Exhibit 10.7
ADOPTION AGREEMENT
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For Jefferson Federal Savings & Loan Association
of Morristown 401(k) plan.
Pentegra
ADOPTION AGREEMENT
FOR
Jefferson Federal Savings & Loan Association of Morristown
401(k) PLAN
Name of Employer: Jefferson Federal Savings & Loan Association of Morristown
Address: 120 Evans Ave. Morristown, TN. 37814
Telephone Number: 423-586-8421
Contact Person: JoEllen McDaniel
Name of Plan: Jefferson Federal Savings & Loan Association of Morristown
401(k) Plan
THIS ADOPTION AGREEMENT, upon execution by the Employer and the Trustee, and
subsequent approval by a duly authorized representative of Pentegra Services,
Inc. (the "Sponsor"), together with the Sponsor's Employees' Savings & Profit
Sharing Plan Agreement (the "Agreement"), shall constitute the Jefferson Federal
Savings & Loan Association of Morristown 401(k) Plan (the "Plan"). The terms and
provisions of the Agreement are hereby incorporated herein by this reference;
provided, however, that if there is any conflict between the Adoption Agreement
and the Agreement, this Adoption Agreement shall control.
The elections hereinafter made by the Employer in this Adoption Agreement may be
changed by the Employer from time to time by written instrument executed by a
duly authorized representative thereof; but if any other provision hereof or any
provision of the Agreement is changed by the Employer other than to satisfy the
requirements of Section 415 or 416 of the Internal Revenue Code of 1986, as
amended (the "Code"), because of the required aggregation of multiple plans, or
if as a result of any change by the Employer the Plan fails to obtain or retain
its tax-qualified status under Section 401(a) of the Code, the Employer shall be
deemed to have amended the Plan evidenced hereby and by the Agreement into an
individually designed plan, in which event the Sponsor shall thereafter have no
further responsibility for the tax-qualified status of the Plan. However, the
Sponsor may amend any term, provision or definition of this Adoption Agreement
or the Agreement in such manner as the Sponsor may deem necessary or advisable
from time to time and the Employer and the Trustee, by execution hereof,
acknowledge and consent thereto. Notwithstanding the foregoing, no amendment of
this Adoption Agreement or of the Agreement shall increase the duties or
responsibilities of the Trustee without the written consent thereof.
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I. Effect of Execution of Adoption Agreement
The Employer, upon execution of this Adoption Agreement by a duly
authorized representative thereof, (choose 1 or 2):
1. Establishes as a new plan the [ Name of Employer ] Employees'
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Savings & Profit Sharing Plan and Trust, effective ,
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(the "Effective Date").
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2. X Amends its existing defined contribution plan and trust Jefferson
Federal Savings & Loan Association of Morristown 401(k) Plan
dated November 1, 1973 in its entirety into effective May 1,
2003, except as otherwise provided herein or in the Agreement
(the "Effective Date").
II. Definitions
A. "Compliance Testing Method" means the prior year testing method unless
the Employer elects to use current year testing for determining the actual
deferral percentages and actual contribution percentages by checking this
line .
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Note: Whichever testing method is selected (prior year testing or current
year testing), it must apply to both the actual deferral percentage test
and the actual contribution percentage test.
B. Employer
1. "Employer," for purposes of the Plan, shall mean:
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Jefferson Federal Savings & Loan Association of Morristown
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2. The Employer is (indicate whichever may apply):
(a) A member of a controlled group of corporations under
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Section 414(b) of the Code.
(b) A member of a group of entities under common control
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under Section 414(c) of the Code.
(c) A member of an affiliated service group under Section
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414(m) of the Code.
(d) X A corporation.
(e) A sole proprietorship or partnership.
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(f) A Subchapter S corporation.
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(g) Other .
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3. Employer's Taxable Year Ends on 6/30.
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4. Employer's Federal Taxpayer Identification Number is 62-1564205.
5. The Plan Number for the Plan is (enter 3-digit number) 001.
C. "Entry Date" means the first day of the (choose 1 or 2):
1. Calendar month coinciding with or next following the date
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the Employee satisfies the Eligibility requirements
described in Section V.
2. X Calendar quarter (January 1, April 1, July 1, October 1)
coinciding with or next following the date the Employee
satisfies the Eligibility requirements described in Section
III.
D. "Limitation Year" means the twelve (12) consecutive month period
ending on (month/day). Note: If no 12 month period
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is selected, the Limitation Year shall be the Plan Year.
E. "Member" means an Employee enrolled in the membership of the Plan.
F. "Normal Retirement Age" means (choose 1 or 2):
1. X Attainment of age 59.5 (select an age not less than 55 and
not greater than 65).
2. Later of: (i) attainment of age 65 or (ii) the fifth
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anniversary of the date the Member commenced participation
in the Plan.
G. "Normal Retirement Date" means the first day of the first calendar
month coincident with or next following the date upon which a Member
attains his or her Normal Retirement Age.
H. "Plan Year" means the twelve (12) consecutive month period ending on
December 31 (month/day).
I. "Salary" for benefit purposes under the Plan means (choose 1, 2 or 3):
1. X Total taxable compensation as reported on Form W-2
(exclusive of any compensation deferred from a prior year).
2. Basic Salary only.
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3. Basic Salary plus one or more of the following (if 3 is
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chosen, then choose (a) or (b), and/or (c) or (d), whichever
shall apply):
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(a) Commissions not in excess of $
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(b) Commissions to the extent that Basic Salary plus
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Commissions do not exceed $
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(c) Overtime
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(d) Overtime and bonuses
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Note: Member pre-tax contributions to a Section 401(k) plan are always
included in Plan Salary.
III. Salary Adjustment
A. Cafeteria Plan (Section 125) Salary Adjustment.
Member pre-tax contributions to a Section 125 cafeteria plan are to be
included in Plan Salary, unless the Employer elects to exclude such
amounts by checking this line .
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B. Transportation Fringe Benefit (Section 132(f) Adjustment).
Member pre-tax contributions for qualified transportation fringe
benefits under Code Section 132(f) are to be included in Plan Salary,
unless the Employer elects to exclude such amounts by checking this
line X.
IV. Highly Compensated Employee Elections
A. Top Paid Group Election:
In determining who is a Highly Compensated Employee, the Employer
makes the Top Paid Group election by checking this line X. The effect
of this election is that an Employee (who is not a 5% owner at any
time during the determination year or the look-back year) with
compensation in excess of $80,000 (as adjusted) for the look- back
year is a Highly Compensated Employee only if the Employee was in the
top-paid group (i.e., the top 20% of Employees ranked on the basis of
compensation paid by the Employer) for the look-back year.
B. Calendar Year Data Election:
For determining which Employees are Highly Compensated Employees, the
look-back year will be the 12 month period immediately preceding the
determination year, except that, for non-calendar year plans, the
look-back year will be the calendar year ending within the Plan Year
by checking this line .
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V. Eligibility Requirements
A. All Employees shall be eligible to participate in the Plan in
accordance with the
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provisions of Article II of the Plan, except the following Employees
shall be excluded (choose whichever shall apply):
1. X Employees who have not attained age 20.5 (Insert an age from
18 to 21).
2. X Employees who have not completed 6 (1-11, 12 or 24)
consecutive months of service.
Note: Employers which permit Members to make pre-tax
elective deferrals to the Plan (see VII.A.3.) may not
elect a 24 month eligibility period.
3. Employees included in a unit of Employees covered by a
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collective bargaining agreement, if retirement benefits were
the subject of good faith bargaining between the Employer
and Employee representatives.
4. Employees who are nonresident aliens and who receive no
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earned income from the Employer which constitutes income
from sources within the United States.
5. Employees included in the following job classifications:
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(a) Hourly Employees.
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(b) Salaried Employees.
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(c) Flex staff employees (i.e.; any Employee who is
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not a regular full-time or part-time Employee).
(d) Short-term Employees ( i.e.; employees who are
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hired under a written agreement which precludes
membership in the Plan and provides for a specific
period of employment not in excess of one year).
(e) Leased Employees.
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6. Employees of the following employers which are aggregated
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under Section 414(b), 414(c) or 414(m) of the Code:
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Note: If no entries are made above, all Employees shall be eligible to
participate in the Plan on the later of: (i) the Effective Date
or (ii) the first day of the calendar month or calendar quarter
(as designated by the Employer in Section II.C.)
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coinciding with or immediately following the Employee's Date of
Employment or, as applicable, Date of Reemployment.
B. Such eligibility computation period established in Section V(A) above
shall be applicable to (choose 1 or 2):
1. X Both present and future Employees.
2. Future Employees only.
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C. Such Eligibility requirements established above shall be (choose 1 or
2):
1. X Applied to the designated Employee group on and after the
Effective Date of the Plan.
2. Waived for the consecutive month period (may not exceed
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12) beginning on the Effective Date of the Plan.
D. Service Crediting Method for Eligibility (Choose 1, 2 or 3):
1. Not applicable. There is no service required for
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eligibility.
2. X Hour of service method (Choose a or b):
a. X The actual number of Hours of Employment.
b. 190 Hours of Employment for each month in which
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the Employee completes at least one hour of
Employment.
3. Elapsed time method.
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E. Requirements to Commence Receipt of Employer Contributions.
1. Employer Contributions shall be allocated to Member's Accounts in
accordance with Article III of the Plan, except that the
following Member's will not be entitled to Employer contributions
(choose (a) or (b) and/or (c)):
(a) X No additional requirements apply. (The eligibility
requirements under Section V above apply to Employer
Contributions); or
(b) Members who have not attained age (Insert an age
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from 18 - 21); and/or
(c) Member's who have not completed _____ (1 - 12)
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consecutive months of service.
2. The requirement to commence receipt of Employer Contributions
established in this Section E shall apply to all Employer
Contributions provided under Section 3.4 of the Plan except:
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(a) Matching contributions
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(b) Basic contributions
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(c) Safe harbor CODA contributions
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(d) Supplemental contributions
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(e) Profit sharing contributions
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(f) Qualified non-elective contribution
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Note: If an Employer contribution type is selected in 2 above,
Member's will receive Employer contributions based upon the
eligibility requirements under Section V above and the provisions
of the Plan document for such Employer contribution type.
VI. Prior Employment Credit
A. Prior Employment Credit:
Employment with the following entity or entities shall be
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included for eligibility and vesting purposes:
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Note: If this Plan is a continuation of a Predecessor Plan, service
under the Predecessor Plan shall be counted under this Plan.
VII. Contributions
Note: Annual Member pre-tax elective deferrals, Employer matching
contributions, Employer safe harbor CODA contributions, Employer basic
contributions, Employer supplemental contributions, Employer profit
sharing contributions and Employer qualified non-elective
contributions, in the aggregate, may not exceed 15% of all Members'
Salary (excluding from Salary Member pre-tax elective deferrals).
A. Employee Contributions (fill in 1 and/or 6 if applicable; choose 2 or
3; 4 or 5):
1. X The maximum amount of monthly contributions a Member may
make to the Plan (both pre-tax deferrals and after-tax
contributions) is 50 % (1-75) of the Member's monthly
Salary.
2. X (Choose a or b):
(a) X A Member may make pre-tax elective deferrals to
the Plan, based on multiples of 1% of monthly
Salary, or
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(b) A Member may make pre-tax elective deferrals to
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the Plan based on a specified dollar amount.
3. A Member may not make pre-tax elective deferrals to the
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Plan.
4. X A Member may make after-tax contributions to the Plan, based
on multiples of 1% of monthly Salary.
5. A Member may not make after-tax contributions to the Plan.
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6. X An Employee may allocate a rollover contribution to the Plan
prior to satisfying the Eligibility requirements described
above.
B. A Member may change his or her contribution rate with respect to, if
made available, pre-tax deferrals and after-tax contributions (choose
1, 2 or 3):
1. 1 time per pay period.
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2. 1 time per calendar month.
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3. X 1 time per calendar quarter.
C. Employer Matching Contributions (fill in 1 or 6 as applicable; and if
you select 1, then choose 2, 3, 4 or 5):
1. The Employer matching contributions under 2, 3, 4 or 5 below
shall be based on the Member's contributions (both pre-tax
deferrals and after-tax contributions) not in excess of %
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(1-20 but not in excess of the percentage specified in A.1.
above) of the Member's Salary.
2. The Employer shall allocate to each contributing Member's
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Account an amount equal to % (not to exceed 200%) of
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the Member's contributions (both pre-tax deferrals and
after-tax contributions) for that month (as otherwise
limited in accordance with C.1. above).
3. The Employer shall allocate to each contributing Member's
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Account an amount based on the Member's contributions for
the month (as otherwise limited in accordance with C.1.
above) and determined in accordance with the following
schedule:
Years of Employment Matching %
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Less than 3 50%
At least 3, but less than 5 75%
5 or more 100%
4. The Employer shall allocate to each contributing Member's
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Account an amount based on the Member's contributions for
the month (as otherwise limited in accordance with C.1.
above) and determined in accordance with the following
schedule:
Years of Employment Matching %
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Less than 3 100%
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At least 3, but less than 5 150%
5 or more 200%
5. The Employer shall allocate to each contributing Member's
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Account an amount equal to % on the first % of the
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Member's monthly contributions plus % on the next
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% of the Member's monthly contributions.
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6. X No Employer matching contributions will be made to the Plan.
D. Safe Harbor CODA Contributions (Actual Deferral Percentage Test Safe
Harbor Contributions) (Complete 1, or 2 below):
1. The Employer shall make a safe harbor Basic Matching
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Contribution to the Plan on behalf of each Member (i.e.; 100% of the
Member's 401(k) Deferrals that do not exceed 3% percent of the
Member's Salary plus 50% of the Member's 401(k) Deferrals that exceed
3% percent of the Member's Salary but that do not exceed 5% of the
Member's Plan Salary).
2. In lieu of safe harbor Basic Matching Contributions, the
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Employer will make the following contributions for the Plan Year
(complete (a) and/or (b)):
(a) Enhanced Matching Contributions (complete 1, 2 or 3
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below):
(1) The Employer shall make Matching
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Contributions to the Account of each Member
in an amount equal to the sum of:
(i) the Member's 401(k) Deferrals that do not
exceed percent of the Member's Salary
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plus
(ii) Percent of the Member's 401(k)
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Deferrals that exceed percent of the
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Member's Salary and that do not exceed
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percent of the Member's Salary.
Note: In the blank in (i) and the second blank in (ii),
insert a number that is 3 or greater but not
greater than 6. The first and last blanks in (ii)
must be completed so that at any rate of 401(k)
Deferrals, the Matching Contribution is at least
equal to the Matching Contribution receivable if
the Employer were making Basic Matching
Contributions, but the rate of match cannot
increase as deferrals increase. For example, if
"4" is inserted in the blank in (i), (ii) need
not be completed.
(2) 150% of the Member's contributions not to
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exceed (Enter 3% or 4%) of the
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Member's Plan Salary; or
(3) 200% of the Member's contributions not to
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exceed (Enter 2% or 3%) of the
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Member's Plan Salary.
(b) Safe Harbor Nonelective Contributions:
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The Employer will make a Safe Harbor Nonelective Contribution to
the Account of each Member in an amount equal to 3 percent of the
Member's Salary for the Plan Year, unless the Employer inserts a
greater percentage here .
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E. Employer Basic Contributions (choose 1 or 2):
1. The Employer shall allocate an amount equal to %
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(based on 1% increments not to exceed 15%) of Member's
Salary for the month to (choose (a) or (b)):
(a) The Accounts of all Members
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(b) The Accounts of all Members who were employed with
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the Employer on the last day of such month.
2. X No Employer basic contributions will be made to the Plan.
F. Employer Supplemental Contributions:
The Employer may make supplemental contributions for any Plan Year in
accordance with Section 3.7 of the Plan.
G. Employer Profit Sharing Contributions (Choose 1, 2, 3, 4, or 5):
1. No Employer Profit Sharing Contributions will be made to the
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Plan.
Non-Integrated Formula
2. Profit sharing contributions shall be allocated to each
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Member's Account in the same ratio as each eligible Member's
Salary during such Contribution Determination Period bears
to the total of such Salary of all eligible Members.
3. X Profit sharing contributions shall be allocated to each
eligible Member's Account in the same ratio as each eligible
Member's Salary for the portion of the Contribution
Determination Period during which the Member satisfied the
Employer's eligibility requirement(s) bears to the total of
such Salary of all eligible Members.
Integrated Formula
4. Profit sharing contributions shall be allocated to each
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eligible Member's Account in a uniform percentage (specified
by the Employer as %) of each Member's Salary during
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the Contribution Determination Period ("Base Contribution
Percentage") for the Plan Year that includes such
Contribution Determination Period , plus a uniform
percentage (specified by the Employer as %, but not in
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excess of the lesser of (i) the Base Contribution Percentage
and (ii) the greater of (1) 5.7% or (2) the percentage equal
to the portion of the Code Section 3111(a) tax imposed on
employers under the Federal Insurance Contributions Act (as
in effect as of the beginning of the Plan Year) which is
attributable to old-age insurance) of each Member's Salary
for the Contribution Determination Period in excess of the
Social Security Taxable
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Wage Base ("Excess Salary") for the Plan Year that includes
such Contribution Determination Period, in accordance with
Article III of the Plan.
5. Profit sharing contributions shall be allocated to each
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eligible Member's Account in a uniform percentage (specified
by the Employer as %) of each Member's Salary for the
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portion of the Contribution Determination Period during
which the Member satisfied the Employer's eligibility
requirement(s), if any, plus a uniform percentage (specified
by the Employer as %, but not in excess of the lesser
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of (i) the Base Contribution Percentage and (ii) the greater
of (1) 5.7% or (2) the percentage equal to the portion of
the Code Section 3111(a) tax imposed on employers under the
Federal Insurance Contributions Act (as in effect as of the
beginning of the Plan Year) which is attributable to old-age
insurance) of each Member's Excess Salary for the portion of
the Contribution Determination Period during which the
Member satisfied the Employer's eligibility requirement(s)
in accordance with Article III of the Plan.
H. Allocation of Employer Profit Sharing Contributions:
In accordance with Section VII, G above, a Member shall be eligible to
share in Employer Profit Sharing Contributions, if any, as follows
(choose 1 or 2):
1. A Member shall be eligible for an allocation of Employer
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Profit Sharing Contributions for a Contribution
Determination Period if he or she is eligible to participate
in the Plan for the Plan Year to which the Profit Sharing
Contributions relates.
2. X A Member shall be eligible for an allocation of Employer
Profit Sharing Contributions for a Contribution
Determination Period only if he or she (choose (a), (b) or
(c) whichever shall apply):
(a) is employed on the last day of the Contribution
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Determination Period, or retired, died or became
totally and permanently disabled prior to the last
day of the Contribution Determination Period.
(b) X completed 1,000 Hours of Employment if the
Contribution Determination Period is a period of
12 months (250 Hours of Employment if the
Contribution Determination Period is a period of 3
months), or retired, died or became totally and
permanently disabled prior to the last day of the
Contribution Determination Period.
(c) is employed on the last day of the Contribution
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Determination Period and, if such period is 12
months, completed 1,000 Hours of Employment (250
Hours of Employment if the Contribution
Determination Period is a period of 3 months), or
retired, died or became totally and permanently
disabled prior to the last day of the Contribution
Determination Period.
I. "Contribution Determination Period" for purposes of determining and
allocating Employer profit sharing contributions means (choose 1,2, 3
or 4):
1. X The Plan Year.
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2. The Employer's Fiscal Year (defined as the Plan's
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"limitation year") being the twelve (12) consecutive month
period commencing (month/day) and
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ending (month/day).
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3. The three (3) consecutive month periods that comprise each
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of the Plan Year quarters.
4. The three (3) consecutive monthly periods that comprise each
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of the Employer's Fiscal Year quarters. (Employer's Fiscal
Year is the twelve (12) consecutive month period commencing
(month/day) and ending
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(month/day).)
J. Employer Qualified Nonelective Contributions:
The Employer may make qualified nonelective contributions for any Plan
Year in accordance with Section 3.9 of the Plan.
K. Top Heavy Contributions:
If the Plan is determined to be Top Heavy and if Top Heavy
Contributions will be made to the Plan, Top Heavy Contributions will
be allocated to: (choose 1 or 2 below):
1. Only Members who are Non-Key Employees.
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2. X All Members.
VIII. Investments
The Employer hereby appoints Barclays Global Investors, N.A. to serve as
Investment Manager under the Plan. The Employer hereby selects the
following Investments to be made available under the Plan (choose whichever
shall apply) and consents to the lending of securities by such funds to
brokers and other borrowers. The Employer agrees and acknowledges that the
selection of Investments made in this Section VIII is solely its
responsibility, and no other person, including the Sponsor or Investment
Manager, has any discretionary authority or control with respect to such
selection process. The Employer hereby holds the Investment Manager
harmless from, and indemnifies it against, any liability Investment Manager
may incur with respect to such Investments so long as Investment Manager is
not negligent and has not breached its fiduciary duties.
1. X Money Market Fund
2. X Stable Value Fund
3. X Government Bond Fund
4. X S&P 500 Stock Fund
5. X S&P 500/Value Stock Fund
6. X S&P 500/Growth Stock Fund
7. X S&P MidCap Stock Fund
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8. X Russell 2000 Stock Fund
9. X International Stock Fund
10. X Asset Allocation Funds (3)
X Income Plus
X Growth & Income
X Growth
11. X Stock Fund (the "Employer Stock Fund") 12. X Certificate of
Deposit Fund
13. X NASDAQ 100 Index Fund
14. Self-directed Brokerage Account
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IX. Employer Securities
A. If the Employer makes available an Employer Stock Fund pursuant to
Section VIII of this Adoption Agreement, then voting and tender offer
rights with respect to Employer Stock shall be delegated and exercised
as follows (choose 1 or 2):
1. X Each Member shall be entitled to direct the Plan
Administrator as to the voting and tender or exchange offer
rights involving Employer Stock held in such Member's
Account, and the Plan Administrator shall follow or cause
the Trustee to follow such directions. If a Member fails to
provide the Plan Administrator with directions as to voting
or tender or exchange offer rights, the Plan Administrator
shall exercise those rights as it determines in its
discretion and shall direct the Trustee accordingly.
2. The Plan Administrator shall direct the Trustee as to the
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voting of all Employer Stock and as to all rights in the
event of a tender or exchange offer involving such Employer
Stock.
X. Investment Direction
A. Members shall be entitled to designate what percentage of employee
contributions and employer contributions made on their behalf will be
invested in the various Investment Funds offered by the Employer as
specified in Section VIII of this Adoption Agreement except;
1. The following portions of a Member's Account will be invested at
the Employer's direction (choose whichever shall apply):
a. Employer Profit Sharing Contributions
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Shall be invested in:
Employer Stock Fund.
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Employer Certificate of Deposit Fund.
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Any Investment Fund or Funds offered by the
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Employer.
b. Employer Matching Contributions
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Shall be invested in:
Employer Stock Fund.
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Employer Certificate of Deposit Fund.
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Any Investment offered by the Employer.
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c. Employer Basic Contributions
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Shall be invested in:
Employer Stock Fund
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Employer Certificate of Deposit Fund
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Any Investment offered by the Employer
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d. Employer Supplemental Contributions
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Shall be invested in:
Employer Stock Fund
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Employer Certificate of Deposit Fund
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Any Investment offered by the Employer
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e. Employer Qualified Nonelective Contributions
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Shall be invested in:
Employer Stock Fund
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Employer Certificate of Deposit Fund
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Any Investment offered by the Employer
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f. Employer Safe Harbor CODA Contributions under Section
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3.14 of the Plan
Shall be invested in:
Employer Stock Fund
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Employer Certificate of Deposit Fund
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Any Investment offered by the Employer
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2. Amounts invested at the Employer's direction may not be
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transferred by the Member to any other Investment Fund.
3. Notwithstanding this election in 2, a Member may transfer
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such amounts to any other Investment Fund upon (choose
whichever may apply):
(a) the attainment of age (insert 45 or greater)
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(b) the completion of (insert 10 or greater)
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Years of Employment
(c) the attainment of age plus Years of Employment
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equal to (insert 55 or greater)
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B. A Member may change his or her investment direction (choose 1,2, or
3):
1. X 1 time per business day.
2. 1 time per calendar month.
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3. 1 time per calendar quarter.
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C. If a Member or Beneficiary (or the Employer, if applicable) fails to
make an effective investment direction, the Member's contributions and
Employer contributions made on the Member's behalf shall be invested
in Money Market Fund (insert one of the Investments selected in
Section VIII of this Adoption Agreement).
D. Effective as of , the following additional provisions
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shall apply to the Employer's Stock Fund (Check all that apply):
1. No additional Employee contributions may be made to the
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Employer Stock Fund;
2. No additional Employer contributions may be made to the
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Employer Stock Fund;
3. No investment fund transfers may be made to the Employer
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Stock Fund; and/or
4. No investment fund transfers may be made from the Employer
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Stock Fund.
XI. Vesting Schedules
A. (Choose 1, 2, 3, 4, 5, 6 or 7)
Schedule Years of Employment Vested %
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1. Immediate Upon Enrollment 100%
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Schedule Years of Employment Vested %
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2. 2-6 Year Graded Less than 2 0%
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2 but less than 3 20%
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3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
3. 5-Year Cliff Less than 5 0%
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5 or more 100%
4. 3-Year Cliff Less than 3 0%
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3 or more 100%
5. 4-Year Graded Less than 1 0%
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1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
6. 3-7 Year Graded Less than 3 0%
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3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
7. X Other Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
B. With respect to the schedules listed above, the Employer elects
(choose 1, 2, 3, 4 or 5):
1. Schedule solely with respect to Employer matching
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contributions.
2. Schedule solely with respect to Employer basic
----
contributions.
3. Schedule solely with respect to Employer supplemental
----
contributions.
4. Schedule solely with respect to Employer profit sharing
----
contributions.
5. Schedule 7 with respect to all Employer contributions.
NOTE: Notwithstanding any election by the Employer to the contrary,
each Member shall acquire a 100% vested interest in his Account
attributable to all Employer contributions made to the Plan upon the
earlier of (i) attainment of Normal Retirement Age, (ii) approval for
disability or (iii) death. In addition, a Member shall at all times
have a 100% vested interest in; the Employer Qualified Non-Elective
Contributions, if
16
any; Safe Harbor CODA contributions, if any; and in the pre-tax
elective deferrals and nondeductible after-tax Member Contributions.
Also, if a Plan is determined to be Top Heavy, a different vesting
schedule, other than the schedule elected above, may apply.
C. Years of Employment Excluded for Vesting Purposes
The following Years of Employment shall be disregarded for vesting
purposes (choose whichever shall apply):
1. Years of Employment during any period in which neither the
---
Plan nor any predecessor plan was maintained by the
Employer.
2. Years of Employment of a Member prior to attaining age 18.
---
D. Service Crediting Method for Vesting (Choose 1, 2, or 3):
1. Not Applicable. Plan provides 100% vesting for all
---
contributions.
2. X Hour of service method (if elected, Years of Service will be
substituted for Years of Employment for purposes of this
Section XI) (Choose a or b):
a. X The actual number of Hours of Employment.
b. 190 Hours of Employment for each month in which
---
the Employee completes at least one Hour of
Employment.
3. Elapsed time method.
---
XII. Withdrawal Provisions
A. The following portions of a Member's Account will be eligible for
in-service withdrawals, subject to the provisions of Article VII of
the Plan (choose whichever shall apply):
1. Employee after-tax contributions and the earnings thereon.
---
In-service withdrawals permitted only in the event of
(choose whichever shall apply):
(a) Hardship.
---
(b) Attainment of age 59 1/2.
---
2. X Employee pre-tax elective deferrals and the earnings
thereon.
Note: In-service withdrawals of all employee pre-tax
elective deferrals and earnings thereon as of December
31, 1988 are permitted only in the event of hardship
or attainment of age 59 1/2. In-service withdrawals of
earnings after December 31, 1988 are permitted only in
the event of attainment of age 59 1/2.
3. Employee rollover contributions and the earnings thereon.
---
17
In-service withdrawals permitted only in the event of
(choose whichever shall apply):
(a) Hardship.
---
(b) Attainment of age 59 1/2.
---
4. X Employer matching contributions and the earnings thereon.
In-service withdrawals permitted only in the event of
(choose whichever shall apply):
(a) X Hardship.
(b) X Attainment of age 59 1/2.
5. Employer basic contributions and the earnings thereon.
---
In-service withdrawals permitted only in the event of
(choose whichever shall apply):
(a) Hardship.
---
(b) Attainment of age 59 1/2.
---
6. X Employer supplemental contributions and the earnings
thereon.
In-service withdrawals permitted only in the event of
(choose whichever shall apply):
(a) X Hardship.
(b) X Attainment of age 59 1/2.
7. X Employer profit sharing contributions and the earnings
thereon.
In-service withdrawals permitted only in the event of
(choose whichever shall apply):
(a) X Hardship.
(b) X Attainment of age 59 1/2.
8. X Employer qualified nonelective contributions and earnings
thereon.
Note: In-service withdrawals of all employer qualified
nonelective contributions and earnings thereon are
permitted only in the event of attainment of age 59
1/2.
9. Employer safe harbor CODA contributions and earnings
---
thereon.
Note: In-service withdrawals of employer safe harbor CODA
contributions and earnings thereon are permitted only
in the event of attainment of age 59 1/2.
18
10. No in-service withdrawals shall be allowed.
---
B. Notwithstanding any elections made in Subsection A of this Section XII
above, the following portions of a Member's Account shall be excluded
from eligibility for in- service withdrawals (choose whichever shall
apply):
1. Employer contributions, and the earnings thereon, credited
---
to the Employer Stock Fund.
2. Employer contributions, and the earnings thereon, credited
---
to the Employer Certificate of Deposit Fund.
3. All contributions and deferrals, and the earnings thereon,
---
credited to the Employer Stock Fund.
4. All contributions and deferrals, and the earnings thereon,
---
credited to the Employer Certificate of Deposit Fund.
5. Other:
--- -----------------------------------------------------
Note: A Member's Account will be available for in-service withdrawals upon
attaining age 70 1/2notwithstanding any provisions of this Section XII to
the contrary.
XIII. Distribution Option (choose whichever shall apply)
1. Lump Sum and partial lump sum payments only.
---
2. X Lump Sum and partial lump sum payments plus one or more of the
following (choose (a) and /or (b)):
(a) Installment payments.
---
(b) X Annuity payments.
3. Distributions in kind of Employer Stock.
---
XIV. Loan Program (choose 1, 2, 3 or 4, if applicable)
1. No loans will be permitted from the Plan.
---
2. X Loans will be permitted from the Member's Account.
3. Loans will be permitted from the Member's Account, excluding
---
(choose whichever shall apply):
(1) Employer Profit sharing contributions and the earnings
---
thereon.
(2) Employer matching contributions and the earnings
---
thereon.
(3) Employer basic contributions and the earnings thereon.
---
(4) Employer supplemental contributions and the earnings
---
thereon.
(5) Employee after-tax contributions and the earnings
---
thereon.
(6) Employee pre-tax elective deferrals and the earnings
---
thereon.
19
(7) Employee rollover contributions and the earnings
---
thereon.
(8) Employer qualified nonelective contributions and the
---
earnings thereon.
(9) Employer safe harbor CODA contributions and the
---
earnings thereon.
(10) Any amounts to the extent invested in the Employer
---
Stock Fund.
(11) Any amounts to the extent invested in the Employer
---
Certificate of Deposit Fund.
4. Loans will only be permitted from the Member's Account in the
---
case of hardship or financial necessity as defined under Section
8.1 of the Plan.
XV. Additional Information
If additional space is needed to select or describe an elective feature of
the Plan, the Employer should attach additional pages and use the following
format:
The following is hereby made a part of Section --- of the Adoption
Agreement and is thus incorporated into and made a part of the [Plan Name]
Signature of Employer's Authorized Representative
--------------------
Signature of Trustee
----------------------------
Supplementary Page of [total number of pages].
----
XVI. Plan Administrator
The Named Plan Administrator under the Plan shall be the (choose 1, 2, 3 or
4):
Note:Pentegra Services, Inc. may not be appointed Plan Administrator.
1. X Employer
2. Employer's Board of Directors
---
3. Plan's Administrative Committee
---
4. Other (if chosen, then provide the following information)
---
Name:
-------------------------------------------------------
Address:
-------------------------------------------------------
Tel No:
-------------------------------------------------------
Contact:
-------------------------------------------------------
20
Note: If no Named Plan Administrator is designated above, the Employer
shall be deemed the Named Plan Administrator.
21
XVII. Trustee
The Employer hereby appoints The Bank of New York to serve as Trustee for
all Investment Funds under the Plan except the Employer Stock Fund.
The Employer hereby appoints the following person(s) or entity to serve as
Trustee under the Plan for the Employer Stock Fund.*
Name:
---------------------------------------------------------------------
Address:
------------------------------------------------------------------
Telephone No: Contact:
-------------------------- ------------------------
-------------------------------------------------------------
Signature of Trustee
(Required only if the Employer is serving as its own Trustee)
* Subject to approval by The Bank of New York, if The Bank of New York is
appointed as Trustee for the Employer Stock Fund.
The Employer hereby appoints The Bank of New York to serve as Custodian
under the Plan for the Employer Stock Fund in the event The Bank of New
York does not serve as Trustee for such Fund.
22
EXECUTION OF ADOPTION AGREEMENT
By execution of this Adoption Agreement by a duly authorized representative of
the Employer, the Employer acknowledges that it has established or, as the case
may be, amended a tax- qualified retirement plan into the Jefferson Federal
Savings & Loan association of Morristown 401(k) Plan (the "Plan"). The Employer
hereby represents and agrees that it will assume full fiduciary responsibility
for the operation of the Plan and for complying with all duties and requirements
imposed under applicable law, including, but not limited to, the Employee
Retirement Income Security Act of 1974, as amended, and the Internal Revenue
Code of 1986, as amended. In addition, the Employer represents and agrees that
it will accept full responsibility for complying with any applicable
requirements of federal or state securities law as such laws may apply to the
Plan and to any investments thereunder.
The adopting Employer may rely on an opinion letter issued by the IRS as
evidence that the Plan is qualified under Section 401 of the Code only to the
extent provided in IRS Announcement 2001-77, 2001-30 I.R.B. The Employer may not
rely on the opinion letter in certain other circumstances or with respect to
certain qualification requirements, which are specified in the opinion letter
issued with respect to the plan and in IRS Announcement 2001-77. In order to
have reliance in such circumstances or with respect to such qualification
requirements, application for a determination letter must be made to Employee
Plans Determinations of the IRS.
The failure to properly complete the Adoption Agreement may result in
disqualification of the Plan and Trust evidenced thereby.
The Sponsor will inform the Employer of any amendments to the Plan or of the
discontinuance or abandonment of the Plan by the Sponsor.
Any inquiries regarding the adoption of the Plan should be directed to the
Sponsor as follows:
Pentegra Services, Inc.
108 Corporate Park Drive
White Plains, New York 10604
(914) 694-1300
IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be
executed by its duly authorized officer this day of ,
------- -------------------
20 .
---
Jefferson Federal Savings & Loan Association of Morristown
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
23
PENTEGRA SERVICES, INC.
EMPLOYEES' SAVINGS & PROFIT SHARING PLAN
BASIC PLAN DOCUMENT
1//1/2001
TABLE OF CONTENTS
ARTICLE I - PURPOSE AND DEFINITIONS 1
ARTICLE II - ARTICIPATION AND MEMBERSHIP 11
Section 1 Eligibility Requirement 11
Section 2 Exclusion of Certain Employees 12
Section 3 Waiver of Eligibility Requirements 12
Section 4 Exclusion of Non-Salaried Employees 13
Section 5 Commencement of Participation 13
Section 6 Termination of Participation 14
ARTICLE III - CONTRIBUTIONS 15
Section 1 Contributions by Members 15
Section 2 Elective Deferrals by Members 15
Section 3 Transfer of Funds and Rollover Contributions by Members 16
Section 4 Employer Contributions - General 17
Section 5 Employer Matching Contributions 17
Section 6 Employer Basic Contributions 18
Section 7 Supplemental Contributions by Employer 18
Section 8 The Profit Sharing Feature 19
Section 9 The 401(k) Feature 21
Section 10 Determining the Actual Deferral Percentages 23
Section 11 Determining the Actual Contribution Percentages 25
Section 12 The Aggregate Limit Test 30
Section 13 Remittance of Contributions 31
Section 14 Safe Harbor CODA 32
ARTICLE IV - INVESTMENT OF CONTRIBUTIONS 34
Section 1 Investment by Trustee or Custodian 34
Section 2 Member Directed Investments 35
Section 3 Employer Securities 35
ARTICLE V - MEMBERS' ACCOUNTS, UNITS AND VALUATION 36
ARTICLE VI - VESTING OF ACCOUNTS 37
Section 1 Vesting of Member Contributions, 401(k)
Deferrals, Qualified Nonelective Contributions
and Rollover Contributions 37
Section 2 Vesting of Employer Contributions 37
Section 3 Forfeitures 41
ARTICLE VII - WITHDRAWALS AND DISTRIBUTIONS 43
Section 1 General Provisions 43
Section 2 Withdrawals While Employed 44
Section 3 Distributions Upon Termination of Employment 46
Section 4 Distributions Due to Disability 51
Section 5 Distributions Due to Death 52
Section 6 Minimum Required Distributions 53
ARTICLE VIII - LOAN PROGRAM 58
Section 1 General Provisions 58
Section 2 Loan Application 58
Section 3 Permitted Loan Amount 60
Section 4 Source of Funds for Loan 60
Section 5 Conditions of Loan 61
Section 6 Crediting of Repayment 61
Section 7 Cessation of Payments on Loan 62
Section 8 Loans to Former Members 62
ARTICLE IX - ADMINISTRATION OF PLAN AND ALLOCATION
OF RESPONSIBILITIES 64
Section 1 Fiduciaries 64
Section 2 Allocation of Responsibilities Among the Fiduciaries 64
Section 3 No Joint Fiduciary Responsibilities 67
Section 4 Investment Manager 67
Section 5 Advisor to Fiduciary 68
Section 6 Service in Multiple Capacities 68
Section 7 Appointment of Plan Administrator 68
Section 8 Powers of the Plan Administrator 69
Section 9 Duties of the Plan Administrator 69
Section 10 Action by the Plan Administrator 69
Section 11 Discretionary Action 69
Section 12 Compensation and Expenses of Plan Administrator 70
Section 13 Reliance on Others 70
Section 14 Self Interest 70
Section 15 Personal Liability - Indemnification 70
Section 16 Insurance 71
Section 17 Claims Procedures 71
Section 18 Claims Review Procedures 72
ARTICLE X - MISCELLANEOUS PROVISIONS 73
Section 1 General Limitations 73
Section 2 Top Heavy Provisions 82
Section 3 Information and Communications 85
Section 4 Small Account Balances 85
Section 5 Amounts Payable to Incompetents, Minors or Estates 85
Section 6 Non-Alienation of Amounts Payable 86
Section 7 Unclaimed Amounts Payable 86
Section 8 Leaves of Absence 87
Section 9 Return of Contributions to Employer 88
Section 10 Controlling Law 88
ARTICLE XI - AMENDMENT & TERMINATION 89
Section 1 General 89
Section 2 Termination of Plan and Trust 89
Section 3 Liquidation of Trust Assets in the Event of Termination 89
Section 4 Partial Termination 90
Section 5 Power to Amend 90
Section 6 Solely for Benefit of Members, Terminated
Members and their Beneficiaries 91
Section 7 Successor to Business of the Employer 91
Section 8 Merger, Consolidation and Transfer 92
Section 9 Revocability 92
TRUSTS ESTABLISHED UNDER THE PLAN 94
ARTICLE I
PURPOSE AND DEFINITIONS
SECTION 1.1
This Plan and Trust, as evidenced hereby, and the applicable Adoption Agreement
and Trust Agreement(s), are designed and intended to qualify in form as a
qualified profit sharing plan and trust under the applicable provisions of the
Internal Revenue Code of 1986, as now in effect or hereafter amended, or any
other applicable provisions of law including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended. Effective January 1, 2001,
except as otherwise provided, the Plan is hereby amended and restated in its
entirety to provide as follows:
SECTION 1.2
The following words and phrases as used in this Plan shall have the following
meanings:
(A) "ACCOUNT" means the Plan account established and maintained in respect
of each Member pursuant to Article V, to which Account shall be
allocated, as applicable, the Member's after-tax amounts, 401(k)
amounts, Employer matching amounts, basic amounts, supplemental
amounts, profit sharing amounts, qualified non-elective contribution
amounts, rollover amounts, and funds directly transferred to the Plan.
(B) "ACTUAL DEFERRAL PERCENTAGE TEST SAFE HARBOR" means the method
described in Section 3.14 (A) of Article III for satisfying the actual
deferral percentage test of ss.401(k)(3) of the Code.
(C) "ACTUAL DEFERRAL PERCENTAGE TEST SAFE HARBOR CONTRIBUTIONS" means
Employer matching contributions and non-elective contributions
described in section 3.14 (A) (1) of Article III.
(D) "ADOPTION AGREEMENT" means the separate document by which the Employer
has adopted the Plan and specified certain of the terms and provisions
hereof. If any term, provision or definition contained in the Adoption
Agreement is inconsistent with any term, provision or definition
contained herein, the one set forth in the Adoption Agreement shall
govern. The Adoption Agreement shall be incorporated into and form an
integral part of the Plan.
(E) "BENEFICIARY" means the person or persons designated to receive any
amount payable under the Plan upon the death of a Member. Such
designation may be made or changed only by the Member on a form
provided by, and filed with, the Third Party Administrator prior to
his death. If the Member is not survived by a Spouse and if no
Beneficiary is designated, or if the designated Beneficiary
predeceases the Member, then any such amount payable shall be paid to
such Member's estate upon his death.
(F) "BOARD" means the Board of Directors of the Employer adopting the
Plan.
(G) "BREAK IN SERVICE" means:
(1) Where an Employer has elected, in its Adoption Agreement, to use
the hours of service method for eligibility and/or vesting, a Plan
Year during which an individual has not completed more than 500 Hours
of Employment, as determined by the Plan Administrator in accordance
with the IRS Regulations. Solely for purposes of determining whether a
Break in Service has occurred, an individual shall be credited with
the Hours of Employment which such individual would have completed but
for a maternity or paternity absence, as determined by the Plan
Administrator in accordance with this Paragraph, the Code and the
applicable regulations issued by the DOL and the IRS; provided,
however, that the total Hours of Employment so credited shall not
exceed 501 and the individual timely provides the Plan Administrator
with such information as it may require. Hours of Employment credited
for a maternity or paternity absence shall be credited entirely (i) in
the Plan Year in which the absence began if such Hours of Employment
are necessary to prevent a Break in Service in such year, or (ii) in
the following Plan Year. For purposes of this Paragraph, maternity or
paternity absence shall mean an absence from work by reason of the
individual's pregnancy, the birth of the individual's child or the
placement of a child with the individual in connection with the
adoption of the child by such individual, or for purposes of caring
for a child for the period immediately following such birth or
placement.
(2) Where an Employer has elected to use the elapsed time method for
eligibility and/or vesting service, a Period of Severance of at least
12 consecutive months.
2
(H) "CODE" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. All citations to sections of the Code are to such
sections as they may from time to time be amended or renumbered.
(I) "COMMENCEMENT DATE" means the date on which an Employer begins to
participate in the Plan.
(J) "CONTRIBUTION DETERMINATION PERIOD" means the Plan Year, fiscal year,
or calendar or fiscal quarter, as elected by an Employer, upon which
eligibility for and the maximum permissible amount of any Profit
Sharing contribution, as defined in Article III, is determined.
Notwithstanding the foregoing, for purposes of Article VI,
Contribution Determination Period means the Plan Year.
(K) "DISABILITY" means a Member's disability as defined in Article VII,
Section 7.4.
(L) "DOL" means the United States Department of Labor.
(M) "EMPLOYEE" means any person in Employment, and who receives
compensation from, the Employer, and any leased employee within the
meaning of Section 414(n)(2) of the Code. The term "leased employee"
means any person (other than an employee of the recipient) who
pursuant to an agreement between the recipient and any other person
("leasing organization") has performed services for the recipient (or
for the recipient and related persons determined in accordance with
Section 414(n)(6) of the Code) on a substantially full time basis for
a period of at least one year, and such services are performed under
primary direction or control by the recipient. 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 Section 415(c)(3) of the
Code, but including amounts contributed pursuant to a salary reduction
agreement which are excludable from the employee's gross income under
Section 125, Section 402(e)(3), Section 402(h)(1)(B) or Section 403(b)
of the Code, (2) immediate participation, and (3) full and
3
immediate vesting; and (ii) leased employees do not constitute more
than 20 percent of the recipient's non-highly compensated work force.
(N) "EMPLOYER" means the entity named in the Adoption Agreement and any
other entity which, together therewith, constitutes an affiliated
service group (as defined in Section 414(m)(2) of the Code), any
corporation which, together therewith, constitutes a controlled group
of corporations as defined in Section 1563 of the Code, and any other
trade or business (whether incorporated or not) which, together
therewith, are required to be aggregated under Sections 414(b),
414(c), or 414(o) of the Code. For purposes of the definition of
"Salary" in Section 1.2(II) and Article III of the Plan, "Employer"
shall refer only to the applicable entity that is participating in the
Plan.
(O) "EMPLOYMENT" means service with an Employer.
(P) "ENROLLMENT DATE" means the date on which an Employee becomes a Member
as provided under Article II.
(Q) "ERISA" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
(R) "FIDUCIARY" means any person who (i) exercises any discretionary
authority or control with respect to the management of the Plan or
control with respect to the management or disposition of the assets
thereof, (ii) renders any investment advice for a fee or other
compensation, direct or indirect, with respect to any moneys or other
property of the Plan, or has any discretionary authority or
responsibility to do so, or (iii) has any discretionary authority or
responsibility in the administration of the Plan, including any other
persons (other than trustees) designated by any Named Fiduciary to
carry out fiduciary responsibilities, except to the extent otherwise
provided by ERISA.
(S) "HIGHLY COMPENSATED EMPLOYEE" means for Plan Years beginning after
December 31, 1996, an Employee (i) who is a 5 percent owner at any
time during the look-back year or determination year, or (ii)(a) who
is employed during the determination year and who during the look-back
year received compensation from the Employer in excess of $80,000 (as
adjusted pursuant to the Code and
4
Regulations for changes in the cost of living), and (b) if elected by
the Employer was in the top-paid group of Employees for such look-back
year.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the 12-month period immediately preceding the
determination year. The Employer may, however, as indicated in the
Adoption Agreement, make a calendar year data election. If a calendar
year data election is made, the look- back year shall be the calendar
year ending within the Plan Year for purposes of determining who is a
Highly Compensated Employee (other than for 5% owners).
The top-paid group shall consist of the top 20 percent of the
Employees when ranked on the basis of compensation paid by the
Employer.
The determination of who is a Highly Compensated Employee will be made
in accordance with Section 414(q) of the Code and the IRS Regulations
thereunder.
A highly compensated former employee is based on the rules applicable
to determining Highly Compensated Employee status as in effect for
that determination year, in accordance with section 1.414(q)-1T, A-4
of the temporary Income Tax Regulations and IRS Notice 97-45.
In determining whether an employee is a Highly Compensated Employee
for years beginning in 1997, the amendments to section 414(q) stated
above are treated as having been in effect for years beginning in
1996.
(T) "HOUR OF EMPLOYMENT" means each hour during which an Employee performs
service (or is treated as performing service as required by law) for
the Employer and, except in the case of military service, for which he
is directly or
5
indirectly paid, or entitled to payment, by the Employer (including
any back pay irrespective of mitigation of damages), all as determined
in accordance with applicable DOL Regulations.
(U) "INVESTMENT MANAGER" means any Fiduciary other than a Trustee or Named
Fiduciary who (i) has the power to manage, acquire or dispose of any
asset of the Plan; (ii) is (a) registered as an investment advisor
under the Investment Advisors Act of 1940; (b) is a bank, as defined
in such Act, or (c) is an insurance company qualified to perform the
services described in clause (i) hereof under the laws of more than
one state of the United States; and (iii) has acknowledged in writing
that he is a Fiduciary with respect to the Plan.
(V) "IRS" means the United States Internal Revenue Service.
(W) "LEAVE OF ABSENCE" means an absence authorized by an Employee's
Employer and approved by the Plan Administrator, on a uniform basis,
in accordance with Article X.
(X) "MEMBER" means an Employee enrolled in the membership of the Plan
under Article II.
(Y) "MONTH" means any calendar month.
(Z) "NAMED FIDUCIARY" means the Fiduciary or Fiduciaries named herein or
in the Adoption Agreement who jointly or severally have the authority
to control and manage the operation and administration of the Plan.
(AA) "NON-HIGHLY COMPENSATED EMPLOYEE" means an Employee who is not a
Highly Compensated Employee.
(BB) "NORMAL RETIREMENT AGE" means the Member's sixty-fifth (65th) birthday
unless otherwise specified in the Adoption Agreement.
(CC) "PERIOD OF SERVICE" means the aggregate of all periods commencing with
the Employee's first day of employment or reemployment with the
Employer and ending on the date a Break in Service begins. The first
day of employment or reemployment is the first day the Employee
performs an Hour of Employment.
6
An Employee will also receive credit for any Period of Severance of
less than 12 consecutive months, provided that the Employee returns to
Employment within 12 months of the Employee's retirement, quit or
discharge or, if earlier, within 12 months of the date the Employee
was first absent from service for any other reason.
(DD) "PERIOD OF SEVERANCE" means a continuous period of time during which
the Employee is not employed by the Employer. Such period begins on
the date the Employee retires, quits or is discharged, or if earlier,
the 12 month anniversary of the date on which the Employee was
otherwise first absent from service. In the case of an individual who
is absent from work for maternity or paternity reasons, the
12-consecutive month period beginning on the first anniversary of the
first day of such absence shall not constitute a Break in Service. For
purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence (a) by reason of the pregnancy of
the individual, (b) by reason of the birth of a child of the
individual, (c) by reason of the placement of a child with the
individual in connection with the adoption of such child by such
individual, or (d) for purposes of caring for such child for a period
beginning immediately following such birth or placement.
(EE) "PLAN" means the Employees' Savings & Profit Sharing Plan as evidenced
by this document, the applicable Adoption Agreement and all subsequent
amendments thereto.
(FF) "PLAN ADMINISTRATOR" means the Named Fiduciary or, as designated by
such Named Fiduciary and approved by the Board in accordance with
Article IX, any officer or Employee of the Employer.
(GG) "PLAN YEAR" means a consecutive 12-month period ending December 31
unless otherwise specified in the Adoption Agreement.
(HH) "REGULATIONS" means the applicable regulations issued under the Code,
ERISA or other applicable law, by the IRS, the DOL or any other
governmental authority and any proposed or temporary regulations or
rules promulgated by such authorities pending the issuance of such
regulations.
7
(II) "SALARY" means regular basic monthly salary or wages, exclusive of
special payments such as overtime, bonuses, fees, deferred
compensation (other than pre-tax elective deferrals pursuant to a
Member's election under Article III), severance payments, and
contributions by the Employer under this or any other plan (other than
before-tax contributions made on behalf of a Member under a Code
Section 125 cafeteria plan and, effective for Plan Years beginning on
or after January 1, 2001, qualified transportation fringe benefits
under Code Section 132(f), unless the Employer specifically elects to
exclude such contributions or benefits). Commissions shall be included
at the Employer's option within such limits, if any, as may be set by
the Employer in the Adoption Agreement and applied uniformly to all
its commissioned Employees. In addition, Salary may also include, at
the Employer's option, special payments such as (i) overtime or (ii)
overtime plus bonuses. As an alternative to the foregoing definition,
at the Employer's option, Salary may be defined to include total
taxable compensation reported on the Member's IRS Form W-2, plus
deferrals, if any, pursuant to Section 401(k) and Section 125 of the
Code, plus, effective for Plan Years beginning on or after January 1,
2001, qualified transportation fringe benefits under Code Section
132(f) (unless the Employer specifically elects to exclude such
Section 125 deferrals or Section 132(f) amounts), but excluding
compensation deferred from previous years. In no event may a Member's
Salary for any Plan Year exceed for purposes of the Plan $150,000
(adjusted for cost of living to the extent permitted by the Code and
the IRS Regulations).
For Plan Years beginning after December 31, 1996, the family member
aggregation rules of Code Section 414(q)(6) (as in effect prior to the
Small Business Job Protection Act of 1996) are eliminated.
(JJ) "SOCIAL SECURITY TAXABLE WAGE BASE" means the contribution and benefit
base attributable to the OASDI portion of Social Security employment
taxes under Section 230 of the Social Security Act (42 U.S.C. 430) in
effect on the first day of each Plan Year.
(KK) "SPOUSE" or "SURVIVING SPOUSE" means the individual to whom a Member
or former Member was married on the date such Member withdraws his
Account, or if such Member has not withdrawn his Account, the
individual to whom the Member or former Member was married on the date
of his death.
8
(LL) "THIRD PARTY ADMINISTRATOR" or "TPA" means Pentegra Services, Inc., a
non-fiduciary provider of administrative services appointed and
directed by the Plan Administrator or the Named Fiduciary either
jointly or severally.
(MM) "TRUST" means the Trust or Trusts established and maintained pursuant
to the terms and provisions of this document and any separately
maintained Trust Agreement or Agreements.
(NN) "TRUSTEE" generally means the person, persons or other entities
designated by the Employer or its Board as the Trustee or Trustees
hereof and specified as such in the Adoption Agreement and any
separately maintained Trust Agreement or Agreements.
(OO) "TRUST AGREEMENT" means the separate document by which the Employer or
its Board has appointed a Trustee of the Plan, specified the terms and
conditions of such appointment and any fees associated therewith.
(PP) "TRUST FUND" means the Trust Fund or Funds established by the Trust
Agreement or Agreements.
(QQ) "UNIT" means the unit of measure described in Article V of a Member's
proportionate interest in the available Investment Funds (as defined
in Article IV).
(RR) "VALUATION DATE" means any business day of any month for the Trustee,
except that in the event the underlying portfolio(s) of any Investment
Fund cannot be valued on such date, the Valuation Date for such
Investment Fund shall be the next subsequent date on which the
underlying portfolio(s) can be valued. Valuations shall be made as of
the close of business on such Valuation Date(s).
(SS) "YEAR OF EMPLOYMENT" means a period of service of 12 months.
(TT) "YEAR OF SERVICE" means any Plan Year during which an individual
completed at least 1,000 Hours of Employment, or satisfied any
alternative requirement, as determined by the Plan Administrator in
accordance with any applicable Regulations issued by the DOL and the
IRS.
(UU) "YEAR OF ELIGIBILITY SERVICE" means where an Employer designates a one
or two 12-consecutive-month eligibility waiting period, an Employee
must complete at least
9
1,000 Hours of Employment during each 12-consecutive-month period
(measured from his date of Employment and then as of the first day of
each Plan Year commencing after such date of Employment); provided,
however, if an Employee is credited with 1,000 Hours of Employment in
both the initial eligibility computation period and the first Plan
Year which commences prior to the first anniversary of the Employee's
employment commencement date, the Employee will be credited, for
eligibility purposes, with two Years of Eligibility Service. Where an
Employer designates an eligibility waiting period of less than 12
months, an Employee must, for purposes of eligibility, complete a
required number of hours (measured from his date of Employment and
each anniversary thereafter) which is arrived at by multiplying the
number of months in the eligibility waiting period requirement by 83;
provided, however, if an Employee completes at least 1,000 Hours of
Employment within the 12 month period commencing on his Employment
commencement date or during any Plan Year commencing after such
Employment commencement date, such Employee will be treated as
satisfying the eligibility service requirements.
SECTION 1.3
The masculine pronoun wherever used shall include the feminine pronoun.
10
ARTICLE II
PARTICIPATION AND MEMBERSHIP
SECTION 2.1 ELIGIBILITY REQUIREMENTS
The Employer may elect as a requirement for eligibility to participate in the
Plan (i) the completion of a service period equal to any number of months not to
exceed 12 consecutive months, or (ii) the completion of a service period equal
to one or two 12-consecutive-month periods, and/or (iii) if the Employer so
elects, it may adopt a minimum age requirement from age 18 to age 21. Such
election shall be made and reflected on the Adoption Agreement. Notwithstanding
the foregoing, in the case of an Employer that adopts the 401(k) feature under
Section 3.9, the eligibility requirements under such feature shall not exceed
the period described in clause (i) above, and, at the election of the Employer,
attainment of age 21 as described in clause (iii) above.
Notwithstanding the foregoing, the Employer may elect in the Adoption Agreement
to establish as an eligibility requirement (as a minimum service requirement,
minimum age requirement, or both) for Employer matching contributions,
Employer basic contributions Employer supplemental contributions, and/or
Employer Profit Sharing contributions (i) the completion of any number of months
not to exceed 12 consecutive months, or (ii) the completion of one or two
12-consecutive-month periods, and/or (iii) if the Employer so elects, it may
adopt a minimum age requirement from age 18 to age 21. Such election shall be
made and reflected in the Adoption Agreement.
In implementing the eligibility service periods described above, (i) if an
Employer designates in the Adoption Agreement an eligibility service crediting
method based on the hours of service method, the satisfaction of the eligibility
service requirement shall be dependent on the completion of a Year of
Eligibility Service and (ii) if an Employer designates in the Adoption Agreement
an eligibility service crediting method based on the elapsed time method, the
satisfaction of the eligibility service requirement shall be dependent on the
completion of the requisite Period of Service.
If a non-vested Member terminates employment without a vested interest in his
Account derived from Employer contributions, Years of Employment (or, as
applicable, Years of Service) before a period of consecutive Breaks in Service
will not be taken into account for eligibility purposes if the number of
consecutive Breaks in Service in such period equals or exceeds the greater of
five or the aggregate number of Years of Employment (or, as
11
applicable Years of Service) before such break. If a Member's service is
disregarded pursuant to this paragraph, such Member will be treated as a new
Employee for eligibility purposes.
SECTION 2.2 EXCLUSION OF CERTAIN EMPLOYEES
To the extent provided in the Adoption Agreement, the following Employees may be
excluded from participation in the Plan:
(i) Employees not meeting the age and service requirements;
(ii) Employees who are included in a unit of Employees covered by a
collective bargaining agreement between the Employee
representatives and one or more Employers if there is evidence
that retirement benefits were the subject of good faith
bargaining between such Employee representatives and such
Employer(s). For this purpose, the term "Employee representative"
does not include any organization where more than one-half of the
membership is comprised of owners, officers and executives of the
Employer;
(iii) Employees who are non-resident aliens and who receive no earned
income from the Employer which constitutes income from sources
within the United States; and
(iv) Employees described in Section 2.4 or included in any other
ineligible job classifications set forth in the Adoption
Agreement.
SECTION 2.3 WAIVER OF ELIGIBILITY REQUIREMENTS
The Employer, at its election, may waive the eligibility requirement(s) for
participation specified above for (i) all Employees, or (ii) all those employed
on or up to 12 months after its Commencement Date under the Plan. Subject to the
requirements of the Code, the eligibility waiting period shall be deemed to have
been satisfied for an Employee who was previously a Member of the Plan.
All Employees whose Employment commences after the expiration date of the
Employer's waiver of the eligibility requirement(s), if any, shall be enrolled
in the Plan in accordance with the eligibility requirement(s) specified in the
Adoption Agreement.
12
SECTION 2.4 EXCLUSION OF NON-SALARIED EMPLOYEES
The Employer, at its election, may exclude non-salaried (hourly paid) Employees
from participation in the Plan, regardless of the number of Hours of Employment
such Employees complete in any Plan Year. Notwithstanding the foregoing, for
purposes of this Section and all purposes under the Plan, a non-salaried
Employee that is hired following the adoption date of the Plan by the Employer,
but prior to the adoption of this exclusion by the Employer, shall continue to
be deemed to be an Employee and will continue to receive benefits on the same
basis as a salaried Member, despite classification as a non-salaried Employee.
SECTION 2.5 COMMENCEMENT OF PARTICIPATION
Every eligible Employee (other than non-salaried or such other Employees who, at
the election of the Employer, are excluded from participation) shall commence
participation in the Plan on the later of:
(1) The Employer's Commencement Date, or
(2) The first day of the month or calendar quarter (as designated by
the Employer in the Adoption Agreement) coinciding with or next
following his satisfaction of the eligibility requirements as
specified in the Adoption Agreement.
The date that participation commences shall be hereinafter referred to as the
Enrollment Date. Notwithstanding the above, no Employee shall under any
circumstances become a Member unless and until his enrollment application is
filed with, and accepted by, the Plan Administrator. The Plan Administrator
shall notify each Employee of his eligibility for membership in the Plan and
shall furnish him with an enrollment application in order that he may elect to
make or receive contributions on his behalf under Article III at the earliest
possible date consonant with this Article.
If an Employee fails to complete the enrollment form furnished to him, the Plan
Administrator shall do so on his behalf. In the event the Plan Administrator
processes the enrollment form on behalf of the Employee, the Employee shall be
deemed to have elected not to make any contributions and/or elective deferrals
under the Plan, if applicable.
In the event a Member is no longer a member of an eligible class of employees
and becomes ineligible to participate but has not incurred a break in service,
such Employee will
13
participate immediately upon returning to an eligible class of employees. If
such Member incurs a break in service, eligibility will be determined under the
break in service rules of the Plan.
In the event an Employee who is not a member of an eligible class of employees
becomes a member of an eligible class, such Employee will participate
immediately if such Employee has satisfied the minimum age and service
requirements and would have otherwise previously become a Member.
SECTION 2.6 TERMINATION OF PARTICIPATION
Membership under all features and provisions of the Plan shall terminate upon
the earlier of (a) a Member's termination of Employment and payment to him of
his entire vested interest, or (b) his death.
14
ARTICLE III
CONTRIBUTIONS
SECTION 3.1 CONTRIBUTIONS BY MEMBERS
If the Adoption Agreement so provides, each Member may elect to make
non-deductible, after-tax contributions under the Plan, based on increments of
1% of his Salary, provided the amount thereof, when aggregated with the amount
of any pre-tax effective deferrals, does not exceed the limit established by the
Employer in the Adoption Agreement. All such after-tax contributions shall be
separately accounted for, nonforfeitable and distributed with and in addition to
any other benefit to which the Member is entitled hereunder. A Member may change
his contribution rate as designated in the Adoption Agreement, but reduced or
suspended contributions may not subsequently be made up.
SECTION 3.2 ELECTIVE DEFERRALS BY MEMBERS
If the Adoption Agreement so provides, each Member may elect to make pre-tax
elective deferrals (401(k) deferrals) under the Plan, based on increments of 1%
of his Salary, provided the amount thereof, when aggregated with the amount of
any after-tax contributions, does not exceed the limit established by the
Employer in the Adoption Agreement. Alternatively, a Member may elect to
contribute for a Plan Year a dollar amount which does not exceed the maximum
amount permitted under this Section 3.2 or the limit established by the Employer
in the Adoption Agreement for such Plan Year and a pro-rata portion shall be
withheld from each payment of Salary to such Member for the balance of the Plan
Year remaining after the election takes effect. All such 401(k) deferrals shall
be separately accounted for, nonforfeitable and distributed under the terms and
conditions described under Article VII with and in addition to any other benefit
to which the Member is entitled hereunder. A Member may change his 401(k)
deferral rate or suspend his 401(k) deferrals as designated in the Adoption
Agreement, but reduced or suspended deferrals may not subsequently be made up.
Notwithstanding any other provision of the Plan, no Member may make 401(k)
deferrals during any Plan Year in excess of $7,000 multiplied by the adjustment
factor as provided by the Secretary of the Treasury. The adjustment factor shall
mean the cost of living adjustment factor prescribed by the Secretary of the
Treasury under Section 402(g)(5) of the Code for years beginning after December
31, 1987, as applied to such items and in such manner as the Secretary shall
provide. In the event that the aggregate amount of
15
such 401(k) deferrals for a Member exceeds the limitation in the previous
sentence, the amount of such excess, increased by any income and decreased by
any losses attributable thereto, shall be refunded to such Member no later than
the April 15 of the Plan Year following the Plan Year for which the 401(k)
deferrals were made. If a Member also participates, in any Plan Year, in any
other plans subject to the limitations set forth in Section 402(g) of the Code
and has made excess 401(k) deferrals under this Plan when combined with the
other plans subject to such limits, to the extent the Member, in writing
designates to the TPA any 401(k) deferrals under this Plan as excess deferrals
by no later than the March 1 of the Plan Year following the Plan Year for which
the 401(k) deferrals were made, the amount of such designated excess, increased
by any income and decreased by any losses attributable thereto, shall be
refunded to the Member no later than the April 15 of the Plan Year following the
Plan Year for which the 401(k) deferrals were made.
SECTION 3.3 TRANSFER OF FUNDS AND ROLLOVER CONTRIBUTIONS BY MEMBERS
Each Member may elect to make, directly or indirectly, a rollover contribution
to the Plan of amounts held on his behalf in (i) an employee benefit plan
qualified under Section 401(a) of the Code, or (ii) an individual retirement
account or annuity as described in Section 408(d)(3) of the Code. All such
amounts shall be certified in form and substance satisfactory to the Plan
Administrator by the Member as being all or part of an eligible "rollover
distribution" or a "rollover contribution" within the meaning of Section
402(c)(4) or Section 408(d)(3), respectively, of the Code. Such rollover
amounts, along with the earnings related thereto, will be accounted for
separately from any other amounts in the Member's Account. A Member shall have a
nonforfeitable vested interest in all such rollover amounts.
The Employer may, at its option, permit Employees who have not satisfied the
eligibility requirements designated in the Adoption Agreement to make a rollover
contribution to the Plan.
The Trustee of the Plan may also accept a direct transfer of funds, which meets
the requirements of Section 1.411(d)-4 of the IRS Regulations, from a plan which
the Trustee reasonably believes to be qualified under Section 401(a) of the Code
in which an Employee was, is, or will become, as the case may be, a participant.
If the funds so directly transferred are transferred from a retirement plan
subject to Code Section 401(a)(11), then such funds shall be accounted for
separately and any subsequent distribution of those
16
funds, and earnings thereon, shall be subject to the provisions of Section 7.3
which are applicable when an Employer elects to provide an annuity option under
the Plan.
SECTION 3.4 EMPLOYER CONTRIBUTIONS - GENERAL
The Employer may elect to make regular or discretionary contributions under the
Plan. Such Employer contributions may be in the form of (i) matching
contributions, (ii) basic contributions, (iii) safe harbor CODA contributions
and/or (iv) profit sharing contributions as designated by the Employer in the
Adoption Agreement and/or (i) supplemental contributions and/or (ii) qualified
nonelective contributions as permitted under the Plan. Each such contribution
type shall be separately accounted for by the TPA.
SECTION 3.5 EMPLOYER MATCHING CONTRIBUTIONS
The Employer may elect to make regular matching contributions under the Plan.
Such matching contributions on behalf of any Member shall be conditioned upon
the Member making after-tax contributions under Section 3.1 and/or 401(k)
deferrals under Sections 3.2 and 3.9.
If so adopted, the Employer shall contribute under the Plan on behalf of each of
its Members an amount equal to a percentage (as specified by the Employer in the
Adoption Agreement) of the Member's after-tax contributions and/or 401(k)
deferrals not in excess of a maximum percentage as specified by the Employer in
the Adoption Agreement (in increments of 1%) of his Salary. The percentage
elected by the Employer shall based on a formula not to exceed 200% or in
accordance with one of the schedules of matching contribution formulas listed
below, and must be uniformly applicable to all Members.
Years of Employment Matching %
-------------------------- ----------
Formula Step 1 Less than 3 50%
At least 3 but less than 5 75%
5 or more 100%
Formula Step 2 Less than 3 100%
At least 3 but less than 5 150%
5 or more 200%
SECTION 3.6 EMPLOYER BASIC CONTRIBUTIONS
17
The Employer may elect to make regular basic contributions under the Plan. Such
basic contributions on behalf of any Member shall not be conditioned upon the
Member making after-tax contributions and/or (401(k) deferrals under this
Article III. If so adopted, the Employer shall contribute to the Plan on behalf
of each Member (as specified by the Employer in the Adoption Agreement) an
amount equal to a percentage not to exceed 15% (as specified by the Employer in
the Adoption Agreement) in increments of 1% of the Member's Salary. The
percentage elected by the Employer shall be uniformly applicable to all Members.
The Employer may elect, if basic contributions are made on behalf of its Members
on a monthly basis, to restrict the allocation of such basic contribution to
those Members who were employed with the Employer on the last day of the month
for which the basic contribution is made.
SECTION 3.7 SUPPLEMENTAL CONTRIBUTIONS BY EMPLOYER
An Employer may, at its option, make a supplemental contribution under Formula
(1) or (2) below:
FORMULA (1) A uniform percentage (as specified by the Employer) of each
Member's contributions not in excess of a maximum percentage (if
the Employer elects to impose such a maximum) of the Member's
Salary which were received by the Plan during the Plan Year with
respect to which the supplemental contribution relates. If the
Employer elects to make such a supplemental contribution, it shall
be made on or before the last day of the second month in the Plan
Year following the Plan Year described in the preceding sentence
on behalf of all those Members who were employed with the Employer
on the last working day of the Plan Year with respect to which the
supplemental contribution relates.
FORMULA (2) A uniform dollar amount per Member or a uniform percentage
(limited to a specific dollar amount, if elected by the Employer)
of each Member's Salary for the Plan Year (or, at the election of
the Employer, the Employer's fiscal year) to which the
supplemental contribution relates. If the Employer elects to make
such a supplemental contribution, it shall be made within the time
prescribed by law, including extensions of time, for filing of the
Employer's federal income tax return on behalf of all those
Members who were employed with the Employer on the last working
day of the Plan Year (or the fiscal year) to which the
supplemental contribution relates. The
18
Employer may, at its option, elect to make a contribution under
this paragraph to only those Members whose Salary is less than an
amount to be specified by the Employer to the extent that such
Salary limit is less than the dollar amount under Section 414(q)
of the Code for such year. The percentage contributed under this
Formula (2) shall be limited in accordance with the Employer's
matching formula and basic contribution rate, if any, under this
Article such that the sum of the Employer's Formula (2)
supplemental contribution plus all other Employer contributions
under this Article shall not exceed 15% of Salary for such year.
SECTION 3.8 THE PROFIT SHARING FEATURE
An Employer may, at its option, adopt the Profit Sharing Feature as described
herein, subject to any other provisions of the Plan, where applicable. This
Feature may be adopted either in lieu of, or in addition to, any other Plan
Feature contained in this Article III. The Profit Sharing Feature is designed to
provide the Employer a means by which to provide discretionary contributions on
behalf of Employees eligible under the Plan.
If this Profit Sharing Feature is adopted, the Employer may contribute on behalf
of each of its eligible Members, on an annual (or at the election of the
Employer, quarterly) basis for any Plan Year or fiscal year of the Employer (as
the Employer shall elect), a discretionary amount not to exceed the maximum
amount allowable as a deduction to the Employer under the provisions of Section
404 of the Code, and further subject to the provisions of Article X.
Any such profit sharing contribution must be received by the Trustee within the
time prescribed by law, including extensions of time, for filing of the
Employer's federal income tax return following the close of the Contribution
Determination Period on
19
behalf of all those Members who are entitled to an allocation of such profit
sharing contribution as set forth in the Adoption Agreement. For purposes of
making the allocations described in this paragraph, a Member who is on a Type 1
nonmilitary Leave of Absence (as defined in Sections 1.2(W) and 10.8(B)(1)) or a
Type 4 military Leave of Absence (as defined in Sections 1.2(W) and 10.8(B)(4))
shall be treated as if he were a Member who was an Employee in Employment on the
last day of such Contribution Determination Period.
Profit sharing contributions shall be allocated to each Member's Account for the
Contribution Determination Period at the election of the Employer, in accordance
with one of the following options:
Profit Sharing Formula 1 - In the same ratio as each Member's Salary during
such Contribution Determination Period bears to
the total of such Salary of all Members.
Profit Sharing Formula 2 - In the same ratio as each Member's Salary for the
portion of the Contribution Determination Period
during which the Member satisfied the Employer's
eligibility requirement(s) bears to the total of
such Salary of all Members.
The Employer may integrate the Profit Sharing Feature with Social Security in
accordance with the following provision. The annual (or quarterly, if
applicable) profit sharing contributions for any Contribution Determination
Period (which period shall include, for the purposes of the following maximum
integration levels provided hereunder where the Employer has elected quarterly
allocations of contributions, the four quarters of a Plan Year or fiscal year)
shall be allocated to each Member's Account at the election of the Employer, in
accordance with one of the following options:
Profit Sharing Formula 3 - In a uniform percentage (as specified by the
Employer in the Adoption Agreement) of each
Member's Salary during the Contribution
Determination Period (the "Base Contribution
Percentage"), plus a uniform percentage (as
specified by the Employer in the Adoption
Agreement) of each Member's Salary for the
Contribution Determination Period in excess of the
Social Security Taxable Wage Base for such
Contribution Determination Period (the "Excess
Contribution Percentage").
20
Profit Sharing Formula 4 - In a uniform percentage (as specified by the
Employer in the Adoption Agreement) of each
Member's Salary for the portion of the
Contribution Determination Period during which the
Member satisfied the Employer's eligibility
requirement(s), if any, up to the Base
Contribution Percentage for such Contribution
Determination Period, plus a uniform percentage
(as specified by the Employer in the Adoption
Agreement) of each Member's Salary for the portion
of the Contribution Determination Period during
which the Member satisfied the Employer's
eligibility requirement(s), equal to the Excess
Contribution Percentage.
The Excess Contribution Percentage described in Profit Sharing Formulas 3 and 4
above may not exceed the lesser of (i) the Base Contribution Percentage, or (ii)
the greater of (1) 5.7% or (2) the percentage equal to the portion of the Code
Section 3111(a) tax imposed on employers under the Federal Insurance
Contributions Act (as in effect as of the beginning of the Plan Year) which is
attributable to old-age insurance. For purposes of this Subparagraph,
"compensation" as defined in Section 414(s) of the Code shall be substituted for
"Salary" in determining the Excess Contribution Percentage and the Base
Contribution Percentage.
Notwithstanding the foregoing, the Employer may not adopt the Social Security
integration options provided above if any other integrated defined contribution
or defined benefit plan is maintained by the Employer during any Contribution
Determination Period.
SECTION 3.9 THE 401(K) FEATURE
The Employer may, at its option, adopt the 401(k) Feature described hereunder
and in Section 3.2 above for the exclusive purpose of permitting its Members to
make 401(k) deferrals to the Plan.
The Employer may make, apart from any matching contributions it may elect to
make, Employer qualified nonelective contributions as defined in Section
1.401(k)-1(g)(13) of the Regulations. The amount of such contributions shall not
exceed 15% of the Salary of all Members eligible to share in the allocation when
combined with all Employer contributions (including 401(k) elective deferrals)
to the Plan for such Plan Year. Allocation of such contributions shall be made,
at the election of the Employer, to the accounts of (i) all
21
Members, or (ii) only Members who are not Highly Compensated Employees.
Allocation of such contributions shall be made, at the election of the Employer,
in the ratio (i) which each eligible Member's Salary for the Plan Year bears to
the total Salary of all eligible Members for such Plan Year, or (ii) which each
eligible Member's Salary not in excess of a fixed dollar amount specified by the
Employer for the Plan Year bears to the total Salary of all eligible Members
taking into account Salary for each such Member not in excess of the specified
dollar amount. Notwithstanding any provision of the Plan to the contrary, such
contributions shall be subject to the same vesting requirements and distribution
restrictions as Members' 401(k) deferrals and shall not be conditioned on any
election or contribution of the Member under the 401(k) feature. Any such
contributions must be made on or before the last day of the second month after
the Plan Year to which the contribution relates. Further, for purposes of the
actual deferral percentage or actual contribution percentage tests described
below, the Employer may apply (in accordance with applicable Regulations) all or
any portion of the Employer qualified nonelective contributions for the Plan
Year toward the satisfaction of the actual deferral percentage test. Any
remaining Employer qualified nonelective contributions not utilized to satisfy
the actual deferral percentage test may be applied (in accordance with
applicable Regulations) to satisfy the actual contribution percentage test.
Effective for Plan Years beginning after December 31, 1996, the actual deferral
percentages for Highly Compensated Employees shall, in accordance with the Code
and IRS Regulations, satisfy either (i) or (ii) as follows:
(i) Prior Year Testing:
Notwithstanding any other provision of this 401(k) Feature, the actual
deferral percentage for a Plan Year for Members who are Highly Compensated
Employees for such Plan Year and the prior year's actual deferral
percentage for Members who were Non-Highly Compensated Employees for the
prior Plan Year must satisfy one of the following tests:
(a) the actual deferral percentage for a Plan Year for Members who are
Highly Compensated Employees for the Plan Year shall not exceed the
prior year's actual deferral percentage of those Members who are not
Highly Compensated Employees for the prior Plan Year multiplied by
1.25; or
(b) the actual deferral percentage for a Plan Year for Members who are
Highly Compensated Employees for the Plan Year shall not exceed the
prior year's actual deferral percentage for Members who were
Non-Highly Compensated
22
Employees for the prior Plan Year multiplied by 2.0, provided that the
actual deferral percentage for Members who are Highly Compensated
Employees does not exceed the actual deferral percentage for Members
who were Non-Highly Compensated Employees in the prior Plan Year by
more than 2 percentage points. This determination shall be made in
accordance with the procedure described in Section 3.10 below.
For the first Plan Year that the Plan permits any Member to make elective
deferrals and this is not a successor plan, for purposes of the foregoing
tests, the prior year's Non-Highly Compensated Employees' actual deferral
percentage shall be 3 percent unless the Employer has elected in the
Adoption Agreement to use the current Plan Year's actual deferral
percentage for these Members. The Employer may elect in the Adoption
Agreement to change from the Prior Year Testing method to the Current Year
Testing method in accordance with the Code and IRS Regulations.
(ii) Current Year Testing:
If elected by the Employer in the Adoption Agreement, the actual deferral
percentage tests in (a) and (b) above, will be applied by comparing the
current Plan Year's actual deferral percentage for Members who are Highly
Compensated Employees for such Plan Year with the current Plan Year's
actual deferral percentage for Members who are Non-Highly Compensated
Employees for such year. Once made, this election can only be changed and
the Prior Year Testing method applied if the Plan meets the requirements
for changing to Prior Year Testing set forth in IRS Notice 98-1 (or
superseding guidance).
A Member is a Highly Compensated Employee for a particular Plan Year if he meets
the definition of a Highly Compensated Employee in effect for that Plan Year.
Similarly, a Member is a Non-highly Compensated Employee for a particular Plan
Year if he does not meet the definition of a Highly Compensated Employee in
effect for that Plan Year.
SECTION 3.10 DETERMINING THE ACTUAL DEFERRAL PERCENTAGES
For purposes of this 401(k) Feature, the actual deferral percentage for a Plan
Year means, for a specified group of Members for a Plan Year, the average of the
ratios (calculated separately for each Member in such group) of (a) the amount
of 401(k) deferrals (including, as provided in Section 3.9, any Employer
qualified nonelective contributions) made to the
23
Member's account for the Plan Year, to (b) the amount of the Member's
compensation (as defined in Section 414(s) of the Code) for the Plan Year or,
alternatively, where specifically elected by the Employer, for only that part of
the Plan Year during which the Member was eligible to participate in the Plan.
An Employee's actual deferral percentage shall be zero if no 401(k) deferral
(or, as provided in Section 3.9, Employer qualified nonelective contribution) is
made by him or on his behalf for such applicable Plan Year. If the Plan and one
or more other plans which include cash or deferred arrangements are considered
as one plan for purposes of Sections 401(a)(4) and 410(b) of the Code, the cash
or deferred arrangements included in such plans shall be treated as one
arrangement for purposes of this 401(k) Feature.
The TPA shall determine as of the end of the Plan Year whether one of the actual
deferral percentage tests specified in Section 3.9 above is satisfied for such
Plan Year. This determination shall be made after first determining the
treatment of excess deferrals within the meaning of Section 402(g) of the Code
under Section 3.2 above. In the event that neither of such actual deferral
percentage tests is satisfied, the TPA shall, to the extent permissible under
the Code and the IRS Regulations, refund the excess contributions for the Plan
Year in the following order of priority: by (i) refunding such amounts deferred
by the Member which were not matched by his Employer (and any earnings and
losses allocable thereto), and (ii) refunding amounts deferred for such Plan
Year by the Member (and any earnings and losses allocable thereto), and, to the
extent permitted under the Code and applicable IRS Regulations, forfeiting
amounts contributed for such Plan Year by the Employer with respect to the
Member's 401(k) deferrals that are returned pursuant to this Paragraph (and any
earnings and losses allocable thereto).
The distribution of such excess contributions shall be made to Highly
Compensated Employees to the extent practicable before the 15th day of the third
month immediately following the Plan Year for which such excess contributions
were made, but in no event later than the end of the Plan Year following such
Plan Year or, in the case of the termination of the Plan in accordance with
Article XI, no later than the end of the twelve-month period immediately
following the date of such termination.
For purposes of this 401(k) Feature, "excess contributions" means, with respect
to any Plan Year, the excess of the aggregate amount of 401(k) deferrals (and
any other amounts contributed by the Employer that are taken into account in
determining the actual deferral percentage of Highly Compensated Employees for
such Plan Year) (collectively, "401(k)
24
amounts") made to the accounts of Highly Compensated Employees for such Plan
Year, over the maximum amount of such deferrals that could be made by such
Members without violating the requirements described above. The excess
contributions to be distributed shall be determined by reducing 401(k) amounts
made by or on behalf of Highly Compensated Employees beginning with the Highly
Compensated Employee with the largest 401(k) amounts for the Plan Year until
such amount is reduced to be equal to the Highly Compensated Employee with the
next largest 401(k) amount. The procedure described in the preceding sentence
shall be repeated until all excess contributions have been eliminated and, as
applicable, refunded.
Where an Employer has elected, in the Adoption Agreement, to allow Member
contributions, a Member may treat excess contributions allocated to him as an
amount distributed to the Member and then contributed by the Member to the Plan.
Recharacterized amounts will remain nonforfeitable. Amounts may not be
recharacterized by a Highly Compensated Employee to the extent that such amount
in combination with other Employee contributions made by that Employee would
exceed any stated limit under the Plan on Employee contributions.
Recharacterization must occur no later than 2 1/2 months after the last day of
the Plan Year in which such excess contributions arose and is deemed to occur no
earlier than the date the last Highly Compensated Employee is informed in
writing of the amount recharacterized and the consequences thereof.
Recharacterized amounts will be taxable to the Member for the Member's taxable
year in which the Member would have received them in cash.
SECTION 3.11 DETERMINING THE ACTUAL CONTRIBUTION PERCENTAGES
Notwithstanding any other provision of this Section 3.11, effective for Plan
Years beginning after December 31, 1996, the actual contribution percentage for
the Plan Year for Highly Compensated Employees shall, in accordance with the
Code and IRS Regulations, satisfy either (i) or (ii) as follows:
(i) Prior Year Testing
(a) the actual contribution percentage for a Plan Year for Members who
are Highly Compensated Employees for the Plan Year shall not exceed
the prior Plan
Year's actual contribution percentage for Members who were Non-Highly
Compensated Employees for the prior Plan Year multiplied by 1.25, or
25
(b) the actual contribution percentage for Members who are Highly
Compensated Employees for the Plan Year shall not exceed the prior
year's actual contribution percentage for Members who were Non-Highly
Compensated Employees for the prior Plan Year multiplied by 2,
provided that the actual contribution percentage for Members who are
Highly Compensated Employees does not exceed the actual contribution
percentage for Members who were Non-Highly Compensated Employees in
the prior Plan Year by more than 2 percentage points.
For the first Plan Year this Plan permits any Member to make after-tax
contributions pursuant to Section 3.1, provides for Employer matching
contributions (pursuant to Section 3.5), or both, and this is not a
successor plan, for purposes of the foregoing tests, the prior Plan Year's
Non-Highly Compensated Employees' actual contribution percentage shall be 3
percent unless the Employer has elected in the Adoption Agreement to use
the current Plan Year's actual contribution percentage for these Members.
(ii) Current Year Testing
If elected by the Employer in the Adoption Agreement, the actual
contribution percentage tests in (a) and (b), above, will be applied by
comparing the current Plan Year's actual contribution percentage for
Members who are Highly Compensated Employees for such Plan Year with the
current Plan Year's actual contribution percentage for Members who are
Non-Highly Compensated Employees for such year. Once made, this election
can only be changed and the Prior Year Testing method applied if the Plan
meets the requirements for changing to Prior Year Testing set forth in IRS
Notice 98-1 (or superseding guidance).
For purposes of this Article III, the "actual contribution percentage" for
a Plan Year means for a specified group of Employees, the average of the
ratios (calculated separately for each Employee in such group) of (A) the
sum of (i) Member after-tax contributions credited to his Account for the
Plan Year, (ii) Employer matching contributions and/or supplemental
contributions under Formula 1 credited to his Account as described in this
Article for the Plan Year, and (iii) in accordance with and to the extent
permitted by the IRS Regulations, 401(k) deferrals (and, as provided in
Section 3.9, any Employer qualified nonelective contributions) credited to
his Account, to (B) the amount of the Member's compensation (as defined in
26
Section 414(s) of the Code) for the Plan Year or, alternatively, where
specifically elected by the Employer, for only that part of the Plan Year
during which the Member was eligible to participate in the Plan. An
Employee's actual contribution percentage shall be zero if no such
contributions are made by him or on his behalf for such Plan Year.
The TPA shall determine as of the end of the Plan Year whether one of the
actual contribution percentage tests specified above is satisfied for such
Plan Year. This determination shall be made after first determining the
treatment of excess deferrals within the meaning of Section 402(g) of the
Code under Section 3.2 above and then determining the treatment of excess
contributions under Section 3.10 above. In the event that neither of the
actual contribution percentage tests is satisfied, the TPA shall (i) refund
the excess aggregate contributions to the extent attributable to Member
after-tax contributions and vested matching contributions for which the
underlying Member after-tax contributions or 401(k) deferrals are not
subject to correction under the actual deferral percentage or actual
contribution percentage tests for such year (and any income related
thereto) and (ii) forfeit the excess aggregate contributions to the extent
attributable to non-vested Employer matching contributions and vested
Employer matching contributions for which the underlying Member after-tax
contributions or 401(k) deferrals are subject to correction under the
actual deferral percentage or actual contribution percentage tests for such
year (and any income related thereto), in the manner described below.
For purposes of this Article III, "excess aggregate contributions" means,
with respect to any Plan Year and with respect to any Member, the excess of
the aggregate amount of contributions (and any earnings and losses
allocable thereto) made as (i) Member after-tax contributions credited to
his Account for the Plan Year, (ii) Employer matching contributions and/or
supplemental contributions under Formula 1 credited to his Account as
described in this Article for the Plan Year, and (iii) in accordance with
and to the extent permitted by the IRS Regulations, 401(k) deferrals (and,
as provided in Section 3.9, any Employer qualified nonelective
contributions) credited to his Account (if the Plan Administrator elects to
take into account such deferrals and contributions when calculating the
actual contribution percentage) of Highly Compensated Employees for such
Plan Year, over the maximum amount of such contributions that could be made
as Employer
27
contributions, Member contributions and 401(k) deferrals of such Members
without violating the requirements of any Subparagraph of this Section
3.11.
To the extent excess aggregate contributions must be refunded or forfeited
for a Plan Year, such excess amounts will be refunded (or, as applicable,
forfeited) first to the Highly Compensated Employees with the largest
Contribution Percentage Amounts (as defined below) taken into account in
calculating the actual contribution percentage test for the year the excess
arose and continuing in descending order until all the excess aggregate
contributions are refunded (or, as applicable, forfeited). For purposes for
the preceding sentence, the "largest amount" is determined after
distribution of any excess aggregate contributions. For purposes of this
paragraph, "Contribution Percentage Amounts" means the sum of Member
after-tax contributions, Employer matching contributions, Employer
supplemental contributions under Formula (1), and qualified matching
contributions ( to the extent not taken into account for purposes of the
actual deferral percentage test) made under the Plan on behalf of the
Member for the Plan Year. However, such Contribution Percentage Amounts
shall not include Employer matching contributions that are forfeited either
to correct excess aggregate contributions or because the contributions to
which they relate are excess deferrals, excess contributions or excess
aggregate contributions. The refund or forfeiture of such excess aggregate
contributions shall be made with respect to such Highly Compensated
Employees to the extent practicable before the 15th day of the third month
immediately following the Plan Year for which such excess aggregate
contributions were made, but in no event later than the end of the Plan
Year following such Plan Year or, in the case of the termination of the
Plan in accordance with Article XI, no later than the end of the
twelve-month period immediately following the date of such termination.
For purposes of this Section, the contribution percentage (which shall mean
the ratio of the Member's Contribution Percentage Amounts to the Member's
compensation for the Plan Year) for any Member who is a Highly Compensated
Employee and who is eligible to have Contribution Percentage Amounts
allocated to his account under two or more plans described in Section
401(a) of the Code, or arrangements described in Section 401(k) of the Code
that are maintained by the Employer, shall be determined as if the total of
such Contribution Percentage Amounts was made under each plan. If a Highly
Compensated Employee
28
participates in two or more cash or deferred arrangements that have
different plan years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be treated as separate
if mandatorily disaggregated under regulations under Section 401(m) of the
Code.
In the event that this plan satisfies the requirements of Sections 401(m),
401(a)(4) or 410(b) of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements of such
Sections of the Code only if aggregated with this Plan, then this Section
shall be applied by determining the actual contribution percentage of
employees as if all such plans were a single plan. Any adjustments to the
Non-highly Compensated Employee actual contribution percentage for the
prior year will be made in accordance with IRS Notice 98-1 and any
superseding guidance, unless the Employer has elected in the Adoption
Agreement to use the Current Year Testing method. Plans may be aggregated
in order to satisfy Section 401(m) of the Code only if they have the same
Plan Year and use the same actual contribution percentage testing method.
For purposes of the actual contribution percentage test, Employee
contributions are considered to have been made in the Plan Year in which
contributed to the trust. Matching contributions and qualified nonelective
contributions will be considered made for a Plan Year if made no later than
the end of the 12-month period beginning on the day after the close of the
Plan Year.
The Employer shall maintain records sufficient to demonstrate satisfaction
of the actual contribution percentage test and the amount of qualified
nonelective contributions used in such test.
A Member is a Highly Compensated Employee for a particular Plan Year if he meets
the definition of a Highly Compensated Employee in effect for that Plan Year.
Similarly, a Member is a Non-highly Compensated Employee for a particular Plan
Year if he does not meet the definition of a Highly Compensated Employee in
effect for that Plan Year.
SECTION 3.12 THE AGGREGATE LIMIT TEST
Notwithstanding any other provision of the Plan, effective for Plan Years
beginning after December 31, 1996, the sum of the actual deferral percentage and
the actual contribution
29
percentage determined in accordance with the procedures described above of those
Employees who are Highly Compensated Employees may not exceed the aggregate
limit as determined below.
For purposes of this Article III, the "aggregate limit" for a Plan Year is the
greater of:
(1) The sum of:
(a) 1.25 times the greater of the actual deferral percentage of the
Non-Highly Compensated Employees for the prior Plan Year or the
actual contribution percentage of the Non-Highly Compensated
Employees for the Plan Year, and
(b) two percentage points plus the lesser of the actual deferral
percentage or actual contribution percentage referred to in (a)
above. In no event, however, shall the percentages described in
the preceding sentence exceed two times the lesser of the
relevant actual deferral percentage or the relevant actual
contribution percentage; or
(2) The sum of:
(a) 1.25 times the lesser of the actual deferral percentage of the
Non-Highly Compensated Employees for the prior Plan Year or the
actual contribution percentage of the Non-Highly Compensated
Employees for the Plan Year, and
(b) two percentage points plus the greater of the actual deferral
percentage or the actual contribution percentage referred to in
(a) above. In no event, however, shall the percentage described
in the preceding sentence exceed two times the greater of the
relevant actual deferral percentage or the relevant actual
contribution percentage; provided, however, that if a less
restrictive limitation is prescribed by the IRS, such limitation
shall be used in lieu of the foregoing. The calculation of the
aggregate limit, as defined above, shall be determined in
accordance with the Code and the IRS Regulations.
The TPA shall determine as of the end of the Plan Year whether the aggregate
limit has been exceeded. This determination shall be made after first
determining the treatment of excess deferrals within the meaning of Section
402(g) of the Code under Section 3.2
30
above, then determining the treatment of excess contributions under Section 3.10
above, and then determining the treatment of excess aggregate contributions
under this Article III. In the event that the aggregate limit is exceeded, the
actual contribution percentage of those Employees who are Highly Compensated
Employees shall be reduced in the same manner as described in Section 3.11 of
this Article until the aggregate limit is no longer exceeded, unless the TPA
designates, in lieu of the reduction of the actual contribution percentage, a
reduction in the actual deferral percentage of those Employees who are Highly
Compensated Employees, which reduction shall occur in the same manner as
described in Section 3.10 of this Article until the aggregate limit is no longer
exceeded. Notwithstanding the provisions of Sections 3.2 and 3.10 above, the
amount of excess contributions to be distributed, with respect to a Member for a
Plan Year, shall be reduced by any excess deferrals distributed to such Member
for such Plan Year.
If the Employer has elected in the Adoption Agreement to use the Current Year
Testing method, then, in calculating the aggregate limit for a particular Plan
Year, the Non-Highly Compensated Employees' actual deferral percentage and
actual contribution percentage for that Plan Year, instead of the prior Plan
Year, is used.
SECTION 3.13 REMITTANCE OF CONTRIBUTIONS
The contributions of both the Employer and the Plan Members shall be recorded by
the Employer and remitted to the TPA for transmittal to the Trustee or custodian
or directly to the Trustee or custodian so that (i) in the case of Employer
contributions the Trustee or custodian shall be in receipt thereof by the 15th
day of the month next following the month in respect of which such contributions
are payable and (ii) in the case of Member after-tax contributions and 401(k)
deferrals, the Trustee or custodian shall be in receipt thereof by the 15th
business day of the month following the month in which the Member contributions
are received by the Employer or the 15th business day of the month following the
month in which such amount would otherwise have been payable to the Member in
cash. Such amounts shall be used to provide additional Units pursuant to Article
V.
31
SECTION 3.14 SAFE HARBOR CODA
If the Employer has elected the safe harbor CODA option in the Adoption
Agreement, the provisions of this Section 3.14 shall apply for the Plan Year and
any provisions relating to the actual deferral percentage test described in
ss.401(k)(3) of the Code or the actual contribution percentage test described in
ss.401(m)(2) of the Code do not apply. To the extent that any other provision of
the Plan is inconsistent with the provisions of this Section, the provisions of
this Section govern.
(A) Actual Deferral Percentage Test Safe Harbor
(1) Unless the Employer elects in the Adoption Agreement to make
Enhanced Matching Contributions (as provided in the Adoption
Agreement) or safe harbor nonelective contributions, the Employer will
contribute monthly or on another periodic basis for the Plan Year a
safe harbor matching contribution to the Plan on behalf of each
eligible Employee equal to (i) 100 percent of the amount of the
Employee's 401(k) deferrals that do not exceed 3 percent of the
Employee's Salary for the Plan Year, plus (ii) 50 percent of the
amount of the Employee's 401(k) deferrals that exceed 3 percent of the
Employee's Salary but that do not exceed 5 percent of the Employee's
Salary ("Basic Matching Contributions").
(2) The Member's benefit derived from ADP Test Safe Harbor
Contributions is nonforfeitable and may not be distributed earlier
than separation from service, death, disability, an event described in
ss.401(k)(10) of the Code, or the attainment of age 59 1/2. In
addition, such contributions must satisfy the ADP Test Safe Harbor
without regard to permitted disparity under ss.401(l) of the Code.
(3) At least 30 days, but not more than 90 days, before the beginning
of the Plan Year, the Employer will provide each Eligible Employee a
comprehensive notice of the Employee's rights and obligations under
the Plan, written in a manner calculated to be understood by the
average Eligible Employee. If an Employee becomes eligible after the
90th day before the beginning of the Plan Year and does not receive
the notice for that reason, the notice must be provided no more than
90 days before the Employee becomes eligible but not later than the
date the Employee becomes eligible.
32
(4) In addition to any other election periods provided under the Plan,
each Eligible Employee may make or modify a deferral election during
the 30-day period immediately following receipt of the notice
described above.
33
ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
SECTION 4.1 INVESTMENT BY TRUSTEE OR CUSTODIAN
All contributions to the Plan shall, upon receipt by the TPA, be delivered to
the Trustee or custodian to be held in the Trust Fund and invested and
distributed by the Trustee or custodian in accordance with the provisions of the
Plan and Trust Agreement. The Trust Fund shall consist of one or more of the
Investment Funds or other applicable investment vehicles designated by the
Employer in the Adoption Agreement.
With the exception of the Employer Stock Fund or, if applicable, the Employer
Certificate of Deposit Fund, the Trustee may in its discretion invest any
amounts held by it in any Investment Fund in any commingled or group trust fund
described in Section 401(a) of the Code and exempt under Section 501(a) of the
Code or in any common trust fund exempt under Section 584 of the Code, provided
that such trust fund satisfies any requirements of the Plan applicable to such
Investment Funds. To the extent that the Investment Funds are at any time
invested in any commingled, group or common trust fund, the declaration of trust
or other instrument pertaining to such fund and any amendments thereto are
hereby adopted as part of the Plan.
The Employer will designate in the Adoption Agreement which of the Investment
Funds or other applicable investment vehicles will be made available to Members
and the terms and conditions under which such Funds will operate with respect to
employee direction of allocations to and among such designated Funds and the
types of contributions and/or deferrals eligible for investment therein.
To the extent made available under the Plan, the Employer may elect, in the
Adoption Agreement, to allow Members to direct the investment of their Accounts,
pursuant to, and in accordance with, such rules and procedures as may be
prescribed by the Employer or the Plan Sponsor, to a self-directed brokerage
account. Where an Employer elects to provide a self-directed brokerage account
under the Plan, the Trustee may invest amounts held by it in a self-directed
brokerage account maintained by Charles Schwab & Co., Inc. (or any other entity
which provides a self-directed brokerage account) on behalf of Plan Members who
elect to utilize such investment vehicle.
34
SECTION 4.2 MEMBER DIRECTED INVESTMENTS
To the extent permitted by the Employer as set forth in the Adoption Agreement,
each Member shall direct in writing that his contributions and deferrals, if
any, and the contributions made by the Employer on his behalf shall be invested
(a) entirely in any one of the investment vehicles made available by the
Employer, or (b) among the available investment vehicles in any combination of
multiples of 1%. If a Member has made any Rollover contributions in accordance
with Article III, Section 3.3, such Member may elect to apply separate
investment directions to such rollover amounts. Any such investment direction
shall be followed by the TPA until changed. Subject to the provisions of the
following paragraphs of this Section, as designated in the Adoption Agreement, a
Member may change his investment direction as to future contributions and also
as to the value of his accumulated Units in each of the available investments by
filing written notice with the TPA. Such directed change(s) will become
effective upon the Valuation Date coinciding with or next following the date
which his notice was received by the TPA or as soon as administratively
practicable thereafter. If the Adoption Agreement provides for Member directed
investments, and if a Member does not make a written designation of an
Investment Fund or Funds, or other investment vehicle, the Employer or its
designee shall direct the Trustee to invest all amounts held or received on
account of the Member in the Investment Fund which in the opinion of the
Employer best protects principal.
Except as otherwise provided below, a Member may not direct a transfer from the
Stable Value Fund to the Government Money Market Fund or the Employer
Certificate of Deposit Fund. A Member may direct a transfer from any other
investment vehicle to the Government Money Market Fund or the Employer
Certificate of Deposit Fund provided that amounts previously transferred from
the Stable Value Fund to such investment vehicle remain in such vehicle for a
period of three months prior to being transferred to the Government Money Market
Fund or the Employer Certificate of Deposit Fund.
SECTION 4.3 EMPLOYER SECURITIES
If the Employer so elects in the Adoption Agreement, the Employer and/or Members
may direct that contributions will be invested in Qualifying Employer Securities
(within the meaning of Section 407(d)(5) of ERISA) through the Employer Stock
Fund.
35
ARTICLE V
MEMBERS' ACCOUNTS, UNITS AND VALUATION
The TPA shall establish and maintain an Account for each Member showing his
interests in the available Investment Funds or other applicable investments, as
designated by the Employer in the Adoption Agreement. The interest in each
Investment Fund shall be represented by Units.
As of each Valuation Date, the value of a Unit in each Investment Fund shall be
determined by dividing (a) the sum of the net assets at market value determined
by the Trustee by (b) the total number of outstanding Units.
The number of additional Units to be credited to a Member's interest in each
available Investment Fund, as of any Valuation Date, shall be determined by
dividing (a) that portion of the aggregate contributions and/or deferrals by and
on behalf of the Member which was directed to be invested in such Investment
Fund and received by the Trustee by (b) the Unit value of such Investment Fund.
The value of a Member's Account may be determined as of any Valuation Date by
multiplying the number of Units to his credit in each available Investment Fund
by that Investment Fund's Unit value on such date and aggregating the results.
If, and to the extent, a Member's Account is invested pursuant to a
self-directed brokerage account, the investments held in that account shall be
valued by the brokerage firm maintaining such account in accordance with such
procedures as may be determined by such brokerage firm.
A Member is treated as benefitting under the plan for any plan year during which
the Member received or is deemed to receive an allocation in accordance with
Section 1.410 (b)-3(a) of the Code.
36
ARTICLE VI ARTICLE VI
VESTING OF ACCOUNTS
SECTION 6.1 VESTING OF MEMBER CONTRIBUTIONS, 401(K) DEFERRALS, QUALIFIED
NONELECTIVE CONTRIBUTIONS, AND ROLLOVER CONTRIBUTIONS
All Units credited to a Member's Account based on after-tax contributions and/or
401(k) deferrals made by the Member and any earnings related thereto (including
any rollover contributions allocated to a Member's Account under the Plan and
any earnings thereon) and, as provided in Section 3.9, Employer qualified
nonelective contributions made on behalf of such Member shall be immediately and
fully vested at all times.
SECTION 6.2 VESTING OF EMPLOYER CONTRIBUTIONS
Except as provided in Section 6.1, the Employer may, at its option, elect one of
the available vesting schedules described herein for each of the employer
contribution types applicable under the Plan as designated in the Adoption
Agreement.
SCHEDULE 1: All applicable Employer contributions (and related earnings) shall
be immediately and fully vested. If the eligibility requirement(s)
selected by the Employer under the Plan require(s) that an
Employee complete a service period which is longer than 12
consecutive months, this vesting Schedule 1 shall be automatically
applicable.
SCHEDULE 2: All applicable Employer contributions (and related earnings) shall
vest in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
- ------------------- ----------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
SCHEDULE 3: All applicable Employer contributions (and related earnings) shall
vest in accordance with the schedule set forth below:
37
Completed Vested
Years of Employment Percentage
- ------------------- ----------
Less than 5 0%
5 or more 100%
SCHEDULE 4: All applicable Employer contributions (and related earnings) shall
vest in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
- ------------------- ----------
Less than 3 0%
3 or more 100%
SCHEDULE 5: All applicable Employer contributions (and related earnings)
shall vest in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
- ------------------- ----------
Less than 1 0%
1 but less than 2 25%
2 but less than 3 50%
3 but less than 4 75%
4 or more 100%
SCHEDULE 6: All applicable Employer contributions (and related earnings)
shall vest in accordance with the schedule set forth below:
Completed Vested
Years of Employment Percentage
- ------------------- ----------
Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
38
SCHEDULE 7: All applicable Employer contributions (and related earnings) shall
vest in accordance with the schedule set forth in the Adoption
Agreement prescribed by the Employer in accordance with applicable
law.
Notwithstanding the vesting schedules above, a Member's interest in his Account
shall become 100% vested in the event that (i) the Member dies while in service
with the Employer and the TPA has received notification of death, (ii) the
Member has been approved for Disability, pursuant to the provisions of Article
VII, and the TPA has received notification of Disability, or (iii) the Member
has attained Normal Retirement Age while in service with the Employer.
Except as otherwise provided hereunder, in the event that the Employer adopts
the Plan as a successor plan to another defined contribution plan qualified
under Sections 401(a) and 501(a) of the Code, or in the event that the Employer
changes or amends a vesting schedule adopted under this Article (or if the Plan
is deemed amended by an automatic change to or from a top-heavy vesting
schedule), any Member who was covered under such predecessor plan or, the
pre-amendment vesting schedule under the Plan, and has completed at least 3
Years of Employment (or, as applicable, 3 years of service) may elect to have
the nonforfeitable percentage of the portion of his Account which is subject to
such vesting schedule computed under such predecessor plan's vesting provisions,
or computed without regard to such change or amendment under the Plan (a
"Vesting Election"). Any Vesting Election shall be made by notifying the TPA in
writing within the election period hereinafter described. The election period
shall begin on the date such amendment is adopted or the date such change is
effective, or the date the Plan, which serves as a successor plan, is adopted or
effective, as the case may be, and shall end no earlier than the latest of the
following dates: (i) the date which is 60 days after the day such amendment is
adopted; (ii) the date which is 60 days after the day such amendment or change
becomes effective; (iii) the date which is 60 days after the day the Member is
given written notice of such amendment or change by the TPA; (iv) the date which
is 60 days after the day the Plan is adopted by the Employer or becomes
effective; or (v) the date which is 60 days after the day the Member is given
written notice that the Plan has been designated as a successor plan. Any such
election, once made, shall be irrevocable.
To the extent permitted under the Code and Regulations, the Employer may, at its
option, elect to treat all Members who are eligible to make a Vesting Election
as having made such Vesting Election if the vesting schedule resulting from such
an election is more favorable than the Vesting Schedule that would apply
pursuant to the Plan amendment.
39
Furthermore, subject to the requirements of the applicable Regulations, the
Employer may elect to treat all Members, who were employed by the Employer on or
before the effective date of the change or amendment, as subject to the prior
vesting schedule, provided such prior schedule is more favorable.
In the event that an Employer elects, in its Adoption Agreement, to use the hour
of service method for determining vesting service, Years of Service shall be
substituted for Years of Employment for all purposes under this Article VI.
No amendment to the Plan shall be effective to the extent that it has the effect
of decreasing a Member's accrued benefit. Notwithstanding the preceding
sentence, a Member's account balance may be reduced to the extent permitted
under Section 412(c)(8) of the Code. For purposes of this paragraph, a plan
amendment which has the effect of decreasing a Member's account balance, with
respect to benefits attributable to service before the amendment shall be
treated as reducing an accrued benefit. Furthermore, if the vesting schedule of
a plan is amended, in the case of an Employee who is a Member as of the later of
the date such amendment is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of such Employee's
employer-derived accrued benefit will not be less than the percentage computed
under the Plan without regard to such amendment.
No amendment to the Plan shall be effective to eliminate or restrict an optional
form of benefit. The preceding sentence shall not apply to a plan amendment that
eliminates or restricts the ability of a Member to receive payment of his
account balance under a particular optional form of benefit if the amendment
satisfies the conditions in (1) and (2) below:
(1) The amendment provides a single-sum distribution form that is
otherwise identical to the optional form of benefit eliminated or restricted.
For purposes of this condition (1), a single-sum distribution form is otherwise
identical only if it is identical in all respects to the eliminated or
restricted optional form of benefit (or would be identical except that it
provides greater rights to the Member) except with respect to the timing of
payments after commencement.
(2) The amendment is not effective unless the amendment provides that
the amendment shall not apply to any distribution with an annuity starting date
40
earlier than the earlier of: (i) the 90th day after the date the Member
receiving the distribution has been furnished a summary that reflects the
amendment and that satisfies the ERISA requirements at 29 CFR 2520.104b-3
relating to a summary of material modifications or (ii) the first day of the
second Plan Year following the Plan Year in which the amendment is adopted.
SECTION 6.3 FORFEITURES
If a Member who was partially vested in his Account on the date of his
termination of Employment returns to Employment, his Years of Employment (or, as
applicable, years of service) prior to the Break(s) in Service shall be included
in determining future vesting and, if he returns before incurring 5 consecutive
one year Breaks in Service, any amounts forfeited from his Account shall be
restored to his Account provided, however, that if such a Member has received a
distribution pursuant to Article VII, his nonvested Account shall not be
restored unless he repays to the Plan the full amount distributed to him before
the earlier of (i) 5 years after the first date on which the Member is
subsequently reemployed by the Employer, or (ii) the close of the first period
of 5 consecutive one-year Breaks in Service commencing after the withdrawal. The
amount restored to the Member's Account will be valued on the Valuation Date
coinciding with or next following the later of (i) the date the Employee is
rehired, or (ii) the date a new enrollment application is received by the TPA.
If a Member terminates Employment without any vested interest in his Account, he
shall (i) immediately be deemed to have received a total distribution of his
Account and (ii) thereupon forfeit his entire Account; provided that if such
Member returns to Employment before the number of consecutive one-year Breaks in
Service equals or exceeds the greater of (i) 5, or (ii) the aggregate number of
the Member's Years Employment (or, as applicable, Years of Service) prior to
such Break in Service, his Account shall be restored in the same manner as if
such Member had been partially vested at the time of his termination of
Employment and had his nonvested Account restored upon a return to employment,
and his Years of Employment (or, as applicable, Years of Service) prior to
incurring the first Break in Service shall be included in any subsequent
determination of his vesting service.
Forfeited amounts, as described in the preceding paragraph, shall be made
available to the Employer, through a transfer from the Member's Account to the
Employer Credit Account, upon: (1) if the Member had a vested interest in his
Account at his termination of Employment, the earlier of (i) the date as of
which the Member receives a distribution of his entire vested interest in his
Account or (ii) the date upon which the Member incurs 5 consecutive one-year
Breaks in Service, or (2) the date of the Member's termination of Employment, if
the Member then has no vested interest in his Account. Once so transferred, such
amounts shall be used at the option of the Employer to (i) offset any
42
contributions to be made by the Employer for that Contribution Determination
Period or (ii) be allocated to all eligible Members deemed to be employed as of
the last day of the Contribution Determination Period. The Employer Credit
Account, referenced in this Subparagraph, shall be maintained to receive, in
addition to the forfeitures described above, (i) contributions in excess of the
limitations contained in Section 415 of the Code, (ii) Employer contributions
made in advance of the date allocable to Members, if any, and (iii) amounts, if
any, forfeited pursuant to Sections 3.10 and 3.11.
No forfeitures will occur solely as a result of an Employee's withdrawal of
employee contributions under Article VII of the Plan.
43
ARTICLE VII
WITHDRAWALS AND DISTRIBUTIONS
SECTION 7.1 GENERAL PROVISIONS
The Employer will define in the Adoption Agreement the terms and conditions
under which withdrawals and distributions will be permitted under the Plan. All
payments in respect of a Member's Account shall be made in cash from the Trust
Fund and in accordance with the provisions of this Article or Article XI except
that if the Adoption Agreement so provides, a Member may elect to have his
Account, to the extent then invested in the Employer Stock Fund, distributed in
the form of Employer Stock in accordance with the provisions of this Article or
Article XI. The amount of payment will be determined in accordance with the
vested value of the Member's Account on the Valuation Date coinciding with or
next following the date proper notice is filed with the TPA, unless following
such Valuation Date a decrease in the value of the Member's investment in any of
the available Investment Funds or other Account investments occurs prior to the
date the Member's Account is paid in which case that part of the payment which
is based on such investments shall equal the value of such investments
determined as of the date of payment which date shall occur as soon as
administratively practicable on or following the Valuation Date such proper
notice is filed with the TPA. If units are redeemed to make a payment of
benefits, the redemption date Unit value with respect to a Member's investment
in any of the available Investment Funds shall equal the value of a Unit in such
Investment Fund, as determined in accordance with the valuation method
applicable to Unit investments in such Investment Fund on the date the Member's
investment is redeemed.
Except where otherwise specified, payments provided under this Article will be
made in a lump sum as soon as practicable after such Valuation Date or date of
redemption, as may be applicable, subject to any applicable restriction on
redemption imposed on amounts invested in any of the available Investment Funds.
Any partial withdrawal shall be deemed to come (to the extent available for
withdrawal):
- -- First from the Member's after-tax contributions made prior to January 1,
1987.
- -- Next from the Member's after-tax contributions made after December 31, 1986
plus earnings on all of the Member's after-tax contributions.
- -- Next from the Member's rollover contributions plus earnings thereon.
44
- -- Next from the Employer matching contributions plus earnings thereon.
- -- Next from the Employer supplemental contributions plus earnings thereon.
- -- Next from the Employer basic contributions plus earnings thereon.
- -- Next from the Employer safe harbor CODA contributions plus earnings
thereon.
- -- Next from the Member's 401(k) deferrals plus earnings thereon.
- -- Next from the Employer qualified nonelective contributions plus earnings
thereon.
- -- Next from the Employer profit sharing contributions plus earnings thereon.
SECTION 7.2 WITHDRAWALS WHILE EMPLOYED
The Employer may, at its option, permit Members to make withdrawals from one or
more of the portions of their Accounts while employed by the Employer, as
designated in the Adoption Agreement, under the terms and provisions described
herein.
VOLUNTARY WITHDRAWALS - To the extent permitted by the Employer as specified in
the Adoption Agreement, a Member may voluntarily withdraw some or all of his
Account (other than his 401(k) deferrals and Employer qualified nonelective
contributions treated as 401(k) deferrals except as hereinafter permitted) while
in Employment by filing a notice of withdrawal with the TPA; provided, however,
that in the event his Employer has elected to provide annuity options under
Section 7.3 and the Member elects an annuity form of payment, no withdrawals may
be made from a married Member's Account without the written consent of such
Member's Spouse (which consent shall be subject to the procedures set forth in
Section 7.3). Only one in-service withdrawal may be made in any Plan Year from
each of the rollover amount of the Member's Account and the remainder of the
Member's Account. This restriction shall not, however, apply to a withdrawal
under this Section in conjunction with a hardship withdrawal.
Notwithstanding the foregoing paragraph, a Member may not withdraw any matching,
basic, supplemental, profit sharing or, solely in the case of the events
described in clause (iii) or (iv), qualified nonelective contributions made by
the Employer under Article III unless (i) the Member has completed 60 months of
participation in the Plan; (ii) the withdrawal occurs at least 24 months after
such contributions were made by the Employer; (iii) the Employer terminates the
Plan without establishing a qualified successor plan; or (iv) the Member dies,
is disabled, retires, attains age 59 1/2 or terminates
45
Employment. For purposes of the preceding requirements, if the Member's Account
includes amounts which have been transferred from a defined contribution plan
established prior to the adoption of the Plan by the Employer, the period of
time during which amounts were held on behalf of such Member and the periods of
participation of such Member under such defined contribution plan shall be taken
into account.
Effective as of January 1, 1997, if an Employer does not permit Members to make
withdrawals from their Account while employed and a Member has attained age 70
1/2 prior to terminating employment with his Employer, such Member may withdraw
some or all of his Account under the terms and provisions of this Section 7.2.
If an Employer, in the Adoption Agreement, permits Members to withdraw 401(k)
deferrals and qualified non-elective contributions (and the income allocable to
each) while employed by the Employer, such deferrals or contributions are not
distributable earlier than upon separation from service, death, disability,
attainment of age 59 1/2 or hardship. Such amounts may also be distributed, in
accordance with Section 401(k)(2)(B)(i)(II) of the Code and the IRS Regulations
thereunder, upon: (i) termination of the Plan without the establishment of
another defined contribution plan other than an employee stock ownership plan
(as defined in Section 4975(e)(7) or Section 409 of the Code) or a simplified
employee pension plan (defined in Code Section 408(k) or a SIMPLE IRA plan
(defined in Code Section 408(p)), or (ii) the disposition by a corporation to an
unrelated corporation of substantially all of the assets (within the meaning of
Section 409(d)(2) of the Code) used in a trade or business of such corporation
if such corporation continues to maintain this Plan after the disposition, but
only with respect to employees who continue employment with the corporation
acquiring such assets, or (iii) the disposition by a corporation to an unrelated
entity of such corporation's interest in a subsidiary (within the meaning of
Section 409(d)(3) of the Code) if such corporation continues to maintain this
Plan, but only with respect to employees who continue employment with such
subsidiary.
HARDSHIP WITHDRAWALS - If designated by the Employer in the Adoption Agreement,
a Member may make a withdrawal of his 401(k) deferrals, Employer qualified
nonelective contributions which are treated as elective deferrals, and any
earnings credited thereto prior to January 1, 1989, prior to attaining age 592,
provided that the withdrawal is solely on account of an immediate and heavy
financial need and is necessary to satisfy such financial need. For the purposes
of this Article, the term "immediate and heavy financial need" shall be limited
to the need of funds for (i) the payment of medical expenses (described in
Section 213(d) of the Code) incurred by the Member, the Member's Spouse,
46
or any of the Member's dependents (as defined in Section 152 of the Code), (ii)
the payment of tuition and room and board for the next 12 months of
post-secondary education of the Member, the Member's Spouse, the Member's
children, or any of the Member's dependents (as defined in Section 152 of the
Code), (iii) the purchase (excluding mortgage payments) of a principal residence
for the Member, or (iv) the prevention of eviction of the Member from his
principal residence or the prevention of foreclosure on the mortgage of the
Member's principal residence. For purposes of this Article, a distribution
generally may be treated as "necessary to satisfy a financial need" if the Plan
Administrator reasonably relies upon the Member's written representation that
the need cannot be relieved (i) through reimbursement or compensation by
insurance or otherwise, (ii) by reasonable liquidation of the Member's available
assets, to the extent such liquidation would not itself cause an immediate and
heavy financial need, (iii) by cessation of Member contributions and/or
deferrals pursuant to Article III of the Plan, to the extent such contributions
and/or deferrals are permitted by the Employer, or (iv) by other distributions
or nontaxable (at the time of the loan) loans from plans maintained by the
Employer or by any other employer, or by borrowing from commercial sources on
reasonable commercial terms. The amount of any withdrawal pursuant to this
Article shall not exceed the amount required to meet the demonstrated financial
hardship, including any amounts necessary to pay any federal income taxes and
penalties reasonably anticipated to result from the distribution as certified to
the Plan Administrator by the Member.
Notwithstanding the foregoing, no amounts may be withdrawn on account of
hardship pursuant to this Article prior to a Member's withdrawal of his other
available Plan assets without regard to any other withdrawal restrictions
adopted by the Employer.
SECTION 7.3 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT
In accordance with the provisions for distributions designated by the Employer
in the Adoption Agreement, a Member who terminates Employment with the Employer
may request a distribution of his Account at any time thereafter up to
attainment of age 70 1/2. Except as otherwise provided by the Employer in the
Adoption Agreement, a Member may withdraw all or a portion of his Account at any
time after termination of employment and any amounts paid under this Article may
not be returned to the Plan. Any distribution made under this Section 7.3
requires that a Request for Distribution be filed with the TPA. If a Member does
not file such a Request, the value of his Account will be paid to him as soon as
practicable after his attainment of age 70 1/2, but in no event shall
47
payment commence later than April 1 of the calendar year following the calendar
year in which the Member attains age 70 1/2 unless otherwise provided by law.
LUMP SUM PAYMENTS - A Member may request a distribution of all or a part of his
Account no more frequently than once per calendar year by filing the proper
Request for Distribution with the TPA. In the event the Employer has elected to
provide an annuity option under the Plan, no distributions may be made from a
married Member's Account without the written consent of such married Member's
spouse (which consent shall be subject to the procedures set forth below).
INSTALLMENT PAYMENTS - To the extent designated by the Employer in the Adoption
Agreement and in lieu of any lump sum payment of his total Account, a Member who
has terminated his Employment may elect in his Request for Distribution to be
paid in installments (no less frequently than annually), provided that a Member
shall not be permitted to elect an installment period in excess of his remaining
life expectancy (or the joint life expectancy of the Member and his designated
Beneficiary) and if a Member attempts such an election, the TPA shall deem him
to have elected the installment period with the next lowest multiple within the
Member's remaining life expectancy. For purposes of installment payments under
this Section 7.3, the Member's life expectancy (or the joint life expectancy of
the Member and his designated Beneficiary) shall not be recalculated. The amount
of each installment will be equal to the value of the total Units in the
Member's Account, multiplied by a fraction, the numerator of which is one and
the denominator of which is the number of remaining installments including the
one then being paid, so that at the end of the installment period so elected,
the total Account will be liquidated. The value of the Units will be determined
in accordance with the Unit values on the Valuation Date on or next following
the TPA's receipt of his Request for Distribution and on each anniversary
thereafter subject to applicable Regulations under Code Section 401(a)(9).
Payment will be made as soon as practicable after each such Valuation Date, but
in no event shall payment commence later than April 1 of the calendar year
following the calendar year in which the Member attains age 702 subject to the
procedure for making such distributions described below. The election of
installments hereunder may not be subsequently changed by the Member, except
that upon written notice to the TPA, the Member may withdraw the balance of the
Units in his Account in a lump sum at any time, notwithstanding the fact that
the Member previously received a distribution in the same calendar year.
48
ANNUITY PAYMENTS - The Employer may, at its option, elect to provide an annuity
option under the Plan. To the extent so designated by the Employer in the
Adoption Agreement and in lieu of any lump sum payment of his total Account, a
Member who has terminated his Employment may elect in his Request for
Distribution to have the value of his total Account be paid as an annuity
secured for the Member by the Plan Administrator through a individual annuity
contract purchased by the Plan. In the event the Employer elects to provide the
annuity option under the Plan and a Member elects an annuity form of payment,
the following provisions shall apply:
UNMARRIED MEMBERS - Any unmarried Member who has terminated his Employment may
elect, in lieu of any other available payment option, to receive a benefit
payable by purchase of a single premium contract providing for (i) a single life
annuity for the life of the Member or (ii) an annuity for the life of the Member
and, if the Member dies leaving a designated Beneficiary, a 50% survivor annuity
for the life of such designated Beneficiary.
MARRIED MEMBERS - Except as otherwise provided below, (i) any married Member who
has terminated his Employment shall receive a benefit payable by purchase of a
single premium contract providing for a Qualified Joint and Survivor Annuity, as
defined below, and (ii) the Surviving Spouse of any married Member who dies
prior to the date payment of his benefit commences shall be entitled to a
Preretirement Survivor Annuity, as defined below. Notwithstanding the foregoing,
any such married Member may elect to receive his benefit in any other available
form, and may waive the Preretirement Survivor Annuity, in accordance with the
spousal consent requirements described herein.
For purposes of this Section 7.3, the term Qualified Joint and Survivor Annuity"
means a benefit providing an annuity for the life of the Member, ending with the
payment due on the last day of the month coinciding with or preceding the date
of his death, and, if the Member dies leaving a Surviving Spouse, a survivor
annuity for the life of such Surviving Spouse equal to one-half of the annuity
payable for the life of the Member under his Qualified Joint and Survivor
Annuity, commencing on the last day of the month following the date of the
Member's death and ending with the payment due on the first day of the month
coinciding with or preceding the date of such Surviving Spouse's death.
For purposes of this Section 7.3, the term "Preretirement Survivor Annuity"
means a benefit providing for payment of 50% of the Member's Account balance as
of the Valuation Date coinciding with or preceding the date of his death.
Payment of a Preretirement Survivor Annuity shall commence in the month
following the month in which
49
the Member dies or as soon as practicable thereafter; provided, however, that to
the extent required by law, if the value of the amount used to purchase a
Preretirement Survivor Annuity exceeds $3,500, then payment of the Preretirement
Survivor Annuity shall not commence prior to the date the Member reached (or
would have reached, had he lived) Normal Retirement Age without the written
consent of the Member's Surviving Spouse. Absence of any required consent will
result in a deferral of payment of the Preretirement Survivor Annuity to the
month following the month in which occurs the earlier of (i) the date the
required consent is received by the TPA or (ii) the date the Member would have
reached Normal Retirement Age had he lived.
The TPA shall furnish or cause to be furnished, to each married Member with an
Account subject to this Section 7.3, explanations of the Qualified Joint and
Survivor Annuity and Preretirement Survivor Annuity. A Member may, with the
written consent of his Spouse (unless the TPA makes a written determination in
accordance with the Code and the Regulations that no such consent is required),
elect in writing (i) to receive his benefit in a single lump sum payment within
the 90-day period ending on the date payment of his benefit commences; and (ii)
to waive the Preretirement Survivor Annuity within the period beginning on the
first day of the Plan Year in which the Member attains age 35 and ending on the
date of his death. Any election made pursuant to this Subparagraph may be
revoked by a Member, without spousal consent, at any time within which such
election could have been made. Such an election or revocation must be made in
accordance with procedures developed by the TPA and shall be notarized.
Notwithstanding anything to the contrary, effective for Plan Years beginning
after December 31, 1996, the 90-day period in which a Member may, with the
written consent of his Spouse, elect in writing to receive his benefit in a
single lump sum shall not end before the 30th day after the date on which
explanations of the Qualified Joint and Survivor Annuity and Preretirement
Survivor Annuity are provided. A Member may elect (with any applicable spousal
consent) to waive any requirement that the written explanation be provided at
least 30 days before the annuity starting date (or to waive the 30-day
requirement under the preceding sentence) if the distribution commences more
than seven days after such explanation is provided.
Notwithstanding the preceding provisions of this Section 7.3, any benefit of
$3,500, subject to the limits of Article X, or less, shall be paid in cash in a
lump sum in full settlement of the Plan's liability therefor; provided, however,
that in the case of a married Member, no such lump sum payment shall be made
after benefits have commenced
50
without the consent of the Member and his Spouse or, if the Member has died, the
Member's Surviving Spouse. Furthermore, if the value of the benefit payable to a
Member or his Surviving Spouse is greater than $3,500 and the Member has or had
not reached his Normal Retirement Age, then to the extent required by law,
unless the Member (and, if the Member is married and his benefit is to be paid
in a form other than a Qualified Joint and Survivor Annuity, his Spouse, or, if
the Member was married, his Surviving Spouse) consents in writing to an
immediate distribution of such benefit, his benefit shall continue to be held in
the Trust until a date following the earlier of (i) the date of the TPA's
receipt of all required consents or (ii) the date the Member reaches his
earliest possible Normal Retirement Age under the Plan (or would have reached
such date had he lived), and thereafter shall be paid in accordance with this
Section 7.3.
Solely to the extent required under applicable law and regulations, and
notwithstanding any provisions of the Plan to the contrary that would otherwise
limit a Distributee's election under this Subparagraph, a Distributee may elect,
at the time and in the manner prescribed by the TPA, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover. For purposes of this
Subparagraph, the following terms shall have the following meanings:
ELIGIBLE ROLLOVER DISTRIBUTION - Any distribution of all or any portion of the
balance to the credit of the Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee's designated
Beneficiary, or for a specified period of ten years or more; any distribution to
the extent such distribution is required under Section 401(a)(9) of the Code;
and the portion of any distribution that is not includable in gross income
(determined without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
Effective January 1, 1999, an Eligible Rollover Distribution excludes hardship
withdrawals as defined in Section 401(k)(2)(B)(i)(IV) of the Code which are
attributable to Member's 401(k) deferrals under Treasury Regulation Section
1.401(k)-1(d)(2)(ii).
ELIGIBLE RETIREMENT PLAN - An individual retirement account described in Section
408(a) of the Code, an individual retirement annuity described in Section 408(b)
of the Code, an annuity plan described in Section 403(a) of the Code, or a
qualified trust described in Section 401(a) of the Code, that accepts the
Distributee's Eligible Rollover Distribution.
51
However, in the case of an Eligible Rollover Distribution to a Surviving Spouse,
an Eligible Retirement Plan is an individual retirement account or an individual
retirement annuity.
DISTRIBUTEE - A Distributee may be (i) an Employee, (ii) a former Employee,
(iii) an Employee's Surviving Spouse, (iv) a former Employee's Surviving Spouse,
(v) an Employee's Spouse or former Spouse who is an alternate payee under a
qualified domestic relations order, as defined in Section 414(p) of the Code, or
(vi) a former Employee's Spouse or former Spouse who is an alternate payee under
a qualified domestic relations order, as defined in Section 414(p) of the Code,
with respect to the interest of the Spouse or former Spouse.
DIRECT ROLLOVER - A payment by the Plan to the Eligible Retirement Plan
specified by the Distributee.
SECTION 7.4 DISTRIBUTIONS DUE TO DISABILITY
A Member who is separated from Employment by reason of a disability which is
expected to last in excess of 12 consecutive months and who is either (i)
eligible for, or is receiving, disability insurance benefits under the Federal
Social Security Act or (ii) approved for disability under the provisions of any
other benefit program or policy maintained by the Employer, which policy or
program is applied on a uniform and nondiscriminatory basis to all Employees of
the Employer, shall be deemed to be disabled for all purposes under the Plan.
The Plan Administrator shall determine whether a Member is disabled in
accordance with the terms of the immediately preceding paragraph; provided,
however, approval of Disability is conditioned upon notice to the Plan
Administrator of such Member's Disability within 13 months of the Member's
separation from Employment. The notice of Disability shall include a
certification that the Member meets one or more of the criteria listed above.
Upon determination of Disability, a Member may withdraw his total Account
balance under the Plan and have such amounts paid to him in accordance with the
applicable provisions of this Article VII, as designated by the Employer. If a
disabled Member becomes reemployed subsequent to withdrawal of some or all of
his Account balance, such Member may not repay to the Plan any such withdrawn
amounts.
SECTION 7.5 DISTRIBUTIONS DUE TO DEATH
52
Subject to the provisions of Section 7.3 above, if a married Member dies, his
Spouse, as Beneficiary, will receive a death benefit equal to the value of the
Member's Account determined on the Valuation Date on or next following the TPA's
receipt of notice that such Member died; provided, however, that if such
Member's Spouse had consented in writing to the designation of a different
Beneficiary, the Member's Account will be paid to such designated Beneficiary.
Such nonspousal designation may be revoked by the Member without spousal consent
at any time prior to the Member's death. If a Member is not married at the time
of his death, his Account will be paid to his designated Beneficiary.
A Member may elect that upon his death, his Beneficiary, pursuant to this
Section 7.5, may receive, in lieu of any lump sum payment, payment in 5 annual
installments (10 if the Spouse is the Beneficiary, provided that the Spouse's
remaining life expectancy is at least 10 years) whereby the value of 1/5th of
such Member's Units (or 1/10th in the case of a spousal Beneficiary, provided
that the Spouse's remaining life expectancy is at least 10 years) in each
available Investment Fund will be determined in accordance with the Unit values
on the Valuation Date on or next following the TPA's receipt of notice of the
Member's death and on each anniversary of such Valuation Date. Payment will be
made as soon as practicable after each Valuation Date until the Member's Account
is exhausted. Such election may be filed at any time with the Plan Administrator
prior to the Member's death and may not be changed or revoked after such
Member's death. If such an election is not in effect at the time of the Member's
death, his Beneficiary (including any spousal Beneficiary) may elect to receive
distributions in accordance with this Article, except that any balance remaining
in the deceased Member's Account must be distributed on or before the December
31 of the calendar year which contains the 5th anniversary (the 10th anniversary
in the case of a spousal Beneficiary, provided that the Spouse's remaining life
expectancy is at least 10 years) of the Member's death. Notwithstanding the
foregoing, payment of a Member's Account shall commence not later than the
December 31 of the calendar year immediately following the calendar year in
which the Member died or, in the event such Beneficiary is the Member's
Surviving Spouse, on or before the December 31 of the calendar year in which
such Member would have attained age 702, if later (or, in either case, on any
later date prescribed by the IRS Regulations). If, upon the Spouse's or
Beneficiary's death, there is still a balance in the Account, the value of the
remaining Units will be paid in a lump sum to such Spouse's or Beneficiary's
estate.
SECTION 7.6 MINIMUM REQUIRED DISTRIBUTIONS
53
Effective as of January 1, 1997, payment of a Member's Account shall not
commence later than April 1 of the calendar year following the later of (i) the
calendar year in which the Member attains age 70 1/2 or (ii) the calendar year
in which the Member retires; provided however, if the Member is a 5 percent
owner (as described in Section 416(i) of the Code), at any time during the Plan
Year ending with or within the calendar year in which the Employee attains age
70 1/2, any benefit payable to such Member shall commence no later than April 1
of the calendar year following the calendar year in which the Member attains age
70 1/2.
(A) Subject to Section 7.3, joint and survivor annuity requirements, the
requirements of this Section shall apply to any distribution of a Member's
interest and will take precedence over any inconsistent provisions of this
Plan. Unless otherwise specified, the provisions of this Section 7.6 apply
to calendar years beginning after December 31, 1984.
All distributions required under this Section 7.6 shall be determined and
made in accordance with the proposed regulations under Section 401(a)(9) of
the Code, including the minimum distribution incidental benefit requirement
of Section 1.401(a)(9)-2 of the proposed regulations.
The entire interest of a Member must be distributed or begin to be
distributed no later than the Member's required beginning date.
(B) As of the first distribution calendar year, distributions, if not made in a
single-sum, may only be made over one of the following periods (or a
combination thereof):
(1) the life of the Member,
(2) the life of the Member and a designated beneficiary,
(3) a period certain not extending beyond the life expectancy of the
Member, or
(4) a period certain not extending beyond the joint and last survivor
expectancy of the Member and a designated beneficiary.
(C) If the Member's interest is to be distributed in other than a single sum,
the following minimum distribution rules shall apply on or after the
required beginning date:
(1) If a Member's benefit is to be distributed over (a) a period not
extending beyond the life expectancy of the Member or the joint life
and last
54
survivor expectancy of the Member and the Member's designated
beneficiary or (b) a period not extending beyond the life expectancy
of the designated beneficiary, the amount required to be distributed
for each calendar year, beginning with distributions for the first
distribution calendar year, must at least equal the quotient obtained
by dividing the Member's benefit by the applicable life expectancy.
(2) For calendar years beginning before January 1, 1989, if the
Member's spouse is not the designated beneficiary, the method of
distribution selected must assure that at least 50% of the present
value of the amount available for distribution is paid within the life
expectancy of the Member.
(3) For calendar years beginning after December 31, 1988, the amount
to be distributed each year, beginning with distributions for the
first distribution calendar year shall not be less than the quotient
obtained by dividing the Member's benefit by the lesser of (a) the
applicable life expectancy or (b) if the Member's spouse is not the
designated beneficiary, the applicable divisor determined from the
table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the proposed
regulations. Distributions after the death of the Member shall be
distributed using the applicable life expectancy in paragraph (1)
above as the relevant divisor without regard to Proposed Regulations
Section 1.401(a)(9)-2.
(4) The minimum distribution required for the Member's first
distribution calendar year must be made on or before the Member's
required beginning date. The minimum distribution for other calendar
years, including the minimum distribution for the distribution
calendar year in which the employee's required beginning date occurs,
must be made on or before December 31 of that distribution calendar
year.
If the Member's benefit is distributed in the form of an annuity purchased
from an insurance company, distributions thereunder shall be made in
accordance with the requirements of Section 401(a)(9) of the Code and the
proposed regulations thereunder.
(D) Distributions beginning before death. If the Member dies after distribution
of his interest has begun, the remaining portion of such interest will
continue to be
55
distributed at least as rapidly as under the method of distribution being
used prior to the Member's death.
(E) Distributions beginning after death. 1) If the Member dies before
distribution of his or her interest begins, distribution of the Member's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Member's death except to the extent
that an election is made to receive distributions in accordance with (a) or
(b) below:
(a) if any portion of the Member's interest is payable to a designated
beneficiary, distributions may be made over the life or over a period
certain not greater than the life expectancy of the designated
beneficiary commencing on or before December 31 of the calendar year
immediately following the calendar year in which the Member died;
(b) if the designated beneficiary is the Member's surviving spouse, the
date distributions are required to begin in accordance with (a) above
shall not be earlier than the later of (i) December 31 of the calendar
year immediately following the calendar year in which the Member died
and (ii) December 31 of the calendar year in which the Member would
have attained age 70 1/2.
2) If the Member has not made an election pursuant to this Section 7.6 by
the time of his death, the Member's designated beneficiary must elect the
method of distribution no later than the earlier of (i) December 31, of the
calendar year in which distributions would be required to begin under this
Section, or (ii) December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Member. If the Member has no
designated beneficiary, or if the designated beneficiary does not elect a
method of distribution, distribution of the Member's entire interest must
be completed by December 31 of the calendar year containing the fifth
anniversary of the Member's death.
(F) For purposes of paragraph (E) above, if the surviving spouse dies after the
Member, but before payments to such spouse begin, the provisions of
paragraph (E), with the exception of paragraph (E)(1)(b) therein, shall be
applied as if the surviving spouse were the Member.
56
(G) For the purposes of paragraphs (D) and (E), distribution of a Member's
interest is considered to begin on the Member's required beginning date
(or, if paragraph (F) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to paragraph (E) above).
If distribution in the form of an annuity irrevocably commences to the
Member before the required beginning date, the date distribution is
considered to begin is the date distribution actually commences.
(H) Applicable life expectancy. The life expectancy (or joint and last survivor
expectancy) calculated using the attained age of the Member (or designated
beneficiary as of the Member's (or designated beneficiary's) birthday in
the applicable calendar year reduced by one for each calendar year which
has elapsed since the date life expectancy was first calculated. If life
expectancy is being recalculated, the applicable life expectancy shall be
the life expectancy as so recalculated. The applicable calendar year shall
be the first distribution calendar year, and if life expectancy is being
recalculated such succeeding calendar year.
(I) Designated beneficiary. The individual who is designated as the beneficiary
under the Plan in accordance with Section 401(a)(9) of the Code and the
proposed regulations thereunder.
(J) Distribution calendar year. A calendar year for which a minimum
distribution is required. For distributions beginning before the Member's
death, the first distribution calendar year is the calendar year
immediately preceding the calendar year which contains the Member's
required beginning date. For distributions beginning after the Member's
death, the first distribution calendar year is the calendar year in which
distributions are required to begin pursuant to paragraphs (D), (E), (F)
and (G) above.
(K) Life expectancy. Life expectancy and joint and last survivor expectancy are
computed by use of the expected return multiples in Tables V and VI of
Section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Member (or spouse, in the case of
distributions described in paragraph (E)(1)(b) above) by the time
distributions are required to begin, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Member
(or spouse) and shall apply to all subsequent years. The life expectancy of
a nonspouse beneficiary may not be recalculated.
57
(L) Member's benefit.
(1) The account balance as of the last valuation date in the calendar year
immediately preceding the distribution calendar year (valuation calendar
year) increased by the amount of any contributions or forfeitures allocated
to the account balance as of dates in the valuation calendar year after the
valuation date and decreased by distributions made in the valuation
calendar year after the valuation date.
(2) Exception for second distribution calendar year. For purposes of
paragraph (1) above, if any portion of the minimum distribution for the
first distribution calendar year is made in the second distribution
calendar year on or before the required beginning date, the amount of the
minimum distribution made in the second distribution calendar year shall be
treated as if it had been made in the immediately preceding distribution
calendar year.
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ARTICLE VIII
LOAN PROGRAM
SECTION 8.1 GENERAL PROVISIONS
An Employer may, at its option, make available the loan program described herein
for any Member (and, if applicable under Section 8.8 of this Article, any
Beneficiary), subject to applicable law. The Employer shall so designate its
adoption of the loan program and the terms and provisions of its operation in
the Adoption Agreement. There shall be a reasonable origination fee and/or an
annual administration fee assessed to the Member's Account for each loan made to
a Member or Beneficiary. In the event that amounts are transferred to the Plan
from a retirement plan subject to Section 401(a)(11) of the Code, no loans may
be made from a married Member's Account without the written consent of such
Member's Spouse (in accordance with the spousal consent rules set forth under
Section 7.3). In the event the Employer elects to permit loans to be made from
rollover contributions and earnings thereon, as designated in the Adoption
Agreement, loans shall be available from the Accounts of any Employees of the
Employer who have not yet become Members. Only one loan may be made to a Member
in the Plan Year, except that if an Employer provides in the Adoption Agreement
to make loans available from Employee rollover contributions and the earnings
thereon, a Member will be permitted to request a second loan in the Plan Year to
the extent of Employee rollover contributions and earnings thereon subject to
any other limitations provided under this Article.
The Employer may elect, in the Adoption Agreement, to make the loan program
available only in the event of hardship or financial necessity. Hardship or
financial necessity is defined as a significant health expense or a loss of
income due to illness or disability incurred by a Member, or the death of a
Member or an immediate family member of a Member. Hardship or financial
necessary also includes the purchase of a Member's principal place of residence
as well as paying for a college education (including graduate studies) for
either a Member or a Member's dependents.
SECTION 8.2 LOAN APPLICATION
Subject to the restrictions described in the paragraph immediately following, a
Member in Employment may borrow from his Account in each of the available
Investment Funds by filing a loan application with the TPA. Such application
(hereinafter referred to as a "completed application") shall (i) specify the
terms pursuant to which the loan is requested
59
to be made and (ii) provide such information and documentation as the TPA shall
require, including a note, duly executed by the Member, granting a security
interest of an amount not greater than 50% of his vested Account, to secure the
loan. With respect to such Member, the completed application shall authorize the
repayment of the loan through payroll deductions. Such loan will become
effective upon the Valuation Date coinciding with or next following the date on
which his completed application and other required documents were submitted,
subject to the same conditions with respect to the amount to be transferred
under this Section which are specified in the Plan procedures for determining
the amount of payments made under Article VII of the Plan.
The Employer shall establish standards in accordance with the Code and ERISA
which shall be uniformly applicable to all Members eligible to borrow from their
interests in the Trust Fund similarly situated and shall govern the TPA's
approval or disapproval of completed applications. The terms for each loan shall
be set solely in accordance with such standards.
The TPA shall, in accordance with the established standards, review and approve
or disapprove a completed application as soon as practicable after its receipt
thereof, and shall promptly notify the applying Member of such approval or
disapproval. Notwithstanding the foregoing, the TPA may defer its review of a
completed application, or defer payment of the proceeds of an approved loan, if
the proceeds of the loan would otherwise be paid during the period commencing on
December 1 and ending on the following January 31.
Subject to the preceding paragraph and Section 8.6, upon approval of a completed
application, the TPA shall cause payment of the loan to be made from the
available Investment Fund(s) in the same proportion that the designated portion
of the Member's Account is invested at the time of the loan, and the relevant
portion of the Member's interest in such Investment Fund(s) shall be cancelled
and shall be transferred in cash to the Member. The TPA shall maintain
sufficient records regarding such amounts to permit an accurate crediting of
repayments of the loan.
Notwithstanding any provision of this Article VIII to the contrary, if an
Employer has elected in the Adoption Agreement to condition loans based upon a
Member's demonstrated hardship or financial necessity, the Plan Administrator,
in a uniform and nondiscriminatory manner, shall determine whether a Member has
incurred a hardship or financial necessity following the Member filing a loan
application with the TPA.
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SECTION 8.3 PERMITTED LOAN AMOUNT
The amount of each loan may not be less than $1,000 nor more than the maximum
amount as described below. The maximum amount available for loan under the Plan
(when added to the outstanding balance of all other loans from the Plan to the
borrowing Member) shall not exceed the lesser of: (a) $50,000 reduced by the
excess (if any) of (i) the highest outstanding loan balance attributable to the
Account of the Member requesting the loan from the Plan during the one-year
period ending on the day preceding the date of the loan, over (ii) the
outstanding balance of all other loans from the Plan to the Member on the date
of the loan, or (b) 50% of the value of the Member's vested portion of his
Account as of the Valuation Date on or next following the date on which the TPA
receives the completed application for the loan and all other required
documents. In determining the maximum amount that a Member may borrow, all
vested assets of his Account will be taken into consideration, provided that,
where the Employer has not elected to make a Member's entire Account available
for loans or where a Member's Account contains investments in a self-directed
brokerage account which shall not be available for loans, in no event shall the
amount of the loan exceed the value of such vested portion of the Member's
Account from which loans are permissible.
SECTION 8.4 SOURCE OF FUNDS FOR LOAN
The amount of the loan will be deducted from the Member's Account in the
available Investment Funds in accordance with Section 8.2 of this Article and
the Plan procedures for determining the amount of payments made under Article
VII. Loans shall be deemed to come (to the extent the Employer permits Members
to take loans from one or more of the portions of their Accounts, as designated
in the Adoption Agreement):
- -- First from the vested Employer profit sharing contributions plus earnings
thereon.
- -- Next from the Employer qualified nonelective contributions plus earnings
thereon.
- -- Next from the Member's 401(k) deferrals plus earnings thereon.
- -- Next from the Member's safe harbor CODA contributions plus earnings
thereon.
- -- Next from the vested Employer basic contributions plus earnings thereon.
- -- Next from the vested Employer supplemental contributions plus earnings
thereon.
- -- Next from the vested Employer matching contributions plus earnings thereon.
61
- -- Next from the Member's rollover contributions plus earnings thereon.
- -- Next from the Member's after-tax contributions made after December 31, 1986
plus earnings on all of the Member's after-tax contributions.
- -- Next from the Member's after-tax contributions made prior to January 1,
1987.
SECTION 8.5 CONDITIONS OF LOAN
Each loan to a Member under the Plan shall be repaid in level monthly amounts
through regular payroll deductions after the effective date of the loan, and
continuing thereafter with each payroll. Except as otherwise required by the
Code and the IRS Regulations, each loan shall have a repayment period of not
less than 12 months and not in excess of 60 months, unless the purpose of the
loan is for the purchase of a primary residence, in which case the loan may be
for not more than 180 months. After the first 3 monthly payments of the loan
have been satisfied, the Member may pay the outstanding loan balance (including
accrued interest from the due date).
The rate of interest for the term of the loan will be established as of the loan
date, and will be the Barron's Prime Rate (base rate) plus 1% as published on
the last Saturday of the preceding month, or such other rate as may be required
by applicable law and determined by reference to the prevailing interest rate
charged by commercial lenders under similar circumstances. The applicable rate
would then be in effect through the last business day of the month.
Repayment of all loans under the Plan shall be secured by 50% of the Member's
vested interest in his Account, determined as of the origination of such loan.
SECTION 8.6 CREDITING OF REPAYMENT
Upon lending any amount to a Member, the TPA shall establish and maintain a loan
receivable account with respect to, and for the term of, the loan. The
allocations described in this Section shall be made from the loan receivable
account. Upon receipt of each monthly installment payment and the crediting
thereof to the Member's loan receivable account, there shall be allocated to the
Member's Account in the available Investment Funds, in accordance with his most
recent investment instructions, the principal portion of the installment payment
plus that portion of the interest equal to the rate determined in Section 8.5 of
this Article. The unpaid balance owed by a Member on a
62
loan under the Plan shall not reduce the amount credited to his Account.
However, from the time of payment of the proceeds of the loan to the Member,
such Account shall be deemed invested, to the extent of such unpaid balance, in
such loan until the complete repayment thereof or distribution from such
Account. Any loan repayment shall first be deemed allocable to the portions of
the Member's Account on the basis of a reverse ordering of the manner in which
the loan was originally distributed to the Member.
SECTION 8.7 CESSATION OF PAYMENTS ON LOAN
If a Member, while employed, fails to make a monthly installment payment when
due, as specified in the completed application, subject to applicable law, he
will be deemed to have received a distribution of the outstanding balance of the
loan. If such default occurs after the first 3 monthly payments of the loan have
been satisfied, the Member may pay the outstanding balance, including accrued
interest from the due date, by the last day of the calendar quarter following
the calendar quarter which contains the due date of the last monthly installment
payment, in which case no such distribution will be deemed to have occurred.
Subject to applicable law, notwithstanding the foregoing, a Member that borrows
any of his 401(k) deferrals and any of the earnings attributable thereto may not
cease to make monthly installment payments while employed and receiving a Salary
from the Employer.
Except as provided below, upon a Member's termination of Employment, death or
Disability, or the Employer's termination of the Plan, no further monthly
installment payments may be made. Unless the outstanding balance, including
accrued interest from the due date, is paid by the last day of the calendar
quarter following the calendar quarter which contains the date of such
occurrence, the Member will be deemed to have received a distribution of the
outstanding balance of the loan including accrued interest from the due date.
SECTION 8.8 LOANS TO FORMER MEMBERS
Notwithstanding any other provisions of this Article VIII, a member who
terminates Employment for any reason shall be permitted to continue making
scheduled repayments with respect to any loan balance outstanding at the time he
becomes a terminated Member. In addition, a terminated Member or Beneficiary may
elect to initiate a new loan from his Account, subject to the conditions
otherwise described in this Article VIII. If any terminated Member who continues
to make repayments or any terminated Member or
63
Beneficiary who borrows from his Account pursuant to this Section 8.8 fails to
make a scheduled monthly installment payment by the last day of the calendar
quarter following the calendar quarter which contains the scheduled payment
date, he will be deemed to have received a distribution of the outstanding
balance of the loan.
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ARTICLE IX
ADMINISTRATION OF PLAN AND ALLOCATION OF RESPONSIBILITIES
SECTION 9.1 FIDUCIARIES
The following persons are Fiduciaries under the Plan.
a) The Trustee,
b) The Employer,
c) The Plan Administrator or committee, appointed by the Employer pursuant to
this Article IX of the Plan and designated as the "Named Fiduciary" of the
Plan and the Plan Administrator, and
d) Any Investment Manager appointed by the Employer as provided in Section
9.4.
Each of said Fiduciaries shall be bonded to the extent required by ERISA.
The TPA is not intended to have the authority or responsibilities which would
cause it to be considered a Fiduciary with respect to the Plan unless the TPA
otherwise agrees to accept such authority or responsibilities in a service
agreement or otherwise in writing.
SECTION 9.2 ALLOCATION OF RESPONSIBILITIES AMONG THE FIDUCIARIES
a) The Trustee
The Employer shall enter into one or more Trust Agreements with a Trustee
or Trustees selected by the Employer. The Trust established under any such
agreement shall be a part of the Plan and shall provide that all funds
received by the Trustee as contributions under the Plan and the income
therefrom (other than such part as is necessary to pay the expenses and
charges referred to in Paragraph (b) of this Section) shall be held in the
Trust Fund for the exclusive benefit of the Members or their Beneficiaries,
and managed, invested and reinvested and distributed by the Trustee in
accordance with the Plan. Sums received for investment may be invested (i)
wholly or partly through the medium of any common, collective or commingled
trust fund maintained by a bank or other financial institution and which is
qualified under Sections 401(a) and 501(a) of the Code and constitutes a
part of the Plan; (ii) wholly or partly through the medium of a group
annuity or other type of contract issued by an insurance company and
65
constituting a part of the Plan, and utilizing, under any such contract,
general, commingled or individual investment accounts; or (iii) wholly or
partly in securities issued by an investment company registered under the
Investment Company Act of 1940. Subject to the provisions of Article XI,
the Employer may from time to time and without the consent of any Member or
Beneficiary (a) amend the Trust Agreement or any such insurance contract in
such manner as the Employer may deem necessary or desirable to carry out
the Plan, (b) remove the Trustee and designate a successor Trustee upon
such removal or upon the resignation of the Trustee, and (c) provide for an
alternate funding agency under the Plan. The Trustee shall make payments
under the Plan only to the extent, in the amounts, in the manner, at the
time, and to the persons as shall from time to time be set forth and
designated in written authorizations from the Plan Administrator or TPA.
The Trustee shall from time to time charge against and pay out of the Trust
Fund taxes of any and all kinds whatsoever which are levied or assessed
upon or become payable in respect of such Fund, the income or any property
forming a part thereof, or any security transaction pertaining thereto. To
the extent not paid by the Employer, the Trustee shall also charge against
and pay out of the Trust Fund other expenses incurred by the Trustee in the
performance of its duties under the Trust, the expenses incurred by the TPA
in the performance of its duties under the Plan (including reasonable
compensation for agents and cost of services rendered in respect of the
Plan), such compensation of the Trustee as may be agreed upon from time to
time between the Employer and the Trustee, and all other proper charges and
disbursements of the Trustee, the Employer, or the Plan Administrator.
b) The Employer
The Employer shall be responsible for all functions assigned or reserved to
it under the Plan and any related Trust Agreement. Any authority so
assigned or reserved to the Employer, other than responsibilities assigned
to the Plan Administrator, shall be exercised by resolution of the
Employer's Board of Directors and shall become effective with respect to
the Trustee upon written notice to the Trustee signed by the duly
authorized officer of the Board advising the Trustee of such exercise. By
way of illustration and not by limitation, the Employer shall have
authority and responsibility:
(1) to amend the Plan;
66
(2) to merge and consolidate the Plan with all or part of the assets
or liabilities of any other plan;
(3) to appoint, remove and replace the Trustee and the Plan
Administrator and to monitor their performances;
(4) to appoint, remove and replace one or more Investment Managers,
or to refrain from such appointments, and to monitor their
performances;
(5) to communicate such information to the Plan Administrator, TPA,
Trustee and Investment Managers as they may need for the proper
performance of their duties; and
(6) to perform such additional duties as are imposed by law.
Whenever, under the terms of this Plan, the Employer is permitted or
required to do or perform any act, it shall be done and performed by an
officer thereunto duly authorized by its Board of Directors.
c) The Plan Administrator
The Plan Administrator shall have responsibility and discretionary
authority to control the operation and administration of the Plan in
accordance with the provisions of Article IX of the Plan, including,
without limiting, the generality of the foregoing:
(1) the determination of eligibility for benefits and the amount and
certification thereof to the Trustee;
(2) the hiring of persons to provide necessary services to the Plan;
(3) the issuance of directions to the Trustee to pay any fees, taxes,
charges or other costs incidental to the operation and management of
the Plan;
(4) the preparation and filing of all reports required to be filed with
respect to the Plan with any governmental agency; and
(5) the compliance with all disclosure requirements imposed by state or
federal law.
67
d) The Investment Manager
Any Investment Manager appointed pursuant to Section 9.4 shall have sole
responsibility for the investment of the portion of the assets of the Trust
Fund to be managed and controlled by such Investment Manager. An Investment
Manager may place orders for the purchase and sale of securities directly
with brokers and dealers.
SECTION 9.3 NO JOINT FIDUCIARY RESPONSIBILITIES
This Article IX is intended to allocate to each Fiduciary the individual
responsibility for the prudent execution of the functions assigned to him, and
none of such responsibilities or any other responsibilities shall be shared by
two or more of such Fiduciaries unless such sharing is provided by a specific
provision of the Plan or any related Trust Agreement. Whenever one Fiduciary is
required to follow the directions of another Fiduciary, the two Fiduciaries
shall not be deemed to have been assigned a shared responsibility, but the
responsibility of the Fiduciary giving the directions shall be deemed his sole
responsibility, and the responsibility of the Fiduciary receiving those
directions shall be to follow them insofar as such instructions are on their
face proper under applicable law. To the extent that fiduciary responsibilities
are allocated to an Investment Manager, such responsibilities are so allocated
solely to such Investment Manager alone, to be exercised by such Investment
Manager alone and not in conjunction with any other Fiduciary, and the Trustee
shall be under no obligation to manage any asset of the Trust Fund which is
subject to the management of such Investment Manager.
SECTION 9.4 INVESTMENT MANAGER
The Employer may appoint a qualified Investment Manager or Managers to manage
any portion or all of the assets of the Trust Fund. For the purpose of this Plan
and the related Trust, a "qualified Investment Manager" means an individual,
firm or corporation who has been so appointed by the Employer to serve as
Investment Manager hereunder, and who is and has acknowledged in writing that he
is (a) a Fiduciary with respect to the Plan, (b) bonded as required by ERISA,
and (c) either (i) registered as an investment advisor under the Investment
Advisors Act of 1940, (ii) a bank as defined in said Act, or (iii) an insurance
company qualified to perform investment management services under the laws of
more than one state of the United States.
Any such appointment shall be by a vote of the Board of Directors of the
Employer naming the Investment Manager so appointed and designating the portion
of the assets of the
68
Trust Fund to be managed and controlled by such Investment Manager. Said vote
shall be evidenced by a certificate in writing signed by the duly authorized
officer of the Board and shall become effective on the date specified in such
certificate but not before delivery to the Trustee of a copy of such
certificate, together with a written acknowledgment by such Investment Manager
of the facts specified in the second sentence of this Section.
SECTION 9.5 ADVISOR TO FIDUCIARY
A Fiduciary may employ one or more persons to render advice concerning any
responsibility such Fiduciary has under the Plan and related Trust Agreement.
SECTION 9.6 SERVICE IN MULTIPLE CAPACITIES
Any person or group of persons may serve in more than one fiduciary capacity
with respect to the Plan, specifically including service both as Plan
Administrator and as a Trustee of the Trust; provided, however, that no person
may serve in a fiduciary capacity who is precluded from so serving pursuant to
Section 411 of ERISA.
SECTION 9.7 APPOINTMENT OF PLAN ADMINISTRATOR
The Employer shall designate the Plan Administrator in the Adoption Agreement.
The Plan Administrator may be an individual, a committee of two or more
individuals, whether or not, in either such case, the individual or any of such
individuals are Employees of the Employer, a consulting firm or other
independent agent, the Trustee (with its consent), the Board of the Employer, or
the Employer itself. Except as the Employer shall otherwise expressly determine,
the Plan Administrator shall be charged with the full power and responsibility
for administering the Plan in all its details. If no Plan Administrator has been
appointed by the Employer, or if the person designated as Plan Administrator is
not serving as such for any reason, the Employer shall be deemed to be the Plan
Administrator. The Plan Administrator may be removed by the Employer or may
resign by giving written notice to the Employer, and, in the event of the
removal, resignation, death or other termination of service of the Plan
Administrator, the Employer shall, as soon as is practicable, appoint a
successor Plan Administrator, such successor thereafter to have all of the
rights, privileges, duties and obligations of the predecessor Plan
Administrator.
SECTION 9.8 POWERS OF THE PLAN ADMINISTRATOR
69
The Plan Administrator is hereby vested with all powers and authority necessary
in order to carry out its duties and responsibilities in connection with the
administration of the Plan as herein provided, and is authorized to make such
rules and regulations as it may deem necessary to carry out the provisions of
the Plan and the Trust Agreement. The Plan Administrator may from time to time
appoint agents to perform such functions involved in the administration of the
Plan as it may deem advisable. The Plan Administrator shall have the
discretionary authority to determine any questions arising in the
administration, interpretation and application of the Plan, including any
questions submitted by the Trustee on a matter necessary for it to properly
discharge its duties; and the decision of the Plan Administrator shall be
conclusive and binding on all persons.
SECTION 9.9 DUTIES OF THE PLAN ADMINISTRATOR
The Plan Administrator shall keep on file a copy of the Plan and the Trust
Agreement(s), including any subsequent amendments, and all annual reports of the
Trustee(s), and such annual reports or registration statements as may be
required by the laws of the United States, or other jurisdiction, for
examination by Members in the Plan during reasonable business hours. Upon
request by any Member, the Plan Administrator shall furnish him with a statement
of his interest in the Plan as determined by the Plan Administrator as of the
close of the preceding Plan Year.
SECTION 9.10 ACTION BY THE PLAN ADMINISTRATOR
In the event that there shall at any time be two or more persons who constitute
the Plan Administrator, such persons shall act by concurrence of a majority
thereof.
SECTION 9.11 DISCRETIONARY ACTION
Wherever, under the provisions of this Plan, the Plan Administrator is given any
discretionary power or powers, such power or powers shall not be exercised in
such manner as to cause any discrimination prohibited by the Code in favor of or
against any Member, Employee or class of Employees. Any discretionary action
taken by the Plan Administrator hereunder shall be consistent with any prior
discretionary action taken by it under similar circumstances and to this end the
Plan Administrator shall keep a record of all discretionary action taken by it
under any provision hereof.
SECTION 9.12 COMPENSATION AND EXPENSES OF PLAN ADMINISTRATOR
70
Employees of the Employer shall serve without compensation for services as Plan
Administrator, but all expenses of the Plan Administrator shall be paid by the
Employer or in accordance with Section 9.2. Such expenses shall include any
expenses incidental to the functioning of the Plan, including, but not limited
to, attorney's fees, accounting and clerical charges, and other costs of
administering the Plan. Non-Employee Plan Administrators shall receive such
compensation as the Employer shall determine.
SECTION 9.13 RELIANCE ON OTHERS
The Plan Administrator and the Employer shall be entitled to rely upon all
valuations, certificates and reports furnished by the Trustee(s), upon all
certificates and reports made by an accountant or actuary selected by the Plan
Administrator and approved by the Employer and upon all opinions given by any
legal counsel selected by the Plan Administrator and approved by the Employer,
and the Plan Administrator and the Employer shall be fully protected in respect
of any action taken or suffered by them in good faith in reliance upon such
Trustee(s), accountant, actuary or counsel and all action so taken or suffered
shall be conclusive upon each of them and upon all Members, retired Members, and
Former Members and their Beneficiaries, and all other persons.
SECTION 9.14 SELF INTEREST
No person who is the Plan Administrator shall have any right to decide upon any
matter relating solely to himself or to any of his rights or benefits under the
Plan. Any such decision shall be made by another Plan Administrator or the
Employer.
SECTION 9.15 PERSONAL LIABILITY - INDEMNIFICATION
The Plan Administrator shall not be personally liable by virtue of any
instrument executed by him or on his behalf. Neither the Plan Administrator, the
Employer, nor any of its officers or directors shall be personally liable for
any action or inaction with respect to any duty or responsibility imposed upon
such person by the terms of the Plan unless such action or inaction is
judicially determined to be a breach of that person's fiduciary responsibility
with respect to the Plan under any applicable law. The limitation contained in
the preceding sentence shall not, however, prevent or preclude a compromise
settlement of any controversy involving the Plan, the Plan Administrator, the
Employer, or any of its officers and directors. The Employer may advance money
in connection with questions of
71
liability prior to any final determination of a question of liability. Any
settlement made under this Article IX shall not be determinative of any breach
of fiduciary duty hereunder.
The Employer will indemnify every person who is or was a Plan Administrator,
officer or member of the Board or a person who provides services without
compensation to the Plan for any liability (including reasonable costs of
defense and settlement) arising by reason of any act or omission affecting the
Plan or affecting the Member or Beneficiaries thereof, including, without
limitation, any damages, civil penalty or excise tax imposed pursuant to ERISA;
provided (1) that the act or omission shall have occurred in the course of the
person's service as Plan Administrator, officer of the Employer or member of the
Board or was within the scope of the Employment of any Employee of the Employer
or in connection with a service provided without compensation to the Plan, (2)
that the act or omission be in good faith as determined by the Employer, whose
determination, made in good faith and not arbitrarily or capriciously, shall be
conclusive, and (3) that the Employer's obligation hereunder shall be offset to
the extent of any otherwise applicable insurance coverage, under a policy
maintained by the Employer, or any other person, or other source of
indemnification.
SECTION 9.16 INSURANCE
The Plan Administrator shall have the right to purchase such insurance as it
deems necessary to protect the Plan and the Trustee from loss due to any breach
of fiduciary responsibility by any person. Any premiums due on such insurance
may be paid from Plan assets provided that, if such premiums are so paid, such
policy of insurance must permit recourse by the insurer against the person who
breaches his fiduciary responsibility. Nothing in this Article IX shall prevent
the Plan Administrator or the Employer, at its, or his, own expense, from
providing insurance to any person to cover potential liability of that person as
a result of a breach of fiduciary responsibility, nor shall any provisions of
the Plan preclude the Employer from purchasing from any insurance company the
right of recourse under any policy by such insurance company.
SECTION 9.17 CLAIMS PROCEDURES
Claims for benefits under the Plan shall be filed with the Plan Administrator on
forms supplied by the Employer. Written notice of the disposition of a claim
shall be furnished to the claimant within 90 days after the application thereof
is filed unless special circumstances require an extension of time for
processing the claim. If such an extension
72
of time is required, written notice of the extension shall be furnished to the
claimant prior to the termination of said 90-day period, and such notice shall
indicate the special circumstances which make the postponement appropriate.
SECTION 9.18 CLAIMS REVIEW PROCEDURES
In the event a claim is denied, the reasons for the denial shall be specifically
set forth in the notice described in this Section 9.18 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 request
further consideration and review of the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims review
procedures. Any Employee, former Employee, or Beneficiary of either, who has
been denied a benefit by a decision of the Plan Administrator pursuant to
Section 9.17 shall be entitled to request the Plan Administrator to give further
consideration to his claim by filing with the Plan Administrator (on a form
which may be obtained from the Plan Administrator) a request for a hearing. Such
request, together with a written statement of the reasons why the claimant
believes his claim should be allowed, shall be filed with the Plan Administrator
no later than 60 days after receipt of the written notification provided for in
Section 9.17. The Plan Administrator shall then conduct a hearing within the
next 60 days, at which the claimant may be represented by an attorney or any
other representative of his choosing and at which the claimant shall have an
opportunity to submit written and oral evidence and arguments in support of his
claim. At the hearing (or prior thereto upon 5 business days' written notice to
the Plan Administrator), the claimant or his representative shall have an
opportunity to review all documents in the possession of the Plan Administrator
which are pertinent to the claim at issue and its disallowance. A final
disposition of the claim shall be made by the Plan Administrator within 60 days
of receipt of the appeal unless there has been an extension of 60 days and shall
be communicated in writing to the claimant. Such communication shall be written
in a manner calculated to be understood by the claimant and shall include
specific reasons for the disposition and specific references to the pertinent
Plan provisions on which the disposition is based. For all purposes under the
Plan, such decision on claims (where no review is requested) and decision on
review (where review is requested) shall be final, binding and conclusive on all
interested persons as to participation and benefits eligibility, the amount of
benefits and as to any other matter of fact or interpretation relating to the
Plan.
ARTICLE X
73
MISCELLANEOUS PROVISIONS
SECTION 10.1 GENERAL LIMITATIONS
(A) In order that the Plan be maintained as a qualified plan and trust under
the Code, contributions in respect of a Member shall be subject to the
limitations set forth in this Section, notwithstanding any other provision
of the Plan. The contributions in respect of a Member to which this Section
is applicable are his own contributions and/or deferrals and the Employer's
contributions.
For purposes of this Section 10.1, a Member's contributions shall be
determined without regard to any rollover contributions as provided in
Section 402(a)(5) of the Code.
(B) Limitations on Allocations
(1) If the Member does not participate in, and has never participated in
another qualified plan maintained by the Employer or a welfare benefit
fund, as defined in Plan 419(e) of the Code maintained by the Employer, or
an individual medical account, as defined in Plan 415(l)(2) of the Code,
maintained by the employer, or a simplified employee pension, as defined in
Plan 408(k) of the Code, maintained by the Employer, which provides an
annual addition as defined in paragraph 13, the amount of annual additions
which may be credited to the Member's account for any limitation year will
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 Member's account would cause
the annual additions for the limitation year to exceed the maximum
permissible amount, 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 Member's actual compensation for the
limitation year, the Employer may determine the maximum permissible amount
for a Member on the basis of a reasonable estimation of the Member's
compensation for the limitation year, uniformly determined for all Members
similarly situated.
74
(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 Member's actual compensation for the
limitation year.
(4) If pursuant to paragraph 3 above or as a result of the allocation of
forfeitures, there is an excess amount the excess will be disposed of as
follows:
(a) Any nondeductible voluntary employee contributions (plus
attributable earnings), to the extent they would reduce the
excess amount, will be returned to the Member;
(b) If after the application of paragraph (a) an excess amount still
exists, any elective deferrals (plus attributable earnings), to
the extent they would reduce the excess amount, will be
distributed to the Member;
(c) If after the application of paragraph (b) an excess amount still
exists, and the Member is covered by the Plan at the end of the
limitation year, the excess amount in the Member's account will
be used to reduce employer contributions (including any
allocation of forfeitures) for such Member in the next limitation
year, and each succeeding limitation year if necessary.
(d) If after the application of paragraph (b) an excess amount still
exists, and the Member 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 for all remaining Members in the
next limitation year, and each succeeding limitation year if
necessary.
(e) If a suspense account is in existence at any time during a
limitation year pursuant to this paragraph 4, 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
75
in the suspense account must be allocated and reallocated to
Members' accounts before any employer or any employee
contributions may be made to the Plan for that limitation year.
Excess amounts may not be distributed to Members or former
Members.
(5) This paragraph applies if, in addition to this Plan, the Member is
covered under another qualified master or prototype defined contribution
plan maintained by the Employer, a welfare benefit fund maintained by the
Employer, an individual medical account maintained by the Employer, or a
simplified employee pension maintained by the Employer, that provides an
annual addition as defined in paragraph 13, during any limitation year. The
annual additions which may be credited to a Member's account under this
Plan for any such limitation year will not exceed the maximum permissible
amount reduced by the annual additions credited to a Member's account under
the other qualified master and prototype defined contribution plans,
welfare benefit funds, individual medical accounts, and simplified employee
pensions for the same limitation year. If the annual additions with respect
to the Member under other qualified master and prototype defined
contribution plans, welfare benefit funds, individual medical accounts, and
simplified employee pensions maintained by the Employer are less than the
maximum permissible amount and the employer contribution that would
otherwise be contributed or allocated to the Member's account 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 funds for the limitation
year will equal the maximum permissible amount. If the annual additions
with respect to the Member under such other qualified master and prototype
defined contribution plans, welfare benefit funds, individual medical
accounts, and simplified employee pensions in the aggregate are equal to or
greater than the maximum permissible amount, no amount will be contributed
or allocated to the Member's account under this Plan for the limitation
year.
(6) Prior to determining the Member's actual compensation for the
limitation year, the Employer may determine the maximum permissible amount
for a Member in the manner described in paragraph 2.
76
(7) 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 Member's actual compensation for the
limitation year.
(8) If, pursuant to paragraph 7 or as a result of the allocation of
forfeitures, a Member'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 simplified employee pension
will be deemed to have been allocated first, followed by annual additions
to a welfare benefit fund or individual medical account, regardless of the
actual allocation date.
(9) If an excess amount was allocated to a Member 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:
(a) the total excess amount allocated as of such date, times
(b) the ratio of (i) the annual additions allocated to the Member for
the limitation year as of such date under this Plan to (ii) the
total annual additions allocated to the Member for the limitation
year as of such date under this and all the other qualified
master or prototype defined contribution plans.
(10) Any excess amount attributed to this Plan will be disposed in the
manner described in paragraph 4.
(11) If the Member is covered under another qualified defined contribution
plan maintained by the employer which is not a master or prototype plan,
annual additions which may be credited to the Member's account under this
Plan for any limitation year will be limited in accordance with paragraphs
5 through 10 as though the other plan were a master or prototype plan.
(12) If the employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Member in this Plan, the sum of the
Member'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 Member's account under this Plan for any
limitation year will be limited in
77
accordance with the adoption agreement. This paragraph 12 does not apply
for limitation years beginning on or after January 1, 2000.
(13) Definitions - Annual additions: The sum of the following amounts
credited to a Member's account for the limitation year:
(a) employer contributions;
(b) employee contributions;
(c) forfeitures;
(d) amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Plan 415(l)(2) of the Code,
which is part of a pension or annuity plan maintained by the
employer are treated as annual additions to a defined
contribution plan. Also amounts derived from contributions
paid or accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to
post-retirement medical benefits, allocated to the separate
account of a key employee, as defined in Plan 419A(d)(3) of
the Code, under a welfare benefit fund, as defined in Plan
419(e) of the Code, maintained by the employer are treated
as annual additions to a defined contribution plan; and
(e) allocations under a simplified employee pension. For this
purpose, any excess amount applied under paragraphs 4 or 10
in the limitation year to reduce employer contributions will
be considered annual additions for such limitation year.
Compensation will mean compensation as required to be
reported under Plans 6041, 6051, and 6052 of the Code
(Wages, tips and other compensation as reported on Form
W-2). Compensation is defined as
78
wages within the meaning of Plan 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 Plans 6041(d), 6051(a)(3), and 6052.
Compensation must be determined without regard to any rules
under Plan 3401(a) 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 Plan 3401(a)(2)).
For any self-employed individual, compensation will mean
earned income. 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 in gross income
during such limitation year. Notwithstanding the preceding
sentence, compensation for a Member 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 Member would have received
for the limitation year if the Member had been paid at the
rate of compensation paid immediately before becoming
permanently and totally disabled; for limitation years
beginning before January 1, 1997, such imputed compensation
for the disabled Member may be taken into account only if
the Member is not a Highly Compensated Employee and
contributions made on behalf of such Member are
nonforfeitable when made. For limitation years beginning
after December 31, 1997, for purposes of applying the
limitations of this article, compensation paid or made
available during such limitation year shall include any
elective deferral (as defined in Code Plan 402(g)(3)), and
any amount which is contributed or deferred by the employer
at the election of the employee and which is not includable
in the gross income of the employee by reason of Plan 125 or
457.
(14) Defined benefit fraction: A fraction, the numerator of which is the
sum of the Member'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 Plans 415(b) and (d) of the Code
or 140 percent of the highest average compensation, including any
adjustments under Plan
79
415(b) of the Code. Notwithstanding the above, if the Member was a Member
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 Member had accrued as of the close of the last
limitation year beginning before January 1, 1987, disregarding any changes
in the terms and conditions of the Plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans individually and in the
aggregate satisfied the requirements of Plan 415 for all limitation years
beginning before January 1, 1987.
(15) Defined contribution dollar limitation: $30,000, as adjusted under
Plan 415(d).
(16) Defined contribution fraction: A fraction, the numerator of which is
the sum of the annual additions to the Member'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 Member's nondeductible employee
contributions to all defined benefit plans, whether or not terminated,
maintained by the employer, and the annual additions attributable to all
welfare benefit funds, individual medical accounts, and simplified employee
pensions, 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
dollar limitation determined under Plans 415(b) and (d) of the Code in
effect under Plan 415(c)(l)(A) of the Code or 35 percent of the Member's
compensation for such year. If the employee was a Member as of the end of
the first day of the first limitation year beginning after December 31,
1986, in one or more defined contribution plans maintained by the employer
which were in existence on May 6, 1986, the numerator of this fraction will
be adjusted if the sum of this fraction and the defined benefit fraction
would otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1)
80
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 Plan 415 limitation applicable
to the first limitation year beginning on or after January 1, 1987. The
annual addition for any limitation year beginning before January 1, 1987,
shall not be recomputed to treat all employee contributions as annual
additions.
(17) For purposes of this Section, Employer shall mean the employer that
adopts this Plan, and all members of a controlled group of corporations (as
defined in Plan 414(b) of the Code as modified by Plan 415(h)), all
commonly controlled trades or businesses (as defined in Plan 414(c) as
modified by Plan 415(h)) or affiliated service groups (as defined in Plan
414(m)) of which the adopting employer is a part, and any other entity
required to be aggregated with the employer pursuant to regulations under
Plan 414(o) of the Code.
(18) Excess amount: The excess of the Member's annual additions for the
limitation year over the maximum permissible amount.
(19) Highest average compensation: The average compensation for the three
consecutive years of service with the employer that produces the highest
average.
(20) Limitation year: The limitation year as specified 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.
(21) Master or prototype plan: A plan the form of which is the subject of a
favorable opinion letter from the Internal Revenue Service.
(22) Maximum permissible amount: The maximum annual addition that may be
contributed or allocated to a Member's account under the Plan for any
limitation year shall not exceed the lesser of:
(a) the defined contribution dollar limitation, or
81
(b) 25 percent of the Member's compensation for the limitation
year. The compensation limitation referred to in (b) shall
not apply to any contribution for medical benefits (within
the meaning of Plan 401(h) or Plan 419A(f)(2) of the Code)
which is otherwise treated as an annual addition under Plan
415(l)(1) or 419A(d)(2) of the Code. 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 limitation multiplied by the following
fraction:
Number of Months in the Short Limitation Year
12
(23) Projected Annual Benefit: 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 Member would be entitled under the terms
of the Plan assuming:
(a) the Member will continue employment until normal retirement age
under the Plan (or current age, if later), and
(b) the Member'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.
(C) Membership in the Plan shall not give any Employee the right to be retained
in the Employment of the Employer and shall not affect the right of the
Employer to discharge any Employee.
(D) Each Member, Spouse and Beneficiary assumes all risk in connection with any
decrease in the market value of the assets of the Trust Fund. Neither the
Employer nor the Trustee guarantees that upon withdrawal, the value of a
Member's Account will be equal to or greater than the amount of the
Member's own deferrals or contributions, or those credited on his behalf in
which the Member has a vested interest, under the Plan.
82
(E) The establishment, maintenance or crediting of a Member's Account pursuant
to the Plan shall not vest in such Member any right, title or interest in
the Trust Fund except at the times and upon the terms and conditions and to
the extent expressly set forth in the Plan and the Trust Agreement.
(F) The Trust Fund shall be the sole source of payments under the Plan and the
Employer, Plan Administrator and TPA assume no liability or responsibility
for such payments, and each Member, Spouse or Beneficiary who shall claim
the right to any payment under the Plan shall be entitled to look only to
the Trust Fund for such payment.
SECTION 10.2 TOP HEAVY PROVISIONS
The Plan will be considered a Top Heavy Plan for any Plan Year if it is
determined to be a Top Heavy Plan as of the last day of the preceding Plan Year.
The provisions of this Section 10.2 shall apply and supersede all other
provisions in the Plan during each Plan Year with respect to which the Plan is
determined to be a Top Heavy Plan.
(A) For purposes of this Section 10.2, the following terms shall have the
meanings set forth below:
(1) "AFFILIATE" shall mean any entity affiliated with the Employer within
the meaning of Section 414(b), 414(c) or 414(m) of the Code, or
pursuant to the IRS Regulations under Section 414(o) of the Code,
except that for purposes of applying the provisions hereof with
respect to the limitation on contributions, Section 415(h) of the Code
shall apply.
(2) "AGGREGATION GROUP" shall mean the group composed of each qualified
retirement plan of the Employer or an Affiliate in which a Key
Employee is a member and each other qualified retirement plan of the
Employer or an Affiliate which enables a plan of the Employer or an
Affiliate in which a Key Employee is a member to satisfy Sections
401(a)(4) or 410 of the Code. In addition, the TPA, at the direction
of the Plan Administrator, may choose to treat any other qualified
retirement plan as a member of the Aggregation Group if such
Aggregation Group will continue to satisfy Sections 401(a)(4) and 410
of the Code with such plan being taken into account.
83
(3) "KEY EMPLOYEE" shall mean a "Key Employee" as defined in Sections
416(i)(1) and (5) of the Code and the IRS Regulations thereunder. For
purposes of Section 416 of the Code and for purposes of determining
who is a Key Employee, an Employer which is not a corporation may have
"officers" only for Plan Years beginning after December 31, 1985. For
purposes of determining who is a Key Employee pursuant to this
Subparagraph (3), compensation shall have the meaning prescribed in
Section 414(s) of the Code, or to the extent required by the Code or
the IRS Regulations, Section 1.415-2(d) of the IRS Regulations.
(4) "NON-KEY EMPLOYEE" shall mean a "Non-Key Employee" as defined in
Section 416(i)(2) of the Code and the IRS Regulations thereunder.
(5) "TOP HEAVY PLAN" shall mean a "Top Heavy Plan" as defined in Section
416(g) of the Code and the IRS Regulations thereunder.
(B) Subject to the provisions of Paragraph (D) below, for each Plan Year that
the Plan is a Top Heavy Plan, the Employer's contribution (including
contributions attributable to salary reduction or similar arrangements)
allocable to each Employee (or to all eligible employees other than Key
Employees at the election of the Employer) who has satisfied the
eligibility requirement(s) of Article II, Section 2, and who is in service
at the end of the Plan Year, shall not be less than the lesser of (i) 3% of
such eligible Employee's compensation (as defined in Section 414(s) of the
Code or to the extent required by the Code or the IRS Regulations, Section
1.415-2(d) of the Regulations), or (ii) the percentage at which Employer
contributions for such Plan Year are made and allocated on behalf of the
Key Employee for whom such percentage is the highest. For the purpose of
determining the appropriate percentage under clause (ii), all defined
contribution plans required to be included in an Aggregation Group shall be
treated as one plan. Clause (ii) shall not apply if the Plan is required to
be included in an Aggregation Group which enables a defined benefit plan
also required to be included in said Aggregation Group to satisfy Sections
401(a)(4) or 410 of the Code.
(C) If the Plan is a Top Heavy Plan for any Plan Year and (i) the Employer has
elected a vesting schedule under Article VI for an employer contribution
type which does not satisfy the minimum Top Heavy vesting requirements or
(ii) if the Employer has not elected a vesting schedule for an employer
contribution type, the vested interest of each Member, who is credited with
at least one Hour of Employment on or after the Plan becomes a Top Heavy
Plan, for each employer contribution type in his Account described
84
in clause (i) or (ii) above, shall not be less than the percentage
determined in accordance with the following schedule:
Completed Years of Vested
Employment Percentage
------------------ ----------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
Notwithstanding the schedule provided above, if the Plan is a Top Heavy
Plan for any Plan Year and if an Employer has elected a cliff vesting
schedule for an employer contribution type described in clause (i) or (ii)
above, the vested interest of each Member, who is credited with at least
one Hour of Employment on or after the Plan becomes a Top Heavy Plan, for
such employer contribution type in his Account, shall not be less than the
percentage determined in accordance with the following schedule:
Completed Years of Vested
Employment Percentage
------------------ ----------
Less than 3 0%
3 or more 100%
In the event that an Employer elects, in its Adoption Agreement, to use the
hour of service method for determining vesting service, Year of Service
shall be substituted for Year of Employment for determining vesting under
this Article X.
(D) The TPA shall, to the maximum extent permitted by the Code and in
accordance with the IRS Regulations, apply the provisions of this Section
10.2 by taking into
85
account the benefits payable and the contributions made under any other
qualified plan maintained by the Employer, to prevent inappropriate
omissions or required duplication of minimum contributions.
SECTION 10.3 INFORMATION AND COMMUNICATIONS
Each Employer, Member, Spouse and Beneficiary shall be required to furnish the
TPA with such information and data as may be considered necessary by the TPA.
All notices, instructions and other communications with respect to the Plan
shall be in such form as is prescribed from time to time by the TPA, shall be
mailed by first class mail or delivered personally, and shall be deemed to have
been duly given and delivered only upon actual receipt thereof by the TPA. All
information and data submitted by an Employer or a Member, including a Member's
birth date, marital status, salary and circumstances of his Employment and
termination thereof, may be accepted and relied upon by the TPA. All
communications from the Employer or the Trustee to a Member, Spouse or
Beneficiary shall be deemed to have been duly given if mailed by first class
mail to the address of such person as last shown on the records of the Plan.
SECTION 10.4 SMALL ACCOUNT BALANCES
Notwithstanding the foregoing provisions of the Plan, and except as provided in
Section 7.3, if the value of all portions of a Member's Account under the Plan,
when aggregated, is equal to or exceeds $500, then the Account will not be
distributed without the consent of the Member prior to age 65 (at the earliest),
but if the aggregate value of all portions of his Account is less than $500,
then his Account will be distributed as soon as practicable following the
termination of Employment by the Member.
SECTION 10.5 AMOUNTS PAYABLE TO INCOMPETENTS, MINORS OR ESTATES
If the Plan Administrator shall find that any person to whom any amount is
payable under the Plan is unable to care for his affairs because of illness or
accident, or is a minor, or has died, then any payment due him or his estate
(unless a prior claim therefor has been made by a duly appointed legal
representative) may be paid to his Spouse, relative or any other person deemed
by the Plan Administrator to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge of
the liability of the Trust Fund therefor.
86
SECTION 10.6 NON-ALIENATION OF AMOUNTS PAYABLE
Except insofar as may otherwise be required by applicable law, or Article VIII,
or pursuant to the terms of a Qualified Domestic Relations Order, no amount
payable under the Plan shall be subject in any manner to alienation by
anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge
or encumbrance of any kind, and any attempt to so alienate shall be void; nor
shall the Trust Fund in any manner be liable for or subject to the debts or
liabilities of any person entitled to any such amount payable; and further, if
for any reason any amount payable under the Plan would not devolve upon such
person entitled thereto, then the Employer, in its discretion, may terminate his
interest and hold or apply such amount for the benefit of such person or his
dependents as it may deem proper. For the purposes of the Plan, a "Qualified
Domestic Relations Order" means any judgment, decree or order (including
approval of a property settlement agreement) which has been determined by the
Plan Administrator, in accordance with procedures established under the Plan, to
constitute a Qualified Domestic Relations Order within the meaning of Section
414(p)(1) of the Code (or any domestic relations order entered before January 1,
1985). No amounts may be withdrawn under Article VII, and no loans granted under
Article VIII, if the TPA has received a document which may be determined
following its receipt to be a Qualified Domestic Relations Order prior to
completion of review of such order by the Plan Administrator within the time
period prescribed for such review by the IRS Regulations.
SECTION 10.7 UNCLAIMED AMOUNTS PAYABLE
If the TPA cannot ascertain the whereabouts of any person to whom an amount is
payable under the Plan, and if, after 5 years from the date such payment is due,
a notice of such payment due is mailed to the address of such person, as last
shown on the records of the Plan, and within 3 months after such mailing such
person has not filed with the TPA or Plan Administrator written claim therefor,
the Plan Administrator may direct in accordance with ERISA that the payment
(including the amount allocable to the Member's contributions) be cancelled, and
used in abatement of the Plan's administrative expenses, provided that
appropriate provision is made for re-crediting the payment if such person
subsequently makes a claim therefor.
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SECTION 10.8 LEAVES OF ABSENCE
(A) If the Employer's personnel policies allow leaves of absence for all
similarly situated Employees on a uniformly available basis under the
circumstances described in Paragraphs (B)(1)-(4) below, then contribution
allocations and vesting service will continue to the extent provided in
Paragraphs (B)(1)-(4).
(B) For purposes of the Plan, there are four types of approved Leaves of
Absence:
(1) Nonmilitary leave granted to a Member for a period not in excess of
one year during which service is recognized for vesting purposes and
the Member is entitled to share in any supplemental contributions
under Article III or forfeitures under Article VI, if any, on a
pro-rata basis, determined by the Salary earned during the Plan Year
or Contribution Determination Period; or
(2) Nonmilitary leave or layoff granted to a Member for a period not in
excess of one year during which service is recognized for vesting
purposes, but the Member is not entitled to share in any contributions
or forfeitures as defined under (1) above, if any, during the period
of the leave; or
(3) To the extent not otherwise required by applicable law, military or
other governmental service leave granted to a Member from which he
returns directly to the service of the Employer. Under this leave, a
Member may not share in any contributions or forfeitures as defined
under (1) above, if any, during the period of the leave, but vesting
service will continue to accrue; or
(4) To the extent not otherwise required by applicable law, a military
leave granted at the option of the Employer to a Member who is subject
to military service pursuant to an involuntary call-up in the Reserves
of the U.S. Armed Services from which he returns to the service of the
Employer within 90 days of his discharge from such military service.
Under this leave, a Member is entitled to share in any contributions
or forfeitures as defined under (1) above, if any, and vesting service
will continue to accrue. Notwithstanding any provision of the Plan to
the contrary, if a Member has one or more loans outstanding at the
time of this leave, repayments on such loan(s) may be suspended, if
the Member so elects, until such time as the Member returns to the
service of the Employer or the end of the leave, if earlier.
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(C) Notwithstanding any provision of this Plan to the contrary, effective
December 12, 1994, contribution allocations and vesting service with
respect to qualified military service will be provided in accordance with
Section 414(u) of the Code. Loan repayments will be suspended under this
Plan as permitted under Section 414(u)(4) of the Code during such period of
qualified military service.
SECTION 10.9 RETURN OF CONTRIBUTIONS TO EMPLOYER
(A) In the case of a contribution that is made by an Employer by reason of a
mistake of fact, the Employer may request the return to it of such
contribution within one year after the payment of the contribution,
provided such refund is made within one year after the payment of the
contribution.
(B) In the case of a contribution made by an Employer or a contribution
otherwise deemed to be an Employer contribution under the Code, such
contribution shall be conditioned upon the deductibility of the
contribution by the Employer under Section 404 of the Code. To the extent
the deduction for such contribution is disallowed, in accordance with IRS
Regulations, the Employer may request the return to it of such contribution
within one year after the disallowance of the deduction.
(C) In the event that the IRS determines that the Plan is not initially
qualified under the Code, any contribution made incident to that initial
qualification by the Employer must be returned to the Employer within one
year after the date the initial qualification is denied, but only if the
application for the qualification is made by the time prescribed by law for
filing the Employer's return for the taxable year in which the Plan is
adopted, or such later date as the Secretary of the Treasury may prescribe.
The contributions returned under (A), (B) or (C) above may not include any gains
on such excess contributions, but must be reduced by any losses.
SECTION 10.10 CONTROLLING LAW
The Plan and all rights thereunder shall be governed by and construed in
accordance with ERISA and the laws of the State of New York, without regard to
the principles of the conflicts of laws thereof.
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ARTICLE XI
AMENDMENT & TERMINATION
SECTION 11.1 GENERAL
While the Plan is intended to be permanent, the Plan may be amended or
terminated completely by the Employer at any time at the discretion of its Board
of Directors. Except where necessary to qualify the Plan or to maintain
qualification of the Plan, no amendment shall reduce any interest of a Member
existing prior to such amendment. Subject to the terms of the Adoption
Agreement, written notice of such amendment or termination as resolved by the
Board shall be given to the Trustee, the Plan Administrator and the TPA. Such
notice shall set forth the effective date of the amendment or termination or
cessation of contributions.
If the Employer's plan fails to attain or retain qualification, such plan will
no longer participate in this master/prototype plan and will be considered an
individually designed plan.
SECTION 11.2 TERMINATION OF PLAN AND TRUST
This Plan and any related Trust Agreement shall in any event terminate whenever
all property held by the Trustee shall have been distributed in accordance with
the terms hereof.
SECTION 11.3 LIQUIDATION OF TRUST ASSETS IN THE EVENT OF TERMINATION
In the event that the Employer's Board of Directors shall decide to terminate
the Plan, or, in the event of complete cessation of Employer contributions, the
rights of Members to the amounts standing to their credit in their Accounts
shall be deemed fully vested and the Plan Administrator shall direct the Trustee
to either continue the Trust in full force and effect and continue so much of
the Plan in full force and effect as is necessary to carry out the orderly
distribution of benefits to Members and their Beneficiaries upon retirement,
Disability, death or termination of Employment; or (a) reduce to cash such part
or all of the Plan assets as the Plan Administrator may deem appropriate; (b)
pay the liabilities, if any, of the Plan; (c) value the remaining assets of the
Plan as of the date of notification of termination and proportionately adjust
Members' Account balances; (d) distribute such assets in cash to the credit of
their
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respective Accounts as of the notification of the termination date; and (e)
distribute all balances which have been segregated into a separate fund to the
persons entitled thereto; provided that no person in the event of termination
shall be required to accept distribution in any form other than cash.
SECTION 11.4 PARTIAL TERMINATION
The Employer may terminate the Plan in part without causing a complete
termination of the Plan. In the event a partial termination occurs, the Plan
Administrator shall determine the portion of the Plan assets attributable to the
Members affected by such partial termination and the provisions of Section 11.3
shall apply with respect to such portion as if it were a separate fund.
SECTION 11.5 POWER TO AMEND
(A) Subject to Section 11.6, the Employer, through its Board of Directors,
shall have the power to amend the Plan in any manner which it deems
desirable, including, but not by way of limitation, the right to change or
modify the method of allocation of contributions, to change any provision
relating to the distribution of payment, or both, of any of the assets of
the Trust Fund. Further, the Employer may (i) change the choice of options
in the Adoption Agreement; (ii) add overriding language in the Adoption
Agreement when such language is necessary to satisfy Section 415 or Section
416 of the Code because of the required aggregation of multiple plans; and
(iii) add certain model amendments published by the IRS which specifically
provide that their adoption will not cause the Plan to be treated as
individually designed. An Employer that amends the Plan for any other
reason, will be considered to have an individually designed plan.
Any amendment shall become effective upon the vote of the Board of
Directors of the Employer, unless such vote of the Board of Directors of
the Employer specifies the effective date of the amendment.
Such effective date of the amendment may be made retroactive to the vote of
the Board of Directors, to the extent permitted by law.
(B) The Employer expressly recognizes the authority of the Sponsor, Pentegra
Services, Inc., to amend the Plan from time to time, except with respect to
elections of the Employer in the Adoption Agreement, and the Employer shall
be deemed to
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have consented to any such amendment. The Employer shall receive a written
instrument indicating the amendment of the Plan and such amendment shall
become effective as of the date of such instrument. No such amendment shall
in any way impair, reduce or affect any Member's vested and nonforfeitable
rights in the Plan and Trust.
SECTION 11.6 SOLELY FOR BENEFIT OF MEMBERS, TERMINATED MEMBERS AND THEIR
BENEFICIARIES
No changes may be made in the Plan which shall vest in the Employer, directly or
indirectly, any interest, ownership or control in any of the present or future
assets of the Trust Fund.
No part of the funds of the Trust other than such part as may be required to pay
taxes, administration expenses and fees, shall be reduced by any amendment or be
otherwise used for or diverted to purposes other than the exclusive benefit of
Members, retired Members, Former Members, and their Beneficiaries, except as
otherwise provided in Section 10.9 and under applicable law.
No amendment shall become effective which reduces the nonforfeitable percentage
of benefit that would be payable to any Member if his Employment were to
terminate and no amendment which modifies the method of determining that
percentage shall be made effective with respect to any Member with at least
three Years of Service unless such member is permitted to elect, within a
reasonable period after the adoption of such amendment, to have that percentage
determined without regard to such amendment.
SECTION 11.7 SUCCESSOR TO BUSINESS OF THE EMPLOYER
Unless this Plan and the related Trust Agreement be sooner terminated, a
successor to the business of the Employer by whatever form or manner resulting
may continue the Plan and the related Trust Agreement by executing appropriate
supplementary agreements and such successor shall thereupon succeed to all the
rights, powers and duties of the Employer hereunder. The Employment of any
Employee who has continued in the employ of such successor shall not be deemed
to have terminated or severed for any purpose hereunder if such supplemental
agreement so provides.
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SECTION 11.8 MERGER, CONSOLIDATION AND TRANSFER
The Plan shall not be merged or consolidated, in whole or in part, with any
other plan, nor shall any assets or liabilities of the Plan be transferred to
any other plan unless the benefit that would be payable to any affected Member
under such plan if it terminated immediately after the merger, consolidation or
transfer, is equal to or greater than the benefit that would be payable to the
affected Member under this Plan if it terminated immediately before the merger,
consolidation or transfer.
SECTION 11.9 REVOCABILITY
This Plan is based upon the condition precedent that it shall be approved by the
Internal Revenue Service as qualified under Section 401(a) of the Code and
exempt from taxation under Section 501(a) of the Code. Accordingly,
notwithstanding anything herein to the contrary, if a final ruling shall be
received in writing from the IRS that the Plan does not initially qualify under
the terms of Sections 401(a) and 501(a) of the Code, there shall be no vesting
in any Member of assets contributed by the Employer and held by the Trustee
under the Plan. Upon receipt of notification from the IRS that the Plan fails to
qualify as aforesaid, the Employer reserves the right, at its option, to either
amend the Plan in such manner as may be necessary or advisable so that the Plan
may so qualify, or to withdraw and terminate the Plan.
Upon the event of withdrawal and termination, the Employer shall notify the
Trustee and provide the Trustee with a copy of such ruling and the Trustee shall
transfer, and in accordance with applicable law, pay over to the Employer (or,
as applicable and to the extent attributable to Member after-tax contributions,
401(k) deferrals or rollover amounts, to the Members) all of the net assets
under the Plan which remain after deducting the proper expense of termination
and the Trust Agreement shall thereupon terminate. For purposes of this Article
XI, "final ruling" shall mean either (1) the initial letter ruling from the
District Director in response to the Employer's original application for such a
ruling, or (2) if such letter ruling is unfavorable and a written appeal is
taken or protest filed within 60 days of the date of such letter ruling, it
shall mean the ruling received in response to such appeal or protest.
If the Plan is terminated, the Plan Administrator shall promptly notify the IRS
and such other appropriate governmental authority as applicable law may require.
Neither the Employer nor its Employees shall make any further contributions
under the Plan after
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the termination date, except that the Employer shall remit to the TPA a
reasonable administrative fee to be determined by the TPA for each Member with a
balance in his Account to defray the cost of implementing its termination. Where
the Employer has terminated the Plan pursuant to this Article, the Employer may
elect to transfer assets from the Plan to a successor plan qualified under
Section 401(a) of the Code in which event the Employer shall remit to the TPA an
additional administrative fee to be determined by the TPA to defray the cost of
such transfer transaction.
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TRUSTS ESTABLISHED UNDER THE PLAN
Assets of the Plan are held in trust under separate Trust Agreements with the
Trustee or Trustees. Any eligible Employee or Member may obtain a copy of these
Trust Agreements from the Plan Administrator.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the Plan by
the Employer, the Employer has caused these presents to be executed on its
behalf and its corporate seal to be hereunder affixed as of the day of
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, 20 .
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ATTEST:
By
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Clerk
Name
-----------------------------------
Title
-----------------------------------
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