401(k) Profit Sharing
Prototype Plan and Trust
o o o
Prepared By:
Krauss and Pasternack
- --------------------------------------------------------------------------------
2603 East College Avenue, State College, Pennsylvania 16801
Phone: (814) 235-2350 Fax: (814) 235-2356
- --------------------------------------------------------------------------------
THIS PLAN AND TRUST IS A LEGAL DOCUMENT AND AN EMPLOYER SHOULD SEEK LEGAL
COUNSEL BEFORE ADOPTING THIS, OR ANY SUCH DOCUMENT.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
FOR
KRAUSS AND PASTERNACK
401(k) PROFIT SHARING PROTOTYPE PLAN AND TRUST
ARTICLE I DEFINITIONS 01
ARTICLE II TOP HEAVY PROVISIONS AND ADMINISTRATION 15
2.1 TOP HEAVY PLAN REQUIREMENTS
2.2 DETERMINATION OF TOP HEAVY STATUS
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
2.6 POWERS AND DUTIES OF THE ADMINISTRATOR
2.7 RECORDS AND REPORTS
2.8 APPOINTMENT OF ADVISERS
2.9 INFORMATION FROM EMPLOYER
2.10 PAYMENT OF EXPENSES
2.11 MAJORITY ACTIONS
2.12 CLAIMS PROCEDURE
2.13 CLAIMS REVIEW PROCEDURE
ARTICLE III ELIGIBILITY 23
3.1 CONDITIONS OF ELIGIBILITY
3.2 EFFECTIVE DATE OF PARTICIPATION
3.3 DETERMINATION OF ELIGIBILITY
3.4 TERMINATION OF ELIGIBILITY
3.5 OMISSION OF ELIGIBLE EMPLOYEE
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
ARTICLE IV CONTRIBUTION AND ALLOCATION 25
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
4.9 MAXIMUM ANNUAL ADDITIONS
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
4.11 TRANSFERS FROM QUALIFIED PLANS
4.12 VOLUNTARY CONTRIBUTIONS
4.13 DIRECTED INVESTMENT ACCOUNT
4.14 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
4.15 INTEGRATION IN MORE THAN ONE PLAN
ARTICLE V VALUATIONS 59
5.1 VALUATION OF THE TRUST FUND
5.2 METHOD OF VALUATION
ARTICLE VI DETERMINATION AND DISTRIBUTION OF BENEFITS 60
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
6.2 DETERMINATION OF BENEFITS UPON DEATH
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
6.5 DISTRIBUTION OF BENEFITS
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
6.7 TIME OF SEGREGATION OR DISTRIBUTION
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
6.10 PRE-RETIREMENT DISTRIBUTION
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP WITHDRAWAL
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS
ARTICLE VII TRUSTEE 76
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
7.3 OTHER POWERS OF THE TRUSTEE
7.4 LOANS TO PARTICIPANTS
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
7.7 ANNUAL REPORT OF THE TRUSTEE
7.8 AUDIT
7.9 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
7.10 TRANSFER OF INTEREST
7.11 TRUSTEE INDEMNIFICATION
7.12 EMPLOYER SECURITIES AND REAL PROPERTY
7.13 LIMITATIONS ON TRUSTEE ACTION
ARTICLE VIII AMENDMENT, TERMINATION AND MERGERS 85
8.1 AMENDMENT
8.2 TERMINATION
8.3 MERGER OR CONSOLIDATION
ARTICLE IX MISCELLANEOUS 87
9.1 EMPLOYER ADOPTIONS
9.2 PARTICIPANT'S RIGHTS
9.3 ALIENATION
9.4 CONSTRUCTION OF PLAN
9.5 GENDER AND NUMBER
9.6 LEGAL ACTION
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS
9.8 BONDING
9.9 INSURER'S PROTECTIVE CLAUSE
9.10 RECEIPT AND RELEASE FOR PAYMENTS
9.11 ACTION BY THE EMPLOYER
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITIES
9.13 HEADINGS
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
9.15 UNIFORMITY
9.16 SPECIAL PROVISIONS FOR TAFT-HARTLEY PLAN
ARTICLE X PARTICIPATING EMPLOYERS 91
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
10.3 DESIGNATION OF AGENT
10.4 EMPLOYEE TRANSFERS
10.5 PARTICIPATING EMPLOYER'S CONTRIBUTION AND FORFEITURES
10.6 AMENDMENT
10.7 DISCONTINUANCE OF PARTICIPATION
10.8 ADMINISTRATOR'S AUTHORITY
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
ARTICLE I
DEFINITIONS
-----------
As used in this Plan, the following words and phrases shall have the
meanings set forth, 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 C2 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
periodically.
1.9 "Collectibles" means an amount equal to the cost of an account of any one
of the following collectibles: any work of art, any rug or antique, any
metal or gem, any stamp or coin, any alcoholic beverage, or any other
tangible personal property specified by the Secretary of the Treasury,
pursuant to Section 408(m) of the Code, except that it shall not include
"American Eagles" or other gold, silver or platinum coins minted by the
United States government which constitute legal tender within the United
States or any gold, silver, platinum, or palladium bullion of a fineness
equal to or exceeding the minimum fineness that a contract market (as
described in section 7 of the Commodity Exchange Act, 7 U.S.C. 7) requires
for metals which may be delivered in satisfaction of a regulated futures
contract, if such bullion is in the physical possession of a trustee
described under Section 408(a) of the Code.
Page 1 of 93
1.10 "Compensation" with respect to any Participant means such Participant's
compensation as specified by the Employer in F1-6 of the Adoption Agreement
that is paid during the applicable period. Compensation for any
Self-Employed Individual shall be equal to his Earned Income.
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual compensation
of each employee taken into account under the Plan shall not exceed the
OBRA 1993 annual compensation limit. The OBRA 1993 annual compensation
limit is $150,000, as adjusted by the Secretary of the Treasury for
increases in the cost of living in accordance with Code Section
401(a)(17)(B) of the Internal Revenue Code. The cost-of-living adjustment
in effect for a calendar year applies to any period, not exceeding twelve
(12) months, over which Compensation is determined (the "determination
period") beginning in such calendar year. If a determination period
consists of fewer than twelve (12) months, the OBRA 1993 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 twelve (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 1993 annual compensation limit set forth in this
provision.
If Compensation for any prior determination period is taken into
into account in determining an Employee's benefits accruing in the current
Plan Year, the Compensation for that prior determination period is subject
to the OBRA 1993 annual compensation limit in effect for that prior
determination period. For this purpose, for determination periods beginning
before the first day of the Plan Year beginning on or after January 1,
1994, the OBRA 1993 annual contribution limit is $150,000.
1.11 "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, the Plan provisions shall control.
1.12 "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.
1.13 "Early Retirement Date" means the date specified in J3 of 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 Participant who terminates employment after satisfying the service
service requirement for Early Retirement and who reaches Early Retirement
Age, as elected in the Adoption Agreement, shall be entitled to receive his
benefits under this Plan.
1.14 "Earned Income" means with respect to a Self-Employed Individual, as
defined in Code Section 401(c)(2), the earnings from Self-Employment in the
trade or business 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
Page 2 of 93
Plan Years beginning after December 31, 1989, net earnings shall be
determined after reflecting the deduction allowed to the Employer by Code
Section 164(f) [relating to the deduction allowed for one-half (11/2) of
taxes under the Self-Employment Contributions Act].
1.15 "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 H2 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)(5), the provisions of which are
specifically incorporated herein by reference.
1.16 "Eligible Employee" means any Employee specified in D1 of the Adoption
Agreement.
1.17 "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). If any Employee shall be improperly excluded as an independent
contractor, then he shall be included as an Employee for all periods
(retroactively if necessary) that he was improperly excluded as an
independent contractor.
All Employees of all entities which are an Affiliated Employer will be
treated as employed by a single employer.
1.18 "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.
1.19 "Excess Compensation" means a Participant's Compensation which is in excess
of the amount set forth in the Adoption Agreement, with respect to a Plan
that is integrated with Social Security.
1.20 "Excess Contributions" means 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 contributions
permitted under Section 4.5(a).
1.21 "Excess Deferred Compensation" means the excess of the aggregate amount of
the Participant's Deferred Compensation and the elective deferrals pursuant
to Section 4.2(f) actually made on behalf of the Participant for such
taxable year, over the dollar limitation provided for in Code Section
402(g).
1.22 "Family Member" means the Participant's spouse, and Participant's lineal
descendants and ascendants and their spouses, all as described in Code
Section 414(q)(6)(B).
1.23 "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 moneys 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 the
Administrator.
Page 3 of 93
1.24 "Fiscal Year" means the Employer's accounting year as specified in the
Adoption Agreement.
1.25 "Forfeiture" means a 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 One Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in the case of a
of a Terminated Participant whose Vested benefit is zero (0), 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.
1.26 "Former Participant" means a person who has been a Participant, but who has
ceased to be a Participant for any reason.
1.27 "414(s) Compensation" with respect to any Employee means his Compensation
as defined in Section 1.10. 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 latter 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
included in the Participant's gross income by reason of the application of
Code Sections 125, 132(f)(4), 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).
1.28 "415 Compensation" means compensation as defined in Section 4.9(f)(2).
1.29 "Highly Compensated Employee" means an Employee described in Code Section
414(q) and the Regulations thereunder and, for Plan Years beginning prior
to January 1, 1997, 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
1.36(c).
(b) Employees who received "415 Compensation" during the "look-back year"
from the Employer in excess of $75,000.
(c) Employees who received "415 Compensation" during the "look-back year"
from the Employer in excess of $50,000 and were in the Top Paid Group
of Employees for the Plan Year.
Page 4 of 93
(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 fifty
percent (50%) of the Code Section 415(b)(1)(A) limited to the lesser
of (i) fifty (50) employees; or (ii) the greater of three (3)
employees or ten percent (10%) of all employees. If the Employer does
not have at least one officer whose annual "415 Compensation" is in
excess of fifty percent (50%) 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 one-hundred (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
testing is being performed, and the "look-back year" shall be the
immediately preceding twelve (12) month period. However, if the Plan Year
is not a calendar year, or if another Plan of the Employer so provides,
then the "look-back year" shall be the calendar year ending within the Plan
Year for which testing is being performed, and the "determination year"
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, 132(f)(4), 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 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 receive 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".
Plan Years beginning after December 31, 1996, except that, in
determining whether an employee is a highly compensated employee in 1997,
the amendments in this subsection are treated as having been in effect in
1996.
Page 5 of 93
The term "Highly Compensated Employee" includes Highly Compensated
Active Employees and Highly Compensated Former Employees. A Highly
Compensated Active Employee means any Employee who
(a) was a five percent (5%) owner (as defined in Section 416(i)(1) of the
Code) of the employer at any time during the current or the preceding
year, or
(b) for the preceding year
(i) had compensation form the employer in excess of $80,000 (as
adjusted by the Secretary pursuant to Section 415(d) of the Code,
except that the base period shall be the calendar quarter ending
September 30, 1996), and
(ii) if the employer elects the application of this clause for such
preceding year, was in the Top-Paid Group of Employees for such
preceding year.
For this purpose, an Employee is in the Top-Paid
Group of Employees for any year if such Employee is
in the group consisting of the top 20 percent of the
Employees when ranked on the basis of Compensation
paid during such year.
The Determination of who is a Highly compensated Employee, including
the determinations of the number and identity of employees in the top-paid
group, will be made in accordance with Section 414(q) of the Code and the
regulations thereunder.
For Plan Years beginning after December 31, 1997, for purposes of
of this subsection, the term "Compensation" means compensation within the
meaning of Section 415(c)(3) of the Code.
The applicable year of the plan for which a determination is being
made is called a determination year and the preceding 12-month period is
called a look-back year.
A highly compensated former employee is based on the rules applicable
to determining highly compensated employee status as in effect for that
determination year, in accordance with section 1.414 (q)-1T, A-4 of the
temporary Income Tax Regulations and Notice 97-45.
In determining whether an employee is a highly compensated employee
for years beginning in 1997, the amendments to section 414(q) stated above
are treated as having been in effect for years beginning in 1996.
1.30 "Highly Compensated Former Employees" A Former Employee shall be treated as
a Highly Compensated Employee if:
(a) such Employee was a Highly Compensated Employee when such Employee
separated from service, or
(b) such Employee was a Highly Compensated Employee at any time after
attaining age 55.
1.31 "Highly Compensated Participant" means any Highly Compensated Employee who
is eligible to participate in the Plan.
Page 6 of 93
1.32 "Hour of Service" means (1) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation by the Employer for the
performance of duties during the applicable computation period; (2) each
hour for which an Employee is directly or indirectly compensated or
entitled to compensation by the Employer for reasons other than performance
of duties (such as vacation, holidays, sickness, 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
shall 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 One-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.
1.33 "Insurer" means any legal reserve insurance company which shall issue one
or more policies under the Plan.
1.34 "Investment Manager" means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledges fiduciary
responsibility to the Plan in writing. Such entity must be a person, firm,
or corporation registered as an investment adviser under the Investment
Advisers Act of 1940, a bank, or an insurance company.
1.35 "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 one-half (1/2), or greater than the amount of the annuity
payable during the joint lives of the Participant and the Participant's
Page 7 of 93
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.
1.36 "Key Employee" for Plan Years beginning before January 1, 2002 means an
Employee as defined in Code Section 416(i) and the Regulations thereunder.
Generally, any Employee or former Employee (as well as each of his
Beneficiaries) is considered a Key Employee if he, at any time during the
Plan Year that contains the "date of determination" 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 fifty percent (50%) of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten (10) 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 (0.5%)
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 any unincorporated business, any person who owns more than
five percent (5%) of the capital or profits interest in the Employer.
In determining percentage ownership hereunder, employers that would
otherwise be aggregated under Code Sections 414(b), (c), (m) and (o)
shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than one percent (1%) of the
outstanding stock of the Employer or stock possessing more than one
percent (1%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than one percent (1%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers. However, in
determining whether an individual has "415 Compensation" of more than
$150,000, "415 Compensation" from each employer required to be
aggregated under Code Sections 414(b), (c), (m) and (o) shall be taken
into account.
For purposes of this section, the determination of "415
Compensation" shall be made by including amounts that would otherwise be
excluded from a Participant's gross income by reason of the application of
Code Section 125, 132(f)(4), 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).
For Plan Years beginning before after December 31,2001 "Key
Employee" means an Employee as defined in Code Section 416(i) and the
Regulations thereunder. Generally, any Employee is considered a Key
Employee if he, at any time during the Plan Year, has been included in one
of the following categories:
(a) an officer of the Employer having an annual compensation greater than
$130,000,
(b) a 5-percent owner of the Employer, or
(c) a 1-percent owner of the Employer having an annual compensation from
the Employer of more than $150,000.
For purposes of clause (a), no more than 50 employees (or, if lesser,
the greater of 3 or 10 percent of the employees) shall be treated as
officers. In case of plan years beginning after December 31, 2002, the
$130,000 amount in clause (a) shall be adjusted at the same time and in the
same manner as under section 415(d), except that the base period shall be
the calendar quarter beginning July 1, 2001, and any increase under this
sentence which is not a multiple of $5,000 shall be rounded to the next
lower multiple of $5,000. Such term shall not include any officer or
employee of an entity referred to in section 414(d) (relating to
governmental plans). For purposes of determining the number of officers
taken into account under clause (a), employees described in section
414(q)(5) shall be excluded.
For purposes of this subsection percentage owners shall be defined as
follows:
(a) 5-percent Owner means
(i) if the employer is a corporation, any person who owns (or is
considered as owning within the meaning of section 318) more than
5 percent of the outstanding stock of the corporation or stock
possessing more than 5 percent of the total combined voting power
of all stock of the corporation, or
(ii) if the employer is not a corporation, any person who owns more
than 5 percent of the capital or profits interest in the
employer.
(b) 1-percent Owner means any person who would be described in clause (a)
above if 1 percent were substituted for 5 percent each place it
appears in clause (a).
1.37 "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.
1.38 "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 (1) year, and such services are under the primary direction or
control of the recipient employer. Contributions or benefits provided a
leased employee by the leasing organization
Page 9 of 93
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 non-integrated employer contribution rate of at least ten
percent (10%) 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, 132(f)(4), 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 twenty percent (20%) of the recipient's non-highly
compensated work force.
1.39 "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.
1.40 "Non-Elective Contributions" 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 H2 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.
1.41 "Non-Highly Compensated Participant" means any Participant who is neither a
Highly Compensated Employee nor a Family Member.
1.42 "Non-Key Employee" means any Employee or Former Employee (and his
Beneficiaries) who is not a Key Employee.
1.43 "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.
1.44 "Normal Retirement Date" means the date specified in the Adoption Agreement
at which time a Participant shall become eligible to have his benefits
distributed to him.
1.45 "One-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 One-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
Page 10 of 93
credited for the computation period in which the absence from work begins,
only if credit therefore is necessary to prevent the Employee from
incurring a One-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 credited for
a "maternity or paternity leave of absence" shall not exceed five-hundred
and one (501).
1.46 "Owner-Employee" means a sole proprietor who owns the entire interest in
the Employer or a partner who owns more than ten percent (10%) of either
the capital interest or the profits interest in the Employer and who
receives income for personal services from the Employer.
1.47 "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.
1.48 "Participant's Account" means the accounts 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.
1.49 "Participant's Combined Account" means the total aggregate amount of each
Participant's Elective Account, Qualified Non-Elective Account,
Participant's Account and Participant's Rollover Account (if applicable).
1.50 "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.
1.51 "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.
1.52 "Plan" means this instrument including all amendments thereto, and the
Adoption Agreement as adopted by the Employer.
1.53 "Plan Year" means the Plan's accounting year as specified in C2 of the
Adoption Agreement.
1.54 "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 fifty percent (50%) of the Participant's Vested
interest in the Plan as of the date of death.
1.55 "Qualified Non-Elective Account" means the Employer's contributions to the
Plan that are made pursuant to Section 4.1(d), Section 4.6(c) and Code
Section 1.1401(k)-1(b)(5) 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
Page 11 of 93
addition, the Employer's contributions to the Plan that are made pursuant
to Section 4.8(i) and comply with Code Section 1.401(k)-1(b)(5) 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 periodically.
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 (in accordance with Section 6.1 hereof).
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 twelve (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 the 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 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.
Page 12 of 93
1.68 "Top Paid Group" shall be determined pursuant to Code Section 414(q) and
the Regulations thereunder and generally means the top twenty percent (20%)
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 seventeen and one-half (171/2)
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 twenty-one (21).
In addition, if ninety percent (90%) 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.
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 twelve (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 Act, 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 A3 of the Adoption Agreement
and any successors trustees.
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.
Page 13 of 93
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 during which an Employee has completed at least one-thousand (1,000)
Hours of Service.
For purposes of eligibility for participation, the initial computation
period shall begin with the date on which the Employee first performs an
Hour of Service (employment commencement date). The computation period
beginning after a One-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 one-thousand (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 (2) 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 to
the same extent as if such Years of Service were with the Employer.
Page 14 of 93
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
---------------------------------------
2.1 TOP HEAVY PLAN REQUIREMENTS
The Plan will 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(f) of the Plan, for
any Top Heavy Plan Year.
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) If the employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the employer has
not maintained any defined benefit plan which during the 5-year period
ending on the determination date(s) has or has had accrued benefits,
the top-heavy ratio for this plan alone or for the required or
permissive aggregation group as appropriate is a fraction, the
numerator of which is the sum of the account balances of all key
employees as of the determination date(s) (including any part of any
account balance distributed in the 5-year period ending on the
determination date(s)), and the denominator of which is the sum of all
account balances (including any part of any account balance
distributed in the 5-year period ending on the determination date(s)),
both computed in accordance with Section 416 of the Code and the
regulations thereunder. Both the numerator and denominator of the
top-heavy ratio are increased to reflect any contribution not actually
made as of the determination date, but which is required to be taken
into account on that date under Section 416 of the Code and the
regulations thereunder.
(b) If the employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan) and the employer
maintains or has maintained one or more defined benefit plans which
during the 5-year period ending on the determination date(s) has or
has had any accrued benefits, the top-heavy ratio for any required or
permissive aggregation group as appropriate is a fraction, the
numerator of which is the sum of account balances under the aggregated
defined contribution plan or plans for all key employees, determined
in accordance with (a) above, and the present value of accrued
benefits under the aggregated defined benefit plan or plans for all
key employees as of the determination date(s), and the denominator of
which is the sum of the account balances under the aggregated defined
contribution plan or plans for all participants, determined in
accordance with (a) above, and the present value of accrued benefits
under the defined benefit plan or plans for all participants as of the
determination date(s), all determined in accordance with Section 416
of the Code and the regulations thereunder. The accrued benefits under
a defined benefit plan in both the numerator and denominator of the
top-heavy ratio are increased for any distribution of an accrued
benefit made in the five-year period ending on the determination date.
(c) For purposes of (a) and (b) above the value of account balances and
the present value of accrued benefits will 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 Section
416 of the Code and the regulations thereunder for the first and
second plan years of a defined benefit plan. The account balances and
accrued benefits of a participant (1) who is not a key employee but
who was a key employee in a prior year, or (2) who has not been
credited with at
Page 15 of 93
least one hour of service with any employer maintaining the plan at
any time during the 5-year period ending on the determination date
will be disregarded. The calculation of the top-heavy ratio, and the
extent to which distributions, rollovers, and transfers are taken into
account will be made in accordance with Section 416 of the Code and
the regulations thereunder. Deductible employee contributions will not
be taken into account for purposes of computing the top-heavy ratio.
When aggregating plans the value of account balances and accrued
benefits will be calculated with reference to the determination dates
that fall within the same calendar year.
The accrued benefit of a participant other than a key employee
shall be determined under (a) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans
maintained by the employer, or (b) if there is no such method, as if
such benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Section 411(b) (1) (C) of the
Code.
(d) This Plan would be considered a Super Top Heavy Plan for any Plan Year
beginning after December 31, 1983, in which (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 which include all Key
and Non-Key Employees under this Plan and all plans of an Aggregation
Group.
(e) 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. The adjustment will 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 the
adjustment will also reflect the amount of any contributions made
after the Determination Date that are allocated as of a date in
the 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, the
distributions are not included as distributions for top heavy
purposes to the extent that the distributions are already
included in the Participant's Aggregate Account balance as of the
valuation date. Nevertheless, 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 the Participant's
account balance because of death will 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 will not be considered to be a
part of the Participant's Aggregate Account balance.
Page 16 of 93
(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 will always consider
the rollovers or plan-to-plan transfers as a distribution
for the purposes of this section. If this Plan is the plan
accepting the rollovers or plan-to-plan transfers, it will
not consider the 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
will 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 will not be counted as
a distribution for purposes of this section. If this Plan is
the plan accepting the rollover or plan-to-plan transfer, it
will consider the rollover or plan-to-plan transfer as part
of the Participant's Aggregate Account balance, irrespective
of the date on which the rollover or plan-to-plan transfer
is accepted.
(7) in determining whether 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) shall be treated as the same employer.
(f) "Aggregation Group" means a Required Aggregation Group.
(1) In determining a Required Aggregation Group, 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 (4) preceding Plan Years, and each other qualified
plan of the Employer which enables any qualified plan in
which a Key Employee participants to meet the requirements
of Code Sections 401(a)(4) or 410, will be required to be
aggregated.
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) In determining the 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.
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.
Page 17 of 93
(3) Only those plans of the Employer in which the Determination
Dates fall within the same calendar year will be aggregated
in order to determine whether the 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 will include any terminated plan of the
Employer if it was maintained within the last five (5) years
ending on the Determination Date.
(g) "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
the Plan Year.
(h) In a defined benefit plan, the Present Value of Accrued Benefit for
a Participant (other than a Key Employee) will 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 will be
determined as of the most recent valuation date that falls within
or ends with the twelve (12) month period ending on the
Determination Date, (except as provided in Code Section 416 and the
Regulations for the first and second Plan Years of a defined
benefit plan).
However, any such determination must include the present value
of accrued benefit attributable to any Plan distributions referred
to in Section 2.2(e)(3) above, any Employee contributions referred
to in Section 2.2(e)(4) above or any related or unrelated rollovers
referred to in Sections 2.2(e)(5) and 2.2(e)(6) above.
(i) "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.
(j) The Administrator will determine whether this Plan is a Top Heavy Plan
on the last day of each Plan Year as specified in the Adoption
Agreement. The determination of the top heavy ratio will be in
accordance with Code Section 416 and the Regulations.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer will be empowered to appoint and remove the Trustee and
the Administrator periodically 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.
Page 18 of 93
(b) The Employer will establish a "funding policy and method", i.e., it
will 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 is a more current need, or will
appoint a qualified person to do so. The Employer or its delegate will
communicate the needs and goals to the Trustee, who will coordinate
the Plan needs with its investment policy. The communication of a
"funding policy and method" will not constitute a directive to the
Trustee as to investment of the Trust Funds. The "funding policy and
method" will be consistent with the objectives of this Plan and with
the requirements of Title I of the Act.
(c) The Employer may appoint an Investment Manager to manage all or a
designated portion of the assets of the Plan provided, however that
any such appointment shall be subject to the exclusive benefit rule
provided by Section 401(a)(2) of the Code. In such an event, the
Trustee will follow the directive of the Investment Manager in
investing the assets of the Plan managed by the Investment Manager.
(d) The Employer will 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 . This requirement may be satisfied by formal periodic
review by the Employer or by a qualified person specifically
designated by the Employer.
2.4 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer will appoint an Administrator of this Plan. Any entity or
person, including, but not limited to, the Employees of the Employer, will be
eligible to serve as an Administrator. Any person so appointed will signify his
acceptance by filing written acceptance with the Employer. An Administrator may
resign by delivering his or its 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, or upon delivery to the Administrator if no date is
specified.
The Employer, upon the resignation or removal of an Administrator, will
promptly designate in writing a successor. 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
amongst themselves, in which event the Administrators will notify the Employer
and the Trustee in writing of such action and specify the responsibilities of
each Administrator. The Trustee thereafter will 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. In no
event shall more than one entity be appointed as Administrator at any one time.
Page 19 of 93
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 will administer the
Plan in accordance with its terms and will have the power and discretion to
interpret the terms of the Plan and determine all questions arising in
connection with the administration, interpretation, and application of the Plan.
Any determination by the Administrator will be conclusive and binding upon all
persons. The Administrator may establish procedures, correct any defect, supply
any information, or reconcile any inconsistency in the manner and to the extent
as will be deemed necessary or advisable to carry out the purpose of the Plan;
provided, that any procedure, discretionary act, interpretation or construction
will be done in a nondiscriminatory manner based upon uniform principles
consistently applied and will be consistent with the intent that the Plan will
continue to be deemed a qualified plan under the terms of Code Section 401(a),
and will comply with the terms of the Act and all regulations issued. The
Administrator will have all powers necessary or appropriate to accomplish his
duties under this Plan.
The Administrator will 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 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 entitled to any Participant;
(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 the
rules for regulation of the Plan as is consistent with the terms of
this instrument, or any amendment hereto;
(f) To determine the size and type of any Contract to be purchased from
any Insurer, and to designate the Insurer from which the Contract
will be purchased;
(g) To periodically compute and certify to the Employer and the Trustee
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;
(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 benefits, elections or
rights available under the Plan.
Page 20 of 93
2.7 RECORDS AND REPORTS
The Administrator will keep a record of all actions taken and will keep
all other books of account, records, and other data that may be necessary for
proper administration of the Plan and will 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 considers 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 will
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
the other pertinent facts as the Administrator may require; and the
Administrator will 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 the information as is supplied by the Employer and will have no duty or
responsibility to verify the information.
2.10 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund unless
paid by the Employer. The expenses will 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 cost of
administering the Plan. Until paid, the expenses will constitute a liability of
the Trust Fund. However, the Employer may reimburse the Trust Fund for any
administration expense. Any administration expense paid to the Trust Fund as a
reimbursement will 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 will be more than one
person acting as Administrator, they will 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 will be furnished to
the claimant within ninety (90) days after the application is filed. In the
event the claim is denied, the reasons for the denial will be specifically set
forth in the notice in language calculated to be understood by the claimant,
pertinent provisions of the Plan will be cited, and, where appropriate, an
explanation as to how the claimant can perfect the claim will be
Page 21 of 93
provided. In addition, the claimant will be furnished with an explanation of the
Plan's claims review procedure.
2.13 CLAMS 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
will be entitled to request the Administrator to give further consideration to
his claim by filing with the Administrator a written request for a hearing. The
request, together with a written statement of the reasons why the claimant
believes his claim should be allowed, will be filed with the Administrator no
later than sixty (60) days after receipt of the written notification provided
for in Section 2.12. The Administrator will then conduct a hearing within the
next sixty (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
will have an opportunity to submit written and oral evidence and arguments in
support of his claim. At the hearing (or prior thereto upon five (5) business
days written notice to the Administrator) the claimant or his representative
will have an opportunity to review all documents in the procession 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 an event, a complete written
transcript of the proceedings will be furnished to both parties by the court
reporter. The full expense of any court reporter and transcripts will be borne
by the party causing the court reporter to attend the hearing. A final decision
as to the allowance of the claim will be made by the Administrator within sixty
(60) days of receipt of the appeal (unless there has been an extension of sixty
(60) days due to special circumstances, provided the delay and the special
circumstances occasioning it are communicated to the claimant within the sixty
(60) day period). Said communication will be written in a manner calculated to
be understood by the claimant and will include specific reasons for the decision
and specific references to the pertinent plan provisions on which the decision
is based.
Page 22 of 93
ARTICLE III
ELIGIBILITY
-----------
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee will be eligible to participate on the date he
has satisfied the requirements specified in the Adoption Agreement.
If so elected in the Adoption Agreement, the Month(s) and Day(s)
Service Requirement in D3 of the Adoption Agreement shall be calculated,
regardless of the number of Hours of Service, from the date that the Employee
performs his first Hour of Service to his "separation from service" date. For
this purpose a "separation from service" shall mean the date that an Employee
severs his service by reason of quit, discharge or retirement and the first
anniversary date of a severance from service for any other reason. If the
absence is attributable to maternity or paternity leave, the individual's period
of severance will not begin until the second anniversary of the date the
individual is first absent and does not perform an hour of service.
Additionally, the first year of an absence due to a maternity or paternity leave
will be included in the individual's period of service and the second one year
period will be neither part of the period of service nor part of the period of
severance. If an Employee completes an Hour of Service within a period equal to
the length of the employee's prior service or five years from his separation
from service, all periods of employment shall be aggregated in determining his
eligibility hereunder. Once an employee is vested under the Plan and is
subsequently terminated, he shall immediately again become an Eligible Employee
upon his completion of an Hour of Service subsequent to his separation from
service. The rules herein stated shall be applied consistent with the elapsed
time rules of Regulation ss. 1.410(a)-7, which is hereby incorporated by
reference.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee who has become eligible to be a Participant will
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 will go from a
classification of a non-eligible Employee to an Eligible Employee, the Employee
will 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 will go from a
classification of an Eligible Employee to a non-eligible Employee consequently
becomes ineligible to participate and has not incurred a One-Year Break in
Service, the Employee will participate in the Plan as of the date he returns to
an eligible class of Employees. If the Employee does incur a One-Year Break in
Service, eligibility will be determined under the Break in Service rules of the
Plan.
Page 23 of 93
3.3 DETERMINATION OF ELIGIBILITY
The Administrator will determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer. The
determination will be conclusive and binding upon all persons, as long as the
same is made pursuant to the Plan and the Act. The determination will be subject
to review per Section 2.13.
3.4 TERMINATION OF ELIGIBILITY
In the event a Participant will go from a classification of an Eligible
Employee to an non-eligible Employee, the Former Participant will continue to
vest in his interest in the Plan for each Year of Service completed while a
non-eligible Employee, until the time as his Participant's Account will be
forfeited or distributed pursuant to the terms of the Plan. Additionally, his
interest in the Plan will 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 submit the error to the Internal Revenue Service VCO Program
for correction.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any persons who should not have been included as
a Participant in the Plan is erroneously included and discovery of the incorrect
inclusion is not made until after a contribution for the year has been made, the
Employer shall submit the error to the Internal Revenue Service VCO Program for
correction.
Page 24 of 93
ARTICLE IV
CONTRIBUTION AND ALLOCATION
---------------------------
4.1 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION
For each Plan Year, the Employer will 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 will be
deemed an Employer's Elective Contribution, plus
(b) A Matching Contribution equal to the percentage specified in H1 of
the Adoption Agreement of the Deferred Compensation of each
Participant eligible to share in the allocations of the Matching
Contribution, which will be deemed an Employer's Non-Elective or
Elective Contribution as selected, plus
(c) A discretionary amount, if any, which will be deemed an Employer's
Non-Elective Contribution (if specified in I1 of the Adoption
Agreement), plus
(d) A Qualified Non-Elective Contribution (if specified in I3 of the
Adoption Agreement).
(e) Nevertheless, the Employer's contributions for any Fiscal Year will
not exceed the maximum amount allowable as a deduction to the
Employer under the provisions of Code Section 404. Contributions by
the Employer will be made in cash.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer a portion of 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 the election, or if later, the latest of the date the
Employer adopts this cash or deferred arrangement, or the date the
arrangement first became effective. Any elections made pursuant to
this section will 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 the Plan Year
all or a portion of any cash bonus attributable to services
performed by the Participant for the Employer during the Plan Year
and which would have been received by the Participant on or before
two and one-half (21/2) 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 the 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 (21/2) months after the
close of the Plan Year will be subjected to whatever deferral
election is in effect at the time the cash bonus would have
otherwise been received.
Page 25 of 93
The amount by which Compensation and/or cash bonuses are
reduced will 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
will 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 will be fully
Vested at all time and will 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 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 (12) months after distribution of all assets from the
Plan maintained by the Employer or a SIMPLE IRA Plan (defined
in ss.408(p) of the Code).
(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 the 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 the 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
will not exceed the limitation imposed by Code Section 402(g), as
in effect for the calendar year in which the Plan Year began. These
dollar limitations will be adjusted annually pursuant to the method
provided in Code Section 415(d) in accordance with Regulations.
In any Plan Year beginning after December 31, 2001, a Participant's
Deferred Compensation made under this Plan and all other plans,
contracts or arrangements of the Employer maintaining this Plan
will not exceed the limitations imposed by Code Sections 402(g) and
414(v), as in effect for the calendar year in which the Plan Year
began. These dollar
Page 26 of 93
limitations will 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 the Participant will 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) will 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 the 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.
For Plan Years beginning after December 31, 2001 the suspension
period of twelve (12) months as stated above will be reduced to six
(6) months.
(f) If a Participant's Deferred Compensation under this Plan together
with any elective deferrals (as defined in Code Section 401(k)),
a simplified employee pension (as defined in Code Section
408(k)), a simple retirement account (as defined in Code Section
408(p)), a salary reduction arrangement (within the meaning of
Code Section 3121(a)(5)(D)), a deferred compensation plan under
Code Section 457, or a trust described in Code Section 501(c)(18)
cumulatively exceed the limitation imposed by Code Section 402(g)
(as adjusted annually in accordance with the method provided in
Code Section 415(d) pursuant to Regulations) for the
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 the excess and request that his
Deferred Compensation under this Plan be reduced by an amount
specified by the Participant. In the event, the Administrator
will direct the Trustee to distribute the excess amount (and any
Income allocable to the excess amount) to the Participant not
later than the first April 15th following the close of the
Participant's taxable year. Any distribution of less than the
entire amount of Excess Deferred Compensation and Incom e will be
treated as a pro rata distribution of Excess Deferred
Compensation and Income. The amount distributed will 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 will 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.
Elective Deferrals shall not include any deferrals properly
distributed as excess annual additions.
The definition of "Income" means the amount of income or loss
allocable to a Participant's Excess Deferred Compensation and will
be equal to the sum of the allocable gain or loss for 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
Page 27 of 93
distribution ("gap period"). The income or loss allocable to each
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 the total amount for the respective
period and increased by the loss allocable to the 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 the "safe harbor method",
allocable income or loss for the "gap period" will 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 (15th) of the month will be treated as having been
made on the last date of the preceding month and a distribution
occurring after the fifteenth (15th) day will 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 will be calculated from the first day of the
taxable year of the Participant to the date on which the
distribution is made pursuant to either the "fractional method" or
the "safe harbor method".
It should be noted that for the 1987 calendar year, the Income
during the "gap period" will not be taken into account.
(g) Notwithstanding Section 4.2(f) above, a Participant's Excess
Deferred Compensation will be reduced, but not below zero, by any
distribution 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 any other date when the Participant
will be entitled to receive benefits, the fair market value of the
Participant's Elective Account will 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 the time
as the allocations pursuant to Section 4.4 have been made. The
accounts must be part of the Trust Fund.
(j) The Employer and the Administrator will adopt a procedure necessary
to implement the salary reduction elections provided for herein.
4.3 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTIONS
The Employer will 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.
Page 28 of 93
However, Employer Elective Contributions accumulated through payroll
deductions will be paid to the Trustee as of the earliest date on which the
contributions can reasonably be segregated from the Employer's general assets,
but in any event within fifteen (15) business days of the month following the
month in which the amounts would otherwise have been payable to the Participant
in cash. [The provisions of the Department of Labor Regulation 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 will be paid to the Plan no later than the twelve-month (12) period
immediately following the close of the Plan Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator will establish and maintain an account in the
name of each Participant to which the Administrator will credit as
of each Anniversary Date, or other valuation date, all amounts
allocated to each such Participant as set forth in the Adoption
Agreement and herein.
(b) The Employer will 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
the information, the Administrator will allocate the 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 the 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 elected in H of the Adoption
Agreement, in accordance with Section 4.1(b).
(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 I1 of the Adoption
Agreement.
However, if an integrated allocation formula is selected at I2
of the Adoption Agreement, then the Employer's Non-Elective
contribution will be allocated to each Participant's Account in an
amount equal to 5.7% of the sum of each Participant's Compensation
plus Excess Compensation. If the Employer does not contribute this
amount for all Participants, each Participant will be allocated a
share of the contribution in the same proportion that his
Compensation plus his Excess Compensation for the Plan Year bears to
the total Compensation plus the total Excess Compensation of all
Participants eligible to share in the allocation for that Plan Year.
The balance of the contribution, if any, will be allocated in the
same proportion that each Participant's Compensation bears to the
total Compensation of all Participant's eligible to share in the
allocation.
Notwithstanding the above, Employer contributions will first
be allocated to each Participant in such amount as is necessary to
meet the requirements of subsection 4.4(f) hereof for any Top Heavy
Plan Year (within the meaning of Section 2.2 hereof).
Page 29 of 93
Regardless of the preceding, 4.3% will 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% will 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 the Participant's Compensation
for the year bears to the total Compensation of all
Participants for the year.
A Participant will share in the allocation of the 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
will be allocated in the same proportion that each Participant's
and Former Participant's non-segregated accounts bear to the total
of all Participants' and Former Participants' non-segregated
accounts as of the date. If any non-segregated 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 will be credited to the account.
(d) Participants' Accounts will be debited for any insurance or annuity
premiums paid, of 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 will first be made available to
reinstate previously forfeited account balances for 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, will
be treated in accordance with the Adoption Agreement. Provided,
however, that in the event the allocation of Forfeitures provided
herein will cause the "annual addition" (as defined in Section
4.9) to any participant's Account to exceed the amount allowable
under Code Section 415, the excess will be reallocated in
accordance with Section 4.10. A Participant who performs less
than a Year of Service during any Plan Year will 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: Notwith-
standing 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 will be
equal to at least three percent (3%) of the 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,
Page 30 of 93
if (i) the sum of the Employer's contributions and Forfeitures
allocated to the Participant's Combined Account of each Key Employee
for the 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 will be equal to the largest percentage allocated
to the Participant's Combined Account of any Key Employee. However,
in determining whether a Non-Key Employee has received the required
minimum allocation, the 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) will not be taken
into account.
If this is an integrated Plan, then for any Top Heavy Plan
Year the Employer's contribution will be allocated as follows:
(1) An amount equal to three percent (3%) multiplied by each
Participant's Compensation for the Plan Year will be allocated
to each Participant's Account. If the Employer does not
contribute the amount for all Participants, the amount will 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 the year.
(2) The balance of the Employer's contribution over the amount
allocated under subparagraph (1) hereof will be allocated to
each Participant's Account in a dollar amount equal to three
percent (3%) multiplied by a Participant's Excess
Compensation. If the Employer does not contribute the 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 of that year.
(3) The balance of the Employer's contribution over the amount
allocated under subparagraph (2) hereof will 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
the 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% will 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% will be substituted for 2.7% above.
(4) The balance of the Employer's contributions over the amount
allocated above, if any, will 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 the 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 three percent (3%) allocation specified above
will be provided as specified in M3 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 will be equal to the ratio of the sum of the
Employer's contributions and Forfeitures allocated on behalf of the
Key Employee divided by the "415 Compensation" for the Key
Employee.
(h) For any Top Heavy Plan Year, the minimum allocations set forth
above will be allocated to the Participant's Combined Account of
all Non-Key Employees who are Participants and who are
Page 31 of 93
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 will 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 will be provided as
follows:
Applies if the second election of M1 of the Adoption Agreement is selected.
(1) The requirements of Section 2.1 will 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 will receive a minimum allocation of five percent
(5%) of the Participant's "415 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-intergrated benefit in the Defined Benefit Plan equal to
2% of his highest five (5) 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
(10).
(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 the ultimate election of M1 of the Adoption Agreement is
selected.
(4) The minimum allocation specified in Section 4.4(i)(1) will 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) will 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) will 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" will be
limited to $150,000, (unless adjusted in the manner as permitted
under Code Section 415(d)). However, for Plan Years beginning prior
to January 1, 1989, the $150,000 limit will apply only for Top
Heavy Plan years and will not be adjusted.
(k) Notwithstanding anything herein to the contrary, participants who
terminated employment during the Plan Year will share in the salary
reduction contributions made by the Employer for the year of
termination without regard to the Hours of Service.
(l) Notwithstanding anything herein to the contrary, (other than
Sections 4.4(k) and 6.6(h)(1)), any Participant who terminated
employment with 500 or less Hours of Service during the Plan
Page 32 of 93
Year, for reasons other than death, Total and Permanent
Disability, or retirement will 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
Contributions made pursuant to Section 4.1(d), and Forfeitures
(for Plan Years beginning after 1989). Any Terminated Participant
with more than 500 Hours of Service during the Plan Year will
share in the allocations regardless of whether they completed a
Year of Service during the Plan Year, unless otherwise elected by
the Employer.
(m) If a Former Participant is re-employed after five (5) consecutive
1-Year Breaks in Service, then separate accounts will be maintained
as follows:
(1) one account for nonforfeitable benefits attributable to
pre-break service; and
(2) one account representing his status in the Plan attributable
to post-break service.
(n) A participant is treated as benefiting under the plan for any plan
year during which the participant received or is deemed to receive
an allocation in accordance with Internal Revenue Code Regulation
Section 1.410 (b) - 3 (a).
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) The Maximum Annual Allocation for each Plan Year beginning after
December 31, 1986 is the annual allocation derived from Employer
Elective Contributions and Qualified Non-Elective Contributions to
a Participant's Elective Account and Qualified Non-Elective Account
which will satisfy one of the following tests:
(1) The "Actual Deferral Percentage" for the Highly Compensated
Participant group will 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
will not be more than two percentage points. Additionally, the
"Actual Deferral Percentage" for the Highly Compensated
Participant group will not be more than the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant group
multiplied by two (2). (The provisions of Code Section
401(k)(3) and Regulation 1.401(k)-1(b) are incorporated herein
by reference.)
In any event, 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
Affiliated Employer will have his actual contribution ratio
reduced pursuant to Regulation 1.401(m)-2.
For this section, "Non-Highly Compensated Employee" means a
Participant who is not a Highly Compensated Employee for the
Plan Year.
(b) For this section, the "Actual Deferral Percentage" means, with
with respect to the Highly Compensated Participant group and
Non-Highly Compensated Participant group for a Plan
Page 33 of 93
Year, the average of the ratios, calculated separately for each
Participant in the group, of the amount of Employer Elective
Contributions and Qualified Non-Elective Contributions allocated to
each Participant's Elective Account and Qualified Non-Elective Account
for the Plan Year, to the Participant's "414(s) Compensation" for the
Plan Year; provided, however that except for the first Plan Year, the
"Actual Deferral Percentage" for the Non-Highly Compensated
Participant group for a given Plan Year shall be determined as of the
preceding 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, will 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 will be reduced
by Excess Deferred Compensation to the extent such excess amounts are
made under this Plan or any other plans maintained by the Employer.
The "Actual Deferral Percentage", for Plan Years beginning after
December 31, 1996, will, at the sponsoring employer's one time
election, use a percentage of deferrals for the Non-Highly Compensated
Participants from the Plan Year prior to the determination year or the
Non-Highly Compensated Participants deferral percentage in the
determination year. Once an election has been made it can only be
changed with the consent of the Secretary of the Treasury. Under
transition relief, a sponsoring employer may make the election to use
current year data for the 1997 Plan Year and prior year data in 1998
without receiving approval from the Internal Revenue Service pursuant
to Section 1433 of the Small Business Job Protection Act of 1996.
For Plans Years beginning after December 31, 1996, the sponsoring
employers will use either the current year information or a three
percent (3%) Non-Highly Compensated deferral rate for determining the
"Actual Deferral Percentage" for the initial Plan Year.
(c) Solely with respect to Plan Years commencing before January 1,
1997, for determining the actual deferral ratio of the Highly
Compensated Participant who is subject to the Family Member
aggregation rules of Code Section 414(q)(6), if the Participant is
either a "five percent owner" of the Employer or one of the ten
(10) Highly Compensated Employees paid the greatest "415
Compensation" during the year, the following will apply:
(1) The combined actual deferral ratio for the family group (which
will be treated as one Highly Compensated Participant) will be
the greater of: (i) the ratio determined by aggregating
Employer Elective Contributions plus Qualified Non-Elective
Contributions by "414(s) Compensation" of all eligible Family
Members who are Highly Compensated Participants without regard
to family aggregation; and (ii) the ratio determined by
aggregating Employer Elective Contributions and "414(s)
Compensation" of all eligible Family Members (including Highly
Compensated Participants). However, in applying the $150,000
limit to "414(s) Compensation" for Plan Years beginning after
December 31, 1993, Family Members will include only the
affected Employee's spouse and any lineal descendants who have
not attained age nineteen (19) before the end of the Plan
Year.
(2) The Employer Elective Contributions and "414(s) Compensation"
of all Family Members will 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.
Page 34 of 93
(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) As it pertains to Section 4.5(a) and 4.6, a Highly Compensated
Participant and a Non-Highly Compensated Participant will include
any Employee eligible to make a deferral election (pursuant to
Section 4.2), whether or not the deferral election was made or
suspended.
(e) For 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 410(b)(2)(A)(ii) as
in effect for Plan Years beginning after December 31, 1988), the
cash or deferred arrangements included in the plans will 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 the programs satisfy
Code Sections 401(a)(4), 410(b) and 401(k). In any case, the cash
or deferred arrangements included in the plans and the plans
including such arrangements will 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 Year and use the same testing
method.
Furthermore, for Plan Years beginning after December 31, 1988,
an Employee Stock Ownership Plan (ESOP) 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 benefits 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 another Employee Stock Ownership Plan as defined
in Code Section 4975(e)(7) for Plan Years beginning after
December 31, 1988) of the Employer or an Affiliated Employer, all
the cash or deferred arrangements will be treated as one cash or
deferred arrangement for the sole purpose of determining the
actual deferral ratio with respect to the Highly Compensated
Participant. However, for Plan Years beginning after December 31,
1988, if the cash or deferred arrangements have different Plan
Years, this paragraph will 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, the Administrator
will adjust Excess Contributions pursuant to the following procedures:
(a) With respect to Plan Years beginning after December 31, 1996, on
or before the fifteenth (15th) day of the third (3rd) month
following the end of each Plan Year, the Administrator will
calculate a total distribution from the Plan to the Highly
Compensated Participant having the highest actual deferral ratio
Page 35 of 93
as though his portion of Excess Contributions were distributed to
him until tests set forth in Section 4.5 would be 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 will continue until one of
the tests set forth in Section 4.5 would have been satisfied. The
Administrator will then distribute or recharacterized pursuant to
Section 4.12 (if so permitted by the Adoption Agreement) the
total calculated distribution to the Highly Compensated
Participants having the greatest dollar amount of elected
contributions and Qualified Non-Elective Contributions at his
election distributed or recharacterized until the entire amount
of the calculated distribution has been distributed or, or until
his dollar amount of Elective Contributions and Qualified
Non-Elective Contributions equals the amount of Elective
Contributions and Qualified Non-Elective Contributions of the
Highly Compensated Participant having the second greatest dollar
amount of elected contributions and Qualified Non-Elective
Contributions. This process will continue until the entire amount
of the calculated distribution has been distributed. 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, the amount will be
reduced by any Excess Deferred Compensation previously
distributed to the affected Highly Compensated Participant for
his taxable year ending with or within the Plan Year. Any
distribution and/or recharacterization of Excess Contributions
will be made in accordance with the rules hereinafter set forth
in this section.
(1) With respect to the distribution of Excess Contributions
pursuant to (a) or (b) of this section, the distribution:
(i) may be postponed but not later than the close of the
Plan Year following the Plan Year to which they are
allocable;
(ii) will be made first from unmatched Deferred
Compensation and, thereafter, simultaneously from
Deferred Compensation which is matched and Matching
Contributions which relate to the Deferred
Compensation. However, any Matching Contributions
(whether or not otherwise vested) will be deemed
non-vested and will be forfeited in lieu of being
distributed;
(iii) will be made from Qualified Non-Elective Contributions
only to the extent that Excess Contributions exceed
the balance in the Participant's Elective Account
attributable to Deferred Compensation and Employer
Matching Contributions;
(iv) will be adjusted for Income; and
(v) will 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) and (b) of this section, the recharacterized
amounts:
(i) will be deemed to have occurred on the date on which
the last of the Highly Compensated Participants with
Excess Contributions to be recharacterized is notified
of the recharacterization and the tax consequences of
the recharacterization;
(ii) will not exceed the amount of Deferred Compensation on
behalf of any Highly Compensated Participant for any
Plan Year;
Page 36 of 93
(iii) will be treated as voluntary Employee contributions
for purposes of Code Section 401(a)(4) and Regulations
1.401(k)-1(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
will continue to be nonforfeitable and subject to the
same distribution rules provided for in Section 4.2
and 6.11;
(iv) are not permitted if the amount recharacterized plus
voluntary Employee contributions actually made by the
Highly Compensated Participant, exceed the maximum
amount of voluntary Employee contributions (determined
prior to application of Section 4.7(a)) that the
Highly Compensated Participant is permitted to make
under the Plan in the absence of recharacterization;
(v) will be adjusted for Income.
(3) For Sections (a) and (b) of this section any distribution
and/or recharacterization of less than the entire amount of
Excess Contributions will be treated as a pro rata
distribution and/or recharacterization of Excess Contributions
and Income.
(b) With respect to Plan Years beginning after December 31, 1986 and prior
to January 1, 1997, on or before the fifteenth (15th) day of the third
(3rd) month following the end of each Plan Year, the Highly
Compensated Participants having the highest actual deferral ratio will
have his portion of Excess Contributions distributed to him and/or,
(if so permitted by the Adoption Agreement) 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 will 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 the 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, the
amount will be reduced by any Excess Deferred Compensation previously
distributed to the affected Highly Compensated Participant for his
taxable year ending with or within the Plan Year. Any distribution
and/or recharacterization of Excess Contributions will be made in
accordance with the rules hereinafter set forth in Section
4.6(a)(1)-(3).
The determination and correction of Excess Contributions of
a Highly Compensated Participant whose actual deferral ratio is
determined under the family aggregation rules will be accomplished
as follows:
(1) If the actual deferral ratio for the Highly Compensated
Participant is determined in accordance with Section
4.5(c)(1)(ii), then the actual deferral ratio will be reduced
as required herein and the Excess Contributions of the family
unit will be allocated amount
Page 37 of 93
the Family Members in proportion to the Elective Contributions
of each Family Member that were combined to determine the
group actual deferral ratio.
(2) If the actual deferral ratio for the Highly Compensated
Participant is determined under Section 4.5(c)(1)(i), then the
actual deferral ratio will first be reduced as required
herein, but not below the actual deferral ratio of the group
of Family Members who are not Highly Compensated Participants
without regard to family aggregation. The Excess Contributions
resulting from this initial reduction will be allocated (in
proportion to Elective Contributions) among the Highly
Compensated Participants whose Elective Contributions were
combined to determine the actual deferral ratio. If further
reduction is still required, then Excess Contributions
resulting from this further reduction will be determined by
taking into account the contributions of all Family Members
and will be allocated among them in proportion to their
respective Elective Contributions.
(c) In lieu of the aforesaid procedures, if so provided in the Adoption
Agreement, the Employer may elect within twelve (12) months after
the end of the Plan Year, to 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). The contribution will be allocated to 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.
(d) For purposes of this section, "Income" means the income or loss
allocable to Excess Contributions which will equal the sum of the
allocable gain or loss for the Plan Year and the allocable gain
or loss for the period between the end of the Plan Year and the
date of distribution ("gap period"). The income or loss allocable
to Excess Contributions for the Plan Year and the "gap period" is
calculated separately and is determined by multiplying the income
or loss for the Plan Year or the "gap period" by a fraction. The
numerator of the fraction is the Excess Contributions for the
Plan Year. The denominator of the fraction is the total of the
Participant's Elective Account attributable to Elective
Contributions and the Participant's Qualified Non-Elective
Account as of the end of the Plan Year or the "gap period",
reduced by the gain allocable to the total amount for the Plan
Year or the "gap period" and increased by the loss allocable to
the 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 the "safe harbor method", allocable Income
for the "gap period" will 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 (15th) day of the month will be treated as having
been made on the last day of the preceding month and a distribution
occurring after the fifteenth (15th) date will be treated as having
been made on the first date of the next subsequent month.
(e) Any amounts not distributed or recharacterized within two and
one-half (21/2) months after the end of the Plan Year will be
subject to the ten percent (10%) Employer excise tax imposed by
Code Section 4979.
Page 38 of 93
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 will not exceed
the greater of:
(1) one-hundred and twenty-five percent (125%) of the percentage
for the Non-Highly Compensated Participant group; or
(2) the lesser of two-hundred percent (200%) of the percentage for
the Non-Highly Compensated Participant group, or the
percentage for the Non-Highly Compensated Participant group
plus two percentage (2%) points. However, for Plan Years
beginning after December 31, 1988, to prevent the multiple use
of the alternative method described in this paragraph and Code
Section 401(m)(9)(A), any Highly Compensated Participant
eligible to make elective deferrals pursuant to Section 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 will
have his actual contribution ratio reduced pursuant to
Regulation 1.401(m)-2. The provisions of Code Section 401(m)
and Regulations 1.401(m)-1(b) and 1.401(m)-2 are incorporated
herein by reference.
For this section, "Non-Highly Compensated Employee" means a
Participant who is not a Highly Compensated Employee for the Plan
Year.
(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 Participant of the Plan Year or Prior;
to
(2) the Participant's "414(s) Compensation" for the Year.
The "Actual Contribution Percentage" in Section 4.7(b), for Plan
Years beginning after December 31, 1996, will, at the sponsoring
employer's one time election, use a percentage of deferrals for the
Non-Highly Compensated Participants from the Plan Year prior to the
determination year or the Non-Highly Compensated Participants
contribution percentage in the determination year. Once an election
has been made it can only be changed as provided by the Secretary
of the Treasury. Under transition relief, a sponsoring employer may
make the election to use current year data for the 1997 Plan Year
and prior year data in 1998 without receiving approval from the
Internal Revenue Service pursuant to Section 1433 of the Small
Business Job Protection Act of 1996.
Page 39 of 93
For Plan Years beginning after December 31, 1996, the
sponsoring employers will use either the current year information
or a three percent (3%) Non-Highly Compensated deferral rate for
determining the "Actual Contribution Percentage" for the initial
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 will 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. The elective
deferrals and qualified non-elective contributions will be
treated as Employer Matching Contributions subject to Regulation
1.401(m)-1(b)(5) 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) With respect to Plan Years commencing prior to January 1, 1997, 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 the Employee is
either a "five percent owner" of the Employer or one of the ten
(10) Highly Compensated Employees paid the greatest "415
Compensation" during the year, the following will apply:
(1) The combined actual contribution ratio for the family group
(which will be treated as one Highly Compensated Participant)
will be the greater of: (i) 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 who are Highly
Compensated Participants without regard to family aggregation;
and (ii) 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 $150,000 limit to "414(s)
Compensation" for Plan Years beginning after December 31,
1993, Family Members will 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 will 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.
Page 40 of 93
(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), 401(m)
and 410(b), 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), the plans will 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 the plans satisfy Code Sections 401(a)(4), 401(m) and
410(b) as though the 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 and use the same testing method.
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),
401(m) and 410(b).
(f) If a Highly Compensated Participant is a Participant under two or
more plans (other than an employee stock ownership plan as defined
in Code Section 4975(e)(7) for Plan Years beginning after December
31, 1988) which are maintained by the Employer of an Affiliated
Employer to which Matching Contributions, Employee contributions,
or both, are made, all the contributions on behalf of the Highly
Compensated Participant will be aggregated for purposes of
determining the 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 will be applied by treating all plans ending with or
within the same calendar year as a single plan.
(g) For purposes of Section 4.7(a) and 4.8, a Highly Compensated
Participant and a Non-Highly Compensated Participant will 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 Contribution" will 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 the 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 and
prior to January 1, 1997, the "Actual Contribution Percentage" for the
Highly Compensated Participants group exceeds the "Actual Contribution
Percentage" for the Non-Highly Compensated Participant
Page 41 of 93
group pursuant to Section 4.7(a), the Administrator (on or before the
fifteenth (15th) day of the third (3rd) month following the end of the
Plan Year, but in no event later than the close of the following Plan
Year) will 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, forfeit 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 will continue
until one of the tests set forth in Section 4.7(a) is satisfied. The
distribution and/or Forfeiture of Excess Aggregate Contributions will
be made in the order set forth below :
(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) In the event that for Plan Years beginning after December 31, 1996,
the "Actual Contribution Percentage" for the Highly Compensated
Participants 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 (15th) day of
the third (3rd) month following the end of the Plan Year, but in no
event later than the close of the following Plan Year) will calculate
a total distribution from the Plan. The calculation uses the Highly
Compensated Participant having the highest actual contribution ratio,
and will reduce his portion of Excess Aggregate Contributions (and
Income allocable to such contributions) or, forfeit Excess Aggregate
Contributions attributable to Employer Matching Contributions (and
Income allocable to such Forfeitures) as though it was distributed to
him until either one of the tests set forth in Section 4.7(a) would be
satisfied, or until his actual contribution ratio equals the actual
contribution ratio of the Highly Compensated Participant having the
second highest actual contribution ratio. The distribution calculation
will be continued until one of the tests set forth in Section 4.7(a)
would be satisfied. The Administrator will then direct the Trustee to
distribute the calculated distribution to the Highly Compensated
Participant whose total Employer Matching Contributions and Voluntary
Employee contributions is the greatest in dollar amount, his portion
of Excess Aggregate Contributions (and Income allocable to such
contributions), or forfeit Excess Aggregate Contributions attributable
to Employer Matching Contributions (and Income allocable to such
Forfeitures) until the entire amount of the calculated distribution
has been distributed or until the dollar amount of the sum of his
Employer Matching Contributions and Voluntary Employee contributions
equals said dollar amount of the Highly Compensated Participant having
the second greatest dollar amount. This process will continue until
the entire amount of the calculated distribution has been distributed.
The distribution and/or Forfeiture of Excess Aggregate Contributions
will be made in the order set forth below:
(1) Voluntary Employee contributions including Excess
Contributions recharacterized as voluntary Employee
contributions pursuant to Section 4.6(a)(2);
(2) Remaining Employer Matching Contributions.
(c) Any distribution or Forfeiture of less than the entire amount of
Excess Aggregate Contributions and Income will be treated as a pro
rata distribution of Excess Aggregate
Page 42 of 93
Contributions and Income. Distribution of Excess Aggregate
Contributions will be designated by the Employer as a
distribution of Excess Aggregate Contributions and Income.
Forfeitures of Excess aggregate Contributions will be treated in
accordance with Section 4.4. However, no Forfeiture may be
allocated to a Highly Compensated Participant whose contributions
are reduced pursuant to this section.
(d) Excess Aggregate Contributions, including forfeited Matching
Contributions, will be treated as Employer contributions for
purposes of Code Sections 404 and 415 even if distributed from the
Plan.
(e) 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 the Plan Year,
over
(2) the maximum amount of contributions permitted under the
limitations of Section 4.7(a).
(f) 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 after 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 will
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 the Highly Compensated Participant
for the Plan Year.
(g) The determination of the amount of Excess Aggregate Contributions
with respect to any Plan Year will be made after determining excess
Deferrals under Code Section 402(g) and the Excess Contributions
under Code Section 401(k) per Section 7.01 and Code Section
401(m)(6)(d), 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).
Page 43 of 93
(h) For Plan Years commencing prior to January 1, 1997, the
determination and correction of Excess Aggregate Contributions of a
Highly Compensated Participant whose actual contribution ratio is
determined under the family aggregation rules will be accomplished
as follows:
(1) If the actual contribution ratio for the Highly Compensated
Participant is determined in accordance with Section
4.7(d)(1)(ii), then the actual contribution ratio will be
reduced and the Excess Aggregate Contributions for the family
unit will 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 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) of
each Family Member that were combined to determine the group
actual contribution ratio.
(2) If the actual contribution ratio for the Highly Compensated
Participant is determined under Section 4.7(d)(1)(i), then the
actual contribution ratio will first be reduced, as required
herein, but not below the actual contribution ratio of the
group of Family Members who are not Highly Compensated
Participants without regard to family aggregation. The Excess
Aggregate Contributions resulting form this initial reduction
will be allocated among the Highly Compensated Participants
whose 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) were
combined to determine the actual contribution ratio. If
further reduction is still required, then Excess aggregate
Contributions resulting from this further reduction will be
determined by taking into account the contributions of all
Family Members and will be allocated among them in proportion
to their respective 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).
(i) 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 any amount sufficient to satisfy one of the tests
set forth in Section 4.7(a). The contribution will 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 will be maintained for the purpose of excluding
the contributions from the "Actual Deferral Percentage" tests
pursuant to Section 4.5(a).
(j) For purposes of this section, "Income" means the income or loss
allocableto Excess Aggregate Contributions which will 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
Page 44 of 93
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 the
total amount for the Plan Year or the "gap period" and increased by
the loss allocable to the total amount for the Plan Year of 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 the "safe harbor method", allocable Income for this "gap period" will
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 accruing on or before the fifteenth (15th) day of the month
will be treated as having been made on the last day of the preceding month
and a distribution occurring after the fifteenth (15th) date will be
treated as having been made on the first (1st) day of the next subsequent
month.
The Income allocable to Excess Aggregate Contributions resulting from
recharacterization of Elective Contributions will be determined and
distributed as if recharacterized Elective Contributions had been
distributed as Excess Contributions.
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, or a simplified
employee pension, as defined in Section 408(k) of the Code,
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 will not
exceed the lesser of the Maximum Permissible Amount or any
other limitation contained in this Plan. If Employer
contributions, and for plan years commencing after 1997,
Salary Deferral Contributions under Code Section 401(k), 457
and 125, 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.
Page 45 of 93
(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(a)(2) or as a result of the
allocation of Forfeitures, there is an Excess Amount, the
excess will be disposed of as follows:
(i) Any Elective Contributions, which are deemed to be
excess annual additions, will be returned to the
participant. If an Excess amount still exists, then any
nondeductible Voluntary Employee Contributions, to the
extent they would reduce the Excess Amount, will be
returned 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 the 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(e))
maintained by the Employer, or an individual medical account
(as defined in Code Section 415(1)(2)) maintained by the
Employer, or a simplified employee pension 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
Limitation Year will 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, welfare benefit funds,
individual medical accounts, and simplified employee
pensions in the aggregate 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 the
plans and welfare benefit funds for the Limitation Year will
equal the Maximum Permissible
Page 46 of 93
Amount. If the Annual Additions with respect to the
Participant under 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 as a result of the
allocation of Forfeitures, a Participant's Annual Additions
under this Plan and 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) With respect to Plan Years commencing after December 31, 1999, 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 this 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(c),
403(a)(4), 403(b)(8) and 408(d)(3)); (2) repayments of loans
Page 47 of 93
made to a Participant from the Plan; (3) repayments of
distributions received by an Employee pursuant to Code Section
411(a)(7)(B) (cash-outs); (4) repayments of distributions
received by an Employee pursuant to Code Section 411(a)(3)(D)
(mandatory contributions); and (5) Employee contributions to a
simplified employee pension excludable from gross income under
Code Section 408(k)(6).
(f) For purposes of this section, the following terms will 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 plan 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 are treated
as annual additions to a defined contribution plan and
allocations under a simplified employee pension. For this
purpose, any excess amount applied under Sections 4.9(a)(4) or
4.9(b)(6) in the limitation year to reduce employer
contributions will be considered annual additions for such
limitation year. Except, however, the "415 Compensation"
percentage limitation referred to in paragraph (a)(2) above
will 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 will be
considered an "Annual Addition".
(2) Compensation means a Participant's earned income, wages,
salaries, fees for professional services and other amounts
received for personal services actually rendered in the course
of employment with the Employer maintaining the Plan
(including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, and bonuses)
and excluding the following:
(i) Employer contributions to a plan of deferred
compensation which are not included 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 that contributions are
excludable from the Employee's gross income, or any
distributions from a plan of deferred compensation;
(ii) contributions made by the Employer to a plan of deferred
compensation to the extent that all or a portion of the
contributions are recharacterized as a voluntary
Employee contribution;
Page 48 of 93
(iii) amounts realized from the exercise of a non-qualified
stock option, or when restricted stock (or property)
held by an Employee becomes freely transferable or is no
longer subject to a substantial risk of forfeiture;
(iv) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
(v) other amounts which received special tax benefits, or
contributions made by an Employer (whether or not under
a salary reduction agreement) towards the purchase of an
annuity contract described in Code Section 403(b)
(whether or not the contributions are excludable from
the gross income of the Employee).
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 the 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 Compensation that the
Participant would have received from the Limitation Year if the
Participant had been paid at the rate of Compensation paid
immediately before becoming permanently and totally disabled; for
limitation years beginning before January 1, 1997, the imputed
Compensation for the disabled Participant may be taken into account
only if contributions made on behalf of the Participant are
nonforfeitable when made.
For limitation years beginning after December 31, 1997, for
purposes of applying the limitations of this section 4.9,
compensation paid or made available during such limitation year
shall include any elective deferral (as defined in Code section
402(g)(3)), and any amount which is contributed or deferred by the
employer at the election of the employee and which is not
includible in the gross income of the employee by reason of section
125 or 457.
For limitation years beginning on and after January 1, 2001,
for purposes of applying the limitation described in this section
of the plan, compensation paid or made available during such
limitation years shall include elective amounts that are not
includible in the gross income of the employee by reason of section
132(f)(4).
(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 (125%) of the dollar
limitation determined for the Limitation Year under Code
Sections 415(b) and (d) or 140 percent (140%) 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 (125%) of the sum of the annual benefits under the 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.
Page 49 of 93
Notwithstanding the foregoing, for any Top Heavy Plan Year,
100 will be substituted for 125 unless the extra minimum allocation
is being made pursuant to the Employer's election in M1 of the
Adoption Agreement. However, for any Plan Year in which this Plan
is a Super Top Heavy Plan, 100 will be substituted for 125 in any
event.
(4) Defined Contribution Dollar Limitation means $30,000.
(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), and simplified
employee pensions maintained by the Employer). and the
denominator of which is the sum of the maximum aggregate
amounts for the current and all prior Limitation Years of
Service with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The maximum
aggregate amount in any Limitation Year is the lesser of
one-hundred and twenty-five percent (125%) of the Defined
Contribution Dollar Limitation or thirty-five percent (35%) of
the Participant's Compensation for the year. For Limitation
Years beginning prior to January 1, 1987, the "Annual
Addition" will 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 6,
1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the Defined Benefit Fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the excess
of the sum of the fractions over 1.0 times (2) the denominator
of this fraction, will be permanently subtracted from the
numerator of this fraction. The adjustment is calculated using
the fractions as they would be computed as of the end of the
last Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the
plan made after May 5, 1986, but using the 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 will be substituted for 125 unless the extra minimum
allocation is being made pursuant to the Employer's election
in M1 of the Adoption Agreement. However, for any Plan year in
which this Plan is a Super Top Heavy Plan, 100 will 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 will be determined pursuant to
the modification made by Code Section 415(h).
(7) Excess Amount means the excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible
Amount.
Page 50 of 93
(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 twelve (12) consecutive month period defined
in Section F of the Adoption Agreement which is used to
determine Compensation under the Plan.
(9) Limitation Year means the Compensation Year (a twelve (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 twelve (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, such amount
being equal to the lesser of:
(i) the Defined Contribution Dollar Limitation, or
(ii) 25 percent (25%) of the Participant's "415 Compensation"
for the Limitation Year.
The Compensation Limitation referred to in (ii) above
will 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(e)(1) or 419A(d)(2).
If a short Limitation Year is created because of an amendment
changing the Limitation year to a different 12 consecutive
month period, the Maximum Permissible Amount will not exceed
the Defined Contribution Dollar Contribution multiplied by
the following fraction:
Number of months in the short Limitation Year
---------------------------------------------
Twelve (12)
(12) Projected Annual Benefit means the annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity
if the 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 will at all times comply with the provisions of
Page 51 of 93
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, or other
facts and circumstances to which Regulation 1.415-6(b)(6) will be
applicable, the "Annual Additions" under this Plan would cause the
maximum provided in Section 4.9 to be exceeded, the Administrator
will treat the excess in accordance with Section 4.9(a)(4).
4.11 TRANSFERS FROM QUALIFIED PLANS
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 part, 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 that is equal to at least $500 paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
(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 the 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 will be set
up in a separate account herein referred to as a "Participant's
Rollover Account". The account will be fully Vested at all times
and will not be subject to forfeiture for any reason.
(b) Amounts in a Participant's Rollover Account will 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 will 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 will be entitled to receive benefits, the fair
market value of the Participant's Rollover Account will be used to
provide additional benefits to the Participant or his Beneficiary.
Any distributions of amounts held in a Participant's Rollover
Account will 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, the amounts
will 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
Page 52 of 93
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 "Eligible rollover
distribution" will mean 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 Internal Revenue Code; any hardship
distribution described in section 401(k)(2)(B)(i)(iv) received
after 12-31-98 the portion of any other distribution(s) that is
not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities); and any other distribution(s) that is
reasonably expected to total less than $200 during a year.
(g) For purposes of this section, the term "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.
(h) For purposes of this section, the term "Direct Rollover" will mean
a payment by the plan to the eligible retirement plan specified by
the distributee.
(i) For purposes of this section, the term "Eligible Retirement Plan"
will mean an individual retirement account described in section
408(a) of the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in section
403(a) of the Code, or a qualified plan 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 retirment account or individual retirement
annuity.
(j) The term "amounts transferred from other qualified plans" will
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
the 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 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 the conduit individual
retirement account.
(k) 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
Page 53 of 93
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.
(l) Notwithstanding anything herein to the contrary, a transfer
directly to this Plan from another qualified plan (or a transaction
having the effect of the a transfer) will 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. The contributions will
be paid to the Trustee within a reasonable period of time but in no
event later than the 15th business day of the month following the
month in which the contribution would otherwise have been payable
in cash to the participant.
(b) The balance in each Participant's Voluntary Contribution Account
will be fully Vested at all times and will 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
thereon) which were made on or before a specified date, a
Participant will be permitted to designate which sub-account will
be the source for his withdrawal. No Forfeitures will 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 the Participant will 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 will be entitled to receive benefits, the fair
market value of the Voluntary Contribution Account will 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.
Page 54 of 93
Participants may direct the Trustee in writing to invest their
account in specific assets as permitted by the Administrator
provide the 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 will be established for each
Participant who has directed an investment. Transfers between the
Participant's regular account and their Directed Investment Account
will be charged and credited as the case may be to each account.
The Directed Investment Account will not share in Trust Fund
Earnings, but it will be charged or credited as appropriate with
the net earnings, gains, losses and expenses as well as any
appreciation or depreciation in market value during each Plan Year
attributable to the account.
(c) The Administrator will 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 will 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, will have his contribution held in a
separate Qualified Voluntary Employee Contribution Account which
will be fully Vested at all times. The contributions, however, will
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 will 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 will be entitled to receive benefits, the fair
market value of the Qualified Voluntary Employee Contribution
Account will 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 will 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 maintained qualified
retirement plans integrated with Social Security that any Participant in this
Plan is covered under more than one of the plans, then the plans will be
considered to be one plan and will be considered to be integrated if the extent
of the integration of all the plans does not exceed one-hundred percent (100%).
For purposes of the preceding sentence, the extent of integration of a plan is
the ratio, expressed as a percentage, which the actual
Page 55 of 93
benefits, benefit rate, offset rate, or employer contribution rate, whatever is
applicable, under the Plan bears to the limitation applicable to the Plan. If
the Employer maintains two or more standardized paired plans, only one plan may
be integrated with Social Security.
4.16 SAFE HARBOR PROVISIONS
(a) If the employer has elected the Safe Harbor CODA option in the
adoption agreement, the provisions of this article shall apply
for the Plan Year and any provisions relating to the ADP test
described in ss.401(k)(3) of the Code or the ACP test
described in ss.401(m)(2) of the Code do not apply.
(b) To the extent that any other provision of the plan is
inconsistent with the provisions of this article, the
provisions of this article govern.
(c) "ACP Test Safe Harbor" is the method described in subsection
(I) of this Section 4.16 for satisfying the ACP test of
ss.401(m)(2) of the Code.
(d) "ACP Test Safe Harbor matching Contributions" are Matching
Contributions described in subsection (I) of this Section
4.16.
(e) "ADP Test Safe Harbor" is the method described in subsection
(II) of this Section 4.16 for satisfying the ADP test of
ss.401(k)(3) of the Code.
(f) "ADP Test Safe Harbor Contributions" are Matching
Contributions and nonelective contributions described in
subsection (II) of this Section 4.16.
(g) "Compensation" is defined in 1.10 of the plan, except, for
purposes of this article, no dollar limit, other than the
limit imposed by ss.401(a)(17) of the Code, applies to the
compensation of a Non-highly Compensated Employee. However,
solely for purposes of determining the compensation subject
to a participant's deferral election, the employer may use an
alternative definition to the one described in the preceding
sentence, provided such alternative definition is a reasonable
definition within the meaning of ss.1.414(s)-1(d)(2) of the
regulations and permits each participant to elect sufficient
Elective Deferrals to receive the maximum amount of Matching
Contributions (determined using the definition of compensation
described in the preceding sentence) available to the
participant under the plan.
(h) "Eligible Employee" means an employee eligible to make
Elective Deferrals under the plan for any part of the Plan
Year or who would be eligible to make Elective Deferrals but
for a suspension due to a hardship distribution described in
6.11 of the plan or to statutory limitations, such as
ss.402(g) and 415 of the Code.
(i) "Matching Contributions" are contributions made by the
employer on account of an Eligible Employee's Elective
Deferrals.
(j) Cumulative permitted disparity limit: Effective for plan years
beginning on or after January 1, 1995, the cumulative
permitted disparity limit for a participant is 35 total
cumulative permitted disparity years. Total cumulative
permitted years means the number of years credited to the
participant for allocation or accrual purposes under this
plan, any
Page 56 of 93
other qualified plan or simplified employee pension plan (whether
or not terminated) ever maintained by the employer. For purposes
of determining the participant's cumulative permitted disparity
limit, all years ending in the same calendar year are treated as
the same year. If the participant has not benefited under a
defined benefit or target benefit plan for any year beginning on
or after January 1, 1994, the participant has no cumulative
disparity limit.
I. ADP Test Safe Harbor Contributions
(a) Unless the employer elects in the adoption agreement to make
Enhanced Matching Contributions or Safe Harbor Nonelective
Contributions, the employer will contribute for the Plan Year
a Safe Harbor Matching Contribution to the plan on behalf of
each Eligible Employee equal to (i) 100 percent of the amount
of the employee's Elective Deferrals that do not exceed 3
percent of the employee's Compensation for the Plan Year, plus
(ii) 50 percent of the amount of the employee's Elective
Deferrals that exceed 3 percent of the employee's Compensation
but that do not exceed 5 percent of the employee's
Compensation ("Basic Matching Contributions").
(b) Notwithstanding the requirement in (a) above that the employer
make the ADP Test Safe Harbor Contributions to this plan, if
the employer so provides in the adoption agreement, the ADP
Test Safe Harbor Contributions will be made to the defined
contribution plan indicated in the adoption agreement.
However, such contributions will be made to this plan unless
(i) each employee eligible under this plan is also eligible
under the other plan and (ii) the other plan has the same Plan
Year as this plan.
(c) The participant's accrued benefit derived from ADP Test Safe
Harbor Contributions is nonforfeitable and may not be
distributed earlier than separation from service, death,
disability, an event described in ss.401(k)(10) of the Code,
or, in the case of a profit-sharing plan, the attainment of
age 59 1/2. In addition, such contributions must satisfy the
ADP Test Safe Harbor without regard to permitted disparity
under ss.401(1).
(d) At least 30 days, but not more than 90 days, before the
beginning the Plan Year, the employer will provide each
Eligible Employee a comprehensive notice of the employee's
rights and obligations under the plan, written in a manner
calculated to be understood by the average Eligible Employee.
If an employee becomes eligible after the 90th day before the
beginning of the Plan Year and does not receive the notice for
that reason, the notice must be provided no more than 90 days
before the employee becomes eligible but not later than the
date the employee becomes eligible.
(e) In addition to any other election periods provided under the
plan, each Eligible Employee may make or modify a deferral
election during the 30-day period immediately following
receipt of the notice described in subsection (I)(d) above.
II. ACP Test Safe Harbor Matching Contributions
(a) In addition to the ADP Test Safe Harbor Contributions
described in Section I of this Section 4.16, the employer will
make the ACP Test Safe Harbor Matching Contributions, if any,
indicated in the adoption agreement for the Plan Year.
Page 57 of 93
(b) ACP Test Safe Harbor Matching Contributions will be vested as
indicated in the adoption agreement, but, in any event, such
contributions shall be fully vested at normal retirement age,
upon the complete or partial termination of the plan, or upon
the complete discontinuance of employer contributions.
Forfeitures of nonvested ACP Test Safe Harbor Matching
Contributions will be used to reduce the employer's
contribution.
Page 58 of 93
ARTICLE V
VALUATIONS
----------
5.1 VALUATION OF THE TRUST FUND
The Administrator will direct the Trustee, on each Anniversary Date,
and at such dates deemed necessary by the Administrator, designated as the
"valuation date," to determine the net worth of the assets comprising the Trust
Fund as it exists on the "valuation date." In measuring the net worth, the
Trustee will value the assets in the Trust Fund at their fair market value as of
the "valuation date" and will account for all receivables or liabilities which,
at the valuation date, has not yet been paid to or from the Trust.
5.2 METHOD OF VALUATION
To determine the fair market value of securities held in the Trust
Fund, (which are listed on a registered stock exchange) the Administrator will
direct the Trustee to value the securities at the prices last traded on the
exchange preceding the close of business on the "valuation date." If the
securities were not traded on the "valuation date," or if the exchange on which
they were traded was not open for business on the "valuation date," then the
securities will be valued at the prices last traded prior to the "valuation
date." Any unlisted security held in the Trust Fund will be valued at its bid
price preceding the close of business on the "valuation date." In determining
the fair market value of assets other than securities for which trading or bid
prices can be obtained, the Trustee shall determine the fair market value of
said assets by appraising the assets itself, or in its discretion, hire one or
more appraisers to value the assets.
Page 59 of 93
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
------------------------------------------
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
A Participant shall be fully Vested in his combined account upon the
earlier of his attainment of his Early Retirement Date or his Normal Retirement
Date. Any such Participant may terminate his employment with his Employer and
retire on or after attaining the earlier of his Normal Retirement Date or his
Early Retirement Date. A Participant so retiring shall receive his distribution
pursuant to the provisions of, and in accordance with the elections provided by,
Section 6.5 hereof. A Participant need not retire at either his Normal
Retirement Date or Early Retirement Date but may continue in employment
thereafter. A Participant who so elects to defer his retirement shall continue
to participate hereunder as long as he shall be an Eligible Employee hereunder.
Any such Participant may retire at any time thereafter, the date of such
retirement being known as the "Late Retirement Date." As soon as practicable
after the retirement of a Participant on his Retirement Date, the Administrator
shall cause the distribution to the Participant or his Beneficiary to be made in
accordance with the election of said Participant provided pursuant to Section
6.5 hereof.
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 the
Participant's Combined Account will become fully Vested. The
Administrator will 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 will
direct (in accordance with the provisions of Sections 6.6 and 6.7)
the distribution of any remaining amounts credited to the accounts
of the deceased Former Participant to the Former Participant's
Beneficiary.
(c) The Administrator may call for proper proof of death and the
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 will be final.
(d) The Beneficiary of the Pre-Retirement Survivor Annuity will be the
Participant's spouse, unless otherwise established in Section 6.6.
except that the Participant may designate a Beneficiary other than
his spouse if:
(1) the Participant and his spouse have waived the Pre-Retirement
Survivor Annuity in the manner prescribed in Section 6.6, and
the spouse had waived the right to be the Participant's
Beneficiary, or
(2) a qualified domestic relations order provides that the death
benefit (or any portion thereof) is to be paid to a former
spouse, or
(3) the Participant has no spouse, or
Page 60 of 93
(4) the spouse cannot be located.
In any of the above events, the designation of a Beneficiary
will be made on a form approved by the Administrator. A Participant
may revoke his designation of a Beneficiary or change his
Beneficiary, at any time, by filing written notice of change with
the Administrator. However, the Participant's spouse must 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 this 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 will 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 the insurance coverage
will be limited to the standard rated premium which was or should
have been used for this purpose.
(f) In the event of any conflict between the terms of this Plan and the
terms of any Contract issued, the Plan provisions will 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 employment, all amounts credited to
the Participant's Combined Account will 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), will direct the distribution to
the Participant of all amounts credited to the Participant's Combined Account as
if he had then retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) On or before the Anniversary Date concurrent 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 separate the amount
of the Vested portion of the Terminated Participant's Combined
Account and invest the aggregate amount 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 separated, the amount will 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 share in gains and
losses) and as the amount becomes a Forfeiture it will be treated
in accordance with the provisions of the Plan regarding
Forfeitures.
Regardless of whether distributions 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 directed by the
Administrator and agreed to by the Terminated Participant, will
assign, transfer, and set over to the Terminated
Page 61 of 93
Participant all Contracts on his life in the form or with
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 will
be made on the occurrence of an event which would result in the
distribution if the Terminated Participant remained employed by the
Employer (upon the Participant's death, Total and Permanent
Disability, Early or Normal Retirement). However, at the election
of the Participant, the Administrator will direct the entire Vested
portion of the Terminated Participant's Combined Account to be
payable to the Terminated Participant provided the conditions, if
any, set in the Adoption Agreement have been satisfied. Any
distribution under this paragraph will 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.
However, if the value of a Terminated Participant's Vested
benefit originated from the Employer and Employee contributions
does not exceed and has never exceeded $5,000, the Administrator
may direct the entire Vested benefit to be paid to the Participant
in a single lump-sum without regard to the consent of the
Participant or the Participant's spouse. If an employee would have
received a distribution under the preceding sentence but for the
fact that the employee's vested account balance exceeded $5,000
when the employee terminated service and if at a later time such
account balance is reduced such that it is not greater than $5,000,
the employee will receive a distribution of such account balance
and the nonvested portion will be treated as a forfeiture.
(b) The Vested portion of any Participant's Account will be a
percentage of the Participant's Account determined on the basis of
the Participant's number of Years of Service conforming to the
vesting schedule designated 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 the Employee's Participant's Account will be
determined without regard to this section 6.4(c).
If the Plan ceases to be a Top Heavy Plan, in any future Plan
Year, the Administrator will 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.
Page 62 of 93
(d) Regardless of 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 will become 100% Vested
and will not be subject to Forfeitures.
(e) If this is an amended or restated Plan and regardless of the
vesting schedule designated in the Adoption Agreement, the Vested
percentage of a Participant's Account will 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 calculation of
a Participant's nonforfeitable percentage of his interest in the
Plan will not be reduced as the result of any direct or indirect
amendment to this Article, or due to changes in the Plan's Top
Heavy status.
(f) If the Plan's vesting schedule is amended, or if the Plan is
amended in any way that directly or indirectly affects the
valuation of the Participant's nonforfeitable percentage or if
the Plan is amended by an automatic change to a top heavy vesting
schedule, then each Participant with at least three (3) Years of
Service as of the expiration date of the election period may
elect to have his nonforfeitable percentage calculated under the
Plan without regard to the amendment or change. However, 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) years
will be substituted for three (3) years in the previous sentence.
If a Participant fails to make the election, then the Participant
will be subject to the new vesting schedule. The Participant's
election period will begin on the adoption date of the amendment
and will end sixty (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 is re-employed by the Employer
before a 1-Year Break in Service occurs, he may continue to
participate in the Plan in the same manner as if the
termination had not occurred.
(2) If a Former Participant is re-employed by the Employer before
five (5) consecutive 1-Year Breaks of Service, and the Former
Participant had received a distribution of his entire Vested
interest prior to re-employment, his forfeited account will be
reinstated only if the participant repays the full amount
distributed to him before the earlier of five (5) years after
the first date on which the Participant is subsequently
re-employed by the Employer or the close of the first period
of five (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
reimburse 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 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
Page 63 of 93
attributable to Employer contributions before the earlier of
five (5) years after the first date on which the Participant
is subsequently re-employed by the Employer, or the date the
Participant incurs five (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 the Former Participant is re-employed by
the Employer before five (5) consecutive 1-Year Breaks
in Service, then the Participant will be deemed to have repaid
the distribution as of the date of re-employment.
(3) If any Former Participant is re-employed after a 1-Year Break
in Service has occurred, Years of Service will include Years
of Service prior to his 1-Year Break in Service subject to the
following rules:
(i) Any Former Participant under the Plan who does not have
a non-forfeitable right to any interest in the Plan
resulting from Employer contributions will lose credits
if his consecutive 1-Year Breaks in Service equal or
exceed the greater of (A) five (5) or (B) the aggregate
number of his pre-break Years of Service;
(ii) After five (5) consecutive 1-Year Breaks in Service, a
Former Participant's Vested Account balance
attributable to pre-break service will not be increased
as a result of post-break service;
(iii) A Former Participant who is re-employed and who has not
had his Years of Service before a 1-Year Break in
Service disregarded pursuant to (i) above, will
participate in the Plan as of his date of
re-employment;
(iv) If a Former Participant completes a Year of Service (a
1-Year Break in Service previously occurred, but
employment had not terminated), he will participate in
the Plan retroactively from the first date 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 will be excluded as specified in the
Adoption Agreement.
6.5 DISTRIBUTION OF BENEFITS
(a) (1) This subparagraph (a) shall not be applicable if item 2 of
Part L of the Adoption Agreement indicates that no annuities will
be allowed in accordance with the waiver provided by Section
401(a)(11)(B) of the Code. Unless otherwise elected below, a
Participant who is married on the "annuity starting date" and who
does not die before the "annuity starting date" will 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 will be equal in value to a single life
annuity. The Joint and Survivor benefits following the
Participant's death will continue to the spouse during the
spouse's lifetime at a rate equal to fifty percent (50%) of the
rate at which the benefits were payable to the Participant. This
Joint and Survivor Annuity will be considered the designated
qualified Joint and Survivor Annuity and automatic form of
payment. 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
Page 64 of 93
Annuity will be equal in value to the automatic Joint and fifty
percent (50%) Survivor Annuity. An unmarried Participant will
receive the value of his benefits in the form of a life annuity.
However, the unmarried Participant 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 an
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 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
Participant is then married. If the spouse is legally
incompetent to give consent, the spouse's legal guardian may
give consent (even if the guardian is the Participant). This
type of election will designate a Beneficiary 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).
This type of election will also state the specific form of
alternate benefit payment to be made. The spouse's consent
will be irrevocable and must acknowledge the effects of the
election and be witnessed by the Plan representative or a
notary public, unless the required consent cannot be obtained
because 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 least until the annuity starting date, or if later,
at any time prior to the expiration of the 7-day period that
begins the day after the explanation of the qualified Joint
and Survivor Annuity is provided to the Participant. The
number of revocations will not be limited. Any new election
must comply with the requirements of this paragraph. A former
spouse's waiver will not be binding on a new spouse.
(3) The election period to waive the Joint and Survivor Annuity
will be the ninety (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 the Plan benefits.
(5) With regard to the election, the Administrator will provide to
the Participant no less than thirty (30) days and no more than
ninety (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 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 the election,
and the effect of the revocation.
Page 65 of 93
(b) In the event a married Participant elects (pursuant to paragraph
(a)(2) above) not to receive his benefits in the form of a Joint and
Survivor Annuity, or if the Participant is not married, in the form of
a life annuity, or if subparagraph 6.5(a) is not applicable pursuant
to its terms, the Administrator shall direct the distribution to a
Participant or his Beneficiary any amount which he is entitled under
the Plan in one or more of the following methods which are allowed
pursuant to the Adoption Agreement but any such direction of the
Administrator shall in any event be consistent with Part L, item 2 and
3 of the Adoption Agreement, and of the election or the Participant or
his Beneficiary made pursuant thereto:
(1) One lump-sum payment in cash or in property;
(2) Payments over a period certain in monthly, quarterly,
semiannually, or annual cash installments. In order to provide
the 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 installment payments. The period over
which the payment is to be made will not extend beyond the
Participant's life expectancy (or the life expectancy of the
Participant and his named Beneficiary);
(3) Purchase of an annuity. However, the 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 the named Beneficiary) or the life expectancy
of the Participant (or the life expectancy of the Participant
and the named 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 ever exceeded at
the time of any prior distribution, $5,000. Further, the spouse of a
Participant must consent in writing to any immediate distribution. If
the value of the Participant's benefit derived from Employer and
Employee contributions does not exceed $5,000 and has never exceeded
$5,000 at the time of any prior distribution, the Administrator may
immediately distribute the benefits without the Participant's consent.
No distribution may be made under the preceding sentence after the
"annuity starting date" unless the Participant and his spousal consent
in writing to such a distribution (but spousal consent shall be
required only if herein above so provided). Any written consent
required under this paragraph must be obtained not more than ninety
(90) days before commencement of the distribution and will 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, $5,000 will
require the Participant's consent if the distribution commences prior
to the later of his Normal Retirement Age or age sixty-two (62). With
regard to this required consent:
(1) No consent will 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
will be deemed an election to defer the commencement of
payment of any benefit. However, any election to defer the
receipt of benefits will not apply with respect to
distributions which are required under Section 6.5(e).
Page 66 of 93
(3) Notice of the rights specified under this paragraph will be
provided no less than thirty (30) days and no more than ninety
(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 ninety (90) days before the
"annuity starting date".
(5) No consent will be valid if a significant detriment is imposed
under the Plan on any Participant who does not consent to the
distribution.
(e) Notwithstanding any provision in the Plan to the contrary, the
distribution of a Participant's benefits, made on or after January
1, 1985, whether under the Plan or through the purchase of an
annuity Contract, will be made in accordance with the following
requirements and will 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 will be distributed to him not later
than April 1st of the calendar year following the later of (i)
the calendar year in which the Participant attains age 70 1/2
or (ii) the calendar year in which the Participant retires;
provided, however, that if the Participant is a "five percent
(5%) 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,
a Participant who becomes a "five percent (5%) owner" during
any subsequent Plan Year, clause (ii) will no longer apply and
the required beginning date will be the April 1st of the
calendar year following the calendar year in which the
subsequent Plan Year ends. For Plan Years beginning prior to
January 1, 1997, clause (ii) above will not apply. Any
Participant who participated in this Plan prior to January 1,
1997 may elect that the minimum distribution rules contained
in the Plan (or any predecessor plan) prior to its amendment
to conform to the Small Business Job Protection Act of 1996 be
applied in lieu of the provisions contained in this paragraph.
(2) Distributions to a Participant and his Beneficiaries will only
be made in accordance with the incidental death benefit
requirements of Code Section 401(a)(9)(G) and the Regulations
thereunder.
(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) will be redetermined annually in accordance with
Regulations if so elected in the Adoption Agreement. If the
Participant or the Participant's spouse may elect whether
recalculations will be made, then the election, once made, will 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 will not be subject to recalculation. Life
expectancy and Joint and Last Survivor expectancy will be computed
using the return multiples in Tables V and VI of Regulations
1.72-9.
(g) All annuity Contracts under this Plan will be non-transferable when
distributed. Furthermore, the terms of any annuity Contract
purchased and distributed to a Participant or spouse will 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 will not apply if a
Participant has, prior to January 1, 1984, made a written
Page 67 of 93
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
the account:
(1) a separate account will 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 will 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 Participant
who dies before the annuity starting date and who has a surviving
spouse will 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 the 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 will 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 will require the spouse's
irrevocable consent in the same manner provided for in Section
6.5(a)(2). Further, the spouse's consent must acknowledge the
specific non-spouse Beneficiary. Notwithstanding the foregoing, the
non-spouse 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 the right.
(c) The election period to waive the Pre-Retirement Survivor Annuity
will 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 the 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
will begin on the date of the separation from service.
(d) With regard to the election, the Administrator will provide each
Participant within the applicable period, with respect to the
Participant (and consistent with Regulations), a written
Page 68 of 93
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. For this purpose, a fully
subsidized qualified Joint and Survivor Annuity is one under
which no increase in cost to, or decrease in actual amounts
received by, the participant may result from the participant's
failure to elect another form of benefit. A qualified
pre-retirement survivor annuity is fully subsidized if the
amount of the participant's benefit is not reduced because of
the qualified pre-retirement survivor annuity coverage and if
no charge to the participant under the plan is made for the
coverage;
(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 will
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 will 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 $5,000 and has
never exceeded $5,000 at the time of any prior distribution, the
Administrator will direct the immediate distribution of the 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, $5,000, an immediate distribution of
the entire amount may be made to the surviving spouse, provided the
surviving spouse consents in writing to such distribution. Any written
consent required under this paragraph must be obtained no more than
ninety (90) days before commencement of the distribution and will 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, the death benefits will 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
Page 69 of 93
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) Payments 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 will have the
right to reduce the period over which the periodic
installments will be made, and the cash amount of the
periodic installments will be adjusted accordingly;
(iii) If death benefits in excess of the Pre-Retirement
Survivor Annuity are to be paid to the surviving
spouse, the 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 provisions in the Plan to the contrary,
distributions upon death of a Participant made on or after January
1, 1985, will be made in accordance with the following requirements
and will 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 the interest will
be distributed at least as rapidly as under the method of
distribution selected pursuant to Section 6.5 as of his date
of death.
(2) If a Participant dies before he has begun to receive any
distributions of his interest in the Plan or before
distributions are deemed to have begun pursuant to
Regulations, then his death benefit will 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) Except as hereinafter provided, the entire death
benefit will 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 five-year distribution requirement of (i) above
will not apply to any portion of the deceased
Participant's interest which is payable to or for the
benefit of a named Beneficiary. In that event, the
portion will be distributed over the life of the named
Beneficiary (or over a period not extending beyond the
life expectancy of the named Beneficiary) provided the
distribution begins not later than December 31st of the
calendar year immediately following the calendar year
in which the Participant dies;
(iii) However, in the event the Participant's spouse
(determined as of the date of the Participant's death)
is his named Beneficiary, the provisions of (ii) above
will apply
Page 70 of 93
except that the requirement that distributions
commence within one year of the participant's death
will 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 dies; 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 the spouse begin,
then the five-year distribution requirement of this
section will apply as if the spouse was the Participant.
(3) Notwithstanding subparagraph (2) above, 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 dies; 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 named Beneficiary
to be excepted from the five-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 named
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 701/2; or (2) December 31st of the calendar year which
contains the fifth anniversary of the date of the Participant's death.
An election by a named Beneficiary must be in writing and will be
irrevocable as of the last day of the election period stated herein.
In the absence of an election by the Participant or a named
Beneficiary, the five-year distribution requirement will 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) will
or will 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 will 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 will not be subject to
recalculations. Life expectancy and joint and last survivor expectancy
will 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 the Participant's spouse, the portion of the
distribution attributable to the Participant's Voluntary Contribution
Account will 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 will 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.
Page 71 of 93
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as otherwise specifically provided herein, 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 the date or as soon thereafter as is practicable, but in no event later than
one-hundred and eight (180) days after the Anniversary Date coincident with or
following the Participant's death, retirement, disability or termination of
employment. 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 will begin not later than the
sixtieth (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 tenth
(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), will 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 the distribution be paid to the legal guardian, or
if none, to a parent of the Beneficiary or to the custodian for the Beneficiary
under the Uniform Gift to Minors Act, if it is permitted by the laws of the
state in which said Beneficiary resides. The payment to the legal guardian,
custodian or parent of a minor Beneficiary will 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 will, 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 the Participant or his Beneficiary, the
amount so distributable will be treated as a Forfeiture pursuant to the Plan. In
the event a Participant or Beneficiary is located subsequent to his benefit
begin reallocated, the benefit will be restored, first from 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
will have attained the age specified in the Adoption Agreement, the
Administrator, at the election of the Participant, will direct the Trustee to
distribute up to the entire amount then credited to the accounts maintained on
behalf of the Participant. However, no distribution may be made to any
Participant unless his Participant's Account has become fully Vested. In the
event that the Administrator makes a distribution, the Participant will continue
to be eligible to participate in the Plan on the same basis as any other
Employee. Any distribution made pursuant to this section will be made in a
manner consistent with Section 6.5, including
Page 72 of 93
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 will not be
permitted prior to the Participants attaining 591/2 except in the case of a
hardship distribution or because of Total and Permanent Disability.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP WITHDRAWAL
Distribution of Elective Deferrals (and any earnings credited to a
participant's Elective Deferral account as of the later of December 31, 1988 and
the end of the last Plan Year ending before July 1, 1989) may be made to a
participant in the event of hardship. For the purposes of this section, hardship
is defined as an immediate and heavy financial need of the employee where such
employee lacks other available resources. Hardship distributions are subject to
the spousal consent requirements contained in ss.401(a)(11) and 417 of the Code.
(a) If so elected at N5 of the Adoption Agreement, the Administrator, at
the election of the Participant, will direct the Trustee to distribute
to any Participant in any one Plan Year up to the lesser of (1)
one-hundred percent (100%) of that portion of his Participant's
Account on which he is then vested or (2) the amount necessary to meet
the immediate and heavy financial need of the Participant. Any such
immediate and heavy financial need shall be documented by the
participant to the Administrator who shall, as an exercise of
discretionary authority, determine whether the amount requested by the
Participant, or any lesser amount, is in fact necessary to meet such
immediate and heavy financial need of the Participant. Notwithstanding
the penultimate sentence of this paragraph however, the Participant's
certification to the Administrator shall be deemed sufficient to
establish the immediate and heavy financial need of the Participant if
he had then participated in this Plan for five (5) or more years, or,
in any event, with respect to contribution made by the employer to the
Participant's Account more than twenty-four (24) month prior to the
date of such request.
(b) If so elected at N5 of the Adoption Agreement, the Administrator, at
the election of the Participant, will direct the Trustee to distribute
to any Participant in any one Plan Year up to the lesser of (1)
one-hundred percent (100%) of that portion of the Participant's
Combined Account in which he is then vested other than the value of
his Participant's Account, as 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 will 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 will be reduced accordingly. Withdrawal
under this section will 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 funeral expenses for a member of the Participant's
family;
Page 73 of 93
(4) Payment of tuition for the next twelve (12) months of
post-secondary education for the Participant, his spouse,
children, or dependents;
(5) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence;
(6) Any other financial need specifically listed by the Secretary
of the Treasury in Regulations or other official guidance that
allows the Plan to make hardship distributions.
(c) No distribution will be made pursuant to Subsection (b) or this
section unless the Administrator, based upon the Participant's
representation and 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;
(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 the next
taxable year less the amount of the Participant's elective
deferrals for the taxable year of the hardship distribution.
(d) Notwithstanding subsections (b) and (c) of this section,
distributions from the Participant's Elective Account and Qualified
Non-Elective Account pursuant to this section will 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 will be made in a
manner which is consistent with and satisfied the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Sections 411(a)(11) and 417 and the
Regulations thereunder.
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections, provided to a Participant
in this Plan will be subject to the rights afforded to any "alternate payee"
under a "qualified domestic relations order." Furthermore, a distribution to an
"alternate payee" will be permitted if the distribution is authorized by
"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" will have the meaning set forth under Code Section 414(p).
Page 74 of 93
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS
If elected in the Adoption Agreement, the following will 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 will 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 surviving spouse, or, if there
is no surviving spouse or the surviving spouse has already
consented to waive his benefit, in accordance with Section 6.6, to
his named 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 will be inoperative
with respect to this Plan.
This section will 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.
If a distribution is one to which Sections 401(a)(11) and 417 of the
Internal Revenue Code do not apply, the distribution may commence less than
thirty (30) days after the notice required under Section 1.411(a)-11(c) of
the Income Tax Regulations is given, provided that:
(1) the plan administrator clearly informs the participant that
the participant has a right to a period of at least thirty
(30) days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if applicable,
a particular distribution option), and
(2) the participant, after receiving the notice, affirmatively
elects a distribution.
Page 75 of 93
ARTICLE VII
TRUSTEE
-------
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee will have the following categories of responsibilities:
(a) Consistent with the "funding policy and method" determined by the
Employer to invest, and manage the Plan assets (by an Investment
Manager if the Employer appoints one) as to all or a portion of the
assets of the Plan;
(b) At the direction of the Administrator, to pay benefits necessary under
the Plan to be paid to Participants or to their Beneficiaries, in the
event of death;
(c) To preserve records of receipts and disbursements and furnish to the
Employer and the Administrator for each Plan Year a written annual
report per Section 7.7; and
(d) If more than one Trustee, they will act by a majority, but may
authorize one or more to sign papers on their behalf.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee will invest and reinvest the Trust Fund to keep the Trust
Fund invested without distinction between principal and income and in
the securities or property, real or personal, as the Trustee will deem
advisable, including, but not limited to, stocks, common or preferred,
bonds and other evidences of debt or ownership, and real estate or any
interest therein. The Trustee will at all times in making investments
of the Trust Fund consider the short-term and long-term financial
needs of the Plan on the basis of information furnished by the
Employer. In making investments decisions, the Trustee will not be
restricted to securities or other property of the character expressly
authorized by the applicable law for trust investments; however, the
Trustee will 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 the bank or trust company will consist of clerical,
custodial and record keeping services.
(c) The Trustee may periodically transfer to a collective, common, or
pooled trust fund maintained by any corporate trustee pursuant to
Revenue Ruling 81-100, all or part of the Trust Fund as the Trustee
may deem advisable, and part or all of the Trust Fund then transferred
will be subject to all the terms and provisions of the collective,
common, or pooled trust fund which provides for the commingling for
investment purposes of the trust assets with other trust assets. The
Trustee may withdraw from the collective, common, or pooled trust fund
all or 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 the purpose and subject to the conditions
Page 76 of 93
in the Adoption Agreement, will 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 will have a
face amount of not less than $1,000, the amount set 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 fifty percent (50%) of the aggregate contributions
and Forfeitures allocated to a Participant's Combined Account. For
purposed 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 the contributions, the aggregate premium must be twenty-five
percent (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 the contributions, the
amount expended for term insurance plus one-half (1/2) of the premium
for ordinary life insurance may not exceed twenty-five percent (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 on or before retirement into cash or provide for a periodic
income so that no portion of the value may be used to continue life
insurance protection beyond retirement. Regardless, the limitations
imposed with respect to the purchase of life insurance will not apply,
to the portion of a Participant's Account that has accumulated for at
least two (2) Plan Years.
Furthermore, amounts credited to a Participant's Qualified
Voluntary Employee Contribution Account pursuant to Section 4.14,
will 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 will be required to pay over all proceeds of the Contract
to the Participant's designated Beneficiary in accordance with the
distribution provisions of Article VI. A Participant's spouse will
be the designated Beneficiary pursuant to Section 6.2, unless a
qualified election has been made in accordance with Sections 6.5
and 6.6 of the Plan. Under no circumstances will the Trust retain
any part of the proceeds. However, the Trustee will 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 Regulations.
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,
will have the following powers and authorities 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,
cash accounts may be opened and maintained, but margin accounts
shall not be maintained, nor shall short positions be held, but all
positions shall be held long on the account;
(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 will be bound to see to the application of
the purchase money
Page 77 of 93
or to inquire into the validity, expediency, or propriety of any
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 there
with; and generally to exercise any of the powers of an owner with
respect to stocks, bonds, securities, or other property;
(d) To cause any securities or other property to be registered in the
Trustee's own name or in the name of one or more of the Trustee's
nominees, and to hold any investments in bearer form, but the books
and records of the Trustee will at all times show that all the
investments are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in the
amount, and upon the terms and conditions, as the Trustee will deem
advisable; and for any sum borrowed, to issue a promissory note as
Trustee, and to secure the repayment by pledging all, or any part,
of the Trust Fund; and no person lending money to the Trustee will
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 the portion of the Trust Fund in cash or cash balances as
the Trustee may, periodically, deem to be in the best interests of
the Plan, without liability for interest;
(g) To accept and retain for the time as the Trustee may deem advisable
any securities or other property received or acquired as Trustee,
whether or not the securities or other property would normally be
purchased as investments;
(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 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 compensation
and expenses, who may or may not be agent or counsel for the
Employer;
(k) To apply for and procure from any Insurer as an investment of the
Trust Fund an annuity, or other contracts (on the life of any
Participant) as the Administrator will deem proper; to periodically
exercise whatever rights and privileges may be granted under the
annuity, or other contract; to collect, receive, and settle for the
proceeds of all such annuity or other contract, as and when
entitled to do so under the provisions;
(l) To invest funds of the Trust in time deposits or savings accounts
bearing a reasonable rate of interest in the Trustee's bank;
Page 78 of 93
(m) To invest in Treasury Bills and other forms of United States
government obligation;
(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 moneys in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(p) To periodically pool all or any of the Trust Fund with assets
belonging to any other qualified employee pension benefit trust
created by the Employer or any Affiliated Employer, and to commingle
the assets and make joint or common investments and carry joint
accounts on behalf of the Plan and the other trust or trusts,
allocating undivided shares or interests in the investments or
accounts or any pooled assets of the two or more trusts in accordance
with their respective interests;
(q) To do all acts and exercise all rights and privileges, although not
specifically mentioned, as the Trustee may deem necessary to carry out
the objectives of the Plan;
(r) As for the Directed Investment Account, the powers granted to the
Trustee will 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 must be followed by the Trustee subject to
restrictions on payment of life insurance premiums), but any such
investments may be made only from those allowed by the Employer who
shall direct the Trustee as to the investments that may be permitted
under the Plan from time to time. Neither the Trustee nor any other
persons including the Administrator will 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 will comply with
all valid directions given by the Participant. Any direction may be of
a continuing nature or otherwise and may be revoked by the Participant
at any time in the such form as the Trustee may require. The Trustee
may refuse to comply with any directions from the Participant in the
event the Trustee, in its sole and absolute discretion, deems the
directions improper by virtue of applicable law or inconsistent with
the antepenultimate sentence of the paragraph, and in the event, the
Trustee will not be responsible or liable for any loss or expense
which may result. Any costs and expenses related particularly to a
Participant's account will be debited to that account.
Nevertheless, the Trustee will not, at any time invest any
portion of a Directed Investment Account in "collectibles" within
the meaning of that term as employed in Code Section 408(m).
Page 79 of 93
7.4 LOANS TO PARTICIPANTS
(a) If specified in the Adoption Agreement, the Trustee (or, if loans
are treated as Directed Investment pursuant to the Adoption
Agreement, the Administrator) may, in the Trustee's (or, if
applicable, the Administrator's) sole discretion, make loans to
Participants or Beneficiaries under the following circumstances:
(1) loans will be made available to all Participants and
Beneficiaries on a reasonably equivalent basis; (2) loans will not
be made available to Highly Compensated Employees in an amount
greater than the amount made available to other Participants; (3)
loans will bear a reasonable rate of interest; (4) loans will be
adequately secured; and (5) will provide for periodic repayment
over a reasonable period of time.
(b) Loans will not be made to any Shareholder-Employee or
Owner-Employee unless an exemption for the loan is obtained
pursuant to Act Section 408 and further provided that the loan
would not be subject to tax pursuant to Code Section 4975.
(c) Loans will not be granted to any Participant that provide for a
repayment period extending beyond the 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)
will 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 (1) year period ending on the date before the
date on which the loan is made, over the outstanding balance
of loans from the Plan to the Participant on the date on which
the 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 will be
considered one plan. Additionally, with respect to any loan made
prior to January 1, 1987, the $50,000 limit specified in (1) above
will be unreduced.
(e) No Participant loan will take into account the present value of the
Participant's Qualified Voluntary Employee Contribution Account.
(f) Loans will provide for level amortization with payments to be made
not less frequently than quarterly over a period not to exceed
five (5) year. 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 will provide for repayment over a reasonable period
of time that may exceed five (5) years. Nevertheless, 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 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.
Page 80 of 93
(g) Under this section, an assignment or pledge, that complies with
Code Section 401(a)(13), of any portion of a Participant's interest
in the Plan, including a loan, pledge, or assignment with respect
to any insurance Contract purchased under the Plan, will be treated
as a loan.
(h) Any loan made pursuant to this section after August 18, 1985 where
the Vested interest of the Participant is used to secure the loan
will require the written consent of the Participant's spouse in a
manner consistent with Section 6.5(a) provided the spousal consent
requirements of the Section apply to the Plan. The written consent
must be obtained within the ninety (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 will be taken into
account in determining the amount of the death benefit or
Pre-Retirement Survivor Annuity. However, no spousal consent will
be required if the total accrued benefit is not in excess of
$5,000.
(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 will be established which must include,
but need not be limited to, the following:
(1) the identity of the person or positions authorized to
administer the Participant loan program;
(2) a procedure for applying for loans;
(3) the basis on which loans will be denied or approved;
(4) limitations, if any, on the types and amounts of loans
offered, including what constitutes a hardship or financial
hardship if elected 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 maintain plan assets.
The Participant loan program will be contained in a separate
written document which, when properly executed, is incorporated by
reference and made a part of this Plan. Furthermore, the
Participant loan program may be modified or amended in revising
this section of the Plan.
(j) No loans will be made to any shareholder-employee or
owner-employee. For purposes of this requirement, a
shareholder-employee means an employee or officer of an electing
small business (Subchapter S) corporation who owns (or is
considered as owning within the meaning of section 318 (a)(1) of
the Code), on any day during the taxable year of such corporation,
more than 5% of the outstanding stock of the corporation.
(k) Loan repayments will be suspended under this plan as permitted
under ss.414(u)(4) of the Internal Revenue Code.
Page 81 of 93
7.5 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee will, periodically,
in keeping with the terms of the Plan, make payments out of the Trust Fund. The
Trustee will not be responsible in any way for the application of the payments.
7.6 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee may be paid the reasonable compensation set in the
Trustee's fee schedule (if the Trustee has a schedule) or as agreed upon in
writing by the Employer and Trustee. An individual serving as Trustee who
already receives full-time pay from the Employer will not receive compensation
from the Plan. In addition, the Trustee will be reimbursed for any reasonable
expenses, including reasonable counsel fees. The compensation and expenses will
be paid from the Trust Fund unless paid or advanced by the Employer. All taxes
of any kind and all kinds that may be levied or assessed under existing or
future laws, the Trust Fund or the income, will 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, will furnish to the Employer and Administrator a written statement
of account with respect to the Plan Year for which the 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, Employer or Administrator
deems appropriate. The Employer, upon receipt of each statement of
account, will acknowledge receipt in writing and advise the Trustee
and Administrator of its approval or disapproval. Failure by the
Employer to disapprove any statement of account within thirty (30)
days after receipt will be considered approval. The approval by the
Employer of any statement of account will be binding as to all matters
embraced as between the Employer and the Trustee to the same extent as
if the account of the Trustee had been settled by judgment or decree
in an action for a judicial settlement of its account in a court of
competent jurisdiction in which the Trustee, the Employer and all
persons having or claiming an interest in the Plan were parties;
provided, however, that nothing contained will 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 will be required by the Act and the
Regulations for any Plan Year, the Administrator will direct the
Trustee to engage on behalf of all Participants an
Page 82 of 93
independent qualified public accountant for that purpose. The
accountant will, after an audit of the books and records of the
Plan in accordance with generally accepted auditing standards,
within a reasonable period after the close of the Plan Year,
furnish to the Administrator and the Trustee a report of his
audit setting forth his opinion as to whether any statements,
schedules or lists, that are required by Act Section 103 or the
Secretary of Labor to be filed with the Plan's annual report, are
presented fairly in conformity with generally accepted accounting
principles applied consistently.
(b) All auditing and accounting fees will 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 will 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 another date as 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 resignation.
(b) The Employer may remove the Trustee by mailing by registered or
certified mail a written notice of his removal, addressed to the
Trustee at his last known address, at least thirty (30) days before
its effective date.
(c) Upon the death, resignation, incapacity, or removal of any Trustee,
a successor may be appointed by the Employer; and upon accepting
the appointment in writing and delivering to the Employer, will,
without further action, become vested with all the estate, rights,
powers, discretion, and duties of the predecessor as if he were
originally named as a Trustee. Until a successor is appointed, the
remaining Trustee or Trustees will 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 the
designation, the successor will, without further action, become
vested with all the estate, rights, powers, discretions, and duties
of his predecessor as if he were originally named as Trustee
immediately upon the death, resignation, incapacity, or removal of
the predecessor.
(e) Whenever any Trustee ceases to serve as trustee, he will 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 will 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 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 in Section 7.7 for
the approval by the Employer of annual statements of account will
apply to any special statement of account rendered and approval
by the Employer of any special statement
Page 83 of 93
in the manner provided in Section 7.7 will have the same effect
upon the statement as the Employer's approval of an annual
statement of account. No successor to the Trustee will 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
Regardless of any other provision contained in this Plan, the Trustee
at the direction of the Administrator will transfer the Vested interest, if any,
of the Participant in his account to another trust forming part of a pension,
profit sharing, or stock bonus plan maintained by the Participant's new employer
and represented by said employer in writing as meeting the requirements of Code
Section 401(a).
7.11 TRUSTEE INDEMNIFICATION
Unless the Trustee shall charge a fee for acting as Trustee hereunder,
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, unless the same
are determined to be due to gross negligence or willful misconduct.
7.12 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee will be empowered to acquire and hold "qualifying Employer
securities" and "qualifying Employer real property," as those terms are defined
in the Act.
7.13 LIMITATIONS ON TRUSTEE ACTION
Notwithstanding anything contained herein to the contrary, the Trustee
and all other fiduciaries shall discharge their duties hereunder solely in the
interest of the Participants and their Beneficiaries with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
Page 84 of 93
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
----------------------------------
8.1 AMENDMENT
(a) The Employer will 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 amendment will become
effective as provided therein upon its execution. The Trustee will
not be required to execute any 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 the 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 Section 412(d) of the Code,
will no longer participate in this Prototype Plan and will be
considered to have an individually designed plan.
(c) The Employer expressly delegates authority to the sponsoring
organization of this Plan, the right to amend this Plan by
submitting a copy of the amendment to each Employer who has adopted
this Plan after first having received a ruling or favorable
determination from the Internal Revenue Service that the Plan as
amended qualifies under Code Section 401(a) and the Act.
(d) No amendment to the Plan will be effective if it authorizes or
permits any part of the Trust Fund (other than as required to pay
taxes and administration expenses) to be used for or diverted to
any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes any
reduction in the amount credited to the account of any Participant;
or causes or permits any portion of the Trust Fund to revert to or
become property of the Employer.
(e) Except as permitted by Regulations (including Regulation
1.411(d)-4), no Plan amendment or transaction having the effect of
a Plan amendment (such as a merger, plan transfer or similar
transaction) will 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 the benefits unless the
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.
Page 85 of 93
8.2 TERMINATION
(a) The Employer will have the right at any time to terminate the Plan
by delivering to the Trustee and Administrator written notice of
termination. Upon any full or partial termination all amounts
credited to the Participants' Combined Accounts will become
one-hundred percent (100%) Vested and will not be subject to
forfeiture, and all unallocated amounts will be allocated to the
accounts of all Participants in accordance with the provisions of
the Plan.
(b) Upon full termination of the Plan, the Employer will 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 will be made in cash (or in property
if permitted in the Adoption Agreement) or through the purchase of
irrevocable nontransferable deferred commitments from an Insurer.
Except as permitted by Regulations, the termination of the Plan
will 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 would be
received by a Participant of the Plan, in the event of a termination of the plan
immediately after this type of 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).
Page 86 of 93
ARTICLE IX
MISCELLANEOUS
-------------
9.1 EMPLOYER ADOPTIONS
(a) Any organization may become the Employer by executing the Adoption
Agreement in a form satisfactory to the Trustee, and will provide
additional information to the Trustee as required by him. The
consent of the Trustee to act will be signified by its execution of
the Adoption Agreement.
(b) Except as otherwise stated in this Plan, the affiliation of the
Employer and the participation of its Participants will be separate
and apart from that of any other employer and its participants.
9.2 PARTICIPANT'S RIGHTS
This Plan will not 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 will be deemed to give
any Participant or Employee the right to be retained in the service of the
Employer or to interfere with the right of the Employer to discharge any
Participant or Employee at any time regardless of the effect the discharge will
have upon the Employee's participation in this Plan.
9.3 ALIENATION
(a) Subject to the exceptions below, no benefit payable to any person
(including a Participant or Beneficiary) shall in any manner be
subject 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 will be void; and no benefit will in any manner be liable for,
or subject to, the debts, contracts, liabilities, engagements, or
torts of any person, nor will it be subject to attachment or legal
process for or against a person, and the same will not be
recognized except to the extent of the law.
(b) This provision will 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 will equal the
indebtedness to be paid to the Plan, to apply against or
discharge the indebtedness. Prior to making a payment, the
Participant or Beneficiary shall be given written notice by the
Administrator that the indebtedness is to be paid in whole or
part from the 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 will
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 will also not apply with respect to a "qualified
domestic relations order" defined in Code Section 414(p) or any
domestic relations order entered before January 1, 1985. The
Administrator will establish a written procedure to determine the
qualified status of domestic relations orders and to administer
distributions under the qualified orders. Further, to the extent
Page 87 of 93
provided under a "qualified domestic relations order", a former
spouse of a Participant will be treated as the spouse or surviving
spouse for all purposes under the Plan.
9.4 CONSTRUCTION OF PLAN
This Plan and Trust will 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, to the extent not pre-empted by the Act.
9.5 GENDER AND NUMBER
Whenever any words are used in the masculine, feminine or neuter
gender, they will be construed as though they were also used in all genders.
Furthermore, any words used in the singular form will be construed as though
they were also used in the plural form and vice versa.
9.6 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or the Plan. The Trustee or Administrator is named as a party
defendant or respondent thereto and the claim, suit, or proceeding is resolved
in favor of the Trustee or Administrator, they will be entitled to be reimbursed
from the Trust Fund for any and all costs, attorney's fees, and other expenses
incurred.
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted by
law, it is prohibited 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 of income of any Trust Fund
maintained pursuant to the Plan or any funds contributed to be used
for, or diverted to, purposes other than the exclusive benefit of
Participants, Former Participants, or their Beneficiaries.
(b) In the event the Employer makes a contribution under a mistake of
fact pursuant to Section 403(c)(2)(A) of the Act, the Employer may
demand repayment of the contribution at any time within one (1)
year following the time of payment and the Trustees will return the
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 must reduce the amount returned.
9.8 BONDING
The purpose of the bond is to 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 will be a corporate surety company (as used
in Act Section 412(a)(2)), and the bond will be in a form approved by the
Secretary of Labor. Furthermore, the cost of the bonds will be an expense which
may, at the election of the Employer, be paid from the Trust Fund or by the
Employer. Every Fiduciary, (except an insurance
Page 88 of 93
company), will be bonded in an amount not less than ten percent (10%) of the
amount of the funds the Fiduciary handles; provided, that the minimum bond will
be $1,000 and the maximum bond, $500,000. The amount of funds handled will be
determined at the beginning of each Plan Year by the amount of funds handled by
the 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 current year.
9.9 INSURER'S PROTECTIVE CLAUSE
The Insurer who will issue Contracts will not have any responsibility
for the validity of the Plan or for the tax or legal aspects. The Insurer will
be protected and held harmless in acting in accordance with any written
direction of the Trustee, and will 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 the Plan, the Insurer will not be
required to take or permit any action or allow any benefit or privilege contrary
to the terms of any Contract issued under the rules of the Insurer.
9.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to a Participant or Beneficiary, or to any guardian or
committee appointed for the Participant or Beneficiary in accordance with the
provisions of this Plan, will be in full satisfaction of all claims against the
Trustee and the Employer.
9.11 ACTION BY THE EMPLOYER
Whenever the Employer of the Plan is permitted or required to perform
any act it will be performed by a person duly authorized by 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 appointed Investment Manager. The
named Fiduciaries will have only those specific powers, duties,
responsibilities, and obligations as specifically given them under the Plan. In
general, the Employer will have the sole responsibility for making the
contributions provided for under Section 4.1; and will 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 will have the sole responsibility for the administration of the
Plan, which responsibility is specifically described in the Plan. The Trustee
will have the sole responsibility of management of the assets held under the
Trust, except those assets, the management which has been assigned to an
Investment Manager, who will 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 will be in accordance with the provisions of the Plan, authorizing or
providing for the direction, information or action. Furthermore, each named
Fiduciary may rely upon any 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 direction, information or action. It is
intended under the Plan that each named Fiduciary will be responsible for the
proper exercise of its own powers, duties, responsibilities and obligations
under the
Page 89 of 93
Plan. No named Fiduciary will 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 the
sole purpose of convenience and should be ignored in any construction thereof.
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary, if, pursuant to an
application filed on or before an adopting employer's federal tax
filing for the year in which the Plan was adopted, 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 the determination
is not contested, or if contested, is finally upheld, then if the Plan
is a new plan, it will be void ab initio and all amounts contributed
to the Plan, by the Employer, less expenses paid, will be returned
within one (1) year and the Plan will terminate, and the Trustee will
be discharged from all further obligations. If the disqualification
relates to an amended plan, the Plan will operate as if it had not be
amended and restated.
(b) All contributions are conditioned upon the deductibility of the
contribution by the Employer under the Code and, to the extent any
deduction is disallowed, the Employer may within one (1) year
following the disallowance of the deduction, demand repayment of the
disallowed contribution and the Trustee will return the contributions
within one (1) year following the disallowance. Earnings of the Plan
attributable to the excess contributions may not be returned to the
Employer, but any losses attributable must reduce to the amount
returned.
(c) If an Employer's Plan fails to attain or retain qualification, then
the 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 will be interpreted and applied in a
uniform, nondiscriminatory manner.
9.16 SPECIAL PROVISIONS FOR TAFT-HARTLEY PLAN
Notwithstanding anything to the contrary herein contained, if this Plan
shall be adopted by a Joint Board of Trustees pursuant to Section 302(c) of the
Labor Management Relations Act of 1947. (29 USC ss.186(c), the Taft-Hartley
Act), the sponsor of the Plan shall be the Joint Board of Trustees so adopting
the Plan and not the Employer and, in that event, only those persons employed by
the Employer who are members of the bargaining unit covered by a collective
bargaining agreement between the Employer and the relevant Union shall be deemed
Employees hereunder. If more than one Employer shall be subject to such
collective bargaining agreement, this Plan shall be deemed a multi-employer plan
within the meaning of Act Section 3(37) [29 USC ss.1002(37)] solely with respect
to the adoption of this Plan by that Joint Board of Trustees.
Page 90 of 93
ARTICLE X
PARTICIPATING EMPLOYERS
-----------------------
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER
With the consent of the Employer and Trustee, any Affiliated Employer
may adopt this Plan and all of the provisions, and participate as a
Participating Employer, by properly executing the Adoption Agreement as therein
provided.
10.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each Participating Employer will be required to select the same
Adoption Agreement provisions as those selected by the Employer.
(b) Each Participating Employer will be required to use the same
Trustee as provided in this Plan.
(c) The Trustee may, but is not required to, commingle, hold and invest
as one Trust Fund all contributions made by Participating
Employers, as well as all additions.
(d) The transfer of any Participant from or to an Employer
participating in this Plan, whether he has been an Employee of the
Employer or a Participating Employer, will not affect the
Participant's rights under the Plan. All amounts credited to the
Participant's Combined Account as well as his accumulated service
time with the transferor or predecessor, and his length of
participation in the Plan, will continue to his credit.
(e) Any expenses of the Plan which are paid by the Employer or borne by
the Trust Fund will be paid by each Participating Employer in the
same proportion that the total amount standing to the credit of all
Participants employed by the Employer bears to the total standing
to the credit of all Participants, or as otherwise agreed between
the Employer and the Participating Employers hereto.
10.3 DESIGNATION OF AGENT
Each Participating Employer will be deemed to be a part of this Plan;
provided, that for all of its relations with the Trustee and Administrator for
the purpose of this Plan, each Participating Employer will be deemed to have
designated irrevocably the Employer as its agent. Unless the context of the Plan
clearly indicates to the contrary, the word "Employer" will include each
Participating Employer as related to the adoption of the Plan.
Page 91 of 93
10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between
Participating Employers, and in the event of any transfer, the Employee involved
will carry his accumulated service and eligibility. No transfer will effect a
termination of employment, and the Participant Employer will become obligated to
the 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 will be allocated among all Participants of all Participating Employers in
accordance with the provisions of this Plan.
10.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there will be a
Participating Employer will only be by the written action of each and every
Participating Employer and with the consent of the Trustee where consent is
necessary in accordance with the terms of this Plan.
10.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer will be allowed to discontinue or revoke
participation in the Plan at any time. At the time of any discontinuance or
revocation, satisfactory evidence of any applicable conditions imposed will be
delivered to the Trustee. The Trustee will then transfer, deliver and assign
Contracts and other Trust Fund assets allocable to the Participants of the
Participating Employer to the new Trustee, in the event that it has established
a separate pension plan for its Employees provided, that no transfer will 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 will retain the assets for the Employees of said
Participating Employer pursuant to the provisions of this Article VII. At no
time will the corpus or income of the Trust Fund be used for or diverted for
purposes other than for the exclusive benefit of the Employees.
10.8 ADMINISTRATOR'S AUTHORITY
The Administrator will 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.
Page 92 of 93
10.9 PARTICIPATING EMPLOYER CONTRIBUTION FOR AFFILIATE
If any Participating Employer is prevented 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 the 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 the Participating
Employer was prevented from making may be made, for the benefit of the
participating employers of the Participating Employer, by other Participating
Employers who are members of the same affiliated group within the meaning of
Code Section 1504 to their current or accumulated earnings or profits, except
that the contributions by each other Participating Employer will be limited to
the proportion of the 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 will not be required to reimburse the contributing
Participating Employers.
Page 93 of 93