EXHIBIT 4.2
MFS Fund Distributors, Inc.
401(k) Profit Sharing Plan and Trust
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS......................................... 6
2.2 DETERMINATION OF TOP HEAVY STATUS................................... 6
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER......................... 8
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY............................. 8
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES....................... 8
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR.............................. 8
2.7 RECORDS AND REPORTS................................................. 8
2.8 APPOINTMENT OF ADVISERS............................................. 8
2.9 INFORMATION FROM EMPLOYER........................................... 8
2.10 PAYMENT OF EXPENSES................................................. 9
2.11 MAJORITY ACTIONS.................................................... 9
2.12 CLAIMS PROCEDURE.................................................... 9
2.13 CLAIMS REVIEW PROCEDURE............................................. 9
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY........................................... 9
3.2 EFFECTIVE DATE OF PARTICIPATION..................................... 9
3.3 DETERMINATION OF ELIGIBILITY........................................ 9
3.4 TERMINATION OF ELIGIBLY............................................. 9
3.5 OMISSION OF ELIGIBLE EMPLOYEE....................................... 9
3.6 INCLUSION OF INELIGIBLE EMPLOYEE.................................... 9
3.7 ELECTION NOT TO PARTICIPATE......................................... 9
3.8 CONTROL OF ENTITIES BY OWNER-EMPLOYEE............................... 10
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION..................... 10
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION............................. 10
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION.......................... 12
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS................ 12
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS.................................... 14
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS...................... 15
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS................................ 16
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS.................. 18
4.9 MAXIMUM ANNUAL ADDITIONS............................................ 19
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS........................... 22
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4.11 TRANSFERS FROM QUALIFIED PLANS...................................... 22
4.12 VOLUNTARY CONTRIBUTIONS............................................. 22
4.13 DIRECTED INVESTMENT ACCOUNT......................................... 23
4.14 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS.......................... 23
4.15 INTEGRATION IN MORE THAN ONE PLAN................................... 23
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND......................................... 23
5.2 METHOD OF VALUATION................................................. 23
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT........................... 23
6.2 DETERMINATION OF BENEFITS UPON DEATH................................ 24
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY.................... 24
6.4 DETERMINATION OF BENEFITS UPON TERMINATION.......................... 24
6.5 DISTRIBUTION OF BENEFITS............................................ 26
6.6 DISTRIBUTION OF BENEFITS UPON DEATH................................. 27
6.7 TIME OF SEGREGATION OR DISTRIBUTION................................. 29
6.8 DISTRIBUTION FOR MINOR BENEFICIARY.................................. 29
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN...................... 29
6.10 PRE-RETIREMENT DISTRIBUTION......................................... 30
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP................................... 30
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS........................... 30
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS.................................. 30
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE............................... 30
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE......................... 31
7.3 OTHER POWERS OF THE TRUSTEE......................................... 31
7.4 LOANS TO PARTICIPANTS............................................... 32
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS............................ 33
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES....................... 33
7.7 ANNUAL REPORT OF THE TRUSTEE........................................ 33
7.8 AUDIT............................................................... 33
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE...................... 34
7.10 TRANSFER OF INTEREST................................................ 34
7.11 TRUSTEE INDEMNIFICATION............................................. 34
7.12 EMPLOYER SECURITIES AND REAL PROPERTY............................... 34
7.13 PASSIVE TRUSTEE..................................................... 34
7.14 DIRECT ROLLOVER..................................................... 34
ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT........................................................... 35
8.2 TERMINATION......................................................... 35
8.3 MERGER OR CONSOLIDATION............................................. 35
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ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS.................................................. 35
9.2 PARTICIPANT'S RIGHTS................................................ 35
9.3 ALIENATION.......................................................... 36
9.4 CONSTRUCTION OF PLAN................................................ 36
9.5 GENDER AND NUMBER................................................... 36
9.6 LEGAL ACTION........................................................ 36
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS.............................. 36
9.8 BONDING............................................................. 36
9.9 INSURER'S PROTECTIVE CLAUSE......................................... 36
9.10 RECEIPT AND RELEASE FOR PAYMENTS.................................... 36
9.11 ACTION BY THE EMPLOYER.............................................. 36
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY.................. 36
9.13 HEADINGS............................................................ 37
9.14 APPROVAL BY INTERNAL REVENUE SERVICE................................ 37
9.15 UNIFORMITY.......................................................... 37
9.16 PAYMENT OF BENEFITS................................................. 37
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER......................... 37
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS............................. 37
10.3 DESIGNATION OF AGENT................................................ 37
10.4 EMPLOYEE TRANSFERS.................................................. 37
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES............... 37
10.6 AMENDMENT........................................................... 38
10.7 DISCONTINUANCE OF PARTICIPATION..................................... 38
10.8 ADMINISTRATOR'S AUTHORITY........................................... 38
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE................... 38
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ARTICLE I
DEFINITIONS
As used in this Plan, the following words and phrases shall have the meanings
set forth herein unless a different meaning is clearly required by the context:
1.1 "Act" means the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time.
1.2 "Administrator" means the person(s) or entity designated by the Employer
pursuant to Section 2.4 to administer the Plan on behalf of the Employer.
1.3 "Adoption Agreement" means the separate Agreement which is executed by the
Employer and accepted by the Trustee which sets forth the elective provisions of
this Plan and Trust as specified by the Employer.
1.4 "Affiliated Employer" means the Employer and any corporation which is a
member of a controlled group of corporations (as defined in Code Section
414(b)) which includes the Employer, any trade or business (whether or not
incorporated) which is under common control (as defined in Code Section 414(c))
with the Employer, any organization (whether or not incorporated) which is a
member of an affiliated service group (as defined in Code Section 414(m)) which
includes the Employer, and any other entity required to be aggregated with the
Employer pursuant to Regulations under Code Section 414(o).
1.5 "Aggregate Account" means with respect to each Participant, the value of
all accounts maintained on behalf of a Participant, whether attributable to
Employer or Employee contributions, subject to the provisions of Section 2.2.
1.6 "Anniversary Date" means the anniversary date specified in C3 of the
Adoption Agreement.
1.7 "Beneficiary" means the person to whom a share of a deceased Participant's
interest in the Plan is payable, subject to the restrictions of Sections 6.2 and
6.6.
1.8 "Code" means the Internal Revenue Code of 1986, as amended or replaced from
time to time.
1.9 "Compensation" with respect to any Participant means one of the following:
(a) Compensation on Form W-2. Compensation is defined as wages, as defined
in Code Section 3401(a), and all other payments of Compensation to an
Employee by the Employer (in the course of the Employer's trade or
business) for which the Employer is required to furnish the Employee a
written statement under Code Sections 6041(d) and 6051(a)(3).
Compensation must be determined without regard to any rules under Code
Section 3401(a) that limit the remuneration included in wages based on
the nature or location of the employment or the services performed
(such as the exception for agricultural labor in Section 3401(a)(2).
Compensation for any Self-Employed Individual shall be equal to his
Earned Income.
(b) Code Section 3401(a) wages. Compensation is defined as wages within the
meaning of Code Section 3401(a) for the purposes of income tax
withholding at the source but determined without regard to any rules
that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the
exception for agricultural labor in Code Section 3401(a)2)).
(c) 415 safe-harbor compensation. Compensation is defined as wages,
salaries, and fees for professional services and other amounts received
(without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of employment with
the Employer maintaining the Plan to the extent that the amounts are
includible in gross income (including, but not limited to, commissions
paid salesmen, compensation for services on the basis of a percentage
of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements, or other expense allowances under a non-
accountable plan (as described in Regulation Section 1.62-2(c)), and
excluding the following:
(1) Employer contributions to a plan of Deferred Compensation which are
not includible in the Employee's gross income for the taxable year
in which contributed, or Employer contributions under a simplified
employee pension plan to the extent such contributions are
deductible by the Employee, or any distributions from a plan of
Deferred Compensation;
(2) Amounts realized from the exercise of a nonqualified stock option,
or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(4) other amounts which received special tax benefits, or contributions
made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity contract described in
section 403(b) of the Internal Revenue Code (whether or not the
contributions are actually excludable from the gross income of the
Employee).
In addition, if specified in the Adoption Agreement, Compensation for all Plan
purposes shall also include compensation which is not currently includible in
the Participant's gross income by reason of the application of Code Sections
125, 402(e)(3), 402(h)(1)(B), or 403(b).
Compensation in excess of $200,000 shall be disregarded. Such amount shall be
adjusted at the same time and in such manner as permitted under Code Section
415(d).
Notwithstanding the above, for Plan Years beginning on or after January 1, 1994,
the Compensation of each Employee taken into account under the Plan shall not
exceed the OBRA `93 annual compensation limit. The OBRA `93 annual compensation
limit is $150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Code Section 401(a)(17)(B). The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which Compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA `93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this Plan
to the limitation under Code Section 401(a)(17) shall mean the OBRA '93 annual
compensation limit set forth in this Section.
In applying these limitations, the family group of a Highly Compensated
Participant who is subject to the Family Member aggregation rules of Code
Section 414(q)(6) because such Participant is either a "five percent owner" of
the Employer or one of the ten (10) Highly Compensated Employees paid the
greatest "415 Compensation" during the year, shall be treated as a single
Participant, except that for this purpose Family Members shall include only the
affected Participant's spouse and any lineal descendants who have not attained
age nineteen (19) before the close of the year. If, as a result of the
application of such rules, the adjusted 1imitation is exceeded, then (except for
purposes of determining the portion of Compensation up to the integration level
if this plan is integrated), the limitation shall be prorated among the affected
individuals in proportion to each such individual's Compensation as determined
under this Section prior to the application of this limitation.
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For Plan Years beginning prior to January 1, 1989, the $200,000 limit (without
regard to Family Member aggregation) shall apply only for Top Heavy Plan Years
and shall not be adjusted.
1.10 "Contract" or "Policy" means any life insurance policy, retirement income
policy, or annuity contract (group or individual) issued by the Insurer. In the
event of any conflict between the terms of this Plan and the terms of any
insurance contract purchased hereunder, the Plan provisions shall control.
1.11 "Deferred Compensation" means that portion of a Participant's total
Compensation that such Participant has elected to defer for a Plan Year pursuant
to Section 4.2.
1.12 "Early Retirement Date" means the date specified in the Adoption Agreement
on which a Participant or Former Participant has satisfied the age and service
requirements specified in the Adoption Agreement (Early Retirement Age). A
Participant shall become fully Vested upon satisfying this requirement if still
employed at his Early Retirement Age.
A Former Participant who terminates employment after satisfying the service
requirement for Early Retirement and who thereafter reaches the age requirement
contained herein shall be entitled to receive his benefits under this Plan.
1.13 "Earned Income" means with respect to a Self-Employed Individual, the net
earnings from self-employment in the trade or business with respect to which the
Plan is established, for which the personal services of the individual are a
material income-producing factor. Net earnings will be determined without regard
to items not included in gross income and the deductions allocable to such
items. Net earnings are reduced by contributions by the Employer to a qualified
Plan to the extent deductible under Code Section 404. In addition, for Plan
Years beginning after December 31, 1989, net earnings shall be determined with
regard to the deduction allowed to the Employer by Code Section 164(f).
1.14 "Elective Contribution" means the Employer's contributions to the Plan that
are made pursuant to the Participant's deferral election pursuant to Section
4.2. In addition, if selected in E3 of the Adoption Agreement, the
Employer's matching contribution made pursuant to Section 4.1(b) shall be
considered an Elective Contribution for purposes of the Plan. Elective
Contributions shall be subject to the requirements of Sections 4.2(b) and 4.2(c)
and shall further be required to satisfy the discrimination requirements of
Regulation 1.401(k)-1(b)(3), the provisions of which are specifically
incorporated herein by reference.
1.15 "Eligible Employee" means any Employee specified in DI of the Adoption
Agreement.
1.16 "Employee" means any person who is employed by the Employer, but excludes
any person who is employed as an independent contractor. The term Employee shall
also include Leased Employees as provided in Code Section 414(n) or (o).
Except as provided in the Non-Standardized Adoption Agreement, all Employees of
all entities which are an Affiliated Employer will be treated as employed by
a single employer.
1.17 "Employer" means the entity specified in the Adoption Agreement, any
Participating Employer (as defined in Section 10.1) which shall adopt this
Plan, any successor which shall maintain this Plan and any predecessor which
has maintained this Plan.
1.18 "Excess Compensation" means, with respect to a Plan that is integrated with
Social Security, a Participant's Compensation which is in excess of the amount
set forth in the Adoption Agreement.
1.19 "Excess Contributions" means, with respect to a Plan Year, the excess
of Elective Contributions and Qualified Non-Elective Contributions made on
behalf of Highly Compensated Participants for the Plan Year over the maximum
amount of such contributions permitted under Section 4.5(a).
1.20 "Excess Deferred Compensation" means, with respect to any taxable year of a
Participant, the excess of the aggregate amount of such Participant's Deferred
Compensation and the elective deferrals pursuant to Section 4.2(f) actually made
on behalf of such Participant for such taxable year, over the dollar limitation
provided for in Code Section 402(g), which is incorporated herein by reference.
1.21 "Family Member" means, with respect to an affected Participant, such
Participant's spouse, and such Participant's lineal descendants and ascendants
and their spouses, all as described in Code Section 414(q)(6)(B).
1.22 "Fiduciary" means any person who (a) exercises any discretionary authority
or discretionary control respecting management of the Plan or exercises any
authority or control respecting management or disposition of its assets, (b)
renders investment advice for a fee or other compensation, direct or indirect,
with respect to any monies or other property of the Plan or has any authority or
responsibility to do so, or (c) has any discretionary authority or discretionary
responsibility in the administration of the Plan, including, but not limited to,
the Trustee, the Employer and its representative body, and the Administrator.
1.23 "Fiscal Year" means the Employer's accounting year as specified in the
Adoption Agreement.
1.24 "Forfeiture" means that portion of a Participant's Account that is not
Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a Participant's
Account, or
(b) the last day of the Plan Year in which the Participant incurs five (5)
consecutive 1-Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in the case of a Terminated
Participant whose Vested benefit is zero, such Terminated Participant shall be
deemed to have received a distribution of his Vested benefit upon his
termination of employment. In addition, the term Forfeiture shall also include
amounts deemed to be Forfeitures pursuant to any other provision of this Plan.
1.25 "Former Participant" means a person who has been a Participant, but who has
ceased to be a Participant for any reason.
1.26 "414(s) Compensation" with respect to any Employee means his Compensation
as defined in Section 1.9. However, for purposes of this Section, Compensation
shall be Compensation paid and shall be determined by including, in the case of
a non-standardized Adoption Agreement, any items that are excluded from
Compensation pursuant to the Adoption Agreement. The amount of "414(s)
Compensation" with respect to any Employee shall include "414(s) Compensation"
during the entire twelve (12) month period ending on the last day of such Plan
Year, except that for Plan Years beginning prior to the later of January 1,
1992, or the date that is sixty (60) days after the date final Regulations are
issued, "414(s) Compensation" shall only be recognized as of an Employee's
effective date of participation.
In addition, if specified in the Adoption Agreement, "414(s) Compensation" shall
also include compensation which is not currently includible in the Participant's
gross income by reason of the application of Code Sections 125, 402(e)(3),
402(h)(1)(B), or 403(b), plus Elective Contributions attributable to Deferred
Compensation recharacterized as voluntary Employee contributions pursuant to
4.6(a).
1.27 "415 Compensation" means compensation as defined in Section 4.9(f)(2).
1.28 "Highly Compensated Employee" means an Employee described in Code Section
414(q) and the Regulations thereunder and generally means an Employee who
performed services for the Employer during the "determination year" and is in
one or more of the following groups:
(a) Employees who at any time during the "determination year" or "look-
back year" were "five percent owners" as defined in Section 1.35(c).
2
(b) Employees who received "415 Compensation" during the "look-back year"
from the Employer in excess of $75.000.
(c) Employees who received "415 Compensation" during the "look-back year"
from the Employer in excess of $50.000 and were in the Top Paid Group
of Employees for the Plan Year.
(d) Employees who during the "look-back year" were officers of the
Employer (as that term is defined within the meaning of the
Regulations under Code Section 416) and received "415 Compensation"
during the look-back year" from the Employer greater than 50 percent
of the limit in effect under Code Section 415(b)(1)(A) for any such
Plan Year. The number of officers shall be limited to the lesser of
(i) 50 employees: or (ii) the greater of 3 employees or 10 percent of
all employees. If the Employer does not have at least one officer
whose annual "415 Compensation" is in excess of 50 percent of the Code
Section 415(b)(1)(A) limit, then the highest paid officer of the
Employer will be treated as a Highly Compensated Employee.
(e) Employees who are in the group consisting of the 100 Employees paid
the greatest "415 Compensation" during the "determination year" and
are also described in (b), (c) or (d) above when these paragraphs are
modified to substitute "determination year" for "look-back year".
The "determination year" shall be the Plan Year for which testing is
being performed, and the "look-back year" shall be the immediately
preceding twelve-month period. However, if the Plan Year is a calendar
year, or if another Plan of the Employer so provides, then the "look-
back year" shall be the calendar year ending with or within the Plan
Year for which testing is being performed, and the "determining year"
(if applicable) shall be the period of time, if any, which extends
beyond the "look-back year" and ends on the last day of the Plan Year
for which testing is being performed (the "lag period"). With respect
to this election, it shall be applied on a uniform and consistent
basis to all plans, entities, and arrangements of the Employer.
For purposes of this Section, the determination of "415 Compensation" shall be
made by including amounts that would otherwise be excluded from a Participant's
gross income by reason of the application of Code Sections 125, 402(e)(3),
402(h)(1)(B) and, in the case of Employer contributions made pursuant to a
salary reduction agreement, Code Section 403(b). Additionally, the dollar
threshold amounts specified in (b) and (c) above shall be adjusted at such time
and in such manner as is provided in Regulations. In the case of such an
adjustment, the dollar limits which shall be applied are those for the calendar
year in which the "determination year" or look back year" begins.
In determining who is a Highly Compensated Employee, Employees who are non-
resident aliens and who received no earned income (within the meaning of Code
Section 911(d)) from the Employer constituting United States source income
within the meaning of Code Section 861(a)(3) shall not be treated as Employees.
Additionally, all Affiliated Employers shall be taken into account as a single
employer and Leased Employees within the meaning of Code Sections 414(n)(2) and
414(o)(2) shall be considered Employees unless such Leased Employees are
covered by a plan described in Code Section 414(n)(5) and are not covered in
any qualified plan maintained by the Employer. The exclusion of Leased
Employees for this purpose shall be applied on a uniform and consistent basis
for all of the Employer's retirement plans. In addition, Highly Compensated
Former Employees shall be treated as Highly Compensated Employees without
regard to whether they performed services during the "determination year".
1.29 "Highly Compensated Former Employee" means a former Employee who had a
separation year prior to the "determination year" and was a Highly Compensated
Employee in the year of separation from service or in any "determination year"
after attaining age 55. Notwithstanding the foregoing, an Employee who separated
from service prior to 1987 will be treated as a Highly Compensated Former
Employee only if during the separation year (or year preceding the separation
year) or any year after the Employee attains age 55 (or the last year ending
before the Employee's 55th birthday), the Employee either received "415
Compensation" in excess of $50,000 or was a "five percent owner". For purposes
of this Section, "determination year", "415 Compensation" and five percent
owner" shall be determined in accordance with Section 1.28. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees. The method
set forth in this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for all purposes
for which the Code Section 414(q) definition is applicable.
1.30 "Highly Compensated Participant" means any Highly Compensated Employee who
is eligible to participate in the Plan.
1.31 "Hour of Service" means (l) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation by the Employer for the
performance of duties during the applicable computation period: (2) each hour
for which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holidays, sickness, jury duty, disability, lay-off, military duty
or leave of absence) during the applicable computation period: (3) each hour for
which back pay is awarded or agreed to by the Employer without regard to
mitigation of damages. The same Hours of Service shall not be credited both
under (1) or (2), as the case may be, and under (3).
Notwithstanding the above, (i) no more than 501 Hours of Service are required to
be credited to an Employee on account of any single continuous period during
which the Employee performs no duties (whether or not such period occurs in a
single computation period); (ii) an hour for which an Employee is directly or
indirectly paid, or entitled to payment, on account of a period during which no
duties are performed is not required to be credited to the Employee if such
payment is made or due under a plan maintained solely for the purpose of
complying with applicable worker's compensation, or unemployment compensation or
disability insurance laws; and (iii) Hours of Service are not required to be
credited for a payment which solely reimburses an Employee for medical or
medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by or due
from the Employer regardless of whether such payment is made by or due from the
Employer directly, or indirectly through among others, a trust fund, or insurer,
to which the Employer contributes or pays premiums and regardless of whether
contributions made or due to the trust fund, insurer, or other entity are for
the benefit of particular Employees or are on behalf of a group of Employees
in the aggregate.
An Hour of Service must be counted for the purpose of determining a Year of
Service, a year of participation for purposes of accrued benefits, a 1-Year
Break in Service, and employment commencement date (or reemployment commencement
date). The provisions of Department of Labor regulations 2530.200b-2(b) and (c)
are incorporated herein by reference.
Hours of Service will be credited for employment with all Affiliated Employers
and for any individual considered to be a Leased Employee pursuant to Code
Sections 414(n) or 414(o) and the Regulations thereunder.
Hours of Service will be determined on the basis of the method selected in the
Adoption Agreement.
1.32 "Insurer" means any legal reserve insurance company which shall issue one
or more policies under the Plan.
1.33 "Investment Manager" means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledges fidu-
3
ciary responsibility to the Plan in writing. Such entity must be a person, firm,
or corporation registered as an investment adviser under the Investment Advisers
Act of 1940, a bank, or an insurance company.
1.34 "Joint and Survivor Annuity" means an annuity for the life of a
Participant with a survivor annuity for the life of the Participant's spouse
which is not less than 1/2, nor greater than the amount of the annuity payable
during the joint lives of the Participant and the Participant's spouse. The
Joint and Survivor Annuity will be the amount of benefit which can be purchased
with the Participant's Vested interest in the Plan.
1.35 "Key Employee" means an Employee as defined in Code Section 416(1) and the
Regulations thereunder. Generally, any Employee or former Employee (as well as
each of his Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined within the meaning
of the Regulations under Code Section 416) having annual "415
Compensation" greater than 50 percent of the amount in effect under
Code Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation" from the
Employer for a Plan Year greater than the dollar limitation in effect
under Code Section 415(c)(1)(A) for the calendar year in which such
Plan Year ends and owning (or considered as owning within the meaning
of Code Section 318) both more than one-half percent interest and the
largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner" means any
person who owns (or is considered as owning within the meaning of Code
Section 318) more than five percent (5%) of the outstanding stock of
the Employer or stock possessing more than five percent (5%) of the
total combined voting power of all stock of the Employer or, in the
case of an unincorporated business, any person who owns more than five
percent (5%) of the capital or profits interest in the Employer. In
determining percentage ownership hereunder, employers that would
otherwise be aggregated under Code Sections 414(b), (c), (m) and (o)
shall he treated as separate employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent
owner" means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than one percent (1%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c), (m)
and (o) shall be treated as separate employers. However, in determining
whether an individual has "415 Compensation" of more than $l50.000.
"415 Compensation" from each employer required to be aggregated under
Code Sections 414(b), (c), (m) and (o) shall be taken into account.
For purposes of this Section, the determination of "415 Compensation" shall be
made by including amounts that would otherwise be excluded from a Participant's
gross income by reason of the application of Code Sections 125. 402(e)(3),
402(h)(I)(B) and, in the case of Employer contributions made pursuant to a
salary reduction agreement, Code Section 403(b).
1.36 "Late Retirement Date" means the date of, or the first day of the month or
the Anniversary Date coinciding with or next following, whichever corresponds to
the election made for the Normal Retirement Date, a Participant's actual
retirement after having reached his Normal Retirement Date.
1.37 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at least one year,
and such services are of a type historically performed by employees in the
business field of the recipient employer. Contributions or benefits provided a
leased employee by the leasing organization which are attributable to services
performed for the recipient employer shall be treated as provided by the
recipient employer.
A leased employee shall not be considered an Employee of the recipient if:
(i)such employee is covered by a money purchase pension plan providing: (1) a
nonintegrated employer contribution rate of at least 10 percent of compensation,
as defined in Code Section 415(c)(3), but including amounts contributed pursuant
to a salary reduction agreement which are excludable from the employee's gross
income under Code Sections 125, 402(e)(3), 402(h), or 403(b), (2) immediate
participation, and (3) full and immediate vesting: and (ii) leased employees do
not constitute more than 20 percent of the recipient's nonhighly compensated
workforce.
1.38 "Net Profit" means with respect to any Fiscal Year the Employer's net
income or profit for such Fiscal Year determined upon the basis of the
Employer's books of account in accordance with generally accepted accounting
principles, without any reduction for taxes based upon income, or for
contributions made by the Employer to this Plan and any other qualified plan.
1.39 "Non-Elective Contribution" means the Employer's contributions to the Plan
other than those made pursuant to the Participant's deferral election made
pursuant to Section 4.2 and any Qualified Non-Elective Contribution. In
addition, if selected in E3 of the Adoption Agreement, the Employer's Matching
Contribution made pursuant to Section 4.1(b) shall be considered a Non-Elective
Contribution for purposes of the Plan.
1.40 "Non-Highly Compensated Participant" means any Participant who is neither a
Highly Compensated Employee nor a Family Member.
1.41 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.42 "Normal Retirement Age" means the age specified in the Adoption Agreement
at which time a Participant shall become fully Vested in his Participant's
Account.
1.43 "Normal Retirement Date" means the date specified in the Adoption Agreement
on which a Participant shall become eligible to have his benefits distributed to
him.
1.44 "1-Year Break in Service" means the applicable computation period during
which an Employee has not completed more than 500 Hours of Service with the
Employer. Further solely for the purpose of determining whether a Participant
has incurred a 1-Year Break in Service. Hours of Service shall be recognized for
"authorized leaves of absence" and "maternity and paternity leaves of absence."
"Authorized leave of absence" means an unpaid temporary cessation from active
employment with the Employer pursuant to an established nondiscriminatory
policy, whether occasioned by illness, military service, or any other reason.
A "maternity or paternity leave of absence" means, for Plan Years beginning
after December 31, 1984, an absence from work for any period by reason of the
Employee's pregnancy, birth of the Employee's child placement of a child with
the Employee in connection with the adoption of such child, or any absence for
the purpose of caring for such child for a period immediately following such
birth or placement. For this purpose, Hours of Service shall be credited for the
computation period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee
4
from incurring a 1-Year Break in Service, or, in any other case, in the
immediately following computation period. The Hours of Service credited for a
"maternity or paternity leave of absence" shall be those which would normally
have been credited but for such absence, or, in any case in which the
Administrator is unable to determine such hours normally credited, eight (8)
Hours of Service per day. The total Hours of Service required to be credited for
a "maternity or paternity leave of absence" shall not exceed 501.
1.45 "Owner-Employee" means a sole proprietor who owns the entire interest in
the Employer or a partner who owns more than 10% of either the capital interest
or the profits interest in the Employer and who receives income for personal
services from the Employer.
1.46 "Participant" means any Eligible Employee who participates in the Plan as
provided in Section 3.2 and has not for any reason become ineligible to
participate further in the Plan.
1.47 "Participant's Account" means the account established and maintained by the
Administrator for each Participant with respect to his total interest under the
Plan resulting from the Employer's Non-Elective Contributions. A separate
accounting shall be maintained for matching contributions if they are deemed to
be Non-Elective Contributions.
1.48 "Participant's Combined Account" means the total aggregate amount of each
Participant's Elective Account, Qualified Non-Elective Account, and
Participant's Account.
1.49 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting from the Employer's Elective
Contributions. A separate accounting shall be maintained with respect to that
portion of the Participant's Elective Account attributable to Elective
Contributions made pursuant to Section 4.2. Employer matching contributions if
they are deemed to be Elective Contributions, and any Qualified Non-Elective
Contributions.
1.50 "Participant's Rollover Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan resulting from amounts transferred from another qualified
plan or "conduit" Individual Retirement Account in accordance with Section 4.11.
1.51 "Plan" means this instrument (hereinafter referred to as MFS Fund
Distributors, Inc. 401(k) Profit Sharing Plan and Trust Basic Plan Document #02)
including all amendments thereto, and the Adoption Agreement as adopted by the
Employer.
1.52 "Plan Year" means the Plan's accounting year as specified in C2 of the
Adoption Agreement.
1.53 "Pre-Retirement Survivor Annuity" means an immediate annuity for the life
of the Participant's spouse, the payments under which must be equal to the
actuarial equivalent of 50% of the Participant's Vested interest in the Plan as
of the date of death.
1.54 "Qualified Non-Elective Account" means the account established hereunder to
which Qualified Non-Elective Contributions are allocated.
1.55 "Qualified Non-Elective Contribution" means the Employer's contributions
to the Plan that are made pursuant to Section 4.1(d) and Section 4.6(b) which
are used to satisfy the "Actual Deferral Percentage" tests. Qualified Non-
Elective Contributions are nonforfeitable when made and are distributable only
as specified in Sections 4.2(c) and 6.11. In addition, the Employer's
contributions to the Plan that are made pursuant to Section 4.8(h) and which are
used to satisfy the "Actual Contribution Percentage" tests shall be considered
Qualified Non-Elective Contributions.
1.56 "Qualified Voluntary Employee Contribution Account" means the account
established and maintained by the Administrator for each Participant with
respect to his total interest under the Plan resulting from the Participant's
tax deductible qualified voluntary employee contributions made pursuant to
Section 4.14.
1.57 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.58 "Retired Participant" means a person who has been a Participant, but who
has become entitled to retirement benefits under the Plan.
1.59 "Retirement Date" means the date as of which a Participant retires for
reasons other than Total and Permanent Disability, whether such retirement
occurs on a Participant's Normal Retirement Date. Early or Late Retirement Date
(see Section 6.1).
1.60 "Self-Employed Individual" means an individual who has earned income for
the taxable year from the trade or business for which the Plan is established,
and, also, an individual who would have had earned income but for the fact that
the trade or business had no net profits for the taxable year. A Self-Employed
Individual shall be treated as an Employee.
1.61 "Shareholder-Employee" means a Participant who owns more than five percent
(5%) of the Employer's outstanding capital stock during any year in which the
Employer elected to be taxed as a Small Business Corporation under the
applicable Code Section.
1.62 "Short Plan Year" means, if specified in the Adoption Agreement, that the
Plan Year shall be less than a 12 month period. If chosen, the following rules
shall apply in the administration of this Plan. In determining whether an
Employee has completed a Year of Service for benefit accrual purposes in the
Short Plan Year, the number of the Hours of Service required shall be
proportionately reduced based on the number of days in the Short Plan Year. The
determination of whether an Employee has completed a Year of Service for vesting
and eligibility purposes shall be made in accordance with Department of Labor
Regulation 2530.203-2(c). In addition, if this Plan is integrated with Social
Security, the integration level shall also be proportionately reduced based on
the number of days in the Short Plan Year.
1.63 "Super Top Heavy Plan" means a plan described in Section 2.2(b)
1.64 "Taxable Wage Base" means, with respect to any year, the maximum amount of
earnings which may be considered wages for such year under Code Section
3121(a)(1).
1.65 "Terminated Participant" means a person who has been a Participant, but
whose employment has been terminated other than by death, Total and Permanent
Disability or retirement.
1.66 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.67 "Top Heavy Plan Year" means a Plan Year commencing after December 31, 1983
during which the Plan is a Top Heavy Plan.
1.68 "Top Paid Group" shall be determined pursuant to Code Section 414(q) and
the Regulations thereunder and generally means the top 20 percent of Employees
who performed services for the Employer during the applicable year, ranked
according to the amount of "415 Compensation" (as determined pursuant to
Section 1.28) received from the Employer during such year. All Affiliated
Employers shall be taken into account as a single employer, and Leased Employees
shall be treated as Employees pursuant to Code Section 414(n) or (o). Employees
who are non-resident aliens who received no earned income (within the meaning of
Code Section 911(d)(2)) from the Employer constituting United States source
income within the meaning of Code Section 861(a)(3) shall not be treated as
Employees. Additionally, for the purpose of determining the number of active
Employees in any year, the following additional Employees shall also be
excluded, however, such Employees shall still be considered for the purpose of
identifying the particular Employees in the Top Paid Group:
(a) Employees with less than six (6) months of service
(b) Employees who normally work less than 17 1/2 hours per week;
(c) Employees who normally work less than six (6) months
during a year and
(d) Employees who have not yet attained age 21.
5
In addition, if 90 percent or more of the Employees of the Employer are covered
under agreements the Secretary of Labor finds to be collective bargaining
agreements between Employee representatives and the Employer, and the Plan
covers only Employees who are not covered under such agreements; then Employees
covered by such agreements shall be excluded from both the total number of
active Employees as well as from the identification of particular Employees in
the Top Paid Group.
The foregoing exclusions set forth in this Section shall be applied on a uniform
and consistent basis for all purposes for which the Code Section 414(q)
definition is applicable.
1.69 "Total and Permanent Disability" means the inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than 12 months. The
disability of a Participant shall be determined by a licensed physician chosen
by the Administrator. However, if the condition constitutes total disability
under the federal Social Security Acts, the Administrator may rely upon such
determination that the Participant is Totally and Permanently Disabled for the
purposes of this Plan. The determination shall be applied uniformly to all
Participants.
1.70 "Trustee" means the person or entity named in B6 of the Adoption Agreement
and any successors.
1.71 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.72 "Vested" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
1.73 "Voluntary Contribution Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan resulting from the Participant's nondeductible voluntary
contributions made pursuant to Section 4.12.
Amounts recharacterized as voluntary Employee contributions pursuant to Section
4.6(a) shall remain subject to the limitations of Sections 4.2(b) and 4.2(c).
Therefore, a separate accounting shall be maintained with respect to that
portion of the Voluntary Contribution Account attributable to voluntary Employee
contributions made pursuant to Section 4.12.
1.74 "Year of Service" means the computation period of twelve (12) consecutive
months, herein set forth, and during which an Employee has completed at least
1000 Hours of Service.
For purposes of eligibility for participation, the initial computation period
shall begin with the date on which the Employee first performs an Hour of
Service (employment commenence date). The computation period beginning after a
1-Year Break in Service shall be measured from the date on which an Employee
again performs an Hour of Service. The succeeding computation periods shall
begin with the first anniversary of the Employee's employment commencement date.
However, if one (1) Year of Service or less is required as a condition of
eligibility, then after the initial eligibility computation period, the
eligibility computation period shall shift to the current Plan Year which
includes the anniversary of the date on which the Employee first performed an
Hour of Service. An Employee who is credited with 1,000 Hours of Service in both
the initial eligibility computation period and the first Plan Year which
commences prior to the first anniversary of the Employee's initial eligibility
computation period will be credited with two Years of Service for purposes of
eligibility to participate.
For vesting purposes, and all other purposes not specifically addressed in this
Section, the computation period shall be the Plan Year including periods prior
to the Effective Date of the Plan unless specifically excluded pursuant to the
Adoption Agreement.
Years of Service and breaks in service will be measured on the same computation
period.
Years of Service with any predecessor Employer which maintained this Plan shall
be recognized. Years of Service with any other predecessor Employer shall be
recognized as specified in the Adoption Agreement.
Years of Service with any Affiliated Employer shall be recognized.
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special vesting
requirements of Code Section 416(b) pursuant to Section 6.4 of the Plan and the
special minimum allocation requirements of Code Section 416(c) pursuant to
Section 4.4(i) of the Plan.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year beginning after
December 31, 1983, in which, as of the Determination Date. (1) the
Present Value of Accrued Benefits of Key Employees and (2) the sum of
the Aggregate Accounts of Key Employees under this Plan and all plans
of an Aggregation Group, exceeds sixty percent (60%) of the Present
Value of Accrued Benefits and the Aggregate Accounts of all Key and
Non-Key Employees under this Plan and all plans of an Aggregation
Group.
If any Participant is a Non-Key Employee for any Plan Year, but such
Participant was a Key Employee for any prior Plan Year, such
Participant's Present Value of Accrued Benefit and/or Aggregate Account
balance shall not be taken into account for purposes of determining
whether this Plan is a Top Heavy or Super Top Heavy Plan (or whether
any Aggregation Group which includes this Plan is a Top Heavy Group).
In addition, if a Participant or Former Participant has not performed
any services for any Employer maintaining the Plan at any time during
the five year period ending on the Determination Date, any accrued
benefit for such Participant or Former Participant shall not be taken
into account for the purposes of determining whether this Plan is a Top
Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year beginning
after December 31, 1983, in which, as of the Determination Date, (1)
the Present Value of Accrued Benefits of Key Employees and (2) the sum
of the Aggregate Accounts of Key Employees under this Plan and all
plans of an Aggregation Group, exceeds ninety percent (90%) of the
Present Value of Accrued Benefits and the Aggregate Accounts of all Key
and Non-Key Employees under this Plan and all plans of an Aggregation
Group.
(c) Aggregate Account: A Participant's Aggregate Account as of the
Determination Date is the sum of:
(1) his Participant's Combined Account balance as of the most recent
valuation occurring within a twelve (12) month period ending on the
Determination Date;
(2) an adjustment for any contributions due as of the Determination
Date. Such adjustment shall be the amount of any contributions
actually made after the valuation date but on or before the
Determination Date, except for the first Plan Year when such
adjustment shall also reflect the amount of any contributions made
after the Determination Date that are allocated as of a date in
that first Plan Year.
(3) any Plan distributions made within the Plan Year that includes the
Determination Date or within the four (4) preceding Plan Years.
However, in the case of distributions made after the valuation date
and prior to the Determination Date, such distributions are not
included
6
as distributions for top heavy purposes to the extent that such
distributions are already included in the Participant's Aggregate
Account balance as of the valuation date. Notwithstanding anything
herein to the contrary, all distributions, including distributions
made prior to January 1, 1984, and distributions under a terminated
plan which if it had not been terminated would have been required
to be included in an Aggregation Group, will be counted. Further,
distributions from the Plan (including the cash value of life
insurance policies) of a Participant's account balance because of
death shall be treated as a distribution for the purposes of this
paragraph.
(4) any Employee contributions, whether voluntary or mandatory.
However, amounts attributable to tax deductible qualified voluntary
employee contributions shall not be considered to be a part of the
Participant's Aggregate Account balance.
(5) with respect to unrelated rollovers and plan-to-plan transfers
(ones which are both initiated by the Employee and made from a
plan maintained by one employer to a plan maintained by another
employer), if this Plan provides the rollovers or plan-to-plan
transfers, it shall always consider such rollovers or plan-to-plan
transfers as a distribution for the purposes of this Section. If
this Plan is the plan accepting such rollovers or plan-to-plan
transfers it shall not consider such rollovers or plan-to-plan
transfers accepted after December 31, 1983 as part of the
Participant's Aggregate Account balance. However, rollovers or
plan-to-plan transfers accepted prior to January 1, 1984 shall be
considered as part of the Participant's Aggregate Account balance.
(6) with respect to related rollovers and plan-to-plan transfers (ones
either not initiated by the Employee or made to a plan maintained
by the same employer), if this Plan provides the rollover or plan-
to-plan transfer, it shall not be counted as a distribution for
purposes of this Section. If this Plan is the plan accepting such
rollover or plan-to-plan transfer, it shall consider such rollover
or plan-to-plan transfer as part of the Participant's Aggregate
Account balance, irrespective of the date on which such rollover or
plan-to-plan transfer is accepted.
(7) For the purposes of determining whether two employers are to be
treated as the same employer in 2.2(c)(5) and 2.2(c)(6) above, all
employers aggregated under Code Section 414(b),(c),(m) and (o) are
treated as the same employer.
(d) "Aggregation Group" means either a Required Aggregation Group or a
Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required Aggregation
Group hereunder, each qualified plan of the Employer, including any
Simplified Employee Pension Plan, in which a Key Employee is a
participant in the Plan Year containing the Determination Date or
any of the four preceding Plan Years, and each other qualified plan
of the Employer which enables any qualified plan in which a Key
Employee participates to meet the requirements of Code Sections
401(a)(4)or 4l0, will be required to be aggregated. Such group
shall be known as a Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the group
will be considered a Top Heavy Plan if the Required Aggregation
Group is a Top Heavy Group. No plan in the Required Aggregation
Group will be considered a Top Heavy Plan if the Required
Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also include any
other plan of the Employer, including any Simplified Employee
Pension Plan, not required to be included in the Required
Aggregation Group, provided the resulting group, taken as a whole,
would continue to satisfy the provisions of Code Sections 401(a)(4)
and 410. Such group shall be known as a Permissive Aggregation
Group.
In the case of a Permissive Aggregation Group, only a plan that is
part of the Required Aggregation Group will be considered a Top
Heavy Plan if the Permissive Aggregation Group is a Top Heavy
Group. No plan in the Permissive Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation Group is
not a Top Heavy Group.
(3) Only those plans of the Employer in which the Determination Dates
fall within the same calendar year shall be aggregated in order to
determine whether such plans are Top Heavy Plans.
(4) When aggregating plans, the value of Aggregate Accounts and Accrued
Benefits will be calculated with reference to the Determination
Dates that fall within the same calendar year.
(5) An Aggregation Group shall include any terminated plan of the
Employer if it was maintained within the last five (5) years ending
on the Determination Date.
(e) "Determination Date" means (a) the last day of the preceding Plan Year,
or (b) in the case of the first Plan Year, the last day of such Plan
Year.
(f) Present Value of Accrued Benefit: In the case of a defined benefit
plan, the Present Value of Accrued Benefit for a Participant other than
a Key Employee shall be as determined using the single accrual method
used for all plans of the Employer and Affiliated Employers, or if no
such single method exists, using a method which results in benefits
accruing not more rapidly than the slowest accrual rate permitted under
Code Section 411(b)(1)(C). The determination of the Present Value of
Accrued Benefit shall be determined as of the most recent valuation
date that falls within or ends with the 12-month period ending on the
Determination Date, except as provided in Code Section 416 and the
Regulations thereunder for the first and second plan years of a defined
benefit plan.
However, any such determination must include present value of accrued
benefit attributable to any Plan distributions referred to in Section
2.2(c)(3) above, any Employee contributions referred to in Section
2.2(c)(4) above or any related or unrelated rollovers referred to in
Sections 2.2(c)(5) and 2.2(c)(6) above.
(g) "Top Heavy Group" means an Aggregation Group in which, as of the
Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees under all
defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group, exceeds sixty percent
(60%) of a similar sum determined for all Participants.
(h) The Administrator shall determine whether this Plan is a Top Heavy Plan
on the Anniversary Date specified in the Adoption Agreement. Such
determination of the top heavy ratio shall be in accordance with Code
Section 416 and the Regulations thereunder.
7
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and remove the Trustee and
the Administrator from time to time as it deems necessary for the
proper administration of the Plan to assure that the Plan is being
operated for the exclusive benefit of the Participants and their
Beneficiaries in accordance with the terms of the Plan, the Code, and
the Act.
(b) The Employer shall establish a "funding policy and method", i.e., it
shall determine whether the Plan has a short run need for liquidity
(e.g., to pay benefits) or whether liquidity is a long run goal and
investment growth (and stability of same) is a more current need, or
shall appoint a qualified person to do so. The Employer or its delegate
shall communicate such needs and goals to the Trustee, who shall
coordinate such Plan needs with its investment policy. The
communication of such a "funding policy and method" shall not however,
constitute a directive to the Trustee as to investment of the Trust
Funds. Such "funding policy and method" shall be consistent with the
objectives of this Plan and with the requirements of Title I of the
Act.
(c) The Employer may, in its discretion, appoint an Investment Manager to
manage all or a designated portion of the assets of the Plan. In such
event, the Trustee shall follow the directive of the Investment Manager
in investing the assets of the Plan managed by the Investment Manager.
(d) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct and
evaluation, or through other appropriate ways.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall appoint one or more Administrators. Any person, including,
but not limited to, the Employees of the Employer, shall be eligible to serve as
an Administarator. Any person so appointed shall signify his acceptance by
filing written acceptance with the Employer. An Administrator may resign by
delivering his written resignation to the Employer or be removed by the Employer
by delivery of written notice of removal, to take effect at a date specified
therein, or upon delivery to the Administrator if no date is specified.
The Employer upon the resignation or removal of an Administrator, shall promptly
designate in writing a successor to this position. If the Employer does not
appoint an Administrator, the Employer will function as the Administrator.
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the responsibilities of
each Administrator may be specified by the Employer and accepted in writing by
each Administrator. In the event that no such delegation is made by the
Employer, the Administrators may allocate the responsibilities among themselves,
in which event the Administrators shall notify the Employer and the Trustee in
writing of such action and specify the responsibilities of each Administrator.
The Trustee thereafter shall accept and rely upon any documents executed by the
appropriate Administrator until such time as the Employer or the Administrators
file with the Trustee a written revocation of such designation.
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the Plan for
the exclusive benefit of the Participants and their Beneficiaries, subject to
the specific terms of the Plan. The Administrator shall administer the Plan in
accordance with its terms and shall have the power and discretion to construe
the terms of the Plan and determine all questions arising in connection with the
administration, interpretation, and application of the Plan. Any such
determination by the Administrator shall be conclusive and binding upon all
persons. The Administrator may establish procedures, correct any defect, supply
any information, or reconcile any inconsistency in such manner and to such
extent as shall be deemed necessary or advisable to carry out the purpose of the
Plan, provided, however, that any procedure, discretionary act, interpretation
or construction shall be done in a nondiscriminatory manner based upon uniform
principles consistently applied and shall be consistent with the intent that the
Plan shall continue to be deemed a qualified plan under the terms of Code
Section 401(a), and shall comply with the terms of the Act and all regulations
issued pursuant thereto. The Administrator shall have all powers necessary or
appropriate to accomplish his duties under this Plan.
The Administrator shall be charged with the duties of the general administration
of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to the eligibility
of Employees to participate or remain a Participant hereunder and to
receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to the amount
and the kind of benefits to which any Participant shall be entitled
hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust
Fund;
(d) to maintain all necessary records for the administration of the Plan;
(e) to interpret the provisions of the Plan and to make and publish such
rules for regulation of the Plan as are consistent with the terms
hereof;
(f) to determine the size and type of any Contract to be purchased from any
Insurer, and to designate the Insurer from which such Contract shall be
purchased;
(g) to compute and certify to the Employer and to the Trustee from time to
time the sums of money necessary or desirable to be contributed to
the Trust Fund;
(h) to consult with the Employer and the Trustee regarding the short and
long-term liquidity needs of the Plan in order that the Trustee can
exercise any investment discretion in a manner designed to accomplish
specific objectives;
(i) to prepare and distribute to Employees a procedure for notifying
Participants and Beneficiaries of their rights to elect Joint and
Survivor Annuities and Pre-Retirement Survivor Annuities if required
by the Code and Regulations thereunder;
(j) to prepare and implement a procedure to notify Eligible Employees that
they may elect to have a portion of their Compensation deferred or paid
to them in cash;
(k) to assist any Participant regarding his rights, benefits, or elections
available under the Plan.
2.7 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall keep all
other books of account, records, and other data that may be necessary for proper
administration of the Plan and shall be responsible for supplying all
information and reports to the Internal Revenue Service, Department of Labor,
Participants, Beneficiaries and others as required by law.
2.8 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the Administrator, may
appoint counsel, specialists, advisers, and other persons as the Administrator
or the Trustee deems necessary or desirable in connection with the
administration of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to perform his functions, the Employer
8
shall supply full and timely information to the Administrator on all matters
relating to the Compensation of all Participants, their Hours of Service, their
Years of Service, their retirement, death, disability, or termination of
employment, and such other pertinent facts as the Administrator may require; and
the Administrator shall advise the Trustee of such of the foregoing facts as may
be pertinent to the Trustee's duties under the Plan. The Administrator may rely
upon such information as is supplied by the Employer and shall have no duty or
responsibility to verify such information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund unless paid by
the Employer. Such expenses shall include any expenses incident to the
functioning of the Administrator, including, but not limited to, fees of
accountants, counsel, and other specialists and their agents, and other costs of
administering the Plan. Until paid, the expenses shall constitute a liability of
the Trust Fund. However, the Employer may reimburse the Trust Fund for any
administration expense incurred. Any administration expense paid to the Trust
Fund as a reimbursement shall not be considered an Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of administrative
authority pursuant to Section 2.5, if there shall be more than one
Administrator, they shall act by a majority of their number, but may authorize
one or more of them to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within 90 days after the application is filed. In the event the
claim is denied, the reasons for the denial shall be specifically set forth
in the notice in language calculated to be understood by the claimant, pertinent
provisions of the Plan shall be cited, and, where appropriate, an explanation as
to how the claimant can perfect the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims review
procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been denied a
benefit by a decision of the Administrator pursuant to Section 2.12 shall be
entitled to request the Administrator to give further consideration so his claim
by filing with the Administrator a written request for a hearing. Such request,
together with a written statement of the reasons why the claimant believes his
claim should be allowed, shall be filed with the Administrator no later than 60
days after receipt of the written notification provided for in Section 2.12. The
Administrator shall then conduct a hearing within the next 60 days, at which the
claimant may be represented by an attorney or any other representative of his
choosing and expense and at which the claimant shall have an opportunity to
submit written and oral evidence and arguments in support of his claim. At the
hearing (or prior thereto upon 5 business days written notice to the
Administrator) the claimant or his representative shall have an opportunity to
review all documents in the possession of the Administrator which are pertinent
to the claim at issue and its disallowance. Either the claimant or the
Administrator may cause a court reporter to attend the hearing and record the
proceedings. In such event, a complete written transcript of the proceedings
shall be furnished to both parties by the court reporter. The full expense of
any such court reporter and such transcripts shall be borne by the party causing
the court reporter to attend the hearing. A final decision as to the allowance
of the claim shall be made by the Administrator within 60 days of receipt of the
appeal (unless there has been an extension of 60 days due to special
circumstances, provided the delay and the special circumstances occasioning it
are communicated to the claimant within the 60 day period). Such communication
shall be written in a manner calculated to be understood by the claimant and
shall include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee shall be eligible to participate hereunder on the date he
has satisfied the requirements specified in the Adoption Agreement.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee who has become eligible to be a Participant shall become a
Participant effective as of the day specified in the Adoption Agreement.
In the event an Employee who has satisfied the Plan's eligibility requirements
and would otherwise have become a Participant shall go from a classification of
a noneligible Employee to an Eligible Employee, such Employee shall become a
Participant as of the date he becomes an Eligible Employee.
In the event an Employee who has satisfied the Plan's eligibility requirements
and would otherwise become a Participant shall go from a classification of an
Eligible Employee to a noneligible Employee and becomes ineligible to
participate and has not incurred a 1-Year Break in Service, such Employee shall
participate in the Plan as of the date he returns to an eligible class of
Employees. If such Employee does incur a 1-Year Break in Service, eligibility
will be determined under the Break in Service rules of the Plan.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer. Such
determination shall be conclusive and binding upon all persons, as long as the
same is made pursuant to the Plan and the Act. Such determination shall be
subject to review per Section 2.13.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant shall go from a classification of an Eligible
Employee to an ineligible Employee, such Former Participant shall continue to
vest in his interest in the Plan for each Year of Service completed while a
noneligible Employee, until such time as his Participant's Account shall be
forfeited or distributed pursuant to the terms of the Plan. Additionally, his
interest in the Plan shall continue to share in the earnings of the Trust Fund.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a Participant in
the Plan is erroneously omitted and discovery of such omission is not made until
after a contribution by his Employer for the year has been made, the Employer
shall make a subsequent contribution, if necessary after the application of
Section 4.4(e), so that the omitted Employee receives a total amount which the
said Employee would have received had he not been omitted. Such contribution
shall be made regardless of whether or not it is deductible in whole or in part
in any taxable year under applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as a
Participant in the Plan is erroneously included and discovery of such incorrect
inclusion is not made until after a contribution for the year has been made, the
Employer shall not be entitled to recover the contribution made with respect to
the ineligible person regardless of whether or not a deduction is allowable
with respect to such contribution. In such event, the amount contributed with
respect to the ineligible person shall constitute a Forfeiture for the Plan Year
in which the discovery is made.
3.7 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect voluntarily not
to participate in the Plan. The election not to participate must be communicated
to the Employer, in writing, at least thirty (30) days before the beginning of a
Plan Year. For Standardized
9
Plans, a Participant or an Eligible Employee may not elect not to participate.
Furthermore, the foregoing election not to participate shall not be available
with respect to partners in a partnership.
3.8 CONTROL OF ENTITIES BY OWNER-EMPLOYEE
(a) If this Plan provides contributions or benefits for one or more Owner-
Employees who control both the business for which this Plan is
established and one or more other entities, this Plan and the plan
established for other trades or businesses must, when looked at as a
single Plan, satisfy Code Sections 401(a) and (d) for the Employees of
this and all other entities.
(b) If the Plan provides contributions or benefits for one or more Owner-
Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan
which satisfies Code Sections 401(a) and (d) and which provides
contributions and benefits not less favorable than provided for Owner-
Employees under this Plan.
(c) If an individual is covered as an Owner-Employee under the plans of two
or more trades or businesses which are not controlled and the individual
controls a trade or business, then the benefits or contributions of the
employees under the plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable
plan of the trade or business which is not controlled.
(d) For purposes of the preceding paragraphs, an Owner-Employee, or two or
more Owner-Employees, will be considered to control an entity if the
Owner-Employee, or two or more Owner-Employees together.
(1) own the entire interest in an unincorporated entity, or
(2) in the case of a partnership, own more than 50 percent of either the
capital interest or the profits interest in the partnership.
(e) For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such
Owner-Employee, or such two or more Owner-Employees, are considered to
control within the meaning of the preceding sentence.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan:
(a) The amount of the total salary reduction elections of all Participants
made pursuant to Section 4.2(a), which amount shall be deemed an
Employer's Elective Contribution, plus
(b) If specified in E3 of the Adoption Agreement, a matching contribution
equal to the percentage specified in the Adoption Agreement of the
Deferred Compensation of each Participant eligible to share in the
allocations of the matching contribution, which amount shall be deemed an
Employer's Non-Elective or Elective Contribution as selected in the
Adoption Agreement, plus
(c) If specified in E4 of the Adoption Agreement, a discretionary amount, if
any, which shall be deemed an Employer's Non-Elective Contribution, plus
(d) If specified in E5 of the Adoption Agreement, a Qualified Non-Elective
Contribution.
(e) Notwithstanding the foregoing, however, the Employer's contributions for
any Fiscal Year shall not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of Code Section 404. All
contributions by the Employer shall be made in cash or in such property
as is acceptable to the Trustee.
(f) Except, however, to the extent necessary to provide the top heavy minimum
allocations, the Employer shall make a contribution even if it exceeds
current or accumulated Net Profit or the amount which is deductible under
Code Section 404.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer his Compensation which would have
been received in the Plan Year, but for the deferral election, subject to
the limitations of this Section and the Adoption Agreement. A deferral
election (or modification of an earlier election) may not be made with
respect to Compensation which is currently available on or before the
date the Participant executed such election, or if later, the latest of
the date the Employer adopts this cash or deferred arrangement, or the
date such arrangement first became effective. Any elections made pursuant
to this Section shall become effective as soon as is administratively
feasible.
Additionally, if elected in the Adoption Agreement, each Participant may
elect to defer and have allocated for a Plan Year all or a portion of any
cash bonus attributable to services performed by the Participant for the
Employer during such Plan Year and which would have been received by the
Participant on or before two and one-half months following the end of the
Plan Year but for the deferral. A deferral election may not be made with
respect to cash bonuses which are currently available on or before the
date the Participant executed such election. Notwithstanding the
foregoing, cash bonuses attributable to services performed by the
Participant during a Plan Year but which are to be paid to the
Participant later than two and one-half months after the close of such
Plan Year will be subjected to whatever deferral election is in effect at
the time such cash bonus would have otherwise been received.
The amount by which Compensation and/or cash bonuses are reduced shall be
that Participant's Deferred Compensation and be treated as an Employer
Elective Contribution and allocated to that Participant's Elective
Account.
Once made, a Participant's election to reduce Compensation shall remain
in effect until modified or terminated. Modifications may be made as
specified in the Adoption Agreement, and terminations may be made at any
time. Any modification or termination of an election will become
effective as soon as is administratively feasible.
(b) The balance in each Participant's Elective Account shall be fully Vested
at all times and shall not be subject to Forfeiture for any reason.
(c) Amounts held in the Participant's Elective Account and Qualified Non-
Elective Account may be distributable as permitted under the Plan, but in
no event prior to the earlier of:
(1) a Participant's termination of employment. Total and Permanent
Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the proven financial hardship of a Participant, subject to the
limitations of Section 6.11;
(4) the termination of the Plan without the existence at the time of Plan
termination of another defined contribution plan (other than an
employee stock ownership plan as defined in Code Section 4975(e)(7))
or the
10
establishment of a successor defined contribution plan (other than an
employee stock ownership plan as defined in Code Section 4975(e)(7))
by the Employer or an Affiliated Employer within the period ending
twelve months after distribution of all assets from the Plan
maintained by the Employer;
(5) the date of the sale by the Employer to an entity that is not an
Affiliated Employer of substantially all of the assets (within the
meaning of Code Section 409(d)(2)) with respect to a Participant who
continues employment with the corporation acquiring such assets; or
(6) the date of the sale by the Employer or an Affiliated Employer of its
interest in a subsidiary (within the meaning of Code Section
409(d)(3)) to an entity that is not an Affiliated Employer with
respect to a Participant who continues employment with such
subsidiary.
(d) In any Plan Year beginning after December 31, 1987, a Participant's
Deferred Compensation made under this Plan and all other plans, contracts
or arrangements of the Employer maintaining this Plan shall not exceed
the limitation imposed by Code Section 402(g), as in effect for the
calendar year in which such Plan Year began. If such dollar limitation is
excluded solely from elective deferrals under this Plan or any other Plan
maintained by the Employer, a Participant will be deemed to have notified
the Administrator of such excess amount which shall be distributed in a
manner consistent with Section 4.2(f). This dollar limitation shall be
adjusted annually pursuant to the method provided in Code Section 415(d)
in accordance with Regulations.
(e) In the event a Participant has received a hardship distribution pursuant
to Regulation 1.401(k)-1(d)(2)(iii)(B) from any other plan maintained by
the Employer or from his Participant's Elective Account pursuant to
Section 6.11(c), then such Participant shall not be permitted to elect to
have Deferred Compensation contributed to the Plan on his behalf for a
period of twelve (12) months following the receipt of the distribution.
Furthermore, the dollar limitation under Code Section 402(g) shall be
reduced with respect to the Participant's taxable year following the
taxable year in which the hardship distribution was made, by the amount
of such Participant's Deferred Compensation, if any, made pursuant to
this Plan (and any other plan maintained by the Employer) for the taxable
year of the hardship distribution.
(f) If a Participant's Deferred Compensation under this Plan together with
any elective deferrals (as defined in Regulation 1.402(g)-1(b)) under
another qualified cash or deferred arrangement (as defined in Code
Section 401(k)), a simplified employee pension (as defined in Code
Section 408(k)), a salary reduction arrangement (within the meaning of
Code Section 3121(a)(5)(D)), a deferred compensation plan under Code
Section 457, or a trust described in Code Section 501(c)(l8) cumulatively
exceed the limitation imposed by Code Section 402(g) (as adjusted
annually in accordance with the method provided in Code Section 415(d)
pursuant to Regulations) for such Participant's taxable year, the
Participant may, not later than March 1st following the close of his
taxable year, notify the Administrator in writing of such excess and
request that his Deferred Compensation under this Plan be reduced by an
amount specified by the Participant. In such event, the Administrator
shall direct the Trustee to distribute such excess amount (and airy
Income allocable to such excess amount) to the Participant not later than
the first April 15th following the close of the Participant's taxable
year. Distributions in accordance with this paragraph may be made for any
taxable year of the Participant which begins after December 31, 1986. Any
distribution of less than the entire amount of Excess Deferred
Compensation and Income shall be treated as a pro rata distribution of
Excess Deferred Compensation and Income. The amount distributed shall not
exceed the Participant's Deferred Compensation under the Plan for the
taxable year. Any distribution on or before the last day of the
Participant's taxable year must satisfy each of the following conditions.
(1) the Participant shall designate the distribution as Excess Deferred
Compensation;
(2) the distribution must be made after the date on which the Plan
received the Excess Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution of Excess
Deferred Compensation.
(4) Any distribution made pursuant to this Section shall be made first
from unmatched Deferred Compensation and, thereafter, simultaneously
from Deferred Compensation which is matched and matching
contributions which relate to such Deferred Compensation. However,
any such matching contributions which are not Vested shall be
forfeited in lieu of being distributed.
Any distribution under this Section shall be made first from unmatched
Deferred Compensation and, thereafter, simultaneously from Deferred
Compensation which is matched and matching contributions which relate
to such Deferred Compensation. However, any such matching contributions
which are not Vested shall be forfeited in lieu of being distributed.
For the purpose of this Section, "Income" means the amount of income or
loss allocable to a Participant's Excess Deferred Compensation and shall
be equal to the sum of the allocable gain or loss for the taxable year
of the Participant and the allocable gain or loss for the period between
the end of the taxable year of the Participant and the date of
distribution ("gap period"). The income or loss allocable to each such
period is calculated separately and is determined by multiplying the
income or loss allocable to the Participant's Deferred Compensation for
the respective period by a fraction. The numerator of the fraction is
the Participant's Excess Deferred Compensation for the taxable year of
the Participant. The denominator is the balance, as of the last day of
the respective period, of the Participant's Elective Account that is
attributable to the Participant's Deferred Compensation reduced by the
gain allocable to such total amount for the respective period and
increased by the loss allocable to such total amount for the respective
period.
In lieu of the "fractional method" described above, a "safe harbor
method" may be used to calculate the allocable income or loss for the
"gap period". Under such "safe harbor method", allocable income or loss
for the "gap period" shall be deemed to equal ten percent (10%) of the
income or loss allocable to a Participant's Excess Deferred Compensation
for the taxable year of the Participant multiplied by the number of
calendar months in the "gap period". For purposes of determining the
number of calendar months in the "gap period", a distribution occurring
on or before the fifteenth day of the month shall be treated as having
been made on the last day of the preceding month and a distribution
occurring after such fifteenth day shall be treated as having been made
on the first day of the next subsequent month.
Income or loss allocable to any distribution of Excess Deferred
Compensation on or before the last day of the taxable year of the
Participant shall be calculated from the
11
first day of the taxable year of the Participant to the date on which the
distribution is made pursuant to either the "fractional method" or the
"safe harbor method".
Notwithstanding the above, for the 1987 calendar year, and for Plan Years
beginning on or after the date this Plan is adopted. Income during the
"gap period" shall not be taken into account.
(g) Notwithstanding Section 4.2(f) above, a Participant's Excess Deferred
Compensation shall be reduced, but not below zero, by any distribution
and/or recharacterization of Excess Contributions pursuant to Section
4.6(a) for the Plan Year beginning with or within the taxable year of the
Participant.
(h) At Normal Retirement Date, or such other date when the Participant shall
be entitled to receive benefits, the fair market value of the
Participant's Elective Account shall be used to provide benefits to the
Participant or his Beneficiary.
(i) Employer Elective Contributions made pursuant to this Section may be
segregated into a separate account for each Participant in a federally
insured savings account, certificate of deposit in a bank or savings and
loan association, money market certificate, or other short-term debt
security acceptable to the Trustee until such time as the allocations
pursuant to Section 4.4 have been made.
(j) The Employer and the Administrator shall adopt a procedure necessary to
implement the salary reduction elections provided for herein.
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its contribution to the Plan
for each Plan Year within the time prescribed by law, including extensions of
time, for the filing of the Employer's federal income tax return for the Fiscal
Year.
However, Employer Elective Contributions accumulated through payroll deductions
shall be paid to the Trustee as of the earliest date on which such contributions
can reasonably be segregated from the Employer's general assets, but in any
event within ninety (90) days from the date on which such amounts would
otherwise have been payable to the Participant in cash. The provisions of
Department of Labor regulations 2510.3-102 are incorporated herein by reference.
Furthermore, any additional Employer contributions which are allocable to the
Participant's Elective Account for a Plan Year shall be paid to the Plan no
later than the twelve-month period immediately following the close of such Plan
Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in the name of
each Participant to which the Administrator shall credit as of each
Anniversary Date, or other valuation date, all amounts allocated to each
such Participant as set forth herein.
(b) The Employer shall provide the Administrator with all information
required by the Administrator to make a proper allocation of the
Employer's contributions for each Plan Year. Within a reasonable period
of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate such contribution as
follows:
(1) With respect to the Employer's Elective Contribution made pursuant to
Section 4.1(a), to each Participant's Elective Account in an amount
equal to each such Participant's Deferred Compensation for the year.
(2) With respect to the Employer's Matching Contribution made pursuant to
Section 4.1(b), to each Participant's Account or Participant's
Elective Account as selected in E3 of the Adoption Agreement, in
accordance with Section 4.1(b).
Except, however, a Participant who is not credited with a Year of
Service during any Plan Year shall or shall not share in the
Employer's Matching Contribution for that year as provided in E3 of
the Adoption Agreement. However, for Plan Years beginning after 1989,
if this is a standardized Plan, a Participant shall share in the
Employer's Matching Contribution regardless of Hours of Service.
(3) With respect to the Employer's Non-Elective Contribution made
pursuant to Section 4.1(c), to each Participant's Account in
accordance with the provisions of E4 of the Adoption Agreement.
However, if an integrated allocation formula is selected at E4 of the
Adoption Agreement, then such contribution shall be allocated to each
Participant's Combined Account in a dollar amount equal to 5.7% of
the sum of each Participant's total Compensation plus Excess
Compensation. If the Employer does not contribute such amount for all
Participants, each Participant will be allocated a share of the
contribution in the same proportion that his total Compensation plus
his total Excess Compensation for the Plan Years bears to the total
Compensation plus the total Excess Compensation of all Participants
for that year. The balance of the contribution, if any, will be
allocated in the same proportion that his total Compensation bears to
the total Compensation of all Participant's eligible to share in the
allocation.
Regardless of the preceding, 4.3% shall be substituted for 5.7% above
if Excess Compensation is based on more than 20% and less than or
equal to 80% of the Taxable Wage Base. If Excess Compensation is
based on less than 100% and more than 80% of the Taxable Wage Base,
then 5.4% shall be substituted for 5.7% above.
(4) With respect to the Employer's Qualified Non-Elective Contribution
made pursuant to Section 4.1(d), to each Participant's Qualified
Non-Elective Contribution Account in the same proportion that each
such Participant's Compensation for the year bears to the total
Compensation of all Participants for such year.
(5) Regardless of the preceding, a Participant who is not credited with a
Year of Service during a Plan Year shall not share in the allocation
of the Employer's Non-Elective Contribution made pursuant to Section
4.1(c) and the Employer's Qualified Non-Elective Contribution made
pursuant to Section 4.1(d), unless reduced pursuant to Section
4.4(h). However, for Plan Years beginning after 1989, for a
standardized plan, and if elected in the non-standardized Adoption
Agreement, a Participant shall share in the allocation of such
contributions regardless of whether a Year of Service was completed
during the Plan Year.
(c) As of each Anniversary Date or other valuation date, before allocation of
Employer contributions and Forfeitures, any earnings or losses (net
appreciation or net depreciation) of the Trust Fund shall be allocated
in the same proportion that each Participant's and Former Participant's
nonsegregated accounts bear to the total of all Participants' and Former
Participants' nonsegregated accounts as of such date. If any
nonsegregated account of a Participant has been distributed prior to the
Anniversary Date or other valuation date subsequent to a Participant's
termination of employment, no earnings or losses shall be credited to
such account.
Notwithstanding the above, with respect to contributions made to a 401(k)
Plan after the previous Anniversary Date
12
or allocation date, the method specified in the Adoption Agreement shall
be used.
(d) Participants' Accounts shall be debited for any insurance or annuity
premiums paid, if any, and credited with any dividends or interest
received on insurance contracts.
(e) As of each Anniversary Date any amounts which became Forfeitures since
the last Anniversary Date shall first be made available to reinstate
previously forfeited account balances of Former Participants, if any, in
accordance with Section 6.4(g)(2) or be used to satisfy any contribution
that may be required pursuant to Section 3.5 and/or 6.9. The remaining
Forfeitures, if any, shall be treated in accordance with the Adoption
Agreement. Provided, however, that in the event the allocation of
Forfeitures provided herein shall cause the "annual addition" (as defined
in Section 4.9) to any Participant's Account to exceed the amount
allowable by the Code, the excess shall be reallocated in accordance
with Section 4.10. Except, however, for any Plan Year beginning prior to
January 1, 1990, and if elected in the non-standardized Adoption
Agreement for any Plan Year beginning on or after January 1, 1990, a
Participant who performs less than a Year of Service during any Plan Year
shall not share in the Plan Forfeitures for that year, unless there is a
Short Plan Year or a contribution required pursuant to Section 4.4(h).
(f) Minimum Allocations Required for Top Heavy Plan Years: Notwithstanding
the foregoing, for any Top Heavy Plan Year, the sum of the Employer's
contributions and Forfeitures allocated to the Participant's Combined
Account of each Non-Key Employee shall be equal to at least three percent
(3%) of such Non-Key Employee's "415 Compensation" (reduced by
contributions and forfeitures, if any, allocated to each Non-Key Employee
in any defined contribution plan included with this plan in a Required
Aggregation Group). However if (i) the sum of the Employer's
contributions and Forfeitures allocated to the Participant's Combined
Account of each Key Employee for such Top Heavy Plan Year is less than
three percent (3%) of each Key Employee's "415 Compensation" and (ii)
this Plan is not required to be included in an Aggregation Group to
enable a defined benefit plan to meet the requirements of Code Section
401(a)(4) or 410, the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Combined Account of each Non-Key Employee
shall be equal to the largest percentage allocated to the Participant's
Combined Account of any Key Employee. However, for Plan Years beginning
after December 31, 1988, in determining whether a Non-Key Employee has
received the required minimum allocation, such Non-Key Employee's
Deferred Compensation and matching contributions used to satisfy the
"Actual Deferral Percentage" test pursuant to Section 4.5(a) or the
"Actual Contribution Percentage" test of Section 4.7(a) shall not be
taken into account.
If this is an integrated Plan, then for any Top Heavy Plan Year the
Employer's contribution shall be allocated as follows:
(1) An amount equal to 3% multiplied by each Participant's Compensation
for the Plan Year shall be allocated to each Participant's Account.
If the Employer does not contribute such amount for all Participants,
the amount shall be allocated to each Participant's Account in the
same proportion that his total Compensation for the Plan Year bears
to the total Compensation of all Participants for such year.
(2) The balance of the Employer's contribution over the amount allocated
under subparagraph (1) hereof shall be allocated to each
Participant's Account in a dollar amount equal to 3% multiplied by a
Participant's Excess Compensation. If the Employer does not
contribute such amount for all Participants, each Participant will be
allocated a share of the contribution in the same proportion that his
Excess Compensation bears to the total Excess Compensation of all
Participants for that year.
(3) The balance of the Employer's contribution over the amount allocated
under subparagraph (2) hereof shall be allocated to each
Participant's Account in a dollar amount equal to 2.7% multiplied by
the sum of each Participant's total Compensation plus Excess
Compensation. If the Employer does not contribute such amount for all
Participants, each Participant will be allocated a share of the
contribution in the same proportion that his total Compensation plus
his total Excess Compensation for the Plan Year bears to the total
Compensation plus the total Excess Compensation of all Participants
for that year.
Regardless of the preceding, 1.3% shall be substituted for 2.7% above
if Excess Compensation is based on more than 20% and less than or
equal to 80% of the Taxable Wage Base. If Excess Compensation is
based on less than 100% and more than 80% of the Taxable Wage Base,
then 2.4% shall be substituted for 2.7% above.
(4) The balance of the Employer's contributions over the amount allocated
above, if any, shall be allocated to each Participant's Account in
the same proportion that his total Compensation for the Plan Year
bears to the total Compensation of all Participants for such year.
For each Non-Key Employee who is a Participant in this Plan and
another non-paired defined contribution plan maintained by the
Employer, the minimum 3% allocation specified above shall be provided
as specified in F3 of the Adoption Agreement.
(g) For purposes of the minimum allocations set forth above, the percentage
allocated to the Participant's Combined Account of any Key Employee shall
be equal to the ratio of the sum of the Employer's contributions and
Forfeitures allocated on behalf of such Key Employee divided by the "415
Compensation" for such Key Employee.
(h) For any Top Heavy Plan Year, the minimum allocations set forth above
shall be allocated to the Participant's Combined Account of all Non-Key
Employees who are Participants and who are employed by the Employer on
the last day of the Plan Year, including Non-Key Employees who have (1)
failed to complete a Year of Service; or (2) declined to make mandatory
contributions (if required) or salary reduction contributions to the
Plan.
(i) Notwithstanding anything herein to the contrary, in any Plan Year in
which the Employer maintains both this Plan and a defined benefit pension
plan included in a Required Aggregation Group which is top heavy, the
Employer shall not be required to provide a Non-Key Employee with both
the full separate minimum defined benefit plan benefit and the full
separate defined contribution plan allocations. Therefore, if the
Employer maintains both a Defined Benefit and a Defined Contribution Plan
that are a Top Heavy Group, the top heavy minimum benefits shall be
provided as follows:
Applies if F1b of the Adoption Agreement is selected -
(1) The requirements of Section 2.1 shall apply except that each Non-Key
Employee who is a Participant in this Plan or a Money Purchase Plan
and who is also a Participant in the Defined Benefit Plan shall
receive a minimum allocation of five percent (5%) of such
13
Participant's "415 Compensation" from the applicable Defined
Contribution Plan(s).
(2) For each Non-Key Employee who is a Participant only in the Defined
Benefit Plan, the Employer will provide a minimum non-integrated
benefit in the Defined Benefit Plan equal to 2% of his highest five
consecutive year average "415 Compensation" for each Year of Service
while a Participant in the Plan, in which the Plan is top heavy, not
to exceed ten.
(3) For each Non-Key Employee who is a Participant only in this Defined
Contribution Plan, the Employer will provide a contribution equal to
3% of his "415 Compensation".
Applies if F1c of the Adoption Agreement is selected -
(4) The minimum allocation specified in Section 4.4(i)(1) shall be 7 1/2%
for years in which the Plan is Top Heavy, but not Super Top Heavy.
(5) The minimum benefit specified in Section 4.4(i)(2) shall be 3% for
years in which the Plan is Top Heavy, but not Super Top Heavy.
(6) The minimum allocation specified in Section 4.4(i)(3) shall be 4% for
years in which the Plan is Top Heavy, but not Super Top Heavy.
(j) For the purposes of this Section, "415 Compensation" shall be limited to
the same dollar limitations set forth in Section 1.9. However, for Plan
Years beginning prior to January 1, 1989, the $200,000 limit shall apply
only for Top Heavy Plan Years and shall not be adjusted.
(k) Notwithstanding anything herein to the contrary, participants who
terminated employment during the Plan Year shall share in the salary
reduction contributions made by the Employer for the year of termination
without regard to the Hours of Service credited.
(l) Notwithstanding anything herein to the contrary (other than Sections
4.4(k) and 6.6(h)(1)), any Participant who terminated employment during
the Plan Year for reasons other than death. Total and Permanent
Disability, or retirement shall or shall not share in the allocations of
the Employer's Matching Contribution made pursuant to Section 4.1(b), the
Employer's Non-Elective Contributions made pursuant to Section 4.1(c).
the Employer's Qualified Non-Elective Contribution made pursuant to
Section 4.1(d), and Forfeitures as provided in the Adoption Agreement.
Notwithstanding the foregoing, for Plan Years beginning after 1989, if
this is a standardized Plan, any such terminated Participant shall share
in such allocations provided the terminated Participant completed more
than 500 Hours of Service.
(m) Notwithstanding anything herein to the contrary, Participants terminating
for reasons of death, Total and Permanent Disability, or retirement shall
share in the allocation of the Employer's Matching Contribution made
pursuant to Section 4.1(b), the Employer's Non-Elective Contributions
made pursuant to Section 4.1(c), the Employer's Qualified Non-Elective
Contribution made pursuant to Section 4.1(d), and Forfeitures as provided
in this Section regardless of whether they completed a Year of Service
during the Plan Year.
(n) If a Former Participant is reemployed after five (5) consecutive 1-Year
Breaks in Service, then separate accounts shall be maintained as follows:
(1) one account for nonforfeitable benefits attributable to
pre-break service; and
(2) one account representing his status in the Plan attributable so
post-break service.
(o) Notwithstanding any election in the Adoption Agreement to the contrary,
if this is a non-standardized Plan that would otherwise fail to meet the
requirements of Code Sections 401(a)(26), 410(b)(1), or 410(b)(2)(A)(i)
and the Regulations, thereunder because Employer matching Contributions
made pursuant so Section 4.1(b). Employer Non-Elective Contributions made
pursuant to Section 4.1(c) or Employer Qualified Non-Elective
Contributions made pursuant to Section 4.1(d) have not been allocated to
a sufficient number or percentage of Participants for a Plan Year, then
the following rules shall apply:
(1) Allocations of the respective contribution and Forfeitures shall
first be made to all active Participants who are employed on the last
day of the Plan Year, regardless of the number of Hours of Service
completed; and
(2) If after application of paragraph (1) above, the applicable test is
still not satisfied, then the group of Participants eligible to share
in the Employer's contribution and Forfeitures for the Plan Year
shall be further expanded so include the minimum number of
Participants who are not actively employed on the last day of the
Plan Year as are necessary to satisfy the applicable test. The
specific Participants who shall become eligible to share shall be
those Participants, when compared to similarly situated Participants,
who have completed the greatest number of Hours of Service in the
Plan Year before terminating employment.
Nothing in this Section shall permit the reduction of a Participant's
accrued benefit. Therefore any amounts that have previously been allocated to
Participants may not be reallocated to satisfy requirements. In such event, the
Employer shall make an additional contribution equal to the amount such affected
Participants would have received had they been included in the allocations, even
if it exceeds the amount which would be deductible under Code Section 404. Any
adjustment to the allocations pursuant to this paragraph shall be considered a
retroactive amendment adopted by the last day of the Plan Year.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year beginning after December
31, 1986, the annual allocation derived from Employer Elective
Contributions and Qualified Non-Elective Contributions to a Participant's
Elective Account and Qualified Non-Elective Account shall satisfy one of
the following tests:
(1) The "Actual Deferral Percentage" for the Highly Compensated
Participant group shall not be more than the "Actual Deferral
Percentage" of the Non-Highly Compensated Participant group
multiplied by 1.25, or
(2) The excess of the "Actual Deferral Percentage" for the Highly
Compensated Participant group over the "Actual Deferral Percentage"
for the Non-Highly Compensated Participant group shall not be more
than two percentage points. Additionally, the "Actual Deferral
Percentage" for the Highly Compensated Participant group shall nor
exceed the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group multiplied by 2. The provisions of
Code Section 401(k)(3) and Regulation 1.40l(k)-1(b) are incorporated
herein by reference.
However, for Plan Years beginning after December 31, 1988, to prevent
the multiple use of the alternative method described in (2) above and
Code Section 401(m)(9)(A), any Highly Compensated Participant
eligible to make elective deferrals pursuant to Section 4.2 and to
make Employee contributions or to receive matching contributions
under this Plan or under any other plan maintained by the Employer or
an Affil-
14
iated Employer shall have his actual contribution ratio reduced
pursuant to Regulation 1.401(m)-2, the provisions of which are
incorporated herein by reference.
(b) For the purposes of this Section "Actual Deferral Percentage" means,
with respect to the Highly Compensated Participant group and Non-
Highly Compensated Participant group for a Plan Year, the average of
the ratios, calculated separately for each Participant in such group,
of the amount of Employer Elective Contributions and Qualified Non-
Elective Contributions allocated to each Participants Elective
Account and Qualified Non-Elective Account for such Plan Year, to
such Participant's "414(s) Compensation" for such Plan Year. The
actual deferral ratio for each Participant and the "Actual Deferral
Percentage" for each group, for Plan Years beginning after December
31, 1988, shall be calculated to the nearest one-hundredth of one
percent of the Participant's "414(s) Compensation". Employer Elective
Contributions allocated to each Non-Highly Compensated Participant's
Elective Account shall be reduced by Excess Deferred Compensation to
the extent such excess amounts are made under this Plan or any plan
maintained by the Employer.
(c) For the purpose of determining the actual deferral ratio of a Highly
Compensated Participant who is subject to the Family Member
aggregation rules of Code Section 414(a)(6) because such Participant
is either a "five percent owner" of the Employer or one of ten
percent (10) Highly Compensated Employees paid the greatest "415
Compensation" during the year, the following shall apply:
(1) The combined actual deferral ratio for the family group (which
shall be determined by aggregating Employer Elective
Contributions and "414(s) Compensation" of all eligible Family
Members (including Highly Compensated Participants). However, in
applying the $200,000 limit to "414(s) Compensation" for Plan
Years beginning after December 31, 1988. Family Members shall
include only the affected Employee's spouse and any lineal
descendants who have not attained age 19 before the close of the
Plan Year.
(2) The Employer Elective Contributions and "414(s) Compensation" of
all Family Members shall be disregarded for purposes of
determining the "Actual Deferral Percentage" of the Non-Highly
Compensated Participant group except to the extent taken into
account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a member of more
than one family group in a plan, all Participants who are members
of those family groups that include the Participant are
aggregated as one family group in accordance with paragraphs
(1)and (2) above.
(d) For the purposes of Section 4.5(a) and 4.6, a Highly Compensated
Participant and a Non-Highly Compensated Participant shall include any
Employee eligible to make a deferral election pursuant to Section 4.2,
whether or not such deferral election was made or suspended pursuant to
Section 4.2.
(e) For the purposes of this Section and Code Sections 401(a)(4), 410(b) and
401(k), if two or more plans which include cash or deferred arrangements
are considered one plan for the purposes of Code Section 401(a)(4) or
410(b) (other than Code Section 401(b)(2)(A)(ii) as in effect for Plan
Years beginning after December 31, 1988), the cash, or deferred
arrangements included in such plans shall be treated as one arrangement.
In addition, two or more cash or deferred arrangements may be considered
as a single arrangement for purposes of determining whether or not such
arrangements satisfy Code Sections 401(a)(4), 410(b) and 401(k). In such
a case, the cash or deferred arrangements included in such plans and the
plans including such arrangements shall be treated as one arrangement and
as one plan for purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(k). For plan years beginning after December 31, 1989,
plans may be aggregated under this paragraph (e) only if they have the
same plan years.
Notwithstanding the above, for Plan Years beginning after December 31,
1988, an employee stock ownership plan described in Code Section
4975(e)(7) may not be combined with this Plan for purposes of determining
whether the employee stock ownership plan or this Plan satisfies this
Section and Code Sections 401(a)(4), 410(b) and 401(k).
(f) For the purposes of this Section, if a Highly Compensated Participant is
a Participant under two (2) or more cash or deferred arrangements (other
than a cash or deferred arrangement which is part of an employee stock
ownership plan as defined in Code Section 4975(e)(7) for Plan Years
beginning after December 31, 1988) of the Employer or an Affiliate
Employer, all such cash or deferred arrangements shall be treated as one
cash or deferred arrangement for the purpose of determining the actual
deferral ratio with respect to such Highly Compensated Participant.
However, for Plan Years beginning after December 31, 1988, if the cash or
deferred arrangements have different Plan Years, this paragraph shall be
applied by treating all cash or deferred arrangements ending with or
within the same calendar year as a single arrangement.
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event that the initial allocations of the Employer's Elective
Contributions and Qualified Non-Elective Contributions made pursuant to Section
4.4 do not satisfy one of the tests set forth in Section 4.5, for Plan Years
beginning after December 31, 1986, the Administrator shall adjust Excess
Contributions pursuant to the options set forth be1ow:
(a) On or before the fifteenth day of the third month following the end of
each Plan Year, the Highly Compensated Participant having the highest
actual deferral ratio shall have his portion of Excess Contributions
distributed to him and/or at his election recharacterized as a voluntary
Employee contribution pursuant to Section 4.12 until one of the tests set
forth in Section 4.5 is satisfied, or until his actual deferral ratio
equals the actual deferral ratio of the Highly Compensated Participant
having the second highest actual deferral ratio. This process shall
continue until one of the tests set forth in Section 4.5 is satisfied.
For each Highly Compensated Participant, the amount of Excess
Contributions is equal to the Elective Contributions and Qualified Non-
Elective Contributions made on behalf of such Highly Compensated
Participant (determined prior to the application of this paragraph) minus
the amount determined by multiplying the Highly Compensated Participant's
actual deferral ratio (determined after application of this paragraph) by
his "414(s) Compensation". However, in determining the amount of Excess
Contributions to be distributed and/or recharacterized with respect to an
affected Highly Compensated Participant as determined herein, such amount
shall be reduced by any Excess Deferred Compensation previously
distributed to such affected Highly Compensation Participant for his
taxable year ending with or within such Plan Year. Any distribution and/
or recharacterization of Excess Contributions shall be made in accordance
with the following:
(1) With respect to the distribution of Excess Contributions pursuant to
(a) above, such distribution:
15
(i) may be postponed but not later than the close of the Plan Year
following the Plan Year to which they are allocable:
(ii) shall be made first from unmatched Deferred Compensation and,
thereafter, simultaneously from Deferred Compensation which is
matched and matching contributions which relate to such
Deferred Compensation. However, any such matching contributions
which are not Vested shall be forfeited in lieu of being
distributed.
(iii) shall be made from Qualified Non-Elective Contributions only to
the extent that Excess Contributions exceed the balance in the
Participants Elective Account attributable to Deferred
Compensation and Employer marching contributions.
(iv) shall be adjusted for Income: and
(v) shall be designated by the Employer as a distribution of Excess
Contributions (and Income).
(2) With respect to the recharacterization of Excess Contributions
pursuant to (a) above, such recharacterized amounts:
(i) shall be deemed to have occurred on the date on which the last
of those Highly Compensated Participants with Excess
Contributions to be recharacterized is notified of the
recharacterization and the tax consequences of such
recharacterization;
(ii) for Plan Years ending on or before August 8, 1988, may be
postponed but not later than October 24, 1988;
(iii) shall not exceed the amount of Deferred Compensation on behalf
of any Highly Compensated Participant for any Plan Year;
(iv) shall be treated as voluntary Employee contributions for
purposes of Code Section 401(a)(4) and Regulation l.401(k)-
l(b). However, for purposes of Sections 2.2 and 4.4(f);
recharacterized Excess Contributions continue to be treated as
Employer contributions that are Deferred Compensation. For Plan
Years beginning after December 31, 1988. Excess Contributions
recharacterized as voluntary Employee contributions shall
continue to be nonforfeitable and subject to the same
distribution rules provided for in Section 4.9(f);
(v) which relate to Plan Years ending on or before October 24,
1988, may be treated as either Employer contributions or
voluntary Employee contributions and therefore shall not be
subject to the restrictions of Section 4.2(c);
(vi) are not permitted if the amount recharacterized plus voluntary
Employee contributions actually made by such Highly Compensated
Participant, exceed the maximum amount of voluntary Employee
contributions (determined prior to application of Section
4.7(a)) that such Highly Compensated Participant is permitted
to make under the Plan in the absence of recharacterization;
(vii) shall be adjusted for Income.
(3) Any distribution and/or recharacterization of less than the entire
amount of Excess Contributions shall be treated as a pro rata
distribution and/or recharacterization of Excess Contributions and
Income.
(4) The determination and correction of Excess Contributions of a Highly
Compensated Participant whose actual deferral ratio is determined
under the family aggregation rules shall be accomplished by reducing
the actual deferral ratio as required herein and the Excess
Contributions for the family unit shall be allocated among the Family
Members in proportion to the Elective Contributions of each Family
Member that were combined to determine the group actual deferral
ratio.
(b) Within twelve (12) months after the end of the Plan Year, the Employer
shall make a special Qualified Non-Elective Contribution on behalf of
Non-Highly Compensated Participants in an amount sufficient to satisfy
one of the tests set forth in Section 4.5(a). Such contribution shall be
allocated to the Participant's Qualified Non-Elective Account of each
Non-Highly Compensated Participant in the same proportion that each Non-
Highly Compensated Participant's Compensation for the year bears to the
total Compensation of all Non-Highly Compensated Participants.
(c) For purposes of this Section, "Income" means the income or loss allocable
to Excess Contributions which shall equal the sum of the allocable gain
or loss for the Plan Year and the allocable gain or loss for the period
between the end of the Plan Year and the date of distribution ("gap
period"). The income or loss allocable to Excess Contributions for the
Plan Year and the "gap period" is calculated separately and is determined
by multiplying the income or loss for the Plan Year or the "gap period"
by a fraction. The numerator of the fraction is the Excess Contributions
for the Plan Year. The denominator of the fraction is the total of the
Participant's Elective Account attributable to Elective Contributions and
the Participant's Qualified Non-Elective Accounts as of the end of the
Plan Year or the "gap period", reduced by the gain allocable to total
amount for the Plan Year or the "gap period" and increased by the loss
allocable to such total amount for the Plan Year or the "gap period".
In lieu of the "fractional method" described above, a "safe harbor
method" may be used to calculate the allocable Income for the "gap
period". Under such safe harbor method", allocable Income for the "gap
period" shall be deemed to equal ten percent (10%) of the Income
allocable to Excess Contributions for the Plan Year of the Participant
multiplied by the number of calendar months in the "gap period". For
purposes of determining the number of calendar months in the "gap
period", a distribution occurring on or before the fifteenth day of the
month shall be treated as having been made on the last day of the
preceding month and a distribution occurring after such fifteenth day
shall be treated as having been made on the first day of the next
subsequent month.
Notwithstanding the above, for Plan Years which began in 1987, and for
Plan Years beginning on or after the date this Plan is adopted, Income
during the "gap period" shall not be taken into account.
(d) Any amounts not distributed or recharacterized within 2 1/2 months after
the end of the Plan Year shall be subject to the 10% Employer excise tax
imposed by Code Section 4979.
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage", for Plan Years beginning after the
later of the Effective Date of this Plan or December 31, 1986, for the
Highly Compensated Participant group shall not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly Compensated
Participant group; or
16
(2) the lesser of 200 percent of such percentage for the Non-Highly
Compensated Participant group, or such percentage for the Non-Highly
Compensated Participant group plus 2 percentage points. However, for
Plan Years beginning after December 31, 1988, to prevent the multiple
use of the alternative method described in this paragraph and Code
Section 40l(m)(9)(A) any Highly Compensated Participant eligible to make
elective deferrals pursuant to Section 4.2 or any other cash or deferred
arrangement maintained by the Employer or an Affiliated Employer and to
make Employee contributions or to receive matching contributions under
any plan maintained by the Employer or an Affiliated Employer shall have
his actual contribution ratio reduced pursuant to Regulation 1401(m)-2.
The provisions of Code Section 401(m) and Regulations 1.401(m)-1(b) and
1401(m)-2 are incorporated herein by reference.
(b) For the purposes of this Section and Section 4.8. "Actual Contribution
Percentage" for a Plan Year means with respect to the Highly Compensated
Participant group and Non-Highly Compensated Participant group, the average
of the ratios (calculated separately for each Participant in each group) of:
(1) the sum of Employer matching contributions pursuant to Section 4.1(b)
(to the extent such matching contributions are not used to satisfy the
tests set forth in Section 4.5), voluntary Employee contributions made
pursuant to Section 4.12 and Excess Contributions recharacterized as
voluntary Employee contributions pursuant to Section 4.6(a) contributed
under the Plan on behalf of each such Participant for such Plan Year: to
(2) the Participant's "414(s) Compensation" for such Plan Year.
(c) For purposes of determining the "Actual Contribution Percentage" and the
amount of Excess Aggregate Contributions pursuant to Section 4.8(e), only
Employer matching contributions contributed to the Plan prior to the end of
the succeeding Plan Year shall be considered. In addition, the Administrator
may elect to take into account, with respect to Employees eligible to have
Employer matching contributions made pursuant to Section 4.1(b) or voluntary
Employee contributions made pursuant to Section 4.12 allocated to their
accounts, elective deferrals (as defined in Regulation 1.402(g)-1(b)) and
qualified non-elective contributions (as defined in Code Section 401(m)4(C))
contributed to any plan maintained by the Employer. Such elective deferrals
and qualified non-elective contributions shall be treated as Employer
matching contributions subject to Regulation 1.401(m)-1(b)(2) which is
incorporated herein by reference. However, for Plan Years beginning after
December 31, 1988, the Plan Year must be the same as the plan year of the
plan to which the elective deferrals and the qualified non-elective
contributions are made.
(d) For the purpose of determining the actual contribution ratio of a Highly
Compensated Employee who is subject to the Family Member aggregation rules
of Code Section 414(q)(6) because such Employee is either a "five percent
owner" of the Employer or one of ten (10). Highly Compensated Employees
paid the greatest "415 Compensation" during the year, the following shall
apply:
(1) The combined actual contribution ratio for the family group (which shall
be treated as one Highly Compensated Participant) shall be the ratio
determined by aggregating Employer matching contributions made pursuant
to Section 4.1(b) (to the extent such matching contributions are not
used to satisfy the tests set forth in Section 4.5), voluntary Employee
contributions made pursuant to Section 4.12. Excess Contributions
recharacterized as voluntary Employee contributions pursuant to Section
4.6(a) and "414(s) Compensation" of all eligible Family Members
(including Highly Compensated Participants). However, in applying the
$200,000 limit to "414(s) Compensation" for Plan Years beginning
after December 31, 1988. Family Members shall include only the affected
Employee's spouse and any lineal descendants who have not attained age
19 before the close of the Plan Year.
(2) The Employer matching contributions made pursuant to Section 4.1(b) (to
the extent such matching contributions are not used to satisfy the tests
set forth in Section 4.5), voluntary Employee contributions made
pursuant to Section 4.12. Excess Contributions recharacterized as
voluntary Employee contributions pursuant to Section 4.6(a) and "414(s)
Compensation" of all Family Members shall be disregarded for purposes of
determining the "Actual Contribution Percentage" of the Non-Highly
Compensated Participant group except to the extent taken into account in
paragraph (1) above.
(3) If a Participant is required to be aggregated as a member of more than
one family group in a plan, all Participants who are members of those
family groups that include the Participant are aggregated as one family
group in accordance with paragraphs (1) and (2) above.
(e) For purposes of this Section and Code Sections 401(a)(4), 410(b) and 401(m),
if two or more plans of the Employer to which matching contributions.
Employee contributions, or both, are made are treated as one plan for
purposes of Code Sections 401(a)(4) or 410(b) (other than the average
benefits test under Code Section 410(b)(2)(A)(ii) as in effect for Plan
Years beginning after December 31, 1988), such plans shall be treated as one
plan. In addition, two or more plans of the Employer to which matching
contributions, Employee contributions, or both, are made may be considered
as a single plan for purposes of determining whether or not such plans
satisfy Code Sections 401(a)(4), 410(b) and 401(m). In such a case, the
aggregated plans must satisfy this Section and Code Sections 401(a)(4),
410(b) and 401(m) as though such aggregated plans were a single plan. For
plan years beginning after December 31, 1989, plans may be aggregated under
this paragraph only if they have the same plan year.
Notwithstanding the above, for Plan Years beginning after December 31, 1988,
an employee stock ownership plan described in Code Section 4975(e)(7) may
not be aggregated with this Plan for purposes of determining whether the
employee stock ownership plan or this Plan satisfies this Section and Code
Sections 401(a)(4), 410(b) and 401(m).
If a Highly Compensated Participant is a Participant under two or more
plans (other than an employee stock ownership plan as defined in Code
Section 4975(e)(7) for Plan Years beginning after December 31, 1988) which
are maintained by the Employer or an Affiliated Employer to which matching
contributions, Employee contributions, or both, are made, all such
contributions on behalf of such Highly Compensated Participant shall be
aggregated for purposes of determining such Highly Compensated Participant's
actual contribution ratio. However, for Plan Years beginning after December
31, 1988, if the plans have different plan years, this paragraph shall be
applied by treating all plans ending with or within the same calendar year
as a single plan.
17
(g) For purposes of Section 4.7(a) and 4.8, a Highly Compensated Participant
and a Non-Highly Compensated Participant shall include any Employee
eligible to have matching contributions made pursuant to Section 4.1(b)
(whether or not a deferred election was made or suspended pursuant to
Section 4.2(e)) allocated to his account for the Plan Year or to make
salary deferrals pursuant to Section 4.2 (if the Employer uses salary
deferrals to satisfy the provisions of this Section) or voluntary
Employee contributions pursuant to Section 4.12 (whether or not
voluntary Employee contributions are made) allocated to his account for
the Plan Year.
(h) For purposes of this Section, "Matching Contributions" shall mean an
Employer contribution made to the Plan, or to a contract described in
Code Section 403(b), on behalf of a Participant on account of an
Employee contribution made by such Participant, or on account of a
participant's deferred compensation, under a plan maintained by the
Employer.
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event that for Plan Years beginning after December 31, 1986, the
"Actual Contribution Percentage" for the Highly Compensated Participant
group exceeds the "Actual Contribution Percentage" for the Non-Highly
Compensated Participant group pursuant to Section 4.7(a), the
Administrator (on or before the fifteenth day of the third month
following the end of the Plan Year, but in no event later than the close
of the following Plan Year) shall direct the Trustee to distribute to
the Highly Compensated Participant having the highest actual
contribution ratio, his portion of Excess Aggregate Contributions (and
Income allocable to such contributions) or, if forfeitable, forfeit such
non-Vested Excess Aggregate Contributions attributable to Employer
matching contributions (and Income allocable to such Forfeitures) until
either one of the tests set forth in Section 4.7(a) is satisfied, or
until his actual contribution ratio equals the actual contribution ratio
of the Highly Compensated Participant having the second highest actual
contribution ratio. This process shall continue until one of the tests
set forth in Section 4.7(a) is satisfied. The distribution and/or
Forfeiture of Excess Aggregate Contributions shall be made in the
following order:
(1) Employer matching contributions distributed and/or forfeited
pursuant to Section 4.6(a)(1);
(2) Voluntary Employee contributions including Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 4.6(a)(2);
(3) Remaining Employer matching contributions.
(b) Any distribution or Forfeiture of less than the entire amount of Excess
Aggregate Contributions (and Income) shall be treated as a pro rata
distribution of Excess Aggregate Contributions and Income. Distribution
of Excess Aggregate Contributions shall be designated by the Employer as
a distribution of Excess Aggregate Contributions (and Income).
Forfeitures of Excess Aggregate Contributions shall be treated in
accordance with Section 4.4. However, no such Forfeiture may be
allocated to a Highly Compensated Participant whose contributions are
reduced pursuant to this Section.
(c) Excess Aggregate Contributions attributable to amounts other than
voluntary Employee contributions, including forfeited matching
contributions, shall be treated as Employer contributions for purposes
of Code Sections 404 and 415 even if distributed from the Plan.
(d) For the purposes of this Section and Section 4.7. "Excess Aggregate
Contributions" means, with respect to any Plan Year, the excess of:
(1) the aggregate amount of Employer matching contributions made
pursuant to Section 4.1(b) (to the extent such contributions are
taken into account pursuant to Section 4.7(b)), voluntary Employee
contributions made pursuant to Section 4.12, Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 4.6(a) and any Qualified Non-Elective Contributions or
elective deferrals taken into account pursuant to Section 4.7(c)
actually made on behalf of the Highly Compensated Participant group
for such Plan Year, over
(2) the maximum amount of such contributions permitted under the
limitations of Section 4.7(a).
(e) For each Highly Compensated Participant, the amount of Excess Aggregate
Contributions is equal to the total Employer matching contributions made
pursuant to Section 4.1(b) (to the extent taken into account pursuant to
Section 4.7(b)), voluntary Employee contributions made pursuant to
Section 4.12. Excess Contributions recharacterized as voluntary Employee
contributions pursuant to Section 4.6(a) and any Qualified Non-Elective
Contributions or elective deferrals taken into account pursuant to
Section 4.7(c) on behalf of the Highly Compensated Participant
(determined prior to the application of this paragraph) minus the amount
determined by multiplying the Highly Compensated Participant's actual
contribution ratio (determined after application of this paragraph) by
his "414(s) Compensation". The actual contribution ratio must be rounded
to the nearest one-hundredth of one percent for Plan Years beginning
after December 31, 1988. In no case shall the amount of Excess Aggregate
Contribution with respect to any Highly Compensated Participant exceed
the amount of Employer matching contributions made pursuant to Section
4.1(b) (to the extent taken into account pursuant to Section 4.7(b)),
voluntary Employee contributions made pursuant to Section 4.12. Excess
Contributions recharacterized as voluntary Employee contributions
pursuant to Section 4.6(a) and any Qualified Non-Elective Contributions
or elective deferrals taken into account pursuant to Section 4.7(c) on
behalf of such Highly Compensated Participant for such Plan Year.
(f) The determination of the amount of Excess Aggregate Contributions with
respect to any Plan Year shall be made after first determining the
Excess Contributions, if any, to be treated as voluntary Employee
contributions due to recharacterization for the plan year of any other
qualified cash or deferred arrangement (as defined in Code Section
401(k)) maintained by the Employer that ends with or within the Plan
Year or which are treated as voluntary Employee contributions due to
recharacterization pursuant to Section 4.6(a).
(g) The determination and correction of Excess Aggregate Contributions of a
Highly Compensated Participant whose actual contribution ratio is
determined under the family aggregation rules shall be accomplished by
reducing the actual contribution percentage ratio as required herein and
the Excess Aggregate Contributions for the family unit shall be
allocated among the Family Members in proportion to the sum of Employer
matching contributions made pursuant to Section 4.1(b) (to the extent
taken into account pursuant to Section), voluntary Employee
contributions made pursuant to Section 4.12, Excess Contributions
recharacterized as voluntary Employee contributions pursuant to Section
and any Qualified Non-Elective Contributions or elective deferrals taken
into account pursuant to Section 5.1 of each Family Member that were
combined to determine the group actual contribution ratio.
18
(h) Notwithstanding the above, within twelve (12) months after the end of
the Plan Year, the Employer may make a special Qualified Non-Elective
Contribution on behalf of Non-Highly Compensated Participants in an
amount sufficient to satisfy one of the tests set forth in Section
4.7(a). Such contribution shall be allocated to the Participant's
Qualified Non-Elective Account of each Non-Highly Compensated
Participant in the same proportion that each Non-Highly Compensated
Participant's Compensation for the year bears to the total Compensation
of all Non-Highly Compensated Participants. A separate accounting shall
be maintained for the purpose of excluding such contributions from the
"Actual Deferral Percentage" tests pursuant to Code Section 4.5(a).
(i) For purposes of this Section. "Income" means the income or loss
allocable to Excess Aggregate Contributions which shall equal the sum of
the allocable gain or loss for the Plan Year and the allocable gain or
loss for the period between the end of the Plan Year and the date of
distribution ("gap period"). The income or loss allocable to Excess
Aggregate Contributions for the Plan Year and the "gap period" is
calculated separately and is determined by multiplying the income or
loss for the Plan Year or the "gap period" by a fraction. The numerator
of the fraction is the Excess Aggregate Contributions for the Plan Year.
The denominator of the fraction is the total Participant's Account and
Voluntary Contribution Account attributable to Employer matching
contributions subject to Section 4.7, voluntary Employee contributions
made pursuant to Section 4.12, and any Qualified Non-Elective
Contributions and elective deferrals taken into account pursuant to
Section 4.7(c) as of the end of the Plan Year or the "gap period",
reduced by the gain allocable to such total amount for the Plan Year or
the "gap period" and increased by the loss allocable to such total
amount for the Plan Year or the "gap period".
In lieu of the "fractional method" described above, a "safe harbor
method" may be used to calculate the allocable Income for the "gap
period". Under such "safe harbor method", allocable Income for the "gap
period" shall be deemed to equal ten percent (10%) of the Income
allocable to Excess Aggregate Contributions for the Plan Year of the
Participant multiplied by the number of calendar months in the "gap
period". For purposes of determining the number of calendar months in
the "gap period", a distribution occurring on or before the fifteenth
day of the month shall be treated as having been made on the last day of
the preceding month and a distribution occurring after such fifteenth
day shall be treated as having been made on the first day of the next
subsequent month.
The Income allocable to Excess Aggregate Contributions resulting from
recharacterization of Elective Contributions shall be determined and
distributed as if such recharacterized Elective Contributions had been
distributed as Excess Contributions.
Notwithstanding the above, for Plan Years which began in 1987, and for
Plan Years beginning on or after the date this Plan is adopted. Income
during the "gap period" shall not be taken into account.
4.9 MAXIMUM ANNUAL ADDITIONS
(a) (1) If the Participant does not participate in, and has never
participated in another qualified plan maintained by the Employer,
or a welfare benefit fund (as defined in Code Section 419(e)),
maintained by the Employer, or an individual medical account (as
defined in Code Section 415(1)(2)), maintained by the Employer,
which provides Annual Additions, the amount of Annual Additions
which may be credited to the Participant's accounts for any
Limitation Year shall not exceed the lesser of the Maximum
Permissible Amount or any other limitation contained in this Plan.
If the Employer contribution that would otherwise be contributed or
allocated to the Participant's accounts would cause the Annual
Additions for the Limitation Year to exceed the Maximum Permissible
Amount, the amount contributed or allocated will be reduced so that
the Annual Additions for the Limitation Year will equal the Maximum
Permissible Amount.
(2) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimation of
the Participant's Compensation for the Limitation Year, uniformly
determined for all Participants similarly situated.
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such Limitation
Year shall be determined on the basis of the Participant's actual
compensation for such Limitation Year.
(4) If pursuant to Section 4.9(a)(2) or Section 4.5, there is an Excess
Amount, the excess will be disposed of in one of the following
manners, as uniformly determined by the Administrator for all
Participants similarly situated.
(i) Any Deferred Compensation or nondeductible Voluntary Employee
Contributions, to the extent they would reduce the Excess
Amount, will be distributed to the Participant;
(ii) If after the application of subparagraph (i), an Excess Amount
still exists, and the Participant is covered by the Plan at
the end of the Limitation Year,the Excess Amount in the
Participant's account will be used to reduce Employer
contributions (including any allocation of Forfeitures) for
such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(iii) If, after the application of subparagraph (i), an Excess
Amount still exists, and the Participant is not covered by the
Plan at the end of a Limitation Year, the Excess Amount will
be held unallocated in a suspense account. The suspense
account will be applied to reduce future Employer
contributions (including allocation of any Forfeitures) for
all remaining Participants in the next Limitation Year,
and each succeeding Limitation Year if necessary:
(iv) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, it will not
participate in the allocation of investment gains and losses.
If a suspense account is in existence at any time during a
particular limitation year, all amounts in the suspense
account must be allocated and reallocated to participants'
accounts before any employer contributions or any employee
contributions may be made to the plan for that limitation
year. Excess amounts may not be distributed to participants or
former participants.
(b) (1) This subsection applies if, in addition to this Plan, the
Participant is covered under another qualified Prototype defined
contribution plan maintained by the Employer, or a welfare benefit
fund (as defined in Code Section 419(c)) maintained by the Employer,
or
19
an individual medical account (as defined in Code Section 415(1)(2))
maintained by the Employer, which provides Annual Additions, during
any Limitation Year. The Annual Additions which may be credited to a
Participant's accounts under this Plan for any such Limitation Year
shall not exceed the Maximum Permissible Amount reduced by the
Annual Additions credited to a Participant's accounts under the
other plans and welfare benefit funds for the same Limitation Year.
If the Annual Additions with respect to the Participant under other
defined contribution plans and welfare benefit funds maintained by
the Employer are less than the Maximum Permissible Amount and the
Employer contribution that would otherwise be contributed or
allocated to the Participant's accounts under this Plan would cause
the Annual Additions for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be reduced so
that the Annual Additions under all such plans and welfare benefit
funds for the Limitation Year will equal the Maximum Permissible
Amount. If the Annual Additions with respect to the Participant
under such other defined contribution plans and welfare benefit
funds in the aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or allocated to
the Participant's account under this Plan for the Limitation Year.
(2) Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant in the manner described in Section
4.9(a)(2).
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation
Year will be determined on the basis of the Participant's actual
Compensation for the Limitation Year.
(4) If, pursuant to Section 4.9(b)(2) or Section 4.5, a Participant's
Annual Additions under this Plan and such other plans would result
in an Excess Amount for a Limitation Year, the Excess Amount will be
deemed to consist of the Annual Additions last allocated, except
that Annual Additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated
first regardless of the actual allocation date.
(5) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another
plan, the Excess Amount attributed to this Plan will be the product
of:
(i) the total Excess Amount allocated as of such date, times
(ii) the ratio of (1)the Annual Additions allocated to the
Participant for the Limitation Year as of such date under
this Plan to (2) the total Annual Additions allocated to the
Participant for the Limitation Year as of such date under
this and all the other qualified defined contribution plans.
(6) Any Excess Amount attributed to this Plan will be disposed in the
manner described in Section 4.9(a)(4).
(c) If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a Prototype
Plan, Annual Additions which may be credited to the Participant's
account under this Plan for any Limitation Year will be limited in
accordance with Section 4.9(b), unless the Employer provides other
limitations in the Adoption Agreement.
(d) If the Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan the sum of
the Participant's Defined Benefit Plan Fraction and Defined Contribution
Plan Fraction will not exceed 1.0 in any Limitation Year. The Annual
Additions which may be credited to the Participant's account under this
Plan for any Limitation Year will be limited in accordance with the
Limitation on Allocations Section of the Adoption Agreement.
(e) For purposes of applying the limitations of Code Section 415, the
transfer of funds from one qualified plan to another is not an "annual
addition". In addition, the following are not Employee contributions
for the purposes of Section 4.9(f)(1)(2): (1) rollover contributions (as
defined in Code Sections 402(a)(5), 403(a)(4), 403(b)(8) and 408(d)(3)):
(2) repayments of loans made to a Participant from the Plan: (3)
repayments of distributions received by an Employee pursuant to Code
Section 411(a)(7)(B) (cashouts): (4) repayments of distributions
received by an Employee pursuant to Code Section 411(a)(3)(D)
(mandatory contributions): and (5) Employee contributions to a
simplified employee pension excludable from gross income under Code
Section 408(k)(6).
(f) For purposes of this Section, the following terms shall be defined as
follows:
(1) Annual Additions means the sum credited to a Participant's accounts
for any Limitation Year of (1) Employer contributions, (2) effective
with respect to "limitation years" beginning after December 31,
1986. Employee contributions, (3) forfeitures, (4) amounts
allocated, after March 31, 1984, to an individual medical account,
as defined in Code Section 415(1)(2), which is part of a pension or
annuity plan maintained by the Employer and (5) amounts derived
from contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable to
post-retirement medical benefits allocated to the separate account
of a key employee (as defined in Code Section 419A(d)(3)) under a
welfare benefit fund (as defined in Code Section 419(e)) maintained
by the Employer. Except, however, the "415 Compensation" percentage
limitation referred to in paragraph (a)(2) above shall not apply to:
(1) any contribution for medical benefits (within the meaning of
Code Section 419A(f)(2)) after separation from service which is
otherwise treated as an "annual addition", or (2) any amount
otherwise treated as an "annual addition" under Code Section
415(1)(1). Notwithstanding the foregoing, for "limitation years"
beginning prior to January 1, 1987, only that portion of Employee
contributions equal to the lesser of Employee contributions in
excess of six percent (6%) of "415 Compensation" or one-half of
Employee contributions shall be considered an "annual addition".
For this purpose, any Excess Amount applied under Sections 4.9(a)(4)
and 4.9(b)(6) in the Limitation Year to reduce Employer
contributions shall be considered Annual Additions for such
Limitation Year.
(2) Compensation means a Participant's Compensation as defined in
Section E1 of the Adoption Agreement.
For purposes of applying the limitations of this Section 4.9.
Compensation for any Limitation Year is the Compensation actually
paid or includible in gross income during such year. Notwithstanding
the preceding sentence. Compensation for a Participant in a
profit-sharing plan who is permanently and totally disabled (as
defined in Code Section 22(e)(3)) is the Compen-
20
sation such Participant would have received for the Limitation Year
if the Participant had been paid at the rate of Compensation paid
immediately before becoming permanently and totally disabled such
imputed Compensation for the disabled Participant may be taken into
account only if the Participant is not a Highly Compensated
Employee and contributions made on behalf of such Participant are
nonforfeitable when made.
(3) Defined Benefit Fraction means a fraction, the numerator of which
is the sum of the Participant's Projected Annual Benefits under all
the defined benefit plans (whether or not terminated) maintained by
the Employer, and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year
under Code Sections 415(b) and (d) or 140 percent of his Highest
Average Compensation including any adjustments under Code Section
415(b).
Notwithstanding the above, if the Participant was a Participant as
of the first day of the first Limitation Year beginning after
December 31, 1986, in one or more defined benefit plans maintained
by the Employer which were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125 percent of
the sum of the annual benefits under such plans which the
Participant had accrued as of the end of the close of the last
Limitation Year beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plan after May 5, 1986.
The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of
Code Section 415 for all Limitation Years beginning before January
1, 1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100
shall be substituted for 125 unless the extra minimum allocation is
being made pursuant to the Employer's election in F1 of the
Adoption Agreement. However, for any Plan Year in which this Plan
is a Super Top Heavy Plan, 100 shall be substituted for 125 in any
event.
(4) Defined Contribution Dollar Limitation means $30,000, or, if
greater, one-fourth of the defined benefit dollar limitation set
forth in Code Section 415(b)(1) as in effect for the Limitation
Year.
(5) Defined Contribution Fraction means a fraction, the numerator of
which is the sum of the Annual Additions to the Participant's
account under all the defined contribution plans (whether or not
terminated) maintained by the Employer for the current and all
prior Limitation Years, (including the Annual Additions
attributable to the Participant's nondeductible voluntary employee
contributions to any defined benefit plans, whether or not
terminated, maintained by the Employer and the annual additions
attributable to all welfare benefit funds, as defined in Code
Section 419(e), and individual medical accounts, as defined in Code
Section 415(1)(2), maintained by the Employer), and the denominator
of which is the sum of the maximum aggregate amounts for the
current and all prior Limitation Years of Service with the Employer
(regardless of whether a defined contribution plan was maintained
by the Employer). The maximum aggregate amount in any Limitation
Year is the lesser of 125 percent of the Defined Contribution
Dollar Limitation or 35 percent of the Participant's Compensation
for such year. For Limitation Years beginning prior to January 1,
1987, the "annual addition" shall not be recomputed to treat all
Employee contributions as an Annual Addition.
If the Employee was a Participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986, in one
or more defined contribution plans maintained by the Employer which
were in existence on May 5, 1986, the numerator of this fraction
will be adjusted if the sum of this fraction and the Defined
Benefit Fraction would otherwise exceed 1.0 under the terms of this
Plan. Under the adjustment, an amount equal to the product of
(1) the excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted from
the numerator of this fraction. The adjustment is calculated using
the fractions as they would be computed as of the end of the last
Limitation Year beginning before January 1, 1987, and disregarding
any changes in the terms and conditions of the plan made after May
5, 1986, but using the Code Section 415 limitation applicable to
the first Limitation Year beginning on or after January 1, 1987.
Notwithstanding the foregoing, for any Top Heavy Plan Year, 100
shall be substituted for 125 unless the extra minimum allocation is
being made pursuant to the Employer's election in F1 of the
Adoption Agreement. However, for any Plan Year in which this Plan
is a Super Top Heavy Plan, 100 shall be substituted for 125 in any
event.
(6) Employer means the Employer that adopts this Plan and all
Affiliated Employers, except that for purposes of this Section.
Affiliated Employers shall be determined pursuant to the
modification made by Code Section 415(b).
(7) Excess Amount means the excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible
Amount.
(8) Highest Average Compensation means the average Compensation for the
three consecutive Years of Service with the Employer that produces
the highest average. A Year of Service with the Employer is the 12
consecutive month period defined in Section E1 of the Adoption
Agreement which is used to determine Compensation under the Plan.
(9) Limitation Year means the Compensation Year (a 12 consecutive month
period) as elected by the Employer in the Adoption Agreement. All
qualified plans maintained by the Employer must use the same
Limitation Year. If the Limitation Year is amended to a different
12 consecutive month period, the new Limitation Year must begin on
a date within the Limitation Year in which the amendment is made.
(10) Master or Prototype Plan means a plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue
Service.
(11) Maximum Permissible Amount means the maximum Annual Addition that
may be contributed or allocated to a Participant's account under
the plan for any Limitation Year, which shall not exceed the lesser
of:
(i) the Defined Contribution Dollar Limitation, or
(ii) 25 percent of the Participant's Compensation for the
Limitation Year.
The Compensation Limitation referred to in (ii) shall not apply to
any contribution for medical benefits (within the meaning of Code
Sections 401(h) or 419A(f)(2)) which is otherwise treated as an
annual addition under Code Sections 415(I)(1)or4l9A(d)(2).
21
If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different 12 consecutive month
period, the Maximum Permissible Amount will not exceed the Defined
Contribution Dollar Contribution multiplied by the following
fraction:
number of months in the short Limitation Year 12
(12) Projected Annual Benefit means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if
such benefit is expressed in a form other than a straight life
annuity or qualified Joint and Survivor Annuity) to which the
Participant would be entitled under the terms of the plan
assuming:
(i) the Participant will continue employment until Normal
Retirement Age (or current age, if later), and
(ii) the Participant's Compensation for the current Limitation
Year and all other relevant factors used to determine
benefits under the Plan will remain constant for all future
Limitation Years.
(g) Notwithstanding anything contained in this Section to the contrary, the
limitations, adjustments and other requirements prescribed in this
Section shall at all times comply with the provisions of Code Section
415 and the Regulations thereunder, the terms of which are specifically
incorporated herein by reference.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If as a result of the allocation of Forfeitures, a reasonable error in
estimating a Participant's annual Compensation, a reasonable error in
determining the amount of elective deferrals (within the meaning of
Code Section 402(g)(3), that may be made with respect to a Participant,
or other facts and circumstances to which Regulation 1,415-6(b)(6)
shall be applicable, the "annual additions" under this Plan would cause
the maximum provided in Section 4.9 to be exceeded, the Administrator
shall treat the excess in accordance with Section 4.9(a)(4).
4.11 TRANSFERS FROM QUALIFIED PLANS
(a) If specified in the Adoption Agreement and with the consent of the
Administrator, amounts may be transferred from other qualified plans,
provided that the trust from which such funds are transferred permits
the transfer to be made and the transfer will not jeopardize the tax
exempt status of the Plan or create adverse tax consequences for the
Employer. The amounts transferred shall be set up in a separate account
herein referred to as a "Participant's Rollover Account. Such account
shall be fully Vested at all times and shall not be subject to
forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account shall be held by the
Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as provided in Paragraphs (c) and (d) of this Section.
(c) Amounts attributable to elective contributions (as defined in
Regulation 1.401(k)-1(g)(4)), including amounts treated as elective
contributions, which are transferred from another qualified plan in a
plan-to-plan transfer shall be subject to the distribution limitations
provided for in Regulation 1.401(k)-1(d).
(d) At Normal Retirement Date, or such other date when the Participant or
his Beneficiary shall be entitled to receive benefits, the fair market
value of the Participant's Rollover Account shall be used to provide
additional benefits to the Participant or his Beneficiary. Any
distributions of amounts held in a Participant's Rollover Account
shall be made in a manner which is consistent with and satisfies the
provisions of Section 6.5, including, but not limited to, all notice
and consent requirements of Code Sections 411(a)(11) and 417 and the
Regulations thereunder. Furthermore, such amounts shall be considered
as part of a Participant's benefit in determining whether an
involuntary cash-out of benefits without Participant consent may be
made.
(e) The Administrator may direct that employee transfers made after a
valuation date be segregated into a separate account for each
Participant until such time as the allocations pursuant to this Plan
have been made, at which time they may remain segregated or be invested
as part of the general Trust Fund, to be determined by the
Administrator.
(f) For purposes of this Section, the term "qualified plan" shall mean any
tax qualified plan under Code Section 401(a). The term "amounts
transferred from other qualified plans" shall mean: (i) amounts
transferred to this Plan directly from another qualified plan: (ii)
lump-sum distributions received by an Employee from another qualified
plan which are eligible for tax free rollover to a qualified plan and
which are transferred by the Employee to this Plan within sixty (60)
days following his receipt thereof: (iii) amounts transferred to this
Plan from a conduit individual retirement account provided that the
conduit individual retirement account has no assets other than assets
which (A) were previously distributed to the Employee by another
qualified plan as a lump-sum distribution (B) were eligible for
tax-free rollover to a qualified plan and (C) were deposited in such
conduit individual retirement account within sixty (60) days of receipt
thereof and other than earnings on said assets and (iv) amounts
distributed to the Employee from a conduit individual retirement
account meeting the requirements of clause (iii) above, and transferred
by the Employee to this Plan within sixty (60) days of his receipt
thereof from such conduit individual retirement account.
(g) Prior to accepting any transfers to which this Section applies, the
Administrator may require the Employee to establish that the amounts to
be transferred to this Plan meet the requirements of this Section and
may also require the Employee to provide an opinion of counsel
satisfactory to the Employer that the amounts to be transferred meet
the requirements of this Section.
(h) Notwithstanding anything herein to the contrary, a transfer directly
to this Plan from another qualified plan (or a transaction having the
effect of such a transfer) shall only be permitted if it will not
result in the elimination or reduction of any "Section 411(d)(6)
protected benefit" as described in Section 8.1.
4.12 VOLUNTARY CONTRIBUTIONS
(a) If elected in the Adoption Agreement, each Participant may, at the
discretion of the Administrator in a nondiscriminatory manner, elect
to voluntarily contribute a portion of his compensation earned while a
Participant under this Plan. Such contributions shall be paid to the
Trustee within a reasonable period of time but in no event later than
90 days after the receipt of the contribution.
(b) The balance in each Participant's Voluntary Contribution Account shall
be fully Vested at all times and shall not be subject to Forfeiture for
any reason.
(c) A Participant may elect to withdraw his voluntary contributions from
his Voluntary Contribution Account and the actual earnings thereon in a
manner which is consistent with and satisfies the provisions of Section
6.5, including, but not limited to, all notice and consent requirements
of Code Sections 411(a)(11) and 417 and the Regulations thereunder. If
the Administrator maintains sub-accounts with respect to voluntary
contributions (and earnings
22
thereon) which were made on or before a specified date, a Participant
shall be permitted to designate which sub-account shall be the source
for his withdrawal. No Forfeitures shall occur solely as a result of an
Employee's withdrawal of Employee contributions.
In the event such a withdrawal is made, or in the event a Participant
has received a hardship distribution pursuant to Regulation
1.401(k)-1(d)(2)(iii)(B) from any other plan maintained by the Employer
or from his Participant's Elective Account pursuant to Section 6.11,
then such Participant shall be barred from making any voluntary
contributions to the Trust Fund for a period of twelve (12) months
after receipt of the withdrawal or distribution.
(d) At Normal Retirement Date, or such other date when the Participant or
his Beneficiary shall be entitled to receive benefits, the fair market
value of the Voluntary Contribution Account shall be used to provide
additional benefits to the Participant or his Beneficiary.
(e) The Administrator may direct that voluntary contributions made after a
valuation date be segregated into a separate account until such time as
the allocations pursuant to this Plan have been made, at which time
they may remain segregated or be invested as part of the general Trust
Fund, to be determined by the Administrator.
4.13 DIRECTED INVESTMENT ACCOUNT
(a) If elected in the Adoption Agreement, all Participants may direct the
Trustee as to the investment of all or a portion of any one or more of
their individual account balances. Participants may direct the Trustee
in writing to invest their account in specific assets as permitted by
the Administrator provided such investments are in accordance with the
Department of Labor regulations and are permitted by the Plan. That
portion of the account of any Participant so directing will thereupon
be considered a Directed Investment Account.
(b) A separate Directed Investment Account shall be established for each
Participant who has directed an investment. Transfers between the
Participant's regular account and their Directed Investment Account
shall be charged and credited as the case may be to each account. The
Directed Investment Account shall not share in Trust Fund Earnings, but
it shall be charged or credited as appropriate with the net earnings,
gains, losses and expenses as well as any appreciation or depreciation
in market value during each Plan Year atttributable to such account.
(c) The Administrator shall establish a procedure, to be applied in a
uniform and nondiscriminatory manner, setting forth the permissible
investment options under this Section, how often changes between
investments may be made, and any other limitations that the
Administrator shall impose on a Participant's right to direct
investments.
4.14 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) If this is an amendment to a Plan that previously permitted deductible
voluntary contributions, then each Participant who made a "Qualified
Voluntary Employee Contribution" within the meaning of Code Section
219(e)(2) as it existed prior to the enactment of the Tax Reform Act of
1986, shall have his contribution held in a separate Qualified
Voluntary Employee Contribution Account which shall be fully Vested at
all times. Such contributions, however, shall not be permitted if they
are attributable to taxable years beginning after December 31, 1986.
(b) A Participant may, upon written request delivered to the Administrator,
make withdrawals from his Qualified Voluntary Employee Contribution
Account. Any distribution shall be made in a manner which is consistent
with and satisfies the provisions of Section 6.5, including, but not
limited to, all notice and consent requirements of Code Sections
411(a)(11) and 417 and the Regulations thereunder.
(c) At Normal Retirement Date, or such other date when the Participant or
his Beneficiary shall be entitled to receive benefits, the fair market
value of the Qualified Voluntary Employee Contribution Account shall be
used to provide additional benefits to the Participant or his
Beneficiary.
(d) Unless the Administrator directs Qualified Voluntary Employee
Contributions made pursuant to this Section be segregated into a
separate account for each Participant, they shall be invested as part
of the general Trust Fund and share in earnings and losses.
4.15 INTEGRATION IN MORE THAN ONE PLAN
If the Employer and/or an Affiliated Employer maintain qualified retirement
plans integrated with Social Security such that any Participant in this Plan is
covered under more than one of such plans, then such plans will be considered to
be one plan and will be considered to be integrated if the extent of the
integration of all such plans does not exceed 100%. For purposes of the
preceding sentence, the extent of integration of a plan is the ratio, expressed
as a percentage, which the actual benefits, benefit rate, offset rate, or
employer contribution rate, whatever is applicable, under the Plan bears to the
limitation applicable to such Plan. If the Employer maintains two or more
standardized paired plans, only one plan may be integrated with Social Security.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Anniversary Date, and at
such other date or dates deemed necessary by the Administrator, herein called
"valuation date", to determine the net worth of the assets comprising the Trust
Fund as it exists on the "valuation date". In determining such net worth, the
Trustee shall value the assets comprising the Trust Fund at their fair market
value as of the "valuation date" and shall deduct all expenses for which the
Trustee has not yet obtained reimbursement from the Employer or the Trust Fund.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the Trust Fund which
are listed on a registered stock exchange, the Administrator shall direct the
Trustee to value the same at the prices they were last traded on such exchange
preceding the c1ose of business on the "valuation date". If such securities were
not traded on the "valuation date", or if the exchange on which they are traded
was not open for business on the "valuation date", then the securities shall
be valued at the prices at which they were last traded prior to the "valuation
date". Any unlisted security held in the Trust Fund shall be valued at its bid
price next preceding the close of business on the "valuation date", which bid
price shall be obtained from a registered broker or an investment banker. In
determining the fair market value of assets other than securities for which
trading or bid prices can be obtained, the Trustee may appraise such assets
itself, or in its discretion, employ one or more appraisers for that purpose and
rely on the values established by such appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the Employer and retire for
the purposes hereof on or after his Normal Retirement
23
Date or Early Retirement Date. Upon such Normal Retirement Date or Early
Retirement Date, all amounts credited to such Participant's Combined Account
shall become distributable. However, a Participant may postpone the termination
of his employment with the Employer to a later date, in which event the
participation of such Participant in the Plan, including the right to receive
allocations pursuant to Section 4.4, shall continue until his Late Retirement
Date. Upon a Participant's Retirement Date, or as soon thereafter as is
practicable, the Administrator shall direct the distribution of all amounts
credited to such Participant's Combined Account in accordance with Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement Date or other
termination of his employment, all amounts credited to such
Participant's Combined Account shall become fully Vested. The
Administrator shall direct, in accordance with the provisions of
Sections 6.6 and 6.7, the distribution of the deceased Participant's
accounts to the Participant's Beneficiary.
(b) Upon the death of a Former Participant, the Administrator shall direct,
in accordance with the provisions of Sections 6.6 and 6.7, the
distribution of any remaining amounts credited to the accounts of such
deceased Former Participant to such Former Participant's Beneficiary.
(c) The Administrator may require such proper proof of death and such
evidence of the right of any person to receive payment of the value of
the account of a deceased Participant or Former Participant as the
Administrator may deem desirable. The Administrator's determination of
death and of the right of any person to receive payment shall be
conclusive.
(d) Unless otherwise elected in the manner prescribed in Section 6.6, the
Beneficiary of the Pre-Retirement Survivor Annuity shall be the
Participant's spouse. Except, however, the Participant may designate a
Beneficiary other than his spouse for the Pre-Retirement Survivor
Annuity if:
(1) the Participant and his spouse have validly waived the
Pre-Retirement Survivor Annuity in the manner prescribed
in Section 6.6, and the spouse has waived his or her right to be
the Participant's Beneficiary, or
(2) the Participant is legally separated or has been abandoned (within
the meaning of local law) and the Participant has a court order to
such effect (and there is no "qualified domestic relations order"
as defined in Code Section 414(p) which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be made on a form
satisfactory to the Administrator. A Participant may at any time revoke
his designation of a Beneficiary or change his Beneficiary by filing
written notice of such revocation or change with the Administrator.
However, the Participant's spouse must again consent in writing to any
change in Beneficiary unless the original consent acknowledged that the
spouse had the right to limit consent only to a specific Beneficiary
and that the spouse voluntarily elected to relinquish such right. The
Participant may, at any time, designate a Beneficiary for death
benefits payable under the Plan that are in excess of the
Pre-Retirement Survivor Annuity. In the event no valid designation of
Beneficiary exists at the time of the Participant's death, the death
benefit shall be payable to his estate.
(e) If the Plan provides an insured death benefit and a Participant dies
before any insurance coverage to which he is entitled under the Plan is
effected, his death benefit from such insurance coverage shall be
limited to the standard rated premium which was or should have been
used for such purpose.
(f) In the event of any conflict between the terms of this Plan and the
terms of any Contract issued hereunder, the Plan provisions shall
control.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior to his
Retirement Date or other termination of his employment, all amounts credited to
such Participant's Combined Account shall become fully Vested. In the event of a
Participant's Total and Permanent Disability, the Administrator, in accordance
with the provisions of Sections 6.5 and 6.7, shall direct the distribution to
such Participant of all amounts credited to such Participant's Combined Account
as though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date coinciding with or subsequent to the
termination of a Participant's employment for any reason other than
retirement, death, or Total and Permanent Disability, the Administrator
may direct the Trustee to segregate the amount of the Vested portion of
such Terminated Participant's Combined Account and invest the aggregate
amount thereof in a separate, federally insured savings account,
certificate of deposit, common or collective trust fund of a bank or a
deferred annuity. In the event the Vested portion of a Participant's
Combined Account is not segregated, the amount shall remain in a
separate account for the Terminated Participant and share in
allocations pursuant to Section 4.4 until such time as a distribution
is made to the Terminated Participant. The amount of the portion of the
Participant's Combined Account which is not Vested may be credited to a
separate account (which will always share in gains and losses of the
Trust) and at such time as the amount becomes a Forfeiture shall be
treated in accordance with the provisions of the Plan regarding
Forfeitures.
Regardless of whether distributions in kind are permitted, in the event
that the amount of the Vested portion of the Terminated Participant's
Combined Account equals or exceeds the fair market value of any
insurance Contracts, the Trustee, when so directed by the Administrator
and agreed to by the Terminated Participant, shall assign, transfer,
and set over to such Terminated Participant all Contracts on his life
in such form or with such endorsements, so that the settlement options
and forms of payment are consistent with the provisions of Section 6.5.
In the event that the Terminated Participant's Vested portion does not
at least equal the fair market value of the Contracts, if any, the
Terminated Participant may pay over to the Trustee the sum needed to
make the distribution equal to the value of the Contracts being
assigned or transferred, or the Trustee, pursuant to the Participant's
election, may borrow the cash value of the Contracts from the Insurer
so that the value of the Contracts is equal to the Vested portion of
the Terminated Participant's Combined Account and then assign the
Contracts to the Terminated Participant.
Distribution of the funds due to a Terminated Participant shall be made
on the occurrence of an event which would result in the distribution
had the Terminated Participant remained in the employ, of the Employer
(upon the Participant's death, Total and Permanent Disability, Early or
Normal Retirement). However, at the election of the Participant, the
Administrator shall direct that the entire Vested portion of the
Terminated Participant's Combined Account to be payable to such
Terminated Participant pro-
24
vided the conditions, if any, set forth in the Adoption Agreement have been
satisfied. Any distribution under this paragraph shall be made in a manner
which is consistent with and satisfies the provisions of Section 6.5,
including but not limited to, all notice and consent requirements of Code
Sections 41l(a)(11) and 417 and the Regulations thereunder.
Notwithstanding the above, if the value of a Terminated Participant's
Vested benefit derived from Employer and Employee contributions does not
exceed, and at the time of any prior distribution, has never exceeded
$3,500, the Administrator shall direct that the entire Vested benefit be
paid to such Participant in a single lump-sum without regard to the consent
of the Participant or the Participant's spouse. A Participant's Vested
benefit shall not include Qualified Voluntary Employee Contributions within
the meaning of Code Section 72(o)(5)(B) for Plan Years beginning prior to
January l, 1989.
(b) The Vested portion of any Participant's Account shall be a percentage of
such Participant's Account determined on the basis of the Participant's
number of Years of Service according to the vesting schedule specified in
the Adoption Agreement.
(c) For any Top Heavy Plan Year, one of the minimum top heavy vesting schedules
as elected by the Employer in the Adoption Agreement will automatically
apply to the Plan. The minimum top heavy vesting schedule applies to all
benefits within the meaning of Code Section 411(a)(7) except those
attributable to Employee contributions, including benefits accrued before
the effective date of Code Section 416 and benefits accrued before the Plan
became top heavy. Further, no decrease in a Participant's Vested percentage
may occur in the event the Plan's status as top heavy changes for any Plan
Year. However, this Section does not apply to the account balances of any
Employee who does not have an Hour of Service after the Plan has initially
become top heavy and the Vested percentage of such Employee's Participant's
Account shall be determined without regard to this Section 6.4(c).
If in any subsequent Plan Year, the Plan ceases to be a Top Heavy Plan, the
Administrator shall continue to use the vesting schedule in effect while
the Plan was a Top Heavy Plan for each Employee who had an Hour of Service
during a Plan Year when the Plan was Top Heavy.
(d) Notwithstanding the vesting schedule above, upon the complete
discontinuance of the Employer's contributions to the Plan or upon any
full or partial termination of the Plan, all amounts credited to the
account of any affected Participant shall become 100% Vested and shall
not thereafter be subject to Forfeiture.
(e) If this is an amended or restated Plan, then notwithstanding the vesting
schedule specified in the Adoption Agreement, the Vested percentage of a
Participant's Account shall not be less than the Vested percentage attained
as of the later of the effective date or adoption date of this amendment
and restatement. The computation of a Participant's nonforfeitable
percentage of his interest in the Plan shall not be reduced as the result
of any direct or indirect amendment to this Article, or due to changes in
the Plan's status as a Top Heavy Plan.
(f) If the Plan's vesting schedule is amended, or if the Plan is amended in any
way that directly or indirectly affects the computation of the
Participant's nonforfeitable percentage or if the Plan is deemed amended by
an automatic change to a top heavy vesting schedule, then each Participant
with at least 3 Years of Service as of the expiration date of the election
period may elect to have his nonforfeitable percentage computed under the
Plan without regard to such amendment or change. Notwithstanding the
foregoing, for Plan Years beginning before January 1, 1989, or with respect
to Employees who fail to complete at least one (1) Hour of Service in a
Plan Year beginning after December 31, 1988, five (5) shall be substituted
for three (3) in the preceding sentence. If a Participant fails to make
such election, then such Participant shall be subject to the new vesting
schedule. The Participant's election period shall commence on the adoption
date of the amendment and shall end 60 days after the latest of:
(1) the adoption date of the amendment.
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the amendment from
the Employer or Administrator.
(g) (1) If any Former Participant shall be reemployed by the Employer before a
1-Year Break in Service occurs, he shall continue to participate in
the Plan in the same manner as if such termination had not occurred.
(2) If any Former Participant shall be reemployed by the Employer before
five (5) consecutive 1-Year Breaks in Service, and such Former
Participant had received a distribution of his entire Vested interest
prior to his reemployment, his forfeited account shall be reinstated
only if he repays the full amount distributed to him before the
earlier of five (5) years after the first date on which the
Participant is subsequently reemployed by the Employer or the close of
the first period of 5 consecutive 1-Year Breaks in Service commencing
after the distribution. If a distribution occurs for any reason other
than a separation from service, the time for repayment may not end
earlier than five (5) years after the date of separation. In the event
the Former Participant does repay the full amount distributed to him,
the undistributed portion of the Participant's Account must be
restored in full, unadjusted by any gains or losses occurring
subsequent to the Anniversary Date or other valuation date preceding
his termination. If an employee receives a distribution pursuant to
this section and the employee resumes employment covered under this
plan, the employee's employer-derived account balance will be restored
to the amount on the date of distribution if the employee repays to
the plan the full amount of the distribution attributable to employer
contributions before the earlier of 5 years after the first date on
which the participant is subsequently re-employed by the employer, or
the date the participant incurs 5 consecutive 1-year breaks in service
following the date of the distribution. If a non-Vested Former
Participant was deemed to have received a distribution and such Former
Participant is reemployed by the Employer before five (5) consecutive
1-Year Breaks in Service, then such Participant will be deemed to have
repaid the deemed distribution as of the date of reemployment.
(3) If any Former Participant is reemployed after a 1-Year Break in
Service has occurred. Years of Service shall include Years of
Service prior to his 1-Year Break in Service subject to the following
rules:
(i) Any Former Participant who under the Plan does not have a
nonforfeitable right to any interest in the Plan resulting from
Employer contributions shall lose credits if his consecutive 1-
Year Breaks in Service equal or exceed the greater of (A) five
(5) or (B) the aggregate number of his pre-break Years of
Service;
25
(ii) After five (5) consecutive 1-Year Breaks in Service, a Former
Participant's Vested Account balance attributable to pre-break
service shall not be increased as a result of post-break
service:
(iii) A Former Participant who is reemployed and who has not had his
Years of Service before a 1-Year Break in Service disregarded
pursuant to (i) above, shall participate in the Plan as of his
date of reemployment:
(iv) If a Former Participant completes a Year of Service (a 1-Year
Break in Service previously occurred, but employment had not
terminated), he shall participate in the Plan retroactively
from the first day of the Plan Year during which he completes
one (1) Year of Service.
(h) In determining Years of Service for purposes of vesting under the
Plan, Years of Service shall be excluded as specified in the Adoption
Agreement.
6.5 DISTRIBUTION OF BENEFITS
(a) (1) Unless otherwise elected as provided below, a Participant who is
married on the "annuity starting date" and who does not die before
the "annuity starting date" shall receive the value of all of his
benefits in the form of a Joint and Survivor Annuity. The Joint
and Survivor Annuity is an annuity that commences immediately and
shall be equal in value to a single life annuity. Such joint and
survivor benefits following the Participant's death shall continue
to the spouse during the spouse's lifetime at a rate equal to 50%
of the rate at which such benefits were payable to the
Participant. This Joint and Survivor Annuity shall be considered
the designated qualified Joint and Survivor Annuity and automatic
form of payment for the purposes of this Plan. However, the
Participant may elect to receive a smaller annuity benefit with
continuation of payments to the spouse at a rate of seventy-five
percent (75%) or one hundred percent (100%) of the rate payable to
a Participant during his lifetime which alternative Joint and
Survivor Annuity shall be equal in value to the automatic Joint
and 50% Survivor Annuity. An unmarried Participant shall receive
the value of his benefit in the form of a life annuity. Such
unmarried Participant, however, may elect in writing to waive the
life annuity. The election must comply with the provisions of this
Section as if it were an election to waive the Joint and Survivor
Annuity by a married Participant but without the spousal consent
requirement. The Participant may elect to have any annuity
provided for in this Section distributed upon the attainment of
the "earliest retirement age" under the Plan. The "earliest
retirement age" is the earliest date on which, under the Plan, the
Participant could elect to receive retirement benefits.
(2) Any election to waive the Joint and Survivor Annuity must be made
by the Participant in writing during the election period and be
consented to by the Participant's spouse. If the spouse is legally
incompetent to give consent, the spouse's legal guardian, even if
such guardian is the Participant, may give consent. Such election
shall designate a Beneficiary (or a form of benefits) that may not
be changed without spousal consent (unless the consent of the
spouse expressly permits designations by the Participant without
the requirement of further consent by the spouse). Such spouse's
consent shall be irrevocable and must acknowledge the effect of
such election and be witnessed by a Plan representative or a
notary public. Such consent shall not be required if it is
established to the satisfaction of the Administrator that the
required consent cannot be obtained because there is no spouse,
the spouse cannot be located, or other circumstances that may be
prescribed by Regulations. The election made by the Participant
and consented to by his spouse may be revoked by the Participant
in writing without the consent of the spouse at any time during
the election period. The number of revocations shall not be
limited. Any new election must comply with the requirements of
this paragraph. A former spouse's waiver shall not be binding on a
new spouse.
(3) The election period to waive the Joint and Survivor Annuity shall
be the 90 day period ending on the "annuity starting date."
(4) For purposes of this Section and Section 6.6. the "annuity
starting date" means the first day of the first period for which
an amount is paid as an annuity, or, in the case of a benefit not
payable in the form of an annuity, the first day on which all
events have occurred which entitles the Participant to such
benefit.
(5) With regard to the election, the Administrator shall provide to
the Participant no less than 30 days and no more than 90 days
before the "annuity starting date" a written explanation of:
(i) the terms and conditions of the Joint and Survivor Annuity,
and
(ii) the Participant's right to make and the effect of an
election to waive the Joint and Survivor Annuity, and
(iii) the right of the Participant's spouse to consent to any
election to waive the Joint and Survivor Annuity, and
(iv) the right of the Participant to revoke such election, and
the effect of such revocation.
(b) In the event a married Participant duly, elects pursuant to paragraph
(a)(2) above not to receive his benefit in the form of a Joint and
Survivor Annuity, or if such Participant is not married, in the form
of a life annuity, the Administrator, pursuant to the election of the
Participant, shall direct the distribution to a Participant or his
Beneficiary any amount to which he is entitled under the Plan in one
or more of the following methods which are permitted pursuant to the
Adoption Agreement.
(1) One lump-sum payment in cash or in property:
(2) Payments over a period certain in monthly, quarterly, semiannual,
or annual cash installments. In order to provide such installment
payments, the Administrator may direct that the Participant's
interest in the Plan be segregated and invested separately, and
that the funds in the segregated account be used for the payment
of the installments. The period over which such payment is to be
made shall not extend beyond the Participant's life expectancy (or
the life expectancy of the Participant and his designated
Beneficiary):
(3) Purchase of or providing an annuity. However, such annuity may not
be in any form that will provide for payments over a period
extending beyond either the life of the Participant (or the lives
of the Participant and his designated Beneficiary) or the life
expectancy of the Participant (or the life expectancy of the
Participant and his designated Beneficiary).
(c) The present value of a Participant's Joint and Survivor Annuity
derived from Employer and Employee contributions may not be paid
without his written consent if the value exceeds, or has ever exceeded
at the time of any prior distribution, $3,500. Further, the spouse of
a
26
Participant must consent in writing to any immediate distribution. If
the value of the Participant's benefit derived from Employer and
Employee contributions does not exceed $3,500 and has never exceeded
$3,500 at the time of any prior distribution, the Administrator may
immediately distribute such benefit without such Participant's
consent. No distribution may be made under the preceding sentence
after the "annuity starting date" unless the Participant and his
spouse consent in writing to such distribution. Any written consent
required under this paragraph must be obtained not more than 90 days
before commencement of the distribution and shall be made in a manner
consistent with Section 6.5(a)(2).
(d) Any distribution to a Participant who has a benefit which exceeds, or
has ever exceeded at the time of any prior distribution, $3,500 shall
require such Participant's consent if such distribution commences
prior to the later of his Normal Retirement Age or age 62. With regard
to this required consent:
(1) No consent shall be valid unless the Participant has received a
general description of the material features and an explanation
of the relative values of the optional forms of benefit available
under the Plan that would satisfy the notice requirements of Code
Section 417.
(2) The Participant must be informed of his right to defer receipt of
the distribution. If a Participant fails to consent, it shall be
deemed an election to defer the commencement of payment of any
benefit. However, any election to defer the receipt of benefits
shall not apply with respect to distributions which are required
under Section 6.5(e).
(3) Notice of the rights specified under this paragraph shall be
provided no less than 30 days and no more than 90 days before the
"annuity starting date".
(4) Written consent of the Participant to the distribution must not
be made before the Participant receives the notice and must not
be made more than 90 days before the "annuity starting date".
(5) No consent shall be valid if a significant detriment is imposed
under the plan on any Participant who does not consent to the
distribution.
(e) Notwithstanding any provision in the entire Plan to the contrary, the
distribution of a Participant's benefits, made on or after January 1,
1985, whether under the Plan or through the purchase of an annuity
Contract, shall be made in accordance with the following requirements
and shall otherwise comply with Code Section 401(a)(9) and the
Regulations thereunder (including Regulation Section 1.401(a)(9)-2),
the provisions of which are incorporated herein by reference.
(1) A Participant's benefits shall be distributed to him not later
than April 1st of the calendar year following the later of (i)
the calendar year in which the Participant attains age 70 l/2 or
(ii) the calendar year in which the Participant retires,
provided, however, that this clause (ii) shall not apply in the
case of a Participant who is a "five (5) percent owner" at any
time during the five (5) Plan Year period ending in the calendar
year in which he attains age 70 1/2 or, in the case of a
Participant who becomes a "five (5) percent owner" during any
subsequent Plan Year, clause (ii) shall no longer apply and the
required beginning date shall be the April 1st of the calendar
year following the calendar year in which such subsequent Plan
Year ends. Alternatively, distributions to a Participant must
begin no later than the applicable April 1st as determined under
the preceding sentence and must be made over the life of the
Participant (or the lives of the Participant and the
Participant's designated Beneficiary) or, if benefits are paid in
the form of a Joint and Survivor Annuity, the life expectancy of
the Participant (or the life expectancies of the Participant and
his designated Beneficiary) in accordance with Regulations. For
Plan Years beginning after December 31, 1988, clause (ii) above
shall not apply to any Participant unless the Participant had
attained age 70 1/2 before January 1, 1988 and was not a "five
(5) percent owner" at any time during the Plan Year ending with
or within the calendar year in which the Participant attained age
66 1/2 or any subsequent Plan Year.
(2) Distributions to a Participant and his Beneficiaries shall only
be made in accordance with the incidental death benefit
requirements of Code Section 401(a)(9)(G) and the Regulations
thereunder.
Additionally, for calendar years beginning before 1989,
distributions may also be made under an alternative method which
provides that the then present value of the payments to be made
over the period of the Participant's life expectancy exceeds
fifty percent (50%) of the then present value of the total
payments to be made to the Participant and his Beneficiaries.
(f) For purposes of this Section, the life expectancy of a Participant and
a Participant's spouse (other than in the case of a life annuity)
shall be redetermined annually in accordance with Regulations if
permitted pursuant to the Adoption Agreement. If the Participant or
the Participant's spouse may elect whether recalculations will be
made, then the election, once made, shall be irrevocable. If no
election is made by the time distributions must commence, then the
life expectancy of the Participant and the Participant's spouse shall
not be subject to recalculation. Life expectancy and joint and last
survivor expectancy shall be computed using the return multiples in
Tables V and VI of Regulation 1.72-9.
(g) All annuity Contracts under this Plan shall be non-transferable when
distributed. Furthermore, the terms of any annuity Contract purchased
and distributed to a Participant or spouse shall comply with all of
the requirements of this Plan.
(h) Subject to the spouse's right of consent afforded under the Plan, the
restrictions imposed by this Section shall not apply if a Participant
has, prior to January 1, 1984, made a written designation to have his
retirement benefit paid in an alternative method acceptable under Code
Section 401(a) as in effect prior to the enactment of the Tax Equity
and Fiscal Responsibility Act of 1982.
(i) If a distribution is made at a time when a Participant who has not
terminated employment is not fully Vested in his Participant's Account
and the Participant may increase the Vested percentage in such
account.
(1) A separate account shall be established for the Participant's
interest in the Plan as of the time of the distribution, and
(2) At any relevant time the Participant's Vested portion of the
separate account shall be equal to an amount ("X") determined by
the formula:
X equals P(AB plus (RxD))-(R x D)
For purposes of applying the formula: P is the Vested percentage
at the relevant time. AB is the account balance at the relevant
time, D is the amount of distribution, and R is the ratio of the
account balance at the relevant time to the account balance after
distribution.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Unless otherwise elected as provided below, a Vested
27
Participant who dies before the annuity starting date and who has a
surviving spouse shall have the Pre-Retirement Survivor Annuity paid to his
surviving spouse. The Participant's spouse may direct that payment of the
Pre-Retirement Survivor Annuity commence within a reasonable period after
the Participant's death. If the spouse does not so direct, payment of such
benefit will commence at the time the Participant would have attained the
later of his Normal Retirement Age or age 62. However, the spouse may elect
a later commencement date. Any distribution to the Participant's spouse
shall be subject to the rules specified in Section 6.6(h).
(b) Any election to waive the Pre-Retirement Survivor Annuity before the
Participant's death must be made by the Participant in writing during the
election period and shall require the spouse's irrevocable consent in the
same manner provided for in Section 65(a)(2). Further, the spouse's consent
must acknowledge the specific nonspouse Beneficiary. Notwithstanding the
foregoing, the nonspouse Beneficiary need not be acknowledged, provided the
consent of the spouse acknowledges that the spouse has the right to limit
consent only to a specific Beneficiary and that the spouse voluntarily
elects to relinquish such right.
(c) The election period to waive the Pre-Retirement Survivor Annuity shall
begin on the first day of the Plan Year in which the Participant attains
age 35 and end on the date of the Participant's death. An earlier waiver
(with spousal consent) may be made provided a written explanation of the
Pre-Retirement Survivor Annuity is given to the Participant and such waiver
becomes invalid at the beginning of the Plan Year in which the Participant
turns age 35. In the event a Vested Participant separates from service
prior to the beginning of the election period, the election period shall
begin on the date of such separation from service.
(d) With regard to the election, the Administrator shall provide each
Participant within the applicable period, with respect to such Participant
(and consistent with Regulations), a written explanation of the Pre-
Retirement Survivor Annuity containing comparable information to that
required pursuant to Section 6.5(a)(5). For the purposes of this paragraph,
the term "applicable period" means, with respect to a Participant,
whichever of the following periods ends last:
(1) The period beginning with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of the Plan Year
preceding the Plan Year in which the Participant attains age 35;
(2) A reasonable period after the individual becomes a Participant. For
this purpose, in the case of an individual who becomes a Participant
after age 32, the explanation must be provided by the end of the
three-year period beginning with the first day of the first Plan Year
for which the individual is a Participant;
(3) A reasonable period ending after the Plan no longer fully subsidizes
the cost of the Pre-Retirement Survivor Annuity with respect to the
Participant;
(4) A reasonable period ending after Code Section 401(a)(11) applies to
the Participant; or
(5) A reasonable period after separation from service in the case of a
Participant who separates before attaining age 35. For this purpose,
the Administrator must provide the explanation beginning one year
before the separation from service and ending one year after
separation.
(e) The Pre-Retirement Survivor Annuity provided for in this Section shall
apply only to Participants who are credited with an Hour of Service on or
after August 23, 1984. Former Participants who are not credited with an
Hour of Service on or after August 23, 1984 shall be provided with rights
to the Pre-Retirement Survivor Annuity in accordance with Section 303(e)(2)
of the Retirement Equity Act of 1984.
(f) If the value of the Pre-Retirement Survivor Annuity derived from Employer
and Employee contributions does not exceed $3,500 and has never exceeded
$3,500 at the time of any prior distribution, the Administrator shall
direct the immediate distribution of such amount to the Participant's
spouse. No distribution may be made under the preceding sentence after the
annuity starting date unless the spouse consents in writing. If the value
exceeds, or has ever exceeded at the time of any prior distribution,
$3,500, an immediate distribution of the entire amount may be made to the
surviving spouse, provided such surviving spouse consents in writing to
such distribution. Any written consent required under this paragraph must
be obtained not more than 90 days before commencement of the distribution
and shall be made in a manner consistent with Section 6.5(a)(2).
(g) (1) In the event there is an election to waive the Pre-Retirement Survivor
Annuity, and for death benefits in excess of the Pre-Retirement
Survivor Annuity, such death benefits shall be paid to the
Participant's Beneficiary by either of the following methods, as
elected by the Participant (or if no election has been made prior to
the Participant's death, by his Beneficiary) subject to the rules
specified in Section 6.6(h) and the selections made in the Adoption
Agreement:
(i) One lump-sum payment in cash or in property;
(ii) Payment in monthly, quarterly, semi-annual, or annual cash
installments over a period to be determined by the Participant or
his Beneficiary. After periodic installments commence, the
Beneficiary shall have the right to reduce the period over which
such periodic installments shall be made, and the cash amount of
such periodic installments shall be adjusted accordingly.
(iii) If death benefits in excess of the Pre-Retirement Survivor
Annuity are to be paid to the surviving spouse, such benefits may
be paid pursuant to (i) or (ii) above, or used to purchase an
annuity so as to increase the payments made pursuant to the Pre-
Retirement Survivor Annuity;
(2) In the event the death benefit payable pursuant to Section 6.2 is
payable in installments, then, upon the death of the Participant, the
Administrator may direct that the death benefit be segregated and
invested separately, and that the funds accumulated in the segregated
account be used for the payment of the installments.
(h) Notwithstanding any provision in the Plan to the contrary, distributions
upon the death of a Participant made on or after January 1, 1985, shall be
made in accordance with the following requirements and shall otherwise
comply with Code Section 401(a)(9) and the Regulations thereunder.
(1) If it is determined, pursuant to Regulations, that the distribution of
a Participant's interest has begun and the Participant dies before his
entire interest has been distributed to him, the remaining portion of
such interest shall be distributed at least as rapidly as under the
method of distribution selected pursuant to Section 6.5 as of his date
of death.
(2) If a Participant dies before he has begun to receive any distributions
of his interest in the Plan or before distri-
28
butions are deemed to have begun pursuant to Regulations, then his
death benefit shall be distributed to his Beneficiaries in
accordance with the following rules subject to the selections made
in the Adoption Agreement and Subsections 6.6(h)(3) and 6.6(i)
below:
(i) The entire death benefit shall be distributed to the
Participant's Beneficiaries by December 31st of the calendar
year in which the fifth anniversary of the Participant's
death occurs:
(ii) The 5-year distribution requirement of (i) above shall not
apply to any portion of the deceased Participant's interest
which is payable to or for the benefit of a designated
Beneficiary. In such event, such portion shall be
distributed over the life of such designated Beneficiary
(or over a period not extending beyond the life expectancy
of such designated Beneficiary) provided such distribution
begins not later than December 31st of the calendar year
immediately following the calendar year in which the
Participant died:
(iii) However, in the event the Participant's spouse (determined
as of the date of the Participant's death) is his
designated Beneficiary, the provisions of (ii) above shall
apply except that the requirement that distributions
commence within one year of the Participant's death shall
not apply. In lieu thereof, distributions must commence on
or before the later of: (1) December 31st of the calendar
year immediately following the calendar year in which the
Participant died: or (2) December 31st of the calendar year
in which the Participant would have attained age 70 1/2. If
the surviving spouse dies before distributions to such
spouse begin, then the 5-year distribution requirement of
this Section shall apply as if the spouse was the
Participant.
(3) Notwithstanding subparagraph (2) above, or any selections made in
the Adoption Agreement, if a Participant's death benefits are to
be paid in the form of a Pre-Retirement Survivor Annuity, then
distributions to the Participant's surviving spouse must commence
on or before the later of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant
died; or (2) December 31st of the calendar year in which the
Participant would have attained age 70 1/2.
(i) For purposes of Section 6.6(h)(2), the election by a designated
Beneficiary to be excepted from the 5-year distribution requirement
(if permitted in the Adoption Agreement) must be made no later than
December 31st of the calendar year following the calendar year of the
Participant's death. Except, however, with respect to a designated
Beneficiary who is the Participant's surviving spouse, the election
must be made by the earlier of: (1) December 31st of the calendar year
immediately following the calendar year in which the Participant died
or, if later, the calendar year in which the Participant would have
attained age 70 1/2: or (2) December 31st of the ca1endar year which
contains the fifth anniversary of the date of the Participant's death.
An election by a designated Beneficiary must be in writing and shall
be irrevocable as of the last day of the election period stated
herein. In the absence of an election by the Participant or a
designated Beneficiary, the 5-year distribution requirement shall
apply.
(j) For purposes of this Section, the life expectancy of a Participant and
a Participant's spouse (other than in the case of a life annuity)
shall or shall not be redetermined annually as provided in the
Adoption Agreement and in accordance with Regulations. If the
Participant or the Participant's spouse may elect, pursuant to the
Adoption Agreement, to have life expectancies recalculated, then the
election, once made shall be irrevocable. If no election is made by
the time distributions must commence, then the life expectancy of the
Participant and the Participant's spouse shall not be subject to
recalculation. Life expectancy and joint and last survivor expectancy
shall be computed using the return multiples in Tables V and VI of
Regulation Section 1.72-9.
(k) In the event that less than 100% of a Participant's interest in the
Plan is distributed to such Participant's spouse, the portion of the
distribution attributable to the Participant's Voluntary Contribution
Account shall be in the same proportion that the Participant's
Voluntary Contribution Account bears to the Participant's total
interest in the Plan.
(l) Subject to the spouse's right of consent afforded under the Plan, the
restrictions imposed by this Section shall not apply if a Participant
has, prior to January 1, 1984, made a written designation to have his
death benefits paid in an alternative method acceptable under Code
Section 401(a) as in effect prior to the enactment of the Tax Equity
and Fiscal Responsibility Act of 1982.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6. whenever a distribution is to be
made, or a series of payments are to commence, on or as of an Anniversary Date,
the distribution or series of payments may be made or begun on such date or as
soon thereafter as is practicable, but in no event later than 180 days after the
Anniversary Date. However, unless a Former Participant elects in writing to
defer the receipt of benefits (such election may not result in a death benefit
that is more than incidental), the payment of benefits shall begin not later
than the 60th day after the close of the Plan Year in which the latest of the
following events occurs: (a) the date on which the Participant attains the
earlier of age 65 or the Normal Retirement Age specified herein: (b) the 10th
anniversary of the year in which the Participant commenced participation in the
Plan; or (c) the date the Participant terminates his service with the Employer.
Notwithstanding the foregoing, the failure of a Participant and, if applicable,
the Participant's spouse, to consent to a distribution pursuant to Section 6.5
(d), shall be deemed to be an election to defer the commencement of payment of
any benefit sufficient to satisfy this Section.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the Administrator may
direct that such distribution be paid to the legal guardian, or if none, to a
parent of such Beneficiary or a responsible adult with whom the Beneficiary
maintains his residence, or to the custodian for such Beneficiary under the
Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted by the
laws of the state in which said Beneficiary resides. Such a payment to the legal
guardian, custodian or parent of a minor Beneficiary shall fully discharge the
Trustee, Employer, and Plan from further liability on account thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to a
Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a Forfeiture
pursuant to the Plan. In the event a Participant or Beneficiary is located
subsequent to his benefit being reallocated, such benefit shall be restored,
first from
29
Forfeitures, if any, and then from an additional Employer contribution if
necessary.
6.10 PRE-RETIREMENT DISTRIBUTION
If elected in the Adoption Agreement, at such time as a Participant shall have
attained the age specified in the Adoption Agreement, the Administrator, at the
election of the Participant, shall direct the Trustee to distribute up to the
entire amount then credited to the accounts maintained on behalf of the
Participant. However, no such distribution may be made to any Participant unless
his Participant's Account has become fully Vested. In the event that the
Administrator makes such a distribution, the Participant shall continue to be
eligible to participate in the Plan on the same basis as any other Employee. Any
distribution made pursuant to this Section shall be made in a manner consistent
with Section 6.5, including but not limited to, all notice and consent
requirements required by Code Sections 411(a)(11) and 417 and the Regulations
thereunder.
Notwithstanding the above, pre-retirement distributions from a Participant's
Elective Account and Qualified Non-Elective Account shall not be permitted prior
to the Participants attaining 59 1/2 except as otherwise permitted under the
terms of the Plan.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant, shall direct
the Trustee to distribute to any Participant in any one Plan Year up
to the lesser of (1) 100% of his accounts as specified in the Adoption
Agreement valued as of the last Anniversary Date or other valuation
date or (2) the amount necessary to satisfy the immediate and heavy
financial need of the Participant. Any distribution made pursuant to
this Section shall be deemed to be made as of the first day of the
Plan Year or, if later, the valuation date immediately preceding the
date of distribution, and the account from which the distribution is
made shall be reduced accordingly. Withdrawal under this Section
shall be authorized only if the distribution is on account of one of
the following or any other items permitted by the Internal Revenue
Service:
(1) Medical expenses described in Code Section 213(d) incurred by the
Participant, his spouse, or any of his dependents (as defined in
Code Section 152);
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Payment of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, his
spouse, children, or dependents; or
(4) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) No such distribution shall be made from the Participant's Account
until such Account has become fully Vested.
(c) No distribution shall be made pursuant to this Section unless the
Administrator, based upon the Participant's representation and such
other facts as are known to the Administrator, determines that all of
the following conditions are satisfied:
(1) The distribution is not in excess of the amount of the immediate
and heavy financial need of the Participant (including any amounts
necessary to pay any federal, state, or local taxes or penalties
reasonably anticipated to result from the distribution);
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently
available under all plans maintained by the Employer;
(3) The Plan, and all other plans maintained by the Employer, provide
that the Participant's elective deferrals and voluntary Employee
contributions will be suspended for at least twelve (12) months
after receipt of the hardship distribution; and
(4) The Plan, and all other plans maintained by the Employer, provide
that the Participant may not make elective deferrals for the
Participant's taxable year immediately following the taxable year
of the hardship distribution in excess of the applicable limit
under Code Section 402(g) for such next taxable year less the
amount of such Participant's elective deferrals for the taxable
year of the hardship distribution.
(d) Notwithstanding the above, distributions from the Participant's
Elective Account and Qualified Non-Elective Account pursuant to this
Section shall be limited solely to the Participant's Deferred
Compensation and any income attributable thereto credited to the
Participant's Elective Account as of December 31, 1988.
(e) Any distribution made pursuant to this Section shall be made in a
manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(ll) and 417 and the Regulations
thereunder.
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections, provided to a Participant in this
Plan shall be subject to the rights afforded to any "alternate payee" under a
"qualified domestic relations order." Furthermore, a distribution to an
"alternate payee" shall be permitted if such distribution is authorized by a
"qualified domestic relations order," even if the affected Participant has not
reached the "earliest retirement age" under the Plan. For the purposes of this
Section, "alternate payee," "qualified domestic relations order" and "earliest
retirement age" shall have the meaning set forth under Code Section 414(p).
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS
If elected in the Adoption Agreement, the following shall apply to a Participant
in a Profit Sharing Plan and to any distribution, made on or after the first day
of the first plan year beginning after December 31, 1988, from or under a
separate account attributable solely to accumulated deductible employee
contributions, as defined in Code Section 72(o)(5)(B), and maintained on behalf
of a participant in a money purchase pension plan, (including a target benefit
plan):
(a) The Participant shall be prohibited from electing benefits in the form
of a life annuity;
(b) Upon the death of the Participant, the Participant's entire Vested
account balances will be paid to his or her surviving spouse, or, if
there is no surviving spouse or the surviving spouse has already
consented to waive his or her benefit, in accordance with Section 6.6,
to his designated Beneficiary; and
(c) Except to the extent otherwise provided in this Section and Section
6.5(h), the other provisions of Sections 6.2, 6.5 and 6.6 regarding
spousal consent and the forms of distributions shall be inoperative
with respect to this Plan.
This Section shall not apply to any Participant if it is determined that this
Plan is a direct or indirect transferee of a defined benefit plan or money
purchase plan, or a target benefit plan, stock bonus or profit sharing plan
which would otherwise provide for a life annuity form of payment to the
Participant.
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of responsibilities:
(a) Consistent with the "funding policy and method" determined by the
Employer to invest, manage, and control the
30
Plan assets subject, however, to the direction of an Investment Manager
if the Employer should appoint such manager as to all or a portion of
the assets of the Plan:
(b) At the direction of the Administrator, to pay benefits required under
the Plan to be paid to Participants, or, in the event of their death,
to their Beneficiaries;
(c) To maintain records of receipts and disbursements and furnish to the
Employer and/or Administrator for each Plan Year a written annual
report per Section 7.7; and
(d) If there shall be more than one Trustee, they shall act by a majority
of their number, but may authorize one or more of them to sign papers
on their behalf.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall, except as provided in the Adoption Agreement, invest
and reinvest the Trust Fund to keep the Trust Fund invested without
distinction between principal and income and in such securities or
property, real or personal, wherever situated, as the Trustee shall
deem advisable, including, but not limited to, stocks, common or
preferred, bonds and other evidences of indebtedness or ownership, and
real estate or any interest therein. The Trustee shall at all times in
making investments of the Trust Fund consider, among other factors, the
short and long-term financial needs of the Plan on the basis of
information furnished by the Employer. In making such investments, the
Trustee shall not be restricted to securities or other property of the
character expressly authorized by the applicable law for trust
investments; however, the Trustee shall give due regard to any
limitations imposed by the Code or the Act so that at all times this
Plan may qualify as a qualified Plan and Trust.
(b) The Trustee may employ a bank or trust company pursuant to the terms of
its usual and customary bank agency agreement, under which the duties
of such bank or trust company shall be of a custodial, clerical and
record-keeping nature.
(c) The Trustee may from time to time transfer to a common, collective, or
pooled trust fund maintained by any corporate Trustee hereunder
pursuant to Revenue Ruling 81-100, all or such part of the Trust Fund
as the Trustee may deem advisable, and or such part or all of the Trust
Fund so transferred shall be subject to all the terms and provisions of
the common, collective, or pooled trust fund which contemplate the
commingling for investment purposes of such trust assets with trust
assets of other trusts. The Trustee may withdraw from such common,
collective, or pooled trust fund all or such part of the Trust Fund as
the Trustee may deem advisable.
(d) The Trustee, at the direction of the Administrator and pursuant to
instructions from the individual designated in the Adoption Agreement
for such purpose and subject to the conditions set forth in the
Adoption Agreement shall ratably apply for, own, and pay all premiums
on Contracts on the lives of the Participants. Any initial or
additional Contract purchased on behalf of a Participant shall have a
face amount of not less than $1,000, the amount set forth in the
Adoption Agreement, or the limitation of the Insurer, whichever is
greater. If a life insurance Contract is to be purchased for a
Participant, the aggregate premium for ordinary life insurance for each
Participant must be less than 50% of the aggregate contributions and
Forfeitures allocated to a Participant's Combined Account. For purposes
of this limitation, ordinary life insurance Contracts are Contracts
with both non-decreasing death benefits and non-increasing premiums. If
term insurance or universal life insurance is purchased with such
contributions, the aggregate premium must be 25% or less of the
aggregate contributions and Forfeitures allocated to a Participant's
Combined Account. If both term insurance and ordinary life insurance
are purchased with such contributions, the amount expended for term
insurance plus one-half of the premium for ordinary life insurance may
not in the aggregate exceed 25% of the aggregate Employer contributions
and Forfeitures allocated to a Participant's Combined Account. The
Trustee must distribute the Contracts to the Participant or convert the
entire value of the Contracts at or before retirement into cash or
provide for a periodic income so that no portion of such value may be
used to continue life insurance protection beyond retirement.
Notwithstanding the above, the limitations imposed herein with respect
to the purchase of life insurance shall not apply, in the case of a
Profit Sharing Plan, to the portion of a Participant's Account that has
accumulated for at least two (2) Plan Years.
Notwithstanding anything hereinabove to the contrary, amounts credited
to a Participant's Qualified Voluntary Employee Contribution Account
pursuant to Section 4.14, shall not be applied to the purchase of life
insurance contracts.
(e) The Trustee will be the owner of any life insurance Contract purchased
under the terms of this Plan. The Contract must provide that the
proceeds will be payable to the Trustee; however, the Trustee shall be
required to pay over all proceeds of the Contract to the Participant's
designated Beneficiary in accordance with the distribution provisions
of Article VI.A Participant's spouse will be designated Beneficiary
pursuant to Section 6.2. unless a qualified election has been made in
accordance with Sections 6.5 and 6.6 of the Plan, if applicable. Under
no circumstances shall the Trust retain any part of the proceeds.
However, the Trustee shall not pay the proceeds in a method that would
violate the requirements of the Retirement Equity Act, as stated in
Article VI of the Plan, or Code Section 401(a)(9) and the Regulations
hereunder.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common
law, statutory authority, including the Act, and other provisions of this Plan,
shall have the following powers and authorities, except as provided in the
Adoption Agreement to be exercised in the Trustee's sole discretion:
(a) To purchase, or subscribe for, any securities or other property and to
retain the same. In conjunction with the purchase of securities, margin
accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options to purchase, or
otherwise dispose of any securities or other property held by the
Trustee, by private contract or at public auction. No person dealing
with the Trustee shall be bound to see to the application of the
purchase money or to inquire into the validity, expediency, or
propriety of any such sale or other disposition, with or without
advertisement;
(c) To vote upon any stocks, bonds, or other securities: to give general or
special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription
rights or other options, and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate securities, and to
delegate discretionary powers, and to pay any assessments or charges in
connection therewith; and generally to exercise any of the powers of
an owner with respect to stocks, bonds, securities, or other property;
(d) To cause any securities or other property to be registered in the
Trustee's own name or in the name of one or more
31
of the Trustee's nominees, and to hold any investments in bearer form,
but the books and records of the Trustee shall at all times show that
all such investments are part of the Trust Fund:
(e) To borrow or raise money for the purposes of the Plan in such amount,
and upon such terms and conditions, as the Trustee shall deem advisable;
and for any sum so borrowed, to issue a promissory note as Trustee, and
to secure the repayment thereof by pledging all, or any part, of the
Trust Fund; and no person lending money to the Trustee shall be bound to
see to the application of the money lent or to inquire into the
validity, expediency, or propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash balances as the
Trustee may, from time to time, deem to be in the best interests of the
Plan, without liability for interest thereon;
(g) To accept and retain for such time as the Trustee may deem advisable any
securities or other property received or acquired as Trustee hereunder,
whether or not such securities or other property would normally be
purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted;
(i) To settle, compromise, or submit to arbitration any claims, debts, or
damages due or owing to or from the Plan, to commence or defend suits
or legal or administrative proceedings, and to represent the Plan in all
suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their reasonable
expenses and compensation, and such agent or counsel may or may not be
agent or counsel for the Employer;
(k) To apply for and procure from the Insurer as an investment of the Trust
Fund such annuity, or other Contracts (on the life of any Participant)
as the Administrator shall deem proper: to exercise, at any time or from
time to time, whatever rights and privileges may be granted under such
annuity, or other Contracts; to collect, receive, and settle for the
proceeds of all such annuity, or other Contracts as and when entitled to
do so under the provisions thereof;
(l) To invest funds of the Trust in time deposits or savings accounts
bearing a reasonable rate of interest in the Trustee's bank;
(m) To invest in Treasury Bills and other forms of United States government
obligations;
(n) To sell, purchase and acquire put or call options if the options are
traded on and purchased through a national securities exchange
registered under the Securities Exchange Act of 1934, as amended, or, if
the options are not traded on a national securities exchange, are
guaranteed by a member firm of the New York Stock Exchange;
(o) To deposit monies in federally insured savings accounts or certificates
of deposit in banks or savings and loan associations;
(p) To pool all or any of the Trust Fund, from time to time, with assets
belonging to any other qualified employee pension benefit trust created
by the Employer or any Affiliated Employer, and to commingle such assets
and make joint or common investments and carry joint accounts on behalf
of this Plan and such other trust or trusts, allocating undivided shares
or interests in such investments or accounts or any pooled assets of the
two or more trusts in accordance with their respective interests;
(q) To do all such acts and exercise all such rights and privileges,
although not specifically mentioned herein, as the Trustee may deem
necessary to carry out the purposes of the Plan.
(r) Directed Investment Account. The powers granted to the Trustee shall be
exercised in the sole fiduciary discretion of the Trustee. However, if
elected in the Adoption Agreement, each Participant may direct the
Trustee to separate and keep separate all or a portion of his interest
in the Plan; and further each Participant is authorized and empowered,
in his sole and absolute discretion, to give directions to the Trustee
in such form as the Trustee may require concerning the investment of the
Participant's Directed Investment Account, which directions must be
followed by the Trustee subject, however, to restrictions on payment of
life insurance premiums. Neither the Trustee nor any other persons
including the Administrator or otherwise shall be under any duty to
question any such direction of the Participant or to review any
securities or other property, real or personal, or to make any
suggestions to the Participant in connection therewith, and the Trustee
shall comply as promptly as practicable with directions given by the
Participant hereunder. Any such direction may be of a continuing nature
or otherwise and may be revoked by the Participant at any time in such
form as the Trustee may require. The Trustee may refuse to comply with
any direction from the Participant in the event the Trustee, in its sole
and absolute discretion, deems such directions improper by virtue of
applicable law, and in such event, the Trustee shall not be responsible
or liable for any loss or expense which may result. Any costs and
expenses related to compliance with the Participant's directions shall
be borne by the Participant's Directed Investment Account.
Notwithstanding anything hereinabove to the contrary, the Trustee shall
not, at any time after December 31, 1981, invest any portion of a
Directed Investment Account in "collectibles" within the meaning of that
term as employed in Code Section 408(m).
7.4 LOANS TO PARTICIPANTS
(a) If specified in the Adoption Agreement, the Trustee may, in the
Trustee's sole discretion, make loans to Participants or Beneficiaries
under the following circumstances: (1) loans shall be made available to
all Participants and Beneficiaries on a reasonably equivalent basis; (2)
loans shall not be made available to Highly Compensated Employees in an
amount greater than the amount made available to other Participants; (3)
loans shall bear a reasonable rate of interest: (4) loans shall be
adequately secured: and (5) shall provide for periodic repayment over a
reasonable period of time.
(b) Loans shall not be made to any Shareholder-Employee or Owner-Employee
unless an exemption for such loan is obtained pursuant to Act Section
408 and further provided that such loan would not be subject to tax
pursuant to Code Section 4975.
(c) Loans shall not be granted to any Participant that provide for a
repayment period extending beyond such Participant's Normal Retirement
Date.
(d) Loans made pursuant to this Section (when added to the outstanding
balance of all other loans made by the Plan to the Participant) shall be
limited to the lesser of:
(1) $50,000 reduced by the excess (if any) of the highest outstanding
balance of loans from the Plan to the Participant during the one
year period ending on the day before the date on which such loan is
made, over the outstanding balance of loans from the Plan to the
32
Participant on the date on which such loan was made, or
(2) the greater of (A) one-half (1/2) of the present value of the non-
forfeitable accrued benefit of the Employee under the Plan, or (B),
if permitted pursuant to the Adoption Agreement, $10,000.
For purposes of this limit, all plans of the Employer shall be
considered one plan. Additionally, with respect to any loan made
prior to January 1, 1987, the $50,000 limit specified in (1) above
shall be unreduced.
(e) No Participant loan shall take into account the present value of such
Participant's Qualified Voluntary Employee Contribution Account.
(f) Loans shall provide for level amortization with payments to be made not
less frequently than quarterly over a period not to exceed five (5)
years. However, loans used to acquire any dwelling unit which, within a
reasonable time, is to be used (determined at the time the loan is made)
as a principal residence of the Participant shall provide for periodic
repayment over a reasonable period of time that may exceed five (5)
years. Notwithstanding the foregoing, loans made prior to January 1,
1987 which are used to acquire, construct, reconstruct or substantially
rehabilitate any dwelling unit which, within a reasonable period of time
is to be used (determined at the time the loan is made) as a principal
residence of the Participant or a member of his family (within the
meaning of Code Section 267(c)(4)) may provide for periodic repayment
over a reasonable period of time that may exceed five (5) years.
Additionally, loans made prior to January 1, 1987, may provide for
periodic payments which are made less frequently than quarterly and
which do not necessarily result in level amortization.
(g) An assignment or pledge of any portion of a Participant's interest in
the Plan and a loan, pledge, or assignment with respect to any insurance
Contract purchased under the Plan, shall be treated as a loan under this
Section.
(h) Any loan made pursuant to this Section after August 18, 1985 where the
vested interest of the Participant is used to secure such loan shall
require the written consent of the Participant's spouse in a manner
consistent with Section 6.5(a) provided the spousal consent requirements
of such Section apply to the Plan. Such written consent must be obtained
within the 90-day period prior to the date the loan is made. Any
security interest held by the Plan by reason of an outstanding loan to
the Participant shall be taken into account in determining the amount of
the death benefit or Pre-Retirement Survivor Annuity. However, no
spousal consent shall be required under this paragraph if the total
accrued benefit subject to the security is not in excess of $3,500.
(i) With regard to any loans granted or renewed on or after the last day of
the first Plan Year beginning after December 31, 1988, a Participant
loan program shall be established which must inc1ude, but need not be
limited to, the following:
(1) the identity of the person or positions authorized to administer the
Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be approved or denied;
(4) limitations, if any, on the types and amounts of loans offered,
including what constitutes a hardship or financial need if selected
in the Adoption Agreement;
(5) the procedure under the program for determining a reasonable rate of
interest;
(6) the types of collateral which may secure a Participant loan; and
(7) the events constituting default and the steps that will be taken to
preserve plan assets,
Such Participant loan program shall be contained in a separate written
document which, when properly executed, is hereby incorporated by
reference and made a part of this plan. Furthermore, such Participant
loan program may be modified or amended in writing from time to time
without the necessity of amending this Section of the Plan.
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from time to time, in
accordance with the terms of the Plan, make payments out of the Trust Fund. The
Trustee shall not be responsible in any way for the application of such
payments.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as set forth in the
Trustee's fee schedule (if the Trustee has such a schedule) or as agreed upon in
writing by the Employer and the Trustee. An individual serving as Trustee who
already receives full-time pay from the Employer shall not receive compensation
from this Plan. In addition, the Trustee shall be reimbursed for any reasonable
expenses, including reasonable counsel fees incurred by it as Trustee. Such
compensation and expenses shall be paid from the Trust Fund unless paid or
advanced by the Employer. All taxes of any kind and all kinds whatsoever that
may be levied or assessed under existing or future laws upon, or in respect of,
the Trust Fund or the income thereof, shall be paid from the Trust Fund.
7.7 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary Date or
receipt of the Employer's contribution for each Plan Year, the Trustee, or its
agent, shall furnish to the Employer and Administrator a written statement of
account with respect to the Plan Year for which such contribution was made
setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon sales or other
disposition of the assets;
(c) the increase, or decrease, in the value of the Trust Fund;
(d) all payments and distributions made from the Trust fund; and
(e) such further information as the Trustee and/or Administrator deems
appropriate. The Employer, forthwith upon its receipt of each such
statement of account, shall acknowledge receipt thereof in writing and
advise the Trustee and/or Administrator of its approval or disapproval
thereof. Failure by the Employer to disapprove any such statement of
account within thirty (30) days after its receipt thereof shall be
deemed an approval thereof. The approval by the Employer of any
statement of account shall be binding as to all matters embraced therein
as between the Employer and the Trustee to the same extent as if the
account of the Trustee had been settled by judgement or decree in an
action for a judicial settlement of its account in a court of competent
jurisdiction in which the Trustee, the Employer and all persons having
or claiming an interest in the Plan were parties; provided, however,
that nothing herein contained shall deprive the Trustee of its right to
have its accounts judicially settled if the Trustee so desires.
7.8 AUDIT
(a) If an audit of the Plan's records shall be required by the Act and the
regulations thereunder for any Plan Year, the Administrator shall direct
the Trustee to engage on behalf of all Participants an independent
qualified public accountant for that purpose. Such accountant shall,
after an audit
33
of the books and records of the Plan in accordance with generally
accepted auditing standards, within a reasonable period after the close
of the Plan Year, furnish to the Administrator and the Trustee a report
of his audit setting forth his opinion as to whether any statements,
schedules or lists, that are required by Act Section 103 or the
Secretary of Labor to be filed with the Plan's annual report, are
presented fairly in conformity with generally accepted accounting
principles applied consistently.
(b) All auditing and accounting fees shall be an expense of and may, at the
election of the Administrator, be paid from the Trust Fund.
(c) If some or all of the information necessary to enable the Administrator
to comply with Act Section 103 is maintained by a bank, insurance
company, or similar institution, regulated and supervised and subject
to periodic examination by a state or federal agency, it shall transmit
and certify the accuracy of that information to the Administrator as
provided in Act Section 103(b) within one hundred twenty (120) days
after the end of the Plan Year or such other date as may be prescribed
under regulations of the Secretary of Labor.
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the Employer, at
least thirty (30) days before its effective date, a written notice of
his resignation.
(b) The Employer may remove the Trustee by mailing by registered or
certified mail, addressed to such Trustee at his last known address, at
least thirty (30) days before its effective date, a written notice of
his removal.
(c) Upon the death, resignation, incapacity, or removal of any Trustee, a
successor may be appointed by the Employer, and such successor, upon
accepting such appointment in writing and delivering same to the
Employer, shall, without further act, become vested with all the
estate, rights, powers, discretions, and duties of his predecessor with
like respect as if he were originally named as a Trustee herein. Until
such a successor is appointed, the remaining Trustee or Trustees shall
have full authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to the death,
resignation, incapacity, or removal of a Trustee. In the event a
successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the estate, rights, powers, discretions, and duties of his
predecessor with the like effect as if he were originally named as
Trustee herein immediately upon the death, resignation, incapacity, or
removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such he shall furnish
to the Employer and Administrator a written statement of account with
respect to the portion of the Plan Year during which he served as
Trustee. This statement shall be either (i) included as part of the
annual statement of account for the Plan Year required under Section
7.7 or (ii) set forth in a special statement. Any such special
statement of account should be rendered to the Employer no later than
the due date of the annual statement of account for the Plan Year.
The procedures set forth in Section 7.7 for the approval by the
Employer of annual statements of account shall apply to any special
statement of account rendered hereunder and approval by the Employer of
any such special statement in the provided in Section 7.7 shall have
the same effect upon the statement as the Employer's approval of an
annual statement of account. No successor to the Trustee shall have any
duty or responsibility to investigate the acts or transactions of any
predecessor who has rendered all statements of account required by
Section 7.7 and this subparagraph.
7.10 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the Trustee at the
direction of the Administrator shall transfer the Vested interest, if any, of
such Participant in his account to another trust forming part of a pension,
profit sharing, or stock bonus plan maintained by such Participant's new
employer and represented by said employer in writing as meeting the requirements
of Code Section 401(a), provided that the trust to which such transfers are made
permits the transfer to be made.
7.11 TRUSTEE INDEMNIFICATION
The Employer agrees to indemnify and save harmless the Trustee against any and
all claims, losses, damages, expenses and liabilities the Trustee may incur in
the exercise and performance of the Trustee's powers and duties hereunder,
unless the same are determined to be due to gross negligence or willful
misconduct
7.12 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold "qualifying Employer
securities" and "qualifying Employer real property," as those terms are defined
in the Act. However, no more than 100% of the fair market value of all the
assets in the Trust Fund may be invested in "qualifying Employer securities" and
"qualifying Employer real property".
7.13 PASSIVE TRUSTEE
Notwithstanding any other provisions of this Plan to the contrary and to the
extent permitted under applicable law, in the event The First National Bank of
Boston is Trustee (or any successor Trustee is appointed by the prototype
sponsoring organization), such Trustee shall exercise powers of the Trustee
under the Plan only at the direction and upon the instructions of the Plan
Administrator and the duties and obligations of The First National Bank of
Boston (or any successor Trustee appointed by the prototype sponsoring
organization) as Trustee shall be limited to holding title to the Plan
assets and all other duties of the Trustee set forth in the Plan shall be the
obligation of the Plan Administrator. The provisions of the Plan applicable to
The First National Bank of Boston shall apply to any successor appointed
by the prototype sponsoring organization.
7.14 DIRECT ROLLOVER
(a) This Section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.
(b) An eligible rollover distribution is any distribution of all or any
portion of the balance to the credit of the distributee, except that
an eligible rollover distribution does not include; any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy)
of the distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the Code; and
the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(c) An eligible retirement plan is an individual retirement account
described in section 408(a) of the Code, an individual retirement
annuity described in section 408(b) of the Code, an annuity plan
described in section 403(a) of
34
the Code, or the qualified trust described in section 401(a) of the
Code, that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual
retirement account or an individual retirement annuity.
(d) A distributee includes an Employee or former Employee. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in section
414(p) of the Code, are distributees with regard to the interest of the
spouse or former spouse.
(e) A direct rollover is a payment by the Plan to the eligible retirement
plan specified by the distributee.
ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend this Plan
subject to the limitations of this Section. However, any amendment
which affects the rights, duties or responsibilities of the Trustee and
Administrator may only be made with the Trustee's and Administrator's
written consent. Any such amendment shall become effective as provided
therein upon its execution. The Trustee shall not be required to
execute any such amendment unless the amendment affects the duties of
the Trustee hereunder.
(b) The Employer may (1) change the choice of options in the Adoption
Agreement (2) add overriding language in the Adoption Agreement when
such language is necessary to satisfy Code Sections 415 or 416 because
of the required aggregation of multiple plans, and (3) add certain
model amendments published by the Internal Revenue Service which
specifically provide that their adoption will not cause the Plan to be
treated as an individually designed plan. An Employer that amends the
Plan for any other reason, including a waiver of the minimum funding
requirement under Code Section 412(d), will no longer participate in
this Prototype Plan and will be considered to have an individually
designed plan.
Furthermore, an Employer may not use this Plan and will be deemed to
have an individually designed plan if the Employer does not maintain a
product of the sponsor of the Plan or any of its affiliates or
subsidiaries.
(c) The Employer expressly delegates authority to the sponsoring
organization of this Plan, the right to amend this Plan by submitting
a copy of the amendment to each Employer who has adopted this Plan
after first having received a ruling or favorable determination from
the Internal Revenue Service that the Plan as amended qualifies under
Code Section 401(a) and the Act. For purposes of this Section, the mass
submitter shall be recognized as the agent of the sponsoring
organization. If the sponsoring organization does not adopt the
amendments made by the mass submitter, it will no longer be identical
to or a minor modifier of the mass submitter plan.
(d) No amendment to the Plan shall be effective if it authorizes or permits
any part of the Trust Fund (other than such part as is required to pay
taxes and administration expenses) to be used for or diverted to any
purpose other than for the exclusive benefit of the Participants or
their Beneficiaries or estates; or causes any reduction in the amount
credited to the amount of any Participant; or causes or permits any
portion of the Trust Fund to revert to or become property of the
Employer.
(e) Except as permitted by Regulations (including Regulation 1.411(d)-4) no
Plan amendment or transaction having the effect of a Plan amendment
(such as a merger, plan transfer or similar transaction) shall be
effective if it eliminates or reduces any "Section 411(d)6) protected
benefit" or adds or modifies conditions relating to "Section 411(d)(6)
protected benefits" the result of which is a further restriction on
such benefit unless such protected benefits are preserved with respect
to benefits accrued as of the later of the adoption date or effective
date of the amendment. "Section 411(d)(6) protected benefits" are
benefits described in Code Section 411(d)(6)(A), early retirement
benefits and retirement-type subsidies, and optional forms of benefit.
82 TERMINATION
(a) The Employer shall have the right at any time to terminate the Plan by
delivering to the Trustee and Administrator written notice of such
termination. Upon any full or partial termination all amounts credited
to the affected Participants' Combined Accounts shall become 100%
Vested and shall not thereafter be subject to forfeiture, and all
unallocated amounts shall be allocated to the accounts of all
Participants in accordance with the provisions hereof.
(b) Upon the full termination of the Plan, the Employer shall direct the
distribution of the assets to Participants in a manner which is
consistent with and satisfies the provisions of Section 6.5.
Distributions to a Participant shall be made in (or in property if
permitted in the Adoption Agreement) or through the purchase of
irrevocable non-transferable deferred commitments from the Insurer.
Except as permitted by Regulations, the termination of the Plan shall
not result in the reduction of "Section 411(d)(6) protected benefits"
as described in Section 8.1.
8.3 MERGER OR CONSOLIDATION
This Plan may be merged or consolidated with, or its assets and/or liabilities
may be transferred to any other plan only if the benefits which would be
received by a Participant of this Plan, in the event of a termination of the
plan immediately after such transfer, merger or consolidation, are at least
equal to the benefits the Participant would have received if the Plan had
terminated immediately before the transfer, merger or consolidation and such
merger or consolidation does not otherwise result in the elimination or
reduction of any "Section 411(d)(6) protected benefits" as described in Section
8.1(e).
ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS
(a) Any organization may become the Employer hereunder by executing the
Adoption Agreement in form satisfactory to the Trustee, and it shall
provide such additional information as the Trustee may require. The
consent of the Trustee to act as such shall be signified by its
execution of the Adoption Agreement.
(b) Except as otherwise provided in this Plan, the affiliation of the
Employer and the participation of its Participants shall be separate
and apart from that of any other employer and its participants
hereunder.
9.2 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the Employer and
any Participant or to be a consideration or an inducement for the employment of
any Participant or Employee. Nothing contained in this Plan shall be deemed to
give any Participant or
35
Employee the right to be retained in the service of the Employer or to interfere
with the right of the Employer to discharge any Participant or Employee at any
time regardless of the effect which such discharge shall have upon him as a
Participant of this Plan.
9.3 ALIENATION
(a) Subject to the exceptions provided below, no benefit which shall be
payable to any person (including a Participant or his Beneficiary)
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt
to anticipate, alienate, sell, transfer, assign, pledge, encumber, or
charge the same shall be void; and no such benefit shall in any
manner be liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of any such person, nor shall it be
subject to attachment or legal process for or against such person, and
the same shall not be recognized except to such extent as may be
required by law.
(b) This provision shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan, for any reason, under any
provision of this Plan. At the time a distribution is to be made to or
for a Participant's or Beneficiary's benefit, such proportion of the
amount to be distributed as shall equal such indebtedness shall be
paid to the Plan, to apply against or discharge such indebtedness.
Prior to making a payment, however, the Participant or Beneficiary
must be given written notice by the Administrator that such
indebtedness is to be so paid in whole or part from his Participant's
Combined Account. If the Participant or Beneficiary does not agree
that the indebtedness is a valid claim against his Vested
Participant's Combined Account, he shall be entitled to a review of
the validity of the claim in accordance with procedures provided in
Sections 2.12 and 2.13.
(c) This provision shall not apply to a "qualified domestic relations
order" defined in Code Section 414(p), and those other domestic
relations orders permitted to be so treated by the Administrator under
the provisions of the Retirement Equity Act of 1984. The Administrator
shall establish a written procedure to determine the qualified stams
of domestic relations orders and to administer distributions under
such qualified orders. Further, to the extent provided under a
"qualified domestic relations order", a former spouse of a Participant
shall be treated as the spouse or surviving spouse for all purposes
under the Plan.
9.4 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the Act and the
laws of the State or Commonwealth in which the Employer's principal office is
located, other than its laws respecting choice of law, to the extent not pre-
empted by the Act.
9.5 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter gender,
they shall be construed as though they were also used in another gender in all
cases where they would so apply, and whenever any words are used herein in the
singular or plural form, they shall be construed as though they were also used
in the other form in all cases where they would so apply.
9.6 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the Trust
and/or Plan established hereunder to which the Trustee or the Administrator may
be a party, and such claim, suit, or proceeding is resolved in favor of the
Trustee or Administrator, they shall be entitled to be reimbursed from the Trust
Fund for any and all costs, attorney's fees, and other expenses pertaining
thereto incurred by them for which they shall have become liable.
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted by law,
it shall be impossible by operation of the Plan or of the Trust, by
termination of either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or by any
other means, for any part of the corpus or income of any Trust Fund
maintained pursuant to the Plan or any funds contributed thereto to be
used for, or diverted to, purposes other than the exclusive benefit of
Participants, Retired Participants, or their Beneficiaries.
(b) In the event the Employer shall make a contribution under a mistake of
fact pursuant to Section 403(c)(2)(A) of the Act, the Employer may
demand repayment of such contribution at any time within one (1) year
following the time of payment and the Trustees shall return such
amount to the Employer within the one (1) year period. Earnings of the
Plan attributable to the contributions may not be returned to the
Employer but any losses attributable thereto must reduce the amount so
returned.
9.8 BONDING
Every Fiduciary, except a bank or an insurance company, unless exempted by the
Act and regulations thereunder, shall be bonded in an amount not less than 10%
of the amount of the funds such Fiduciary handles; provided, however, that the
minimum bond shall be $1.000 and the maximum bond, $500.000. The amount of
funds handled shall be determined at the beginning of each Plan Year by the
amount of funds handled by such person, group, or class to be covered and their
predecessors, if any, during the preceding Plan Year, or if there is no
preceding Plan Year, then by the amount of the funds to be handled during the
then current year. The bond shall provide protection to the Plan against any
loss by reason of acts of fraud or dishonesty by the Fiduciary alone or in
connivance with others. The surety shall be a corporate surety company (as such
term is used in Act Section 412(a)(2)), and the bond shall be in a form approved
by the Secretary of Labor. Notwithstanding anything in the Plan to the
contrary, the cost of such bonds shall be an expense of and may, at the
election of the Administrator, be paid from the Trust Fund or by the Employer.
9.9 INSURER'S PROTECTIVE CLAUSE
The Insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The Insurer shall be protected and held harmless in acting in
accordance with any written direction of the Trustee, and shall have no duty to
see to the application of any funds paid to the Trustee, nor be required to
question any actions directed by the Trustee. Regardless of any provision of
this Plan, the Insurer shall not be required to take or permit any action or
allow any benefit or privilege contrary to the terms of any Contract which it
issues hereunder, or the rules of the Insurer.
9.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary, or to any
guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of this Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer.
9.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or required to do
or perform any act or matter or thing, it shall be done and performed by a
person duly authorized by its legally constituted authority.
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator, (3) the Trustee, and (4) any Investment Manager appointed
hereunder. The named Fiduciaries shall have only those specific powers, duties,
responsibilities, and obligations as are specifically given them under the
Plan. In general, the Employer shall have the sole responsibility for making the
contributions provided
36
for under Section 4.1: and shall have the sole authority to appoint and remove
the Trustee and the Administrator, to formulate the Plan's "funding policy and
method"; and to amend the elective provisions of the Adoption Agreement or
terminate, in whole or in part, the Plan. The Administrator shall have the sole
responsibility for the administration of the Plan, which responsibility is
specifically described in the Plan. The Trustee shall have the sole
responsibility of management of the assets held under the Trust, except those
assets, the management of which has been assigned to an Investment Manager, who
shall be solely responsible for the management of the assets assigned to it
all as specifically provided in the Plan. Each named Fiduciary warrants that any
directions given, information furnished, or action taken by it shall be in
accordance with the provisions of the Plan, authorizing or providing for such
direction, information or action. Furthermore, each named Fiduciary may rely
upon any such direction, information or action of another named Fiduciary as
being proper under the Plan, and is not required under the Plan to inquire into
the propriety of any such direction, information or action. It is intended under
the Plan that each named Fiduciary shall be responsible for the proper exercise
of its own powers, duties, responsibilities and obligations under the Plan. No
named Fiduciary shall guarantee the Trust Fund in any manner against investment
loss or depreciation in asset value. Any person or group may serve in more than
one Fiduciary capacity.
9.13 HEADINGS
The headings and subheadings of this Plan have been inserted for convenience of
reference and are to be ignored in any construction of the provisions hereof.
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary, if, pursuant to a
timely application filed by or in behalf of the Plan, the Commissioner
of Internal Revenue Service or his delegate should determine that the
Plan does not initially qualify as a tax-exempt plan under Code
Sections 401 and 501, and such determination is not contested, or if
contested, is finally upheld, then if the Plan is a new plan, it shall
be void ab initio and all amounts contributed to the Plan, by the
Employer, less expenses paid, shall be returned within one year and
the Plan shall terminate, and the Trustee shall be discharged from all
further obligations. If the disqualification relates to an amended
plan, then the Plan shall operate as if it had not been amended and
restated.
(b) Notwithstanding any provisions to the contrary, except Sections 3.5,
3.6. and 4.1(f), any contribution by the Employer to the Trust Fund is
conditioned upon the deductibility of the contribution by the
Employer under the Code and, to the extent any such deduction is
disallowed, the Employer may within one (1) year following the
disallowance of the deduction, demand repayment of such disallowed
contribution and the Trustee shall return such contribution within one
(1) year following the disallowance. Earnings of the Plan attributable
to the excess contribution may not be returned to the Employer, but
any losses attributable thereto must reduce the amount so returned.
(c) If an Employer's Plan fails to attain or retain qualification, then
such Plan will no longer participate in this Prototype Plan and will
be considered an individually designed plan.
9.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner.
9.16 PAYMENT OF BENEFITS
Benefits under this Plan shall be paid, subject to Section 6.10 and Section 6.11
only upon death. Total and Permanent Disability, normal or early retirement,
termination of employment, or upon Plan Termination.
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER
Notwithstanding anything herein to the contrary, with the consent of the
Employer and Trustee, any Affiliated Employer may adopt this Plan and all of the
provisions hereof, and participate herein and be known as a Participating
Employer, by a properly executed document evidencing said intent and will of
such Participating Employer.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each Participating Employer shall be required to select the same
Adoption Agreement provisions as those selected by the Employer other
than the Plan Year, the Fiscal Year, and such other items that must,
by necessity, vary among employers.
(b) Each such Participating Employer shall be required to use the same
Trustee as provided in this Plan.
(c) The Trustee may, but shall not be required to, commingle, hold and
invest as one Trust Fund all contributions made by Participating
Employers, as well as all increments thereof.
(d) The transfer of any Participant from or to an Employer participating
in this Plan, whether he be an Employee of the Employer or a
Participating Employer, shall not affect such Participant's rights
under the Plan, and all amounts credited to such Participant's
Combined Account as well as his accumulated service time with the
transferor or predecessor, and his length of participation in the
Plan, shall continue to his credit.
(e) Any expenses of the Plan which are to be paid by the Employer or borne
by the Trust Fund shall be paid by each Participating Employer in the
same proportion that the total amount standing to the credit of all
Participants employed by such Employer bears to the total standing to
the credit of all Participants.
10.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a part of this Plan; provided,
however, that with respect to all of its relations with the Trustee and
Administrator for the purpose of this Plan, each Participating Employer shall be
deemed to have designated irrevocably the Employer as its agent. Unless the
context of the Plan clearly indicates the contrary, the word "Employer" shall be
deemed to include each Participating Employer as related to its adoption of the
Plan.
10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between Participating
Employers, and in the event of any such transfer, the Employee involved shall
carry with him his accumulated service and eligibility. No such transfer shall
effect a termination of employment hereunder, and the Participating Employer to
which the Employee is transferred shall thereupon become obligated hereunder
with respect to such Employee in the same manner as was the Participating
Employer from whom the Employee was transferred.
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES
Any contribution or Forfeiture subject to allocation during each Plan Year shall
be allocated among all Participants of all Participating Employers in accordance
with the provisions of this Plan. On the basis of the information furnished by
the Administrator, the Trustee shall keep separate books and records concerning
the affairs of each Participating Employer hereunder and as to the accounts and
credits of the Employees of each Participating Employer. The Trustee may, but
need not, register Contracts so as to evidence that a particular Participating
Employer is the interested Employer hereunder, but in the event of an Employee
transfer from one Participating Employer to another, the employing Employer
shall immediately notify the Trustee thereof.
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10.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be a
Participating Employer hereunder shall only be by the written action of each and
every Participating Employer and with the consent of the Trustee where such
consent is necessary in accordance with the terms of this Plan.
10.7 DISCONTINUANCE OF PARTICIPATION
Except in the case of a Standardized Plan, any Participating Employer shall be
permitted to discontinue or revoke its participation in the Plan at any time. At
the time of any such discontinuance or revocation, satisfactory evidence thereof
and of any applicable conditions imposed shall be delivered to the Trustee. The
Trustee shall thereafter transfer, deliver and assign Contracts and other Trust
Fund assets allocable to the Participants of such Participating Employer to such
new Trustee as shall have been designated by such Participating Employer, in the
event that it has established a separate pension plan for its Employees
provided, however, that no such transfer shall be made if the result is the
elimination or reduction of any "Section 411(d)(6) protected benefits" in
accordance with Section 8.1(e). If no successor is designated, the Trustee shall
retain such assets for the Employees of said Participating Employer pursuant to
the provisions of Article VII hereof. In no such event shall any part of the
corpus or income of the Trust Fund as it relates to such Participating Employer
be used for or diverted for purposes other than for the exclusive benefit of the
Employees of such Participating Employer.
10.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary rules or
regulations, binding upon all Participating Employers and all Participants, to
effectuate the purpose of this Article.
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented in whole or in part from making a
contribution which it would otherwise have made under the Plan by reason of
having no current or accumulated earnings or profits, or because such earnings
or profits are less than the contribution which it would otherwise have made,
then, pursuant to Code Section 404(a)(3)(B), so much of the contribution which
such Participating Employer was so prevented from making may be made, for the
benefit of the participating employees of such Participating Employer, by other
Participating Employers who are members of the same affiliated group within the
meaning of Code Section 1504 to the extent of their current or accumulated
earnings or profits, except that such contribution by each such other
Participating Employer shall be limited to the proportion of its total current
and accumulated earnings or profits remaining after adjustment for its
contribution to the Plan made without regard to this paragraph which the total
prevented contribution bears to the total current and accumulated earnings or
profits of all the Participating Employers remaining after adjustment for all
contributions made to the Plan without regard to this paragraph.
A Participating Employer on behalf of whose employees a contribution is made
under this paragraph shall not be required to reimburse the contributing
Participating Employers.
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