1
EXHIBIT 4.7
ELITE LOGISTICS SERVICES, INC. 401(K) PLAN
2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER .......................... 15
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY .............................. 16
2.3 POWERS AND DUTIES OF THE ADMINISTRATOR ............................... 16
2.4 RECORDS AND REPORTS .................................................. 18
2.5 APPOINTMENT OF ADVISERS .............................................. 18
2.6 PAYMENT OF EXPENSES .................................................. 18
2.7 CLAIMS PROCEDURE ..................................................... 18
2.8 CLAIMS REVIEW PROCEDURE .............................................. 18
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY ............................................ 19
3.2 EFFECTIVE DATE OF PARTICIPATION ...................................... 19
3.3 DETERMINATION OF ELIGIBILITY ......................................... 19
3.4 TERMINATION OF ELIGIBILITY ........................................... 20
3.5 OMISSION OF ELIGIBLE EMPLOYEE ........................................ 20
3.6 INCLUSION OF INELIGIBLE EMPLOYEE ..................................... 20
3.7 ELECTION NOT TO PARTICIPATE .......................................... 20
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION ........................ 20
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION .............................. 22
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION ............................. 26
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS ................. 26
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS ..................................... 29
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS ....................... 32
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS ................................. 34
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS ................... 38
3
4.9 MAXIMUM ANNUAL ADDITIONS ............................................. 39
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS ............................ 41
4.11 TRANSFERS FROM QUALIFIED PLANS ....................................... 42
4.12 DIRECTED INVESTMENT ACCOUNT .......................................... 44
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND .......................................... 45
5.2 METHOD OF VALUATION .................................................. 46
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT ............................ 46
6.2 DETERMINATION OF BENEFITS UPON DEATH ................................. 46
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY ..................... 47
6.4 DETERMINATION OF BENEFITS UPON TERMINATION ........................... 47
6.5 DISTRIBUTION OF BENEFITS ............................................. 50
6.6 DISTRIBUTION OF BENEFITS UPON DEATH .................................. 52
6.7 TIME OF SEGREGATION OR DISTRIBUTION .................................. 53
6.8 DISTRIBUTION FOR MINOR BENEFICIARY ................................... 54
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN ....................... 54
6.10 PRE-RETIREMENT DISTRIBUTION .......................................... 54
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP .................................... 54
6.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION ...................... 56
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE ................................ 56
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE .......................... 57
7.3 OTHER POWERS OF THE TRUSTEE .......................................... 58
7.4 DUTIES OF THE TRUSTEE REGARDING PAYMENTS ............................. 60
7.5 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES ........................ 60
7.6 ANNUAL REPORT OF THE TRUSTEE ......................................... 60
7.7 AUDIT ................................................................ 61
7.8 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE ....................... 61
4
7.9 TRANSFER OF INTEREST ................................................ 62
7.10 DIRECT ROLLOVER ..................................................... 62
7.11 EMPLOYER SECURITIES AND REAL PROPERTY ............................... 63
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT ........................................................... 64
8.2 TERMINATION ......................................................... 64
8.3 MERGER OR CONSOLIDATION ............................................. 65
ARTICLE IX
TOP HEAVY
9.1 TOP HEAVY PLAN REQUIREMENTS ......................................... 65
9.2 DETERMINATION OF TOP HEAVY STATUS ................................... 65
ARTICLE X
MISCELLANEOUS
10.1 PARTICIPANT'S RIGHTS ................................................ 68
10.2 ALIENATION .......................................................... 68
10.3 CONSTRUCTION OF PLAN ................................................ 69
10.4 GENDER AND NUMBER ................................................... 69
10.5 LEGAL ACTION ........................................................ 69
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS .............................. 70
10.7 BONDING ............................................................. 70
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE .......................... 70
10.9 INSURER'S PROTECTIVE CLAUSE ......................................... 70
10.10 RECEIPT AND RELEASE FOR PAYMENTS .................................... 71
10.11 ACTION BY THE EMPLOYER .............................................. 71
10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY .................. 71
10.13 HEADINGS ............................................................ 72
10.14 APPROVAL BY INTERNAL REVENUE SERVICE ................................ 72
10.15 UNIFORMITY .......................................................... 72
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ADOPTION BY OTHER EMPLOYERS ......................................... 72
5
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS ............................. 73
11.3 DESIGNATION OF AGENT ................................................ 73
11.4 EMPLOYEE TRANSFERS .................................................. 74
11.5 PARTICIPATING EMPLOYER CONTRIBUTION ................................. 74
11.6 AMENDMENT ........................................................... 74
11.7 DISCONTINUANCE OF PARTICIPATION ..................................... 74
11.8 ADMINISTRATOR'S AUTHORITY ........................................... 75
6
ELITE LOGISTICS SERVICES, INC. 401(K) PLAN
THIS AGREEMENT, hereby made and entered into this 24th day of May 2000,
by and between Elite Logistics Services, Inc. (herein referred to as the
"Employer") and Richard L. Hansen, Joseph D. Smith and Hanh Nguyen (herein
referred to as the "Trustee").
WITNESSETH:
WHEREAS, the Employer desires to recognize the contribution made to its
successful operation by its employees and to reward such contribution by means
of a 401(k) Profit Sharing Plan for those employees who shall qualify as
Participants hereunder;
NOW, THEREFORE, effective June 1, 2000, (hereinafter called the
"Effective Date"), the Employer hereby establishes a 401(k) Profit Sharing Plan
and creates this trust (which plan and trust are hereinafter called the "Plan")
for the exclusive benefit of the Participants and their Beneficiaries, and the
Trustee hereby accepts the Plan on the following terms:
ARTICLE I
DEFINITIONS
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 Employer unless another person or entity has
been designated by the Employer pursuant to Section 2.2 to administer the Plan
on behalf of the Employer.
1.3 "Affiliated Employer" means 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).
1.4 "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 9.2.
1.5 "Anniversary Date" means May 31st.
1.6 "Beneficiary" means the person to whom the share of a deceased
Participant's total account is payable, subject to the restrictions of Sections
6.2 and 6.6.
1.7 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1
7
1.8 "Compensation" with respect to any Participant means such Participant's
wages as defined in Code Section 3401(a) and all other payments of compensation
by the Employer (in the course of the Employer's trade or business) for a Plan
Year for which the Employer is required to furnish the Participant a written
statement under Code Sections 6041(d), 6051(a)(3) and 6052. Compensation must
be determined without regard to any rules under Code Section 3401(a) that limit
the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Code Section 3401(a)(2)).
For purposes of this Section, the determination of Compensation shall
be made by:
(a) including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections 125,
402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee contributions
described in Code Section 414(h)(2) that are treated as Employer
contributions.
For a Participant's initial year of participation, Compensation shall
be recognized as of such Employee's effective date of participation pursuant to
Section 3.2.
Compensation in excess of $150,000 shall be disregarded. Such amount
shall be adjusted for increases in the cost of living in accordance with Code
Section 401(a)(17), except that the dollar increase in effect on January 1 of
any calendar year shall be effective for the Plan Year beginning with or within
such calendar year. For any short Plan Year the Compensation limit shall be an
amount equal to the Compensation limit for the calendar year in which the Plan
Year begins multiplied by the ratio obtained by dividing the number of full
months in the short Plan Year by twelve (12).
For purposes of this Section, if the Plan is a plan described in Code
Section 413(c) or 414(f) (a plan maintained by more than one Employer), the
limitation applies separately with respect to the Compensation of any
Participant from each Employer maintaining the Plan.
1.9 "Contract" or "Policy" means any life insurance policy, retirement
income or annuity policy or annuity contract (group or individual) issued
pursuant to the terms of the Plan.
1.10 "Deferred Compensation" with respect to any Participant means the
amount of the Participant's total Compensation which has been contributed to
the Plan in accordance with the Participant's deferral election pursuant to
Section 4.2 excluding any such amounts distributed as excess "annual additions"
pursuant to Section 4.10(a).
1.11 "Designated Investment Alternative" means a specific investment
identified by name by a Fiduciary as an available investment under the Plan
which may be acquired or disposed of by the Trustee pursuant to the investment
direction by a Participant.
2
8
1.12 "Directed Investment Option" means one or more of the following:
(a) a Designated Investment Alternative.
(b) any other investment permitted by the Plan and the
Participant Direction Procedures and acquired or disposed of by the
Trustee pursuant to the investment direction of a Participant.
1.13 "Early Retirement Date." This Plan does not provide for a retirement
date prior to Normal Retirement Date.
1.14 "Elective Contribution" means the Employer contributions to the Plan
of Deferred Compensation excluding any such amounts distributed as excess
"annual additions" pursuant to Section 4.10(a). In addition, the Employer
contribution made pursuant to Section 4.1(b) which is used to satisfy the safe
harbor methods permitted by Code Sections 401(k)(12) and 401(m)(11) and any
Employer Qualified Non-Elective Contribution made pursuant to Section 4.6(b)
which is used to satisfy the "Actual Deferral Percentage" tests shall be
considered an Elective Contribution for purposes of the Plan. Any contributions
deemed to be Elective Contributions (whether or not used to satisfy the "Actual
Deferral Percentage" tests) shall be subject to the requirements of Sections
4.2(b) and 4.2(c) and shall further be required to satisfy the nondiscrimination
requirements of Regulation 1.401(k)-1(b)(5), the provisions of which are
specifically incorporated herein by reference.
1.15 "Eligible Employee" means any Employee.
Employees who are Leased Employees within the meaning of Code Sections
414(n)(2) and 414(o)(2) shall not be eligible to participate in this Plan.
Employees whose employment is governed by the terms of a collective
bargaining agreement between Employee representatives (within the meaning of
Code Section 7701(a)(46)) and the Employer under which retirement benefits were
the subject of good faith bargaining between the parties will not be eligible to
participate in this Plan unless such agreement expressly provides for coverage
in this Plan.
Employees who are nonresident aliens (within the meaning of Code
Section 7701(b)(1)(B)) and who receive no earned income (within the meaning of
Code Section 911(d)(2)) from the Employer which constitutes income from sources
within the United States (within the meaning of Code Section 861(a)(3)) shall
not be eligible to participate in this Plan.
Any worker that the Employer treats as an independent contractor shall
not be eligible to participate in this Plan, regardless of any other Plan terms
to the contrary and regardless of whether the individual is a common law
employee of the Employer, during the period that the worker is so treated. A
worker is treated as an independent contractor if payment of his services is
reported on a Form 1099 and not on a Form W-2. The purpose of this provision is
to exclude from participation in the Plan all persons who may actually be common
law employees of the Employer, but who are not paid as though they were
employees, regardless of the reason they are excluded from payroll and
regardless of whether that exclusion is correct.
3
9
Any worker who has signed an employment agreement, independent
contractor agreement, or other personal services contract with the Employer
stating that he is not eligible to participate in the Plan shall not be eligible
to participate in this Plan.
Employees of Affiliated Employers shall not be eligible to participate
in this Plan unless such Affiliated Employers have specifically adopted this
Plan in writing.
1.16 "Employee" means any person who is employed by the Employer or
Affiliated Employer. Employee shall include Leased Employees within the meaning
of Code Sections 414(n)(2) and 414(o)(2) unless such Leased Employees are
covered by a plan described in Code Section 414(n)(5) and such Leased Employees
do not constitute more than 20% of the recipient's non-highly compensated work
force.
1.17 "Employer" means Elite Logistics Services, Inc. and any successor
which shall maintain this Plan; and any predecessor which has maintained this
Plan. The Employer is a corporation, with principal offices in the State of
Texas. In addition, where appropriate, the term Employer shall include any
Participating Employer (as defined in Section 11.1) which shall adopt this Plan.
1.18 "Excess Aggregate Contributions" means, with respect to any Plan Year,
the excess of the aggregate amount of the Employer matching contributions made
pursuant to Section 4.1(b) (to the extent such matching contributions are not
used to satisfy the safe harbor methods permitted by Code Sections 401(k)(12)
and 401(m)(1 1)), Employer matching contributions made pursuant to Section
4.1(c) and any qualified non-elective contributions or elective deferrals taken
into account pursuant to Section 4.7(c) on behalf of Highly Compensated
Participants for such Plan Year, over the maximum amount of such contributions
permitted under the limitations of Section 4.7(a) (determined by reducing
contributions made on behalf of Highly Compensated Participants in order of the
actual contribution ratios beginning with the highest of such ratios).
1.19 "Excess Contributions" means, with respect to a Plan Year, the excess
of Elective Contributions used to satisfy the "Actual Deferral Percentage" tests
made on behalf of Highly Compensated Participants for the Plan Year over the
maximum amount of such contributions permitted under Section 4.5(a) (determined
by reducing contributions made on behalf of Highly Compensated Participants in
order of the actual deferral ratios beginning with the highest of such ratios).
Excess Contributions shall be treated as an "annual addition" pursuant to
Section 4.9(b).
1.20 "Excess Deferred Compensation" means, with respect to any taxable year
of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals pursuant to Section 4.2(f)
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference. Excess Deferred Compensation shall be treated as an "annual
addition" pursuant to Section 4.9(b) when contributed to the Plan unless
distributed to the affected Participant not later than the first April 15th
following the close of the Participant's taxable year. Additionally, for
purposes of Sections 9.2 and 4.4(g), Excess Deferred Compensation shall continue
to be treated as Employer contributions even if distributed pursuant to Section
4.2(f). However, Excess Deferred Compensation of Non-Highly Compensated
Participants is not taken into account for
4
10
purposes of Section 4.5(a) to the extent such Excess Deferred Compensation
occurs pursuant to Section 4.2(d).
1.21 "Fiduciary" means any person who (a) exercises any discretionary
authority or discretionary control respecting management of the Plan or
exercises any authority or control respecting management or disposition of its
assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan, including, but
not limited to, the Trustee, the Employer and its representative body, and the
Administrator.
1.22 "Fiscal Year" means the Employer's accounting year of 12 months
commencing on June 1st of each year and ending the following May 31st.
1.23 "Forfeiture" means that portion of a Participant's Account that
is not Vested, and occurs on the earlier of:
(a) the distribution of the entire Vested portion of a Terminated
Participant's Account, or
(b) the last day of the Plan Year in which the Participant incurs
five (5) consecutive 1-Year Breaks in Service.
Furthermore, for purposes of paragraph (a) above, in the case of a
Terminated Participant whose Vested benefit is zero, such Terminated Participant
shall be deemed to have received a distribution of his Vested benefit upon his
termination of employment. Restoration of such amounts shall occur pursuant to
Section 6.4(e)(2). In addition, the term Forfeiture shall also include amounts
deemed to be Forfeitures pursuant to any other provision of this Plan.
1.24 "Former Participant" means a person who has been a Participant, but
who has ceased to be a Participant for any reason.
1.25 "415 Compensation" with respect to any Participant means such
Participant's wages as defined in Code Section 3401(a) and all other payments of
compensation by the Employer (in the course of the Employer's trade or business)
for a Plan Year for which the Employer is required to furnish the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and 6052. "415
Compensation" must be determined without regard to any rules under Code Section
3401(a) that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception for
agricultural labor in Code Section 3401(a)(2)).
For Plan Years beginning after December 31, 1997, for purposes of this
Section, the determination of "415 Compensation" 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 Participant and
which is not includible in the gross income of the Participant by reason of Code
Sections 125 or 457.
5
11
1.26 "414(s) Compensation" with respect to any Participant means such
Participant's "415 Compensation" paid during a Plan Year. The amount of "414(s)
Compensation" with respect to any Participant shall include "414(s)
Compensation" for the entire twelve (12) month period ending on the last day of
such Plan Year, except that "414(s) Compensation" shall only be recognized for
that portion of the Plan Year during which an Employee was a Participant in the
Plan.
For purposes of this Section, the determination of "414(s)
Compensation" shall be made by including amounts which are contributed by the
Employer pursuant to a salary reduction agreement and which are not includible
in the gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
"414(s) Compensation" in excess of $150,000 shall be disregarded. Such
amount shall be adjusted for increases in the cost of living in accordance with
Code Section 401(a)(17), except that the dollar increase in effect on January
1 of any calendar year shall be effective for the Plan Year beginning with or
within such calendar year. For any short Plan Year the "414(s) Compensation"
limit shall be an amount equal to the "414(s) Compensation" limit for the
calendar year in which the Plan Year begins multiplied by the ratio obtained by
dividing the number of full months in the short Plan Year by twelve (12).
1.27 "Highly Compensated Employee" means an Employee described in Code
Section 414(q) and the Regulations thereunder, and generally means an Employee
who performed services for the Employer during the "determination year" and is
in one or more of the following groups:
(a) Employees who at any time during the "determination year" or
"look-back year" were "five percent owners" as defined in Section
1.34(c).
(b) Employees who received "415 Compensation" during the
"look-back year" from the Employer in excess of $80,000 and were in
the Top Paid Group of Employees for the Plan Year.
The "determination year" shall be the Plan Year for which testing is
being performed, and the "look-back year" shall be the immediately preceding
twelve-month period.
For purposes of this Section, the determination of "415 Compensation"
shall be made by including amounts which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions. Additionally, the
dollar threshold amount specified in (b) above shall be adjusted at such time
and in the same manner as under Code Section 415(d), except that the base period
shall be the calendar quarter ending September 30, 1996. In the case of such an
adjustment, the dollar limit which shall be applied is the limit for the
calendar year in which the "look-back year" begins.
6
12
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who received no earned income (within the meaning of
Code Section 911(d)(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, 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. Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the "determination year."
1.28 "Highly Compensated Former Employee" means a former Employee who had a
separation year prior to the "determination year" and was a Highly Compensated
Employee in the year of separation from service or in any "determination year"
after attaining age 55. Notwithstanding the foregoing, an Employee who separated
from service prior to 1987 will be treated as a Highly Compensated Former
Employee only if during the separation year (or year preceding the separation
year) or any year after the Employee attains age 55 (or the last year ending
before the Employee's 55th birthday), the Employee either received "415
Compensation" in excess of $50,000 or was a "five percent owner." For purposes
of this Section, "determination year," "415 Compensation" and "five percent
owner" shall be determined in accordance with Section 1.27. Highly Compensated
Former Employees shall be treated as Highly Compensated Employees. The method
set forth in this Section for determining who is a "Highly Compensated Former
Employee" shall be applied on a uniform and consistent basis for all purposes
for which the Code Section 414(q) definition is applicable.
1.29 "Highly Compensated Participant" means any Highly Compensated Employee
who is eligible to participate in the Plan.
1.30 "Hour of Service" means, for purposes of eligibility for
participation, each hour for which an Employee is paid or entitled to payment
for the performance of duties for the Employer.
1.31 "Hour of Service" means, for purposes of vesting and benefit accrual,
(1) each hour for which an Employee is directly or indirectly compensated or
entitled to compensation by the Employer for the performance of duties (these
hours will be credited to the Employee for the computation period in which the
duties are performed); (2) each hour for which an Employee is directly or
indirectly compensated or entitled to compensation by the Employer (irrespective
of whether the employment relationship has terminated) for reasons other than
performance of duties (such as vacation, holidays, sickness, jury duty,
disability, lay-off, military duty or leave of absence) during the applicable
computation period (these hours will be calculated and credited pursuant to
Department of Labor regulation 2530.200b-2 which is incorporated herein by
reference); (3) each hour for which back pay is awarded or agreed to by the
Employer without regard to mitigation of damages (these hours will be credited
to the Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
agreement or payment is made). The same Hours of Service shall not be credited
both under (1) or (2), as the case may be, and under (3).
7
13
Notwithstanding the above, (i) no more than 501 Hours of Service are
required to be credited to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not such period
occurs in a single computation period); (ii) an hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account of a period
during which no duties are performed is not required to be credited to the
Employee if such payment is made or due under a plan maintained solely for the
purpose of complying with applicable worker's compensation, or unemployment
compensation or disability insurance laws; and (iii) Hours of Service are not
required to be credited for a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the Employee.
For purposes of this Section, a payment shall be deemed to be made by
or due from the Employer regardless of whether such payment is made by or due
from the Employer directly, or indirectly through, among others, a trust fund,
or insurer, to which the Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
For purposes of this Section, Hours of Service will be credited for
employment with other Affiliated Employers. The provisions of Department of
Labor regulations 2530.200b-2(b) and (c) are incorporated herein by reference.
1.32 "Income" means the income or losses allocable to "excess amounts"
which shall equal the allocable gain or loss for the "applicable computation
period". The income allocable to "excess amounts" for the "applicable
computation period" is determined by multiplying the income for the "applicable
computation period" by a fraction. The numerator of the fraction is the "excess
amount" for the "applicable computation period." The denominator of the fraction
is the total "account balance" attributable to "Employer contributions" as of
the end of the "applicable computation period", reduced by the gain allocable to
such total amount for the "applicable computation period" an increased by the
loss allocable to such total amount for the "applicable computation period". The
provisions of this Section shall be applied:
(a) For purposes of Section 4.2(f), by substituting:
(1) "Excess Deferred Compensation" for "excess amounts";
(2) "taxable year of the Participant" for "applicable
computation period";
(3) "Deferred Compensation" for "Employer contributions"; and
(4) "Participant's Elective Account" for "account balance."
(b) For purposes of Section 4.6(a), by substituting:
(1) "Excess Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation period";
8
14
(3) "Elective Contributions" for "Employer contributions"; and
(4) "Participant's Elective Account" for "account balance."
(c) For purposes of Section 4.8(a), by substituting:
(1) "Excess Aggregate Contributions" for "excess amounts";
(2) "Plan Year" for "applicable computation period";
(3) "Employer matching contributions made pursuant to Section
4.1(b) (to the extent such matching contributions are used to
satisfy the "Actual Contribution Percentage" tests), Employer
matching contributions made pursuant to Section 4.1(c) and any
qualified non-elective contributions or elective deferrals taken
into account pursuant to Section 4.7(c)" for "Employer
contributions"; and
(4) "Participant's Account" for "account balance."
Income allocable to any distribution of Excess Deferred Compensation
on or before the last day of the taxable year of the Participant shall be
calculated from the first day of the taxable year of the Participant to the date
on which the distribution is made pursuant to either the "fractional method" or
the "safe harbor method." Under such "safe harbor method," allocable Income for
such period shall be deemed to equal ten percent (10%) of the Income allocable
to such Excess Deferred Compensation multiplied by the number of calendar months
in such period. For purposes of determining the number of calendar months in
such period, a distribution occurring on or before the fifteenth day of the
month shall be treated as having been made on the last day of the preceding
month and a distribution occurring after such fifteenth day shall be treated as
having been made on the first day of the next subsequent month.
1.33 "Investment Manager" means an entity that (a) has the power to manage,
acquire, or dispose of Plan assets and (b) acknowledges fiduciary responsibility
to the Plan in writing. Such entity must be a person, firm, or corporation
registered as an investment adviser under the Investment Advisers Act of 1940, a
bank, or an insurance company.
1.34 "Key Employee" means an Employee as defined in Code Section 416(i) and
the Regulations thereunder. Generally, any Employee or former Employee (as well
as each of his Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the "Determination Date" or any of the
preceding four (4) Plan Years, has been included in one of the following
categories:
(a) an officer of the Employer (as that term is defined within
the meaning of the Regulations under Code Section 416) having annual
"415 Compensation" greater than 50 percent of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan Year.
(b) one of the ten employees having annual "415 Compensation"
from the Employer for a Plan Year greater than the dollar limitation
in effect
9
15
under Code Section 415(c)(1)(A) for the calendar year in which such
Plan Year ends and owning (or considered as owning within the meaning
of Code Section 318) both more than one-half percent interest and the
largest interests in the Employer.
(c) a "five percent owner" of the Employer. "Five percent owner"
means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the
outstanding stock of the Employer or stock possessing more than five
percent (5%) of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who
owns more than five percent (5%) of the capital or profits interest in
the Employer. In determining percentage ownership hereunder, employers
that would otherwise be aggregated under Code Sections 414(b), (c),
(m) and (o) shall be treated as separate employers.
(d) a "one percent owner" of the Employer having an annual "415
Compensation" from the Employer of more than $150,000. "One percent
owner" means any person who owns (or is considered as owning within
the meaning of Code Section 318) more than one percent (1%) of the
outstanding stock of the 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 which are contributed by the Employer
pursuant to a salary reduction agreement and which are not includible in the
gross income of the Participant under Code Sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457(b), and Employee contributions described in Code
Section 414(h)(2) that are treated as Employer contributions.
1.35 "Late Retirement Date" means the first day of the month coinciding
with or next following a Participant's actual Retirement Date after having
reached his Normal Retirement Date.
1.36 "Leased Employee" means any person (other than an Employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at least one
year, and such services are performed under primary direction or control by the
recipient employer. Contributions or benefits provided a Leased Employee by the
leasing organization which are attributable to services performed
10
16
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:
(a) if such employee is covered by a money purchase pension plan
providing:
(1) a non-integrated employer contribution rate of at least 10%
of compensation, as defined in Code Section 415(c)(3), but
including amounts which are contributed by the Employer pursuant
to a salary reduction agreement and which are not includible in
the gross income of the Participant under Code Sections 125,
402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee
contributions described in Code Section 414(h)(2) that are
treated as Employer contributions.
(2) immediate participation; and
(3) full and immediate vesting; and
(b) if Leased Employees do not constitute more than 20% of the
recipient's non-highly compensated work force.
1.37 "Non-Elective Contribution" means the Employer contributions to the
Plan excluding, however, contributions made pursuant to the Participant's
deferral election provided for in Section 4.2, matching contributions or
nonelective contributions (which are used to satisfy the safe harbor methods
permitted by Code Sections 401(k)(12) and 401(m)(11)) made pursuant to Section
4.1(b) and any Qualified Non-Elective Contribution used in the "Actual Deferral
Percentage" tests.
1.38 "Non-Highly Compensated Participant" means any Participant who is not
a Highly Compensated Employee.
1.39 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.40 "Normal Retirement Age" means the Participant's 65th birthday, or his
5th anniversary of joining the Plan, if later. A Participant shall become fully
Vested in his Participant's Account upon attaining his Normal Retirement Age.
1.41 "Normal Retirement Date" means the first day of the month coinciding
with or next following the Participant's Normal Retirement Age.
1.42 "1-Year Break in Service" means, for purposes of eligibility for
participation, a Period of Severance of at least 12 consecutive months.
1.43 "1-Year Break in Service" means, for purposes of vesting, the
applicable computation period during which an Employee has not completed more
than 500 Hours of Service with the Employer. Further, solely for the purpose of
determining whether a Participant has incurred a 1-Year Break in Service, Hours
of Service shall be recognized for "authorized leaves of absence" and "maternity
and paternity leaves of absence." Years of Service and 1-Year Breaks in Service
shall be measured on the same computation period.
11
17
"Authorized leave of absence" means an unpaid, temporary cessation
from active employment with the Employer pursuant to an established
nondiscriminatory policy, whether occasioned by illness, military service, or
any other reason.
A "maternity or paternity leave of absence" means, for Plan Years
beginning after December 31, 1984, an absence from work for any period by reason
of the Employee's pregnancy, birth of the Employee's child, placement of a child
with the Employee in connection with the adoption of such child, or any absence
for the purpose of caring for such child for a period immediately following such
birth or placement. For this purpose, Hours of Service shall be credited for the
computation period in which the absence from work begins, only if credit
therefore is necessary to prevent the Employee from incurring a 1-Year Break in
Service, or, in any other case, in the immediately following computation period.
The Hours of Service credited for a "maternity or paternity leave of absence"
shall be those which would normally have been credited but for such absence, or,
in any case in which the Administrator is unable to determine such hours
normally credited, eight (8) Hours of Service per day. The total Hours of
Service required to be credited for a "maternity or paternity leave of absence"
shall not exceed 501.
1.44 "Participant" means any Eligible Employee who participates in the Plan
and has not for any reason become ineligible to participate further in the Plan.
1.45 "Participant Direction Procedures" means such instructions, guidelines
or policies, the terms of which are incorporated herein, as shall be established
pursuant to Section 4.12 and observed by the Administrator and applied and
provided to Participants who have Participant Directed Accounts.
1.46 "Participant's 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 Non-Elective Contributions.
A separate accounting shall be maintained with respect to that portion
of the Participant's Account attributable to Employer matching contributions and
nonelective contributions made pursuant to Section 4.1(b), Employer matching
contributions made pursuant to Section 4.1(c), Employer discretionary
contributions made pursuant to Section 4.1(d) and any Employer Qualified
Non-Elective Contributions.
1.47 "Participant's Combined Account" means the total aggregate amount of
each Participant's Elective Account and Participant's Account.
1.48 "Participant's Directed Account" means that portion of a Participant's
interest in the Plan with respect to which the Participant has directed the
investment in accordance with the Participant Direction Procedure.
1.49 "Participant's Elective Account" means the account established and
maintained by the Administrator for each Participant with respect to his total
interest in the Plan and Trust resulting from the Employer Elective
Contributions used to satisfy the "Actual Deferral Percentage" tests. A separate
accounting shall be maintained with respect to that portion of the Participant's
Elective Account attributable to such Elective Contributions pursuant to
Section 4.2, Employer matching contributions and nonelective
12
18
contributions made pursuant to Section 4.1(b) and any Employer Qualified
Non-Elective Contributions.
1.50 "Period of Service" means the aggregate of all periods commencing with
the Employee's first day of employment or reemployment with the Employer or
Affiliated Employer and ending on the date a 1-Year Break in Service begins. The
first day of employment or reemployment is the first day the Employee performs
an Hour of Service. An Employee will also receive partial credit for any Period
of Severance of less than 12 consecutive months. Fractional periods of a year
will be expressed in terms of days.
1.51 "Period of Severance" means a continuous period of time during which
the Employee is not employed by the Employer. Such period begins on the date the
Employee retires, quits or is discharged, or if earlier, the 12 month
anniversary of the date on which the Employee was otherwise first absent from
service.
In the case of an individual who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the first
anniversary of the first day of such absence shall not constitute a 1-Year Break
in Service. For purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence (a) by reason of the pregnancy of the
individual, (b) by reason of the birth of a child of the individual, (c) by
reason of the placement of a child with the individual in connection with the
adoption of such child by such individual, or (d) for purposes of caring for
such child for a period beginning immediately following such birth or placement.
1.52 "Plan" means this instrument, including all amendments thereto.
1.53 "Plan Year" means the Plan's accounting year of twelve (12) months
commencing on June 1st of each year and ending the following May 31st.
1.54 "Qualified Non-Elective Contribution" means any Employer contributions
made pursuant to Section 4.6(b) and Section 4.8(f). Such contributions shall be
considered an Elective Contribution for the purposes of the Plan and used to
satisfy the "Actual Deferral Percentage" tests or the "Actual Contribution
Percentage" tests.
1.55 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.56 "Retired Participant" means a person who has been a Participant, but
who has become entitled to retirement benefits under the Plan.
1.57 "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 or Late Retirement Date (see
Section 6.1).
1.58 "Super Top Heavy Plan" means a plan described in Section 9.2(b).
1.59 "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.
13
19
1.60 "Top Heavy Plan" means a plan described in Section 9.2(a).
1.61 "Top Heavy Plan Year" means a Plan Year during which the Plan is a Top
Heavy Plan.
1.62 "Top Paid Group" means the top 20 percent of Employees who performed
services for the Employer during the applicable year, ranked according to the
amount of "415 Compensation" (determined for this purpose in accordance with
Section 1.27) received from the Employer during such year. 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. Employees who are non-resident aliens and who received no earned
income (within the meaning of Code Section 911(d)(2)) from the Employer
constituting United States source income within the meaning of Code Section
861(a)(3) shall not be treated as Employees. Additionally, for the purpose of
determining the number of active Employees in any year, the following additional
Employees shall also be excluded; however, such Employees shall still be
considered for the purpose of identifying the particular Employees in the Top
Paid Group:
(a) Employees with less than six (6) months of service;
(b) Employees who normally work less than 17 1/2 hours per week;
(c) Employees who normally work less than six (6) months during a
year; and
(d) Employees who have not yet attained age 21.
In addition, if 90 percent or more of the Employees of the Employer
are covered under agreements the Secretary of Labor finds to be collective
bargaining agreements between Employee representatives and the Employer, and the
Plan covers only Employees who are not covered under such agreements, then
Employees covered by such agreements shall be excluded from both the total
number of active Employees as well as from the identification of particular
Employees in the Top Paid Group.
The foregoing exclusions set forth in this Section shall be applied on
a uniform and consistent basis for all purposes for which the Code Section
414(q) definition is applicable.
1.63 "Total and Permanent Disability" means a physical or mental condition
of a Participant resulting from bodily injury, disease, or mental disorder which
renders him incapable of continuing his usual and customary employment with the
Employer. The disability of a Participant shall be determined by a licensed
physician chosen by the Administrator. The determination shall be applied
uniformly to all Participants.
1.64 "Trustee" means the person or entity named as trustee herein or in any
separate trust forming a part of this Plan, and any successors.
14
20
1.65 "Trust Fund" means the assets of the Plan and Trust as the same shall
exist from time to time.
1.66 "USERRA" means the Uniformed Services Employment and Reemployment
Rights Act of 1994. Notwithstanding any provision of this Plan to the contrary,
effective December 12, 1994, contributions, benefits and service credit with
respect to qualified military service will be provided in accordance with Code
Section 414(u).
1.67 "Valuation Date" means the Anniversary Date and such other date or
dates deemed necessary by the Administrator. The Valuation Date may include any
day during the Plan Year that the Trustee, any transfer agent appointed by the
Trustee or the Employer and any stock exchange used by such agent are open for
business.
1.68 "Vested" means the nonforfeitable portion of any account maintained on
behalf of a Participant.
1.69 "Year of Service" means the computation period of twelve (12)
consecutive months, herein set forth, during which an Employee has at least 1000
Hours of Service.
For vesting purposes, the computation periods shall be measured from
the date on which the Employee first performs an Hour of Service and
anniversaries thereof, including periods prior to the Effective Date of the
Plan.
The computation period shall be the Plan Year if not otherwise set
forth herein.
Notwithstanding the foregoing, for any short Plan Year, the
determination of whether an Employee has completed a Year of Service shall be
made in accordance with Department of Labor regulation 2530.203-2(c). However,
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 full months in
the short Plan Year.
Years of Service with any Affiliated Employer shall be recognized.
ARTICLE II
ADMINISTRATION
2.1 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) In addition to the general powers and responsibilities
otherwise provided for in this Plan, the Employer shall be empowered
to appoint and remove the Trustee and the Administrator from time to
time as it deems necessary for the proper administration of the Plan
to ensure 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. The Employer may appoint counsel,
specialists, advisers, agents (including any nonfiduciary agent) and
other persons as the Employer deems necessary or desirable in
connection with the exercise of its fiduciary duties under this Plan.
The Employer may compensate such agents or advisers from the
15
21
assets of the Plan as fiduciary expenses (but not including any
business (settlor) expenses of the Employer), to the extent not paid
by the Employer.
(b) The Employer shall establish a "funding policy and method,"
i.e., it shall determine whether the Plan has a short run need for
liquidity (e.g., to pay benefits) or whether liquidity is a long run
goal and investment growth (and stability of same) is a more current
need, or shall appoint a qualified person to do so. The Employer or
its delegate shall communicate such needs and goals to the Trustee,
who shall coordinate such Plan needs with its investment policy. The
communication of such a "funding policy and method" shall not,
however, constitute a directive to the Trustee as to investment of the
Trust Funds. Such "funding policy and method" shall be consistent with
the objectives of this Plan and with the requirements of Title I of
the Act.
(c) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct
and evaluation, or through other appropriate ways.
2.2 DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Employer shall be the Administrator. The Employer may appoint any
person, including, but not limited to, the Employees of the Employer, to perform
the duties of the Administrator. Any person so appointed shall signify his
acceptance by filing written acceptance with the Employer. Upon the resignation
or removal of any individual performing the duties of the Administrator, the
Employer may designate a successor.
2.3 POWERS AND DUTIES OF THE ADMINISTRATOR
The primary responsibility of the Administrator is to administer the
Plan for the exclusive benefit of the Participants and their Beneficiaries,
subject to the specific terms of the Plan. The Administrator shall administer
the Plan in accordance with its terms and shall have the power and discretion to
construe the terms of the Plan and to determine all questions arising in
connection with the administration, interpretation, and application of the Plan.
Any such determination by the Administrator shall be conclusive and binding upon
all persons. The Administrator may establish procedures, correct any defect,
supply any information, or reconcile any inconsistency in such manner and to
such extent as shall be deemed necessary or advisable to carry out the purpose
of the Plan; provided, however, that any procedure, discretionary act,
interpretation or construction shall be done in a nondiscriminatory manner based
upon uniform principles consistently applied and shall be consistent with the
intent that the Plan shall continue to be deemed a qualified plan under the
terms of Code Section 401(a), and shall comply with the terms of the Act and all
regulations issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish his duties under this Plan.
16
22
The Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the following:
(a) the discretion to determine all questions relating to the
eligibility of Employees to participate or remain a Participant
hereunder and to receive benefits under the Plan;
(b) to compute, certify, and direct the Trustee with respect to
the amount and the kind of benefits to which any Participant shall be
entitled hereunder;
(c) to authorize and direct the Trustee with respect to all
nondiscretionary or otherwise directed disbursements from the Trust;
(d) to maintain all necessary records for the administration of
the Plan;
(e) to interpret the provisions of the Plan and to make and
publish such rules for regulation of the Plan as are consistent with
the terms hereof;
(f) to determine the size and type of any Contract to be
purchased from any insurer, and to designate the insurer from which
such Contract shall be purchased;
(g) to compute and certify to the Employer and to the Trustee
from time to time the sums of money necessary or desirable to be
contributed to the Plan;
(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 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;
(j) to act as the named Fiduciary responsible for communications
with Participants as needed to maintain Plan compliance with ERISA
Section 404(c), including but not limited to the receipt and
transmitting of Participant's directions as to the investment of their
account(s) under the Plan and the formulation of policies, rules, and
procedures pursuant to which Participants may give investment
instructions with respect to the investment of their accounts;
(k) to assist any Participant regarding his rights, benefits, or
elections available under the Plan.
17
23
2.4 RECORDS AND REPORTS
The Administrator shall keep a record of all actions taken and shall
keep all other books of account, records, policies, and other data that may be
necessary for proper administration of the Plan and shall be responsible for
supplying all information and reports to the Internal Revenue Service,
Department of Labor, Participants, Beneficiaries and others as required by law.
2.5 APPOINTMENT OF ADVISERS
The Administrator, or the Trustee with the consent of the
Administrator, may appoint counsel, specialists, advisers, agents (including
nonfiduciary agents) and other persons as the Administrator or the Trustee deems
necessary or desirable in connection with the administration of this Plan,
including but not limited to agents and advisers to assist with the
administration and management of the Plan, and thereby to provide, among such
other duties as the Administrator may appoint, assistance with maintaining Plan
records and the providing of investment information to the Plan's investment
fiduciaries and to Plan Participants.
2.6 PAYMENT OF EXPENSES
All expenses of administration may be paid out of the Trust Fund
unless paid by the Employer. Such expenses shall include any expenses incident
to the functioning of the Administrator, or any person or persons retained or
appointed by any Named Fiduciary incident to the exercise of their duties under
the Plan, including, but not limited to, fees of accountants, counsel,
Investment Managers, agents (including nonfiduciary agents) appointed for the
purpose of assisting the Administrator or the Trustee in carrying out the
instructions of Participants as to the directed investment of their accounts and
other specialists and their agents, and other costs of administering the Plan.
Until paid, the expenses shall constitute a liability of the Trust Fund.
2.7 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within 90 days after the application is filed. In the event the
claim is denied, the reasons for the denial shall be specifically set forth in
the notice in language calculated to be understood by the claimant, pertinent
provisions of the Plan shall be cited, and, where appropriate, an explanation as
to how the claimant can perfect the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims review
procedure.
2.8 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been
denied a benefit by a decision of the Administrator pursuant to Section 2.7
shall be entitled to request the Administrator to give further consideration to
his claim by filing with the Administrator (on a form which may be obtained from
the Administrator) a request for a hearing. Such request, together with a
written statement of the reasons why the claimant believes his claim should be
allowed, shall be filed with the Administrator no later than 60
18
24
days after receipt of the written notification provided for in Section 2.7. The
Administrator shall then conduct a hearing within the next 60 days, at which the
claimant may be represented by an attorney or any other representative of his
choosing and at which the claimant shall have an opportunity to submit written
and oral evidence and arguments in support of his claim. At the hearing (or
prior thereto upon 5 business days written notice to the Administrator) the
claimant or his representative shall have an opportunity to review all documents
in the possession of the Administrator which are pertinent to the claim at issue
and its disallowance. Either the claimant or the Administrator may cause a court
reporter to attend the hearing and record the proceedings. In such event, a
complete written transcript of the proceedings shall be furnished to both
parties by the court reporter. The full expense of any such court reporter and
such transcripts shall be borne by the party causing the court reporter to
attend the hearing. A final decision as to the allowance of the claim shall be
made by the Administrator within 60 days of receipt of the appeal (unless there
has been an extension of 60 days due to special circumstances, provided the
delay and the special circumstances occasioning it are communicated to the
claimant within the 60 day period). Such communication shall be written in a
manner calculated to be understood by the claimant and shall include specific
reasons for the decision and specific references to the pertinent Plan
provisions on which the decision is based.
ARTICLE III
ELIGIBILITY
3.1 CONDITIONS OF ELIGIBILITY
Any Eligible Employee who was employed on June 1, 2000 shall be
eligible to participate and shall enter the Plan as of the first day of such
Plan Year. Any other Eligible Employee who has completed a 90 day Period of
Service shall be eligible to participate hereunder as of the date he has
satisfied such requirements.
3.2 EFFECTIVE DATE OF PARTICIPATION
An Eligible Employee shall become a Participant effective as of the
earlier of the first day of the Plan Year or the first day of the seventh month
of such Plan Year coinciding with or next following the date such Employee met
the eligibility requirements of Section 3.1, provided said Employee was still
employed as of such date (or if not employed on such date, as of the date of
rehire if a 1-Year Break in Service has not occurred).
In the event an Employee who is not a member of an eligible class of
Employees becomes a member of an eligible class, such Employee will participate
immediately if such Employee has satisfied the minimum age and service
requirements and would have otherwise previously become a Participant.
3.3 DETERMINATION OF ELIGIBILITY
The Administrator shall determine the eligibility of each Employee for
participation in the Plan based upon information furnished by the Employer. Such
determination shall be conclusive and binding upon all persons, as long as the
same is made pursuant to the Plan and the Act. Such determination shall be
subject to review per Section 2.8.
19
25
3.4 TERMINATION OF ELIGIBILITY
(a) In the event a Participant shall go from a classification of
an Eligible Employee to an ineligible Employee, such Former
Participant shall continue to vest in his interest in the Plan for
each Year of Service completed while a noneligible Employee, until
such time as his Participant's Account shall be forfeited or
distributed pursuant to the terms of the Plan. Additionally, his
interest in the Plan shall continue to share in the earnings of the
Trust Fund.
(b) In the event a Participant is no longer a member of an
eligible class of Employees and becomes ineligible to participate,
such Employee will participate immediately upon returning to an
eligible class of Employees.
3.5 OMISSION OF ELIGIBLE EMPLOYEE
If, in any Plan Year, any Employee who should be included as a
Participant in the Plan is erroneously omitted and discovery of such omission is
not made until after a contribution by his Employer for the year has been made,
the Employer shall make a subsequent contribution with respect to the omitted
Employee in the amount which the said Employer would have contributed with
respect to him had he not been omitted. Such contribution shall be made
regardless of whether or not it is deductible in whole or in part in any taxable
year under applicable provisions of the Code.
3.6 INCLUSION OF INELIGIBLE EMPLOYEE
If, in any Plan Year, any person who should not have been included as
a Participant in the Plan is erroneously included and discovery of such
incorrect inclusion is not made until after a contribution for the year has been
made, the Employer shall not be entitled to recover the contribution made with
respect to the ineligible person regardless of whether or not a deduction is
allowable with respect to such contribution. In such event, the amount
contributed with respect to the ineligible person shall constitute a Forfeiture
(except for Deferred Compensation which shall be distributed to the ineligible
person) for the Plan Year in which the discovery is made.
3.7 ELECTION NOT TO PARTICIPATE
An Employee may, subject to the approval of the Employer, elect
voluntarily not to participate in the Plan. The election not to participate must
be communicated to the Employer, in writing, at least thirty (30) days before
the beginning of a Plan Year.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 FORMULA FOR DETERMINING EMPLOYER CONTRIBUTION
For each Plan Year, the Employer shall contribute to the Plan, except
as otherwise provided:
20
26
(a) The amount of the total salary reduction elections of all
Participants made pursuant to Section 4.2(a), which amount shall be
deemed an Employer Elective Contribution.
(b) On behalf of each Participant, at the election of the
Employer, either (1), (2), (3) or (4) below:
(1) Basic Matching Contributions: An amount equal to the
Participant's Deferred Compensation up to 3% of his Compensation
plus one-half of the Participant's Deferred Compensation in
excess of 3% of his Compensation (but not in excess of 5%), which
amount shall be deemed an Employer Elective Contribution.
(2) Enhanced Matching Contribution: An amount, at any rate of
Deferred Compensation, equal to at least the aggregate amount of
matching contributions that would have been provided under the
Basic Matching Contribution formula. In addition, the rate of
matching contribution may not increase as a Participant's rate of
Deferred Compensation increases. The amount of any Enhanced
Matching Contribution shall be deemed an Employer Elective
Contribution.
(3) Nonelective Contribution: An amount equal to at least 3% of
the Participant's Compensation, which amount shall be deemed an
Employer Elective Contribution.
(4) A contribution to another plan maintained by the Employer,
which amount shall be deemed an Employer Elective Contribution.
Contributions made to the Plan pursuant to this Section
4.1(b) are intended to comply with Sections 4.5(a) and 4.7(a) pursuant
to the safe harbor methods permitted by Code Sections 401(k)(12) and
401(m)(11). However, if matching contributions are made to this Plan
or any other plan maintained by the Employer, and (i) such matching
contributions are made with respect to Deferred Compensation or
voluntary Employee contributions that in the aggregate exceed 6% of
the Employee's Compensation, (ii) the rate of matching contributions
increases as the rate of Deferred Compensation or voluntary Employee
contributions increases, (iii) at any rate of Deferred Compensation or
voluntary Employee contributions, the rate of matching contributions
that would apply with respect to any Highly Compensated Employee is
greater than the rate of matching contributions that would apply with
respect to a Non-Highly Compensated Participant and who has the same
rate of Deferred Compensation or voluntary Employee contributions,
(iv) any discretionary matching contribution made to this Plan and any
other plan maintained by the Employer, in the aggregate, exceed 4% of
the Participant's Compensation, then such matching contributions in
the aggregate must satisfy the "Actual Contribution Percentage" tests
of Section 4.7. In this regard, the Employer may elect to disregard,
with respect to all Eligible Employees, all matching contributions
with respect to a Participant's Deferred Compensation up to 6% of each
Participant's Compensation, or matching contributions up to 4% of each
Participant's
21
27
Compensation. In applying the "Actual Contribution Percentage" tests,
match contributions or nonelective contributions made pursuant to this
Section 4.1(b) that satisfy the safe harbor methods permitted by Code
Section 401(k)(12) may not be treated as matching contributions under
Code Section 401(m)(3).
The rules that apply for purposes of aggregating and
disaggregating cash or deferred arrangements and plans under Code
Sections 401(k) and 401(m) also apply for purposes of Code Sections
401(k)(12) and 401(m)(11).
(c) On behalf of each Participant who is eligible to share in
matching contributions for the Plan Year, a matching contribution
equal to 50% of each such Participant's Deferred Compensation plus a
uniform discretionary percentage of each such Participant's Deferred
Compensation, the exact percentage, if any, to be determined each year
by the Employer, which amount, if any, shall be deemed an Employer
Non-Elective Contribution.
Except, however, in applying the matching percentage
specified above, only salary reductions up to 6% of payroll period
Compensation shall be considered.
(d) A discretionary amount, which amount, if any, shall be deemed
an Employer Non-Elective Contribution.
(e) Additionally, to the extent necessary, the Employer shall
contribute to the Plan the amount necessary to provide the top heavy
minimum contribution. All contributions by the Employer shall be made
in cash.
4.2 PARTICIPANT'S SALARY REDUCTION ELECTION
(a) Each Participant may elect to defer from 1% to 15% of his
Compensation which would have been received in the Plan Year, but for
the deferral election. A deferral election (or modification of an
earlier election) may not be made with respect to Compensation which
is currently available on or before the date the Participant executed
such election or, if later, the latest of the date the Employer adopts
this cash or deferred arrangement, or the date such arrangement first
became effective. For purposes of this Section, Compensation shall be
determined prior to any reductions made pursuant to Code Sections 125,
402(e)(3), 402(h)(1)(B), 403(b) or 457(b), and Employee contributions
described in Code Section 414(h)(2) that are treated as Employer
contributions.
The amount by which Compensation is reduced shall be that
Participant's Deferred Compensation and be treated as an Employer
Elective Contribution and allocated to that Participant's Elective
Account.
22
28
(b) The balance in each Participant's Elective Account shall be
fully Vested at all times and shall not be subject to Forfeiture for
any reason.
(c) Notwithstanding anything in the Plan to the contrary, amounts
held in the Participant's Elective Account may not be distributable
earlier than:
(1) a Participant's separation from service, Total and Permanent
Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan without the establishment or
existence of a "successor plan," as that term is described in
Regulation 1.401(k)-1(d)(3);
(4) the date of disposition 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)) used in a trade or
business of such corporation if such corporation continues to
maintain this Plan after the disposition with respect to a
Participant who continues employment with the corporation
acquiring such assets;
(5) the date of disposition by the Employer or an Affiliated
Employer who maintains the Plan of its interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) to an entity which
is not an Affiliated Employer but only with respect to a
Participant who continues employment with such subsidiary; or
(6) the proven financial hardship of a Participant, subject to
the limitations of Section 6.11.
(d) For each Plan Year, a Participant's Deferred Compensation
made under this Plan and all other plans, contracts or arrangements of
the Employer maintaining this Plan shall not exceed, during any
taxable year of the Participant, the limitation imposed by Code
Section 402(g), as in effect at the beginning of such taxable year. If
such dollar limitation is exceeded, a Participant will be deemed to
have notified the Administrator of such excess amount which shall be
distributed in a manner consistent with Section 4.2(f). The dollar
limitation shall be adjusted annually pursuant to the method provided
in Code Section 415(d) in accordance with Regulations.
(e) In the event a Participant has received a hardship
distribution from his Participant's Elective Account pursuant to
Section 6.11(b) or pursuant to Regulation 1.401(k)-1(d)(2)(iv)(B)
from any other plan maintained by the Employer, then such Participant
shall not be permitted to elect to have Deferred Compensation
contributed to the Plan on his behalf for a period of twelve (12)
months following the receipt of the distribution. Furthermore, the
dollar limitation under Code Section 402(g) shall be reduced, with
respect to the Participant's taxable year following the taxable year
in which the hardship distribution was made, by the amount of such
Participant's Deferred
23
29
Compensation, if any, pursuant to this Plan (and any other plan
maintained by the Employer) for the taxable year of the hardship
distribution.
(f) If a Participant's Deferred Compensation under this Plan
together with any elective deferrals (as defined in Regulation
1.402(g)-1(b)) under another qualified cash or deferred arrangement
(as defined in Code Section 401(k)), a simplified employee pension (as
defined in Code Section 408(k)), a salary reduction arrangement
(within the meaning of Code Section 3121(a)(5)(D)), a deferred
compensation plan under Code Section 457(b), or a trust described in
Code Section 501(c)(18) cumulatively exceed the limitation imposed by
Code Section 402(g) (as adjusted annually in accordance with the
method provided in Code Section 415(d) pursuant to Regulations) for
such Participant's taxable year, the Participant may, not later than
March 1 following the close of the Participant's taxable year, notify
the Administrator in writing of such excess and request that his
Deferred Compensation under this Plan be reduced by an amount
specified by the Participant. In such event, the Administrator may
direct the Trustee to distribute such excess amount (and any Income
allocable to such excess amount) to the Participant not later than the
first April 15th following the close of the Participant's taxable
year. Any distribution of less than the entire amount of Excess
Deferred Compensation and Income shall be treated as a pro rata
distribution of Excess Deferred Compensation and Income. The amount
distributed shall not exceed the Participant's Deferred Compensation
under the Plan for the taxable year (and any Income allocable to such
excess amount). Any distribution on or before the last day of the
Participant's taxable year must satisfy each of the following
conditions:
(1) the distribution must be made after the date on which the
Plan received the Excess Deferred Compensation;
(2) the Participant shall designate the distribution as Excess
Deferred Compensation; and
(3) the Plan must designate the distribution as a distribution of
Excess Deferred Compensation.
Any distribution made pursuant to this Section 4.2(f) shall
be made first from unmatched Deferred Compensation and, thereafter,
from Deferred Compensation which is matched. Matching contributions
which relate to such Deferred Compensation shall be forfeited.
(g) Notwithstanding Section 4.2(f) above, a Participant's Excess
Deferred Compensation shall 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 such other date when the
Participant shall be entitled to receive benefits, the fair market
value of the Participant's Elective Account shall be used to provide
additional benefits to the Participant or his Beneficiary.
24
30
(i) Employer Elective Contributions made pursuant to this Section
may be segregated into a separate account for each Participant in a
federally insured savings account, certificate of deposit in a bank or
savings and loan association, money market certificate, or other
short-term debt security acceptable to the Trustee until such time as
the allocations pursuant to Section 4.4 have been made.
(j) The Employer and the Administrator shall implement the salary
reduction elections provided for herein in accordance with the
following:
(1) A Participant must make his initial salary deferral election
within a reasonable time, not to exceed thirty (30) days, after
entering the Plan pursuant to Section 3.2. If the Participant
fails to make an initial salary deferral election within such
time, then such Participant may thereafter make an election in
accordance with the rules governing modifications. The
Participant shall make such an election by entering into a
written salary reduction agreement with the Employer and filing
such agreement with the Administrator. Such election shall
initially be effective beginning with the pay period following
the acceptance of the salary reduction agreement by the
Administrator, shall not have retroactive effect and shall remain
in force until revoked.
(2) A Participant may modify a prior election during the Plan
Year and concurrently make a new election by filing a written
notice with the Administrator within a reasonable time before the
pay period for which such modification is to be effective.
However, modifications to a salary deferral election shall only
be permitted quarterly, during election periods established by
the Administrator prior to the first day of each Plan Year
quarter. Any modification shall not have retroactive effect and
shall remain in force until revoked.
(3) A Participant may elect to prospectively revoke his salary
reduction agreement in its entirety at any time during the Plan
Year by providing the Administrator with thirty (30) days written
notice of such revocation (or upon such shorter notice period as
may be acceptable to the Administrator). Such revocation shall
become effective as of the beginning of the first pay period
coincident with or next following the expiration of the notice
period. Furthermore, the termination of the Participant's
employment, or the cessation of participation for any reason,
shall be deemed to revoke any salary reduction agreement then in
effect, effective immediately following the close of the pay
period within which such termination or cessation occurs.
(4) If the Employer elects to make a contribution pursuant to
Section 4.1(b), the Employer, at least 30 days, but not more than
90 days, before the beginning of the Plan Year, 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 Employee. If an Employee becomes
25
31
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. In addition to any other election periods provided
under this Section 4.2, each eligible Employee may make or modify
a salary reduction election during the 30-day period immediately
following receipt of the notice described above.
4.3 TIME OF PAYMENT OF EMPLOYER CONTRIBUTION
The Employer shall generally pay to the Trustee its contribution to
the Plan for each Plan Year within the time prescribed by law, including
extensions of time, for the filing of the Employer federal income tax return for
the Fiscal Year.
However, Employer Elective Contributions accumulated through payroll
deductions shall be paid to the Trustee as of the earliest date on which such
contributions can reasonably be segregated from the Employer general assets, but
in any event within ninety (90) days from the date on which such amounts would
otherwise have been payable to the Participant in cash. The provisions of
Department of Labor regulations 2510.3-102 are incorporated herein by reference.
Furthermore, any additional Employer contributions which are allocable to the
Participant's Elective Account for a Plan Year shall be paid to the Plan no
later than the twelve-month period immediately following the close of such Plan
Year.
4.4 ALLOCATION OF CONTRIBUTION, FORFEITURES AND EARNINGS
(a) The Administrator shall establish and maintain an account in
the name of each Participant to which the Administrator shall credit
as of each Anniversary Date all amounts allocated to each such
Participant as set forth herein.
(b) The Employer shall provide the Administrator with all
information required by the Administrator to make a proper allocation
of the Employer contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate such contribution as
follows:
(1) With respect to the Employer Elective Contribution made
pursuant to Section 4.1(a), to each Participant's Elective
Account in an amount equal to each such Participant's Deferred
Compensation for the year.
(2) With respect to the Employer Elective Contribution made
pursuant to Section 4.1(b), to each Participant's Elective
Account when used to satisfy the "Actual Deferral Percentage"
tests, otherwise to each Participant's Account.
26
32
(3) With respect to the Employer Non-Elective Contribution made
pursuant to Section 4.1(c), to each Participant's Account in
accordance with Section 4.1(c).
Any Participant actively employed during the Plan Year shall be
eligible to share in the matching contribution for the Plan Year.
(4) With respect to the Employer Non-Elective Contribution made
pursuant to Section 4.1(d), to each Participant's Account in the
same proportion that each such Participant's Compensation for the
year bears to the total Compensation of all Participants for such
year.
Only Participants who have completed a Year of Service during the
Plan Year and are actively employed on the last day of the Plan
Year shall be eligible to share in the discretionary contribution
for the year.
(c) As of each Anniversary Date any amounts which became
Forfeitures since the last Anniversary Date shall first be made
available to reinstate previously forfeited account balances of Former
Participants, if any, in accordance with Section 6.4(e)(2). The
remaining Forfeitures, if any, shall be used to reduce the
contribution of the Employer hereunder for the Plan Year in which such
Forfeitures occur in the following manner:
(1) Forfeitures attributable to Employer matching contributions
made pursuant to Section 4.1(c) shall be used to reduce the
Employer contribution for the Plan Year in which such Forfeitures
occur.
(2) Forfeitures attributable to Employer discretionary
contributions made pursuant to Section 4.1(d) shall be used to
reduce the Employer contribution for the Plan Year in which such
Forfeitures occur.
(d) For any Top Heavy Plan Year, Employees not otherwise eligible
to share in the allocation of contributions as provided above, shall
receive the minimum allocation provided for in Section 4.4(g) if
eligible pursuant to the provisions of Section 4.4(i).
(e) Notwithstanding the foregoing, Participants who are not
actively employed on the last day of the Plan Year due to Retirement
(Normal or Late), Total and Permanent Disability or death shall share
in the allocation of contributions for that Plan Year.
(f) As of each Valuation Date, any earnings or losses (net
appreciation or net depreciation) of the Trust Fund shall be allocated
in the same proportion that each Participant's and Former
Participant's time weighted average nonsegregated accounts bear to the
total of all Participants' and Former Participants' time weighted
average nonsegregated accounts as of such date. Earnings or losses
with respect to a Participant's Directed Account shall be allocated in
accordance with Section 4.12.
27
33
Participants' transfers from other qualified plans deposited
in the general Trust Fund shall share in any earnings and losses (net
appreciation or net depreciation) of the Trust Fund in the same manner
provided above. Each segregated account maintained on behalf of a
Participant shall be credited or charged with its separate earnings
and losses.
(g) Minimum Allocations Required for Top Heavy Plan Years:
Notwithstanding the foregoing, for any Top Heavy Plan Year, the sum of
the Employer contributions allocated to the Participant's Combined
Account of each Employee shall be equal to at least three percent (3%)
of such Employee's "415 Compensation" (reduced by contributions and
forfeitures, if any, allocated to each Employee in any defined
contribution plan included with this plan in a Required Aggregation
Group). However, if (1) the sum of the Employer contributions
allocated to the Participant's Combined Account of each Key Employee
for such Top Heavy Plan Year is less than three percent (3%) of each
Key Employee's "415 Compensation" and (2) 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 contributions allocated to the Participant's Combined
Account of each Employee shall 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, such Non-Key Employee's Deferred
Compensation and matching contributions needed to satisfy the "Actual
Deferral Percentage" tests pursuant to Section 4.5(a) or the "Actual
Contribution Percentage" tests pursuant to Section 4.7(a) shall not be
taken into account.
However, no such minimum allocation shall be required in this
Plan for any Employee who participates in another defined contribution
plan subject to Code Section 412 included with this Plan in a Required
Aggregation Group.
(h) For purposes of the minimum allocations set forth above, the
percentage allocated to the Participant's Combined Account of any Key
Employee shall be equal to the ratio of the sum of the Employer
contributions allocated on behalf of such Key Employee divided by the
"415 Compensation" for such Key Employee.
(i) For any Top Heavy Plan Year, the minimum allocations set
forth above shall be allocated to the Participant's Combined Account
of all Employees who are Participants and who are employed by the
Employer on the last day of the Plan Year, including Employees who
have (1) failed to complete a Year of Service; and (2) declined to
make mandatory contributions (if required) or, in the case of a cash
or deferred arrangement, elective contributions to the Plan.
(j) For the purposes of this Section, "415 Compensation" shall be
limited to $150,000. Such amount shall be adjusted for increases in
the cost of living in accordance with Code Section 401(a)(17), except
that the dollar increase in effect on January 1 of any calendar year
shall be effective for the
28
34
Plan Year beginning with or within such calendar year. For any short
Plan Year the "415 Compensation" limit shall be an amount equal to the
"415 Compensation" limit for the calendar year in which the Plan Year
begins multiplied by the ratio obtained by dividing the number of full
months in the short Plan Year by twelve (12).
(k) Notwithstanding anything herein to the contrary, Participants
who terminated employment for any reason during the Plan Year shall
share in the salary reduction contributions made by the Employer for
the year of termination without regard to the Hours of Service
credited.
(l) If a Former Participant is reemployed after five (5)
consecutive 1-Year Breaks in Service, then separate accounts shall be
maintained as follows:
(1) one account for nonforfeitable benefits attributable to
pre-break service; and
(2) one account representing his status in the Plan attributable
to post-break service.
4.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) Maximum Annual Allocation: For each Plan Year, the annual
allocation derived from Employer Elective Contributions to a Highly
Compensated Participant's Elective Account shall satisfy one of the
following tests:
(1) The "Actual Deferral Percentage" for the Highly Compensated
Participant group shall not be more than the "Actual Deferral
Percentage" of the Non-Highly Compensated Participant group (for
the preceding Plan Year if the prior year testing method is used
to calculate the "Actual Deferral Percentage" for 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 (for
the preceding Plan Year if the prior year testing method is used
to calculate the "Actual Deferral Percentage" for the Non-Highly
Compensated Participant group) shall not be more than two
percentage points. Additionally, the "Actual Deferral Percentage"
for the Highly Compensated Participant group shall not exceed the
"Actual Deferral Percentage" for the Non-Highly Compensated
Participant group (for the preceding Plan Year if the prior year
testing method is used to calculate the "Actual Deferral
Percentage" for the Non-Highly Compensated Participant group)
multiplied by 2. The provisions of Code Section 401(k)(3) and
Regulation 1.401(k)-1(b) are incorporated herein by reference.
29
35
However, in order to prevent the multiple use of the alternative
method described in (2) above and in 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 shall have a combination of his Elective
Contributions and Employer matching contributions reduced
pursuant to Section 4.6(a) and Regulation 1.401(m)-2, the
provisions of which are incorporated herein by reference.
Notwithstanding the above, if the prior year testing method is
used for the first Plan Year, the "Actual Deferral Percentage"
for the Non-Highly Compensated Participant group shall be
determined for such Plan Year. However, the Plan shall not have a
first Plan Year (1) if the Plan is aggregated under Regulation
1.401(k)-1(g)(11) with any other plan that was or that included
a Code Section 401(k) plan in the prior year, or (2) the Plan is
a "successor plan" as defined in Internal Revenue Service Notice
98-1, Section V and any superseding guidance.
(b) For the purposes of this Section "Actual Deferral Percentage"
means, with respect to the Highly Compensated Participant group and
Non-Highly Compensated Participant group for a Plan Year, the average
of the ratios, calculated separately for each Participant in such
group, of the amount of Employer Elective Contributions allocated to
each Participant's Elective Account for such Plan Year, to such
Participant's "414(s) Compensation" for such Plan Year. The actual
deferral ratio for each Participant and the "Actual Deferral
Percentage" for each group shall be calculated to the nearest
one-hundredth of one percent. Employer Elective Contributions
allocated to each Non-Highly Compensated Participant's Elective
Account shall be reduced by Excess Deferred Compensation to the extent
such excess amounts are made under this Plan or any other plan
maintained by the Employer.
(c) For the purposes of Sections 4.5(a) and 4.6, a Highly
Compensated Participant and a Non-Highly Compensated Participant shall
include any Employee eligible to make a deferral election pursuant to
Section 4.2, whether or not such deferral election was made or
suspended pursuant to Section 4.2.
(d) If the Plan uses the prior year testing method, the "Actual
Deferral Percentage" for the Non-Highly Compensated Participant group
is determined without regard to changes in the group of Non-Highly
Compensated Participants who are eligible under the Plan in the
testing year. However, if the Plan results from, or is otherwise
affected by, a "Plan Coverage Change" that becomes effective during
the testing year, then the "Actual Deferral Percentage" for the
Non-Highly Compensated Participant group for the prior year is the
"Weighted Average Of The Actual Deferral Percentages For The Prior
Year Subgroups." Notwithstanding the above, if ninety (90) percent or
more of the total number of Non-Highly Compensated
30
36
Participants from all "Prior Year Subgroups" are from a single "Prior
Year Subgroup," then in determining the "Actual Deferral Percentage"
for the Non-Highly Compensated Participants for the prior year, the
Employer may elect to use the "Actual Deferral Percentage" for
Non-Highly Compensated Participants for the prior year under which
that single "Prior Year Subgroup" was eligible, in lieu of using the
weighted averages. For purposes of this Section the following
definitions shall apply:
(1) "Plan Coverage Change" means a change in the group or groups
of eligible Participants on account of (i) the establishment or
amendment of a plan, (ii) a plan merger, consolidation, or
spinoff under Code Section 414(l), (iii) a change in the way
plans within the meaning of Code Section 414(l) are combined or
separated for purposes of Regulation 1.401(k)-1(g)(11), or (iv)
a combination of any of the foregoing.
(2) "Prior Year Subgroup" means all Non-Highly Compensated
Participants for the prior year who, in the prior year, were
eligible Participants under a specific Code Section 401(k) plan
maintained by the Employer and who would have been eligible
Participants in the prior year under the plan tested if the plan
coverage change had first been effective as of the first day of
the prior year instead of first being effective during the
testing year.
(3) "Weighted Average Of The Actual Deferral Percentages For The
Prior Year Subgroups" means the sum, for all prior year
subgroups, of the "Adjusted Actual Deferral Percentages."
(4) "Adjusted Actual Deferral Percentage" with respect to a prior
year subgroup means the Actual Deferral Percentage for Non-Highly
Compensated Participants for the prior year of the specific plan
under which the members of the prior year subgroup were eligible
Participants, multiplied by a fraction, the numerator of which is
the number of Non-Highly Compensated Participants in the prior
year subgroup and the denominator of which is the total number of
Non-Highly Compensated Participants in all prior year subgroups.
(e) For the purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(k), if two or more plans which include cash
or deferred arrangements are considered one plan for the purposes of
Code Section 401(a)(4) or 410(b) (other than Code Section
410(b)(2)(A)(ii)), the cash or deferred arrangements included in such
plans shall be treated as one arrangement. In addition, two or more
cash or deferred arrangements may be considered as a single
arrangement for purposes of determining whether or not such
arrangements satisfy Code Sections 401(a)(4), 410(b) and 401(k). In
such a case, the cash or deferred arrangements included in such plans
and the plans including such arrangements shall be treated as one
arrangement and as one plan for purposes of this Section and Code
Sections 401(a)(4), 410(b) and 401(k). Any adjustment to the
Non-Highly Compensated Participant actual deferral ratio for the
prior year shall be made in accordance
31
37
with Internal Revenue Service Notice 98-1 and any superseding
guidance. Plans may be aggregated under this paragraph (e) only if
they have the same plan year. Notwithstanding the above, for Plan
Years beginning after December 31, 1996, if two or more plans which
include cash or deferred arrangements are permissively aggregated
under Regulation 1.410(b)-7(d), all plans permissively aggregated
must use either the current year testing method or the prior year
testing method for the testing year.
Notwithstanding the above, an employee stock ownership plan
described in Code Section 4975(e)(7) or 409 may not be combined with
this Plan for purposes of determining whether the employee stock
ownership plan or this Plan satisfies this Section and Code Sections
401(a)(4), 410(b) and 401(k).
(f) For the purposes of this Section, if a Highly Compensated
Participant is a Participant under two or more cash or deferred
arrangements (other than a cash or deferred arrangement which is part
of an employee stock ownership plan as defined in Code Section
4975(e)(7) or 409) of the Employer or an Affiliated Employer, all such
cash or deferred arrangements shall be treated as one cash or deferred
arrangement for the purpose of determining the actual deferral ratio
with respect to such Highly Compensated Participant. However, if the
cash or deferred arrangements have different plan years, this
paragraph shall be applied by treating all cash or deferred
arrangements ending with or within the same calendar year as a single
arrangement.
(g) For the purpose of this Section, when calculating the "Actual
Deferral Percentage" for the Non-Highly Compensated Participant group,
the year testing method shall be used. Any change from the current
year testing method to the prior year testing method shall be made
pursuant to Internal Revenue Service Notice 98-1, Section VII (or
superseding guidance), the provisions of which are incorporated herein
by reference.
(h) Notwithstanding the above, contributions made pursuant to
Section 4.1(b) are intended to comply with this Section 4.5 pursuant
to the alternative methods permitted by Code Section 401(k)(12).
4.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event (or if it is anticipated) that the initial allocations of
the Employer Elective Contributions made pursuant to Section 4.4 do (or might)
not satisfy one of the tests set forth in Section 4.5(a), the Administrator
shall adjust Excess Contributions pursuant to the options set forth below:
(a) On or before the fifteenth day of the third month following
the end of each Plan Year, the Highly Compensated Participant having
the largest amount of Elective Contributions shall have a portion of
his Elective Contributions distributed to him until the total amount
of Excess Contributions has been distributed, or until the amount of
his Elective Contributions equals the Elective Contributions of the
Highly Compensated Participant having the
32
38
second largest amount of Elective Contributions. This process shall
continue until the total amount of Excess Contributions has been
distributed. In determining the amount of Excess Contributions to be
distributed with respect to an affected Highly Compensated Participant
as determined herein, such amount shall be reduced pursuant to Section
4.2(f) by any Excess Deferred Compensation previously distributed to
such affected Highly Compensated Participant for his taxable year
ending with or within such Plan Year.
(1) With respect to the distribution of Excess Contributions
pursuant to (a) above, such distribution:
(i) may be postponed but not later than the close of the
Plan Year following the Plan Year to which they are
allocable;
(ii) shall be adjusted for Income; and
(iii) shall be designated by the Employer as a distribution
of Excess Contributions (and Income).
(2) Any distribution of less than the entire amount of Excess
Contributions shall be treated as a pro rata distribution of
Excess Contributions and Income.
(3) Matching contributions which relate to Excess Contributions
shall be forfeited unless the related matching contribution is
distributed as an Excess Aggregate Contribution pursuant to
Section 4.8.
(b) Within twelve (12) months after the end of the Plan Year, the
Employer may make a special Qualified Non-Elective Contribution on
behalf of Non-Highly Compensated Participants in an amount sufficient
to satisfy (or to prevent an anticipated failure of) one of the tests
set forth in Section 4.5(a). Such contribution shall be allocated to
the Participant's 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.
However, if the prior year testing method is used, the
special Qualified Non-Elective Contribution shall be allocated in the
prior Plan Year to the Participant's Elective Account on behalf of
each Non-Highly Compensated Participant who was employed by the
Employer on the last day of the prior Plan Year in the same proportion
that each such Non-Highly Compensated Participant's Compensation for
the prior Plan Year bears to the total Compensation of all such
Non-Highly Compensated Participants for the prior Plan Year. Such
contribution shall be made by the Employer prior to the end of the
current Plan Year.
Notwithstanding the above, if the testing method changes from
the current year testing method to the prior year testing method, then
for purposes of preventing the double counting of Qualified
Non-Elective Contributions for the first testing year for which the
change is effective, any
33
39
special Qualified Non-Elective Contribution on behalf of Non-Highly
Compensated Participants used to satisfy the "Actual Deferral
Percentage" or "Actual Contribution Percentage" test under the current
year testing method for the prior year testing year shall be
disregarded.
(c) If during a Plan Year the projected aggregate amount of
Elective Contributions to be allocated to all Highly Compensated
Participants under this Plan would, by virtue of the tests set forth
in Section 4.5(a), cause the Plan to fail such tests, then the
Administrator may automatically reduce proportionately or in the order
provided in Section 4.6(a) each affected Highly Compensated
Participant's deferral election made pursuant to Section 4.2 by an
amount necessary to satisfy one of the tests set forth in Section
4.5(a).
4.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) The "Actual Contribution Percentage" for the Highly
Compensated Participant group shall not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly Compensated
Participant group (for the preceding Plan Year if the prior year
testing method is used to calculate the "Actual Contribution
Percentage" for the Non-Highly Compensated Participant group); or
(2) the lesser of 200 percent of such percentage for the
Non-Highly Compensated Participant group (for the preceding Plan
Year if the prior year testing method is used to calculate the
"Actual Contribution Percentage" for the Non-Highly Compensated
Participant group), or such percentage for the Non-Highly
Compensated Participant group (for the preceding Plan Year if the
prior year testing method is used to calculate the "Actual
Contribution Percentage" for the Non-Highly Compensated
Participant group) plus 2 percentage points. However, 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 this
Plan or under any plan maintained by the Employer or an
Affiliated Employer shall have a combination of his Elective
Contributions and Employer matching contributions reduced
pursuant to Regulation 1.401(m)-2 and Section 4.8(a). The
provisions of Code Section 401(m) and Regulations 1.401(m)-1(b)
and 1.401(m)-2 are incorporated herein by reference.
Notwithstanding the above, if the prior year testing method is
used for the first Plan Year, the "Actual Contribution
Percentage" for the Non-Highly Compensated Participant group
shall be determined for such Plan Year. However, the Plan shall
not have a first Plan Year (1) if the Plan is aggregated under
Regulation 1.401(m)-1(g)(14) with any other plan that was or
that included a Code Section 401(m) plan in
34
40
the prior year, or (2) the Plan is a "successor plan" as defined
in Internal Revenue Service Notice 98-1, Section V and any
superseding guidance.
(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 (for the preceding Plan Year if the prior year
testing method is used to calculate the "Actual Contribution
Percentage" for the Non-Highly Compensated Participant group), the
average of the ratios (calculated separately for each Participant in
each group rounded to the nearest one-hundredth of one percent) of:
(1) the sum of Employer matching contributions made pursuant to
Section 4.1(b) (to the extent such matching contributions are not
used to satisfy the safe harbor methods permitted by Code
Sections 401(k)(12) and 401(m)(11) and Employer matching
contributions made pursuant to Section 4.1(c) on behalf of each
such Participant for such Plan Year; to
(2) the Participant's "414(s) Compensation" for such Plan Year.
(c) For purposes of determining the "Actual Contribution
Percentage", only Employer matching contributions contributed to the
Plan prior to the end of the succeeding Plan Year shall be considered.
In addition, the Administrator may elect to take into account, with
respect to Employees eligible to have Employer matching contributions
pursuant to Section 4.1(b) (to the extent such matching contributions
are not used to satisfy the safe harbor methods permitted by Code
Sections 401(k)(12) and 401(m)(11) and Employer matching contributions
pursuant to Section 4.1(c) allocated to their accounts, nonelective
contributions (as described in Code Section 401(k)(12)(C)) (to the
extent such nonelective contributions are not used to satisfy the safe
harbor methods permitted by Code Section 401(k)(12) and 401(m)),
elective deferrals (as defined in Regulation 1.402(g)-1(b)) and
qualified non-elective contributions (as defined in Code Section
401(m)(4)(C)) contributed to any plan maintained by the Employer. Such
Nonelective Contributions, elective deferrals and qualified
non-elective contributions shall be treated as Employer matching
contributions subject to Regulation 1.401(m)-1(b)(5) which is
incorporated herein by reference. However, the Plan Year must be the
same as the plan year of the plan to which the elective deferrals and
the qualified non-elective contributions are made.
(d) For purposes of this Section and Code Sections 401(a)(4),
410(b) and 401(m), if two or more plans of the Employer to which
matching contributions, Employee contributions, or both, are made are
treated as one plan for purposes of Code Sections 401(a)(4) or 410(b)
(other than the average benefits test under Code Section
410(b)(2)(A)(ii)), such plans shall be treated as one plan. In
addition, two or more plans of the Employer to which matching
contributions, Employee contributions, or both, are made may be
considered as a single plan for purposes of determining whether or not
35
41
such plans satisfy Code Sections 401(a)(4), 410(b) and 401(m). In such
a case, the aggregated plans must satisfy this Section and Code
Sections 401(a)(4), 410(b) and 401(m) as though such aggregated plans
were a single plan. Any adjustment to the Non-Highly Compensated
Participant actual contribution ratio for the prior year shall be made
in accordance with Internal Revenue Service Notice 98-1 and any
superseding guidance. Plans may be aggregated under this paragraph (e)
only if they have the same plan year. Notwithstanding the above, for
Plan Years beginning after December 31, 1996, if two or more plans
which include cash or deferred arrangements are permissively
aggregated under Regulation 1.410(b)-7(d), all plans permissively
aggregated must use either the current year testing method or the
prior year testing method for the testing year.
Notwithstanding the above, an employee stock ownership plan
described in Code Section 4975(e)(7) or 409 may not be aggregated with
this Plan for purposes of determining whether the employee stock
ownership plan or this Plan satisfies this Section and Code Sections
401(a)(4), 410(b) and 401(m).
(e) 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) or 409) which are maintained by the
Employer or an Affiliated Employer to which matching contributions,
Employee contributions, or both, are made, all such contributions on
behalf of such Highly Compensated Participant shall be aggregated for
purposes of determining such Highly Compensated Participant's actual
contribution ratio. However, if the plans have different plan years,
this paragraph shall be applied by treating all plans ending with or
within the same calendar year as a single plan.
(f) For purposes of Sections 4.7(a) and 4.8, a Highly Compensated
Participant and Non-Highly Compensated Participant shall include any
Employee eligible to have Employer matching contributions (whether or
not a deferral election was made or suspended) or voluntary employee
contributions (whether or not voluntary employee contributions are
made) allocated to his account for the Plan Year.
(g) If the Plan uses the prior year testing method, the "Actual
Contribution Percentage" for the Non-Highly Compensated Participant
group is determined without regard to changes in the group of
Non-Highly Compensated Participants who are eligible under the Plan in
the testing year. However, if the Plan results from, or is otherwise
affected by, a "Plan Coverage Change" that becomes effective during
the testing year, then the "Actual Contribution Percentage" for the
Non-Highly Compensated Participant group for the prior year is the
"Weighted Average Of The Actual Contribution Percentages For The Prior
Year Subgroups." Notwithstanding the above, if ninety (90) percent or
more of the total number of Non-Highly Compensated Participants from
all "Prior Year Subgroups" are from a single "Prior Year Subgroup,"
then in determining the "Actual Contribution Percentage" for the
Non-Highly Compensated Participants for the prior year, the Employer
may elect to use the "Actual Contribution Percentage" for Non-Highly
36
42
Compensated Participants for the prior year under which that single
"Prior Year Subgroup" was eligible, in lieu of using the weighted
averages. For purposes of this Section the following definitions shall
apply:
(1) "Plan Coverage Change" means a change in the group or
groups of eligible Participants on account of (i) the
establishment or amendment of a plan, (ii) a plan merger,
consolidation, or spinoff under Code Section 414(l), (iii) a
change in the way plans within the meaning of Code Section
414(l) are combined or separated for purposes of Regulation
1401(k)-1(g)(11), or (iv) a combination of any of the
foregoing.
(2) "Prior Year Subgroup" means all Non-Highly Compensated
Participants for the prior year who, in the prior year, were
eligible Participants under a specific Code Section 401(m)
plan maintained by the Employer and who would have been
eligible Participants in the prior year under the plan
tested if the plan coverage change had first been effective
as of the first day of the prior year instead of first being
effective during the testing year.
(3) "Weighted Average Of The Actual Contribution Percentages
For The Prior Year Subgroups" means the sum, for all prior
year subgroups, of the "Adjusted Actual Contribution
Percentages."
(4) "Adjusted Actual Contribution Percentage" with respect
to a prior year subgroup means the Actual Contribution
Percentage for Non-Highly Compensated Participants for the
prior year of the specific plan under which the members of
the prior year subgroup were eligible Participants,
multiplied by a fraction, the numerator of which is the
number of Non-Highly Compensated Participants in the prior
year subgroup and the denominator of which is the total
number of Non-Highly Compensated Participants in all prior
year subgroups.
(h) For the purpose of this Section, when calculating the "Actual
Contribution Percentage" for the Non-Highly Compensated Participant
group, the year testing method shall be used. Any change from the
current year testing method to the prior year testing method shall be
made pursuant to Internal Revenue Service Notice 98-1, Section VII (or
superseding guidance), the provisions of which are incorporated herein
by reference.
(i) Notwithstanding the above, contributions made pursuant to
Section 4.1(b) are intended to comply with this Section 4.7 pursuant
to the alternative methods permitted by Code Section 401(m)(11).
37
43
4.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event (or if it is anticipated) that the "Actual
Contribution Percentage" for the Highly Compensated Participant group
exceeds (or might exceed) the "Actual Contribution Percentage" for the
Non-Highly Compensated Participant group pursuant to Section 4.7(a),
the Administrator (on or before the fifteenth day of the third month
following the end of the Plan Year, but in no event later than the
close of the following Plan Year) shall direct the Trustee to
distribute to the Highly Compensated Participant having the largest
amount of contributions determined pursuant to Section 4.7(b)(2), his
Vested portion of such contributions (and Income allocable to such
contributions) and, if forfeitable, forfeit such non-Vested Excess
Aggregate Contributions attributable to Employer matching
contributions (and Income allocable to such forfeitures) until the
total amount of Excess Aggregate Contributions has been distributed,
or until his remaining amount equals the amount of contributions
determined pursuant to Section 4.7(b)(2) of the Highly Compensated
Participant having the second largest amount of contributions. This
process shall continue until the total amount of Excess Aggregate
Contributions has been distributed.
If the correction of Excess Aggregate Contributions
attributable to Employer matching contributions is not in proportion
to the Vested and non-Vested portion of such contributions, then the
Vested portion of the Participant's Account attributable to Employer
matching contributions after the correction shall be subject to
Section 6.5(f).
(b) Any distribution and/or forfeiture of less than the entire
amount of Excess Aggregate Contributions (and Income) shall be treated
as a pro rata distribution and/or forfeiture of Excess Aggregate
Contributions and Income. Distribution of Excess Aggregate
Contributions shall be designated by the Employer as a distribution of
Excess Aggregate Contributions (and Income). Forfeitures of Excess
Aggregate Contributions shall be treated in accordance with Section
4.4.
(c) Excess Aggregate Contributions, including forfeited matching
contributions, shall be treated as Employer contributions for purposes
of Code Sections 404 and 415 even if distributed from the Plan.
Forfeited matching contributions that are reallocated to
Participants' Accounts for the Plan Year in which the forfeiture
occurs shall be treated as an "annual addition" pursuant to Section
4.9(b) for the Participants to whose Accounts they are reallocated and
for the Participants from whose Accounts they are forfeited.
(d) The determination of the amount of Excess Aggregate
Contributions with respect to any Plan Year shall be made after first
determining the Excess Contributions, if any, to be treated as
voluntary Employee contributions due to recharacterization for the
plan year of any other qualified cash or deferred arrangement (as
defined in Code Section 401(k)) maintained by the Employer that ends
with or within the Plan Year.
38
44
(e) If during a Plan Year the projected aggregate amount of
Employer matching contributions to be allocated to all Highly
Compensated Participants under this Plan would, by virtue of the
tests set forth in Section 4.7(a), cause the Plan to fail such
tests, then the Administrator may automatically reduce
proportionately or in the order provided in Section 4.8(a) each
affected Highly Compensated Participant's projected share of such
contributions by an amount necessary to satisfy one of the tests
set forth in Section 4.7(a).
(f) Notwithstanding the above, within twelve (12) months
after the end of the Plan Year, the Employer may make a special
Qualified Non-Elective Contribution on behalf of Non-Highly
Compensated Participants in an amount sufficient to satisfy (or
to prevent an anticipated failure of) one of the tests set forth
in Section 4.7(a). Such contribution shall be allocated to the
Participant's Account of Non-Highly Compensated Participant in
the same proportion that each Non-Highly Compensated
Participant's Compensation for the Plan Year bears to the total
Compensation of all Non-Highly Compensated Participants for the
Plan Year. A separate accounting of any special Qualified
Non-Elective Contribution shall be maintained in the
Participant's Account.
However, if the prior year testing method is used, the
special Qualified Non-Elective Contribution shall be allocated in
the prior Plan Year to the Participant's Account on behalf of
each Non-Highly Compensated Participant who was employed by the
Employer on the last day of the prior Plan Year in the same
proportion that each such Non-Highly Compensated Participant's
Compensation for the prior Plan Year bears to the total
Compensation of all such Non-Highly Compensated Participants for
the prior Plan Year. Such contribution shall be made by the
Employer prior to the end of the current Plan Year. A separate
accounting of any special Qualified Non-Elective Contributions
shall be maintained in the Participant's Account.
Notwithstanding the above, if the testing method changes
from the current year testing method to the prior year testing
method, then for purposes of preventing the double counting of
Qualified Non-Elective Contributions for the first testing year
for which the change is effective, any special Qualified
Non-Elective Contribution on behalf of Non-Highly Compensated
Participants used to satisfy the "Actual Deferral Percentage" or
"Actual Contribution Percentage" test under the current year
testing method for the prior year testing year shall be
disregarded.
4.9 MAXIMUM ANNUAL ADDITIONS
(a) Notwithstanding the foregoing, the maximum "annual
additions" credited to a Participant's accounts for any
"limitation year" shall equal the lesser of: (1) $30,000 adjusted
annually as provided in Code Section 415(d) pursuant to the
Regulations, or (2) twenty-five percent (25%) of the
Participant's "415 Compensation" for such "limitation year." For
any short "limitation year," the dollar limitation in (1) above
shall be reduced by a
39
45
fraction, the numerator of which is the number of full months in
the short "limitation year" and the denominator of which is
twelve (12).
(b) For purposes of applying the limitations of Code Section
415, "annual additions" means the sum credited to a Participant's
accounts for any "limitation year" of (1) Employer contributions,
(2) Employee contributions, (3) forfeitures, (4) amounts
allocated, after March 31, 1984, to an individual medical
account, as defined in Code Section 415(l)(2) which is part of a
pension or annuity plan maintained by the Employer and (5)
amounts derived from contributions paid or accrued after December
31, 1985, in taxable years ending after such date, which are
attributable to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code Section
419A(d)(3)) under a welfare benefit plan (as defined in Code
Section 419(e)) maintained by the Employer. Except, however, the
"415 Compensation" percentage limitation referred to in paragraph
(a)(2) above shall not apply to: (1) any contribution for medical
benefits (within the meaning of Code Section 419A(f)(2)) after
separation from service which is otherwise treated as an "annual
addition," or (2) any amount otherwise treated as an "annual
addition" under Code Section 415(l)(1).
(c) 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(b)(2): (1)
rollover contributions (as defined in Code Sections 402(e)(6),
403(a)(4), 403(b)(8) and 408(d)(3)); (2) repayments of loans made
to a Participant from the Plan; (3) repayments of distributions
received by an Employee pursuant to Code Section 411(a)(7)(B)
(cash-outs); (4) repayments of distributions received by an
Employee pursuant to Code Section 411(a)(3)(D) (mandatory
contributions); and (5) Employee contributions to a simplified
employee pension excludable from gross income under Code Section
408(k)(6).
(d) For purposes of applying the limitations of Code Section
415, the "limitation year" shall be the Plan Year.
(e) For the purpose of this Section, all qualified defined
contribution plans (whether terminated or not) ever maintained by
the Employer shall be treated as one defined contribution plan.
(f) For the purpose of this Section, if the Employer is a
member of a controlled group of corporations, trades or
businesses under common control (as defined by Code Section
1563(a) or Code Section 414(b) and (c) as modified by Code
Section 415(h)), is a member of an affiliated service group (as
defined by Code Section 414(m)), or is a member of a group of
entities required to be aggregated pursuant to Regulations under
Code Section 414(o), all Employees of such Employers shall be
considered to be employed by a single Employer.
40
46
(g) For the purpose of this Section, if this Plan is a Code
Section 413(c) plan, each Employer who maintains this Plan will
be considered to be a separate Employer.
(h)(1) If a Participant participates in more than one
defined contribution plan maintained by the Employer which have
different Anniversary Dates, the maximum "annual additions" under
this Plan shall equal the maximum "annual additions" for the
"limitation year" minus any "annual additions" previously
credited to such Participant's accounts during the "limitation
year."
(2) If a Participant participates in both a defined
contribution plan subject to Code Section 412 and a defined
contribution plan not subject to Code Section 412 maintained
by the Employer which have the same Anniversary Date,
"annual additions" will be credited to the Participant's
accounts under the defined contribution plan subject to Code
Section 412 prior to crediting "annual additions" to the
Participant's accounts under the defined contribution plan
not subject to Code Section 412.
(3) If a Participant participates in more than one defined
contribution plan not subject to Code Section 412 maintained
by the Employer which have the same Anniversary Date, the
maximum "annual additions" under this Plan shall equal the
product of (A) the maximum "annual additions" for the
"limitation year" minus any "annual additions" previously
credited under subparagraphs (1) or (2) above, multiplied by
(B) a fraction (i) the numerator of which is the "annual
additions" which would be credited to such Participant's
accounts under this Plan without regard to the limitations
of Code Section 415 and (ii) the denominator of which is
such "annual additions" for all plans described in this
subparagraph.
(i) Notwithstanding anything contained in this Section to
the contrary, the limitations, adjustments and other requirements
prescribed in this Section shall at all times comply with the
provisions of Code Section 415 and the Regulations thereunder,
the terms of which are specifically incorporated herein by
reference.
4.10 ADJUSTMENT FOR EXCESSIVE ANNUAL ADDITIONS
(a) If, as a result of a reasonable error in estimating a
Participant's Compensation, a reasonable error in determining the
amount of elective deferrals (within the meaning of Code Section
402(g)(3)) that may be made with respect to any Participant under
the limits of Section 4.9 or other facts and circumstances to
which Regulation 1.415-6(b)(6) shall be applicable, the "annual
additions" under this Plan would cause the maximum "annual
additions" to be exceeded for any Participant, the Administrator
shall (1) distribute any elective deferrals (within the meaning
of Code Section 402(g)(3)) or return any Employee contributions
(whether voluntary or mandatory), and for the distribution of
gains attributable to those elective
41
47
deferrals and Employee contributions, to the extent that the
distribution or return would reduce the "excess amount" in the
Participant's accounts (2) hold any "excess amount" remaining
after the return of any elective deferrals or voluntary Employee
contributions in a "Section 415 suspense account" (3) use the
"Section 415 suspense account" in the next "limitation year" (and
succeeding "limitation years" if necessary) to reduce Employer
contributions for that Participant if that Participant is covered
by the Plan as of the end of the "limitation year," or if the
Participant is not so covered, allocate and reallocate the
"Section 415 suspense account" in the next "limitation year" (and
succeeding "limitation years" if necessary) to all Participants
in the Plan before any Employer or Employee contributions which
would constitute "annual additions" are made to the Plan for such
"limitation year" (4) reduce Employer contributions to the Plan
for such "limitation year" by the amount of the "Section 415
suspense account" allocated and reallocated during such
"limitation year."
(b) For purposes of this Article, "excess amount" for any
Participant for a "limitation year" shall mean the excess, if
any, of (1) the "annual additions" which would be credited to his
account under the terms of the Plan without regard to the
limitations of Code Section 415 over (2) the maximum "annual
additions" determined pursuant to Section 4.9.
(c) For purposes of this Section, "Section 415 suspense
account" shall mean an unallocated account equal to the sum of
"excess amounts" for all Participants in the Plan during the
"limitation year." The "Section 415 suspense account" shall not
share in any earnings or losses of the Trust Fund.
4.11 TRANSFERS FROM QUALIFIED PLANS
(a) With the consent of the Administrator, amounts may be
transferred from other qualified plans by Eligible Employees,
provided that the trust from which such funds are transferred
permits the transfer to be made and the transfer will not
jeopardize the tax exempt status of the Plan or Trust or create
adverse tax consequences for the Employer. The amounts
transferred shall be set up in a separate account herein referred
to as a "Participant's Rollover Account." Such account shall be
fully Vested at all times and shall not be subject to Forfeiture
for any reason.
(b) Amounts in a Participant's Rollover Account shall be
held by the Trustee pursuant to the provisions of this Plan and
may not be withdrawn by, or distributed to the Participant, in
whole or in part, except as provided in paragraphs (c) and (d) of
this Section.
(c) Except as permitted by Regulations (including Regulation
1.411(d)-4), amounts attributable to elective contributions (as
defined in Regulation 1.401(k)-1(g)(3)), including amounts
treated as elective contributions, which are transferred from
another qualified plan in a plan-to-plan transfer shall be
subject to the distribution limitations provided for in
Regulation 1.401(k)-1(d).
42
48
(d) The Administrator, at the election of the Participant,
shall direct the Trustee to distribute all or a portion of the
amount credited to the Participant's Rollover Account. Any
distributions of amounts held in a Participant's Rollover Account
shall be made in a manner which is consistent with and satisfies
the provisions of Section 6.5, including, but not limited to, all
notice and consent requirements of Code Section 411(a)(11) and
the Regulations thereunder. Furthermore, such amounts shall be
considered as part of a Participant's benefit in determining
whether an involuntary cash-out of benefits without Participant
consent may be made.
(e) The Administrator may direct that employee transfers
made after a Valuation Date be segregated into a separate account
for each Participant in a federally insured savings account,
certificate of deposit in a bank or savings and loan association,
money market certificate, or other short term debt security
acceptable to the Trustee until such time as the allocations
pursuant to this Plan have been made, at which time they may
remain segregated or be invested as part of the general Trust
Fund, to be determined by the Administrator.
(f) For purposes of this Section, the term "qualified plan"
shall mean any tax qualified plan under Code Section 401(a). The
term "amounts transferred from other qualified plans" shall mean:
(i) amounts transferred to this Plan directly from another
qualified plan; (ii) distributions from another qualified plan
which are eligible rollover distributions and which are either
transferred by the Employee to this Plan within sixty (60) days
following his receipt thereof or are transferred pursuant to a
direct rollover; (iii) amounts transferred to this Plan from a
conduit individual retirement account provided that the conduit
individual retirement account has no assets other than assets
which (A) were previously distributed to the Employee by another
qualified plan as a lump-sum distribution (B) were eligible for
tax-free rollover to a qualified plan and (C) were deposited in
such conduit individual retirement account within sixty (60) days
of receipt thereof and other than earnings on said assets; and
(iv) amounts distributed to the Employee from a conduit
individual retirement account meeting the requirements of clause
(iii) above, and transferred by the Employee to this Plan within
sixty (60) days of his receipt thereof from such conduit
individual retirement account.
(g) Prior to accepting any transfers to which this Section
applies, the Administrator may require the Employee to establish
that the amounts to be transferred to this Plan meet the
requirements of this Section and may also require the Employee to
provide an opinion of counsel satisfactory to the Employer that
the amounts to be transferred meet the requirements of this
Section.
(h) This Plan shall not accept any direct or indirect
transfers (as that term is defined and interpreted under Code
Section 401(a)(11) and the Regulations thereunder) from a
defined benefit plan, money purchase plan (including a target
benefit plan), stock bonus or profit sharing plan which
43
49
would otherwise have provided for a life annuity form of payment
to the Participant.
(i) Notwithstanding anything herein to the contrary, a
transfer directly to this Plan from another qualified plan (or a
transaction having the effect of such a transfer) shall only be
permitted if it will not result in the elimination or reduction
of any "Section 411(d)(6) protected benefit" as described in
Section 8.1.
4.12 DIRECTED INVESTMENT ACCOUNT
(a) Participants may, subject to a procedure established by
the Administrator (the Participant Direction Procedures) and
applied in a uniform nondiscriminatory manner, direct the Trustee
to invest all of their accounts in specific assets, specific
funds or other investments permitted under the Plan and the
Participant Direction Procedures. That portion of the interest of
any Participant so directing will thereupon be considered a
Participant's Directed Account.
(b) As of each Valuation Date, all Participant Directed
Accounts shall be charged or credited with the net earnings,
gains, losses and expenses as well as any appreciation or
depreciation in the market value using publicly listed fair
market values when available or appropriate.
(1) To the extent that the assets in a Participant's
Directed Account are accounted for as pooled assets or
investments, the allocation of earnings, gains and losses of
each Participant's Directed Account shall be based upon the
total amount of funds so invested, in a manner proportionate
to the Participant's share of such pooled investment.
(2) To the extent that the assets in the Participant's
Directed Account are accounted for as segregated assets, the
allocation of earnings, gains and losses from such assets
shall be made on a separate and distinct basis.
(c) The Participant Direction Procedures shall provide an
explanation of the circumstances under which Participants and
their Beneficiaries may give investment instructions, including,
but need not be limited to, the following:
(1) the conveyance of instructions by the Participants and
their Beneficiaries to invest Participant Directed Accounts
in Directed Investments;
(2) the name, address and phone number of the Fiduciary
(and, if applicable, the person or persons designated by
the Fiduciary to act on its behalf) responsible for
providing information to the Participant or a Beneficiary
upon request relating to the investments in Directed
Investments;
44
50
(3) applicable restrictions on transfers to and from any
Designated Investment Alternative;
(4) any restrictions on the exercise of voting, tender and
similar rights related to a Directed Investment by the
Participants or their Beneficiaries;
(5) a description of any transaction fees and expenses which
affect the balances in Participant Directed Accounts in
connection with the purchase or sale of Directed
Investments; and
(6) general procedures for the dissemination of investment
and other information relating to the Designated Investment
Alternatives as deemed necessary or appropriate, including
but not limited to a description of the following:
(i) the investment vehicles available under the Plan,
including specific information regarding any Designated
Investment Alternative;
(ii) any designated Investment Managers; and
(iii) a description of the additional information which
may be obtained upon request from the Fiduciary
designated to provide such information.
(d) Any information regarding investments available under
the Plan, to the extent not required to be described in the
Participant Direction Procedures, may be provided to the
Participant in one or more written documents which are separate
from the Participant Direction Procedures and are not thereby
incorporated by reference into this Plan.
(e) The Administrator may, at its discretion, include in or
exclude by amendment or other action from the Participant
Direction Procedures such instructions, guidelines or policies as
it deems necessary or appropriate to ensure proper administration
of the Plan, and may interpret the same accordingly.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
The Administrator shall direct the Trustee, as of each Valuation Date,
to determine the net worth of the assets comprising the Trust Fund as it
exists on the Valuation Date. In determining such net worth, the Trustee
shall value the assets comprising the Trust Fund at their fair market value
as of the Valuation Date and shall deduct all expenses for which the
Trustee has not yet obtained reimbursement from the Employer or the Trust
Fund. The Trustee may update the value of any shares held in the
45
51
Participant Directed Account by reference to the number of shares held by
that Participant, priced at the market value as of the Valuation Date.
5.2 METHOD OF VALUATION
In determining the fair market value of securities held in the Trust
Fund which are listed on a registered stock exchange, the Administrator
shall direct the Trustee to value the same at the prices they were last
traded on such exchange preceding the close of business on the Valuation
Date. If such securities were not traded on the Valuation Date, or if the
exchange on which they are traded was not open for business on the
Valuation Date, then the securities shall be valued at the prices at which
they were last traded prior to the Valuation Date. Any unlisted security
held in the Trust Fund shall be valued at its bid price next preceding the
close of business on the Valuation Date, which bid price shall be obtained
from a registered broker or an investment banker. In determining the fair
market value of assets other than securities for which trading or bid
prices can be obtained, the Trustee may appraise such assets itself, or in
its discretion, employ one or more appraisers for that purpose and rely on
the values established by such appraiser or appraisers.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Every Participant may terminate his employment with the Employer and
retire for the purposes hereof on his Normal Retirement Date. However, a
Participant may postpone the termination of his employment with the
Employer to a later date, in which event the participation of such
Participant in the Plan, including the right to receive allocations
pursuant to Section 4.4, shall continue until his Late Retirement Date.
Upon a Participant's Retirement Date or attainment of his Normal Retirement
Date without termination of employment with the Employer, or as soon
thereafter as is practicable, the Trustee shall distribute, at the election
of the Participant, all amounts credited to such Participant's Combined
Account in accordance with Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant before his Retirement
Date or other termination of his employment, all amounts credited
to such Participant's Combined Account shall become fully Vested.
The Administrator shall direct the Trustee, in accordance with
the provisions of Sections 6.6 and 6.7, to distribute the value
of the deceased Participant's accounts to the Participant's
Beneficiary.
(b) Upon the death of a Former Participant, the
Administrator shall direct the Trustee, in accordance with the
provisions of Sections 6.6 and 6.7, to distribute any remaining
Vested amounts credited to the accounts of a deceased Former
Participant to such Former Participant's Beneficiary.
(c) The Administrator may require such proper proof of death
and such evidence of the right of any person to receive payment
of the value of the account of a deceased Participant or Former
Participant as the
46
52
Administrator may deem desirable. The Administrator's
determination of death and of the right of any person to receive
payment shall be conclusive.
(d) The Beneficiary of the death benefit payable pursuant to
this Section shall be the Participant's spouse. Except, however,
the Participant may designate a Beneficiary other than his spouse
if:
(1) the spouse has waived the right to be the Participant's
Beneficiary, or
(2) the Participant is legally separated or has been
abandoned (within the meaning of local law) and the
Participant has a court order to such effect (and there is
no "qualified domestic relations order" as defined in Code
Section 414(p) which provides otherwise), or
(3) the Participant has no spouse, or
(4) the spouse cannot be located.
In such event, the designation of a Beneficiary shall be
made on a form satisfactory to the Administrator. A Participant
may at any time revoke his designation of a Beneficiary or change
his Beneficiary by filing written notice of such revocation or
change with the Administrator. However, the Participant's spouse
must again consent in writing to any change in Beneficiary unless
the original consent acknowledged that the spouse had the right
to limit consent only to a specific Beneficiary and that the
spouse voluntarily elected to relinquish such right. In the event
no valid designation of Beneficiary exists at the time of the
Participant's death, the death benefit shall be payable to his
estate.
(e) Any consent by the Participant's spouse to waive any
rights to the death benefit must be in writing, must acknowledge
the effect of such waiver, and be witnessed by a Plan
representative or a notary public. Further, the spouse's consent
must be irrevocable and must acknowledge the specific nonspouse
Beneficiary.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior
to his Retirement Date or other termination of his employment, all amounts
credited to such Participant's Combined Account shall become fully Vested.
In the event of a Participant's Total and Permanent Disability, the
Trustee, in accordance with the provisions of Sections 6.5 and 6.7, shall
distribute to such Participant all amounts credited to such Participant's
Combined Account as though he had retired.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) If a Participant's employment with the Employer is
terminated for any reason other than death, Total and Permanent
Disability or retirement,
47
53
such Participant shall be entitled to such benefits as are
provided hereinafter pursuant to this Section 6.4.
Distribution of the funds due to a Terminated
Participant shall be made on the occurrence of an event which
would result in the distribution had the Terminated Participant
remained in the employ of the Employer (upon the Participant's
death, Total and Permanent Disability or Normal Retirement).
However, at the election of the Participant, the Administrator
shall direct the Trustee to cause the entire Vested portion of
the Terminated Participant's Combined Account to be payable to
such Terminated Participant. Any distribution under this
paragraph shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5, including, but not
limited to, all notice and consent requirements of Code Section
411(a)(11) and the Regulations thereunder.
If the value of a Terminated Participant's Vested
benefit derived from Employer and Employee contributions does not
exceed $5,000, the Administrator shall direct the Trustee to
cause the entire Vested benefit to be paid to such Participant in
a single lump sum.
For purposes of this Section 6.4, if the value of a
Terminated Participant's Vested benefit is zero, the Terminated
Participant shall be deemed to have received a distribution of
such Vested benefit.
(b) The Vested portion of any Participant's Account shall be
a percentage of the total amount credited to his Participant's
Account determined on the basis of the Participant's number of
Years of Service according to the following schedule:
Vesting Schedule
Years of Service Percentage
0-1 0%
2 25%
3 50%
4 75%
5 100%
(c) Notwithstanding the vesting schedule above, upon the
complete discontinuance of the Employer contributions to the Plan
or upon any full or partial termination of the Plan, all amounts
credited to the account of any affected Participant shall become
100% Vested and shall not thereafter be subject to Forfeiture.
(d) The computation of a Participant's nonforfeitable
percentage of his interest in the Plan shall not be reduced as
the result of any direct or indirect amendment to this Plan. For
this purpose, the Plan shall be treated as having been amended if
the Plan provides for an automatic change in vesting due to a
change in top heavy status. In the event that the Plan is amended
to change or modify any vesting schedule, a Participant with at
48
54
least three (3) Years of Service as of the expiration date of the
election period may elect to have his nonforfeitable percentage
computed under the Plan without regard to such amendment. If a
Participant fails to make such election, then such Participant
shall be subject to the new vesting schedule. The Participant's
election period shall commence on the adoption date of the
amendment and shall end 60 days after the latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the
amendment from the Employer or Administrator.
(e)(1) If any Former Participant shall be reemployed by the
Employer before a 1-Year Break in Service occurs, he shall
continue to participate in the Plan in the same manner as if such
termination had not occurred.
(2) If any Former Participant shall be reemployed by the
Employer before five (5) consecutive 1-Year Breaks in
Service, and such Former Participant had received, or was
deemed to have received, a distribution of his entire Vested
interest prior to his reemployment, his forfeited account
shall be reinstated only if he repays the full amount
distributed to him before the earlier of five (5) years
after the first date on which the Participant is
subsequently reemployed by the Employer or the close of the
first period of five (5) consecutive 1-Year Breaks in
Service commencing after the distribution, or in the event
of a deemed distribution, upon the reemployment of such
Former Participant. In the event the Former Participant does
repay the full amount distributed to him, or in the event of
a deemed distribution, the undistributed portion of the
Participant's Account must be restored in full, unadjusted
by any gains or losses occurring subsequent to the Valuation
Date coinciding with or preceding his termination. The
source for such reinstatement shall first be any Forfeitures
occurring during the year. If such source is insufficient,
then the Employer shall contribute an amount which is
sufficient to restore any such forfeited Accounts provided,
however, that if a discretionary contribution is made for
such year pursuant to Section 4.1(d), such contribution
shall first be applied to restore any such Accounts and the
remainder shall be allocated in accordance with Section 4.4.
(3) If any Former Participant is reemployed after a 1-Year
Break in Service has occurred, Years and Periods of Service
shall include Years and Periods of Service prior to his
1-Year Break in Service subject to the following rules:
(i) If a Former Participant has a 1-Year Break in
Service, his pre-break and post-break service shall be
used for computing Years and Periods of Service for
eligibility and for vesting purposes only after he has
been employed for one (1) Year or
49
55
Period of Service, whichever is applicable, following the
date of his reemployment with the Employer;
(ii) Any Former Participant who under the Plan does not
have a nonforfeitable right to any interest in the Plan
resulting from Employer contributions shall lose credits
otherwise allowable under (i) above 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 or Periods of Service, whichever is applicable;
(iii) After five (5) consecutive 1-Year Breaks in
Service, a Former Participant's Vested Account balance
attributable to pre-break service shall not be increased
as a result of post-break service;
(iv) If a Former Participant is reemployed by the
Employer, he shall participate in the Plan immediately on
his date of reemployment;
(v) If a Former Participant (a 1-Year Break in Service
previously occurred, but employment had not terminated)
is credited with an Hour of Service after the first
eligibility computation period in which he incurs a
1-Year Break in Service, he shall participate in the Plan
immediately.
6.5 DISTRIBUTION OF BENEFITS
(a) The Administrator, pursuant to the election of the
Participant, shall direct the Trustee to distribute to a
Participant or his Beneficiary any amount to which he is entitled
under the Plan in one or more of the following methods:
(1) One lump-sum payment in cash.
(2) Payments over a period certain in monthly, quarterly,
semiannual, or annual cash installments. In order to provide
such installment payments, the Administrator may (A)
segregate the aggregate amount thereof in a separate,
federally insured savings account, certificate of deposit in
a bank or savings and loan association, money market
certificate or other liquid short-term security or (B)
purchase a nontransferable annuity contract for a term
certain (with no life contingencies) providing for such
payment. The period over which such payment is to be made
shall not extend beyond the Participant's life expectancy
(or the life expectancy of the Participant and his
designated Beneficiary).
(b) Any distribution to a Participant who has a benefit
which exceeds $5,000 shall require such Participant's consent if
such distribution commences prior to the later of his Normal
Retirement Age or age 62. However, if a
50
56
Participant has begun to receive distributions pursuant to an
optional form of benefit under which at least one scheduled
periodic distribution has not yet been made, and if the value of
the Participant's benefit, determined at the time of the first
distribution under that optional form of benefit, exceeded
$5,000, then the value of the Participant's benefit is deemed to
continue to exceed such amount. With regard to this required
consent:
(1) The Participant must be informed of his right to defer
receipt of the distribution. If a Participant fails to
consent, it shall be deemed an election to defer the
commencement of payment of any benefit. However, any
election to defer the receipt of benefits shall not apply
with respect to distributions which are required under
Section 6.5(c).
(2) Notice of the rights specified under this paragraph
shall be provided no less than 30 days and no more than 90
days before the date the distribution commences.
(3) Consent of the Participant to the distribution must not
be made before the Participant receives the notice and must
not be made more than 90 days before the date the
distribution commences.
(4) No consent shall be valid if a significant detriment is
imposed under the Plan on any Participant who does not
consent to the distribution.
Any such distribution may commence less than 30 days after
the notice required under Regulation 1.411(a)-11 (c) is given,
provided that: (1) the Administrator clearly informs the
Participant that the Participant has a right to a period of at
least 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.
(c) Notwithstanding any provision in the Plan to the
contrary, the distribution of a Participant's benefits shall be
made in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the Regulations
thereunder (including Regulation 1.401(a)(9)-2), the provisions
of which are incorporated herein by reference:
(1) A Participant's benefits shall be distributed or must
begin to be distributed to him not later than April 1st of
the calendar year following the later of (i) the calendar
year in which the Participant attains age 70 1/2 or (ii) the
calendar year in which the Participant retires, provided,
however, that this clause (ii) shall not apply in the case
of a Participant who is a "five (5) percent owner" at any
time during the Plan Year ending with or within the calendar
year in which such owner attains age 70 1/2. Such
distributions shall be equal to or greater than any required
distribution.
51
57
Alternatively, distributions to a Participant must begin no
later than the applicable April 1st as determined under the
preceding paragraph and must be made over a period certain
measured by the life expectancy of the Participant (or the
life expectancies of the Participant and his designated
Beneficiary) in accordance with Regulations.
(2) Distributions to a Participant and his Beneficiaries
shall only be made in accordance with the incidental death
benefit requirements of Code Section 401(a)(9)(G) and the
Regulations thereunder.
(d) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse shall not be redetermined
in accordance with Code Section 401(a)(9)(D). Life expectancy
and joint and last survivor expectancy shall be computed using
the return multiples in Tables V and VI of Regulation 1.72-9.
(e) All annuity Contracts under this Plan shall be
non-transferable when distributed. Furthermore, the terms of any
annuity Contract purchased and distributed to a Participant or
spouse shall comply with all of the requirements of the Plan.
(f) If a distribution is made at a time when a Participant
is not fully Vested in his Participant's Account and the
Participant may increase the Vested percentage in such account:
(1) a separate account shall be established for the
Participant's interest in the Plan as of the time of the
distribution; and
(2) at any relevant time, the Participant's Vested portion
of the separate account shall be equal to an amount ("X")
determined by the formula:
X equals P(AB plus (R x D)) - (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)(1) The death benefit payable pursuant to Section 6.2
shall be paid to the Participant's Beneficiary within a
reasonable time after the Participant's death by either of the
following methods, as elected by the Participant (or if no
election has been made prior to the Participant's death, by his
Beneficiary) subject, however, to the rules specified in Section
6.6(b):
(i) One lump-sum payment in cash.
52
58
(ii) Payment in monthly, quarterly, semi-annual, or
annual cash installments over a period to be
determined by the Participant or his Beneficiary.
After periodic installments commence, the Beneficiary
shall have the right to direct the Trustee to reduce
the period over which such periodic installments
shall be made, and the Trustee shall adjust the cash
amount of such periodic installments accordingly.
(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 the Trustee
to segregate the death benefit into a separate account, and
the Trustee shall invest such segregated account separately,
and the funds accumulated in such account shall be used for
the payment of the installments.
(b) Notwithstanding any provision in the Plan to the
contrary, distributions upon the death of a Participant shall be
made in accordance with the following requirements and shall
otherwise comply with Code Section 401(a)(9) and the Regulations
thereunder. If it is determined pursuant to Regulations that the
distribution of a Participant's interest has begun and the
Participant dies before his entire interest has been distributed
to him, the remaining portion of such interest shall be
distributed at least as rapidly as under the method of
distribution selected pursuant to Section 6.5 as of his date of
death. If a Participant dies before he has begun to receive any
distributions of his interest under the Plan or before
distributions are deemed to have begun pursuant to Regulations,
then his death benefit shall be distributed to his Beneficiaries
by December 31st of the calendar year in which the fifth
anniversary of his date of death occurs.
However, in the event that the Participant's spouse
(determined as of the date of the Participant's death) is his
Beneficiary, then in lieu of the preceding rules, distributions
must be made over a period not extending beyond the life
expectancy of the spouse and must commence on or before the later
of: (1) December 31st of the calendar year immediately following
the calendar year in which the Participant died; or (2) December
31st of the calendar year in which the Participant would have
attained age 70 1/2. If the surviving spouse dies before
distributions to such spouse begin, then the 5-year distribution
requirement of this Section shall apply as if the spouse was the
Participant.
(c) For purposes of this Section, the life expectancy of a
Participant and a Participant's spouse shall not be redetermined
in accordance with Code Section 401(a)(9)(D). Life expectancy
and joint and last survivor expectancy shall be computed using
the return multiples in Tables V and VI of Regulation 1.72-9.
6.7 TIME OF SEGREGATION OR DISTRIBUTION
Except as limited by Sections 6.5 and 6.6, whenever the Trustee
is to make a distribution or to commence a series of payments the
distribution or series of payments may be made or begun as soon as is
practicable. However, unless a Former Participant elects in
53
59
writing to defer the receipt of benefits (such election may not result in a
death benefit that is more than incidental), the payment of benefits shall begin
not later than the 60th day after the close of the Plan Year in which the latest
of the following events occurs: (a) the date on which the Participant attains
the earlier of age 65 or the Normal Retirement Age specified herein; (b) the
10th anniversary of the year in which the Participant commenced participation in
the Plan; or (c) the date the Participant terminates his service with the
Employer.
6.8 DISTRIBUTION FOR MINOR BENEFICIARY
In the event a distribution is to be made to a minor, then the
Administrator may direct that such distribution be paid to the legal guardian;
or if none, to a parent of such Beneficiary or a responsible adult with whom the
Beneficiary maintains his residence, or to the custodian for such Beneficiary
under the Uniform Gift to Minors Act or Gift to Minors Act, if such is permitted
by the laws of the state in which said Beneficiary resides. Such a payment to
the legal guardian, custodian or parent of a minor Beneficiary shall fully
discharge the Trustee, Employer, and Plan from further liability on account
thereof.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that all, or any portion, of the distribution payable to
a Participant or his Beneficiary hereunder shall, at the later of the
Participant's attainment of age 62 or his Normal Retirement Age, remain unpaid
solely by reason of the inability of the Administrator, after sending a
registered letter, return receipt requested, to the last known address, and
after further diligent effort, to ascertain the whereabouts of such Participant
or his Beneficiary, the amount so distributable shall be treated as a Forfeiture
pursuant to the Plan. In the event a Participant or Beneficiary is located
subsequent to his benefit being reallocated, such benefit shall be restored
unadjusted for earnings or losses.
6.10 PRE-RETIREMENT DISTRIBUTION
At such time as a Participant shall have attained the age of 59 1/2
years, the Administrator, at the election of the Participant, shall direct the
Trustee to distribute all or a portion of the amount then credited to the
accounts maintained on behalf of the Participant. However, no distribution from
the Participant's Account shall occur prior to 100% vesting. In the event that
the Administrator makes such a distribution, the Participant shall continue to
be eligible to participate in the Plan on the same basis as any other Employee.
Any distribution made pursuant to this Section shall be made in a manner
consistent with Section 6.5, including, but not limited to, all notice and
consent requirements of Code Section 411(a)(11) and the Regulations thereunder.
Notwithstanding the above, pre-retirement distributions from a
Participant's Elective Account shall not be permitted prior to the Participant
attaining age 59 1/2 except as otherwise permitted under the terms of the Plan.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) The Administrator, at the election of the Participant, shall
direct the Trustee to distribute to any Participant in any one Plan
Year up to the lesser of 100% of his Participant's Elective Account
(excluding amounts attributable to the Employer contribution made
pursuant to Section 4.1(b))
54
60
valued as of the last Valuation Date or the amount necessary to
satisfy the immediate and heavy financial need of the Participant. Any
distribution made pursuant to this Section shall be deemed to be made
as of the first day of the Plan Year or, if later, the Valuation Date
immediately preceding the date of distribution, and the Participant's
Elective Account shall be reduced accordingly. Withdrawal under this
Section is deemed to be on account of an immediate and heavy financial
need of the Participant if the withdrawal is for:
(1) Expenses for medical care described in Code Section 213(d)
previously incurred by the Participant, his spouse, or any of his
dependents (as defined in Code Section 152) or necessary for
these persons to obtain medical care;
(2) The costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments);
(3) Payment of tuition, related educational fees, and room and
board expenses for the next twelve (12) months of post-secondary
education for the Participant, his spouse, children, or
dependents; or
(4) Payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure on the
mortgage of the Participant's principal residence.
(b) No distribution shall be made pursuant to this Section unless
the Administrator, based upon the Participant's representation and
such other facts as are known to the Administrator, determines that
all of the following conditions are satisfied:
(1) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant. The amount
of the immediate and heavy financial need may include any amounts
necessary to pay any federal, state, or local income taxes or
penalties reasonably anticipated to result from the distribution;
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable (at the time of the
loan) 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 or, the
Participant, pursuant to a legally enforceable agreement, will
suspend his elective deferrals and voluntary Employee
contributions to the Plan and all other plans maintained by the
Employer 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
55
61
Participant's taxable year immediately following the taxable year
of the hardship distribution in excess of the applicable limit
under Code Section 402(g) for such next taxable year less the
amount of such Participant's elective deferrals for the taxable
year of the hardship distribution.
(c) Notwithstanding the above, distributions from the
Participant's Elective Account pursuant to this Section shall be
limited solely to the Participant's total Deferred Compensation as of
the date of distribution, reduced by the amount of any previous
distributions pursuant to this Section and Section 6.10.
(d) Any distribution made pursuant to this Section shall be made
in a manner which is consistent with and satisfies the provisions of
Section 6.5, including, but not limited to, all notice and consent
requirements of Code Section 411(a)(11) and the Regulations
thereunder.
6.12 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
All rights and benefits, including elections, provided to a
Participant in this Plan shall be subject to the rights afforded to any
"alternate payee" under a "qualified domestic relations order." Furthermore, a
distribution to an "alternate payee" shall be permitted if such distribution is
authorized by a "qualified domestic relations order," even if the affected
Participant has not separated from service and has not reached the "earliest
retirement age" under the Plan. For the purposes of this Section, "alternate
payee," "qualified domestic relations order" and "earliest retirement age" shall
have the meaning set forth under Code Section 414(p).
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
(a) The Trustee shall have the following categories of
responsibilities:
(1) Consistent with the "funding policy and method" determined
by the Employer, to invest, manage, and control the Plan assets
subject, however, to the direction of a Participant with respect
to his Participant Directed Accounts, the Employer or an
Investment Manager if the Trustee should appoint such manager as
to all or a portion of the assets of the Plan;
(2) At the direction of the Administrator, to pay benefits
required under the Plan to be paid to Participants, or, in the
event of their death, to their Beneficiaries; and
(3) To maintain records of receipts and disbursements and
furnish to the Employer and/or Administrator for each Plan Year a
written annual report per Section 7.6.
56
62
(b) In the event that the Trustee shall be directed by a
Participant (pursuant to the Participant Direction Procedures), or the
Employer, or an Investment Manager with respect to the investment of
any or all Plan assets, the Trustee shall have no liability with
respect to the investment of such assets, but shall be responsible
only to execute such investment instructions as so directed.
(1) The Trustee shall be entitled to rely fully on the written
instructions of a Participant (pursuant to the Participant
Direction Procedures), or the Employer, or any Fiduciary or
nonfiduciary agent of the Employer, in the discharge of such
duties, and shall not be liable for any loss or other liability,
resulting from such direction (or lack of direction) of the
investment of any part of the Plan assets.
(2) The Trustee may delegate the duty to execute such
instructions to any nonfiduciary agent, which may be an affiliate
of the Trustee or any Plan representative.
(3) The Trustee may refuse to comply with any direction from the
Participant in the event the Trustee, in its sole and absolute
discretion, deems such directions improper by virtue of
applicable law. The Trustee shall not be responsible or liable
for any loss or expense which may result from the Trustee's
refusal or failure to comply with any directions from the
Participant.
(4) Any costs and expenses related to compliance with the
Participant's directions shall be borne by the Participant's
Directed Account, unless paid by the Employer.
(c) If there shall be more than one Trustee, they shall act by a
majority of their number, but may authorize one or more of them to
sign papers on their behalf.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the Trust Fund to keep
the Trust Fund invested without distinction between principal and
income and in such securities or property, real or personal, wherever
situated, as the Trustee shall deem advisable, including, but not
limited to, stocks, common or preferred, bonds and other evidences of
indebtedness or ownership, and real estate or any interest therein.
The Trustee shall at all times in making investments of the Trust Fund
consider, among other factors, the short and long-term financial needs
of the Plan on the basis of information furnished by the Employer. In
making such investments, the Trustee shall not be restricted to
securities or other property of the character expressly authorized by
the applicable law for trust investments; however, the Trustee shall
give due regard to any limitations imposed by the Code or the Act so
that at all times the Plan may qualify as a qualified Profit Sharing
Plan and Trust.
57
63
(b) The Trustee may employ a bank or trust company pursuant to
the terms of its usual and customary bank agency agreement, under
which the duties of such bank or trust company shall be of a
custodial, clerical and record-keeping nature.
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 the Plan,
shall 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, margin accounts may be opened and maintained;
(b) To sell, exchange, convey, transfer, grant options to
purchase, or otherwise dispose of any securities or other property
held by the Trustee, by private contract or at public auction. No
person dealing with the Trustee shall be bound to see to the
application of the purchase money or to inquire into the validity,
expediency, or propriety of any such sale or other disposition, with
or without advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power
of substitution; to exercise any conversion privileges, subscription
rights or other options, and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate securities, and
to delegate discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to exercise any of the
powers of an owner with respect to stocks, bonds, securities, or other
property. However, the Trustee shall not vote proxies relating to
securities for which it has not been assigned full investment
management responsibilities. In those cases where another party has
such investment authority or discretion, the Trustee will deliver all
proxies to said party who will then have full responsibility for
voting those proxies;
(d) To cause any securities or other property to be registered in
the Trustee's own name or in the name of one or more of the Trustee's
nominees, and to hold any investments in bearer form, but the books
and records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such
amount, and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all, or any
part, of the Trust Fund; and no person lending money to the Trustee
shall be bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any borrowing;
58
64
(f) To keep such portion of the Trust Fund in cash or cash
balances as the Trustee may, from time to time, deem to be in the best
interests of the Plan, without liability for interest thereon;
(g) To accept and retain for such time as the Trustee may deem
advisable any securities or other property received or acquired as
Trustee hereunder, whether or not such securities or other property
would normally be purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other instruments
that may be necessary or appropriate to carry out the powers herein
granted;
(i) To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to commence or
defend suits or legal or administrative proceedings, and to represent
the Plan in all suits and legal and administrative proceedings;
(j) To employ suitable agents and counsel and to pay their
reasonable expenses and compensation, and such agent or counsel may or
may not be agent or counsel for the Employer;
(k) To apply for and procure from responsible insurance
companies, to be selected by the Administrator, as an investment of
the Trust Fund such annuity, or other Contracts (on the life of any
Participant) as the Administrator shall deem proper; to exercise, at
any time or from time to time, whatever rights and privileges may be
granted under such annuity, or other Contracts; to collect, receive,
and settle for the proceeds of all such annuity or other Contracts as
and when entitled to do so under the provisions thereof;
(l) To invest funds of the Trust in time deposits or savings
accounts bearing a reasonable rate of interest in the Trustee's bank;
(m) To invest in Treasury Bills and other forms of United States
government obligations;
(n) To invest in shares of investment companies registered under
the Investment Company Act of 1940;
(o) 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;
(p) To deposit monies in federally insured savings accounts or
certificates of deposit in banks or savings and loan associations;
(q) To pool all or any of the Trust Fund, from time to time, with
assets belonging to any other qualified employee pension benefit trust
59
65
created by the Employer or an affiliated company of the Employer, and
to commingle such assets and make joint or common investments and
carry joint accounts on behalf of this Plan and such other trust or
trusts, allocating undivided shares or interests in such investments
or accounts or any pooled assets of the two or more trusts in
accordance with their respective interests;
(r) To appoint a nonfiduciary agent or agents to assist the
Trustee in carrying out any investment instructions of Participants
and of any Investment Manager or Fiduciary, and to compensate such
agent(s) from the assets of the Plan, to the extent not paid by the
Employer;
(s) To do all such acts and exercise all such rights and
privileges, although not specifically mentioned herein, as the Trustee
may deem necessary to carry out the purposes of the Plan.
7.4 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator, the Trustee shall, from time to
time, in accordance with the terms of the Plan, make payments out of the Trust
Fund. The Trustee shall not be responsible in any way for the application of
such payments.
7.5 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as shall from
time to time be agreed upon in writing by the Employer and the Trustee. An
individual serving as Trustee who already receives full-time pay from the
Employer shall not receive compensation from the Plan. In addition, the Trustee
shall be reimbursed for any reasonable expenses, including reasonable counsel
fees incurred by it as Trustee. Such compensation and expenses shall be paid
from the Trust Fund unless paid or advanced by the Employer. All taxes of any
kind and all kinds whatsoever that may be levied or assessed under existing or
future laws upon, or in respect of, the Trust Fund or the income thereof, shall
be paid from the Trust Fund.
7.6 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary
Date or receipt of the Employer contribution for each Plan Year, the Trustee
shall furnish to the Employer and Administrator a written statement of account
with respect to the Plan Year for which such contribution was made setting
forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon sales
or other disposition of the assets;
(c) the increase, or decrease, in the value of the Trust Fund;
(d) all payments and distributions made from the Trust Fund; and
60
66
(e) such further information as the Trustee and/or Administrator
deems appropriate. The Employer, forthwith upon its receipt of each
such statement of account, shall acknowledge receipt thereof in
writing and advise the Trustee and/or Administrator of its approval or
disapproval thereof. Failure by the Employer to disapprove any such
statement of account within thirty (30) days after its receipt thereof
shall be deemed an approval thereof. The approval by the Employer of
any statement of account shall be binding as to all matters embraced
therein as between the Employer and the Trustee to the same extent as
if the account of the Trustee had been settled by judgment or decree
in an action for a judicial settlement of its account in a court of
competent jurisdiction in which the Trustee, the Employer and all
persons having or claiming an interest in the Plan were parties;
provided, however, that nothing herein contained shall deprive the
Trustee of its right to have its accounts judicially settled if the
Trustee so desires.
7.7 AUDIT
(a) If an audit of the Plan's records shall be required by the
Act and the regulations thereunder for any Plan Year, the
Administrator shall direct the Trustee to engage on behalf of all
Participants an independent qualified public accountant for that
purpose. Such accountant shall, after an audit of the books and
records of the Plan in accordance with generally accepted auditing
standards, within a reasonable period after the close of the Plan
Year, furnish to the Administrator and the Trustee a report of his
audit setting forth his opinion as to whether any statements,
schedules or lists that are required by Act Section 103 or the
Secretary of Labor to be filed with the Plan's annual report, are
presented fairly in conformity with generally accepted accounting
principles applied consistently. All auditing and accounting fees
shall be an expense of and may, at the election of the Administrator,
be paid from the Trust Fund.
(b) If some or all of the information necessary to enable the
Administrator to comply with Act Section 103 is maintained by a bank,
insurance company, or similar institution, regulated and supervised
and subject to periodic examination by a state or federal agency, it
shall transmit and certify the accuracy of that information to the
Administrator as provided in Act Section 103(b) within one hundred
twenty (120) days after the end of the Plan Year or by such other date
as may be prescribed under regulations of the Secretary of Labor.
7.8 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the
Employer, at least thirty (30) days before its effective date, a
written notice of his resignation.
(b) The Employer may remove the Trustee by mailing by registered
or certified mail, addressed to such Trustee at his last known
address, at least thirty (30) days before its effective date, a
written notice of his removal.
61
67
(c) Upon the death, resignation, incapacity, or removal of any
Trustee, a successor may be appointed by the Employer; and such
successor, upon accepting such appointment in writing and delivering
same to the Employer, shall, without further act, become vested with
all the estate, rights, powers, discretions, and duties of his
predecessor with like respect as if he were originally named as a
Trustee herein. Until such a successor is appointed, the remaining
Trustee or Trustees shall have full authority to act under the terms
of the Plan.
(d) The Employer may designate one or more successors prior to
the death, resignation, incapacity, or removal of a Trustee. In the
event a successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the estate, rights, powers, discretions, and duties of his
predecessor with the like effect as if he were originally named as
Trustee herein immediately upon the death, resignation, incapacity, or
removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, he
shall furnish to the Employer and Administrator a written statement of
account with respect to the portion of the Plan Year during which he
served as Trustee. This statement shall be either (i) included as part
of the annual statement of account for the Plan Year required under
Section 7.6 or (ii) set forth in a special statement. Any such special
statement of account should be rendered to the Employer no later than
the due date of the annual statement of account for the Plan Year. The
procedures set forth in Section 7.6 for the approval by the Employer
of annual statements of account shall apply to any special statement
of account rendered hereunder and approval by the Employer of any such
special statement in the manner provided in Section 7.6 shall have the
same effect upon the statement as the Employer's approval of an annual
statement of account. No successor to the Trustee shall have any duty
or responsibility to investigate the acts or transactions of any
predecessor who has rendered all statements of account required by
Section 7.6 and this subparagraph.
7.9 TRANSFER OF INTEREST
Notwithstanding any other provision contained in this Plan, the
Trustee at the direction of the Administrator shall transfer the Vested
interest, if any, of such Participant in his account to another trust forming
part of a pension, profit sharing or stock bonus plan maintained by such
Participant's new employer and represented by said employer in writing as
meeting the requirements of Code Section 401(a), provided that the trust to
which such transfers are made permits the transfer to be made.
7.10 DIRECT ROLLOVER
(a) Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this
Section, a distributee may elect, at the time and in the manner
prescribed by the Administrator, to have any portion of an eligible
rollover distribution that is equal to at least
62
68
$500 paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
(b) For purposes of this Section the following definitions shall
apply:
(1) An eligible rollover distribution is any distribution of all
or any portion of the balance to the credit of the distributee,
except that an eligible rollover distribution does not include:
any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period
of ten years or more; any distribution to the extent such
distribution is required under Code Section 401(a)(9); the
portion of any other distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities); any
hardship distribution described in Code Section
401(k)(2)(B)(i)(IV); and any other distribution that is
reasonably expected to total less than $200 during a year.
(2) An eligible retirement plan is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity
plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a), that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or
individual retirement annuity.
(3) A distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations
order, as defined in Code Section 414(p), are distributees with
regard to the interest of the spouse or former spouse.
(4) A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
7.11 EMPLOYER SECURITIES AND REAL PROPERTY
The Trustee shall be empowered to acquire and hold "qualifying
Employer securities" and "qualifying Employer real property," as those terms are
defined in the Act, provided, however, that the Trustee shall not be permitted
to acquire any qualifying Employer securities or qualifying Employer real
property if, immediately after the acquisition of such securities or property,
the fair market value of all qualifying Employer securities and qualifying
Employer real property held by the Trustee hereunder should amount to more than
100% of the fair market value of all the assets in the Trust Fund.
63
69
ARTICLE VIII
AMENDMENT, TERMINATION AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend the
Plan, subject to the limitations of this Section. However, any
amendment which affects the rights, duties or responsibilities of the
Trustee and Administrator, other than an amendment to remove the
Trustee or Administrator, may only be made with the Trustee's and
Administrator's written consent. Any such amendment shall become
effective as provided therein upon its execution. The Trustee shall
not be required to execute any such amendment unless the Trust
provisions contained herein are a part of the Plan and the amendment
affects the duties of the Trustee hereunder.
(b) No amendment to the Plan shall be effective if it authorizes
or permits any part of the Trust Fund (other than such part as is
required to pay taxes and administration expenses) to be used for or
diverted to any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries or estates; or causes any
reduction in the amount credited to the account of any Participant; or
causes or permits any portion of the Trust Fund to revert to or become
property of the Employer,
(c) Except as permitted by Regulations, no Plan amendment or
transaction having the effect of a Plan amendment (such as a merger,
plan transfer or similar transaction) shall be effective to the extent
it eliminates or reduces any "Section 411(d)(6) protected benefit" or
adds or modifies conditions relating to "Section 411(d)(6) protected
benefits" the result of which is a further restriction on such benefit
unless such protected benefits are preserved with respect to benefits
accrued as of the later of the adoption date or effective date of the
amendment. "Section 411(d)(6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement benefits and
retirement-type subsidies, and optional forms of benefit.
8.2 TERMINATION
(a) The Employer shall have the right at any time to terminate
the Plan by delivering to the Trustee and Administrator written notice
of such termination. Upon any full or partial termination, all amounts
credited to the affected Participants' Combined Accounts shall become
100% Vested as provided in Section 6.4 and shall not thereafter be
subject to forfeiture, and all unallocated amounts shall be allocated
to the accounts of all Participants in accordance with the provisions
hereof.
(b) Upon the full termination of the Plan, the Employer shall
direct the distribution of the assets of the Trust Fund to
Participants in a manner which is consistent with and satisfies the
provisions of Section 6.5. Distributions to a Participant shall be
made in cash or through the purchase of irrevocable nontransferable
deferred commitments from an insurer. Except as
64
70
permitted by Regulations, the termination of the Plan shall not result
in the reduction of "Section 411(d)(6) protected benefits" in
accordance with Section 8.1(c).
8.3 MERGER OR CONSOLIDATION
This Plan and Trust may be merged or consolidated with, or its assets
and/or liabilities may be transferred to any other plan and trust only if the
benefits which would be received by a Participant of this Plan, in the event of
a termination of the plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Participant would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation, and such transfer, merger or consolidation does not otherwise
result in the elimination or reduction of any "Section 411(d)(6) protected
benefits" in accordance with Section 8.1(c).
ARTICLE IX
TOP HEAVY
9.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special
vesting requirements of Code Section 416(b) pursuant to Section 6.4 of the Plan
and the special minimum allocation requirements of Code Section 416(c) pursuant
to Section 4.4 of the Plan.
9.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year in
which, as of the Determination Date, (1) the Present Value of Accrued
Benefits of Key Employees and (2) the sum of the Aggregate Accounts of
Key Employees under this Plan and all plans of an Aggregation Group,
exceeds sixty percent (60%) of the Present Value of Accrued Benefits
and the Aggregate Accounts of all Key and Non-Key Employees under this
Plan and all plans of an Aggregation Group.
If any Participant is a Non-Key Employee for any Plan Year,
but such Participant was a Key Employee for any prior Plan Year, such
Participant's Present Value of Accrued Benefit and/or Aggregate
Account balance shall not be taken into account for purposes of
determining whether this Plan is a Top Heavy or Super Top Heavy Plan
(or whether any Aggregation Group which includes this Plan is a Top
Heavy Group). In addition, if a Participant or Former Participant has
not performed any services for any Employer maintaining the Plan at
any time during the five year period ending on the Determination Date,
any accrued benefit for such Participant or Former Participant shall
not be taken into account for the purposes of determining whether this
Plan is a Top Heavy or Super Top Heavy Plan.
(b) This Plan shall be a Super Top Heavy Plan for any Plan Year
in which, as of the Determination Date, (1) the Present Value of
Accrued Benefits of Key Employees and (2) the sum of the Aggregate
Accounts of Key
65
71
Employees under this Plan and all plans of an Aggregation Group,
exceeds ninety percent (90%) of the Present Value of Accrued Benefits
and the Aggregate Accounts of all Key and Non-Key Employees under this
Plan and all plans of an Aggregation Group.
(c) Aggregate Account: A Participant's Aggregate Account as of
the Determination Date is the sum of:
(1) his Participant's Combined Account balance as of the most
recent valuation occurring within a twelve (12) month period
ending on the Determination Date;
(2) an adjustment for any contributions due as of the
Determination Date. Such adjustment shall be the amount of any
contributions actually made after the Valuation Date but due on
or before the Determination Date, except for the first Plan Year
when such adjustment shall also reflect the amount of any
contributions made after the Determination Date that are
allocated as of a date in that first Plan Year.
(3) any Plan distributions made within the Plan Year that
includes the Determination Date or within the four (4) preceding
Plan Years. However, in the case of distributions made after the
Valuation Date and prior to the Determination Date, such
distributions are not included as distributions for top heavy
purposes to the extent that such distributions are already
included in the Participant's Aggregate Account balance as of the
Valuation Date. Notwithstanding anything herein to the contrary,
all distributions, including distributions under a terminated
plan which if it had not been terminated would have been required
to be included in an Aggregation Group, will be counted. Further,
distributions from the Plan (including the cash value of life
insurance policies) of a Participant's account balance because of
death shall be treated as a distribution for the purposes of this
paragraph.
(4) any Employee contributions, whether voluntary or mandatory.
However, amounts attributable to tax deductible qualified
voluntary employee contributions shall not be considered to be a
part of the Participant's Aggregate Account balance.
(5) with respect to unrelated rollovers and plan-to-plan
transfers (ones which are both initiated by the Employee and made
from a plan maintained by one employer to a plan maintained by
another employer), if this Plan provides the rollovers or
plan-to-plan transfers, it shall always consider such rollovers
or plan-to-plan transfers as a distribution for the purposes of
this Section. If this Plan is the plan accepting such rollovers
or plan-to-plan transfers, it shall not consider such rollovers
or plan-to-plan transfers as part of the Participant's Aggregate
Account balance.
66
72
(6) with respect to related rollovers and plan-to-plan transfers
(ones either not initiated by the Employee or made to a plan
maintained by the same employer), if this Plan provides the
rollover or plan-to-plan transfer, it shall not be counted as a
distribution for purposes of this Section. If this Plan is the
plan accepting such rollover or plan-to-plan transfer, it shall
consider such rollover or plan-to-plan transfer as part of the
Participant's Aggregate Account balance, irrespective of the date
on which such rollover or plan-to-plan transfer is accepted.
(7) For the purposes of determining whether two employers are to
be treated as the same employer in (5) and (6) above, all
employers aggregated under Code Section 414(b), (c), (m) and (o)
are treated as the same employer.
(d) "Aggregation Group" means either a Required Aggregation Group
or a Permissive Aggregation Group as hereinafter determined.
(1) Required Aggregation Group: In determining a Required
Aggregation Group hereunder, each plan of the Employer in which a
Key Employee is a participant in the Plan Year containing the
Determination Date or any of the four preceding Plan Years, and
each other plan of the Employer which enables any plan in which a
Key Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410, will be required to be aggregated.
Such group shall be known as a Required Aggregation Group.
In the case of a Required Aggregation Group, each plan in the
group will be considered a Top Heavy Plan if the Required
Aggregation Group is a Top Heavy Group. No plan in the Required
Aggregation Group will be considered a Top Heavy Plan if the
Required Aggregation Group is not a Top Heavy Group.
(2) Permissive Aggregation Group: The Employer may also include
any other plan not required to be included in the Required
Aggregation Group, provided the resulting group, taken as a
whole, would continue to satisfy the provisions of Code Sections
401(a)(4) and 410. Such group shall be known as a Permissive
Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that
is part of the Required Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is a Top Heavy
Group. No plan in the Permissive Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation Group
is not a Top Heavy Group.
(3) Only those plans of the Employer in which the Determination
Dates fall within the same calendar year shall be aggregated in
order to determine whether such plans are Top Heavy Plans.
67
73
(4) An Aggregation Group shall include any terminated plan of
the Employer if it was maintained within the last five (5) years
ending on the Determination Date.
(e) "Determination Date" means (a) the last day of the preceding
Plan Year, or (b) in the case of the first Plan Year, the last day of
such Plan Year.
(f) Present Value of Accrued Benefit: In the case of a defined
benefit plan, the Present Value of Accrued Benefit for a Participant
other than a Key Employee, shall be as determined using the single
accrual method used for all plans of the Employer and Affiliated
Employers, or if no such single method exists, using a method which
results in benefits accruing not more rapidly than the slowest accrual
rate permitted under Code Section 411(b)(1)(C). The determination of
the Present Value of Accrued Benefit shall be determined as of the
most recent Valuation Date that falls within or ends with the 12-month
period ending on the Determination Date except as provided in Code
Section 416 and the Regulations thereunder for the first and second
plan years of a defined benefit plan.
(g) "Top Heavy Group" means an Aggregation Group in which, as of
the Determination Date, the sum of:
(1) the Present Value of Accrued Benefits of Key Employees under
all defined benefit plans included in the group, and
(2) the Aggregate Accounts of Key Employees under all defined
contribution plans included in the group,
exceeds sixty percent (60%) of a similar sum determined for
all Participants.
ARTICLE X
MISCELLANEOUS
10.1 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the
Employer and any Participant or to be a consideration or an inducement for the
employment of any Participant or Employee. Nothing contained in this Plan shall
be deemed to give any Participant or Employee the right to be retained in the
service of the Employer or to interfere with the right of the Employer to
discharge any Participant or Employee at any time regardless of the effect which
such discharge shall have upon him as a Participant of this Plan.
10.2 ALIENATION
(a) Subject to the exceptions provided below, no benefit which
shall be payable out of the Trust Fund to any person (including a
Participant or his Beneficiary) shall be subject in any manner to
anticipation, alienation,
68
74
sale, transfer, assignment, pledge, encumbrance, or charge, and any
attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, or charge the same shall be void; and no such benefit shall
in any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of any such person, nor shall it be
subject to attachment or legal process for or against such person, and
the same shall not be recognized by the Trustee, except to such extent
as may be required by law.
(b) This provision shall not apply to a "qualified domestic
relations order" defined in Code Section 414(p), and those other
domestic relations orders permitted to be so treated by the
Administrator under the provisions of the Retirement Equity Act of
1984. The Administrator shall establish a written procedure to
determine the qualified status of domestic relations orders and to
administer distributions under such qualified orders. Further, to the
extent provided under a "qualified domestic relations order," a former
spouse of a Participant shall be treated as the spouse or surviving
spouse for all purposes under the Plan.
(c) This provision shall not apply to an offset to a
Participant's accrued benefit against an amount that the Participant
is ordered or required to pay the Plan with respect to a judgment,
order, or decree issued, or a settlement entered into, on or after
August 5, 1997, in accordance with Code Sections 401(a)(13)(C) and
(D).
10.3 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the
Act and the laws of the State of Texas, other than its laws respecting choice
of law, to the extent not preempted by the Act.
10.4 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or
neuter gender, they shall be construed as though they were also used in another
gender in all cases where they would so apply, and whenever any words are used
herein in the singular or plural form, they shall be construed as though they
were also used in the other form in all cases where they would so apply.
10.5 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or Plan established hereunder to which the Trustee, the Employer or
the Administrator may be a party, and such claim, suit, or proceeding is
resolved in favor of the Trustee, the Employer or the Administrator, they shall
be entitled to be reimbursed from the Trust Fund for any and all costs,
attorney's fees, and other expenses pertaining thereto incurred by them for
which they shall have become liable.
69
75
10.6 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically
permitted by law, it shall be impossible by operation of the Plan or
of the Trust, by termination of either, by power of revocation or
amendment, by the happening of any contingency, by collateral
arrangement or by any other means, for any part of the corpus or
income of any trust fund maintained pursuant to the Plan or any funds
contributed thereto to be used for, or diverted to, purposes other
than the exclusive benefit of Participants, Retired Participants, or
their Beneficiaries.
(b) In the event the Employer shall make an excessive
contribution under a mistake of fact pursuant to Act Section
403(c)(2)(A), the Employer may demand repayment of such excessive
contribution at any time within one (1) year following the time of
payment and the Trustees shall return such amount to the Employer
within the one (1) year period. Earnings of the Plan attributable to
the excess contributions may not be returned to the Employer but any
losses attributable thereto must reduce the amount so returned.
10.7 BONDING
Every Fiduciary, except a bank or an insurance company, unless
exempted by the Act and regulations thereunder, shall be bonded in an amount
not less than 10% of the amount of the funds such Fiduciary handles; provided,
however, that the minimum bond shall be $1,000 and the maximum bond, $500,000.
The amount of funds handled shall be determined at the beginning of each Plan
Year by the amount of funds handled by such person, group, or class to be
covered and their predecessors, if any, during the preceding Plan Year, or if
there is no preceding Plan Year, then by the amount of the funds to be handled
during the then current year. The bond shall provide protection to the Plan
against any loss by reason of acts of fraud or dishonesty by the Fiduciary
alone or in connivance with others. The surety shall be a corporate surety
company (as such term is used in Act Section 412(a)(2)), and the bond shall be
in a form approved by the Secretary of Labor. Notwithstanding anything in the
Plan to the contrary, the cost of such bonds shall be an expense of and may, at
the election of the Administrator, be paid from the Trust Fund or by the
Employer.
10.8 EMPLOYER'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer, the Administrator, nor the Trustee, nor their
successors shall be responsible for the validity of any Contract issued
hereunder or for the failure on the part of the insurer to make payments
provided by any such Contract, or for the action of any person which may delay
payment or render a Contract null and void or unenforceable in whole or in
part.
10.9 INSURER'S PROTECTIVE CLAUSE
Any insurer who shall issue Contracts hereunder shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. The insurer shall be protected and held harmless in acting in
accordance with any written
70
76
direction of the Trustee, and shall have no duty to see to the application of
any funds paid to the Trustee, nor be required to question any actions directed
by the Trustee. Regardless of any provision of this Plan, the insurer shall not
be required to take or permit any action or allow any benefit or privilege
contrary to the terms of any Contract which it issues hereunder, or the rules
of the insurer.
10.10 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary,
or to any guardian or committee appointed for such Participant or Beneficiary
in accordance with the provisions of the Plan, shall, to the extent thereof, be
in full satisfaction of all claims hereunder against the Trustee and the
Employer, either of whom may require such Participant, legal representative,
Beneficiary, guardian or committee, as a condition precedent to such payment,
to execute a receipt and release thereof in such form as shall be determined by
the Trustee or Employer.
10.11 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or
required to do or perform any act or matter or thing, it shall be done and
performed by a person duly authorized by its legally constituted authority.
10.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer, (2) the
Administrator and (3) the Trustee. The named Fiduciaries shall have only those
specific powers, duties, responsibilities, and obligations as are specifically
given them under the Plan or as accepted by or assigned to them pursuant to any
procedure provided under the Plan, including but not limited to any agreement
allocating or delegating their responsibilities, the terms of which are
incorporated herein by reference. In general, unless otherwise indicated herein
or pursuant to such agreements, the Employer shall have the duties specified in
Article II hereof, as the same may be allocated or delegated thereunder,
including but not limited to the responsibility for making the contributions
provided for under Section 4.1; and shall have the authority to appoint and
remove the Trustee and the Administrator; to formulate the Plan's "funding
policy and method"; and to amend or terminate, in whole or in part, the Plan.
The Administrator shall have the responsibility for the administration of the
Plan, including but not limited to the items specified in Article II of the
Plan, as the same may be allocated or delegated thereunder. The Administrator
shall act as the named Fiduciary responsible for communicating with the
Participant according to the Participant Direction Procedures. The Trustee
shall have the responsibility of management and control of the assets held
under the Trust, except to the extent directed pursuant to Article II or with
respect to those assets, the management of which has been assigned to an
Investment Manager, who shall be solely responsible for the management of the
assets assigned to it, all as specifically provided in the Plan and any
agreement with the Trustee. Each named Fiduciary warrants that any directions
given, information furnished, or action taken by it shall be in accordance with
the provisions of the Plan, authorizing or providing for such direction,
information or action. Furthermore, each named Fiduciary may rely upon any such
direction, information or action of another named Fiduciary as being proper
under the Plan, and is not required under the Plan to inquire into the
propriety of any such direction, information or action. It is intended under
the Plan that each named
71
77
Fiduciary shall be responsible for the proper exercise of its own powers,
duties, responsibilities and obligations under the Plan as specified or
allocated herein. No named Fiduciary shall guarantee the Trust Fund in any
manner against investment loss or depreciation in asset value. Any person or
group may serve in more than one Fiduciary capacity. In the furtherance of
their responsibilities hereunder, the "named Fiduciaries" shall be empowered to
interpret the Plan and Trust and to resolve ambiguities, inconsistencies and
omissions, which findings shall be binding, final and conclusive.
10.13 HEADINGS
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
10.14 APPROVAL BY INTERNAL REVENUE SERVICE
(a) Notwithstanding anything herein to the contrary,
contributions to this Plan are conditioned upon the initial
qualification of the Plan under Code Section 401. If the Plan receives
an adverse determination with respect to its initial qualification,
then the Plan may return such contributions to the Employer within one
year after such determination, provided the application for the
determination is made by the time prescribed by law for filing the
Employer's return for the taxable year in which the Plan was adopted,
or such later date as the Secretary of the Treasury may prescribe.
(b) Notwithstanding any provisions to the contrary, except
Sections 3.5, 3.6, and 4.1(e), any contribution by the Employer to the
Trust Fund is conditioned upon the deductibility of the contribution
by the Employer under the Code and, to the extent any such deduction
is disallowed, the Employer may, within one (1) year following the
disallowance of the deduction, demand repayment of such disallowed
contribution and the Trustee shall return such contribution within one
(1) year following the disallowance. Earnings of the Plan attributable
to the excess contribution may not be returned to the Employer, but
any losses attributable thereto must reduce the amount so returned.
10.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a
uniform, nondiscriminatory manner. In the event of any conflict between the
terms of this Plan and any Contract purchased hereunder, the Plan provisions
shall control.
ARTICLE XI
PARTICIPATING EMPLOYERS
11.1 ADOPTION BY OTHER EMPLOYERS
Notwithstanding anything herein to the contrary, with the consent of
the Employer and Trustee, any other corporation or entity, whether an affiliate
or subsidiary or not, may adopt this Plan and all of the provisions hereof, and
participate herein and be
72
78
known as a Participating Employer, by a properly executed document evidencing
said intent and will of such Participating Employer.
11.2 REQUIREMENTS OF PARTICIPATING EMPLOYERS
(a) Each such Participating Employer shall be required to use
the same Trustee as provided in this Plan.
(b) The Trustee may, but shall not be required to, commingle,
hold and invest as one Trust Fund all contributions made by
Participating Employers, as well as all increments thereof. However,
the assets of the Plan shall, on an ongoing basis, be available to pay
benefits to all Participants and Beneficiaries under the Plan without
regard to the Employer or Participating Employer who contributed such
assets.
(c) The transfer of any Participant from or to an Employer
participating in this Plan, whether he be an Employee of the Employer
or a Participating Employer, shall not affect such Participant's
rights under the Plan, and all amounts credited to such Participant's
Combined Account as well as his accumulated service time with the
transferor or predecessor, and his length of participation in the
Plan, shall continue to his credit.
(d) All rights and values forfeited by termination of
employment shall inure only to the benefit of the Participants of the
Employer or Participating Employer by which the forfeiting Participant
was employed, except if the Forfeiture is for an Employee whose
Employer is an Affiliated Employer, then said Forfeiture shall inure
to the benefit of the Participants of those Employers who are
Affiliated Employers. Should an Employee of one ("First") Employer be
transferred to an associated ("Second") Employer which is an
Affiliated Employer, such transfer shall not cause his account balance
(generated while an Employee of "First" Employer) in any manner, or by
any amount to be forfeited. Such Employee's Participant Combined
Account balance for all purposes of the Plan, including length of
service, shall be considered as though he had always been employed by
the "Second" Employer and as such had received contributions,
forfeitures, earnings or losses, and appreciation or depreciation in
value of assets totaling the amount so transferred.
(e) Any expenses of the Trust which are to be paid by the
Employer or borne by the Trust Fund shall be paid by each
Participating Employer in the same proportion that the total amount
standing to the credit of all Participants employed by such Employer
bears to the total standing to the credit of all Participants.
11.3 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a party to this
Plan; provided, however, that with respect to all of its relations with the
Trustee and Administrator for the purpose of this Plan, each Participating
Employer shall be deemed to have designated irrevocably the Employer as its
agent. Unless the context of the Plan clearly
73
79
indicates the contrary, the word "Employer" shall be deemed to include each
Participating Employer as related to its adoption of the Plan.
11.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between
Participating Employers, and in the event of any such transfer, the Employee
involved shall carry with him his accumulated service and eligibility. No such
transfer shall effect a termination of employment hereunder, and the
Participating Employer to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Participating Employer from whom the Employee was transferred.
11.5 PARTICIPATING EMPLOYER CONTRIBUTION
Any contribution subject to allocation during each Plan Year shall be
allocated only among those Participants of the Employer or Participating
Employer making the contribution, except if the contribution is made by an
Affiliated Employer, in which event such contribution shall be allocated among
all Participants of all Participating Employers who are Affiliated Employers in
accordance with the provisions of this Plan. On the basis of the information
furnished by the Administrator, the Trustee shall keep separate books and
records concerning the affairs of each Participating Employer hereunder and as
to the accounts and credits of the Employees of each Participating Employer.
The Trustee may, but need not, register Contracts so as to evidence that a
particular Participating Employer is the interested Employer hereunder, but in
the event of an Employee transfer from one Participating Employer to another,
the employing Employer shall immediately notify the Trustee thereof.
11.6 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be
a Participating Employer hereunder shall only be by the written action of each
and every Participating Employer and with the consent of the Trustee where such
consent is necessary in accordance with the terms of this Plan.
11.7 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue or revoke
its participation in the Plan. At the time of any such discontinuance or
revocation, satisfactory evidence thereof and of any applicable conditions
imposed shall be delivered to the Trustee. The Trustee shall thereafter
transfer, deliver and assign Contracts and other Trust Fund assets allocable to
the Participants of such Participating Employer to such new Trustee as shall
have been designated by such Participating Employer, in the event that it has
established a separate pension plan for its Employees, provided however, that
no such transfer shall be made if the result is the elimination or reduction of
any "Section 411(d)(6) protected benefits" in accordance with Section 8.1(c).
If no successor is designated, the Trustee shall retain such assets for the
Employees of said Participating Employer pursuant to the provisions of Article
VII hereof. In no such event shall any part of the corpus or income of the
Trust as it relates to such Participating Employer be used for or diverted to
74
80
purposes other than for the exclusive benefit of the Employees of such
Participating Employer.
11.8 ADMINISTRATOR'S AUTHORITY
The Administrator shall have authority to make any and all necessary
rules or regulations, binding upon all Participating Employers and all
Participants, to effectuate the purpose of this Article.
75
81
IN WITNESS WHEREOF, this Plan has been executed the day and year first
above written.
Signed, sealed, and delivered
in the presence of:
Elite Logistics Services, Inc.
/s/ DIANA SMITH By /s/ JOSEPH D. SMITH
- -------------------------------- -------------------------------------
EMPLOYER
/s/ REBECCA WOMACK
- --------------------------------
WITNESSES AS TO EMPLOYER
ATTEST /s/ REBECCA WOMACK
--------------------------------
/s/ DIANA SMITH /s/ JOSEPH D. SMITH (SEAL)
- -------------------------------- --------------------------------
TRUSTEE
/s/ REBECCA WOMACK
- --------------------------------
WITNESSES AS TO TRUSTEE
/s/ DIANA SMITH /s/ HANH NGUYEN (SEAL)
- -------------------------------- --------------------------------
TRUSTEE
/s/ REBECCA WOMACK
- --------------------------------
WITNESSES AS TO TRUSTEE
(SEAL)
- -------------------------------- --------------------------------
TRUSTEE
- --------------------------------
WITNESSES AS TO TRUSTEE
76
82
CERTIFICATE OF CORPORATE RESOLUTION
The undersigned Secretary of Elite Logistics Services, Inc.
(the Corporation) hereby certifies that the following resolutions were duly
adopted by the board of directors of the Corporation on May 24, 2000, and that
such resolutions have not been modified or rescinded as of the date hereof:
RESOLVED, that the form of Profit Sharing Plan and Trust
effective June 1, 2000, presented to this meeting is hereby approved and adopted
and that the proper officers of the Corporation are hereby authorized and
directed to execute and deliver to the Trustee of the Plan one or more
counterparts of the Plan.
RESOLVED, that for purposes of the limitations on
contributions and benefits under the Plan, prescribed by Section 415 of the
Internal Revenue Code, the "limitation year" shall be the Plan Year.
RESOLVED, that not later than the due date (including
extensions hereof) of the Corporation's federal income tax return for each of
its fiscal years hereafter, the Corporation shall contribute to the Plan for
each such fiscal year such amount as shall be determined by the board of
directors of the Corporation and that the Treasurer of the Corporation is
authorized and directed to pay such contribution to the Trustee of the Plan in
cash or property and to designate to the Trustee the year for which such
contribution is made.
RESOLVED, that the proper officers of the Corporation shall
act as soon as possible to notify the employees of the Corporation of the
adoption of the Profit Sharing Plan by delivering to each employee a copy of the
summary description of the Plan in the form of the Summary Plan Description
presented to this meeting, which form is hereby approved.
The undersigned further certifies that attached hereto as
Exhibits A, B and C, respectively, are true copies of Elite Logistics Services,
Inc. 401(k) Plan, Summary Plan Description and Funding Policy and Method
approved and adopted in the foregoing resolutions.
/s/ DIANA SMITH
--------------------------------
Secretary Assistant
5-24-2000
--------------------------------
Date
83
ELITE LOGISTICS SERVICES, INC. 401(K) PLAN
FUNDING POLICY AND METHOD
A pension benefit plan (as defined in the Employee Retirement
Income Security Act of 1974) has been adopted by the company for the purpose of
rewarding long and loyal service to the company by providing to employees
additional financial security at retirement. Incidental benefits are provided in
the case of disability, death or other termination of employment.
Since the principal purpose of the plan is to provide benefits
at normal retirement age, the principal goal of the investment of the funds in
the plan should be both security and long-term stability with moderate growth
commensurate with the anticipated retirement dates of participants. Investments,
other than "fixed dollar" investments, should be included among the plan's
investments to prevent erosion by inflation. However, investments should be
sufficiently liquid to enable the plan, on short notice, to make some
distributions in the event of the death or disability of a participant.