in the
allocations.
E8 ALLOCATIONS TO TERMINATED PARTICIPANTS (Plan Section 4.3(k))
Any Participant who terminated employment during the Plan Year (i.e. not
actively employed the last day of the Plan Year) for reasons other than
death, Total and Permanent Disability or retirement:
a. With respect to Employer Non-Elective Contributions (other than
matching), Qualified Non-Elective Contributions, and Forfeitures:
1. For Plan Years beginning after 1989.
i. ( ) N/A, Plan does not provide for such contributions
ii. ( ) shall share in the allocations provided such Participant
completed more than 500 Hours of Service
iii. ( ) shall share in such allocations provided such Participant
completed a Year of Service.
iv. (X) shall not share in such allocations, regardless of Hours
of Service.
2. For Plan Years beginning before 1990.
i. (X) N/A, new Plan, or same as years beginning after 1989.
ii. ( ) shall share in such allocations provided such Participant
completed a Year of service.
iii. ( ) shall not share in such allocation, regardless of Hours of
Service.
NOTE: If a.1.iii or iv. is selected, the Plan could violate minimum
participation and coverage requirements under Code Sections
401(a)(26) and 410.
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b. With respect to the allocation of Employer Matching Contributions, a
Participant:
1. For Plan Years beginning after 1989,
i. ( ) N/A, Plan does not provide for such contributions.
ii. (X) shall share in the allocations, regardless of Hours of
Service
iii. ( ) shall share in such allocations provided such Participant
completed more than 500 Hours of Service.
iv. ( ) shall share in such allocations provided such Participant
completed a Year of Service.
v. ( ) shall not share in such allocations, regardless of Hours
of Service.
For Plan Years beginning before 1990:
i. (X) N/A, new Plan, or same as years beginning after 1989.
ii. ( ) shall share in the allocations, regardless of Hours of
Service
iii. ( ) shall share in such allocations provided such
Participant completed a Year of Service.
iv. ( ) shall not share in such allocations, regardless of
Hours of Service.
NOTE: If b.1.iv or v is selected, the Plan could violate minimum
participation and coverage requirements under Code Section
401(a)(26) and 410.
E9 ALLOCATIONS OF EARNINGS (Plan Section 4.3(c))
Allocations of earnings with respect to amount contributed to the Plan
after the previous Anniversary Date or other valuation date shall be
determined...
a. ( ) by using a weighted average.
b. ( ) by treating one-half of all such contributions as being a part of
the Participant's nonsegregated account balance as of the previous
Anniversary Date or valuation date.
c. (X) by using the method specified in Section 4.3(c).
d. ( ) other ____
E10 LIMITATIONS ON ALLOCATIONS (Plan Section 4.4)
a. If any Participant is or was covered under another qualified
defined contribution plan maintained by the Employer, or if the
Employer maintains a welfare benefit fund, as defined in Code
Section 419(e), or an individual medical account, as defined in
Code Section 415(1)(2), under which amounts are treated as Annual
Additions with respect to any Participant in this Plan:
1. (X) N/A.
2. ( ) The provisions of Section 4.4(b) of the Plan will apply.
3. ( ) Provide the method under which the Plans will limit total
Annual Additions to the Maximum Permissible Amount, and will
properly reduce any Excess Amounts, in a manner that precludes
Employer discretion.
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b. If any Participant is or ever has been a Participant in a defined
benefit plan maintained by the Employer:
1. ( ) N/A.
2. (X) In any Limitation Year, the Annual Additions credited to the
Participant under this Plan may not cause the sum of the
Defined Benefit Plan Fraction and the Defined Contribution
Fraction to exceed 1.0. If the Employer's contribution that
would otherwise be made on the Participant's behalf during the
limitation year would cause the 1.0 limitation to be exceeded,
the rate of contribution under this Plan will be reduced so
that the sum of the fractions equals 1.0. If the 1.0
limitations exceeded because of an Excess Amount, such Excess
amount will be reduced in accordance with Section 4.4(a)(4) of
the Plan.
3. ( ) Provide the method under which the Plans involved will satisfy
the 1.0 limitation in a manner that precludes Employer
discretion.
E11 DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h)) Distributions upon the death
of a Participant prior to receiving any benefits shall...
a. (X) be made pursuant to the election of the Participant or beneficiary.
b. ( ) begin within 1 year of death for a designated beneficiary and be
payable over the life (or over a period not exceeding the life
expectancy) of such beneficiary, except that if the beneficiary is
the Participant's spouse, begin within the time the Participant
would have attained age 70 1/2.
c. ( ) be made within 5 years of death for all beneficiaries.
d. ( ) other _______
E12 LIFE EXPECTANCIES (Plan Section 6.5(f)) for minimum distributions required
pursuant to Code Section 401(a)(9) shall...
a. (X) be recalculated at the Participant's election.
b. ( ) be recalculated.
c. ( ) not be recalculated.
E13 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION
Distributions upon termination of employment pursuant to Section 6.4(a)
of the Plan shall not be made unless the following conditions have been
satisfied:
a. (X) N/A. Immediate distributions may be made at Participant's election.
b. ( ) The Participant has incurred ____ 1-Year Break(s) in Service.
c. ( ) The Participant has reached his or her Early or Normal Retirement
Age.
d. ( ) Distributions may be made at the Participant's election on or after
the Anniversary Date following termination of employment.
e. ( ) Other _______
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E14 FORM OF DISTRIBUTIONS (Plan Section 6.5 and 6.6)
Distributions under the Plan may be made...
a. 1. (X) in lump sums.
2. ( ) in lump sums or installments.
b. AND, pursuant to Plan Section 6.13,
1. (X) no annuities are allowed (avoids Joint and Survivor rules).
2. ( ) annuities are allowed (Plan Section 6.13 shall not apply).
NOTE: b.1. above may not be elected if this is an amendment to a plan
which permitted annuities as a form of distribution or if this
Plan has accepted a plan to plan transfer of assets from a plan
which permitted annuities as a form of distribution.
c. AND, may be made in...
1. ( ) cash only (except for insurance or annuity contracts).
2. (X) cash or property.
TOP HEAVY REQUIREMENTS
F1. TOP HEAVY DUPLICATIONS (Plan Section 4.3(1)): When a Non-Key Employee is a
Participant in this Plan and a Defined Benefit Plan maintained by the
Employer, indicate which method shall be utilized to avoid duplication of
top heavy minimum benefits.
a. ( ) The Employer does not maintain a Defined Benefit Plan.
b. ( ) A minimum, non-integrated contribution of 5% of each Non-Key
Employee's total Compensation shall be provided in this Plan, as
specified in Section 4.3(i). (The Defined Benefit and Defined
Contribution Fractions will be computed using 100% if this choice
is selected.)
c. ( ) A minimum, non integrated contribution of 7 1/2% of each Non-Key
Employee's total Compensation shall be provided in this Plan, as
specified in Section 4.3(i). (If this choice is selected, the
Defined Benefit and Defined Contribution Fractions will be
computed using 125% for all Plan Years in which the Plan is Top
Heavy, but not Super Top Heavy.)
d. (X) Specify the method under which the Plans will provide top heavy
minimum benefits for Non-Key Employees that will preclude Employer
discretion and avoid inadvertent omissions, including any
adjustments required under Code Section 415(e).
Minimum Contributions will be provided under the Defined Benefit
----------------------------------------------------------------
Plan.
----
20
F2 PRESENT VALUE OF ACCRUED BENEFIT (Plan Section 2.2) for Top Heavy purposes
where the Employer maintains a Defined Benefit Plan in addition to this
Plan, shall be based on...
a. ( ) N/A. The Employer does not maintain a defined benefit plan.
b. (X) Interest Rate: 7.5
-----
Mortality Table: 1958 Insurance Commission Morality
----------------------------------
F3 TOP HEAVY DUPLICATIONS: Employer maintaining two (2) or more Defined
Contribution Plans.
a. (X) N/A.
b. ( ) A minimum, non-integrated contribution of 3% of each Non-Key
Employee's total Compensation shall be provided in the Money
Purchase Plan (or other plan subject to Code Section 412), where
the Employer maintains two (2) or more non-paired Defined
Contribution Plans.
c. ( ) Specify the method under which the Plans will provide top heavy
minimum benefits for Non-Key Employees that will preclude Employer
discretion and avoid inadvertent omissions, including any
adjustments required under Code Section 415(e).
21
MISCELLANEOUS
G1 LOANS TO PARTICIPANTS (Plan Section 7.4)
a. ( ) Yes, loans may be made up to $50,000 or 1/2 Vested interest.
b. (X) No, loans may not be made.
If YES, (check all that apply)...
c. ( ) loans shall be treated as a Directed Investment.
d. ( ) loans shall only be made for hardship or financial necessity.
e. ( ) the minimum loan shall be $1,000.
f. ( ) $10,000 de minimis loans may be made regardless of Vested interest.
(If selected, Plan may need security in addition to Vested
interest.)
NOTE: Department of Labor Regulations require the adoption of a separate
written loan program setting forth the requirements outlined in Plan
Section 7.4.
G2 DIRECTED INVESTMENT ACCOUNTS (Plan Section 4.8) are permitted for the
interest in any one or more accounts.
a. (X) Yes, regardless of the Participant's Vested interest in the Plan.
b. ( ) Yes, but only with respect to the Participant's Vested interest in
the Plan.
c. ( ) Yes, but only with respect to those accounts which are 100% Vested.
d. ( ) No directed investments are permitted.
G3 TRANSFERS FROM QUALIFIED PLANS (Plan Section 4.6)
a. (X) Yes, transfers from qualified plans (and rollovers) will be allowed.
b. ( ) No, transfers from qualified plans (and rollovers) will not be
allowed.
AND, transfers shall be permitted...
c. (X) from any Employee, even if not a Participant.
d. ( ) from Participants only.
G4 EMPLOYEES' VOLUNTARY CONTRIBUTIONS (Plan Section 4.7)
a. ( ) Yes, Voluntary Contributions are allowed subject to the limits of
Section 4.9.
b. (X) No, Voluntary Contributions will not be allowed.
NOTE: TRA '86 subjects voluntary contributions to strict discrimination
rules.
G5 HARDSHIP DISTRIBUTIONS (Plan Sections 6.11 and 11.8)
a. (X) Yes, from any accounts which are 100% Vested
b. ( ) Yes, from Participant's Elective Account only.
c. ( ) Yes, but limited to the Participant's Account only.
d. ( ) No.
22
NOTE: Distributions from a Participant's Elective Account are limited to
the portion of such account attributable to such Participant's
Deferred Compensation and earnings attributable thereto up to
December 31, 1988. Also hardship distributions are not permitted
from a Participant's Qualified Non-Elective Account.
G6 PRE-RETIREMENT DISTRIBUTION (Plan Section 6.10)
a. (X) If a Participant has reached the age of 59 1/2 , distributions may
------
be made, at the Participant's election, from any accounts which are
100% Vested without requiring the Participant to terminate
employment.
b. ( ) No pre-retirement distribution may be made.
NOTE: Distributions from a Participant's Elective Account and Qualified
Non-Elective Account are not permitted prior to age 59 1/2.
G7 LIFE INSURANCE (Plan Section 7.2(d)) may be purchased with Plan
contributions.
a. (X) No life insurance may be purchased.
b. ( ) Yes, at the option of the Administrator.
c. ( ) Yes, at the option of the Participant.
AND, the purchase of initial or additional life insurance shall be subject
to the following limitations: (select all that apply)
d. ( ) N/A, no limitations.
e. ( ) each initial Contract shall have a minimum face amount of $______.
f. ( ) each additional Contract shall have a minimum face amount of
$______.
g. ( ) the Participant has completed ____ Years of Service.
h. ( ) the Participant has completed ____ Years of Service while a
Participant in the Plan.
i. ( ) the Participant is under age ____ on the Contract issue date.
j. ( ) the maximum amount of all Contracts on behalf of a Participant shall
not exceed $_____.
k. ( ) the maximum face amount of life insurance shall be $______.
23
The adopting Employer may not rely on an opinion letter issued by the National
Office of the Internal Revenue Service as evidence that the plan is qualified
under Code Section 401. In order to obtain reliance with respect to plan
qualification, the Employer must apply to the appropriate Key District Office
for a determination letter.
This Adoption Agreement may be used only in conjunction with the basic Plan
document #01. This Adoption Agreement and the basic Plan document shall together
be known as PENSION & BENEFIT FINANCIAL SERVICES, INC. Non-Standardized 401(k)
Profit Sharing Plan and Trust #01-005.
The adoption of this Plan, its qualification by the IRS, and the related tax
consequences are the responsibility of the Employer and its independent tax and
legal advisors.
PENSION & BENEFIT FINANCIAL SERVICES, INC. will notify the Employer of any
amendments made to the Plan or of the discontinuance or abandonment of the Plan
provided this Plan has been acknowledged by PENSION & BENEFIT FINANCIAL
SERVICES, INC. or its authorized representative. Furthermore, in order to be
eligible to receive such notification, we agree to notify PENSION & BENEFIT
FINANCIAL SERVICES, INC. of any change in address.
24
IN WITNESS WHEREOF, the Employer and Trustee hereby cause this Plan to be
executed on ___________________________. Furthermore, this Plan may not be used
unless acknowledged by PENSION & BENEFIT FINANCIAL SERVICES, INC. or its
authorized representative.
EMPLOYER:
Charter Bank
By: ________________________
PENSION & BENEFIT TRUST COMPANY
- -------------------------------
By: ________________________ _____________________________
Trustee Trustee
____________________________ _____________________________
Trustee Trustee
____________________________
Trustee
____________________________
PARTICIPATING EMPLOYER:
____________________________
(enter name)
By: ________________________
This Plan may not be used, and shall not be deemed to be a Regional Prototype
Plan, unless an authorized representative of PENSION & BENEFIT FINANCIAL
SERVICES, INC. has acknowledged the use of the Plan. Such acknowledgment is for
ad ministerial purposes only. It acknowledges that the Employer is using the
Plan but does not represent that this Plan, including the choices selected on
the Adoption Agreement, has been reviewed by a representative of the sponsor or
constitutes a qualified retirement plan.
PENSION & BENEFIT FINANCIAL SERVICES, INC.
By: ___________________________________
25
================================================================================
PENSION & BENEFIT FINANCIAL SERVICES, INC.
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST
================================================================================
PENSION & BENEFIT FINANCIAL SERVICES, INC.
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST
Copyright 1997 Pension & Benefit Financial Services, Inc.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS.......................................... 15
2.2 DETERMINATION OF TOP HEAVY STATUS.................................... 15
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER.......................... 19
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY.............................. 20
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES........................ 20
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR............................... 20
2.7 RECORDS AND REPORTS.................................................. 21
2.8 APPOINTMENT OF ADVISERS.............................................. 21
2.9 INFORMATION FROM EMPLOYER............................................ 22
2.10 PAYMENT OF EXPENSES.................................................. 22
2.11 MAJORITY ACTIONS..................................................... 22
2.12 CLAIMS PROCEDURE..................................................... 22
2.13 CLAIMS REVIEW PROCEDURE.............................................. 22
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY............................................ 23
3.2 EFFECTIVE DATE OF PARTICIPATION...................................... 23
3.3 DETERMINATION OF ELIGIBILITY......................................... 23
3.4 TERMINATION OF ELIGIBILITY........................................... 23
3.5 OMISSION OF ELIGIBLE EMPLOYEE........................................ 24
3.6 INCLUSION OF INELIGIBLE EMPLOYEE..................................... 24
3.7 ELECTION NOT TO PARTICIPATE.......................................... 24
3.8 CONTROL OF ENTITIES BY OWNER-EMPLOYEE................................ 24
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Page
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION...................... 25
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION........................... 26
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS................. 26
4.4 MAXIMUM ANNUAL ADDITIONS............................................. 32
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS............................ 39
4.6 TRANSFERS FROM QUALIFIED PLANS....................................... 39
4.7 VOLUNTARY CONTRIBUTIONS.............................................. 40
4.8 DIRECTED INVESTMENT ACCOUNT.......................................... 41
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS........................... 42
4.10 ACTUAL CONTRIBUTION PERCENTAGE TESTS................................. 42
4.11 INTEGRATION IN MORE THAN ONE PLAN.................................... 43
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND.......................................... 43
5.2 METHOD OF VALUATION.................................................. 43
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT............................ 43
6.2 DETERMINATION OF BENEFITS UPON DEATH................................. 44
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY..................... 45
6.4 DETERMINATION OF BENEFITS UPON TERMINATION........................... 45
6.5 DISTRIBUTION OF BENEFITS............................................. 49
6.6 DISTRIBUTION OF BENEFITS UPON DEATH.................................. 53
6.7 TIME OF SEGREGATION OR DISTRIBUTION.................................. 57
6.8 DISTRIBUTION FOR MINOR BENEFICIARY................................... 58
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN....................... 58
6.10 PRE-RETIREMENT DISTRIBUTION.......................................... 58
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP.................................... 58
-ii-
Page
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS............................ 59
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS................................... 59
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE................................ 60
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE.......................... 61
7.3 OTHER POWERS OF THE TRUSTEE.......................................... 62
7.4 LOANS TO PARTICIPANTS................................................ 65
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS............................. 67
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES........................ 67
7.7 ANNUAL REPORT OF THE TRUSTEE......................................... 67
7.8 AUDIT................................................................ 68
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE....................... 69
7.10 TRANSFER OF INTEREST................................................. 69
7.11 TRUSTEE INDEMNIFICATION.............................................. 70
7.12 EMPLOYER SECURITIES AND REAL PROPERTY................................ 70
ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT............................................................ 71
8.2 TERMINATION.......................................................... 72
8.3 MERGER OR CONSOLIDATION.............................................. 72
ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS................................................... 72
9.2 PARTICIPANT'S RIGHTS................................................. 73
9.3 ALIENATION........................................................... 73
9.4 CONSTRUCTION OF PLAN................................................. 73
9.5 GENDER AND NUMBER.................................................... 74
9.6 LEGAL ACTION......................................................... 74
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Page
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS............................... 74
9.8 BONDING.............................................................. 74
9.9 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE........................... 75
9.10 INSURER'S PROTECTIVE CLAUSE.......................................... 75
9.11 RECEIPT AND RELEASE FOR PAYMENTS..................................... 75
9.12 ACTION BY THE EMPLOYER............................................... 75
9.13 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY................... 75
9.14 HEADINGS............................................................. 76
9.15 APPROVAL BY INTERNAL REVENUE SERVICE................................. 76
9.16 UNIFORMITY........................................................... 76
9.17 PAYMENT OF BENEFITS.................................................. 76
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER.......................... 77
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS.............................. 77
10.3 DESIGNATION OF AGENT................................................. 77
10.4 EMPLOYEE TRANSFERS................................................... 78
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES................ 78
10.6 AMENDMENT............................................................ 78
10.7 DISCONTINUANCE OF PARTICIPATION...................................... 78
10.8 ADMINISTRATOR'S AUTHORITY............................................ 78
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE.................... 79
ARTICLE XI
CASH OR DEFERRED PROVISIONS
11.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION...................... 79
11.2 PARTICIPANT'S SALARY REDUCTION ELECTION.............................. 80
11.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS................. 84
11.4 ACTUAL DEFERRAL PERCENTAGE TESTS..................................... 86
11.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS....................... 89
11.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS................................. 92
-iv-
Page
11.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS................... 95
11.8 ADVANCE DISTRIBUTION FOR HARDSHIP.................................... 99
-v-
ARTICLE I
DEFINITIONS
As used in this Plan, the following words and phrases shall have the
meanings set forth herein unless a different meaning is clearly required by the
context:
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.
1.2 "Administrator" means the person(s) or entity designated by the
Employer pursuant to Section 2.4 to administer the Plan on behalf of the
Employer.
1.3 "Adoption Agreement" means the separate Agreement which is executed
by the Employer and accepted by the Trustee which sets forth the elective
provisions of this Plan and Trust as specified by 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 includes 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 "Aggregate Account" means with respect to each Participant, the value
of all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, subject to the provisions of Section 2.2.
1.6 "Anniversary Date" means the anniversary date specified in C3 of the
Adoption Agreement.
1.7 "Beneficiary" means the person to whom a share of a deceased
Participant's interest in the Plan is payable, subject to the restrictions of
Sections 6.2 and 6.6.
1.8 "Code" means the Internal Revenue Code of 1986, as amended or
replaced from time to time.
1.9 "Compensation" with respect to any Participant means one of the
following as elected in the Adoption Agreement. However, Compensation for any
Self-Employed Individual shall be equal to his Earned Income.
(a) Information required to be reported under Sections 6041,
6051 and 6052 (wages, tips and Other Compensation Box on Form W-2).
Compensation is defined as wages, as defined in Code Section 3401(a),
and all other payments of Compensation to an Employee by the Employer
(in the course of the Employer's trade or business) for which the
Employer is required to furnish the Employee a written statement
under Code Sections 6041(d) and 6051(a)(3). Compensation must be
determined without regard to any rules under Code Section 3401(a)
that
1
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)).
(b) Section 3401(a) wages. Compensation is defined as wages
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)).
(c) 415 safe-harbor compensation. Compensation is defined as
wages, salaries, and 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
Section 1.62-2(c)), and excluding the following:
(1) Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income for the
taxable year in which contributed, or Employer contributions
under a simplified employee pension plan to the extent such
contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(2) Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by the
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 received special tax benefits, or
contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity
contract described in section 403(b) of the Internal Revenue
Code (whether or not the contributions are actually excludable
from the gross income of the Employee).
If, in connection with the adoption of any amendment, the definition
of Compensation has been modified, then, for Plan Years prior to the Plan Year
which includes the adoption date of such amendment, Compensation means
compensation determined pursuant to the Plan then in effect.
2
In addition, if specified in the Adoption Agreement, Compensation for
all Plan purposes shall also include compensation which is not currently
includible in the Participant's gross income by reason of the application of
Code Sections 125, 402(a)(8), 402(h)(1)(B), or 403(b).
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). 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
(except for purposes of determining the portion of Compensation up to the
integration level if this plan is integrated), 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.
For Plan Years beginning prior to January 1, 1989, the $200,000 limit
(without regard to Family Member aggregation) shall apply only for Top Heavy
Plan Years and shall not be adjusted.
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 for 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 Internal Revenue 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 40l(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
Compensation limit in effect for that prior determination period. For this
purpose, for determination periods beginning before the first day of the Plan
Year beginning on or after January 1, 1994, the OBRA '93 annual Compensation
limit is $150,000.
3
1.10 "Contract" or "Policy" means any life insurance policy, retirement
income policy, or annuity contract (group or individual) issued by the Insurer.
In the event of any conflict between the terms of this Plan and the terms of any
insurance contract purchased hereunder, the Plan provisions shall control.
1.11 "Deferred Compensation" means, with respect to any Participant, that
portion of the Participant's total Compensation which has been contributed to
the Plan in accordance with the Participant's deferral election pursuant to
Section 11.2.
1.12 "Early Retirement Date" means the date specified in the Adoption
Agreement on which a Participant or Former Participant has satisfied the age and
service requirements specified in the Adoption Agreement (Early Retirement Age).
A Participant shall become fully Vested upon satisfying this requirement if
still employed at his Early Retirement Age.
A Former Participant who terminates employment after satisfying the
service requirement for Early Retirement and who thereafter reaches the age
requirement contained herein shall be entitled to receive his benefits under
this Plan.
1.13 "Earned Income" means with respect to a Self-Employed Individual, the
net earnings from self-employment in the trade or business with respect to which
the Plan is established, for which the personal services of the individual are a
material income-producing factor. Net earnings will be determined without regard
to items not included in gross income and the deductions allocable to such
items. Net earnings are reduced by contributions by the Employer to a qualified
Plan to the extent deductible under Code Section 404. In addition, for Plan
Years beginning after December 31, 1989, net earnings shall be determined with
regard to the deduction allowed to the Employer by Code Section 164(f).
1.14 "Elective Contribution" means the Employer's contributions to the
Plan that are made pursuant to the Participant's deferral election pursuant to
Section 11.2, excluding any such amounts distributed as "excess annual
additions" pursuant to Section 4.4. In addition, if selected in E3 of the
Adoption Agreement, the Employer's matching contribution made pursuant to
Section 11.1(b) shall or shall not be considered an Elective Contribution for
purposes of the Plan, as provided in Section 11.1(b), Elective Contributions
shall be subject to the requirements of Sections 11.2(b) and 11.2(c) and shall
further be required to satisfy the discrimination requirements of Regulation
1.401(k)-1(b)(3), the provisions of which are specifically incorporated herein
by reference.
1.15 "Eligible Employee" means any Employee specified in D1 of the
Adoption Agreement.
1.16 "Employee" means any person who is employed by the Employer, but
excludes any person who is employed as an independent contractor. The term
Employee shall also include Leased Employees as provided in Code Section 414(n)
or (o).
Except as provided in the Non-Standardized Adoption Agreement, all
Employees of all entities which are an Affiliated Employer will be treated as
employed by a single employer.
4
1.17 "Employer" means the entity specified in the Adoption Agreement, any
Participating Employer (as defined in Section 10.1) which shall adopt this Plan,
any successor which shall maintain this Plan and any predecessor which has
maintained this Plan.
1.18 "Excess Compensation" means, with respect to a Plan that is
integrated with Social Security, a Participant's Compensation which is in excess
of the amount set forth in the Adoption Agreement.
1.19 "Excess Contributions" means, with respect to a Plan Year, the excess
of Elective Contributions and Qualified Non-Elective Contributions made on
behalf of Highly Compensated Participants for the Plan Year over the maximum
amount of such contributions permitted under Section 114(a).
1.20 "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 11.2(f)
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 4.4 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.
1.21 "Family Member" means, with respect to an affected Participant, such
Participant's spouse, and such Participant's lineal descendants and ascendants
and their spouses, all as described in Code Section 414(q)(6)(B).
1.22 "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.
1.23 "Fiscal Year" means the Employer's accounting year as specified in
the Adoption Agreement.
1.24 "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.
Furthermore, for purposes of paragraph (a) above, in the case of a
Terminated Participant whose Vested benefit is zero, such Terminated Participant
shall be deemed to have received a distribution of his Vested benefit upon his
termination of employment. In addition, the
5
term Forfeiture shall also include amounts deemed to be Forfeitures pursuant to
any other provision of this Plan.
1.25 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.26 "414(s) Compensation" with respect to any Employee means his
Compensation as defined in Section 1.9. However, for purposes of this Section,
Compensation shall be Compensation paid and, if selected in the Adoption
Agreement, shall only be recognized as of an Employee's effective date of
participation. If, in connection with the adoption of any amendment, the
definition of "414(s) Compensation" has been modified, then for Plan Years prior
to the Plan Year which includes the adoption date of such amendment, "414(s)
Compensation" means compensation determined pursuant to the Plan Year in effect.
In addition, if specified in the Adoption Agreement, "414(s)
Compensation" shall also include compensation which is not currently includible
in the Participant's gross income by reason of the application of Code Sections
125, 402(a)(8), 402(h)(1)(B), or 403(b), plus Elective Contributions
attributable to Deferred Compensation recharacterized as voluntary Employee
contributions pursuant to 11.5(a).
1.27 "415 Compensation" means compensation as defined in Section
4.4(f)(2).
If, in connection with the adoption of any amendment, the definition
of "415 Compensation" has been modified, then, for Plan Years prior to the Plan
Year which includes the adoption date of such amendment, "415 Compensation"
means compensation determined pursuant to the Plan then in effect.
1.28 "Highly Compensated Employee" means an Employee described in Code
Section 414(q) and the Regulations thereunder and generally means an Employee
who performed services for the Employer during the "determination year" and is
in 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" as defined in Section
1.35(c).
(b) Employees who received "415 Compensation" during the "look-
back year" from the Employer in excess of $75,000.
(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.
(d) Employees who during the "look-back year" were officers of
the Employer (as that term is defined within the meaning of the
Regulations under Code Section 416) 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
6
percent of all employees. 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 "determination year" shall be the Plan Year for which testing is
being performed, and the "look-back year" shall be the immediately preceding
twelve-month period. However, if the Plan Year is a calendar year, or if another
Plan of the Employer so provides, then 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"). With
respect to this election, it shall be applied on a uniform and consistent basis
to all plans, entities, and arrangements of the Employer.
For purposes of this Section, the determination of "415 Compensation"
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(a)(8), 402(h)(1)(B) and, in the case of Employer contributions made pursuant
to a salary reduction agreement, Code Section 403(b). Additionally, the dollar
threshold 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)) 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 Affiliated 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. In addition, Highly Compensated Former Employees
shall be treated as Highly Compensated Employees without regard to whether they
performed services during the "determination year."
1.29 "Highly Compensated Former Employee" means a former Employee who
had a separation year prior to the "determination year" and was a Highly
Compensated Employee in the year of separation from service or in any
"determination year" after attaining age 55. Notwithstanding the foregoing, an
Employee who separated from service prior to 1987 will be treated as a Highly
Compensated Former Employee only if during the separation year (or year
preceding the separation year) or any year after the Employee attains age 55 (or
the last year
7
ending before the Employee's 55/th/ birthday), the Employee either received "415
Compensation" in excess of $50,000 or was a "five percent owner." For purposes
of this Section, "determination year," "415 Compensation" and "five percent
owner" shall be determined in accordance with Section 1.28. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees. The method
set forth in this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for all purposes
for which the Code Section 414(q) definition is applicable.
1.30 "Highly Compensated Participant" means any Highly Compensated
Employee who is eligible to participate in the Plan.
1.31 "Hour of Service" means (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, 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. The same Hours of Service shall not be credited both
under (1) or (2), as the case may be, and under (3).
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.
Hours of Service will be credited for employment with all Affiliated
Employers and for any individual considered to be a Leased Employee pursuant to
Code Sections 414(n) or 414(o) and the Regulations thereunder.
8
Hours of Service will be determined on the basis of the method
selected in the Adoption Agreement.
1.32 "Insurer" means any legal reserve insurance company which shall issue
one or more policies under the Plan.
1.33 "Investment Manager" means an entity that (a) has the power to
manage, acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm, or
corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.34 "Joint and Survivor Annuity" means an annuity for the life of a
Participant with a survivor annuity for the life of the Participant's spouse
which is not less than 1/2, 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 interest in the Plan.
1.35 "Key Employee" means an Employee as defined in Code Section 416(i)
and the Regulations thereunder. Generally, any Employee or former Employee (as
well as each of his Beneficiaries) is considered a Key Employee if he, at any
time during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(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.
(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
interest and the largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner"
means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the
outstanding stock of the Employer or stock possessing more than five
percent (5%) 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 (5%) 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.
(d) a "one percent owner" of the Employer having an 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) more than one percent (1%) of the
outstanding stock of the
9
Employer or stock possessing more than one percent (1%) 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 one
percent (1%) 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. However, in determining
whether an individual has "415 Compensation" of more than $150,000,
"415 Compensation" from each employer required to be aggregated
under Code Sections 414(b), (c), (m) and (o) shall be taken into
account.
For purposes of this Section, the determination of "415
Compensation" 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(a)(8), 402(h)(1)(B) and, in the case of Employer contributions
made pursuant to a salary reduction agreement, Code Section 403(b).
1.36 "Late Retirement Date" means the date of, or the first day of the
or the Anniversary Date coinciding with or next following, whichever
corresponds to the election made for the Normal Retirement Due, a Participant's
actual retirement after having reached his Normal Retirement Date.
1.37 "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 recipient 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. 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
recipient employer.
A leased employee shall not be considered an Employee of the
recipient 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 Sections 125, 402(a)(8), 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 recipient's
nonhighly compensated workforce.
1.38 "Net Profit" means with respect to any Fiscal Year the Employer's
net income or profit for such Fiscal Year determined upon the basis of the
Employer's books of account in accordance with generally accepted accounting
principles, without any reduction for taxes based upon income, or for
contributions made by the Employer to this Plan and any other qualified plan.
1.39 "Non-Elective Contribution" means the Employer's contributions to
the Plan other than those made pursuant to the Participant's deferral election
made pursuant to Section 11.2 and any Qualified Non-Elective Contribution. In
addition, if selected in E3 of the Adoption
10
Agreement, the Employer's Matching Contribution made pursuant to Section 4.3(b)
shall be considered a Non-Elective Contribution for purposes of the Plan.
1.40 "Non-Highly Compensated Participant" means any Participant who is
neither a Highly Compensated Employee nor a Family Member.
1.41 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.42 "Normal Retirement Age" means the age specified in the Adoption
Agreement at which time a Participant shall become fully Vested in his
Participant's Account.
1.43 "Normal Retirement Date" means the date specified in the Adoption
Agreement on which a Participant shall become eligible to have his benefits
distributed to him.
1.44 "1-Year Break in Service" means the applicable computation period
during which an Employee has not completed more than 500 Hours of Service with
the Employer. 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" means, for Plan Years
beginning after December 31, 1984, 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
therefore 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 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.
1.45 "Owner-Employee" means a sole proprietor who owns the entire
interest in the Employer or a partner who owns more than 10% of either the
capital interest or the profits interest in the Employer and who receives income
for personal services from the Employer.
1.46 "Participant" means any Eligible Employee who participates in the
Plan as provided in Section 3.2 and has not for any reason become ineligible to
participate further in the Plan.
1.47 "Participant's Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest under the Plan resulting from
11
(a) the Employer's contributions in the case of a Profit Sharing Plan or Money
Purchase Plan, and (b) the Employer's Non-Elective Contributions in the case of
a 401(k) Profit Sharing Plan.
1.48 "Participant's Combined Account" means the account established
and maintained by the Administrator for each Participant with respect to his
total interest under the Plan resulting from the Employer's contributions.
1.49 "Participant's 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 Employer's Elective
Contributions and Qualified Non-Elective Contributions. A separate accounting
shall be maintained with respect to that portion of the Participant's Elective
Account attributable to Elective Contributions made pursuant to Section 11.2,
Employer matching contributions if they are deemed to be Elective Contributions,
and any Qualified Non-Elective Contributions.
1.50 "Participant's Rollover Account" means the account established
and maintained by the Administrator for each Participant with respect to his
total interest in the Plan resulting from amounts transferred from another
qualified plan or "conduit" Individual Retirement Account in accordance with
Section 4.6.
1.51 "Plan" means this instrument (hereinafter referred to as Pension
& Benefit Financial Services, Inc. Regional Prototype Defined Contribution Plan
and Trust Basic Plan Document #01) including all amendments thereto, and the
Adoption Agreement as adopted by the Employer.
1.52 "Plan Year" means the Plan's accounting year as specified in C2
of the Adoption Agreement.
1.53 "Pre-Retirement Survivor Annuity" means an immediate annuity for
the life of the Participant's spouse, the payments under which must be equal to
the actuarial equivalent of 50% of the Participant's Vested interest in the Plan
as of the date of death.
1.54 "Qualified Non-Elective Account" means the account established
hereunder to which Qualified Non-Elective Contributions are allocated.
1.55 "Qualified Non-Elective Contribution" means the Employer's
contributions to the Plan that are made pursuant to E5 of the Adoption Agreement
and Section 11.1(d) which are used to satisfy the "Actual Deferral Percentage"
tests. Qualified Non-Elective Contributions are non forfeitable when made and
are distributable only as specified in Sections 11.2(c) and 11.8. In addition,
the Employer's contributions to the Plan that are made pursuant to Section
11.7(h) and which are used to satisfy the "Actual Contribution Percentage" tests
shall be considered Qualified Non-Elective Contributions.
1.56 "Qualified Voluntary Employee Contribution Account" means the
account established and maintained by the Administrator for each Participant
with respect to his total interest under the Plan resulting from the
Participant's tax deductible qualified voluntary employee contributions made
pursuant to Section 4.9.
12
1.57 "Regulation" means the Income Tax Regulations as promulgated by
the Secretary of the Treasury or his delegate, and as amended from time to time.
1.58 "Retired Participant" means a person who has been a Participant,
but who has become entitled to retirement benefits under the Plan.
1.59 "Retirement Date" means the date as of which a Participant
retires for reasons other than Total and Permanent Disability, whether such
retirement occurs on a Participant's Normal Retirement Date, Early or Late
Retirement Date (see Section 6.1).
1.60 "Self-Employed Individual" means an individual who has earned
income for the taxable year from the trade or business for which the Plan is
established, and, also, an individual who would have had earned income but for
the fact that the trade or business had no net profits for the taxable year. A
Self-Employed Individual shall be treated as an Employee.
1.61 "Shareholder-Employee" means a Participant who owns more than
five percent (5%) of the Employer's outstanding capital stock during any year in
which the Employer elected to be taxed as a Small Business Corporation under the
applicable Code Section.
1.62 "Short Plan Year" means, if specified in the Adoption Agreement,
that the Plan Year shall be less than a 12 month period. If chosen, the
following rules shall apply in the administration of this Plan. In determining
whether an Employee has completed a Year of Service for benefit accrual purposes
in the Short Plan Year, the number of the Hours of Service required shall be
proportionately reduced based on the number of days in the Short Plan Year. The
determination of whether an Employee has completed a Year of Service for vesting
and eligibility purposes shall be made in accordance with Department of Labor
Regulation 2530.203-2(c). In addition, if this Plan is integrated with Social
Security, the integration level shall also be proportionately reduced based on
the number of days in the Short Plan Year.
1.63 "Super Top Heavy Plan" means a plan described in Section 2.2(b).
1.64 "Taxable Wage Base" means, with respect to any year, the maximum
amount of earnings which may be considered wages for such year under Code
Section 3121(a)(1).
1.65 "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.
1.66 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.67 "Top Heavy Plan Year" means a Plan Year commencing after December
31, 1983 during which the Plan is a Top Heavy Plan.
1.68 "Top Paid Group" shall be determined pursuant to Code Section
414(q) and the Regulations thereunder and generally means the top 20 percent of
Employees who performed services for the Employer during the applicable year,
ranked according to the amount of "415 Compensation" (as determined pursuant to
Section 1.28) received from the Employer during such year. All Affiliated
Employers shall be taken into account as a single employer, and Leased
13
Employees shall be treated as Employees pursuant to Code Section 414(n) or (o).
Employees who are non-resident aliens 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, for the purpose of determining the number of active
Employees in any year, the following additional Employees shall also be
excluded, however, such Employees shall still be considered for the purpose of
identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours per
week;
(c) Employees who normally work less than six (6) months
during a year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the Employer are
covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer, and the
Plan covers only Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both the total
number of active Employees as well as from the identification of particular
Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be applied on a
uniform and consistent basis for all purposes for which the Code Section 414(q)
definition is applicable.
1.69 "Total and Permanent Disability" means the inability to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
12 months. The disability of a Participant shall be determined by a licensed
physician chosen by the Administrator. However, if the condition constitutes
total disability under the federal Social Security Acts, the Administrator may
rely upon such determination that the Participant is Totally and Permanently
Disabled for the purposes of this Plan. The determination shall be applied
uniformly to all Participants.
1.70 "Trustee" means the person or entity named in B6 of the Adoption
Agreement and any successors.
1.71 "Trust Fund" means the assets of the Plan and Trust as the same
shall exist from time to time.
1.72 "Vested" means the nonforfeitable portion of any account
maintained on behalf of a Participant.
1.73 "Voluntary Contribution Account" means the account established
and maintained by the Administrator for each Participant with respect to his
total interest in the Plan
14
resulting from the Participant's nondeductible voluntary contributions made
pursuant to Section 4.7.
1.74 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, and during which an Employee has completed
at least 1000 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 (employment commencement date). The 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 succeeding
computation periods shall begin with the first anniversary of the Employee's
employment commencement date. However, if one (1) Year of Service or less is
required as a condition of eligibility, then after the initial eligibility
computation period, the eligibility computation period shall shift to the
current Plan Year which includes the anniversary of the date on which the
Employee first performed an Hour of Service. An Employee who is credited with
1,000 Hours of Service in both the initial eligibility computation period and
the first Plan Year which commences prior to the first anniversary of the
Employee's initial eligibility computation period will be credited with two
Years of Service for purposes of eligibility to participate.
For vesting purposes, and all other purposes not specifically
addressed in this Section, the computation period shall be the Plan Year,
including periods prior to the Effective Date of the Plan unless specifically
excluded pursuant to the Adoption Agreement.
Years of Service and breaks in service will be measured on the
same computation period.
Years of Service with any predecessor Employer which maintained
this Plan shall be recognized. Years of Service with any other predecessor
Employer shall be recognized as specified in the Adoption Agreement.
Years of Service with any Affiliated Employer shall be
recognized.
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special
vesting requirements of Code Section 416(b) pursuant to Section 6.4 of the Plan
and the special minimum allocation requirements of Code Section 416(c) pursuant
to Section 4.3(i) of the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year
beginning after December 31, 1983, 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
15
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). In addition, 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 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 beginning after December 31, 1983, 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 Combined Account balance as of the
most recent valuation occurring within a twelve (12) month
period ending on the Determination Date;
(2) for a Profit Sharing Plan, 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 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) for a Money Purchase Plan, contributions that would be
allocated as of a date not later than the Determination
Date, even though those amounts are not yet made or required
to be made.
(4) 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. In the case of a
distribution of an annuity Contract, the
16
amount of such distribution is deemed to be the current
actuarial value of the Contract, determined on the date of
the distribution. 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 purpose of this paragraph.
(5) 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.
(6) 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 accepted after December 31, 1983 as part of
the Participant's Aggregate Account balance. However,
rollovers or plan-to-plan transfers accepted prior to
January 1, 1994 shall be considered as part of the
Participant's Aggregate Account balance.
(7) 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.
(8) For the purposes of determining whether two employers
are to be treated as the same employer in 2.2(c)(6) and
2.2(c)(7) above, all employers aggregated under Code Section
414(b), (c), (m) and (o) are treated as the same employer.
(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 qualified plan of the
Employer, including any Simplified Employee Pension Plan, in
which a Key Employee is a
17
participant in the Plan Year containing the Determination
Date or any of the four preceding Plan Years, and each other
qualified plan of the Employer which enables any qualified
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 of the Employer, including any
Simplified Employee Pension 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 and Affiliated Employers, 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 Determination Date, except as provided in Code
Section 416 and
18
the Regulations thereunder for the first and second plan years of
a defined benefit plan.
However, any such determination must include present value of
accrue benefit attributable to any Plan distributions referred to in Section
2.2(c)(4) above, any Employee contributions referred to in Section 2.2(c)(5)
above or any related or unrelated rollovers referred to in Sections 2.2(c)(6)
and 2.2(c)(7) above.
(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,
(3) exceeds sixty percent (60%) of a similar sum determined
for all Participants.
(h) The Administrator shall determine whether this Plan is
a Top Heavy Plan on the Anniversary Date specified in the
Adoption Agreement. Such determination of the top heavy ratio
shall be in accordance with Code Section 416 and the Regulations
thereunder.
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
directive of the Investment Manager in investing the assets of
the Plan managed by the Investment Manager.
19
(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.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any
person, including, but not limited to, the Employees of the Employer, shall be
eligible to serve as an Administrator. Any person so appointed shall signify his
acceptance by filing written acceptance with the Employer. 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.
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. 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 and discretion to
construe the terms of the Plan and 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. 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.
20
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(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
Fund;
(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 prepare and distribute to Employees a procedure for
notifying Participants and Beneficiaries of their rights to elect
Joint and Survivor Annuities and Pre-Retirement Survivor Annuities if
required by the Code and Regulations thereunder;
(j) 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.
21
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, 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 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 in writing with the
Administrator. 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 a written
22
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 expense 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. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. 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
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 III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee shall be eligible to participate hereunder on
the date he has satisfied the requirements specified in the Adoption Agreement.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee who has become eligible to be a Participant shall
become a Participant effective as of the day specified in the Adoption
Agreement.
In the event an Employee who has satisfied the Plan's eligibility
requirements and would otherwise have become a Participant shall go from a
classification of a noneligible Employee to an Eligible Employee, such Employee
shall become a Participant as of the date he becomes an Eligible Employee.
In the event an Employee who has satisfied the Plan's eligibility
requirements and would otherwise become a Participant shall go from a
classification of an Eligible Employee to a noneligible Employee and becomes
ineligible to participate and has not incurred a 1-Year Break in Service, such
Employee shall participate in the Plan as of the date he returns to an eligible
class of Employees. If such Employee does incur a 1-Year Break in Service,
eligibility will be determined under the Break in Service rules of the Plan.
23
3.3 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 pursuant to the Plan and the Act. Such determination shall be
subject to review per Section 2.13.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of an
Eligible Employee to an ineligible Employee, such Former Participant shall
continue to vest in his interest in the Plan for each Year of Service completed
whether 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.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission is
not made until after a contribution by his Employer for the year has been made,
the Employer shall make a subsequent contribution, if necessary after the
application of Section 4.3(e), so that the omitted Employee receives a total
amount which the said Employee would have received had he not been omitted. Such
contribution shall be made regardless of whether or not it is deductible in
whole or in part in any taxable year under applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as
a Participant in the Plan is erroneously included and discovery of such
incorrect inclusion is not made until after a contribution for the year has been
made, the Employer shall not be entitled to recover the contribution made with
respect to the ineligible person regardless of whether or not a deduction is
allowable with respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall constitute a Forfeiture
for the Plan Year in which the discovery is made.
3.7 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate must
be communicated to the Employer, in writing, at least thirty (30) days before
the beginning of a Plan Year. For Standardized Plans, a Participant or an
Eligible Employee may not elect not to participate. Furthermore, the foregoing
election not to participate shall not be available with respect to partners in a
partnership.
3.8 CONTROL OF ENTITIES BY OWNER-EMPLOYEE
(a) If this Plan provides contributions or benefits for one or
more Owner-Employees who control both the business for which this Plan
is established and one or more other entities, this Plan and the plan
established for
24
other trades or businesses must, when looked at as a single Plan, satisfy
Code Sections 401(a) and (d) for the Employees of this and all other
entities.
(b) If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan
which satisfies Code Sections 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for Owner-
Employees under this Plan.
(c) If an individual is covered as an Owner-Employee under the plans
of two or more trades or businesses which are not controlled and the
individual controls a trade or business, then the benefits or contributions
of the employees under the plan of the trades or businesses which are
controlled must be as favorable as those provided for him under the most
favorable plan of the trade or business which is not controlled.
(d) For purposes of the preceding paragraphs, an Owner-Employee, or
two or more Owner-Employees, will be considered to control an entity if the
Owner-Employee, or two or more Owner-Employees together:
(1) own the entire interest in an unincorporated entity, or
(2) in the case of a partnership, own more than 50 percent of either
the capital interest or the profits interest in the partnership.
(e) For purposes of the preceding sentence, an Owner-Employee, or two
or more Owner-Employees shall be treated as owning any interest in a
partnership which is owned, directly or indirectly, by a partnership which
such Owner-Employee, or such two or more Owner-Employees, are considered to
control within the meaning of the preceding sentence.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
(a) For a Money Purchase Plan -
(1) The Employer shall make contributions over such period of years as
the Employer may determine on the following basis. On behalf of each
Participant eligible to share in allocations, for each year of his
participation in this Plan, the Employer shall contribute the amount
specified in the Adoption Agreement. All contributions by the Employer
shall be made in cash or in such property as is acceptable to the
Trustee. The Employer shall be required to obtain a waiver from the
Internal Revenue Service for any Plan Year in which it is unable to
make the full required contribution to the Plan. In the event a waiver
is obtained, this Plan shall be deemed to be an individually designed
plan.
25
(2) For any Plan Year beginning prior to January 1, 1990, and if
elected in the non-standardized Adoption Agreement, for any Plan Year
beginning on or after January 1, 1990, the Employer shall not
contribute on behalf of a Participant who performs less than a Year of
Service during any Plan Year, unless there is a Short Plan Year or a
contribution is required pursuant to 4.3(h).
(3) Notwithstanding the foregoing, the Employer's contribution for any
Fiscal Year shall not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of Code Section 404.
However, to the extent necessary to provide the top heavy minimum
allocations, the Employer shall make a contribution even if it exceeds
the amount which is deductible under Code Section 404.
(b) For a Profit Sharing Plan -
(1) For each Plan Year, the Employer shall contribute to the Plan such
amount as specified by the Employer in the Adoption Agreement.
Notwithstanding the foregoing, however, the Employer's contribution
for any Fiscal Year shall not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of Code Section 404.
All contributions by the Employer shall be made in cash or in such
property as is acceptable to the Trustee.
(2) Except, however, to the extent necessary to provide the top heavy
minimum allocations, the Employer shall make a contribution even if it
exceeds current or accumulated Net Profit or the amount which is
deductible under Code Section 404.
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its contribution to the
Plan for each Plan Year within the time prescribed by law, including extensions
of time, for the filing of the Employer's federal income tax return for the
Fiscal Year.
4.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in the
name of each Participant to which the Administrator shall credit as of
each Anniversary Date, or other valuation date, all amounts allocated to
each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all information
required by the Administrator to make a proper allocation of the
Employer's contributions for each Plan Year. Within a reasonable period
of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate such contribution as
follows:
26
(1) For a Money Purchase Plan:
(i) The Employer's Contribution shall be allocated to each
Participant's Combined Account in the manner set forth in
Section 4.1 herein and as specified in Section E2 of the
Adoption Agreement.
(2) For an Integrated Profit Sharing Plan:
(i) The Employer's contribution shall be allocated to each
Participant's Account, except as provided in Section 4.3(f),
in a dollar amount equal to 5.7% of the sum of each
Participant's total Compensation plus Excess Compensation. If
the Employer does not contribute such amount for all
Participants, each Participant will be allocated a share of
the contribution in the same proportion that his total
Compensation plus his total Excess Compensation for the Plan
Year bears to the total Compensation plus the total Excess
Compensation of all Participants for that year.
Regardless of the preceding, 4.3% shall be substituted for 5.7% above
if Excess Compensation is based on more than 20% and less than or
equal to 80% of the Taxable Wage Base. If Excess Compensation is based
on less than 100% and more than 80% of the Taxable Wage Base, then
5.4% shall be substituted for 5.7% above.
(ii) The balance of the Employer's contribution over the
amount allocated above, if any, shall be allocated to each
Participant's Combined Account in the same proportion that his
total Compensation for the Year bears to the total
Compensation of all Participants for such year.
(iii) Except, however, for any Plan Year beginning prior to
January 1, 1990, and if elected in the non-standardized
Adoption Agreement for any Plan Year beginning on or after
January 1, 1990, a Participant who performs less than a Year
of Service during any Plan Year shall not share in the
Employer's contribution for that year, unless there is a Short
Plan Year or a contribution is required pursuant to Section
4.3(h).
(3) For a Non-Integrated Profit Sharing Plan:
(i) The Employer's contribution shall be allocated to each
Participant's Account in the same proportion that each such
Participant's Compensation for the year bears to the total
Compensation of all Participants for such year.
(ii) Except, however, for any Plan Year beginning prior to
January 1, 1990, and if elected in the non-standardized
Adoption
27
Agreement for any Plan Year beginning on or after
January 1, 1990, a Participant who performs less than a
Year of Service during any Plan Year shall not share in
the Employees contribution for that year, unless there
is a Short Plan Year or a contribution is required
pursuant to Section 4.3(h).
(c) As of each Anniversary Date or other valuation date,
before allocation of Employer contributions and Forfeitures, any
earnings or losses (net appreciation or net depreciation) of the
Trust Fund shall be allocated in the same proportion that each
Participant's and Former Participant's nonsegregated accounts bear
to the total of all Participants' and Former Participants'
nonsegregated accounts as of such date. If any nonsegregated
account of a Participant has been distributed prior to the
Anniversary Date or other valuation date subsequent to a
Participant's termination of employment, no earnings or losses
shall be credited to such account.
Notwithstanding the above, with respect to contributions made to
the Plan after the previous Anniversary Date or allocation date, the method
specified in the Adoption Agreement shall be used.
(d) Participants' Accounts shall be debited for any insurance
or annuity premiums paid, if any, and credited with any dividends
or interest received on insurance contracts.
(e) 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 6.4(g)(2)
or be used to satisfy any contribution that may be required
pursuant to Section 3.5 and/or 6.9. The remaining Forfeitures, if
any, shall be treated in accordance with the Adoption Agreement.
Provided, however, that in the event the allocation of Forfeitures
provided herein shall cause the "annual addition" (as defined in
Section 4.4) to any Participant's Account to exceed the amount
allowable by the Code, the excess shall be reallocated in
accordance with Section 4.5. Except, however, for any Plan Year
beginning prior to January 1, 1990, and if elected in the non-
standardized Adoption Agreement for any Plan Year beginning on or
after January 1, 1990, 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 there is a Short Plan Year or a
contribution required pursuant to Section 4.3(h).
(f) 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 Combined Account of each Non-Key Employee shall be
equal to at least three percent (3%) of such Non-Key Employee's
"415 Compensation" (reduced by contributions and forfeitures, if
any, allocated to each Non-Key Employee in any defined contribution
plan included with this plan in a Required Aggregation Group).
28
However, if (i) the sum of the Employer's contributions and
Forfeitures allocated to the Participant's Combined 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 Combined Account of
each Non-Key Employee shall be equal to the largest percentage
allocated to the Participant's Combined Account of any Key
Employee.
However, for each Non-Key Employee who is a Participant in a paired
Profit Sharing Plan or 401(k) Profit Sharing Plan and a paired Money Purchase
Plan, the minimum 3% allocation specified above shall be provided in the Money
Purchase Plan.
If this is an integrated Plan, then for any Top Heavy Plan Year the
Employer's contribution shall be allocated as follows:
(1) An amount equal to 3% multiplied by each Participant's
Compensation for the Plan Year shall be allocated to each
Participant's Account. If the Employer does not contribute
such amount for all Participants, the amount shall be
allocated to each Participant's Account in the same
proportion that his total Compensation for the Plan Year
bears to the total Compensation of all Participants for such
year.
(2) The balance of the Employer's contribution over the
amount allocated under subparagraph (1) hereof shall be
allocated to each Participant's Account in a dollar amount
equal to 3% multiplied by a Participant's Excess
Compensation. If the Employer does not contribute such
amount for all Participants, each Participant will be
allocated a share of the contribution in the same proportion
that his Excess Compensation bears to the total Excess
Compensation of all Participants for that year.
(3) The balance of the Employer's contribution over the
amount allocated under subparagraph (2) hereof shall be
allocated to each Participant's Account in a dollar amount
equal to 2.7% multiplied by the sum of each Participant's
total Compensation plus Excess Compensation. If the Employer
does not contribute such amount for all Participants, each
Participant will be allocated a share of the contribution in
the same proportion that his total Compensation plus his
total Excess Compensation for the Plan Year bears to the
total Compensation plus the total Excess Compensation of all
Participants for that year.
Regardless of the preceding, 1.3% shall be substituted for
2.7% above if Excess Compensation is based on more than 20%
and less than or equal to 80% of the Taxable Wage Base. If
Excess Compensation is based on less than 100% and more than
80% of the Taxable Wage Base, then 2.4% shall be substituted
for 2.7% above.
29
(4) The balance of the Employer's contributions over the
amount allocated above, if any, shall be allocated to each
Participant's Account in the same proportion that his total
compensation for the Plan Year bears to the total
Compensation of all Participants for such year.
For each Non-Key Employee who is a Participant in this Plan and
another non-paired defined contribution plan maintained by the Employer, the
minimum 3% allocation specified above shall be provided as specified in F3 of
the Adoption Agreement.
(g) For purposes of the minimum allocations set forth above,
the percentage allocated to the Participant's Combined Account of
any Key Employee shall be equal to the ratio of the sum of the
Employer's contributions and Forfeitures allocated on behalf of
such Key Employee divided by the "415 Compensation" for such Key
Employee.
(h) For any Top Heavy Plan Year, the minimum allocations set
forth in this Section shall be allocated to the Participant's
Combined 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; or (2) declined to make mandatory
contributions (if required) or, in the case of a cash or deferred
arrangement, elective contributions to the Plan.
(i) Notwithstanding anything herein to the contrary, in any
Plan Year in which the Employer maintains both this Plan and a
defined benefit pension plan included in a Required Aggregation
Group which is top heavy, the Employer shall not be required to
provide a Non-Key Employee with both the full separate minimum
defined benefit plan benefit and the full separate defined
contribution plan allocations. Therefore, if the Employer
maintains both a Defined Benefit and a Defined Contribution Plan
that are a Top Heavy Group, the top heavy minimum benefits shall
be provided as follows:
(1) Applies if 1 of the Adoption Agreement is Selected -
(i) The requirements of Section 2.1 shall apply
except that each Non-Key Employee who is a
Participant in the Profit Sharing Plan or Money
Purchase Plan and who is also a Participant in the
Defined Benefit Plan shall receive a minimum
allocation of five percent (5%) of such Participant's
"415 Compensation" from the applicable Defined
Contribution Plan(s).
(ii) For each Non-Key Employee who is a Participant
only in the Defined Benefit Plan the Employer will
provide a minimum non-integrated benefit equal to 2%
of his highest five consecutive year average "415
Compensation" for each Year of Service whether a
Participant in the Plan, in which the Plan is top
heavy, not to exceed ten.
30
(iii) For each Non-Key Employee who is a Participant only in
this Defined Contribution Plan, the Employer shall provide a
contribution equal to 3% of his "415 Compensation."
(2) Applies if Flc of the Adoption Agreement is Selected -
(i) The minimum allocation specified in Section
4.3(i)(1)(i) shall be 7 1/2% if the Employer elects in the
Adoption Agreement for years in which the Plan is Top Heavy,
but not Super Top Heavy.
(ii) The minimum benefit specified in Section 4.3(i)(1)(ii)
shall be 3% if the Employer elects in the Adoption Agreement
for years in which the Plan is Top Heavy, but not Super Top
Heavy.
(iii) The minimum allocation specified in Section
4.3(i)(1)(iii) shall be 4% if the Employer elects in the
Adoption Agreement for years in which the Plan is Top Heavy,
but not Super Top Heavy.
(j) For the purposes of this Section, "415 Compensation" shall be
limited to $200,000 (unless adjusted in such manner as permitted under
Code Section 415(d)). However, for Plan Years beginning prior to
January 1, 1989, the $200,000 limit shall apply only for Top Heavy
Plan Years and shall not be adjusted.
(k) Notwithstanding anything herein to the contrary, any
Participant who terminated employment during the Plan Year for reasons
other than death, Total and Permanent Disability, or retirement shall
or shall not share in the allocations of the Employer's Contributions
and Forfeitures as provided in the Adoption Agreement. Notwithstanding
the foregoing, for Plan Years beginning after 1989, if this is a
standardized Plan, any such terminated Participant shall share in the
allocations as provided in this Section provided such Participant
completed more than 500 Hours of Service.
(l) Notwithstanding anything herein to the contrary, Participants
terminating for reasons of death, Total and Permanent Disability, or
retirement shall share in the allocations as provided in this Section
regardless of whether they completed a Year of Service during the Plan
Year.
(m) If a Former Participant is reemployed after five (5)
consecutive1-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 employer derived account balance
in the Plan attributable to post-break service.
31
(n) Notwithstanding any election in the Adoption Agreement to the
contrary, if this is a non-standardized Plan that would otherwise fail
to meet the requirements of Code Sections 401(a)(26), 410(b)(1), or
410(b)(2)(A)(i) and the Regulations thereunder because Employer
Contributions have not been allocated to a sufficient number or
percentage of Participants for a Plan Year, then the following rules
shall apply:
(1) The group of Participants eligible to share in the Employer's
contribution and Forfeitures for the Plan Year shall be expanded
to include the minimum number of Participants who would not
otherwise be eligible as are necessary to satisfy the applicable
test specified above. The specific participants who shall become
eligible under the terms of this paragraph shall be those who are
actively employed on the last day of the Plan Year and, when
compared to similarly situated Participants, have completed the
greatest number of Hours of Service in the Plan Year.
(2) If after application of paragraph (1) above, the applicable
test is still not satisfied, then the group of Participants
eligible to share in the Employer's contribution and Forfeitures
for the Plan Year shall be further expanded to include the
minimum number of Participants who are not actively employed on
the last day of the Plan Year as are necessary to satisfy the
applicable test. The specific Participants who shall become
eligible to share shall be those Participants, when compared to
similarly situated Participants, who have completed the greatest
number of Hours of Service in the Plan Year before terminating
employment.
Nothing in this Section shall permit the reduction of a Participant's
accrued benefit. Therefore any amounts that have previously been allocated to
Participants may not be reallocated to satisfy these requirements. In such
event, the Employer shall make an additional contribution equal to the amount
such affected Participants would have received had they been included in the
allocations, even if it exceeds the amount which would be deductible under Code
Section 404. Any adjustment to the allocations pursuant to this paragraph shall
be considered a retroactive amendment adopted by the last day of the Plan Year.
4.4 MAXIMUM ANNUAL ADDITIONS
(a) (1) If the Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer, or
a welfare benefit fund (as defined in Code Section 419(e)), maintained
by the Employer, or an individual medical account (as defined in Code
Section 415(l)(2)) maintained by the Employer, which provides Annual
Additions, the amount of Annual Additions which may be credited to the
Participant's accounts for any Limitation Year shall not exceed the
lesser of the Maximum Permissible Amount or any other limitation
contained in this Plan. If the Employer contribution that would
otherwise be contributed or allocated to the Participant's accounts
would cause the Annual Additions for the Limitation Year to exceed the
Maximum Permissible Amount,
32
the amount contributed or allocated will be reduced so that the Annual
Additions for the Limitation Year will equal the Maximum Permissible
Amount.
(2) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant on the basis of a reasonable
estimation of the Participant's Compensation for the Limitation
Year, uniformly determined for all Participants similarly
situated.
(3) 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.
(4) If there is an excess amount pursuant to Section 4.4(a)(2) or
Section 4.5, the excess will be disposed of in one of the
following manners, as uniformly determined by the Plan
Administrator for all Participants similarly situated:
(i) Any Deferred Compensation or nondeductible Voluntary
Employee Contributions, to the extent they would reduce the
Excess Amount, will be distributed to the Participant;
(ii) If, after the application of subparagraph (i), an
Excess Amount still exists, and the Participant is covered
by the Plan at the end of the Limitation Year, the Excess
Amount in the Participant's account will be used to reduce
Employer contributions (including any allocation of
Forfeitures) for such Participant in the next Limitation
Year, and each succeeding Limitation Year if necessary;
(iii) If, after the application of subparagraph (i), an
Excess Amount still exists, and the Participant is not
covered by the Plan at the end of a Limitation Year, the
Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce
future Employer contributions (including allocation of any
Forfeitures) for all remaining Participants in the next
Limitation Year, and each succeeding Limitation Year if
necessary;
(iv) 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 and
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
any employee contributions may be made to the plan for that
limitation
33
year. Excess amounts may not be distributed to participants
or former participants.
(b) (1)This subsection applies if, in addition to this Plan, the
Participant is covered under another qualified Regional Prototype
defined contribution plan maintained by the Employer, or a welfare
benefit fund (as defined in Code Section 419(e)) maintained by the
Employer, or an individual medical account (as defined in Code Section
415(l)(2)) maintained by the Employer, which provides Annual
Additions, during any Limitation Year. The Annual Additions which may
be credited to a Participant's accounts under this Plan for any such
Limitation Year shall not exceed the Maximum Permissible Amount
reduced by the Annual Additions credited to a Participant's accounts
under the other plans and welfare benefit funds for the same
Limitation Year. If the Annual Additions with respect to the
Participant under other defined contribution plans and welfare benefit
funds maintained by the Employer are less than the Maximum Permissible
Amount and the Employer contribution that would otherwise be
contributed or allocated to the Participant's accounts under this Plan
would cause the Annual Additions for the limitation Year to exceed
this limitation, the amount contributed or allocated will be reduced
so that the Annual Additions under all such plans and welfare benefit
funds for the Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the Participant under
such other defined contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the Maximum Permissible Amount,
no amount will be contributed or allocated to the Participant's
account under this Plan for the Limitation Year.
(2) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant in the manner described in
Section 4.4(a)(2).
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the
Participant's actual Compensation for the Limitation Year.
(4) If, pursuant to Section 4.4(b)(2) or Section 4.5, a
Participant's Annual Additions under this Plan and such other
plans would result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the Annual Additions
last allocated, except that Annual Additions attributable to a
welfare benefit fund or individual medical account will be deemed
to have been allocated first regardless of the actual allocation
date.
(5) 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 attributed to this Plan
will be the product of:
(i) the total Excess Amount allocated as of such date,
times
34
(ii) the ratio of (1) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under
this Plan to (2) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under
this and all the other qualified defined contribution plans.
(6) Any Excess Amount attributed to this Plan will be disposed in
the manner described in Section 4.4(a)(4).
(c) If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a Regional
Prototype Plan. Annual Additions which may be credited to the
Participant's account under this Plan for any Limitation Year will be
limited in accordance with Section 4.4(b), unless the Employer
provides other limitations in the Adoption Agreement.
(d) If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan
the sum of the Participant's Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction will not exceed 1.0 in any Limitation Year.
The Annual Additions which may be credited to the Participant's
account under this Plan for any Limitation Year will be limited in
accordance with the Limitation on Allocations Section of the Adoption
Agreement.
(e) 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 the purposes of Section 4.4(f)(1)(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)(6).
(f) For purposes of this Section, the following terms shall be
defined as follows:
(1) Annual Additions means the sum credited to a Participant's
accounts for any Limitation Year of (1) Employer contributions,
(2) effective with respect to "limitation years" beginning after
December 31, 1986, Employee contributions, (3) forfeitures, (4)
amounts allocated, after March 31, 1984, to an individual medical
account, as defined in Code Section 415(l)(2), which is 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
35
separate account of a key employee (as defined in Code Section
419A(d)(3)) under a welfare benefit fund (as defined in Code
Section 419(e)) maintained by the Employer. Except, however, the
"415 Compensation" percentage 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). Notwithstanding the
foregoing, for "limitation years" beginning prior to January 1,
1987, only that portion of Employee contributions equal to the
lesser of Employee contributions in excess of six percent (6%) of
"415 Compensation" or one-half of Employee contributions shall be
considered an "annual addition."
For this purpose, any Excess Amount applied under Sections
4.4(a)(4) and 4.4(b)(6) in the Limitation Year to reduce Employer
contributions shall be considered Annual Additions for such
Limitation Year.
(2) Compensation means a Participant's Compensation as elected in
the Adoption Agreement. However, regardless of any selection made
in the Adoption Agreement, "415 Compensation" shall exclude
compensation which is not currently includible in the
Participant's gross income by mason of the application of Code
Sections 125, 402(a)(8), 402(h)(1)(B), or 403(b).
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.
Notwithstanding the preceding sentence, compensation for a
participant in a defined contribution plan who is permanently and
totally disabled (as defined in section 22(e)(3) of the Internal
Revenue Code) is the compensation such participant would have
received for the limitation year if the participant had been paid
at the rate of compensation paid immediately before becoming
permanently and totally disabled; such imputed compensation for
the disabled participant may be taken into account only if the
participant is not a Highly Compensated Employee and
contributions made on behalf of such participant are
nonforfeitable when made.
(3) Defined Benefit Fraction means 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
36
415(b) and (d) or 140 percent of his Highest Average Compensation
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 end 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 Code Section 415 for all Limitation Years
beginning before January 1, 1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100
shall be substituted for 125 unless the extra minimum allocation
is being made pursuant to the Employer's election in Fl of the
Adoption Agreement. However, for any Plan Year in which this Plan
is a Super Top Heavy Plan, 100 shall be substituted for 125 in
any event.
(4) Defined Contribution Dollar Limitation means $30,000, or, if
greater, one-fourth of the defined benefit dollar limitation set
forth in Code Section 415(b)(1) as in effect for the Limitation
Year.
(5) Defined Contribution Fraction means 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 voluntary
employee contributions to any 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 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
Defined Contribution Dollar Limitation or 35 percent of the
Participant's Compensation for such year. For Limitation Years
beginning prior to January 1, 1987, the annual addition" shall
not be recomputed to treat all Employee contributions as an
Annual Addition.
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
37
existence on May 5, 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 Code Section 415 limitation
applicable to the first Limitation Year beginning on or after
January 1, 1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100
shall be substituted for 125 unless the extra minimum allocation
is being made pursuant to the Employer's election in Fl of the
Adoption Agreement. However, for any Plan Year in which this Plan
is a Super Top Heavy Plan, 100 shall be substituted for 125 in
any event.
(6) Employer means the Employer that adopts this Plan and all
Affiliated Employers, except that for purposes of this Section,
Affiliated Employers shall be determined pursuant to the
modification made by Code Section 415(h).
(7) Excess Amount means the excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible
Amount.
(8) Highest Average Compensation means the average Compensation
for the three consecutive Years of Service with the Employer that
produces the highest average. A Year of Service with the Employer
is the 12 consecutive month period defined in Section El of the
Adoption Agreement which is used to determine Compensation under
the Plan.
(9) Limitation Year means the Compensation Year (a 12 consecutive
month period) as elected by the Employer in the Adoption
Agreement. All qualified plans maintained by the Employer must
use the same Limitation Year. If the Limitation Year is amended
to a different 12 consecutive month period, the new Limitation
Year must begin on a date within the Limitation Year in which the
amendment is made.
(10) Maximum Permissible Amount means the maximum Annual Addition
that may be contributed or allocated to a Participant's account
under the plan for any Limitation Year, which shall not exceed
the lesser of:
(i) the Defined Contribution Dollar limitation, or
38
(ii) 25 percent of the Participant's Compensation for the
Limitation Year.
The Compensation Limitation referred to in (ii) shall not
apply to any contribution for medical benefits (within the
meaning of Code Sections 401(h) or 419A(f)(2)) which is
otherwise treated as an annual addition under Code Sections
415(l)(1) or 419A(d)(2).
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different 12 consecutive month
period, the Maximum Permissible Amount will not exceed the
Defined Contribution Dollar Contribution multiplied by the
following fraction:
number of months in the short Limitation Year
---------------------------------------------
12
(11) Projected Annual Benefit means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if
such benefit is expressed in a form other than a straight life
annuity or qualified Joint and Survivor Annuity) to which the
Participant would be entitled under the terms of the plan
assuming:
(i) the Participant will continue employment until Normal
Retirement Age (or current age, if later), and
(ii) the Participant's Compensation for the current
Limitation Year and all other relevant factors used to
determine benefits under the Plan will remain constant for
all future Limitation Years.
(g) Regional Prototype Plan means a plan the form of which has
been the subject of a favorable notification letter from the Internal
Revenue Service.
(h) 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.
4.5 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If as a result of the allocation of Forfeitures, a reasonable
error in estimating a Participant's annual Compensation, a reasonable
error in determining the amount of elective deferrals (within the
meaning of Code Section 402(g)(3)) that may be made with respect to
any Participant under the limits of Section 4.4, 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
provided in Section 4.4 to be exceeded, the Administrator shall arm
the excess in accordance with Section 4.4(a)(4).
39
4.6 TRANSFERS FROM QUALIFIED PLANS
(a) If specified in the Adoption Agreement and with the consent
of the Administrator, amounts may be transferred from other qualified
plans, 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 "Participant's 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) Amounts attributable to elective contributions (as defined in
Regulation 1.401(k)-1(g)(4)), 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) At Normal Retirement Date, or such other date when the
Participant or his Beneficiary shall be entitled to receive benefits,
the fair market value of the Participant's Rollover Account shall be
used to provide additional benefits to the Participant or his
Beneficiary. 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 6.5, including, but not
limited to, all notice and consent requirements of Code Sections
411(a)(11) and 417 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 consent may be made.
(e) The Administrator may direct that employee transfers made
after a valuation date be segregated into a separate account for each
Participant until such time as the allocations pursuant to this Plan
have been made, at which time they may remain segregated or be
invested as part of the general Trust Fund, to be determined by the
Administrator.
(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) lump-sum distributions received by an Employee from another
qualified plan which are eligible for tax free rollover to a qualified
plan and which are transferred by the Employee to this Plan within
sixty (60) days following his receipt thereof; (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
40
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 transfers to which this Section
applies, the Administrator may require the Employee to establish that
the amounts to be transferred 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
transferred meet the requirements of this Section.
(h) 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 only be permitted if it
will not result in the elimination or reduction of any "Section 411
(d)(6) protected benefit" as described in Section 8.1.
4.7 VOLUNTARY CONTRIBUTIONS
(a) If this is an amendment to a Plan that had previously allowed
voluntary Employee contributions, then, except as provided in 4.7(b)
below, this Plan will not accept voluntary Employee contributions for
Plan Years beginning after the Plan Year in which this Plan is adopted
by the Employer.
(b) For 401(k) Plans, if elected in the Adoption Agreement, each
Participant may, at the discretion of the Administrator in a
nondiscriminatory manner, elect to voluntarily contribute a portion of
his compensation earned whether a Participant under this Plan. Such
contributions shall be paid to the Trustee within a reasonable period
of time but in no event later than 90 days after the receipt of the
contribution.
(c) The balance in each Participant's Voluntary Contribution
Account shall be fully Vested at all times and shall not be subject to
Forfeiture for any reason.
(d) A Participant may elect to withdraw his voluntary
contributions from his Voluntary Contribution Account and the actual
earnings thereon in a manner which is consistent with and satisfies
the provisions of Section 6.5, including, but not limited to, all
notice and consent requirements of Code Sections 411(a)(11) and 417
and the Regulations thereunder. If the Administrator maintains sub-
accounts with respect to voluntary contributions (and earnings
thereon) which were made on or before a specified date, a Participant
shall be permitted to designate which sub-account shall be the source
for his withdrawal. No Forfeitures shall occur solely as a result of
an Employee's withdrawal of Employee contributions.
41
In the event such a withdrawal is made, or in the event a Participant
has received a hardship distribution pursuant to Regulation 1.401(k)-
1(d)(2)(iii)(B) from any plan maintained by the Employer, then such Participant
shall be barred from making any voluntary contributions for a period of twelve
(12) months after receipt of the withdrawal or distribution.
(e) At Normal Retirement Date, or such other date when the
Participant or his Beneficiary shall be entitled to receive benefits,
the fair market value of the Voluntary Contribution Account shall be
used to provide additional benefits to the Participant or his
Beneficiary.
(f) The Administrator may direct that voluntary contributions
made after a valuation date be segregated into a separate account
until such time as the allocations pursuant to this Plan have been
made, at which time they may remain segregated or be invested as part
of the general Trust Fund, to be determined by the Administrator.
4.8 DIRECTED DIVESTMENT ACCOUNT
(a) If elected in the Adoption Agreement, all Participants may
direct the Trustee as to the investment of all or a portion of any one
or more of their individual account balances. Participants may direct
the Trustee in writing to invest their account in specific assets as
permitted by the Administrator provided such investments are in
accordance with the Department of Labor regulations and are permitted
by the Plan. That portion of the account of any Participant so
directing will thereupon be considered a Directed Investment Account.
(b) A separate Directed Investment Account shall be established
for each Participant who has directed an investment. Transfers between
the Participant's regular account and their 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.
(c) The Administrator shall establish a procedure, to be applied
in a uniform and nondiscriminatory manner, setting forth the
permissible investment options under this Section, how often changes
between investments may be made, and any other limitations that the
Administrator shall impose on a Participant's right to direct
investments.
4.9 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) If this is an amendment to a Plan that previously permitted
deductible voluntary contributions, then each Participant who made a
"Qualified Voluntary Employee Contribution" within the meaning of Code
Section 219(e)(2) as it existed prior to the enactment of the Tax
Reform Act of 1986, shall have his contribution held in a separate
Qualified Voluntary Employee Contribution
42
Account which shall be fully Vested at all times. Such contributions,
however, shall not be permitted if they are attributable to taxable
years beginning after December 31, 1986.
(b) A Participant may, upon written request delivered to the
Administrator, make withdrawals from his Qualified Voluntary Employee
Contribution Account. Any distribution shall be made in a manner which
is consistent with and satisfies the provisions of Section 6.5,
including, but not limited to, all notice and consent requirements of
Code Sections 411 (a)(11) and 417 and the Regulations thereunder.
(c) At Normal Retirement Date, or such other date when the
Participant or his Beneficiary shall be entitled to receive benefits,
the fair market value of the Qualified Voluntary Employee Contribution
Account shall be used to provide additional benefits to the
Participant or his Beneficiary.
(d) Unless the Administrator directs Qualified Voluntary Employee
Distributions made pursuant to this Section be segregated into a
separate account for each Participant, they shall be invested as part
of the general Trust Fund and share in earnings and losses.
4.10 ACTUAL CONTRIBUTION PERCENTAGE TESTS
In the event this Plan previously provided for voluntary or mandatory
Employee contributions, then, with respect to Plan Years beginning after
December 31, 1986, such contributions must satisfy the provisions of Code
Section 401(m) and the Regulations thereunder.
4.11 INTEGRATION IN MORE THAN ONE PLAN
If the Employer and/or an Affiliated Employer maintain qualified
retirement plans integrated with Social Security such that any Participant in
this Plan is covered under more than one of such plans, then such plans will be
considered to be one plan and will be considered to be integrated if the extent
of the integration of all such plans does not exceed 100%. For purposes of the
preceding sentence, the extent of integration of a plan is the ratio, expressed
as a percentage, which the actual benefits, benefit rate, offset rate, or
employer contribution rate, whatever is applicable under the Plan bears to the
limitation applicable to such Plan. If the Employer maintains two or more
standardized paired plans, only one plan may be integrated with Social Security.
ARTICLE V
VALUATIONS
5.1 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
43
date," to determine the net worth of the assets comprising the Trust Fund as it
exists on the "valuation date." 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.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the Trust
Fund which are listed on a registered stock exchange, the Administrator shall
direct the Trustee to value the same at the prices they were last traded on such
exchange preceding the close of business on the "valuation date." If such
securities were not traded on the "valuation date," or if the exchange on which
they are traded was not open for business on the "valuation date," then the
securities shall be valued at the prices at which they were last traded prior to
the valuation date." Any unlisted security held in the Trust Fund shall be
valued at its bid price next preceding the close of business on the "valuation
date," which bid price shall be obtained from a registered broker or an
investment banker. In determining the fair market value of assets other than
securities for which trading or bid prices can be obtained, the Trustee may
appraise such assets itself, or in its discretion, employ one or more appraisers
for that purpose and rely on the values established by such appraiser or
appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the Employer and
retire for the purposes hereof on or after his Normal Retirement Date or Early
Retirement Date. Upon such Normal Retirement Date or Early Retirement Date, all
amounts credited to such Participant's Combined 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, including the right to receive allocations
pursuant to Section 4.3, shall continue until his Late Retirement Date. Upon a
Participant's Retirement Date, or as soon thereafter as is practicable, the
Administrator shall direct the distribution of all amounts credited to such
Participant's Combined Account in accordance with Section 6.5.
6.2 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 Combined Account shall become fully Vested. The
Administrator shall direct, in accordance with the provisions of
Sections 6.6 and 6.7, the distribution of the deceased Participant's
accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator
shall direct, in accordance with the provisions of Sections 6.6 and
6.7, the distribution of any remaining amounts credited to the
accounts of such deceased Former Participant to such Former
Participant's Beneficiary.
44
(c) 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.
(d) Unless otherwise elected in the manner prescribed in Section
6.6, the Beneficiary of the Pre-Retirement Survivor Annuity shall be
the Participant's spouse. Except, however, the Participant may
designate a Beneficiary other than his spouse for the Pre-Retirement
Survivor Annuity if:
(1) the Participant and his spouse have validly waived the Pre-
Retirement Survivor Annuity in the manner prescribed in Section
6.6, and the spouse has waived his or 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 change in Beneficiary unless the
original consent acknowledged that the spouse had the right to limit consent
only to a specific Beneficiary and that the spouse voluntarily elected to
relinquish such right. The Participant may, at any time, designate a Beneficiary
for death benefits payable under the Plan that are in excess of the Pre-
Retirement Survivor Annuity. 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.
(e) If the Plan provides an insured death benefit and a
Participant dies before any insurance coverage to which he is entitled
under the Plan is effected, his death benefit from such insurance
coverage shall be limited to the standard rated premium which was or
should have been used for such purpose.
(f) In the event of any conflict between the terms of this Plan
and the terms of any Contract issued hereunder, the Plan provisions
shall control.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior
to his Retirement Date or other termination of his employment, all amounts
credited to such Participant's Combined Account shall become fully Vested. In
the event of a Participant's Total
45
and Permanent Disability, the Administrator, in accordance with the provisions
of Sections 6.5 and 6.7, shall direct the distribution to such Participant of
all amounts credited to such Participant's Combined Account as though he had
retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date, or other valuation date,
coinciding with or subsequent to the termination of a Participant's
employment for any reason other than retirement, death, or Total and
Permanent Disability, the Administrator may direct that the amount of
the Vested portion of such Terminated Participant's Combined Account
be segregated and invested separately. In the event the Vested portion
of a Participant's Combined Account is not segregated, the amount
shall remain in a separate account for the Terminated Participant and
share in allocations pursuant to Section 4.3 until such time as a
distribution is made to the Terminated Participant. The amount of the
portion of the Participant's Combined Account which is not Vested may
be credited to a separate account (which will always share in gains
and losses of the Trust Fund) and at such time as the amount becomes a
Forfeiture shall be treated in accordance with the provisions of the
Plan regarding Forfeitures.
Regardless of whether distributions in kind are permitted, in the
event that the amount of the Vested portion of the Terminated Participant's
Combined Account equals or exceeds the fair market value of any insurance
Contracts, the Trustee, when so directed by the Administrator and agreed to by
the Terminated Participant, shall assign, transfer, and set over to such
Terminated Participant all Contracts on his life in such form or with such
endorsements, so that the settlement options and forms of payment are consistent
with the provisions of Section 6.5. In the event that the Terminated
Participant's Vested portion does not at least equal the fair market value of
the Contracts, if any, the Terminated Participant may pay over to the Trustee
the sum needed to make the distribution equal to the value of the Contracts
being assigned or transferred, or the Trustee, pursuant to the Participant's
election, may borrow the cash value of the Contracts from the Insurer so that
the value of the Contracts is equal to the Vested portion of the Terminated
Participant's Combined Account and then assign the Contracts to the Terminated
Participant.
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 that the entire Vested portion of the Terminated Participant's Combined
Account to be payable to such Terminated Participant provided the conditions, if
any, set forth in the Adoption Agreement have been satisfied. Any distribution
under this paragraph shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5, including but not limited to, all
notice and consent requirements of Code Sections 411(a)(11) and 417 and the
Regulations thereunder.
Notwithstanding the above, if the value of a Terminated Participant's
Vested benefit derived from Employer and Employee contributions does not exceed,
and at the time of
46
any prior distribution, has never exceeded $3,500, the Administrator shall
direct that the entire Vested benefit be paid to such Participant in a single
lump-sum without regard to the consent of the Participant or the Participant's
spouse. A Participant's Vested benefit shall not include Qualified Voluntary
Employee Contributions within the meaning of Code Section 72(o)(5)(B) for Plan
Years beginning prior to January 1, 1989.
(b) The Vested portion of any Participant's Account shall be a
percentage of such Participant's Account determined on the basis of
the Participant's number of Years of Service according to the vesting
schedule specified in the Adoption Agreement.
(c) For any Top Heavy Plan Year, one of the minimum top heavy
vesting schedules as elected by the Employer in the Adoption Agreement
will automatically apply to the Plan. The minimum top heavy vesting
schedule applies to all benefits within the meaning of Code Section
411(a)(7) except those attributable to Employee contributions,
including benefits accrued before the effective date of Code Section
416 and benefits accrued before the Plan became top heavy. Further, no
decrease in a Participant's Vested percentage may occur in the event
the Plan's status as top heavy changes for any Plan Year. However,
this Section does not apply to the account balances of any Employee
who does not have an Hour of Service after the Plan has initially
become top heavy and the Vested percentage of such Employee's
Participant's Account shall be determined without regard to this
Section 6.4(c).
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy
Plan, the Administrator shall continue to use the vesting schedule in effect
whether the Plan was a Top Heavy Plan for each Employee who had an Hour of
Service during a Plan Year when the Plan was Top Heavy.
(d) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer's contributions to the Plan or upon any
full or partial termination of the Plan, all amounts credited to the
account of any affected Participant shall become 100% Vested and shall
not thereafter be subject to Forfeiture.
(e) If this is an amended or restated Plan, then notwithstanding
the vesting schedule specified in the Adoption Agreement, the Vested
percentage of a Participant's Account shall not be less than the
Vested percentage attained as of the later of the effective date or
adoption date of this amendment and restatement. 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, or due to changes in the Plan's status as a Top Heavy
Plan.
(f) If the Plan's vesting schedule is amended, or if the Plan is
amended in any way that directly or indirectly affects the computation
of the Participant's nonforfeitable percentage or if the Plan is
deemed amended by an automatic change to a top heavy vesting schedule,
then each Participant with at least 3 Years
47
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 or change. Notwithstanding the foregoing, for
Plan Years beginning before January 1, 1989, or with respect to
Employees who fail to complete at least one (1) Hour of Service in a
Plan Year beginning after December 31, 1988, five (5) shall be
substituted for three (3) in the preceding sentence. 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.
(g) (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 5 consecutive 1-Year
Breaks in Service commencing after the distribution. If a
distribution occurs for any reason other than a separation from
service, the time for repayment may not end earlier than five (5)
years after the date of separation. 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. If an employee receives a distribution
pursuant to this section and the employee resumes employment
covered under this plan, the employee's employer-derived account
balance will be restored to the amount on the date of
distribution if the employee repays to the plan the full amount
of the distribution attributable to employer contributions before
the earlier of 5 years after the first date on which the
participant is subsequently re-employed by the employer, or the
date the participant incurs 5 consecutive 1-year breaks in
service following the date of the distribution. If a non-Vested
Former Participant was deemed to have received a distribution and
such Former Participant is reemployed by the Employer before five
(5) consecutive 1-Year Breaks in Service, then such
48
Participant will be deemed to have repaid the deemed distribution
as of the date of reemployment.
(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) Any Former Participant who under the Plan does not
have a nonforfeitable right to any interest in the Plan
resulting from Employer contributions shall lose credits if
his consecutive 1-Year Breaks in Service equal or exceed
the greater of (A) five (5) or (B) the aggregate number of
his pre-break Years of Service;
(ii) 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;
(iii) A Former Participant who is reemployed and who has
not had his Years of Service before a 1-Year Break in
Service disregarded pursuant to (i) above, shall
participate in the Plan as of his date of reemployment;
(iv) If a Former Participant 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.
(h) In determining Years of Service for purposes of vesting under
the Plan, Years of Service shall be excluded as specified in the
Adoption Agreement.
6.5 DISTRIBUTION OF BENEFITS
(a) (1) Unless otherwise elected as provided below, a Participant
who is married on the "annuity starting date" and who does not die
before the "annuity starting date" shall receive the value of all of
his benefits in the form of a Joint and Survivor Annuity. The Joint
and Survivor Annuity is an annuity that commences immediately and
shall be equal in value to a single life annuity. Such joint and
survivor benefits following the Participant's death shall continue to
the spouse during the spouse's lifetime at a rate equal to 50% of the
rate at which such benefits were payable to the Participant. This
Joint and Survivor Annuity shall be considered the designated
qualified Joint and Survivor Annuity and automatic form of payment for
the purposes of this Plan. However, the Participant may elect to
receive a smaller annuity benefit with continuation of payments to the
spouse at a rate of seventy-five percent (75%) or one hundred percent
(100%) of the rate payable to a Participant during his lifetime which
alternative Joint and Survivor Annuity shall be equal in value to the
automatic Joint and 50% Survivor Annuity. An unmarried Participant
shall receive the value of his benefit in the form of a life
49
annuity. Such unmarried Participant, however, may elect in writing to
waive the life annuity. The election must comply with the provisions
of this Section as if it were an election to waive the Joint and
Survivor Annuity by a married Participant, but without the spousal
consent requirement. The Participant may elect to have any annuity
provided for in this Section distributed upon the attainment of the
"earliest retirement age" under the Plan. The "earliest retirement
age" is the earliest date on which, under the Plan, the Participant
could elect to receive retirement benefits.
(2) Any election to waive the Joint and Survivor Annuity must be
made by the Participant in writing during the election period and
be consented to by the Participant's spouse. If the spouse is
legally incompetent to give consent, the spouse's legal guardian,
even if such guardian is the Participant, may give consent. Such
election shall designate a Beneficiary (or a form of benefits)
that may not be changed without spousal consent (unless the
consent of the spouse expressly permits designations by the
Participant without the requirement of further consent by the
spouse). Such spouse's consent shall be irrevocable and must
acknowledge the effect of such election and be witnessed by a
Plan representative or a notary public. Such consent shall not be
required if it is established to the satisfaction of the
Administrator that the required consent cannot be obtained
because there is no spouse, the spouse cannot be located, or
other circumstances that may be prescribed by Regulations. The
election made by the Participant and consented to by his spouse
may be revoked by the Participant in writing without the consent
of the spouse at any time during the election period. The number
of revocations shall not be limited. Any new election must comply
with the requirements of this paragraph. A former spouse's waiver
shall not be binding on a new spouse.
(3) The election period to waive the Joint and Survivor Annuity
shall be the 90 day period ending on the "annuity starting date."
(4) For purposes of this Section and Section 6.6, the "annuity
starting date" means the first day of the first period for which
an amount is paid as an annuity, or, in the case of a benefit not
payable in the form of an annuity, the first day on which all
events have occurred which entitles the Participant to such
benefit.
(5) With regard to the election, the Administrator shall provide
to the Participant no less than 30 days and no more than 90 days
before the "annuity starting date" a written explanation of:
(i) the terms and conditions of the Joint and Survivor
Annuity, and
(ii) the Participant's right to make and the effect of an
election to waive the Joint and Survivor Annuity, and
50
(iii) the right of the Participant's spouse to consent to
any election to waive the Joint and Survivor Annuity, and
(iv) the right of the Participant to revoke such election,
and the effect of such revocation.
(b) In the event a married Participant duly elects pursuant to
paragraph (a)(2) above not to receive his benefit in the form of a Joint
and Survivor Annuity, or if such Participant is not married, in the form
of a life annuity, the Administrator, pursuant to the election of the
Participant, shall direct the distribution to a Participant or his
Beneficiary any amount to which he is entitled under the Plan in one or
more of the following methods which are permitted pursuant to the
Adoption Agreement:
(1) One lump-sum payment in cash or in property;
(2) Payments over a period certain in monthly, quarterly,
semiannual, or annual cash installments. In order to provide such
installment payments, the Administrator may direct that the
Participant's interest in the Plan be segregated and invested
separately, and that the funds in the segregated account be used
for the payment of the installments. 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);
(3) Purchase of or providing an annuity. However, such annuity may
not be in any form that will provide for payments over a period
extending beyond either the life of the Participant (or the lives
of the Participant and his designated Beneficiary) or the life
expectancy of the Participant (or the life expectancy of the
Participant and his designated Beneficiary).
(c) The present value of a Participant's Joint and Survivor Annuity
derived from Employer and Employee contributions may not be paid without
his written consent if the value exceeds, or has ever exceeded at the
time of any prior distribution, $3,500. Further, the spouse of a
Participant must consent in writing to any immediate distribution. If the
value of the Participant's 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 may immediately
distribute such benefit without such Participant's consent. No
distribution may be made under the preceding sentence after the "annuity
starting date" unless the Participant and his spouse consent in writing
to such distribution. Any written consent required under this paragraph
must be obtained not more than 90 days before commencement of the
distribution and shall be made in a manner consistent with Section
6.5(a)(2).
(d) Any distribution to a Participant who has a benefit which
exceeds, or has ever exceeded at the time of any prior distribution,
$3,500 shall require such
51
Participant's consent if such distribution commences prior to the
later of his Normal Retirement Age or age 62. With regard to this
required consent:
(1) No consent shall be valid unless the Participant has received
a general description of the material features and an explanation
of the relative values of the optional forms of benefit available
under the Plan that would satisfy the notice requirements of Code
Section 417.
(2) 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 commencement of
payment of any benefit. However, any election to defer the
receipt of benefits shall not apply with respect to distributions
which are required under Section 65(e).
(3) Notice of the rights specified under this paragraph shall be
provided no less than 30 days and no more than 90 days before the
"annuity starting date."
(4) 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 "annuity starting date."
(5) No consent shall be valid if a significant detriment is
imposed under the Plan on any Participant who does not consent to
the distribution.
(e) Notwithstanding any provision in the Plan to the contrary,
the distribution of a Participant's benefits, made on or after January
1, 1985, whether under the Plan or through the purchase of an annuity
Contract, 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 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,
provided, however, that this clause (ii) shall not apply in the
case of a Participant who is a "five (5) percent owner" at any
time during the five (5) Plan Year period ending in the calendar
year in which he attains age 70 1/2 or, in the case of a
Participant who becomes a "five (5) percent owner" during any
subsequent Plan Year, clause (ii) shall no longer apply and the
required beginning date shall be the April 1st of the calendar
year following the calendar year in which such subsequent Plan
Year ends. 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 of the
Participant (or the lives of the Participant and the
Participant's designated Beneficiary) or, if benefits
52
are paid in the form of a Joint and Survivor Annuity, the life
expectancy of the Participant (or the life expectancies of the
Participant and his designated Beneficiary) in accordance with
Regulations. For Plan Years beginning after December 31, 1988,
clause (ii) above shall not apply to any Participant unless the
Participant had attained age 70 1/2 before January 1, 1988 and
was not a "five (5) percent owner" at any time during the Plan
Year ending with or within the calendar year in which the
Participant attained age 66 1/2 or any subsequent Plan Year.
(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 before 1989, distributions
may also 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) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse (other than in the case of a
life annuity) shall be redetermined annually in accordance with
Regulations if permitted pursuant to the Adoption Agreement. If the
Participant or the Participant's spouse may elect whether
recalculations will be made, then 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. Life
expectancy and joint and last survivor expectancy shall be computed
using the return multiples in Tables V and VI of Regulation 1.72-9.
(g) All annuity Contracts under this Plan shall be non-
transferable when distributed. Furthermore, the terms of any annuity
Contract purchased and distributed to a Participant or spouse shall
comply with all of the requirements of this Plan.
(h) Subject to the spouse's right of consent afforded under the
Plan, the restrictions imposed by this Section shall not apply if a
Participant has, prior to January 1, 1994, made a written designation
to have his retirement benefit paid in an alternative method
acceptable under Code Section 401(a) as in effect prior to the
enactment of the Tax Equity and Fiscal Responsibility Act of 1982.
(i) If a distribution is made at a time when a Participant who
has not terminated employment is not fully Vested in his Participant's
Account and the Participant may increase the Vested percentage in such
account:
(1) A separate account shall be established for the Participant's
interest in the Plan as of the time of the distribution, and
(2) At any relevant time the Participant's Vested portion of the
separate account shall be equal to an amount ("X") determined by
the formula:
53
X equals P(AB plus (RxD)) - (R x D)
For purposes of applying the formula: P is the Vested percentage at the
relevant time, AB is the account balance at the relevant time, D is the
amount of distribution, and R is the ratio of the account balance at the
relevant time to the account balance after distribution.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below, a Vested Participant
who dies before the annuity starting date and who has a surviving spouse
shall have the Pre-Retirement Survivor Annuity paid to his surviving
spouse. The Participant's spouse may direct that payment of the Pre-
Retirement Survivor Annuity commence within a reasonable period after the
Participant's death. If the spouse does not so direct, payment of such
benefit will commence at the time the Participant would have attained the
later of his Normal Retirement Age or age 62. However, the spouse may elect
a later commencement date. Any distribution to the Participant's spouse
shall be subject to the rules specified in Section 6.6(h).
(b) Any election to waive the Pre-Retirement Survivor Annuity before
the Participant's death must be made by the Participant in writing during
the election period and shall require the spouse's irrevocable consent in
the same manner provided for in Section 6.5(a)(2). Further, the spouse's
consent must acknowledge the specific nonspouse Beneficiary.
Notwithstanding the foregoing, the nonspouse Beneficiary need not be
acknowledged, provided the consent of the spouse acknowledges that the
spouse has the right to limit consent only to a specific Beneficiary and
that the spouse voluntarily elects to relinquish such right.
(c) The election period to waive the Pre-Retirement Survivor Annuity
shall begin on the first day of the Plan Year in which the Participant
attains age 35 and end on the date of the Participant's death. An earlier
waiver (with spousal consent) may be made provided a written explanation of
the Pre-Retirement Survivor Annuity is given to the Participant and such
waiver becomes invalid at the beginning of the Plan Year in which the
Participant turns age 35. In the event a Vested Participant separates from
service prior to the beginning of the election period, the election period
shall begin on the date of such separation from service.
(d) With regard to the election, the Administrator shall provide each
Participant within the applicable period, with respect to such Participant
(and consistent with Regulations), a written explanation of the Pre-
Retirement Survivor Annuity containing comparable information to that
required pursuant to Section 6.5(a)(4). For the purposes of this paragraph,
the term "applicable period" means, with respect to a Participant,
whichever of the following periods ends last:
(1) The period beginning with 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;
54
(2) A reasonable period after the individual becomes a Participant.
For this purpose, in the case of an individual who becomes a
Participant after age 32, the explanation must be provided by the end
of the three-year period beginning with the first day of the first
Plan Year for which the individual is a Participant;
(3) A reasonable period ending after the Plan no longer fully
subsidizes the cost of the Pre-Retirement Survivor Annuity with
respect to the Participant;
(4) A reasonable period ending after Code Section 401 (a)(11) applies
to the Participant; or
(5) A reasonable period after separation from service in the case of a
Participant who separates before attaining age 35. For this purpose,
the Administrator must provide the explanation beginning one year
before the separation from service and ending one year after
separation.
(e) The Pre-Retirement Survivor Annuity provided for in this Section
shall apply only to Participants who are credited with an Hour of Service
on or after August 23, 1984. Former Participants who are not credited with
an Hour of Service on or after August 23, 1984 shall be provided with
rights to the Pre-Retirement Survivor Annuity in accordance with Section
303(e)(2) of the Retirement Equity Act of 1984.
(f) If the value of the Pre-Retirement Survivor Annuity 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 immediate distribution of such amount to the Participant's
spouse. No distribution may be made under the preceding sentence after the
annuity starting date unless the spouse consents in writing. If the value
exceeds, or has ever exceeded at the time of any prior distribution,
$3,500, an immediate distribution of the entire amount may be made to the
surviving spouse, provided such surviving spouse consents in writing to
such distribution. Any written consent required under this paragraph must
be obtained not more than 90 days before commencement of the distribution
and shall be made in a manner consistent with Section 6.5(a)(2).
(g) (1) In the event there is an election to waive the Pre-Retirement
Survivor Annuity, and for death benefits in excess of the Pre-Retirement
Survivor Annuity, such death benefits shall be paid to the Participant's
Beneficiary by either of the following methods, as elected by the
Participant (or if no election has been made prior to the Participant's
death, by his Beneficiary) subject to the rules specified in Section 6.6(h)
and the selections made in the Adoption Agreement:
(i) One lump-sum payment in cash or in property;
55
(ii) Payment in monthly, quarterly, semi-annual, or annual
cash installments over a period to be determined by the
Participant or his Beneficiary. After periodic installments
commence, the Beneficiary shall have the right to reduce the
period over which such periodic installments shall be made,
and the cash amount of such periodic installments shall be
adjusted accordingly.
(iii) If death benefits in excess of the Pre-Retirement
Survivor Annuity are to be paid to the surviving spouse, such
benefits may be paid pursuant to (i) or (ii) above, or used
to purchase an annuity so as to increase the payments made
pursuant to the Pre-Retirement Survivor Annuity;
(2) In the event the death benefit payable pursuant to Section 6.2 is
payable in installments, then, upon the death of the Participant the
Administrator may direct that the death benefit be segregated and
invested separately, and that the funds accumulated in the segregated
account be used for the payment of the installments.
(h) Notwithstanding any provision in the Plan to the contrary,
distributions upon the death of a Participant made on or after January 1,
1985, shall be made in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the Regulations
thereunder.
(1) 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 6.5 as of his date of death.
(2) If a Participant dies before he has begun to receive any
distributions of his interest in the Plan or before distributions are
deemed to have begun pursuant to Regulations, then his death benefit
shall be distributed to his Beneficiaries in accordance with the
following rules subject to the selections made in the Adoption
Agreement and Subsections 6.6(h)(3) and 6.6(i) below:
(i) The entire death benefit shall be distributed to the
Participant's Beneficiaries by December 31st of the calendar
year in which the fifth anniversary of the Participant's
death occurs;
(ii) The 5-year distribution requirement of (i) above 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 shall be
distributed over the life of such designated Beneficiary (or
over a period not extending beyond the life expectancy of
such designated Beneficiary) provided such
56
distribution begins not later than December 31st of the
calendar year immediately following the calendar year in
which the Participant died;
(iii) However, in the event the Participant's spouse
(determined as of the date of the Participant's death) is
his designated Beneficiary, the provisions of (ii) above
shall apply except that the requirement that distributions
commence within one year of the 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 which the Participant would have attained age 70 1/2. If
the surviving spouse dies before distributions to such
spouse begin, then the 5-year distribution requirement of
this Section shall apply as if the spouse was the
Participant.
(3) Notwithstanding subparagraph (2) above, or any selections made
in the Adoption Agreement, if a Participant's death benefits are to
be paid in the form of a Pre-Retirement Survivor Annuity, then
distributions to the Participant's surviving spouse 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 which the
Participant would have attained age 70 1/2.
(i) For purposes of Section 6.6(h)(2), the election by a designated
Beneficiary to be excepted from the 5-year distribution requirement (if
permitted in the Adoption Agreement) 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 70 1/2; 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.
(j) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse (other than in the case of a life
annuity) shall or shall not be redetermined annually as provided in the
Adoption Agreement and in accordance with Regulations. If the Participant
or the Participant's spouse may elect, pursuant to the Adoption Agreement,
to have life expectancies recalculated, then 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. Life expectancy and joint
57
and last survivor expectancy shall be computed using the return
multiples in Tables V and VI of Regulation Section 1.72-9.
(k) In the event that less than 100% of a Participant's interest
in the Plan is distributed to such Participant's spouse, the portion
of the distribution attributable to the Participant's Voluntary
Contribution Account shall be in the same proportion that the
Participant's Voluntary Contribution Account bears to the
Participant's total interest in the Plan.
(l) Subject to the spouse's right of consent afforded under the
Plan, the restrictions imposed by this Section shall not apply if a
Participant has, prior to January 1, 1984, made a written designation
to have his death benefits paid in an alternative method acceptable
under Code Section 401(a) as in effect prior to the enactment of the
Tax Equity and Fiscal Responsibility Act of 1982.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever a distribution is
to be made, or a series of payments are to commence, on or as of an Anniversary
Date, the distribution or series of payments may be made or begun on such date
or as soon thereafter as is practicable, but in no event later than 180 days
after the Anniversary Date. However, unless a Former 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 shall begin
not later than the 60th day after the close of the Plan Year in which the latest
of the following events occurs: (a) the date on which the Participant attains
the earlier of age 65 or the Normal Retirement Age specified herein; (b) the
10th anniversary of the year in which the Participant commenced participation in
the Plan; or (c) the date the Participant terminates his service with the
Employer.
Notwithstanding the foregoing, the failure of a Participant and, if
applicable, the Participant's spouse, to consent to a distribution pursuant to
Section 6.5(d), shall be deemed to be an election to defer the commencement of
payment of any benefit sufficient to satisfy this Section.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may 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, custodian or parent of a minor Beneficiary shall fully
discharge the Trustee, Employer, and Plan from further liability on account
thereof.
6.9 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 later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator,
58
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 treated 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, first from Forfeitures, if any, and then from an additional Employer
contribution if necessary.
6.10 PRE-RETIREMENT DISTRIBUTION
For Profit Sharing Plans and 401(k) Profit Sharing Plans, if elected
in the Adoption Agreement, at such time as a Participant shall have attained the
age specified in the Adoption Agreement, the Administrator, at the election of
the Participant, shall direct the distribution of up to the entire amount then
credited to the accounts maintained on behalf of the Participant. However, no
such distribution from the Participant's Account shall occur prior to 100%
Vesting. In the event that the Administrator makes such a distribution, the
Participant shall continue to be eligible to participate in the Plan on the same
basis as any other Employee. Any distribution made pursuant to this Section
shall be made in a manner consistent with Section 6.5, including, but not
limited to, all notice and consent requirements of Code Sections 411(a)(11) and
417 and the Regulations thereunder.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) For Profit Sharing Plans, if elected in the Adoption
Agreement, the Administrator, at the election of the Participant,
shall direct the distribution to any Participant in any one Plan Year
up to the lesser of 100% of his Participant's Combined 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. 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 account from which the distribution is made shall be reduced
accordingly. Withdrawal under this Section shall be authorized only
if the distribution is on account of:
(1) Medical expenses described in Code Section 213(d) incurred by
the Participant, his spouse, or any of his dependents (as defined
in Code Section 152) or expenses necessary for these persons to
obtain medical care;
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Funeral expenses for a member of the Participant's family;
(4) Payment of tuition and related educational fees for the next
12 months of post-secondary education for the Participant, his
spouse, children, or dependents; or
59
(5) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) No such distribution shall be made from the Participant's
Account until such Account has become fully Vested.
(c) Any distribution made pursuant to this Section shall be made
in a manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411 (a)(11) and 417 and the Regulations
thereunder.
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
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 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).
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS
If elected in the Adoption Agreement, the following shall apply to a
Participant in a Profit Sharing Plan or 401(k) Profit Sharing Plan and to any
distribution, made on or after the first day of the first plan year beginning
after December 31, 1988, from or under a separate account attributable solely to
accumulated deductible employee contributions, as defined in Code Section
72(o)(5)(B), and maintained on behalf of a participant in a money purchase
pension plan, (including a target benefit plan):
(a) The Participant shall be prohibited from electing benefits in
the form of a life annuity;
(b) Upon the death of the Participant, the Participant's entire
Vested account balances will be paid to his or her surviving spouse,
or, if there is no surviving spouse or the surviving spouse has
already consented to waive his or her benefit, in accordance with
Section 6.6, to his designated Beneficiary;
(c) Except to the extent otherwise provided in this Section and
Section 6.5(h), the other provisions of Sections 6.2, 6.5 and 6.6
regarding spousal consent and the forms of distributions shall be
inoperative with respect to this Plan.
(d) If a distribution is one to which Sections 401(a)(11) and 417
of the Internal Revenue Code do not apply, such distribution may
commence less than 30 days after the notice required under Section
1.411(a)-11(c) of the Income Tax Regulations is given, provided that:
60
(1) the Plan Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days after
the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution
option), and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
This Section shall not apply to any Participant if it is determined
that this Plan is a direct or indirect transferee of a defined benefit plan or
money purchase plan, or a target benefit plan, stock bonus or profit sharing
plan which would otherwise provide for a life annuity form of payment to the
Participant.
ARTICLE VII
TRUSTEE
7.1 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 to invest, manage, and control the Plan assets subject,
however, to the direction of an Investment Manager if the Employer
should appoint such manager as to all or a portion of the assets of
the Plan;
(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 Plan Year a written
annual report per Section 7.7; and
(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.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust Fund to keep
the Trust Fund invested without distinction between principal and
income and in such securities or property, real or personal, wherever
situated, as the Trustee shall deem advisable, including, but not
limited to, stocks, common or preferred, bonds and other evidences of
indebtedness or ownership, and real estate or any interest therein.
The Trustee shall at all times in making investments of the Trust Fund
consider, among other factors, the short and long-term financial needs
of the Plan on the basis of information furnished by the Employer. In
making such investments, the Trustee shall not be restricted to
securities or other property of
61
the character expressly authorized by the applicable law for trust
investments; however, the Trustee shall give due regard to any
limitations imposed by the Code or the Act so that at all times this
Plan may qualify as a qualified Plan and Trust.
(b) The Trustee may employ a bank or trust company pursuant to
the terms of its usual and customary bank agency agreement, under
which the duties of such bank or trust company shall be of a
custodial, clerical and record-keeping nature.
(c) The Trustee may from time to time transfer to a common,
collective, or pooled trust fund maintained by any corporate Trustee
hereunder pursuant to Revenue Ruling 81-100, all or such part of the
Trust Fund as the Trustee may deem advisable, and such part or all of
the Trust Fund so transferred shall be subject to all the terms and
provisions of the common, collective, or pooled trust fund which
contemplate the commingling for investment purposes of such trust
assets with trust assets of other trusts. The Trustee may withdraw
from such common, collective, or pooled trust fund all or such part of
the Trust Fund as the Trustee may deem advisable.
(d) The Trustee, at the direction of the Administrator and
pursuant to instructions from the individual designated in the
Adoption Agreement for such purpose and subject to the conditions set
forth in the Adoption Agreement, shall ratably apply for, own, and pay
all premiums on Contracts on the lives of the Participants. Any
initial or additional Contiza purchased on behalf of a Participant
shall have a face amount of not less than $1,000, the amount set forth
in the Adoption Agreement, or the limitation of the Insurer, whichever
is greater. If a life insurance Contract is to be purchased for a
Participant, the aggregate premium for ordinary life insurance for
each Participant must be less than 50% of the aggregate contributions
and Forfeitures allocated to a Participant's Combined Account. For
purposes of this limitation, ordinary life insurance Contracts are
Contracts with both non-decreasing death benefits and non-increasing
premiums. If term insurance or universal life insurance is purchased
with such contributions, the aggregate premium must be 25% or less of
the aggregate contributions and Forfeitures allocated to a
Participant's Combined Account. If both term insurance and ordinary
life insurance are purchased with such contributions, the amount
expended for term insurance plus one-half of the premium for ordinary
life insurance may not in the aggregate exceed 25% of the aggregate
Employer contributions and Forfeitures allocated to a Participant's
Combined Account. The Trustee must distribute the Contracts to the
Participant or convert the entire value of the Contracts at or before
retirement into cash or provide for a periodic income so that no
portion of such value may be used to continue life insurance
protection beyond retirement. Notwithstanding the above, the
limitations imposed herein with respect to the purchase of life
insurance shall not apply, in the case of a Profit Sharing Plan, to
the portion of a Participant's Account that has accumulated for at
least two (2) Plan Years.
62
Notwithstanding anything hereinabove to the contrary, amounts credited
to a Participant's Qualified Voluntary Employee Contribution Account pursuant to
Section 4.9, shall not be applied to the purchase of life insurance contracts.
(e) The Trustee will be the owner of any life insurance Contract
purchased under the terms of this Plan. The Contract must provide that
the proceeds will be payable to the Trustee; however, the Trustee
shall be required to pay over all proceeds of the Contract to the
Participant's designated Beneficiary in accordance with the
distribution provisions of Article VI. A Participant's spouse will be
the designated Beneficiary pursuant to Section 6.2, unless a qualified
election has been made in accordance with Sections 6.5 and 6.6 of the
Plan, if applicable. Under no circumstances shall the Trust retain any
part of the proceeds. However, the Trustee shall not pay the proceeds
in a method that would violate the requirements of the Retirement
Equity Act, as stated in Article VI of the Plan, or Code Section
401(a)(9) and the Regulations thereunder.
7.3 POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common
law, statutory authority, including the Act and other provisions of this Plan,
shall have the following powers and authorities to be exercised in the Trustee's
sale discretion:
(a) To purchase, or subscribe for, any securities or other
property and to retain the same. In conjunction with the purchase of
securities, margin accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other property
held by the Trustee, by private contract or at public auction. No
person dealing with the Trustee shall be bound to see to the
application of the purchase money or to inquire into the validity,
expediency, or propriety of any such sale or other disposition, with
or without advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power
of substitution; to exercise any conversion privileges, subscription
rights or other options, and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate securities, and
to delegate discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to exercise any of the
powers of an owner with respect to stocks, bonds, securities, or other
property;
(d) To cause any securities or other property to be registered in
the Trustee's own name or in the name of one or more of the Trustee's
nominees, and to hold any investments in bearer form, but the books
and records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
63
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any
part, of the Trust Fund; and no person lending money to the Trustee
shall be bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash
balances as the Trustee may, from time to time, deem to be in the best
interests of the Plan, without liability for interest thereon;
(g) To accept and retain for such time as it may deem advisable
any securities or other property received or acquired by it as Trustee
hereunder, whether or not such securities or other property would
normally be purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other instruments
that may be necessary or appropriate to carry out the powers herein
granted;
(i) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to commence or
defend suits or legal or administrative proceedings, and to represent
the Plan in all suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agent or counsel may or
may not be agent or counsel for the Employer;
(k) To apply for and procure from the Insurer as an investment of
the Trust Fund such annuity, or other Contracts (on the life of any
Participant) as the Administrator shall deem proper; to exercise, at
any time or from time to time, whatever rights and privileges may be
granted under such annuity, or other Contracts; to collect, receive,
and settle for the proceeds of all such annuity, or other Contracts as
and when entitled to do so under the provisions thereof;
(l) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest in the Trustee's bank;
(m) To invest in Treasury Bills and other forms of United States
government obligations;
(n) To sell, purchase and acquire put or call options if the
options are traded on and purchased through a national securities
exchange registered under the Securities Exchange Act of 1934, as
amended, or, if the options are not traded on a national securities
exchange, are guaranteed by a member firm of the New York Stock
Exchange;
64
(o) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(p) To pool all or any of the Trust Fund, from time to time, with
assets belonging to any other qualified employee pension benefit trust
created by the Employer or any Affiliated Employer, and to commingle
such assets and make joint or common investments and carry joint
accounts on behalf of this Plan and such other trust or trusts,
allocating undivided shares or interests in such investments or
accounts or any pooled assets of the two or more trusts in accordance
with their respective interests;
(q) To do all such acts and exercise all such rights and
privileges, although not specifically mentioned herein, as the Trustee
may deem necessary to carry out the purposes of the Plan.
(r) Directed Investment Account. The powers granted to the
Trustee shall be exercised in the sole fiduciary discretion of the
Trustee. However, if elected in the Adoption Agreement, each
Participant may direct the Trustee to separate and keep separate all
or a portion of his interest in the Plan; and further each Participant
is authorized and empowered, in his sole and absolute discretion, to
give directions to the Trustee in such form as the Trustee may require
concerning the investment of the Participant's Directed Investment
Account, which directions must be followed by the Trustee subject,
however, to restrictions on payment of life insurance premiums.
Neither the Trustee nor any other persons including the Administrator
or otherwise shall be under any duty to question any such direction of
the Participant or to review any securities or other property, real or
personal, or to make any suggestions to the Participant in connection
therewith, and the Trustee shall comply as promptly as practicable
with directions given by the Participant hereunder. Any such direction
may be of a continuing nature or otherwise and may be revoked by the
Participant at any time in such form as the Trustee may require. The
Trustee may refuse to comply with any direction from the Participant
in the event the Trustee, in its sole and absolute discretion, deems
such directions improper by virtue of applicable law, and in such
event, the Trustee shall not be responsible or liable for any loss or
expense which may result. Any costs and expenses related to compliance
with the Participant's directions shall be borne by the Participant's
Directed Investment Account.
Notwithstanding anything hereinabove to the contrary, the Trustee
shall not, at any time after December 31, 1981, invest any portion of a Directed
Investment Account in "collectibles" within the meaning of that term as employed
in Code Section 408(m).
7.4 LOAN TO PARTICIPANTS
(a) If specified in the Adoption Agreement, the Trustee (or, if
loans are treated as Directed Investment pursuant to the Adoption
Agreement, the Administrator) may, in the Trustee's (or, if
applicable, the Administrator's) sole discretion, make loans to
Participants or Beneficiaries under the following
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circumstances: (1) loans shall be made available to all Participants
and Beneficiaries on a reasonably equivalent basis; (2) loans shall
not be made available to Highly Compensated Employees in an amount
greater than the amount made available to other Participants; (3)
loans shall bear a reasonable rate of interest; (4) loans shall be
adequately secured; and (5) shall provide for periodic repayment over
a reasonable period of time.
(b) Loans shall not be made to any Shareholder-Employee or Owner-
Employee unless an exemption for such loan is obtained pursuant to Act
Section 408 and further provided that such loan would not be subject
to tax pursuant to Code Section 4975.
(c) Loans shall not be granted to any Participant that provide
for a repayment period extending beyond such Participant's Normal
Retirement Date.
(d) Loans made pursuant to this Section (when added to the
outstanding balance of all other loans made by the Plan to the
Participant) shall be limited to the lesser of:
(1) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans from the Plan to the Participant
during the one year period ending on the day before the date on
which such loan is made, over the outstanding balance of loans
from the Plan to the Participant on the date on which such loan
was made, or
(2) the greater of (A) one-half (1/2) of the present value of the
non-forfeitable accrued benefit of the Employee under the Plan,
or (B), if permitted pursuant to the Adoption Agreement, $10,000.
For purposes of this limit, all plans of the Employer shall be
considered one plan. Additionally, with respect to any loan made prior to
January 1, 1987, the $50,000 limit specified in (1) above shall be unreduced.
(e) No Participant loan shall take into account the present value
of such Participant's Qualified Voluntary Employee Contribution
Account.
(f) Loans shall provide for level amortization with payments to
be made not less frequently than quarterly over a period not to exceed
five (5) years. However, loans used to acquire any dwelling unit
which, within a reasonable time, is to be used (determined at the time
the loan is made) as a principal residence of the Participant shall
provide for periodic repayment over a reasonable period of time that
may exceed five (5) years. Notwithstanding the foregoing, loans made
prior to January 1, 1987 which are used to acquire, construct,
reconstruct or substantially rehabilitate any dwelling unit which,
within a reasonable period of time is to be used (determined at the
time the loan is made) as a principal residence of the Participant or
a member of his family (within the meaning of Code Section 267(c)(4))
may provide for periodic repayment over a reasonable period of time
that may exceed five (5) years. Additionally, loans
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made prior to January 1, 1987, may provide for periodic payments which
are made less frequently than quarterly and which do not necessarily
result in level amortization.
(g) An assignment or pledge of any portion of a Participant's
interest in the Plan and a loan, pledge, or assignment with respect to
any insurance Contract purchased under the Plan, shall be treated as a
loan under this Section.
(h) Any loan made pursuant to this Section after August 18, 1985
where the Vested interest of the Participant is used to secure such
loan shall require the written consent of the Participant's spouse in
a manner consistent with Section 6.5(a) provided the spousal consent
requirements of such Section apply to the Plan. Such written consent
must be obtained within the 90-day period prior to the date the loan
is made. Any security interest held by the Plan by reason of an
outstanding loan to the Participant shall be taken into account in
determining the amount of the death benefit or Pre-Retirement Survivor
Annuity. However, no spousal consent shall be required under this
paragraph if the total accrued benefit subject to the security is not
in excess of $3,500.
(i) With regard to any loans granted or renewed on or after the
last day of the first Plan Year beginning after December 31, 1988, a
Participant loan program shall be established which must include, but
need not be limited to, the following:
(1) the identity of the person or positions authorized to
administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans
offered, including what constitutes a hardship or financial need
if selected in the Adoption Agreement;
(5) the procedure under the program for determining a reasonable
rate of interest;
(6) the types of collateral which may secure a Participant loan;
and
(7) the events constituting default and the steps that will be
taken to preserve plan assets.
Such Participant loan program shall be contained in a separate written
document which, when properly executed, is hereby incorporated by reference and
made a part of this plan. Furthermore, such Participant loan program may be
modified or amended in writing from time to time without the necessity of
amending this Section of the Plan.
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7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from time to
time, in accordance with the terms of the Plan, make payments out of the Trust
Fund. The Trustee shall not be responsible in any way for the application of
such payments.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as set forth in
the Trustee's fee schedule (if the Trustee has such a schedule) or as agreed
upon in writing by the Employer and the Trustee. An individual serving as
Trustee who already receives full-time pay from the Employer shall not receive
compensation from this Plan. In addition, the Trustee shall be reimbursed for
any reasonable expenses, including reasonable counsel fees incurred by it as
Trustee. Such compensation and expenses shall be paid from the Trust Fund unless
paid or advanced by the Employer. All taxes of any kind and all kinds whatsoever
that may be levied or assessed under existing or future laws upon, or in respect
of, the Trust Fund or the income thereof, shall be paid from the Trust Fund.
7.7 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary
Date or receipt of the Employer's contribution for each Plan Year, the Trustee,
or its agent, shall furnish to the Employer and Administrator a written
statement of account with respect to the Plan Year for which such contribution
was made setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon sales
or other disposition of the assets;
(c) the increase, or decrease, in the value of the Trust Fund;
(d) all payments and distributions made from the Trust Fund; and
(e) such further information as the Trustee and/or Administrator
deems appropriate. The Employer, forthwith upon its receipt of each
such statement of account, shall acknowledge receipt thereof in
writing and advise the Trustee and/or Administrator of its approval or
disapproval thereof. Failure by the Employer to disapprove any such
statement of account within thirty (30) days after its receipt thereof
shall be deemed an approval thereof. The approval by the Employer of
any statement of account shall be binding as to all matters embraced
therein as between the Employer and the Trustee to the same extent as
if the account of the Trustee had been settled by judgment or decree
in an action for a judicial settlement of its account in a court of
competent jurisdiction in which the Trustee, the Employer and all
persons having or claiming an interest in the Plan were parties;
provided, however, that nothing herein contained shall deprive the
Trustee of its right to have its accounts judicially settled if the
Trustee so desires.
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7.8 AUDIT
(a) If an audit of the Plan's records shall be required by the
Act and the regulations thereunder for any Plan Year, the
Administrator shall direct the Trustee to engage on behalf of all
Participants an independent qualified public accountant for that
purpose. Such accountant shall, after an audit of the books and
records of the Plan in accordance with generally accepted auditing
standards, within a reasonable period after the close of the Plan
Year, furnish to the Administrator and the Trustee a report of his
audit setting forth his opinion as to whether any statements,
schedules or lists, that are required by Act Section 103 or the
Secretary of Labor to be filed with the Plan's annual report, are
presented fairly in conformity with generally accepted accounting
principles applied consistently.
(b) All auditing and accounting fees shall be an expense of and
may, at the election of the Administrator, be paid from the Trust
Fund.
(c) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated and supervised
and subject to periodic examination by a state or federal agency, it
shall transmit and certify the accuracy of that information to the
Administrator as provided in Act Section 103(b) within one hundred
twenty (120) days after the end of the Plan Year or such other date as
may be prescribed under regulations of the Secretary of Labor.
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the
Employer, at least thirty (30) days before its effective date, a
written notice of his resignation.
(b) The Employer may remove the Trustee by mailing by registered
or certified mail, addressed to such Trustee at his last known
address, at least thirty (30) days before its effective date, a
written notice of his removal.
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such
successor, upon accepting such appointment in writing and delivering
same to the Employer, shall, without further act, become vested with
all the estate, rights, powers, discretions, and duties of his
predecessor with like respect as if he were originally named as a
Trustee herein. Until such a successor is appointed, the remaining
Trustee or Trustees shall have full authority to act under the terms
of the Plan.
(d) The Employer may designate one or more successors prior to
the death, resignation, incapacity, or removal of a Trustee. In the
event a successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the estate, rights, powers, discretions, and duties of his
predecessor with the like effect as if he were originally named as
69
Trustee herein immediately upon the death, resignation, incapacity,
or removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, he
shall furnish to the Employer and Administrator a written statement
of account with respect to the portion of the Plan Year during which
he served as Trustee. This statement shall be either (i) included as
part of the annual statement of account for the Plan Year required
under Section 7.7 or (ii) set forth in a special statement. Any such
special statement of account should be rendered to the Employer no
later than the due date of the annual statement of account for the
Plan Year. The procedures set forth in Section 7.7 for the approval
by the Employer of annual statements of account shall apply to any
special statement of account rendered hereunder and approval by the
Employer of any such special statement in the manner provided in
Section 7.7 shall have the same effect upon the statement as the
Employer's approval of an annual statement of account. No successor
to the Trustee shall have any duty or responsibility to investigate
the acts or transactions of any predecessor who has rendered all
statements of account required by Section 7.7 and this subparagraph.
7.10 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the
Trustee at the direction of the Administrator shall transfer the Vested
interest, if any, of such Participant in his account to another trust forming
part of a pension, profit sharing, or stock bonus plan maintained by such
Participant's new employer and represented by said employer in writing as
meeting the requirements of Code Section 401(a), provided that the trust to
which such transfers are made permits the transfer to be made.
(a) Notwithstanding any provision of the plan to the contrary,
with respect to distributions made after December 31, 1992, a
Participant shall be permitted to elect to have any "eligible
rollover distribution" transferred directly to an "eligible
retirement plan" specified by the Participant. The Plan provisions
otherwise applicable to distributions continue to apply to the
direct, transfer option. The Participant shall, in the time and
manner prescribed by the Administrator, specify the amount to be
directly transferred and the "eligible retirement plan" to receive
the transfer. Any portion of a distribution which is not transferred
shall be distributed to the Participant.
(b) For purposes of this Section, the term "eligible rollover
distribution" means any distribution other than a distribution of
substantially equal periodic payments over the life or life
expectancy of the Participant (or joint life or joint life
expectancies of the Participant and the designated beneficiary) or a
distribution over a period certain of ten years or more. Amounts
required to be distributed under Code Section 401(a)(9) are not
eligible rollover distributions. The direct transfer option described
in subsection (a) applies only to eligible rollover distributions
which would otherwise be includible in gross income if not
transferred.
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(c) For purposes of this Section, the term "eligible retirement
plan" means an individual retirement account as described in Code
Section 408(a), an individual retirement annuity as described in Code
Section 408(b), an annuity plan as described in Code Section 403(a),
or a defined contribution plan as described in Code Section 401 (a)
which is exempt from tax under Code Section 501(a) and which accepts
rollover distributions.
(d) The election described in subsection (a) also applies to the
surviving spouse after the Participant's death; however, distributions
to the surviving spouse may only be transferred to an individual
retirement account or individual retirement annuity. For purposes of
subsection (a), a spouse or former spouse who is the alternate payee
under a qualified domestic relations order as defined in Code Section
414(p) will be treated as the Participant.
7.11 TRUSTEE INDEMNIFICATION
The Employer agrees to indemnify and save harmless the Trustee against
any and all claims, losses, damages, expenses and liabilities the Trustee may
incur in the exercise and performance of the Trustee's powers and duties
hereunder, unless the same are determined to be due to gross negligence or
willful misconduct.
7.12 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold "qualifying
Employer securities" and "qualifying Employer real property," as those terms are
defined in the Act. However, no more than 100%, in the case of a Profit Sharing
Plan or 401(k) Plan or 10%, in the case of a Money Purchase Plan of the fair
market value of all the assets in the Trust Fund may be invested in "qualifying
Employer securities" and "qualifying Employer real property."
ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend this
Plan subject to the limitations of this Section. However, any
amendment which affects the rights, duties or responsibilities of the
Trustee and Administrator may only be made with the Trustee's and
Administrator's written 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 amendment
affects the duties of the Trustee hereunder.
(b) The Employer may (1) change the choice of options in the
Adoption Agreement, (2) add overriding language in the Adoption
Agreement when such language is necessary to satisfy Code Sections 415
or 416 because of the required aggregation of multiple plans, and (3)
add certain model amendments published by the Internal Revenue Service
which specifically provide that their adoption will not cause the Plan
to be treated as an individually designed plan. An
71
Employer that amends the Plan for any other reason, including a waiver
of the minimum funding requirement under Code Section 412(d), will no
longer participate in this Regional Prototype Plan and will be
considered to have an individually designed plan.
(c) The Employer expressly delegates authority to the sponsoring
organization of this Plan, the right to amend this Plan by submitting
a copy of the amendment to each Employer who has adopted this Plan
after first having received a ruling or favorable determination from
the Internal Revenue Service that the Plan as amended qualifies under
Code Section 401(a) and the Act.
(d) No amendment to the Plan shall be effective if it authorizes
or permits 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 any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes any
reduction in the amount credited to the account of any Participant; or
causes or permits any portion of the Trust Fund to revert to or become
property of the Employer.
(e) Except as permitted by Regulations (including Regulation
1.411(d)-4), no Plan amendment or transaction having the effect of a
Plan amendment (such as a merger, plan transfer or similar
transaction) shall be effective if it eliminates or reduces any
"Section 411(d)(6) protected benefit" or adds or modifies conditions
relating to "Section 411(d)(6) protected benefits" the result of which
is a further restriction on such benefit unless such protected
benefits are preserved with respect to benefits accrued as of the
later of the adoption date or effective date of the amendment.
"Section 411(d)(6) protected benefits" are benefits described in Code
Section 411(d)(6)(A), early retirement benefits and retirement-type
subsidies, and optional forms of benefit.
8.2 TERMINATION
(a) 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. Upon any full or partial termination all amounts
credited to the affected Participants' Combined 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.
(b) Upon the full termination of the Plan, the Employer shall
direct the distribution of the assets to Participants in a manner
which is consistent with and satisfies the provisions of Section 6.5.
Distributions to a Participant shall be made in cash (or in property
if permitted in the Adoption Agreement) or through the purchase of
irrevocable nontransferable deferred commitments from the Insurer.
Except as permitted by Regulations, the termination of the Plan shall
not result in the reduction of "Section 411(d)(6) protected benefits"
as described in Section 8.1.
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8.3 MERGER OR CONSOLIDATION
This Plan may be merged or consolidated with, or its assets and/or
liabilities may be transferred to any other plan only if the benefits which
would be received 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 and such
merger or consolidation does not otherwise result in the elimination or
reduction of any "Section 411 (d)(6) protected benefits" as described in Section
8.1(e).
ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS
(a) Any organization may become the Employer hereunder by
executing the Adoption Agreement in form satisfactory to the Trustee,
and it shall provide such additional information as the Trustee may
require. The consent of the Trustee to act as such shall be signified
by its execution of the Adoption Agreement.
(b) Except as otherwise provided in this Plan, the affiliation of
the Employer and the participation of its Participants shall be
separate and apart from that of any other employer and its
participants hereunder.
9.2 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.
9.3 ALIENATION
(a) Subject to the exceptions provided below, no benefit which
shall be payable 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 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 this Plan. At the
73
time a distribution is to be made to or for a Participant's or
Beneficiary's benefit, such proportion of the amount to be distributed
as shall equal such indebtedness shall be paid to the Plan, 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 Combined Account. If the Participant or
Beneficiary does not agree that the indebtedness is a valid claim
against his Vested Participant's Combined 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.
9.4 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the
Act and the laws of the State or Commonwealth in which the Employer's principal
office is located, other than its laws respecting choice of law, to the extent
not pre-empted by the Act.
9.5 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.
9.6 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.
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) 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
74
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.
(b) In the event the Employer shall make a contribution under a
mistake of fact pursuant to Section 403(c)(2)(A) of the Act, the
Employer may demand repayment of such 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 contributions may not be
returned to the Employer but any losses attributable thereto must
reduce the amount so returned.
9.8 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 Act Section 412(a)(2)), 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.
9.9 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.
9.10 INSURER'S PROTECTIVE CLAUSE
The 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.
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9.11 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 this Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer.
9.12 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.
9.13 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 and the Administrator, to formulate the Plan's
"funding policy and method"; and to amend the elective provisions of the
Adoption Agreement 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.
9.14 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.
9.15 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary, if, pursuant
to a timely 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 under Code Sections 401 and 501, and such
76
determination is not contested, or if contested, is finally upheld,
then if the Plan is a new plan, it 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. If the
disqualification relates to an amended plan, then the Plan shall
operate as if it had not been amended and restated.
(b) Except as specifically stated in the Plan, 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 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.
9.16 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner.
9.17 PAYMENT OF BENEFITS
Benefits under this Plan shall be paid, subject to Section 6.10 and
Section 6.11 only upon death, Total and Permanent Disability, normal or early
retirement, termination of employment, or upon Plan Termination.
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER
Notwithstanding anything herein to the contrary, with the consent of
the Employer and Trustee, any Affiliated Employer 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.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each Participating Employer shall be required to select the
same Adoption Agreement provisions as those selected by the Employer
other than the Plan Year, the Fiscal Year, and such other items that
must, by necessity, vary among employers.
(b) Each such Participating Employer shall be required to use the
same Trustee as provided in this Plan.
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(c) 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.
(d) 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 Participant's
Combined 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.
(e) Any expenses of the Plan 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.
10.3 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.
10.4 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.
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES
Any contribution or Forfeiture subject to allocation during each Plan
Year shall be allocated among all Participants of all Participating Employers in
accordance with the provisions of this Plan. On the basis of the information
furnished by the Administrator, the Trustee shall keep separate books and
records concerning the affairs of each Participating Employer hereunder and as
to the accounts and credits of the Employees of each Participating Employer. The
Trustee may, but need not, register Contracts so as to evidence that a
particular Participating Employer is the interested Employer hereunder, but in
the event of an Employee transfer from one Participating Employer to another,
the employing Employer shall immediately notify the Trustee thereof.
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10.6 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.
10.7 DISCONTINUANCE OF PARTICIPATION
Except in the case of a Standardized Plan, any Participating Employer
shall be permitted to discontinue or revoke its participation in the Plan at any
time. 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 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 provided, however, that no such transfer shall be made if the result
is the elimination or reduction of any "Section41l(d)(6) protected benefits" in
accordance with Section 8.1(e). 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 Fund 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.
10.8 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.
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or in part from
making a contribution 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
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 be required to reimburse the contributing
Participating Employers.
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ARTICLE XI
CASH OR DEFERRED PROVISIONS
Notwithstanding any provisions in the Plan to the contrary, the
provisions of this Article shall apply with respect to any 401(k) Profit Sharing
Plan.
Notwithstanding anything in this Article to the contrary, effective as
of the Plan Year in which this amendment becomes effective, the Actual Deferral
Percentage Test and the Actual Contribution Percentage Test shall be applied
(and adjusted) by applying the Family Member aggregation rules of Code Section
414(q)(6).
11.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 11.2(a), which amount shall be
deemed an Employer's Elective Contribution, plus
(b) If specified in E3 of the Adoption Agreement, a matching
contribution equal to the percentage specified in the Adoption
Agreement of the Deferred Compensation of each Participant eligible to
share in the allocations of the matching contribution, which amount
shall be deemed an Employer's Non-Elective or Elective Contribution as
selected in the Adoption Agreement, plus
(c) If specified in E4 of the Adoption Agreement, a discretionary
amount, if any, which shall be deemed an Employer's Non-Elective
Contribution, plus
(d) If specified in E5 of the Adoption Agreement, a Qualified
Non-Elective Contribution.
(e) Notwithstanding the foregoing, however, the Employer's
contributions for any Fiscal Year shall not exceed the maximum amount
allowable as a deduction to the Employer under the provisions of Code
Section 404. All contributions by the Employer shall be made in cash
or in such property as is acceptable to the Trustee.
(f) Except, however, to the extent necessary to provide the top
heavy minimum allocations, the Employer shall make a contribution even
if it exceeds current or accumulated Net Profit or the amount which is
deductible under Code Section 404.
(g) 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 within ninety (90) days
from the date on which such amounts would otherwise have been payable
to the Participant in cash. The provisions of
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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.
11.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) If selected in the Adoption Agreement, each Participant may
elect to defer his Compensation which would have been received in the
Plan Year, but for the deferral election, subject to the limitations
of this Section and the Adoption Agreement. A deferral election (or
modification of an earlier election) may not be made with respect to
Compensation which is currently available on or before the date the
Participant executed such election, or if later, the latest of the
date the Employer adopts this cash or deferred arrangement, or the
date such arrangement first became effective. Any elections made
pursuant to this Section shall become effective as soon as is
administratively feasible.
Additionally, if elected in the Adoption Agreement, each Participant
may elect to defer and have allocated for a Plan Year all or a, portion of any
cash bonus attributable to services performed by the Participant for the
Employer during such Plan Year and which would have been received by the
Participant on or before two and one-half months following the end of the Plan
Year but for the deferral. A deferral election may not be made with respect to
cash bonuses which are currently available on or before the date the Participant
executed such election. Notwithstanding the foregoing, cash bonuses attributable
to services performed by the Participant during a Plan Year but which are to be
paid to the Participant later than two and one-half months after the close of
such Plan Year will be subjected to whatever deferral election is in effect at
the time such cash bonus would have otherwise been received.
The amount by which Compensation and/or cash bonuses are reduced shall
be that Participant's Deferred Compensation and be trend as an Employer Elective
Contribution and allocated to that Participant's Elective Account.
Once made, a Participant's election to reduce Compensation shall
remain in effect until modified or terminated. Modifications may be made as
specified in the Adoption Agreement, and terminations may be made at any time.
Any modification or termination of an election will become effective as soon as
is administratively feasible.
(b) 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.
(c) Amounts held in the Participant's Elective Account and
Qualified Non-Elective Account may be distributable as permitted under
the Plan, but in no event prior to the earlier of:
(1) a Participant's termination of employment, Total and
Permanent Disability, or death;
(2) a Participant's attainment of age 59 1/2;
81
(3) the proven financial hardship of a Participant, subject to the
limitations of Section 11.8;
(4) the termination of the Plan without the existence at the time of
Plan termination of another defined contribution plan (other than an
employee stock ownership plan as defined in Code Section 4975(e)(7))
or the establishment of a successor defined contribution plan (other
than an employee stock ownership plan as defined in Code Section
4975(e)(7)) by the Employer or an Affiliated Employer within the
period ending twelve months after distribution of all assets from the
Plan maintained by the Employer;
(5) the date of the sale by the Employer to an entity that is not an
Affiliated Employer of substantially all of the assets (within the
meaning of Code Section 409(d)(2)) with respect to a Participant who
continues employment with the corporation acquiring such assets; or
(6) the date of the sale by the Employer or an Affiliated Employer of
its interest in a subsidiary (within the meaning of Code Section
409(d)(3)) to an entity that is not an Affiliated Employer with
respect to a Participant who continues employment with such
subsidiary.
(d) In any Plan Year beginning after December 31, 1986, a
Participant's Deferred Compensation made under this Plan and all other
plans, contracts or arrangements of the Employer maintaining this Plan
shall not exceed the limitation imposed by Code Section 402(g), as in
effect for the calendar year in which such Plan Year began. If such dollar
limitation is exceeded solely from elective deferrals made under this Plan
or any other Plan maintained by the Employer, a Participant will be deemed
to have notified the Administrator of such excess amount which shall be
distributed in a manner consistent with Section 11.2(f). This dollar
limitation shall be adjusted annually pursuant to the method provided in
Code Section 415(d) in accordance with Regulations.
(e) In the event a Participant has received a hardship distribution
pursuant to Regulation 1.401(k)-1(d)(2)(iii)(B) from any other plan
maintained by the Employer or from his Participant's Elective Account
pursuant to Section 11.8, then such Participant shall not be permitted to
elect to have Deferred Compensation contributed to the Plan on his behalf
for a period of twelve (12) months following the receipt of the
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, made pursuant to this
Plan (and any other plan maintained by the Employer) for the taxable year
of the hardship distribution.
(f) 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
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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 1st 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 shall direct the Trustee to distribute such excess
amount (and any Income allocable to such excess amount) to the
Participant not later than the first April 15th following the close of
the Participant's taxable year. Distributions in accordance with this
paragraph may be made for any taxable year of the Participant which
begins after December 31, 1986. 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 Participant shall designate the distribution as Excess
Deferred Compensation;
(2) the distribution must be made after the date on which the
Plan received the Excess Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution of
Excess Deferred Compensation.
Any distribution under this Section 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. However, any such matching contributions which are not Vested
shall be forfeited in lieu of being distributed.
For the purpose of this Section, "Income" means the amount of income
or loss allocable to a Participant's Excess Deferred Compensation and shall be
equal to the sum of the allocable gain or loss for the taxable year of the
Participant and the allocable gain or loss for the period between the end of the
taxable year of the Participant and the date of distribution ("gap period"). The
income or loss allocable to each such period is calculated separately and is
determined by multiplying the income or loss allocable to the Participant's
Deferred Compensation for the respective period by a fraction. The numerator of
the fraction is the Participant's Excess Deferred Compensation for the taxable
year of the Participant. The denominator is the balance, as of the last day of
the respective period, of the Participant's Elective Account that is
attributable to the Participant's Deferred Compensation reduced by the
83
gain allocable to such total amount for the respective period and increased by
the loss allocable, to such total amount for the respective period.
In lieu of the "fractional method" described above, a "safe harbor
method' may be used to calculate the allocable income or loss for the "gap
period." Under such "safe harbor method," allocable income or loss for the "gap
period" shall be deemed to equal ten percent (10%) of the income or loss
allocable to a Participant's Excess Deferred Compensation for the taxable year
of the Participant 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.
Income or loss allocable to any distribution of Excess Deferred
Compensation on or before the last day of the taxable year of the Participant
shall be calculated from the first day of the taxable year of the Participant to
the date on which the distribution is made pursuant to either the "fractional
method" or the "safe harbor method."
Notwithstanding the above, for any distribution under this Section
which is made after August 15, 1991, such distribution shall not include any
income for the "gap period". Further provided, for any distribution under this
Section which is made after August 15, 1991, the amount of Income may be
computed using a reasonable method that is consistent with Section 43(c),
provided such method is used consistently for all. Participants and for all such
distributions for the Plan Year.
Notwithstanding the above, for the 1987 calendar year, Income during
the "gap period" shall not be taken into account.
(g) Notwithstanding the above, a Participant's Excess Deferred
Compensation shall be reduced, but not below zero, by any distribution
and/or recharacterization of Excess Contributions pursuant to Section
11.5(a) for the Plan Year beginning with or within the taxable year of
the Participant.
(h) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair market
value of the Participant's Elective Account shall be used to provide
benefits to the Participant or his Beneficiary.
(i) Employer Elective Contributions made pursuant to this Section
may be segregated into a separate account for each Participant in a
federally insured savings account, certificate of deposit in a bank or
savings and loan association, money market certificate, or other
short-term debt security acceptable to the Trustee until such time as
the allocations pursuant to Section 11.3 have been made.
(j) The Employer and the Administrator shall adopt a procedure
necessary to implement the salary reduction elections provided for
herein.
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11.3 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in
the name of each Participant to which the Administrator shall credit
as of each Anniversary Date, or other valuation date, all amounts
allocated to each such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of the Employer's contributions for each Plan Year. Within a
reasonable period of time after the date of receipt by the
Administrator of such information, the Administrator shall allocate
such contribution as follows:
(1) With respect to the Employer's Elective Contribution made
pursuant to Section 11.1 (a), to each Participant's Elective
Account in an amount equal to each such Participant's Deferred
Compensation for the year.
(2) With respect to the Employer's Matching Contribution made
pursuant to Section 11.1(b), to each Participant's Account, or
Participant's Elective Account as selected in E3 of the Adoption
Agreement, in accordance with Section 11.1(b).
Except, however, a Participant who is not credited with a Year of
Service during any Plan Year shall or shall not share in the
Employer's Matching Contribution for that year as provided in E3
of the Adoption Agreement. However, for Plan Years beginning
after 1989, if this is a standardized Plan, a Participant shall
share in the Employer's Matching Contribution regardless of Hours
of Service.
(3) With respect to the Employer's Non-Elective Contribution made
pursuant to Section 11.1(c), to each Participant's Account in
accordance with the provisions of Sections 4.3(b)(2) or 43(b)(3),
whichever is applicable, 4.3(k) and 4.3(l).
(4) With respect to the Employer's Qualified Non-Elective
Contribution made pursuant to Section 11.1(d), to each
Participant's Qualified Non-Elective Contribution Account in the
same proportion that each such Participant's Compensation for the
year bears to the total Compensation of all Participants for such
year. However, for any Plan Year beginning prior to January 1,
1990, and if elected in the non-standardized Adoption Agreement
for any Plan Year beginning on or after January 1, 1990, a
Participant who is not credited with a Year of Service during any
Plan Year shall not share in the Employer's Qualified Non-
Elective Contribution for that year, unless required pursuant to
Section 43(h). In addition, the provisions of Sections 4.3(k) and
4.3(l) shall apply with respect to the allocation of the
Employer's Qualified Non-Elective contribution.
85
(c) Notwithstanding anything in the Plan to the contrary, for
Plan Years beginning after December 31, 1988, in determining whether a
Non-Key Employee has received the required minimum allocation pursuant
to Section 4.3(f) such Non-Key Employee's Deferred Compensation and
matching contributions used to satisfy the "Actual Deferral
Percentage" test pursuant to Section 11.4(a) or the "Actual
Contribution Percentage" test of Section 11.6(a) shall not be taken
into account.
(d) Notwithstanding anything herein to the contrary, participants
who terminated employment during the Plan Year shall share in the
salary reduction contributions made by the Employer for the year of
termination without regard to the Hours of Service credited.
(e) Notwithstanding anything herein to the contrary (other than
Sections 1.3(d) and 113(g)), any Participant who terminated employment
during the Plan Year for reasons other than death, Total and Permanent
Disability, or retirement shall or shall not share in the allocations
of the Employer's Matching Contribution made pursuant to Section
11.1(b), the Employer's Non-Elective Contributions made pursuant to
Section 11.1(c), the Employer's Qualified Non-Elective Contribution
made pursuant to Section 11.1(d), and Forfeitures as provided in the
Adoption Agreement. Notwithstanding the foregoing, for Plan Years
beginning after 1989, if this is a standardized Plan, any such
terminated Participant shall share in such allocations provided the
terminated Participant completed more than 500 Hours of Service.
(f) Notwithstanding anything herein to the contrary, Participants
terminating for reasons of death, Total and Permanent Disability, or
retirement shall share in the allocation of the Employer's Matching
Contribution made pursuant to Section 11.1(b), the Employer's Non-
Elective Contributions made pursuant to Section 11.1(c), the
Employer's Qualified Non-Elective Contribution made pursuant to
Section 11.1(d), and Forfeitures as provided in this Section
regardless of whether they completed a Year of Service during the Plan
Year.
(g) Notwithstanding any election in the Adoption Agreement to the
contrary, if this is a non-standardized Plan that would otherwise fail
to meet the requirements of Code Sections 401(a)(26), 410(b)(1), or
410(b)(2)(A)(i) and the Regulations under because Employer matching
Contributions made pursuant to Section 11.1(b), Employer Non-Elective
Contributions made pursuant to Section 11.1(c) or Employer Qualified
Non-Elective Contributions made pursuant to Section 11.1(d) have not
been allocated to a sufficient number or percentage of Participants
for a Plan Year, then the following rules shall apply:
(1) The group of Participants eligible to share in the respective
contributions for the Plan Year shall be expanded to include the
minimum number of Participants who would not otherwise be
eligible as are necessary to satisfy the applicable test
specified above. The specific participants who shall become
eligible under the terms of this paragraph
86
shall be those who are actively employed on the last day of the
Plan Year and, when compared to similarly situated Participants,
have completed the greatest number of Hours of Service in the
Plan Year.
(2) If after application of paragraph (1) above, the applicable
test is still not satisfied, then the group of Participants
eligible to share for the Plan Year shall be further expanded to
include the minimum number of Participants who are not actively
employed on the last day of the Plan Year as are necessary to
satisfy the applicable test. The specific Participants who shall
become eligible to share shall be those Participants, when
compared to similarly situated Participants, who have completed
the greatest number of Hours of Service in the Plan Year before
terminating employment.
11.4 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year beginning after
December 31, 1986, the annual allocation derived from Employer
Elective Contributions and Qualified Non-Elective Contributions to a
Participant's Elective Account and Qualified Non-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)-l(b) are incorporated herein by reference.
However, for Plan Years beginning after December 31, 1988, 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 pursuant to Section 11.2 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,
87
calculated separately for each Participant in such group, of the
amount of Employer Elective Contributions and Qualified Non-Elective
Contributions allocated to each Participant's Elective Account and
Qualified Non-Elective Account for such Plan Year, to such
Participant's "414(s) Compensation" for such Plan Year. The actual
deferral ratio for each Participant and the "Actual Deferral
Percentage" for each group, for Plan Years beginning after December
31, 1988, shall be calculated to the nearest one-hundredth of one
percent of the Participant's "414(s) Compensation." 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 purpose of determining the actual deferral ratio of a
Highly Compensated Participant who is subject to the Family Member
aggregation rules of Code Section 414(9)(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, the following shall apply:
(1) The combined actual deferral ratio for the family group
(which shall be treated as one Highly Compensated Participant)
shall be the greater of: (i) the ratio determined by aggregating
Employer Elective Contributions and "414(s) Compensation" of all
eligible Family Members who are Highly Compensated Participants
without regard to family aggregation; and (ii) the ratio
determined by aggregating Employer Elective Contributions and
"414(s) Compensation" of all eligible Family Members (including
Highly Compensated Participants). However, in applying the
$200,000 limit to "414(s) Compensation" for Plan Years beginning
after December 31, 1988, Family Members shall include only the
affected Employee's spouse and any lineal descendants who have
not attained age 19 before the close of the Plan Year.
(2) The Employer Elective Contributions and "414(s) Compensation"
of all Family Members shall be disregarded for purposes of
determining the "Actual Deferral Percentage" of the Non-Highly
Compensated Participant group except to the extent taken into
account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a member of
more than one family group in a plan, all Participants who are
members of those family groups that include the Participant are
aggregated as one family group in accordance with paragraphs (1)
and (2) above.
(d) For the purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(k), if two or more plans which 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 401(b)(2)(A)(ii) as in
effect for Plan Years beginning after December 31, 1988), the cash or
deferred arrangements included in such plans shall be treated as one
arrangement. In addition, two or more cash or deferred
88
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) and 401(k).
For plan years beginning after December 31, 1989, plans may be
aggregated under this paragraph (e) only if they have the same plan
year.
Notwithstanding the above, for Plan Years beginning after December 31,
1988, an employee stock ownership plan described in Code Section 4975(e)(7) may
not be combined with this Plan for purposes of determining whether the employee
stock ownership plan 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 which is part
of an employee stock ownership plan as defined in Code Section
4975(e)(7) for Plan Years beginning after December 31, 1988) of the
Employer or an Affiliated Employer, all such cash or deferred
arrangements shall be treated as one cash or deferred arrangement for
the purpose of determining the actual deferral ratio with respect to
such Highly Compensated Participant. However, for Plan Years beginning
after December 31, 1988, 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.
11.5 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the, Employees Elective
Contributions and Qualified Non-Elective Contributions do not satisfy one of the
tests set forth in Section 11.4, for Plan Years beginning after December 31,
1986, the Administrator shall adjust Excess Contributions pursuant to the
options set forth below:
(a) On or before the fifteenth 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 distributed to him and/or at his election
recharacterized as a voluntary Employee contribution pursuant to
Section 4.7 until one of the tests set forth in Section 11.4 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 shall continue until one
of the tests set forth in Section 11.4 is satisfied. For each Highly
Compensated Participant, the amount of Excess Contributions is equal
to the Elective Contributions and Qualified Non-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
"414(s) Compensation." However, in
89
determining the amount of Excess Contributions to be distributed
and/or recharacterized 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. Any distribution and/or recharacterization of
Excess Contributions shall be made in accordance with the following:
(1) With respect to the distribution of Excess Contributions
pursuant to (a) above, 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 first from unmatched Deferred
Compensation and, thereafter, simultaneously from Deferred
Compensation which is matched and matching contributions
which relate to such Deferred Compensation. However, any
such matching contributions which are not Vested shall be
forfeited in lieu of being distributed;
(iii) shall be made from Qualified Non-Elective
Contributions only to the extent that Excess Contributions
exceed the balance in the Participant's Elective Account
attributable to Deferred Compensation and Employer matching
contributions.
(iv) shall be adjusted for Income; and
(v) shall be designated by the Employer as a distribution
of Excess Contributions (and Income).
(2) With respect to the recharacterization of Excess
Contributions pursuant to (a) above, such recharacterized
amounts:
(i) shall be deemed to have occurred on the date on which
the last of those Highly Compensated Participants with
Excess Contributions to be recharacterized is notified of
the recharacterization and the tax consequences of such
recharacterization;
(ii) for Plan Years ending on or before August 8, 1988, may
be postponed but not later than October 24, 1988;
(iii) shall not exceed the amount of Deferred Compensation
on behalf of any Highly Compensated Participant for any Plan
Year;
(iv) shall be treated as voluntary Employee contributions
for purposes of Code Section 401(a)(4) and Regulation
1.401(k)-1b).
90
However, for purposes of Sections 2.2 and 4.3(f),
recharacterized Excess Contributions continue to be treated
as Employer contributions that are Deferred Compensation.
For Plan Years beginning after December 31, 1988, Excess
Contributions recharacterized as voluntary Employee
contributions shall continue to be nonforfeitable and
subject to the same distribution rules provided for in
Section 11.2(c);
(v) which relate to Plan Years ending on or before October
24, 1988, may be treated as either Employer contributions or
voluntary Employee contributions and therefore shall not be
subject to the restrictions of Section 11.2(c);
(vi) are not permitted if the amount recharacterized plus
voluntary Employee contributions actually made by such
Highly Compensated Participant, exceed the maximum amount of
voluntary Employee contributions (determined prior to
application of Section 11.6) that such Highly Compensated
Participant is permitted to make under the Plan in the
absence of recharacterization;
(vii) shall be adjusted for Income.
(3) Any distribution and/or recharacterization of less than the
entire amount of Excess Contributions shall be treated as a pro
rata distribution and/or recharacterization of Excess
Contributions and Income.
(4) The determination and correction of Excess Contributions of a
Highly Compensated Participant whose actual deferral ratio is
determined under the family aggregation rules shall be
accomplished as follows:
(i) If the actual deferral ratio for the Highly
Compensated Participant is determined in accordance with
Section 11.4(c)(1)(ii), then the actual deferral ratio shall
be reduced as required herein and the Excess Contributions
for the family unit shall be allocated among the Family
Members in proportion to the Elective Contributions of each
Family Member that were combined to determine the group
actual deferral ratio.
(ii) If the actual deferral ratio for the Highly
Compensated Participant is determined under Section
11.4(c)(1)(i), then the actual deferral ratio shall first be
reduced as required herein, but not below the actual
deferral ratio of the group of Family Members who are not
Highly Compensated Participants without regard to family
aggregation. The Excess Contributions resulting from this
initial reduction shall be allocated (in proportion to
Elective Contributions) among the Highly Compensated
Participants whose
91
Elective Contributions were combined to determine the actual
deferral ratio. If further reduction is still required, then
Excess Contributions resulting from this further reduction
shall be determined by taking into account the contributions
of all Family Members and shall be allocated among them in
proportion to their respective Elective Contributions.
(b) Within twelve (12) months after the end of the Plan Year, the
Employer shall 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 11.4(a). Such
contribution shall be allocated to the Participant's Qualified Non-
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.
(c) For purposes of this Section, "Income" means the income or
loss allocable to Excess Contributions which shall equal the sum of
the allocable gain or loss for the Plan Year and the Allocable gain or
loss for the period between the end of the Plan Year and the date of
distribution ("gap period"). The income or loss allocable to Excess
Contributions for the Plan Year and the "gap period" is calculated
separately and is determined by multiplying the income or loss for the
Plan Year or the "gap period" by a fraction. The numerator of the
fraction is the Excess Contributions for the Plan Year. The
denominator of the fraction is the total of the Participant's Elective
Account attributable to Elective Contributions and the Participant's
Qualified Non-Elective Account as of the end of the Plan Year or the
"gap period," reduced by the gain allocable to such total amount for
the Plan Year or the "gap period" and increased by the loss allocable
to such total amount for the Plan Year or the "gap period."
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 such "safe harbor method," allocable Income for the "gap period" shall be
deemed to equal ten percent (10%) of the, Income allocable to Excess
Contributions for the Plan Year of the Participant 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.
Notwithstanding the above, for Plan Years which began in 1987, Income
during the "gap period" shall not be taken into account.
Notwithstanding the above, for any distribution under this Section
which is made after August 15, 1991, such distribution shall not include any
Income for the "gap period". Further provided, for any distribution under this
Section which is made after August 15, 1991, the amount of Income may be
computed by using a reasonable method that is consistent with
92
Section 4.3(c), provided such method is used consistently for all Participants
and for all such distributions for the Plan Year.
(d) Any amounts not distributed or recharacterized within 2 1/2
months after the end of the Plan Year shall be subject to the 10%
Employer excise tax imposed by Code Section 4979.
11.6 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage," for Plan Years
beginning after the later of the Effective Date of this Plan or
December 31, 1986, 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. However, for Plan Years beginning after December 31,
1988, to prevent the multiple use of the alternative method
described in this paragraph and Code Section 401(m)(9)(A), any
Highly Compensated Participant eligible to make elective
deferrals pursuant to Section 11.2 or any other cash or deferred
arrangement maintained by the Employer or an Affiliated Employer
and to make Employee contributions or to receive matching
contributions under any 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 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 11.7, "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 Employer matching contributions made pursuant to
Section 11.1(b) (to the extent such matching contributions are
not used to satisfy the tests set forth in Section 11.4),
voluntary Employee contributions made pursuant to Section 4.7 and
Excess Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 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 11.7(d), only Employer matching contributions (excluding
matching contributions forfeited or
93
distributed pursuant to Section 11.2(f), 11.5(a), or 11.7(a))
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 Employer
matching contributions made pursuant to Section 11.1(b) or voluntary
Employee contributions made pursuant to Section 4.7 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 matching contributions subject to Regulation
1.401(m)-1(b)(2) which is incorporated herein by reference. However,
for Plan Years beginning after December 31, 1988, 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 the purpose of determining the actual contribution ratio
of a Highly Compensated Employee who is subject to the Family Member
aggregation rules of Code Section 414(9)(6) because such Employee 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, the following shall apply:
(1) The combined actual contribution ratio for the family group
(which shall be treated as one Highly Compensated Participant)
shall be the greater of: (i) the ratio determined by aggregating
Employer matching contributions made pursuant to Section 11.1(b)
(to the extent such matching contributions are not used to
satisfy the tests set forth in Section 11.4), voluntary Employee
contributions made pursuant to Section 4.7, Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5 and "414(s) Compensation" of all eligible Family
Members who are Highly Compensated Participants without regard to
family aggregation; and (ii) the ratio determined by aggregating
Employer matching contributions made pursuant to Section 11.1(b)
(to the extent such matching contributions are not used to
satisfy the tests set forth in Section 11.4), voluntary Employee
contributions made pursuant to Section 4.7, Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5 and "414(s) Compensation" of all eligible Family
Members (including Highly Compensated Participants). However, in
applying the $200,000 limit to "414(s) Compensation" for Plan
Years beginning after December 31, 1988, Family Members shall
include only the affected Employee's spouse and any lineal
descendants who have not attained age 19 before the close of the
Plan Year.
(2) The Employer matching contributions made pursuant to Section
11.1(b) (to the extent such matching contributions are not used
to satisfy the tests set forth in Section 11.4), voluntary
Employee contributions made pursuant to Section 4.7, Excess
Contributions recharacterized as voluntary Employee contributions
pursuant to Section 11.5 and "414(s) Compensation" of all Family
Members shall be disregarded for purposes
94
of determining the "Actual Contribution Percentage" of the Non-
Highly Compensated Participant group except to the extent taken
into account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a member of
more than one family group in a plan, all Participants who are
members of those family groups that include the Participant arp
aggregated as one family group in accordance with paragraphs (1)
and (2) above.
(e) 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) as in effect for Plan Years beginning after December
31, 1988), 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. For plan years beginning after December 31, 1989, plans
may be aggregated under this paragraph only if they have the same plan
year.
Notwithstanding the above, for Plan Years beginning after December 31,
1988, an employee stock ownership plan described in Code Section 4975(e)(7) may
not be aggregated with this Plan for purposes of determining whether the
employee stock ownership plan or this Plan satisfies this Section and Code
Sections 401(a)(4), 410(b) and 401(m).
(f) If a Highly Compensated Participant is a Participant under
two or more plans (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7) for Plan Years beginning after
December 31, 1988) which are maintained by the Employer or an
Affiliated 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, for Plan Years beginning after December
31, 1988, 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.
(g) For purposes of Section 11.6(a) and 11.7, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to have matching contributions made
pursuant to Section 11.1 (b) (whether or not a deferred election was
made or suspended pursuant to Section 11.2(e)) allocated to his
account for the Plan Year or to make salary deferrals pursuant to
Section 11.2 (if the Employer uses salary deferrals to satisfy the
provisions of this Section) or voluntary Employee contributions
pursuant to
95
Section 4.7 (whether or not voluntary Employee contributions are made)
allocated to his account for the Plan Year.
(h) For purposes of this Section, "Matching Contribution" shall
mean an Employer contribution made to the Plan, or to a contract
described in Code Section 403(b), on behalf of a Participant on
account of an Employee contribution made by such Participant, or on
account of a participant's deferred compensation, under a plan
maintained by the Employer.
11.7 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that for Plan Years beginning after December 31,
1986, 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 11.6(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 portion of Excess Aggregate
Contributions (and Income allocable to such contributions) or, if
forfeitable, forfeit such non-Vested Excess Aggregate Contributions
attributable to Employer matching contributions (and Income allocable
to such Forfeitures) until either one of the tests set forth in
Section 11.6(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
11.6(a) is satisfied. The distribution and/or Forfeiture of Excess
Aggregate Contributions shall be made in the following order.
(1) Employer matching contributions distributed and/or forfeited
pursuant to Section 11.5(a)(1);
(2) Voluntary Employee contributions including Excess
Contributions recharacterized as voluntary Employee contributions
pursuant to Section 11.5(a)(2);
(3) Remaining Employer matching contributions.
(b) Any distribution or Forfeiture 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.
Distribution of Excess Aggregate Contributions shall be designated by
the Employer as a distribution of Excess Aggregate Contributions (and
Income). Forfeitures of Excess Aggregate Contributions shall be
treated in accordance with Section 4.3. However, no such Forfeiture
may be allocated to a Highly Compensated Participant whose
contributions are reduced pursuant to this Section.
(c) Excess Aggregate Contributions attributable to amounts other
than voluntary Employee contributions, including forfeited matching
contributions,
96
shall be treated as Employer contributions for purposes of Code
Sections 404 and 415 even if distributed from the Plan.
(d) For the purposes of this Section and Section 11.6, "Excess
Aggregate Contributions" means, with respect to any Plan Year, the
excess of:
(1) the aggregate amount of Employer matching contributions made
pursuant to Section 11.1(b) (to the extent such contributions are
taken into account pursuant to Section 11.6(a)), voluntary
Employee contributions made pursuant to Section 4.7, Excess
Contributions recharacterized as voluntary Employee contributions
pursuant to Section 11.5 and any Qualified Non-Elective
Contributions or elective deferrals taken into account pursuant
to Section 11.6(c) actually made on behalf of the Highly
Compensated Participant group for such Plan Year, over
(2) the maximum amount of such contributions permitted under the
limitations of Section 11.6(a).
(e) For each Highly Compensated Participant, the amount of Excess
Aggregate Contributions is equal to the total Employer matching
contributions made pursuant to Section 11.1(b) (to the extent taken
into account pursuant to Section 11.6(a)), voluntary Employee
contributions made pursuant to Section 4.7, Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.5 and any Qualified Non-Elective Contributions or elective
deferrals taken into account pursuant to Section 11.6(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 for Plan Years beginning after
December 31, 1998. In no case shall the amount of Excess Aggregate
Contribution with respect to any Highly Compensated Participant
exceed. the amount of Employer matching contributions made pursuant to
Section 11.1(b) (to the extent taken into account pursuant to Section
11.6(a)), voluntary Employee contributions made pursuant to Section
4.7, Excess Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and any Qualified Non-Elective
Contributions or elective deferrals taken into account pursuant to
Section 11.6(c) on behalf of such Highly Compensated Participant for
such Plan Year.
(f) The determination of the amount of Excess Aggregate
Contributions with respect to any Plan Year shall be made after first
determining the Excess Contributions, if any, to be treated as
voluntary Employee contributions due to recharacterization for the
plan year of any other qualified cash or deferred arrangement (as
defined in Code Section 401(k)) maintained by the Employer that ends
with or within the Plan Year or which are treated as voluntary
Employee contributions due to recharacterization pursuant to Section
11.5.
97
(g) The determination and correction of Excess Aggregate
Contributions of a Highly Compensated Participant whose actual
contribution ratio is determined under the family aggregation rules
shall be accomplished as follows:
(1) If the actual contribution ratio for the Highly Compensated
Participant is determined in accordance with Section 11.6(d)(1),
then the actual contribution ratio shall be reduced and the
Excess Aggregate Contributions for the family unit shall be
allocated among the Family Members in proportion to the sum of
Employer matching contributions made pursuant to Section 11.1(b)
(to the extent taken into account pursuant to Section 11.6(a)),
voluntary Employee contributions made pursuant to Section 4.7,
Excess Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and any Qualified Non-
Elective Contributions or elective deferrals taken into account
pursuant to Section 11.6(c) of each Family Member that were
combined to determine the group actual contribution ratio.
(2) If the actual contribution ratio for the Highly Compensated
Participant is determined under Section 11.6(d)(2), then the
actual contribution ratio shall first be reduced, as required
herein, but not below the actual contribution ratio of the group
of Family Members who are not Highly Compensated Participants
without regard to family aggregation. The Excess Aggregate
Contributions resulting from this initial reduction shall be
allocated among the Highly Compensated Participants whose
Employer matching contributions made pursuant to Section 11.1 (b)
(to the extent taken into account pursuant to Section 11.6(a)),
voluntary Employee contributions made pursuant to Section 4.7,
Excess Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.5 and any Qualified Non-
Elective Contributions or elective deferrals taken into account
pursuant to Section 11.6(c) were combined to determine the actual
contribution ratio. If further reduction is still required, then
Excess Aggregate Contributions resulting from this further
reduction shall be determined by taking into account the
contributions of all Family Members and shall be allocated among
them in proportion to their respective Employer matching
contributions made pursuant to Section 11. 1(b) (to the extent
taken into account pursuant to Section11.6(a)), voluntary
Employee contributions made pursuant to Section 4.7, Excess
Contributions recharacterized as voluntary Employee contributions
pursuant to Section 11.5 and any Qualified Non-Elective
Contributions or elective deferrals taken into account pursuant
to Section 11.6(c).
(h) 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 11.6. Such contribution shall be allocated to the
Participant's Qualified Non-Elective Account of each Non-Highly
Compensated Participant in the same proportion that each
98
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 11.4.
(i) For purposes of this Section, "Income" means the income or
loss allocable to Excess Aggregate Contributions which shall equal the
sum of the allocable gain or loss for the Plan Year and the allocable
gain or loss for the period between the end of the Plan Year and the
date of distribution ("gap period"). The income or loss allocable to
Excess Aggregate Contributions for the Plan Year and the "gap period"
is calculated separately and is determined by multiplying the income
or loss for the Plan Year or the "gap period" by a fraction. The
numerator of the fraction is the Excess Aggregate Contributions for
the Plan Year. The denominator of the fraction is the total
Participant's Account and Voluntary Contribution Account attributable
to Employer matching contributions subject to Section 11.6, voluntary
Employee contributions made pursuant to Section 4.7, and any Qualified
Non-Elective Contributions and elective deferrals taken into account
pursuant to Section 11.6(c) as of the end of the Plan Year or the "gap
period," reduced by the gain allocable to such total amount for the
Plan Year or the "gap period" and increased by the loss allocable to
such total amount for the Plan Year or the "gap period."
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 such "safe harbor method," allocable Income for the "gap period" shall be
deemed to equal ten percent (10%) of the Income allocable to Excess Aggregate
Contributions for the Plan Year of the Participant 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.
The Income allocable to Excess Aggregate Contributions resulting from
recharacterization of Elective Contributions shall be determined and distributed
as if such recharacterized Elective Contributions had been distributed as Excess
Contributions.
Notwithstanding the above, for any distribution under this Section
which is made after August 15, 1991, such distribution shall not include any
Income for the "gap period". Further provided, for any distribution under this
Section which is made after August 15, 1991, the amount of Income may be
computed using a reasonable method that is consistent with Section 4.3(c),
provided such method is used consistently for all Participants and for all such
distributions for the Plan Year.
Notwithstanding the above, for Plan Years which began in 1987, Income
during the "gap period" shall not be taken into account.
99
Notwithstanding the above, for any distribution under this Section
which is made after August 15, 1991, such distribution shall not include any
Income for the "gap period". Further provided, for any distribution under this
Section which is made after August 15, 1991, the amount of Income may be
computed using a reasonable method that is consistent with Section 43(c),
provided such method is used consistently for all Participants and for all such
distributions for the Plan Year.
11.8 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute in any Participant in any one Plan
Year up to the lesser of (1) 100% of his accounts as specified in the
Adoption Agreement valued as of the last Anniversary Date or other
valuation date or (2) the amount necessary to satisfy the immediate
and heavy financial need of the Participant. 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 account from which the
distribution is made shall be reduced accordingly. Withdrawal under
this Section shall be authorized only if the distribution is on
account of one of the following or any other items permitted by the
Internal Revenue Service:
(1) Medical expenses described in Code Section 213(d) incurred by
the Participant, his spouse, or any of his dependents (as defined
in Code Section 152) or expenses necessary for these persons to
obtain medical care;
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Payment of tuition and related educational fees for the next
12 months of post-secondary education for the Participant, his
spouse, children, or dependents; or
(4) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) No such distribution shall be made from the Participant's
Account until such Account has become fully Vested.
(c) No distribution shall be made pursuant to this Section unless
the Administrator, based upon the Participant's representation and
such other facts as are known to the Administrator, determines that
all of the following conditions are satisfied.
(1) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant (including
any amounts necessary
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to pay any federal, state, or local taxes or penalties reasonably
anticipated to result from the distribution);
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently
available under all plans maintained by the Employer;
(3) The Plan, and all other plans maintained by the Employer,
provide that the Participant's elective deferrals and voluntary
Employee contributions will be suspended for at least twelve (12)
months after receipt of the hardship distribution; and
(4) The Plan, and all other plans maintained by the Employer,
provide that the Participant may not make elective deferrals for
the Participant's taxable year immediately following the taxable
year of the 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.
(d) Notwithstanding the above, distributions from the
Participant's Elective Account and Qualified Non-Elective Account
pursuant to this Section shall be limited solely to the Participant's
Deferred Compensation and any income attributable thereto credited to
the Participant's Elective Account as of December 31, 1988.
(e) Any distribution made pursuant to this Section shall be made
in a manner which is consistent with and satisfies the provisions of
Section 6.5. including, but not limited to, all notice and consent
requirements of Code Sections 411 (a)(11) and 417 and the Regulations
thereunder.
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